DRAFT RED HERRING PROSPECTUS

Please read Section 60B of the Companies Act, 1956

100% Book Built Issue
The Draft red Herring Prospectus shall be updated upon filing with the RoC
Dated January 8, 2007

AFCONS INFRASTRUCTURE LIMITED

(Our Company was originally incorporated as Asia Foundations and Constructions Private Limited on November 22, 1976 under the Companies Act,
1956. The word “private” was deleted on March 18, 1977 pursuant to section 43A of the Companies Act, 1956. The name of our Company was changed
to Afcons Infrastructure Limited on August 14, 1996 and it was converted into a public limited company on November 11, 1997. For details of changes
in the name and registered office of the Company, please refer to “Our History and Certain Corporate Matters” on page 108 of this Draft Red Herring
Prospectus)
Registered Office: Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azad Nagar P.O., Mumbai – 400 053.
Tel: (91 22) 6677 3100; Fax: (91 22) 2673 0047
Website: www.afcons.com; Email: ipo@afcons.com Contact Person: P.R. Rajendran
PUBLIC ISSUE OF 16,065,000 EQUITY SHARES OF Rs. 10 EACH OF AFCONS INFRASTRUCTURE LIMITED (“AFCONS” OR THE
“COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF Rs. [

] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF Rs.
[●] PER EQUITY SHARE) AGGREGATING Rs. [

] MILLION (THE “ISSUE”). THE ISSUE COMPRISES A NET ISSUE OF 15,743,700
EQUITY SHARES TO THE PUBLIC AND A RESERVATION OF 321,300 EQUITY SHARES FOR ELIGIBLE EMPLOYEES. THE ISSUE
WOULD CONSTITUTE 18.37% OF THE POST ISSUE PAID UP CAPITAL OF THE COMPANY. THE NET ISSUE WOULD
CONSTITUTE 18.0 % OF THE POST ISSUE PAID UP CAPITAL OF THE COMPANY.
PRICE BAND: Rs. [

] TO Rs. [

] PER EQUITY SHARE OF FACE VALUE OF RS. 10 EACH
THE FACE VALUE OF THE EQUITY SHARES IS RS. 10 EACH. THE ISSUE PRICE IS [●] TIMES THE FACE VALUE AT THE LOWER
END OF THE PRICE BAND AND [●] ATIMES THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND.
In case of revision in the Price Band, the Bidding/Issue Period will be extended for three additional working days after revision of the Price Band subject
to the Bidding/Issue Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be
widely disseminated by notification to National Stock Exchange of India Limited (“NSE”) and Bombay Stock Exchange Limited (“BSE”), by issuing a
press release, and also by indicating the change on the website of the BRLM, CBRLMs and at the terminals of the Syndicate Members.
In terms of Rule 19(2)(b) of the Securities Contracts Regulations Rules, 1957, this being an issue for less than 25% of the post-Issue capital, the Issue is
being made through the 100% Book Building Process wherein at least 60% of the Net Issue shall be allocated on a proportionate basis to QIB Bidders.
5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be
available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue
Price. Further, not less than 10% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than
30% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or
above the Issue Price. We have not opted for IPO grading of this Issue.
RISK IN RELATION TO FIRST ISSUE
This being the first issue of equity shares of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the
shares is Rs. 10 each and the Floor Price is [•] times of the face value and the Cap Price is [•] times of the face value. The Issue Price (as determined
by the Company in consultation with the BRLM and the CBRLMs on the basis of assessment of market demand for the Equity Shares by way of book
building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given
regarding an active and/or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.
GENERAL RISKS
Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford
to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this Issue. For
taking an investment decision, investors must rely on their own examination of the Company and the Issue including the risks involved. The Equity
Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee
the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the section titled “Risk Factors” beginning
on page xii of this Draft Red Herring Prospectus.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Company having made all reasonable inquiries, accepts responsibility for and confirm that this Draft Red Herring Prospectus contains all information
with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Draft Red Herring
Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are
honestly held and that there are no other facts, the omission of which make this Draft Red Herring Prospectus as a whole or any of such information or
the expression of any such opinions or intentions misleading in any material respect.
LISTING ARRANGEMENT
The Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on the NSE and BSE. We have received an ‘in-principle’
approval from the NSE and the BSE, for the listing of the Equity Shares pursuant to letters dated [●] and [●], respectively. For the purposes of the Issue,
the Designated Stock Exchange shall be [●].
BOOK RUNNING CO-BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE
LEAD MANAGER ISSUE
[●]

ENAM FINANCIAL CLSA INDIA JM MORGAN STANLEY SBI CAPITAL [●]

CONSULTANTS LIMITED PRIVATE LIMITED MARKETS LIMITED
PRIVATE LIMITED
8/F Dalamal House 141, Maker Chambers III, 202, Maker Towers ‘E’,
801/ 802, Dalamal Towers Nariman Point Nariman Point Cuffe Parade,
Nariman Point Mumbai 400 021 Mumbai 400 021, India Mumbai 400 005
Mumbai 400 021, India Tel: (91 22) 6650 5050 Tel.: (91 22) 6630 3030 Tel: (91 22) 2218 9166
Tel: (91 22) 6638 1800 Fax: (91 22) 2284 1657 Fax.: (91 22) 2204 7185 Fax: (91 22) 2218 8332
Fax: (91 22) 2284 6824 E-mail: Email: Email :
E-mail: afcons.ipo@clsa.com afcons.ipo@jmmorganstanley. afcons.ipo@sbicaps.com
afcons.ipo@enam.com Website: com Website :
Website: www.enam.com www.india.clsa.com Website: www.sbicaps.com
Contact Person: Contact Person: Varun www.jmmorganstanley.com Contact Person :
Aishwarya Mehra Kumar Contact Person: Utkarsh Swaminathan B
Katoria
ISSUE PROGRAMME
BID/ISSUE OPENS ON: [●] BID/ISSUE CLOSES ON: [●]

1
 TABLE OF CONTENTS

DEFINITIONS AND ABBREVIATIONS…………………………………………………………..……...iii

CERTAIN CONVENTIONS; USE OF MARKET DATA………………………………………..………...ix
FORWARD-LOOKING STATEMENTS…………………………………………………………..………..x
RISK FACTORS………………………………………………………………………………..…………...xi
SUMMARY……………………………………………………………………………………………..…....1
SUMMARY FINANCIAL INFORMATION…………………………………………………..……………7
THE ISSUE……………………………………………………………………………….………………...21
GENERAL INFORMATION……………………………………………………………………..………...22
CAPITAL STRUCTURE………………………………………………………………………….………..29
OBJECTS OF THE ISSUE…………………………………………………………………………………43
BASIS FOR ISSUE PRICE………………………………………………………………………………...46
STATEMENT OF TAX BENEFITS……………………………………………………………………….48
INDUSTRY…………………………………………………………………………………………………56
BUSINESS………………………………………………………………………………………………….81
REGULATIONS AND POLICIES……………………………………………………………………….104
HISTORY AND CERTAIN CORPORATE MATTERS…………………………………………………108
OUR MANAGEMENT……………………………………………………………………………………122
OUR PROMOTERS……………………………………………………………………………………….139
RELATED PARTY TRANSACTIONS…………………………………………………………………..194
DIVIDEND POLICY…………………………………………………………………………………...…203
INDEBTEDNESS………………………………………………………………………………………….204
FINANCIAL STATEMENTS……………………………………………………………………………..207
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS……………………………………………………..………………………………….316
OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS……………………………......337
GOVERNMENT APPROVALS……………………………………………………………………….….349
OTHER REGULATORY AND STATUTORY DISCLOSURES……………………………………..….361
TERMS OF THE ISSUE…………………………………………………………………………………..370
ISSUE STRUCTURE…………………………………………………..………………………………….373
ISSUE PROCEDURE…………………………………………………..………………………………....376
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES…………………………... 404
MAIN PROVISIONS OF ARTICLES OF ASSOCIATION…………………………...............................405
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION…………....................................426
DECLARATION…………………………………………………..……………………………………...428
 DEFINITIONS AND ABBREVIATIONS

Term
“AIL”, “our Company”,
the “Company”, “We”,
“Us”, “Our”, the “Issuer”
Description
Unless the context otherwise requires, refers to Afcons Infrastructure
Limited, a company incorporated under the Companies Act, 1956 and
having its registered office at Afcons House, 16 Shah Industrial Estate,
Azad Nagar P.O., Veera Desai Road, Andheri (W), Mumbai 400 053,
India.

Company Related Terms

Term Description
Articles/Articles of The Articles of Association of the Company.
Association
Auditors The statutory auditors of our Company; Mr. J. C. Bhatt, Chartered
Accountant and M/s. C.C.Chokshi & Co., Chartered Accountants (Joint
Auditors)
Board of Directors/Board The board of directors of the Company or a committee constituted
thereof.
Directors Directors of the Company, unless otherwise specified.
Memorandum/ The Memorandum of Association of the Company.
Memorandum of
Association
Registered Office of the Afcons House, 16 Shah Industrial Estate, Azad Nagar P.O., Veera Desai
Company Road, Andheri (W), Mumbai 400 053
SPCL Shapoorji Pallonji & Co. Limited, a company incorporated under the
Companies Act, and having its registered office at 70, Nagindas Master
Road, Fort, Mumbai 400 023
CIL Cyrus Investments Limited, a company incorporated under the
Companies Act, and having its registered office at Esplanade House,
Hazarimal Somani Marg, Fort, Mumbai 400 001
SICL Sterling Investment Corporation Private Limited, a company
incorporated under the Companies Act, and having its registered office at
70, Nagindas Master Road, Fort, Mumbai 400 023
FIL Floreat Investments Limited, a company incorporated under the
Companies Act, and having its registered office at 70, Nagindas Master
Road, Fort, Mumbai 400 023

Issue Related Terms

Term Description
Allotment/Allot/Allotted Unless the context otherwise requires, the allotment of Equity Shares
pursuant to this Issue to the successful Bidders.
Allottee The successful Bidder to whom the Equity Shares are being/have been
Allotted.
Banker(s) to the Issue [●]
Bid An indication to make an offer during the Bidding/Issue Period by a
prospective investor to subscribe to the Company’s Equity Shares at a
price within the Price Band, including all revisions and modifications
thereto.
Bid Amount The highest value of the optional Bids indicated in the Bid cum
Application Form and payable by the Bidder on submission of the Bid in
the Issue.
Bid /Issue Closing Date The date after which the Syndicate will not accept any Bids for this
Issue, which shall be notified in an English national newspaper, a Hindi

iii
 Term Description
national newspaper and a Marathi newspaper with wide circulation.
Bid cum Application Form The form in terms of which the Bidder shall make an offer to subscribe
to the Equity Shares of our Company and which will be considered as
the application for issue of the Equity Shares pursuant to the terms of
this Draft Red Herring Prospectus.
Bidder Any prospective investor who makes a Bid pursuant to the terms of the
Red Herring Prospectus and the Bid cum Application Form.
Bidding/Issue Period The period between the Bid Opening Date /Issue Opening Date and the
Bid Closing Date/Issue Closing Date inclusive of both days and during
which prospective Bidders can submit their Bids.
Bid/Issue Opening Date The date on which the Syndicate shall start accepting Bids for the Issue,
which shall be the date notified in a widely circulated English national
newspaper, a Hindi national newspaper and a Marathi newspaper with
wide circulation.
Book Building Process The book building process as provided under Chapter XI of the SEBI
Guidelines, in terms of which the Issue is being made.
BRLM/Book Running Book Running Lead Manager to the Issue, in this case being Enam
Lead Manager/ Enam Financial Consultants Private Limited,
CBRLMs/ Co Book Co Book Running Lead Managers to the Issue, in this case being CLSA
Running Lead Managers India Limited, JM Morgan Stanley India Private Limited and SBI
Capital Markets Limited
CAN/Confirmation of The note or advice or intimation of allocation of Equity Shares sent to
Allocation Note the Bidders who have been allocated Equity Shares after discovery of the
Issue Price in accordance with the Book Building Process.
Cap Price The higher end of the Price Band, above which the Issue Price will not
be finalised and above which no Bids will be accepted.
CLSA CLSA India Limited, having its registered office at 8th Floor, Dalamal
House, Nariman Point, Mumbai 400 021
Cut-off Price Any price within the Price Band finalised by the Company in
consultation with the BRLM and the CBRLMs. A Bid submitted at Cut-
off Price is a valid Bid at all price levels within the Price Band.
Designated Date The date on which the Escrow Collection Banks transfer funds from the
Escrow Account(s) to the Public Issue Account after the Prospectus is
filed with the RoC, following which the Board of Directors shall allot
Equity Shares to successful Bidders.
Designated Stock [●]
Exchange
Draft Red Herring This Draft Red Herring Prospectus issued in accordance with Section
Prospectus 60B of the Companies Act, which does not contain complete particulars
on the price at which the Equity Shares are offered and the size of the
Issue.
Eligible Employees Permanent employees of the Company who are Indian Nationals based
in India and are present in India on the date of submission of the Bid-
cum-Application Form.
Employee Reservation The portion of the Issue being up to 321,300 Equity Shares available for
allocation to Eligible Employees.
Equity Shares Equity shares of the Company of face value of Rs. 10 each, unless
otherwise specified in the context thereof.
Escrow Account An account opened with an Escrow Collection Bank(s) and in whose
favour the Bidder will issue cheques or drafts in respect of the Bid
Amount when submitting a bid.
Escrow Agreement Agreement entered into amongst the Company, the Registrar, the Escrow
Collection Bank(s), the BRLM, the CBRLMs and the Syndicate
Members for collection of the Bid Amounts and for remitting refunds, if

iv
 Term Description
any, of the amounts collected, to the Bidders.
Escrow Collection Bank(s) The banks, which are clearing members and registered with SEBI as
Banker(s) to the Issue, at which the Escrow Account will be opened and
in this case being [•].
First Bidder The Bidder whose name appears first in the Bid cum Application Form
or Revision Form.
Floor Price The lower end of the Price Band, below which the Issue Price will not be
finalised and below which no Bids will be accepted.
IPO Initial Public Offering
Issue Public Issue of 16,065,000 Equity Shares of Rs. 10 each of the Issuer for
cash at a price of Rs. [●] per Equity Share (including a share premium
of Rs. [●] per Equity Share) aggregating Rs. [●]
Issue Price The final price at which Equity Shares will be Allotted in the Issue, as
determined by the Company in consultation with the BRLM and the
CBRLMs, on the Pricing Date.
Issue Account An account opened with the Banker(s) to the Issue to receive monies
from the Escrow Accounts for the Issue on the Designated Date.
JMMS JM Morgan Stanley Private Limited, having its resgistered office at 141,
Maker Chambers III, Nariman Point, Mumbai 400 021, India
Margin Amount The amount paid by the Bidder at the time of submission of their Bid,
which may range from 10% to 100% of the Bid Amount.
Mutual Funds A mutual fund registered with SEBI pursuant to the SEBI (Mutual
Funds) Regulations, 1996, as amended from time to time.
Mutual Funds Portion 5% of the QIB Portion or 472,311 Equity Shares (assuming the QIB
Portion is for 60% of the Net Issue Size) available for allocation to Non-
Institutional Bidders
Net Issue The Issue less the Employee Reservation Portion
Non-Institutional Bidders All Bidders that are not QIBs or Retail Individual Bidders and who have
Bid for Equity Shares for an amount more than Rs 100,000
Non-Institutional Portion The portion of this Net Issue being not less than 1,574,370 Equity Shares
available for allocation to Non Institutional Bidders
Pay- in – Date The Bid/Issue Closing Date or the last date specified in the CAN sent to
Bidders, as applicable.
Pay-in-Period With respect to Bidders whose Margin Amount is 100% of the Bid
Amount, the period commencing on the Bid Opening Date and extending
until the Bid Closing Date; and

With respect to Bidders whose Margin Amount is less than 100% of the
Bid Amount, the period commencing on the Bid Opening Date and
extending until the closure of the Pay – in Date.
Price Band The price band with a minimum price (Floor Price) of Rs. [•] and the
maximum price (Cap Price) of Rs. [•], including any revisions thereof.
Pricing Date The date on which the Company in consultation with the BRLM and the
CBRLMs finalize the Issue Price.
Promoter Our Promoter being Shapoorji Pallonji & Co., Limited, Sterling
Investment Corporation Private Limited, Cyrus Investments Limited and
Floreat Investments Limited
Promoter Group Unless the context otherwise requires, refers to those companies
Companies mentioned in the section titled “Our Promoter” on page 139 of this Draft
Red Herring Prospectus.
Prospectus The Prospectus, to be filed with the RoC containing, inter alia, the Issue
Price that is determined at the end of the Book Building Process, the size
of the Issue and certain other information.
Public Issue Account An account opened with the Banker(s) to the Issue to receive monies

v
 Term Description
from the Escrow Account for this Issue on the Designated Date.
QIB Margin Amount An amount representing at least 10% of the Bid Amount.
QIB Portion The portion of the Net Issue to public being not less than 9,446,220
Equity Shares each at the Issue Price, required to be allocated to QIBs.
Qualified Institutional Public financial institutions as defined in Section 4A of the Companies
Buyers or QIBs Act, FIIs, scheduled commercial banks, mutual funds registered with
SEBI, venture capital funds registered with SEBI, foreign venture capital
investors registered with SEBI, state industrial development
corporations, insurance companies registered with the Insurance
Regulatory and Development Authority, provident funds with a
minimum corpus of Rs. 250 million, pension funds with a minimum
corpus of Rs. 250 million, and multilateral and bilateral development
financial institutions.
Refund Account(s) Account(s) opened with an Escrow Collection Bank from which refunds
if any, shall be made.
Registrar /Registrar to the Registrar to the Issue, in this case being [●]
Issue
Retail Individual Bidders Individual Bidders (including HUFs) who have Bid for Equity Shares for
an amount less than or equal to Rs. 100,000 in any of the bidding options
in the Issue.
Retail Portion The portion of the Net Issue to the public being not less than 4,723,110
Equity Shares available for allocation to Retail Individual Bidder(s).
Revision Form The form used by the Bidders to modify the quantity of Equity Shares or
the Bid Price in any of their Bid cum Application Forms or any previous
Revision Form(s).
RHP or Red Herring The red herring prospectus issued in accordance with Section 60B of the
Prospectus Companies Act, which does not have complete particulars on the price at
which the Equity Shares are offered and the size of the Issue. The Red
Herring Prospectus which will be filed with the RoC at least three days
before the Bid Opening Date and will become a Prospectus after filing
with the RoC after the Pricing Date.
SBI CAP SBI Capital Markets Limited 202, having its registered office at Maker
Towers ‘E’, Cuffe Parade, Mumbai 400 005
Stock Exchanges NSE and BSE
Syndicate The BRLM, the CBRLM and the Syndicate Members.
Syndicate Agreement The agreement to be entered into among the Company and the Syndicate
in relation to the collection of Bids in this Issue.
Syndicate Members Enam Securities Private Limited, JMMS Financial Services and SBICAP
Securities Limited
TRS or Transaction The slip or document issued by the Syndicate Members to the Bidder as
Registration Slip proof of registration of the Bid.
Underwriters The BRLM, the CBRLMs and the Syndicate Members.
Underwriting Agreement The agreement among the members of the Syndicate and the Company
to be entered into on or after the Pricing Date.

Technical and Industry Terms

Term Description
BOT Build, Operate and Transfer
BOOT Build, Own, Operate and Transfer
BOLT Build, Operate, Lease and Transfer
BOQ Bill of Quantities
COD Commercial Operation Date
EPC Engineering, Procurement and Construction

vi
 Term Description
MCGM Municipal Corporation of Greater Mumbai.
MHADA Mumbai Housing and Area Development Authority
MoP Ministry of Power
MTPA Million tonnes per annum
NABARD National Bank for Agricultural & Rural Development
NHAI National Highways Authority of India
NHDP National Highways Development Project
O&M Operations and Maintenance
PPA Power Purchase Agreement
PPP Public Private Partnership
RCC Roller Compacted Concrete
RFQ Request for Qualification
RFP Request for Proposal
SPV’s Special Purpose Vehicle(s)
TEU Twenty Feet Equivalent Unit

Conventional/General Terms

Term Description
AGM Annual General Meeting
AS Accounting Standards issued by the Institute of Chartered Accountants of
India
AY Assessment Year
BIFR Board for Industrial and Financial Reconstruction
BSE Bombay Stock Exchange Limited
CAGR Compounded Annual Growth Rate
CDSL Central Depository Services (India) Limited
Companies Act The Companies Act, 1956, as amended from time to time
Depositories Act The Depositaries Act, 1996, as amended from time to time
Depository A body corporate registered under the SEBI (Depositaries and
Participant) Regulations, 1996, as amended from time to time
Depository Participant A depository participant as defined under the Depositories Act, 1996
DGFT Director General of Foreign Trade
EBITDA Earnings Before Interest, Tax, Depreciation & Ammortisation
ECS Electronic Clearing System
EGM Extraordinary General Meeting
EPS Earning Per Share
Electronic Transfer of Refunds through ECS, NEFT, Direct Credit or RTGS as applicable
Funds
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999, as amended from time to time
and the regulations framed thereunder
FII Foreign Institutional Investor (as defined under Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident outside
India) Regulations, 2000) registered with SEBI under applicable laws in
India
FIPB Foreign Investment Promotion Board, Government of India
Financial Year /fiscal Period of twelve months ended March 31 of that particular year, unless
year/FY/ fiscal otherwise stated
GIR Number General Index Registry Number
Government/ GOI The Government of India
HUF Hindu Undivided Family
I.T. Act The Income Tax Act, 1961, as amended from time to time

vii
 Term Description
Indian GAAP Generally Accepted Accounting Principles in India
MICR Magnetic Ink Character Recognition
NAV Net Asset Value
NEFT National Electronic Funds Transfer
NOC No Objection Certificate
Non Residents/NR Non-Resident is a Person resident outside India, as defined under FEMA
and includes a Non-Resident Indian.
NRE Account Non-Resident External Account
NRI/Non-Resident Indian Non-Resident Indian, is a Person resident outside India, who is a citizen
of India or a Person of Indian origin and shall have the same meaning as
ascribed to such term in the Foreign Exchange Management (Transfer or
Issue of Security by a Person Resident Outside India) Regulations, 2000.
NRO Account Non-Resident Ordinary Account
NSDL National Securities Depository Limited
OCB/ Overseas Corporate A company, partnership, society or other corporate body owned directly
Body or indirectly to the extent of at least 60% by NRIs, including overseas
trusts in which not less than 60% of beneficial interest is irrevocably held
by NRIs directly or indirectly as defined under Foreign Exchange
Management
(Deposit) Regulations, 2000. OCBs are not allowed to invest in this
Issue.
p.a/P.A Per Annum
PAT Profit after tax
PBT Profit before tax
P/E Ratio Price/Earnings Ratio
PAN Permanent Account Number
Person/Persons Any individual, sole proprietorship, unincorporated association,
unincorporated organization, body corporate, corporation, company,
partnership, limited liability company, joint venture, or trust or any other
entity or organization validly constituted and/or incorporated in the
jurisdiction in which it exists and operates, as the context requires
PIO/ Person of Indian Shall have the same meaning as is ascribed to such term in the Foreign
Origin Exchange Management (Investment in Firm or Proprietary Concern in
India) Regulations, 2000.
Re. One Indian Rupee
RBI The Reserve Bank Of India
Reserve Bank of India The Reserve Bank of India Act, 1934, as amended from time to time
Act/RBI Act
RoC/Registrar of The Registrar of Companies, Maharashtra at Mumbai located at Everest
Companies House, Marine Lines, Mumbai 400 020
Rs. Indian Rupees
RTGS Real Time Gross Settlement Process
SCRA Securities Contract (Regulation) Act, 1956, as amended from time to
time.
SCRR Securities Contract (Regulation) Rules, 1957, as amended from time to
time.
SEBI The Securities and Exchange Board of India constituted under the SEBI
Act, 1992
SEBI Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by
SEBI on January 27, 2000, as amended, including instructions and
clarifications issued by SEBI in relation thereto from time to time.
SEBI Takeover Securities and Exchange Board of India (Substantial Acquisition of
Regulations Shares and Takeover) Regulations, 1997, as amended from time to time
SICA Sick Industrial Companies (Special Provisions) Act, 1985

viii
 Term Description
UIN Unique Identification Number

ix
 CERTAIN CONVENTIONS; USE OF MARKET DATA

Unless stated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our
restated consolidated and unconsoliadated financial statements prepared in accordance with Indian
GAAP and included in this Draft Red Herring Prospectus. Our current fiscal year commenced on April
1, 2006 and ends on March 31, 2007. In this Draft Red Herring Prospectus, any discrepancies in any
table between the total and the sums of the amounts listed are due to rounding-off.

There are significant differences between Indian GAAP and U.S. GAAP. Accordingly, the degree to
which the Indian GAAP financial statements included in this Draft Red Herring Prospectus will
provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian
accounting practices. Any reliance by Persons not familiar with Indian accounting practices on the
financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited. We
have not attempted to explain those differences or quantify their impact on the financial data included
herein, and we urge you to consult your own advisors regarding such differences and their impact on
our financial data.

Any percentage amounts, as set forth in “Risk Factors”, “Business”, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and elsewhere in this Draft Red Herring
Prospectus, unless otherwise indicated, have been calculated on the basis of our restated consolidated
and unconsoliadated financial statements prepared in accordance with Indian GAAP.

All references to “India” contained in this Draft Red Herring Prospectus are to the Republic of India,
all references to the “US”, “USA”, or the “United States” are to the United States of America, and all
references to “UK” are to the United Kingdom.

For definitions, please see the section titled “Definitions and Abbreviations” on page iii of this Draft
Red Herring Prospectus. In the section entitled “Main Provisions of Articles of Association”, defined
terms have the meaning given to such terms in the Articles.

Use of Market data

Unless stated otherwise, industry data used throughout this Draft Red Herring Prospectus has been
obtained from industry sources such as CRIS INFAC (February 2006), NHAI website accessed on
December 9, 2006 and 10th Five Year Plan. Industry sources generally state that the information
contained in those publications has been obtained from sources believed to be reliable but that their
accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we
believe that industry data used in this Draft Red Herring Prospectus is reliable, it has not been
independently verified.

Currency of Presentation

In this Draft Red Herring Prospectus, all references to “Rupees” and “Rs.” are to the legal currency of
India, all references to “U.S. Dollars”, and “US$” are to the legal currency of the United States of
America.

x
 FORWARD-LOOKING STATEMENTS

We have included statements in this Draft Red Herring Prospectus, that contain words or phrases such
as “will”, “aim”, “will likely result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”,
“intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will
pursue” and similar expressions or variations of such expressions that are “forward-looking
statements”.

All forward-looking statements are subject to risks, uncertainties and assumptions that could cause
actual results to differ materially from those contemplated by the relevant forward-looking statement.
Important factors that could cause actual results to differ materially from our expectations include,
among others:

• Implementation risks involved in our projects;

• Political and regulatory environment;
• Our ability to raise capital for our future projects;
• Our ability to meet our debt service obligations;
• Continuation of tax benefits available to us;
• Our ability to successfully implement our strategy, growth and expansion plans;
• Our exposure to market risks;
• Changes in the value of the Rupee and other currencies;
• The monetary and interest policies of India, inflation, deflation, unanticipated turbulence in
interest rates;
• Changes in the foreign exchange control regulations in India;
• Foreign exchange rates, equity prices or other rates or prices; and
• The performance of the financial markets in India.

For further discussion of factors that could cause our actual results to differ, see the section titled “Risk
Factors” on page xii of this Draft Red Herring Prospectus. By their nature, certain risk disclosures are
only estimates and could be materially different from what actually occurs in the future. As a result,
actual future gains or losses could materially differ from those that have been estimated. We, the
members of the Syndicate and their respective affiliates do not have any obligation to, and do not
intend to, update or otherwise revise any statements reflecting circumstances arising after the date
hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not
come to fruition. In accordance with SEBI requirements, we, the BRLM and the CBRLMs will ensure
that investors in India are informed of material developments until such time as the grant of listing and
trading permission by the Stock Exchanges.

xi
 RISK FACTORS

An investment in Equity Shares involves a high degree of risk. You should carefully consider all the
information in this Draft Red Herring Prospectus, including the risks and uncertainties described
below, before making an investment in our Equity Shares. If any of the following risks actually occur,
our business, results of operations and financial condition could suffer and the price of our Equity
Shares and the value of your investment in our Equity Shares could decline.

Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specify
or quantify the financial or other implications of any of the risks mentioned herein.

Internal Risk Factors

There are criminal cases pending against the Company and our Directors:

There are two criminal cases pending against the Company and our Directors, which are as follows:

• Criminal case pending against the Company under section 29(1)(e) and 29(2)(e) of the
Karnataka Sales Tax Act, 1957 before the Judicial Magistrate First Class, Bangalore.

• Complaint pending against Mr. Pallonji Shapoorji Mistry, Mr. Shapoorji Pallonji Mistry and
Mr. Cyrus Pallonji Mistry for allegedly committing an offence of dishonouring hundies under
sections 406, 417, 422, 423 and 468 read with section 120B of the Indian Penal Code, before
the Judicial Magistrate-II, Chennai.

For more details on the above litigations, see the section entitled “Outstanding Litigation and Material
Developments” on page 337 of this Draft Red Herring Prospectus.

A significant part of our business transactions are with Indian governmental or government-funded
entities or agencies and any change in the Indian government policies or focus may affect our
business and results of operations.

Our business is dependent on infrastructure projects undertaken by governmental authorities and other
entities funded by governments or international and multilateral development finance institutions.
Contracts awarded by Indian central, state, local governmental authorities and government bodies
accounted for approximately 54.92 % of our order book as of September 30, 2006. For a breakdown of
our recent historical revenues, see the section entitled “Business” beginning on page 81 of this Draft
Red Herring Prospectus. Government focus on and sustained increase in budgetary allocation for
investments in the infrastructure sector, and the development of a structured and comprehensive
infrastructure policy that encourages greater private sector participation as well as increased funding by
international and multilateral development financial institutions in infrastructure projects in India, have
resulted in or are expected to result in the commencement of several large infrastructure projects in
India. If there is any change in the government or in governmental policies, practices or focus that
results in a slowdown in infrastructure projects, our business and results of operations may be
adversely affected. In addition, for projects of value less than Rs.1,000 million, government agencies in
India may grant “purchase preference” to public sector construction companies whose bid for the
project is within 10% of the lowest bidder, and give such public sector enterprises an option to match
the lowest bid.
Unfavourable geopolitical, economic or other developments in our intenational markets could
adversely affect our results of operations in those markets

We have undertaken overseas projects in the past and as of September 30. 2006, overseas projects
constitute 8.65 % of our Order Book. Our strategy includes sustained focus on key international
markets especially the Middle East and Africa. These operations are subject to risks associated with

xii
uncertain political and economic environments, government instability, and legal systems, laws and
regulations, that are different from the legal systems that we are familiar with in India. If any of these
risks materialize our results of operations could be adversely affected.

Our profitability and results of operations may be adversely affected in the event of increases in the
price of raw materials, fuel costs, labour or other inputs.

The cost of raw materials, fuel, labour and other inputs constitutes a significant part of our operating
expenses. Our construction operations require various construction raw materials including steel and
cement. Fuel costs for operating our construction and other equipment also constitute a significant part
of our operating expenses, especially in the case of our infrastructure projects. Our ability to pass on
increases in the purchase price of raw materials, fuel and other inputs may be limited in the case of
fixed-price contracts or contracts with limited price escalation provisions. Under the terms and
conditions of fixed-price contracts, we generally agree to provide services for the part of the project
contracted to us for a fixed price, subject to contract variations pursuant to changes in the client’s
project requirements. Fixed-price contracts contain limited or no price escalation clauses covering
increases in the cost of raw materials. We derived approximately 26.65% and 8.19% of our contract
revenue in the year ended March 31, 2006 and in the six months ended September 30, 2006,
respectively, from such fixed-price contracts. Fixed-price contracts accounted for approximately
19.89% of our Order Book as of September 30, 2006. Our actual expense in executing a fixed-price
contract may vary substantially from the assumptions underlying our bid for several reasons, including:

• unanticipated increases in the cost of raw materials, fuel, labour or other inputs;

• unforeseen construction conditions, including the inability of the client to obtain requisite
environmental and other approvals, resulting in delays and increased costs;

• delays caused by local weather conditions; and

• suppliers’ or subcontractors’ failures to perform.

Unanticipated increases in the price of raw materials, fuel costs, labour or other inputs not taken into
account in our bid can also have compounding effects by increasing costs of performing other parts of
the contract. These variations and other risks generally inherent to the construction industry may result
in our profits on a project being less than as originally estimated or may result in our experiencing
losses. Depending on the size of a project, these variations from estimated contract performance could
have a significant effect on our results of operations.

Our construction contracts are dependent on adequate and timely supply of key raw materials such
as steel and cement at commercially acceptable prices.

Timely and cost effective execution of our projects is dependant on the adequate and timely supply of
key raw materials. We have not entered into any long-term supply contracts with our suppliers.
Additionally, we typically use third-party transportation providers for the supply of most of our raw
materials. Transportation strikes by, for example, members of various Indian truckers’ unions and
various legal or regulatory restrictions placed on transportation providers have had in the past, and
could have in the future, an adverse effect on our receipt of supplies. Further, transportation costs have
been steadily increasing, and the prices of raw materials themselves can fluctuate. In addition, the
availability of supplies may not be commensurate with the rate of growth being experienced by the
infrastructure sector. If we are unable to procure the requisite quantities of raw materials in time and at
commercially acceptable prices, the performance of our business and results of operations may be
adversely affected.

We have high working capital requirements. If we experience insufficient cash flows to allow us to
make required payments on our debt or fund working capital requirements, there may be an adverse
effect on our results of operations.

xiii
Our business requires a great deal of working capital. In many cases, significant amounts of working
capital are required to finance the purchase of materials, the hiring of equipment and the performance
of engineering, construction and other work on projects before payments are received from clients. In
certain cases, we are contractually obligated to our clients to fund the working capital requirements of
our projects.

Our working capital requirements may increase if, under certain contracts, payment terms do not
include advance payments or such contracts have payment schedules that shift payments toward the
end of a project or otherwise increase our working capital burdens. In addition, our working capital
requirements have increased in recent years because we have undertaken a growing number of projects
within a similar timeframe and due to the growth of the Company’s business generally. All of these
factors may result, or have resulted, in increases in our working capital needs.

It is customary in the industry in which we operate to provide bank guarantees or performance bonds in
favour of clients to secure obligations under contracts. In addition, letters of credit are often required to
satisfy payment obligations to suppliers and sub-contractors. If we are unable to provide sufficient
collateral to secure the letters of credit, bank guarantees or performance bonds, our ability to enter into
new contracts or obtain adequate supplies could be limited. Providing security to obtain letters of
credit, bank guarantees and performance bonds increases our working capital needs. We may not be
able to continue obtaining new letters of credit, bank guarantees, and performance bonds in sufficient
quantities to match our business requirements.

Our expansion plans require significant expenditure and if we are unable to obtain the necessary
funds for expansion, our business may be adversely affected.

We will need significant additional working capital and long-term capital to finance our future business
plans and, in particular, our plan for expansion and purchase of capital equipment as referred to in
“Objects of the Issue” on page 43 of this Draft Red Herring Prospectus. Due to various factors,
including certain extraneous factors such as changes in tariff regulations, interest rates, insurance and
other costs or borrowing and lending restrictions, if any, we may not be able to finance our expansion
plans, or secure other financing when needed, on acceptable commercial terms. Any such situation
would adversely affect our business and growth prospects.

Delays associated with the collection of receivables from our clients may adversely affect our
business and results of our operations.

There may be delays associated with the collection of receivables from our clients, including
government owned, controlled or funded entities and related parties. As of the year ended March 31,
2006 and as of September 30, 2006, Rs. 1,193.99 million, or 60.27% and 1,420.36 million, or 73.92 %,
of our accounts receivable were outstanding for a period of more than six months respectively. Our
operations involve significant working capital requirements and delayed collection of receivables could
adversely affect our liquidity and results of operations. In addition, we may be subject to additional
regulatory or other scrutiny associated with commercial transactions with government owned,
controlled or funded entities.

Our business is subject to a significant number of tax regimes and changes in legislation governing
the rules implementing them or the regulator enforcing them in any one of those jurisdictions could
negatively and adversely affect our results of operations.

We currently have operations and staff spread across many states of India. Consequently, we are
subject to the jurisdiction of a number of tax authorities and regimes. The revenues recorded and
income earned in these various jurisdictions are taxed on differing bases, including net income actually

xiv
earned, net income deemed earned and revenue-based tax withholding. The final determination of our
tax liabilities involves the interpretation of local tax laws and related authorities in each jurisdiction as
well as the significant use of estimates and assumptions regarding the scope of future operations and
results achieved and the timing and nature of income earned and expenditures incurred. We are
involved in various disputes with the tax authorities. For more details, see “Outstanding Litigation –
Taxation related matters” on page 340 of this Draft Red Herring Prospectus. Changes in the operating
environment, including changes in tax law, could impact the determination of our tax liabilities for any
given tax year.

Taxes and other levies imposed by the central or state governments in India that affect our industry
include customs duties, excise duties, VAT, income tax, service tax and other taxes, duties or
surcharges introduced from time to time. The central and state tax scheme in India is extensive and
subject to change from time to time. Any adverse changes in any of the taxes levied by the central or
state governments may adversely affect our competitive position and profitability.

Projects included in our Order Book may be delayed, cancelled or not fully paid for by our clients,
which could materially harm our cash flow position, revenues and earnings.

Our Order Book does not necessarily indicate future earnings related to the performance of that work.
Order Book projects represent business that is considered firm, but cancellations or scope or schedule
adjustments may occur. We may also encounter problems executing the project as ordered, or
executing it on a timely basis. Moreover, factors beyond our control like contractual risks which are
under the control of our clients may postpone a project or cause its cancellation, including delays or
failures to obtain necessary permits, authorizations, permissions, right-of-way, and other types of
difficulties or obstructions. Due to the possibility of cancellations or changes in project scope and
schedule, as a result of exercises of our clients’ discretion, problems we encounter in project execution,
or reasons outside our control or the control of our clients, we cannot predict with certainty when, if or
to what extent an Order Book project will be performed. Delays in the completion of a project can lead
to clients delaying or refusing to make payment to us of some or all of the amounts we expect to be
paid in respect of the project. Even relatively short delays or surmountable difficulties in the execution
of a project could result in our failure to receive, on a timely basis or at all, the final payments due to us
on a project. These payments often represent a significant portion of the margin we expect to earn on
the project. In addition, even where a project proceeds as scheduled, it is possible that the contracting
parties may default or otherwise fail to pay amounts owed. Any delay, reduction in scope, cancellation,
execution difficulty, payment postponement or payment default in regard to Order Book projects or any
other uncompleted projects, or disputes with clients in respect of any of the foregoing, could materially
harm our cash flow position, revenues and earnings.
Given the long-term nature of the projects we undertake, we face various kinds of implementation
risks.

Most infrastructure construction projects involve agreements that are long-term in nature. Long-term
agreements have inherent risks associated with them that may not necessarily be within our control and
accordingly our exposure to a variety of implementation and other risks, including construction delays,
material shortages, unanticipated cost increases, cost overruns, inability to negotiate satisfactory
arrangements with joint venture partners, and disagreements with our joint venture partners is
enhanced.

For example, business circumstances may materially change over the life of one or more of our
agreements and we may not have the ability to modify our agreements to reflect these changes. Further,
being committed under these agreements may restrict our ability to implement changes to our business
plan. This limits our business flexibility, exposes us to an increased risk of unforeseen business and
industry changes and could have a material adverse effect on our business, financial condition and
results of operations.

As our revenue structure under each such agreement is set over the life of the agreement (and fluctuates
subject to the built-in adjustment mechanisms contained in such agreement), our profitability is largely

xv
a function of how effectively we are able to manage our costs during the terms of our agreements. The
nature of the industry is such where quantity variations are an integral part of many contracts.
Uncertainty attached to this factor may result in adverse impact in revenues and profitability. If we are
unable to effectively manage costs, our business, financial condition and results of operations may be
materially and adversely affected.

An inability to manage our growth could disrupt our business and reduce our profitability.

We have experienced high growth in recent years and expect our construction and infrastructure
business to continue to grow as we gain greater access to financial resources. We expect this growth to
place significant demands on us and require us to continuously evolve and improve our operational,
financial and internal controls across our organization. In particular, continued expansion increases the
challenges involved in:

• preserving a uniform work culture, values and work environment across our projects;

• developing and improving our internal administrative infrastructure, particularly our financial
systems,

• operational, communications, internal control and other internal systems;

• recruiting, training and retaining technical and marketing personnel and key managerial personnel;

• maintaining high levels of client satisfaction; and

• adhering to health, safety, and environmental standards.

Any inability to manage our growth may have an adverse effect on our business and results of
operations.

Any inability to attract, recruit and retain skilled personnel could adversely affect our business and
results of operations.

Our ability to meet future business challenges depends on our ability to attract, recruit and retain
talented and skilled personnel. We are highly dependent on our senior management, our Directors and
other key personnel, including skilled project management personnel. A significant number of our
employees are skilled engineers and we face strong competition to recruit and retain skilled and
professionally qualified staff. Due to the limited pool of available skilled personnel, competition for
senior management and skilled engineers in our industry is intense. We may experience difficulties in
attracting, recruiting and retaining an appropriate number of managers and engineers for our business
needs. We may also need to increase our pay structures to attract and retain such personnel. Our future
performance will depend upon the continued services of these persons. The loss of any of the members
of our senior management, our Directors or other key personnel or an inability to manage the attrition
levels in different employee categories may materially and adversely impact our business and results of
operations.

Contracts awarded to us by governments or government-backed entities may be unilaterally

terminated for convenience.

One of the standard conditions in contracts typically awarded by governments or government-backed

entities is that the government or entity, as the client, has the right to terminate the contract for
convenience, without any reason, at any time after providing us with notice that may vary from a
period of 30 to 90 days. In the event that a contract is so terminated, our results of operations may be
adversely affected.

xvi
We face significant competition in our business from other civil engineering and construction
companies.

We operate in a competitive environment. Our competition varies depending on the size, nature and
complexity of the project and on the geographical region in which the project is to be executed. We
compete against various civil engineering and construction companies. For more information
concerning our competitors in specific industry and project segments, please see “Business” beginning
on page 81 of this Draft Red Herring Prospectus. While many factors affect the client decisions, price
is a key deciding factor in most of the tender awards.

We may be unable to compete with larger engineering construction companies for complex, high-value
contracts as well as projects that are of comparatively lesser value, many of whom may have greater
financial resources, better technology, larger manpower, economics of scale and operating efficiencies.
If we are unable to bid for and win engineering construction projects, both large and small, or compete
with larger competitors, we could fail to increase, or maintain our volume of order intake and our
results of operations may be materially adversely affected. There can be no assurance that we can
continue to effectively compete with our competitors in the future, and failure to compete effectively
may have an adverse effect on our business, financial condition and results of operations.

Our inability to qualify for and win large contracts and compete with other civil engineering and
construction companies could adversely affect our margins and results of operations.

Substantially all our contracts are obtained through a competitive bidding process. Pre-qualification is
key to our winning major projects. In selecting contractors for such projects, clients generally limit the
tender to contractors they have pre-qualified based on several criteria, including experience, technical
ability, past performance, reputation for quality, safety record, financial strength and the size of
previous contracts in similar projects, although the price competitiveness of the bid is usually the most
important selection criterion. We are currently qualified to bid for projects up to certain values,
depending on the client, and therefore may not be able to compete with other construction companies
for larger, higher-value projects. Our ability to bid for and win major projects is dependent on our
ability to show experience working on such large engineering, procurement and construction contracts
and develop strong engineering capabilities and credentials to execute more technically complex
projects.

The auditors report appearing in this Draft Red Herring Prospectus have been qualified by the
auditors

Our Auditors in their report on our consolidated and unconsolidated financial statement for the years
ended March 31, 2002, 2003, 2004, 2005, 2006 and six months ended September 30, 2006 have put
certain qualifications. For more details please refer to the Financial Statements appearing on page 207
of this Draft Red Herring Prospectus.

We depend on forming successful joint ventures to qualify for the bidding process as well as for
executing certain projects.

In order to be able to bid for some large scale projects, we enter into memoranda of understanding or
joint venture agreements with various other companies to meet capital adequacy, technical or other
requirements that may be required as part of the pre-qualification for bidding or execution of the
contract. In cases where we are unable to forge an alliance with appropriate companies to meet such
requirements, we may lose out on opportunities to bid.

Where we have formed a joint venture, our Company can claim benefits flowing to the joint venture to
the extent of its share in the joint venture as agreed among the joint venture partners. However, the
liability of joint venture partners is joint and several. Therefore, we would be liable for completion of
the entire project if our joint venture partner were to default on its duty to perform. Additionally, our
joint venture partners may not have adequate financial resources to meet their indemnity obligations to

xvii
us. In the event that we were to face a situation where our joint venture partner defaulted on their duties
to perform and we were unable to recover indemnities payable by them , it could have an adverse effect
on our business and results of operations

Our portfolio is relatively concentrated in certain large-scale projects.

There are various risks associated with the execution of large-scale integrated projects. Large contracts
may take up a large part of our portfolio, increasing the potential volatility of our results through
increased exposure to individual contract risks. Managing large-scale integrated projects may also
increase the potential relative size of cost overruns and negatively affect our operating margins. Large-
scale integrated projects may cause us to assume portions of the project that have potentially lower
profit margins. In addition, we often execute large-scale integrated projects as joint ventures with other
companies. Should the other members of our joint ventures default on their duties to perform, we
would remain liable for the completion of the project. Our 12 largest contracts in terms of outstanding
value represented approximately 81.49 % of our Order Book as of September 30, 2006. For a
breakdown of our recent historical revenues, see the section entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” beginning on page 316 of this Draft Red
Herring Prospectus. We believe that our contract portfolio will continue to be concentrated to a similar
degree in the future. If we do not achieve our expected margins or suffer losses on one or more of these
large contracts, this could have an adverse effect on our results of operations.

We may not be able to participate in certain NHAI road projects

Currently, we are undertaking three road projects for NHAI and as of September 30, 2006, the
outstanding contract value aggregating to Rs. 881.60 million constituting 2.9% of our Order Book.
Owing to non-resolution of certain disputes with NHAI arising from delays in execution of road
projects, we propose to participate in such projects only through the BOT/ BOOT route in association
with Shapoorji Pallonji group and other established entities, which would function as a concessionaire
whilst we would execute the EPC job. Owing to this strategy, our participation in the number of road
projects with NHAI may reduce, which may have an adverse impact on our operations.

Our Promoters will continue to retain majority control in the Company after the Issue, which will
enable them to influence the outcome of matters submitted to shareholders for approval.

Upon completion of the Issue, the Promoters and Promoter Group Companies will beneficially own
79.12 % of our post-Issue equity share capital. As a result, the Promoters will have the ability to control
our business including matters relating to any sale of all or substantially all of our assets, the timing and
distribution of dividends and the election or termination of appointment of our officers and Directors.
This control could delay, defer or prevent a change in control of the Company, impede a merger,
consolidation, takeover or other business combination involving the Company, or discourage a
potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company
even if it is in the Company’s best interest.

In addition, for so long as the Promoters continue to exercise significant control over the Company,
they may influence the material policies of the Company in a manner that could conflict with the
interests of our other shareholders. The Promoters may have interests that are adverse to the interests of
our other shareholders and may take positions with which we or our other shareholders do not agree.

Our insurance coverage may not adequately protect us against all material hazards.

Our Company has covered itself against certain risks. Our significant insurance policies consist of
among others contractors all risk policy for our projects, special contingency policy for plant,
machinery and equipments, marine transit policy, fire policy for buildings, furniture and fixtures,
workmen’s compensation group personal accident policy etc. In addition, we have obtained separate
insurance coverage for personnel related risks, motor vehicle risks and loss of movable assets risks.
Under certain of our contracts and sub-contracts, we are required to obtain insurance for the project

xviii
undertaken by us, which, in some cases, we have not obtained or we permitted such insurance policies
to lapse prior to the completion of the project. While we believe that the insurance coverage we
maintain would reasonably be adequate to cover all normal risks associated with the operation of our
business, there can be no assurance that any claim under the insurance policies maintained by us will be
honoured fully, in part or on time, nor that we have taken out sufficient insurance to cover all material
losses. Further, we may not have obtained insurance cover for some of our projects that do not require
us to maintain insurance. To the extent that we suffer loss or damage for which we did not obtain or
maintain insurance, that is not covered by insurance or exceeds our insurance coverage, the loss would
have to be borne by us and our results of operations and financial performance could be adversely
affected.

Timely and successful completion of our projects is dependent upon our performance and, in case of
many projects, the cooperation of our joint venture partners and sub-contractors.

Typically, construction contracts are subject to specific completion schedule requirements with
liquidated damages chargeable in the event that a project falls behind schedule. We often enter into
joint ventures to take on a project or sub-contract part of the work in a project to various sub-
contractors. In those instances, the completion of the contract for our client depends in part on the
performance of us and of our joint venture partners and sub-contractors. Delay or failure on our part or
on the part of a joint venture partner or sub-contractor to complete its work on a project on time, for
any reason, could result in delayed payment to us or termination of the contract, which in turn may
affect our cash flow and results of operations. Furthermore, failure to adhere to contractually agreed
timelines for any reason could cause damage to our reputation and client base, result in our being
required to pay liquidated damages or lead to forfeiture of security deposits or invocation of
performance guarantees. Damage to our reputation could adversely affect our ability to pre-qualify for
projects, which in turn may adversely affect our business and results of operations.

Additionally, joint venture partners or sub-contractors may not have adequate financial resources to
meet their indemnity obligations to us. Losses may derive from risks not addressed in our indemnity
agreements or insurance policies, or it may no longer be possible to obtain adequate insurance against
some risks on commercially reasonable terms. Failure to effectively cover ourselves against risks for
any of these reasons could expose us to substantial costs and potentially lead to material losses. The
occurrence of any of these possibilities may also adversely affect industry perception of our operations
and the perception of our suppliers, clients and employees, leading to an adverse effect on our business,
results of operations and financial condition.

Our indebtedness and the conditions and restrictions imposed on us by our financing agreements
could adversely affect our ability to conduct our business.

As of September 30, 2006, we had total secured and unsecured loans of Rs. 4,433.35 million. We may
incur additional indebtedness in the future. Our indebtedness could have several important
consequences, including but not limited to the following:

• a portion of our cash flow will be used towards repayment of our existing debt, which will
reduce the availability of cash to fund working capital needs, capital expenditures, acquisitions
and other general corporate requirements;

• our ability to obtain additional financing in the future at reasonable terms may be restricted;

• fluctuations in market interest rates may affect the cost of our borrowings, as some of our
loans are at variable interest rates; and

• we may be more vulnerable to economic downturns, may be limited in our ability to withstand
competitive pressures and may have reduced flexibility in responding to changing business,
regulatory and economic conditions.

xix
Most of our financing arrangements are secured by our movable and immoveable assets.. Our accounts
receivable and inventories are subject to charges created in favour of specific secured lenders. Many of
our financing agreements also include various conditions and covenants that require us to obtain lender
consents prior to carrying out certain activities and entering into certain transactions. Failure to meet
these conditions or obtain these consents could have significant consequences for our business.
Specifically, we must seek, and may be unable to obtain, lender consents to incur additional debt,
change our capital structure, increase or modify our capital expenditure plans, create additional charges
on or further encumber our assets or merge with or acquire other companies, whether or not there is
any failure by us to comply with the other terms of such agreements.

Compliance with the various terms of our loans is, however, subject to interpretation and we cannot
assure you that we have requested or received all consents from our lenders that would be advisable
under our financing documents. As a result, it is possible that a lender could assert that we have not
complied with all the terms under our financing documents. Any failure to service our indebtedness,
comply with a requirement to obtain a consent or perform any condition or covenant could lead to a
termination of one or more of our credit facilities, acceleration of amounts due under such facilities and
cross-defaults under certain of our other financing agreements, any of which may adversely affect our
ability to conduct our business and have a material adverse effect on our financial condition and results
of operations.

Our operations are subject to physical hazards and similar risks that could expose us to material
liabilities, loss in revenues and increased expenses.

While construction companies, including us, conduct various scientific and site studies during the
course of bidding for projects, there are always anticipated or unforeseen risks that may come up due to
adverse weather conditions, geological conditions, specification changes and other reasons.
Additionally, our operations are subject to hazards inherent in providing engineering and construction
services, such as risk of equipment failure, work accidents, fire or explosion, including hazards that
may cause injury and loss of life, severe damage to and destruction of property and equipment, and
environmental damage.

We may also be subject to claims resulting from defects arising from engineering, procurement and/or
construction services provided by us within the warranty periods stipulated in our contracts, which
typically range from 12 to 60 months from the date of commissioning. Actual or claimed defects in
equipment procured and/or construction quality could give rise to claims, liabilities, costs and
expenses, relating to loss of life, personal injury, damage to property, damage to equipment and
facilities, pollution, inefficient operating processes, loss of production or suspension of operations. Our
policy of covering these risks through contractual limitations of liability, indemnities and insurance
may not always be effective. In some of the jurisdictions in which we operate, environmental and
workers’ compensation liability may be assigned to us as a matter of law. As per AS 7 of the Indian
Accounting Standards, construction companies are required to recognize, in the respective accounting
period, potential losses that may be incurred in the foreseeable future. These liabilities and costs could
have a material adverse effect on our business, results of operations and financial condition.

We could be adversely affected if we fail to keep pace with technical and technological developments
in the construction industry.

Our recent experience indicates that clients are increasingly developing larger, more technically
complex projects in the civil construction and infrastructure sector. To meet our clients’ needs, we must
regularly update existing technology and acquire or develop new technology for our engineering
construction services. In addition, rapid and frequent technology and market demand changes can often
render existing technologies and equipment obsolete, requiring substantial new capital expenditures
and/or write-downs of assets. Our failure to anticipate or to respond adequately to changing technical,
market demands and/or client requirements could adversely affect our business and financial results.

xx
Our business is subject to a variety of environmental laws and regulations. Any failure on our part
to comply with applicable environmental laws and regulations could have an adverse effect on our
business.

Our operations are subject to numerous environmental protection laws and regulations, which are
complex and stringent. We regularly perform work in and around sensitive environmental areas such as
rivers, lakes, coastlines and forests. The client may not be able to obtain and handover possession of the
site due to problems related to displacement and rehabilitation of the project affected people.
Significant fines and penalties may be imposed for non-compliance with environmental laws and
regulations and certain environmental laws provide for strict liability for remediation of releases of
hazardous substances, rendering a person liable for environmental damage without regard to negligence
or fault on the part of such person. Furthermore, we incur significant expenditure relating to operating
methodologies and standards in order to comply with applicable environmental laws and regulations.

Our clients are generally responsible for obtaining environmental permits required to proceed with the
project. Any failure or inability by our clients to retain the requisite permits may have an adverse effect
on our business and results of operations.

Such laws and regulations may expose us to liability arising out of the conduct of operations or
conditions caused by others, or for our own acts including those that were in compliance with all
applicable laws at the time such acts were performed. Sanctions for failure to comply with these laws,
rules and regulations, many of which may be applied retroactively, may include administrative, civil
and criminal penalties, revocation of permits and corrective action orders.

Our inability to obtain, renew or maintain the statutory and regulatory permits and approvals
required to operate our business could have a material adverse effect on our business.

We require certain statutory and regulatory permits and approvals for our business. There can be no
assurance that the relevant authorities will issue such permits or approvals in the timeframe anticipated
by us or at all. Failure by us to renew, maintain or obtain the required permits or approvals may result
in the interruption of our operations and may have a material adverse effect on our business, financial
condition and results of operations. If we are unable to obtain the requisite licenses in a timely manner,
or at all, our operations may be affected.

Claims made by us against our clients for payment have increased over the last few years and failure
by us to recover adequately on future claims could have a material adverse effect on our financial
condition, results of operations and cash flows.

Our project claims have increased in recent years. Project claims are claims brought by us against our
clients for additional work and costs incurred in excess of the contract price or amounts not included in
the contract price. These claims typically arise from changes in the initial scope of work or from delays
caused by the client. These claims are often subject to lengthy arbitration, litigation or other dispute
resolution proceedings. The costs associated with these changes or client caused delays include
additional direct costs, such as labour and material costs associated with the performance of the
additional work, as well as indirect costs that may arise due to delays in the completion of the project,
such as increased labour costs resulting from changes in labour markets. We have used significant
additional working capital in projects with cost overruns pending the resolution of the relevant project
claims. Project claims may continue in the future. For further information, please refer to the section
titled “Outstanding Litigation and Material Developments” on page 337 of this Draft Red Herring
Prospectus.

Failure to recover amounts under these claims could have a material adverse impact on our liquidity,
financial condition and results of operations.

We have certain contingent liabilities that may adversely affect our financial condition.

xxi
Clients of construction companies usually demand performance guarantees from construction
companies as a safety net against potential defaults by the construction companies. Additionally,
construction companies are usually required to have letters of credit issued by their lenders in favour of
their suppliers and other vendors. Hence, construction companies often carry substantial contingent
liabilities for the projects they undertake. As of September 30, 2006, contingent liabilities appearing in
our financial statements are as follows:

Contingent Liabilities As on September 30,

2006 (Rs. In millions)
Estimated amount of contracts remaining to be executed on capital account 451.10
and not provided

Claims against the Company not acknowledged as debt 156.92

Bank guarantees given on behalf of subsidiaries 1.28

In respect of sales tax demands raised by sales tax authorities in matters of 89.63
disallowance of labour and service charges, consumables for which appeal is
pending before various appellate authorities

In respect of income tax matters in appeals 51.36

In respect of excise duty demands in appeals 11.30

In the event that any of these contingent liabilities materialize, our financial condition may be adversely
affected.

Our results of operations could be adversely affected by disputes with our employees.

As of November 30, 2006, we employed around 1,473 full-time employees. In addition, as of such
date, we contracted for around 2,695 temporary labourers on our project sites.

While we believe that we maintain good relationships with our employees and contract labour, there
can be no assurance that we will not experience future disruptions to our operations due to disputes or
other problems with our work force, which may adversely affect our business and results of operations.
Our employees are organized under three trade unions and significant management time could be lost
in dealing with conflicting aspiration of the three trade unions. Further, the settlement with one of these
Unions expired on December 31, 2006 and the other expires on March 31, 2007 whilst the charter of
demands by one is pending settlement since 2005. The number of contract labourers varies from time
to time based on the nature and extent of work contracted to sub-contractors. We enter into contracts
with sub-contractors to complete specified assignments. We may however be still liable for any non-
compliance or violations by our sub-contractors. Further, any upward revision of wages required by the
government to be paid to contract labourers, or offer of permanent employment or the unavailability of
the required number of contract labourers, may adversely affect our business and results of our
operations.

There are outstanding litigations against the Company, our Directors, our Promoters and our
Promoter Group entities.

We are defendants in certain legal proceedings incidental to our business and operations. These legal
proceedings are pending at different levels of adjudication before various courts and tribunals.
Additionally, there are certain instances of regulatory non-compliance by us. In the event of rulings
against us by courts or tribunals in these proceedings or levy of penalties by statutory authorities, we
may need to make payments to others or book provisions against probable future payments, which
could increase our expenses and our current liabilities.

xxii
There are certain claims pending in various courts and authorities at different levels of adjudication
against our Directors and our Promoter Group entities.

For further details of outstanding litigations against the Company, our Directors, our Promoters and our
Promoter Group, please see the section titled “Outstanding Litigations and Material Developments” on
page 337 of this Draft Red Herring Prospectus.

We have entered into transactions with related parties.

We have entered into certain transactions with related parties, including our Promoter Group, Directors
and our employees. For detailed information on our related party transactions, see the section titled
“Related Party Transactions” on page 194 of this Draft Red Herring Prospectus.

We had negative cash flows from operating activities and have incurred losses in the past

We had negative consolidated and unconsolidated cash flows for the each of the previous four financial
years and six months ended September 30, 2006. We incurred loses for the financial years ending
March 31, 2002, 2003 and 2004 on a consolidated basis. For more details, see the section titled
“Financial Statements” on page 207 of this Draft Red Herring Prospectus.

Certain of our Promoter Group entities have incurred losses.

Some of our Subsidiaries have in recent years, incurred losses, as set forth in the table below:

Name of Subsidiaries Fiscal 2006 Fiscal 2005 Fiscal 2004

Profits / (Losses) in Rs. Million
AFCONS Arethusa Offshore Services Private Limited (0.525) (0.78) (1.767)
Hazarat & Company Private Ltd. 0.01 (0.01) (0.01)
Afcons Pauling Joint Venture (partnership entity) (1.83) 2.62 (0.62)

Some of our Promoter Group entities have, in recent years, incurred losses or have negative net worth,
as set forth in the table below:

Name of Promoter Group entity Fiscal 2006 Fiscal 2005 Fiscal 2004
Profits / (Losses) in Rs. Million
Abhipreet Trading Private Limited (0.08) 0.02 (0.10)
Afcons Overseas Constrcution & Investments (0.01) (0.006) (0.004)
Private Limited
Afcons BOT Constructions (0.005) (0.006) (0.006)
Afcons Dredging & Marine Services Limited (0.03) (0.05) (0.04)
Bracewall Builders Private Limited (0.01) - -
Calligra Finance Private Limited (0.02) - -
Cama Properties Limited (0.04) (0.01) (0.01)
Chinsha Properties Limited (0.02) (0.01) (0.02)
Cyrus Chemical Private Limited 0.53 (0.36) (0.40)
Cyrus Engineers Private Limited 1.13 1.13 (1.27)
Delna Finance and Investments Private Limited (1.75) (1.63) (0.01)
Eastview Estates Private Limited (0.03) - -
Faery Estates Private Limited (0.46) (0.02) (0.01)
Floral Finance Private Limited (0.10) (0.09) (0.08)
Flooraise Developers Private Limited (0.01) - -
Flotilla Investments Private Limited (0.13) (0.13) (0.13)
Forvol International Services Limited 14 4.5 (4.56)
Grandview Estates Private Limited (0.01) (0.01) (0.01)
High Street Developers Private Limited (0.01) - -
Khajarana Ganesh Properties Limited (0.10) (0.003) (0.003)
Kolland Developers Private Limited (0.03) - -
Magpie Finance Private Limited (0.17) 0.04 (0.07)
Manjri Stud Farm Private Limited (69.16) (70.09) (27.45)
Mazsons Builders and Developers Private Limited (0.04) (0.05) (0.02)
Meriland Estates Private Limited (0.15) (0.15) 0.05

xxiii
 Name of Promoter Group entity Fiscal 2006 Fiscal 2005 Fiscal 2004
Milvin Investments Private Limited (2.73) (0.55) (0.09)
Palchin Real Estates Private Limited (0.12) (0.09) (0.20)
Ramili Investments Private Limited (0.05) (0.04) (0.04)
Shachin Real Estates Private Limited 0.21 (0.08) 0.19
S.C. Impex Private Limited (0.28) (0.27) (0.25)
Shapoorji & Co., Private Limited 0.03 0.01 (0.05)
Shapoorji & Co. (Rajkot) Private Limited (5.48) (0.25) (0.33)
Shapoorji Data Processing Private Limited (3.54) (1.00) (1.31)
Shapoorji Drilling Enterprises Private Limited (0.02) (0.02) (0.03)
Shapoorji Hotels Private Limited (0.01) (0.01) (0.01)
SP Aluminum Systems Private Limited (0.54) (0.61) (0.61)
SP Infocity Developers Private Limited (0.01) - -
SP Fabricators Private Limited 48.53 16.16 (0.68)
Shapoorji Pallonji Ports Private Limited (0.01) 0.01 (0.01)
Shapoorji Pallonji & Co., (Rajkot) Limited (0.22) (0.07) (0.03)
Skyscape Developers Private Limited (0.01) - -
Sterling Generators Private Limited (29.18) (0.89) (0.53)
Sunny View Estates Private Limited (15.78) (0.15) (0.02)
United Motors (India) Limited 26.78 15.30 (78.18)
Windward Developers Private Limited (0.06) - -

The following Promoter Group Companies had a negative networth as of March 31, 2006:
1. Delna Finance and Investments Private Limited
2. Khajarana Ganesh Properties Limited
3. Magpie Finance Private Limited
4. Manjri Stud Farm Private Limited
5. Shapoorji Data Processing Private Limited
6. Sharus Building Services Private Limited

For a detailed description of our Promoter Group entities, please see the section titled “Our Promoters”
on page 139 of this Draft Red Herring Prospectus.

We have in the last 12 months issued Equity Shares.

We have in the last 12 months made the following issuances of Equity Shares. We have allotted 20
million Equity Shares each to two of our Promoters, FIL and SICL at par by way of conversion of
convertible preference shares in terms of the issue of the preference shares.

For further details regarding such issuances of Equity Shares, please see the section titled “Capital
Structure” beginning on page 29 of this Draft Red Herring Prospectus.

We have not entered into any definitive agreements to use a substantial portion of the net proceeds
of the Issue. Further, the utilization of the Issue proceeds is not subject to monitoring by an
independent agency

We intend to use the net proceeds of the Issue for purchase of capital equipment, repayment of debt and
general corporate purposes and strategic initiatives. See “Objects of the Issue” on page 43 of this Draft
Red Herring Prospectus. We have not entered into any definitive agreements to utilize the net proceeds
of the Issue for approximately Rs. 1,250 million of our proposed capital expenditure. The purposes for
which the net proceeds of the Issue are to be utilized have not been appraised by an independent entity
and are based on our estimates and on third-party quotations. In addition, our capital expenditure plans
are subject to a number of variables, including possible cost overruns and changes in management’s
views of the desirability of current plans, among others. There can be no assurance that we will be able
to conclude definitive agreements for investments in capital equipment or for investments in any
special purpose vehicles or joint venture or otherwise on commercially acceptable terms.

The objects of the Issue have not been appraised by any bank or financial institution. The deployment
of funds is entirely at the discretion of our management and our Board of Directors and is not subject to

xxiv
monitoring by any independent agency. We intend to rely on our internal systems and controls to
monitor the use of such proceeds.

Any further issuance of Equity Shares by the Company or sales of Equity Shares by any significant
shareholders may adversely affect the trading price of the Equity Shares.

Any future issuance of our Equity Shares by the Company including our employee stock option
scheme, could dilute your shareholding. Any such future issuance of our Equity Shares or sales of our
Equity Shares by any of our significant shareholders may also adversely affect the trading price of our
Equity Shares, and could impact our ability to raise capital through an offering of our securities. In
addition, any perception by investors that such issuances or sales might occur could also affect the
trading price of our Equity Shares. Upon completion of the Issue, the entire post-Issue paid-up capital
held by our Promoters will be locked up for a period of one year and 20% of our post-Issue paid-up
capital held by certain of our Promoters will be locked up for a period of three years from the date of
allotment of Equity Shares in the Issue. For further information relating to such Equity Shares that will
be locked up, please see Notes to the Capital Structure in the section “Capital Structure” beginning on
page 29 of this Draft Red Herring Prospectus.

Our Promoters and certain Promoter Group entities are engaged in business activities similar to
ours.

Our Promoter Directors and certain Promoter Group entities are engaged in business activities similar
to those undertaken by our Company such as construction and civil engineering and this could be a
potential source of conflict of interest.

External Risk Factors

Demand for our construction services depends principally on activity and expenditure levels in the
building and infrastructure sectors.

Demand for our construction services is principally dependent on sustained economic development in
the regions in which we operate. In addition, demand for our infrastructure services is largely
dependent on government policies relating to infrastructure development and budgetary allocations
made by governments for such development, as well as funding provided by international and
multilateral development financial institutions for infrastructure projects. Investment by the private
sector in infrastructure projects is dependent on the potential returns from such projects and is therefore
linked to government policies relating to private sector participation and the sharing of risks and returns
from such projects. A reduction of capital investment in the building or infrastructure sectors for any
reason could have a material adverse effect on our business, results of operations and financial
condition.

Our operations are sensitive to weather conditions.

We have business activities that could be materially and adversely affected by severe weather. Severe
weather conditions may require us to evacuate personnel or curtail services and may result in damage
to a portion of our fleet of equipment or to our facilities, resulting in the suspension of operations, and
may further prevent us from delivering materials to our project sites in accordance with contract
schedules or generally reduce our productivity. Our operations are also adversely affected by difficult
working conditions and extremely high temperatures during summer months and during monsoon,
which restrict our ability to carry on construction activities and fully utilize our resources.

We record contract revenues for those stages of a project that we complete, after we receive
certification from the client that such stage has been successfully completed. Since revenues are not
recognized until we make progress on a contract and receive such certification from our clients,
revenues recorded in the first half of our financial year between April and September are traditionally
substantially lower compared to revenues recorded during the second half of our financial year. During

xxv
periods of curtailed activity due to adverse weather conditions, we may continue to incur operating
expenses, but our revenues from operations may be delayed or reduced.

Natural calamities could have a negative impact on the Indian economy and cause our business to
suffer.

India has experienced natural calamities such as earthquakes, a tsunami, floods and drought in the past
few years. Natural calamities could have a negative impact on the Indian economy and may cause
suspension, delays or damage to our current projects and operations, which may adversely affect our
business and our results of operations.

We are subject to risks arising from interest rate fluctuations, which could adversely affect our
business, financial condition and results of operations.

Changes in interest rates could significantly affect our financial condition and results of operations. As
of September 30, 2006, Rs. 3,274.57 million or 74.76% of our total borrowings from banks and
financial institutions were at floating rates of interest. If the interest rates for our existing or future
borrowings increase significantly, our cost of servicing such debt will increase. This may adversely
impact our results of operations, planned capital expenditures and cash flows.

The price of our Equity Shares may be volatile, or an active trading market for our Equity Shares
may not develop.

Prior to this Issue, there has been no public market for our Equity Shares. The trading price of our
Equity Shares may fluctuate after this Issue due to a variety of factors, including our results of
operations and the performance of our business, competitive conditions, general economic, political
and social factors, volatility in the Indian and global securities markets, the performance of the Indian
and global economy, significant developments in India’s fiscal regime and other factors. There can be
no assurance that an active trading market for our Equity Shares will develop or be sustained after this
Issue, or that the price at which our Equity Shares are initially offered will correspond to the prices at
which they will trade in the market subsequent to this Issue.

NOTES TO RISK FACTORS:

1. Public issue of 16,065,000 Equity Shares for cash at a price of Rs. [•] per Equity Share
(including a share premium of Rs. [●] per Equity Share) aggregating Rs. [•] million
comprising. The Issue would constitute 18.37% of the post issue paid-up capital of the
Company. The Net Issue would constitute 18.00% of the post issue paid-up capital of the
Company.

2. The average cost of acquisition of Equity Shares by our Promoters which has been calculated
by taking the average amount paid by them to acquire our Equity Shares is as follows:

CIL Rs. 16.50

SICL Rs. 11.96
FIL Rs. 10.00

For details, please see section titled “Capital Structure” on page 29 of this Draft Red Herring
Prospectus.

3. Our net worth before the Issue as of March 31, 2006 and September 30, 2006 respectively was
Rs. 2,119 million and Rs. 2,176 million respectively on a consolidated basis and the book
value per Equity Share as of as of March 31, 2006 and September 30, 2006 respectively was
Rs. 17.88 Equity Share and Rs. 18.96 respectively on a consolidated basis.

xxvi
4. For details on relating to related party transactions in the section titled “Related Party
Transactions” on page 194 of this Draft Red Herring Prospectus.

5. For details of the interests of our Directors and Key Managerial Personnel, please refer to the
section titled “Our Management” on page 122 of this Draft Red Herring Prospectus. For
details of the interests of our Promoters and Promoter Group, please refer to the section titled
“Our Promoters” on page 139 of this Draft Red Herring Prospectus.

6. Investors may contact the BRLM and the CBRLMs for any complaints, information or
clarification pertaining to the Issue. The BRLM and the CBRLMs are obliged to provide the
same to investors.

7. Our Company was originally incorporated as Asia Foundations and Constructions Private
Limited on November 22, 1976 under the Companies Act, 1956. The word “private” was
deleted on March 18, 1977 pursuant to section 43 A of the Companies Act, 1956. The name of
our Company was changed to Afcons Infrastructure Limited on August 14, 1996 and it was
converted into a public limited company on November 11, 1997.

8. Before making an investment decision in respect of this Issue, Investors are advised to refer to
the section titled “Basis for Issue Price” on page 46 of this Draft Red Herring Prospectus.

9. We, the BRLM and the CBRLMs are obliged to keep this Draft Red Herring Prospectus
updated and inform the public of any material change / development until the listing and
trading of the Equity Shares offered under the Issue commences.

xxvii
 SUMMARY

Overview

We are a civil engineering and construction company in India and we are the flagship infrastructure
construction company of the Shapoorji Pallonji group, a well-known and reputed name in the
construction industry. We have an experience of over four decades in construction industry, which
includes a wide variety of infrastructure projects like marine works, bridges, fly-overs, roads, general
civil engineering works including industrial structures, nuclear power projects, tunneling, pipelines,
LNG storage tanks and special foundation works such as piling, diaphragm wall, pre-stressed anchors,
drilling and grouting and other ground improvement works throughout India. We have also
successfully completed and are currently engaged in execution of projects in Middle East and Africa.

Over the years we have developed an expertise in marine works and we believe that we have an
established reputation and expertise in this service line through successful execution of more than 150
structures along the Indian coastline. We have also successfully completed more than 100 bridges,
flyovers, viaducts, two LNG storage tanks, underground and elevated train corridors and have executed
2,000 lane kilo meters of road works.

We enter into contracts primarily through a competitive bidding process at the domestic and the
international level. We have worked on projects for Qatar Petroleum, Shell, Reliance Industries
Limited, Mumbai Port Trust, Konkan Railway Corporation Limited, Delhi Metro Rail Corporation
(DMRC) and are currently undertaking projects for National Highway Authority of India, Ministry of
Transport and Communication, Sultanate of Oman. Of the above clients, we have several repeat orders
from Reliance Industries Limited, Konkan Railway Corporation Limited, National Thermal Power
Corporation and DMRC.

Some of the important projects successfully completed by us in the recent past include:

• Engineering, procurement, installation and commissioning of cofferdams for pump house of

Ras Laffan common cooling sea water system for Qatar Petroleum Technical Directorate;
• Construction of jetty for docking LNG carriers and other marine works at Hazira for Shell;
• Construction of underground station including the tunnel at Barakhamba Road and elevated
structure (via duct) between Tis Hazari – Tri Nagar rail corridor for Delhi Metro Rail
Corporation Limited; and
• Sewage Marine outfalls at Bandra and Worli, Mumbai for Dywidag International GmbH (as a
nominated sub-contractor).

The projects being currently executed by us include:

• Construction of marine, civil and pipeline works for Reliance Infrastructure Limited at
Jamnagar;
• Design and construction of special bridge across River Chenab in Jammu & Kashmir for
Konkan Railway Corporation Limited (in joint venture);
• Construction of single line tunnel on Katra – Laole section of Udhampur – Srinagar –
Baramulla rail link project for Konkan Railway Corporation Limited;
• Construction of an Oil Jetty at Port Louis Harbour, Mauritius; and
• Construction of new bridge over River Sone for East Central Railways.

We focus on technology and constantly strive to develop new technologies and innovations in-house to
execute large and complex civil engineering and construction works in a cost-efficient and timely
manner. For instance, we developed the micro piling technology as early as 1970 and subsequently
patented this technology for underpinning works to strengthen existing structures. We have
successfully been using the in-house developed Sahayadri Lift Barge for over 15 years now for our
shallow as well as deep water projects. The Sahayadri Lift Barge has a hydraulic lift crane capable of
lifting 1200 tonnes. .

In the years ended March 31, 2005 and 2006, our consolidated income was Rs. 5,541.88 million and
Rs. 7,177.67 million, respectively, representing an annual growth rate of 29.52 %. In the six months

1
ended September 30, 2006, our consolidated income was Rs. 4,123.85 million. In the years ended
March 31, 2005 and 2006, we incurred a consolidated loss of Rs. (14.71) million and earned a
consolidated net profit for the year of Rs. 47.85 million respectively, while our consolidated net profit
for the six months ended September 30, 2006 was Rs. 48.98 million. Our order book, which includes
the projects awarded to us but where we have not yet commenced work and the unfinished and
uncertified portions of our commenced projects was Rs. 30,303.4 million as of September 30, 2006, out
of which, domestic projects and international projects accounted for Rs. 27,682.50 million and Rs.
2,620.90 million respectively. We have added contracts aggregating Rs. 222.0 million to our order
book during the period October 1, 2006 to December 31, 2006 which are all domestic projects.

As of September 30, 2006, our work force consisted of approximately 1,473 full time employees and
more than 2,695 temporary labour based around India, enabling us to mobilize our skilled employee
resources depending on the location and the necessary expertise for projects undertaken by us. Our
equipments and skilled employee resources, together with our civil engineering capabilities enable us
to successfully implement modern civil engineering construction methodologies. We enjoy the ISO
9001:2000 BVQI accreditation and have received several awards, certifications and appreciation letters
from clients for our operations and projects such as the appreciation letter from Shell for the
construction of jetty for docking of LNG carriers and other marine works at Hazira,

We are committed to adhering to health, safety and environment policies and practices in the execution
of our projects. We have received the Safety Award 2005 by the National Safety Council of India in
respect for the Sone Bridge, Bihar and ISO 14001:2004 and OHSAS 18001:1999 certifications by
BVQI for the construction of elevated viaduct for Delhi Metro Rail Project.

We are a part of the Shapoorji Pallonji Group, which is one of the leading conglomerates in India with
over 140 years of experience in the construction industry. Its business interests ranges from
construction, building materials and real estate to aluminum, finance, biotech, power and fuel oil
additives. The Shapoorji Pallonji Group also has a significant presence overseas having been involved
in real estate development and construction since 1970. We are the flagship company of the Shapoorji
Pallonji Group in the infrastructure construction sector.

Corporate History and Structure

We began our operations as a civil construction firm in 1959 as a partnership between the Rodio
Foundation Engineering Limited, Switzerland and Hazarat & Company, India. Consequent to the exit
of Rodio Foundation Engineers and Hazarat & Co, we were reorganized as a company with the name
‘Asia Foundations and Constructions Private Limited’ in 1976 engaged in the business of contractors
and engineers. We became a deemed public limited company as per Section 43A(1) of the Companies
Act from March 18, 1977. Shipping Credit and Investment Corporation of India (SCICI) became a
20% shareholder of our Company in 1993, which shareholding was transferred to ICICI pursuant to the
merger of SCICI with ICICI. We changed the name of our Company from Asia Foundations and
Constructions Limited to Afcons Infrastructure Limited with effect from August 14, 1996. We became
a full fledged public company on November 11, 1997. In 1998 ICICI subscribed to further shares in
our Company which made ICICI the single largest shareholder with 47.37% equity stake in our
Company. Shapoorji Pallonji Group acquired 53.96% shareholding in our Company in 2000 where
47.37% was acquired from ICICI Ltd. and 6.59% was acquired from the Hazarat family.

We have 3 subsidiaries and 1 joint venture company. We also operate through various unincorporated
joint ventures formed for specific projects.

Our Strengths

Significant experience and strong track record

With over four decades of experience as a civil engineering and construction firm, we believe we have
become one of the significant players in the Indian construction industry. We believe that we have
established a track record for executing large and complex civil engineering and construction and
infrastructure contracts in a timely manner with quality work. We have also completed several projects
ahead of schedule including the LNG terminal project at Dahej, Moolchand underpass at Delhi and

2
Cable stayed bridge for Goa Industrial Infrastructure Corporation. We have received ISO 9001:2000
certification for the quality management system that we apply to the design and construction of civil
engineering projects.

Our portfolio of completed construction projects includes over 150 marine works, 100 bridges/ fly-
overs, 2,000 lane kilometres of roads, general civil engineering works relating to industrial structures
including 2 LNG storage tanks and civil work for 2 nuclear power projects.

We believe that the breadth and depth of our experience, among other factors, which among other
things, enables us to pre-qualify for a greater number of potentially higher-margin projects.

Diversified business and versatile capabilities

We have a presence in the different sectors within the Indian construction industry and in different
geographical regions in India. We have also been operating in the Middle East for over three decades
and have expanded into other parts of Asia such as Sri Lanka and Nepal. This variety of project types
in our portfolio enables us to keep our business diversified and reduces our dependence on any one
segment or nature of project and allows us to deal with cyclical risks associated with the industry. The
diversified business interests also allows us to participate in various projects where we believe we can
add value. We believe that through our diversified and long standing experience we have been able to
develop the ability to adapt to and operate in different work conditions and find solutions to complex
construction projects. For example, while undertaking work in relation to the Calcutta metro rail
project, we were able to construct a tunnel in soft soil using a special blade sheld technique. Similarly,
we used the jet-grouting technology for making a tunnel at Liliguma for South Eastern Railways. We
have successfully executed projects in diverse work conditions, including overseas. We have entered
into renewed partnerships for new projects with various existing joint venture partners and have also
received repeat orders from clients demonstrating our ability to work efficiently with various partners.

Focus on technology

We are a technology driven company, with a focus on innovation and development of technologies for
the execution of complex civil construction and engineering projects. We believe our quick adaptability
and solution oriented approach to construction complexities coupled with our technological capabilities
enable us to execute projects in an efficient manner. Some of the technological innovations achieved by
us include micropiling for underpinning works to strengthen structures, stabilizing of hill slopes by
prestressed anchors, river training using underwater geofabric, development of Sahayadri Lift Barge,
which has a capacity of lifting 1,200 tonnes, which was developed more than 15 years back and design
and construction of jack up platforms as early as 1978. We believe that we are the first Indian company
to have indigenously constructed an underground metro station for DMRC at Barakhamba, New Delhi.
. We believe that our sustained focus on technology provides us with a key competitive strength.

In- house developed expertise in marine works

We entered into marine construction in 1963 and over the years have developed an expertise in marine
works. We have constructed more than 150 structures along the Indian coastline which includes jetties,
wharves, slipways, relieving platforms and dry docks. While most of the marine and harbour projects in
India have historically relied on the conventional end-on-method whereby construction was undertaken
from the shore or along the shoreline, we have successfully commissioned marine projects using a
variety of floating devices units and jack up platforms. The development of design and fabrication
work for such innovative floating devices and jack up platforms was done in-house. We own a fleet of
strategic construction equipments including cranes, marine flotilla including jack up platform, barges
and pontoons. We have successfully developed many of our important equipments such as the
Sahayadri Lift Barge and jack up platforms in-house that have allowed us to customize the equipment
to the specific conditions in which we operate. We believe that the increased focus on development of
marine infrastructure by both the Government and private sector will allow us to leverage our expertise
to achieve higher growth.

Long term relationship with reputed clients

3
We have developed long-term relationships with our clients and have received repeat orders from
several of our domestic and international clients. We believe that our client centric approach enables us
to develop an established and long term association with many of our clients. We have successfully
executed several projects overseas and have received repeat orders showing our ability to work in
multicultural environments and with diverse set of clients. For example after our successful association
for the Jamnagar Phase - I project, Reliance Infrastructure Limited has placed cost plus basis contracts
with us for several structures including modification of jetty job. Other clients from whom we have
received repeat orders also include Konkan Railway Corporation Limited, National Thermal Power
Corporation, Cochin Port Trust, Nuclear Power Corporation and DMRC. .

Experienced management team and staff

We have an experienced and dedicated management team and a skilled workforce. Our employees
include over 707 engineers and 269 skilled operators and technicians. We believe that a large pool of
skilled engineering and technical workers is essential to the efficient and effective execution of our
projects. In addition, our senior management comprises highly qualified people with extensive
experience in our business, with engineering or technical backgrounds, which we believe, enhances our
ability to successfully execute large and complex construction projects. Our key managerial personnel
on an average have more than 25 years of experience in the construction industry. Our staff force also
has diversified experience in various types of construction projects, which allows us to staff our
projects with the most appropriate people.

Parentage

We are a part of the Shapoorji Pallonji Group, which is one of the leading conglomerates in India and
has been operating for over 140 years in the construction industry. We draw on the expertise and
commercial acumen of our parent company in the construction industry for our own business
development. Owing to the long-standing history of the Shapoorji Pallonji Group, we believe it enjoys
strong brand recognition. Further, we believe that our customers, along with Indian financial
institutions, associate the Shapoorji Pallonji Group with quality, reliability and the ability to complete
projects on schedule. We believe that the financial strength of the Shapoorji Pallonji Group and its
track record and visibility, especially in overseas markets allow us to secure and execute bigger
projects.

Our Strategy

Continue to focus on the high growth opportunities in the Indian construction and infrastructure
sector.

We believe that the increasing levels of investment in infrastructure by governments and private parties
will be a major driver for growth in our domestic business in the foreseeable future. Additionally, the
GoI has taken steps to encourage additional investments in infrastructure and construction sector, such
as formulating plans to create SEZs in various areas of India and providing economic benefits to
private sector participants for projects executed on a BOT basis. We intend to take advantage of such
growing opportunities in infrastructure development by strengthening our existing expertise and
continuing to pursue growth opportunities in India. We shall continue our focus on marine projects,
speciality bridges and metro projects and strive to enhance our share in sectors such as Hydro/Tunnels
and Oil and Gas pipelines, where we have recently entered.

Focus on opportunities in the international market

Apart from pursuing opportunities in India, our objective is to expand and strengthen our overseas
operations further by focusing on the regions where we already have a presence, such as the Middle
East and Africa, by capitalizing on our local experience, established contacts with local clients and
suppliers, and familiarity with local working conditions. Middle East is experiencing a recent increase
in construction activities, which makes it an attractive market for us. In addition, we propose to pursue
opportunities in newer regions like Algeria and Sudan where large infrastructure initiatives are being
made with the aid of multilateral institutions and in Yemen which is experiencing increased
construction activities because of the recent discovery of large oil reserves. We currently propose to
focus on the medium size contracts where local competition is lesser and we have the capability to

4
compete with large multi national players for such projects.

We believe that the overseas projects executed by us allow us to earn better margins. Overseas projects
also assist us in building our services and technology portfolio through the global exposure and
international benchmarking of projects. Further, we also use overseas assignments as a retention
measure for our employees.

In pursuing our strategies, we seek to identify markets where we believe we can provide cost and
operational advantages to our clients and distinguish ourselves from other competitors. In order to
expand our operations, we also seek to identify joint venture/ consortium partners whose resources,
capabilities and strategies are complementary to ours and who are likely to enhance our business
operations in such regions. We shall continue our focus on marine projects, specialty bridges and strive
to enhance our share in sectors such as Hydro/Tunnels and Oil and Gas pipelines, where we have
recently entered.

Increased focus on EPC contracts and design & build contracts.

As of September 30, 2006, engineering, procurement, construction (EPC) and design & build contracts
constituted 37.78 % of our total order book. We intend to use our engineering capabilities to enable us
to provide value added engineering services for clients and win more EPC contracts. Owing to complex
nature of projects being envisaged, there is an increased demand for engineering capabilities. We
believe that EPC projects will enable us to realize greater added value on construction projects through
provision of comprehensive integrated solutions. .

Leverage on the strength of the Shapoorji Pallonji Group

The Shapoorji Pallonji Group is already an established player in the construction and real estate
industry catering to diverse sectors. We are the flagship company of the Shapoorji Pallonji Group in the
infrastructure construction sector. We intend to build upon and draw on its established presence and the
financial strengths. Accordingly, we also intend to bid for and participate in large BOT infrastructure
projects, including road projects in consortium with a Shapoorji Pallonji entity, which would function
as the concessionaire with the construction/ EPC job being executed by us. We will participate and
expand in those sectors where we derive the necessary strengths from the Shapoorji Pallonji Group in
terms of technical expertise, execution skills and an established presence.

Enhance profitability and capital efficiency

Infrastructure construction is a highly competitive, capital-intensive activity. We believe that the

optimal utilisation of financial, human and other resources is a key element for achieving success in
this industry, and we shall continue focusing on the strategy of concentrating on a limited number of
high-value/ high margin projects in order to maintain execution quality, reliability and timeliness.
Going forward, our strategy will be to continue focusing on our capital utilisation and structure to
optimise returns, by actively analysing and identifying projects and assigning priority to projects,
which are likely to maximise returns. We also intend to improve capital efficiency by striving for
accelerated completion of projects and better contract and relationship management with the client. We
propose to continue to mitigate our risks by including effective and equitable dispute resolution clauses
in our contracts.

Participitate in road projects only in consortium with BOT/ BOOT entities

We believe that our ability to effectively manage our cash flows and resultant profitability is adversely
affected owing to high level of commodization of the road contracts directly awarded by agencies like
NHAI in the competitive bidding route and high level of delays experienced in execution of these
projects on account of delays in acquiring land. Typically under the BOT/ BOOT route, 80% of the
land is acquired prior to the award of contracts and therefore, the likelihood of delays in execution and
consequent adverse impact on cash flow is reduced. Therefore, currently, we propose to participate in
road projects only through the BOT/ BOOT route in association with Shapoorji Pallonji group and
other established entities, which would function as a concessionaire whilst we would execute the EPC
job.

5
Attract, train and retain qualified personnel

We understand that maintaining quality, minimising costs and ensuring timely completion of
engineering and construction projects depends largely on the skill and workmanship of our employees.
As competition for qualified personnel is increasing among construction companies in India,
particularly with the entry of international engineering and construction companies into the Indian
market and as we pursue greater growth opportunities, we seek to attract, train and retain qualified
personnel by increasing our focus on training our staff in advanced engineering and construction
technology and skills. We frequently conduct well-designed training programmes for our staff. A total
of 16,984 training man-hours have been spent on employee training between periods April 2005 to
November 2006. We also offer our engineering and technical personnel a wide range of work
experience and learning opportunities by providing them with an opportunity to work on a variety of
large, complex construction projects and forming cross functional teams with the objective of giving
them an opportunity to innovate. In addition, we give our employees opportunities to work on wide
variety of projects including overseas assignments.

Develop and maintain strong alliances with strategic partners.

We have strategic alliances for the execution of our projects with companies including Dywidag,
Germany, Per Aarsleff, Denmark, Kajima, Japan and Walter Mining, Australia. We intend to continue
to establish strategic alliances and share risks with companies, whose resources, skills and strategies are
complementary to and are likely to enhance our business opportunities, including the formation of joint
ventures and consortia to achieve competitive advantage. In the light of our focus on technology, we
also seek partners who can assist us in improving our technological capabilities in execution of our
projects.

6
 SUMMARY FINANCIAL INFORMATION

The following table sets forth summary financial information derived from our restated consolidated
and unconsolidated financial statements as of and for the fiscal years ended March 31, 2002, 2003,
2004, 2005 and 2006 and as of the six months ended September 30, 2006, which are included in this
Draft Red Herring Prospectus under the section titled "Financial Statements" on page 207 of this Draft
Red Herring Prospectus. The restated consolidated and unconsolidated financial statements have been
prepared in accordance with the SEBI Guidelines and have been restated as described in the auditors'
report attached thereto. The summary financial information presented below should be read in
conjunction with the financial statements included in this Draft Red Herring Prospectus, the notes
thereto and the section titled "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on page 316 of this Draft Red Herring Prospectus.

SUMMARY STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED

(Rupees in millions)
Particulars As at As at March As at As at As at As at March
September 31, 2006 March 31, March 31, March 31, 31, 2002
30, 2006 2005 2004 2003
FIXED ASSETS

Gross Block 2,854.36 2,648.96 2,195.37 1,987.44 1,721.94 1,540.86

Less: Depreciation 1,565.41 1,481.10 1,152.19 1,013.33 908.69 812.50

Net Block 1,288.95 1,167.86 1,043.18 974.11 813.25 728.36

Less: Revaluation Reserve 59.54 64.08 9.08 9.07 13.95 12.30

Net Block after adjustment
for Revaluation Reserve 1,229.41 1,103.78 1,034.10 965.04 799.30 716.06

Capital Work In Progress 330.72 51.06 18.26 6.15 29.39 12.99

TOTAL - (A) 1,560.13 1,154.84 1,052.36 971.19 828.69 729.05

INVESTMENTS - (B) 65.95 65.95 105.11 105.11 121.27 121.27

CURRENT ASSETS, LOANS AND ADVANCES

Inventories 580.05 515.56 387.09 404.59 410.26 344.61

Work-in-Progress - - - 1,714.30 1,108.69 638.64

Unbilled Revenue 3,995.15 2,857.30 1,786.95 - - -

Sundry Debtors 1,808.99 1,887.18 1,732.53 1,705.62 1,199.68 899.46

Cash & Bank Balances 127.00 214.45 169.32 145.87 127.37 228.41

Loans & Advances 1,141.33 1,106.12 1,090.71 1,038.04 1,021.88 930.50

Other Current Assets 0.92 0.91 0.91 0.91 1.48 1.48

TOTAL - (C) 7,653.44 6,581.52 5,167.51 5,009.33 3,869.36 3,043.10

7
 (Rupees in millions)
Particulars As at As at March As at As at As at As at March
September 31, 2006 March 31, March 31, March 31, 31, 2002
30, 2006 2005 2004 2003

LIABILITIES AND PROVISIONS

Secured Loans 1,101.45 1,054.35 563.64 829.59 563.82 340.64

Unsecured Loans 3,331.90 2,430.51 2,233.91 1,225.89 927.02 313.11

Current Liabilities 2,443.53 2,005.10 1,625.42 2,670.19 2,202.46 2,235.12

Provisions 121.18 107.21 32.52 34.32 33.53 48.19

Deferred Tax Liability (Net) 119.13 94.93 34.64 23.34 9.43 -

TOTAL - (D) 7,117.19 5,692.10 4,490.13 4,783.33 3,736.26 2,937.06

NET WORTH - (A+B+C-

D) 2,162.33 2,110.21 1,834.85 1,302.30 1,083.06 956.36

REPRESENTED BY

1. Share Capital 1,715.25 1,715.25 1,214.00 714.00 514.00 314.00

(Refer note 1
below)

2. Reserves & Surplus 566.76 525.11 707.86 686.21 683.05 670.78

Less: Revaluation
Reserve 59.54 64.08 9.08 9.07 13.95 12.30
Reserves & Surplus (Net
of Revaluation Reserves) 507.22 461.03 698.78 677.14 669.10 658.48

Total 2,222.47 2,176.28 1,912.78 1,391.14 1,183.10 972.48

Less: Miscellaneous
Expenses
(to the extent not written
off) 60.14 66.07 77.93 88.84 100.04 16.12

NET WORTH 2,162.33 2,110.21 1,834.85 1,302.30 1,083.06 956.36

2) The above statement should be read with the Notes on Adjustments to Restated Financial Statements,
Significant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

8
 SUMMARY STATEMENT OF PROFIT AND LOSS ACCOUNT, AS RESTATED

(Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31, 2002
April 1, 2006 2005 2004 2003
2006 to
September
30, 2006

INCOME :
Income from Operations 3,902.25 6,490.38 5,425.16 4,441.65 4,262.37 4,090.54
Other Income 129.02 372.51 113.89 213.15 178.09 59.19
Total Income 4,031.27 6,862.89 5,539.05 4,654.80 4,440.46 4,149.73

EXPENDITURE :
Cost of Construction 2,916.10 4,514.32 4,008.21 3,316.72 3,149.13 3,342.84
Payments to and Provision
for employees 329.35 610.72 483.92 443.00 456.61 449.92
Other Expenses 381.95 1,005.75 496.80 404.31 363.61 354.47
Financial Lease Rentals 9.82 43.09 49.29 52.95 73.17 78.89
Interest and Financial
charges 231.76 381.33 334.85 299.82 284.00 209.93
Depreciation 84.32 158.15 140.88 118.97 102.06 81.65
Less : Depreciation on the
amount added on
Revaluation transferred
from Revaluation Reserve 4.53 9.07 9.09 9.09 13.94 12.29
Total Expenditure 3,948.77 6,704.29 5,504.86 4,626.68 4,414.64 4,505.41

Less: Company's Share of

Loss in jointly controlled
entity (Unaudited) - 9.61 - - - -
Profit\(Loss) before prior
period adjustments,
extraordinary items and
tax 82.50 148.99 34.19 28.12 25.82 (355.68)

Provision for tax:

- Current Tax (9.24) (14.28) (2.63) (1.97) (2.10) -
- Wealth Tax (0.01) (0.02) (0.02) (0.02) (0.02) (0.02)
- Deferred Tax (24.20) (60.29) (11.30) (13.90) (9.43) -
- Fringe Benefit Tax (4.60) (10.40) - - - -
- Foreign Tax - (6.68) - - - -
Total Provision for Tax (38.05) (91.67) (13.95) (15.89) (11.55) (0.02)

Profit\(Loss) after tax 44.45 57.32 20.24 12.23 14.27 (355.70)

- - - - -
Adjustments: - - - - -

9
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31, 2002
April 1, 2006 2005 2004 2003
2006 to
September
30, 2006
Impact of material
adjustment for restatement
in corresponding years
(Refer Annexure IIIA) - (10.49) 10.49 - 13.61 (13.61)
- - - - -
Adjusted Net Profit\(Loss) 44.45 46.83 30.73 12.23 27.88 (369.31)

(Short)/ Excess Provision for

taxes in respect of earlier
years (Refer note 1 below) 1.73 0.81 (1.66) -
- - - - - -
Balance Brought Forward
from Previous Year (347.09) (164.55) (195.28) (207.51) (256.63) 44.96
Transfer From Debenture
Redemption Reserve - - - 22.90 67.72

Profit \ (Loss) available for

appropriation (300.91) (116.91) (164.55) (195.28) (207.51) (256.63)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31, 2002
April 1, 2006 2005 2004 2003
2006 to
September
30, 2006
Appropriations:
Debit Balance in Profit and
Loss account of APIL taken
over on Amalgamation - (230.18) - - - -
- - - - -
Balance carried to
Summary Statement of
Assets and Liabilities, as
restated - - - - - -

10
 STATEMENT OF CASH FLOW STATEMENT, AS RESTATED

(Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March March 31, March 31, March March 31,
2006 to 31, 2006 2005 2004 31, 2003 2002
September 30,
2006

Cash Flow from Operating

Activities

Net Profit\(Loss) before prior

period adjustments, extraordinary
items and tax, as restated 82.49 138.50 44.68 28.12 39.43 (369.29)

Adjusted for :
Depreciation 79.79 149.08 131.79 109.88 88.11 69.35
(Profit)\Loss on Sale of Fixed Assets - (1.51) 0.22 0.30 0.50 2.80
Interest Expenses 231.76 381.33 334.85 299.82 284.00 209.93
Interest income (34.02) (204.60) (50.20) (91.67) (31.73) (29.63)
Lease Rental Expense 9.98 43.09 49.29 52.95 73.17 78.89
Bad irrecoverable debtor/ Unbilled
Revenue/ Advance w/off 1.65 165.31 - - - -
Share of Loss/(Profit) in a firm in
which the Company is a partner 1.25 1.83 (2.49) 0.62 0.06 1.34
Share of Loss in Jointly Controlled
Entity (Unaudited) - 9.61 - - - -
Deferred revenue expenditure paid
during the year - - (0.96) (0.57) (90.25) -
Provision for diminution in the value
of long term inv w/back/ provided - - - (13.61) - 13.61
Dividend Income - (0.18) (0.18) (0.14) (0.17) (4.20)
Excess provision no longer required
written back (37.95) (19.47) (15.66) (17.47) - -
(Profit) on Sale /Disposal of Short-
term investment - (0.88) (0.34) 16.71 - -
(Profit) on Sale /Disposal of Long-
term investment - (7.58) - - - (0.26)
Amount received on transfer of
tenancy rights - (60.00) - - - -
Deferred revenue expenditure written
off 5.93 11.87 11.87 11.77 6.34 5.37
Provision for Projected Losses (11.45) 27.74 1.86 - - -

Operating Profit\(Loss) before 329.43 634.14 504.73 396.71 369.46 (22.09)

prior period items and Working
Capital Changes
Adjustment for:
(Increase)/Decrease in Trade
receivables 98.75 (15.64) (26.91) (505.93) (224.17) (257.97)
(Increase)/Decrease in inventories (64.50) (128.46) 17.50 5.67 (65.66) (45.22)

11
 (Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March March 31, March 31, March March 31,
2006 to 31, 2006 2005 2004 31, 2003 2002
September 30,
2006

(Increase)\Decrease in Work-in-
Progress - - 1,714.30 (605.61) (470.05) (140.52)
(Increase) in Unbilled Revenue (1,137.85) (1,187.38) (2,674.81) - - -
(Increase) in Loans and Advances 16.32 (47.67) (23.56) (60.50) (255.05) (67.38)
Increase/(Decrease) in trade, other
payables and provisions 485.24 431.76 (144.09) 495.08 (31.83) 905.82
Adjustment on account for
amalgamation for net current assets - 73.29 - - - -
Adjustment on account for
amalgamation for loans given to
Subsidiary Company - (276.81) - - - -
Direct Taxes paid (43.13) (21.97) (78.81) (10.00) 31.26 (55.00)
Prior period expenses - - - - - -
- - - - - -
Net Cash from Operating Activities
- (A) (315.74) (538.74) (711.65) (284.58) (646.04) 317.64
Cash Flow from Investing
Activities
Purchase of Fixed Assets (485.06) (298.82) (222.57) (259.10) (205.76) (249.39)
Sale of Fixed Asset - 6.83 0.31 2.23 1.91 1.85
Purchase of Investments - (280.61) (1.90) - - -
Sale of Investments - 287.99 2.23 13.07 - 0.01
Sale of Subsidiary - 0.60 - - - 0.86
(Loss)/Profit in a firm in which the
Company is partner - (1.83) 2.49 (0.62) (0.06) (1.34)
Share of Loss in Jointly Controlled
Entity - (9.61) - - - -
Dividend received - 0.18 0.18 0.14 0.17 4.20
Interest received 13.51 23.64 50.39 92.61 17.57 15.75
Amount received on transfer of
tenancy rights - 60.00 - - - -

Net Cash from Investing Activities

- (B) (471.55) (211.63) (168.87) (151.67) (186.17) (228.06)

Cash Flow from Financing

Activities
Proceeds from Issue of Preference
Shares - 500.00 500.00 200.00 200.00 200.00
Proceeds from long term borrowings - 2,215.12 1,414.84 487.33 465.36 177.25
Repayment of long term borrowings - (1,526.08) (1,742.14) (559.77) (205.81) (251.57)
Proceeds from short term borrowings
- net 943.93 (5.02) 1,068.84 637.04 578.33 108.51
Interest paid (234.22) (376.30) (336.61) (308.87) (283.33) (218.67)
Lease rentals paid (9.82) (13.23) (0.66) (0.49) (23.11) (43.30)

12
 (Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March March 31, March 31, March March 31,
2006 to 31, 2006 2005 2004 31, 2003 2002
September 30,
2006

Dividend paid - - - - (0.01) (6.83)

Corporate dividend tax - - - - - (0.70)
- - - - - -
Net Cash from Financing Activities
- (C) 699.89 794.49 904.27 455.24 731.43 (35.31)

Net Increase in Cash and Cash

Equivalent (A+B+C) (87.40) 44.12 23.75 18.99 (100.78) 54.27

Cash and Cash Equivalent at the

beginning of year 214.39 169.31 145.56 126.57 227.36 173.10
Cash and cash equivalents taken over
on amalgamation - 0.96 - - - -
Cash and Cash Equivalent at the end
of year 126.99 214.39 169.31 145.56 126.58 227.37

(87.40) 44.12 23.75 18.99 (100.78) 54.27

Reconciliation of Cash and Cash

Equivalents
As per Balance Sheet 126.99 214.45 169.31 145.87 127.38 228.42
Less: Interest accrued on Bank
Deposits - (0.06) - (0.31) (0.80) (1.05)
As per Cash flow statement 126.99 214.39 169.31 145.56 126.58 227.37

13
 SUMMARY STATEMENT OF CONSOLIDATED ASSETS AND LIABILITIES, AS RESTATED

(Rupees in millions)
Particulars As at As at As at March As at March As at March As at March
September March 31, 31, 2005 31, 2004 31, 2003 31, 2002
30, 2006 2006
FIXED ASSETS

Gross Block 2,887.81 2,667.51 2,482.11 2,276.34 2,013.39 1,829.09

Less: Depreciation 1,578.36 1,494.77 1,412.60 1,270.06 1,158.47 1,049.70

Net Block 1,309.45 1,172.74 1,069.51 1,006.28 854.92 779.39

Less: Revaluation Reserve 59.54 64.08 9.08 9.07 13.95 12.30

Net Block after adjustment for
Revaluation Reserve 1,249.91 1,108.66 1,060.43 997.21 840.97 767.09

Capital Work In Progress 330.72 51.06 18.30 6.19 30.97 14.24

TOTAL - (A) 1,580.63 1,159.72 1,078.73 1,003.40 871.94 781.33

INVESTMENTS - (B) 42.65 42.65 43.33 43.33 58.73 58.74

CURRENT ASSETS, LOANS

AND ADVANCES

Inventories 611.00 515.61 387.53 405.46 411.77 348.14

Work-in-Progress 14.79 14.99 14.79 1,729.39 1,123.82 780.67

Unbilled Revenue 4,027.62 2,857.30 1,786.95 - - -

Sundry Debtors 1,921.59 1,981.02 1,866.71 1,903.46 1,402.03 964.19

Cash & Bank Balances 150.64 237.65 195.73 174.60 156.51 260.20

Loans & Advances 1,111.75 1,030.21 813.89 749.84 789.84 794.17

Other Current Assets 16.23 0.96 0.94 0.94 1.68 1.71

TOTAL - (C) 7,853.62 6,637.74 5,066.54 4,963.69 3,885.65 3,149.08

LIABILITIES AND
PROVISIONS

Secured Loans 1,101.45 1,054.35 563.64 829.59 563.82 364.11

Unsecured Loans 3,331.89 2,430.50 2,233.91 1,225.89 927.02 313.11

Current Liabilities 2,615.35 2,022.47 1,688.95 2,749.36 2,289.50 2,338.28

Provisions 127.06 112.46 37.77 39.58 38.84 66.54

Deferred Tax Liability (Net) 119.12 94.92 34.64 23.43 9.50 3.30
Minority Interest

14
 (Rupees in millions)
Particulars As at As at As at March As at March As at March As at March
September March 31, 31, 2005 31, 2004 31, 2003 31, 2002
30, 2006 2006
6.49 6.53 6.98 7.06 8.03 8.81

TOTAL - (D) 7,301.36 5,721.23 4,565.89 4,874.91 3,836.71 3,094.15

NET WORTH - (A+B+C-D) 2,175.54 2,118.88 1,622.71 1,135.51 979.61 895.00

REPRESENTED BY

1. Share Capital 1,715.25 1,715.25 1,214.00 714.00 514.00 314.00

(Refer
note 1
below)

2. Reserves & Surplus 579.97 533.78 495.72 519.42 579.60 609.42

Less: Revaluation Reserve 59.54 64.08 9.08 9.07 13.95 12.30

Reserves & Surplus (Net of
Revaluation Reserves) 520.43 469.70 486.64 510.35 565.65 597.12

Total 2,235.68 2,184.95 1,700.64 1,224.35 1,079.65 911.12

Less: Miscellaneous
Expenses
(to the extent not written off) 60.14 66.07 77.93 88.84 100.04 16.12

NET WORTH 2,175.54 2,118.88 1,622.71 1,135.51 979.61 895.00

15
 SUMMARY STATEMENT OF CONSOLIDATED PROFIT AND LOSS ACCOUNT, AS RESTATED

(Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006

INCOME :
Income from Operations 3,990.22 6,804.42 5,433.84 4,453.29 4,299.12 4,130.37
Other Income 133.63 373.25 108.04 193.61 156.56 47.17
Total Income 4,123.85 7,177.67 5,541.88 4,646.90 4,455.68 4,177.54

EXPENDITURE :
Cost of Construction 2,992.20 4,759.03 4,012.65 3,325.05 3,156.03 3,390.27
Payments to and Provisions for
employees 335.28 654.25 488.21 447.57 455.30 460.44
Other Expenses 385.66 1,040.68 513.22 421.28 381.83 363.02
Financial Lease Rentals 9.82 43.09 61.19 68.20 92.68 107.07
Interest and Financial charges 234.39 381.48 336.65 300.28 286.85 217.61
Depreciation 85.52 158.64 146.71 129.65 116.72 99.02
Less : Depreciation on the amount
added on Revaluation transferred
from Revaluation Reserve 4.53 9.07 9.09 9.09 13.94 12.29
Total Expenditure 4,038.34 7,028.10 5,549.54 4,682.94 4,475.47 4,625.14
Profit\ (Loss) before prior period
adjustments, extraordinary items
and tax 85.51 149.57 (7.66) (36.04) (19.79) (447.60)

Provision for tax:

- Current tax (9.35) (14.66) (2.77) (2.19) (2.24) (0.54)
- Wealth Tax (0.01) (0.02) (0.02) (0.02) (0.02) (0.02)
- Deferred Tax (24.20) (60.28) (11.21) (13.92) (9.27) -
- Fringe Benefit Tax (4.70) (10.40) - - - -
- Foriegn Tax - (6.68) - - - -
Total Provision for Tax (38.26) (92.04) (14.00) (16.13) (11.53) (0.56)

Profit\ (Loss) after tax, before prior

period adjustments and
extraordinary items 47.25 57.53 (21.66) (52.17) (31.32) (448.16)
Adjustments:
Impact of material adjustment for
restatement in corresponding years
(Refer Annexure IIIA) - (10.49) 10.49 - 16.92 (16.92)

Adjusted Profit\ (Loss) after tax,

before prior period adjustments
and extraordinary items 47.25 47.04 (11.17) (52.17) (14.40) (465.08)

(Short)/ Excess Provision for taxes in

respect of earlier years (Refer note 1 1.73 0.81 (3.54) 0.09 (1.61) (0.03)

16
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
below)

Prior Period Expenses - - - - (0.21) 1.39

Profit\ ( Loss) after taxation and

before minority Interest 48.98 47.85 (14.71) (52.08) (16.22) (463.72)

Minority Interest 0.04 (0.08) 11.32 16.25 10.78 23.87

Profit\ ( Loss) after Minority
Interest 49.02 47.77 (3.39) (35.83) (5.44) (439.85)

Balance Brought Forward from

Previous Year (282.18) (329.76) (326.39) (290.56) (308.69) 63.66
Transfer From Debenture
Redemption Reserve - - - - 22.90 67.72
Profit\ ( Loss) available for
appropriation (233.16) (281.99) (329.78) (326.39) (291.23) (308.47)

Appropriations:

Proposed Final Dividend - - - - - (0.11)

Transfer from/ (to) General Reserve - (0.19) - - 0.67 (0.11)

Less: Deducted from general reserve
as per contra 233.16 282.18 329.78 326.39 290.56 308.69

Balance carried to Summary

Statement of Assets and Liabilities, - - - - - -
as restated

17
 STATEMENT OF CONSOLIDATED CASH FLOW STATEMENT, AS RESTATED

(Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006

Cash Flow from Operating

Activities

Net Profit\(Loss) before prior 85.51 139.08 2.83 (36.04) (6.18) (461.21)
period adjustments,
extraordinary items and tax, as
restated

Adjustment for :
Depreciation 81.01 149.58 137.60 120.55 102.78 86.73
(Profit) / Loss on sale / discard of - (1.51) (0.79) (0.23) - 2.80
fixed assets (net)
Dividend income - (0.18) (0.18) (0.15) - (4.05)
Interest income (34.44) (198.99) (30.89) (73.90) (17.50) (15.40)
Interest expense 234.39 381.48 336.65 300.28 286.85 217.61
Lease rentals expense 9.82 43.09 61.19 68.20 92.69 107.07
Dividend adjustment - - - - - (0.14)
Bad/irrecoverable Debtors 3.80 165.32 3.89 - 4.38 -
/Unbilled Revenue /Advances
w/off / TDS W/off
Provision for diminution in the - - - (13.61) - 13.61
value of long-term investments
(w/back)/provided
Share of Loss in Jointly - - - - 0.01 -
controlled entity (subject to
audit)/ Associate
Deferred revenue expenditure - - (0.96) (0.57) (90.25) -
paid during the year
Excess Provision for expenses of (42.17) (19.47) (19.89) (21.05) (48.07) 1.39
earlier years written back
(Profit) / Loss on sale / disposal - (0.88) (0.34) - - -
of short term investments- Others
(Profit) / Loss on sale / disposal - (7.58) - 16.02 - (0.26)
of long term investments- Others
Amount received on transfer of - (60.00) - - - -
tenancy rights
Deferred revenue expenditure 5.93 11.87 11.87 11.77 6.34 5.37
written off

Prior Period Expenses (net) - - - - (0.21) -

Provision for Projected Losses (11.46) 27.74 1.86 - - -
Reversed

Operating Profit before

working capital changes 332.39 629.55 502.84 371.27 330.84 (46.48)

18
 (Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006

Adjustment for:
(Increase) / Decrease in trade 76.18 (92.32) 47.24 (501.42) (441.26) (96.13)
receivables
(Increase)/Decrease in (95.39) (128.09) 17.94 6.31 (64.60) (37.52)
inventories
(Increase)/ Decrease in work-in- 0.19 (0.21) 1,714.60 (605.57) (343.15) (103.61)
progress
(Increase) / Decrease in unbilled (1,170.34) (1,070.35) (1,786.95) - - -
revenue
(Increase)/Decrease in loans and (53.45) (294.34) (95.91) (69.51) (48.56) (78.70)
advances
Increase / (Decrease) in 643.91 385.58 (1,043.35) 490.79 3.34 691.17
trade,other payables and
provisions
Cash (used in) Operations (266.51) (570.18) (643.59) (308.13) (563.39) 328.73
Direct taxes (paid) (42.93) 24.19 (37.29) 39.89 (52.56) 27.05

Net cash from \ (used in)

Operating Activities - (A) (309.44) (545.99) (680.88) (268.24) (615.95) 355.78

Cash Flow from Investing

Activities
Purchase of fixed assets (499.96) (300.05) (222.84) (259.34) (211.50) (259.18)
Sale of fixed assets - 6.83 1.60 3.37 2.51 1.85
Purchase of Investments - (280.61) (1.90) - - -
Sale of investments 0.01 288.55 2.23 12.99 - 0.01
Sale of Subsidiary - 0.60 - - - -
Amount received on disposal of - - - - - 0.86
long term investments
Dividend received - 0.18 0.18 0.15 - 4.05
Interest received 13.97 18.01 20.58 75.02 17.88 15.84
Amount received on transfer of - 60.00 - - - -
tenancy rights
Share of Loss in Associate - - - - (0.01) -

Net Cash from \ (used in)

Investing Activities - (B) (485.98) (206.49) (200.15) (167.81) (191.12) (236.57)

Cash Flow from Financing

Activities
Proceeds from issue of - 500.00 500.00 200.00 200.00 200.00
Preference share
Proceeds from long-term 489.62 2,215.12 1,414.84 487.33 465.36 177.25
borrowings
Repayment of long-term (476.89) (1,526.08) (1,742.14) (559.77) (205.81) (251.57)
borrowings
Proceeds from short term 931.20 (5.02) 1,068.84 637.07 554.07 104.93
borrowings - net
Interest paid (235.46) (376.45) (338.41) (309.36) (285.39) (228.30)
Lease rentals paid - (13.23) (0.66) (0.64) (24.49) (55.14)

19
 (Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006

Dividend paid - - - - (0.11) (6.94)

Corporate Dividend Tax paid - - - - - (0.72)

Net Cash from \ (used in)

Financing Activities - (C) 708.47 794.34 902.47 454.63 703.63 (60.49)

Net Increase in Cash and Cash

Equivalent (A+B+C) (86.95) 41.86 21.44 18.58 (103.44) 58.72

Cash and cash equivalents at the 237.59 195.73 174.29 155.71 259.15 200.43
beginning of the year
Cash and cash equivalents taken - - - - - -
over on amalgamation
Cash and cash equivalents at the 150.64 237.59 195.73 174.29 155.71 259.15
end of the year

(86.95) 41.86 21.44 18.58 (103.44) 58.72

Reconciliation of cash and cash

equivalents
As per Balance sheet 150.64 237.59 195.73 174.60 156.51 259.15
Less: Interest accrued on Bank - - - 0.31 0.80 -
Deposits
As per Cash flow statement 150.64 237.59 195.73 174.29 155.71 259.15

20
 THE ISSUE

Equity Shares offered by the Company 160,65,000Equity Shares

Employee Reservation Portion 321,300 Equity Shares

Therefore

Net Issue to the Public 15,743,700 Equity Shares

Of which

A) Qualified Institutional Buyers (QIB) portion At least 9,446,220 Equity Shares*

Of which
Available for allocation to Mutual 472,311 Equity Shares
Funds only
Balance for all QIBs including Mutual Funds 8,973,909 Equity Shares

B) Non-Institutional Portion At least 1,574,370 Equity Shares*

C) Retail Portion At least 4,723,110 Equity Shares*

Equity Shares outstanding prior to the Issue 71,400,000 Equity Shares

Equity Shares outstanding after the Issue 87,465,000 Equity Shares

Use of Proceeds by the Company See the section titled “Objects of the Issue” on page
43 of this Draft Red Herring Prospectus.

* Allocation on a proportionate basis

21
 GENERAL INFORMATION

Registered Office

Afcons House, 16, Shah Industrial Estate,

Veera Desai Road, Azad Nagar P.O,
Mumbai 400 053
Tel No: (91 22) 6677 3100; Fax: (91 22) 2673 0047
Registration No: 11-19335
A
We are registered with the RoC situated at Everest House, Marine Lines, Mumbai 400 020

Board of Directors of the Issuer

Name Designation
C. P. Mistry Chairman
K. Subrahmanian Managing Director
P. S. Mistry Non-Executive Director
S. P. Mistry Non-Executive Director
J.J. Parakh Non-Executive Director
A.N.Jangle Executive Director
S. Paramasivan Executive Director
A.H. Divanji Independent Director
N. J. Jhaveri Independent Director
N.D. Khurody Independent Director
P. N. Kapadia Independent Director

For further details of our Directors, see section titled “Our Management” on page122 of this Draft Red
Herring Prospectus.

Company Secretary and Compliance Officer

P.R. Rajendran
Afcons House, 16, Shah Industrial Estate,
Veera Desai Road, Azad Nagar P.O.,
Mumbai 400 053
Tel No: (91 22) 66773100; Fax: (91 22) 26730047/26731031
Email: ipo@afcons.com

Investors can contact the Compliance Officer or the Registrar in case of any pre-Issue or post-Issue
related problems such as non-receipt of letters of allocation, credit of allotted Equity Shares in the
respective beneficiary account or refund orders, etc.

Book Running Lead Manager

Enam Financial Consultants Private Limited

801/ 802, Dalamal Towers
Nariman Point
Mumbai 400 021, India
Tel: (91 22) 6638 1800
Fax: (91 22) 2284 6824
E-mail: afcons.ipo@enam.com
Website: www.enam.com
Contact Person: Aishwarya Mehra

Co Book Running Lead Managers

22
 CLSA India Limited JM Morgan Stanley Private SBI Capital Markets Limited
Limited
8/F Dalamal House 141, Maker Chambers III, 202, Maker Towers ‘E’,
Nariman Point Nariman Point Cuffe Parade,
Mumbai 400 021 Mumbai 400 021, India Mumbai 400 005
Tel: (91 22) 6650 5050 Tel.: (91 22) 6630 3030 Tel: (91 22) 2218 9166
Fax: (91 22) 2284 1657 Fax.: (91 22) 2204 7185 Fax: (91 22) 2218 8332
E-mail: Email: Email : afcons.ipo@sbicaps.com
afcons.ipo@clsa.com afcons.ipo@jmmorganstanley.com Website : www.sbicaps.com
Website: Website: www.jmmorganstanley.com Contact Person : Swaminathan B
www.india.clsa.com Contact Person: Utkarsh Katoria
Contact Person: Varun
Kumar

Syndicate Members

Enam Securities Private Limited

Khatau Building, 2nd Floor
44B Bank Street,
Off Shaheed Bhagat Singh Road,
Fort, Mumbai – 400023 (India)
Tel. No.: (91 22) 2267 7901
Fax No. (91 22) 2266 5613

JM Morgan Stanley Financial Services Private Limited

Apeejay House, 3, Dinshaw Waccha Road,
Churchgate
Mumbai 400 021
India
Tel: (91 22) 6504 0404
Fax: (91 22) 6630 1694

SBICAP Securities Limited

191, Maker Tower F
Cuffe parade
Mumbai 400 005, India
Tel (91 22) 22189166
Fax: (91 22) 2218 8332
Contact Person: Prasad Chitnis

Legal Advisors to the Issue

Amarchand Mangaldas & Suresh A. Shroff & Co.

5th Floor, Peninsula Chambers,
Peninsula Corporate Park,
Ganpatrao Kadam Marg, Lower Parel,
Mumbai 400 013.
Tel: (91 22) 2496 4455
Fax: (91 22) 2496 3666

Registrar to the Issue

[●]
Tel: [●]
Fax: [●]
E-mail: [●]
Website: [●]
Contact Person: [●]

23
Bankers to the Issue and Escrow Collection Banks

[●]

Bankers to the Company

Bank of India Oriental Bank of Commerce

Andheri Corporate Banking Branch, Corporate Group Finance Branch, Maker
28, S.V. Road, Andheri (West), Tower "E"
Mumbai 400 058 18th Floor, Cuffe Parade,
Tel: (91 22) 2671 8565 Mumbai 400 005
Fax:(91 22) 2624 7655 Tel: (91 22) 2215 4656
Fax: (91 22) 2215 3533

BNP Paribas State Bank of India

62, Homji Street, Commercial Branch,
Fort, NGN Vaidya Marg,
Mumbai 400 001 Mumbai 400 023
Tel : (91 22) 5650 1300 Tel : (91 22) 2266 2205
Fax : (91 22) 2265 1275 Fax : (91 22) 2262 1915

Dena Bank Union Bank of India

Corporate Business Branch, C-10, 66/80, Mumbai Samachar Marg,
G-Block, Bandra-Kurla Complex, Fort,
Bandra (E), Mumbai 400 051 Mumbai 400023
Tel: (91 22) 2654 5016 Tel: (91 22) 2262 9300
Fax: (91 22) 2654 5017 Fax: (91 22) 2267 4919

ICICI Bank Limited UTI Bank Limited

ICICI Bank Towers, Universal Bhavan Building,
Bandra-Kurla Complex, Bandra (E) Sir P.M. Road,Fort,
Mumbai 400 051 Mumbai 400 001
Tel: (91 22) 5653 8770 Tel: (91 22) 2285 1418
Fax: (91 22) 5653 8855 Fax: (91 22) 2283 5785

ING Vysya Bank Limited UCO Bank

Trade Finance Unit, 1st Floor, Mafatlal Centre,
Patel Chambers, Nariman Point,
Mumbai 400 007 Mumbai 400021
Tel: (91 22) 2388 9282 Tel: (91 22) 2202 6449
Fax: (91 22) 2382 0958 Fax: (91 22) 2202 5338

Statement of Inter Se Allocation of Responsibilities for the Issue

The following table sets forth the distribution of responsibility and coordination for various activities
amongst the BRLMs:

S. Activities Responsibility Co-ordinator

No.
1 Capital structuring with the relative components and Enam/CLSA/
Enam
formalities JMMS/SBI CAP
2 Due diligence of the Company’s operations / Enam/CLSA/
Enam
management / business plans/legal documents etc. JMMS/SBI CAP
3 Drafting and design of Issue Document and of statutory Enam/CLSA/
advertisement including memorandum containing salient JMMS/SBI CAP
Enam
features of the Prospectus. Compliance with stipulated
requirements and completion of prescribed formalities

24
S. Activities Responsibility Co-ordinator
No.
with Stock Exchange, Registrar of Companies and SEBI
4 Drafting and approval of all publicity material other than Enam/CLSA/
statutory advertisement as mentioned above including JMMS/SBI CAP Enam
corporate advertisement, brochure, etc.
5 Appointment of Registrar, Bankers, Printer and Enam/CLSA/
Enam
Advertising agency JMMS/SBI CAP
6 Institutional Marketing Strategy Enam/CLSA/
Finalisation of the list of investors for one to one JMMS/SBI CAP
Enam
meetings in consultation with the Company
Preparation of roadshow presentation
7 Retail/HNI Marketing Strategy Enam/CLSA/ JM
Finalize centres for holding conference for brokers etc JMMS/SBI CAP
Finalise media, marketing and PR strategy
Follow up on distribution of publicity and issue materials
including form, prospectus and deciding on the quantum
of the Issue material
Finalise Collection orders
8 Managing the Book and Co-ordination with Stock Enam/CLSA/
Enam
Exchanges JMMS/SBI CAP
9 Pricing and allocation Enam/CLSA/
Enam
JMMS/SBI CAP
10 The post bidding activities including management of Enam/CLSA/ SBI
escrow accounts, co-ordination of non-institutional JMMS/SBI CAP
allocation, intimation of allocation and despatch of
refunds to bidders
11 The post Issue activities of the Issue will involve Enam/CLSA/ SBI
essential follow up steps, which must include finalisation JMMS/SBI CAP
of listing of instruments and dispatch of certificates and
refunds, with the various agencies connected with the
work such as Registrars to the Issue, Bankers to the Issue
and the bank handling refund business. BRLMs shall be
responsible for ensuring that these agencies fulfil their
functions and enable him to discharge this responsibility
through suitable agreements with the Issuer Company.

Credit Rating

As this is an offer of Equity Shares, there is no credit rating for this Issue.
Trustees

As this is an issue of Equity Shares, the appointment of Trustees is not required.

IPO Grading

We have not opted for grading of this Issue.

Monitoring Agency

There is no requirement to appoint a Monitoring Agency for the Issue in terms of clause 8.17.1 of the
SEBI DIP Guidelines as the Issue size is less than Rs. 500 crores.

Book Building Process

Book building, with reference to the Issue, refers to the process of collection of Bids on the basis of the
Red Herring Prospectus within the Price Band. The Issue Price is finalized after the Bid/ Issue Closing
Date. The principal parties involved in the Book Building Process are:

1. The Company;

25
2. BRLM;

3. CBRLMs;

4. Syndicate Member who is an intermediary registered with SEBI or registered as brokers with
BSE/NSE and eligible to act as Underwriters. The Syndicate Member is appointed by the
BRLM and the CBRLMs; and

5. Registrar to the Issue

This being an issue for less than 25% of post issue equity capital of the Company, the SEBI Guidelines
read with rule 19(2) (b) of the SCRR, have permitted an issue of securities to the public through the
100% Book Building Process, wherein not less than 60% of the Net Issue shall be allocated on a
proportionate basis to QIBs, out of which 5% shall be available for allocation on a proportionate basis
to Mutual Funds only. The remainder shall be available for allocation on a proportionate basis to QIBs
including the Mutual Funds subject to valid bids being received at or above the Issue Price. If at least
60% of the Net Issue cannot be allocated to QIBs, then the entire application money will be refunded
forthwith. Further, not less than 10% of the Net Issue shall be available for allocation on a
proportionate basis to Non Institutional Bidders and not less than 30% of the Net Issue shall be
available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids
being received at or above the Issue Price. We will comply with the SEBI Guidelines and any other
ancillary directions issued by SEBI for this Issue. In this regard, we have appointed the BRLM and the
CBRLMs to manage the Issue and to procure subscriptions to the Issue.

Pursuant to amendments to the SEBI Guidelines, QIB Bidders are not allowed to withdraw their Bid(s)
after the Bid /Issue Closing Date and for further details see the section titled “Terms of the Issue” on
page 370 of this Draft Red Herring Prospectus.

The process of Book Building under SEBI Guidelines is subject to change from time to time and
investors are advised to make their own judgment about investment through this process prior to
making a Bid or Application in the Issue.

Illustration of Book Building Process and Price Discovery Process (Investors should note that this
example is solely for illustrative purposes and is not specific to the Issue)

Bidders can bid at any price within the price band. For instance, assume a price band of Rs. 20 to Rs.
24 per share, offer size of 3,000 equity shares and receipt of five bids from bidders out which one
bidder has bid for 500 shares at Rs. 24 per share while another has bid for 1,500 shares at Rs. 22 per
share. A graphical representation of consolidated demand and price would be made available at the
bidding centers during the bidding period. The illustrative book given below shows the demand for the
shares of the Company at various prices and is collated from bids from various investors.

Bid Quantity Bid Price (Rs.) Cumulative Quantity Subscription

500 24 500 16.67%
1,000 23 1,500 50%
1,500 22 3,000 100%
2,000 21 5,000 166.67%
2,500 20 7,500 250%

The price discovery is a function of demand at various prices. The highest price at which the Company
is able to offer the desired number of shares is the price at which the book cuts off i.e. Rs. 22 in the
above example. The Company in consultation with BRLM and the CBRLMs, will finalise the Issue
Price at or below such cut off price, i.e. at or below Rs. 22. All bids at or above the Issue Price and cut
off bids are valid bids and are considered for allocation in the respective categories.

Steps to be taken by the Bidders for bidding:

26
• Check eligibility for bidding (please refer to the section titled “Issue Procedure - Who Can
Bid” on page 376 of this Draft Red Herring Prospectus);

• Ensure that the Bidder has an active demat account and the demat account details are correctly
mentioned in the Bid cum Application Form;

• If the Bid is for Rs. 50,000/- or more, ensure that you have mentioned your PAN and attached
copies of your PAN card to the Bid Cum Application Form (see section titled “Issue
Procedure” on page376 of this Draft Red Herring Prospectus; and

• Ensure that the Bid cum Application Form is duly completed as per instructions given in this
Draft Red Herring Prospectus and in the Bid Cum Application Form.

Underwriting Agreement

After the determination of the Issue Price but prior to filing of the Prospectus with the RoC, we will
enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be
offered through this Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the
BRLM and the CBRLMs shall be responsible for bringing in the amount devolved in the event that
their respective Syndicate Members do not fulfill their underwriting obligations.

The Underwriters have indicated their intention to underwrite the following number of Equity
Shares:

(This portion has been intentionally left blank and will be filled in before the filing of the Prospectus
with the RoC)

Name and Address of the Indicative Number of Equity shares to be Amount

Underwriters Underwritten Underwritten
(Rs. in Million)
Enam Financial Consultants [●] [●]
Private Limited

801, Dalamal Tower, Nariman

Point,
Mumbai 400 021
India
CLSA India Limited [●] [●]

8/F, Dalamal House, Nariman

Point
Mumbai 400 021
India
SBI Capital Markets Limited [●] [●]

202, Maker Towers ‘E’,

Cuffe Parade,
Mumbai 400 005
India

JM Morgan Stanley Private [●] [●]

Limited

141, Maker Chambers III

Nariman Point,
Mumbai 400 021

The above mentioned amount is indicative underwriting and this would be finalized after the pricing
and actual allocation.

27
In the opinion of our Board of Directors (based on a certificate given by the Underwriters), the
resources of the above mentioned Underwriters are sufficient to enable them to discharge their
respective underwriting obligations in full. The above-mentioned Underwriters are registered with
SEBI under Section 12(1) of the SEBI Act or registered as brokers with the Stock Exchange(s). Our
Board of Directors, at its meeting held on [●], has accepted and entered into the Underwriting
Agreement mentioned above on behalf of the Company.

Notwithstanding the above table, the BRLM, the CBRLMs and the Syndicate Member shall be
responsible for ensuring payment with respect to Equity Shares allocated to investors procured by
them. In the event of any default in payment, the respective Underwriter, in addition to other
obligations defined in the underwriting agreement, will also be required to procure subscriptions
for/subscribe to Equity Shares to the extent of the defaulted amount.

28
 CAPITAL STRUCTURE

Our Equity Share capital before the Issue and after giving effect to the Issue, as at the date of filing of
this Draft Red Herring Prospectus with SEBI, is set forth below:

Aggregate Value Aggregate Value

at Face Value at Issue Price
(Rs.) (Rs.)
A Authorized Capital*
124,000,000 Equity Shares 1,240,000,000 -

101,000,000 Preference Shares 1,010,000,000

B. Issued, Subscribed And Paid-Up Capital before

the Issue
71,400,000 Equity Shares fully paid-up before the 714,000,000 [●]
Issue
50,000,000- 7.25% Redeemable Cumulative 500,000,000 [●]
Preference Shares of Rs. 10 each
50,000,000- 7.5% Redeemable Cumulative Preference 500,000,000 [●]
Shares of Rs. 10 each
125,000 Zero Coupon Redeemable Preference Shares 1,250,000 [●]
of Rs. 10 each
C. Present Issue in terms of this Draft Red Herring
Prospectus
16,065,000 Equity Shares ** 160,650,000 [●]
D. Employee Reservation Portion 3,213,000 [●]
Up to 321,300 Equity Shares
E. Net Issue to the Public 157,437,000 [●]
15,743,700 Equity Shares
F. Equity Capital after the Issue 874,650,000 [●]
87,465,000 Equity Shares

G. Share Premium Account

Before the Issue 161,500,000
After the Issue - [●]

** The Issue in terms of this Draft Red Herring Prospectus has been authorized pursuant to a resolution
passed at the EGM dated December 22, 2006.

* Details in relation to the change in authorized capital clause:

Date Details of change

March 18, The Authorised Share Capital Rs. 5,000,000 divided into 50,000 Equity Shares of Rs.
1977 100 each.
January 30, The Authorised Share Capital was increased from Rs. 5,000,000 divided into 50,000
1982 Equity Shares of Rs. 100 each to Rs. 25,000,000 divided into 250,000 Equity Shares
of Rs. 100 each.
December 31, The Authorised Share Capital was increased from Rs. 25,000,000 divided into
1988 250,000 Equity Shares of Rs. 100 each to Rs. 75,000,000 divided into 750,000 Equity
Shares of Rs. 100 each.
April 6, 1991 The Authorised Share Capital was increased from Rs. 75,000,000 divided into
750,000 Equity Shares of Rs. 100 each to Rs. 100,000,000 divided into 750,000
Equity Shares of Rs. 100 each and 250,000 unclassified shares of Rs. 100 each.

29
 Date Details of change

September 20, The Authorised Share Capital of Rs. 100,000,000 divided into 750,000 Equity Shares
1991 of Rs. 100 each and 250,000 unclassified shares of Rs. 100 each was changed to
750,000 Equity Shares of Rs. 100 each, 100,000 15% Redeemable Cumulative
Preference Shares of Rs. 100 each and 150,000 unclassified shares of Rs. 100 each.
July 25, 1996 The Authorised Share Capital of Rs. 100,000,000 divided into 750,000 Equity Shares
of Rs. 100 each, 100,000 15% Redeemable Cumulative Preference Shares of Rs. 100
each and 150,000 unclassified shares of Rs. 100 each was changed to 9,000,000
Equity Shares of Rs. 10 each and 1,000,000 Preference Shares of Rs. 10 each.
October 11, The Authorised Share Capital of Rs. 100,000,000 divided into 9,000,000 Equity
1996 Shares of Rs. 10 each and 1,000,000 Preference Shares of Rs. 10 each was increased
to Rs. 150,000,000 divided into 13,000,000 Equity Shares of Rs. 10 each and
2,000,000 Preference Shares of Rs. 10 each.
March 7, 2002 The Authorised Share Capital of Rs. 150,000,000 divided into 13,000,000 Equity
Shares of Rs. 10 each and 2,000,000 Preference Shares of Rs. 10 each was increased
to Rs. 330,000,000 divided into 33,000,000 shares of Rs. 10 each.
March 13, The Authorised Share Capital of. Rs. 330,000,000 divided into 33,000,000 shares of
2003 Rs. 10 each was increased to Rs. 750,000,000 divided into 75,000,000 shares of Rs.
10 each.
March 30, The Authorised Share Capital of Rs. 750,000,000 divided into 75,000,000 shares of
2005 Rs. 10 each was increased to Rs. 1,250,000,000 divided into 125,000,000 shares of
Rs. 10 each.
March 31, The Authorised Share Capital of Rs. 1,250,000,000 divided into 125,000,000 shares
2006 of Rs. 10 each was increased to Rs. 1,750,000,000 divided into 175,000,000 shares of
Rs. 10 each.
December 22, The Authorised Share Capital of Rs.1,750,000,000 divided into 175,000,000 shares of
2006 Rs.10 each was increased to Rs. 2,250,000,000 divided into 124,000,000 Equity
Shares of Rs.10 each and 101,000,000 Preference Shares of Rs.10 each.

Notes to Capital Structure

1. (a) Equity Share Capital History of the Company

Date of No. of Cumulative Face Issue Nature of Reasons for Cumulative Cumulative
Allotment Shares No. of Value Price Payment of Allotment Paid-Up Equity
Equity (Rs.) (Rs.) Consideration Equity Share
Shares Capital Premium
(Rs.) (Rs.)
November 21 21 100 100 Cash Alloted to 2,100 -
22, 1976 Subscribers
to
Memorandum

March 18, 20,000 20,021 100 100 Consideration Alloted 20,02,100 -

1977 other than cash pursuant to
acquisition of
the
partnership
firm M/s
Rodio
Foundation
Engineering
Ltd. and
Hazarat &
Co.

April 22, 29,979 50,000 100 100 Cash Fresh issue of 5,000,000 -
1977 shares at par
to employees

30
 Date of No. of Cumulative Face Issue Nature of Reasons for Cumulative Cumulative
Allotment Shares No. of Value Price Payment of Allotment Paid-Up Equity
Equity (Rs.) (Rs.) Consideration Equity Share
Shares Capital Premium
(Rs.) (Rs.)
April 10, 50,000 100,000 100 100 Bonus Bonus in the 10,000,000 -
1982 ratio of 1:1
(by
capitalizing
from general
reserves)
January 100,000 200,000 100 100 Bonus Bonus in the 20,000,000 -
25, 1986 ratio of 1:1
(by
capitalizing
from general
reserves)
April 15, 200,000 400,000 100 100 Bonus Bonus in the 40,000,000
1989 ratio of 1:1
(by
capitalizing
from general
reserves)
February 100,000 500,000 100 100 Cash Fresh issue at 50,000,000 -
1, 1990 par to
Employee
Trusts
November 1,25,000 6,25,000 100 100 Cash Fresh issue 62,500,000 -
26, 1993 at par to
SCICI Ltd.
July 25, 62,50,000 10 10 N.A. Split of 62,500,000 -
1996 Equity Shares
from the face
value of Rs.
100 each to
Rs. 10 each
November 12,50,000 7,500,000 10 30 Cash Rights issue 75,000,000 25,000,000
7, 1996 in the ratio of
1:5 at a
premium of
Rs. 20 per
share
January 3,900,000 11,400,000 10 45 Cash Private 114,000,000 161,500,000
19, 1998 placement to
ICICI Ltd. at
a premium of
Rs. 35 per
share
March 27, 20,000,000 31,400,000 10 10 Cash Alloted to 314,000,000 161,500,000
2003 CIL pursuant
to conversion
of 12%
Redeemable
Cumulative
Convertible
Preference
Shares into
Equity Shares
at par.

31
 Date of No. of Cumulative Face Issue Nature of Reasons for Cumulative Cumulative
Allotment Shares No. of Value Price Payment of Allotment Paid-Up Equity
Equity (Rs.) (Rs.) Consideration Equity Share
Shares Capital Premium
(Rs.) (Rs.)
March 31, 20,000,000 51,400,000 10 10 Cash Alloted to 514,000,000 161,500,000
2006 FIL pursuant
to conversion
of 9 .5%
Redeemable
Cumulative
Convertible
Preference
Shares
(initially
allotted to
SICL, but
transferred to
FIL) into
Equity Shares
at par.
December 20,000,000 71,400,000 10 10 Conversion Alloted to 714,000,000 161,500,000
22, 2006 SICL
pursuant to
conversion of
7 .5%
Redeemable
Cumulative
Convertible
Preference
Shares
(initially
allotted to
CIL, but
transferred to
SICL) into
Equity Shares
at par.

(b) Preference Share Capital History of the Company

Date of No. of Cumulative Face Issue Nature of Reasons for Cumulative

Allotment Preference No. of Value Price Payment of Allotment Paid-Up
Shares Preference (Rs.) (Rs.) Consideration Preference
Shares Share
Capital (Rs.)
March 27, 20,000,000 20,000,000 10 10 Cash 12% 200,000,000
2002 Redeemable
Cumulative
Convertible
Preference
shares of Rs.
10 each
issued to CIL
March 25, 20,000,000 40,000,000 10 10 Cash 9.5% 400,000,000
2003 Redeemable
Non-
Cumulative
Convertible
Preference

32
 Date of No. of Cumulative Face Issue Nature of Reasons for Cumulative
Allotment Preference No. of Value Price Payment of Allotment Paid-Up
Shares Preference (Rs.) (Rs.) Consideration Preference
Shares Share
Capital (Rs.)
shares of Rs.
10 each
issued to
SICL

March 27, - 20,000,000 - - Conversion 12% 200,000,000

2003 Redeemable
Cumulative
Convertible
Preference
Shares of Rs.
10 each
issued to CIL
converted
into equity
shares at par
March 26, 20,000,000 40,000,000* 10 10 Cash 7.5% 400,000,000
2004 Redeemable
Non-
Cumulative
Convertible
Preference
shares of Rs.
10 each
issued to CIL

March 30, 50,000,000 90,000,000 10 10 Cash 7.5% 900,000,000

2005 Redeemable
Non-
Cumulative
Convertible
Preference
Shares of Rs.
10 each were
issued to
SICL.*

March 31, 50,000,000 140,000,000 10 10 Cash 7.5% 1,400,000,000

2006 Redeemable
Non-
Cumulative
Optionally
Convertible
Preference
shares of Rs.
10 each were
issued to
FIL**

March 31, - 120,000,000 - - Conversion 9.5% 1,200,000,000

2006 Redeemable
Non-
Cumulative
Convertible

33
 Date of No. of Cumulative Face Issue Nature of Reasons for Cumulative
Allotment Preference No. of Value Price Payment of Allotment Paid-Up
Shares Preference (Rs.) (Rs.) Consideration Preference
Shares Share
Capital (Rs.)
Preference
Shares of
Rs.10 each
issued to
SICL later
transferred to
FIL
converted
into Equity
Shares at par.
June 30, 1,25,000 12,01,25,000 10 10 Consideration Zero Coupon 120,12,50,000
2006 other than cash Redeemable
Preference
Shares
allotted to
SICL and
Pauling PLC,
U.K. pursuant
to
amalgamation
of AFCONS
Pauling
(India) Ltd.
with the
Company
vide High
Court Order
dated May 6,
2006
December 10,01,25,000 - - Conversion 7.5% 100, 12,
22, 2006 Redeemable 50,000
Non-
Cumulative
Convertible
Preference
Shares of Rs.
10 each
issued to CIL
and later
trasnferred to
SICL
converted
into Equity
Shares at par.

* On March 31, 2006 SICL transferred 7.5% Redeemable Non-Cumulative Convertible

Preference Shares to FIL. The Company in an EGM held on December 22, 2006 has amended
the terms and conditions of these Preference Shares to the following effect:
(a) The Preference Shares so issued will be redeemable, non-convertible and cumulative
Preference Shares;
(b) The Preference Shares shall be redeemable at any time after 3 years but not later than
20 years from the date of variation of such rights by either the Company or the
shareholders by exercising call and put option, respectively by giving 21 days notice;

34
 (c) The holders of the Redeemable Preference Shares shall be entitled to a fixed
cumulative preferential dividend @ 7.25% per annum on the paid up preference
capital in preference to the Equity Shares.

** On March 31, 2006 the Company allotted 7.5% Redeemable Non-Cumulative Optionally
Convertible Preference shares of Rs. 10 each to FIL. The Company in an EGM held on
December 22, 2006 has amended the terms and conditions of these Preference Shares to the
following effect:

(a) The Preference Shares so issued will be redeemable, non-convertible and cumulative
Preference Shares;
(b) The Preference Shares shall be redeemable at any time after 5 years but not later than 20
years from the date of variation of such rights by either the Company or the shareholders
by exercising call and put option, respectively by giving 21 days notice;
(c) The holders of the Redeemable Preference Shares shall be entitled to a fixed cumulative
preferential dividend @ 7.5% per annum on the paid up preference capital in preference
to the Equity Shares.

2. Promoter Contribution and Lock-in

Pursuant to the SEBI Guidelines, an aggregate of 20% of the fully diluted post-Issue capital of the
Company held by the Promoters shall be locked in for a period of three years from the date of
Allotment in the Issue. All Equity Shares which are being locked in are eligible for computation of
Promoter’s contribution and lock in under clause 4.6 of the SEBI Guidelines. The details of such lock-
in are given below:

Name Number of Face Nature of Issue Date of Reasons % of Lock

Equity Value Consideration Price Allotment for post- – in
Shares per Allotment Issue period
Equity paid-
Share up
(Rs.) capital
Cyrus 174,93,000 10 Cash 10 March 27, Alloted to 20% 3
Investments 2003 CIL years
Limited pursuant to
conversion
of 12%
Redeemable
Cumulative
Convertible
Preference
Shares into
Equity
Shares at
par.

35
In terms of Clause 4.14.1 of the SEBI Guidelines, in addition to 20% of the post-Issue shareholding of
the Company held by the Promoter and locked in for three years as specified above, the entire pre-Issue
share capital of the Company will be locked in for a period of one year from the date of Allotment in
this Issue.

In terms of Clause 4.16.1(a) of the SEBI Guidelines, the Equity Shares held by persons other than the
Promoter prior to the Issue may be transferred to any other person holding the Equity Shares which are
locked-in as per Clause 4.14 of the SEBI Guidelines, subject to continuation of the lock-in in the hands
of the transferees for the remaining period and compliance with the SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997, as applicable. Further, in terms of Clause 4.16.1(b) of the
SEBI Guidelines, Equity Shares held by the Promoter may be transferred to and among the Promoter
Group or to a new promoter or persons in control of the Company subject to continuation of the lock-in
in the hands of the transferees for the remaining period and compliance with the SEBI (Substantial
Acquisition of Shares and Takeovers) Regulations, 1997, as applicable.

In addition, the Equity Shares subject to lock-in will be transferable subject to compliance with the
SEBI Guidelines, as amended from time to time.

Locked-in Equity Shares held by the Promoter can be pledged only with banks or financial institutions
as collateral security for loans granted by such banks or financial institutions provided that the pledge
of the Equity Shares is one of the terms of the sanction of the loan.

3. Details of transactions in Equity Shares by the Promoters and Promoter Group

Companies

The following Equity Shares have been sold or purchased by the Promoter and the Promoter Group
Companies, during the period of six months preceding the date on which the Draft Red Herring
Prospectus is filed with SEBI.

Transferee Transferor Date on Number Face Consideration Purchase/Sale

which of Shares value (Rs.) Price (per
Shares (Rs.) Equity Share)
purchased (Rs.)
or sold
CIL R. Babu October 3, 120 10 1,800 15
2006
CIL A.K. October 3, 240 .10 3,600 15
Mohanty 2006
CIL S. Devi October 3, 4,320 10 64,800 15
2006
CIL R.S. December 100 10 1500 15
Shikare 21, 2006
Rising FIL December 50,000 10 5,00,000 10
Mountain 21, 2006
Properties
Private Limited
Afcons CIL December 1,363,211 10 25,901,009 19
Dredging and 28, 2006
Marine Services
Limited
Afcons FIL December 26,53,039 10 26,530,390 10
Dredging and 28, 2006
Marine Services
Limited
K. Subramanian FIL December 23,168 10 393,856 17
held jointly with 28, 2006
S. Sundari
S. Paramasivan FIL December 19,859 10 337,603 17

36
 Transferee Transferor Date on Number Face Consideration Purchase/Sale
which of Shares value (Rs.) Price (per
Shares (Rs.) Equity Share)
purchased (Rs.)
or sold
28, 2006
A.N. Jangle FIL December 16,549 10 281,333 17
28, 2006
Selvaraj N. FIL December 16,549 10 281,333 17
jointly held with 28, 2006
R. Selvaraj
S. Sankar FIL December 16,549 10 281,333 17
28, 2006
S. Kuppuswamy FIL December 9,929 10 168,793 17
28, 2006
P. Sampath FIL December 9,929 10 168,793 17
28, 2006
H. J. Tavaria FIL December 9,929 10 168,793 17
jointly held with 28, 2006
N.H. Tavaria
J.J. Parakh FIL December 6,619 10 112,523 17
jointly held with 28, 2006
V.J. Parakh
A. R. Mirza FIL December 3,310 10 56,278 17
jointly held with 28, 2006
R. K. Mirza
M. J. Parakh FIL December 3,310 10 56,278 17
jointly held with 28, 2006
P M. Parakh
N. J. Jhaveri FIL December 16,549 10 281,333 17
jointly held with 28, 2006
C. N. Jhaveri
FK. Bhathena FIL December 6,620 10 112,540 17
jointly held with 28, 2006
D. F. Bhathena
R.M. Nentin FIL December 3,310 10 56,278 17
jointly held with 28, 2006
G. M. Nentin
jointly held with
M. M. Nentin
M. D. Saini FIL December 16,549 10 281,333 17
jointly held with 28, 2006
Kanta Saini
S. C. Dixit FIL December 13,239 10 225,063 17
jointly held with 28, 2006
Lata Dixit
M. S. Hingorani FIL December 9,929 10 168,793 17
jointly held with 28, 2006
K. M.
Hingorani.
A.H. Daruwalla FIL December 6,620 10 112,540 17
28, 2006
B. Prasad jointly FIL December 6,620 10 112,540 17
held with V. 28, 2006
Prasad
P.R.Rajendran FIL December 9,929 10 168,793 17
jointly held with 28, 2006
S. Rajendran
W. Kabir jointly FIL December 9,929 10 168,793 17

37
 Transferee Transferor Date on Number Face Consideration Purchase/Sale
which of Shares value (Rs.) Price (per
Shares (Rs.) Equity Share)
purchased (Rs.)
or sold
held with N. 28, 2006
Kabir
V.Manivannan FIL December 6,620 10 112,540 17
jointly held with 28, 2006
S. Manivannan
N.S.Iyer jointly FIL December 13,239 10 225,063 17
held with S. S. 28, 2006
Iyer
P. V. Bhat FIL December 9,929 10 168,793 17
jointly held with 28, 2006
V. K. Bhat
Afcons Bot FIL December 4,016,250 10 40,162,500 10
Constructions 28, 2006
Pvt.Ltd.

3. Details of transactions in Preference Shares by the Promoters and Promoter Group

Companies

Transferee Transferor Date on Number Face Consideratio Purchas

which of Shares value n (Rs.) e/Sale
Shares (Rs.) Price
purchase (per
d or sold Equity
Share)
SIPL CIL December 20,000,000 10 200,000,000 10
21, 2006

4. Equity Shares held by top ten shareholders

The details of the top ten shareholders of the Company and the number of Equity Shares held by them
are as under:

a) As on the date of, and ten days prior to filing of this Draft Red Herring Prospectus:

S.No. Shareholder(s) Number of Percentage

Equity Shares (%)
1. Cyrus Investments Limited 24,075,389 33.72
2. Sterling Investment Corporation Private 24,075,389 33.72
Limited
3. Floreat Investments Limited 13,015,929 24.23
4. Afcons Dredging and Marine Services Limited 4,016,250 5.63
5. Afcons BOT Constructions Private Limited 4,016,250 5.63
6. A.H. Divanji 81,720 0.26
7. J.A.Divanji 60,000 0.19
8. H. J. Tavaria as trustee of Afcons Shareholders 50,000 0.15
(Holiday Assistance) Trust No. 2*
9. H. J. Tavaria as trustee of Afcons Shareholders 50,000 0.15
(Holiday Assistance) Trust No. 3*
10. H. J. Tavaria as trustee of Afcons Shareholders 50,000 0.15
(Educational Assistance) Trust No. 1*

38
 * See “Our Management – Employee Trusts” on page 132 of this Draft Red Herring
Prospectus.

b) Two years prior to filing of this Draft Red Herring Prospectus:

S.No. Shareholder(s) Number of Percentage

Equity Shares (%)
1. Cyrus Investments Limited 25,412,760 80.93
2. Sterling Investments Corporation Private 4,075,389 12.97
Limited
3. A.H. Divanji 81,720 0.26
4. J.A. Divanji 60,000 0.19
5. H. J. Tavaria as trustee of Afcons Shareholders 50,000 0.16
(Holiday Assistance) Trust No. 1*
6. H.J. Tavaria as trustee of Afcons Shareholders 50,000 0.16
(Holiday Assistance) Trust No. 2*
7. H.J. Tavaria as trustee of Afcons Shareholders 50,000 0.16
(Holiday Assistance) Trust No. 3*
8. H.J. Tavaria as trustee of Afcons Shareholders 50,000 0.16
(Medical Benefit) Trust No. 1*
9. H.J. Tavaria as trustee of Afcons Shareholders 50,000 0.16
(Educational Assistance) Trust No. 1*
10. H.J. Tavaria as trustee of Afcons Shareholders 50,000 0.16
(Educational Assistance) Trust No. 2*
* See “Our Management – Employee Trusts” on page 132 of this Draft Red Herring
Prospectus.

5. Shareholding Pattern of the Company

The shareholding pattern of the Company before and after the Issue is as under:

Category Pre-Issue Post Issue**

No of Equity Percentage No of Equity Percentage
Shares Shares
Promoters (A)
Shapoorji Pallonji & Co Nil Nil Nil Nil
Limited
Cyrus Investments 24, 075,389 33.72 24,075,389 27.53
Limited
Sterling Investment 24, 075,389 33.72 24,075,389 27.53
Corporation Private
Limited
Floreat Investments 13,015,929 18.22 13,015,929 14.88
Limited
Total (A) 61,166,707 85.66 61,166,707 69.94
Promoter Group (B)
Afcons Dredging and 4,016,250 5.63 4,016,250 4.59
Marine Services Limited
Afcons BOT Constructions 4,016,250 5.63 4,016,250 4.59
Private Limited
Total (B) 8,032,500 11.26 8,032,500 9.18

39
 Category Pre-Issue Post Issue**
No of Equity Percentage No of Equity Percentage
Shares Shares
Others (C)
Employee Trusts* 1,191,370 1.67 1,191,370 1.37
Employees and Others 732,759 1.03 732,759 0.83
Executive Directors/Non- 226,664 0.32 226,664 0.26
Executive Directors
Rising Mountain Properties 50,000 0.06 50,000 0.05
Private Limited
Total (C) 2,200,793 3.08 2,200,793 2.51
Public (D) Nil Nil 1,60,65,000 18.37

Total (A+B+C+D) 71,400,000 100 87,465,000 100

* See “Our Management – Employee Trusts” on page 132of this Draft Red Herring
Prospectus.
** On the assumption that the total shareholding of the categories of the shareholders listed
out below will not change upon completion of the Issue.
6. Except for options granted under our employee stock option plan (“ESOP”), there are
no outstanding warrants, options or rights to convert debentures, loans or other
instruments into the Equity Shares.

7. Employee stock option scheme

We have an employee stock option scheme in force, which is applicable to all our Directors,
and employees:

ESOP Outstanding
scheme Options Remarks
Afcons 721,150 The special resolution passed by our Company at its EGM dated
Infrastructure December 22, 2006 approved the grant of up to 1,785,000
Limited equity shares of the Company.
Employee
Stock Option
Scheme,
2006

(a) ESOP 2006

Particulars Details
Options granted 721,150
Exercise price of options Rs. 17 per option

Total options vested Nil

Options exercised Nil
Total number of equity shares that would 721,150
arise as a result of full exercise of options
already granted
Options forfeited/ lapsed/ cancelled Nil
Variations in terms of options Nil
Money realised by exercise of options N.A.
Options outstanding (in force) 721,150
Person wise details of options granted to
i) Directors and key managerial Refer Note 1 below
employees
ii) Any other employee who received a Nil
grant in any one year of options

40
 Particulars
amounting to 5% or more of the
options granted during the year
iii) Identified employees who are
granted options, during any one
year equal to exceeding 1% of the
issued capital (excluding
outstanding warrants and
conversions) of the Company at the
time of grant
Fully diluted EPS on a pre-Issue basis
Vesting schedule
Lock-in
Impact on profits of the last three years
Details
Nil
0.2846 (On a consolidated basis)
0.2681 (On a unconsolidated basis)
Options would vest as follows:
20% Within one year of date of
grant*
25% Within two year of date of grant
25% Within three year of date of
grant
30% Within four year of date of grant
For employees retiring within four years of
grant options would vest from the date of
grant as follows:
50% Within one year of date of grant
50% Within two year of date of grant
No lock-in period for exercised options
Nil

* For employees who have not completed minimum two years of service, the vesting
shall commence from the expiry of two years from the date of grant and the balance
shall vest every year thereafter in the same formula mentioned above.

Note 1: Details regarding options granted to our Directors and our key managerial employees are set
forth below:

Name of director/ Key No. of options No. of options No. of options No. of Equity
Managerial Personnel granted exercised outstanding Shares held
under ESOP under ESOP under ESOP
2006 2006 2006
K. Subrahmanian 35,040 Nil 35,040 23,168
A. N. Jangle 14,460 Nil 14,460 17,549
S. Paramasivan 26,280 Nil 26,280 19,859
N. Selvaraj 21,900 Nil 21,900 20,549
N.S. Iyer 10,510 Nil 10,510 13,239
W. Kabir 10,510 Nil 10,510 9,929
P. R. Rajendran 13,140 Nil 13,140 10,409
M. Jayaram 13,140 Nil 13,140 -
S. Sankar 17,520 Nil 17,520 16,549
K. Ramesh 13,140 Nil 13,140 -
V. K. Bhat 13,140 Nil 13,140 9,929
R. Kalyanakrishnan 8,760 Nil 8,760 -
J. D. Bakshi 8,760 Nil 8,760 -
V. Prasada Rao 13,140 Nil 13,140 -

7. The Company, its Directors, the BRLM and the CBRLMs have not entered into any buy-back
and/or standby arrangements for purchase of the Equity Shares from any person.

8. The Company has not raised any bridge loan against the proceeds of the Issue. For details on
use of proceeds, see the section titled “Objects of the Issue” on page 43 of this Draft Red
Herring Prospectus.

41
9. At least 60% of the Net Issue shall be allocated to QIBs on a proportionate basis. 5% of the
QIB Portion shall be available for allocation to Mutual Funds only and the remaining QIB
Portion shall be available for allocation to the QIB Bidders including Mutual Funds subject to
valid Bids being received at or above the Issue Price. Further, not less than 10% of the Net
Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and
not less than 30% of the Net Issue will be available for allocation to Retail Individual Bidders,
subject to valid Bids being received from them at or above the Issue Price. Under-
subscription, if any, in the Non-Institutional and Retail Individual categories would be allowed
to be met with spill over from any other category at the discretion of the Company, the BRLM
and the CBRLMs. The Issue includes the Employee Reservation Portion of up to 321,300
Equity Shares which are available for allocation to Eligible Employees.

10. Only Eligible Employees would be entitled to apply in this Issue under the Employee
Reservation Portion, on competitive basis. Bid/ Application by Eligible Employees can be
made also in the “Net Issue” and such Bids shall not be treated as multiple Bids.

11. Under-subscription, if any, in the Employee Reservation Portion will be added back to the
Non Institutional Portion and Retail Portion at the discretion of the BRLM and the CBRLMs.
In case of under-subscription in the Net Issue, spill-over to the extent of under-subscription
shall be permitted from the Employee Reservation Portion. Under-subscription, if any, in any
category, except the QIB Portion, would be met with spill over from other categories at our
discretion in consultation with the BRLM and the CBRLMs.

12. A Bidder cannot make a Bid for more than the number of Equity Shares offered in this Issue,
subject to the maximum limit of investment prescribed under relevant laws applicable to each
category of investor.

13. There would be no further issue of capital whether by way of issue of bonus shares,
preferential allotment, and rights issue or in any other manner during the period commencing
from submission of the Draft Red Herring Prospectus with SEBI until the equity shares
offered hereby have been listed.

14. The Company presently does not have any intention or proposal to alter capital structure for a
period of six months commencing from the date of opening of this Issue, by way of split/
consolidation of the denomination of Equity Shares or further issue of Equity Shares or
securities convertible into Equity Shares, whether on a preferential basis or otherwise.
However, during such period or at a later date, we may issue Equity Shares pursuant to our
employee stock option plan or issue equity shares or securities linked to equity shares to
finance an acquisition, merger or joint venture by us or as consideration for such acquisition,
merger or joint venture, or for regulatory compliance or such other scheme of arrangement if
an opportunity of such nature is determined by our Board to be in our interest.

16. We have not issued any Equity Shares out of revaluation reserves or for consideration other
than cash except as stated in the Equity Share Capital History table above.

17. There will be only one denomination of the Equity Shares of the Company unless otherwise
permitted by law and the Company shall comply with such disclosure and accounting norms
as may be specified by SEBI from time to time.

18. An oversubscription to the extent of 10% of the Issue can be retained for the purposes of
rounding off.

19. As of December 31, 2006, we had 624 members.

42
 OBJECTS OF THE ISSUE
The objects of the Issue are to achieve the benefits of listing on the Stock Exchanges and the raising of
capital for our capital expansion plans. We believe that listing will enhance the Company’s brand
name, its visibility among investors and would provide liquidity to our existing shareholders. We
intend to use the proceeds of the Issue after deducting underwriting and management fees, selling
commissions and other expenses associated with the Issue (the “Net Proceeds”) for the following
purposes:

• Purchase capital equipment;

• Repayment of debt;
• General corporate purposes and strategic initiatives.

Our fund requirements are based on our current business plan and are based on management estimates.
In view of the dynamic nature of our industry, we may have to revise our business plans from time to
time and consequently our fund requirements may also change. This may include rescheduling of our
capital expenditure programmes and /or reducing or increasing the amount of repayment of debt.

Proposed use of net proceeds from the Issue

The following table summarizes the use and the year wise implementation of Net Proceeds of the Issue:

(in Rs. Million)

S.No. Particulars FY 2007 FY 2008 Total
1. Investment in capital equipment - 1,250 1,250
2. Prepayment/repayment of debt 200 550 750
3. General Corporate Purposes and strategic initiatives [●] [●] [●]
Total [●] [●] [●]

Whilst we intend to utilize the Net Proceeds of the Issue in the manner provided above, in the event of
a surplus, we will use such surplus towards general corporate purposes. In the event of any shortfall in
using the Net Proceeds of the Issue, we will reduce the amount of repayment of high cost debt.

The main objects clause and the objects incidental or ancillary to the main objects clause of the
Memorandum of Association enable us to undertake our existing activities and the activities for which
funds are being raised by us in the Issue.

Details of Use of Proceeds

1. Investment in Capital Equipment

We require to make investments in capital equipment on a recurring basis due to the nature of the
industry we operate in. We intend to use Rs. 1,250 million from the Net Proceeds for the purchase of
capital equipment to meet the requirements of our various projects based on our order book of projects
as of September 30, 2006 and future requirements as estimated by the management.

The following table sets out the equipments that are currently under consideration for placement of
order:

S. No. Equipment Quantity Estimated Price(In Rs. Million)

Equipments being fabricated in-house
1. Jackup Platform -1200 m2 1 120.00
2. Tug -600 bhp -2000 bhp 3 120.00
3. Split Barges – 1000 m3 3 90.00
4. Barge – Dumb – 1000 MT cap 2 40.00
Equipments being purchased
5. Cranes of various capacities 18 308.21
ranging from 40 MT to 200 MT
6. Piling Equipments – B180 8 250.56

43
 S. No. Equipment Quantity Estimated Price(In Rs. Million)
7. Vibro Hammer – 40 TM cap 2 34.79
8. Desander 4 10.32
9. Batching Plant – 60 m3 3 25.90
10. Transit Mixers, Tippers with rock 70 97.34
body
11. Generators of various capacities 49 43.29
ranging from 40 KVA to 600 KVA
12. Pipeline Equipment – 1 set – 30” 26 109.81
laying capacity
Total 187 1250.22

We purchase the equipments set out above on a regular basis in the course of our business. The prices
for the equipments proposed to be purchased as set out above are as per internal management estimates
based on the price at which such equipments were purchased in last one year or past quotations. The
Company is in the process of seeking fresh quotations for such purchases. The cost for the equipments
being fabricated in-house has been certified by M/s AB Marine, Independent Naval Architects by way
of their letter dated January 4, 2007.

The estimated expenditure plan has not been appraised by an independent organization. In addition, the
Company’s capital expenditure plans are subject to a number of variables, including possible cost
overruns, construction delays or defects and changes in the management’s views of the desirability of
current plans, among others.

2. Repayment of Debt

The Company has entered into various financing arrangements with a number of banks/ financial
institutions and other lenders. These arrangements include fund based facilities from banks/ financial
institutions and other lenders aggregating Rs. 5,940.30 million as on September 30, 2006. As on
September 30, 2006, the amount outstanding from the Company under these facilities was Rs. 4,379.88
million. Details of the amounts proposed to be repaid out of Issue proceeds are provided in the table
below:
(In Rs. Million)
S.No. Bank/Financial Total Amount Rate of Repayment Amount Amount
Institution/Lender Sanctioned Interest date Outstanding proposed to
Under Fund as on be repaid
Based Facilities September out of the
30, 2006 Issue
proceeds
A. Unsecured
Corporate Loans
1. Bank of India 250.0 9.75% March 28, 250.00 250.0
2007
2. UTI Bank 250.00 9.5% August 8, 251.90 250.00
2007
3. Dena Bank 250.00 9.0% September 250.0 250.0
15, 2007
Total 750.00

In view of the dynamic nature of our industry, the Company may have to revise its business plan from
time to time and consequently our fund requirement may also change. Thus, the Company may reduce
or increase the amount of prepayment or repayment of debt/advances as stated above.

3. General Corporate Purposes and other strategic initiatives

The Company intends to use upto Rs. [●] million from the proceeds of the Issue for general corporate
purposes. The Company intends to use the net proceeds of the Issue in accordance with the growth plan
and long term strategy. The civil engineering and construction industry is dynamic in nature and the
Company’s plan and strategy will depend on future additions in the Order Book, the types of contracts
and the schedule of execution of different contracts. Hence, the Company’s management will utilize

44
these funds for various corporate purposes including purchase of capital equipments, working capital,
repayment of debts/advances, strategic investments in projects, subsidiaries, acquisitions and joint
ventures etc. The Company’s management, in accordance with the policies established by the Board,
will have flexibility in deploying the proceeds received from the Issue for the purposes as stated in the
Memorandum of Association.

Issue Related Expenses

The Issue related expenses consist of underwriting fees, selling commission, fees payable to BRLM
and the CBRLMs to the Issue, legal counsels, Bankers to the Issue, Escrow Bankers and Registrars to
the Issue, printing and stationery expenses, advertising and marketing expenses and all other incidental
and miscellaneous expenses for listing the Equity Shares on the Stock Exchanges. We intend to use
about Rs. [●] million towards these expenses for the Issue. All expenses with respect to the Issue will
be borne out of Issue proceeds.

Means of finance

The stated objects of the Issue are proposed to be financed entirely out of the proceeds of this Issue.

Interim Use of Proceeds

The Company’s management, in accordance with the policies established by the Board, will have
flexibility in deploying the proceeds received from the Issue. Pending utilization of the proceeds out of
the Issue for the purposes described above, we intend to temporarily invest the funds in high quality
interest bearing liquid instruments including money market mutual funds, deposits with banks or
temporarily deploy the funds in investment grade interest bearing securities as may be approved by the
Board. Such investments would be in accordance with the investment policies approved by the Board
from time to time. Further, we would not employ proceeds of the Issue in equity capital markets.

Monitoring of Utilization of Funds

The Board shall monitor the utilization of the proceeds of the Issue. The Company will disclose the
utilization of the proceeds of the Issue under a separate head in the Company’s balance sheet for Fiscal
2007 and 2008 clearly specifying the purpose for which such proceeds have been utilized. The
Company will also, in the Company’s balance sheet for Fiscal 2007 and 2008, provide details, if any, in
relation to all such proceeds of the Issue that have not been utilized and also indicating investments, if
any, of such unutilized proceeds of the Issue.

No part of the Issue proceeds will be paid by the Company as consideration to the Promoters, the
Directors, the Company’s key management personnel or companies promoted by the Promoters except
in the usual course of business.

45
 BASIS FOR ISSUE PRICE

The Price Band for the Issue shall be decided prior to the filing of the Red Herring Prospectus with the
ROC. The Issue Price will be determined by the Company in consultation with the BRLMs on the basis
of the assessment of market demand for the offered Equity Shares by the book building process. The
face value of the Equity Shares of the Company is Rs. 10 each and the Issue Price is [●] times of the
face value.

Qualitative Factors

• Significant experience and strong track record

• Diversified business and versatile capabilities
• Focus on technology
• In- house developed expertise in marine works
• Long term relationship with reputed clients
• Experienced management team and staff
• Parentage

For further details please refer to the section titled, ‘Business’ on page 81 of this Draft Red Herring
Prospectus.

Quantitative Factors

Information presented in this section is derived from our restated unconsolidated financial statements
prepared in accordance with Indian GAAP.

1. Earning Per Share (EPS) (as adjusted for changes in capital)

Particulars Face value per share (Rs. 10 per share)

Rupees Weight
Year ended March 31, 2004 0.39 1
Year ended March 31, 2005 0.98 2
Year ended March 31, 2006 1.51 3
Weighted average 1.15
The EPS for the Six months Period ended September, 2006 was Rs. 0.90 (Not Annualised)

2. Price/Earning (P/E) ratio in relation to Issue Price of Rs. [•].

a. Based on the year ended March 31, 2006, EPS is Rs. 1.51.
b. P/E based on profits after taxes, as restated, for the year ended March 31, 2006 is Rs. [•].
c. P/E for Industry based on fiscal 2006 data

Particulars Construction Industry

Highest 268.6
Lowest 4.2
Industry Composite 51.3

3. Return on Average Net Worth as per restated Indian GAAP financials:

Particulars RONW % Weight

Year ended March 31, 2004 1.36 1
Year ended March 31, 2005 3.29 2
Year ended March 31, 2006 5.23 3
Weighted Average 3.94
The RONW for the Six months Period ended September, 2006 was 9.61 % (Not Annualised)

4. Minimum Return on Increased Net Worth required to maintain pre-issue EPS is [•] %.

46
5. Net Asset Value per Equity Share

(i) Net Asset Value per Equity Share for the Year ended March 31, 2006 and for the half year ended
September 30, 2006 is Rs. 17.71 and Rs. 18.70.
(ii) After the Issue: [•]
(iii) Issue Price: Rs. [•]

Issue Price per Equity Share will be determined on conclusion of book building process.

6. Comparison of Accounting Ratios

EPS (Rs.) P/E RONW% NAV (Rs.)

AFCONS Infrastructure 1.51 [●] 5.23 17.71

Peer Group:
Gammon India 9.3 34.7 13.9 98.1
Hindustan Construction
Company 3.2 39.7 13.4 34.7
IVRCL Infrastructure 8.3 41.2 25.5 49.2
Simplex Infrastructure 9.7 40.3 24.5 54.4
Jaiprakash Associates 15.7 41.4 20.8 101.3
Patel Engineering 11.9 28.1 44.7 103.8
Note: The EPS, P/E, RONW and NAV figures are based on the latest audited results for the year ended
March 31, 2006

Source: Capital Market Volume XXI/22 Jan 01 -14, 2007

7. The Issue Price is [•] times of the face value of the Equity Shares.

The BRLM believe that the Issue Price of Rs. [●] is justified in view of the above qualitative and
quantitative parameters. See the section titled “Risk Factors” on page xii of this Draft Red Herring
Prospectus and the financials of the Company including important profitability and return ratios, as set
out in the Auditors Report on page 207 of this Draft Red Herring Prospectus to have a more informed
view.

47
 STATEMENT OF TAX BENEFITS

22 December, 2006

Afcons Infrastructure Limited

Afcons House,
16, Shah Industrial Estate,
Veera Desai Road,
Andheri (West),
Mumbai 400 053.

Dear Sirs,

Statement of Possible Direct Tax Benefits

We hereby report that the enclosed annexure states the possible tax benefits available to Afcons
Infrastructure Limited (“Company”) and its shareholders under the current tax laws in India. Several of
these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed
under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax
benefits is dependent upon fulfilling such conditions which, based on business imperatives which the
Company may face in the future, the Company may or may not fulfill.

The benefits discussed below are not exhaustive. This statement is only intended to provide general
information to the investors and is neither designed nor intended to be a substitute for professional tax
advice. In view of the individual nature of the tax consequences and the changing tax laws, each
investor is advised to consult his or her own tax consultant with respect to the specific tax implications
arising out of his or her participation in the issue.

Wedo not express any opinion or provide any assurance whether:

• the Company or its shareholders will continue to obtain these benefits in future; or
• the conditions prescribed for availing the benefits have been or would be met.

The contents of the annexure are based on information, explanations and representations obtained from
the Company and on the basis of our understanding of the business activities and operations of the
Company.

Our views expressed herein are based on the facts and assumptions indicated by you. No assurance is
given that the revenue authorities/courts will concur with the views expressed herein. Our views are
based on the existing provisions of law and its interpretation, which are subject to change from time to
time. We do not assume responsibility to update the views consequent to such changes. The views are
exclusively for the use of Afcons Infrastructure Limited. We shall not be liable to Afcons Infrastructure
Limited for any claims, liabilities or expenses relating to this assignment except to the extent of fees
relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or
intentional misconduct. We will not be liable to any other person in respect of this statement.

Thanking you,

Yours faithfully,

CC Chokshi & Co.,

48
 ANNEXURE

STATEMENT OF POSSIBLE DIRECT TAX BENEFITS AVAILABLE TO AFCONS

INFRASTRUCTURE LIMITED AND TO ITS SHAREHOLDERS

A. Under the Income Tax Act, 1961 (“the Act”)

I. Benefits available to the Company

1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e.
dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) is exempt
from tax.

2. As per section 10(35) of the Act, the following income will be exempt from tax in the hands of the
Company:
a. Income received in respect of the units of a Mutual Fund specified under
section 10(23D); or
b. Income received in respect of units from the Administrator of the specified
undertaking; or
c. Income received in respect of units from the specified company:

However, this exemption does not apply to any income arising from transfer
of units of the Administrator of the specified undertaking or of the specified
Company or of a mutual fund, as the case may be.

For this purpose (i) “Administrator” means the Administrator as referred to in section 2(a) of the
Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 and (ii) “Specified Company”
means a company as referred to in section 2(h) of the said Act.

3. As per section 10(38) of the Act, long term capital gains arising to the Company from the transfer
of a long term capital asset being an equity share in a company or a unit of an equity oriented fund,
where such transaction is chargeable to securities transaction tax, will be exempt in the hands of
the Company.

For this purpose, “equity oriented fund” means a fund –

(i) where the investible funds are invested by way of equity shares in domestic
companies to the extent of more than sixty-five percent of the total proceeds of such
funds; and
(ii) which has been set up under a scheme of a Mutual Fund specified under section
10(23D) of the Act.

As per section 115JB, while calculating “book profits” for the purpose of “Minimum Alternate
Tax”, the Company will not be entitled to reduce the long term capital gains to which the
provisions of section 10(38) of the Act apply.

4. Under section 48 of the Act, the long term capital gains arising out of sale of capital assets
excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be
computed after indexing the cost of acquisition/ improvement.

5. As per section 54EC of the Act and subject to the conditions and to the extent specified therein,
long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the
transfer of a long-term capital asset will be exempt from tax if the capital gains are invested in a
“long term specified asset” within a period of six months after the date of such transfer. However,
if the assessee transfers or converts the long term specified asset into money within a period of
three years from the date of its acquisition, the amount of capital gains exempted earlier would
become chargeable to tax as long-term capital gains in the year in which the long term specified
asset is transferred or converted into money.

49
 A “long term specified asset” means any bond, redeemable after three years and issued on or after
the 1st day of April 2006:
(i) by the National Highways Authority of India constituted under section 3 of the National
Highways Authority of India Act, 1988, and notified by the Central Government in the
Official Gazette for the purposes of this section; or
(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956, and notified by the Central Government in the Official Gazette for the
purposes of this section.

6. As per section 80IA of the Act and subject to the fulfillment of specified conditions, the profits and
gains derived from any enterprise carrying on the business of development or operation and
maintenance or development, operation and maintenance of any infrastructure facility is exempt
for a period of any 10 consecutive years, falling within the first 15/20 years as the case may be,
beginning from the year in which eligible undertaking starts development or operation and
maintenance or development, operation and maintenance of the infrastructure facility.

7. As per section 111A of the Act, short term capital gains arising to the Company from the sale of
equity shares or units of an equity oriented mutual fund transacted through a recognized stock
exchange in India, where such transaction is chargeable to securities transaction tax, will be
taxable at the rate of 10% (plus
applicable surcharge and education cess).

8. As per section 112 of the Act, long-term capital gains on sale of listed securities or units or zero
coupon bonds (in cases not covered under section 10(38) of the Act) will be charged to tax at the
rate of 20% (plus applicable surcharge and education cess) after considering indexation benefits in
accordance with and subject to the provisions of section 48 of the Act or at 10% (plus applicable
surcharge and education cess) without indexation benefits, whichever is less.

II. Benefits available to Resident Shareholders

1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e.
dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received
on the shares of the Company is exempt from tax.

2. As per section 10(38) of the Act, long term capital gains arising from the transfer of a long term
capital asset being an equity share of the Company, where such transaction is chargeable to
securities transaction tax, will be exempt from tax in the hands of the shareholder.

3. As per section 111A of the Act, short term capital gains arising from the sale of equity shares of
the Company transacted through a recognized stock exchange in India, where such transaction is
chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable
surcharge and education cess).

4. Under section 48 of the Act, the long term capital gains arising out of sale of capital assets
excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be
computed after indexing the cost of acquisition/ improvement.

5. As per section 54EC of the Act and subject to the conditions and to the extent specified therein,
long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the
transfer of a long-term capital asset will be exempt from tax if the capital gains are invested in a
“long term specified asset” within a period of six months after the date of such transfer. However,
if the assessee transfers or converts the long term specified asset into money within a period of
three years from the date of its acquisition, the amount of capital gains exempted earlier would
become chargeable to tax as long-term capital gains in the year in which the long term specified
asset is transferred or converted into money.

A “long term specified asset” means any bond, redeemable after three years and issued on or after
the 1st day of April 2006:

50
 (i) by the National Highways Authority of India constituted under section 3 of the National
Highways Authority of India Act, 1988, and notified by the Central Government in the
Official Gazette for the purposes of this section; or
(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956, and notified by the Central Government in the Official Gazette for the
purposes of this section.

6. As per section 54F of the Act, long term capital gains (in cases not covered under section 10(38))
arising on the transfer of the shares of the Company held by an individual or Hindu Undivided
Family will be exempt from tax if the net consideration is utilised, within a period of one year
before, or two years after the date of transfer, in the purchase of a residential house, or for
construction of a residential house within three years. Such benefit will not be available:
(a) if the individual or Hindu Undivided Family-
− owns more than one residential house, other than the new residential house, on
the date of transfer of the shares; or
− purchases another residential house within a period of one year after the date of
transfer of the shares; or
− constructs another residential house within a period of three years after the date
of transfer of the shares; and
(b) the income from such residential house, other than the one residential house owned on
the date of transfer of the original asset, is chargeable under the head “Income from
house property”.

If only a part of the net consideration is so invested, so much of the capital gain as bears to the
whole of the capital gain the same proportion as the cost of the new residential house bears to the
net consideration will be exempt.

If the new residential house is transferred within a period of three years from the date of purchase
or construction, the amount of capital gains on which tax was not charged earlier, will be deemed
to be income chargeable under the head “capital gains” of the year in which the residential house is
transferred.

7. As per section 112 of the Act, long-term capital gains on sale of listed securities or units or zero
coupon bonds (in cases not covered under section 10(38) of the Act) will be charged to tax at the
rate of 20% (plus applicable surcharge and education cess) after considering indexation benefits or
at 10% (plus applicable surcharge and education cess) without indexation benefits, whichever is
less.

8. As per section 88E of the Act, the securities transaction tax paid by the shareholder in respect of
taxable securities transactions entered into in the course of the business will be eligible for
deduction from the amount of income tax on the income chargeable under the head “Profits and
Gains of Business or Profession” arising from taxable securities transactions, subject to certain
limit specified in the section. As such, no deduction will be allowed in computing the income
chargeable to tax as “capital gains” or under the head “Profits and gains of Business or Profession”
for such amount paid on account of securities transaction tax.

III. Benefits available to Non-Resident Shareholders (Other than FIIs and Venture Capital Companies /
Funds)

1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e.
dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received
on the shares of the Company is exempt from tax.

2. As per section 10(38) of the Act, long term capital gains arising from the transfer of a long term
capital asset being an equity share of the Company, where such transaction is chargeable to
securities transaction tax, will be exempt from tax.

51
3. As per section 111A of the Act, short term capital gains arising from the sale of equity shares of
the Company transacted through a recognized stock exchange in India, where such transaction is
chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable
surcharge and education cess).

4. As per the first proviso to section 48 of the Act, in case of a non resident shareholder, the capital
gain/loss arising from transfer of shares of the Company, acquired in convertible foreign exchange,
will be computed by converting the cost of acquisition, sales consideration and expenditure
incurred wholly and exclusively incurred in connection with such transfer, into the same foreign
currency which was initially utilized in the purchase of shares. Cost indexation benefit will not be
available in such a case. As per section 112 of the Act, long-term capital gains, if any, on sale of
shares of the Company (in cases not covered under section 10(38) of the Act) will be charged to
tax at the rate of 20% (plus applicable surcharge and education cess).

5. As per section 54EC of the Act and subject to the conditions and to the extent specified therein,
long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the
transfer of a long-term capital asset will be exempt from tax if the capital gains are invested in a
“long term specified asset” within a period of six months after the date of such transfer. However,
if the assessee transfers or converts the long term specified asset into money within a period of
three years from the date of its acquisition, the amount of capital gains exempted earlier would
become chargeable to tax as long-term capital gains in the year in which the long term specified
asset is transferred or converted into money.

A “long term specified asset” means any bond, redeemable after three years and issued on or after
the 1st day of April 2006:
(i) by the National Highways Authority of India constituted under section 3 of the National
Highways Authority of India Act, 1988, and notified by the Central Government in the
Official Gazette for the purposes of this section; or
(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956, and notified by the Central Government in the Official Gazette for the
purposes of this section.

6. As per section 54F of the Act, long term capital gains (in cases not covered under section 10(38))
arising on the transfer of the shares of the Company held by an individual or Hindu Undivided
Family will be exempt from capital gains tax if the net consideration is utilised, within a period of
one year before, or two years after the date of transfer, in the purchase of a residential house, or for
construction of a residential house within three years. Such benefit will not be available:
(a) if the individual or Hindu Undivided Family-
− owns more than one residential house, other than the new residential house, on
the date of transfer of the shares; or
− purchases another residential house within a period of one year after the date of
transfer of the shares; or
− constructs another residential house within a period of three years after the date
of transfer of the shares; and
(b) the income from such residential house, other than the one residential house owned on
the date of transfer of the original asset, is chargeable under the head “Income from
house property”.

If only a part of the net consideration is so invested, so much of the capital gain as bears to the
whole of the capital gain the same proportion as the cost of the new residential house bears to the
net consideration will be exempt.

If the new residential house is transferred within a period of three years from the date of purchase
or construction, the amount of capital gains on which tax was not charged earlier, will be deemed
to be income chargeable under the head “capital gains” of the year in which the residential house is
transferred

52
7. As per section 88E of the Act, the securities transaction tax paid by the shareholder in respect of
taxable securities transactions entered into in the course of the business will be eligible for
deduction from the amount of income tax on the income chargeable under the head “Profits and
Gains of Business or Profession” arising from taxable securities transactions, subject to certain
limit specified in the section. As such, no deduction will be allowed in computing the income
chargeable to tax as “capital gains” or under the head “Profits and gains of Business or Profession”
for such amount paid on account of securities transaction tax.

8. As per section 115E of the Act, in the case of a shareholder being a non-resident Indian, and
subscribing to the shares of the Company in convertible foreign exchange, in accordance with and
subject to the prescribed conditions, long term capital gains arising on transfer of the shares of the
Company (in cases not covered under section 10(38) of the Act) will be subject to tax at the rate of
10% (plus applicable surcharge and education cess), without any indexation benefit.

9. As per section 115F of the Act and subject to the conditions specified therein, in the case of a
shareholder being a non-resident Indian, gains arising on transfer of a long term capital asset being
shares of the Company will not be chargeable to tax if the entire net consideration received on such
transfer is invested within a period of six months in any specified asset or savings certificates
referred to in section 10(4B) of the Act. If part of such net consideration is invested within the
period of six months in any specified asset or savings certificates referred to in section 10(4B) of
the Act, then such gains would not be chargeable to tax on a proportionate basis. Further, if the
specified asset or savings certificate in which the investment has been made is transferred within a
period of three years from the date of investment, the amount of capital gains exempted earlier
would become chargeable to tax as long term capital gains in the year in which such specified asset
or savings certificates are transferred.

10. As per section 115G of the Act, non-resident Indians are not obliged to file a return of income
under section 139(1) of the Act, if their only source of income is income from specified
investments or long term capital gains earned on transfer of such investments or both, provided tax
has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act.

11. As per section 115H of the Act, where a non-resident Indian becomes assessable as a resident in
India, he may furnish a declaration in writing to the Assessing Officer, along with his return of
income for that year under section 139 of the Act to the effect that the provisions of Chapter XII-A
shall continue to apply to him in relation to such investment income derived from the specified
assets for that year and subsequent assessment years until such assets are converted into money.

12. As per section 115I of the Act, a non-resident Indian may elect not to be governed by the
provisions of Chapter XII-A for any assessment year by furnishing a declaration along with his
return of income for that assessment year under section 139 of the Act, that the provisions of
Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for
that assessment year will be computed in accordance with the other provisions of the Act.

13. The tax rates and consequent taxation mentioned above will be further subject to any benefits
available under the Tax Treaty, if any, between India and the country in which the non-resident
has fiscal domicile. As per the provisions of section 90(2) of the Act, the provisions of the Act
would prevail over the provisions of the Tax Treaty to the extent they are more beneficial to the
non-resident.

IV. Benefits available to Foreign Institutional Investors (‘FIIs’)

1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e.
dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received
on the shares of the Company is exempt from tax.

2. As per section 10(38) of the Act, long term capital gains arising from the transfer of a long term
capital asset being an equity share of the Company, where such transaction is chargeable to
securities transaction tax, will be exempt in the hands of the FIIs.

53
3. As per section 115AD read with section 111A of the Act, short term capital gains arising from the
sale of equity shares of the Company transacted through a recognized stock exchange in India,
where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 10%
(plus applicable surcharge and education cess).

4. As per section 115AD of the Act, FIIs will be taxed on the capital gains that are not exempt under
the provisions of section 10(38) of the Act at the following rates:

Nature of income Rate of tax (%)

Long term capital gains 10
Short term capital gains (other than 30
referred to in section 111A)

The above tax rates will be increased by the applicable surcharge and education cess.

In case of long term capital gains, (in cases not covered under section 10(38) of the Act), the tax is
levied on the capital gains computed without considering the cost indexation and without
considering foreign exchange fluctuation.

5. The tax rates and consequent taxation mentioned above will be further subject to any benefits
available under the Tax Treaty, if any between India and the country in which the FII has fiscal
domicile. As per the provisions of section 90(2) of the Act, the provisions of the Act would prevail
over the provisions of the Tax Treaty to the extent they are more beneficial to the FII.

6. As per section 54EC of the Act and subject to the conditions and to the extent specified therein,
long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the
transfer of a long-term capital asset will be exempt from tax if the capital gains are invested in a
“long term specified asset” within a period of six months after the date of such transfer. However,
if the assessee transfers or converts the long term specified asset into money within a period of
three years from the date of its acquisition, the amount of capital gains exempted earlier would
become chargeable to tax as long-term capital gains in the year in which the long term specified
asset is transferred or converted into money.

A “long term specified asset” means any bond, redeemable after three years and issued on or after
the 1st day of April 2006:
(i) by the National Highways Authority of India constituted under section 3 of the National
Highways Authority of India Act, 1988, and notified by the Central Government in the
Official Gazette for the purposes of this section; or
(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the
Companies Act, 1956, and notified by the Central Government in the Official Gazette for the
purposes of this section.

V. Benefits available to Mutual Funds

As per section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and
Exchange Board of India Act, 1992 or Regulations made thereunder, Mutual Funds set up by public
sector banks or public financial institutions and Mutual Funds authorised by the Reserve Bank of India
will be exempt from income tax, subject to such conditions as the Central Government may by
notification in the Official Gazette, specify in this behalf.

VI. Benefits available to Venture Capital Companies / Funds

As per section 10(23FB) of the Act, all Venture Capital Companies / Funds registered with the
Securities and Exchange Board of India, subject to the conditions specified, are eligible for exemption
from income tax on their entire income, including income from sale of shares of the company.
However, under section 115U of the Act, income received by a person out of investment made in a

54
venture capital company or in a venture capital fund will be chargeable to tax in the hands of such
person.

B. Benefits available under the Wealth Tax Act, 1957

“Asset” as defined under section 2(ea) of the Wealth tax Act, 1957 does not include shares in
companies and hence, shares are not liable to wealth tax.

C. Benefits available under the Gift Tax Act, 1958

Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of
shares will not attract gift tax.

NOTES

(i) The above Statement of Possible Direct Tax Benefits sets out the provisions of law in a summary
manner only and is not a complete analysis or listing of all potential tax consequences of the
purchase, ownership and disposal of shares.

(ii) All the above benefits are as per the current tax laws.

(iii) In view of the individual nature of tax consequences, each investor is advised to consult his/her
own tax advisor with respect to specific tax consequences of his/her investments in the shares of
the Company.

Our views expressed herein are based on the facts and assumptions indicated by you. No assurance is
given that the revenue authorities/courts will concur with the views expressed herein. Our views are
based on the existing provisions of law and its interpretation, which are subject to change from time to
time. We do not assume responsibility to update the views consequent to such changes. The views are
exclusively for the use of Afcons Infrastructure Limited. We shall not be liable to Afcons Infrastructure
Limited for any claims, liabilities or expenses relating to this assignment except to the extent of fees
relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or
intentional misconduct. We will not be liable to any other person in respect of this statement.

55
 INDUSTRY

INDIA’S CONSTRUCTION INDUSTRY: AN OVERVIEW:

The infrastructure sector covers the services of transportation (railways, roads and road transportation,
ports, and civil aviation), communications (telecommunications and postal services), electricity and
other services such as water supply and sanitation, solid waste management, and urban transport.
Construction activity is an integral part of a country’s infrastructure and industrial development and
hence can rightly be termed as the basic input for socio-economic development. Its presence and
contribution is immense in terms of providing huge opportunities for direct and indirect employment.
In India, construction is the second largest economic activity after agriculture. Construction investment
accounts for nearly 11 per cent of the GDP and roughly 50 per cent of the Gross Fixed Capital
Formation. Construction investments are expected to grow to the tune of Rs 8,300 billion, at a CAGR
of 8 per cent, over the next 3 years (FY06 to FY08) (source: CRIS INFAC Construction Annual
Review Report, February 2006 (“CRIS INFAC”).

Over the past ten years, the Indian economy has been one of the fastest growing economies in the
world, witnessing an average growth of over 6% per year. The following chart presents a comparison
of India’s GDP growth rate with the growth rates of certain other countries from 1993 to 2003.

Country Average GDP Growth

India 6.16%
Australia 3.79%
Brazil 2.52%
Chile 4.56%
China 8.92%
Japan 1.32%
Korea 5.50%
Malaysia 5.32%
Russia 0.91%
Thailand 3.54%
United Kingdom 2.92%
United States of America 3.27%

(Source: United Nations Statistical Division)

India recently has had a high GDP growth rate. India’s GDP growth rate has increased from 4% in FY
2003 to an estimated 7.5%-8% in FY 2006 (Source: ET Intelligence .com & CSO). This growth in the
Indian economy has fuelled demand for quality infrastructure services.

Investment requirements

Despite recent progress, India has lagged behind many other developing and developed nations in
terms of infrastructure development. The following chart illustrates the gap between India and other
selected countries for 2003, in terms of certain indicators of infrastructure development:

56
(Source: World Development Indicators Online 2005, World Bank)

Investment in infrastructure, given the intent of the Government is expected to rise. The increase in
infrastructure development in India is driven by political will and new sources of funding. Independent
research studies and estimates from the Plan Documents suggest that there will be an investment of
approximately Rs. 8,618 billion into various Indian infrastructure projects (sectors including power,
roads, ports, railways, airports, pipelines, irrigation and water supply, urban infrastructure) over the
next five years. Construction companies are expected to benefit from this momentum.

The Central and State Governments of India are actively engaged in finding the appropriate policy
framework for the infrastructure sector which gives the private sector adequate confidence and
incentives to make large-scale investments, but which also preserves adequate checks and balances
through transparency, competition and regulation. Accordingly, there has been a shift towards
financing of infrastructure development to the private sector, primarily through the use of Public
Private Partnerships (“PPPs”), which are based on a partnership between the public and the private
sectors for the purpose of delivering a project or service traditionally provided by the public sector.
PPPs are designed to mobilise financial resources and realise benefits from private sector efficiencies to
meet the growing demand for infrastructure services.

Infrastructure projects (underway and proposed) indicates prospective investments of Rs 4,356 billion,
growing at a CAGR of 9 per cent over the next 3 years (2005-06 to 2007-08) driven by investments in
roads, water supply and sanitation and irrigation, which are supported by regulation/government
policies, increasing private sector participation and availability of funds (budgetary supports and
multilateral funds). (source: CRIS INFAC)

Expected Infrastructure Investment

Construction Infrastructure Investments

(Rs in billion)
component of
investment
(per cent) 2002-03 2003-04 2004-05 E 2005-06 F

Airports 42 20 15 15 24
Irrigation 80 151 139 208 222
Ports 50 7 5 5 1
Power - 232 312 340 350
Thermal 20 136 204 224 226
Hydel 70 90 96 98 98
Nuclear 30 6 13 18 26
Railways 42 121 135 153 146
Roads 100 206 190 199 358
Telecom 10 133 126 89 116

57
 Construction Infrastructure Investments
(Rs in billion)
component of
investment
(per cent) 2002-03 2003-04 2004-05 E 2005-06 F

Tourism 55 2 4 5 7
Urban
infrastructure 60 162 174 184 220
Total 1,034 1,101 1,197 1,444
Source: CRIS INFAC

Construction companies in India are typically civil engineering companies which undertake
construction work on a contract basis, in sectors like roads, ports, marine structures, power projects etc.
All construction projects have eligibility criteria. Companies who have the requisite financial strength
and experience typically meet these eligibility criteria and undertake projects independently. Smaller
companies generally have to enter into joint ventures to meet the eligibility criteria and to spread the
financial and business risk. Foreign engineering and construction companies typically participate in the
infrastructure development in India through joint development ventures with Indian construction
companies.

The following chart depicts the percentage of construction component within each infrastructure
segment:

Construction: Sector-wise construction component

Source: NICMAR and CRIS INFAC

Based on the proportion of civil construction-related expenses in each sector, the Infrastructure projects
(underway and proposed) have the potential to translate into orders worth Rs 2,229 billion for the
construction industry.(source: CRIS INFAC)

58
(source: CRIS INFAC)

We undertake projects pre-dominantly in the following sectors:

1. Marine
2. Roads
3. Railways
4. Water Supply
5. Industrial
6. Oil & Gas
7. Power

The trends of these sectors are as under:

THE PORTS SECTOR IN INDIA

Unless otherwise indicated, all financial and statistical data in the following discussion is derived from
Indian Ports Association’s website. The data may have been re-classified by us for the purpose of
presentation.

India has an extensive coastline of 6,000 kilometres, which is serviced by 13 major ports and 184
intermediate and minor ports. Ports are gateways to India’s International trade by sea and handle almost
90% of India’s foreign trade in terms of volume and 75% in terms of value are routed through the ports
system. Indian ports handled a total traffic of 518 million tonnes in financial year 2005 with the ports in
the western states of Gujarat and Maharashtra having a 42% market share. The volumes handled over
the last five years are as follows:

Financial 2001 2002 2003 2004 2005 2006

Year (in
million
tonnes)
Major Ports 282.6 288.0 313.6 344.8 383.7 423.4
Traffic
Minor Ports 87.4 95.5 108.1 118.9 134.7 145.5
Traffic
Total Indian 370.0 383.5 421.6 463.7 518.3 568.9
Port Traffic
Capacity of 362.8 362.8 362.8 362.8 389.5 397.5
Major Ports

59
Financial 2001 2002 2003 2004 2005 2006
Year (in
million
tonnes)
Capacity 78% 79% 86% 95% 106%
Utilisation of
Major Ports
(%)
(Source: Indian Ports Association)

Regulatory Framework

In India, ports are classified as major ports and intermediate and minor (“I&M”) ports. The 13 major
ports are governed by the GOI through the Ministry of Surface Transport (“MOST”). Each port is
governed by a port trust (responsible for administration, control and management of port operations)
reporting to MOST. The tariffs of individual ports were regulated by MOST and by the Tariff
Authority for Major Ports (“TAMP”).

The I&M ports fall outside the ambit of the GOI, but are still subject to the provisions of The Indian
Port Act, 1908. The development and management of intermediate and minor ports is the responsibility
of state governments. State governments are free to initiate policy matters (like privatization, pricing of
services, etc.) in respect of the minor ports in their respective states. States administer their ports either
through state maritime boards, as in Gujarat, Maharashtra and Tamil Nadu, or through government
departments. Maritime boards have structures and powers similar to those of the Board of Trustees of a
major port.

Privatization of Ports

The GOI has decided to corporatise the major ports as well as privatize them in a phased manner.
Almost all the major ports in India are in the public sector and currently lack commercial orientation
because, in part, to a number of restrictions imposed by the central government. This has led to
corporatisation of ports as it ensures that the ports achieve a desirable level of autonomy and
accountability. The GOI has privatized some of the berths in major ports specifically to handle
containers. Some of them are as follows:

Port Company Container Terminal Operator

Major Ports
JNPT
Berth 1 NSICT P&O Ports Australia
Berth 3 GTL AP Moller Terminals, Denmark

Chennai Port Trust CCTL P&O Ports Australia

Tuticorin PortTrust PSCTL PSA International, Singapore
Vizag Port Trust VGTPL Dubai Ports International
Kochi PortTrust IGTPL Dubai Ports International

Minor Ports (both in Gujarat)

Pipavav Port GPPL AP Moller Terminals, Denmark
Mundra Port GAPL P&O Ports Australia

(Source: Indian Ports Association)

Port Utilisation
The traffic traffic vis-a-vis capacity at major ports during 1999-2000 to 2004-05 is given below:

60
(source: National Maritime Development Program)

National Maritime Development Program –capacity expansion of ports

Million tones Estimated

Port FY 2004 FY 2014 percent increase
Kolkata 10 22 120%
Haldia 34 74 116%
Paradip 39 92 137%
Vizag 49 130 164%
Ennore 12 62 415%
Chennai 42 62 47%
Tuticorin 16 46 190%
Cochin 16 59 277%
Mormugao 24 57 143%
New M'lore 30 56 84%
JNPT 33 95 187%
Kandla 45 106 135%
(Source: National Maritime Development Program)

With the above projections in view, all the major ports identified those projects, which would meet
the challenges of the growing international traffic demand of the country along with developing
the port facilities at par with world standards for giving a concrete shape to the vision and strategy
laid down in the Maritime policy document over a period of 10 year’s time horizon relating to
projects related to port development like construction of jetties berths etc, procurement,
replacement or upgradation of port equipment, deepening of channels for improvements in drafts
projects related to port connectivity and other related schemes. The total investment required is
about Rs. 603,385 million. The program is proposed to be implemented through public/private
partnership. (Source: National Maritime Development Program)

Future potential

A Feasibility study for a World class Container Terminal at Ennore Port has been completed.
Further action in this regard is being taken up by the port authorities. Ennore Port is also set to
enter in chemical handling operation through private sector participation.

Government has approved the proposal for award of contract for Development of International
Container Transhipment Terminal at Cochin on BOT basis to Dubai Port International and
accordingly the license agreement between Cochin Port Trust and India Gateway Terminal
Private Limited, 100% subsidiary of the Dubai Port International was signed in FY2005.

In the process of reviving the Sethu Samundram Ship Navigation Channel Project, techno-
economic viability and environment impact assessment studies on the project completed.
Based on the study, the Government has decided to implement the project, through a SPV by
the name “Sethusamundram Corporation Limited”. The project envisages cutting of a ship
canal to connect Gulf of Mannar & Palk bay, so that most of the ships, depending on draft
required, moving between east and west coast of the country could have a continuous
navigable sea route around the peninsula, which will save up to 400 nautical miles and up to
36 hours of sailing time for ships between east & west coast.

61

The Jawaharlal Nehru Port has signed a license agreement with Gateway Terminals India
Private Limited, a joint venture company formed by Maersk A/S- CONCOR Consortium for
operation of the Third Container Terminal on Build Operate Transfer basis.

The Centre has approved the JNPT plan to extend its existing CFS facilities over a 300-
hectare land to facilitate cargo movement after the commencement of the port’s third terminal
in the next year.

JNPT is contemplating development of fourth container terminal in two phases of 1.5 million
TEU capacity each. The first phase is estimated to cost Rs. 2,567 crores and will be
operational in FY 2010. The second phase is estimated to cost Rs. 2,134 crores and will be
operational in FY 2014. JNPT is conducting a feasibility study for the same. (Source: JNPT
Website).

Mumbai port is developing an offshore container terminal on BOT basis in two phases — the
first phase envisages construction of two berths with a capacity to handle 0.8 million TEU and
the second phase involves construction of a third berth to take up the total capacity to 1.2
million TEU.
(Source: National Maritime Development Program)

THE ROAD SECTOR IN INDIA

(source NHAI website accessed on December 9, 2006)

The Indian road network of 33.4 lakh kilometer is second largest in the world and consists of :

Length (In Km)

200
Expressways
National Highways 66,590
State Highways 1,28,000
Major District Roads 4,70,000
Rural and Other Roads 26,50,000
Total Length 33.4 Lakhs Kms(Approx)

Modal Shift
• About 65% of freight and 80% passenger traffic is carried by the roads.
• National Highways constitute only about 2% of the road network but carry bout 40% of the
total road traffic .
• Number of vehicles has been growing at an average pace of 10.16% per annum over the last
five years.

The status of National Highways as on October 31, 2006 is as follows:

Single Lane/Intermediate Lane 35%

Double Lane 55%
Four or more Lanes 10%

Key Growth Drivers for the Road Sector in India

• Scarcity of quality roads:

• Strong Economic Growth: The Indian economy has been growing at the rate of 8.2%, 6.4% and
6.2% in FY 2004, FY 2005 and FY 2006 respectively. As the economy grows, economic activities,
such as industrial production and personal consumption will increase which will in turn drive road
cargo and passenger traffic growth.
• Growth in vehicles:
• Growth in tourism:

The National Highways Authority of India (NHAI)

62
The National Highways Authority of India was constituted by an act of Parliament, the National
Highways Authority of India Act, 1988. It is responsible for the development, maintenance and
management of National Highways entrusted to it and for matters connected or incidental thereto. The
National Highways Authority of India was operationalised in Feb, 1995.

The NHAI mandate covers the following:

1. The primary mandate of NHDP is through host of funding options including from external
multilateral agencies like World Bank, Asian Development Bank, JBIC etc. Work mainly
comprises of strengthening and four laning of high-density corridors around 13,146 Kms.
The components are:
• Golden Quadrilateral (GQ)- 5,846 Kms connecting Delhi-Kolkata-Chennai-Mumbai
• North-South-East-West Corridor (NSEW)- 7,300 Kms connecting Kashmir to
Kanyakumari and Silchar to Porbandhar
2. Providing road connectivity to major ports.
3. Involving the private sector in financing the construction, maintenance and operation of National
Highways and wayside amenities
4. Improvement, maintenance and augmentation of the existing National Highways network.
5. Implementation of road safety measures and environmental management.
6. Introducing Information Technology in construction, maintenance and all operation of NHAI.

In addition to implementation of NHDP, the NHAI is also responsible for implementing other projects
on National Highways (mainly road connectivity to major ports in India) at an estimated cost of Rs.
4,000 crore (at 1999 prices) (USD 0.913 billion).

NHAI is now responsible for implementing on National Highways of length around 24,000 Km.

NHAI proposes to finance its projects by a host of financing mechanisms. Some of them are as
follows:-

Through budgetary allocations from the Government of India.

Cess
In a historic decision , the Government of India introduced a Cess on both Petrol and Diesel. This
amount at that time (at 1999 prices) came to a total of approximately Rs. 2,000 crores per annum.
Further, Parliament decreed that the fund so collected were to be put aside in a Central Road Fund
(CRF) for exclusive utilization for the development of a modern road network. The developmental
work that it could be tapped to fund, an the agencies to whom it was available were clearly defined as :

1. Construction and maintenance of State Highways by State Governments.

2. Development of Rural Roads by State Governments
3. Construction of Rail over- bridges by Indian Railways
4. Construction and maintenance of National Highways by NHDP and Ministry of Road Transport &
Highways

Today, the Cess contributes between Rs 5 to 6 Thousands crores per annum towards NHDP.

Loan assistance from international funding agencies

Loan assistance is available from multilateral development agencies like Asian Development Bank and
World Bank or Other overseas lending agencies like Japanese Bank of International Co - Operation.

Market borrowing
NHAI proposes to tap the market by securities cess receipts

Private sector participation

Major policy initiatives have been taken by the Government to attract foreign as well as domestic
private investments. To promote involvement of the private sector in construction and maintenance of
National Highways, Some Projects are offered on Build Operate and Transfer (BOT) basis to private
agencies. After the concession period ,which can range up to 30 years, this road is to be transferred
back to NHAI by the Concessionaries.

63
NHAI funds are also leveraged by the setting up of Special Purpose Vehicles (SPVs).The SPVs will be
borrowing funds and repaying these through toll revenues in the future. This model will also be tried in
some other projects. Some more models may emerge in the near future for better leveraging of funds
available with NHAI such as Annuity, which is a variant of BOT model

Fund Requirement

The financial arrangement for the development of GQ and the corridors has been made as:

Rs. in Crore
Cess 20,000
World Bank/Asian Development Bank Loan Assistance 20,000
Market Borrowings 12,000
Private Sector 6,000
Total Rs. 58,000 Crore
$(12,608) Million

National Highways Development Project (NHDP)

NHAI is mandated to implement National Highways Development Project (NHDP) which is

• India 's Largest ever highways project

• World class roads with uninterrupted traffic flow

As National Highways comprise about 2% of the total road length in the country and yet carryover
40% of total traffic, the first and the foremost task mandated to the NHAI is the implementation of
NHDP- comprising of the Golden Quadrilateral and North-South & East-West Corridors. In addition to
the projects under NHDP, the NHAI is also currently responsible for about 1,000 km of Highways
connecting major Ports & also on National Highways 8A, 24, 6, 45 & 27. Highways length with NHAI
currently is around 14,162 km.

NHDP (Phase I & II) was launched in 1999 covering a length of nearly 14,000 km at an estimated cost
of Rs. 54,000 crore (at 1999 prices) (USD 12.317 billion) and NHDP (Phase III) was launched in 2005
for upgradation and 4 laning of 10,000 km of selected high-density corridors of National Highways at
an estimated cost of Rs. 55,000 crore (at 2005 prices) (USD 12.544 billion).

NHDP's prime focus is on developing International standard roads with facilities for uninterrupted flow
of traffic with:

• Enhanced safety features

• Better Riding Surface.
• Better Road Geometry
• Better Traffic Management and Noticeable Signage.
• Divided carriageways and Service roads
• Grade separators
• Over bridges and Underpasses
• Bypasses
• Wayside amenities

The main components of NHDP include:

(a) Golden Quadrilateral (GQ) b) North-South & East-West Corridors
Length :- 5846 km Length :-7 ,300 km
Connecting Delhi, Kolkata, Chennai Kashmir to Kanyakumari -4000 km
and Mumbai (with a spur to Cochin) and Silchar to
Porbandar- 3300 km.

64
Scheduled for completion by 2007 (earlier it was 2009).

Total length of NS & EW Corridors has been taken around 7,300 km. Alignment finalization is in
progress
Status of NHDP & Other NHAI Projects

NHDP Port Others Total by

Connectivity NHAI
Total Length GQ NS - EW NHDP NHDP NHDP
(Km.) Ph. I & Phase Phase V Total
II IIIA
Already 4- 5,846 7,300+ 6139 6500 25,785 380 945^ 27,110
Laned
(Km.)
Under 5,453** 840 30 - 6,323 122 287 6,732
Implementation
(Km.)
Contracts 393 5,055 1,090 148 6,686 237 638 7,561
Under
Implementation
(No.)
Balance length 35 139+ 17 2 193 8 16 217
for award
(Km.)
- 1,306^ 5,019^ 6,352 12,677 21 20 12,718

** Out of 5,453 km, 5106 km includes BC layer and 347 km upto DBM. ^ The difference in length is
because of change in length after award of works.
+Out of 7300 km, 981 km length is in Phase-I and remaining length is in Phase-II. Against 981
km, 840 km length was 4 laned. Actual length at present excluding 442 km common length with GQ is
7,274 km. However, this may again change after preparation of DPRs. The original approved length of
Corridors is 7,300 km.

65
Future Outlook

Roads to contribute nearly 34 per cent share in infrastructure investments

Investments in roads sector are likely to increase from Rs 550 billion in the past 3 years (FY2002-03 to
FY2004- 05) to Rs 757 billion in the next 3 years. Activity in the roads sector is centred around NHDP
and to some extent PMGSY. The development of state roads has been concentrated in only certain
states. NHDP and PMGSY are expected to constitute more than 60 per cent of total planned activities
in the sector over the next 3 years.

Restructuring and expansion of existing programmes

The government plans a massive facelift of the entire road network in the country over the next 10
years, and NHDP is the flagship project in the sector. To expedite its implementation, the project has
been restructured and now involves seven phases (entailing the building, upgrade and maintenance of
51,411 km of roads), at a cost of Rs 1,871 billion.

The Centre has till date approved only Phase I (GQ), Phase II (NSEW) and Phase IIIA,
totalling 18,279 km. NHAI, the implementing authority for the projects, has done preliminary work
on the remaining phases and the Cabinet has given in-principle approval for Phases IIIB to VII.

Since the United Progressive Alliance (UPA) government took over at the Centre, the scope and

66
estimates of the PMGSY programme have also been revised, after the government unveiled the Bharat
Nirman programme, where the development of rural roads is one of the core activities.

The government has approved investments to the tune of Rs 1,466 billion in NHDP (up to
Phase IIIA) and PMGSY. Of this, Rs 300 billion has already been spent on NHDP and Rs 183 billion
on PMGSY. Over the next 5 years, Rs 511 billion will be spent on NHDP Phase I, Phase II and Phase
IIIA.

Increasing thrust on private sector participation

The government is also inviting greater private sector participation, which is evident from the fact that
all the phases from Phase IIIA onwards have been planned predominantly on build-operate-
transfer (BOT) basis. In contrast, most of the contracts in the North South East West corridor
(NSEW) and all projects in PMGSY have been planned on cash contract basis. CRIS INFAC feels that
it is also logical, as private players will participate enthusiastically only when a particular stretch gives
them adequate returns.

GQ substantially completed; NSEW and Phase IIIA take off well in 2005, but delays galore

After a lull in 2003 and most of 2004, the road sector activity again gathered momentum towards the
end of last year. Within NHDP, with the Golden Quadrilateral (GQ) project nearing completion, the
implementation focus has shifted to NSEW and Phase IIIA. These two programmes are currently being
implemented simultaneously, and the crux of NHAI's awarding activity will be centred on them, at
least in the next 2 years.

Expected Levels of Roads Activity under NHDP

Phase IIIB to Phase VII: Still on the drawing board Most of these projects (cumulatively over
30,000 km) are still in the conceptualisation stage, though in some cases certain stretches have
been identified. NHAI has planned to complete all of them on BOT-toll or BOT- annuity basis.

67
The Railway Sector in India

The Indian Railways, with a capital base of about Rs. 55,000 crore, is the principal mode of
transportation for carrying bulk freight and long distance passenger traffic. Railways are cost effective
and also environment friendly. Yet, capacity and efficiency constraints in the freight segment have,
over the years, led to a significant shift from railways to road transport. A renewed focus of the
Railway Ministry on efficiency, customer care, and commercial principles is aimed at reversing this
trend. The recent turn around in railway operations suggests that Indian Railways are poised for rapid
growth in capacity expansion.

Investments

The Railways has a large number of ongoing projects, which require huge funds for completion. The
Tenth Five Year Plan provides on capacity augmentation and improvement of the quality of services.
The Golden Quadrangle and its diagonals, which comprise 25 per cent of the total broad gauge route
km. carry more than 65 per cent of the total freight traffic and more than 55 per cent of the total
passenger throughput, would be given priority. The capacity augmentation of the system and
improvement in quality of services would be carried out through technological upgradation and
modernisation. While augmenting capacity in various sections, route-wise study based on origin and
destination survey would be carried out.

The Tenth Plan identified certain thrust areas in the railways sector. These are: capacity expansion
through modernisation and technological upgradation, improvement in the quality of service,
rationalisation of tariff in order to improve the share of rail freight in the total traffic and to improve the
safety and reliability of rail services. The Tenth Plan had targeted a relative low growth rate of 5 per
cent in freight. The average annual growth rate of freight (originating tonnage) in the first three years of
the Tenth Plan is likely to be 6.8 per cent. This is commendable and it is necessary to continue to
maintain this growth rate in future
and ideally also step it up in view of the need for increasing the share of railways in freight traffic and
ensuring a cost-efficient mode of transport, which will benefit the economy in the long run. This will
require augmenting capacity, particularly on the main routes which are currently over-stretched. The
rate of growth of passenger traffic (in terms of number of passengers) is only around 2.02 per cent,
against 4.93 per cent in case of passenger kms, indicating an increase in the average lead of pssenger
traffic, is a welcome development on the whole. It is expected that the Railways will be able to achieve
its targets for passenger traffic of Tenth Plan.

National Rail Vikas Yojana

The Government announced the National Rail Vikas Yojana (NRVY) in August, 2002 in order to
remove capacity bottlenecks in the critical sections of the Indian Railway Network. It comprises of
three components:
° Strengthening of the Golden Quadrilateral (GQ) and its diagonals.
° Strengthening of rail connectivity to ports and development of multi – modal corridors to the
hinterland.
° Construction of four mega bridges:

Bogibeel Rail-cum-Road bridge across river Brahmaputra, Munger Rail cum Road bridge
across river Ganga, Patna Ganga bridge and a bridge over river Kosi.

The NRVY projects, except for the mega bridges, are targeted to be completed in five years (2002-07).
The Rail Vikas Nigam Limited (RVNL) was set up as a SPV to execute the first two components of
NRVY. The RVNL is to undertake project development and mobilisation of resources along with
execution of projects on a commercial format, using largely non-budgetary funds. The Ministry of
Railways has assigned 53 capacity enhancement projects to RVNL. Of these, 32 projects lie on the GQ
and 21 projects relate to connecting ports and strengthening hinterland connectivity. The RVNL
projects involve doubling of 1911 km, gauge conversion of 1640 km, new lines of 522 km, railway
electrification of 1916 km. and strengthening of about 10,000 km. of GQ and its diagonals for running
of freight trains t 100 km. per hour (kmph). The total route kilometres. under various types of
developmental works is about 16,019 kms.

68
The Union Government has envisaged a budgetary support of Rs.3,000 crore for RVNL, including
Rs.1,500 crore as external aid from the Asian Development Bank (ADB), which shall be available to
RVNL as Government of India.s equity. The rest of the funding requirements will have to be arranged
by RVNL by devising various financing models.

The initiative of implementing financially viable projects through RVNL needs to be reinforced. Three
such SPVs have already been formed and more are being developed specially in the port connectivity
projects. RVNL also intends to execute identified projects through BOT and market borrowings.
Project-specific SPVs may raise resources from the market or from external resources against identified
incremental revenues from the project. Some of the SPVs could be in the form of joint ventures with
stake holders. Others could be based on BOT/ Build-Operate-Lease-Transfer (BOLT) mode.

Public-Private Partnership in Running of Trains

Indian Railways have already set up Indian Railways Catering and Tourism Corporation for taking all
steps to boost up rail based tourism, including running of tourist trains. In fact village on wheels and
hill trains are being run. In addition, railways are tying up with different state governments for running
tourist trains on the pattern of palace on wheels and Deccan Odyssey Railway may explore the
possibility of Public Private Partnerships in running tourist trains. The operational part relating to
traffic management and use of railway tracks may continue to vest in the railways.

Railways have taken steps recently for private participation in goods traffic, such as allowing
competition in movement of container traffic and wagon investment schemes. However, Railways may
explore the possibility of public-private partnership in running goods trains between specified
destinations as suggested for tourist trains. This would help in adding modern rolling stock that would
add to the traffic and revenues of the railways.

Rail Budget 2006-07

The rail budget has planned an outlay of Rs. 23,475 crore for the year 2006-07. The thrust of the
Annual Plan is on early completion of throughput enhancement works, safety, development and
expansion of the network. The outlay on safety related plan heads, is Rs.2,922 crore for Track
Renewals, Rs.590 crore for Bridges and Rs.1,518 crore for Signalling &Telecommunications, Rs.436
crore for contstruction of ROBs/RUBs and Rs.275 crore for manning of unmanned level crossings. For
national projects need based funds to be released by Ministry of Finance of Rs. 2,092 crore. As per the
rail budget outlined the investment strategy as giving the highest priority to route-wise throughput
enhancement works on high-density network. In addition, all pending throughput enhancement works
to be completed in the next three years.

Increased share in freight traffic:

Railways have taken a number of steps during Tenth Plan period to improve railways’ share in freight
traffic. These include rationalization of freight tariff structure, user benefit measures such as trainload
benefit for all block rakes and commodities, flexible rating policy for specific pairs of stations,
incentive to premier customers generating high freight earnings for traffic originating from sidings,
computerisation of freight movements, provision of in-house facilities etc. Other measures taken by the
railways include provision of linkages to ports, introduction of more high speed wagons and
refrigerated parcel vans. The Railway Budget for 2006-07 has also announced a number of initiatives
aimed at increasing the freight traffic.

The Delhi-Mumbai (Western) and Delhi-Howrah (Eastern) dedicated freight corridor projects:

The rail budget announced a plan for the Dedicated Multimodal High Axle Load Freight Corridor with
computerised control on Western and Eastern routes to be constructed at an estimated cost of Rs.
22,000 crores. The Cabinet has approved the proposal, with railways to go in for EPC & PPP and an
SPV has been formed to construct the freight corridors. The project would take at least five years for
implementation (after the new organizational structure is established, project report finalized, approval
obtained and funding firmed up) and assuming that the current estimates are correct, the average annual
requirement would work out to more than Rupees 4500 crore. This requirement would be over and

69
above the normal requirements of the Railways for renewal and replacement, acquisition of rolling
stock, multiplexing, modernization, projects for new lines and conversion into broad gauge etc.

The Task Force noted that the development of a dedicated freight corridor is highly capital intensive.
The provision of such a corridor and its operation must be on commercial principles if quality services
are to be provided on a sustainable basis. This would require setting up of higher productivity
standards, entailing the adoption of norms, benchmarks, policies and practices, which may be
significantly different from what
are being followed by the Indian Railways.

In an interim draft report by RITES, an Indian Railways undertaking, the construction cost of the east
and west corridors has gone up a whopping Rs 13,000 crore to Rs 35,000 crore, from the earlier
estimate of Rs 22,000 crore. According to the draft report, the eastern corridor would cover 1,280 km,
of which 280 km would be on a new alignment. Similarly, the western corridor will cover 1,483 km, of
which 276 km will be diverted. The report awaits ministry comments.

THE WATER SUPPLY SECTOR IN INDIA: (water supply, sanitation and irrigation):

After roads, urban infrastructure and irrigation sectors are expected to be the biggest
contributor to the total infrastructure investments expected to materialise over the next 3 years. (CRIS
INFAC)

Water needs to be managed as an economic asset rather than a free commodity. India, which has 16per
cent of the world’s population, has only 2.45 per cent of the world’s land resources and 4 per cent of
the world’s fresh water resources. Monsoon rain is the main source of fresh water, with 76 per cent of
the rainfall occurring between June and September under the influence of the southwest monsoon. The
average annual precipitation in volumetric terms is 4,000 billion cubic metres (BCM). The average
annual flow out of this is 1,869 BCM, the rest being lost in infiltration and evaporation. Due to
topographical and other constraints, only 690 BCM can be utilised. (Source: 10th Five Year Plan)

Rainfall in India, as in all tropical countries, is confined mainly to the southwest monsoon months of
June to September. The all India annual average rainfall is 1,170 mm. Irrigation constitutes the main
use of water and is thus the focal issue in water resources development. As of now, irrigation use is 84
per cent of the total water use. However, due to growing population, the per capita availability of water
is steadily going down, declining from 5,000 cubic metres a year at the time of Independence to abut
2,000 cubic metres as of now. This, coupled with urbanisation and industrialisation, has raised
concerns about the deteriorating quality of surface and ground water. (Source: 10th Five Year Plan)

According to the 54th round of National Sample Survey (NSS) an estimated 70 per cent of urban
households reported being served by tap and 21 per cent by tube well or hand pump. Sixty-six per cent
of urban households reported having their principal source of drinking water within their premises,
while 32 per cent had it within 0.2 km. Forty-one per cent had sole access to their principal source of
drinking water, which means that 59 per cent were sharing a public source. Fifteen per cent of
households did not get sufficient drinking water from their principal source, between April and June,
May being the worst month. The general financial position of the urban water supply and sewerage
sector is very poor. Only a few providers in large urban areas generate sufficient revenues to make any
contribution to investment. In medium and small towns these entities typically do not collect sufficient
revenue to cover operating expenses. There is no matching of revenues against expenditures. Collection
efficiency is very low. (Source: 10th Five Year Plan)

Investment Needs of the Water Supply Sector:

Water supply and sanitation schemes are capital intensive and, consequently, they are financed from
the budget, borrowings from financial institutions or the market, and external funding agencies. Most
State Governments have a policy relating to the financing pattern of the schemes, with shares for the
urban local bodies (ULB), State Government, and institutional finance.

The Central Public Health and Environmental Engineering Organisation (CPHEEO) has estimated that
by the end of the year 2007, the urban population of the country is likely to be around 363 million. For
achieving 100 per cent coverage by the end of the Tenth Five Year Plan and taking into account the

70
urban population already covered, the requirement of funds has been assessed. In regard to sewerage
and sanitation facilities, it is assessed that 57 per cent of the urban population is likely to be covered by
end of Ninth Plan. The estimates are based on the proposed coverage of 75 per cent of urban
population. Moreover, 35 per cent of population already covered by the end of the Eighth Plan would
need augmentation/rehabilitation and is included in calculation of fund requirements. Based on these
assumptions of requirements to be met, the CPHEEO has estimated the following requirements during
the Tenth Plan:

Water Supply – Rs 282,400 million

Sanitation – Rs 231,570 million
Solid waste management – Rs 23,226 million
Total – Rs 537,198 million
(Source: Tenth Five Year Plan)

HUDCO has been financing water supply projects for the past 30 years, especially those in small and
medium towns, against State Government guarantee. As much as 28 per cent of the cumulative loan
sanctions for urban infrastructure of HUDCO is towards water supply. During the Ninth Plan period,
HUDCO has sanctioned 101 water supply schemes for financial assistance of Rs 48,280 million.
However the main problem in financing of urban water supply and sanitation is the sustainability of the
present model which is heavily dependent on the State Governments’ willingness and capacity to
provide guarantees for institutional finance, apart from meeting the agreed state share of the project
cost. Inability of the states to provide committed shares of project costs, and the tendency to sanction
more works than financially feasible, has led to a situation of large numbers of incomplete works,
project delays, and cost over-runs. (Source: 10th Five Year Plan)

The states such as Andhra Pradesh, Gujarat, Maharashtra, Karnataka and Uttar Pradesh are the
few states to have witnessed substantial investments in irrigation sector over the last 3 years.
Over the next 5 years, around Rs 400 billion worth of irrigation projects have been envisaged by
the State of Andhra Pradesh alone, and therefore, it will be the key focus area of implementation of
irrigation projects. Central assistance, though very minimal, is largely routed through the Accelerated
Irrigation Benefit Programme, under which the funds are allocated to help the states to fund the
uncompleted irrigation projects. (source: CRIS INFAC)

WSS projects are state-driven projects, but the implementation focus remains restricted mainly to
cities. The key states to have witnessed substantial investments in the last 3 years in the implementation
of the WSS projects are Gujarat, Delhi, Maharashtra, Karnataka, Kerala, Tamil Nadu and Uttar
Pradesh. Over the next 3 years, besides the above states, Rajasthan and Madhya Pradesh are
expected to witness substantial part of the total WSS investments.

Key catalysts to investments:

• Increasing levels of urbanisation (water projects)
• Proactive states (as mentioned above)
• Political interests
• Multilateral funding (For details see the tables in the Annexure)
• Improvement in the credit ratings of a few urban local bodies, helping them to issue bonds

A number of projects have been mooted in various metros to alleviate the water supply situation. Most
projects focus on pumping in water from distant sources. Desalination is another option being looked
into. There are only seven large desalination plants in India for the conversion for city sewage into
process water.

A water augmentation mechanism is a method by which water that would normally run off into rivers
or seas, and so would not be accessible for drinking or agriculture, is harvested or stored so that it can
be used. Augmentation methods include storing water in underground tanks for use in the dry season;
collecting rainwater on the rooftops of homes, schools etc; and watershed scale rainwater harvesting
which can directly be tapped or can recharge the surrounding aquifer. Of these methods, watershed
scale rainwater harvesting has received the most attention in the literature and on the ground in India,
and is part of official water policy in at least five states. The simplest and most common method of
watershed-scale rainwater harvesting is the construction of a checkdam across a seasonal drainage.
During heavy rains the ground becomes saturated and rainwater flows quickly along the surface instead

71
of percolating into the earth, 39 flowing into drainage channels and then into streams, rivers, and
ultimately the ocean. A checkdam built across a drainage channel prevents the water from flowing
downstream, creating a small reservoir. (Source: Stanford Center for International Development
(SCID)’s Fifth Annual Conference on Indian Economic Policy Reform)

Rainwater harvesting presents a lot of opportunities for players in the construction sector. This has been
taken up as a thrust area in Chennai and Delhi and must be given priority in all towns in the country.
The Delhi Jal Board has taken up more than 80 works to harvest rain water and intends to cover about
200 buildings. The Delhi Government has approached the Ministry of Urban Development and Poverty
Alleviation to amend building bye-laws to make rain water harvesting mandatory in the Capital.
(Source: 10th Five Year Plan)

O&M contacts: a potential growth area

The basic principle of this approach is to contract out the operation and maintenance of a water supply
and network it to a private sector operator. The operator is compensated on the basis of achieving pre
agreed operational target levels and would have provision for incentives and penalties for achieving
over performance and under performance respectively. A short term contract is a comparatively low
risk option as compared to a long term BOT contracts or concession agreements.

Sectoral reforms and private participation can further boost investments in the sector

The water segment has witnessed some level of public/private participation in the projects. The
successful implementation of the desalination project in Chennai and the expected growth in this
particular segment along the Coromondel Coast are the few success stories of PPP models, which need
to be repeated on a larger and wider scale. (source:CRIS INFAC)

The Industrial Sector in India

After a slowdown in industrial investments between FY99 and FY03, investments have picked
up mildly in FY04. The decline in investments between 1998-99 and 2002-03 was largely due to the
absence of major capacity expansions in most manufacturing sectors. In the same period, the
operating rates reached high levels, due to demand growth and lack of investments. Therefore, the
sustained demand growth and the high operating rates triggered the current upturn in industrial
investments.

CMIE's quarterly capital expenditure data demonstrates an upward trend in investments as announced,
proposed as well as those under implementation. Notably, while proposed investments picked up in
January 2004, a surge in projects announced and an increase in projects under implementation began in
July 2004.

Trends in investments: Proposed, announced and under implementation

(source: CRISIL & CMIE)

72
The average annual investment is expected to increase from Rs 220 billion over the past 7 years
(1998-99 to 2004-05) to Rs 865 billion over the next 5 years (2005-06 to 2009-10), propelled by
investments in oil and gas, and metals. Other industries such as automobiles, petrochemicals, cement,
paper and fertilisers, too, are expected to record healthy investments from FY06 to FY10. (Source:
CRIS INFAC)

This huge investment is likely to result in around Rs 650 billion of construction demand from industrial
projects over the next 5 years. (Assuming civil construction to account for nearly 15 per cent of the
total capital cost of the projects.) (Source: CRIS INFAC)

Sector-wise industrial investments (Rs billion)

High current capacity utilisations and demand growth are expected to result in major capacity additions
in 2005-06 and 2006-07.

The Oil & Gas Sector in India

The strong growth of the Indian economy and infrastructure and the resulting increased demand in the
energy industry has resulted in the need to develop an efficient distribution network for oil and natural
gas transportation. The use of natural gas in the energy industry is also expected to increase
significantly. The current low per capita usage of pipes in India, the recent discovery of large oil and
gas reserves in various pasts of India, the Government’s decision to permit oil retailing by the private
sector and the proposed national pipeline grid formulated by GAIL and infrastructure development
project of other major players in the energy industry in India are expected to increase engineering
construction activity in the Indian energy industry.

In response to the recent privatization initiatives of the Government, large oil and natural companies in
India including IOC, RIL, Essar Oil, BPCL and ONGC have commenced significant oil and natural gas
exploration and transportation infrastructure projects. Certain of these companies also propose to
establish dedicated distribution networks.

There is expected to be a tremendous increase in the volumes of transportation facilities in the oil and
gas industry. Investments worth Rs 1,702 billion are expected in the oil and gas sector over the next 5
years as compared with Rs 998 billion of investments made in the last 7 years. A substantial part of the
additional investments is expected to come from oil and gas exploration and development (E&D).

The oil and gas E&D is going to witness substantial investments, mainly on account of the New
Exploration and Licensing Policy announced to increase the reserves and improve the domestic supply
of crude oil and natural gas. Accordingly, NELP I, II, III and IV have been announced, which will
generate an estimated investment of Rs 147.5 billion. (source:CRIS INFAC)

73
Investments in oil and gas (Rs billion)

However, civil construction accounts for only 4 per cent of the total capital costs of oil and gas E&D
projects, whereas its proportion is as high as 80 per cent in the case of oil and gas pipeline projects.
Therefore, the key investments from the oil and gas sector for the construction industry are
expected to come through the oil and gas pipeline projects. (source: CRIS INFAC)

The Power Sector in India

The power industry in India has been characterized by acute shortages in supply of power in
comparison with the level of its demand. In FY 2004 and 2005, demand for electricity exceeded supply
by an estimated 11% and 12% respectively in terms of total requirements, on average (Source: CEA
Executive Summary).

The deficit numbers in the table below illustrates the pressing need for increased investment at a faster
pace in India:

(source: CEA)

Although power generation capacity in India has increased substantially in recent years, it has not kept
pace with the growth in demand or the growth of the economy generally.
The concluded Ninth Plan (1996-2001) targeted a capacity addition of 40,245 MW, of which 24.4%
was to come from hydro capacity, 73.4% was to come from thermal capacity, and 2.2% was to come
from nuclear capacity.
Ministry of Power (MoP) estimates indicate that only around 19,251 MW, or 48% of the planned
capacity addition, were achieved in aggregate during the Ninth Plan.

74
The following table gives the achievement of hydro-power as against the target in each of the Eighth,
Ninth and Tenth Plans:

*Implementation of the Tenth Plan not completed. Table shows achievement of the Tenth Plan to the
end of March 2005. [Source: Planning Commission]
Historically, most of the power generated in India has been through thermal sources, with
approximately 25% coming from the hydro sector as shown in the graph below.

Installed Generation Capacities (YE 2001 - YE 2005) by Generation

Source: CEA Executive Summary March 2005

Internationally, the normal ratio of hydro to thermal power generation is 40:60 (Source: NHPC). The
Government is therefore increasing its efforts to improve hydro-power generation through its future
plans and also due to the inherent benefits of the hydro-power. These include:

° Hydro-power is cost effective as water is abundantly available, at zero cost;

° Hydro-power plants can handle variations in frequencies and in peak and off-peak
requirements without
° significant added cost, unlike other modes of generation;
° Hydro-power plants are also more desirable from a social perspective, as they provide
integrated solutions
° for power, drinking water and irrigation, without damage to the environment; and
° Hydro-power has lower operating cost than thermal power.

The Government has recognized these benefits and therefore plans to increase the use of hydro-power
in the future plans as illustrated in the table below :-

The Tenth Plan and the Eleventh Plan envisage a capacity addition as set out in the table below. The
effort is to close the deficit by the end of the Eleventh Plan to ensure “Power for all by 2012”. Of the
total capacity addition, 62% would be in thermal plants, and over 30% in hydro-power plants and the
rest would be nuclear power.

Envisaged Capacity addition in Power in MW

Source: Plan Documents, * Company estimates

75
The Government plans to develop around 50,000 MW of hydro-power projects in the next 20 years
(Source: CEA). This is expected to result in an outlay of Rs. 2,000,000 million (at the rate of Rs. 40
million per MW as per our Company’s estimate) for civil construction. MoP has identified 162 projects
in 16 states, which will provide approximately 50,000 MW. Feasibility Reports for 132 projects have
been received by MoP and of that number, 103 projects have been finalized. Feasibility Reports have
been prepared by the following:

Source: Central Electricity Authority Website (cea.nic.in)

Overseas

Project exports represent another key growth area for Indian companies. Indian project export
companies have recently been successful at executing larger and more complex projects worldwide.

Trend in Project Exports

(US $ Million) 2000-01 2001-02 2002-03 2003-04 2004-05

Civil 328 818
construction 271 603 644
Turnkey 877
project 336 642 645 472
Consultancy
services 49 57 54 31 5
Note: In 2004-05, civil construction figures are from April to December 2004 only and turnkey project
and consultancy services are from April to January 2005 only.
Source: CRIS INFAC & PEPC & EXIM Bank

Future Outlook

The top 15 nations in construction spending are as follows:

(in US$ billion)

Country 2003 2004 2005 2006 2007 2008

United 1039.3 1159.1 1210.1 1218 1244 1288.6
States
Japan 464.5 506.8 543.8 571.5 587.4 609.5
China 241.9 269.1 299.6 338.1 388.4 440
Germany 220.6 246.8 258.2 267 282.2 292.1
France 173 196.8 208.2 218.3 234 245.2

76
Italy 160 182.1 193.4 203.1 218.4 229.3
United 151.2 177.5 183.4 190 201.4 210.8
Kingdom
Spain 144 165.9 178.7 189.6 204.4 215.4
Canada 105.9 123.3 132.2 141 151.5 160.1
Netherlands 70 78.5 82.6 86.4 92.5 96.9
India 65 73.9 78.5 84.9 92.2 100
Mexico 62.6 65.5 69.1 71.4 72.8 75.1
Brazil 42.3 54.3 56.7 59.4 61.4 65.3
Australia 48.5 49.3 51.3 53.8 55.9 58.7
Russia 33.9 42.3 47 51.5 56.2 61
Total 3489.5 3913.5 4151.5 4335.6 4577.2 4817.7
(55
Countries)
Source: Global Insight Inc.
Source: CRIS INFAC

World Bank's cumulative lending - Top 20 countries (as on June 30, 2005)

($ million) IBRD loans IDA loans Total

Amount Amount Amount
India 32664.4 31702.1 64366.5
China 29522.5 9946.7 39469.2
Mexico 36246.7 0.0 36246.7
Brazil 36221.9 0.0 36221.9
Indonesia 28957.6 1905.3 30862.9
Turkey 23803.8 178.5 23982.3
Argentina 22113.2 0.0 22113.2
Republic of Korea 15647.0 110.8 15757.8
Pakistan 7011.6 8170.9 15182.5
Russian Federation 13446.1 0.0 13446.1
Colombia 12961.1 19.5 12980.6
Philippines 11518.2 294.2 11812.4
Bangladesh 46.1 11594.6 11640.7
Morocco 8988.1 50.8 9038.9
Nigeria 6248.2 2466.0 8714.2
Thailand 8063.4 125.1 8188.5
Egypt 5040.4 1984.0 7024.4
Romania 7000.0 0.0 7000.0
Peru 6354.5 0.0 6354.5
Yugoslavia, former 6090.7 0.0 6090.7
Yugoslav Republic
Source: Indian Infrastructure

Source: CRIS INFAC

CONSTRUCTION BUSINESS MODELS

Types of contract

There are different models currently being adopted for PPPs in India which vary in the distribution of
risks and responsibility between the public and the private sectors for financing, constructing,
operating, and maintaining assets. Two important types of contracts - BOT and BOOT - are explained
below, as well as certain other contracts generally used in the Indian construction industry.

Build-Operate-Transfer (“BOT”)

Under this type of PPP contract, the Government grants to a contractor a concession to finance, build,
operate and maintain a facility for a concession period. During the life of the concession, the operator

77
collects user fees and applies these to cover the costs of construction, debt-servicing and operations. At
the end of the concession period, the facility is transferred back to the public authority. BOT is the most
commonly used approach in relation to new highway projects in India, and is also used in the energy
and port sectors.

Build-Own-Operate-Transfer (“BOOT”)

BOOT contracts are similar to BOT contracts, except that in this case the contractor owns the
underlying asset, instead of only owning a concession to operate the asset. For example, in the case of
hydroelectric power projects, the contractor would own the asset during the underlying concession
period and the asset would be transferred to the Government at the end of that period pursuant to the
terms of the concession agreement.

Design-Build-Finance-Operate (“DBFO”)

The NHAI is planning to award new highway contracts under the DBFO scheme, wherein the detailed
design work is done by the concessionaire. The NHAI would restrict itself to setting out the exact
requirements in terms of quality and other structures of the road, and the design of the roads will be at
the discretion of the concessionaire. The NHAI expects the DBFO scheme will improve the design
efficiency, reduce the cost of construction and reduce time to commence operations, in addition to
giving the concessionaire greater flexibility in terms of determining the finer details of the project in
the most efficient manner.

Item Rate Contracts

These contracts are also known as unit-price contracts or schedule contracts. For item rate contracts,
contractors are required to quote rates for individual items of work on the basis of a schedule of
quantities furnished by the customer. The design and drawings are provided by the customer. The
contractor bears almost no risk in these contracts, except escalation in the rates of items quoted by the
contractor, as it is paid according to the actual amount of work on the basis of the per-unit price quoted.

Engineering Procurement Construction/Lump-Sum Turnkey Contracts

In this form of contract, contractors are required to quote a fixed sum for the execution of an entire
project including design, engineering and execution in accordance with drawings, designs and
specifications submitted by the contractor and approved by the customer. The contractor bears the risk
of incorrect estimation of the amount of work, materials or time required for the job. Escalation clauses
might exist in some cases to cover, at least partially, cost overruns.

Operations and Maintenance (“O&M”) Contracts

Typically an operations and maintenance contract is issued for operating and maintaining facilities.
This could be in sectors such as water, highways, buildings and power. The contract specifies routine
maintenance activities to be undertaken at a predetermined frequency as well as break-down
maintenance during the contract period. While the contractor is paid for the routine maintenance based
on the quoted rates which are largely a function of manpower, consumables and maintenance
equipment to be deployed at the site, any breakdown maintenance is paid for on a cost-plus basis.

Front End Engineering and Design (“FEED”) Contracts

Ordinarily, FEED work is carried out as a part of a consultancy assignment where the consultant
provides FEED data to the project owner to enable it to take a decision on making a tender for
construction. In addition to this, the FEED is also a prerequisite to enable a contractor to bid for
EPC/turnkey projects. A FEED project can be an independent consultancy project or a part of an
EPC/turnkey contract.

Price Preference

In tenders for the projects funded by multilateral agencies such as the World Bank and the Asian
Development Bank, where there is international competitive bidding, generally there is a clause of

78
price preference of 7.5% for domestic bidders. In this case, if the bid by the domestic player is 7.5%
higher than the lowest international bid then the employer has to award the project to the domestic
bidder. This would be subject to certain conditions specific to the project. In case the domestic bidder
is in joint venture with an international bidder, then the domestic bidder should have share of 51% or
more in the joint venture.

Purchase Preference

In government tenders for projects normally less than Rs. 100 crores, there is a purchase preference
clause wherein a tender submitted by a Public Sector Undertaking (PSU) will entail 10% price
preference over other bidders. In this case, if the bid by the PSU is 10% higher than the lowest bidder,
the employer reserves the right to award the project to the PSU if they can match the price of the lowest
bidder.

Approaches

In the case of large projects, players have adopted two critical approaches, in order to obtain and
execute the contract. While contractors have entered into joint ventures (JVs) in order to secure the
projects, project execution is undertaken largely through subcontracting.

Joint ventures (JVs)

JVs are usually project-specific and are contractual obligations among either domestic or
foreign contractors. Besides pre-qualifying for projects, JVs are formed to reduce the risk exposure in
large projects and combine specialist skills. JVs are usually project-specific, with revenues/profits
shared on a pre-determined basis.

For instance, in the case of road projects, all the stretches under Phase III have been planned on BOT
basis, and therefore, will need higher level of investments. This has compelled a lot of small
contractors to join hands with bigger players, and together on a joint venture basis, bid for the projects.
The bigger player benefits from the joint venture as, to some extent, his equity and project completion
risk is shared by the other smaller members of the joint venture (consortium). The bigger player is
likely to get higher margins as compared to smaller contractors as he assumes greater equity risk in the
project. The bigger sized projects will also bring in economies of scale and thereby can reduce the
construction cost to some extent.

Sub-contracting

Subcontract arrangements are widespread in the construction industry, because of the diversified nature
of the jobs in a project. Moreover, the use of sub-contract arrangements enable larger construction
companies to maintain flexibility in operations and lower their overheads, while enabling the relatively
smaller contractors to gain expertise and increase their turnover.

In sub-contracting, smaller companies undertake tasks that are not undertaken by the principal
contractor, or specialised tasks, through a sub-contract arrangement. Currently, only up to 30 per cent
of the project can be sub- contracted. Sub-contracting practices are adopted by both large and small
contractors. Large contractors, sub-contract work in India to smaller contractors, while in the
international construction market, they undertake sub-contracting activity for larger foreign players.

While sub-contracting decreases the capital investment of prime contractors, it enhances the likelihood
of timely completion and lowers overhead expenses. It also results in lower profit margins for
contractors.

79
Process of contract disbursements

80
 BUSINESS
Overview

We are a civil engineering and construction company in India and we are the flagship infrastructure
construction company of the Shapoorji Pallonji group, a well-known and reputed name in the
construction industry. We have an experience of over four decades in construction industry, which
includes a wide variety of infrastructure projects like marine works, bridges, fly-overs, roads, general
civil engineering works including industrial structures, nuclear power projects, tunneling, pipelines,
LNG storage tanks and special foundation works such as piling, diaphragm wall, pre-stressed anchors,
drilling and grouting and other ground improvement works throughout India. We have also
successfully completed and are currently engaged in execution of projects in Middle East and Africa.

Over the years we have developed an expertise in marine works and we believe that we have an
established reputation and expertise in this service line through successful execution of more than 150
structures along the Indian coastline. We have also successfully completed more than 100 bridges,
flyovers, viaducts, two LNG storage tanks, underground and elevated train corridors and have executed
2,000 lane kilo meters of road works.

We enter into contracts primarily through a competitive bidding process at the domestic and the
international level. We have worked on projects for Qatar Petroleum, Shell, Reliance Industries
Limited, Mumbai Port Trust, Konkan Railway Corporation Limited, Delhi Metro Rail Corporation
(DMRC) and are currently undertaking projects for National Highway Authority of India, Ministry of
Transport and Communication, Sultanate of Oman. Of the above clients, we have several repeat orders
from Reliance Industries Limited, Konkan Railway Corporation Limited, National Thermal Power
Corporation and DMRC.

Some of the important projects successfully completed by us in the recent past include:

• Engineering, procurement, installation and commissioning of cofferdams for pump house of

Ras Laffan common cooling sea water system for Qatar Petroleum Technical Directorate;
• Construction of jetty for docking LNG carriers and other marine works at Hazira for Shell;
• Construction of underground station including the tunnel at Barakhamba Road and elevated
structure (via duct) between Tis Hazari – Tri Nagar rail corridor for Delhi Metro Rail
Corporation Limited; and
• Sewage Marine outfalls at Bandra and Worli, Mumbai for Dywidag International GmbH (as a
nominated sub-contractor).

The projects being currently executed by us include:

• Construction of marine, civil and pipeline works for Reliance Infrastructure Limited at
Jamnagar;
• Design and construction of special bridge across River Chenab in Jammu & Kashmir for
Konkan Railway Corporation Limited (in joint venture);
• Construction of single line tunnel on Katra – Laole section of Udhampur – Srinagar –
Baramulla rail link project for Konkan Railway Corporation Limited;
• Construction of an Oil Jetty at Port Louis Harbour, Mauritius; and
• Construction of new bridge over River Sone for East Central Railways.

We focus on technology and constantly strive to develop new technologies and innovations in-house to
execute large and complex civil engineering and construction works in a cost-efficient and timely
manner. For instance, we developed the micro piling technology as early as 1970 and subsequently
patented this technology for underpinning works to strengthen existing structures. We have
successfully been using the in-house developed Sahayadri Lift Barge for over 15 years now for our
shallow as well as deep water projects. The Sahayadri Lift Barge has a hydraulic lift crane capable of
lifting 1200 tonnes. .

In the years ended March 31, 2005 and 2006, our consolidated income was Rs. 5,541.88 million and
Rs. 7,177.67 million, respectively, representing an annual growth rate of 29.52 %. In the six months

81
ended September 30, 2006, our consolidated income was Rs. 4,123.85 million. In the years ended
March 31, 2005 and 2006, we incurred a consolidated loss of Rs. (14.71) million and earned a
consolidated net profit for the year of Rs. 47.85 million respectively, while our consolidated net profit
for the six months ended September 30, 2006 was Rs. 48.98 million. Our order book, which includes
the projects awarded to us but where we have not yet commenced work and the unfinished and
uncertified portions of our commenced projects was Rs. 30,303.4 million as of September 30, 2006, out
of which, domestic projects and international projects accounted for Rs. 27,682.50 million and Rs.
2,620.90 million respectively. We have added contracts aggregating Rs. 222.0 million to our order
book during the period October 1, 2006 to December 31, 2006 which are all domestic projects.

As of September 30, 2006, our work force consisted of approximately 1,473 full time employees and
more than 2,695 temporary labour based around India, enabling us to mobilize our skilled employee
resources depending on the location and the necessary expertise for projects undertaken by us. Our
equipments and skilled employee resources, together with our civil engineering capabilities enable us
to successfully implement modern civil engineering construction methodologies. We enjoy the ISO
9001:2000 BVQI accreditation and have received several awards, certifications and appreciation letters
from clients for our operations and projects such as the appreciation letter from Shell for the
construction of jetty for docking of LNG carriers and other marine works at Hazira,

We are committed to adhering to health, safety and environment policies and practices in the execution
of our projects. We have received the Safety Award 2005 by the National Safety Council of India in
respect for the Sone Bridge, Bihar and ISO 14001:2004 and OHSAS 18001:1999 certifications by
BVQI for the construction of elevated viaduct for Delhi Metro Rail Project.

We are a part of the Shapoorji Pallonji Group, which is one of the leading conglomerates in India with
over 140 years of experience in the construction industry. Its business interests ranges from
construction, building materials and real estate to aluminum, finance, biotech, power and fuel oil
additives. The Shapoorji Pallonji Group also has a significant presence overseas having been involved
in real estate development and construction since 1970. We are the flagship company of the Shapoorji
Pallonji Group in the infrastructure construction sector.

Corporate History and Structure

We began our operations as a civil construction firm in 1959 as a partnership between the Rodio
Foundation Engineering Limited, Switzerland and Hazarat & Company, India. Consequent to the exit
of Rodio Foundation Engineers and Hazarat & Co, we were reorganized as a company with the name
‘Asia Foundations and Constructions Private Limited’ in 1976 engaged in the business of contractors
and engineers. We became a deemed public limited company as per Section 43A(1) of the Companies
Act from March 18, 1977. Shipping Credit and Investment Corporation of India (SCICI) became a
20% shareholder of our Company in 1993, which shareholding was transferred to ICICI pursuant to the
merger of SCICI with ICICI. We changed the name of our Company from Asia Foundations and
Constructions Limited to Afcons Infrastructure Limited with effect from August 14, 1996. We became
a full fledged public company on November 11, 1997. In 1998 ICICI subscribed to further shares in
our Company which made ICICI the single largest shareholder with 47.37% equity stake in our
Company. Shapoorji Pallonji Group acquired 53.96% shareholding in our Company in 2000 where
47.37% was acquired from ICICI Ltd. and 6.59% was acquired from the Hazarat family.

We have 3 subsidiaries and 1 joint venture company. We also operate through various unincorporated
joint ventures formed for specific projects.

Our Strengths

Significant experience and strong track record

With over four decades of experience as a civil engineering and construction firm, we believe we have
become one of the significant players in the Indian construction industry. We believe that we have
established a track record for executing large and complex civil engineering and construction and
infrastructure contracts in a timely manner with quality work. We have also completed several projects
ahead of schedule including the LNG terminal project at Dahej, Moolchand underpass at Delhi and
Cable stayed bridge for Goa Industrial Infrastructure Corporation. We have received ISO 9001:2000

82
certification for the quality management system that we apply to the design and construction of civil
engineering projects.

Our portfolio of completed construction projects includes over 150 marine works, 100 bridges/ fly-
overs, 2,000 lane kilometres of roads, general civil engineering works relating to industrial structures
including 2 LNG storage tanks and civil work for 2 nuclear power projects.

We believe that the breadth and depth of our experience, among other factors, which among other
things, enables us to pre-qualify for a greater number of potentially higher-margin projects.

Diversified business and versatile capabilities

We have a presence in the different sectors within the Indian construction industry and in different
geographical regions in India. We have also been operating in the Middle East for over three decades
and have expanded into other parts of Asia such as Sri Lanka and Nepal. This variety of project types
in our portfolio enables us to keep our business diversified and reduces our dependence on any one
segment or nature of project and allows us to deal with cyclical risks associated with the industry. The
diversified business interests also allows us to participate in various projects where we believe we can
add value. We believe that through our diversified and long standing experience we have been able to
develop the ability to adapt to and operate in different work conditions and find solutions to complex
construction projects. For example, while undertaking work in relation to the Calcutta metro rail
project, we were able to construct a tunnel in soft soil using a special blade sheld technique. Similarly,
we used the jet-grouting technology for making a tunnel at Liliguma for South Eastern Railways. We
have successfully executed projects in diverse work conditions, including overseas. We have entered
into renewed partnerships for new projects with various existing joint venture partners and have also
received repeat orders from clients demonstrating our ability to work efficiently with various partners.

Focus on technology

We are a technology driven company, with a focus on innovation and development of technologies for
the execution of complex civil construction and engineering projects. We believe our quick adaptability
and solution oriented approach to construction complexities coupled with our technological capabilities
enable us to execute projects in an efficient manner. Some of the technological innovations achieved by
us include micropiling for underpinning works to strengthen structures, stabilizing of hill slopes by
prestressed anchors, river training using underwater geofabric, development of Sahayadri Lift Barge,
which has a capacity of lifting 1,200 tonnes, which was developed more than 15 years back and design
and construction of jack up platforms as early as 1978. We believe that we are the first Indian company
to have indigenously constructed an underground metro station for DMRC at Barakhamba, New Delhi.
. We believe that our sustained focus on technology provides us with a key competitive strength.

In- house developed expertise in marine works

We entered into marine construction in 1963 and over the years have developed an expertise in marine
works. We have constructed more than 150 structures along the Indian coastline which includes jetties,
wharves, slipways, relieving platforms and dry docks. While most of the marine and harbour projects in
India have historically relied on the conventional end-on-method whereby construction was undertaken
from the shore or along the shoreline, we have successfully commissioned marine projects using a
variety of floating devices units and jack up platforms. The development of design and fabrication
work for such innovative floating devices and jack up platforms was done in-house. We own a fleet of
strategic construction equipments including cranes, marine flotilla including jack up platform, barges
and pontoons. We have successfully developed many of our important equipments such as the
Sahayadri Lift Barge and jack up platforms in-house that have allowed us to customize the equipment
to the specific conditions in which we operate. We believe that the increased focus on development of
marine infrastructure by both the Government and private sector will allow us to leverage our expertise
to achieve higher growth.

Long term relationship with reputed clients

We have developed long-term relationships with our clients and have received repeat orders from
several of our domestic and international clients. We believe that our client centric approach enables us

83
to develop an established and long term association with many of our clients. We have successfully
executed several projects overseas and have received repeat orders showing our ability to work in
multicultural environments and with diverse sets of clients. For example after our successful
association for the Jamnagar Phase - I project, Reliance Infrastructure Limited has placed cost plus
basis contracts with us for several structures including modification of jetty job. Other clients from
whom we have received repeat orders also include Konkan Railway Corporation Limited, National
Thermal Power Corporation, Cochin Port Trust, Nuclear Power Corporation and DMRC. .

Experienced management team and staff

We have an experienced and dedicated management team and a skilled workforce. Our employees
include over 707 engineers and 269 skilled operators and technicians. We believe that a large pool of
skilled engineering and technical workers is essential to the efficient and effective execution of our
projects. In addition, our senior management comprises of highly qualified people with extensive
experience in our business, with engineering or technical backgrounds, which we believe, enhances our
ability to successfully execute large and complex construction projects. Our key managerial personnel
on an average have more than 25 years of experience in the construction industry. Our staff force also
has diversified experience in various types of construction projects, which allows us to staff our
projects with the most appropriate people.

Parentage

We are a part of the Shapoorji Pallonji Group, which is one of the leading conglomerates in India and
has been operating for over 140 years in the construction industry. We draw on the expertise and
commercial acumen of our parent company in the construction industry for our own business
development. Owing to the long-standing history of the Shapoorji Pallonji Group, we believe it enjoys
strong brand recognition. Further, we believe that our customers, along with Indian financial
institutions, associate the Shapoorji Pallonji Group with quality, reliability and the ability to complete
projects on schedule. We believe that the financial strength of the Shapoorji Pallonji Group and its
track record and visibility, especially in overseas markets allow us to secure and execute bigger
projects.

Our Strategy

Continue to focus on the high growth opportunities in the Indian construction and infrastructure
sector.

We believe that the increasing levels of investment in infrastructure by governments and private parties
will be a major driver for growth in our domestic business in the foreseeable future. Additionally, the
GoI has taken steps to encourage additional investments in infrastructure and construction sector, such
as formulating plans to create SEZs in various areas of India and providing economic benefits to
private sector participants for projects executed on a BOT basis. We intend to take advantage of such
growing opportunities in infrastructure development by strengthening our existing expertise and
continuing to pursue growth opportunities in India. We shall continue our focus on marine projects,
speciality bridges and metro projects and strive to enhance our share in sectors such as Hydro/Tunnels
and Oil and Gas pipelines, where we have recently entered.

Focus on opportunities in the international market

Apart from pursuing opportunities in India, our objective is to expand and strengthen our overseas
operations further by focusing on the regions where we already have a presence, such as the Middle
East and Africa, by capitalizing on our local experience, established contacts with local clients and
suppliers, and familiarity with local working conditions. Middle East is experiencing a recent increase
in construction activities, which makes it an attractive market for us. In addition, we propose to pursue
opportunities in newer regions like Algeria and Sudan where large infrastructure initiatives are being
made with the aid of multilateral institutions and in Yemen which is experiencing increased
construction activities because of the recent discovery of large oil reserves. We currently propose to
focus on the medium size contracts where local competition is lesser and we have the capability to
compete with large multi national players for such projects.

84
We believe that the overseas projects executed by us allow us to earn better margins. Overseas projects
also assist us in building our services and technology portfolio through the global exposure and
international benchmarking of projects. Further, we also use overseas assignments as a retention
measure for our employees.

In pursuing our strategies, we seek to identify markets where we believe we can provide cost and
operational advantages to our clients and distinguish ourselves from other competitors. In order to
expand our operations, we also seek to identify joint venture/ consortium partners whose resources,
capabilities and strategies are complementary to ours and who are likely to enhance our business
operations in such regions. We shall continue our focus on marine projects, specialty bridges and strive
to enhance our share in sectors such as Hydro/Tunnels and Oil and Gas pipelines, where we have
recently entered.

Increased focus on EPC contracts and design & build contracts.

As of September 30, 2006, engineering, procurement, construction (EPC) and design & build contracts
constituted 37.78 % of our total order book. We intend to use our engineering capabilities to enable us
to provide value added engineering services for clients and win more EPC contracts. Owing to complex
nature of projects being envisaged, there is an increased demand for engineering capabilities. We
believe that EPC projects will enable us to realize greater added value on construction projects through
provision of comprehensive integrated solutions. .

Leverage on the strength of the Shapoorji Pallonji Group

The Shapoorji Pallonji Group is already an established player in the construction and real estate
industry catering to diverse sectors. We are the flagship company of the Shapoorji Pallonji Group in the
infrastructure construction sector. We intend to build upon and draw on its established presence and the
financial strengths. Accordingly, we also intend to bid for and participate in large BOT infrastructure
projects, including road projects in consortium with a Shapoorji Pallonji entity, which would function
as the concessionaire with the construction/ EPC job being executed by us. We will participate and
expand in those sectors where we derive the necessary strengths from the Shapoorji Pallonji Group in
terms of technical expertise, execution skills and an established presence.

Enhance profitability and capital efficiency

Infrastructure construction is a highly competitive, capital-intensive activity. We believe that the

optimal utilisation of financial, human and other resources is a key element for achieving success in
this industry, and we shall continue focusing on the strategy of concentrating on a limited number of
high-value/ high margin projects in order to maintain execution quality, reliability and timeliness.
Going forward, our strategy will be to continue focusing on our capital utilisation and structure to
optimise returns, by actively analysing and identifying projects and assigning priority to projects,
which are likely to maximise returns. We also intend to improve capital efficiency by striving for
accelerated completion of projects and better contract and relationship management with the client. We
propose to continue to mitigate our risks by including effective and equitable dispute resolution clauses
in our contracts.

Participate in road projects only in consortium with BOT/ BOOT entities

We believe that our ability to effectively manage our cash flows and resultant profitability is adversely
affected owing to high level of commodization of the road contracts directly awarded by agencies like
NHAI in the competitive bidding route and high level of delays experienced in execution of these
projects on account of delays in acquiring land. Typically under the BOT/ BOOT route, 80% of the
land is acquired prior to the award of contracts and therefore, the likelihood of delays in execution and
consequent adverse impact on cash flow is reduced. Therefore, currently, we propose to participate in
road projects only through the BOT/ BOOT route in association with Shapoorji Pallonji group and
other established entities, which would function as a concessionaire whilst we would execute the EPC
job.

Attract, train and retain qualified personnel

85
We understand that maintaining quality, minimising costs and ensuring timely completion of
engineering and construction projects depends largely on the skill and workmanship of our employees.
As competition for qualified personnel is increasing among construction companies in India,
particularly with the entry of international engineering and construction companies into the Indian
market and as we pursue greater growth opportunities, we seek to attract, train and retain qualified
personnel by increasing our focus on training our staff in advanced engineering and construction
technology and skills. We frequently conduct well-designed training programmes for our staff. A total
of 16,984 training man-hours have been spent on employee training between the period April 2005 to
November 2006. We also offer our engineering and technical personnel a wide range of work
experience and learning opportunities by providing them with an opportunity to work on a variety of
large, complex construction projects and forming cross functional teams with the objective of giving
them an opportunity to innovate. In addition, we give our employees opportunities to work on wide
variety of projects including overseas assignments.

Develop and maintain strong alliances with strategic partners.

We have strategic alliances for the execution of our projects with companies including Dywidag,
Germany, Per Aarsleff, Denmark, Kajima, Japan and Walter Mining, Australia. We intend to continue
to establish strategic alliances and share risks with companies, whose resources, skills and strategies are
complementary to and are likely to enhance our business opportunities, including the formation of joint
ventures and consortia to achieve competitive advantage. In the light of our focus on technology, we
also seek partners who can assist us in improving our technological capabilities in execution of our
projects.

Our Services

We provide integrated engineering, procurement and construction services for civil construction and
infrastructure projects. We have been involved in execution of infrastructure projects right since our
inception. Infrastructure development has seen growth in India, especially in recent years with
increasing government focus and funding for the sector. Increased investment in infrastructure has led
to a surge in the activities of the construction industry. Infrastructure projects have emerged as, and we
believe that they will continue to be, a significant business driver for us. We have developed skill sets
in providing engineering and construction services for a diverse range of infrastructure projects. Apart
from the infrastructure work undertaken by us, we continue to focus on providing mainly engineering
and construction services for civil construction projects especially industrial structures. We broadly
track our business under the following seven categories of service lines. We separately also track the
overseas component our business.

Marine Works

We entered into the field of marine construction in the year 1963 and have executed more than 150
marine structures all along the Indian coastline. The structures include all types of jetties, wharves,
slipways, breakwater, dry docks, intake and outfall structures. Most of the above structures have been
executed under very challenging environmental conditions. We have through the years acquired the
necessary expertise and skill to execute works under very high tidal variations and high sub surface
water currents. Our works span the coastline of India as shown in the map below:

86
 HAZIRA (1)
SIKKA (3)
KANDLA (4)

JAMNAGAR (1)
OKHA (2)

MULDWARKA (2)
CALCUT (4
(4)
JAFARABAD (1) A )
HALDI (2
(2)
PIPAVAV (1) A )
PARADI (3
(3)
DAHEJ (1) P )
GOPALPU (7
(7)
MUMBAI (13) RRR )
VISHAKHAPATNAM (30)
NHAVA-SHEVA (2)
DABHOL (2) NELLORE (1)
CHENNAI (3)
RATNAGIRI (4)
KALPAKKAM (2)
MORMUGA (8)
MORMUGAO (8
O ) PONDICHERRY(1)
KARWA (2)
KARWAR (2
R ) TUTICORIN(2)
MANGALOR (8)
MANGALORE (8
E ) OUR MAJOR MARINE PROJECTS IN INDIA
COCHIN (1) OUR MAJOR MARINE PROJECT SITES IN INDIA
( FIGURES IN BRACKETS INDICATE NUMBER OF MARINE STRUCTURES
.)

Note: The above is not for scale only for reference

The following table provides a brief summary of some of the notable projects that we have undertaken
and completed as of November 30, 2006 in this service line:

Name of Project Client Location Contract Completion

Value at Date
Completion
(in Rs.
millions)

Engineering, procurement, II, installation Qatar Petroleum Qatar 1,011.00 2006

and commissioning of 2 nos. cofferdams for
pump house nos. 1 & 3 of Ras Laffan
common cooling seawater system Qatar

Modernisation of Marine Oil Terminal Berth Mumbai Port Mumbai. 1,588.70 2005
J1 to J3 at Jawahar Dweep Mumbai Trust, Mumbai

Crude Unloading Jetty & Assosiciated Chennai Petroleum Nagapattinum 718.50 2003
facilities onshore cross country pipeline up Corporation. Limited Chennai
refinery at Nagapattinum

Sewage marine Outfalls at Bandra & Worli Dywidag International Mumbai. 1,347.96 2001
in Mumbai.(Afcons - Subcontractor) (Main GmbH
Contractor - Dywidag)

The following table describes some of the notable projects that we are in the process of executing as of
November 30, 2006 in this service line:

87
Name of Project Client Location Estimated Scheduled
Contract Completio
Value n Date
(in Rs.
million)
Construction of Container Yard at Pipavav Port Limited Gujarat 352.80 April 2007
Pipavav Port
Construction of Jetty Modification-Zero Reliance Industries Limited Gujarat 1,380.00 January 2008
Point to New Riser Platform, Jamnagar
Construction of New Mooring Facility in Sultanate of Oman Oman 1,135.10 January 2008
Shanna, Al Wusta Region
Construction of Oil Jetty at Port Louis Mauritius Port Authority Mauritius 730.10 January 2008
Harbour, Mauritius
Construction of Breakwater and Finolex India Maharashtra 1,250.00 August 2008
Associated Works at Pawas Bay,
Ratnagiri

Bridges/ Flyovers

We have executed more than 100 projects involving construction of bridges, fly-overs and viaducts.
Our experience includes construction of cast insitu, precast, pre-stressed concrete, cable stayed and
structural steel bridges including arch bridges for railways and roads.

The following table provides a brief summary of some of the notable projects that we have undertaken
and completed as of November 30, 2006 in this service line:

Contract Value
at Completion Completion
Name of Project Client Location
Date
(in Rs. Millions)

Construction of Bridges and Roads

for Vypeen Bride Project under Cochin Port Trust Kerala 541.8 2006
(G3IDA) Kerala

Construction of Bridge across Goa State Infrastructure

Mapusa river connecting Aldona & Development Corporation Goa 237.70 2004
Corjuem including approach roads Limited

Three grade separator at Ring Road

Public Works Department,
and Rohtak Road at Punjabi Bagh, Delhi 551.3 2003
Government of Delhi
Delhi

Road Bridge across Thane Creek

CIDCO, Mumbai Mumbai 928.5 1999
near Airoli, Navi Mumbai

The following table describes some of the notable projects that we were in the process of executing as
of November 30, 2006 in this service line:

Name of Project Client Location Estimated Scheduled

Contract Completio
Value n Date
(in Rs.
million)
Const.of grade separation at Mukarba PWD, Delhi Delhi 1,706.20 August 2008
Chowk in Delhi
Design and construction Of special KRCL Jammu Kashmir 5,173.80 December
bridge across the River Chenab in Jammu 2008
& Kashmir.
Construction of new bridge over River East Central Railway Bihar 2,269.70 February
Sone 2009

88
Roads

We have executed more than 2,000 lane kilometers of road works/expressways projects in India funded
by agencies such as World Bank, Asian Development Bank and the National Highways Authority of
India. Currently we are executing 676 lane kilometers of National Highway projects which are part of
the Golden Quadrilaterial/North South Corridor Project for National Highway Authority of India.

The following table provides a brief summary of some of the notable projects that we have undertaken
and completed as of November 30, 2006 in this service line:

Name of Project Client Location Contract Completion

Value at Date
Completion
(in Rs.
millions)
Widening to four lanes of Bhubaneswar - Public Works Department,
Cuttack - Jagatpur of NH - 5. Government of Orissa, Orissa 1,598.02 2002
Bhubaneswar.
Improvement of Panagarh Public Works Department, West Bengal 2,417.40 2000
Moregram Road in West Government of West
Bengal From KM. 00.00 to K.M. 81.00 (S8 Bengal
& S9) & from K.M.81.00 to K.M. 150 (S10
& S11) (ADB Aided)

Improvement of East Coast Road extending Public Works Department, Chennai 933.99 1999
from Chennai to Cuddalore excluding Government of Tamil
Pondicherry bypass. (Total length 159 kms) Nadu

The following table describes some of the notable projects that we were in the process of executing as
of November 30, 2006 in this service line:

Name of Project Client Location Estimated Scheduled

Contract Completio
Value n Date
(in Rs.
million)

Hyderabad-Bangalore Section Of NH-7 - NHAI Karnataka 866.10 March 2007

Six Lanning , Karnataka,NHAI
Haveri- Hubli Section Of NH-4 Km 340- NHAI Karnataka 2,037.50 May 2007
404- Four Laning Road ,Karnataka,NHAI
Rehabilitation of road from Kallerbavale Karnataka State Highway Karnataka 257.90 May 2007
Cross to Harihara Bellary for KSHIP Improvement Project
Widening & Rehabilitation of Ponamalle- NHAI Tamil Nadu 1,744.20 August 2007
Kanchipuram Road-NH4,Tamilnadu
Design Engineering, Construction of 4 Trichy Tollways Private Tamil Nadu 3,145.00 June 2008
Laning from Existing 2 Lane Ulundurpet Limited.
to Padalur

General Civil Works

The general civil engineering works carried out by us include industrial buildings such as workshop,
dry dock complexes, cooling water pump houses, two LNG Tanks, a shopping mall and a major work
of turbine buildings, tunnels, trenches, D.M. Plants and associated civil works for a nuclear power
plant. We have executed various civil works for a refinery complex which included industrial building,
intake channel, culverts, compound wall, effluent treatment and outfall.

The following table provides a brief summary of some of the notable projects that we have undertaken
and completed as of November 30, 2006 in this service line:

89
Name of Project Client Location Contract Completion
Value at Date
Completion
(in Rs.
millions)
Construction of Turbine Bldg. C.C.W Nuclear Power Tarapur, 1,948.90 2004
Tunnels External RCC Trenches, D.M. Plant Corporation of India Maharashtra
at Tarapur Atomic Power Project 3 & 4
(Package -3) Tarapur (Maharashtra)

Ishikawajima Harima
LNG Tank civil works for Dahej LNG
Heavy Industries Dahej 982.20 2003
Terminal Project
Company Limited

The following table describes some of the notable projects that we were in the process of executing as
of November 30, 2006 in this service line:

Name of Project Client Location Estimated Scheduled

Contract Completion
Value Date
(in Rs.
million)

Civil and Structural Construction of National Cement Company, Yemen 812.20 August 2007
Green Field Cement Plant for M/S Yemen
National Cement Company at Al Awad
Yemen
Construction of Marine, Civil and Reliance Infrastructure Gujarat 5,000.00 January 2008
Pipeline Works for Reliance - Jamnagar Limited

Metro

Our experience in metro projects include various projects for DMRC like the elevated viaducts at Tis
Hazari and Tri Nagar Section and at Dwarka station totalling a total length of 10.32 kilometers,
underground construction work for the Barakhamba underground station and two elevated station
buildings at Wazirpur and Rithala. We have also carried out sub-contracted work of construction of the
diaphragm wall at Chowri Bazar, Central Secretariat and Patel Chowk for the main contractors of
DMRC.

The following table provides a brief summary of some of the notable projects that we have undertaken
and completed as of November 30, 2006 in this service line:

Name of Project Client Location ContractVa Completion

lue at Date
Completion
(in Rs.
millions)
Construction of Underground Station
DMRC Delhi 1,462.60 2006
including tunnel at Barakhambha Road
Construction of Elevated Viaduct between
DMRC Delhi 789.80 2006
Connaught Palace & Dwarka
Construction of Wazirpur & Rithala Stations
DMRC Delhi 450.50 2004
Contract RC25
Construction of Elevated STR (Viaduct) on
DMRC Delhi 864.40 2003
Tis Hazari - Tri Nagar Section

The following table describes some of the notable projects that we were in the process of executing as
of November 30, 2006 in this service line.

90
Name of Project Client Location Estimated Scheduled
Contract Completio
Value n Date
(in Rs.
million)
Construction of viaduct and four stations
on Viswavidyalaya - Jahangirpuri DMRC Delhi 1,234.9 July 2008
corridor for DMRC
Part Design and Construction of Elevated DMRC Delhi 1,409.5 December
Viacuct and Structural Work Of 3 2008
Elevated Stations DMRC

Hydro/ Tunnel

We entered into the hydro power sector by securing a project for construction of civil work and
desilting arrangement for Koldam Hydroelectric Power Project for National Thermal Power
Corporation Limited, which we are currently executing. We have been involved in tunnelling projects
for over a decade.

The following table provides a brief summary of some of the notable projects that we have undertaken
and completed as of November 30, 2006 in this service line:

Name of Project Client Location Contract Completio

Value n Date
(in Rs.
millions)
Construction of Tunnel No.23 of Koraput -
South Eastern Railway Orissa 191.0 1995
Rayagada B.C. Railway Line.
Shield Tunnelling underpass below existing Kolkata, West
Metro Railway, Kolkata 8.5 1991
Eastern Railway Track Section A-1. Bengal

The following table describes some of the notable projects that we were in the process of executing as
of November 30, 2006 in this service line:

Name of Project Client Location Estimated Scheduled

Contract Completio
Value n Date
(in Rs.
million)
Construction of main civil works of
Himachal
desilting arrangement for Kol Dam NTPC 1,204.70 April 2008
Pradesh
Hydro-Electric Project
Construction of BG single line tunnel on KRCL Jammu Kashmir 3557.80 June 2009
Katra - Laole section of Udhampur -
Srinagar – Baramulla Rail Link Project

Pipelines

Recently, we began actively pursuing opportunities involving laying of land and submarine oil & gas
pipelines. Previously, we undertook laying of pipeline in respect of some of our jetty projects. We are
currently executing an EPC contract for laying of cross country pipeline for ONGC in Assam.

The following table provides a brief summary of some of the notable projects that we have undertaken
and completed as of November 30, 2006 in this service line:

Name of Project Client Location Contract Completio

Value n Date
(in Rs.
millions)
Laying of 8" dia 3.5 km long submarine National Organica Thane creek, 37.7 1989
pipeline in Thane Creek Chemical Industries Maharashtra
Limited

91
Name of Project Client Location Contract Completio
Value n Date
(in Rs.
millions)
Submarine Pipeline across Thane Creek Hindustan Petroleum Thane creek, 27.6 1988
including Cathodic Protection Corporation Limited Maharashtra
Submarine Pipeline Hindustan Petroleum Vishakapatnam, 38.0 1985
Corporation Limited Andhra Pradesh
Onshore Pipeline and Trestle Bridge Hindustan Petroleum Vishakapatnam, 60.0 1985
Corporation Limited Andhra Pradesh

The following table describes some of the notable projects that we were in the process of executing as
of November 30, 2006 in this service line.

Name of Project Client Location Estimated Scheduled

Contract Completio
Value n Date
(in Rs.
million)
Design, Engineering, Supply & ONGC Assam 391.90 June 2007
Installation Of 200 MM ND Oil Trunk
Pipe Line, Jorhat, Assam

Order Book

Our order book comprises the unfinished and uncertified portion of projects that we have undertaken
and includes the projects awarded to us but where we have not yet commenced work. In our industry,
the order book is considered an indicator of potential future performance since it represents a
significant portion of the likely future revenue stream. Our strategy is not focused solely on adding
contracts to the order book but instead is focused on capturing quality contracts with potentially high
margins. Our Order Book as of September 30, 2006, was Rs. 30,303.40 million. The orders in our order
book are subject to cancellation and modification provisions contained in the various contracts and
other relevant documentation.

The following table sets forth the value of our order book as of March 31, 2006 and 2005, and as of
September 30, 2006 based on the different service lines that we operate in:

(Rs. in millions)
As of September 30, As of March 31, 2006 As of March 31, 2005
2006

Marine Works 3,270.4 474.70 638.20

Bridges/ Flyovers 8,469.4 6,971.50 7,287.50

Roads 4,222.4 1,814.50 3,363.80

General Civil Work 4,636.10 5,374.20 157.20

Metro 2,546.20 1,234.90 395.00

Hydro/ Tunnel 4,287.50 4826.10 1583.60

Pipelines 250.50 391.90 0.00

Overseas 2,620.90 54.00 1,388.00

TOTAL 30,303.40 21,141.80 14,813.30

92
 ORDER BOOK BREAK UP BY SECTORS
30000

25000
Rs. in Millions

20000

15000

10000

5000

0
March 31, 2005 March 31, 2006 September 30, 2006
Date

Bridges/ Flyovers General Civil Work Hydro/ Tunnel

Roads Metro Overseas
Pipelines

The following table sets forth the value of our order book as of March 31, 2006 and 2005, and as of
September 30, 2006 based on the client composition:

ORDER BOOK BREAKUP BY CLIENT COMPOSITION

As of March 31s, As of March 31,
As of September 30,
Sectors 2006 (Rs. In 2005 (Rs. In
2006 (Rs. In Millions)
Millions) Millions)

Government 3,146.40 2,054.10 2,428.90

Government Bodies 13,496.30 13,386.20 10,598.30

Private Bodies 11,039.80 5,647.50 398.10

International 2,620.90 54.00 1,388.00

Total 30,303.4 21,141.80 14,813.30

93
 ORDER BOOK BREAKUP BY CLIENT COMPOSITION

35,000
30,000
Rs. in Million

25,000
20,000
15,000
10,000
5,000
0
March 31, 2005 March 31, 2006 September 30, 2006
Date

Government Bodies Government Private Bodies International

Some Details of our Order Book

The following table sets forth certain information concerning the top 12 contracts in our order book by
outstanding value as on September 30, 2006. These orders represented more than 81 % of our order
book as on September 30, 2006, based on the outstanding values as on September 30, 2006.

(Rs. in millions)
No. Name of Project Service Total Current Amount Scheduled Client
Line Contract Contract Outstanding as Completion
Value Value of Date
September 30,
2006

1. Design and construction Bridge 5,127.4 5,173.8 4,040.00 December, Konkan Railway
of special bridge across 2008 Corporation Ltd.
the River Chenab in
Jammu & Kashmir. (in
the name of the joint
venture)
2. Construction of Marine, Civil 5,000.0 5,000 4,400.00 January, Reliance
Civil And Pipeline Works 2008 Infrastructure
Works for Reliance – Limited
Jamnagar
3. Construction of BG Hydro/ 3,345.2 3,557.80 3,481.00 June, 2009 Konkan Railway
Single Line Tunnel on Tunnel Corporation Ltd.
Katra - Laole section of
Udhampur - Srinagar -
Baramulla Rail Link
Project
4. Design Road 3,145.00 3,145.00 3,145.00 June, 2008 Trichy Tollways
Enginering,Construction Pvt.Ltd.
of 4 Laning from
Existing 2 Lane
Ulundurpet to Padalur
5. Construction of new Bridge 2,117.80 2,269.70 1,232.70 February, East Central
bridge over River Sone 2009 Railway, Patna
6. Construction.of Grade Bridges/ 1,706.20 1,706.20 1,706.20 August, Public Works
Separation at Mukarba Flyover 2008 Dept., Delhi
Chowk in Delhi
7. Construction of Main Hydro/ 1,583.60 1,204.70 795.00 April, 2008 National Thermal
Civil Works of Tunnels Power
Desilting Arrangement Corporation Ltd.
for Koldam Hydro-
Electric Project. (in the
name of JV)

94
No. Name of Project Service Total Current Amount Scheduled Client
Line Contract Contract Outstanding as Completion
Value Value of Date
September 30,
2006

8. Part Design and Metro 1,409.50 1,409.50 1409.50 December, Delhi Metro Rail
Construction of Rails 2008 Corporation
Elevated Viaduct and
Structural Work Of 3
Elevated Stations
DMRC
9. Construction of Jetty Marine 1,380.0 1,380.0 1,380.0 January, Reliance
Modification-Zero Point Works 2008 Industries Ltd.
to New Riser Platform,
Jamnagar
10. Construction of Marine 1,250.00 1,250.00 1,250.00 August, Finolex Industries
Breakwater and Work 2008 Ltd.
Associated Works at
Pawas Bay, Ratnagiri
11. Construction of new Marine 1,135.10 1,135.10 1.135.10 January, Sultanate of
mooring facility in Works 2008 Oman
Shannah, Al Wusta
Region
12. Construction of Oil Marine 822.80 730.1 718.10 January, Mauritius Ports
Jetty At Louis Harbour, Work 2008 Authority
Mauritius

Project Lifecycle

A typical project cycle can be accounted for in two distinct phases. The first phase relates to
identification of the opportunity and leading to receipt of a contract through a series of activities. Once
the contract is received, the second phase of project management and execution commences as depicted
below. During both these phases, the finance activity interfaces at various stages with corresponding
inputs of guarantees, cash flow and fund management.

Project Cycle
Project Management Business Development Finance

Project Identification

Pre-Qualification/
Bid - Submission

Tender Preparation

Submission of Bid EMD

Not
Result Return of EMD
Awarded

Letter of Intent Work Awarded

Performance Guarantee
Signing of Agreement

Return of EMD
Execution Plan

Execution Mobilisation Advance/

Guarantee / Funds

Completion Return of Funds

Defect Liability Return of MABG

Project Completion Obtaining Experience
Certificate
Receipt of Retention
Return of Funds
Money

Return of PG

95
 The various stages involved in the two phases namely: Phase I (business opportunity leading upto the
order) and PhaseII (project management and execution) are further detailed below.

Phase I:
• Awarding the contract
o Expression of interest - called for by the project owner
o Request for Qualification (RFQ) or Pre-qualification
o Invitation to tender /request for proposal/ (RFP)
o Obtain Document- purchase of tender document
o Site Visit and Pre-Bid Queries
o Post-qualification / Technical Documentation and Financial Bid
o Submission of the tender along with Earnest Money Deposit (“EMD”).
o Award of the contract to the lowest bidder and issue of Letter of Intent
o Signing of the contract along with submission of performance securities and refund
of EMD

Phase II:
• Execution of the project
o Prepare the Project Cost and Analysis) for execution, detailed execution plan,
detailed resource plan and expenditure plan
o Kick-off meetings
o Mobilization of resources
o Purchase of materials required in the project
o Execution of the project as per execution plan
o Raising monthly (as per tender condition) Running Account Bills

• Project closure
o Implement all project completion activities to the satisfaction of the client.
o Receipt of final bill
o Taking substantial completion certificate
o Taking handing over certificate
o Implementing Defect Liability/ O&M period, if there is any
o Receive the final retention money after Defect Liability Period

• Defect Liability Period

Normally all projects stipulate a defect liability period of 12 months from the date of handing over.
Contractor is responsible to make good any defects that may arise as a consequence of inadequate
quality of supplies and workmanship during this period. The retention money / bank guarantee of
equivalent amount which is held by the client (approximately 5-10%) is returned to the contractor on
successful completion of the defect liability period.

Business Development and tendering

We enter into contracts primarily through a competitive bidding process. Government and other clients
typically advertise potential projects in leading national newspapers or on their websites. Our tendering
department regularly scans newspapers and websites to identify projects that could be of interest to us.
We have a centralized Business Development Department that is responsible for applying for all pre-
qualifications and tenders. We endeavour to qualify on our own for projects in which we propose to
bid. In the event that we do not qualify for a project in which we are interested due to eligibility
requirements relating to the size of the project or other reasons, we may seek to form strategic alliances
or project-specific joint ventures with other relevant experienced and qualified contractors, using the
combined credentials of such companies to strengthen our chances of pre-qualifying and winning the
bid for the project. Our Business Development department determines the bidding strategy depending
upon the type of contract. For example, in the event of bid for a design-build project, we would appoint
a competent consultant to design the project and provide us with drawings to enable further analysis of
the various aspects of the project. This allows us to make a more informed bid. Similarly, a lump sum
tender would entail quantity take-offs from the drawings supplied by the clients.

96
We also maintain an extensive computerized data bank and continuously upgrade it to track vendors,
prices of various materials in all states of India over the last 20 years. This along with the quotations
received help us to determine the price charged by us.

Engineering & Design

We provide detailed engineering services, if required by the client, for the projects that we undertake.
Typically, for design-build projects, the client supplies conceptual information pertaining to the project
and spells out the project requirements and specifications. We are required to prepare detailed
architectural and /or structural designs based on the conceptual requirements of the client and also
conform to various statutory and code requirements.

For those particular segments in which we do not have in-house design capabilities, we outsource
design services from experienced consultants who specialise in the particular segment. Prior to bidding
for the project, our Business Development department and senior management review the preliminary
design prepared by these consultants. Over the years, we have through a combination of experience and
technical ability developed expertise in assessing the preliminary pre-tender designs prepared by our
consultants, vis-à-vis the requirements of the client. After our initial review of the preliminary designs,
we continue to confer with our consultants to arrive at the final solution for the project. Once the
project is awarded to us, our consultants prepare detailed designs pursuant to the project requirements.

Procurement and Construction

Because material procurement plays such a critical part in the success of any project, we maintain
experienced staff in our purchase department to carry out material, services and equipment
procurement for all project sites. Procurement is a centralized function performed at our headquarters.
Only in certain cases is procurement done from project sites.

The Company has over the years developed relationships with a number of vendors for key materials,
services and equipment. The Company has also developed an extensive vendor database for various
materials and services. We maintain material procurement, tracking and control systems, which enable
monitoring of our purchases.

Procurement of material, services and equipment from external suppliers typically comprises a
significant part of a project’s cost. The ability to cost-effectively procure material, services and
equipment, and meeting quality specifications for our projects is essential for the successful execution
of such projects. We continually evaluate our existing vendors and also attempt to develop additional
sources of supply for most of the materials, services and equipment needed for our projects.

The key construction activities involved in a project depend on the nature and scope of the project. We
have a project management system that helps us track the physical and financial progress of work vis-à-
vis the project schedule. Daily progress reports are prepared by the major sites and sent to the project
monitoring cell in the head office for collation. Project personnel hold periodic review meetings with
the client at sites and also with key head office personnel in our headquarters to discuss the progress
being made on the project. The project managers also hold periodic review meetings with our vendors
and sub-contractors to review progress and assess future needs.

Each project site has a billing department that is responsible for preparing and dispatching periodic
invoices to the clients. Joint measurements with the client’s representative are taken on a periodic basis
and interim invoices prepared on the basis of such measurements are sent to the client for certification
and release of interim payments. The billing department is also responsible for certifying the bills
prepared by our vendors and sub-contractors for particular projects and forwarding the same to our
head office for further processing.

We are an ISO 9001:2000 certified company with a defined and documented Quality System Manual.
The quality assurance cells at our various project sites help to ensure implementation of the procedures
set forth in our Quality System Manual in order to help enable us to comply with the quality parameters
stipulated in the contract by the client. Two surveillance audits are conducted in a year by external
parties to ensure that the policies of the Company are followed. In addition, we also conduct periodic
internal audits to ensure the same.

97
We consider a project to be “virtually complete” when it is ready to be handed over to the client. We
then jointly inspect the project with the client to begin the process of handing over the project to the
client. Once satisfied, the client prepares a “virtual completion certificate”, which signifies the
commencement of the defects liability period or the maintenance period (i.e., the period during which
we are contractually bound to rectify any defects arising out of construction, which can last up to 60
months). On completion of the defects liability period, we request the client to release any performance
bonds or retention monies that may be outstanding.

Types of Contracts

Our contracts types fall into the following categories:

• Lump Sum contracts – Lump Sum contracts provide for a single price for the total amount of
work, subject to variations pursuant to changes in the client’s project requirements. In Lump Sum
contracts, the client supplies all the information relating to the project, such as designs and
drawings. Based on such information, we are required to estimate the quantities of various items,
such as raw materials, and the amount of work that would be needed to complete the project, and
then prepare our own bill of quantities (“BOQ”) to arrive at the price to be quoted. We are
responsible for the execution of the project based on the information provided and technical
stipulations laid down by the client at our quoted price.

• Design and Build contracts – Design and Build contracts provide for a single price for the total
amount of work, subject to variations pursuant to changes in the client’s project requirements. In
Design and Build contracts, the client supplies conceptual information pertaining to the project and
spells out the project requirements and specifications. We are required to (i) appoint consultants to
design the proposed structure, (ii) estimate the quantities of various items that would be needed to
complete the project based on the designs and drawings prepared by our consultants and (iii)
prepare our own BOQ to arrive at the price to be quoted. We are responsible for the execution of
all aspects of the project based on the above at our quoted price.

• Item rate contracts - Item rate contracts are contracts where we need to quote the price of each
item presented in a BOQ furnished by the client. In item rate contracts the client supplies all the
information such as design, drawings and BOQ. We are responsible for the execution of the project
based on the information provided and technical stipulations laid down by the client at our quoted
rates for each respective item.

• Percentage rate contracts - Percentage rate contracts require us to quote a percentage above,
below or at par with the estimated cost furnished by the client. In percentage rate contracts, the
client supplies all the information such as design, drawings and BOQ with the estimated rates for
each item of the BOQ. We are responsible for the execution of the project based on the
information provided and technical stipulations laid down by the client at our quoted rates, which
are arrived at by adding or subtracting the percentage quoted by us above or below the estimated
cost furnished by the client.

• Cost Plus Contracts – We have also been awarded cost plus contracts with certain clients like
Reliance Industries Limited with whom we have developed a long term relationship. These
contracts typically allow us to recover a fixed margin over the total costs incurred by us for
execution of the projects based on periodic invoices submitted by us.

Depending on the nature of the project and the project requirements, contracts may also contain a
combination of aspects of any of the contract types discussed above.

Contracts, irrespective of their type (i.e., Lump Sum, item rate, percentage rate, design-build), typically
contain price variation or escalation clauses that provide for either reimbursement by the client in the
event of a variation in the prices of key raw materials (e.g., steel and cement) or a formula that splits
the contract into pre-defined components for materials, labour and fuel and links the escalation in
amounts payable by the client to pre-defined price indices published periodically by the RBI or the
Government. Some contracts do not include such price variation or escalation clauses. Thus, in those
instances, we face the risk that the price of key raw materials and other inputs will increase during the
project execution period and are unable to pass on the increases in such costs to the client.

98
Project-specific Joint Ventures and Strategic Alliances

Generally, we bid for projects as the sole contractor of the project with full responsibility for the entire
project, including, if required, the overall responsibility and sole discretion to select and supervise sub-
contractors. From time to time, on certain larger projects that require resources beyond those we may
have available, such as financial strength, equipment, manpower or local content resources, or when we
wish to share the risk on a particularly large project, we seek to make alliances through the formation
of special purpose vehicles (SPVs) or project-specific joint ventures with other contracting, engineering
and construction companies.

In a project-specific joint venture, each member of the joint venture shares the risks and revenues of the
project according to a predetermined agreement. The agreements specifically assign the work to be
performed by each party and the responsibilities of each party with respect to the joint venture,
including how the joint venture will be managed and the equipment, personnel or other assets that each
party will contribute or make available to the joint venture. The profits and losses of the joint venture
are shared among the members according to a predetermined ratio. The fixed assets that are acquired
by the joint venture are generally transferred to the respective joint venture members upon completion
of the joint venture project. The agreements may also set forth the manner in which any disputes among
the members will be resolved. The construction contracts that the joint ventures enter into, or the joint
ventures themselves, typically impose joint and several liability on the members. Thus, should the other
member(s) of our joint ventures default on its or their duties to perform, we would remain liable for the
completion of the project. The SPV or project-specific joint venture typically terminates at the
completion of the defect liability period, at which point the SPV or project-specific joint venture
liquidates and dissolves.

As of November 30, 2006, we had entered into memoranda of understanding, joint venture agreements
and consortium agreements in respect of projects being currently executed as described in the table
below. For details of these memoranda of understanding, joint venture agreements and consortium
agreements, see the section titled “History and Certain Corporate Matters” on page 108.

Joint Venture/ Other Party/Parties/ Type of Project

Arrangement
Memorandum of Understanding with Ace
Pipeline Contracts Private Limited
Joint venture agreement with R. N. Shetty and
Company Private Limited
Joint venture agreement with Shapoorji Pallonji
and Company Limited
Joint venture agreement with Ultra Construction
and Engineering Company Limited and VSL
India Private Limited
Joint venture agreement with Al Saeed
Company
Joint venture agreement with Oman Shapoorji
Construction Company LL.C.
Khoraghat GGS-1 – Borholla GGS in A & AA basin,
Jorhat Pipeline construction project
Koldam Hydro Electric Power Project (4 X 200 MW)
for National Thermal Power Corporation, Delhi
Construction of a flyover at the University Circle and
Agriculture College in Pune
Construction of a special bridge across Chenab river at
KM 50/800 on the Katra – Laole Section of
Udhamppur-Srinagar-Baramullah Rail Link Project in
J&K for Konkan Railway Corporation Limited
Construction of a cement plant for the National
Cement Company at Wadi, Faltah, [Yemen]
Construction of New Mooring Facility in Shannah
(Al-Wusta Region) for the Ministry of Transport and
Communications, Directorate General of Ports and
Maritime Affairs, Sultanate of Oman

We have also entered into pre-tender tie ups to work as a sub-contractor as per the details provided
below:

Counter Party/Parties/ Type of Arrangement Project

Subcontract Agreement with PentaOcean Dredging and jetty works for Kochi LNG Terminal.
Construction Company Limited, Japan Project

Subcontract Agreement with Ishikawajima - Design, Engineering, procurement, construction,

Harima Heavy Industries Limited, Japan completion, commissioning and testing work of LNG

99
 Counter Party/Parties/ Type of Arrangement
Subcontract Agreement with Toyo Engineering
India Limited, India
Memorandum of understanding with Terna
Cyprus, S.A., Greece
Project
Tanks for the Kochi LNG Terminal Project
Civil Construction work for the Kochi LNG Terminal.
Project
Construction of Qatar Primary Route North Road –
Contract 2&3 for Qatar Works Authority

We have also entered into an agreement with Diamond Offshore Drilling (Overseas) Inc., USA to act
as a business development agent in relation to the offshore drilling operations in India. Under this
agreement, we are paid a fixed commission fee for the services performed in India.

Competition

We operate in a competitive environment. Our competition depends on whether the project is in the
civil construction sector or the infrastructure sector. It also depends on a host of other factors, such as
the type of project, contract value and potential margins, the complexity and location of the project, the
reputation of the client and the risks relating to revenue generation. While service quality, technical
ability, performance record, experience, health and safety records and the availability of skilled
personnel are key factors in client decisions among competitors, price is often the deciding factor in
most tender awards. We mainly compete with domestic Indian entities in the different segments in
which we operate. Some of our key competitors are Larsen and Toubro Limited, Hindustan
Construction Company Limited, Gammon India Limited, IVRCL Infrastructures and Projects Limited,
Simplex Infrastructures Limited and ITD Cementation Limited.

Insurance

Our operations are subject to hazards inherent in providing engineering and construction services, such
as risk of equipment failure, work accidents, fire, earthquake, flood and other force majeure events, acts
of terrorism and explosions including hazards that may cause injury and loss of life, severe damage to
and the destruction of property and equipment and environmental damage. We may also be subject to
claims resulting from defects arising from engineering, procurement or construction services provided
by us within the warranty periods extended by us, which can range from 12 to 60 months from the date
of commissioning.

We obtain specialized insurance for construction risks and third party liabilities for most projects for
the duration of the project and the defect liability period. We generally maintain insurance covering our
assets and operations at levels that we believe to be appropriate. Risks of loss or damage to project
works and materials are often insured jointly with our clients.

Our significant insurance policies consist of coverage for risks relating to physical loss or damage as
well as business interruption loss. Loss or damage to our materials and property, including contract
works, whether permanent or temporary, and materials or equipment supplied by us or supplied to us,
are generally covered by “contractors’ all risks” insurance. Under the all risks insurance policy we are
also provided cover for price escalation, debris removal and surrounding properties. Under our general
public liability insurance policy, we are indemnified against legal liability to pay damages for third
party civil claims arising out of bodily injury or property damage caused by an accident during the
project in the course of business.

Under certain of our contracts and sub-contracts, we are required to obtain insurance for the project. In
some such cases, we have either not obtained insurance or we have obtained insurance but permitted
the insurance policy to lapse prior to the completion of the project. For some projects that do not
require us to maintain insurance, we have not taken insurance cover.

We also maintain automobile policies and workmen’s compensation policies as well as hospitalization
and group personnel accident policies for our permanent employees.

Guarantees

We are often required to provide financial and performance guarantees our performance and financial
obligations in relation to a project. The amount of guarantee facilities available to us depends upon our

100
financial condition and the availability of adequate security for the banks and financial institutions that
provide us with such facilities. There have been zero instances where our performance guarantees have
been invoked by our clients.

Our Employees

We believe that a well-trained, motivated and satisfied employee base is key to our competitive
advantage. As of November 30, 2006, we employed 1,473 full-time employees, of which 47.99 %
were engineers. Additionally, as of November 30, 2006, we employed 2,695 temporary labourers on
our project sites.

We are committed to the development of the expertise and know-how of our employees through
regular technical seminars and training sessions organised or sponsored by the Company. Our
personnel policies are aimed towards recruiting the talent that we need, facilitating the integration of
our employees into the Company and encouraging the development of skills in order to support our
performance and the growth of our operations.

The following table sets forth certain information in respect of our full-time and temporary labour as of
November 30, 2006:

Category Number of Full-Time Number of Temporary Total

Employees labour
Technical Staff 976 1,033 2,009
Commercial Staff 441 645 1,022
Workers 56 1017 1,073
Total 1,473 2,695 4,104

All our non-supervisory employees are members of registered trade unions. There are three trade
unions each representing 442, 84 and 22 employees respectively. In relation to two of the unions, we
concluded collective bargaining agreements in May 2004 and reached a wage agreement which took
effect retrospectively from April 1, 2003 to March 31, 2007 and January 1, 2003 to December 31, 2006
respectively. Besides wage settlement, our management and the unions came to an agreement on
several other aspects of employee management. The charter of demand in respect of one of the unions,
which represents 22 employees, has been pending since January 21, 2005.

As such, we consider our relations with our employees to be good.

Health, Safety and Environment

We are committed to complying with applicable Health, Safety and Environmental (HSE) regulations
and other requirements in our operations and have a documented policy in place.

To help ensure effective implementation of our practices, at the beginning of every project we seek to
identify all potential material hazards, evaluate all material risks and institute, implement and monitor
appropriate controls. We believe that accidents and occupational health hazards can be significantly
reduced through the systematic analysis and control of risks and by providing appropriate training to
management, employees and sub-contractors. We seek to work proactively towards minimizing or
eliminating the impact of hazards to people and the environment. On all project sites, we employ safety
personnel dedicated to helping ensure the implementation of our HSE policies at such sites.
Additionally, safety managers are sent from the head office to monitor safety standards at project sites.
We were awarded ISO 14001:2004 and OHSAS 18001:1999 certifications by BVQI in respect of
construction of elevated viaduct for Delhi Metro Rail Project.

Our Equipment

We believe that our strategic investment in equipment and fixed assets is an advantage that enables us
to rapidly mobilize our equipment to project sites as needs arise. We have a fleet of strategic
construction equipment assets, including cranes, equipment for piling and diaphragm wall, drilling and
grouting, concrete/ earth moving transport, marine flotilla including jack up platform, barges and
pontoons. Having such an asset base is in our view an important advantage in serving the technically

101
challenging and diverse nature of the construction projects in which we are engaged. We have
developed several of equipment in-house. We have equipment storage, maintenance and repair
facilities at Ulva (Navi Mumbai), Nagpur, Delhi and Chennai.

As of September 30, 2006, our total investment in equipments was Rs. 2,469.93 million (on a
consolidated basis). The following table provides a list of some of our more substantial equipment as
of September 30, 2006:

No. Equipment Particulars Number of Units

1) Marine Construction
a) Jackup platform 4
b) Heavy lifting barge (Shayadri) 1200 T capacity 1
c) Submersible dock barges 3
d) Diving bell 1
e) Toyo pump dredging 11
2) Piling equipment used for dock and harbour as well as
bridges, flyovers etc.
a) Intregrated piling rig 6
b) Crane mounted rotary piling rig 6
c) Casing mounted wirth rig 1
3) Diaphragm Wall equipments
a) Hydraulic Kelly 4
4) Heavy duty crane
a) Tower crane 7
b) Crawler Cranes (20T to 200T capacity) 44
c) Mobile cranes (various capacity) 37
5) Crusher
a) Fully integrated mobile crushers 3
b) Crusher of various capacity 6
6) Concreting equipment
a) Batching plant (3ocum/hr to 60 cum/hr) 21
b) Transit mixer (4 cum/hr to 6 cum/hr) 79
c) Concrete pumps 30
7) Asphalt Road construction equipment
a) Hot mix plants 5
b) Sensor Pavers/Wet mix Pavers 12
c) Wet mix Plants 7
8) Earthmoving equipment
a) Dozers 11
b) Graders 20
c) Loaders 26
d) Excavators/JCB 44
e) Vibro Rollers/ Dead Weight Roller 28
9) Trailers and Tippers 205

Risk Management

The risk management framework includes the assessment of risks such as political, economic,
contractual and immigration. We have established a Risk Management System to identify all possible
risks during selection of project, tender estimation and /submission of tenders. Particularly for foreign
projects, we evaluate risks under the category of country risk, political risk, banking risk, currency
fluctuation risk, inflation possibility, contract conditions, dispute redressal system, visa restrictions,
client profile prior to submitting a bid.

During cost estimation at tender stage we also evaluate risk related to labour/ material cost variation,
equipment availability in the country, geological conditions, cash flow, consideration of time schedule,
liquidated damages, guarantee / warranty requirement and maintenance requirement. Management
approval in selection of projects and price to be quoted duly depends on the evaluation and liquidation
of the above risks.

When the work is awarded the Project Management Team is briefed on the risks on the basis of tender
preparation in light of the actual risks. During the execution of the projects, our project managers as
well as the project controllers are appraised of the risks expected and to enable them to avoid / mitigate
increased time and cost due to such risks.

Enterprise Resource Planning

102
We are currently implementing an enterprise resource planning (ERP) software to manage our various
business functions effectively. Phase I of this implementation which would centralize accounts,
purchase, stores, payroll and CPE (covering of implementation of major equipments at various project
sites) has already been completed. This assists us in monitoring our projects on a day-to-day basis in an
effective manner and improves information availability for our employees. Phase II involving planning,
execution, costing, maintenance, which is currently under implementation, would further integrate our
various operational arms.

Our Properties

Our registered office and corporate headquarters are located at Afcons House, 16, Shah Industrial
Estate, Veera Desai Road, Azad Nagar P.O., Mumbai 400 053 on a plot of land measuring 5,794.55
square metres. We occupy these premises pursuant to a deed of assignment dated March 22, 1977
whereby the partnership firm of Rodio Foundation Engineering and Hazarat & Co. transferred the
entire business and undertaking of the partnership along with all properties to us on July 1, 1976.

We also own the premises of an area of 2,534.75 square metres at located at Plot No. 254 D(1), “Band
Box House”, Dr. Annie Besant Road, Worli, Mumbai 400 018. Presently, the Company is not using
this premises.

We have signed a lease agreement with the Maharashtra Industrial Development Corporation dated
April 15, 1994 for our office and workshop premises of an area of 7,200 square metres in the Nagpur
Industrial Area. The lease is valid for a period of 95 years from January 1, 1975. We have paid a sum
of Rs. 57,600 as premium at the time of signing the lease agreement. We pay a yearly rent of Re.1
along with service charges. Afcons Paulings Limited (which has now merged into us) had entered into
a lease agreement with the Maharashtra Industrial Development Corporation dated April 26, 199 for
our workshop and storage premises of an area of 40,000 square metres in the Butibori Industrial Area,
Nagpur. The lease is valid for a period of 95 years from June1, 1993. A sum of Rs. 1,600,000 was paid
as premium at the time of signing the lease agreement. We pay a yearly rent of Re.1 along with service
charges

We have signed a lease agreement with Mr. Mukesh Kumar dated March 22, 2006 in respect of the
premises located at Raswooltur Road, Near Railway Crossing, Munka, Delhi measuring 24,281.40
square metres used for storage of our equipment in New Delhi. The lease is valid for a period of 24
months from March 22, 2006. We pay a monthly rent of Rs. 5,687 per acre.

We have signed a contract with Amma Lines Limited dated October 14, 2006 for premises measuring
2,500 square metres in Ulwa, Mumbai to park our jack-up platforms and marine crafts. The contract is
valid for a period of 12 months. We pay a monthly rent of Rs. 82, 500.

Our Intellectual Property

The “AFCONS” trademark bearing Trade Mark No. 717311 in Class 19 has been approved by the
Examiner of Trade Marks, Trade Marks Registry, Government of India, Mumbai and is valid up to
September 12, 2013. Apart from this we have no other intellectual property rights.

103
 REGULATIONS AND POLICIES

The following description is a summary of the relevant regulations and policies as prescribed by the
Government of India. The information detailed in this chapter has been obtained from publications
available in the public domain. The regulations set out below are not exhaustive, and is only intended
to provide general information to the investors and is neither designed nor intended to be a substitute
for professional legal advice.

Introduction

The Company is engaged in the business of civil construction, specialized foundations such as all
types of pile foundations, drillings & groutings, construction of diaphragm walls, RCC or otherwise,
construction of tunnels, bridges, harbours, dry docks, sea walls, landings and or other types of
marine structures.

Set forth below are certain significant legislations and regulations that generally govern this industry in
India:

Regulation of Ports

The primary legislation governing ports is the Major Port Trusts Act, 1963 (the Port Trust Act). Each
port is administered, controlled and managed by a board of trustees (Port Trust) which is constituted by
the central government under the Port Trust Act. The Port Trust usually renders services such as
landing and shipping of passengers and goods, transporting and storing goods, receiving, transporting
and dispatching goods originating in the vessel in the port and intended for carriage by the railways or
vice versa; piloting, hauling, mooring, hooking or measuring of vessels or any other service in respect
of vessels. Such services can be sanctioned to be performed by private persons if approval of the
central government is obtained. For this, such person cannot charge any sum in excess of the amount
specified by the Tariff Authority for Major Ports (Port Tariff Authority) by notification. The Port Tariff
Authority is an independent body established for fixing and revising port tariffs. These tariffs
determine the upper limit of tariffs that can be charged by private entrepreneurs and the port.

Private participation is allowed in the following activities pertaining to ports: (i) leasing out assets of
the port; (ii) construction and creation of additional assets (this includes: construction and operation of
container terminals; (iii) construction and operation of bulk break bulk, multipurpose and specialized
cargo berths; (iv) warehousing, container freight stations, storage facilities and tank farms; (v)
crainage/handling equipment; (vi) setting up of captive power plants; (vii) dry docking and ship repair
facilities; (viii) leasing of equipment for port handling and leasing of floating crafts from the private
sector; (ix) pilotage; (x) captive facilities for port based industries. Further activities may be permitted
to be opened to private sector participation after consultation with the central government.

The approval of the Port Trust is required for making, erecting or fixing any wharf, dock, quay, stage,
jetty, pier, erection or mooring within the port or its approaches and the Port Trust may specify
conditions subject to which such consent is granted.

Though activities have been opened to participation by the private sector, these persons are obligated to
operate in accordance with certain considerations such as protection of national interests including
national security and adhering to priority berthing orders of the central government, in this regard.
Other considerations include following statutory requirements on environmental protection, anti-
pollution measures and safety.

However, private sector participants would be permitted to give priority berthing to their own ships and
they would service other ships on a first come first served basis with respect to berths constructed or
taken on lease by private entrepreneurs.

Regulation of the Road Sector

104
The primary central legislations governing the roads sector are the National Highways Act, 1956 and
the National Highways Authority of India Act, 1988 (NHAI Act).

National Highways Act, 1956

Under this Act, the central government is vested with the power to declare a highway as a National
Highway and also to acquire land for this purpose. The central government may by notification, declare
its intention to acquire any land when it is satisfied that for a public purpose such land is required for
the building, maintenance, management or operation of a national highway. The National Highways
Act prescribes the procedure for the same. Such procedure relates to declaration of an intention to
acquire, entering and inspecting such land, hearing of objections, declaration required to be made for
the acquisition and the mode of taking possession.

The central government is responsible for the development and maintenance of national highways.
However, it may direct that such functions may also be exercised by state governments. Further, the
central government has the power to enter into an agreement with any person for the development and
maintenance of a part or whole of the highway. Such person would have the right to collect and retain
fees at such rates as may be notified by the central government.

The National Highways (Collection of Fees by any Person for the use of Section of National
Highways/ Permanent Bridge/ Temporary Bridge on National Highways) Rules, 1997 provide that the
central government may enter into agreements with persons for development and maintenance of the
whole or part of a national highway/permanent bridge/temporary bridge on national highway. Such
person may invest his own funds for development or maintenance and is allowed to collect and retain
the fees at agreed rates from different categories of vehicles for an agreed period for the use of the
facilities created herein. The rates of fees and the period of collection are decided by the central
government and the factors taken into account to decide the same include expenditure involved in
building; maintenance, management and operation of the whole or part of such section; interest on the
capital invested; reasonable return, the volume of traffic; and the period of such agreement.

Once the period of collection of fees by the person is completed, all rights pertaining to the section,
permanent bridge or the temporary bridge on the national highway would be deemed to have been
taken over by the central government.

Hydro Projects

Under the Electricity Act 2003, specific provisions have been made for hydro projects. The generating
company intending to set up a hydro project station is required to submit any scheme which is
estimated to involve a capital expenditure exceeding such sum as may be fixed by the central
government before the CEA for approval. The CEA is required to look into whether the proposed river-
works will prejudice the best development of the river or its tributaries for power generation. Further
factors such as drinking water, irrigation, navigation, flood-control or other public purposes are also
required to be considered. The CEA is also required to consider whether the proposed scheme meets
the norms regarding dam design and safety.

Fiscal Legislation

Section 80-IA of the Income Tax Act, 1961 provides that while computing the total income of an
undertaking set up for generation of power, 100% deduction of the profit and gains is allowed. This
deduction is allowed during any 10 consecutive years in a block of first 15 years from the start of
operations of the infrastructure facility. This is applicable when the particular undertaking is not
formed by splitting up or reconstruction of a business already in existence and is not formed by the
transfer to a new business of machinery or plant previously used for any purpose.

Environment Regulation

Infrastructure projects must also ensure compliance with environmental legislation such as the Water
(Prevention and Control of Pollution) Act 1974 (Water Pollution Act), the Air (Prevention and Control
of Pollution) Act, 1981 (Air Pollution Act) and the Environment Protection Act, 1986 (Environment
Act).

105
The Water Pollution Act aims to prevent and control water pollution. This legislation provides for the
constitution of a Central Pollution Control Board and State Pollution Control Boards. The functions of
the Central Board include coordination of activities of the State Boards, collecting data relating to
water pollution and the measures for the prevention and control of water pollution and prescription of
standards for streams or wells. The State Pollution Control Boards are responsible for the planning for
programmes for prevention and control of pollution of streams and wells, collecting and disseminating
information relating to water pollution and its prevention and control; inspection of sewage or trade
effluents, works and plants for their treatment and to review the specifications and data relating to
plants set up for treatment and purification of water; laying down or annulling the effluent standards for
trade effluents and for the quality of the receiving waters; and laying down standards for treatment of
trade effluents to be discharged. This legislation debars any person from establishing any industry,
operation or process or any treatment and disposal system, which is likely to discharge trade effluent
into a stream, well or sewer without taking prior consent of the State Pollution Control Board.

The Central and State Pollution Control Boards constituted under the Water Pollution Act are also to
perform functions as per the Air Pollution Act for the prevention and control of air pollution. The Air
Pollution Act aims for the prevention, control and abatement of air pollution. It is mandated under this
Act that no person can, without the previous consent of the State Board, establish or operate any
industrial plant in an air pollution control area.

The Environment Act has been enacted for the protection and improvement of the environment. The
Act empowers the central government to take measures to protect and improve the environment such as
by laying down standards for emission or discharge of pollutants, providing for restrictions regarding
areas where industries may operate and so on. The central government may make rules for regulating
environmental pollution.

With respect to forest conservation, the Forest (Conservation) Act, 1980 prevents state governments
from making any order directing that any forest land be used for a non-forest purpose or that any forest
land is assigned through lease or otherwise to any private person or corporation not owned or
controlled by the Government without the approval of the central government. The Ministry of
Environment and Forests mandates that Environment Impact Assessment (EIA) must be conducted for
projects. In the process, the Ministry receives proposals for the setting up of projects and assesses their
impact on the environment before granting clearances to the projects.

Foreign Ownership

Under the Industrial Policy and FEMA, FDI up to 100% is permitted in construction and related
engineering services. Further, the Industrial Policy now also permits foreign direct investment under
the automatic route in projects for construction and maintenance of roads, highways, vehicular bridges,
toll roads and ports and harbours.

Subject to certain conditions and guidelines, the Industrial Policy and FEMA further permit up to 100%
FDI in townships, housing, built-up infrastructure and construction development projects which
include, but are not restricted to, housing, commercial premises, hotels, resorts, hospitals, educational
institutions, recreational facilities and city and regional level infrastructure.

The RBI by its A.P. (DIR Series) circular No. 16 dated October 4, 2004 granted general permission for
the transfer of shares of an Indian company by Non-Residents to residents and residents to Non-
Residents, subject to the terms and conditions, including pricing guidelines, specified in such circular.
No approvals of the FIPB or the RBI are required for such Allotment of Equity Shares under this Issue.

Investment by Foreign Institutional Investors

Foreign Institutional Investors (FIIs) including institutions such as pension funds, investment trusts,
asset management companies, nominee companies and incorporated, institutional portfolio managers
can invest in all the securities traded on the primary and secondary markets in India. FIIs are required
to obtain an initial registration from the SEBI and a general permission from the RBI to engage in
transactions regulated under FEMA. FIIs must also comply with the provisions of the SEBI (Foreign
Institutional Investors) Regulations, 1995, as amended from time to time. The initial registration and

106
the RBI’s general permission together enable the registered FII to buy (subject to the ownership
restrictions discussed below) and sell freely securities issued by Indian companies, to realise capital
gains or investments made through the initial amount invested in India, to subscribe or renounce rights
issues for shares, to appoint a domestic custodian for custody of investments held and to repatriate the
capital, capital gains, dividends, income received by way of interest and any compensation received
towards sale or renunciation of rights issues of shares.

Ownership Restrictions of FIIs

Under the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation basis
should not exceed 24% of post-issue paid-up capital of a company. However, the limit of 24% can be
raised up to the permitted sectoral cap (which is 100% for the engineering and construction sector) for
that company after approval of the Board of Directors and shareholders of the company. As of date, no
such approval has been obtained. The total holding of a single FII should not exceed 10% of the post-
issue paid-up capital of the Company or 5% of the total paid-up capital in case such sub-account is a
foreign corporate or an individual. In respect of an FII investing in equity shares of a company on
behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the
total issued capital of that company.

Other Laws and Regulations

Certain other laws and regulations that may be applicable to the Company include the following:

• Contract Labor (Regulation and Abolition) Act, 1970;

• Building and Other Construction Workers (Regulation of Employment and Conditions of
Service) Act, 1996;
• Inter State Migrant Workers Act, 1979;
• Factories Act, 1948;
• Payment of Wages Act, 1936;
• Payment of Bonus Act, 1965;
• Employees’ State Insurance Act, 1948;
• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;
• Equal Remuneration Act, 1976;
• Payment of Gratuity Act, 1972;
• Shops and Commercial Establishments Acts, where applicable;
• Minimum Wages Act 1948;
• Hazardous Waste (Management and Handling) Rules, 1989;
• Hazardous Chemicals Rules, 1989;
• Industrial Disputes Act, 1947;
• Mines and Quarries Act, 1954;
• The Explosives Act, 1884;
• Workmen’s Compensation Act, 1923;
• The Air ( Prevention and Control of Pollution) Act, 1981; and
• The Water (Prevention and Control of Pollution) Act, 1974

107
 HISTORY AND CERTAIN CORPORATE MATTERS

Our History

We began our operations as a civil construction firm in 1959 as a partnership between the Rodio
Foundation Engineering Limited, Switzerland and Hazarat & Company, India. Pursuant to the exit of
Rodio Foundation Engineers and Hazarat & Co, we were reorganized as a company called Asia
Foundations and Constructions Private Limited in 1976 engaged in the business of contractors and
engineers. We became a deemed public limited company as per Section 43A(1) of the Companies Act
from March 18, 1977. Shipping Credit and Investment Corporation of India (SCICI) became a 20%
shareholder of our Company in 1993, which shareholding was transferred to ICICI pursuant to the
merger of SCICI with ICICI. We became a full fledged public company in November 1997. In 1998
ICICI subscribed to further shares in our Company which made ICICI the single largest shareholder
with 47.37% equity stake in our Company. Shapoorji Pallonji Group acquired 53.96% per cent
shareholding in our Company in 2000 where 47.37% was acquired from ICICI Ltd. and 6.59% was
acquired from the Hazarat family.

We changed the name of our Company from Asia Foundations and Constructions Limited to Afcons
Infrastructure Limited with effect from August 14, 1996 pursuant to a special resolution of the
shareholders passed at an EGM on July 25, 1996. The fresh certificate of incorporation consequent on
change of name was granted by the RoC to our Company on August 14, 2000.

Our registered office was shifted from Band Box House, 2nd Floor, 254-D, Dr. Annie Besant Road,
Worli, Mumbai 400 018, India to the current address by a resolution of our Board dated November 1,
1992.

Some of our key milestones include:

Year Milestones
1959 Born as Rodio Hazarat Co, a partnership between Rodio Foundation, Switzerland and
Hazarat & Co., India
1963 The firm entered into marine construction
1974 Intake Structure at Kalpakkam was completed.

Entry of the firm in the overseas market by construction of intake jetty for desalination
plant, Ghubrah, Oman
1976 Renamed as Asia Foundations and Construction Private Limited wherein from a
partnership it became a closely held private limited company with equity shares distributed
to the employees.
1978 The Company entered Iraq for construction of four berthing dolphins at Muftiah Harbour
for State Organisation for Oil Projects.
1979 Design and construction of cofferdam across Narmada where the Company executed the
project by using a special technique of touching pile and colgrouting.
1982 Underwater joining of concrete caissons in Oil Berth project at Vizag where caissons were
joined together underwater thus eliminating the use of dry docks for caisson foundation.
1986 The Company entered into road construction when large road projects funded by World
Bank/ Asian Development Bank were put to tender.
1991 The Company completed the Construction of Thane Creek Railway Bridge for
Metropolitan Transport Project (Railways).
1995 Dyckerhoff & Widman (Dywidag) and the Company as nominated sub contractor were
awarded the project for construction of sewage marine outfall at Bandra and Worli in
Mumbai by Mumbai Municipal Corporation.
1997 The Company was renamed as “Afcons Infrastructure Limited” because of the Company’s
major thrust in infrastructure related work.
2000 The Company was acquired by Shapoorji Pallonji Group.
2002 The Company was certified ISO 9001:2000 by BVQI.
2004 Construction and commissioning of 2 LNG Tanks of 40 meter height and 80m diameter

108
 Year Milestones
and ahead of the stipulated time schedule for IHI of Japan.

The Company was awarded the contract of Chenab Bridge in Jammu and Kashmir by
Konkan Railways (for Indian Railways) as part of a joint venture with Ultra Construction
and Engineering Limited and VSL India Private Limited.
2005 Awarded major overseas job which include Engineering, Procurement, Installation and
Commissioning two Cofferdams for Ras Laffan Common Cooling Sea Water System for
Qatar Petroleum.

Main Objects

Our main objects that enable us to carry on our business and proposed business as contained in our
Memorandum of Association are as follows:

(a) To carry on in India and other parts of the world the business of securing and executing
contracts or works relating to specialised foundations such as all types of pile foundations,
exploratory borings, sub-surface investigations, drillings & groutings, tube-well constructions,
lowering ground water tables, construction of diaphragm walls, RCC or otherwise,
construction of tunnels, bridges, harbours, dry docks, sea walls, landings and or other types of
marine structures, construction and execution of anchors prestressed or otherwise, soil and
material testing, mining, dredging, underwater works- of all types,, drilling and blasting, micro
piles, underpining of structures, guniting, ground consolidation, sand piles, sand drains and
civil & soil engineering consultancy services.

(b) To carry on business as building contractors and undertake and carry out building
construction works.

(c) To carry on the business of ship owners, ship brokers, shipping agents, ship managers, ship
charterers, barge owners, dock owners, stevedores, warehouse-men, wharfingers, salvors,
marine consultants, crew recruitments, ship repairers, loading brokers, freight contractors,
haulage and general contractors, marine engineers, surveyors or any other work connected
with shipping business.

(d) To carry on the business of manufacturers of and dealers in ropes, tarpaulins, waterproofings,
shipstores and allied products.

(e) To manufacture, deal in, hire, store and warehouse, all engines, nautical instruments, rigging
machinery, implements, utensils, appliances used in the shipping industry.

Amendments to our Memorandum of Association

Date Details of change

March 18, The Authorised Share Capital Rs. 5,000,000 divided into 50,000 Equity Shares of Rs.
1977 100 each.
January 30, The Authorised Share Capital was increased from Rs. 5,000,000 divided into 50,000
1982 Equity Shares of Rs. 100 each to Rs. 250,00,000 divided into 250,000 Equity Shares
of Rs. 100 each.
December 6, Amendment in object clause of the Memorandum of Association-
1986
Addition of words in sub-clause 3 of clause III

Insertion of new sub- clauses (4A), (4B), (4C) and (4D) after the existing sub-clause
4 of clause III

December 31, The Authorised Share Capital was increased from Rs. 25,000,000 divided into
1988 250,000 Equity Shares of Rs. 100 each to Rs. 75,000,000 divided into 750,000 Equity
Shares of Rs. 100 each.

109
 Date Details of change

April 6, 1991 The Authorised Share Capital was increased from Rs. 75,000,000 divided into
750,000 Equity Shares of Rs. 100 each to Rs. 100,000,000 divided into 750,000
Equity shares of Rs. 100 each and 250,000 unclassified shares of Rs. 100 each.
September 20, The Authorised Share Capital of Rs. 100,000,000 divided into 750,000 Equity Shares
1991 of Rs. 100 each and 250,000 unclassified shares of Rs. 100 each was changed to
750,000 Equity Shares of Rs. 100 each, 100,000 15% Redeemable Cumulative
Preference Shares of Rs. 100 each and 150,000 unclassified shares of Rs. 100 each.
September 22, Insertion of Object No. 33A:
1994
“To apply for, promote and obtain any charter, privilege, concession, licence,
authorization, from any Government or authorities Municipal, local or otherwise,
provisional order or licence or any authority for enabling the Company to carry any
of its objects into effect or for extending any of the powers of the Company.”

Insertion of Object No. 33B:

“To enter into any arrangement for sharing of profits, union of interests, co-
operation, reciprocal concession, lease, licence or otherwise or to amalgamate with
any person, body corporate or company carrying on or engaged in, any business or
transaction which the company is authorised to carry on or engage in or which can
be carried on in conjunction therewith or which is capable of being conducted so as
directly or indirectly to benefit the company.”
July 25, 1996 The Authorised Share Capital of Rs. 100,000,000 divided into 750,000 Equity Shares
of Rs. 100 each, 1,00,000 15% Redeemable Cumulative Preference Shares of Rs. 100
each and 150,000 unclassified shares of Rs. 100 each was changed to 9,000,000
Equity Shares of Rs. 10 each and 1,000,000 Preference Shares of Rs. 10 each.
October 11, The Authorised Share Capital of Rs. 100,000,000 divided into 9,000,000 Equity
1996 Shares of Rs. 10 each and 1,000,000 Preference Shares of Rs. 10 each was increased
to Rs. 150,000,000 divided into 13,000,000 Equity Shares of Rs. 10 each and
2,000,000 Preference Shares of Rs. 10 each.
March 7, 2002 The Authorised Share Capital of Rs. 150,000,000 divided into 13,000,000 Equity
Shares of Rs. 10 each and 2,000,000 Preference Shares of Rs. 10 each was increased
to Rs. 330,000,000 divided into 33,000,000 shares of Rs. 10 each.
March 13, The Authorised Share Capital of. Rs. 330,000,000 divided into 33,000,000 shares of
2003 Rs. 10 each was increased to Rs. 750,000,000 divided into 75,000,000 shares of Rs.
10 each.
March 30, The Authorised Share Capital of Rs. 750,000,000 divided into 75,000,000 shares of
2005 Rs. 10 each was increased to Rs. 1,250,000,000 divided into 125,000,000 shares of
Rs. 10 each.
March 31, The Authorised Share Capital of Rs. 1,250,000,000 divided into 125,000,000 shares
2006 of Rs. 10 each was increased to Rs. 1,750,000,000 divided into 175,000,000 shares of
Rs. 10 each.
December 22, The Authorised Share Capital of Rs.1,750,000,000 divided into 175,000,000 shares of
2006 Rs.10 each was increased to Rs. 2,250,000, 000 divided into 124,000,000 Equity
Shares of Rs.10 each and 101,000,000 Preference Shares of Rs.10 each.

Amalgamation of Afcons Pauling (India) Limited with the Company

Afcons Pauling (India) Limited which was a subsidiary of the Company, merged with the Company
with effect from April1 1, 2005 pursuant to a resolution passed by the shareholders of the Company in
a court convened meeting on March 10, 2006. The High Court of Mumbai vide its order dated May 5,
2006 approved the amalgamation of Afcons Pauling India Limited with the Company. The
shareholders of Afcons Pauling India Limited pursuant to the scheme of amalgamation were allotted
one zero coupon redeemable preference share of the Company at the par value of Rs.10 each for every
ten equity shares of Rs.10 each held by the shareholders in Afcons Pauling India Limited. The zero
coupon redeemable preference shares issued by the Company to shareholders Afcons Pauling India
Limited will be redeemed on the expiry of 24 months from the date of issue at a premium of 10% of the

110
face value. The Board of Directors of the Company issued and allotted 125,000 zero coupon
redeemable preference shares of Rs. 10 each to the shareholders of Afcons Pauling India Limited.

Our Joint Ventures

The Company has entered into the following joint ventures/ memoranda of understanding where the
project is at various stages of pre qualification/ tendering/ execution. Unless extended expressly, joint
ventures at the pre qualification/ tendering stage expire if the projects are not awarded to the joint
venture. None of these joint ventures are incorporated entities.

Projects under execution

1. Memorandum of understanding with Ace Pipeline Contracts Private Limited

The Company entered into a memorandum of understanding dated September 29, 2005 with
Ace Pipeline Contracts Private Limited (ACE) to form a joint venture to participate in the
Khoraghat GGS-1 – Borholla GGS in A & AA basin, Jorhat Pipeline construction project for
Oil & Natural Gas Corporation Limited (Project). Both parties have agreed to be bound by the
terms and conditions of the tender document for the Project. The parties have agreed that the
Company shall execute the entire Project, whilst ACE shall act as sub-contractors and
undertake the site work under the management of the Company. Subsequently, the Company
and ACE have entered into a subcontract agreement dated February 1, 2006. The Project is
currently under execution.

2. Joint venture agreement with R. N. Shetty and Company Private Limited

The Company entered into a memorandum of understanding dated October 1, 2004 with R. N.
Shetty and Company Private Limited (RNS) and subsequently the parties entered into a joint
venture agreement dated April 4, 2005. This agreement has been entered into for the purpose
of construction of desilting Koldam Hydro Electric Power Project (4 X 200 MW) for National
Thermal Power Corporation, Delhi (Project).

By way of a supplemental agreement dated April 12, 2005 the parties have agreed that the
Company will execute the entire work at its own risk and cost without making RNS liable for
anything in relation to the Project. RNS has agreed to provide only technical support to the
Company in relation to the Project. The Company is required to pay technical fees for such
services. The Project is currently under execution.

3. Joint venture agreement with Shapoorji Pallonji and Company Limited

The Company has entered into a joint venture agreement (JVA) with Shapoorji Pallonji and
Company Limited (SPCL) dated April 12, 2004 in relation to the construction of a flyover at
the University Circle and Agriculture College in Pune for Maharashtra State Road
Development Corporation Limited (Project).

Subsequently, by a power of attorney dated May 17, 2005 executed by SPCL, SPCL has
authorized the Company to execute the entire Project under the contract. It is agreed that the
JVA will remain valid until the Project is completed. The project is currently under execution.

4. Joint venture agreement with Ultra Construction and Engineering Company Limited and VSL
India Private Limited

The Company entered into a detailed joint venture agreement dated November 24, 2004 with
Ultra Construction and Engineering Company Limited (Ultra) (a company incorporated in
South Korea) and VSL India Private Limited (VSL) pursuant to an initial joint venture
agreement between the above parties, dated March 20, 2004. This agreement relates to the
design and construction of a special bridge across Chenab river at KM 50/800 on the Katra –
Laole Section of Udhamppur-Srinagar-Baramullah Rail Link Project in J&K for Konkan
Railway Corporation Limited (Project).

111
 Pursuant to this agreement, the parties executed a supplemental internal agreement dated
February 18, 2005 whereby the parties agreed that the Company will execute the entire work
relating to the Project and VSL and Ultra will be paid technical fees as per the terms of this
agreement. The Company has agreed to keep VSL and Ultra indemnified against all claims
that may be made by any third party in relation to the Project. The joint venture and the
aforesaid supplemental agreement will remain valid until the Project is completed. The Project
is currently under execution.

5. Joint venture agreement with Per Aarsleff A/S

The Company entered into a joint venture agreement with Per Aarsleff A/S (PAA) (a company
incorporated in Denmark) dated June 7, 2004 in relation to the construction of a Flour Mill
Jetty in Aden, Yemen for Longulf Trading, London U.K.(Project). The parties have an equal
interest this joint venture.

The parties have agreed that they shall share the rights and obligations, risks, costs and
expenses, net profit or net loss in relation to the Project in equal proportions. It was agreed
that the executive body of this joint venture would comprise of a supervisory board; a
manager and a site manager. It is provided that this agreement will remain valid until the
Project is completed. The Project has already been executed and the finalization of accounts
between the parties is pending.

6. Joint venture agreement with Al Saeed Company

The Company entered into a joint venture agreement with Al Saeed Company for
Manufacturing Concrete and Contracting (SMCC), Yemen on April 27, 2006, for carrying out
construction of a cement plant for the National Cement Company at Wadi, Faltah,
(Yemen)(Project). It has been agreed that the interests of the parties in this joint venture would
be in equal ratios.

The parties have agreed that the executive body of this joint venture will comprise of a
supervisory board and a project manager. The supervisory board will be responsible for and
will decide the general policy of the joint venture in relation to the execution of the Project
and related financial matters. It is provided that each member of the said board will have one
vote and decisions of the board shall be unanimous. It has been agreed that this agreement
would be valid up to the final settlement of accounts on the basis of audited final balance
sheet. The Project is currently under execution.

7. Joint venture agreement with Oman Shapoorji Construction Company LL.C.

The Company entered into a joint venture agreement with Oman Shapoorji Construction
Company LL.C. (OSCO), Oman dated August 10, 2006 in relation to the construction of New
Mooring Facility in Shannah (Al-Wusta Region) for the Ministry of Transport and
Communications, Directorate General of Ports and Maritime Affairs, Sultanate of Oman
(Project).
This agreement was modified by a supplemental agreement between the parties dated August
11, 2006 which provided that OSCO would only be responsible for construction of roads and
pavements, electromechanical work and concrete work. It is provided that the joint venture
and the aforesaid supplemental agreement would be valid upto the completion of the Project.
The Project is currently under execution.

Projects pending tender/pre-qualification

1. Memorandum of understanding with United Linear Agencies of India Private Limited

The Company entered into a memorandum of understanding (MOU) with United Linear
Agencies of India Private Limited (ULA) dated March 1, 2006 for the development of
13th/14th/15th/16th Multipurpose Cargo (other than liquid/container cargo) Berths at Kandla
Port for the Kandla Port Trust (Project). The parties have agreed to form a joint venture in the

112
 event the Project is awarded to them. It has been agreed that the parties would have equal
stake in the consortium. Subsequently, by an amendment agreement dated December 11,
2006, the parties have agreed to extend the validity of the MOU from 9 months from the last
date of submission of RFQ (June 12, 2007) to June 30, 2007 or till the signing of a detailed
memorandum of understanding for submission of the RFP document, whichever is earlier.

2. Memorandum of understanding with United Linear Agencies of India Private Limited

The Company entered into a memorandum of understanding (MOU) with United Linear
Agencies of India Private Limited (ULA) dated January 12, 2006 for the development of
cruise-cum-container terminal for Mormugoa Port at Goa on BOT basis (Project). The parties
have agreed to form a joint venture in the event the Project is awarded. Subsequently, by an
amendment agreement dated October 10, 2006 the parties have agreed to extend the validity
of the MOU from 9 months of the last date of submission of the RFQ to June 30, 2007 or till
the signing of a detailed memorandum of understanding for submission of the RFP document,
whichever is earlier.

3. Memorandum of understanding with Shapoorji Pallonji and Company Limited

The Company entered into a memorandum of understanding with Shapoorji Pallonji and
Company Limited (SPCL) dated September 4, 2004 to form a bidding consortium for City
Road development projects on annuity basis for the Pimpri Chinchwad Municipal Corporation
(PCMC) (Project).

The parties have agreed that SPCL shall be the lead member and shall hold a minimum of
51% (along with promoters, subsidiaries or affiliates) of the consortium. The Company (along
with promoters, subsidiaries or affiliates) will be a significant consortium member and will
hold 26% of the consortium. The Company shall be responsible for construction of the Project
whereas SPCL shall be responsible for the overall execution of the Project. The parties have
agreed that this memorandum of understanding will remain valid for a minimum of 9 months
from the last date of submission of proposal for prequalification.

4. Memorandum of understanding with Shapoorji Pallonji and Company Limited and

Infrastructure Development Finance Company Limited

The Company entered into a memorandum of understanding with Shapoorji Pallonji and
Company Private Limited (SPCL) and Infrastructure Development Finance Company limited
(IDFCL) dated September 4, 2006. The parties have agreed to form a special purpose vehicle
in relation to the development of Bhopal-Dewas highway section (including existing by-pass
of Bhopal-Dewas highway) into 4 lanes in the state of Madhya Pradesh on BOT basis for the
Madhya Pradesh Road Development Corporation The parties have agreed that the minimum
equity holding in the SPV shall be as follows:

i) SPCL- 39.78%
ii) Company- 7.80%
iii) IDFCL- 7.80%

(Balance will be held by SPCL, the Company, IDFCL and/or their associates).

This memorandum of understanding is valid for a period of nine months from the last date of
submission of proposal for prequalification. The Project is yet to commence.

5. Memorandum of understanding with Kajima Corporation

The Company has entered into a memorandum of understanding dated April 21, 2005 with
Kajima Corporation (Kajima) (a company incorporated in Japan). The parties have agreed to
form a joint venture to participate in the application of prequalification and tender for the
Bangalore Metro Project Phase - I for Bangalore Mass Rapid Transit Limited (Project) and
jointly perform the Project, if awarded. Kajima has been designated as the leader both during
the pre-tender stage and execution stage of the Project. The parties have agreed that they will

113
 have joint and several liability in the joint venture. The parties have agreed that participation
of the parties in the joint venture will be as follows:

i) Kajima- 55%
ii) Company- 45%

6. Joint Venture Agreement with Vijay Tanks and Vessels Limited

The Company entered into a joint venture agreement (JVA) with Vijay Tanks and Vessels
Limited (VTV) dated March 30, 2006 to bid for the Construction of 1 no Butane & 1 no
Propane Tank for Angola LNG Project, Angola for Overseas Bechtel Inc., Houston, USA
(Project) and jointly execute the Project, if awarded.

This agreement provides that each party will bear its respective cost incurred for the tendering
process but will share the cost common to the joint venture. It has been agreed that VTV shall
be the lead partner and shall provide steel structure/associated works and any other residual
works, wheras the Company is responsible for concrete structure construction work. It has
been agreed that this agreement may terminate if the Project is not awarded or in the event that
it is converted into a detailed joint venture agreement or on December 31, 2006, or such other
date as mutually agreed to by the parties. Subsequently, the parties have entered into an
Addendum Agreement on December 21, 2006 whereby the parties have agreed to –extend the
term of the JVA to June 30, 2007. The Project is pending tender.

7. Memorandum of understanding with Daelim Industrial Company Limited

The Company has entered into a memorandum of understanding dated July 11, 2006 with
Daelim Industrial Company Limited (Daelim) (a company incorporated in South Korea) to
form a joint venture for the pre-qualification in relation to the construction of dry dock at Al
Duqm port in Oman for Daewoo Shipbuilding & Marine Engineering Company
Limited/HanmiParsons (Project). It is provided that Daelim shall be the leader in the joint
venture and that the interest of the parties in the joint venture shall be as follows:

i) Daelim- 51%
ii) Company- 49%

The parties have agreed that each party will bear its costs during the preparation of the
prequalification application. This agreement shall remain in force until a formal joint venture
is executed between the parties. The Project is pending tender.

8 Memorandum of understanding with Walter Mining PTY Limited

The Company entered into a memorandum of understanding (MOU) dated July 6, 2006 with
Walter Mining PTY Limited (Walter) (a company incorporated in Australia) to work in
collaboration to identify civil projects in India (involving tunneling and mining) and in
furtherance, to explore feasibility of forming a joint venture. It is provided that once a
particular project is identified, the parties will enter into a pre-bid agreement for that project.
Walter has agreed that it will, in order to enable the Company to submit an offer, assume the
lead role in preparing the parties’ technical offer for the underground sections of the work and
cost estimates based on tender documents. The above parties have undertaken to indemnify
each other from and against all losses arising out of or as a consequence of this MOU. The
MOU will remain valid for a period of 24 months from the date of its execution.

9. Memorandum of understanding Agreement with Construzioni Cimolai Armando SPA

The Company entered into a memorandum of understanding dated September 22, 2005 with
Construzioni Cimolai Armando SPA (Cimolai) (a company incorporated in Italy) to form a
joint venture in order to pre-qualify and submit tender in relation to the work of construction
of steel superstructure of rail cum road bridge across river Ganga at Munger (Project). It has
been agreed that the participating interest of each party in the joint venture shall be as follows:

114
 (i) Company- 51%
(ii) Cimolai- 49%

It is provided that this agreement may be terminate if the parties are not pre-qualified for the
project; by mutual consent of the parties or until the detailed joint venture is entered into,
whichever is earlier. The Project is tending tender.

10. Consortium Agreement with OOO Peter Gaz

The Company entered into a consortium agreement dated July 3, 2006 with OOO Peter Gaz
(“OOO”) (a company incorporated in Russia) to jointly prepare and submit the application of
prequalification and tender for development of Bhadbhut-Ganaand Rajkot-Janmagar Pipeline
project on an EPC basis for Gujarat State Petronet Limited (Project) and thereafter, to enter
into a contract to carry out the Project, if awarded. It has been agreed that the Company shall
be the leader of the consortium and has been authorized to incur liabilities and receive
instruction for and on behalf of any one or all members of the consortium. The Company has
agreed to provide manpower, equipment, consumable etc. for executing the Project and OOO
has agreed to lend technology and project management expertise. Subsequently, by way of a
supplementary consortium agreement dated July 5, 2006, MJR Engineering Overseas Limited
(a company incorporated in Russia) has also been made a party to this arrangement.

11. Joint Venture Agreement with R. N. Shetty and Company Private Limited

The Company entered into a joint venture agreement with R.N Shetty and Company Limited
(RNS) dated February 4, 2004 pertaining to the construction of earth dam (main dam across
the river, left embankment and right embankment) including concrete spillway,
power/irrigation intake structures, instrumentation and powerhouse of Pagladiya Dam Project
in the district of Nalbari, Assam for Brahmaputra Board (Ministry of Water Resources),
Government of India. (Project). The parties have agreed that Company shall execute the
entire Project and RNS shall be paid fees for the technical services provided.

12. Memorandum of Understanding with JSC OGCC KazstroyService

The Company has entered into a memorandum of understanding (MOU) with JSC OGCC
KazstroyService (a company incorporated in Kazakhstan) on October 16, 2006 for the purpose
of bidding for Assam Renewal Project vide Tender No. MR/OW/MM/APR/)01/2006
(Project). The parties have agreed to form a joint venture named Afcons-KazStroyService
Joint Venture (JV) in the event the Project is awarded to them. It is provided that the Company
shall be the leader of the JV. Both parties have agreed to participate in the JV in relation to
profit or loss and contractual works in the ratio as follows:

i) Company- 51%
ii) KazStroyService- 49%

The above MOU shall terminate if the bid of the parties is not accepted or; the bid process is
cancelled or submission is postponed beyond June 30, 2007 (unless extended in wrting) or; the
Project is awarded to a bidder other than the JV or, a detailed joint venture agreement is
executed between the parties (in the event of the Project being awarded to them).

Our Subsidiaries

Unless otherwise stated no subsdaries of ours is a sick company under the meaning of SICA and none
of them are under winding up. Further, all our subsdiarires are unlisted companies and they not made
any public issue of securities in the preceding three years.

AFCONS Arethusa Offshore Services Private Limited.

Corporate Information

115
This company was incorporated on May 2, 1984. Presently, its registered office is located at Afcons
House, 16, Shah Industrial Estate, Veera Desai Road, Azadnagar P.O, Mumbai 400 053.

The company had been involved in oil drilling jobs for the Oil and Natural Gas Corporation Limited as
a contractor. However, for the last three years this company has not engaged in any business.

Shareholding pattern as on December 31, 2006:

Sr No. Name of the Shareholder No. of Equity Shares Percentage

1. Afcons Infrastructure Limited and its nominees. 60,000 60.0
2. Z North Sea Ltd. 40,000 40.0

Board of Directors:

The board of directors as on December 31, 2006 consists of:

1. A. H. Divanji
2. M.F. Baudion (Alternate Director- J.K. Davis)
3. W.C. Long (Alternate Director- S.G. Elwood)
4. P.R.Rajendran

Financial Information:

The audited financial results for this company for the last three fiscal are as follows:

(Rs. million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Equity Share Capital 1.00

1.00 1.00
Reserves and Surplus 8.02
6.71 7.23
Income - - -
Profit/ After Tax (PAT) (1.767)
(0.525) (0.78)

Earning Per Share (EPS) (Rs.)

(5.25) (7.84) (17.67)
Book Value (Face value of Rs.10 per share) (Rs.) 82.36 90.20
77.11

Hazarat & Company Private Ltd.

Corporate Information:

This company was incorporated on November 11, 1982. Presently, its registered office is located at
Warden House, Sir P.M.Road, Fort, Mumbai 400 023.

The company was formed to acquire the running business of M/s Hazarat & Co. which was a sole
proprietary business. The company carries on the business of commission agents, importers &
exporters, traders and financiers, including the rendering of secretarial and administrative services to
sister & outside concerns. The company also carries on the business of contractors and sub contractors
and to award contracts or sub contracts. The company can also undertake work as contractors to
execute complete or partial designs, erection and construction of structures, buildings and other works
of all description.
The company is not presently engaged in any activities.
Shareholding pattern as on December 31, 2006

116
Sr Name of the Shareholder No. of Equity Shares Percentage
No.
1. Afcons Infrastructure Ltd. and its 2,02,610 100
nominees

Board of Directors:

The board of directors as on December 31, 2006 consists of:

1. A. H. Divanji
2. H. J. Tavaria
3. F. K. Bathena

Financial Performance

The audited financial results for this company for the last three fiscal are as follows

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Equity Share Capital 2.02 2.02 2.02

Reserves and Surplus (0.18) (0.19) (0.18)
Income 0.12 0.08 0.08
Profit/ After Tax (PAT)
0.01 (0.01) (0.01)
Earning Per Share (EPS) (Rs.) 0.07 (0.08) (0.07)
Book Value (Face value of Rs.10/- per share) (Rs.)
9.09 9.01 9.10

SSS Electricals (India) Private Limited

Corporate Information

This company was incorporated on July 18, 1985. Presently, its registered office is located at Afcons
House, 16, Shah Industrial Estate, Veera Desai Road, Azadnagar P.O, Mumbai 400 053.

This company was formed to undertake construction, fabrication and erection of overhead transmission
line systems; production and erection of electrical switching plants, distribution boards and control
panels; and active corrosion protection systems (anodic and cathodic). The company is currently
undertaking jobs relating to cathodic protection

Board of Directors

The board of directors as on December 31, 2006 consists of:

1. A. H. Divanji
2 G. Zimmermann (Alternate Director- R.P.Nagar)
3. S. Paramasivan

Shareholding pattern as on December 31, 2006:

Sr No. Name of the Shareholder No. of Equity Shares Percentage

1 Afcons Infrastructure Limited and its nominees. 48,000 60.00

2. Sterlestorm Und Signal Bangesellschaft 32,000 40.00

Financial Performance:

The audited financial results for this company for the last three fiscal are as follows:

117
 (Rs. in million except per share data)
Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Equity Share Capital 0.8 0.8 0.8

Reserves and Surplus 7.50 6.78 6.49
Income 12.49 9.00 11.68
Profit/ After Tax (PAT) 0.71 0.29 0.52
Earning Per Share (EPS) (Rs.) 8.94 3.59 6.51
Book Value (Face value of Rs.10/- per share) (Rs.)
103.72 94.77 91.18

Associate Companies

Afcons Construction Mid East LLC

This company was incorporated on September 3, 2005 under the laws of the United Arab Emirates.
Presently its registered office is located at Office No. 203, 2nd Floor, Ali Saeed Abdulla Bel Hub AlAli
Amiri Building, Opposite Dubai Residential Oasis, P.O. Box 47516, P.O. Al Guasis, Dubai, United
Arab Emirates.

The Company has entered into an agreement for incorporation dated September 25, 2005 for Afcons
Construction Mid East LLC with Ahmed Hasan Mohamed Ali Alali. Some of the main provisions of
this incorporation agreement are as follows:

(a) any partner can transfer his/its shares in this company to another partner or to a third party by
virtue of a written instrument. The selling price for the shares in case of such a transfer will
have to be certified by the auditor of this company and will be without any discount or
premium However, no such transfer of shares will be permitted which would reduce the
number of partners to less than two or which would increase the number of partners to more
than fifty.

(b) The board of managers for this company are to consist of a minimum of two and a maximum
of 5 members and it has been agreed that the Company shall be entitled to appoint up to 5
individuals to the board of managers.

(c) This company is to have a general meeting composed of all the partners in Dubai atleast once
a year. The Board of Managers must call for a general meeting if requested by any partner
holding at least one quarter of the shares. A partner is entitled to the number of votes equal to
the number of shares he/it owns or represents.

(d) The net profits shall be distributable among the present partners as follows:

(i) Ahmad Hasan Mohamed Ali AlAli – 20%

(ii) Afcons Infrastructure Limited – 80%

(e) This agreement cannot be amended neither can the share capital of this company be increased
or reduced without the consent of partners holding three-quarters of the shares.

(f) All disputes which may arise between the partners regarding liquidation of this company or
regarding any provision of this agreement shall be referred to the civil courts in the Emirate of
Dubai, if they cannot be amicably resolved.

(g) This agreement shall be governed by and be construed, interpreted and take effect in
accordance with the laws in force in the Emirate of Dubai from time to time.

This company has been formed to engage in jobs relating to contracting of piling and foundation
works, road works, construction of bridges and dams, ports and marine construction and prestressed
concrete works.

118
Board of Managers

The board of mangers as on December 31, 2006 consists of:

1. C.P. Mistry
2. J.J. Parakh
3. K. Subrahmanian
4. A.N. Jangle
5. N. Selvaraj

Shareholding Pattern as on December 31, 2006:

(Figures in Arabian Emirates Dirham)
Sr Name of the Shareholder Paid up capital Percentage
No.

1. Afcons Infrastructure Limited 147,000 49%

2. Ahmed Hasan Mohamed Ali AlAli 153000 51%

Financial Performance

The company has no financial performance figures to report since it has not commenced any business
activity as yet.

Partnerships

Afcons Pauling Joint Venture

The company entered into a partnership agreement dated August 5, 1988 with Pauling PLC, London.
The partnership was formed to execute, perform and complete and maintain jointly the works of a
particular tender. This partnership is presently not engaged in any business activity.

The profit/loss sharing ratio of the partnership is as follows:

Profit Loss
Afcons Infrastructure Limited 95% 100%
Pauling PLC, U.K. 5% -

Financial Performance

The audited financial results for this partnership for the last three fiscal are as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Share Capital 17.4 17.4 17.4

Reserves and Surplus - - -
Income - 3.93 0.03
Expenditure 1.83 1.32 0.65
Profit/(Loss) After Tax (1.83) 2.62 (0.62)

Subsidiaries under Liquidation

Kier Afcons (India) Limited

This company was incorporated on December 14, 1987. The company was formed to bid for execution
of civil construction works. However the company is now under voluntary winding up and the matter is
pending with the Official Liquidator for filing with the High Court of Mumbai. The final assets and

119
liabilities of the company have been fully realized and proceeds have been paid to the shareholders of
the company.

Board of Directors

The erstwhile board of directors of the company consisted of:

1. A.H. Divanji
2. S.A. Graham
3. S.J. Paul
4. R.A. Bhansali
5. N.J. Jhaveri (Alternate Director)

Shareholding Pattern of this company before filing for liquidation was as follows:

Sr No. Name of the Shareholder No. of Equity Shares Percentage

1. Afcons Infrastructure Limited and its nominees 76,500 51.0%
2. K.I. Investments Limited, U.K. 73,500 49.0%

Financial Performance

The company does not have any financial performance figures to report since the company had not
undertaken any business activity since incorporation up to winding up.

The company was an unlisted company and it did not make any public issue in the preceding three
years before it was resolved to be voluntarily wound up.

Subsidiaries that have been wound up

Rodio Afcons India Limited

The company was incorporated November 21, 1986. The company was formed to bid for specialized
pile foundation works in India and abroad. However, the company has been voluntarily wound up as
per the order of the High Court of Mumbai with effect from September 8, 2004.

Nakajo Engineering Works (India) Limited

The company was incorporated on December 24, 1998. The company was formed to bid for
specialized jobs for fabrication engineering. However, the company has been voluntarily wound up as
per the order of the High Court of Mumbai with effect from July 2, 2004.

Subsidiaries of the Company that have been sold

Tensacciai India Private Limited

This company was incorporated on November 24, 1986. The company had been formed to bid for
specialized jobs of civil contracts. The Company sold 6000 shares with a par value of Rs.100 per share
aggregating to 60% of its equity holding in the company to Prudential Securities and Financial Trust
Private Limited for a sum aggregating approximately to Rs.0.78 million. The shares in the company
were sold through a share sale and purchase agreement dated March 27, 2006.

Afcons Dredging and Marine Services Limited

This company was incorporated on January 24, 1986. This company had been formed to carry on in
India and other parts of the world, the business of securing and executing contracts of works relating to
dredging and other ancillary works. The company sold 10,000 shares with a par value of Rs.100 per
share aggregating to 100% of its equity holding in this company to Shapoorji Pallonji Infrastructure
Capital Co., Limited on December 7, 2006 for a sum aggregating to Rs. 1 million

Afcons BOT Constructions Private Limited

120
This company was incorporated on June 17, 1987. This company had been formed to carry on the
business of conducting hydrographic, oceanographic, geophysical, topographic and geodetic surveys,
underwater diving and render and supply all forms of connected services. The company sold 40,000
shares with a par value of Rs. 10 per share aggregating to 100% of its equity holding in this company to
Shapoorji Pallonji & Co., Limited on December 15, 2006 for a sum aggregating to Rs. 0.4 million.

Afcons (Overseas) Constructions & Investments Private Limited

This company was incorporated on August 28, 1981. This company had been formed to carry on in
India and other parts of the world, the business of securing and executing contracts of works relating to
specialized foundations such as pile foundations and construction of marine works. This company
could also carry on business as building contractors and undertakes and carries out building
construction works. The company sold 1000 shares with a par value of Rs. 100 per share aggregating
to 100% of its equity holding in this company to Shapoorji Pallonji & Co.; Limited on December 15,
2006 for a sum aggregating to Rs. 0.1 million.

121
 OUR MANAGEMENT

Board of Directors:

We currently have 11 directors. The following table sets forth details regarding our Board as of the
date of filing the Draft Red Herring Prospectus with SEBI.

Name, Designation, Father’s Name, Address, Age Other Directorships

Occupation and Term
Cyrus P. Mistry 38 • Shapoorji Pallonji & Co., Ltd.
(S/o Pallonji Mistry) • Buildbazaar Technologies (India) Pvt.
Non-Executive Chairman Ltd.
• Cyrus Investments Ltd.
Sterling Bay, • Samalpatti Power Co.Pvt. Ltd.
103, Walkeshwar Road, • Shapporji Pallonji Finance Ltd.
Walkeshwar, Mumbai 400 006, • United Motors (India) Ltd.
India
• Shapoorji Pallonji Power Co. Ltd.
• Shapoorji Pallonji Infrastructure
Term: Liable to retire by rotation
Capital Co.Ltd.
Occupation: Business
• Sterling Investment Corporation Pvt.
Ltd.
• Tata Elxsi Ltd.
• Oman Shapoorji Construction Co.
LLC., Muscat
• Shapoorji Pallonji & Co. (Rajkot) Pvt.
Ltd.
• Pallonji Shapoorji & Co. Pvt. Ltd.
• Forbes Gokak Limited
• Forvol International Services Ltd.
• Afcons Construction Mideast
(LLC)
• Tata Sons Limited
• ANS Textiles (Bangalore Limited)

K. Subrahmanian 48 • Afcons Construction Mideast

(S/o S. Krishnamurthy) (LLC).
Managing Director

611 Wing ‘C’, Evening Star,

Raheja Vihar, Andheri (East), Mumbai 400 072,
India

Term: July 1, 2005 – June 30, 2008. Also liable

to retire by rotation.
Occupation: Service

Pallonji S. Mistry 77 • Shapoorji Pallonji & Co.Ltd.

(S/o Shapoorji Mistry) • Forbes Gokak Ltd.
Non-Executive Director • Cyrus Investments Ltd.
• Shapoorji Pallonji Power Co.Ltd.
Sterling Bay, • United Motors (India) Ltd.
103, Walkeshwar Road, • Shapoorji Pallonji Finance Ltd.
Walkeshwar, Mumbai 400 006,
• Pallonji Shapoorji & Co. Pvt.
India
Ltd.
• Shapoorji Pallonji Infrastructure
Term: Liable to retire by rotation
Capital Co.Ltd.
Occupation: Business
• Oman Shapoorji Construction

122
 Name, Designation, Father’s Name, Address, Age Other Directorships
Occupation and Term
Co. LLC., Muscat
• Shapoorji Pallonji Mid East LLC,
UAE
• Sterling Trading Co. (LLC)
Dubai.
• Euro Forbes International Pte.
Ltd.
• Forvol International Services
Ltd.

Shapoor P. Mistry 42 • Shapoorji Pallonji & Co.Ltd.

(S/o Pallonji Mistry) • Eureka Forbes Ltd.
Non-Executive Director • Forbes Gokak Ltd.
• Samalpatti Power Co.Pvt. Ltd.
Sterling Bay, • Shapoorji Pallonji Infrastructure
103, Walkeshwar Road, Capital Co.Ltd.
Walkeshwar, Mumbai 400 006, • Pallonji Shapoorji & Co. Pvt. Ltd.
India
• The Manji Stud Farm Pvt. Ltd.
• Shapporji Pallonji Finance Ltd.
Term: Liable to retire by rotation
• Shapoorji Pallonji & Co.Rajkot)
Occupation: Business
Pvt. Ltd.
• Sterling Investment Corporation
Pvt.Ltd.
• Forbes Infotainment Pvt. Ltd.
• S.P. Oil Exploration Pvt. Ltd.
• Sovereign Pharma Pvt. Ltd.
• Shapoorji Pallonji Power Co. Ltd.
• The Indian Hotels Company Ltd.
• Cyrus Investments Ltd.
• United Motors (I) Ltd.
• Forvol International Services Ltd.
• ANS Textiles (Bangalore Limited)

Jimmy Jehangir Parakh 56 • Afcons (Mideast) Constructions

(S/o Jehangir Parakh) Investments Pvt. Ltd.
Non –Executive Director • Adaro Securities Pvt. Ltd.
• Advance Tech Energy Additives
502, Sterling Tower, Pvt. Ltd.
Horichandra Goregaonkar • Afcons Construction Mideast LLC
Marg, Gamdevi, • Blue Arrow Finance Co. Pvt. Ltd.
Mumbai 400 007, • Cama Properties Pvt. Ltd.
India
• Chinsha Investments Pvt. Ltd.
• Chinsha Propertyy Pvt. Ltd.
Term: Liable to retire by rotation
• Cyrus Engineers Pvt. Ltd.
Occupation: Service
• Cyrus Investments Limited
• Crystal Investment Company Pvt.
Ltd.
• Day Star Investments Pvt. Ltd
• Dhan Gaming Solution (India)
Pvt. Ltd.
• Faery Estates Pvt. Ltd.
• Finvestco Investments Pvt. Ltd.
• Floreat Investments Ltd
• Floral Finance Pvt. Ltd.

123
 Name, Designation, Father’s Name, Address, Age Other Directorships
Occupation and Term
• Flooraise Developers Pvt. Ltd.
• Grand View Estates Pvt. Ltd.
• Glittering Gold Finance Pvt. Ltd.
• Heminishi Investments Pvt. Ltd.
• Highstreet Developers Pvt. Ltd.
• Kaisha Manufacturers Pvt. Ltd.
• Mangal Shrusti Gruh Nirmiti Pvt.
Ltd.
• Meriland Estates Pvt. Ltd.
• Manjri Developers Pvt. Ltd.
• Next Gen Publishing Limited
• Palchin Real Estate Pvt. Ltd.
• SP Fabricators Pvt. Ltd.
• SP Finance Pvt. Ltd.
• SP Oil Exploration Pvt. Ltd.
• Shapoorji Data Processing Pvt.
Ltd.
• Shapoorji Hotels Pvt. Ltd.
• Shapoorji Pallonji & Co. Ltd.
• Shapoorji Pallonji (Cama Estates)
Pvt. Ltd.
• Silver Streak Investments Pvt.
Ltd.
• Shapoorji Pallonji Finance Ltd.
• S.C. Impex Pvt. Ltd.
• Sterling Investment Corporation
Pvt. Ltd
• Sterling Overseas Impex Pvt. Ltd.
• Sterling Generators Private
Limited
• S.C. Finance & Investments Pvt.
Ltd.
• United Motors (India) Ltd.
• West Star Finance & Investments
Pvt. Ltd.
• Winward Builders Pvt. Ltd
Anil N. Jangle 64 • Afcons Construction Mideast
(S/o Namdeo Jangle) (LLC)
Executive Director • Trichy Tollway Limited.

Flat No.703, Janki Kutir,

Vikram Apartments,
Juhu, Mumbai: 400 049,
India

Term: July 1, 2005 – June 30, 2008

Also liable to retire by rotation. Occupation:
Service

S. Paramasivan 49 • Afcons (Mideast) Constructions

(S/o R. Srinivasan) and Investments Pvt. Ltd.
Executive Director • SSS Electrical (India) Pvt. Ltd.
• Fouress Engineering (India) Ltd.
Venus – Flat No.85, • Afcons BOT Constructions Pvt.
Versova Venus CHS. .Ltd. Ltd.
Plot No.6, R.D.P. 2, S.V.P. Nagar, Andheri (W), • Afcons Dredging & Marine

124
 Name, Designation, Father’s Name, Address, Age Other Directorships
Occupation and Term
Near Versova Tel. Exchange, Mumbai 400 053, Services Limited
India

Term: June 10, 2005-June 30, 2008

Also liable to retire by rotation.
Occupation: Service

Abhimanyu H. Divanji 78 • Afcons (Overseas) Constructions

(S/o Hemendra Divanji) And Investments Private Limited
Independent Director • Afcons (Mideast) Constructions
And Investments Private Limited
Le Repos, Flat No.51 Perry Cross Road, Bandra • Hazarat & Company Private
(West), Limited
Mumbai 400 050, • Afcons – Arethusa Offshore
India Services Pvt. Limited
• SSS Electricals (India) Private
Term: Liable to retire by rotation Limited
Occupation: Service • Afcons Dredging & Marine
Services Limited
• Afcons BOT Constructions
Private Ltd.

Narendra Jamnadas Jhaveri 71 • Indian Aluminium Co. Ltd.

(S/o. Jamnadas Jhaveri) • National Securities Depository
Independent Director Ltd.
• Pidilite Industries Limited
C-42, Samprat Residency, Opp. Parivar Society, • SKF Bearings India Limited
Near Maharaja Farm, Premchandnagar Road, • Siemens Ltd.
Bodakdev, Ahmedabad 380 015, • Usha Martin Ltd.
India
• Voltas Ltd.
• Gujarat State Petronet Limited
Term: Liable to retire by rotation
• Siemens Information Systems Ltd.
Occupation: Consultant
• Star Paper Mills Ltd.
• Hindalco Industries Ltd
• Manipal Health Systems Pvt. Ltd.
• UltraTech Cement Ltd.
• Juniper Hotels Pvt. Ltd.

N.D. Khurody 69 • Voltas Limited

(S/o D. Khurody) • Eureka Forbes Limited
Independent Director • Samrat Holdings Limited
• Kurody Technical Services Pvt.
12 A, Darbhanga Mansions, Ltd.
M.L. Dhanukar Marg, • HSBC Asset Management (I) Pvt.
Mumbai 400 026 Ltd.
• Vantech Investments Limited
Term: Liable to retire by rotation
• Forbes Gokak Limited
Occupation: Company Director
• Forbes Infotainment Limited
• Tata Ceramics Limited
• Next Gen Publishing Limited
Pradip N. Kapadia 55 • Fortune Communications Private
(S/o Narotam Kapadia) Limited.
Independent Director • Hindustan Thompson Associates
Private Limited.
Govind Building, • Mafatlal Denim Limited.
140, Princess Street, • Navin Flourine International

125
Name, Designation, Father’s Name, Address, Age Other Directorships
Occupation and Term
Mumbai 400 002 Limited.
• Sumangala Investments Private
Term: Liable to retire by rotation Limited
Occupation: Advocate and Solicitor • The Sanmar Group Corporate
Board

Brief Biographies

Mr. Cyrus P. Mistry, 38, an Irish national is the Non-Executive Chairman of the Company. Cyrus
Mistry is an alumnus of the Imperial College, London from where he graduated with a degree in B.E.
(Civil). He is also an alumnus of the London Business School from where he graduated with a
postgraduate degree in Master of Science in Management. Cyrus Mistry is also a Fellow of the Institute
of Civil Engineers. Cyrus Mistry’s expertise includes formation of business plans, risk evaluation,
business investment strategy and property and infrastructure development. Cyrus Mistry has been
actively involved in the business of Shapoorji Pallonji & Co., Limited as the Managing Director since
April 1994 and has significantly contributed towards expansion of the company.

Mr. K. Subrahmanian, 48, an Indian national is the Managing Director of the Company. K.
Subrahmanian is an alumnus of REC, Trichy from where he graduated in mechanical engineering. He
is also an alumnus of NITIE, Mumbai from where he graduated with a post graduate degree in
industrial engineering. K. Subrahmanian has previously worked with Hindustan Construction Company
Ltd. in various areas of project management including project planning, execution, and overall project
management apart from contract management and corporate planning. K. Subrahmanian has
contributed to various international bodies such as the World Bank, Asian Development Bank for the
development and implementation of standard contract forms for the Construction Industry. K.
Subrahmanian is a recipient of the “Bharat Shiromani Award, 2004” in recognition for his notable
contribution in the construction industry.

Mr. Pallonji S. Mistry, 77, an Irish national is a Non-Executive Director of the Company. Pallonji S.
Mistry joined the business of Shapoorji Pallonji and Co., Limited at the age of 18 years and has
garnered over 55 years of experience in various facets of the Company’s business. Pallonji S. Mistry
was instrumental in expanding the business of Shapoorji Pallonji & Co., Limited Shapoorji Pallonji &
Co., Limited completed a number of notable contracts, under the Chairmanship of Pallonji S. Mistry,
such as the construction of the Sultan’s palace and a number of ministerial buildings in Oman, a
hospital as well as the palace guest house in Abu Dhabi and the setting up of a private power project in
India. Pallonji S. Mistry’s experience spreads over diverse streams of business such as real estate,
trading, power generation and information technology. Pallonji S. Mistry was ranked 199th in the
Forbes List of World Billionaires.

Mr. Shapoor P. Mistry, 42 an Irish national is a Non Executive Director of the Company. Shapoor P.
Mistry is an alumnus of Richmond College, London from where he graduated with a degree in BA
(Business and Economics). Shapoor P. Mistry has been actively involved in the business of Shapoorji
Pallonji & Co., Limited. Shapoor P. Mistry is currently the Chairman of Forbes Gokak Limited as well
as Eureka Forbes Limited.

Mr. Jimmy J. Parakh, 56 an Indian national is a Non-Executive Director of the Company. J. Parakh is
a Fellow member of the Institute of Chartered Accountants of India and holds a senior management
position in the Shapoorji Pallonji Group of companies. J. Parakh has over 30 years of experience in the
management of corporate affairs of the companies engaged in diversified business activities. He has
been involved in setting up and operation of companies specializing in various businesses such as civil
engineering contracts, property development, automobile marketing, finance and infrastructure.

Mr. Anil N. Jangle, 64, an Indian national is an executive director of the Company and currently
designated as Executive Director (Business Development). A.N. Jangle is an alumnus of the
University of Bombay from where he graduated in civil engineering. A.N. Jangle is also an alumnus of
the Indian Institute of Technology, Bombay from where he graduated with a masters degree in soil
engineering. A.N. Jangle has been involved with the successful completion of a number of important

126
projects relating to major ports, highways, nuclear power plants, oil terminal jetties, cargo berths and
submarine pipelines. A.N. Jangle has contributed to a number of articles which have been published in
technical journals in India and the United Kingdom. A.N. Jangle has been associated with various
committees of the Indian Standards Institutes and has been involved with deliberations, formulations
and finalization of several codes of practices.

Mr. S. Paramasivan, 49, an Indian national is an Executive Director of the Company and currently
designated as Senior Executive Director (Finance and Commercial). S. Paramasivan is an alumnus of
the University of Madurai from where he graduated with a degree in Commerce. S. Paramasivan is a
Certified Associate of the Indian Institute of Bankers. He is a fellow member of Instititue of Cost and
Work Accountants of India and Institute of Company Secretaries of India. Mr. S. Paramasivan has
previously served the State Bank of Travancore for 15 years. S. Paramasivan was a member of the
Banking and Finance Committee of the Bombay Chamber of Commerce and Industry. He has
contributed numerous articles on matters of interest on banking and finance.

Mr. Abhimanyu. H. Divanji, 78, an Indian national is a Director of the Company. Abhimanyu H.
Divanji graduated with a degree in B.E. (Civil) and was instrumental in forming Asia Foundation and
Construction Private Limited in 1976. Prior to this, he was instrumental in forming the partnership firm
of Rodio Foundation Engineering (Swiss Company) and Hazarat & Company in 1959 of which he was
Chief Operating Executive. Abhimanyu H. Divanji had been the managing director of the Company
since its inception up to February, 2002. Abhimanyu H. Divanji during his tenure as managing director
of the Company was instrumental in diversification of the Company’s activities from pile foundation
works to construction of bridges, marine structures and highways.

Mr. Narendra J. Jhaveri, 71, an Indian national is a Director of the Company. Narendra J. Jhaveri
obtained his master’s degree in economics from the London School of Economics. He has worked
with the RBI and the ICICI in all major operational areas including project finance, equity investment,
leasing, restructuring, merchant banking, venture capital and technology finance besides economic and
market research. Narendra J. Jhaveri has provided advisory services to the World Bank, development
banks in Bhutan, Uganda and Tanzania. Narendra J. Jhaveri was also a member of several official
committees including SEBI. He has also contributed numerous articles and research papers in Indian
journals and has been a frequent speaker at various seminars and conferences held all over India. He
also serves as independent director on the board of directors of several reputed companies in India.

Mr. N.D. Khurody, 69, an Indian national is a Director of the Company. N.D. Khurody is an alumnus
of Trinity College, Cambridge from where he graduated with a masters degree in Economics with
honours. N.D. Khurody has previously worked with Tata Administration Service where he worked in
various capacities and has handled operations in diverse businesses such as tea and steel. Mr. N.D.
Khurody has extensive experience in business and financial planning.

Mr. Pradip N. Kapadia, 55, an Indian national is a Director of the Company. Pradip N. Kapadia is an
alumnus of the University of Bombay from where he graduated with B.A. and LL.B degrees. Pradip
N. Kapadia qualified as an advocate in 1974 and subsequently as an attorney at law of the High Court
of Judicature at Bombay in 1976. Pradip N. Kapadia is presently a senior partner in the law firm of
Vigil Juris in Mumbai. Pradip N. Kapadia is also a member of the Law review, Reform and
Rationalisation Committee of Indian Merchant’s Chamber as well as the Legal Affairs Committee of
the Bombay Chamber of Commerce and Industry.

Remuneration of Directors

The remuneration of our executive Directors is as per the terms of appointment contained below:

Agreement with Mr. K. Subrahmanian, our Managing Director

Under the terms of an agreement dated September 1, 2005, Mr. K. Subramanian has been reappointed
as our Managing Director with effect from July 1, 2005 for a term of three years till June 30, 2008. The
revised remuneration payable to him with effect from July 1, 2006 which has been ratified by the Board
of Directors at its meeting held on November 28, 2006 is provided below. The shareholders by way of
their resolution dated September 30, 2005 had approved the overall limit within which the Board has
fixed the revised remuneration to Mr. Subrahmanian.

127
Fixed A monthly fixed compensation of Rs. 86,250 in the grade of Rs. 70,000 – Rs.
Compensation: 1,20,000. Mr. Subrahmanian will be entitled to receive a sum of Rs. 26,00,000 per
annum in the scale of Rs. 19,19,000 – Rs. 32, 90,000 for availing perquisites as are
applicable to other senior executives of the Company.
Variable Mr. Subrahmanian will be eligible to receive payments of annual incentives as
Compensation: may be applicable to other senior executives of the Company.
Benefits and Mr. Subrahmanian is eligible to receive benefits and payments which include
Payments: mediclaim policy for self and family as per rules of the Company, reimbursement
of medical expenses for self and family not exceeding one month’s basic salary
per annum, annual executive health check up for self and wife, Company to
provide two air conditioners at the residence of Mr. Subrahmanian but the
electricity and cost of maintenance to be borne by Mr. Subrahmanian,
contribution to provident fund and superannuation fund as per company rules.
Others: Mr. Subrahmanian is eligible to receive certain other benefits which are in addition
to the aforesaid remuneration package. These benefits include gratuity as per
Company rules, a Company maintained car and in the event the Company does not
provide a car, Mr. Subrahmanian will be reimbursed a sum of Rs. 4,500 per month
or such sum as per Company rules but expenses towards use of car for personal
use to be borne by Mr. Subrahmanian, reimbursement of one telephone bill at Mr.
Subrahmanian’s residence excluding personal and long distance calls, leave
entitlements and leave encashment accumulated but not availed as per Company
rules and reimbursement of entertainment and club expenses incurred for business
of the Company.

Agreement with Mr. S. Paramasivan, our Executive Director (Finance and Commercial)

Under the terms of an agreement dated September 1, 2005, S. Paramasivan has been reappointed as our
whole time director designated as Executive Director (Finance and Commercial) with effect from June
10, 2005 for a term of three years till June 30, 2008. The revised remuneration payable to him with
effect from July 1, 2006 which has been ratified by the Board of Directors at its meeting held on
November 28, 2006 and is provided below. The shareholders by way of their resolution dated
September 30, 2005 had approved the overall limit within which the Board has fixed the revised
remuneration to Mr. S. Paramasivan.

Fixed A monthly fixed compensation of Rs. 64,500 in the grade of Rs.42,000 – Rs.
Compensation: 70,000 per annum. Mr. Paramasivan will be entitled to receive a sum of Rs.
19,52,000 per annum in the scale of Rs. 12,98,000 – Rs. 21,63,000 for availing
perquisites as are applicable to other senior executives of the Company.

Variable Mr.Paramasivan will be eligible to receive payments of annual incentives as may

Compensation: be applicable to other senior executives of the Company.

Benefits and Mr. Paramasivan is eligible to receive benefits and payments which include
Payments: mediclaim policy for self and family as per rules of the Company, reimbursement
of medical expenses for self and family not exceeding one month’s basic salary
per annum, contribution to provident fund and superannuation fund as per
company rules.

Others Mr. Paramsivan is eligible to receive certain other benefits which are in addition to
the aforesaid remuneration package. These benefits include gratuity as per
Company rules, a Company maintained car and in the event the Company does not
provide a car, Mr. Paramsivan will be reimbursed a sum of Rs. 4,500 per month or
such sum as per Company rules but expenses towards use of car for personal use
to be borne by Mr. Paramsivan, reimbursement of one telephone bill at Mr.
Paramsivan’s residence excluding personal and long distance calls, leave
entitlements and leave encashment accumulated but not availed as per Company
rules.

Agreement with A.N. Jangle, our Executive Director (Business Development)

128
Under the terms of an agreement dated September 1, 2005, A.N. Jangle has been reappointed as our
whole time director designated as “Executive Director (Business Development)” with effect from July
1, 2005 for a term of three years till June 30, 2008. The revised remuneration payable to him with
effect from July 1, 2006 which has been ratified by the Board of Directors at its meeting held on
November 28, 2006 is provided below. The shareholders by way of their resolution dated September
30, 2005 had approved the overall limit within which the Board has fixed the revised remuneration to
Mr. Jangle .

Fixed A monthly fixed compensation of Rs. 60,000 in the grade of Rs. 42,000 – Rs.
Compensation: 70,000. Mr. Jangle will be entitled to receive a sum of Rs. 18,01,000 per annum in
the scale of Rs. 11,70,000 – Rs. 19,50,000 for availing perquisites as are
applicable to other senior executives of the Company.

Variable Mr. Jangle will be eligible to receive payments of annual incentives as may be
Compensation: applicable to other senior executives of the Company.

Benefits and Mr. Jangle is eligible to receive benefits and payments which include
Payments: reimbursement of medical expenses including premium payable for mediclaim
policy for self and family not exceeding Rs. 15,000 per annum and contribution to
provident fund and superannuation fund as per company rules.

Others: Mr. Jangle is eligible to receive certain benefits which are in addition to the
aforesaid remuneration package. These benefits include gratuity capped at 15
days’ basic salary for each completed year of service, payment of Rs. 2,50,000 per
annum in lieu of Company providing a car, payment of Rs. 3,40,000 per annum
towards maintenance, petrol, insurance and driver’s salary towards use of car but
expenses towards use of car for personal use to be borne by Mr. Jangle,
reimbursement of one telephone bill at Mr. Jangle’s residence excluding personal
and long distance calls and leave entitlements and leave encashment accumulated
but not availed as per Company rules .

In relation to other Directors of the Company, apart from sitting fees and reimbursement of expenses,
no remuneration is payable by the Company.

Interests of Directors

All of our Directors may be deemed to be interested to the extent of fees payable to them for attending
meetings of the Board or a committee thereof as well as to the extent of other remuneration and
reimbursement of expenses payable to them under our Articles of Association, and to the extent of
remuneration paid to them for services rendered as an officer or employee of our Company.

Our Directors may also be regarded as interested in the Equity Shares, if any, held by them or by the
companies/firms/ventures promoted by them or that may be subscribed by or allotted to the companies,
firms, trusts, in which they are interested as Directors, members, partners, trustees and Promoters,
pursuant to this Issue. All of our Directors may also be deemed to be interested to the extent of any
dividend payable to them and other distributions in respect of the said Equity Shares.

Our executive Directors receive remuneration from us. For further details see the above. Except as
stated in the section titled “Related Party Transactions” on page 194 of this Draft Red Herring
Prospectus, and to the extent of shareholding in our Company, our Directors do not have any other
interest in our business.

Corporate Governance

We have complied with the requirements of the applicable regulations, including the listing agreement
with the Stock Exchanges and the SEBI Guidelines, in respect of corporate governance including
constitution of the Board and Committees thereof. The corporate governance framework is based on an

129
effective independent Board, separation of the Board’s supervisory role from the executive
management team and constitution of the Board Committees, as required under law.

We have a Board constituted in compliance with the Companies Act and listing agreement with Stock
Exchanges and in accordance with best practices in corporate governance. The Board functions either
as a full Board or through various committees constituted to oversee specific operational areas. Our
executive management provides the Board detailed reports on its performance periodically.

The Board has 11 Directors. The Board comprises a Non-executive Chairman, a managing director,
two executive directors and seven other non-executive directors out of which four are Independent
Directors.

Committees of the Board

Audit Committee

The members of the Audit Committee are;

• N.J. Jhaveri, Independent Director (Chairman)

• N.D. Khurody, Independent Director
• J.J. Parakh, Non- Executive Director

The Audit Committee was reconstituted by a meeting of the Board of Directors held on December 22,
2006. The scope and function of the Audit Committee is in accordance with Section 292A of the
Companies Act and Clause 49 of the Listing Agreement and its terms of reference include the
following:

• Overseeing the Company’s financial reporting process and the disclosure of financial
information.
• Recommending the appointment and removal of external auditors and fixation of audit fees.
• Review with management the annual financial statements before submission to the Board.
• Review with management, external and internal auditors, the adequacy of internal controls.

Remuneration Committee

The members of the Remuneration Committee are;

• N.J. Jhaveri, Independent Director (Chairman)

• N.D. Khurody, Independent Director
• P.N. Kapadia, Independent Director

The Remuneration Committee was reconstituted by a meeting of the Board of Directors held on
December 22, 2006. This committee looks in all matters pertaining to remuneration of whole time
directors and the managing director.

Shareholders/Investors’ Grievance cum Share Transfer Committee

The members of the Shareholders/Investors’ Grievance Committee are:

• P.N. Kapadia Independent Director

• J.J. Parakh, Non-Executive Director
• S. Paramasivan, Wholetime Director

The Shareholders/Investors’ Grievance Committee was constituted by a meeting of the Board of

Directors held on November 28, 2006. This Committee is responsible for redressal of shareholders’
and investors’ complaints relating to transfer of shares, issue of duplicate/consolidated share
certificates, allotment and listing of shares, review of cases for refusal of transfer/transmission of shares
and debentures, non-receipt of balance sheet, and non-receipt of dividends declared. It is also
responsible for reviewing the process and mechanism of redressal of investor complaints and

130
suggesting measures of improving the existing system of redressal of investor grievances. This
Committee is also responsible for approval of transfer of Equity and preference shares including power
to delegate the same to registrar and transfer agents.

Other Committees of the Board

Committee of Directors

The members of the Committee of Directors are;

• N.J. Jhaveri, Independent Director

• J.J. Parakh, Non-Executive Director
• K. Subrahmanian, Managing Director
• S. Paramasivan, Wholetime Director
• A.N. Jangle, Wholetime Director

The Committee of Directors was reconstituted by a meeting of the Board of Directors held on
December 22, 2006. The scope of the Committee of Directors is as follows:

• To review the various aspects of business including operations, finance, business development
etc. from time to time and to assist the Chairman in strategizing the focus of the Company and
create better value for the organization from all angles.
• To open a banking account with any scheduled bank and authorise such persons as may be
deemed fit by the Committee of Directors to operate the same.
• To approve and execute power of attorney in favour of any employee of the Company in
respect of matters as may be deemed necessary from time to time.
• To execute or direct execution of any contract document and power of attorney related to the
day-to-day business of the Company under the common seal of the Company, which may be
required to be executed between Board meetings.
• To draw, endorse and negotiate promissory notes, hundies, bills of exchange, letters of credit,
railway receipts, bills of lading and other negotiable and mercantile documents.

Compensation Committee

The members of the Compensation Committee are:

• N.J. Jhaveri, Independent Director (Chairman)

• P.N. Kapadia, Independent Director
• K. Subrahmanian, Managing Director

The Compensation Committee was constituted by a meeting of the Board of Directors held on
November 28, 2006. The scope of the Compensation Committee is to administer the employee stock
option Scheme of the Company.

IPO Committee

The members of the IPO Committee are:

• P.N. Kapadia, Independent Director

• J.J. Parakh, Non-Executive Director
• K. Subrahmanian, Managing Director
• S. Paramasivan, Wholetime Director
• A.N. Jangle, Wholetime Director

The IPO Committee was reconstituted by a meeting of the Board of Directors held on December 22,
2006. The scope of the IPO Committee is to administer and exercise all powers and to take all
necessary actions to give effect to the initial public offering by the Company including variation of
rights of preference shareholders of the Company.

131
Shareholding of the Directors

In terms of the Articles of Association, the Directors are not required to hold any qualification shares.
The list of Directors holding Equity Shares and stock options as of the date of filing this Draft Red
Herring Prospectus is set forth below:

Name of Director No. of options No. of equity shares

K. Subrahmanian 35,040 23,168
A. N. Jangle 14,060 17,549
S. Paramasivan 26,280 19,859
A.H. Divanji* NIL 141,720
N.J. Jhaveri NIL 17,749
J.J. Parakh NIL 6,619
* 60,000 Equity Shares held jointly with J.A. Divanji

Employee Stock Options Scheme

For details of employee stock option scheme and conversion of options granted to the directors and key
managerial personnel see the section titled “Capital Structure” on page 29 of this Draft Red Herring
Prospectus.

Employee Trusts

As of the date of this Draft Red Herring Prospectus, 11,91370 Equity Shares, constituting 1.67% of the
equity share capital of the Company are held by 24 employee trusts, which have been constituted to
hold the equity shares for the benefit of the employees of the Company. The trustees of these trusts
are:

1. H.J. Tavaria
2. J.J. Parakh
3. F.K. Bhathena

The trustees are required to deal with the equity shares in such manner as to assist employees towards
meeting expenses for education, hobbies and craft, holidays, payments towards medical benefits,
training and development, health promotion and personnel development.

Borrowing Powers of our Board

In terms of our Articles, the Board may, from time to time, at its discretion by a resolution passed at its
meeting raise or borrow or secure the payment of any sum or sums of money for the purposes of the
Company. However, if the moneys sought to be borrowed together with the moneys already borrowed
(apart from temporary loans obtained from the Company’s bankers in the ordinary course of business)
should exceed the aggregate of the paid-up capital of the Company and its free reserves (not being
reserves set apart for any specific purpose), the Board is required to obtain the consent of the Company
in general meeting prior to undertaking such borrowing.

In this regard, our Company, in the EGM dated December 22, 2006 had resolved that pursuant to the
provisions of Section 293(1)(d) of the Companies Act, 1956, the Board is authorised to borrow moneys
(apart from temporary loans obtained from the bankers of the Company in ordinary course of business)
from banks, financial institutions, NBFCs etc., from time to time, for the purpose of Company’s
business in excess of the aggregate of the paid-up capital of the Company and its free reserves (not
being reserves set apart for any specific purpose) provided that the total amount of such borrowings
together with the amounts already borrowed and outstanding shall not exceed Rs. 15,000 million.
Further, our Company in the AGM dated September 28, 2006 has authorised the Board to charge
moveable and immoveable properties of the Company for securing loans, facilities from Banks for an
increased limit of Rs.2,0000 million

Changes in our Board of Directors in the last three years

The following changes have occurred in Board of Directors of the Company in the last three years:

132
 Name of Date of Appointment / Re- Reason
Director appointment/Cessation
A.N. Jangle April 7, 2003 Appointed as Additional Director and
Whole time Director
K.C. Mehra November 24, 2003 Appointed as Additional Director
M.S. Hingorani July 1, 2005 Appointed as Additional Director
H.J. Tavaria November 28, 2006 Resigned
J.J. Parakh November 28, 2006 Resigned
S. November 28, 2006 Resigned
Kuppuswammy
K.C. Mehra November 28, 2006 Resigned
P. Sampath November 28, 2006 Resigned
M.S. Hingorani November 28, 2006 Resigned
P. N. Kapadia November 28, 2006 Appointed as Director
N.D. Khurody December 22, 2006 Appointed as Director
J.J. Parakh December 22, 2006 Appointed as Director

133
Organisation Structure
CHAIRMAN

BOARD OF
DIRECTORS

MANAGING
DIRECTOR

Exec. Vice Exec. Vice Vice President Head Head Director Executive Director Head- Head - Head - Executive Head-
President President (Operations) Planning Design International (Tendering& Business Legal & CPE HRD Director Systems
(operations) (Operations) Operations Development) Contracts (Finance &
Road Projects Commercial)

Dy. Dy. Dy. Dy. Head Dy. Head G.M Head- Head- Head-BD Head-BD Head-BD Head- HRD Head-
Project Project Project Planning Design QA/QC Tendering Special Bridges Naval / HSE Procurement
controller controller controller Marine /Metros BOT
Projects Projects Projects

Contract Contract Contract Planning Design Marine Training & Head-

Manager Manager Manager Engineer Engineers Works Development Secretarial

Coordinating Coordinating Coordinating Roads Head –F & A

Engineer Engineer Engineer
T
e
n
d
e
PM’s PM’s PM’s ri Flyovers Head - Store
n /Bridges
g

Sub Civil Head-Taxation

contract Works
Cell

Geo Power
Head-IR
Technical Projects
Admin &
cell Personal

Vice PM : PROJECT MANAGER @ SITE * EXEC DIRECTOR (TENDERING & BD) IN ADDmON TO NORMAL RESPONSIBILITIES IS APPOINTTED AS MANAGEMENT REPRESENTATIVE WITH Mis. Cost
President THE RESPONSIBILITY FOR ESTABLISHING. IMPLEMENTING & MAINTAINING THE QUALITY MANAGEMENT SYSTEM & REPORTING ITS Code &
Projects EFFECTIVENESS ( REFER QM05, 5.5.2 ) Budgeting
Key Managerial Personnel of our Company

For profile of K. Subrahmanian, the Managing Director, A.N. Jangle and S. Paramasivan, our Wholetime
Directors, please refer to page 122 of this Draft Red Herring Prospectus under the section “Our
Management”. All the key managerial personnel mentioned below are permanent employees of the
Company.

N. Selvaraj, aged 50 years graduated with B.E. Civil (Hons.) and is the Executive Vice President (B/D) of
our Company. He has about 28 years of varied experience in our Company. Selvaraj Narayanan joined us
as an Engineer for Building Docks at Vizag and Mazagaon Dry Dock. He has been involved in successful
completion of various projects like Submarine Tunnel and Sand Slurry Pipe Line, Cargo Handling Quay
Wall and Const. of 2 cutter suction dredgers, ECR Road Works, Okha Jetty, Honavar Sites. He was
responsible for Tendering and Business Development Activities as Project Manager of our company for 6
years. He was also overall in-charge of Planning and Design activities as Vice President for 5 years.
Presently, Selvaraj Narayanan is responsible for Business Development in relation to tendering. During
Fiscal 2006, he was paid a gross compensation of Rs. 1.87 million.

N.S. Iyer, aged 67 years holds a Diploma in Civil Engineering and is the Executive Vice President of our
Company. He has 43 years of varied experience in the field of construction. N.S. Iyer has worked as
General Manager for HCC Limited and was a Project controller for Ennore Breakwater and Project
Manager for Bandra - Worli Sea Link Project. He has been involved in the successful execution of projects
of Wet Basin on Bored piles at Hazira and Planning and Execution of Harira jetty and assisted in Business
Development Department at Essar Construction for 3 Years. Prior to this he has also worked with us for 24
years as the Project Manager for Vizag Port Trust, Pirpau Jetty, Rihand Lake sites etc. Presently he is the
Executive Vice President - Operations of our Company and is the Coordinator for Delhi Sites, Sone Bridge,
Koldam and Chenab Bridge Sites. During Fiscal 2006, he was paid a gross compensation of Rs. 1.76
million.

W. Kabir, aged 66 years graduated with a B.Sc. Engg. Civil and is the Executive Vice President -
Operations of our Company. He has 39 years of varied experience in the field of construction and
infrastructure development. Wajahat Kabir has previously worked with Government of India’s PWD
Department for 21 years as the Chief Project Manager and has worked as Junior Engineer and Chief Project
Manager, in construction of residential buildings, Highways and Industrial Structures. He has also served in
the Indian army as chief marshall for 4 years. In his stint with HCC Ltd spanning 4 years, he has been the
Project Controller for Mumbai - Pune Expressway among other works. He has also served in DHV
Consultants BV, Netherlands as Senior Resident Engineer for 4 years and has done supervision, monitoring
and administration of Dhaka Urban Transport Project. Presently Mr. Kabir is the Executive Vice President
of our Company and is Project Controller for Hubli, Harihara, Bangalore - Hyd. Road and Poonamalle -
Kanchipuram Road Projects. During Fiscal 2006, he was paid a gross compensation of Rs. 1.77 million.

P. R. Rajendran, aged 54 years graduated with a Bachelor of Commerce from and later graduated with a
L.L.B (Gen). He is an Associate Member of Institute of Company Secretaries of India and is the Vice
President - Commercial and Secretarial of our Company. He has 37 years of experience in commercial and
secretarial work. P. R. Rajendran has previously worked with Precision Fasteners Ltd. as an Assistant
Company Secretary for 22 Years and was responsible for secretarial related work. Presently he is the Vice
President - Commercial and Company Secretary of our Company and is responsible for secretarial related
works as well as commercial and legal matters. During Fiscal 2006, he was paid a gross compensation of
Rs. 1.34 million.

M. Jayaram, aged 48 years graduated with a B.E. Civil. He has 25 years of experience inhis field of
experience. Jayaram Matta has worked with our Company as Deputy for 20 years and has been involved in
the successful execution of 6th Cargo Berth at Kandla, North Dry Dock at Vizag, Gopalpur Port Trust,
Coast Guard at Vizag, NMPT at Mangalore, Sheva - Pagota Site, Apollo hospital, ECR Road Works, RPL
Jamnagar Site, Dabhol Power Project etc. He has previously worked for NMPT, Mangalore as a
Superintendent Engineer for 2 years and was responsible for Planning & Construction of Tanker Jetty No.3
& 4 for NMPT. Presently as Vice President – Projects of our Company, he is Engineer Incharge of
Poonamalle - Kanchipuram Road, RPL Jetty – Jamnagar Project. During Fiscal 2006, he was paid a gross
compensation of Rs. 1.19 million.

S. Sankar, aged 57 years graduated with a B.E. (Civil) and is currently the Vice President – Contracts. He
has 33 years of experience in the construction industry. Sivaprakasam Sankar has worked with various
companies and handled an array of jobs including design of various water supply components, design of
water distribution networks intake, structure, pump house etc., quantity surveying and estimation,
tendering, and contracts administration. He has previously worked for HCC Limited. as DGM-Contracts,
for a span of 9 years involving contracts administration and arbitration for works at various sites. During
Fiscal 2006, he was paid a gross compensation of Rs. 1.39 million.

K. Ramesh, aged 59 years holds a Diploma in Civil Engineering and is the Vice President – Projects. He
has 36 years of experience in his field of expertise. K. Ramesh has worked with our Company as Sr. Project
Manager for 31 Years and has been Engineer-In-charge of various projects like Jettyies, Berths, Dry Docks,
Cable stayed bridges, Pile Foundation works etc. He has previously worked for Raghava & Veera as Civil
Supervisor and Navyuga Engineering Company as General Manager. Currently as Vice President –
Projects of our Company, he is also the Engineer In-charge of Poonamalle - Kanchipuram Road. During
Fiscal 2006, he was paid a gross compensation of Rs. 1.15 million.

V. K. Bhat, aged 50 years graduated with a B.Tech Civil and later with a post graduate degree in M.Tech
O.E. He is the Vice President – Operations of our Company. He has 26 years of experience in the
construction industry. V. K. Bhat has previously worked as Lecturer for 2 years at KREC, Suratkal. He has
also worked for Essar Construction, Mumbai as Junior General Manager for 22 years & was in-charge of
Marine & Offshore Divisions. Presently as Vice President – Operations of our Company, he is also the
Project Coordinator for Jetties, Berths & Marine Structures. During Fiscal 2006, he was paid a gross
compensation of Rs. 1.65 million.

R. Kalyanakrishnan, aged 50 years graduated with a degree in Bachelor of Science. He is an Associate

Member of Institute of Chartered Accountants of India and also Institute of Cost & Works Accountants of
India. He is the Vice President – Finance & Accounts. He has 26 years of experience in his field of
expertise. R. Kalyanakrishnan has previously worked with Saif Bin Darwish, UAE as a Financial
Controller for 6 years and was responsible for implementation of ERP System. He has also worked for
Lovelock & Lewes, Ballarpur Industries Ltd., Nestle India Ltd., Nuware India Ltd., involving varied
responsibilities including spearheading accounting and finance functions for Engineering Division and
Implementation of Financial & Material Accounting Systems. Presently as Vice President – Finance &
Accounts of our Company he is responsible for implementation of ERP System & Accounts Activities.
During Fiscal 2006, he was paid a gross compensation of Rs. 1.53 million.
R.Kalyanakrishnan joined the Company on April 7, 2005.

J. D. Bakshi, aged 58 years holds a Diploma in Civil Engineering and AMIE. He is currently designated as
Vice President – Projects of our Company. He has 36 years of experience in his field of expertise. J.D.
Bakshi has previously worked with Punj Lloyd Ltd. as a General Manager for 6 years and was in charge of
Estimating, Costing & Bidding and Execution of Hazira LNG Terminal. He has also worked for Bridge &
Roof Co for 20 years, and Delhi Development Authority for 6 Years and has undertaken Design &
Estimation of Development Works and worked as Coordinator for Industrial Civil Projects. Presently as
Vice President – Projects of our Company, he is also the Coordinator for Construction of cement plant at
Yemen. During Fiscal 2006, he was paid a gross compensation of Rs.1.00 million. J.D. Bakshi joined the
Company on May 31, 2005.

V. Prasada Rao, aged 56 years graduated with a degree in B.E. (Mechanical Engineer) He is currently the
Vice President – Steel Works of our Company. He has 33 years of experience in fabrication & erection of
various steel structures and equipments. V. Prasada Rao has previously worked with Navyuga Engineering.
Company as Senior General Manager for 10 Years and was involved in execution of Electro Mechanical
works, Bridges & Berths. He has also worked for our Company for 9 years as resident engineer and has
done Fabrication and Erection of Steel Structures, Tender Estimation, Equipment Planning & Project

136
Monitoring. Presently as Vice President – Steel Works of our Company he is also the Engineer In-charge of
Chenab Bridge Project. During Fiscal 2006, he was paid a gross compensation of Rs.0.92 million.
V.Prasada Rao joined the Company on August 5, 2005.

B. Jaggi, aged 65 years is an alumnus of Jadavpur University, Kokata from where he graduated with a
degree in BE(Civil) and is Vice President (Projects). He has 38 years of experience in his filed of expertise.
He has previously worked with Consulting Engineering Services (I) Limited, New Delhi as chief general
manager and has been involved with West Bengal Corridor Development Project as well as construction
supervision of Surat Manor Tollway Project. B. Jaggi was not paid any remuneration in Fiscal 2006 since
he joined the Company on November 20, 2006.

J.R. Sample aged 61 years an English national graduated with a degree in B.Sc. Engineering (Civil) and is
a Senior Project Manager with Murray & Roberts Engineering Solutions. He has 30 years of experience in
his field of expertise. J.R. Sample has presently been engaged by the Company as Director (International).
J.R. Sample has been involved in a variety of construction projects which include civil engineering, general
building construction and mining process plants. J.R. Sample has worked on projects in Kenya, South
Korea, Malaysia, Dubai, Saudi Arabia, the United Kingdom and the United States of America. During
Fiscal 2006, J.R. Sample was not paid any compensation since he started to work along with Company on
November 6, 2006.

Shareholding/ Interest of the Key Managerial Personnel of the Company and our Subsidiaries

The list of our Key Managerial Personnel holding Equity Shares and the number of Equity Shares held by
each of them as of the date of this Draft Red Herring Prospectus is set forth below:

Key Managerial Personnel No. of Equity Shares held No. of stock options
K.Subrahmanian 23,168 35,040
S.Paramasivan 19,859 26,280
A.N.Jangle 17,549 14,460
N.Selvaraj 20,549 21,900
N.S.Iyer 13,239 10,510
W.Kabir 9,929 10,510
P.R.Rajendran 10,409 13,140
M.Jayaram Nil 13,140
S.Sankar 16,549 17,520
K.Ramesh Nil 13140
V.K.Bhat 9,929* 13,140
R.Kalyanakrishnan Nil 8,760
J.D.Bakshi Nil 8,760
V.Prasada Rao Nil 13,140
* Shares jointly held with his wife

Changes in Key Managerial Personnel

The following are the changes in our key managerial personnel over the last three years:

137
Name and Designation of the Employee Date of Change Reason

K Ramesh January 23, 2004 Appointment as Vice

President (Projects)
V K Bhat February 24, 2004 Appointment as Vice
President (Operations)
A.K. Kashalkar February 29, 2004 Resignation (Ex-Vice
President [Operations])
K Selvaraj March 19, 2004 Appointment as Head I.T.
Services
S.B. Joshi May 31, 2004 Resignation (Ex General
Manager Planning)
Col. W. Kabir July 1, 2004 Appointment as Executive
Vice President
M M Lalvani September 19, 2004 Appointment as General
Manager (Taxation)
Prema Chandrsekhar November 2, 2004 Resignation (Ex-Genral
Manager [Finance &
Accounts])
Richard Boehm April 1, 2005 Appointment as Project
Manager (contractual)
R. Kalyanakrishnan April 7, 2005 Appointment as Vice
President (Finance &
Accounts)
J D Bakshi May 31, 2005 Appointment as Vice
President (Projects)
Col. S.G. Diwanji May 31, 2005 Resignation (Ex-General
Manager [Projects])
V Prasada Rao August 5, 2005 Appointment as Vice
President (Steel Works)
P M Thorat September 10, 2005 Appointment as Assistant
Vice President (Pipeline &
Special Projects)
D A Bhide September 28, 2005 Appointment as General
Manager (Design)
A. Chakravarty October 14, 2005 Resignation (Ex-Assistant
Vice President [Business
Development])
N.K. Batta March 31, 2006 Resignation (Ex-General
Manager Procurement)
GovindaRajulu Venkata May 15, 2006 Resignation (Ex-General
Manager [CPE])
Alok Gupta October 12, 2006 Resignation (Ex-General
Manager [Projects])
Jim Sample November 6, 2006 Appointment as Director
(International)
Bharat Jaggi November 20, 2006 Appointment as Vice
President (Projects)

138
 OUR PROMOTERS

Our Promoters are:

1. Shapoorji Pallonji & Co., Limited (“SPCL”)

2. Sterling Investment Corporation Private Limited (“SICL”)
3. Cyrus Investments Limited (“CIL”)
4. Floreat Investments Limited (“FIL”)

Unless otherwise stated none of the above is a sick company under the meaning of SICA and none of them
are under winding up. Further, all our Promoters are unlisted companies and they not made any public issue
of securities in the preceding three years.

Shapoorji Pallonji & Co. Limited

SPCL was incorporated on January 23, 1943. The company is engaged in the business of construction.

Registered Office

The registered office of SPCL is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of SPCL as on December 31, 2006 consists of:

1. Pallonji Shapoorji Mistry

2. Shapoor Pallonji Mistry
3. Cyrus Pallonji Mistry
4. K.B. Captain
5. F.K. Bhathena
6. Jimmy J. Parakh

Shareholding Pattern

The shareholding pattern of SPCL as on December 31, 2006is as under:

Names of the shareholders No. of shares held % holding

Shapoorji Pallonji & Co., (Rajkot) Limited 246,000 30%
Shapoorji & Co., (Rajkot) Private Limited 246,000 30%
Shapoor Pallonji Mistry 81,100 9.89%
Cyrus Pallonji Mistry 81,100 9.89%
Pallonji Shapoorji & Co., Private Limited 78,000 9.51%
SC Finance and Investments Private Limited 41,900 5.11%
SP Finance Private Limited 41,900 5.11%
Silver Streak Investments Private Limited 4000 0.49%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

139
 (Rs. in million except per share data)
Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*
Equity capital 8.20 8.20 8.20
Reserves 1,287.14 1,064.76 1,010.59
Sales 10,593.58 8,543.91 5,562.52
PAT 222.38 54.23 76.81
EPS (Rs.) 271.19 661.40 936.73
Book value per share (Rs.) 1,579.69 13,084.93 12,423.53

* In Fiscal 2004 and 2005 the face value per share was Rs. 1000 while the face value per share in Fiscal
2006 was Rs. 10

Sterling Investment Corporation Private Limited

SICL was incorporated on June 3, 1943 in Mumbai. SICL became a deemed public company on June 15,
1998; however on December 14, 2000 it was converted into a private company as per the Companies
Amendment Act, 2000. SICL is a subsidiary of SPCL and is engaged in the business of investments in
stocks and securities.

Registered Office

The registered office of SICL is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Sterling Investment Corporation Private Limited as on December 31, 2006
consists of:

1. Shapoor Pallonji Mistry

2. Cyrus Pallonji Mistry
3. P.P. Mistry
4. R.M. Nentin
5. J.J. Parakh
6. F.K. Bhathena

Shareholding Pattern

Shareholding Pattern of Sterling Investment Corporation Private Limited as on December 31, 2006 is as
under:

Names of the shareholders No. of shares held % holding

SPCL 2439600 99.98%
SPCL. and Pallonji Shapoorji Mistry 100 0.004%
SPCL. and K.B. Captain 100 0.004%
SPCL. and Shapoor Pallonji Mistry 100 0.004%
SPCL. and Cyrus Pallonji Mistry 100 0.004%

140
Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 224.40 24.40 24.40
Reserves 890.52 659.75 461.11
Sales 424.20 481.61 193.79
PAT 230.76 198.04 65.39
EPS (Rs.) 94.57* 8116.37* 2680.01*
Book value per share (Rs.) 456.93 28,039.00 19, 897.94

* In Fiscal 2004 and 2005 the face value per share was Rs. 1000 while the face value per share in Fiscal
2006 was Rs. 10

Cyrus Investments Limited

CIL was incorporated on March 8, 1923 as F.E. Dinshaw Limited in Mumbai. The name of this company
was subsequently changed to F.E. Dinshaw Private Limited on February 1, 1978. On November 11, 1978
the name of the company was changed to Cyrus Investments Private Limited and finally renamed as Cyrus
Investment Limited on October 6, 1988. CIL is a subsidiary of Shapoorji and Pallonji Co., Limited and is
engaged in the business of investments in stocks and securities.

Registered Office

The registered office of CIL is at:

Esplanade House,
Hazarimal Somani Marg, Fort,
Mumbai 400 001,
India

Board of Directors

The board of directors of CIL as on December 31, 2006 consists of :

1. Pallonji Shapoorji Mistry

2. Shapoor Pallonji Mistry
3. Cyrus Pallonji Mistry
4. K. B. Captain
5. J.J. Parakh
6. F.K. Bhathena

Shareholding Pattern

Shareholding Pattern of Cyrus Investment Limited as on December 31, 2006 is as under

Names of the shareholders No. of shares held % holding

SPCL. 14,500,000 96.25%
SICL 562250 3.732%
SICL and Pallonji Shapoorji Mistry 500 0.003%
SICL and K.B. Captain 500 0.003%
SICLand RS Khushrokhan 500 0.003%

141
 Names of the shareholders No. of shares held % holding
SICL and PC Sheth 100 0.001%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*
Equity capital 150.63 150.63 150.63
Reserves 855.60 625.87 460.31
Sales 275.23 214.51 136.76
PAT 228.61 165.57 63.33
EPS (Rs.) 15.25 10.99 416.52
Book value per share (Rs.) 66.80 51274.37 4034.50

* In Fiscal 2004 and 2005 the face value per share was Rs. 1000 while the face value per share in Fiscal
2006 was Rs. 10

Floreat Investments Limited

FIL was incorporated on March 13, 1989. This company is engaged in the business of investment in stocks
and securities and trading in securities.

Registered Office

The registered office of FIL is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of FIL consists of:

1. A. Daruvala
2. D. Guzdar
3. A. Khambata
4. F.J. Hiloo
5. U.B. Upasani
6. R. Sharma

Shareholding Pattern

The shareholding pattern of FIL is as under:

Names of the shareholders No. of shares held % holding

SPCL 94,998 99.99%
SPCL and K.B. Captain 1 0.001%
SPCL and Jimmy J. Parakh 1 0.001%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

142
 (Rs. in million except per share data)
Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 9.50 9.50 9.50
Reserves - 7.41 6.71
Sales 0.60 2.21 7.77
PAT (11.43) 0.70 4.01
EPS (Rs.) (120.32) 7.41 42.24
Book value per share (Rs.) 57.68 178 170.59

We confirm that the Permanent Account Number, Bank Account Numbers, the Company Registration
Number and the address of the Registrar of Companies where the Promoters are registered have been
submitted to the Stock Exchanges at the time of filing the Draft Red Herring Prospectus. Further, the
Promoters have not been declared as a willful defaulter by the Reserve Bank of India or any other
Government authority and there are no violations of securities laws committed by the Promoters in the past
or are pending against the Promoter.

143
Our Promoter Group

Apart from our Promoters, Subsidiaries and Associate company, the following individuals, entities and
companies constitute our Promoter Group:

I. Companies

1. Abhipreet Trading Private Limited

2. Afcons BOT Constructions Private Limited
3. Afcons Dredging amd Marine Services Private Limited
4. Afcons (Overseas) ConstructionS & Investments Private Limited
5. Bracewall Builders Private Limited
6. Calligra Finvest Private Limited
7. Cama Properties Private Limited
8. Chinsha Properties Private Limited
9. Cyrus Chemicals Private Limited
10. Cyrus Engineers Private Limited
11. Delna Finance and Investments Private Limited
12. Eastview Estates Private Limited
13. Faery Estates Private Limited
14. Floral Finance Private Limited
15. Flooraise Developers Private Limited
16. Flotilla Finance Private Limited
17. Forbes Gokak Limited
18. Forvol International Services Ltd
19. Grandview Estates Private Limited
20. High Street Developers Private Limited
21. Khajrana Ganesh Properties Private Limited
22. Kolland Developers Private Limited
23. Magpie Finance Private Limited
24. Mangal Shrusti Private Limited
25. Manjri Stud Firm Private Limited
26. Manjri Builders and Developers Private Limited
27. Mazsons Builders and Developers Private Limited
28. Meriland Estates Private Limited
29. Milvin Investments Private Limited
30. Palchin Real Estates Private Limited
31. Ramili Investments Private Limited
32. Sachin Real Estates Private Limited
33. S.C. Impex Private Limited
34. Shapoorji & Co., Private Limited
35. Shapoorji & Co. (Rajkot) Private Limited
36. Shapoorji Data Processing Private Limited
37. Shapoorji Drilling Enterprises Private Limited
38. Shapoorji Hotels Private Limited
39. Sharus Building Services India Private Limited
40. SP Aluminum Systems Private Limited
41. SP Architectural Coatings Private Limited
42. SP Infocity Developers Private Limited
43. SP Fabricators Private Limited
44. Shapoorji Pallonji Biotech Private Limited
45. Shapoorji Pallonji Finance Limited
46. Shapoorji Pallonji Infrastructure Capital Co. Limited
47. Shapoorji Pallonji (Gwalior) Private Limited
48. Shapoorji Pallonji Ports Private Limited
49. Shapoorji Pallonji Power Company Limited

144
50. Shapoorji Pallonji & Company (Rajkot) Private Limited
51. Skyscape Developers Private Limited
52. Sterling Generators Private Limited
53. Sunny View Estates Private Limited
54. United Motors (India) Limited
55. Windward Developers Private Limited

Unless otherwise stated none of the above is a sick company under the meaning of SICA and none of them
are under winding up. Further unless otherwise stated, all our Promoter Group Companies are unlisted
companies and they not made any public issue of securities in the preceding three years.

1. Abhipreet Trading Private Limited

Abhipreet Trading Private Limited (previously known as Abhipreet Investments Private Limited) was
incorporated on November 15, 1988. This company is engaged in the business of trading.

Registered Office

The registered office of Abhipreet Trading Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Abhipreet Trading Private Limited consists of :

1. K.B. Captain
2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Abhipreet Trading Private Limited is as under:

Names of the shareholders No. of shares held % holding

Shapoorji Pallonji & Co., Limited 29,998 99.99%
Shapoorji Pallonji & Co., Limited and RM Nentin 1 0.003%
Shapoorji Pallonji & Co., Limited and FK Bhathena 1 0.003%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Equity capital 3.00 3.00 3.00
Reserves 0.04 0.04 0.14
Sales 0.18 0.18 0.21
PAT (0.08) 0.02 (0.10)
EPS (Rs.) (3.51) (2.91) (3.41)
Book value per share (Rs.) 97.66 100.27 103.27

145
2. AFCONS BOT Constructions Private Limited

Afcons BOT Constructions Private Limited was incorporated on June 17, 1987. This company was formed to carry on the
business of conducting hydrographic, oceanographic, geophysical, topographic & geodetic surveys, underwater diving and
render & supply all forms of connected services. This company is not presently engaged in any activities.

Registered Office

The registered office of Afcons BOT Constructions Private Limited is at:

Afcons House,
16, Shah Industrial Estate,
Veera Desai Road,
Azadnagar P.O. Post Box No. 11978
Andheri (W), Mumbai 400 053

Board of Directors

The board of directors as on consists of:

1. A. H. Divanji
2. H. J. Tavaria
3. S. Paramasivan

Shareholding pattern as on December 26, 2006

Sr Name of the Shareholder No. of Equity Shares Percentage

No.
1 Shapoorji Pallonji Infrastructure 40,000 100
Capital Co., Limited and its
nominees

Financial Performance

The audited financial results for this company for the last three fiscal are as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity Share Capital 0.40 0.40 0.40
Reserves and Surplus (0.37) (0.36) (0.356)
Income - - -
Profit/ After Tax (PAT) (0.005) (0.006) (0.006)
Earning Per Share (EPS) (Rs.) 0.15 (0.15) (0.16)
Book Value (Face value of Rs.10per share) (Rs.) 0.000 0.939 1.095

3. AFCONS Dredging & Marine Services Limited.

Corporate Information:

Afcons Dredging & Marine Services Limited was incorporated on January 24, 1986. Presently, its
registered office is located at Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azadnagar P.O,
Mumbai 400 053. .

146
Afcons Dredging & Marine Services Limited was formed to carry on in India and other parts of the world,
the business of securing and executing contracts of works relating to dredging and other ancillary works.
This company is not presently engaged in any activities.

Shareholding pattern
Sr No. Name of the Shareholder No. of Equity Shares Percentage
1. Shapoorji Pallonji Infrastructure 10,000 100
Capital Co., Limited

Board of Directors

The board of directors as on consists of:

1. A. H. Divanji
2. S. Paramasivan
3. P.R.Rajendran

Financial Performance:

The audited financial results for this company for the last three fiscal are as follows:
(Rs. in million except per share data)
Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity Share Capital 1.00 1.00 1.00
Reserves and Surplus .009 0.048 0.10
Income 0.048 0.030 0.050
Profit/ After Tax (PAT) (0.03) (0.050 (0.04)
Earning Per Share (EPS) (Rs.) (3.86) (5.997) (4.395)
Book Value (Face value of Rs.100/- per share) 100.99 104.89 110.84
(Rs.)

4. AFCONS (Overseas) Construction & Investments Private Limited

AFCONS (Overseas) Construction & Investments Limited was incorporated on August 28, 1981. This
company was formed to carry on in India and other parts of the world, the business of securing and
executing contracts of works relating to specialized foundations such as pile foundations and construction
of marine works This company can also carry on business as building contractors and undertakes and
carries out building construction works.
This company is not presently engaged in any activities.

Registered Office
The registered office of AFCONS (Overseas) Construction & Investments Private Limited is at:

Afcons House,
16, Shah Industrial Estate,
Veera Desai Road,
Azadnagar P.O. Post Box No. 11978
Andheri (W), Mumbai 400 053

Board of Directors

147
The board of directors as on December 31, 2006 consists of:

1. A. H. Divanji
2. H. J. Tavaria
3. F. K. Bhathena
4. P. Sampath

Shareholding Pattern

Names of the shareholder No. of shares held % holding

Shapoorji Pallonji & Co., Limited 4,000 100%

Financial Performance

The audited financial results for this company for the last three fiscal are as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity Share Capital 0.1 0.1 0.1
Reserves and Surplus 0.014 0.02 0.033
Income 0.009 0.0089 0.01
Profit/ After Tax (PAT) (0.01) (0.006) (0.004)
Earning Per Share (EPS) (Rs.) (12.41) (6.49) (4.192)
Book Value (Face value of Rs.100 per share) 113.80 126.21 132.70
(Rs.)

5. Bracewall Builders Private Limited

Bracewall Builders Private Limited was incorporated on November 11, 2005. This company is engaged in
the business of real estate development.

Registered Office

The registered office of Bracewall Builders Private Limited is at:

59, Haji Mansion,

5th Road, Khar,
Mumbai 400 052
India

Board of Directors

The board of directors of Bracewall Builders Private Limited consists of:

1. Adil Khambatta
2. Manikant Shah

Shareholding Pattern

The shareholding pattern of Bracewell Builders Private Limited is as under:

Names of the shareholders No. of shares held % holding

148
 Names of the shareholders No. of shares held % holding
Meriland Estates Private Limited 4999 49.99%
Grandview Estates Private Limited 4999 49.99%
Adil Khambatta 1 0.01%
Manikant Shah 1 0.01%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*
Equity capital 0.10 - -
Reserves - - -
Sales - - -
PAT (0.01) - -
EPS (Rs.) (1.28) - -
Book value per share(Rs.) 8.09 - -
*Bracewall Builders Private Limited was incorporated in Fiscal 2006.

6. Calligra Finvest Private Limited

Calligra Finvest Private Limited was incorporated on September 10, 1996. This company is engaged in the
business of real estate development.

Registered Office

The registered office of Calligra Finance Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Calligra Finance Private Limited consists of:

1. Manikant Shah
2. D.P. Divecha

Shareholding Pattern

The shareholding pattern of Calligra Finance Private Limited is as under

Names of the shareholders No. of shares held % holding
SICL 9998 99.98%
SICL and Manikant Shah 1 0.01%
SICL and FK Bhathena 1 0.015%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

149
 Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.10 0.10 0.10
Reserves - - -
Sales - - -
PAT (0.02) - -
EPS (Rs.) (1.53) 0.38 0.37
Book value per share (Rs.) 4.53 7.39 7.77

7. Cama Properties Private Limited

Cama Properties Private Limited (previously known as Shapoorji Pallonji (Cama Estates) Private Limited)
was incorporated on February 17, 1998. This company is engaged in the business of real estate
development.

Registered Office

The registered office of Cama Properties Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Cama Properties Private Limited consists of:

1. K.B. Captain
2. Jimmy J. Parakh

Shareholding Pattern

The shareholding of Cama Properties Limited is as under

Names of the shareholders No. of shares held % holding

Shapoorji Pallonji Infrastructure Capital 998 99.8%
Co., Limited
Shapoorji Pallonji Infrastructure Capital 1 0.1%
Co., Limited and Jimmy J. Parakh
Shapoorji Pallonji Infrastructure Capital 1 0.1%
Co., Limited and RM Nentin

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows :

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.10 0.10 0.10
Reserves - - -
Sales - - -
PAT (0.04) (0.01) (0.01)
EPS (Rs.) (44.71) (9.51) (5.02)
Book value per share (Rs.) 17.21 61.92 70.43

150
8. Chinsha Properties Private Limited

Chinsha Properties Private Limited was incorporated on February 28, 1995. The company is engaged in
the business of property development.

Registered Office

The registered office of Chinsha Properties Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Chinsha Properties Private Limited consists of:

1. F.K. Bhathena
2. Jimmy J. Parakh

Shareholding Pattern

The shareholding pattern of Chinsha Properties Private Limited is as under

Names of the shareholders No. of shares held % holding

SICL 399,998 99.99%
SICLand Jimmy J. Parakh 1 0.00025%
SICL and F.K. Bhathena 1 0.00025%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 4.00 4.00 4.00
Reserves - - -
Sales - - -
PAT (0.02) (0.01) (0.02)
EPS (Rs.) (0.04) (0.04) (0.04)
Book value per share (Rs.) 9.62 9.66 9.72

9. Cyrus Chemicals Private Limited

Cyrus Chemicals Private Limited was incorporated on October 24, 1978. This company is engaged in the
business of investment in property and agricultural land.

Registered Office

The registered office of Cyrus Chemicals Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

151
Board of Directors

The board of directors of Cyrus Chemicals Private Limited consists of:

1. F.K. Bhathena
2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Cyrus Chemicals Private Limited is as under:

Names of the shareholders No. of shares held % holding

SPCL 2397 99.87
SPCL and R.S.Khushrokhan 1 0.04%
SPCL and R.M. Nentin 1 0.04%
SPCL and F.K. Bhathena 1 0.04%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 2.40 2.40 2.40
Reserves - - -
Sales 1.06 - -
PAT 0.53 (0.36) (0.40)
EPS (Rs.) 221.54 (150.09) (165.96)
Book value per share (Rs.) 292.73 71.18 222.58

10. Cyrus Engineers Private Limited

Cyrus Engineers Private Limited was incorporated on June 28, 1979. This company is engaged in the
business of investment in stocks and securities..

Registered Office

The registered office of Cyrus Engineers Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Shareholding Pattern

The shareholding pattern of Cyrus Engineers Private Limited is as under:

Names of the shareholders No. of shares held % holding

SPCL 497 99.4%
SPCL and K.B. Captain 1 0.2%
SPCL and P.C. Sheth 1 0.2%
SPCL and Jimmy J. Parakh 1 0.2%

Financial Performance

152
Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.50 0.50
Reserves 8.52 7.40 7.25
Sales 1.25 0.11 0.16
PAT 1.13 1.13 (1.27)
EPS (Rs.) 2253.66 285.27 (2531.49)
Book value per share (Rs.) 18047.56 15793.90 15508.63

11. Delna Finance and Investments Private Limited

Delna Finance and Investments Private Limited was incorporated on October 22, 1991. This company is
engaged in the business of investment in stocks.

Registered Office

The registered office of Delna Finance and Investments Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Delna Finance and Investments Private Limited consists of:

1. K.B. Captain
2. R.M. Nentin

The shareholding pattern of Delna Finance and Investments Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 4998 99.96%
SICL and R.M. Nentin 1 0.02%
SICL and Jimmy J. Parakh 1 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.50 0.50
Reserves - - -
Sales 1.33 0.83 -
PAT (1.75) (1.63) (0.01)
EPS (Rs.) (350.38) (325.82) (1.83)
Book value per share (Rs.) (612.37) (241.02) 84.80

12. Eastview Estates Private Limited

153
Eastview Estates Private Limited was incorporated on November 25, 2005. This company is engaged in
the business of real estate development.

Registered Office

The registered office of Eastview Estates Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Eastview Estates Private Limited consists of:

1. F.K. Bhathena
2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Eastview Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 9998 99.98%
SICL and R.M. Nentin 1 0.01%
SICL and F.K. Bhathena 1 0.01%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004*
Equity capital 0.10 - -
Reserves - - -
Sales - - -
PAT (0.03) - -
EPS (Rs.) (2.71) - -
Book value per share (Rs.) 6.66 - -
* Eastview Estates Private Limited was incorporated in Fiscal 2006.

13. Faery Estates Private Limited

Faery Estates Private Limited was incorporated on May 8, 1998. This company is engaged in the business
of real estate development.

Registered Office

The registered office of Faery Estates Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

154
Board of Directors

The board of directors of Faery Estates Private Limited consists of:

1. Jimmy J. Parakh
2. R.M. Nentin

The shareholding pattern of Faery Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 49980 99.96%
SICL and R.M. Nentin 10 0.02%
SICL and Jimmy J. Parakh 10 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.50 0.10
Reserves - - -
Sales - - -
PAT (0.46) (0.02) (0.01)
EPS (Rs.) (9.22) (0.37) (0.54)
Book value per share (Rs.) 9.89 8.88 6.28

14. Floral Finance Private Limited

Floral Investments Private Limited was incorporated on March 9, 1989. This company is engaged in the
business of investment in stocks and securities.

Registered Office

The registered office of Floral Finance Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Floral Finance Private Limited consists of:

1. F.K. Bhathena
2. Jimmy J. Parakh

Shareholding Pattern

The shareholding pattern of Floral Finance Private Limited is as under:

Names of the shareholders No. of shares held % holding

SPCL 12016 99.98%
SPCL and R.M. Nentin 1 0.008%

155
 Names of the shareholders No. of shares held % holding
SPCL and F.K. Bhathena 1 0.008%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 1.20 1.20 1.20
Reserves - - -
Sales - - 0.01
PAT (0.10) (0.09) (0.08)
EPS (Rs.) (8.01) (7.09) (6.45)
Book value per share (Rs.) 70.04 80.97 88.08

15. Flooraise Developers Private Limited

Flooraise Developers Private Limited was incorporated on December 27, 2005. This company is engaged
in the business of real estate development.

Registered Office

The registered office of Flooraise Developers Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Flooraise Developers Private Limited consists of:

1. Jimmy J. Parakh
2. Manikant Shah

The shareholding pattern of Flooraise Developers Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 9998 99.98%
SICL and Manikant Shah 1 0.01%
SICL and Jimmy J. Parakh 1 0.01%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*
Equity capital 0.10 - -
Reserves - - -
Sales - - -
PAT (0.01) - -
EPS (Rs.) (1.20) - -

156
 Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*
Book value per share (Rs.) 8.17 - -
*Flooraise Developers Private Limited was incorporated in Fiscal 2006

16. Flotilla Finance Private Limited

Flotilla Finance Private Limited was incorporated on March 9, 1989. This company is engaged in the
business of investment in stocks and securities and trading in securities.

Registered Office

The registered office of Flotilla Investments Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Flotilla Finance Private Limited consists of:

1. K.B. Captain
2. H.J. Tavaria

Shareholding Pattern

The shareholding pattern of Flotilla Finance Private Limited is as under:

Names of the shareholders No. of shares held % holding

SPCL 29,998 99.99%
SPCL and R.M. Nentin 1 0.003%
SPCL and F.K. Bhathena 1 0.003%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 3.00 3.00 3.00
Reserves 0.28 0.41 0.54
Sales 0.02 0.02 0.04
PAT (0.13) (0.13) (0.13)
EPS (Rs.) (4.33) (4.32) (4.34)
Book value per share (Rs.) 109.35 113.68 118

17. Forbes Gokak Limited

Forbes Gokak Limited was formed pursuant to an amalgamation of Forbes Campbell & Co., Ltd with
Gokak Patel Volkart Limited from January 1, 1992 vide an order dated July 23, 1992 of the High Court,
Mumbai. Upon amalgamation, the name of the amalgamated company was changed to Forbes Gokak
Limited. The fresh certificate of change of name was issued by the RoC on September 28, 1992. The
activities of Forbes Gokak Ltd. at the present include manufacture of yarn, precision engineering products,

157
knitted garments, shipping agencies, freight forwarding business, office automation products and
investments. The equity shares of the company are currently listed on the BSE.

Registered Office

The registered office of Forbes Gokak Limited is at:

Forbes Building, Charanjit Rai Marg,

Fort, Mumbai 400 001,
India

Board of Directors

The board of directors of Forbes Gokak Limited consists of:

1. P.S. Mistry
2. S.P. Mistry
3. K.C. Mehra
4. D.B. Engineer
5. D.S. Soman
6. C.G. Shah
7. R.N. Jha
8. C.P. Mistry
9. N.D. Khurody
10. S.L. Goklaney

Promoter and Promoter Groupof Forbes Gokak Limited

1. SPCL
2. SICL
3. CIL
4. Warrior Investment Limited
5. Forbes Finance Limited

Shareholding Pattern

The shareholding pattern of Forbes Gokak Limited as on November 17, 2006 is as under:

Names of the shareholders No. of shares held % holding

SICL 8326352 64.55%
Public 1832323 14.21%
Life Insurance Corporation of India 624091 4.84%
SPCL 614505 4.76%
CIL 354436 2.75%
Other Private Companies 239236 1.85%
The National Insurance Co., Limited 193460 1.50%
Forbes Finance Limited 164862 1.28%
Benhill Finance Limited 124000 0.96%
Holborn Finance Limited 124000 0.96%
Central/State Government Institutions 110343 0.86%
Other NRIs/OCBs 81711 0.63
Equity Intelligence India Private 45894 0.36%
Limited
Foreign Institutional Investors 41135 0.32%
Banks 20309 0.16%

158
 Names of the shareholders No. of shares held % holding
Warrior (Investment) Limited 1536 0.01%
Mutual Funds 402 0.003%
Unit Trust of India 21 0.0001%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 124.53 124.53 124.53
Reserves 2906.92 1905.31 1727.45
Sales 6144.64 4909.30 4369.48
PAT 216.00 249.46 157.50
EPS (Rs.) 16.75 20.03 12.65
Book value per share (Rs.) 225.37 153 138.71

Stock Market Data

The shares of Forbes Gokak Limited are listed on the BSE.

The highest and lowest price of the shares of Forbes Gokak Limited on BSE in the last six months is as
follows:

Month High (Rs.) Low (Rs.) Volumes Volumes

(No of Shares ( Rs. in million)
traded )
July 2006 506.00 390.00 18,861 8.52
August 2006 487.75 409 28,948 12.56
September 2006 470.00 405.00 65,403 29.22
October 2006 483.65 403.00 40,104 17.45
November 2006 598.90 415.05 235,739 124.7
December 2006 575.00 455.00 107,655 54.22

Source: BSE Website

Closing share price on BSE as on January 4, 2006 was Rs. 478

Market Capitalisation as on January 4, 2006 was Rs. 6,166.2 million.

Forbes Gokak Limited has not made any public or rights issue of equity or preference shares or debentures
in the past five years.

18. Forvol International Services Limited

Forvol International Services Limited was incorporated on May 19, 1977. This company is engaged in the
business of a traveling agency and a tour operator.

Registered Office

9-10, Torana Apartments,

159
Opposite P&T colony,
Andheri Sahar Road,
Andheri (E), Mumbai 400 099

Board of Directors

The board of directors of Forvol International Services Limited consists of:

1. K.C. Mehra
2. P.S. Mistry
3. D.B. Engineer
4. S.P. Mistry
5. C.P. Mistry

Shareholding Pattern

Forvol International Services Limited is a wholly owned subsidiary of Sterling Investment Corporation
Private Limited

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 8.0 8.0 8.0
Reserves 8.24 8.24 8.24
Sales 75.2 55.8 49.5
PAT 14 4.5 (4.56)
EPS (Rs.) 17.55 5.65 (11.25)
Book value per share (Rs.) 10 10 10

19. Grand View Estates Private Limited

Grand View Estates Private Limited was incorporated on May 4, 1998. This company is engaged in the
business of investment in property.

Registered Office

The registered office of Grand View Estates Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Grand View Estates Private Limited consists of:

1. K.B. Captain
2. Jimmy J. Parakh

Shareholding Pattern

The shareholding pattern of Grand View Estates Private Limited is as under:

160
 Names of the shareholders No. of shares held % holding
SICL 9980 99.8%
SICL and R.M. Nentin 10 0.1%
SICL and K.B. Captain 10 0.1%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.10 0.10 0.10
Reserves - - -
Sales - - -
PAT (0.01) (0.01) (0.01)
EPS (Rs.) (0.89) (0.56) (0.55)
Book value per share (Rs.) 40.83 5.71 6.28

20. High Street Developers Private Limited

High Street Developers Private Limited was incorporated on December 16, 2005. This company is
engaged in the business of real estate development.

Registered Office

The registered office of High Street Developers Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of High Street Developers Private Limited consists of:

1. F.K. Bhathena
2. Jimmy J. Parakh

Shareholding Pattern

The shareholding pattern of High Street Developers Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 4980 99.6%
SICL and F.K. Bhathena 10 0.2%
SICL and Jimmy J. Parakh 10 0.2%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*

161
 Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*
Equity capital 0.50 - -
Reserves - - -
Sales - - -
PAT (0.01) - -
EPS (Rs.) (2.86) - -
Book value per share (Rs.) 93.26 -
*High Street Developers Private Limited was incorporated in Fiscal 2006.

21. Khajarana Ganesh Properties Private Limited

Khajarana Ganesh Properties Private Limited was incorporated on September 25, 1995. This company is
engaged in the business of real estate development.

Registered Office

The registered office of Khajarana Ganesh Properties Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Khajarana Ganesh Properties Private Limited consists of:

1. Manikant Shah
2. Adil Khambatta

The shareholding pattern of Khajarana Ganesh Properties Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 9998 99.98%
SICL and Manikant Shah 1 0.01%
SICL and Adil Khambatta 1 0.01%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.10 0.10 0.10
Reserves - - -
Sales - - -
PAT (0.10) (0.003) (0.003)
EPS (Rs.) (9.85) (0.38) (0.37)
Book value per share (Rs.) (3.78) 7.39 7.77

22. Kolland Developers Private Limited

Kolland Developers Private Limited was incorporated on December 22, 2005. This company is engaged in
the business of real estate development

162
Registered Office

The registered office of Kolland Developers Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Kolland Developers Private Limited consists of :

1. Adil Khambata
2. Manikant Shah

Shareholding Pattern

Shareholding Pattern of Kolland Developers Limited is as under

Names of the shareholders No. of shares held % holding

FIL 9998 99.98%
FIL and Adil Khambata 1 0.0001%
FIL and Manikant Shah 1 0.0001%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*
Equity capital 0.10 - -
Reserves - - -
Sales - - -
PAT (0.03) - -
EPS (Rs.) (2.78) - -
Book value per share (Rs.) 6.58 - -
* Kolland Developers Private Limited was incorporated in Fiscal 2005.

23. Magpie Finance Private Limited

Magpie Finance Private Limited was incorporated on March 10, 1989. This company is engaged in the
business of investment in stocks and securities.

Registered Office

The registered office of Magpie Finance Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

163
The board of directors of Magpie Finance Private Limited consists of:

1. F.K. Bhathena
2. R. Jain
3. B.S. Mistry

Shareholding Pattern

The shareholding pattern of Magpie Finance Private Limited is as under:

Names of the shareholders No. of shares held % holding

Manjri Stud Farm Private Limited 4998 99.96%
Manjri Stud Farm Private Limited and 1 0.02%
R. Jain
Manjri Stud Farm Private Limited and 1 0.02%
Shapoor Pallonji Mistry

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.50 0.50
Reserves - - -
Sales 0.42 1.89 1.15
PAT (0.17) 0.04 (0.07)
EPS (Rs.) (33.0) 9.00 (14.00)
Book value per share (Rs.) (153.90) (120.42) (129.31)

24. Manjri Developers Private Limited

Manjri Developers Private Limited was incorporated on March 23, 2006. This company is not presently
engaged in any business activity.

Registered Office

The registered office of Manjri Developers Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Manjri Developers Private Limited consists of:

1. R.M. Nentin
2. Jimmy J. Parakh

Shareholding Pattern

The shareholding pattern of Manjri Developers Private Limited is as under:

164
 Names of the shareholders No. of shares held % holding
SICL 4,999 49.9%
Pallonji Shapporji & Co., Private 4,999 49.9%
Limited
SICL and R.M. Nentin 1 0.01%
Pallonji Shapoorji & Co., Private 1 0.01%
Limited
and Jimmy J. Parakh

Financial Performance

There are no figures to report for financial performance of this company since it does not presently engage
in any business activity.

25. Manjri Stud Farm Private Limited

Manjri Stud Farm Private Limited was incorporated on October 26, 1939. This company is engaged in the
business of stud and agricultural activity, racing of horses and development of information technology
infrastructure services.

Registered Office

The registered office of Manjri Stud Farm Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors
The board of directors of Manjri Stud Farm Private Limited consists of:

1. Shapoor Pallonji Mistry

2. F.K. Bhathena
3. R.M. Nentin
4. R. Jain

Shareholding Pattern

The shareholding pattern of Manjri Stud Farm Private Limited is as under:

Names of the shareholders No. of shares held % holding

SPCL 37,484 99.96%
SPCL and RM Nentin 2 0.01%
SPCL and Shapoor Pallonji Mistry. 2 0.01%
Estate of Sir Jamshedji Jeejibhoy 12 0.03%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 37.50 37.50 37.5
Reserves - - -

165
 Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Sales 191.96 83.55 39.09
PAT (69.16) (70.09) (27.45)
EPS (Rs.) (1844.29) (1869.14) (731.98)
Book value per share (Rs.) (4392.81) (2548.51) (679.37)

26. Mazsons Builders and Developers Private Limited

Mazsons Builders and Developers Private Limited was incorporated on March 17, 2004. This company is
engaged in the business of property development.

Registered Office

The registered office of Mazsons Builders and Developers Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Mazsons Builders and Developers Private Limited consists of:

1. R. Sharma
2. P. Shah
3. A. Kapadia

Shareholder Pattern

The shareholding pattern of Mazsons Builders and Developers Private Limited is as under:

Names of the shareholders No. of shares held % holding

Delna Finance and Investments Private 4980 99.6%
Limited
Delna Finance and Investments Private 10 0.2%
Limited and K.B. Captain
Delna Finance and Investments Private 10 0.2%
Limited and R.M. Nentin

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.48 0.48
Reserves - - -
Sales - - -
PAT (0.04) (0.05) (0.02)
EPS (Rs.) (7.42) (11.47) (5.06)
Book value per share (Rs.) 73.66 79.74 90.79

166
27. Meriland Estates Private Limited

Meriland Estates Private Limited was incorporated on May 4, 1998. This company is engaged in the
business of real estate developments and investment.

Registered Office

The registered office of Meriland Estates Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Meriland Estates Private Limited consists of:

1. F.K. Bhathena
2. K.B. Captain
3. J. J. Parakh

Shareholding Pattern

The shareholding pattern of Meriland Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 49980 99.96%
SICL and F.K. Bhathena 10 0.02%
SICL and K.B. Captain 10 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.50 0.50
Reserves - - -
Sales - - 0.12
PAT (0.15) (0.15) 0.05
EPS (Rs.) (2.98) (3.24) 1.13
Book value per share (Rs.) 4.48 7.46 9.93

28. Milvin Investments Private Limited

Milvin Investments Private Limited was incorporated on November 15, 1988. This company is engaged in
the business of investment in stocks and securities.

Registered Office

The registered office of Milvin Investments Private Limited is at:

167
70, Nagindas Master Road,
Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Milvin Investments Private Limited consists of:

1. R.M. Nentin
2. P.C. Sheth
3. H.J. Tavaria

Shareholding Pattern

The shareholding pattern of Milvin Investments Private Limited is as under:

Names of the shareholders No. of shares held % holding
Sterling Investments Corporation 34,998 99.99%
Limited
Sterling Investments Corporation 1 0.002%
Limited and F.K. Bhathena
Sterling Investments Corporation 1 0.002%
Limited and Jimmy J. Parakh

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 3.50 3.50 3.50
Reserves 0.19 0.19 0.19
Sales 0.02 0.02 0.04
PAT (2.73) (0.55) (0.09)
EPS (Rs.) (78.12) (1.57) (2.65)
Book value per share (Rs.) 12.97 91.09 92.66

29. Palchin Real Estates Private Limited

Palchin Real Estates Private Limited was incorporated on January 19, 1995. This company is engaged in
the business of real estate development.

Registered Office

The registered office of Palchin Real Estates Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Palchin Real Estates Private Limited consists of:

1. F.K. Bhathena

168
2. Jimmy J. Parakh

Shareholding Pattern

The shareholding pattern of Palchin Real Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 49980 99.96%
SICL and R.M. Nentin 10 0.02%
SICL and F.K. Bhathena 10 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.50 0.50
Reserves 0.14 0.26 0.35
Sales - 0.19 -
PAT (0.12) (0.09) (0.20)
EPS (Rs.) (2.48) (1.82) 3.94
Book value per share (Rs.) 9.89 15.20 17.07

30. Ramili Investments Private Limited

Ramili Investments Private Limited was incorporated on January 13, 1989. This company is engaged in
the business of investment in stocks.

Registered Office

The registered office of Ramili Investments Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Ramili Investments Private Limited consists of:

1. Jimmy J. Parakh
2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Ramili Investments Private Limited is as under:

Names of the shareholders No. of shares held % holding
SPCL 21,998 99.99%
SPCL and R.M. Nentin 1 0.004%
SPCL and Jimmy J. Parakh 1 0.004%

Financial Performance

169
Summary audited stand-alone financial statements for the last three fiscal years is as under

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 2.20 2.20 2.40
Reserves - - -
Sales - - 0.02
PAT (0.05) (0.04) (0.04)
EPS (Rs.) (2.15) (1.87) (1.87)
Book value per share (Rs.) 53.69 55.84 57.71

31. Shachin Real Estates Private Limited

Shachin Real Estates Private Limited was incorporated on January 24, 1995. This company is engaged in
the business of real estate development.

Registered Office

The registered office of Shachin Real Estates Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Shachin Real Estates Private Limited consists of:

1. K.B. Captain
2. R.M. Nentin
3. P.C. Sheth

Shareholding Pattern

The shareholding pattern of Shachin Real Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding

Sterling Investments Corporation 129,800 99.84%
Limited
Sterling Investments Corporation 100 0.08%
Limited and K.B. Captain
Sterling Investments Corporation 100 0.08%
Limited and R.M. Nentin

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 1.30 1.30 1.30
Reserves 0.34 0.13 0.22
Sales 0.36 0.36 0.33

170
 Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
PAT 0.21 (0.08) 0.19
EPS (Rs.) 1.58 (0.63) 1.43
Book value per share (Rs.) 10.50 10.69 11.26

32. S.C. Impex Private Limited

S.C. Impex Private Limited was incorporated on March 21, 1979. This company is engaged in the business
of investing in property.

Registered Office

The registered office of S.C. Impex Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of S.C. Impex Private Limited consists of:

1. Jimmy J. Parakh
2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of S.C. Impex Private Limited is as under:

Names of the shareholders No. of shares held % holding

SPCL 2399 99.95%
SPCL and K.B. Captain 1 0.04%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 2.40 2.40 2.40
Reserves - - -
Sales - - -
PAT (0.28) (0.27) (0.25)
EPS (Rs.) (117.85) (113.85) (106.1)
Book value per share (Rs.) 109.72 226.90 340.75

33. Shapoorji & Co., Private Limited

Shapoorji & Co., Private Limited was incorporated on December 12, 1943. This company is engaged in
the business of investment in stocks and securities and trading in securities.

Registered Office

171
The registered office of Shapoorji & Co., Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Shapoorji & Co., Private Limited consists of:

1. K.B. Captain
2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Shapoorji & Co., Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 44998 99.99%
SICL and Pallonji Shapoorji Mistry 1 0.002%
SICL and R.S. Khusrokhan 1 0.002%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 4.50 4.50 4,50
Reserves 1.23 1.20 1.19
Sales 0.30 0.32 0.31
PAT 0.03 0.01 (0.05)
EPS (Rs.) 0.57 0.31 (1.08)
Book value per share (Rs.) 127.30 126.73 126.42

34. Shapoorji & Co. (Rajkot) Private Limited

Shapoorji & Co. (Rajkot) Private Limited was incorporated on April 1, 1942. This company is engaged in
the business of investment in stocks and securities.

Registered Office

The registered office of Shapoorji & Co. (Rajkot) Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Shapoorji & Co. (Rajkot) Private Limited consists of:

1. R.M. Nentin
2. SH.J. Tavaria

172
Financial Performance

The shareholding pattern of Shapoorji & Co. (Rajkot) Private Limited is as under:

Names of the shareholders No. of shares held % holding

Shapoor Pallonji Mistry 23,199,940 49.99%
Cyrus Pallonji Mistry 23,199,940 49.99%
S P Finance Private Limited 20 0.00004%
SC Finance and Investments Private 20 0.00004%
Limited
Shapoor Pallonji Mistry and PMistry 10 0.00002%
Shapoor Pallonji Mistry and K.B. 10 0.00002%
Captain
Shapoor Pallonji Mistry and Jimmy J. 10 0.00002%
Parakh
Shapoor Pallonji Mistry and F.K. 10 0.00002%
Bhathena
Cyrus Pallonji Mistry and K.B. Captain 10 0.00002%
Cyrus Pallonji Mistry and F.K. 10 0.00002%
Bhathena
Cyrus Pallonji Mistry and Jimmy J. 10 0.00002%
Parakh

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 2862.50 0.50 0.50
Reserves 7.26 12.74 12.99
Sales 1.35 0.06 0.08
PAT (5.48) (0.25) (0.33)
EPS (Rs.) (2.28) (49.81) (65.75)
Book value per share (Rs.) 9.96 2648.05 2697.86

35. Shapoorji Data Processing Private Limited

Shapoorji Data Processing Private Limited (previously known as Strata Search Shapoorji Private Limited)
was incorporated on October 21, 1985. The company is engaged in the business of investments in
property.

Registered Office

The registered office of Shapoorji Data Processing Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

173
The board of directors of Shapoorji Data Processing Private Limited consists of:

1. J.J Parakh
2. K.B. Captain
3. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Shapoorji Data Processing Private Limited is as under:

Names of the shareholders No. of shares held % holding

SPCL 4998 99.96%
SPCL and Jimmy J. Parakh 1 0.02%
SPCL and K.B. Captain 1 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.50 0.50
Reserves - - -
Sales 1.73 2.64 3.07
PAT (3.54) (1.00) (1.31)
EPS (Rs.) (707.40) (199.27) (261.82)
Book value per share (Rs.) (1845.07) (1239.41) (1038.22)

36. Shapoorji Drilling Enterprises Private Limited

Shapoorji Drilling Enterprises Private Limited was incorporated on September 25, 1984. This company is
engaged in the business of investment in stocks and securities and trading in securities.

Registered Office

The registered office of Shapoorji Drilling Enterprises Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Shapoorji Drilling Enterprises Private Limited consists of:

1. K.B. Captain
2. R.M. Nentin

The shareholding pattern of Shapoorji Drilling Enterprises Private Limited is as under:

Names of the shareholders No. of shares held % holding
SPCL 20598 99.99%
SPCL and Jimmy J. Parakh 1 0.004%
SPCL and K.B. Captain 1 0.004%

174
Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 1.66 1.66 1.66
Reserves - - -
Sales - - -
PAT (0.02) (0.02) (0.03)
EPS (Rs.) (1.02) (0.89) (1.50)
Book value per share (Rs.) 70.46 71.48 72.37

37. Shapoorji Hotels Private Limited

Shapoorji Hotels Private Limited was incorporated on July 14, 1993. This company is engaged in the
business of investment in stocks and securities.

Registered Office

The registered office of Shapoorji Hotels Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Shapoorji Hotels Private Limited consists of:

1. Jimmy J. Parakh
2. K.B. Captain

Shareholding Pattern

The shareholding pattern of Shapoorji Hotels Private Limited is as under:

Names of the shareholders No. of shares held % holding

CIL and K.B. Captain 9980 99.8%
CIL 10 0.1%
CIL and Jimmy J. Parakh 10 0.1%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.10 0.10 0.10
Reserves - - -
Sales - - -
PAT (0.01) (0.01) (0.01)
EPS (Rs.) (1.17) (0.55) (0.50)
Book value per share (Rs.) 3.47 4.63 5.18

175
38. Sharus Building Services India Private Limited

Sharus Building Services India Private Limited was incorporated on September 27, 1999. The company is
engaged in the manufacture of steel door frames.

Registered Office

The registered office of Sharus Building Services India Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Sharus Building Services India Private Limited consists of:

1. K.B. Captain
2. R. Jain

Shareholding Pattern

The shareholding pattern Sharus Building Services India Private Limited is as under:

Names of the shareholders No. of shares held % holding

Sterling Investments Corporation 10 50%
Limited and K.B. Captain
R. Jain 10 50%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.50 0.50
Reserves 0.28 0.25 0.28
Sales 77.03 107.20 51.81
PAT 0.04 0.42 0.15
EPS (Rs.) 7.24 84.46 30.58
Book value per share (Rs.) (964.14) 148.43 33.94

39. SP Aluminum Systems Private Limited

SP Aluminum Systems Private Limited was incorporated on December 14, 1995. This company is engaged
in the business of investment in stocks and securities.

Registered Office

The registered office of SP Aluminum Systems Private Limited is at:

70, Nagindas Master Road,

176
Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of SP Aluminum Systems Private Limited consists of:

1. Cyrus Pallonji Mistry

2. R. Jain
3. P.C. Sheth

Shareholding Pattern

The shareholding pattern of SP Aluminum Systems Private Limited is as under:

Names of the shareholders No. of shares held % holding

Abhipreet Trading Private Limited 16000 20%
Ramili Investments Private Limited 16000 20%
Rosate 16000 20%
Flotilla Investments Private Limited 16000 20%
Floral Investments Private Limited 16000 20%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 8.00 8.00 8.00
Reserves - - -
Sales - - -
PAT (0.54) (0.61) (0.61)
EPS (Rs.)* (679) (768) (769)
Book value per share (Rs.) 68.21 74.98 82.65
* The face value of shares issued is Rs.100

40. SP Architectural Coatings Private Limited

SP Architectural Coatings Private Limited was incorporated on June 28, 1999. This company is engaged in
the business of carrying out processes for coating of aluminum profiles and sheets.

Registered Office

The registered office of SP Architectural Coatings Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of SP Architectural Coatings Private Limited consists of:

177
1. K.B. Captain
2. H.J. Tavaria

The shareholding pattern of SP Architectural Coatings Private Limited is as under:

Names of the shareholders No. of shares held % holding

Anand Agencies Private Limited 110,000 22
SICL 100,000 20
Shapoorji Drilling Enterprises Private 100,000 20
Limited
Cyrus Engineers Private Limited 100,000 20
Shapoorji & Co. (Rajkot) Limited 90,000 18

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 5.00 5.00 5.00
Reserves 1.44 - -
Sales 24.97 25.99 28.55
PAT 3.15 1.51 3.56
EPS (Rs.) 6.31 3.03 7.13
Book value per share (Rs.) 12.86 6.07 3.09

41. SP Infocity Developers Private Limited

SP Infocity Developers Private Limited was incorporated on February 8, 2006. This company is not
currently engaged in any business.

Registered Office

The registered office of SP Infocity Developers Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of SP Infocity Developers Private Limited consists of:

1. F.K. Bhathena
2. R.M. Nentin

Shareholding Pattern
The shareholding pattern of SP Infocity Developers Private Limited is as under:

178
 Names of the shareholders No. of shares held % holding
SPCL 29,998 59.97%
Manjri Stud Firm Private Limited 19,992 39.98%
Manjri Stud Firm Private Limited and 10 0.02%
F.K. Bhathena
SPCL and Jimmy J. Parakh 10 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*
Equity capital 0.50 - -
Reserves - - -
Sales - - -
PAT (0.01) - -
EPS (Rs.) (0.22) - -
Book value per share (Rs.) 9.40 - -
* SP Infocity Developers Private Limited was incorporated in Fiscal 2006

42. SP Fabricators Private Limited

SP Fabricators Private Limited was incorporated on June 28, 1993. This company is engaged in the
business of structural blazing, aluminum composite paneling and manufacture of skylights.

Registered Office

The registered office of SP Fabricators Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of SP Fabricators Private Limited consists of:

1. R. Jain
2. M.S. Hingorani
3. Jimmy J. Parakh
4. H.J. Tavaria

Shareholding Pattern

The shareholding pattern of SP Fabricators Private Limited is as under:

179
 Names of the shareholders Equity % Holding Preference % Holding
Shares Shares(9%
Redeemable)
CIL - - 415,000 51.87%
SICL - - 225,000 28.12%
Anand Agencies - - 95,000 11.87%
Shapoorji Pallonji (Rajkot) Limited - - 55,000 6.8%
Shapoorji & Co. (Rajkot) Limited - - 10,000 1.25%
SP Aluminum Systems Private Limited 149998 99.99% - -
SP Aluminum Systems Private Limited 1 0.0006% - -
and R. Jain
SP Aluminum Systems Private Limited 1 0.0006% - -
and K.B. Captain

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 15.00 15.00 15.00
Reserves 12.14 - -
Sales 792.51 446.59 313.75
PAT 48.53 16.16 (0.68)
EPS (Rs.) 324.00 107.76 (0.5)
Book value per share (Rs.) 131.43 (203.57) (470.35)

43. Shapoorji Pallonji Biotech Park Private Limited

Shapoorji Pallonji Biotech Park Private Limited was incorporated on September 7, 2001. This company is
engaged in the business of development of biotechnology parks.

Registered Office

The registered office of Shapoorji Pallonji Biotech Park Private Limited is at:

A-13, Ground Floor,

R.K. Nivas, Street No. 3,
Indian Airlines Colony, Begumpet,
Secunderabad 500 003, Andhra Pradesh,
India

Board of Directors

The board of directors of Shapoorji Pallonji Biotech Park Private Limited consists of:

1. M.S. Hingorani
2. S.Dhawan
3. S. Kuppuswamy
4. L. Parthasarthy (Nominee of the Government of Andhra Pradesh)

180
Shareholding Pattern

The shareholding pattern of Shapoorji Pallonji Biotech Park Private Limited is as under:

Names of the shareholders No. of shares held % holding

Cyrus Investments Limited 2,000,000 91.04%
Government of Andhra Pradesh 186,800 8.50%
Shapoorji & Co. (Rajkot) Limited 9,997 0.46%
Z. Iqbal 1 0.00005%
M.S. Hingorani 1 0.00005%
S. Kuppuswamy 1 0.00005%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 21.97 21.97 1.97
Reserves 22.83 - -
Sales 120.62 - -
PAT 29.09 - -
EPS (Rs.) 13.24 - -
Book value per share (Rs.) 20.39 1.42 (63.59)

44. Shapoorji Pallonji Finance Limited

Shapoorji Pallonji Finance Limited was incorporated on April 4, 1994. This company is engaged in the
business of leasing, hire purchase and syndication of loans.

Registered Office

The registered office of Shapoorji Pallonji Finance Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Shapoorji Pallonji Finance Limited consists of:

1. Pallonji Shapoorji Mistry

2. Shapoor Pallonji Mistry
3. Cyrus Pallonji Mistry
4. P.C. Sheth
5. Jimmy J. Parakh
6. N.C. Singal

Shareholding Pattern

The shareholding pattern of Shapoorji Pallonji Finance Limited is as under:

181
 Names of the shareholders No. of shares held % holding
Cyrus Investments Limited 4637695 61.83%
Shapoorji Pallonji & Co., Limited 2025000 27.00%
Flotilla Finance Limited 350000 4.67%
Abhipreet Investments Limited 175000 2.33%
Cyrus Engineers Limited 160601 2.14%
S. Mistry 50000 0.66%
S. Mistry 50000 0.66%
Anand Agencies Private Limited 25000 0.33%
R. Mistry 25000 0.33%
A. Tata 20000 0.26%
H. Amin 3000 0.040%
Pallonji Shapoorji & Co. Private 2000 0.02%
Limited
S. Suryanarayan 1000 0.01%
C. Herawatt 500 0.006%
R. Tata 200 0.002%
F.K. Bhathena 1 0%
K. Captain 1 0%
P.C. Sheth 1 0%
Pallonji Shapoorji Mistry 1 0%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 75 75 75
Reserves 3.14 2.92 2.73
Sales 14.32 7.84 8.05
PAT 1.01 0.87 2.00
EPS (Rs.) 0.13 0.12 0.27
Book value per share (Rs.) 6.20 6.07 5.95

45. Shapoorji Pallonji Infrastructure Capital Co. Limited

Shapoorji Pallonji Infrastructure Capital Co. Limited was incorporated on June 9, 1997. This company is
engaged in the business in investments and finance of infrastructure projects.

Registered Office

The registered office of Shapoorji Pallonji Infrastructure Capital Co. Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Shapoorji Pallonji Infrastructure Capital Co. Limited consists of:

1. Pallonji Shapoorji Mistry

2. Shapoor Pallonji Mistry

182
3. Cyrus Pallonji Mistry
4. F.K. Bhathena
5. H.J. Tavaria
6. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Shapoorji Pallonji Infrastructure Capital Co. Limited is as under:

Names of the shareholders No. of shares held % holding

CIL 1,96,05,160 99.97%
Cyrus Engineers Private Limited 2390 0.012%
Shapoorji & Co., Private Limited 2380 0.012%
P.C. Sheth 10 0.00005%
K.B. Captain 10 0.00005%
P.N. Maloo 10 0.00005%
F.K. Bhathena 10 0.00005%
J.J. Parakh 10 0.00005%
R.M. Nentin 10 0.00005%
CIL and R.M. Nentin 10 0.00005%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 196.10 196.10 196.10
Reserves 149.87 49.20 18.22
Sales 102.54 31.06 10.22
PAT 100.67 30.99 10.14
EPS (Rs.) 4.11 1.26 0.41
Book value per share (Rs.) 17.64 12.50 10.92

46. Shapoorji Pallonji (Gwalior) Private Limited

Shapoorji Pallonji (Gwalior) Private Limited was incorporated on September 29, 1944. This company is
engaged in the business of investment in stocks and securities and trading in securities.

Registered Office

The registered office of Shapoorji Pallonji (Gwalior) Private Limited is at:

Next to Burmah Shell Training Centre,

Juhu Tara Road,
Mumbai – 400 054,
India

Board of Directors

The board of directors of Shapoorji Pallonji (Gwalior) Private Limited consists of :

1. K.B. Captain
2. R.M. Nentin

183
3. P.P. Mistry

Shareholding Pattern

The shareholding pattern of Shapoorji Pallonji (Gwalior) Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 249,970 99.98%
SICL and P.P. Mistry 10 0.004%
SICL and K.B. Captain 10 0.004%
SICL and F.K. Bhathena 10 0.004%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 2.50 2.50 2.50
Reserves 3.26 3.25 2.63
Sales 0.34 0.35 0.35
PAT 0.01 0.01 -
EPS (Rs.) 0.004 0.031 0.015
Book value per share (Rs.) 23.03 22.99 20.53

47. Shapoorji Pallonji Ports Private Limited

Shapoorji Pallonji Ports Private Limited was incorporated on May 12, 2003. This company is engaged in
the business of development of sea ports and undertakes port related services.

Registered Office

The registered office of Shapoorji Pallonji Ports Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Shapoorji Pallonji Ports Private Limited consists of:

1. K.B. Captain
2. R.M. Nentin
3. D.S. Salgia

Shareholding Pattern

The shareholding pattern of Shapoorji Pallonji Ports Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 49998 99.99%
SICL and Deepesh Salgia 1 0.002%
SICL and K.B. Captain 1 0.002%

184
Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.50 0.50
Reserves - - -
Sales 0.01 0.01 -
PAT (0.01) 0.01 (0.01)
EPS (Rs.) (0.26) 0.18 (0.15)
Book value per share (Rs.) (60.67) 9.71 9.50

48. Shapoorji Pallonji Power Company Limited

Shapoorji Pallonji Power Company Limited was incorporated on January 3, 1995. This company was
formed for the purpose of setting up a power plant, however presently this company does not engage in any
business activity.

Registered Office

The registered office of Shapoorji PallonjiCompany Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Shapoorji Pallonji Power Company Limited consists of:

1. Pallonji Shapoorji Mistry

2. Shapoorji Pallonji Mistry
3. Cyrus Pallonji Mistry
4. P.C. Sheth
5. F.K. Bhathena
6. Hanut Singh
7. M.S. Hingori

Shareholding Pattern

The shareholding pattern of Shapoorji Pallonji Power Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 37498 37.50%
CIL 37498 37.50%
Cyrus Engineers Private Limited 24998 25.00%
R.M. Nentin 2 0.002%
P.C. Sheth 1 0.001%
K.B. Captain 1 0.001%
F.K. Bhathena 1 0.001%
J.J. Parakh 1 0.001%
SICL and R.M. Nentin 1 0.001%

185
Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 1.00 1.00 1.00
Reserves - - -
Sales 3.91 0.79 5.83
PAT 2.53 0.18 3.49
EPS (Rs.) 25.28 1.80 36.28
Book value per share (Rs.) (73.36) (98.65) (100.44)

49. Shapoorji Pallonji & Co., (Rajkot) Private Limited

Shapoorji Pallonji & Co., (Rajkot) Private Limited was incorporated on July 3, 1942. This company is
engaged in the business of investment in stocks and securities.

Registered Office

The registered office of Shapoorji Pallonji & Co., (Rajkot) Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Shapoorji Pallonji & Co., (Rajkot) Private Limited consists of:

1. Shapoor Pallonji Mistry

2. Cyrus Pallonji Mistry
3. P.C. Sheth
4. F.K. Bhathena

Shareholding Pattern

The shareholding pattern of Shapoorji Pallonji & Co., (Rajkot) Private Limited is as under:

186
 Names of the shareholders No. of shares held % holding
Shapoor Pallonji Mistry 23,199,940 49.99%
Cyrus Pallonji Mistry 23, 199,940 49.99%
SP Finance Private Limited 20 0.00004%
SC Finance and Investments Private 20 0.00004%
Limited
Shapoor Pallonji Mistry and P.P. Mistry 10 0.00002%
Shapoor Pallonji Mistry and K.B. 10 0.00002%
Captain
Shapoor Pallonji Mistry and Jimmy J. 10 0.00002%
Parakh
Shapoor Pallonji Mistry and F.K. 10 0.00002%
Bhathena
Cyrus Pallonji Mistry and K.B. Captain 10 0.00002%
Cyrus Pallonji Mistry and F.K. 10 0.00002%
Bhathena
Cyrus Pallonji Mistry and Jimmy J. 10 0.00002%
Parakh

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 464 0.50 0.50
Reserves 26.62 26.84 26.91
Sales 1.84 0.54 0.67
PAT (0.22) (0.07) (0.03)
EPS (Rs.) (0.51) (13.98) (6.85)
Book value per share (Rs.) 10.50 5468.42 5482.41

50. Skyscape Developers Private Limited

Skyscape Developers Private Limited was incorporated on January 18, 2006. This company is engaged in
the business of property development.

Registered Office

The registered office of Skyscape Developers Private Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

The board of directors of Skyscape Developers Private Limited consists of:

1. F.K. Bhathena
2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Skyscape Developers Private Limited is as under:

187
 Names of the shareholders No. of shares held % holding
CIL 4999 49.99%
Anand Agencies 4999 49.99%
F.K. Bhathena 1 0.01%
R.M. Nentin 1 0.01%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*
Equity capital 0.10 - -
Reserves - - -
Sales - - -
PAT (0.01) - -
EPS (Rs.) (1.08) - -
Book value per share (Rs.) 8.29 - -
* Skyscape Developers Private Limited was incorporated in Fiscal 2006.

51. Sterling Generators Private Limited

Sterling Generators Private Limited (previously known as Chinsha Investments Private Limited) was
incorporated on February 24, 1995. This company is engaged in the business of manufacturing of diesel
generating sets and transformers.

Registered Office

The registered office of Sterling Generators Private Limited is at:

Bussa Udyog Bhavan,

T.J. Road, Sewree,
Mumbai 400 015,
India

Board of Directors

The board of directors of Sterling Generators Private Limited consists of:

1. Jimmy J. Parakh
2. Z.Y. Darawalla
3. K.Y. Darawalla

Shareholding Pattern

The shareholding pattern of Sterling Generators Private Limited is as under:

Names of the shareholders No. of shares held % holding
SICL 9998 99.98%
Aloo N. Tata 1 0.01%
SICL and Jimmy J. Parakh 1 0.01%

Financial Performance

188
Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 10.00 0.10 0.10
Reserves - - -
Sales 0.18 - -
PAT (4.25) (0.01) (0.01)
EPS (Rs.) (29.18) (0.54) (0.54)
Book value per share (Rs.) 5.70 4.89 5.47

52. Sunny View Estates Private Limited

Sunny View Estates Private Limited was incorporated on May 18, 1998. This company is engaged in the
business of property development.

Registered Office

The registered office of Sunny View Estates Private Limited:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Sunny View Estates Private Limited consists of:

1. F.K. Bhathena
2. R.M. Nentin

The shareholding pattern of Sunny View Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding

SICL 49980 99.96%
SICL and F.K. Bhathena 10 0.02%
SICL and Jimmy J. Parakh 10 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 0.50 0.50 0.10
Reserves - - -
Sales 53.36 - -
PAT (15.78) (0.15) (0.02)
EPS (Rs.) (315.64) (2.97) (0.61)
Book value per share (Rs.) (309.62) 6.02 4.97

53. United Motors (India) Limited

189
United Motors (India) Limited was incorporated on August 4, 1920. This company is engaged in the
business of sale of petrol and diesel and retail.

Registered Office

The registered office of United Motors (India) Limited is at:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of United Motors (India) Limited cosnists of:

1. P.S. Mistry
2. S.P. Mistry
3. C.P. Mistry
4. P.C. Sheth
5. J. J. Parakh
6.

Shareholding Pattern

The shareholding pattern of United Motors (India) Limited is as under:

Names of the shareholders No. of equity % holding No. of % holding

shares held preference
shares held
SPCL 403344 50.55% 7500000 50%
FIL 262977 32.96% 7500000 50%
CIL 54924 6.88% - -
Shapoorji Pallonji (Gwalior) 53620 6.72% - -
Limited
Others 16715 2.09% - -
Unallotted bonus shares to 2296 0.29% - -
foreign shareholders
T.N. Atkinson 1400 0.18% - -
Pallonji Shapoorji & Co., 564 0.07% - -
Private Limited
Anand Agencies Private 560 0.07% - -
Limited
A.L. Doherty 560 0.07% - -
K.M. Mistry 400 0.05% - -
Bank of India 184 0.02% - -
Lt. Col. R.B. Lloyd 168 0.02% - -
B.G. White 112 0.01% - -
E.C. Allen 56 0.01% - -
H.M. Khajurina 56 0.01% - -

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

190
 (Rs. in million except per share data)
Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004
Equity capital 7.98 7.98 7.98
Reserves 112.89 112.89 112.89
Sales 50.75 71.93 28.54
PAT 26.78 15.30 (78.18)
EPS (Rs.) 33.57 19.17 (97.97)
Book value per share (Rs.) (134.78) (187.11) (225.28)

54. Windward Developers Private Limited

Windward Developers Private Limited was incorporated on December 22, 2005. This company is engaged
in the business of property development.

The registered office of Windward Developers Private Limited:

70, Nagindas Master Road,

Fort, Mumbai 400 023,
India

Board of Directors

The board of directors of Windward Developers Private Limited consists of:

1. Jimmy J. Parakh
2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Windward Developers Private Limited is as under:

Names of the shareholders No. of shares held % holding
SICL 3237 64.74
SPCL 1494 29.88
Manjri Stud Firm Private Limited 249 4.98
SICL and R.M. Nentin 10 0.20
SICL and Jimmy J. Parakh 10 0.20

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*
Equity capital 0.50 - -
Reserves - - -
Sales - - -
PAT (0.01) - -
EPS (Rs.) (2.78) - -
Book value per share (Rs.) 93.34 - -
* Windward Developers Private Limited was incorporated in Fiscal 2006

191
Promoter Group companies under winding up

SIV Industries Limited

This company was incorporated on August 22, 1957. This company was engaged in the manufacture of
manmade fibres such as viscose fibre. However, this company is now under liquidation pursuant to a
winding up order dated August 25, 2004 passed by the High Court of Madras. The Official Liquidator took
charge of all assets of the company in October, 2004. The liquidation process is yet to be completed. The
equity shares of this company were listed on the BSE, NSE and the Madras Stock Exchange. The stock
exchanges were informed of the winding up process of this company by a letter from this company dated
September 15, 2004.

Board of Directors

The erstwhile board of directors of this company consisted of:

1. K.K. Shah
2. A.S. Rajagopalan
3. C. Sivaramakrishnan
4. T.S. Chellam
5. V.K. Subburaj (Representative of the Government of Tamil Nadu)
6. Ajay Bhattacharya (Representative of the Government of Tamil Nadu)

Shareholding pattern of this company as of the date of filing for liquidation was as follows:

Sr No. Name of the Shareholder No. of Equity Shares Percentage

1. Promoters and Associates
Gherda S.A. 19,838,057 28.701%
Sterling Investment Corporation Private Limited 11,953,092 17.293%
Shapoorji Pallonji & Co., Limited 6,928,520 10.024%
United Motors India Limited 2,894,835 4.188%
Pallonji Shapoorji & Co., Private Limited 265,000 0.383%
Anand Agencies Private Limited 141,820 0.205%
S.P. Mistry 128,200 0.185%
C.P. Mistry 66,200 0.096%
SC Finance & Investments Private Limited 58,200 0.084%
SP Finance Private Limited 54,200 0.078%
A.N. Tata 20,000 0.029%
Crystal Investment Co., Private Limited 8,424 0.012%
Shakai Containers Private Limited 4000 0.006%
Kaisha Manufacturers Private Limited 4000 0.006%
Glittering Gold Finance Private Limited 4,176 0.006%
P.P. Mistry 4,000 0.006%
P.S. Mistry 3,600 0.005%
N.N. Tata 3,539 0.005%
B.S. Mistry 2,000 0.003%
H. Mehta 1,800 0.003%
R.C. Mistry 500 0.001%
N.M. Adenwala 300 0.00%
Promoter and Associates Total 42, 384,463 61.32%

2. Public 11,176,640 16.17%

3. Corporate Bodies 33,38,477 4.83%
4. G.I.C. and Subsidiaries 31,86,413 4.61%
5. Bank of New York 31,31,118 4.53%

192
Sr No. Name of the Shareholder No. of Equity Shares Percentage
6. L.I.C. 24,53,746 3.55%
7. Unit Trust of India 16,31,222 2.36%
8. Government of Tamil Nadu 7,60,316 1.10%
9. Foreign Instiutional Investors 6,56,636 0.95%
10. Non-Domestic Companies 1,31,327 0.19%
11. Non-Resident Indians 1,03,679 0.15%
12. Mutual Funds and Banks 76,031 0.11%
TOTAL 69,119,608 100%

Stock Price Data

Since this company is currently under winding up, it is not traded on any stock exchange.

Financial Performance

Summary audited stand alone financial statements for the last three fiscal years is as follows:

Particulars 2004 2003 2002

Equity capital n.a. 69.12 69.12
Reserves n.a. -437.22 -324.72
Sales 6.92 6.40 14.30
PAT -121.74 -112.5 -73.09
EPS (Rs.) n.a. -16.27 -10.5744
Book value per
share(Rs.) n.a. -437.22 -324.72
n.a.: not available
Source: www.bseindia.com/capital line
This company has been under winding up since August 25, 2004 and therefore, no financials are available
after fiscal 2005.

Companies disassociated/ struck off

The promoters have not disassociated themselves from any company/ firm during preceding three years. No
promoter group companies have been struck from the records of the registrar of companies during
preceding three years.

Common pursuits with the Issuer

One of our promoters, SPCL is engaged in the business of civil construction and real estate development,
whilst one of our promoter group companies, Shapoorji Pallonji Infrastructure Capital Co. Limited is
engaged in the business in investments and finance of infrastructure projects.

193
 RELATED PARTY TRANSACTIONS

STATEMENT OF RELATED PARTIES

(Rupees in
millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
(I) Transactions during the
year:

Holding company(s)

Issue of 7.5% Redeemable

Non - Cumulative
Convertible Preference
Share Capital
Cyrus Investments Limited - 200.00 200.00 200.00 - -
Issue of 12% Redeemable
Non - Cumulative
Convertible Preference
Share Capital
Cyrus Investments Limited - - - - - 200.00
Conversion of 12%
Redeemable Cumulative
Convertible Preference
Share Capital to Equity
Share Capital
Cyrus Investments Limited - - - - 200.00 -
Guarantees Given
by/(Released)
Cyrus Investments Limited - - 150.00 - - -

Subsidiary companies

Sub-Contract Expenses
Afcons Pauling (India) - - - - - 0.71
Limited
Purchase of stores & spares
SSS Electrical (India) Private - - - - - 0.67
Limited
Sale of Stores & spares
Afcons Pauling (India) - - - - - 0.37
Limited

194
Service Charges
Afcons Dredging & Marine 0.03 0.06 0.06 0.06 0.06 0.06
Services Limited
SSS Electrical (India) Private 0.03 0.06 0.06 0.06 0.06 0.06
Limited
Tensacciai (India) Private - 0.06 0.06 0.06 0.06 0.06
Limited
Dividend Income
SSS Electrical (India) Private - - - - 0.17 0.14
Limited
Current Account (net)
outflow / (inflow)
Hazarat & Company Private - (0.12) - 0.11 - (0.12)
Limited
Afcons Arethusa Offshore - (0.03) 0.02 - - -
Services Private Limited
Afcons Pauling (India) - - 15.07 18.23 36.74 (52.59)
Limited
SSS Electrical (India) Private 0.05 (0.51) (0.06) 0.17 (1.23) (1.63)
Limited
Afcons Dredging & Marine 0.03 (0.15) 0.01 0.01 0.02 0.01
Services Limited
Tensacciai (India) Private - (0.20) 0.01 - (0.39) 0.02
Limited
Afcons BOT Constructions - (0.01) (0.02) - - 0.01
Private Limited
Kier Afcons (India) Private - - - - (0.01) -
Limited
Interest Income - Current
Account
Hazarat & Company Private - 0.01 0.01 - 0.01 0.01
Limited
SSS Electrical (India) Private 0.01 0.03 0.05 0.04 0.09 -
Limited
Afcons Dredging & Marine - 0.01 0.01 0.01 0.03 0.02
Services Limited
Tensacciai (India) Private - 0.01 0.01 - 0.01 0.02
Limited
Afcons Pauling (India) - - 19.40 17.93 14.37 14.47
Limited
Kier Afcons (India) Private - - - - - -
Limited
Rent Income - - - - - -
Hazarat & Company Private 0.06 0.12 0.09 0.09 - -
Limited
Recovery of expenses - - - - - -
Afcons Pauling (India) - - 6.98 6.80 16.25 33.46
Limited
SSS Electrical (India) Private - - - - - 1.67
Limited
Repayment/Conversion of
loan

195
Afcons BOT Constructions - - 0.02 - - -
Private Limited
Afcons Pauling (India) - - 75.07 - - -
Limited
Tensacciai (India) Private - 0.21 - - - -
Limited
Afcons Dredging & Marine - - - 1.30 - -
Services Limited
Kier Afcons (India) Private - - - - 0.01 -
Limited
Guarantees Given
for/(Released)
SSS Electrical (India) Private (0.25) 0.84 (0.57) 1.18 - -
Limited
Afcons Pauling (India) - - (100.00) - 100.00 410.00
Limited

Fellow Subsidiary(s)

Issue of Zero coupon

Redeemable Preference
Shares
Sterling Investments 1.24 - - - - -
Corporation Private Limited
Issue of Equity Share
Capital on conversion of
9.5% Redeemable Non -
Cumulative Convertible
Preference Share.
Floreat Investment Limited - 200.00 - - - -
Issue of 9.5% Redeemable
Non - Cumulative
Convertible Preference
Share Capital
Sterling Investments - - - - 200.00 -
Corporation Private Limited
Issue of 7.5% Redeemable
Non - Cumulative
Convertible Preference
Share Capital
Floreat Investment Limited - 500.00 500.00 - - -
Cyrus Investments Limited - - - - - -
Issue of 7.5% Redeemable
Non - Cumulative Optionally
Convertible Preference
Share Capital
Floreat Investment Limited - 500.00 - - - -
Loan Taken
Sterling Investments - - - - 200.00 -
Corporation Private Limited
Repayment/Conversion of
loan
Sterling Investments - - - - 200.00 -

196
Corporation Private Limited
Interest paid loan
Sterling Investments - - - - 3.53 -
Corporation Private Limited

Partnership firm in which

Company is a Partner

Current Account (net)

outflow / (inflow)
Afcons Pauling Joint Venture 1.21 1.74 (2.71) 0.33 (3.08) 0.04
Profit/(Loss) of share in - - - - - -
partnership firm
Afcons Pauling Joint Venture (1.25) (1.83) 2.49 (0.62) (0.06) 1.34

Associate Company

Finance Lease Charges

Afcons (Mideast) Construction 0.04 0.07 0.07 0.07 5.60 5.60
and Investments Private
limited

Particulars For the For the Financial Year Ended

period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Current Account (net)
outflow / (inflow)
Afcons (Mideast) Construction - - - - - 0.82
and Investments Private
limited
Loan Taken
Afcons (Mideast) Construction - - - 9.00 - -
and Investments Private
limited
Repayment/Conversion of
loan
Afcons (Mideast) Construction - - - - 6.05 -
andInvestments Private limited
Interest paid loan
Afcons (Mideast) Construction 0.29 0.45 0.46 0.46 - -
and Investments Private
limited

Jointly Controller Entity

197
Service Charges
Afcons Aarsleff Joint Venture - 42.96 - - - -
Current Account (net) - - - - - -
outflow / (inflow)
Afcons Aarsleff Joint Venture 18.16 25.78 - - - -

Key Management Personnel

Managerial Remuneration
paid
A.H.Divanji - - - - - 1.59
A.M.Nerurkar - - - - - 0.01
Rajul A.Bhansali - - - - 1.63 1.41
K.Subrahmanian 1.20 2.64 2.56 2.37 0.80 -
Sitting Fees paid - - - - - -
P.S.Mistry - - - 0.01 0.03 -
C.P.Mistry
0.01 0.03 0.03 0.04 0.03 -
A.H.Divanji
- - - - - 0.01

Particulars For the For the Financial Year Ended

period from
April 1,
2006 to
September
30, 2006
March 31, March 31, March 31, March 31, March 31,
2006 2005 2004 2003 2002
(II) Balances as at year end:

Holding company(s)

Outstanding amount of
guarantee given/ (taken)
Cyrus Investments Limited (800.00) (800.00) (150.00) - - -

Subsidiary companies

Outstanding amount of
guarantee given/ (taken)
Afcons Pauling (India) - - 18.23 118.23 - -
Limited
SSS Electrical (India) Private 1.28 1.53 0.68 1.25 - -
Limited
Outstanding Amount - - - - - -
Dr/(Cr)

198
Afcons Pauling (India) - - 395.80 428.78 385.82 318.45
Limited
Afcons (Overseas) 0.12 0.12 0.12 0.11 0.11 0.11
Constructions and
Investments Private Limited
Hazarat & Company Private 0.21 0.20 0.20 0.19 0.16 0.16
Limited
Afcons BOT Constructions - - 0.01 0.04 0.04 0.03
Private Limited
SSS Electrical (India) Private 0.24 0.19 0.61 0.56 0.30 1.37
Limited
Tensacciai (India) Private - - 0.34 0.27 0.21 0.52
Limited
Afcons Dredging & Marine 0.12 0.09 0.17 0.10 1.33 1.22
Services Limited
Afcons Arethusa Offshore 0.03 - 0.03 - - -
Services Private Limited
Afcons Employees Healthcare 0.01 0.01 0.01 - - -
& Welfare Company Private
Limited
- - - - - -
Partnership firm in which
Company is a Partner

Outstanding Amount
Dr/(Cr)
Afcons Pauling Joint Venture 146.49 146.53 146.63 146.85 147.14 150.28

Associate Company

Outstanding Amount
Dr/(Cr)
Afcons (Mideast) Construction (10.92) (10.59) (10.06) (9.52) - 9.98
and Investments Private
limited

Jointly Controller Entity

Outstanding Amount
Dr/(Cr)
Afcons Aarsleff Joint Venture 24.40 100.34 - - - -
Al - Saeed Afcons Joint 5.11 - - - - -
Venture

199
CONSOLIDATED STATEMENT OF RELATED PARTIES

(Rupees in
millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
(I) Transactions during the year:

Holding company(s)

Issue of 7.5% Redeemable Non -

Cumulative Convertible Preference
Share Capital
Cyrus Investments Limited - 200.00 200.00 200.00 - -
Issue of 12% Redeemable Non -
Cumulative Convertible Preference
Share Capital
Cyrus Investments Limited - - - - - 200.00
Conversion of 12% Redeemable
Cumulative Convertible Preference
Share Capital to Equity Share
Capital
Cyrus Investments Limited - - - - 200.00 -
Guarantees Given by/(Released)
Cyrus Investments Limited - - 150.00 - - -

Fellow Subsidiary(s)

Issue of Zero coupon Reedemable

Preference Shares
Sterling Investments Corporation 1.24 - - - - -
Private Limited
Issue of Equity Share Capital on
conversion of 9.5% Redeemable
Non - Cumulative Convertible
Preference Share.
Floreat Investment Limited - 200.00 - - - -
Issue of 9.5% Redeemable Non -
Cumulative Convertible Preference
Share Capital
Sterling Investments Corporation - - - - 200.00 -
Private Limited
Issue of 7.5% Redeemable Non -
Cumulative Convertible Preference
Share Capital
Floreat Investment Limited - 500.00 500.00 - - -
Issue of 7.5% Redeemable Non -
Cumulative Optionally Convertible

200
Preference Share Capital

Floreat Investment Limited - 500.00 - - - -

Loan Taken
Sterling Investments Corporation - - - - 200.00 -
Private Limited
Repayment/Conversion of loan
Sterling Investments Corporation - - - - 200.00 -
Private Limited
Interest paid loan
Sterling Investments Corporation - - - - 3.53 -
Private Limited

Associate Company

Finance Lease Charges

Afcons (Mideast) Construction and 0.04 0.07 0.07 0.07 5.60 5.60
Investments Private limited
Current Account (net) outflow /
(inflow)
Afcons (Mideast) Construction and - - - - - 0.82
Investments Private limited
Loan Taken
Afcons (Mideast) Construction and - - - 9.00 - -
Investments Private limited
Repayment/Conversion of loan
Afcons (Mideast) Construction and - - - - 6.05 -
Investments Private limited
Interest paid loan
Afcons (Mideast) Construction and 0.29 0.45 0.46 0.46 - -
Investments Private limited

Key Management Personnel

Managerial Remuneration paid

A.H.Divanji - - - - - 1.59
A.M.Nerurkar - - - - - 0.01
Rajul A.Bhansali - - - - 1.63 1.41
K.Subrahmanian 1.20 2.64 2.56 2.37 0.80 -
Sitting Fees paid
P.S.Mistry - - - 0.01 0.03 -
C.P.Mistry 0.01 0.03 0.03 0.04 0.03 -
A.H.Divanji - - - - - 0.01

(II) Balances as at year end:

Holding company(s)

201
Outstanding amount of guarantee
given/ (taken)
Cyrus Investments Limited (800.00) (800.00) (150.00) - - -

Associate Company

Outstanding Amount Dr/(Cr)

Afcons (Mideast) Construction and (10.92) (10.59) (10.06) (9.52) - 9.98
Investments Private limited

202
 DIVIDEND POLICY

We have not declared or paid any cash dividend on our Equity Shares in the last five Fiscals. The
declaration and payment of dividends if any, will be recommended by our Board of Directors and approved
by our shareholders in their discretion, and will depend on a number of factors, including but not limited to
our earnings, capital requirements and overall financial position. Our Company has no stated dividend
policy. This is not indicative of our dividend policy or dividend amount, if any, in future.

203
 INDEBTEDNESS

Details of Secured Borrowings

Our secured borrowings as of September 30, 2006 are as follows:

A. Working Capital

We have working capital facilities with a consortium of banks consisting of the following:

1. State Bank of India

2. Dena Bank
3. BNP Paribas
4. UTI Bank
5. ING Vysya Bank Limited
6. UCO Bank
7. Bank of India
8. Oriental Bank of Commerce
9. Union Bank of India
10. ICICI Bank Limited

The total cash credit limit granted under the said facility is Rs. 1,000 million. As of September 30,
2006, the outstanding in respect of the same was Rs. 605 million. In addition, a non-fund based
limit of Rs. 9,000 million is also available to us under the said facility.

This facility is secured by the following:

1. Pari passu hypothecation charge over Company’s entire present and future stocks of raw
material, work in progress, finished product and book debts;

2. Pledge of UTI Bonds (face value Rs. 38 million) ;

3. First Equitable mortgage charge on Company’s properties situated in Nagpur, Andheri

(Afcons House) and Worli (Band Box Hose); and

4. Second charge on plant and machinery of the Company

The loan agreements and sanction letters provide for certain negative and restrictive covenants that
must be observed by the Company during the currency of this working capital facility. These
include:

(1) It is provided that the Company cannot effect any change in its capital structure without
the prior consent of the lender in writing.

(2) It is provided that the company cannot implement of any major scheme or expansion or
acquisition of fixed assets involving major expenditure without the prior consent of the
lender in writing.

(3) It is provided that the Company cannot formulate any scheme of amalgamation or
reconstruction without the prior consent of the lender.

204
 (4) It is provided that the Company cannot invest by way of share capital in or lend or
advance funds to or place deposits with any other concern without the prior consent of
the lender in writing.

(5) It is provided that the Company cannot enter into any borrowing arrangements either
secured or unsecured with any other Bank/financial institutions, company or accept of
deposits apart from existing arrangements without the prior consent of the lender in
writing.

(6) Undertake any guarantee obligations on behalf of the companies without the prior written
consent of the lender in writing.

(7) Declaration of dividends for any year except out of profits relating to that year after
making all due and necessary provisions (provided that no default had occurred in any
repayment obligations) without the prior consent of the lender in writing.

B. Equipment Loan

As of September 30, 2006, the Company had availed of a total amount of Rs. 1,218.80 from
different lenders for the purchase of equipment against such equipment and machinery as
collateral security as provided below:
(Rs. In Million)
Sr. Name of the Lender Sanctioned Outstanding Interest
No. Amount
1. ICICI Bank 126.46 59.56 6.75% to
11.25%
2. HDFC Bank 70.40 21.13 6.90% to
9.87%
3. Srei International Finance 166.93 14.29 7.75% to
Limited 14.00%
4. Bharat Overseas Bank 300.00 165.04 8.75% to
10.00%
5. Oriental Bank of Commerce 500.00 213.64 7.75%

6. UTI Bank Limited 55.00 22.04 9.00%

C. Unsecured Borrowings

As of September 30, 2006, the total unsecured loans of the Company aggregated to Rs. 3,721.5
million. This includes loans taken from the following banks:

(In Rs. million)

Sr. Name of the Amount Amount Outstanding Interest
No. lender

1. UCO Bank 500.00 503.39 8.25%

2. Dena Bank 1,000.00 1,000.00 8.75% and 9.00%

3. UTI Bank 500.00 503.80 9.00% and 9.50%

4. Bank of India 500.00 500.00 8.25% and 9.75%

205
 Sr. Name of the Amount Amount Outstanding Interest
No. lender

5. Central Bank of 250.00 250.00 8.50%

India
6. State Bank of 250.00 250.00 7.75%
Hyderabad
7. Oriental Bank of 250.00 156.2 7.75%
Commerce
8. HDFC Limited 312.5 Nil 10.75%

9. Afcons Mideast 9.00 9.00 6.50%

10. IDBI Limited 150.00 115.00 7.80%

D. Other

As of September 30, 2006 the Company has an amount aggregating approximately to Rs. 44.45
million outstanding which was raised by the Company by way of public deposits pursuant to
Companies (Acceptance of Deposits) Rules, 1975.

206
 FINANCIAL STATEMENTS

AUDITORS’ REPORT
To,
The Board of Directors
AFCONS Infrastructure Limited
Afcons House,
16, Shah Industrial Estate
Veera Desai Road, Azad Nagar P. O.
Post Box No. 11976
Andheri (West), Mumbai 400 053

Dear Sirs,

Re: The proposed public offering by Afcons Infrastructure Limited.

1. We have examined the attached financial information of Afcons Infrastructure Limited (“the
Company”), as approved by the Board of Directors of the Company, prepared in terms of the
requirements of Paragraph B, Part II of Schedule II of the Companies Act, 1956 (“the Act”) and the
Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 as
amended up to 18th October, 2006 (“SEBI Guidelines”) and in terms of our engagement agreed upon
with you in accordance with our engagement letter dated 4th December, 2006 requesting us to examine
financial information referred to above and proposed to be included in the Offer Document being
issued by the Company in connection with the proposed issue of Equity shares of the Company.

2. The above information have been extracted by the Management from the financial statements for the
year ended 31st March, 2002, 2003, 2004, 2005 and 2006.

3. We have also examined the financial information of the Company for the period 1st April, 2006 to 30th
September, 2006 prepared and approved by the Board of Directors for the purpose of disclosure in the
offer document of the Company mentioned in Paragraph (1) above. The financial information for the
above period was examined to the extent practicable, for the purpose of audit of financial information
in accordance with the Auditing and Assurance Standards issued by the Institute of Chartered
Accountants of India. Those Standards require that we plan and perform our audit to obtain reasonable
assurance, whether the financial information under examination is free of material misstatement.
Based on the above, we report that in our opinion and according to the information and explanations
given to us, we have found the same to be correct and the same have been accordingly used in the
financial information appropriately.

4. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI
Guidelines and terms of our engagement as aforesaid, we further report that:

a) The Restated Summary Statement of Assets and Liabilities of the Company as at 31st March,
2002, 2003, 2004, 2005, 2006 and 30th September, 2006, Profits and Losses and Statement of Cash
flows of the Company for the year ended 31st March, 2002, 2003, 2004, 2005 and 2006 and for the
period 1st April, 2006 to 30th September, 2006 examined by us, as set out in Annexures I, II and V
respectively to this report are after making adjustments and regrouping as in our opinion are
appropriate as per Annexure IIIA and read with Notes on Adjustments on account of Restatements
/ Audit Qualifications as appearing in Annexure IIIB and the Significant Accounting Policies and
Notes to the Accounts as appearing in Annexure IV.

207
b) Based on above we are of the opinion that the restated financial information have been made after
incorporating:

(i) Adjustments for the changes in accounting Policies retrospectively in respective

financial years to reflect the same accounting treatment as per changed accounting
policy for all the reporting periods.
(ii) Adjustments for the material amounts in the respective financial years to which they
relate.
(iii) And there are no extra-ordinary items that need to be disclosed separately in the
accounts.

c) The Summary Statement of Assets and Liabilities, Profits and Losses and Statement of Cash flows
mentioned in (a) above have not been restated to reflect the effect of the Auditors’ qualifications
as stated hereunder, since the said qualifications are not capable of precise quantification.

(i) Non-provision for probable non-recovery of dues from a Partnership firm; (Refer note
no. B(6)(i) of Annexure IIIB)
(ii) Non-provision for debts and advances; (Refer note no. B(6)(ii) of Annexure IIIB)
(iii) Non-provision for diminution in value of certain unquoted investments in subsidiaries
and in value of the capital of a partnership firm; (Refer note no. B(6)(iii) of Annexure
IIIB)
(iv) The manner of determination of projected losses in respect of contracts in progress, for
which we have relied upon the management’s current estimates of costs to completion
owing to their technical nature and due to uncertainties of future; (Refer note no.
B(6)(iv) of Annexure IIIB)
(v) Non-provision for unbilled revenue; (Refer note no. B(6)(v) of Annexure IIIB)
(vi) The manner of accounting for outstanding arbitration awards and interest accrued
thereon; (Refer note no. B(6)(vi) of Annexure IIIB)
(vii) Non-provision for fall in the value of investments in and dues from a subsidiary; (Refer
note no. B(6)(vii) of Annexure IIIB)

In view of the fact that in respect of items mentioned under clauses (i) to (vii) above, the probable
loss on account of non-recovery or partial recovery of debts, loans and advances, other
receivables, fall in the value of investments, contracts in progress, Arbitration awards in appeal
etc. are not capable of being estimated and quantified with reasonable accuracy owing to
insufficient evidence and information available which includes, inter alia, a review of events
occurring after the Balance Sheet date, management’s experience of similar transactions and in
some cases reports from independent experts, the overall effect of the above qualifications could
not be determined. Hence, it is not possible to adjust the above non-provisions in the restated
summary statements.

d) We have also examined the following other financial information set out in Annexures prepared
by the management and approved by the Board of Directors relating to the Company for the year
ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period 1st April, 2006 to 30th
September, 2006 for the purpose of inclusion in the Offer Document:-
(i) Statement of Accounting Ratios included in Annexure VI
(ii) Statement of Capitalization as at 30th September, 2006 included in Annexure VII
(iii) Statement of Tax Shelter included in Annexure VIII
(iv) Statement of Secured Loan included in Annexure IX
(v) Statement of Other Income included in Annexure X
(vi) Statement of Dividend included in Annexure XI
(vii) Statement of Unsecured Loan included in Annexure XII

208
 (viii) Statement of Sundry Debtors included in Annexure XIII
(ix) Statement of Loans and Advances included in Annexure XIV
(x) Statement of Investments included in Annexure XV
(xi) Statement of Contingent Liabilities included in Annexure XVI
(xii) Statement of Related Party transactions included in Annexure XVII

5. In our opinion the financial information contained in Annexures I to XVII of this report read along
with the Significant Accounting Policies and Notes to accounts included in Annexure IV to this
report, prepared after making adjustments and regrouping as considered appropriate and read with our
observations contained in the paragraph 4 (c) above, have been prepared in accordance with the
requirements of Part II of Schedule II of the Act and the SEBI Guidelines.

6. Our report is intended solely for use of the management and for inclusion in the offer document in
connection with the proposed issue of equity shares of the Company and should not be used for any
other purpose except with our prior consent in writing.

For C. C. Chokshi & Co., J. C. Bhatt

Chartered Accountants Chartered Accountant

R. Laxminarayan
Partner
Membership No.33023 Membership No.10977

Place: Mumbai
Dated: 5th January, 2007

209
 ANNEXURE – I : SUMMARY STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED

(Rupees in millions)
Particulars As at As at March As at As at As at As at March
September 31, 2006 March 31, March 31, March 31, 31, 2002
30, 2006 2005 2004 2003
FIXED ASSETS

Gross Block 2,854.36 2,648.96 2,195.37 1,987.44 1,721.94 1,540.86

Less: Depreciation 1,565.41 1,481.10 1,152.19 1,013.33 908.69 812.50

Net Block 1,288.95 1,167.86 1,043.18 974.11 813.25 728.36

Less: Revaluation Reserve 59.54 64.08 9.08 9.07 13.95 12.30

Net Block after adjustment
for Revaluation Reserve 1,229.41 1,103.78 1,034.10 965.04 799.30 716.06

Capital Work In Progress 330.72 51.06 18.26 6.15 29.39 12.99

TOTAL - (A) 1,560.13 1,154.84 1,052.36 971.19 828.69 729.05

INVESTMENTS - (B) 65.95 65.95 105.11 105.11 121.27 121.27

CURRENT ASSETS, LOANS AND ADVANCES

Inventories 580.05 515.56 387.09 404.59 410.26 344.61

Work-in-Progress - - - 1,714.30 1,108.69 638.64

Unbilled Revenue 3,995.15 2,857.30 1,786.95 - - -

Sundry Debtors 1,808.99 1,887.18 1,732.53 1,705.62 1,199.68 899.46

Cash & Bank Balances 127.00 214.45 169.32 145.87 127.37 228.41

Loans & Advances 1,141.33 1,106.12 1,090.71 1,038.04 1,021.88 930.50

Other Current Assets 0.92 0.91 0.91 0.91 1.48 1.48

TOTAL - (C) 7,653.44 6,581.52 5,167.51 5,009.33 3,869.36 3,043.10

LIABILITIES AND PROVISIONS

Secured Loans 1,101.45 1,054.35 563.64 829.59 563.82 340.64

Unsecured Loans 3,331.90 2,430.51 2,233.91 1,225.89 927.02 313.11

Current Liabilities 2,443.53 2,005.10 1,625.42 2,670.19 2,202.46 2,235.12

210
 (Rupees in millions)
Particulars As at As at March As at As at As at As at March
September 31, 2006 March 31, March 31, March 31, 31, 2002
30, 2006 2005 2004 2003

Provisions 121.18 107.21 32.52 34.32 33.53 48.19

Deferred Tax Liability (Net) 119.13 94.93 34.64 23.34 9.43 -

TOTAL - (D) 7,117.19 5,692.10 4,490.13 4,783.33 3,736.26 2,937.06

NET WORTH - (A+B+C-

D) 2,162.33 2,110.21 1,834.85 1,302.30 1,083.06 956.36

REPRESENTED BY

1. Share Capital 1,715.25 1,715.25 1,214.00 714.00 514.00 314.00

(Refer note 1
below)

2. Reserves & Surplus 566.76 525.11 707.86 686.21 683.05 670.78

Less: Revaluation
Reserve 59.54 64.08 9.08 9.07 13.95 12.30
Reserves & Surplus (Net
of Revaluation Reserves) 507.22 461.03 698.78 677.14 669.10 658.48

Total 2,222.47 2,176.28 1,912.78 1,391.14 1,183.10 972.48

Less: Miscellaneous
Expenses
(to the extent not written
off) 60.14 66.07 77.93 88.84 100.04 16.12

NET WORTH 2,162.33 2,110.21 1,834.85 1,302.30 1,083.06 956.36

Note:
1) Share capital includes share application money of Rs.1.25 million in respect of Zero Coupon Redeemable
Preference Shares pending allotment. (Refer note no. III(c) of Annexure IV).

2) The above statement should be read with the Notes on Adjustments to Restated Financial Statements,
Significant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

211
 ANNEXURE II: SUMMARY STATEMENT OF PROFIT AND LOSS ACCOUNT, AS RESTATED

(Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31, 2002
April 1, 2006 2005 2004 2003
2006 to
September
30, 2006

INCOME :
Income from Operations 3,902.25 6,490.38 5,425.16 4,441.65 4,262.37 4,090.54
Other Income 129.02 372.51 113.89 213.15 178.09 59.19
Total Income 4,031.27 6,862.89 5,539.05 4,654.80 4,440.46 4,149.73

EXPENDITURE :
Cost of Construction 2,916.10 4,514.32 4,008.21 3,316.72 3,149.13 3,342.84
Payments to and Provision
for employees 329.35 610.72 483.92 443.00 456.61 449.92
Other Expenses 381.95 1,005.75 496.80 404.31 363.61 354.47
Financial Lease Rentals 9.82 43.09 49.29 52.95 73.17 78.89
Interest and Financial
charges 231.76 381.33 334.85 299.82 284.00 209.93
Depreciation 84.32 158.15 140.88 118.97 102.06 81.65
Less : Depreciation on the
amount added on
Revaluation transferred
from Revaluation Reserve 4.53 9.07 9.09 9.09 13.94 12.29
Total Expenditure 3,948.77 6,704.29 5,504.86 4,626.68 4,414.64 4,505.41

Less: Company's Share of

Loss in jointly controlled
entity (Unaudited) - 9.61 - - - -
Profit\(Loss) before prior
period adjustments,
extraordinary items and
tax 82.50 148.99 34.19 28.12 25.82 (355.68)
Provision for tax:
- Current Tax (9.24) (14.28) (2.63) (1.97) (2.10) -
- Wealth Tax (0.01) (0.02) (0.02) (0.02) (0.02) (0.02)
- Deferred Tax (24.20) (60.29) (11.30) (13.90) (9.43) -
- Fringe Benefit Tax (4.60) (10.40) - - - -
- Foreign Tax - (6.68) - - - -
Total Provision for Tax (38.05) (91.67) (13.95) (15.89) (11.55) (0.02)

Profit\(Loss) after tax 44.45 57.32 20.24 12.23 14.27 (355.70)

- - - - -

212
Adjustments: - - - - -
Impact of material
adjustment for restatement
in corresponding years
(Refer Annexure IIIA) - (10.49) 10.49 - 13.61 (13.61)
- - - - -
Adjusted Net Profit\(Loss) 44.45 46.83 30.73 12.23 27.88 (369.31)

(Short)/ Excess Provision for

taxes in respect of earlier
years (Refer note 1 below) 1.73 0.81 (1.66) -
- - - - - -
Balance Brought Forward
from Previous Year (347.09) (164.55) (195.28) (207.51) (256.63) 44.96
Transfer From Debenture
Redemption Reserve - - - 22.90 67.72

Profit \ (Loss) available for

appropriation (300.91) (116.91) (164.55) (195.28) (207.51) (256.63)
Appropriations:
Debit Balance in Profit and
Loss account of APIL taken
over on Amalgamation - (230.18) - - - -
Less: Deducted from
General Reserve as per
contra 300.91 347.09 164.55 195.28 207.51 256.63
Balance carried to
Summary Statement of
Assets and Liabilities, as
restated - - - - - -
Notes:
1) Short \ Excess Provision for tax relates to financial year prior to year ending March 31, 2002 and
hence it is not possible to restate in the above annexure.

2) The above statement should be read with the Notes on Adjustments to Restated Financial Statements, Significant
Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

213
ANNEXURE IIIA: STATEMENT OF IMPACT ON PROFIT AND LOSS DUE TO RESTATEMENTS
AND OTHER MATERIAL ADJUSTMENTS MADE TO AUDITED FINANCIAL
STATEMENTS.
(Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March March 31, March March 31, March 31,
2006 to 31, 2006 2005 31, 2004 2003 2002
September 30,
2006
Net Profit\(Loss) after tax as per
audited Profit and Loss Account 44.45 57.32 20.24 12.23 14.27 (355.70)
Deferred Tax (Refer note 1
below)
Interest income on arbitration -
awards now adjusted in respective
financial years - (10.49) 10.49 - -
Impact of Auditor's qualifications on Profit & Loss Account (Refer note 2 below):

Provision for diminution in the

value of quoted investment. - - - - 13.61 (13.61)
Net Profit\(Loss) after tax as per
restated profit and loss account 44.45 46.83 30.73 12.23 27.88 (369.31)

Notes:
1) Pursuant to Accounting Standard (AS) 22 on " Accounting for Taxes on Income" issued by The Institute of
Chartered Accountants of India (ICAI), the company has computed Deferred Tax Assets and Liabilities in
respect of timing differences as at March 31, 2002. The net Deferred Tax Liability for the year ended March 31,
2001 is Rs. NIL. Since the net Deferred Tax Liability for the year is also Rs. NIL, there is no charge on account of
Deferred Tax expense in Profit and Loss account for the year.

2) Refer part B of Annexure IIIB for adjustments arising out of audit qualifications \ other restatements, not given
effect to.

3) The above statement should be read with the Notes on Adjustments to Restated Financial Statements,
Significant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

214
ANNEXURE IIIB - NOTES ON ADJUSTMENT ON ACCOUNT OF RESTATEMENTS / AUDIT
QUALIFICATIONS

A The following adjustments have been made to the Summary Statement of Profits and Losses,
Summary Statement of Assets and Liabilities and Statement of Restated Cash Flow (“Summary
Statements”):

1. Interest on arbitration awards accounted in the year ended March 31, 2006 in respect of arbitration
awards decided in favour of the company adjusted in respective years to which it relates, except as
mentioned below:

Afcons Pauling (India) Limited (APIL) a subsidiary of the Company was amalgamated with the
Company with effect from 1st April, 2005. During the year ended 31st March, 2006, interest on
arbitration awards pertaining to earlier years of APIL aggregating to Rs.98.39 million was
accounted as income, which was related to the years prior to amalgamation. For the purpose of this
statement the said interest income has not been adjusted in the respective years, as APIL was not
part of the Company's operation in those years.

2. Provision for diminution in the value of investment in units of UTI was made in the year ended
March 31, 2003. For the purpose of this statement same has been adjusted in the year ended March
31, 2002 as such provision was related to the financial year 2001-2002.

B The following adjustments have not been made to the Summary Statements for the reasons
stated therein:

1. The trustees of Afcons Infrastructure Limited Employees Group Gratuity-cum-Life Assurance

Scheme Trust have taken a Group Gratuity-cum-Life Assurance Policy from the Life Insurance
Corporation of India (LIC). Provision for gratuity is made on the basis of premium payable in
respect of aforesaid policy and actuarial valuation carried out by the independent actuarial valuer
as at the year end.

The Company has made provision for gratuity liability and unavailed leave for the period ended
September 30, 2006 as per revised Accounting Standard (AS -15) “Employees Benefit” issued by
the Institute of Chartered Accountants of India (ICAI).

For the purpose of this statement, Revised AS-15 has not been applied for the years ended March
31, 2002, 2003, 2004 and 2005 as the same was not applicable in those years. Consequently,
additional impact, if any, on account of actuarial valuation of gratuity and unavailed leave as per
revised (AS 15) has not been recognised in this statement for those years.

Based on revised actuarial valuation carried out as per Revised (AS-15) for the year ended March
31, 2006, there was no additional liability on account of gratuity as on 31st March, 2006.

2. Prior to 1st April, 2004, the Company accounted contract revenue and contract cost in accordance
with the Accounting Standard AS7. “Accounting for Construction Contracts” issued in the year
1983 in respect of contracts entered into before 1st April, 2003 and Accounting Standard AS7
“Construction Contracts (Revised)” issued in the year 2002 in respect of contracts entered into on
or after 1st April, 2003. During the year ended March 31, 2005, with a view to have uniformity in
accounting treatment, the Company has accounted Contract Revenue and costs in accordance with
AS7 (revised) in respect of all contracts (including contracts entered into prior to 1st April, 2003).
Revenue recognized as a result of this change is Rs. 864.45 millions. Adjustment on this account
has not been made in the summary financial statement for the years ended March 31, 2002, 2003
and 2004 in the absence of available information.
3. Prior to 1st April, 2004, the Company has accounted work done remaining to be certified / billed at
cost. From the financial year 2004-05 onwards the company has treated work done remaining to
be certified / billed as unbilled Revenue in the accounts and valued the same at the contract rates.

215
 Adjustment on this account has not been made in the summary financial statement for the years
ended March 31, 2002, 2003 and 2004 in the absence of available information.

4. Prior to 1st April, 2002, it was the practice of the Company to defer expenditure on voluntary
retirement compensation over a period of five years. During the year 2002-03, the company has
changed this practice on the basis of reassessment and has decided to amortize the said
expenditure over a period of 10 years with retrospective effect. This change has the effect of (i)
write back to the profit and loss account excess amount of amortization, Rs. 5.37 millions (ii)
decreasing the amortization charge for the year by Rs 11.71 millions (iii) increasing the profit for
the year by Rs. 17.09 millions and (iv) increasing the deferred revenue expenditure carried
forward by Rs 17.09 millions. Adjustment on this account have not been made in the summary
financial statement for the years ended March 31, 2002 as in the opinion of the Company, the
impact of the same in the summary statements for the year ended March 31, 2002 is not material.

5. The Company’s subsidiary AFCONS Pauling (India) Limited was amalgamated with the
Company w.e.f. 1st April, 2005 in accordance with the scheme of amalgamation and approval of
Bombay High Court. Hence, Summary Statement of the Company for the year ended March 31,
2006 and for the six month period ended on September 30, 2006 are inclusive of assets, liabilities
and reserves taken over from AFCONS Pauling (India) Limited. Summary Statements for the
year ended March 31, 2002, 2003, 2004 and 2005 are exclusive of above effects. It is not possible
to segregate the data of post amalgamation so as to make Summary Statements of March 31, 2006
and September 30, 2006 comparable with those of earlier years.

6. Auditors’ Qualifications on financial statements:

(i) Audit report for the year ended March 31 2002, 2003, 2004, 2005, 2006 and for the period
ended September 30, 2006 has been qualified for non-provision for dues from the
partnership firm “Afcons Pauling Joint Venture” in which the Company is a partner. Refer
Note no. II (2) of Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Amount (Rupees in millions)

30th September, 2006 146.49
31st March, 2006 146.53
31st March, 2005 146.63
31st March, 2004 146.85
31st March, 2003 147.14
31st March, 2002 150.28

(ii) Audit report for the year ended March 31, 2002, 2003, 2004, 2005, 2006 and for the period
ended September 30, 2006 has been qualified for non-provision of debts and advances
which are subject matter of arbitration\litigation. Refer Note no. II (3) of Annexure IV. A
detailed year wise break-up is given below:

Year\Period ended Amount (Rupees in millions)

30th September, 2006 168.40
31st March, 2006 183.83
31st March, 2005 185.54
31st March, 2004 131.46
31st March, 2003 154.19
31st March, 2002 100.25

(iii) Audit report for the year ended March 31, 2002, 2003, 2004, 2005, 2006 and for the period
ended September 30, 2006 has been qualified for non-provision for diminution in the value

216
 of certain unquoted investments in subsidiaries and in the capital of a partnership firm.
Refer Note no. II (4) of Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Value of Capital Aggregate value of

Amount (Rupees in all unquoted
millions) investments in
subsidiaries
(Rupees in millions)
30th September, 2006 17.40 3.11
31st March, 2006 17.40 4.14
31st March, 2005 17.40 44.42
31st March, 2004 17.40 44.42
31st March, 2003 17.40 45.18
31st March, 2002 17.40 45.18

(iv) Audit report for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period
ended 30th September, 2006 has been qualified in respect of determination of projected
losses in respect of contracts in progress. Auditors have relied upon the management
estimate of costs to completion owing to their technical nature and due to uncertainties of
future. Refer Note no. II (6) of Annexure IV.

(v) Audit report for the year ended March 31, 2005, 2006 and for the period ended September 30,
2006 has been qualified for non-provision of unbilled revenue outstanding since long period
and subject matter of arbitration. Refer Note no. II (8) of Annexure IV. A detailed year wise
break-up is given below:

Year\Period ended Arbitration award

Amount (Rupees in
millions)
30th September, 2006 51.97
31st March, 2006 51.97
31st March, 2005 69.15

(vi) Audit report for the year ended March 31, 2004, 2005, 2006 and for the period ended
September 30, 2006 has been qualified for outstanding arbitration awards unanimously
decided in Company’s favour and interest accrued thereon. Refer Note no. II (9) of
Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Arbitration award Interest on

Amount (Rupees in arbitration awards
millions) Amount (Rupees in
millions)
30th September, 2006 532.46 127.09
31st March, 2006 457.49 106.53
31st March, 2005 194.99 -
31st March, 2004 186.99 45.43

(vii) Audit report for the year ended March 31, 2002, 2003, 2004 and 2005 has been qualified
for non-provision of investment in and dues from subsidiary company. Refer Note no. IV
(1) of Annexure IV. A detailed year wise break-up is given below:

217
 Year\Period Investment Debts Loans &
ended Amount Amount advances
(Rupees in (Rupees in millions) Amount
millions) (Rupees in
millions)
31st March, 2005 39.67 118.99 276.81
31st March, 2004 39.67 118.99 309.79
31st March, 2003 39.67 118.99 266.83
31st March, 2002 39.67 118.99 199.46

In view of the fact that in respect of items mentioned under clauses (i) to (vii) above, the
probable loss on account of non-recovery or partial recovery of debts, loans and advances,
other receivables, fall in the value of investments, contracts in progress, Arbitration awards
in appeal etc. are not capable of being estimated and quantified with reasonable accuracy
owing to insufficient evidence and information available which includes, inter alia, a review
of events occurring after the Balance Sheet date, management’s experience of similar
transactions and in some cases reports from independent experts, the overall effect of the
above qualifications could not be determined. Hence, it is not possible to adjust the above
non-provisions in the restated summary statements.

(viii) Auditors’ Qualifications in Companies Auditor’s Report Order, 2003 \ Manufacturing

and Other Companies (Auditor’s) Report Order, 1988:

Audit report for the year ended March 31, 2002, 2003, 2004, 2005 and 2006 has been
qualified in respect of statement contained in Companies Auditor’s Report Order, 2003 \
Manufacturing and Other Companies (Auditor’s) Report Order, 1988 regarding;

a) Fixed assets register being under updation to show full particulars including quantitative
details and situation of fixed assets.

Audit report for the year ended March 31, 2004, 2005 and 2006 has been qualified in
respect of statement contained in Companies Auditor’s Report Order, 2003 \ Manufacturing
and Other Companies (Auditor’s) Report Order, 1988 regarding;

b) Receipt of interest is not regular in respect of loans granted to the parties covered in the
register maintained under section 301 of the Companies Act, 1956.

Audit report for the year ended March 31, 2005 and 2006 has been qualified in respect of
statement contained in Companies Auditor’s Report Order, 2003 regarding;

c) Payment of interest is not regular in respect of loan taken from the party covered in the
register maintained under section 301 of the Companies Act, 1956.

Audit report for the year ended March 31, 2002 has been issued with disclaimer of opinion
in respect of statement contained in Manufacturing and Other Companies (Auditor’s)
Report Order, 1988 regarding;

d) Terms of interest and other terms and conditions of loans granted to another company
under the same management within the meaning of section 370(1B) of the Companies
Act, 1956 are prima facie prejudicial to the interest of the Company or not;

C Figures in the Restated Summary Statements have been appropriately regrouped wherever possible to
conform to the reclassification made in the subsequent years.

218
ANNEXURE IV - SUMMARY OF SIGNIFICANT ACCOUNTING AND POLICIES AND NOTES
ON ACCOUNTS FORMING PART OF THE RESTATED SUMMARY
STATEMENTS.

I Significant accounting policies:

a) Fixed assets

Fixed assets are stated at cost of acquisition/ construction or book value and include amounts
added on revaluation less accumulated depreciation. Leasehold improvements have been
capitalized and are written off over the lease term from the date(s) of installation.

b) Impairment loss

Impairment loss is provided to the extent the carrying amount of assets exceeds their
recoverable amounts. Recoverable amount is the higher of an asset’s net selling price and its
value in use. Value in use is the present value of estimated future cash flows expected to arise
from the continuing use of the asset and from its disposal at the end of its useful life. Net
selling price is the amount obtainable from sale of the asset in an arm’s length transaction
between knowledgeable, willing parties, less the costs of disposal.

c) Depreciation

Depreciation on fixed assets is provided on the straight-line basis. Cost of the Intangible
assets are amortised over a period of five years.

d) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are
carried at cost. However, when there is a decline, other than temporary, the carrying amount
is reduced to recognize the decline.

e) Inventories

Construction materials, stores and spare parts are valued at lower of cost and net realizable
value. Cost is determined on the basis of weighted average method. Cost of shuttering
materials (included in construction materials) issued to jobs, is charged off equally over a
period of four years.

f) Unbilled Revenue

Work done remaining to be certified/ billed is treated as Unbilled Revenue in the accounts.
The same is valued at the contract rates.

g) Retention monies

Amounts retained by the clients until satisfactory completion of the contract(s) are recognised
in the financial statements as receivables. Where such retention monies have been released by
the clients against submission of bank guarantees, the amounts so released are adjusted
against receivables from these clients.

h) Foreign currency transactions

Transactions in foreign currency, including in respect of branch operations integral in nature,

are recorded at the original rates of exchange in force at the time the transactions are effected.
At the year end, monetary items, including those of branch operations integral in nature,

219
 denominated in foreign currency are reported using the closing rates of exchange. Exchange
differences arising thereon and on realization/ payment of foreign exchange are accounted for
in the relevant year as income or expense except in the case of fixed assets acquired from
outside India, in which case, these are adjusted in the carrying amounts of such assets.

i) Revenue recognition on contracts

(i) Contract revenue and expenses are recognized, when outcome can be estimated reliably,
on the basis of percentage completion method. Percentage of completion is determined
based on the nature of contracts, either in proportion of contract costs incurred up to the
reporting date to the estimated total cost or on the basis of physical proportion of the
contract work completed.

(ii) Variations (in contracts) and amounts in respect thereof are recognized only when it is
probable that the customer(s) will approve them and amounts can be measured reliably.

(iii) Claims and amounts in respect thereof are recognized only when negotiations have
advanced to stage where it is probable that the customer(s) will accept them and amounts
can be reliably measured.

j) Retirement benefits

(i) Gratuity

The trustees of Afcons Infrastructure Limited Employees Group Gratuity-cum-Life

Assurance Scheme Trust have taken a Group Gratuity-cum-Life Assurance Policy from
the Life Insurance Corporation of India (LIC). Provision for gratuity is made on the basis
of premium payable in respect of the aforesaid policy and actuarial valuation carried out
by the independent actuarial valuer as at the year end.

(ii) Superannuation

The trustees of Afcons Infrastructure Limited Superannuation Scheme Trust have taken a
Group Superannuation policy from the LIC. Provision for superannuation is made on the
basis of premium payable in respect of the aforesaid policy.

(iii) Provident fund

Contribution as required under the statute/ rules is made to the Company’s Provident
Fund/ Government Provident Fund.

(iv) Leave encashment

Provision for leave encashment benefits is made based on the expected cost of unavailed
earned leave.

k) Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of

qualifying assets are capitalized as a part of the cost of such assets. A qualifying asset is one
that necessarily takes a substantial period of time to get ready for its intended use or sale. All
other borrowing costs are charged to revenue.

220
 l) Deferred revenue expenditure

The expenditure on voluntary retirement compensation is treated as ‘Deferred Revenue

Expenditure’ and amortized over a period of ten years.

m) Finance lease rentals

These are accounted over the life of the asset determined on the basis of technical evaluation
made by an independent valuer/ surveyor.

n) Doubtful debts and advances

Provision is made in the accounts for debts and advances which in the opinion of the
management are considered doubtful of recovery.

o) Taxes on income

Tax expense comprises both current and deferred tax at the applicable enacted/ substantively
enacted rates. Current tax represents the amount of income-tax payable/ recoverable in respect
of the taxable income/ loss for the reporting period. Deferred tax represents the effect of
timing differences between taxable income and accounting income for the reporting period
that originate in one period and are capable of reversal in one or more subsequent periods.
Provision for Fringe Benefits Tax is made in accordance with Chapter XII-H of the Income-
tax Act, 1961.

p) Provisions and Contingencies

Provisions are recognized when the Company has a legal and constructive obligation as a
result of a past event, for which it is probable that cash outflow will be required and a reliable
estimate can be made of the amount of the obligation. Contingent liabilities are disclosed
when the Company has a possible or present obligation where it is not probable that an
outflow of resources will be required to settle it. Contingent assets are neither recognized nor
disclosed.

II Common notes for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period
from 1st April, 2006 to 30th September, 2006.

1. Revaluation of fixed assets:

(a) Some of the Fixed assets viz., Plant & Machinery, (including certain items fully written
off in previous years) Laboratory Equipment, Barges (floating equipments), New &
Old Workshop and Office Building as on 1st April, 1990 were revalued on the basis of
the valuation made by the external valuers resulting in net increase of Rs.455.12
millions being surplus on revaluation.

(b) Revalued amounts substituted for Historical Cost as at 1st April, 1990 are as under:

(i) Plant & Machinery Rs.426.15 millions (Gross)

(ii) Laboratory Equipments Rs. 12.45 millions (Gross)
(iii) Workshop & Godown Rs. 46.60 millions (Gross)
(iv) Buildings Rs. 126.00 millions(Gross)
(v) Barges (Floating Equipments) Rs. 89.98 millions (Gross)

(c) The difference between depreciation provided for the year on revalued cost of assets
and that calculated on original cost of assets for the year as per (a) above has been

221
 withdrawn from Revaluation reserve and credited to the Profit and Loss account as
given below:

Year \ Period ended Amount (Rupees in

millions)
30th September, 2006 4.53
31st March, 2006 9.07
31st March, 2005 9.09
31st March, 2004 9.09
31st March, 2003 13.94
31st March, 2002 12.29

2. The Company is a partner in a partnership firm ‘Afcons Pauling Joint Venture’ (APJV).
The balance in capital account is Rs. 17.40 millions. The profit/ loss sharing ratio of the
Venturers is as follows:

Profit Loss
The Company 95% 100%
Pauling P.L.C.; UK 5% -

Following amounts were due at each year end from the Partnership Firm (APJV):

Year \ Period ended Amount

(Rupees in millions)
30th September, 2006 146.49
31st March, 2006 146.53
31st March, 2005 146.63
31st March, 2004 146.85
31st March, 2003 147.14
31st March, 2002 150.28

The Firm has made claims aggregating to Rs. 166.62 millions against its clients which are
pending as at period ended 30th September, 2006. These claims are subject matters of
arbitration where it expects favorable results. No provision has been made for the amount,
if any that may ultimately become irrecoverable, as it cannot be quantified, with reasonable
accuracy at this stage.

3. No provision has been made for debts and advances outstanding at each year end, for the
following years:

Year \ Period ended Amount

(Rupees in
millions)
30th September, 2006 168.40
31st March, 2006 183.83
31st March, 2005 185.54
31st March, 2004 131.46
31st March, 2003 154.19
31st March, 2002 100.25

Out of these, substantial amounts are due from various Government departments \ Agencies
and are subject matters of arbitration\ litigation where the Company has obtained awards in
favour in some cases and expects favorable results in other cases and hence, the amounts, if

222
 any, that may ultimately become irrecoverable cannot be quantified, at this stage. However,
in view of the uncertainties involved and the procedural delays taking place in the dispute
resolution process, the debts and advances have been categorized as ‘Doubtful’ for the
purpose of presentation in the financial statements.

4. No provision has been made in the accounts for diminution in the value of certain unquoted
investments and in the capital of a partnership firm, by reason of these investments being in
the nature of strategic/ long-term investments and the decline in their value being on
account of temporary factors.

5. Confirmation letters have not been obtained from the debtors and creditors. Hence, their
balances are subject to confirmation, reconciliation and consequent adjustments, if any.

6. Projected losses, if any, in respect of contracts in progress are provided for based upon
current estimates of cost to completion.

7. Interest on arbitration awards (awards) includes interest in respect of :

(a) unpaid awards decided in favour of the Company as given below, at the rate
mentioned in the awards from the date of awards till the date of payment or year end as
the case may be.

Year \ Period ended Amount

(Rupees in millions)
30th September, 2006 127.10
31st March, 2006 106.53 (including Rs. 72.18 millions in
respect of earlier years)

(b) awards decided in the favour of the Company in the earlier years as given below,
which was not accounted then.

Year \ Period ended Amount

(Rupees in
millions)
30th September, 2006 20.56
31st March, 2006 30.21

(c) awards decided in favour of the Company during the year as given below.

Year \ Period ended Amount

(Rupees in
millions)
30th September, 2006 -
31st March, 2006 45.94

8. Current Assets, Loans and Advances includes unbilled revenue (net of advances) of Rs.
3,995.15 millions as at 30th September, 2006 (Rs. 2,857.30 millions as at 31st March, 2006).
Of this, Rs. 51.97 millions are outstanding for a long period as at 30th September, 2006 and
31st March, 2006. These pertain to variations in contracts, which are subject matter of
arbitration, in view of which no provision is considered necessary for the said amount of
Rs. 51.97 millions.

223
9. Debtors include unpaid arbitration awards (awards) of Rs. 532.46 millions as at 30th
September, 2006 (Rs. 457.49 millions as at 31st March, 2006) unanimously decided in the
Company’s favour and interest accrued on these awards from the date of awards till the
year end/date of payment at the rate mentioned in the award of Rs. 127.10 millions as at
30th September, 2006 (Rs. 106.53 millions as at 31st March, 2006). Though these awards
are subject matters of appeal, the Company is hopeful of positive outcome and as such
expects them to be fully recovered.

10. Cost of fixed assets taken on operating lease till 31st March, 2001 and future lease rental
obligations there against are as follows:

Year \ Period ended Plant & Machinery Future lease

(at Cost) rental
(Rupees in millions) (Rupees in
millions)
30th September, 2006 94.98 1.07
31st March, 2006 94.98 1.61
31st March, 2005 292.33 3.82
31st March, 2004 302.08 6.31
31st March, 2003 302.08 9.16
31st March, 2002 409.25 39.40

11. For the assets acquired on hire purchase basis after 1st April, 2001, they have been treated
as assets acquired on finance lease as per Accounting Standard on ‘Leases’ (AS-19) issued
by the Institute of Chartered Accountants of India. Minimum lease rentals outstanding in
respect of these assets are as under:
(Rupees in millions)
As at 30th As at 31st As at 31st As at 31st As at As at
September, March, March, March, 31st 31st
2006 2006 2005 2004 March, March,
2003 2002

Total Minimum Lease payment outstanding:

Not less than one 0.24 3.93 18.61 19.83 27.69 13.91
year
Later than 1 Year _ _ 3.90 22.51 56.70 38.52
and not later than 5
year
Total 0.24 3.93 22.51 42.33 84.39 52.43

Interest not due

Not less than one 0.01 0.14 1.94 4.45 9.12 5.73
year
Later than 1 Year _ _ 0.14 2.08 8.53 7.65
and not later than
5 year
Total 0.01 0.14 2.08 6.53 17.65 14.38

Present value of minimum lease payments

Not less than one 0.23 3.79 16.67 15.38 18.57 8.18
year
Later than 1 Year _ _ 3.75 20.43 48.17 30.88
and not later than 5
Year
Total 0.23 3.79 20.43 35.81 66.74 39.05

224
12. The Company has entered into a Co-operation Agreement with Dyckerhoff & Widmann
Aktingesellschaft, Germany (DYWIDAG) for the execution of the Worli-Bandra Outfalls
project of the Municipal Corporation of Greater Mumbai. The relationship of the Company
with DYWIDAG is that of a sub-contractor. Nevertheless, in terms of the Agreement that
envisages supplementing the resources of each other on mutually agreed basis, both
DYWIDAG and the Company have raised debit notes on each other. Accordingly, in
earlier years, debit notes for expenses were raised by the Company on DYWIDAG,
aggregating to Rs. 17.52 millions and by DYWIDAG on the Company, aggregating to Rs.
16.10 millions. Adjustments, if any, in respect of these debit notes will be made on
completion of project.

13. Segment Information

The Company has only one reportable business segment of construction business, hence
information for primary business segment is not given.

Segment information for Secondary segment reporting (by geographical segment)

The Company has two reportable geographical segments based on location of customers:

Revenue from customers within India- Local projects

Revenue from customers outside India- Foreign projects
(Rupees in millions)
Year \ Period Local Foreign Total
ended Projects Projects
Income from 30th September, 3,830.48 71.82 3,902.30
Operations 2006
31st March, 2006 5,452.02 1,038.36 6,490.38
Carrying amount of 30th September, 8,999.70 140.32 9,140.00
assets 2006
31st March, 2006 7,214.70 371.28 7,585.98
Additions to fixed 30th September, 481.61 3.45 485.06
assets 2006
31st March, 2006 301.70 15.41 317.11

14. Related party disclosures:

Related Party where Control exists

Holding Company(s)

Cyrus Investments Limited (Directly)***

Shapoorji Pallonji & Company Limited (Indirectly)

Subsidiaries of the Company

Afcons Pauling (India) Limited**

Afcons (Overseas) Constructions and Investments Private Limited
Hazarat & Company Private Limited
Afcons BOT Constructions Private Limited
SSS Electricals (India) Private Limited
Tensacciai (India) Private Limited *
Afcons Dredging & Marine Services Limited
Afcons Arethusa Offshore Services Private Limited

225
 Fellow Subsidiary(s)

Sterling Investments Corporation Private Limited

Floreat Investments Limited

Associate of the Company

Afcons (Mideast) Construction and Investments Private Limited

Partnership firm in which the Company is a partner

Afcons Pauling Joint Venture

Jointly Controlled Entity

Afcons Aarsleff Joint Venture

Al – Saeed Afcons Joint Venture

* Ceased to be a subsidiary w.e.f 27.03.06

** Amalgamated with the Company w.e.f 01.04.05
*** Ceased to be a holding Company w.e.f 31.03.06 and becomes an entity of which the
Company is an Associate

Refer Annexure XVII to the restated financial statement for transactions with related
parties.
15. Expenses capitalized during the year on fabrication/ improvement of equipment that has
resulted in increased future benefits beyond their previously assessed standard of
performance are as under:
(Rupees in millions)
For the For the Financial Year Ended
period 1st March March March March March
April, 2006 31, 31, 2005 31, 2004 31, 2003 31, 2002
to 30th 2006
September,
2006
Construction 0.70 7.35 - 3.48 3.56 24.96
Material
consumed
Sub Contract 2.41 2.48 - 5.15 11.79 6.83
charges
Site installation - 0.78 - 0.10 5.74 4.32
expenses
Stores and spares 11.71 10.77 16.07 31.27 5.62 6.54
Consumed
Repairs 4.24 4.04 5.54 8.29 2.46 11.23
Traveling and - - - 0.7 0.57 -
Conveyance
Payroll cost - - - 4.60 4.7 -
Freight - - - 2.20 0.59 -
forwarding and
packing
Others 0.04 2.97 - 1.13 1.67 2.23

226
16. Derivative Instruments:
Payables and Receivables in foreign currency as at the balance sheet date not covered by
forward contracts are as given below.
(Rupees in millions)
As at 30th September, As at 31st March,
2006 2006
Payables 89.33 350.37
Receivable 226.35 227.04

17. Details of the Joint Venture, classified as ‘Jointly Controlled Entities’ are as follows:

Sr. Name of the Joint Name of the joint Venture Share of

No. Venture Partner ownership interest
1 Afcons Aarsleff Joint Per Aarsleff A/S 50%
Venture
2 Al – Saeed Afcons Al Saeed Co. for 50%
Joint Venture Manufacturing Concrete &
Contracting – Al Saeed
(SMCC)
3 Afcons Constructions Ahmed Hasan Mohamed Ali 49%
Mideast LLC Alali

(Rupees in millions)
Name of the Joint For the period For the year
Venture ended 30th ended 31st
September, March, 2006
2006
Company’s share in Afcons Aarsleff 16.38 59.46
Assets Joint Venture
Al – Saeed Afcons 160.65 -
Joint Venture
Afcons 1.83 1.78
Constructions
Mideast LLC
Company’s share in Afcons Aarsleff 0.37 2.35
Liabilities Joint Venture
Al – Saeed Afcons 160.65 -
Joint Venture
Afcons - -
Constructions
Mideast LLC
Company’s share of Afcons Aarsleff 7.82 325.29
Income Joint Venture
Al – Saeed Afcons 83.83 -
Joint Venture
Afcons - -
Constructions
Mideast LLC
Company’s share of Afcons Aarsleff 4.92 334.90
Expenses Joint Venture
Al – Saeed Afcons 83.83 -
Joint Venture
Afcons - 0.01
Constructions
Mideast LLC

227
 18. Work in Progress is identified project wise and is based on book records maintained by the
Company as physical verification of the material, component; etc at the various project sites
is not feasible.

III Significant notes for the year ended 31st March, 2006

The High Court of Judicature at Bombay sanctioned the Scheme of Amalgamation (SoA) of
Afcons Pauling (India) Limited (APIL), a subsidiary of the Company with the Company. APIL
was engaged in the business of Construction. The amalgamation is accounted in the books of the
Company as per the High Court Order. The effective date of Amalgamation is 18th May, 2006
and the appointed date is 1st April 2005. Accordingly, the SoA has been given effect to in the
accounts. Pursuant to the SoA:

(a) the assets and liabilities of APIL on the appointed date have been taken at book values
(subject to adjustments made as given in the SoA);

(b) debit balances in the Profit and Loss account of APIL has been aggregated with the
balances in Profit and Loss account of the Company.

(c) in consideration for the transfer, the minority shareholders of APIL are to be issued 1
(one) Zero Coupon Redeemable Preference Shares of the Company (of Rs. 10/- each)
to be redeemed on the expiry of 24 months from the date of issue at a premium of 10%
of the face value for every 10 (ten) equity shares held by them in APIL. These have
been shown under share capital.

(d) the (deficit) of the value of the assets over the value of the liabilities taken over by the
Company and aggregate face value of the Redeemable preference shares to be issued
by the Company as stated above, after adjusting the debit balance in Profit and Loss
Account taken over, has been adjusted against General Reserve Account (to the extent
of Rs. 48.65 millions);

(e) Cost of investment (Rs. 39.67 millions) of the Company in the shares of APIL is
written off and charged to Revaluation Reserve Account;

(f) As required by the SoA, the debit balance in profit and loss account of APIL has been
aggregated with the balance in profit and loss account of the Company. If there was no
treatment given in the SoA for the same, than as per the Accounting Standard (AS) 14
“Accounting for Amalgamations”, the debit balance in profit and loss account of APIL
would not have been aggregated with the balance in profit and loss account of the
Company and there would have been “Goodwill on Amalgamation” aggregating to Rs.
180.72 millions).

IV Significant notes for the year ended 31st March, 2005

1. The Company holds investment of Rs. 39.67 millions in its subsidiary company, Afcons
Pauling (India) Limited (APIL), representing 75% of the share capital of that company.
APIL owes to the Company Debts, aggregating to Rs.118.99 millions and advances,
aggregating to Rs. 276.81 millions as on 31st Mach, 2005. As per the latest audited accounts
of APIL, as at 31st March, 2005, its net worth stands eroded. APIL has substantial
experience of nearly two decades in the execution of road projects. Therefore, in
combination with the company, it has been working on a business plan for generating future
revenues in the preferred lines of business of roads and highways construction and is very

228
 hopeful of bagging jobs. APIL has also preferred huge claims against its clients that are
subject matter of arbitration where it is confident of positive outcome. It is therefore
confident of paying back advances of the company out of the above and also out of monies
falling due from its debtors in 2005-06. Hence, no provision is deemed necessary for
diminution in the value of the Company's investment in APIL and also for amounts due
from it, which are considered good and recoverable.

2. Hitherto, the Company accounted contract revenue and contract cost in accordance with the
Accounting Standard AS7. “Accounting for Construction Contracts” issued in the year
1983 in respect of contracts entered into before 01-04-2003 and Accounting Standard AS7
“Construction Contracts (Revised)” issued in the year 2002 in respect of contracts entered
into on or after 01-04-2003.During the year, with a view to have uniformity in accounting
treatment, the Company has accounted Contract Revenue and costs in accordance with AS7
(revised) in respect of all contracts (including contracts entered into prior to 01-04-2003).
Revenue recognized as a result of this change is Rs. 864.45 millions).

V Significant notes for the year ended 31st March, 2004

The Company received subsequent to the year end arbitration awards (unanimously decided)
pertaining to earlier years, aggregating to Rs. 186.99 millions(including interest Rs. 45.43
million which are subject of appeals, the ultimate outcome of which is not ascertainable.

VI Significant notes for the year ended 31st March, 2003

Expenditure on Voluntary Retirement Compensation:

Hitherto, it was the practice to defer expenditure on voluntary retirement compensation over a
period of five years. During the year 2002-03, the company has changed this practice on the
basis of reassessment and has decided to amortize the said expenditure over a period of 10 years
with retrospective effect. This change has the effect of (i) write back to the profit and loss
account excess amount of amortization, Rs. 5.37 million (ii) decreasing the amortization charge
for the year by Rs 11.71 million (iii) increasing the profit for the year by Rs 17.09 million and
(iv) increasing the deferred revenue expenditure carried forward by Rs 17.09 millions.

VII Significant notes for the year ended 31st March, 2002

1. Provision for bank balances has been made in the year 2001-02 on account of
uncertainties in remittances of monies lying in bank accounts abroad.

2. Adjustment in the year 2001-02 represents regrouping of self constructed assets of Rs 6.26
millions from work–in–progress to capital work in progress in respect of previous year.

229
 ANNEXURE V: STATEMENT OF CASH FLOWS, AS RESTATED

(Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March March 31, March 31, March March 31,
2006 to 31, 2006 2005 2004 31, 2003 2002
September 30,
2006

Cash Flow from Operating

Activities

Net Profit\(Loss) before prior

period adjustments, extraordinary
items and tax, as restated 82.49 138.50 44.68 28.12 39.43 (369.29)

Adjusted for :
Depreciation 79.79 149.08 131.79 109.88 88.11 69.35
(Profit)\Loss on Sale of Fixed Assets - (1.51) 0.22 0.30 0.50 2.80
Interest Expenses 231.76 381.33 334.85 299.82 284.00 209.93
Interest income (34.02) (204.60) (50.20) (91.67) (31.73) (29.63)
Lease Rental Expense 9.98 43.09 49.29 52.95 73.17 78.89
Bad irrecoverable debtor/ Unbilled
Revenue/ Advance w/off 1.65 165.31 - - - -
Share of Loss/(Profit) in a firm in
which the Company is a partner 1.25 1.83 (2.49) 0.62 0.06 1.34
Share of Loss in Jointly Controlled
Entity (Unaudited) - 9.61 - - - -
Deferred revenue expenditure paid
during the year - - (0.96) (0.57) (90.25) -
Provision for diminution in the value
of long term inv w/back/ provided - - - (13.61) - 13.61
Dividend Income - (0.18) (0.18) (0.14) (0.17) (4.20)
Excess provision no longer required
written back (37.95) (19.47) (15.66) (17.47) - -
(Profit) on Sale /Disposal of Short-
term investment - (0.88) (0.34) 16.71 - -
(Profit) on Sale /Disposal of Long-
term investment - (7.58) - - - (0.26)
Amount received on transfer of
tenancy rights - (60.00) - - - -
Deferred revenue expenditure written
off 5.93 11.87 11.87 11.77 6.34 5.37
Provision for Projected Losses (11.45) 27.74 1.86 - - -

Operating Profit\(Loss) before 329.43 634.14 504.73 396.71 369.46 (22.09)

prior period items and Working
Capital Changes
Adjustment for:

230
 (Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March March 31, March 31, March March 31,
2006 to 31, 2006 2005 2004 31, 2003 2002
September 30,
2006

(Increase)/Decrease in Trade
receivables 98.75 (15.64) (26.91) (505.93) (224.17) (257.97)
(Increase)/Decrease in inventories (64.50) (128.46) 17.50 5.67 (65.66) (45.22)
(Increase)\Decrease in Work-in-
Progress - - 1,714.30 (605.61) (470.05) (140.52)
(Increase) in Unbilled Revenue (1,137.85) (1,187.38) (2,674.81) - - -
(Increase) in Loans and Advances 16.32 (47.67) (23.56) (60.50) (255.05) (67.38)
Increase/(Decrease) in trade, other
payables and provisions 485.24 431.76 (144.09) 495.08 (31.83) 905.82
Adjustment on account for
amalgamation for net current assets - 73.29 - - - -
Adjustment on account for
amalgamation for loans given to
Subsidiary Company - (276.81) - - - -
Direct Taxes paid (43.13) (21.97) (78.81) (10.00) 31.26 (55.00)
Prior period expenses - - - - - -
- - - - - -
Net Cash from Operating Activities
- (A) (315.74) (538.74) (711.65) (284.58) (646.04) 317.64
Cash Flow from Investing
Activities
Purchase of Fixed Assets (485.06) (298.82) (222.57) (259.10) (205.76) (249.39)
Sale of Fixed Asset - 6.83 0.31 2.23 1.91 1.85
Purchase of Investments - (280.61) (1.90) - - -
Sale of Investments - 287.99 2.23 13.07 - 0.01
Sale of Subsidiary - 0.60 - - - 0.86
(Loss)/Profit in a firm in which the
Company is partner - (1.83) 2.49 (0.62) (0.06) (1.34)
Share of Loss in Jointly Controlled
Entity - (9.61) - - - -
Dividend received - 0.18 0.18 0.14 0.17 4.20
Interest received 13.51 23.64 50.39 92.61 17.57 15.75
Amount received on transfer of
tenancy rights - 60.00 - - - -

Net Cash from Investing Activities

- (B) (471.55) (211.63) (168.87) (151.67) (186.17) (228.06)

Cash Flow from Financing

Activities
Proceeds from Issue of Preference
Shares - 500.00 500.00 200.00 200.00 200.00

231
 (Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March March 31, March 31, March March 31,
2006 to 31, 2006 2005 2004 31, 2003 2002
September 30,
2006

Proceeds from long term borrowings - 2,215.12 1,414.84 487.33 465.36 177.25
Repayment of long term borrowings - (1,526.08) (1,742.14) (559.77) (205.81) (251.57)
Proceeds from short term borrowings
- net 943.93 (5.02) 1,068.84 637.04 578.33 108.51
Interest paid (234.22) (376.30) (336.61) (308.87) (283.33) (218.67)
Lease rentals paid (9.82) (13.23) (0.66) (0.49) (23.11) (43.30)
Dividend paid - - - - (0.01) (6.83)
Corporate dividend tax - - - - - (0.70)
- - - - - -
Net Cash from Financing Activities
- (C) 699.89 794.49 904.27 455.24 731.43 (35.31)

Net Increase in Cash and Cash

Equivalent (A+B+C) (87.40) 44.12 23.75 18.99 (100.78) 54.27

Cash and Cash Equivalent at the

beginning of year 214.39 169.31 145.56 126.57 227.36 173.10
Cash and cash equivalents taken over
on amalgamation - 0.96 - - - -
Cash and Cash Equivalent at the end
of year 126.99 214.39 169.31 145.56 126.58 227.37

(87.40) 44.12 23.75 18.99 (100.78) 54.27

Reconciliation of Cash and Cash

Equivalents
As per Balance Sheet 126.99 214.45 169.31 145.87 127.38 228.42
Less: Interest accrued on Bank
Deposits - (0.06) - (0.31) (0.80) (1.05)
As per Cash flow statement 126.99 214.39 169.31 145.56 126.58 227.37

232
 ANNEXURE VI: ACCOUNTING RATIOS

Particulars For the For the Financial Year Ended

period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Net Profit\(Loss) after 44.45 46.83 30.73 12.23 27.88 (369.31)
tax, as restated (Rs. in
millions)
(Short)/ Excess 1.73 0.81 - - (1.66) -
Provision for taxes in
respect of earlier years
(Rs. in millions)
Dividend on Preference - - - - (23.67) (0.33)
shares (including
corporate dividend tax
at the applicable rate)
(Rs. in millions)
Net Profit\(Loss) A 46.18 47.64 30.73 12.23 2.55 (369.64)
attributable to equity
shareholders, as
restated (Rs. in
millions)

Net worth (Rs. in B 2,162.33 2,110.21 1,834.85 1,302.30 1,083.06 956.36

millions)

Net worth excluding C 961.08 910.22 934.85 902.30 883.06 783.59

Preference Share
Capital (Rs. in millions)

Total No of equity D 51400000 51400000 31400000 31400000 31400000 11400000

Shares outstanding
during the year - Basic

Weighted average no. of E 51400000 31454795 31400000 31400000 11673973 11400000

equity shares
outstanding as on date -
Basic

Diluted No. of equity F 171501776 121536986 71673973 51728767 32441096 11673973

shares

233
 Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Earning per Equity
Share
Basic (Rs.) A/E 0.90 1.51 0.98 0.39 0.22 (32.42)
Diluted (Rs.) A/F 0.27 0.39 0.43 0.24 0.08 (32.42)
(Refer Note 2
below)

Return on Net worth A/C

(%) annualised 9.61% 5.23% 3.29% 1.36% 0.29% -47.17%
(Refer Note 4 below)

Net Asset Value Per

18.70 17.71 29.77 28.74 28.12 68.74
Share (Rs.) C/D
(Refer Note 5 below)

Face Value Per Share 10 10 10 10 10 10

Weighted average no. of shares outstanding during the year -for calculating dilutive EPS

Particulars For the For the Financial Year Ended

period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Opening number of equity shares 51400000 31400000 31400000 31400000 11400000 11400000
Add: Conversion of 12% - - - - 273973 -
Redeemable Cumulative
Convertible Preference share in
to equity shares at par
Add: Potential equity shares that - - - - 19726027 273973
could arise on conversion of
entire 12% Redeemable
Cumulative Convertible
Preference Shares at par
Add: Diluted effect of Potential - 54795 - - - -
equity shares allotted on
conversion of 9.5 % redeemable
non-cumulative convertible
preference shares.

234
Add: Potential equity shares that - 19945205 20273973 20000000 1041096 -
could arise on conversion of
entire 9.5% Redeemable Non-
Cumulative Convertible
Preference Shares at par
Add: Potential equity shares that 70000000 70000000 20000000 328767 - -
could arise on conversion of
entire 7.5% Redeemable Non-
Cumulative Convertible
Preference Shares at par
Add: Potential equity shares that 50000000 136986 - - - -
could arise on conversion of
entire 7.5% Redeemable Non-

Cumulative Optionally
Convertible Preference Shares of
Rs.10 each at par
Add: Potential equity shares that 101776 - - - - -
could arise on conversion of
entire Zero Coupon Redeemable
Preference Shares of Rs.10 each
to be redeemed at the expiry of
24 months at 10 % premium of
FV.

Total 171501776 121536986 71673973 51728767 32441096 11673973

Notes:
1) The above ratios have been computed on the basis of the restated Summary Statements as per Annexures
I and II
2) Since the potential equity shares have an anti-dilutive effect, diluted EPS is same as basic EPS.
3) The effect of potential dilution pursuant to the proposed issue has not been considered since the quantum
of equity shares that will ultimately be subscribed cannot be ascertained at present.
4) Return on Net Worth (%) represents Profit/(Loss) after tax as restated, divided by Net Worth.
5) Net Assets Value is calculated as Net Worth (excluding Preference Share Capital) at the end of each
financial year divided by the number of equity shares at the end of each financial year.

235
 ANNEXURE VII: CAPITALISATION STATEMENT

(Rupees in millions)
Particulars Pre issue - As at September Adjusted for post issue
30th, 2006

Secured and Unsecured Debt

Short term 2,799.48 2,799.48
Long term 1,633.87 1,633.87

Total Debt 4,433.35 4,433.35

Shareholders' funds
Share Capital 1,715.25 Refer Note below
Reserves and Surplus (excluding
Revaluation Reserve) 507.22 Refer Note below
Less: Miscellaneous Expenditure to the
extent not
written off. 60.14 Refer Note below

Total Shareholders' funds 2,162.33 Refer Note below

Total Capitalization 6,595.68

Long Term Debt/Equity 0.67

Note:
These figures will be known only after finalisation of the issue price by the Lead Manger to the issue and
approval of the same by SEBI and other authorities, if any involved therein.

236
 ANNEXURE VIII: STATEMENT OF TAX SHELTER

(Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March March 31,
2006 to 2006 2005 2004 31, 2003 2002
September 30,
2006

Profit before prior period 82.50 138.50 44.68 28.12 39.43 (369.29)
adjustments, extraordinary items
and tax as restated

Normal Tax Rate 33.66% 33.66% 36.59% 35.88% 36.75% 35.70%

MAT Tax rate 11.22% 8.42% 7.84% 7.69% 7.88% 7.65%
Tax at actual rate on book profits 27.77 46.62 16.35 10.09 14.49 -

Adjustments
Permanent differences
Dividend on shares exempt from tax - (0.18) (0.18) (0.14) - (4.20)
u/s. 10(34)\10(33)
Interest on tax-free bonds of UTI (1.37) (2.74) (2.74) (2.28) - -
Surrender of Tenancy Right - (60.00) - - - -
Donations 1.13 0.28 1.19 0.21 0.26 0.21
Expenses on increase in share capital - 6.00 3.50 0.20 - -
Profit\Loss on sale of Long-term - - (0.34) 16.71 - -
Investments
Share of Loss\(Profit) of Partnership 1.25 1.83 (2.49) 0.62 0.06 1.34
Firm
Provision for dimunition in value of - - - (13.61) - 13.61
Investment written back
Profit on Sale of Shares - (7.58) - - - (0.26)
Provision for Projected Loss (11.46) 27.74 1.86 - - -
Interest paid on Income-tax - 15.14 - - - -
Expenditure disallowed u/s. 40A(3) - 0.13 - - 0.05 -
TDS written off - 0.67 - - - -
Capital expenditure debited to Profit - - - - 0.36 -
& Loss account
Prior period expenses - - - - - 9.94

Total (A) (10.45) (18.71) 0.80 1.71 0.73 20.64

Timing Differences
Difference between tax and book 5.19 21.30 (44.12) (52.27) (43.47) (36.18)
depreciation
(Profit) / Loss on sale of Assets (Diff 0.71 (1.51) 0.22 0.30 0.50 2.80
treatment of tax)
43B Items - 34.59 (2.94) 4.18 4.15 (12.87)
Expenditure disallowed u/s 40a(i) - 0.53 - - - -

237
Interest on arbitration awards (20.56) (219.23) (18.50) (186.19) - -
Deferred Revenue Expenditure - VRS (3.25) (6.99) (11.87) (11.66) (17.09) -
u/s.35DDA
Deferred Amalgamation Expenses (0.01) 0.09 - - - -
u/s. 35DD
Lease Rental 9.78 43.09 49.29 52.46 50.06 35.59

Total (B) (8.14) (128.13) (27.92) (193.18) (5.85) (10.66)

Net Adjustments (A) + (B) (18.59) (146.84) (27.12) (191.47) (5.12) 9.98

Tax (Saving)\Expense thereon (6.26) (49.43) (9.92) (68.69) (1.88) 3.56

Tax payable for the year 21.51 - 6.42 - 12.61 -

Set off of Unabsorbed loss (63.91) - (17.56) - (34.32) -

- - - - - -
Tax effect of unabsorbed loss (21.51) - (6.42) - (12.61) -
- - - - - -

Tax payable as per normal rate - - - - - -

Profit as per Income Tax Return 69.02 (9.21) 17.56 (163.35) 34.32 (359.30)

Tax as per Income Tax Returns

(MAT) 9.26 9.23 0.86 - 2.04 -

Note:
The statement of tax shelter has been prepared based on income tax return filed by the Company for the year ending
31.03.2002 to 31.03.2006, except for the period ended 30.09.2006, which are provisional and final amount will be
ascertained at the time of filing of Return of Income. The effect of assessment / appellate orders have not been considered
in above.

238
 ANNEXURE IX: DETAILS OF SECURED LOANS

(Rupees in millions)
Particulars of Details of Securities Principal & Interest outstanding
Loan As at As at As at As at As at As at
Septembe March March 31, March 31, March March 31,
r 30, 2006 31, 2006 2005 2004 31, 2003 2002

Debentures Secured by a first charge on - - - - - 45.80

certain construction equipments
and a second charge on the
immovable properties of the
Company situated at Andheri,
Mumbai and Nagpur mortgaged
to the consortium of banks for
working capital requirements.
Further secured by pledge of
3,740,000 equity shares held by
the Company in Afcons Pauling
(India) Limited, a subsidiary
company and 1,238,352 equity
shares of the Company held by
Afcons (Mideast) Constructions
and Investments Private Limited.
Term Loan Secured by first and exclusive - - - - - 10.17
from SICOM charge by way on retention
Limited money receivable from a client
and by a floating charge on all
movable assets of the Company
Term Loan Secured by a first charge on - - - 200.00 250.00 -
from Export certain specified movable fixed
Import Bank of assets and pledge of 1,238,352
India equity shares of the Company
held by Cyrus Investments
Limited, the holding company
Term Loan Secured by first and exclusive - 144.98 - - - -
from Export charge on current assets
Import Bank of (including receivables)
India pertaining to Qatar Petroleum
Project
Term Loan Secured by first charge by way - 60.00 150.00 150.00 - -
from IDBI of hypothecation of specific
Limited. equipment purchased out of this
loan
Hire Purchase Secured by lien on assets - - - - 17.73 22.30
from purchased under hire purchase
Associates agreements
India Financial
Services Pvt.
Limited.

239
 (Rupees in millions)
Particulars of Details of Securities Principal & Interest outstanding
Loan As at As at As at As at As at As at
Septembe March March 31, March 31, March March 31,
r 30, 2006 31, 2006 2005 2004 31, 2003 2002

Equipment Secured by first charge by way - - - - 16.03 20.82

Loan \ Car of hypothecation of the
from L & T equipment \ Car financed
Finance
Limited
Equipment Secured by first charge by way - - 0.15 0.24 0.73 0.53
Loan \ Car of hypothecation of the
from GAMC- equipment / car(s) financed
TCFC Finance
Limited
Equipment Secured by lien on assets 14.29 28.64 66.31 91.40 49.00 16.75
Loan and Hire purchased under hire purchase
Purchase from agreements & Secured by lien on
SREI assets purchased under hire
Infrastructure purchase agreements
Finance
Limited (Loan
& Hire
Purchase)
Equipment Secured by first charge by way - - - - 37.53 41.65
Loan from of hypothecation of the
Centurion equipment \ Cars financed
Bank
Equipment Secured by first charge by way - - 4.33 9.50 6.60 0.69
Loan from of hypothecation of the
Kotak equipment / car(s) financed
Mahindra
Bank Limited
Equipment Secured by first charge by way 59.56 77.30 81.12 70.12 29.59 -
Loan from of hypothecation of the
ICICI Bank equipment / car(s) financed
Limited
Equipment Secured by first charge by way 21.13 31.16 49.07 46.08 0.74 -
Loan from of hypothecation of the
HDFC Bank equipment / car(s) financed
Limited
Equipment Secured by first charge by way 165.04 130.67 42.34 31.36 - -
Loan from of hypothecation of the
Bharat equipment / car(s) financed
Overseas Bank
Limited
Equipment Secured by first charge by way 22.01 28.88 42.64 - - -
Loan from UTI of hypothecation of the
Bank Limited. equipment / car(s) financed
Equipment Secured by first charge by way 213.63 21.48 - - - -
Loan from of hypothecation of the
Oriental Bank equipment / car(s) financed
of Commerce

240
 (Rupees in millions)
Particulars of Details of Securities Principal & Interest outstanding
Loan As at As at As at As at As at As at
Septembe March March 31, March 31, March March 31,
r 30, 2006 31, 2006 2005 2004 31, 2003 2002

Cash Credit Secured by a first charge on the 604.40 529.03 126.93 230.67 155.69 177.81
and Working immovable properties of the
Capital Company situated in Andheri,
Demand Loans Mumbai and Nagpur and
mortgage of the Company's
premises in Band Box House,
Worli, Mumbai on a pari-passu
basis. Further secured by
hypothecation of the Company's
stocks of raw materials, stores
and work-in-progress, all other
movable properties, plant and
machinery and book debts and
by pledge of 380,100 Bonds
(3,800,000 units as at
31.03.2003) of the Unit Trust of
India on a pari-passu basis.
Interest 1.39 2.21 0.75 0.22 0.18 -
Accrued and
Due

Advances from Secured by hypothecation of - - - - - 4.12

Clients specific plant and machinery at
the respective Client sites.

Total 1,101.45 1,054.35 563.64 829.59 563.82 340.64

241
 ANNEXURE X: PARTICULARS OF OTHER INCOME

(Rupees in millions)
Particulars For the For the Financial Year Ended Nature of Related
period from March 31, March 31, March 31, March 31, March Income or not
April 1, 2006 2005 2004 2003 31, 2002 Related to
2006 to Business
September
30, 2006
Profit before prior 82.50 148.99 34.19 28.12 25.82 (355.68) - -
period adjustments,
extraordinary items tax,
as per summarised
restated profit & Loss
statement, as restated

Other Incomes

Interest Income:
On Arbitration awards 20.56 191.63 7.05 45.43 - - Non- Related
recurring
On Long-term 1.41 2.74 2.74 2.32 1.48 1.48 Non- Related
investments recurring
On Deposits with Banks 0.22 0.49 1.13 1.62 2.69 2.63 Recurring Related
On Income-tax refund 11.80 13.94 7.83 3.35 12.91 10.19 Non- Not
recurring related
On Interest on Loan to - - 19.47 17.98 14.51 14.52 Recurring Not
Subsidiaries related
Miscellaneous interest 0.03 6.30 1.49 20.96 0.15 0.82 Recurring Related
Total Interest 34.02 215.10 39.71 91.66 31.74 29.64
Dividend (Long Term
Investments):
- from Subsidiaries - - - - 0.17 0.14 Recurring Not
related
- from Others - 0.18 0.18 0.14 - 4.05 Recurring Not
related
Total Dividend - 0.18 0.18 0.14 0.17 4.19
Consultancy fees - - - - 28.00 - Non- Related
recurring
Equipment Hire 0.25 - - 13.70 0.29 10.15 Recurring Related
Charges
Service Charges 0.06 0.18 0.18 0.18 0.18 0.18 Recurring Related
Insurance Claim 2.47 0.76 9.90 2.50 0.41 0.15
Provision in respect of - - - 13.61 - - Non- Not
diminution in the value recurring related
of long term
investments written
back
Excess provision in 37.95 19.47 15.66 17.47 47.62 - Non- Not
respect of earlier years recurring related

242
 (Rupees in millions)
Particulars For the For the Financial Year Ended Nature of Related
period from March 31, March 31, March 31, March 31, March Income or not
April 1, 2006 2005 2004 2003 31, 2002 Related to
2006 to Business
September
30, 2006
written back

Profit on Sale of fixed - 1.51 - - - - Non- Related

assets (net) recurring
Profit on Sale of current - 0.88 0.34 - - - Non- Not
Investments. recurring related
Profit on sale of Long - 7.58 - - - 0.26 Non- Not
term Investments recurring related
Share of Profit in firm - - 2.49 - - - Non- Related
in which Company is a recurring
Partner
Amount received on - 60.00 - - - - Non- Related
transfer of tenancy recurring
rights
Rent Income - 2.25 4.50 4.50 4.50 4.50 Recurring Not
related
Agency Commission - - 8.11 - - - Non- Not
recurring related
Sales Tax\Excise Duty 11.67 2.57 2.42 0.04 4.23 - Non- Not
Refund recurring related
Subcontractors - - 9.24 2.09 24.60 - Non- Related
Recoveries recurring
Liquidated Damages - - - - 2.28 - Non- Related
released by clients recurring
Rebate/TOD given by 12.84 - 6.80 10.34 0.36 - Non- Related
Creditors recurring
Compensation on Iraqi - - - 4.76 - - Non- Not
Bonds recurring related
Idling charges - - - 16.69 - - Non- Not
recurring related
Gain/loss in Exchange 8.25 4.89 0.26 0.41 0.49 2.62 Recurring Related
Miscellaneous Income 21.51 57.16 14.11 35.05 33.23 7.50 Recurring Related
Total 129.02 372.52 113.89 213.16 178.12 59.19

243
Other Income 0.12 0.36 39.30 36.32 29.72 29.68
from Related
Parties included
above

ANNEXURE XI: STATEMENT OF DIVIDEND PAID

No dividend on equity share capital or preference share captial has been paid by the Company during any
of the period \ years covered by the restated financial statements.

244
 ANNEXURE XII: DETAILS OF UNSECURED LOANS

(Rupees in millions)
Particulars Principal and Interest outstanding
As at As at As at As at As at As at
Septembe March 31, March 31, March 31, March 31, March 31,
r 30, 2006 2006 2005 2004 2003 2002

Fixed Deposits 44.45 55.93 77.10 104.52 157.06 186.27

Short-term loans
From Banks:
DCB Limited - - - 100.00 100.00 100.00
UTI Bank Limited 250.00 - 250.00 150.00 100.00 -
Oriental Bank of Commerce 125.00 125.00 31.25 250.00 - -
Dena Bank 750.00 500.00 250.00 150.00 - -
ING Vysya Bank Limited - - 150.00 - - -
Bank of India 375.00 250.00 250.00 - - -
Union Bank of India - 250.00 - - -
IDBI Limited 77.50 62.50 - - - -
State Bank of Hyderabad 100.00 50.00 - - - -
Central Bank of India - - - - - -
UCO Bank 500.00 - - - - -
Interest accrued on above -
loans

Interest accrued on the 7.19 1.82 - - - -

above loans

From Others:
Afcons (Mideast) 9.00 9.00 9.00 9.00 - -
Constructions and
Investments Private Limited

Other loans from Banks

From Banks:
UTI Bank Limited 250.00 250.00 - - - -
Oriental Bank of Commerce 31.26 93.76 218.75
Dena Bank 250.00 250.00 500.00
IDBI Limited 37.50 82.50 150.00
Bank of India 125.00 250.00 - - - -
State Bank of Hyderabad 150.00 200.00 - - - -
Central Bank of India 250.00 250.00 - - - -
Line of Credit from HDFC - - - 350.00 500.00 -

245
 (Rupees in millions)
Particulars Principal and Interest outstanding
As at As at As at As at As at As at
Septembe March 31, March 31, March 31, March 31, March 31,
r 30, 2006 2006 2005 2004 2003 2002

Limited

From Others:
Advances from Clients - - 97.81 112.37 69.96 26.84
against Plant and Machinery

Total 3,331.90 2,430.51 2,233.91 1,225.89 927.02 313.11

Due to Related Party

included above 9.00 9.00 9.00 9.00 - -

246
 ANNEXURE XIII: STATEMENT OF SUNDRY DEBTORS

(Rupees in millions)
Particulars As at As at As at As at As at As at March 31,
September March 31, March 31, March 31, March 31, 2002
30, 2006 2006 2005 2004 2003

Unsecured
Debts
Outstanding for a
period exceeding
Six Months

Arbitration 532.46 457.52 205.49 - - -

Awards
Others 801.46 794.89 566.22 697.37 446.51 474.61

1,333.92 1,252.41 771.71 697.37 446.51 474.61

Other Debts

Arbitration 127.10 106.50 - 186.99 - -

Awards
Others 347.97 528.27 960.82 821.26 753.17 424.85

475.07 634.77 960.82 1,008.25 753.17 424.85

TOTAL 1,808.99 1,887.18 1,732.53 1,705.62 1,199.68 899.46

820.62
Good 1,667.77 1,731.69 1,567.50 1,603.13 1,072.22
78.84
Doubtful * 141.22 155.49 165.03 102.49 127.46

TOTAL 1,808.99 1,887.18 1,732.53 1,705.62 1,199.68 899.46

* does not include debts referred to in notes II(2) and

II(9) of Annexure IV

Due from 89.77 151.88 195.26 195.24 195.26 195.22

Related parties
included above

247
 ANNEXURE – XIV: STATEMENT OF LOANS AND ADVANCES

(Rupees in millions)
Particulars As at As at As at As at As at March As at March
Septembe March 31, March 31, March 31, 31, 2003 31, 2002
r 30, 2006 2006 2005 2004

Advances and Loans

Subsidiary
Companies 0.73 0.64 278.28 311.07 268.97 202.90
Partnership Firm in
which Company is
a Partner 70.23 70.28 70.37 70.59 70.88 74.03
Advances to jointly
controlled entity 16.00 24.72 8.55 - - -
Other advances - - - - - 6.05
Total 86.96 95.64 357.20 381.66 339.85 282.98

Deposit with a company

(including interest
accrued) 1.06 1.02 1.26 1.14 1.04 1.33

Advances recoverable
in cash or in kind or for
value to be received 810.87 820.23 546.98 394.55 481.29 391.06

Balance with Central

Excise Authorities - - 0.02 0.02 0.02 0.02

Advance Tax (net of

provision) 242.44 189.23 185.25 260.67 199.68 255.11

TOTAL 1,141.33 1,106.12 1,090.71 1,038.04 1,021.88 930.50

Good 1,114.15 1,077.78 1,070.19 1,009.06 995.14 909.09

Doubtful * 27.18 28.34 20.52 28.98 26.74 21.41

TOTAL 1,141.33 1,106.12 1,090.71 1,038.04 1,021.88 930.50

248
* does not include advances referred to in notes

II(2) Annexure IV

Dues from related

Parties included above 86.95 95.63 357.19 381.66 339.85 276.93

249
 ANNEXURE XV: STATEMENT OF INVESTMENTS

(Rupees in millions)
Particulars No. of As at As at As at As at As at As at
Shares September March 31, March March 31, March 31, March
30, 2006 2006 31, 2005 2004 2003 31, 2002

INVESTMENTS
(Long Term)

Government
Securities
(Unquoted) :

(i) National Savings 0.06 0.06 0.06 0.06 0.06 0.06

Certificates *
(ii) 11.40% GOI - - - - 12.95 12.95
Compensation
(Project Exports to
Iraq) Bonds, 2003
(iii) 5½ Years Kisan - - - - 0.02 0.02
Vikas Patra
(iv) 5½ Years Indira - - - - 0.02 0.02
Vikas Patra
- - - - - -
Total - (A) 0.06 0.06 0.06 0.06 13.05 13.05

Non-Trade
Investments

Investment in Equity
Shares of Subsidiary
Companies of
(Unquoted) :
Afcons (Overseas) 1000 0.10 0.10 0.10 0.10 0.10 0.10
Constructions And
Investments Private
Limited of Rs. 100
each fully paid up
Hazarat & Company 202610 2.03 2.03 2.03 2.03 2.03 2.03
Private Limited of Rs.
10 each fully paid up
Shares of Afcons 10000 0.60 0.60 0.60 0.60 0.60 0.60
Dredging & Marine (6000 as
Services Limited of at
Rs. 100 each fully 31.03.200
paid up 3)
Afcons Arethusa 60000 0.60 0.60 0.60 0.60 0.60 0.60
Offshore Services
Private Limited of Rs.

250
 (Rupees in millions)
Particulars No. of As at As at As at As at As at As at
Shares September March 31, March March 31, March 31, March
30, 2006 2006 31, 2005 2004 2003 31, 2002

10 each fully paid up

SSS Electricals 48000 0.48 0.48 0.48 0.48 0.48 0.48

(India) Private
Limited of Rs. 10
each fully paid up
Tensacciai (India) NIL (6000 - - 0.60 0.60 0.60 0.60
Private Limited of Rs. as at
100 each fully paid 31.03.200
up 5)
Afcons Pauling NIL - - 39.67 39.67 39.67 39.67
(India) Limited of Rs. (3740000
10 each fully paid up as at
31.03.200
5)
Kier Afcons (India) NIL - - - - 0.76 0.76
Private Limited of Rs. (76500 as
10 each fully paid up at
31.03.200
3)
Afcons Bot 40000 0.34 0.34 0.34 0.34 0.33 0.33
Constructions Private
Limited of Rs. 10
each fully paid up
- - - - - -
Other Investments: - - - - - -
Quoted - - - - - -
Equity Shares of 134351 2.02 2.02 2.70 2.70 2.70 2.70
Hindustan Oil (180000
Exploration Company as at
Limited of Rs.10 each 31.03.200
fully paid up 5)
Equity shares of 1000 - - - - - -
Hindustan
Construction Ltd. of
Re 1 each fully paid
up.

Equity shares of 100 - - - - - -

Simplex Concrete
Piles Ltd. of Rs.10
each fully paid up.
Equity shares of 50 0.02 0.02 - - - -
Skanska Cementation
India Ltd of Rs.10

251
 (Rupees in millions)
Particulars No. of As at As at As at As at As at As at
Shares September March 31, March March 31, March 31, March
30, 2006 2006 31, 2005 2004 2003 31, 2002

each fully paid up.

Equity shares of 250 0.01 0.01 - - - -

Gammon India Ltd.
of Rs. 2 each fully
paid up
6.75% Tax Free 405337 40.52 40.52 40.53 40.53 - -
Bonds of Unit Trust
of India of Rs.100
each **
Units of Units Trust 4051374 - - - - 56.56 56.56
of India - US 64
Scheme of Rs. 10 #
Less: Provision - - - - (13.61) (13.61)
- - - - - -
Unquoted - - - - - -
Equity share of 1 - - - - - -
Afcons (Mideast)
Constructions &
Investments Private
Limited of Rs.100
each fully paid
Share of Afcons 147 1.77 1.77 - - - -
Construction Mideast
LLC of AED 1000
each fully paid
- - - - - -
Total - (B) 48.49 48.49 87.65 87.65 90.82 90.82

Capital of
Partnership Firm
Afcons Pauling Joint - 17.40 17.40 17.40 17.40 17.40 17.40
Venture

Total - (C) 17.40 17.40 17.40 17.40 17.40 17.40

Total - (A) + (B) + 65.95 65.95 105.11 105.11 121.27 121.27

(C)

252
 (Rupees in millions)
Particulars No. of As at As at As at As at As at As at
Shares September March 31, March March 31, March 31, March
30, 2006 2006 31, 2005 2004 2003 31, 2002

Investments in 5.92 5.92 44.42 44.42 45.19 45.19

Related Parties
included above

* Out of this Rs.0.05 millions lodged with Government Authorities and Clients

** 380,100 bonds pledged with Banks

# 3,800,000 units pledged with Banks

253
 ANNEXURE XVI: STATEMENT OF CONTINGENT LIABILITIES

(Rupees in
millions)
Particulars As at As at As at As at As at As at
September March March March March 31, March 31,
30, 2006 31, 2006 31, 2005 31, 2004 2003 2002

Estimated amount of contracts 451.10 80.74 21.87 62.51 34.48 33.07

remaining to be executed on
capital account and not provided
Claims Against the Company not 156.92 94.01 87.62 50.17 57.13 56.50
acknowledged as debt
Bank Guarantees Given on 1.28 1.37 18.91 19.48 18.30 17.63
Behalf of Subsidiaries
Corporate Guarantees Given on - - - 100.00 100.00 410.00
Behalf of Subsidiaries for its
credit Facilities
In respect of Service Tax matters - 0.28 0.26 0.24 0.22 -
in appeals in respect of non-
registration and non-payment
under Service Tax is in dispute.
In respect of Sales Tax demands 89.63 91.35 34.38 71.72 89.00 7.68
raised by Sales Tax Authorities
in matters of disallowance of
labour and service charges,
consumables for which appeal is
pending before various appellate
authorities.
In respect of Income Tax matters 51.36 51.36 241.95 157.20 63.70 62.11
in appeals.
In respect of Excise Duty 11.30 - - 8.64 48.99 62.51
demand in appeals
Agreement with Trade Union for - - - Not Not
Enlisted Workers Ascertaina Ascertainabl
ble e
Arrears of fixed cumulative - 24.00 24.00 24.00 24.00 0.33
dividend on 12% Redeemable
Cumulative Convertible
Preference shares of Rs. 10/-
each fully paid-up.
'A petition to wind up the - 13.23 - - - -
Company pursuant to the
provisions of the Companies Act,
1956 has been filed in the Hon.
High Court at Bombay by an
erstwhile sub-contractor. The
petitioner has alleged that the
Company has not paid its dues.
Against this, the Company has
filed a suit and made a counter
claim for the liquidated damages.

254
 Particulars As at As at As at As at As at As at
September March March March March 31, March 31,
30, 2006 31, 2006 31, 2005 31, 2004 2003 2002

Bills discounted with banks - 10.83 - - - -

Sundry claims against the - - - - - -
Company by employees and
others not admitted (amount
indeterminate)

255
 ANNEXURE XVII: STATEMENT OF RELATED PARTY TRANSACTIONS

(Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
(I) Transactions during the
year:

Holding company(s)

Issue of 7.5% Redeemable

Non - Cumulative
Convertible Preference
Share Capital
Cyrus Investments Limited - 200.00 200.00 200.00 - -
Issue of 12% Redeemable
Non - Cumulative
Convertible Preference
Share Capital
Cyrus Investments Limited - - - - - 200.00
Conversion of 12%
Redeemable Cumulative
Convertible Preference
Share Capital to Equity
Share Capital
Cyrus Investments Limited - - - - 200.00 -
Guarantees Given
by/(Released)
Cyrus Investments Limited - - 150.00 - - -

Subsidiary companies

Sub-Contract Expenses
Afcons Pauling (India) - - - - - 0.71
Limited
Purchase of stores & spares
SSS Electrical (India) Private - - - - - 0.67
Limited
Sale of Stores & spares
Afcons Pauling (India) - - - - - 0.37
Limited

256
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Service Charges
Afcons Dredging & Marine 0.03 0.06 0.06 0.06 0.06 0.06
Services Limited
SSS Electrical (India) Private 0.03 0.06 0.06 0.06 0.06 0.06
Limited
Tensacciai (India) Private - 0.06 0.06 0.06 0.06 0.06
Limited
Dividend Income
SSS Electrical (India) Private - - - - 0.17 0.14
Limited
Current Account (net)
outflow / (inflow)
Hazarat & Company Private - (0.12) - 0.11 - (0.12)
Limited
Afcons Arethusa Offshore - (0.03) 0.02 - - -
Services Private Limited
Afcons Pauling (India) - - 15.07 18.23 36.74 (52.59)
Limited
SSS Electrical (India) Private 0.05 (0.51) (0.06) 0.17 (1.23) (1.63)
Limited
Afcons Dredging & Marine 0.03 (0.15) 0.01 0.01 0.02 0.01
Services Limited
Tensacciai (India) Private - (0.20) 0.01 - (0.39) 0.02
Limited
Afcons BOT Constructions - (0.01) (0.02) - - 0.01
Private Limited
Kier Afcons (India) Private - - - - (0.01) -
Limited
Interest Income - Current
Account
Hazarat & Company Private - 0.01 0.01 - 0.01 0.01
Limited
SSS Electrical (India) Private 0.01 0.03 0.05 0.04 0.09 -
Limited
Afcons Dredging & Marine - 0.01 0.01 0.01 0.03 0.02
Services Limited
Tensacciai (India) Private - 0.01 0.01 - 0.01 0.02
Limited
Afcons Pauling (India) - - 19.40 17.93 14.37 14.47
Limited
Kier Afcons (India) Private - - - - - -
Limited
Rent Income - - - - - -
Hazarat & Company Private 0.06 0.12 0.09 0.09 - -
Limited
Recovery of expenses - - - - - -

257
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Afcons Pauling (India) - - 6.98 6.80 16.25 33.46
Limited
SSS Electrical (India) Private - - - - - 1.67
Limited
Repayment/Conversion of
loan
Afcons BOT Constructions - - 0.02 - - -
Private Limited
Afcons Pauling (India) - - 75.07 - - -
Limited
Tensacciai (India) Private - 0.21 - - - -
Limited
Afcons Dredging & Marine - - - 1.30 - -
Services Limited
Kier Afcons (India) Private - - - - 0.01 -
Limited
Guarantees Given
for/(Released)
SSS Electrical (India) Private (0.25) 0.84 (0.57) 1.18 - -
Limited
Afcons Pauling (India) - - (100.00) - 100.00 410.00
Limited

Fellow Subsidiary(s)

Issue of Zero coupon

Reedemable Preference
Shares
Sterling Investments 1.24 - - - - -
Corporation Private Limited
Issue of Equity Share
Capital on conversion of
9.5% Redeemable Non -
Cumulative Convertible
Preference Share.
Floreat Investment Limited - 200.00 - - - -
Issue of 9.5% Redeemable
Non - Cumulative
Convertible Preference
Share Capital
Sterling Investments - - - - 200.00 -
Corporation Private Limited
Issue of 7.5% Redeemable
Non - Cumulative
Convertible Preference
Share Capital
Floreat Investment Limited - 500.00 500.00 - - -

258
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Cyrus Investments Limited - - - - - -
Issue of 7.5% Redeemable
Non - Cumulative Optionally
Convertible Preference
Share Capital
Floreat Investment Limited - 500.00 - - - -
Loan Taken
Sterling Investments - - - - 200.00 -
Corporation Private Limited
Repayment/Conversion of
loan
Sterling Investments - - - - 200.00 -
Corporation Private Limited
Interest paid loan
Sterling Investments - - - - 3.53 -
Corporation Private Limited

Partnership firm in which

Company is a Partner

Current Account (net)

outflow / (inflow)
Afcons Pauling Joint Venture 1.21 1.74 (2.71) 0.33 (3.08) 0.04
Profit/(Loss) of share in - - - - - -
partnership firm
Afcons Pauling Joint Venture (1.25) (1.83) 2.49 (0.62) (0.06) 1.34

Associate Company

Finance Lease Charges

Afcons (Mideast) Construction 0.04 0.07 0.07 0.07 5.60 5.60
and Investments Private
limited
Current Account (net)
outflow / (inflow)
Afcons (Mideast) Construction - - - - - 0.82
and Investments Private
limited
Loan Taken
Afcons (Mideast) Construction - - - 9.00 - -
and Investments Private
limited
Repayment/Conversion of
loan

259
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Afcons (Mideast) Construction - - - - 6.05 -
andInvestments Private limited
Interest paid loan
Afcons (Mideast) Construction 0.29 0.45 0.46 0.46 - -
and Investments Private
limited

Jointly Controller Entity

Service Charges
Afcons Aarsleff Joint Venture - 42.96 - - - -
Current Account (net) - - - - - -
outflow / (inflow)
Afcons Aarsleff Joint Venture 18.16 25.78 - - - -

Key Management Personnel

Managerial Remuneration
paid
A.H.Divanji - - - - - 1.59
A.M.Nerurkar - - - - - 0.01
Rajul A.Bhansali - - - - 1.63 1.41
K.Subrahmanian 1.20 2.64 2.56 2.37 0.80 -
Sitting Fees paid - - - - - -
P.S.Mistry - - - 0.01 0.03 -
C.P.Mistry
0.01 0.03 0.03 0.04 0.03 -
A.H.Divanji
- - - - - 0.01

(II) Balances as at year end:

Holding company(s)

Outstanding amount of
guarantee given/ (taken)
Cyrus Investments Limited (800.00) (800.00) (150.00) - - -

Subsidiary companies

Outstanding amount of
guarantee given/ (taken)

260
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Afcons Pauling (India) - - 18.23 118.23 - -
Limited
SSS Electrical (India) Private 1.28 1.53 0.68 1.25 - -
Limited
Outstanding Amount - - - - - -
Dr/(Cr)
Afcons Pauling (India) - - 395.80 428.78 385.82 318.45
Limited
Afcons (Overseas) 0.12 0.12 0.12 0.11 0.11 0.11
Constructions and
Investments Private Limited
Hazarat & Company Private 0.21 0.20 0.20 0.19 0.16 0.16
Limited
Afcons BOT Constructions - - 0.01 0.04 0.04 0.03
Private Limited
SSS Electrical (India) Private 0.24 0.19 0.61 0.56 0.30 1.37
Limited
Tensacciai (India) Private - - 0.34 0.27 0.21 0.52
Limited
Afcons Dredging & Marine 0.12 0.09 0.17 0.10 1.33 1.22
Services Limited
Afcons Arethusa Offshore 0.03 - 0.03 - - -
Services Private Limited
Afcons Employees Healthcare 0.01 0.01 0.01 - - -
& Welfare Company Private
Limited
- - - - - -
Partnership firm in which
Company is a Partner

Outstanding Amount
Dr/(Cr)
Afcons Pauling Joint Venture 146.49 146.53 146.63 146.85 147.14 150.28

Associate Company

Outstanding Amount
Dr/(Cr)
Afcons (Mideast) Construction (10.92) (10.59) (10.06) (9.52) - 9.98
and Investments Private
limited

Jointly Controller Entity

261
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Outstanding Amount
Dr/(Cr)
Afcons Aarsleff Joint Venture 24.40 100.34 - - - -
Al - Saeed Afcons Joint 5.11 - - - - -
Venture

262
 AUDITORS’ REPORT

To,
The Board of Directors
AFCONS Infrastructure Limited
Afcons House,
16, Shah Industrial Estate
Veera Desai Road, Azad Nagar P. O.
Post Box No. 11976
Andheri (West), Mumbai 400 053

Dear Sirs,

Re: The proposed public offering by Afcons Infrastructure Limited.

1. We have examined the attached consolidated financial information of Afcons Infrastructure

Limited and its subsidiaries, associates and joint ventures (“the Group”), as approved by the
Board of Directors of the Company, prepared in terms of the requirements of Paragraph B, Part II
of Schedule II of the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of
India (Disclosure and Investor Protection) Guidelines, 2000 as amended up to 18th October, 2006
(“SEBI Guidelines”) and in terms of our engagement agreed upon with you in accordance with our
engagement letter dated 4th December, 2006 requesting us to examine financial information
referred to above and proposed to be included in the Offer Document being issued by the
Company in connection with the proposed issue of Equity shares of the Company.

2. These information have been prepared by the Management from the financial statements for the
year ended 31st March, 2002, 2003, 2004, 2005 and 2006.

3. We did not jointly audit the Financial statements of the subsidiaries, associates and joint ventures
for the financial years ended 31st March, 2002, 2003, 2004, 2005 and 2006, whose Financial
Statements reflect total assets, total revenue and total cash flows as mentioned below.

31st March, 31st March, 31st March, 31st March, 31st March,
2006 2005 2004 2003 2002
Rupees in Rupees in Rupees in Rupees in Rupees in
millions millions millions millions millions
Total Revenue 337.96 29.55 17.15 46.30 78.48

Total Assets 96.79 466.86 564.36 595.15 631.81

Total Cash flows 2.26 2.31 0.41 2.66 4.46

4. These financial statements have been audited by either of us in our individual capacity or by other
auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to the
amount included in respect of subsidiaries and an associate is based solely on reports of the
respective auditors except that in the case of Afcons Constructions Mideast LLC and Afcons
Aarsleff Joint Venture, our opinion is based on the unaudited separate financial statements
prepared by the Joint Venturers and included in the consolidated financial statements. The
unaudited Financial Statements of the joint ventures reflect total Assets of Rs.61.24 millions, total
revenue of Rs. 325.29 millions and total cash flows of Rs.11.42 millions for the year ended 31st
March, 2006.

263
5. We have also examined the consolidated financial information of the Company and its
subsidiaries, associates and joint ventures for the period 1st April, 2006 to 30th September, 2006
prepared and approved by the Board of Directors for the purpose of disclosure in the offer
document of the Company mentioned in Paragraph (1) above. The consolidated financial
information for the above period was examined to the extent practicable, for the purpose of audit
of financial information in accordance with the Auditing and Assurance Standards issued by the
Institute of Chartered Accountants of India. Those Standards require that we plan and perform our
audit to obtain reasonable assurance, whether the financial information under examination is free
of material misstatement. Based on the above, we report that in our opinion and according to the
information and explanations given to us, we have found the same to be correct and the same have
been accordingly used in the financial information appropriately.

6. We did not jointly audit the financial statements of the subsidiaries, associates and joint ventures
for the period 1st April, 2006 to 30th September, 2006, whose Financial Statements reflect total
assets of Rs. 386.23 millions, total revenues of Rs. 99.05 millions and total cash flows of Rs. 0.50
millions for the period 1st April, 2006 to 30th September, 2006. These financial statements have
been audited by either of us in our individual capacity or by other auditors, whose reports have
been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of
subsidiaries and an associate, is based solely on reports of the respective auditors except that in the
case of Afcons Constructions Mideast LLC, Afcons Aarsleff Joint Venture and Al-Saeed Afcons
joint venture, our opinion is based on the unaudited separate financial statements prepared by the
Joint Venturers and included in the consolidated financial statements. The unaudited Financial
Statements of the joint ventures reflect total Assets of Rs. 180.80 millions as at 30th September,
2006, total revenues of Rs. 91.65 millions and total cash flows of Rs. 0.96 millions for the period
1st April, 2006 to 30th September, 2006.

7. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI
Guidelines and terms of our engagement as aforesaid, we further report that:

e) The Consolidated Restated Summary Statement of Assets and Liabilities of the Company as
at 31st March, 2002, 2003, 2004, 2005, 2006 and 30th September, 2006, Consolidated Profits
and Losses and Consolidated Statement of Cash flows of the Company for the year ended
31st March, 2002, 2003, 2004, 2005 and 2006 and for the period 1st April, 2006 to 30th
September, 2006 examined by us, as set out in Annexures I, II and V respectively to this
report are after making adjustments and regrouping as in our opinion are appropriate as per
Annexure IIIA and read with Notes on Adjustments on account of Restatements / Audit
Qualifications as appearing in Annexure IIIB and the Significant Accounting Policies and
Notes to the Accounts as appearing in Annexure IV.

f) Based on above and also as per the reliance placed on reports submitted by either of us in our
individual capacity or by other auditors for subsidiaries and associates, whose reports have
been furnished to us, and our opinion, in so far as it relates to the amounts included in respect
of subsidiaries and an associate is based solely on reports of the respective auditors for the
respective years and so far as it relates to the amounts included in respect of joint ventures
mentioned in paragraphs 4 and 6 above is based on the unaudited financial statements
prepared by the venturers for the year ended 31st March, 2006 and for the period 1st April,
2006 to 30th September, 2006, we are of the opinion that the restated financial information
have been made after incorporating:

(i) Adjustments for the changes in accounting Policies retrospectively in respective

financial years to reflect the same accounting treatment as per changed accounting
policy for all the reporting periods.
(ii) Adjustments for the material amounts in the respective financial years to which they
relate.

264
 (iii) And there are no extra-ordinary items that need to be disclosed separately in the
accounts.

g) The Summary Consolidated Statement of Assets and Liabilities, Consolidated Profits and
Losses and Consolidated Statement of Cash flows mentioned in (a) above have not been
restated to reflect the effect of the Auditors’ qualifications as stated hereunder, since the said
qualifications are not capable of precise quantification.

(viii) Non-provision for probable non-recovery of dues from a Partnership firm; (Refer Note
no. B(5)(i) of Annexure IIIB)
(ix) Non-provision for debts and advances; (Refer Note no. B(5)(ii) of Annexure IIIB)
(x) The manner of determination of projected losses in respect of contracts in progress, for
which we have relied upon the management’s current estimates of costs to completion
owing to their technical nature and due to uncertainties of future; (Refer Note no.
B(5)(iii) of Annexure IIIB)
(xi) Non-provision for unbilled revenue; (Refer Note no. B(5)(iv) of Annexure IIIB)
(xii) The manner of accounting for outstanding arbitration awards and interest accrued
thereon; (Refer Note no. B(5)(v) of Annexure IIIB)
(xiii) Accounts of a subsidiary for the year ended 31st March, 2004 and 2005 prepared on
going concern basis; (Refer Note no. B(6)(i) of Annexure IIIB)
(xiv) Non-provision for claims lodged by a subsidiary of the company pending final
settlement/acceptances. As the final amount(s) that may be ultimately realised on these
claims cannot be ascertained, the overall effect of which on the financial statements for
the respective year could not be determined. (Refer Note no. B(6)(ii) of Annexure IIIB)
(xv) Non-updation by a subsidiary of the fixed asset register and no physical verification of
assets being conducted during the year. (Refer Note no. B(6)(iii) of Annexure IIIB)

In view of the fact that in respect of items mentioned under clauses (i) to (vii) above, the probable
loss on account of non-recovery or partial recovery of debts, loans and advances, other
receivables, fall in the value of investments, contracts in progress, Arbitration awards in appeal
etc. are not capable of being estimated and quantified with reasonable accuracy owing to
insufficient evidence and information available which includes, inter alia, a review of events
occurring after the Balance Sheet date, management’s experience of similar transactions and in
some cases reports from independent experts, the overall effect of the above qualifications could
not be determined. Hence, it is not possible to adjust the above non-provisions in the restated
summary statements.

h) We have also examined the following consolidated other financial information set out in
Annexures prepared by the management and approved by the Board of Directors relating to
the Company and its subsidiaries, associates and joint ventures for the year ended 31st March,
2002, 2003, 2004, 2005, 2006 and for the period 1st April, 2006 to 30th September, 2006 for
the purpose of inclusion in the Offer Document:-

(i) Statement of Accounting Ratios included in Annexure VI

(ii) Statement of Capitalization as at 30th September, 2006 included in Annexure VII
(iii) Statement of Tax Shelter included in Annexure VIII
(iv) Statement of Secured Loan included in Annexure IX
(v) Statement of Other Income included in Annexure X
(vi) Statement of Dividend included in Annexure XI
(vii) Statement of Unsecured Loan included in Annexure XII
(viii) Statement of Sundry Debtors included in Annexure XIII
(ix) Statement of Loans and Advances included in Annexure XIV
(x) Statement of Investments included in Annexure XV
(xi) Statement of Contingent Liabilities included in Annexure XVI
(xii) Statement of Related Party transactions included in Annexure XVII

265
8. In our opinion the financial information contained in Annexures I to XVII of this report read along
with the Significant Accounting Policies and Notes to accounts included in Annexure IV to this
report, prepared after making adjustments and regrouping as considered appropriate and read with
our observations contained in paragraph 7(c) above, have been prepared in accordance with the
requirements of Part II of Schedule II of the Act and the SEBI Guidelines.

9. Our report is intended solely for use of the management and for inclusion in the offer document in
connection with the proposed issue of equity shares of the Company and should not be used for
any other purpose except with our prior consent in writing.

For C. C. Chokshi & Co., J. C. Bhatt

Chartered Accountants Chartered Accountant

R. Laxminarayan
Partner
Membership No.33023 Membership No.10977

Place: Mumbai
Dated: 5th January, 2007

266
ANNEXURE – I : SUMMARY STATEMENT OF CONSOLIDATED ASSETS AND LIABILITIES, AS
RESTATED

(Rupees in millions)
Particulars As at As at As at March As at March As at March As at March
September March 31, 31, 2005 31, 2004 31, 2003 31, 2002
30, 2006 2006
FIXED ASSETS

Gross Block 2,887.81 2,667.51 2,482.11 2,276.34 2,013.39 1,829.09

Less: Depreciation 1,578.36 1,494.77 1,412.60 1,270.06 1,158.47 1,049.70

Net Block 1,309.45 1,172.74 1,069.51 1,006.28 854.92 779.39

Less: Revaluation Reserve 59.54 64.08 9.08 9.07 13.95 12.30

Net Block after adjustment for
Revaluation Reserve 1,249.91 1,108.66 1,060.43 997.21 840.97 767.09

Capital Work In Progress 330.72 51.06 18.30 6.19 30.97 14.24

TOTAL - (A) 1,580.63 1,159.72 1,078.73 1,003.40 871.94 781.33

INVESTMENTS - (B) 42.65 42.65 43.33 43.33 58.73 58.74

CURRENT ASSETS, LOANS

AND ADVANCES

Inventories 611.00 515.61 387.53 405.46 411.77 348.14

Work-in-Progress 14.79 14.99 14.79 1,729.39 1,123.82 780.67

Unbilled Revenue 4,027.62 2,857.30 1,786.95 - - -

Sundry Debtors 1,921.59 1,981.02 1,866.71 1,903.46 1,402.03 964.19

Cash & Bank Balances 150.64 237.65 195.73 174.60 156.51 260.20

Loans & Advances 1,111.75 1,030.21 813.89 749.84 789.84 794.17

Other Current Assets 16.23 0.96 0.94 0.94 1.68 1.71

TOTAL - (C) 7,853.62 6,637.74 5,066.54 4,963.69 3,885.65 3,149.08

LIABILITIES AND
PROVISIONS

Secured Loans 1,101.45 1,054.35 563.64 829.59 563.82 364.11

Unsecured Loans 3,331.89 2,430.50 2,233.91 1,225.89 927.02 313.11

Current Liabilities 2,615.35 2,022.47 1,688.95 2,749.36 2,289.50 2,338.28

267
 (Rupees in millions)
Particulars As at As at As at March As at March As at March As at March
September March 31, 31, 2005 31, 2004 31, 2003 31, 2002
30, 2006 2006

Provisions 127.06 112.46 37.77 39.58 38.84 66.54

Deferred Tax Liability (Net) 119.12 94.92 34.64 23.43 9.50 3.30

Minority Interest 6.49 6.53 6.98 7.06 8.03 8.81

TOTAL - (D) 7,301.36 5,721.23 4,565.89 4,874.91 3,836.71 3,094.15

NET WORTH - (A+B+C-D) 2,175.54 2,118.88 1,622.71 1,135.51 979.61 895.00

REPRESENTED BY

1. Share Capital 1,715.25 1,715.25 1,214.00 714.00 514.00 314.00

(Refer
note 1
below)

2. Reserves & Surplus 579.97 533.78 495.72 519.42 579.60 609.42

Less: Revaluation Reserve 59.54 64.08 9.08 9.07 13.95 12.30

Reserves & Surplus (Net of
Revaluation Reserves) 520.43 469.70 486.64 510.35 565.65 597.12

Total 2,235.68 2,184.95 1,700.64 1,224.35 1,079.65 911.12

Less: Miscellaneous
Expenses
(to the extent not written off) 60.14 66.07 77.93 88.84 100.04 16.12

NET WORTH 2,175.54 2,118.88 1,622.71 1,135.51 979.61 895.00

Notes:
1) Share Capital Includes share application money of Rs.1.25 million in respect of Zero Coupon
Redeemable Preference Shares pending allotment.( Refer note no. VIII(c) of Annexure IV)

2) The above statement should be read with the Notes on Adjustments to Restated Financial Statements,
Signifcant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

268
 ANNEXURE II: SUMMARY STATEMENT OF CONSOLIDATED PROFIT AND LOSS ACCOUNT, AS
RESTATED

(Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006

INCOME :
Income from Operations 3,990.22 6,804.42 5,433.84 4,453.29 4,299.12 4,130.37
Other Income 133.63 373.25 108.04 193.61 156.56 47.17
Total Income 4,123.85 7,177.67 5,541.88 4,646.90 4,455.68 4,177.54

EXPENDITURE :
Cost of Construction 2,992.20 4,759.03 4,012.65 3,325.05 3,156.03 3,390.27
Payments to and Provisions for
employees 335.28 654.25 488.21 447.57 455.30 460.44
Other Expenses 385.66 1,040.68 513.22 421.28 381.83 363.02
Financial Lease Rentals 9.82 43.09 61.19 68.20 92.68 107.07
Interest and Financial charges 234.39 381.48 336.65 300.28 286.85 217.61
Depreciation 85.52 158.64 146.71 129.65 116.72 99.02
Less : Depreciation on the amount
added on Revaluation transferred
from Revaluation Reserve 4.53 9.07 9.09 9.09 13.94 12.29
Total Expenditure 4,038.34 7,028.10 5,549.54 4,682.94 4,475.47 4,625.14
Profit\ (Loss) before prior period
adjustments, extraordinary items
and tax 85.51 149.57 (7.66) (36.04) (19.79) (447.60)

Provision for tax:

- Current tax (9.35) (14.66) (2.77) (2.19) (2.24) (0.54)
- Wealth Tax (0.01) (0.02) (0.02) (0.02) (0.02) (0.02)
- Deferred Tax (24.20) (60.28) (11.21) (13.92) (9.27) -
- Fringe Benefit Tax (4.70) (10.40) - - - -
- Foriegn Tax - (6.68) - - - -
Total Provision for Tax (38.26) (92.04) (14.00) (16.13) (11.53) (0.56)

Profit\ (Loss) after tax, before prior

period adjustments and
extraordinary items 47.25 57.53 (21.66) (52.17) (31.32) (448.16)

Adjustments:
Impact of material adjustment
forrestatementincorresponding years
(Refer Annexure IIIA) - (10.49) 10.49 - 16.92 (16.92)

269
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Adjusted Profit\ (Loss) after tax,
before prior period adjustments
and extraordinary items 47.25 47.04 (11.17) (52.17) (14.40) (465.08)

(Short)/ Excess Provision for taxes in

respect of earlier years (Refer note 1
below) 1.73 0.81 (3.54) 0.09 (1.61) (0.03)

Prior Period Expenses - - - - (0.21) 1.39

Profit\ ( Loss) after taxation and

before minority Interest 48.98 47.85 (14.71) (52.08) (16.22) (463.72)

Minority Interest 0.04 (0.08) 11.32 16.25 10.78 23.87

Profit\ ( Loss) after Minority
Interest 49.02 47.77 (3.39) (35.83) (5.44) (439.85)

Balance Brought Forward from

Previous Year (282.18) (329.76) (326.39) (290.56) (308.69) 63.66
Transfer From Debenture
Redemption Reserve - - - - 22.90 67.72
Profit\ ( Loss) available for
appropriation (233.16) (281.99) (329.78) (326.39) (291.23) (308.47)

Appropriations:

Proposed Final Dividend - - - - - (0.11)

Transfer from/ (to) General Reserve - (0.19) - - 0.67 (0.11)

Less: Deducted from general reserve
as per contra 233.16 282.18 329.78 326.39 290.56 308.69

Balance carried to Summary

Statement of Assets and Liabilities, - - - - - -
as restated

Notes:
1) Short \ Excess Provision for tax relates to financial year prior to year ending March 31, 2002 and hence
it is not possible to restate in the above annexure.

2) The above statement should be read with the Notes on Adjustments to Restated Financial Statements, Significant
Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

270
ANNEXURE IIIA: CONSOLIDATED STATEMENT OF IMPACT ON PROFIT AND LOSS DUE TO
RESTATEMENTS AND OTHER MATERIAL ADJUSTMENTS MADE TO AUDITED FINANCIAL
STATEMENTS.
(Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2006 2005 2004 2003 2002
to
September
30, 2006
Net Profit after tax, before prior
period adjustments and
extraordinary items as per audited
Profit and Loss Account 47.25 57.53 (21.66) (52.17) (31.32) (448.16)
(Refer note 1
below)
Deferred Tax
- - - - 3.31 (3.31)
Interest income on arbitration awards
now adjusted in respective financial
years - (10.49) 10.49 - - -
Impact of Auditors qualifications on Profit & Loss Account (Refer note 2 below)
Provision for diminution in the value
of quoted investment.
- - - - 13.61 (13.61)
Net Profit after tax, before prior
period adjustments and
extraordinary items as per restated
profit and loss account 47.25 47.04 (11.17) (52.17) (14.40) (465.08)

Notes:

1) Afcons Pauling (India) Limited (APIL) a subsidiary of the Company was amalgamated with the Company with effect
from 1st April’2005. During the year ended 31st March’2006, interest on arbitration awards pertaining to earlier years of
APIL aggregating to Rs. 98.39 million was accounted as income, which was related to the years prior to amalgamation.
For the purpose of this statement the said interest income has not been adjusted in the respective years, as APIL was not
part of the Company’s operation in those years.
2) Refer Part B of Annexure IIIB for adjustments arising out of audit qualifications \ other restatements, not given effect
to.

3) The above statement should be read with the Notes on Adjustments to Restated Financial Statements, Significant
Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

271
ANNEXURE IIIB – CONSOLIDATED NOTES ON ADJUSTMENT ON ACCOUNT OF
RESTATEMENTS / AUDIT QUALIFICATIONS

A The following adjustments have been made to the Summary Statement of Profits and Losses,
Summary Statement of Assets and Liabilities and Statement of Restated Cash Flow (“Summary
Statements”):

3. Interest on arbitration awards accounted in the year ended 31st March, 2006 in respect of
arbitration awards decided in favour of the company; adjusted in respective years to which it
relates, except as mentioned below:

Afcons Pauling (India) Limited (APIL) a subsidiary of the Company was amalgamated with the
Company with effect from 1st April, 2005. During the year ended 31st March, 2006, interest on
arbitration awards pertaining to earlier years of APIL aggregating to Rs.98.39 million was
accounted as income, which was related to the years prior to amalgamation. For the purpose of this
statement the said interest income has not been adjusted in the respective years, as APIL was not
part of the Company's operation in those years.

4. Provision for diminution in the value of investment in units of UTI was made in the year ended
31st March, 2003.For the purpose of this statement same has been adjusted in the year ended 31st
March, 2002 as such provision was related to the financial year 2001-2002.

B The following adjustments have not been made to the Summary Statements for the reasons
stated therein:

1. The trustees of Afcons Infrastructure Limited Employees Group Gratuity-cum-Life Assurance

Scheme Trust have taken a Group Gratuity-cum-Life Assurance Policy from the Life Insurance
Corporation of India (LIC). Provision for gratuity is made on the basis of premium payable in
respect of aforesaid policy and actuarial valuation carried out by the independent actuarial valuer
as at the year end.

The Company has made provision for gratuity liability and unavailed leave for the period ended
30th September, 2006 as per revised Accounting Standard (AS -15) “Employees Benefit” issued by
the Institute of Chartered Accountants of India (ICAI).

For the purpose of this statement, Revised AS-15 has not been applied for the years ended March
31, 2002, 2003, 2004 and 2005 as the same was not applicable in those years. Consequently,
additional impact, if any, on account of actuarial valuation of gratuity as per revised (AS 15) has
not been recognised in this statement for those years.

Based on revised actuarial valuation carried out as per Revised (AS-15) for the year ended 31st
March, 2006, there was no additional liability on account of gratuity as on 31st March, 2006.

2. Prior to 1st April, 2004, the Company accounted contract revenue and contract cost in accordance
with the Accounting Standard AS7. “Accounting for Construction Contracts” issued in the year
1983 in respect of contracts entered into before 1st April, 2003 and Accounting Standard AS7
“Construction Contracts (Revised)” issued in the year 2002 in respect of contracts entered into on
or after 1st April, 2003. During the year ended 31st March, 2005, with a view to have uniformity in
accounting treatment, the Company has accounted Contract Revenue and costs in accordance with
AS7 (revised) in respect of all contracts (including contracts entered into prior to 1st April, 2003).
Revenue recognized as a result of this change is Rs.864.45 millions. Adjustment on this account
has not been made in the summary financial statement for the years ended March 31, 2002, 2003
and 2004 in the absence of available information.

272
3. Prior to 1st April, 2004, the Company has accounted work done remaining to be certified / billed
at cost. From the financial year 2004-05 onwards the company has treated work done remaining to
be certified / billed as unbilled Revenue in the accounts and valued the same at the contract rates.
Adjustment on this account has not been made in the summary financial statement for the years
ended March 31, 2002, 2003 and 2004 in the absence of available information.

4. Prior to 1st April, 2002, it was the practice of the Company to defer expenditure on voluntary
retirement compensation over a period of five years. During the year 2002-03, the company has
changed this practice on the basis of reassessment and has decided to amortize the said
expenditure over a period of 10 years with retrospective effect. This change has the effect of (i)
write back to the profit and loss account excess amount of amortization, Rs.5.37millions (ii)
decreasing the amortization charge for the year by Rs11.71millions (iii) increasing the profit for
the year by Rs 17.09 millions and (iv) increasing the deferred revenue expenditure carried forward
by Rs 17.09 millions. Adjustment on this account have not been made in the summary financial
statement for the years ended March 31, 2002 as in the opinion of the Company, the impact of the
same in the summary statements for the year ended March, 31, 2002 is not material.

5. Auditors’ Qualifications on financial statements of the Company:

(ix) Audit report for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period
ended 30th September, 2006 has been qualified for non-provision for dues from the
partnership firm “Afcons Pauling Joint Venture” in which the Company is a partner. Refer
Note no. VII (2) of Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Amount (Rupees in

millions)
30th September, 2006 146.49
31st March, 2006 146.53
31st March, 2005 146.63
31st March, 2004 146.85
31st March, 2003 147.14
31st March, 2002 150.28

(x) Audit report for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period
ended 30th September, 2006 has been qualified for non-provision of debts and advances
which are subject matter of arbitration\litigation. Refer Note no. VII (3) of Annexure IV. A
detailed year wise break-up is given below:

Year\Period ended Amount (Rupees in

millions)
30th September, 2006 168.40
31st March, 2006 183.83
31st March, 2005 185.54
31st March, 2004 131.46
31st March, 2003 154.19
31st March, 2002 100.25

273
 (xi) Audit report for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period
ended 30th September, 2006 has been qualified in respect of determination of projected
losses in respect of contracts in progress. Auditors have relied upon the management
estimate of costs to completion owing to their technical nature and due to uncertainties of
future. Refer Note no. VII (5) of Annexure IV.

(xii) Audit report for the year ended 31st March, 2005, 2006 and for the period ended 30th
September, 2006 has been qualified for non-provision of unbilled revenue outstanding since
long period and subject matter of arbitration. Refer Note no. VII (7) of Annexure IV. A
detailed year wise break-up is given below :

Year\Period ended Arbitration award

Amount (Rupees in
millions)
30th September, 2006 51.97
31st March, 2006 51.97
31st March, 2005 69.15

(xiii) Audit report for the year ended 31st March, 2004, 2005, 2006 and for the period ended 30th
September, 2006 has been qualified for outstanding arbitration awards unanimously
decided in Company’s favour and interest accrued thereon. Refer Note no. VII (8) of
Annexure IV. A detailed break-up of year wise non-provision is given below:

Year\Period ended Arbitration award Interest on

Amount (Rupees in arbitration awards
millions) Amount (Rupees in
millions)
30th September, 2006 532.46 127.10
31st March, 2006 457.49 106.53
31st March, 2005 194.99 -
31st March, 2004 186.99 45.43

In view of the fact that in respect of items mentioned under clauses (i) to (v) above, the
probable loss on account of non-recovery or partial recovery of debts, loans and advances,
other receivables, fall in the value of investments, contracts in progress, Arbitration awards
in appeal etc. are not capable of being estimated and quantified with reasonable accuracy
owing to insufficient evidence and information available which includes, inter alia, a review
of events occurring after the Balance Sheet date, management’s experience of similar
transactions and in some cases reports from independent experts, the overall effect of the
above qualifications could not be determined. Hence, it is not possible to adjust the above
non-provisions in the restated summary statements.

6. Auditors’ Qualifications on financial statements of subsidiary of the Company:

AFCONS PAULING (INDIA) LIMITED

(i) Attention was drawn in Audit report for the year ended 31st March, 2004 and 2005 to Note V
(1) of Annexure IV regarding accounts of the Company prepared on going concern basis;

274
 (ii) Attention was drawn in Audit report for the year ended 31st March, 2002, 2003, 2004 and
2005 to Note V (2) of Annexure IV regarding claims lodged by the company pending final
settlement/acceptances. As the final amount(s) that may be ultimately realised on these
claims cannot be ascertained, the overall effect of which on this financial statements for the
respective year could not be determined. A detailed break-up of year wise non-provision is
given below:

Year\Period Claim Award Dues of completed project

ended Amount included included in Debtors which
included in in Claim will be settled upon
sundry Amount completion of arbitration
debtors (Rupees (Rupees in millions)
(Rupees in in
millions) millions)
31st March, 2005 112.09 63.86 11.67
31st March, 2004 112.09 63.86 11.67
31st March, 2003 112.09 63.86 11.67
31st March, 2002 112.09 63.86 11.67

(iii) Observation was made in Audit report for the year ended 31st March, 2003 for the fixed
assets of the Company owned as well taken on lease which were in the possession of the
holding Company. The Company has neither updated the fixed asset register nor conducted a
physical verification of these assets during the year. In the absence of updated book records
and physical verification, auditors were unable to comment on the discrepancies, if any,
between the book records and results of physical and impact thereof on the financial
statements, if any.

(iv) Observation was made in audit report for the year ended 31st March, 2002 regarding Mr.
Prosser Abaker Peter and Mr. Rowland Roy Veron have not produced written representations
for the purpose of section 274 (1)(g) of the Companies Act, 1956. In the absence of this
representation the auditors were unable to comment whether Mr. Prosser Abaker Peter and
Mr. Rowland Roy Veron are disqualified from being appointed as directors under clause (g)
of sub-section (1) of section 274 of the Companies Act, 1956.

7. Auditors’ Qualifications in Companies Auditor’s Report Order, 2003 \

Manufacturing and Other Companies (Auditor’s) Report Order, 1988:

Audit report of the Company for the year ended 31st March, 2002, 2003, 2004, 2005 and
2006 has been qualified in respect of statement contained in Companies Auditor’s Report
Order, 2003 \ Manufacturing and Other Companies (Auditor’s) Report Order, 1988
regarding;

a) Fixed assets register being under updation to show full particulars including quantitative
details and situation of fixed assets.

Audit report for the year ended 31st March, 2004, 2005 and 2006 has been qualified in
respect of statement contained in Companies Auditor’s Report Order, 2003 \ Manufacturing
and Other Companies (Auditor’s) Report Order, 1988 regarding;

b) Receipt of interest being not regular in respect of loans granted to the parties covered in
the register maintained under section 301 of the Companies Act, 1956.

Audit report for the year ended 31st March, 2005 and 2006 has been qualified in respect of
statement contained in Companies Auditor’s Report Order, 2003 regarding;

275
 c) Payment of interest being not regular in respect of loan taken from the party covered in
the register maintained under section 301 of the Companies Act, 1956.

Audit report for the year ended 31st March, 2002 has been issued with disclaimer of opinion
in respect of statement contained in Manufacturing and Other Companies (Auditor’s)
Report Order, 1988 regarding;

d) Terms of interest and other terms and conditions of loans granted to another company
under the same management within the meaning of section 370(1B) of the Companies
Act, 1956 are prima facie prejudicial to the interest of the Company or not;

8. Audit report of the Subsidiary of the Company for the year ended 31st March, 2002, 2003, 2004,
2005 and 2006 has been qualified in respect of statement contained in Companies Auditor’s
Report Order, 2003 \ Manufacturing and Other Companies (Auditor’s) Report Order, 1988
regarding;

a) SSS ELECTRICALS (INDIA) PRIVATE LIMITED

(i) Observation was made in audit report for the year ended 31st March, 2002 regarding
payment of undisputed statutory dues relating to Fringe Benefit Tax was not regular
and it has been paid only once on 31st March’06 for the entire financial year.

(ii) Observation was made in audit report for the year ended 31st March, 2004 that in the
opinion of the auditors, there was no regular internal audit. However, strict and rigid
controls were maintained and vigilant procedures were introduced and observed to
avoid any misfeasance or fraud on or by the Company.

(iii) Observation was made in audit report for the year ended 31st March, 2003 regarding
Payment of undisputed statutory dues of an amount of Rs.0.03 million in respect of
sales-tax being not regular.

(iv) Observation was made in audit report for the year ended 31st March, 2002 that The
Company does not have a system of allocating man-hours utilized to the relative
jobs.

b) AFCONS ARETHUSA OFFSHORE SERVICES PRIVATE LIMITED

(i) Observation was made in audit report for the year ended 31st March, 2004, 2005 and
2006 that the Company did not have an internal audit system during the year.

(ii) Observation was made in audit report for the year ended 31st March, 2004 regarding
payment of undisputed statutory dues relating to tax deducted at source was not
regular.

(iii) Payment of undisputed statutory dues relating to custom duty of Rs.0.44 millions,
provident fund dues of Rs.0.29 million and income tax dues of Rs.0.03 million was
not paid and outstanding for more than six months from the date they become
payable.

276
c) AFCONS PAULING (INDIA) LIMITED

For the year ended 31st March, 2005.

(i) Fixed assets were not physically verified during the year by the management and
hence auditors were unable to comment on discrepancies, if any;

(ii) Payments of undisputed statutory dues relating to sales-tax were not regular. There
were no arrears of outstanding dues as at the last day of the financial year for a
period of more than six months from the date they became payable except in respect
of sales-tax of Rs.0.1 million;

(iii) There were cases of non-deposit with appropriate authorities of disputed dues of
sales-tax of Rs.12.61 millions and income-tax of Rs.5.53 millions which disputes are
pending before the Appellate Tribunal-Sales tax (Rs.3.77millions), Deputy
Commissioner-Commercial Tax (Rs.0.22 million), Additional Commissioner sales
tax (Rs.8.62millions) and Commissioner of Income Tax (Appeals) of Rs 5.53
millions.

For the year ended 31st March, 2002, 2003 and 2004.

Fixed assets register was in process of being updated. Fixed assets were not
physically verified during the year by the management and hence auditors were
unable to comment on discrepancies, if any;

For the year ended 31st March, 2004.

(i) Payment of undisputed statutory dues relating to sales-tax were not regular. There
were no arrears of outstanding dues as at the last day of the financial year for a
period of more than six months from the date they became payable except in respect
of sales-tax of Rs.0.1 million;

(ii) There were no cases of non-deposit with appropriate authorities of disputed dues of
sales-tax, income-tax, customs duty, wealth-tax, excise duty and cess except for sales
tax of Rs.12.40 millions where the disputes are pending before Appellate Tribunal-
Sales tax (Rs.3.77 millions), Deputy Commissioner-Commercial Tax (Rs.0.22
million) and Additional Commissioner sales taxes (Rs.8.41 millions) respectively.

For the year ended 31st March, 2002 and 2003.

(i) Physical verification has not been conducted by the management at reasonable
intervals in respect of stores, spare parts and construction materials.

(ii) The procedures of physical verification of inventories followed by the Management

need to be strengthened to make them commensurate with the size of the Company
and the nature of its business. In the opinion of the auditors, the frequency of such
verification needs to be increased.

(iii) The internal control procedures with regard to purchases of stores, construction
materials including components, plant and machinery, equipment and other assets
need to be strengthened to make them commensurate with the size of the Company
and the nature of its business.

277
 For the year ended 31st March, 2002

(i) The Company is in the process of determining unserviceable or damaged stores and
construction materials. Adequate provision, if any, will be made in the accounts for
the loss arising on the items once the same is determined.

(ii) The internal audit system of the Company is not commensurate with its size and the
nature of its business.

C Figures in the Restated Summary Statements have been appropriately regrouped wherever possible to
conform with the reclassification made in the subsequent years.

278
ANNEXURE IV - SUMMARY OF SIGNIFICANT ACCOUNTING AND POLICIES AND NOTES
ON CONSOLIDATED ACCOUNTS FORMING PART OF THE RESTATED
SUMMARY STATEMENTS.

VIII Principles of Consolidation :

a. The consolidated financial statements relate to AFCONS Infrastructure Limited (‘the

Company”) and its subsidiaries and associate companies, which together constitute the
Group. The consolidated financial statements have been prepared on the following basis :

(iv) The financial statements of the Company and its subsidiary companies are combined
on a line-by-line basis by adding together the book values of like items of assets,
liabilities, income and expenses, after fully eliminating intra-group balances and
intra-group transactions resulting in unrealised profits or losses in accordance with
Accounting Standard (AS- 21) “Consolidated Financial Statements” issued by the
Institute of Chartered Accountants of India.

(v) The difference between the costs of investment in the subsidiaries, over the net assets
at the time of acquisition of shares in the subsidiaries is recognized in the financial
statements as Goodwill or Capital Reserve as the case may be.

(vi) Minority Interest’s share of net profit of consolidated subsidiaries for the year is
identified and adjusted against the income of the group in order to arrive at the net
income attributable to shareholders of the Company.

(vii) Minority Interest’s share of net assets of consolidated subsidiaries is identified and
presented in the consolidated balance sheet separate from liabilities and the equity of
the Company’s shareholders.

(viii) In case of associates, where the Company directly or indirectly through subsidiaries
holds more than 20% of equity or exercises significant influence over the Investee,
investments are accounted for using equity method in accordance with Accounting
Standard (AS-23) “Accounting for Investments in Associates in Consolidated
Financial Statements” issued by the Institute of Chartered Accountants of India.

(ix) The difference between the cost of investment in the associates and the share of net
assets at the time of acquisition of shares in the associates is identified in the
financial statements as Goodwill or Capital Reserve as the case may be.

(x) As far as possible, the consolidated financial statements are prepared using uniform
accounting policies for like transactions and other events in similar circumstances
and appropriate adjustments are made to the financial statements of subsidiaries
when they are used in preparing the consolidated financial statements that are
presented in the same manner as the Company’s separate financial statements.

b. As required by Accounting Standard (AS-23) “Accounting for Investments in Associates

on Consolidated Financial Statements” issued by the Institute of Chartered Accountants
of India, the carrying amounts of investments in Associates is adjusted for post
acquisition change in the Company’s share in the net assets of the associates after
eliminating unrealised profits or losses, if any.

c. The list of the subsidiaries of the Company which are included in the consolidation and
the Group’s holding therein are as under:

279
 Name of Subsidiary Country of Percentage
Incorporation Holding-Share

Afcons (Overseas) Constructions and Investments India 100%

Private Limited.

Hazarat and Company Private Limited. India 100%

SSS Electricals (India) Private Limited. India 60%
Afcons Dredging and Marine Services Limited. India 100%
Afcons BOT Constructions Private Limited. India 100%

Afcons Arethusa Offshore Services Limited. India 60%

Afcons Pauling Joint Venture India 95%

Kier Afcons (India) Private Limited* India 51%

Trensaccai (India) Private Limited** India 60%

* Not been included in consolidation for the year ended 31st March, 2002, 2003, 2004,
2005, 2006 and for the period from 1st April, 2006 to 30th September, 2006 as the
company is under liquidation.
**Company ceases to be subsidiary w.e.f. March 27, 2006.

d. The list of the associates of the Group which are included in the consolidation and the
Group’s holdings therein are as under:

Name of the Associate Country of Percentage

Incorporation Holding-Share

Afcons (Mideast) Construction and Investments India Less than 1%

Private Limited.*

* It is accounted based on significant influence by the Company on the composition of

Board of Directors of Afcons (Mideast) Construction and Investments Private Limited.

e. The list of the Joint Venture of the Group which are included in the consolidation and the
Group’s holdings therein are as under:

Name of the Joint Venture Percentage Holding-Share

Afcons Constructions Mideast LLC* 49%
AFCONS Aarsleff Joint Venture* 50%
Al-Saeed Afcons joint venture* 50%

*For the purpose of consolidation of above joint venture; unaudited management

financial statements were considered.

IX Significant accounting policies

q) Fixed assets
Fixed assets are stated at cost of acquisition/ construction or book value and include amounts
added on revaluation less accumulated depreciation. Leasehold improvements have been
capitalized and are written off over the lease term from the date(s) of installation.

280
r) Impairment loss

Impairment loss is provided to the extent the carrying amount of assets exceeds their
recoverable amounts. Recoverable amount is the higher of an asset’s net selling price and its
value in use. Value in use is the present value of estimated future cash flows expected to arise
from the continuing use of the asset and from its disposal at the end of its useful life. Net
selling price is the amount obtainable from sale of the asset in an arm’s length transaction
between knowledgeable, willing parties, less the costs of disposal.

s) Depreciation

Depreciation on fixed assets is provided on the straight-line basis. Cost of the Intangible
assets are amortised over a period of five years.

t) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are
carried at cost. However, when there is a decline, other than temporary, the carrying amount
is reduced to recognize the decline.

u) Inventories

Construction materials, stores and spare parts are valued at lower of cost and net realizable
value. Cost is determined on the basis of weighted average method. Cost of shuttering
materials (included in construction materials) issued to jobs, is charged off equally over a
period of four years.

v) Unbilled Revenue

Work done remaining to be certified/ billed is treated as Unbilled Revenue in the accounts.
The same is valued at the contract rates.

w) Retention monies

Amounts retained by the clients until satisfactory completion of the contract(s) are recognised
in the financial statements as receivables. Where such retention monies have been released by
the clients against submission of bank guarantees, the amounts so released are adjusted
against receivables from these clients.

x) Foreign currency transactions

Transactions in foreign currency, including in respect of branch operations integral in nature,

are recorded at the original rates of exchange in force at the time the transactions are effected.
At the year end, monetary items, including those of branch operations integral in nature,
denominated in foreign currency are reported using the closing rates of exchange. Exchange
differences arising thereon and on realization/ payment of foreign exchange are accounted for
in the relevant year as income or expense except in the case of fixed assets acquired from
outside India, in which case, these are adjusted in the carrying amounts of such assets.

y) Revenue recognition

(i) Contract revenue and expenses are recognized, when outcome can be estimated reliably,
on the basis of percentage completion method. Percentage of completion is determined
based on the nature of contracts, either in proportion of contract costs incurred up to the

281
 reporting date to the estimated total cost or on the basis of physical proportion of the
contract work completed.

(ii) Variations (in contracts) and amounts in respect thereof are recognized only when it is
probable that the customer(s) will approve them and amounts can be measured reliably.

(iii) Claims and amounts in respect thereof are recognized only when negotiations have
advanced to stage where it is probable that the customer(s) will accept them and amounts
can be reliably measured.

(iv) Revenue from survey activity is recognized as per the terms of the contract. Revenue
from annual maintenance contracts is recognized in the ratio of the period expired to the
total period of the contract. Revenue from repairs work carried out under such contracts
is recognized at contractual rates for materials used in such repair works.

(v) Day rate charges for hire of the off-shore drilling rig under the drilling agreement with
ONGC Limited are recognized over the period of the agreement. Claims by the Company
are recognized upon realization.

Charter hire costs:

Charter hire costs comprise day rate charges for the hire of the off-shore drilling rig under
the charter hire agreement with Diamond Off-shore Drilling, Inc. (Diamond). Claims by
Diamond against the Company are recognized upon realization of corresponding claims
by the Company on ONGC Limited.

(vi) Other revenue is recognised when no significant uncertainty as to determination or

realisation exists

z) Retirement benefits

I) Gratuity
The trustees of Afcons Infrastructure Limited Employees Group Gratuity-cum-Life
Assurance Scheme Trust have taken a Group Gratuity-cum-Life Assurance Policy from
the Life Insurance Corporation of India (LIC). Provision for gratuity is made on the basis
of premium payable in respect of the aforesaid policy and actuarial valuation carried out
by the independent actuarial valuer as at the year end.

II) Superannuation
The trustees of Afcons Infrastructure Limited Superannuation Scheme Trust have taken a
Group Superannuation policy from the LIC. Provision for superannuation is made on the
basis of premium payable in respect of the aforesaid policy.

III) Provident fund

Contribution as required under the statute/ rules is made to the Company’s Provident
Fund/ Government Provident Fund.

IV) Leave encashment

Provision for leave encashment benefits is made based on the expected cost of unavailed
earned leave.

aa) Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of

qualifying assets are capitalized as a part of the cost of such assets. A qualifying asset is one
that necessarily takes a substantial period of time to get ready for its intended use or sale. All
other borrowing costs are charged to revenue.

282
 bb) Deferred revenue expenditure

The expenditure on voluntary retirement compensation is treated as ‘Deferred Revenue

Expenditure’ and amortized over a period of ten years.

cc) Finance lease rentals

These are accounted over the life of the asset determined on the basis of technical evaluation
made by an independent valuer/ surveyor.

dd) Doubtful debts and advances

Provision is made in the accounts for debts and advances which in the opinion of the
management are considered doubtful of recovery.

ee) Taxes on income

Tax expense comprises both current and deferred tax at the applicable enacted/ substantively
enacted rates. Current tax represents the amount of income-tax payable/ recoverable in respect
of the taxable income/ loss for the reporting period. Deferred tax represents the effect of
timing differences between taxable income and accounting income for the reporting period
that originate in one period and are capable of reversal in one or more subsequent periods.
Provision for Fringe Benefits Tax is made in accordance with Chapter XII-H of the Income-
tax Act, 1961.

ff) Provisions and Contingencies

Provisions are recognized when the Company has a legal and constructive obligation as a
result of a past event, for which it is probable that cash outflow will be required and a reliable
estimate can be made of the amount of the obligation. Contingent liabilities are disclosed
when the Company has a possible or present obligation where it is not probable that an
outflow of resources will be required to settle it. Contingent assets are neither recognized nor
disclosed.

X Common notes for subsidiaries for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and
for the period from 1st April, 2006 to 30th September, 2006.

The following subsidiaries of the Company have provided depreciation on fixed assets on
written down value method, which is in variance to the method adopted by the Company as
under:

Name of Subsidiary Gross Value of Fixed Assets (Rupees in millions)

As at As at As at As at As at As at
September March March 31, March March March 31,
30, 2006 31, 2005 31, 31, 2003 2002
2006 2004
Hazarat and Company 0.02 0.02 0.02 0.02 0.02 0.02
Private Limited

SSS Electrical (India) 5.48 5.36 4.12 4.09 4.42 4.32

Private Limited

283
XI Significant notes for the period ended 30th September, 2006 and year ended 31st March, 2006

Segment Information

The Company has only one reportable business segment of construction business, hence
information for primary business segment is not given.

Segment information for Secondary segment reporting (by geographical segment)

The Company as two reportable geographical segments based on location of customers:

Revenue from customers within India- Local projects

Revenue from customers outside India- Foreign projects

For the period 30th For the year ended

Segment September, 2006 31st March, 2006
Rupees In millions Rupees In millions
Segment Assets:
Local Projects 9,251.01 7,638.07
Foreign Projects 345.58 332.18
Total 9,596.59 7970.25
Segment Income
from Operations:
Local Projects 3,826.75 5,483.42
Foreign Projects 163.47 1,321.00
Total 3,990.22 6,804.42

Additions to assets:
Local Projects 531.82 302.94
Foreign Projects 19.20 15.41
Total 551.02 318.35

XII Significant notes for the year ended 31st March, 2004, 2005

AFCONS Pauling (India) Limited (APIL)

1. The accumulated losses of APIL as at the year end (as well as at 31 March, 2004) have far
exceeded its share capital. The Company has also incurred a loss of Rs.44.94 millions during the
year (Previous Year Rs.62.98 millions). Together with it's holding Company - Afcons
Infrastructure Limited, the Company is working on a Business Plan for increasing future Revenues
and Profits in it's preferred line of business of Roads and Highways construction. Further,
financial and operational supports will continue to be provided by the Company's major
shareholders.
The Company has repaid all it's borrowings from third parties and is confident of repaying
advances from it's holding company through receipts of work related claims filed/to be filed and
which are at various stages of consideration/settlement.
In view of the foregoing, APIL Company is positive of it's future business and profitability and
accordingly, accounts have been prepared on going concern basis.

2. Sundry debtors of APIL outstanding for more than six months include an amount of Rs.112.09
millions as at 31st March,2002, 2003, 2004 and 2005 which represents work yet to be certified by
the clients. This includes an award of Rs.63.86 millions as at 31st March,2002, 2003, 2004 and
2005 awarded in favour of the APIL by the arbitrator, which has been disputed and referred to the

284
 Civil Court by the client (out of which subsequent to year end the APIL has received an amount of
Rs.21.33 millions ) and Rs.48.23 millions on account of other claims lodged by the APIL.
Further, it also includes Rs.11.67 millions as at 31st March, 2002, 2003, 2004 and 2005 due in
respect of completed projects, which will be settled by client on completion of arbitration.

3. Confirmations letters have not been obtained from debtors, creditors, hence there balances are
subject to confirmation, reconciliation and consequent adjustments, if any.

XIII Significant notes for the year ended 31st March, 2003

AFCONS Pauling (India) Limited (APIL)

Revenue for the year includes arbitration claim awarded in favour of the Company of Rs.22.04
millions. On the basis of prudence, only the principal portion of the claim has been recognized
in the books of accounts. The interest will be recognized on collection.

Significant notes of the Company – Afcons Infrastructure Limited

XIV Common notes for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period
from 1st April, 2006 to 30th September, 2006.

1. Revaluation of fixed assets:

(a) Some of the Fixed assets viz., Plant & Machinery, (including certain items fully written
off in previous years) Laboratory Equipment, Barges (floating equipments), New &
Old Workshop and Office Building as on 1st April, 1990 were revalued on the basis of
the valuation made by the external valuers resulting in net increase of Rs.455.12
million being surplus on revaluation.

(b) Revalued amounts substituted for Historical Cost as at 1st April, 1990 are as under:

(vi) Plant & Machinery Rs.426.15 millions (Gross)

(vii) Laboratory Equipments Rs. 12.45 millions (Gross)
(viii) Workshop & Godown Rs. 46.60 millions (Gross)
(ix) Buildings Rs. 126.00 millions (Gross)
(x) Barges (Floating Equipments) Rs. 89.98 millions (Gross)

(c) The difference between depreciation provided for the year on revalued cost of assets
and that calculated on original cost of assets for the year as per (a) above has been
withdrawn from Revaluation reserve and credited to the Profit and Loss account as
given below:

Year \ Period ended Amount (Rupees in

millions)
30th September, 2006 4.53
31st March, 2006 9.07
31st March, 2005 9.09
31st March, 2004 9.09
31st March, 2003 13.94
31st March, 2002 12.29

285
19. The Company is a partner in a partnership firm ‘Afcons Pauling Joint Venture’ (APJV).
The balance in capital account is Rs. 17.40 millions. The profit/ loss sharing ratio of the
Venturers is as follows:

Profit Loss
The Company 95% 100%
Pauling P.L.C.; UK 5% -

Following amounts were due at each year end from the Partnership Firm (APJV):

Year \ Period ended Amount

(Rupees in millions)
30th September, 2006 146.49
31st March, 2006 146.53
31st March, 2005 146.63
31st March, 2004 146.85
31st March, 2003 147.14
31st March, 2002 150.28

The Firm has made claims aggregating to Rs.166.62millions against its clients which are
pending as at period ended 30th September, 2006. These claims are subject matters of
arbitration where it expects favorable results. No provision has been made for the amount,
if any that may ultimately become irrecoverable, as it cannot be quantified, with reasonable
accuracy at this stage.

20. No provision has been made for debts and advances outstanding at each year end, for the
following years:

Year \ Period ended Amount

(Rupees in millions
30th September, 2006 168.40
31st March, 2006 183.83
31st March, 2005 185.54
31st March, 2004 131.46
31st March, 2003 154.19
31st March, 2002 100.25

Out of these, substantial amounts are due from various Government departments \ Agencies
and are subject matters of arbitration/ litigation where the Company has obtained awards in
favour in some cases and expects favorable results in other cases and hence, the amounts, if
any, that may ultimately become irrecoverable cannot be quantified, at this stage. However,
in view of the uncertainties involved and the procedural delays taking place in the dispute
resolution process, the debts and advances have been categorized as ‘Doubtful’ for the
purpose of presentation in the financial statements.

21. Confirmation letters have not been obtained from the debtors and creditors. Hence, their
balances are subject to confirmation, reconciliation and consequent adjustments, if any.

22. Projected losses, if any, in respect of contracts in progress are provided for based upon
current estimates of cost to completion.

23. Interest on arbitration awards (awards) includes interest in respect of :

286
 (d) unpaid awards decided in favour of the Company as given below, at the rate
mentioned in the awards from the date of awards till the date of payment or year end as
the case may be.

Year \ Period ended Amount

(Rupees in millions)
30th September, 2006 127.10
31st March, 2006 106.53 (including Rs.72.18 millions in respect of earlier
years)

(e) awards decided in the favour of the Company in the earlier years as given below,
which was not accounted then.

Year \ Period ended Amount

(Rupees in millions)
30th September, 2006 20.56
31st March, 2006 30.21

(f) awards decided in favour of the Company during the year as given below.

Year \ Period ended Amount

(Rupees in millions )
30th September, 2006 -
31st March, 2006 45.94

24. Current Assets, Loans and Advances includes unbilled revenue (net of advances) of Rs.
3995.15 millions as at 30th September, 2006 (Rs. 2857.30 millions as at 31st March, 2006).
Of this, Rs. 51.97 millions are outstanding for a long period as at 30th September, 2006 and
31st March, 2006. These pertain to variations in contracts, which are subject matter of
arbitration, in view of which no provision is considered necessary for the said amount of
Rs. 51.97 millions.

25. Debtors include unpaid arbitration awards (awards) of Rs.532.46 millions as at 30th
September, 2006 (Rs.457.49 millions as at 31st March, 2006) unanimously decided in the
Company’s favour and interest accrued on these awards from the date of awards till the
year end/date of payment at the rate mentioned in the award of Rs. 127.10 millions as at
30th September, 2006 (Rs. 106.53 millions as at 31st March, 2006). Though these awards
are subject matters of appeal, the Company is hopeful of positive outcome and as such
expects them to be fully recovered.

26. Cost of fixed assets taken on operating lease till 31st March, 2001 and future lease rental
obligations there against are as follows:

Year \ Period ended Plant & Machinery (at Cost) Future lease rental
(Rupees in millions (Rupees in millions
30th September, 2006 94.98 1.01
31st March, 2006 94.98 1.61
31st March, 2005 361.27 3.82
31st March, 2004 439.73 6.32
31st March, 2003 447.47 9.32
31st March, 2002 554.65 40.98

287
27. For the assets acquired on hire purchase basis after 1st April, 2001, they have been treated
as assets acquired on finance lease as per Accounting Standard on ‘Leases’ (AS-19) issued
by the Institute of Chartered Accountants of India. Minimum lease rentals outstanding in
respect of these assets are as under:

(Rupees in millions)
As at 30th As at 31st As at 31st As at 31st As at As at
September, March, March, March, 31st 31st
2006 2006 2005 2004 March, March,
2003 2002

Total Minimum Lease payment outstanding:

Not less than one 1.04 3.93 18.61 19.83 27.69 13.91
year
Later than 1 Year _ _ 3.90 22.51 56.70 38.52
and not later than 5
year
Total 1.04 3.93 22.51 42.34 84.39 52.43

Interest not due

Not less than one 0.01 0.14 1.94 4.45 9.12 5.73
year
Later than 1 Year _ _ 0.14 2.08 8.53 7.65
and not later than
5 year
Total 0.01 0.14 2.08 6.53 17.65 14.38

Present value of minimum lease payments

Not less than one 1.03 3.79 16.67 15.38 18.57 8.17
year
Later than 1 Year _ _ 3.76 20.43 48.17 30.88
and not later than 5
Year
Total 1.03 3.79 20.43 35.81 66.74 39.05

28. The Company has entered into a Co-operation Agreement with Dyckerhoff & Widmann
Aktingesellschaft, Germany (DYWIDAG) for the execution of the Worli-Bandra Outfalls
project of the Municipal Corporation of Greater Mumbai. The relationship of the Company
with DYWIDAG is that of a sub-contractor. Nevertheless, in terms of the Agreement that
envisages supplementing the resources of each other on mutually agreed basis, both
DYWIDAG and the Company have raised debit notes on each other. Accordingly, in
earlier years, debit notes for expenses were raised by the Company on DYWIDAG,
aggregating to Rs. 17.52 millions and by DYWIDAG on the Company, aggregating to
Rs.16.10 millions Adjustments, if any, in respect of these debit notes will be made on
completion of project.

29. Related party disclosures:

Related Party where Control exists

Holding Company(s)

Cyrus Investments Limited (Directly)***

Shapoorji Pallonji & Company Limited (Indirectly)

288
 Fellow Subsidiary(s)

Sterling Investments Corporation Private Limited

Floreat Investments Limited

Associate of the Company

Afcons (Mideast) Construction and Investments Private Limited

*** Ceased to be a holding Company w.e.f 31.03.06 and becomes an entity of which the
Company is an Associate

Refer Annexure XVII to the restated financial statement for transactions with related
parties.

30. Expenses capitalized during the year on fabrication/ improvement of equipment that has
resulted in increased future benefits beyond their previously assessed standard of
performance are as under:
(Rupees in millions)
For the For the Financial Year Ended
period 1st March March March March March
April, 2006 31, 31, 2005 31, 2004 31, 2003 31, 2002
to 30th 2006
September,
2006
Construction 0.70 7.35 - 3.48 3.56 24.96
Material
consumed
Sub Contract 2.41 2.48 - 5.15 11.79 6.83
charges
Site installation - 0.78 - 0.10 5.74 4.32
expenses
Stores and spares 11.71 10.77 16.07 31.27 5.62 6.54
Consumed
Repairs 4.24 4.04 5.54 8.29 2.46 11.23
Traveling and - - - 0.70 0.57 -
Conveyance
Payroll cost - - - 4.60 4.70 -
Freight - - - 2.20 0.59 -
forwarding and
packing
Professional fees 0.28 - - - - 6.63
Others 0.04 2.97 - 1.13 1.67 2.23

31. Derivative Instruments:

Payables and Receivables in foreign currency as at the balance sheet date not covered by
forward contracts are as given below.

289
 (Rupees in millions)
As at 30th September, As at 31st March,
2006 2006
Payables 175.62 350.37
Receivable 19.23 227.04

32. Work in Progress is identified project wise and is based on book records maintained by the
Company as physical verification of the material, component; etc at the various project sites
is not feasible.

XV Significant notes for the year ended 31st March, 2006

The High Court of Judicature at Bombay sanctioned the Scheme of Amalgamation (SoA) of
Afcons Pauling (India) Limited (APIL), a subsidiary of the Company with the Company. APIL
was engaged in the business of Construction. The amalgamation is accounted in the books of the
Company as per the High Court Order. The effective date of Amalgamation is 18th May, 2006
and the appointed date is 1st April 2005. Accordingly, the SoA has been given effect to in the
accounts. Pursuant to the SoA:

(g) the assets and liabilities of APIL on the appointed date have been taken at book values
(subject to adjustments made as given in the SoA);

(h) debit balances in the Profit and Loss account of APIL has been aggregated with the
balances in Profit and Loss account of the Company.

(i) in consideration for the transfer, the minority shareholders of APIL are to be issued 1
(one) Zero Coupon Redeemable Preference Shares of the Company (of Rs. 10/- each)
to be redeemed on the expiry of 24 months from the date of issue at a premium of 10%
of the face value for every 10 (ten) equity shares held by them in APIL. These have
been shown under share capital.

(j) the (deficit) of the value of the assets over the value of the liabilities taken over by the
Company and aggregate face value of the Redeemable preference shares to be issued
by the Company as stated above, after adjusting the debit balance in Profit and Loss
Account taken over, has been adjusted against General Reserve Account (to the extent
of Rs. 48.65 millions);

(k) Cost of investment (Rs. 39.67 millions) of the Company in the shares of APIL is
written off and charged to Revaluation Reserve Account;

(l) As required by the SoA, the debit balance in profit and loss account of APIL has been
aggregated with the balance in profit and loss account of the Company. If there was no
treatment given in the SoA for the same, than as per the Accounting Standard (AS) 14
“Accounting for Amalgamations”, the debit balance in profit and loss account of APIL
would not have been aggregated with the balance in profit and loss account of the
Company and there would have been “Goodwill on Amalgamation” aggregating to Rs.
180.72 millions.

XVI Significant notes for the year ended 31st March, 2005

3. The Company holds investment of Rs. 39.67 millions in its subsidiary company, Afcons
Pauling (India) Limited (APIL), representing 75% of the share capital of that company.
APIL owes to the Company Debts, aggregating to Rs.118.99 millions and advances,

290
 aggregating to Rs. 276.81 millions as on 31st Mach,2005. As per the latest audited accounts
of APIL, as at 31st March,2005, its net worth stands eroded. APIL has substantial
experience of nearly two decades in the execution of road projects. Therefore, in
combination with the company, it has been working on a business plan for generating future
revenues in the preferred lines of business of roads and highways construction and is very
hopeful of bagging jobs. APIL has also preferred huge claims against its clients that are
subject matter of arbitration where it is confident of positive outcome. It is therefore
confident of paying back advances of the company out of the above and also out of monies
falling due from its debtors in 2005-06. Hence, no provision is deemed necessary for
diminution in the value of the Company's investment in APIL and also for amounts due
from it, which are considered good and recoverable.

4. Hitherto, the Company accounted contract revenue and contract cost in accordance with the
Accounting Standard AS7. “Accounting for Construction Contracts” issued in the year
1983 in respect of contracts entered into before 01-04-2003 and Accounting Standard AS7
“Construction Contracts (Revised)” issued in the year 2002 in respect of contracts entered
into on or after 01-04-2003.During the year, with a view to have uniformity in accounting
treatment, the Company has accounted Contract Revenue and costs in accordance with AS7
(revised) in respect of all contracts (including contracts entered into prior to 01-04-2003).
Revenue recognized as a result of this change is Rs. 864.45 millions.

XVII Significant notes for the year ended 31st March, 2004

The Company received subsequent to the year end arbitration awards (unanimously
decided) pertaining to earlier years, aggregating to Rs.186.99 millions (including interest
Rs.45.43 millions) which are subject of appeals, the ultimate outcome of which is not
ascertainable.

XVIII Significant notes for the year ended 31st March, 2003

Expenditure on Voluntary Retirement Compensation:

Hitherto, it was the practice to defer expenditure on voluntary retirement compensation

over a period of five years. During the year 2002-03, the company has changed this practice
on the basis of reassessment and has decided to amortize the said expenditure over a period
of 10 years with retrospective effect. This change has the effect of (i) write back to the
profit and loss account excess amount of amortization, Rs. 5.37 millions (ii) decreasing the
amortization charge for the year by Rs 11.71 millions (iii) increasing the profit for the year
by Rs 17.09 millions and (iv)increasing the deferred revenue expenditure carried forward
by Rs 17.09 millions.

XIX Significant notes for the year ended 31st March, 2002

3. Provision for bank balances has been made in the year 2001-02 on account of
uncertainties in remittances of monies lying in bank accounts abroad.

4. Adjustment in the year 2001-02 represents regrouping of self constructed assets of Rs 6.26
millions from work–in–progress to capital work in progress in respect of previous year.

291
 ANNEXURE V: STATEMENT OF CONSOLIDATED CASH FLOWS, AS RESTATED

(Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006

Cash Flow from Operating

Activities

Net Profit\(Loss) before prior 85.51 139.08 2.83 (36.04) (6.18) (461.21)
period adjustments,
extraordinary items and tax, as
restated

Adjustment for :
Depreciation 81.01 149.58 137.60 120.55 102.78 86.73
(Profit) / Loss on sale / discard of - (1.51) (0.79) (0.23) - 2.80
fixed assets (net)
Dividend income - (0.18) (0.18) (0.15) - (4.05)
Interest income (34.44) (198.99) (30.89) (73.90) (17.50) (15.40)
Interest expense 234.39 381.48 336.65 300.28 286.85 217.61
Lease rentals expense 9.82 43.09 61.19 68.20 92.69 107.07
Dividend adjustment - - - - - (0.14)
Bad/irrecoverable Debtors 3.80 165.32 3.89 - 4.38 -
/Unbilled Revenue /Advances
w/off / TDS W/off
Provision for diminution in the - - - (13.61) - 13.61
value of long-term investments
(w/back)/provided
Share of Loss in Jointly - - - - 0.01 -
controlled entity (subject to
audit)/ Associate
Deferred revenue expenditure - - (0.96) (0.57) (90.25) -
paid during the year
Excess Provision for expenses of (42.17) (19.47) (19.89) (21.05) (48.07) 1.39
earlier years written back
(Profit) / Loss on sale / disposal - (0.88) (0.34) - - -
of short term investments- Others
(Profit) / Loss on sale / disposal - (7.58) - 16.02 - (0.26)
of long term investments- Others
Amount received on transfer of - (60.00) - - - -
tenancy rights
Deferred revenue expenditure 5.93 11.87 11.87 11.77 6.34 5.37
written off

292
 (Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006

Prior Period Expenses (net) - - - - (0.21) -

Provision for Projected Losses (11.46) 27.74 1.86 - - -
Reversed

Operating Profit before

working capital changes 332.39 629.55 502.84 371.27 330.84 (46.48)
Adjustment for:
(Increase) / Decrease in trade 76.18 (92.32) 47.24 (501.42) (441.26) (96.13)
receivables
(Increase)/Decrease in (95.39) (128.09) 17.94 6.31 (64.60) (37.52)
inventories
(Increase)/ Decrease in work-in- 0.19 (0.21) 1,714.60 (605.57) (343.15) (103.61)
progress
(Increase) / Decrease in unbilled (1,170.34) (1,070.35) (1,786.95) - - -
revenue
(Increase)/Decrease in loans and (53.45) (294.34) (95.91) (69.51) (48.56) (78.70)
advances
Increase / (Decrease) in 643.91 385.58 (1,043.35) 490.79 3.34 691.17
trade,other payables and
provisions
Cash (used in) Operations (266.51) (570.18) (643.59) (308.13) (563.39) 328.73
Direct taxes (paid) (42.93) 24.19 (37.29) 39.89 (52.56) 27.05

Net cash from \ (used in)

Operating Activities – (A) (309.44) (545.99) (680.88) (268.24) (615.95) 355.78

Cash Flow from Investing

Activities
Purchase of fixed assets (499.96) (300.05) (222.84) (259.34) (211.50) (259.18)
Sale of fixed assets - 6.83 1.60 3.37 2.51 1.85
Purchase of Investments - (280.61) (1.90) - - -
Sale of investments 0.01 288.55 2.23 12.99 - 0.01
Sale of Subsidiary - 0.60 - - - -
Amount received on disposal of - - - - - 0.86
long term investments
Dividend received - 0.18 0.18 0.15 - 4.05
Interest received 13.97 18.01 20.58 75.02 17.88 15.84
Amount received on transfer of - 60.00 - - - -
tenancy rights
Share of Loss in Associate - - - - (0.01) -

Net Cash from \ (used in)

Investing Activities – (B) (485.98) (206.49) (200.15) (167.81) (191.12) (236.57)

293
 (Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006

(Rupees in
millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006

Cash Flow from Financing

Activities
Proceeds from issue of - 500.00 500.00 200.00 200.00 200.00
Preference share
Proceeds from long-term 489.62 2,215.12 1,414.84 487.33 465.36 177.25
borrowings
Repayment of long-term (476.89) (1,526.08) (1,742.14) (559.77) (205.81) (251.57)
borrowings
Proceeds from short term 931.20 (5.02) 1,068.84 637.07 554.07 104.93
borrowings – net
Interest paid (235.46) (376.45) (338.41) (309.36) (285.39) (228.30)
Lease rentals paid - (13.23) (0.66) (0.64) (24.49) (55.14)
Dividend paid - - - - (0.11) (6.94)
Corporate Dividend Tax paid - - - - - (0.72)

Net Cash from \ (used in)

Financing Activities – (C) 708.47 794.34 902.47 454.63 703.63 (60.49)

Net Increase in Cash and Cash

Equivalent (A+B+C) (86.95) 41.86 21.44 18.58 (103.44) 58.72

Cash and cash equivalents at the 237.59 195.73 174.29 155.71 259.15 200.43
beginning of the year
Cash and cash equivalents taken - - - - - -
over on amalgamation
Cash and cash equivalents at the 150.64 237.59 195.73 174.29 155.71 259.15
end of the year

(86.95) 41.86 21.44 18.58 (103.44) 58.72

Reconciliation of cash and cash

equivalents
As per Balance sheet 150.64 237.59 195.73 174.60 156.51 259.15
Less: Interest accrued on Bank - - - 0.31 0.80 -
Deposits
As per Cash flow statement 150.64 237.59 195.73 174.29 155.71 259.15

294
 ANNEXURE VI: CONSOLIDATED ACCOUNTING RATIOS

(Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006

Net Profit\ ( Loss) after 47.25 47.04 (11.17) (52.17) (14.40) (465.08)
tax, before prior period
adjustments and
extraordinary items as
restated (Rupees in
millions)
(Short)/ Excess Provision 1.73 0.81 (3.54) 0.09 (1.61) (0.03)
for taxes in respect of
earlier years (Rupees in
millions)
Prior Period (Expenses) / - - - - (0.21) 1.39
Income
Minority Interest 0.04 (0.08) 11.32 16.25 10.78 23.87
Dividend on Preference - - - - (23.67) (0.33)
shares (including
corporate dividend tax at
the applicable rate)
(Rupees in millions)
Net Profit\ (Loss) A 49.02 47.77 (3.39) (35.83) (29.11) (440.18)
attributable to equity
shareholders, as restated
(Rupees in millions)

Networth (Rupees in B 2,176 2,119 1,623 1,136 980 895

millions)

Networth excluding C 974.29 918.89 722.71 735.51 779.61 695.00

Preference Share Capital
(Rupees in millions)

Total No of equity Shares D 51400000 51400000 31400000 31400000 31400000 11400000

outstanding during the
year - Basic

Weighted average no. of E 51400000 31454795 31400000 31400000 11673973 11400000

equity shares outstanding
as on date - Basic

Diluted No. of equity F 171501776 121536986 71673973 51728767 32441096 11673973

shares

295
 (Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006
Earning per Equity
Share
Basic (Rs.) A/E 0.95 1.52 (0.11) (1.14) (2.49) (38.61)
Diluted (Rs.) A/F 0.29 0.39 (0.11) (1.14) (2.49) (38.61)
(Refer (Refer
(Refer note 2 note 2 note 2 (Refer note 2
below) below) below) below)

Return on Networth (%) A/C

annualised 10.06% 5.20% -0.47% -4.87% -3.73% -63.34%
(Refer note 4 below)

Net Asset Value Per

18.96 17.88 23.02 23.42 24.83 60.96
Share (Rs.) C/D
(Refer note 5 below)

Face Value Per Share 10 10 10 10 10 10

Weighted average no. of shares outstanding during the year -for calculating dilutive EPS

Particulars For the For the Financial Year Ended

period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Opening number of equity 51400000 31400000 31400000 31400000 11400000 11400000
shares
Add: Conversion of 12% 273973
Redeemable Cumulative - - - - -
Convertible Preference
share in to equity shares at
par
Add: Potential equity 19726027 273973
shares that could arise on - - - -
conversion of entire 12%
Redeemable Cumulative
Convertible Preference
Shares at par
Add: Diluted effect of 54795
Potential equity shares - - - - -
allotted on conversion of
9.5 % redeemable non-
cumulative convertible
preference shares.

296
 Particulars For the For the Financial Year Ended
period from
April 1,
2006 to March 31, March 31, March 31, March 31, March 31,
September 2006 2005 2004 2003 2002
30, 2006

Add: Potential equity 19945205 20273973 20000000 1041096

shares that could arise on - -
conversion of entire 9.5%
Redeemable Non-
Cumulative Convertible
Preference Shares at par
Add: Potential equity 70000000 70000000 20000000 328767
shares that could arise on - -
conversion of entire 7.5%
Redeemable Non-
Cumulative Convertible
Preference Shares at par
Add: Potential equity 50000000 136986
shares that could arise on - - - -
conversion of entire 7.5%
Redeemable Non-
Cumulative Optionally
Convertible Preference
Shares of Rs.10 each at
par
Add: Potential equity 101776
shares that could arise on - - - - -
conversion of entire Zero
Coupon Redeemable
Preference Shares of
Rs.10 each to be redeemed
at the expiry of 24 mons at
10 % premium of FV.

Total 171501776 121536986 71673973 51728767 32441096 11673973

Notes:
1) The above ratios have been computed on the basis of the restated Summary Statements as per Annexures
I and II
2) Since the potential equity shares have an anti-dilutive effect, diluted EPS is same as basic EPS.
3) The effect of potential dilution pursuant to the proposed issue has not been considered since the quantum
of equity shares that will ultimately be subscribed cannot be ascertained at present.
4) Return on Net Worth (%) represents Profit/(Loss) after tax as restated, divided by Net Worth.
5) Net Assets Value is calculated as Net Worth (excluding Preference Share Capital) at the end of each
financial year divided by the number of equity shares at the end of each financial year.

297
 ANNEXURE VII: CONSOLIDATED CAPITALISATION STATEMENT

(Rupees in millions)
Particulars Pre issue - As at Adjusted for post issue
September 30th, 2006

Secured and Unsecured Debt

Short term 2,799.48 2,799.48
Long term 1,633.86 1,633.86

Total Debt 4,433.34 4,433.34

Shareholders' funds

Share Capital 1,715.25 Refer note below

Reserves and Surplus (excluding
Revaluation Reserve) 520.43 Refer note below
Less: Miscellaneous Expenditure to
the extent not
written off. 60.14 Refer note below

Total Shareholders' funds 2,175.54 Refer note below

Total Capitalization 6,608.88

Long Term Debt/Equity 0.67

Note:
These figures will be known only after finalisation of the issue price by the Lead Manger to
the issue and approval of the same by SEBI and other authorities, if any involved therein.

298
 ANNEXURE VIII: CONSOLIDATED STATEMENT OF TAX SHELTER

(Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006

Profit before prior period

adjustments,
extraordinary items and
tax as Restated 82.61 139.08 2.83 (36.04) (6.18) (461.21)

Normal Tax Rate 33.66% 33.66% 36.59% 35.88% 36.75% 35.70%

MAT Tax rate 11.22% 8.42% 7.84% 7.69% 7.88% 7.65%
Tax at actual rate on book
profits 28.29 47.60 16.53 10.55 14.52 0.58

Adjustments
Permanent differences
Dividend on shares exempt
from tax u/s. 10(34)\10(33) (1.37) (0.18) (0.18) (0.14) - (4.20)
Interest on tax-free bonds of
UTI - (2.74) (2.74) (2.28) - -
Surrender of Tenancy Right - (60.00) - - - -
Donations 1.13 0.28 1.19 0.21 0.26 0.21
Expenses on increase in
share capital - 6.00 3.50 0.20 - -
Profit\Loss on sale of Long-
term Investments - - (0.34) 16.71 - -
Provision for dimunition in
value of Investment written
back - - - (13.61) - 13.61
Profit on Sale of Shares - (7.58) - - - (0.26)
Provision for Projected Loss (11.46) 27.74 1.86 - - -
Interest paid on Income-tax - 15.14 - - 0.01 -
Expenditure disallowed u/s.
40A(3) - 0.13 - - 0.05 -
TDS written off - 0.67 3.09 - - -
Capital expenditure debited
to Profit & Loss account - - - - 0.36 -
Prior period expenses - - - - (0.20) 9.94
Foreign Exchange Diff (not
remited) - - 0.49 - - -
Total (A) (11.70) (20.54) 6.87 1.09 0.48 19.30
Timing Differences
Difference between tax and
book depreciation 5.25 21.46 (43.47) (48.74) (36.73) (27.36)

299
 (Rupees in millions)
Particulars For the period For the Financial Year Ended
from April 1, March 31, March 31, March 31, March 31, March 31,
2006 to 2006 2005 2004 2003 2002
September 30,
2006
(Profit) / Loss on sale of
Assets (Diff treatment of
tax) 0.71 (1.51) (0.80) (0.23) - 2.80
43B Items - 34.59 (2.94) 4.24 4.15 (12.87)
Expenditure disallowed u/s
40a(i) - 0.53 - - - -
Interest on arbitration
awards (20.56) (219.23) (18.50) (186.19) - -
Deferred Revenue
Expenditure - VRS
u/s.35DDA (3.25) (6.99) (11.87) (11.66) (17.09) -
Deferred Amalgamation
Expenses u/s. 35DD (0.01) 0.09 - - - -
Lease Rental 9.78 43.09 61.19 67.56 68.21 55.93
Provision for doubtful
advance - (0.25) (0.25) - 0.51 4.39

Total (B) (8.08) (128.22) (16.64) (175.02) 19.05 22.89

Net Adjustments (A) + (B) (19.78) (148.76) (9.77) (173.93) 19.53 42.19

Tax (Saving)\Expense
thereon (6.66) (50.07) (9.08) (68.87) (1.76) 3.11

Tax payable for the year 21.63 0.31 7.45 0.23 12.76 0.53

Set off of Unabsorbed loss (63.92) (0.02) (20.25) - (34.42) -

Tax effect of unabsorbed

loss (21.52) (0.01) (7.41) - (12.65) -

Tax payable as per normal

rate 0.11 0.30 0.04 0.23 0.11 0.53

Profit as per Income Tax

Return 67.94 (10.63) (6.96) (209.94) 13.55 (418.63)

Tax as per Income Tax

Returns (MAT) 9.24 9.23 0.86 - 2.04 -

Note:
The statement of tax shelter has been prepared based on income tax return filed by the Company and its
subsidiaries for the year ending 31.03.2002 to 31.03.2006, except for the period ended 30.09.2006, which are
provisional and final amount will be ascertained at the time of filing of Return of Income. The effect of
assessment / appellate orders have not been considered in above.

300
 ANNEXURE IX: CONSOLIDATED DETAILS OF SECURED LOANS

(Rupees in millions)
Particulars of Details of Securities Principal & Interest outstanding
Loan As at As at As at March As at As at As at March
September March 31, 31, 2005 March 31, March 31, 31, 2002
30, 2006 2006 2004 2003

Debentures Secured by a first charge on certain - - - - - 45.80

construction equipments and a
second charge on the immovable
properties of the Company situated
at Andheri, Mumbai and Nagpur
mortgated to the consortium of
banks for working capital
requirements. Further secured by
pledge of 3,740,000 equity sahres
held by the Company in Afcons
Pauling (India) Limited, a
subsidiary company and 1,238,352
equity shares of the Company held
by Afcons (Mideast) Constructions
and Investments Private Limited.
Term Loan Secured by first and exclusive - - - - - 10.17
from SICOM charge by way on retention money
Limited receivable from a client and by a
floating charge on all movable
assets of the Company
Term Loan Secured by a first charge on certain - - - 200.00 250.00 -
from Export specified movable fixed assets and
Import Bank of pledge of 1,238,352 equity shares
India of the Company held by Cyrus
Investments Limited, the holding
company
Term Loan Secured by first and exclusive - 144.98 - - - -
from Export charge on current assets (including
Import Bank of receivables) pertaining to Qatar
India Petroleum Project
Term Loan Secured by first charge by way of - 60.00 150.00 150.00 - -
from IDBI hypothecation of specific
Limited. equipment purchased out of this
loan
Hire Purchase Secured by lien on asstes - - - - 17.73 22.30
from purchased under hire purchase
Associates agreements
India Financial
Services Pvt.
Limited.
Equipment Secured by first charge by way of - - - - 16.03 20.82
Loan \ Car hypothecation of the equipment \
from L & T Car financed
Finance
Limited

301
 (Rupees in millions)
Particulars of Details of Securities Principal & Interest outstanding
Loan As at As at As at March As at As at As at March
September March 31, 31, 2005 March 31, March 31, 31, 2002
30, 2006 2006 2004 2003

Equipment Secured by first charge by way of - - 0.15 0.24 0.73 0.53

Loan \ Car hypothecation of the equipment /
from GAMC- car(s) financed
TCFC Finance
Limited
Equipment Secured by lien on assets 14.29 28.64 66.31 91.40 49.00 16.75
Loan and Hire purchased under hire purchase
Purchase from agreements & Secured by lien on
SREI asstes purchased under hire
Infrastructure purchase agreements
Finance
Limited (Loan
& Hire
Purchase)
Equipment Secured by first charge by way of - - - - 37.53 41.65
Loan from hypothecation of the equipment \
Centurion Cars financed
Bank Limited
Equipment Secured by first charge by way of - - 4.33 9.50 6.60 0.69
Loan from hypothecation of the equipment /
Kotak car(s) financed
Mahindra Bank
Limited
Equipment Secured by first charge by way of 59.56 77.30 81.12 70.12 29.59 -
Loan from hypothecation of the equipment /
ICICI Bank car(s) financed
Limited
Equipment Secured by first charge by way of 21.13 31.16 49.07 46.08 0.74 -
Loan from hypothecation of the equipment /
HDFC Bank car(s) financed
Limited
Equipment Secured by first charge by way of 165.04 130.67 42.34 31.36 - -
Loan from hypothecation of the equipment /
Bharat car(s) financed
Overseas Bank
Limited
Equipment Secured by first charge by way of 22.01 28.88 42.64 - - -
Loan from UTI hypothecation of the equipment /
Bank Limited. car(s) financed
Equipment Secured by first charge by way of 213.63 21.48 - - - -
Loan from hypothecation of the equipment /
Oriental Bank car(s) financed
of Commerce

302
 (Rupees in millions)
Particulars of Details of Securities Principal & Interest outstanding
Loan As at As at As at March As at As at As at March
September March 31, 31, 2005 March 31, March 31, 31, 2002
30, 2006 2006 2004 2003

Cash Credit Secured by a first charge on the 604.40 529.03 126.93 230.67 155.69 201.27
and Working immovable properties of the
Capital Company situated in Andheri,
Demand Loans Mumbai and Nagpur and mortgage
of the Company's premises in Band
Box House, Worli, Mumbai on a
pari-passu basis. Further secured
by hypothecation of the Company's
stocks of raw materials, stores and
work-in-progress, all other
movable properties, plant and
machinery and book debts and by
pledge of 380,100 Bonds
(3,800,000 units as at 31.03.2003)
of the Unit Trust of India on a pari-
passu basis.
Interest 1.39 2.21 0.75 0.22 0.18 -
Accrued and
Due

Advances from Secured by hypothecation of - - - - - 4.13

Clients specific plant and machinery at the
respective Client sites.

Total 1,101.45 1,054.35 563.64 829.59 563.82 364.11

303
 ANNEXURE X: CONSOLIDATED PARTICULARS OF OTHER INCOME

(Rupees in millions)
Particulars For the For the Financial Year Ended Nature Related or
period March 31, March 31, March 31, March 31, March 31, of not Related
from 2006 2005 2004 2003 2002 Income to Business
April 1,
2006 to
Septembe
r 30, 2006
Profit before prior period
adjustments, extraordinary
items and tax, as per
summarised restated profit
& Loss statement, as
restated 85.51 149.57 (7.66) (36.04) (19.79) (447.60)

Other Incomes

Interest Income:
Non- Related
recurrin
On Arbitration awards 20.56 191.63 7.05 45.43 - - g
Non- Related
On Long-term recurrin
investments 1.39 2.74 2.74 2.32 1.48 1.48 g
Recurrin Related
On Deposits with Banks 0.68 1.17 1.27 1.83 2.89 2.92 g
Non- Not related
recurrin
On Income-tax refund 11.80 13.94 7.84 3.36 12.97 10.19 g
Recurrin Related
Miscellaneous interest 0.03 6.28 1.49 20.96 0.17 0.82 g

Total Interest 34.46 215.76 20.39 73.90 17.51 15.41

Dividend (Long Term
Investments):
Recurrin Not related
- from Others - 0.18 0.18 0.15 - 4.05 g
Total Dividend 0.00 0.18 0.18 0.15 - 4.05
Non- Related
recurrin
Consultancy fees - - - - 28.00 - g
Recurrin Related
Equipment Hire Charges - - - 13.70 0.29 10.15 g
Recurrin Related
Service Charges - - - - - 0.02 g

Insurance Claim - - 0.02 - - 3.23

Provision in respect of Non- Not related
diminution in the value of recurrin
long term investments g
written back - - - 13.61 - -

304
 (Rupees in millions)
Particulars For the For the Financial Year Ended Nature Related or
period March 31, March 31, March 31, March 31, March 31, of not Related
from 2006 2005 2004 2003 2002 Income to Business
April 1,
2006 to
Septembe
r 30, 2006
Excess provision in Non- Not related
respect of earlier years recurring
written back 42.17 19.47 19.89 21.05 48.07 -
Profit on Sale of fixed Non- Related
assets (net) - 1.51 1.02 0.53 0.49 - recurring
Profit on Sale of current Non- Not related
Investments. - 0.88 0.34 - - - recurring
Profit on sale of Long Non- Not related
term Investments - 7.58 - - - 0.26 recurring
Amount received on Non-
transfer of tenancy rights - 60.00 - - - - recurring Related
Recurring Not related
Rent Income - 2.25 4.50 4.50 4.50 4.50
Non- Not related
Agency Commission - - 8.11 - - - recurring
Non- Not related
Sales Tax\Excise Duty recurring
Refund 11.67 2.57 2.42 0.04 4.23 -
Non- Related
Duty Drawback - - 12.99 - - - recurring
Non- Related
Doubtful debts Recovered - 0.25 0.25 - - - recurring
Non- Related
Subcontractors Recoveries - - 9.24 2.09 24.60 - recurring
Liquidated Damages Non- Not related
released by clients - - - - 2.28 - recurring
Rebate/TOD given by Non- Not related
Creditors 12.84 - 6.80 10.34 0.36 - recurring
Compensation on Iraqi Recurring Related
Bonds - - - 4.76 - -
Recurring Related
Idling charges - - - 16.69 - -

Gain/loss in Exchange 8.25 4.89 0.26 0.41 0.49 2.66 Recurring Related

Miscellaneous Income 24.24 57.91 21.63 31.84 25.74 6.89 Recurring Related

Total 133.63 373.25 108.04 193.61 156.56 47.17

305
ANNEXURE XI: CONSOLIDATED STATEMENT OF DIVIDEND PAID

No dividend on equity share capital or preference share captial has been paid by the Company during any
of the period \ years covered by the restated financial statement.

306
 ANNEXURE XII: CONSOLIDATED DETAILS OF UNSECURED LOANS

(Rupees in millions)
Particulars Principal and Interest outstanding
As at As at March As at March As at March As at March As at March
September 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
30, 2006
Fixed Deposits 44.45 55.93 77.10 104.52 157.06 186.27

Short-term loans
From Banks:
DCB Limited - - - 100.00 100.00 100.00
UTI Bank Limited 250.00 - 250.00 150.00 100.00 -
Oriental Bank of Commerce 125.00 125.00 31.25 250.00 - -
Dena Bank 750.00 500.00 250.00 150.00 - -
ING Vysya Bank Limited - - 150.00 - - -
Bank of India 375.00 250.00 250.00 - - -
Union Bank of India - - 250.00 - - -
IDBI Bank 77.50 62.50 - - - -
State Bank of Hyderabad 100.00 50.00 - - - -
UCO Bank 500.00 - - - - -
Interest accrued on the 7.19 1.82 - - - -
above loans
From Others:
Afcons (Mideast) 9.00 9.00 9.00 9.00 - -
Constructions and
Investments Private Limited
Other loans from Banks
From Banks:
UTI Bank Limited 250.00 250.00 - - - -
Oriental Bank of Commerce 31.25 93.75 218.75 - - -
Dena Bank 250.00 250.00 500.00 - - -
IDBI Bank 37.50 82.50 150.00 - - -
Bank of India 125.00 250.00 - - - -
State Bank of Hyderabad 150.00 200.00 - - - -
Central Bank of India 250.00 250.00 - - - -
Line of Credit from HDFC - - - 350.00 500.00 -
Limited
From Others:
Advances from Clients - - 97.81 112.37 69.96 26.84
against Plant and Machinery

Total 3,331.89 2,430.50 2,233.91 1,225.89 927.02 313.11

Due to Related Party
included above 9.00 9.00 9.00 9.00 - -

307
 ANNEXURE XIII: CONSOLIDATED STATEMENT OF SUNDRY DEBTORS

(Rupees in
millions)
Particulars As at As at March As at March As at March As at March As at March
September 31, 2006 31, 2005 31, 2004 31, 2003 31, 2002
30, 2006

Unsecured
Debts Outstanding for a
period exceeding Six
Months

-
Arbitration Awards 532.46 457.52 205.48 - -
892.00
Others 887.90 736.47 549.20 604.36 314.07

892.00
1,420.36 1,193.99 754.68 604.36 314.07
Other Debts

186.99 -
Arbitration Awards 127.10 106.49 - -
824.47
Others 374.13 680.54 1,112.03 797.67 650.12

501.23 787.03 1,112.03 1,011.46 797.67 650.12

TOTAL 1,921.59 1,981.02 1,866.71 1,903.46 1,402.03 964.19

Good 1,780.36 1,825.53 1,701.69 1,800.97 1,274.57 885.35

102.99
Doubtful * 141.23 155.49 165.27 127.97 78.84
Less: Provision for - - -
Doubtful Debts (0.25) (0.50) (0.51)

TOTAL 1,921.59 1,981.02 1,866.71 1,903.46 1,402.03 964.19

* does not include debts referred to in notes VII(9) of

Annexure IV

Due from Related

Parties included above. - - - - - -

308
 ANNEXURE – XIV: STATEMENT OF LOANS AND ADVANCES
(Rupees in millions)
Particulars As at As at March As at March As at March As at As at March 31,
September 31, 2006 31, 2005 31, 2004 March 31, 2002
30, 2006 2003

Advances and Loans

- Other advances - - - - - 6.05
Total - - - - - 6.05

Deposit with a company

{including interest
accrued} 1.06 1.02 1.26 1.14 1.04 1.33

Advances recoverable
in cash or in kind or for
value to be received 858.56 830.29 575.38 540.46 538.35 550.89

Balance with Central

Excise Authorities - - 0.02 0.02 0.02 0.02

Advance Tax (net of

provision) 251.90 198.70 236.86 207.52 249.58 234.17

Other Deposits 0.23 0.20 0.37 0.70 0.85 1.71

TOTAL 1,111.75 1,030.21 813.89 749.84 789.84 794.17

Good 1,084.57 1,001.87 793.36 720.86 763.10 772.76

Doubtful 27.18 28.34 24.92 33.37 31.13 25.80
Less: Provision for
Doubtful Loans &
Advances - - (4.39) (4.39) (4.39) (4.39)

TOTAL 1,111.75 1,030.21 813.89 749.84 789.84 794.17

Due from Related

Parties included above - - - - - -

309
 ANNEXURE XV: CONSOLIDATED STATEMENT OF INVESTMENTS

(Rupees in millions)
Particulars No. of As at As at As at As at As at As at March
Shares September 30, March 31, March March 31, March 31, 31, 2002
2006 2006 31, 2005 2004 2003

INVESTMENTS
(Long Term)

Government Securities
(Unquoted) :

(i) National Savings - 0.06 0.06 0.06 0.06 0.06 0.06

Certificates *
(ii) 11.40% GOI - - - - - 12.95 12.95
Compensation (Project
Exports to Iraq) Bonds,
2003
(iii) 5½ Years Kisan - - - - - 0.02 0.02
Vikas Patra
(iv) 5½ Years Indira - - - - - 0.02 0.02
Vikas Patra

Total - (A) 0.06 0.06 0.06 0.06 13.05 13.05

Non-Trade
Investments

Quoted
Equity Shares of 134351 2.02 2.02 2.70 2.70 2.70 2.70
Hindustan Oil (180000 as
Exploration Company at
Limited of Rs.10 each 31.03.200
fully paid up 5)

Equity shares of 1000 (100 - - - - - -

Hindustan Construction shares of
Ltd. of Re 1 each fully Rs.10 each
paid up. as at
31.03.200
5)

Equity shares of 100 - - - - - -

Simplex Concrete Piles
Ltd. of Rs.10 each fully
paid up.

310
Equity shares of 50 0.02 0.02 0.02 0.02 0.02 0.02
Skanska Cementation
India Ltd of Rs.10 each
fully paid up.
(formerly known as
Kvaerner Cementation
India Ltd.)
Equity shares of 250 0.01 0.01 0.01 0.01 0.01 0.01
Gammon India Ltd. of
Rs. 2 each fully paid up
6.75% Tax Free Bonds 405337 40.53 40.53 40.53 40.53 - -
of Unit Trust of India of
Rs.100 each **
Units of Units Trust of 4051374 - - - - 56.55 56.55
India - US 64 Scheme
of Rs. 10 #
Less: Provision - - - - (13.61) (13.61)

Unquoted
Equity share of Afcons 1 0.01 0.01 0.01 0.01 0.01 0.02
(Mideast) Constructions
& Investments Private
Limited of Rs.100 each
fully paid

Total - (B) 42.59 42.59 43.27 43.27 45.68 45.69

Total - (A) + (B) 42.65 42.65 43.33 43.33 58.73 58.74

Investments in Related Parties

included above 0.01 0.01 0.01 0.01 0.01 0.02

* Out of this Rs.0.05 millions lodged with Government Authorities and Clients
** 380,100 bonds pledged with Banks
# 3,800,000 unitspledged with Banks

311
 ANNEXURE XVI: CONSOLIDATED STATEMENT OF CONTINGENT LIABILITIES

(Rupees in millions)
Particulars As at As at As at As at As at As at
September March 31, March March March 31, March 31,
30, 2006 2006 31, 2005 31, 2004 2003 2002

Estimated amount of contracts remaining to be 451.10 80.74 21.87 62.51 34.48 33.07
executed on capital account and not provided
Claims Against the Company not 156.92 94.01 111.71 82.83 89.78 89.15
acknowledged as debt
Bank Guarantees Given on Behalf of 1.28 1.37 18.91 19.48 18.30 17.63
Subsidiaries
Corporate Guarantees Given on Behalf of - - - 100.00 100.00 410.00
Subsidiaries for its credit Facilities
In respect of Service Tax matters in appeals in - 0.28 0.26 0.24 0.22 -
respect of non-registration and non-payment
under Service Tax is in dispute.
In respect of Sales Tax demands raised by 89.63 91.35 66.80 102.99 115.58 18.43
Sales Tax Authorities in matters of
disallowance of labour and service charges,
consumables for which appeal is pending
before various appellate authorities.
In respect of Income Tax matters in appeals. 51.36 51.36 244.03 158.58 69.81 68.22
In respect of Excise Duty demand in appeals 11.30 - - 8.64 48.99 62.51
Agreement with Trade Union for Enlisted - - - Not Not -
Workers Ascertai Ascertaina
nable ble
Arrears of fixed cumulative dividend on 12% - 24.00 24.00 24.00 24.00 0.33
Redeemable Cumulative Convertible
Preference shares of Rs. 10/- each fully paid-
up.
A petition to wind up the Company pursuant - 13.23 - - - -
to the provisions of the Companies Act, 1956
has been filed in the Hon. High Court at
Bombay by an erstwhile sub-contractor. The
petitioner has alleged that the Company has
not paid its dues. Against this, the Company
has filed a suit and made a counter claim for
the liquidated damages.
Bills discounted with banks - 10.83 - - - -
Sundry claims against the Company by - - - - - -
employees and others not admitted (amount
indeterminate)

312
 ANNEXURE XVII: CONSOLIDATED STATEMENT OF RELATED PARTY TRANSACTIONS

(Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
(I) Transactions during the year:

Holding company(s)

Issue of 7.5% Redeemable Non -

Cumulative Convertible Preference
Share Capital
Cyrus Investments Limited - 200.00 200.00 200.00 - -
Issue of 12% Redeemable Non -
Cumulative Convertible Preference
Share Capital
Cyrus Investments Limited - - - - - 200.00
Conversion of 12% Redeemable
Cumulative Convertible Preference
Share Capital to Equity Share
Capital
Cyrus Investments Limited - - - - 200.00 -
Guarantees Given by/(Released)
Cyrus Investments Limited - - 150.00 - - -

Fellow Subsidiary(s)

Issue of Zero coupon Reedemable

Preference Shares
Sterling Investments Corporation 1.24 - - - - -
Private Limited
Issue of Equity Share Capital on
conversion of 9.5% Redeemable
Non - Cumulative Convertible
Preference Share.
Floreat Investment Limited - 200.00 - - - -
Issue of 9.5% Redeemable Non -
Cumulative Convertible Preference
Share Capital
Sterling Investments Corporation - - - - 200.00 -
Private Limited
Issue of 7.5% Redeemable Non -
Cumulative Convertible Preference
Share Capital
Floreat Investment Limited - 500.00 500.00 - - -
Issue of 7.5% Redeemable Non -
Cumulative Optionally Convertible

313
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006
Preference Share Capital

Floreat Investment Limited - 500.00 - - - -

Loan Taken
Sterling Investments Corporation - - - - 200.00 -
Private Limited
Repayment/Conversion of loan
Sterling Investments Corporation - - - - 200.00 -
Private Limited
Interest paid loan
Sterling Investments Corporation - - - - 3.53 -
Private Limited

Associate Company

Finance Lease Charges

Afcons (Mideast) Construction and 0.04 0.07 0.07 0.07 5.60 5.60
Investments Private limited
Current Account (net) outflow /
(inflow)
Afcons (Mideast) Construction and - - - - - 0.82
Investments Private limited
Loan Taken
Afcons (Mideast) Construction and - - - 9.00 - -
Investments Private limited
Repayment/Conversion of loan
Afcons (Mideast) Construction and - - - - 6.05 -
Investments Private limited
Interest paid loan
Afcons (Mideast) Construction and 0.29 0.45 0.46 0.46 - -
Investments Private limited

Key Management Personnel

Managerial Remuneration paid

A.H.Divanji - - - - - 1.59
A.M.Nerurkar - - - - - 0.01
Rajul A.Bhansali - - - - 1.63 1.41
K.Subrahmanian 1.20 2.64 2.56 2.37 0.80 -
Sitting Fees paid
P.S.Mistry - - - 0.01 0.03 -
C.P.Mistry 0.01 0.03 0.03 0.04 0.03 -
A.H.Divanji - - - - - 0.01

314
 (Rupees in millions)
Particulars For the For the Financial Year Ended
period from March 31, March 31, March 31, March 31, March 31,
April 1, 2006 2005 2004 2003 2002
2006 to
September
30, 2006

(II) Balances as at year end:

Holding company(s)

Outstanding amount of guarantee

given/ (taken)
Cyrus Investments Limited (800.00) (800.00) (150.00) - - -

Associate Company

Outstanding Amount Dr/(Cr)

Afcons (Mideast) Construction and (10.92) (10.59) (10.06) (9.52) - 9.98
Investments Private limited

315
 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations together with
our consolidated financial statements, as restated, under Indian GAAP for the Fiscal years ended March
31, 2003, 2004, 2005 and 2006, and for the six month period ended September 30, 2006, including the
significant accounting policies and notes and annexures thereto which begin on page 207. The following
discussion relates to our Company and is based on our consolidated restated financial statements.

Our restated financial statements have been derived from our consolidated financial statements prepared
in accordance with Indian GAAP, the accounting standards referred to in Section 211(3C) of the
Companies Act and the other applicable provisions of the Companies Act and Indian Securities
regulations. The following discussion is also based on internally prepared statistical information and
publicly available information. You are also advised to read the section titled “Risk Factors” beginning on
page xii, which discusses a number of factors and contingencies that could affect our financial condition,
results of operations and cash flows. For a discussion of our financial condition and results of operation
on the basis of our consolidated financial statements as restated for the same periods, please see page 207.

The following discussion does not relate to our results of operations after the six months ended September
30, 2006. Our Fiscal year ends on March 31, so all references to a particular Fiscal year are to the twelve
month period ended March 31.

Certain industry, technical and financial terms with initial capitals used in this discussion shall have the
meanings ascribed to them in the section titled “Definitions and Abbreviations” beginning on page iii.

Overview

We are a civil engineering and construction company in India and we are the flagship infrastructure
construction company of the Shapoorji Pallonji group, a well-known and reputed name in the construction
industry. We have an experience of over four decades in construction industry, which includes a wide
variety of infrastructure projects like marine works, bridges, fly-overs, roads, general civil engineering
works including industrial structures, nuclear power projects, tunneling, pipelines, LNG storage tanks and
special foundation works such as piling, diaphragm wall, pre-stressed anchors, drilling and grouting and
other ground improvement works throughout India. We have also successfully completed and are currently
engaged in execution of projects in Middle East and Africa.

Over the years we have developed an expertise in marine works and we believe that we have an established
reputation and expertise in this service line through successful execution of more than 150 structures along
the Indian coastline. We have also successfully completed more than 100 bridges, flyovers, viaducts, two
LNG storage tanks, underground and elevated train corridors and have executed 2,000 lane kilo meters of
road works.

We enter into contracts primarily through a competitive bidding process at the domestic and the
international level. We have worked on projects for Qatar Petroleum, Shell, Reliance Industries Limited,
Mumbai Port Trust, Konkan Railway Corporation Limited, Delhi Metro Rail Corporation (DMRC) and are
currently undertaking projects for National Highway Authority of India, Ministry of Transport and
Communication, Sultanate of Oman. Of the above clients, we have several repeat orders from Reliance
Industries Limited, Konkan Railway Corporation Limited, National Thermal Power Corporation and
DMRC.

We focus on technology and constantly strive to develop new technologies and innovations in-house to
execute large and complex civil engineering and construction works in a cost-efficient and timely manner.
For instance, we developed the micro piling technology as early as 1970 and subsequently patented this
technology for underpinning works to strengthen existing structures. We have successfully been using the

316
in-house developed Sahayadri Lift Barge for over 15 years now for our shallow as well as deep water
projects. The Sahayadri Lift Barge has a hydraulic lift crane capable of lifting 1200 tonnes. .

In the years ended March 31, 2005 and 2006, our consolidated income was Rs. 5,541.88 million and Rs.
7,177.67 million, respectively, representing an annual growth rate of 29.52 %. In the six months ended
September 30, 2006, our consolidated income was Rs. 4,123.85 million. In the years ended March 31, 2005
and 2006, we incurred a consolidated loss of Rs. 14.71 million and earned a consolidated net profit for the
year of Rs. 47.85 million respectively, while our consolidated net profit for the six months ended
September 30, 2006 was Rs. 48.98 million. Our order book, which includes the projects awarded to us but
where we have not yet commenced work and the unfinished and uncertified portions of our commenced
projects was Rs. 30,303.4 million as of September 30, 2006, out of which, domestic projects and
international projects accounted for Rs. 27,682.50 million and Rs. 2,620.90 million respectively. We have
added contracts aggregating Rs. 222.0 million to our order book during the period October 1, 2006 to
December 31, 2006 which are all domestic projects.

As of September 30, 2006, our work force consisted of approximately 1,473 full time employees and more
than 2,695 temporary labour based around India, enabling us to mobilize our skilled employee resources
depending on the location and the necessary expertise for projects undertaken by us. Our equipments and
skilled employee resources, together with our civil engineering capabilities enable us to successfully
implement modern civil engineering construction methodologies. We enjoy the ISO 9001:2000 BVQI
accreditation and have received several awards, certifications and appreciation letters from clients for our
operations and projects such as the appreciation letter from Shell for the construction of jetty for docking of
LNG carriers and other marine works at Hazira,

We are committed to adhering to health, safety and environment policies and practices in the execution of
our projects. We have received the Safety Award 2005 by the National Safety Council of India in respect of
the Sone Bridge, Bihar and ISO 14001:2004 and OHSAS 18001:1999 certifications by BVQI for the
construction of elevated viaduct for Delhi Metro Rail Project.

We are a part of the Shapoorji Pallonji Group, which is one of the leading conglomerates in India with over
140 years of experience in the construction industry. Its business interests ranges from construction,
building materials and real estate to aluminum, finance, biotech, power and fuel oil additives. The
Shapoorji Pallonji Group also has a significant presence overseas having been involved in real estate
development and construction since 1970. We are the flagship company of the Shapoorji Pallonji Group in
the infrastructure construction sector.

Factors Affecting our Results of Operations and Financial Condition

General economic and business conditions.

As a company operating in India, we are affected by the general economic conditions in the country and in
particular the factors affecting the infrastructure industry in general and the projects we develop in
particular. The Indian economy has grown steadily over the past three years and registered an impressive
growth of 8.9% in Q1 FY 2007. This improved performance was propelled by the growth in industrial
activity and robust services sector. Quality infrastructure, covering the services of transportation, energy,
urban infrastructure and industrial and commercial infrastructure is one of the important necessities for
promoting and sustaining this economic growth. Growth in the industrial and manufacturing activity and
services sector leads to growth in demand for infrastructure facilities which translates into new proposals
for construction, up-gradation and maintenance of infrastructure facilities. Also, improvements in
infrastructure facilities in turn have a strong impact upon GDP growth. The overall economic growth will
therefore impact the results of our operations. The growth prospects of our business and our ability to
implement our strategies will be influenced by macro-economic factors affecting the economy and business
conditions.

317
Growth in the infrastructure sector.

Over the past few years, the Government of India’s focus on and sustained increase in budgetary allocation
for the infrastructure sector and the development of a structured and comprehensive infrastructure policy
that encourages greater private sector participation as well as increased funding by international and
multilateral development financial institutions for infrastructure projects in India has resulted in several
large infrastructure projects in this sector which have been key to our results of operations. Going forward,
we believe the Govt policy on the sector and future budgetary allocations for the same would remain a key
factor influencing the evolution of infrastructure sector which would directly affect our business.

Competition.

We compete against major construction and engineering companies like Larsen & Toubro, Hindustan
Construction Company Limited, Gammon India Limited, IVRCL Infrastructure and Projects Limited,
Simplex Infrastructure Limited and ITD Cementation. Our competition for a particular project varies
depending on the size, nature and complexity of the project and on the geographical region in which the
project is to be executed. In selecting contractors for major projects, clients generally invite the tenders
from contractors that have pre-qualified based on several criteria including experience, technological
capability, capacity, performance, reputation for quality, safety record, financial strength and bonding
capacity and size of previous contracts in similar projects, although price competitiveness of the bid is the
most important selection criterion. Pre-qualification is one of the key factors to our winning major
projects. The company has adopted quite a selective approach in pursuing new business with adequate
focus on risk-return analysis. The company identifies the new business areas or geographical locations for
expansion thereby building up its order book.

Ability to attract and retain skilled personnel

A significant number of our employees are skilled engineers and we face competitive pressures in
recruiting and retaining skilled and professionally qualified staff. Since the project management and
technological skills of a company primarily rests with its skilled employees, the loss of key personnel or
any inability to manage the attrition levels in different employee categories may materially and adversely
impact our results of operations.

Increase in prices of major inputs such as steel, cement and petroleum products.

To the extent possible, the company has decided to avoid fixed price contracts and pursue only those
projects where either steel / cement is supplied by the client free of charge or at basic rate or price
escalation is provided in the contract. This will enable the company to minimize the impact of adverse
price fluctuations in the future. The company also ensures the supply of these materials directly from
the manufacturer and enters into MOU / Project specific Rate contracts.

Weather conditions.

Our business operations may be adversely affected by severe weather conditions, which may require us to
evacuate personnel or curtail services. Further, it may result in damage to a portion of our fleet of
equipment or facilities resulting in the suspension of operations and may prevent us from delivering
materials or essential equipments to our jobsites in accordance with stipulated contract schedules or
generally reduce our productivity. Our operations are also adversely affected by difficult working
conditions like extremely high temperatures during summer months and heavy rains during monsoon which
restrict our ability to carry on construction activities and fully utilize our resources. Our revenues are
accounted on an accrual basis. Revenue from contracts is recognized on the percentage completion method
based on billing schedules agreed with the client on a progressive completion basis. As previously
mentioned, our operations are adversely affected during monsoons. Accordingly, revenues recorded in the
first half of our financial year between April and September are traditionally lower than revenues recorded
during the other quarters of our financial year and hence comparison of our financials on a quarter to
quarter basis would not be relevant for this specific period of the year.

318
Fluctuations in currency exchange rates.

To the extent that our income and expenditure are not denominated in the same currency, exchange rate
fluctuations could cause some of our costs to grow higher than the proportionate revenues on a given
contract or on the contrary, could also result in some of our costs falling below budget resulting in higher
profitability. Further, being active in foreign markets, a part of our revenues is also exposed to favorable or
negative movements in foreign exchange. Our future capital expenditure may include imported equipment
and machinery which may be denominated in currencies other than Indian rupees. Therefore, any decline
in the value of the rupee against such other currencies could increase the rupee cost of purchasing such
equipment thus affecting our results of operations.

OUR SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies (for the financial statements as at and for the half year ended
September 30, 2006)

a) Fixed assets

Fixed assets are stated at cost of acquisition/ construction or book value and include amounts
added on revaluation less accumulated depreciation. Leasehold improvements have been
capitalized and are written off over the lease term from the date(s) of installation.

b) Impairment loss

Impairment loss is provided to the extent the carrying amount of assets exceeds their
recoverable amounts. Recoverable amount is the higher of an asset’s net selling price and its
value in use. Value in use is the present value of estimated future cash flows expected to arise
from the continuing use of the asset and from its disposal at the end of its useful life. Net
selling price is the amount obtainable from sale of the asset in an arm’s length transaction
between knowledgeable, willing parties, less the costs of disposal.

c) Depreciation

Depreciation on fixed assets is provided on the straight-line basis. Cost of the Intangible
assets are amortised over a period of five years.

d) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are
carried at cost. However, when there is a decline, other than temporary, the carrying amount
is reduced to recognize the decline.

e) Inventories

Construction materials, stores and spare parts are valued at lower of cost and net realizable
value. Cost is determined on the basis of weighted average method. Cost of shuttering
materials (included in construction materials) issued to jobs, is charged off equally over a
period of four years.

f) Unbilled Revenue

Work done remaining to be certified/ billed is treated as Unbilled Revenue in the accounts.
The same is valued at the contract rates.

319
g) Retention monies

Amounts retained by the clients until satisfactory completion of the contract(s) are recognised
in the financial statements as receivables. Where such retention monies have been released by
the clients against submission of bank guarantees, the amounts so released are adjusted
against receivables from these clients.

h) Foreign currency transactions

Transactions in foreign currency, including in respect of branch operations integral in nature,

are recorded at the original rates of exchange in force at the time the transactions are effected.
At the year end, monetary items, including those of branch operations integral in nature,
denominated in foreign currency are reported using the closing rates of exchange. Exchange
differences arising thereon and on realization/ payment of foreign exchange are accounted for
in the relevant year as income or expense except in the case of fixed assets acquired from
outside India, in which case, these are adjusted in the carrying amounts of such assets.

i) Revenue recognition on contracts

(i) Contract revenue and expenses are recognized, when outcome can be estimated reliably, on the
basis of percentage completion method. Percentage of completion is determined based on
the nature of contracts, either in proportion of contract costs incurred up to the reporting
date to the estimated total cost or on the basis of physical proportion of the contract work
completed.

(ii) Variations (in contracts) and amounts in respect thereof are recognized only when it is
probable that the customer(s) will approve them and amounts can be measured reliably.

(iii) Claims and amounts in respect thereof are recognized only when negotiations have
advanced to stage where it is probable that the customer(s) will accept them and amounts
can be reliably measured.

j) Retirement benefits

1. Gratuity

The trustees of Afcons Infrastructure Limited Employees Group Gratuity-cum-Life

Assurance Scheme Trust have taken a Group Gratuity-cum-Life Assurance Policy from
the Life Insurance Corporation of India (LIC). Provision for gratuity is made on the basis
of premium payable in respect of the aforesaid policy and actuarial valuation carried out
by the independent actuarial valuer as at the year end.

2. Superannuation

The trustees of Afcons Infrastructure Limited Superannuation Scheme Trust have taken a
Group Superannuation policy from the LIC. Provision for superannuation is made on the
basis of premium payable in respect of the aforesaid policy.

3. Provident fund

Contribution as required under the statute/ rules is made to the Company’s Provident
Fund/ Government Provident Fund.

4. Leave encashment

320
 Provision for leave encashment benefits is made based on the expected cost of unavailed
earned leave.

k) Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of

qualifying assets are capitalized as a part of the cost of such assets. A qualifying asset is one
that necessarily takes a substantial period of time to get ready for its intended use or sale. All
other borrowing costs are charged to revenue.

l) Deferred revenue expenditure

The expenditure on voluntary retirement compensation is treated as ‘Deferred Revenue

Expenditure’ and amortized over a period of ten years.

m) Finance lease rentals

These are accounted over the life of the asset determined on the basis of technical evaluation
made by an independent valuer/ surveyor.

n) Doubtful debts and advances

Provision is made in the accounts for debts and advances which in the opinion of the
management are considered doubtful of recovery.

o) Taxes on income

Tax expense comprises both current and deferred tax at the applicable enacted/ substantively
enacted rates. Current tax represents the amount of income-tax payable/ recoverable in respect
of the taxable income/ loss for the reporting period. Deferred tax represents the effect of
timing differences between taxable income and accounting income for the reporting period
that originate in one period and are capable of reversal in one or more subsequent periods.
Provision for Fringe Benefits Tax is made in accordance with Chapter XII-H of the Income-
tax Act, 1961

p) Provisions and Contingencies

Provisions are recognized when the Company has a legal and constructive obligation as a
result of a past event, for which it is probable that cash outflow will be required and a reliable
estimate can be made of the amount of the obligation. Contingent liabilities are disclosed
when the Company has a possible or present obligation where it is not probable that an
outflow of resources will be required to settle it. Contingent assets are neither recognized nor
disclosed.

321
INCOME

We derive our income from (i) operations and (ii) other income.

The following table sets forth income from operations from different sectors during the years ended March
31, 2004, 2005 and 2006 and in the six months ended September 30, 2006:
Rs in million

6 months ended
September 30,
Sectors FY 2004 FY 2005 FY 2006 2006
Domestic
Civil Works 216.36 421.63 276.61 741.50
Marine Works 858.63 832.48 408.48 115.20
Bridge 1099.82 1020.71 1758.38 1007.54
Hydro 0.00 1.76 131.56 347.97
Tunnel 0.00 0.00 38.61 121.60
Metro 675.09 1297.58 588.64 198.64
Pipeline 0.00 0.00 0.51 128.27
Power 342.05 48.87 3.33 0.00
Road Works 1202.94 1681.47 2193.56 1141.29

Overseas
Marine Works 0 44.37 1339.97 70.60
Civil Works 0.85 0.00 0.00 93.68

Other
Cathodic Protection 11.64 8.68 12.12 7.28
Sale of Scrap 45.91 76.29 52.63 16.63
Total 4453.29 5433.84 6804.42 3990.22

Order Bookings

In our industry, the order book is considered an indicator of potential future performance since it represents
a significant portion of the likely future revenue stream. Our order book comprises the unfinished and
uncertified portion of projects that we have undertaken and includes the projects awarded to us but where
we have not yet commenced work. Our strategy is focused on capturing quality contracts with potentially
high margins. The following table sets forth the value of our order book as of September 30, 2006 based on
the different sectors that we operate in:

Sector Value as on September 30, 2006

Rs. In millions
Marine Works 3270.40
Bridges 8469.40
Roads Works 4222.40
Civil Works 4636.10
Metro Projects 2546.20
Hydro/Tunnel Works 4287.50
Pipeline Project 250.50
Overseas Project 2620.90

322
 30303.40

Some Details of our Order Book

The following table sets forth certain information concerning the major contracts in our order book by
outstanding value as on September 30, 2006. These orders represented more than 81 % of our order book.

(Rs. in millions)

No. Name of Project Service Total Current Amount Scheduled Client

Line Contract Contract Outstanding Completion
Value Value as of Date
September
30, 2006

1. Design and construction Bridge 5,127.4 5,173.8 4,040.00 December, Konkan

of special bridge across 2008 Railway
the River Chenab in Corporation
Jammu & Kashmir. (in Ltd.
the name of the joint
venture)
2. Construction of Marine, Civil 5,000.0 5,000 4,400.00 January, Reliance
Civil And Pipeline Works 2008 Infrastructure
Works for Reliance – Limited
Jamnagar
3. Construction of BG Hydro/ 3,345.2 3,557.80 3,481.00 June, 2009 Konkan
Single Line Tunnel on Tunnel Railway
Katra - Laole section of Corporation
Udhampur - Srinagar - Ltd.
Baramulla Rail Link
Project
4. Design Road 3,145.00 3,145.00 3,145.00 June, 2008 Trichy
Enginering,Construction Tollways
of 4 Laning from Pvt.Ltd.
Existing 2 Lane
Ulundurpet to Padalur
5. Construction of new Bridge 2,117.80 2,269.70 1,232.70 February, East Central
bridge over River Sone 2009 Railway,
Patna
6. Construction.of Grade Bridges/ 1,706.20 1,706.20 1,706.20 August, Public
Separation at Mukarba Flyover 2008 Works Dept.,
Chowk in Delhi Delhi
7. Construction of Main Hydro/ 1,583.60 1,204.70 795.00 April, 2008 National
Civil Works of Tunnels Thermal
Desilting Arrangement Power
for Koldam Hydro- Corporation
Electric Project. (in the Ltd.
name of JV)
8. Part Design and Metro 1,409.50 1,409.50 1409.50 December, Delhi Metro
Construction of Rails 2008 Rail
Elevated Viaduct and Corporation
Structural Work Of 3
Elevated Stations
DMRC

323
No. Name of Project Service Total Current Amount Scheduled Client
Line Contract Contract Outstanding Completion
Value Value as of Date
September
30, 2006

9. Construction of Jetty Marine 1,380.0 1,380.0 1,380.0 January, Reliance

Modification-Zero Point Works 2008 Industries
to New Riser Platform, Ltd.
Jamnagar
10. Construction of Marine 1,250.00 1,250.00 1,250.00 August, Finolex
Breakwater and Work 2008 Industries
Associated Works at Ltd.
Pawas Bay, Ratnagiri
11. Construction of new Marine 1,135.10 1,135.10 1.135.10 January, Sultanate of
mooring facility in Works 2008 Oman
Shannah, Al Wusta
Region
12. Construction of Oil Marine 822.80 730.1 718.10 January, Mauritius
Jetty At Louis Harbour, Work 2008 Ports
Mauritius Authority
TOTAL 28022.60 27961.90 24692.60

Other income includes income (i) from our investments, (ii) profits on sale of investments / assets (iii) other
miscellaneous income including interest on arbitration awards, excess provision for earlier years written
back, sales tax/excise duty refund, insurance claim settled etc and gains from foreign exchange fluctuations
are recorded as other income.

EXPENDITURE

Our expenditure comprises of (i) construction expenses; (ii) employee cost; (iii) other expenses; (iv)
interest cost (net); and (iv) depreciation and amortization;

Construction expenditure includes: (i) expenditure for construction materials used in our projects such as
steel, cement, equipment and materials used for construction, consumable stores, steel plates, spares for the
equipments etc.; (ii) contractor charges paid to sub-contractors to whom we have contracted a part of our
project responsibilities, piece rate workers’ payments and labour borrow wages; (iii) hire charges paid for
hiring of equipment from third parties; (iv) repair and maintenance costs of our equipment and facilities;
(v) power, electricity and water charges; and (vi) freight, octroi and transportation cost etc. Construction
expenditure is dependent on the type of project being executed and is also influenced by the nature of work
being carried out such as labor intensive or mechanized job being carried out.

Employee costs include: (i) salaries, wages, gratuity and bonus payments to our employees; (ii)
contributions made to provident fund and other fund and iii) expenses relating to workmen and staff.
Other expenses include: (i) rent paid for office space and facilities utilized by us; (ii) insurance charges;(iii)
traveling and conveyance charges; (iv) fees and taxes paid; (v) consultancy and professional charges paid;
and (vi) other miscellaneous administrative and establishment expenses such as office expenses, printing
and stationary, communication expenses, postage and advertisement expenses, donation, bank guarantee
and bank commission charges etc. We also record any bad debts or advances that are written off, and any
loss on sale of fixed assets (net) during a fiscal period under administration expenses.

Interest costs include (i) interest payable on term loans, debentures issued, interest payable on hire purchase
arrangements for equipment and interest on unsecured loans. The interest received from banks on our fixed

324
and short term deposits, interest on loan given, if any and interest on income tax refund is reduced from the
interest cost.

The nature of expenditure incurred by us on a given project is significantly dependent on the nature of the
project. For example, for our construction activities, we may consider using varying proportions of manual
or mechanized labor depending on the project specifications and conditions, or decide to sub-contract parts
of such construction activities, resulting in, for example, a varying proportion of labor, fuel and/or sub-
contractor costs. In addition, in EPC projects, expenditure relating to procurement of equipment and
materials constitute a significantly higher proportion of the total expenditure incurred in comparison with
other infrastructure projects, where fuel and labor costs constitute a significantly higher proportion of the
expenditure.

RESULTS OF OPERATIONS

As a result of the various factors discussed above that affect our income and expenditure on specific
projects, our consolidated results of operations may vary from period to period depending on the nature of
projects undertaken by us, their completion schedules, the nature of expenditure involved in a particular
project and the specific terms of the contract, including payment terms. The following table sets forth
certain information with respect to our consolidated results of operations for the periods indicated:

Rs. in million
30-Sep-06 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03
INCOME
Income from 3990.22 6804.42 5433.84 4453.29 4299.12
Operations:
% to Total Revenue 96.76 94.80 98.05 95.83 96.49

Other Income 133.63 373.25 108.04 193.61 156.56

% to Total Revenue 3.24 5.20 1.95 4.17 3.51

Total Revenue 4123.85 7177.67 5541.88 4646.90 4455.68

EXPENDITURE
Construction 2992.20 4759.03 4012.65 3325.05 3156.03
Expenditure
% to Total Revenue 72.56 66.30 72.41 71.55 70.83

Employee Cost 335.28 654.25 488.21 447.57 455.30

% to Total Revenue 8.13 9.12 8.81 9.63 10.22

Other Expenses 385.66 1040.68 513.22 421.28 381.83

% to Total Revenue 9.35 14.50 9.26 9.07 8.57

Operating 3713.14 6453.96 5014.08 4193.90 3993.16

Expenditure
% to Total Revenue 90.04 89.92 90.48 90.25 89.62

EBITDA 410.71 723.71 527.80 453.00 462.52

% to Total Revenue 9.96 10.08 9.52 9.75 10.38

325
 Rs. in million
30-Sep-06 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03
Interest paid 244.21 424.57 397.84 368.48 379.53
Less: Interest 34.46 215.76 20.39 73.90 17.51
Received

Interest Cost (Net) 209.75 208.81 377.45 294.58 362.02

% to Total Revenue 5.09 2.91 6.81 6.34 8.13

Depreciation 80.99 149.57 137.62 120.56 102.78

% to Total Revenue 1.96 2.08 2.48 2.59 2.31

Total Expenditure 4038.34 7028.10 5549.54 4682.94 4475.47

% to Total Revenue 97.93 97.92 100.14 100.78 100.44

Profit before Taxation 85.51 149.57 (7.66) (36.04) (19.79)

and Extra Ordinary
Items
% to Total Revenue 2.07 2.08 (0.14) (0.78) (0.44)

Provision for (9.35) (14.66) (2.77) (2.19) (2.24)

Taxation - Current
Provision for (24.20) (60.28) (11.21) (13.92) (9.27)
Taxation - Deferred
Provision for (4.70) (10.40) - - -
Taxation - Fringe
Benefit Tax
Provision for Wealth (0.01) (0.02) (0.02) (0.02) (0.02)
Tax
Foreign Tax - (6.68) - - -
Profit after Taxation 47.25 57.53 (21.66) (52.17) (31.32)
before Extra Ordinary
items
% to Total Revenue 1.15 0.80 (0.39) (1.12) (0.70)

Profit after Taxation 47.25 57.53 (21.66) (52.17) (31.32)

and Extra Ordinary
Items (A)
% to Total Revenue 1.15 0.80 (0.39) (1.12) (0.70)

Impact of material - -10.49 10.49 - 16.92

adjustments for
restatement in
corresponding years
(B)

326
 Rs. in million
30-Sep-06 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03
Adjusted Profit before 47.25 47.04 -11.17 -52.17 -14.4
minority interest

% to Total Revenue 1.15 0.66 -0.2 -1.12 -0.32

(Short)/Excess 1.73 0.81 -3.54 0.09 0.04

provision for taxes in
respect of earlier
years
Prior Period Expenses - - - - -0.21

Short provision for - - - - -1.65

tax in respect of
earlier years
Profit/ (Loss) after 48.98 47.85 -14.71 -52.08 -16.22
taxation and before
minority interest
% to Total Revenue 1.19 0.67 -0.27 -1.12 -0.36

Minority Interest 0.04 -0.08 11.32 16.25 10.78

Adjusted Profit/(Loss) 49.02 47.77 -3.39 -35.83 -5.44

% to Total Revenue 1.19 0.67 -0.06 -0.77 -0.12

Shapoorji Pallonji Group acquired our Company on March 31, 2000. On acquisition, SP Group decided to
continue with the existing management till such time it became necessary to take corrective steps and in FY
2003 several steps were taken by our Promoters including management change, introduction of voluntary
retirement scheme bringing in more focused business development activity with a change in the business
mix, renewed focus on overseas markets, improving the commercial acumen etc.. The effects of the above
has resulted in consistent improvement in efficiencies as reflected in the financials.

Six months ended September 30, 2006

Significant Developments

During the six-month ending 30th September’2006 we secured contracts worth Rs. 12,783.50 million.
Major contracts secured are as follows:
1) Our first project for a BOT concessionaire involving Design, Engineering, Construction
development of four laning the existing two lane from Ulundurrpet to Padalur in the state of Tamil
Nadu.
2) Jetty Modifications in Jamnagar for RIL Group.
3) Jetty modification at Jamnagar
4) Oil Jetty at Port Louis Harbor, Mauritius.
5) New Mooring Facility in Shannam, Oman.
6) Civil and Structural construction of Green Field cement plants at Al Anad, Yemen

Our operations in the six months ended September 30, 2006 can be attributed to the following factors:

Total Revenue: We recorded total revenue of Rs. 4123.85 million in the six months ended September 30,

327
2006, comprising of Rs. 3990.22 million of contract revenue, and other income of Rs. 133.63 million.

Income from operations: Our total income from operations in the six months ended September 30, 2006
comprised of Rs.3990.22 million. Overseas operations contributed 4.12 % of the total contract revenue and
the balance derived from our Indian operations.

Operating Expenditure: We incurred operating expenditure of Rs. 3713.14 millions in the six months
ended September 30, 2006.

Construction expenditure: In the six months ended September 30, 2006, we incurred construction
expenditure of Rs 2992.20 millions which stands at 80.58% of our operating expenditure for the period.

Employee costs: In the six months ended September 30, 2006, we incurred personnel expenses of Rs.
335.28 million, including salaries, wages, gratuity and bonus, contribution to provident funds and other
statutory employee welfare funds.

Other Expenses: Our other administrative expenses for the six months ended September 30, 2006 amounted
to Rs. 385.66 million.

EBIDTA: Our earnings before providing for depreciation and amortisation charges, interest and taxation
was Rs 410.71 million and the EBIDTA margin was 9.96%.

Interest (net): We incurred expenditure on account of interest on borrowings of Rs. 209.75 million which is
net of interest received of Rs. 34.44 million.

Depreciation: We recorded depreciation charges of Rs. 80.99 million in the six months ended September
30, 2006.

Profit before tax: For the reasons discussed above, profit before taxes in the six months ended September
30, 2006 was Rs. 85.51 million.

Provision for taxes: Provision for taxes includes current tax liabilities, fringe benefit tax and deferred tax
liabilities. Provision for taxes in the six months ended September 30, 2006 was Rs. 38.26 million.

Profit after tax before minority interest: The profit after tax before minority interest for six months ended
September 30, 2006 was Rs. 48.98 million. Minority Interest refers to that part of the equity stake not
owned by the Company. We hold 60% of the equity in SSS Electricals (India) Pvt. Ltd and Afcons
Arethusa Offshore Service Limited. The shareholding details of these subsidiaries are as follows:

Sr. No. Name of the Subsidiary % of AFCONS % of Minority Name of Minority

Holding Holding
1 SSS Electricals (India) Pvt. 60% 40% SSS Germany
Ltd
2 Afcons Arethusa Offshore 60% 40% Z North Sea Ltd.
Service Limited

Adjusted Profit: The restated profit was Rs. 49.02 million in the six months ended September 30, 2006.

Year ended March 31, 2006 compared to year ended March 31, 2005

Significant Developments:

During the financial year 2005-2006 the significant developments are as under:
1. Major Contracts secured
a) Single line tunnel Udampur-Srinagar-Baramulla rail project for Konkan Railway Corpn. Ltd.
b) Marine, civil and pipeline works for Reliance Infrastructure Limited– Jamnagar.

328
 c) Viaduct and four stations on Viswavidyalaya – Jangidpuri Corridor for Delhi Metro Rail
Corpn. Ltd.

2. Amalgamation of the subsidiary Afcons Pauling (India) Ltd. with the company w.e.f. 1st April
2005.

Our results of operations in the year ended March 31, 2005 and 2006 can be summarised as follows:

Total Revenue: Our total revenue increased by 29.52 % from Rs. 5541.88 million in the year ended March
31, 2005 to Rs. 7177.67 million in the year ended March 31, 2006 on account of more contracts being
awarded to us and efficient project management.

Income from operations: Our income from operations increased by 25.22 % from Rs. 5433.84 million in
the year ended March 31, 2005 to Rs. 6804.42 million in the year ended March 31, 2006.

Other Income: Our other income increased by 245.47 % from Rs. 108.04 million in the year ended March
31, 2005 to Rs. 373.25 million in the year-ended March 31, 2006 due to receipt of non recurring income
towards transfer of tenancy rights, interest on arbitration award and increase in profit on sale of long term
investments.

Operating Expenditure: Our expenditure consists of construction expenses, employee cost, operating and
administrative expenses, interest cost and depreciation and amortization charges. Our expenditure increased
by 28.72 % from Rs. 5014.08 million in FY 2005 to Rs. 6453.96 million in FY 2006 in line with increased
business

Construction expenditure: Expenditure relating to stores and spares consumed increased by 18.60 % from
Rs. 4012.65 million in FY 2005 to Rs. 4759.03 million in FY 2006. Compared to increase in income from
operations the material cost has actually reduced by 8.18 % due to major works given to subcontractors.

Employee costs: Employee costs which consists of salaries, gratuity, wages and bonus payments to
employees, contributions to providend funds and other funds and expenses incurred in connection with
workmen and staff welfare, increased by 34.01 % from Rs. 488.21 million in FY 2005 to Rs 654.25 million
in FY 2006 due to salary cost revision and increase in number of new projects resulting in increase in
manpower.

Other Expenses: Other expenses increased by 102.77 % from Rs. 513.22 million in FY 2005 to Rs. 1040.68
million in FY 2006. This can be attributed mainly to write off of old debts and advances and also due to
increase in legal and professional fees relating to our Chenab Bridge Project.

EBIDTA: Our earnings before providing for tax, interest and depreciation and amortisation charges was Rs.
723.71 million and the EBIDTA margin was 10.08% in FY 2006 as compared to Rs. 527.80 million
constituting 9.52 % in FY 2005. The increase in EBDITA margin was due to the decrease in the
construction cost as a percentage to income from operations.

Interest cost (Net): Our net interest cost decreased by 44.67% from Rs. 377.45 million in FY 2005 to Rs.
208.81 million in FY 2006. This was due to increase in interest received on Arbitration awards.

Depreciation: Depreciation expenses increased by 8.68% from Rs. 137.62 million in FY 2005 to Rs.
149.57 million in FY 2006, primarily due to acquisition of additional equipments amounting to Rs.267.29
millions in FY 2006.

Profit before tax: Profit before taxes increased to Rs. 149.57 million in FY 2006 from a loss of Rs. 7.66
million in FY 2005.

Provision for taxes: Provision for taxes includes current tax liabilities and deferred tax liabilities.
Provision for taxes increased by 557.43% to Rs. 92.04 million in FY 2006 from Rs. 14.00 million in FY

329
2005 primarily because of increase in taxable profits, due to provision for fringe benefit tax which was
introduced in FY 2005-2006 and impact of deferred tax.

Profit after tax before minority interest: The profit increased from a loss of Rs. 14.71million in FY 2005 to
Rs. 47.85 million in FY 2006. Minority Interest refers to that part of the equity stake not owned by the
Company.

We hold 60% of the equity in SSS Electricals (India) Pvt. Ltd and Afcons Arethusa Offshore Service
Limited. The shareholding details of these subsidiaries is as follows:

Sr. No. Name of the Subsidiary % of AFCONS % of Minority Name of Minority

Holding Holding
1 SSS Electricals (India) Pvt. 60% 40% SSS Germany
Ltd
2 Afcons Arethusa Offshore 60% 40% Z North Sea Ltd.
Service Limited

Adjusted profit: The restated profit for FY 2006 was Rs. 47.77 million as compared to a loss of Rs.
3.39million in FY 2005 . The restatement is mainly due to interest on arbitration. In FY 2005 the adjusted
loss is due to consolidation of accounts with our subsidiary AFCONS Pauling (India) Limited which had
incurred a loss of Rs.44.94 millions.

Year ended March 31, 2005 compared to year ended March 31, 2004

Significant Developments:
During the financial year 2004-2005 major contracts secured are as follows:

1. Construction of special bridge across river Chenab at Km 50/800 on the Karta-Laole Section of
the Udampur-Srinagar-Baramulla rail link project for Konkan Railway Corpn. Ltd.
2. Desilting Arrangement Package for Koldam Hydro Electric Power Project (4*200MW) for NTPC.
3. Engineering, Procurement , Installation and Commissioning of 2 nos Cofferdams for Pumphouse
No.1 & 3 of Ras Laffan Common Cooling Seawater systemPhase II for Qatar Petroleum in Qatar.
4. Construction of Elevated Viaduct between Ch.22.13 km to Ch.28.449 km on Extension of
Barakhamba Road for Delhi Metro Rail Corpn Ltd..

Our results of operations in the year ended March 31, 2005 and 2004 can be summarised as follows:

Total Revenue: Our total revenue increased by 19.26% from Rs. 4646.90 million in the year ended March
31, 2004 to Rs. 5541.88 million in the year ended March 31, 2005, primarily owing to increase in order
book and execution.

Income from operations: Our income from operations increased by 22.02% from Rs. 4453.29 million in the
year ended March 31, 2004 to Rs. 5433.84 million in the year ended March 31, 2005.

Other Income: Our other income decreased by 44.20% from Rs. 193.61 million in the year ended March
31, 2004 to Rs. 108.04 million in the year ended March 31, 2005 primarily because of non recurring
income relating to provision write back in FY 2003-04.

Operating Expenditure: Our expenditure consists of construction expenses, employee cost, operating and
administrative expenses, interest cost, depreciation and amortization charges. Our expenditure increased by
19.56% from Rs. 4193.90 million in FY 2004 to Rs. 5014.08 million in FY 2005 primarily due to
corresponding increase in revenue.

Construction expenditure: Expenditure relating to stores and spares consumed increased by 20.68 % from
Rs. 3325.05 million on FY 2004 to Rs. 4012.65 million in FY 2005 which was due to increase in revenue.

330
Employee costs: Employee costs which consists of salaries, wages, gratuity and bonus payments to
employees, contributions to provident funds and other funds and expenses incurred in connection with
workmen and staff welfare increased by 9.08% from Rs. 447.57million in FY 2004 to Rs. 488.21million in
FY 2005 because of increase in revenue.

Other expenses: increased by 21.82% from Rs. 421.28 million in FY 2004 to Rs. 513.22 million in FY
2005 primarily due to increase in revenue.

EBIDTA: Our earnings before providing for tax, interest and depreciation and amortisation charges was Rs.
527.80 million and the EBIDTA margin was 9.52% in FY 2005 as compared to Rs. 453.0 million
constituting 9.75% in FY 2004. This can be attributed to non recurring income relating to provision written
back in FY 2004

Interest cost (net): Our net interest cost increased by 28.13% from Rs. 294.58 million in FY 2004 to Rs.
377.45 million in FY 2005. This was due to increase in borrowings.

Depreciation: Depreciation expenses increased by 14.15% from Rs. 120.56 million in FY 2004 to Rs.
137.62 million in FY 2005, primarily due to acquisition of additional equipments amounting to Rs.210.74
millions in FY 2005.

Profit before tax: Loss before taxes decreased to Rs 7.66 million in FY 2005 from Rs. 36.04 million in FY
2004. This can be attributed to increase in income from operations.

Provision for taxes: Provision for taxes includes current tax liabilities and deferred tax liabilities. Provision
for taxes decreased by 13.21% to Rs. 14.00 million in FY 2005 from Rs. 16.13 million in FY 2004,
primarily due to decrease in provision for wealth tax and impact of deferred tax.

Profit after tax before minority interest: The loss decreased from Rs. 52.08 million in FY 2004 to Rs. 14.71
million in FY 2005. Minority Interest refers to that part of the equity stake not owned by the Company.
The shareholding details of such subsidiaries is as follows:

Sr. No. Name of the Subsidiary % of AFCONS % of Minority Name of Minority

Holding Holding
1 SSS Electricals (India) Pvt. 60% 40% SSS Germany
Ltd
2 Afcons Arethusa Offshore 60% 40% Z North Sea Ltd.
Service Limited
3 Tensacciai (India) Pvt. Ltd 60% 40% Tensacciai, Italy
4 Afcons Pauling (India) Ltd 75% 25% Pauling PLC – 0.20%
Sterling Invetsment –
24.80%
5 Afcons Pauling Joint 95% 5% Pauling PLC
Venture

Adjusted profit: The restated profit/(loss) for FY 2005 was Rs. (3.39) million as compared to Rs. (35.83)
million in FY 2004. The restatement is mainly due to interest on arbitration. In FY 2005 and FY 2004 the
adjusted loss is due to consolidation of accounts with our subsidiary Afcons Pauling (India) Limited which
had incurred a loss of Rs.44.94 millions in FY 2005 and Rs.62.98 millions in FY 2004.

Year ended March 31, 2004 compared to year ended March 31, 2003

Significant Developments:
During the financial year 2003-2004, major contracts secured are as follows:
1. Sone Bridge in Lieu of existing Bridge No.531 on HWH Delhi Grand Cord section under Eastern
Railway.

331
2. Dahej LNG Terminal Jetty Civil works.
3. Dredging in Mandovi river on Panaji Bank & Sand bars at the mouth of river Chapora.

Our results of operations in the year ended March 31, 2004 and 2003 can be summarised as follows:

Total Revenue: Our total revenue increased by marginally from Rs. 4455.68 million in the year ended
March 31, 2003 to Rs. 4646.90 million in the year ended March 31, 2004.

Income from operations: Our income from operations increased by 3.59% from Rs. 4299.12 million in the
year ended March 31, 2003 to Rs. 4453.29 million in the year ended March 31, 2004.

Other Income: Our other income increased by 23.67% from Rs. 156.56 million in the year ended March 31,
2003 to Rs. 193.61 million in the year ended March 31, 2004 due to due to provision write back in the year
2003-04 and equipment hire charges received in 2004.

Operating Expenditure: Our expenditure consists of construction expenses, employee cost, operating and
administrative expenses, interest cost, depreciation and amortization charges. Our expenditure increased by
5.03% from Rs. 3993.16 million in FY 2003 to Rs. 4193.90 million in FY 2004.

Construction expenditure: Expenditure relating to stores and spares consumed increased by 5.36 % from
Rs. 3156.03 million in FY 2003 to Rs. 3325.05 million in FY 2004 on account of additional expenditure on
road equipment repairs and spares.

Employee costs: Employee costs which consists of salaries, wages, gratuity and bonus payments to
employees, contributions to provident funds and other funds and expenses incurred in connection with
workmen and staff welfare, decreased by 1.70% from Rs. 455.30 million in FY 2003 to Rs. 447.57 million
in FY 2004.

Other expenses: Other administrative and general expenses increased by 10.33% from Rs. 381.83 million
in FY 2003 to Rs. 421.28 million in FY 2004. There was a decrease in professional and technical
consultancy fees from Rs. 82.10 million in FY 2003 to Rs. 71.88 million in FY 2004 due to completion of
projects where consultancy fees were paid.

EBIDTA: Our earnings before providing for tax, interest cost and depreciation and amortisation charges
was Rs. 453.0 million and the EBIDTA margin was 9.75% in FY 2004 as compared to Rs. 462.52 million
constituting 10.38% in FY 2003. The decrease in EBDITA margin is attributed to an increase in the
construction cost as a percentage of income from operations.

Interest cost (net): Our net interest cost decreased by 18.63% from Rs. 362.04 million in FY 2003 to Rs.
294.58 million in FY 2004 because of increase in interest earnings in the year 2003-2004.

Depreciation: Depreciation expenses increased by 17.30 % from Rs. 102.78 million in FY 2003 to Rs.
120.56 million in FY 2004 due to acquisition of additional equipments amounting to Rs.284.23 millions
during the year 2003-2004.

Profit before tax: Loss before taxes was Rs.36.04 million in FY 2004 as compared to Rs. 19.79 million in
FY 2003. This can be attributed to increase in construction cost as a percentage of income from operation

Provision for taxes: Provision for taxes includes current tax liabilities and tax provision for earlier years.
Provision for taxes increased to Rs 16.13 million in FY 2004 from Rs. 11.53 million in FY 2003.

Profit after taxes: The loss was Rs. 52.17 million in FY 2004 as compared to Rs. 31.32 million in FY 2003.

Profit after tax before minority interest: The loss was Rs. 52.08 million in FY 2004 as compared to Rs.

332
16.22 million in FY 2003. Minority Interest refers to that part of the equity stake not owned by the
Company.

The shareholding details of these subsidiaries is as follows:

Sr. No. Name of the Subsidiary % of AFCONS % of Minority Name of Minority

Holding Holding
1 SSS Electricals (India) Pvt. 60% 40% SSS Germany
Ltd
2 Afcons Arethusa Offshore 60% 40% Z North Sea Ltd.
Service Limited
3 Tensacciai (India) Pvt. Ltd 60% 40% Tensacciai, Italy
4 Afcons Pauling (India) Ltd 75% 25% Pauling PLC – 0.20%
Sterling – 24.80%

Adjusted profit: The restated profit/(loss) for FY 2004 was Rs. (35.83) million as compared to Rs. (5.44)
million in FY 2003. The restatement is mainly due to provision write back. In FY 2004 and FY 2003 the
adjusted loss is due to consolidation of accounts with our subsidiary Afcons Pauling (India) Limited which
had incurred a loss of Rs.62.98 millions in FY 2004 and Rs. 40.76 millions in FY 2003.

Liquidity and Capital Resources

Liquidity

Historically, our primary liquidity requirements have been to finance our working capital needs and our
capital expenditures. We meet this requirement from cash flows from generations as well as from
borrowings. In certain cases, we are contractually obligated to our clients to fund for mobilization and
machinery on our projects.
Cash Flows

The table below summarizes our cash flows in the years ended March 31, 2005 and 2006 and in the six
months ended September 30, 2006:
(In Rupees million)
Six Month Year ended March 31,
Ended
September
30 2006
2006 2005 2004
Net cash from (used in) operating activities (309.45) (545.99) (680.88) (268.24)
Net cash from (used in) investing activities (485.98) (206.49) (200.15) (167.82)
Net cash from (used in) financing activities 708.48 794.35 902.47 454.64
Net increase (decrease) in cash and cash (86.95) 41.87 21.44 18.58
equivalents

Sundry Debtors
• Debtors Days
Rs. In millions
Description Period Ended Period Ended Period Ended Period Ended
30/09/06 31/03/06 31/03/05 31/03/04
Income from operations 3990.22 6804.42 5433.84 4453.29
Outstanding Debtor at the end of each 1921.59 1981.02 1866.71 1903.46
period
Debtors Less than 180 days 501.23 787.03 1112.03 1011.46
Debtors more than 180 days 1420.36 1193.99 754.68 892.00

333
Description Period Ended Period Ended Period Ended Period Ended
30/09/06 31/03/06 31/03/05 31/03/04
% Of debtors less than 180 days 26.08% 39.73% 59.57% 53.14%
% Of debtors more than 180 days 73.92% 60.27% 40.43% 46.86%
Provision for Doubtful debts 0 0 0.25 0.50
Debtors – Outstanding no. of days 88 106 125 156

The number of days outstanding has reduced due to improved collections/ realizations.

Sundry Creditors
Rs. In millions
Description Period Ended Period Ended Period Ended Period Ended
30/09/06 31/03/06 31/03/05 31/03/04
Cost of Construction 2992.20 4759.03 4012.65 3325.05
Outstanding creditors at the end of 2615.35 2022.47 1688.95 2749.36
each period
Creditors – Outstanding no. of days 100 113 88 118

Generally our creditors days including retention money of sub-contractors varies from 90 days to 120 days..

Foreign currency risk

To the extent that our income and expenditure are not denominated in the same currency, exchange rate
fluctuations could cause some of our costs to grow higher than the proportionate revenues on a given
contract or could also result in some of our costs falling below budget resulting in higher profitability. Our
future capital expenditure may include imported equipment and machinery which may be denominated in
currencies other than Indian rupees. Therefore, declines in the value of the rupee against such other
currencies could increase the rupee cost of purchasing such equipment which may not be completely offset
by the corresponding increase in the income as a result of decline in rupee.

Interest rate risk

Changes in interest rates could affect our financial condition and results of operations as it is directly linked
to our borrowing. If the interest rates for our existing or future borrowings increase significantly, our cost
of servicing such debt will increase. This may impact our results of operations, planned capital
expenditures and cash flows.

However, Changes in interest rate will not have significant impact on our financial position.

Inflation

In recent years, although India has experienced fluctuation in inflation rates, inflation has not had material
impact on our business and results of operations. According to CMIE, inflation in India was approximately
3.7%, 6.5%, 4.6% and 5.1% in fiscal 2003, 2004, 2005 and 2006 respectively. In most of our project work
the risk related to inflation is covered by escalation linked to material indices.

334
Unusual or Infrequent Events or Transactions
Rs. In millions
Particulars For the period For the Financial Year Ended
from April 1, 2006
to September 30,
2006 31-Mar-06 31-Mar-05 31-Mar-04

Incomes
Provision in respect of diminution in the
value of long term investments written
back - - - 13.61
Excess provision in respect of earlier
years written back 42.17 19.47 19.89 21.05
Amount received on transfer of tenancy
rights - 60.00 - -

Expenses
Loosers Compensation 30.00 - -
-

Known trends or uncertainties

Other than as described in the sections entitled “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations”, on page xii and 316 of this Red Herring
Prospectus respectively, to our knowledge there are no known trends or uncertainties that have or had or
are expected to have a material adverse impact on revenues or income of our Company from continuing
operations.

Future relationship between costs and income

Other than as described in the sections entitled “Risk Factors”, “Business” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations”, to our knowledge there are no known
factors which will have a material adverse impact on the operation and finances of our Company.

Business Segments

Other than as described in section titled “Business” on page 81 of this Red Herring Prospectus, there are no
new business segments in which we operate.

Seasonality of business

Our revenues are also dependent on the stage of the project and the nature and level of activity involved
during each stage. In addition, our operations are also adversely affected during a monsoon, which restricts
our ability to carry out construction activities and fully utilize our resources. Accordingly, revenues
recorded in the first half of the financial year between April to September are traditionally lower than
revenues recorded in the second half of the financial year.

335
Competitive conditions

For details please refer to the discussions of our competition in the sections entitled “Risk Factors” and
“Business” beginning on pages xii and 81 in this Red Herring Prospectus.

Significant developments after September 30, 2006 that may affect our future results of operations

1. Conversion of Preference shares into equity shares. For further details please refer to section titled
“Capital Structure” on page 29 of the Draft Red Herring Prospectus.
2. Grant of Employee Stock Options. For further details please refer to section titled “Capital
Structure” on page 29 of the Draft Red Herring Prospectus.

336
 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS

Except as stated below there are no outstanding litigation, suits, criminal or civil prosecutions, proceedings
or tax liabilities against our Company, our subsidiaries, our directors, our Promoter and Promoter Group
Companies and there are no defaults, non payment of statutory dues, over-dues to banks/financial
institutions/small scale undertaking(s), defaults against banks/financial institutions/small scale
undertaking(s), defaults in dues payable to holders of any debenture, bonds and fixed deposits and arrears
of preference shares issued by the Company, defaults in creation of full security as per terms of issue/other
liabilities, proceedings initiated for economic/civil/any other offences (including past cases where penalties
may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of
Part 1 of Schedule XIII of the Companies Act) other than unclaimed liabilities of the Company and no
disciplinary action has been taken by SEBI or any stock exchanges against our Company, our Promoter or
Directors. In respect of description of cases involving the Company, apart from criminal cases, a
materiality threshold of Rs. 10 million has been adopted for cases filed against the Company and a
materiality threshold of Rs. 100 million for cases filed by the Company. The cases involving amounts
below these materiality thresholds have been presented on an aggregate basis.

Contingent Liability

The following table sets forth the principal components of our contingent liabilities as of September 30,
2006

Contingent Liabilities As on September 30, 2006 (Rs. In millions)

Estimated amount of contracts remaining to be 451.10

executed on capital account and not provided

Claims against the Company not acknowledged as 156.92

debt

Bank guarantees given on behalf of subsidiaries 1.28

In respect of sales tax demands raised by sales tax 89.63

authorities in matters of disallowance of labour and
service charges, consumables for which appeal is
pending before various appellate authorities

In respect of income tax matters in appeals 51.36

In respect of excise duty demands in appeals 11.30

Cases against the Company

There are 66 cases filed against the Company in relation to various matters out of which 32 cases involve
an amount of Rs. 80.16 million (out of the 66 cases filed against the Company, 3 civil cases were filed
against Afcons Pauling India Limited (“APIL”), which was a subsidiary of the Company and has now
merged with the Company and 4 civil cases are filed against APIL AMIL Joint Venture (“APIL-AMIL
JV”), a joint venture established between APIL and Alfred McAlpine International Limited (AMIL)). In
respect of 34 cases, the amount of claims cannot be quantified.

There are 28 civil cases filed against the Company in relation to disputes and amounts payable, pertaining
to various contracts and subcontracts for construction and claims arising due to injuries sustained by

337
employees at construction sites in which the aggregate amount claimed is Rs. 79.47 million. There are 15
cases pertaining to the same matters in respect of which the amount of claims cannot be quantified.

There are 23 suits/writ petitions and labour disputes filed by employees/ex-employees pending against the
Company out of which 4 cases involve a total claim amount of Rs. 0.68 million. In respect of 19 cases, the
amount of claims cannot be quantified.

There is 1criminal case filed against the Company in relation to alleged sales tax evasion.

Criminal case

1. The Joint Commissioner of Commercial Taxes (Intelligence) (Karnataka) has filed a charge sheet
against the Company under section 29 (1) (e) and 29 (2) (e) of the Karnataka Sales Tax Act, 1957
before the Judicial Magistrate First Class (Sales Tax), Bangalore, in June 2005, alleging that the
Company has committed an offence by not keeping true and current books of accounts in relation
to the Hubli- Haveri National Highway Project and has claimed a tax amount of Rs. 14.08 million.
The Hon’ble Magistrate has taken cognizance of the offence and has directed that criminal
proceedings be initiated against the Company. The Company has filed a criminal petition before
the High Court, Bangalore (Criminal Petition No. 4756 of 2005) under section 482 of the Criminal
Procedure Code against the Joint Commissioner of Commercial Taxes (Intelligence) and Assistant
Commissioner of Commercial Taxes (Respondents) and has requested that the criminal
proceedings initiated against the Company (in CC No. 1081 of 2005) be quashed. The Company
has stated that it has duly replied to the show cause notice in spite of which the charge sheet was
filed against the Company. The Company has submitted that it has maintained proper books of
accounts, not evaded any tax and has regularly submitted annual returns with the Respondent(s)
authorities. The Company has submitted that the criminal action cannot be maintained against it if
neither an assessment order nor a provisional assessment order was passed against it. The matter is
pending as of date. The High Court by its order dated December 1, 2005 has stayed the
proceedings initiated against the Company pending the admission of the criminal petition filed by
the Company.

Civil cases

1. Associated Engineering Enterprises (Plaintiff) had filed a suit (Original Suit No. 83 of 2000) –
before the Court of the Additional Chief Judge, City Civil Court, Secunderabad against APIL for
the recovery of retention money and balance amount to the tune of Rs. 12.93 million, allegedly
payable to the Plaintiff in relation to a subcontract between the parties (pertaining to the
Hyderabad-Karimnagar Road Project). The Company has filed its written statement in the above
matter and has denied that any payment or balance is payable to the Plaintiff by the Company. The
matter is pending as of date.

2. Cherian Varkey Construction Company Private Limited (Plaintiff) has filed a suit against the
Company and others before the Subordinate Judge’s Court, Ernakulam (Original Suit No. 424 of
2004) claiming an amount of Rs. 22.5million in relation to bill of quantities arising under the
subcontract between the parties (pertaining to the Vypeen Bridge and Road Project). The
Company has filed its written statement in this matter and has denied all claims made by the
Plaintiff. Subsequently, the Plaintiff filed an Interim Application in the said matter before the
Subordinate Court, requesting that the dispute be referred to arbitration according to section 89 of
the Civil Procedure Code. The Subordinate Court by its order dated October 26, 2005, referred the
parties to arbitration and appointed a sole arbitrator in this regard. The Company appealed against
the said order before the High Court, Ernakulam, stating that the above claims are not arbitrable.
The High Court by its order dated October 11, 2006 has confirmed the Subordinate Court’s order
referring the parties to arbitration. .The Company intends to challenge the reference to arbitration
by way of an appeal in the Supreme Court.

338
 Additionally, the Plaintiff has filed another suit (O.S. No. 441 of 2006) against the Company
before the Subordinate Judge’s Court, Ernakulam, claiming an amount of Rs. 26 million on
account of alleged additional works performed by the Plaintiff under the aforesaid subcontract.
The Company has filed its written statement in this matter and has denied all claims made by the
Plaintiff. The matter is pending as of date.

Cases filed by the Company

There are 35 civil cases filed by the Company (including arbitration claims) in relation to disputes and
amounts payable pertaining to various contracts and subcontracts for construction and for refund of
municipal taxes paid by the Company in which the aggregate amount claimed by the Company is Rs.
2,399.54 million (out of the 35 cases filed by the Company, 4 cases were filed by APIL and 2 cases are
filed by Afcons Puling Joint Venture (“APJV”) (a partnership firm established between the Company and
Pauling PLC, London)

Arbitration claims

1. The Company has initiated arbitration proceedings against the Board of Trustees of the Port of
Mumbai (Respondent) before a sole arbitrator in Mumbai in February 2005. The Company is
claiming damages against the Respondent and recovery of amounts alleged to have wrongfully
been held by the Respondent (by way of liquidated damages), aggregating Rs. 645.37 million in
relation to a contract between the parties (pertaining to the Modernization of Marine Oil Terminal
Berths Project in Mumbai). The claims set forth by the Company are: (a) claim for delay on the
part of the Respondent in executing the project under the said contract (b) claim for compensation
for extended stay (c) claim for loss of deemed export benefits by the claimant and (d) claim for
refund of amounts withheld by way of liquidated damages. In response to the Company’s
statement of claims, the Respondent has filed its written statement denying the above claims and
has made a counter claim in the amount of Rs. 453 million for losses incurred by the Respondent
due to the alleged delay of the Company in performance of the works under the contract. The next
date of hearings in this matter is February 5 to February 9, 2007.

2. The Company has initiated arbitration proceedings against Bhaba Atomic Research Centre
(Respondent) on April 12, 2006 before a sole arbitrator, claiming a total amount of Rs. 119.60
million plus interest thereon as amount payable due to additional costs incurred by the Company
in performing the contract (pertaining to construction of High Block Building Project in Tarapur).
The Company has alleged that these costs were incurred due to delays on part of the Respondent.
The Respondent has filed a written statement wherein it has denied the above claim and made a
counter-claim to the tune of Rs. 202.37 million as amount allegedly due and payable by the
Company under the said contract. The matter is pending as of date

3. The Company has initiated arbitration proceedings against Chennai Petroleum Corporation
Limited (Respondent) on February 19, 2004 before a sole arbitrator in New Delhi claiming a total
amount of approximately Rs. 321.77 million as amount payable in relation to various stages of
work performed by the Company under the contract between the parties (pertaining to a project in
Nagapattinam). The Company has submitted that it has performed its part of the said contract to
the satisfaction of the Respondent and that the Respondent commenced operations of the various
facilities with effect from March 1, 2003. The Respondent has made a counter-claim denying the
aforesaid claim of the Company and has alleged that the Company has caused delay in completion
of work under the contract due to which Respondent suffered a loss. In this regard, the Respondent
is seeking damages against the Company to the tune of Rs. 70.35 million. Hearings in this matter
have been completed and the arbitral award is pending.

4. The Company has initiated arbitration proceedings against Delhi Metro Rail Corporation Limited
(Respondent) in December 2005 before an arbitral panel in New Delhi consisting of 3 arbitrators,
claiming an amount of approximately Rs. 210.7 million as additional costs towards various stages
of the work performed under the contract between the parties (pertaining to the Wazirpur-Rithiala

339
 Station Building Project). The Respondent has filed its written statement in the said matter and has
denied owing any amount whatsoever to the Company and has made a counter-claim to the tune of
Rs. 72.7 million. The matter is pending as of date.5. The Company has initiated four separate
arbitration proceedings against the State of West Bengal Public Works Department (Respondent)
before a panel of 3 arbitrators in Calcutta in December 2004, each of the four claims arising under
the contract executed between the Company and the Respondent (pertaining to Panagarh
Moregram Road Project in West Bengal). The Company has claimed a total amount of Rs. 327.2
million towards additional expenses incurred by the Company due to delay in execution of work
under the said contract. The panel has granted four arbitral awards (dated June 30, 2004,
September 30, 2004, September 19, 2005 and March 21, 2006) in each of the four proceedings in
favour of the Company, aggregating Rs. 302.56 million (including interest thereon). The
Respondent has filed 4 appeals in the High Court of Calcutta (A.P 23 of 2004, AP 331 of 2004,
AP 346 of 2005 and AP 216 of 2006) challenging all the four arbitral awards granted in favour of
the Company. The High Court has dismissed two out of the four appeals (AP 23 of 2004 and AP
346 of 2005) filed by the Respondent. Hearings in the remaining 2 appeals have been concluded
and judgement(s) is awaited.

6. APJV has initiated arbitration proceedings against the State of Punjab (Respondent) in October,
2005 in relation to three contracts which have been consolidated in the said proceeding (in
connection to the widening of 4 lanes and strengthening of a national highway in Punjab). APJV
has submitted that it incurred additional expense in relation to the extension and delay in execution
of the work under the three contracts, allegedly caused by the Respondent. An amount of Rs.
100.8 million has been claimed. The matter is pending as of date.

7. APIL has initiated arbitration proceedings in December 1999 against the Government of Andhra
Pradesh (Respondent) in relation to the contract executed between the parties (pertaining to the
Hyderabad- Karimnagar Ramagundam Road Project). APIL has submitted 3 separate claims
arising out of 3 different packages (segments) of the contract executed between the parties,
aggregating Rs. 75.4 million. By an arbitral award dated October 16, 2000, the arbitral panel has
combined the claims arising under all 3 packages and has granted an award to the tune of Rs.
61.83 million in favour of the Company. The Respondent has made 3 applications (IA 607, IA 608
and IA 609 of 2000) in the Court of the Chief Judge, City Civil Court, Hyderabad to set aside the
said arbitral award granted by the panel. The Court passed a common judgment in relation to the
above three applications on November 12, 2002 and dismissed the Respondent’s application in
regard to certain claims and set aside the arbitral award with respect to certain other claims.
Subsequently, the Company has submitted additional claims in arbitration against the Respondent
pertaining to disputes arising in connection with bitumen, sales tax and cess, claiming a total
amount of Rs. 35.5 million. The arbitral panel by its award dated January 28, 3003, has awarded
the Company Rs. 22.10 million against the Respondent in respect of the said claims arising under
all 3 packages relating to sales tax, bitumen and cess. The Respondent has filed 3 petitions (O.P.
1514 of 2003, O.P. 1515 of 2003 and O.P. 1516 of 2003) before the Chief Judge, City Civil Court,
Hyderabad, challenging the said arbitral award dated January 28, 2003. The appeals in this matter
are pending as of date.

Tax related matters

Income Tax

There are 9 disputes relating to income tax assessments involving the Company, out of which 8 disputes
involve a total amount of Rs. 226.33 million claimed against the Company. In respect of 1 dispute the
amount of claim cannot be quantified.

There are 10 disputes relating to income tax assessments involving the Company (including 2 disputes
involving APIL) in which the total amount claimed by the Company is Rs. 57.91 million.

340
1. The Commissioner of Income Tax (CIT) (Appeals) VIII, Mumbai, by way of its order dated
October 5, 2006 confirmed/ confirmed in part, the disallowances in respect of the following items
in the assessment order for the assessment year 2003-2004:

• Interest on loans to subsidiary companies; and

• Other minor items

The Company has filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai,
against the said order. The total disputed disallowance amount in this matter is Rs. 5.73 million.

2. The CIT (Appeals) VIII, Mumbai by way of its order dated April 28, 2006, confirmed/confirmed
in part, the additions in respect of the following items in the assessment order for the assessment
year 2002-2003:

• Interest paid on loans to subsidiaries;

• Expenses relating to income exempt under section 14A of the Income Tax Act; and
• Other minor items

The Company has filed an appeal dated June 29, 2006 before ITAT, Mumbai against the said
order. The appeal is still pending and the total disallowance disputed amount is Rs. 16.13 million.

The Income Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief
allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief
amount disputed is Rs.764.62 million.

3. The CIT (Appeals) VIII, Mumbai, by way of its order dated March 17, 2005, confirmed/confirmed
in part, the additions in respect of the following items in the assessment order for the assessment
year 2001-2002:

• Interest on loans to subsidiary companies;

• Expenses relating to income exempt under section 14A of Income Tax Act; and
• Other minor items

The Company has filed an appeal before ITAT, Mumbai against the said order on May 24, 2005.
The appeal is still pending and the total disputed disallowance amount is Rs.11.58 million.

The Income Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief
allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief
amount disputed is Rs. 158.18 million.

4. The CIT (Appeals) VIII, Mumbai, by way of its order dated October 17, 2003
confirmed/confirmed in part, the additions in respect of the following items in the assessment
order for the assessment year 2000-2001:

• Interest on loans to subsidiary companies and;

• Expenses relating to income exempt under section 14A of Income Tax Act

The Company has filed an appeal before ITAT, Mumbai against the said order on June 9, 2006.
The appeal is still pending and the total disputed disallowance amount is Rs. 59.16 million.

The Income-Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief
allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief
amount disputed is Rs. 101.11 million.

341
5. The CIT (Appeals) VIII, Mumbai by way of its order dated March 27, 2006, confirmed/confirmed
in part, the additions in respect of the following items in the assessment order for the assessment
year 1999-2000:

• Interest on loans to subsidiary companies;

• Expenses relating to income exempt under section 14A of Income Tax Act;
• Claims under section 80HHB of Income Tax Act; and
• Other minor items

The Company has filed an appeal before ITAT, Mumbai against the said order on April 17, 2003.
The appeal is still pending and the total disputed disallowance amount is Rs. 47.82 million.

The Income Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief
allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief
amount disputed is Rs. 118.04 million.

6. The CIT (Appeals) VIII, Mumbai, , by way of its order dated February 20, 2006 confirmed/
confirmed in part, the disallowances in respect of the following items in the assessment order for
the assessment year 1998-1999:

• Club membership expenses;

• Advances made to subsidiary and associated companies;
• Interest on loans to subsidiary companies; and
• Other minor items

The Company has filed an appeal before ITAT, Mumbai against the said order on April 17, 2003
The appeal is still pending and the total disputed disallowance amount is Rs. 15.19 million.

The Income Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief
allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief
amount disputed is Rs. 101.69 million.

7. The ITAT, Mumbai, by way of its order dated July 19, 2005 confirmed the order of the CIT
(Appeals) dated July 12, 2001 relating to partial disallowances in respect of interest on loans to
subsidiary in the assessment order for the assessment year 1997-1998. The Company has filed a
writ petition in the High Court of Judicature, Mumbai, challenging the said order of ITAT,
Mumbai. The total disputed disallowance amount is Rs.11.52 million.

The Income-Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief
allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief
amount disputed is Rs. 68.82 million.

Sales Tax

There are 37 disputes in relation to sales tax assessments involving the Company (including 7 disputes
involving APIL, 3 disputes involving APIL AMIL JV and 8 disputes involving APJV), in which the total
amount claimed by the Company is Rs. 106.05 million.

1. The Delhi Sales Tax Department in its assessment order dated March 31, 2006 for the assessment
year 2004-2005 has disallowed the following deductions claimed by the Company:

• Labour and service charges; and

• Subcontract claims

342
 The Company has filed an appeal before the Additional Commissioner of Sales Tax (“ACS”)
(Appeals) III, Delhi against the said order on May 22, 2006 and the total disputed tax amount is
Rs. 16.61 million. The ACS (Appeals), Delhi by its order dated October 12, 2006 has stayed the
tax demand made by the Delhi Sales Tax Department pertaining to the Company’s taxable
turnover under dispute. The said appeal is pending as of date.

2. The Delhi Sales Tax Department in its assessment order dated March 21, 2005 for the assessment
year 2003-2004 has disallowed deductions claimed by the Company in respect of labour and
service charges.

The Company has filed an appeal before the (ACS) (Appeals) III, Delhi against the said order on
May 19, 2005. The appeal is still pending and the total disputed tax amount is Rs. 11.23 million.

3. The Orissa Sales Tax Department in its assessment order dated March 16, 2002 for the assessment
year 1998-1999 has disallowed deductions claimed by the Company in respect of labour and
service charges.

The Company has filed an appeal before the ACS (Appeals) II, Cuttack against the said order on
February 22, 2003. The appeal is still pending and the total disputed tax amount is
Rs.17.37million.

4. The Orissa State Sales Tax Department in its assessment order dated March 31, 2003 for the
assessment year 1999-2000 had disallowed the following deductions claimed by APIL AMIL JV.

• Escalation payments; and

• Payments made in respect of explosives

The JV Company has filed an appeal before ACS (Appeals) II, Cuttack against the said order in
December, 2003 The appeal is still pending and total disputed tax amount is Rs. 135.91 million

5. The Orissa Sales Tax Department in its assessment order dated March 16, 2002 for the assessment
year 1998-1999 had disallowed deduction claimed by APIL AMIL JV in respect of labour and
service charges

The APIL AMIL JV has filed an appeal before ACS (Appeals) II, Cuttack against the said order
on December 31, 2002. The appeal is still pending and total disputed tax amount is Rs. 19.13
million.

Excise Duty

There are 5 disputes in relation to excise duty involving the Company (including 2 disputes involving
APJV) in which the total amount claimed against the Company is Rs. 24.57 million.

There are 3 disputes in relation to excise duty involving the Company in which the total amount claimed by
the Company is Rs. 8.12 million.

Cases against the Directors

1. Mr. Kader Oli has filed a complaint before the Judicial Magistrate-II, Chennai against Mr. Pallonji
Shapoorji Mistry, Mr. Shapoorji Pallonji Mistry and Mr. Cyrus Pallonji Mistry in their capacities
as directors of (along with other other directors) of SIV Industries Limited for allegedly
committing an offence of dishonouring hundies under sections 406, 417, 422, 423 and 468 read
with section 120B of the Indian Penal Code. Mr. Pallonji Shapoorji Mistry, Mr. Shapoorji Pallonji
Mistry and Mr. Cyrus Pallonji Mistry have stated that they had resigned as Directors of SIV
Industries much prior to the date of the alleged offence. Hearing for disposal of complaint in this
matter is pending as of date.

343
Cases against the Promoter and Promoter Group

Cyrus Chemicals Private Limited (“CCPL”)

There are 3 disputes pending before the High Court, Mumbai involving CCPL in relation to income tax
matters (determination of annual value of house property), involving a total claim amount of Rs. 0.40
million.

Cyrus Investments Limited (“CIL”)

There are 9 tax disputes pending before the High Court, Mumbai involving CIL, out of which 5 disputes
pertain to income tax matters and 4 disputes pertain to wealth tax matters (determination of annual value of
house property and value of CHS flat whether liable to wealth tax), involving a total claim amount of Rs.
2.08 million. There are 2disputes pending before the Income Tax Appellate Tribunal, Mumbai, involving a
total claim amount of Rs0.62 million.

Forbes Gokak Limited (“FGL”)

Cases against FGL

Show cause notice issued against FGL by Bombay Stock Exchange Limited (BSE)-

BSE has issued a show cause notice dated August 8, 2006 against FGL in relation to non-compliance with
the provisions of Clause 41 of the Listing Agreement relating to publication of unaudited results for the
quarter and the year ended March 31, 2006. FGL had published the audited results for the quarter and the
year ended March 31, 2006, on July 26, 2006 and has replied to the said notice issued by BSE vide its letter
dated August 14, 2006.

There are 307 cases filed against FGL in relation to various matters (including cases filed against Gokak
Vadodara Spinning Mills which is a division of FGL and FAL Industries Limited which has merged with
FGL) out of which 296 cases involve a total claim amount of Rs. 381.72 million. In respect of 10 cases, the
amount of claims cannot be quantified.

1. There are 11 cases filed against FGL in relation to recovery of monies on account of various
services rendered and supplies furnished, involving a total claim amount of Rs. 361.41 million.

2. There are 8 cases filed against FGL by various investors in relation to loss/non receipt of
approximately 3300 equity shares of FGL/erstwhile Forbes Campbell and Company Limited and
in order to restrain FGL from transferring the said shares. The amount of claims in respect of these
8 cases cannot be quantified.

3. There are 286 suits/writ petitions and labour disputes filed by employees/ex-employees pending
against FGL and the total amount claimed by the plaintiffs in these cases is approximately Rs.
20.31 million.

4. There are 2 cases filed against FGL in relation to eviction of premises and wrongful dismissal of
employees. The amount of claims in respect of these 2 cases cannot be quantified.

Cases filed by FGL

There are 4 cases filed by FAL Industries Limited and Gokak Vadodara Spinning Mills in relation to
recovery of monies, involving a total claim amount of Rs. 24.58 million.

Tax related matters

344
There are 18 disputes involving FGL in relation to income tax and sales tax assessments and imposition of
central and excise duties, involving a total claim amount of Rs. 350.282 million (including disputes
involving Gokak Vadodara Spinning Mills and FAL Industries Limited).

Floreat Investments Limited (“FIL”)

Cases against FIL

There are 3 cases filed against FIL in relation to property matters and the amount of claims in all 3 cases
cannot be quantified.

1. There are 2 cases filed against FIL in relation to ownership of property wherein FIL as a developer
has been made a necessary party to the respective suits. The amount of claims in respect of these 2
cases cannot be quantified.

2. There is 1 case filed against FIL challenging permission granted to FIL in relation to
redevelopment of property situated in Mumbai. The amount of claim in respect of this case cannot
be quantified.

Tax related matters

There are 2 tax disputes involving FIL in relation to income tax matters, each pending before the High
Court, Mumbai and the Income Tax Tribunal Appellate, Mumbai, in which aggregate claim amount
involved is Rs. 21.87 million.

Floral Finance Limited (“FFL”)

Cases filed by FFL

There are 2 cases filed by FFL in relation to Section 138 of the Negotiable Instruments Act, 1881,
(dishonour of cheque), involving a total claim amount of Rs. 0.40 million. FFL filed a criminal complaint
before the Esplanade Court, Mumbai under the above section pursuant to which it also filed a summary suit
in the same matter before the High Court, Mumbai for recovery of the above amount of Rs. 0.40 million.

Manjri Stud Farm (“MSF”)

Cases filed by MSF

MSF has filed 1 criminal complaint before the 33rd Court, Metropolitan Magistrate Court, Mumbai in
relation to Section 138 of the Negotiable Instruments Act, 1881 and the amount of claim involved is Rs.
0.50 million.

Tax related matters

There are 5 disputes involving MSF in relation to income tax assessments in which the aggregate claim
amount involved is Rs. 12.07 million.

Shapoorji Pallonji and Co., Limited (“SPCL”)

Cases against SPCL

There are 8 cases filed against SPCL in relation to various matters out of which 5 cases involve a claim
amount of Rs. 1.25 million. In respect of 4 cases, the amount of claims cannot be quantified.

345
1. There are 4 cases relating to eviction notices issued against SPCL by various companies in respect
of certain premises situated in Mumbai. The amount of claims in respect of these 4 cases cannot be
quantified.

2. There is 1 case pending before the Central Excise and Service Tax Appellate Tribunal, Bangalore
in relation to imposition of excise duty and penalty involving a total claim amount against SPCL
of Rs. 0.62 million.

3. There are 3 cases filed against SPCL by its workers/employees before the Workmens’
Compensation Court (Raigad) in relation to permenent disability compensation, involving a total
claim amount of Rs. 0.63 million

Cases filed by SPCL

1. There are 3 cases filed by SPCL in relation to various matters involving a total claim amount of
Rs. 252.40 million.

2. There are 2 arbitration proceedings initiated by SPCL in relation to recovery of monies payable
under various contracts in which the total amount claimed is Rs. 238.80 million.

3. There is 1 summary suit filed before the High Court, Bombay in relation to the recovery of money
involving a claim amount of Rs. 13.60 million.

Tax related matters

There are 12 tax disputes involving SPCL in relation to income tax matters and wealth tax matters
(determination whether value of CHA flat liable to wealth tax, difference in receipts as per TDS certificates
and actual receipts and disallowance under section 14 A of Income Tax Section), involving a total claim
amount of Rs. 95.99 million. Out of the 12 disputes, 8 disputes are pending before High Court, Bombay
and 4 disputes are pending before the Income Tax Tribunal, Mumbai. There are 8 disputes relating to sales
tax assessments involving SPCL in which the aggregate claim amount involved is Rs. 49.76 million.

Shapoorji Data Processing Private Limited (“SDPP”)

Cases filed by SDPP

There are 5 cases filed by SDPP in relation to various matters out of which 3 cases involve a claim amount
of Rs. 0.43 million. In respect of 2 cases, the amount of claims cannot be quantified.

1. There are 3 cases filed by SDPP in relation to recovery of rental lease and arrears of rent involving
an amount of Rs. 0.43 million.

2. There are 2 cases filed by SDPP in relation to wrongful sub-lease and possession of property. The
amount of claims in respect of these 2 cases cannot be quantified.

Shapoorji Pallonji Power Company Limited (“SPP’’)

There are 2 disputes involving SPP relating to income tax matters, pending before the Income Tax
Appellate Tribunal, Mumbai in which the aggregate claim amount involved is Rs. 8.12million.

Shapoorji and Co., (Rajkot) Private Limited (“SCRP”)

346
There are 6 disputes involving SCRP pending before the High Court, Mumbai and 1 dispute pending
before the Income Tax Appellate Tribunal, Mumbai in relation to income tax matters (determination of
annual value of house property), involving a total claim amount of Rs. 0.93 million. There is 1 dispute
involving SCRP pending before the Supreme Court in relation to income tax (determination of annual value
of house property), involving a total claim amount of Rs. 0.23 million.

Shapoorji Pallonji and Co., (Rajkot) Private Limited (“SPCR”)

There are 6 disputes involving SPCR in relation to income tax matters (determination of annual value of
house property) before the High Court, Mumbai and 1 dispute before the Income Tax Appellate Tribunal
Mumbai ,involving a total claim amount of Rs. 0.82 million.

Shapoorji Pallonji (Gwalior) Private Limited (“SPGP”)

There are 6 disputes involving SPGP in relation to income tax matters (determination of annual value of
house property), pending before the High Court, Mumbai involving a total claim amount of Rs. 1.15
million.

Sterling Investment Corporation Private Limited (“SICL”)

Cases filed by SICL

SICL has filed 1 suit in relation to eviction from premises on account of non-payment of rent. The amount
of claim in respect of this case cannot be quantified.

Tax related matters

There are 7 tax disputes involving SICL pending before the High Court, Mumbai , out of which 6 disputes
pertain to wealth tax matters (valuation of property and value of CHS flat whether liable to wealth tax),
involving a total claim amount of Rs. 0.17million and 1 dispute pertains to income tax (exemption of
capital gains), involving a claim amount of Rs. 6.93 million.

Shapoorji Pallonji Finance Limited (“SPFL”)

Cases against SPFL

There are 2 cases filed against SPFL before the Consumer Forum, Mumbai in relation to deficiency of
services and defective vehicles, involving a total claim amount of Rs. 0.39 million.

Cases filed by SPFL

There are 41 cases filed by SPFL in relation to various matters out of which 39 cases involve a claim
amount of Rs. 20.56 million. In respect of 2 cases, the amount of claims cannot be quantified.

1. There are 2 criminal complaints filed by SPFL against individuals under Section 406 of the Indian
Penal Code for criminal breach of trust, before the 33rd Court, Metropolitan Magistrate Court,
Mumbai. The amount of claims in respect of these 2 cases cannot be quantified.

2. There are 25 criminal complaints filed by SPFL against various individuals and entities under
Section 138 of the Negotiable Instrument Act, 1881, (for dishonour of cheques), before the 33rd
Court, Metropolitan Magistrate Court, Mumbai, involving a total claim amount of Rs. 4.91
million.

347
3. There are 14 summary suits filed by SPFL before the High Court, Bombay against various
individuals and entities pertaining to recovery of monies, involving a total claim amount of Rs.
15.64 million

Tax related matters

There are 8 disputes in relation to income tax assessments involving SPFL, pending before the Income Tax
Appellate Tribunal, Mumbai, in which the aggregate amount claimed is Rs. 34.30 million.

United Motors (India) Limited (“UMIL”)

Cases against UMIL

There are 20 cases filed against UMIL in relation to various matters out of which 16 cases involve a claim
amount of Rs. 10.34 million. In respect of 4 cases, the amount of claims cannot be quantified.

1. There are 8 civil cases filed against UMIL before the High Court, Small Causes Court, and Thane
Court, Mumbai, in relation to recovery of monies and eviction of premises, involving a total claim
amount of Rs. 0.83 million.

1. There are 6 consumer cases filed against UMIL in relation to deficiency of services, replacement
of car and recovery of monies, involving a total claim amount of Rs. 2.89 million.

3. There is 1 case filed against UMIL in relation defect in vehicle in respect of which the amount of
claim cannot be quantified.

There are 6 labour disputes pending against UMIL, 3 before the Industrial Court, (Mumbai) and 3 before
the Industrial Court, (Ratnagiri), out of which 2 disputes involve a total claim amount of Rs. 2.5 million. In
respect of 4 disputes, the amount of claims cannot be quantified.

Cases filed by UMIL

There are 2 civil cases filed by UMIL in relation to recovery of monies involving a total claim amount of
Rs. 1.45 million..

Tax related matters

There is 1 dispute against UMIL pending before the Income Tax Appellate Tribunal, Mumbai in relation to
income tax matters (disallowance of bad debts and VRS expenses) involving a claim amount of Rs. 7.21
million.

348
 GOVERNMENT APPROVALS

We have received the necessary consents, licenses, permissions and approvals from the government and
various governmental agencies required for our present business and except as mentioned below, no further
approvals are required for carrying on our present business.

Approvals for the Issue

1. In-principle approval from the National Stock Exchange dated [•];

2. In-principle approval from the Bombay Stock Exchange dated [•].

Approvals to carry on our Business

Name of Number and Date Validity Period Purpose Granting

License/Registrati Of Registration/License Authority
Fron To
on Authority
Labour License in 28/2002-C1 Decemb January 21, Labour Licensing
relation to er 22, 2007 Licence Officer,
construction of 2005 under Bangalore
road at 6 laning of Section
Bangalore- 12(1) of
Hyderabad the
Contract
(Regulatio
n and
Abolition)
Act, 1970

Labour License in LO/MK/ /962/05 March March 31, Labour Licensing

relation to Koldam 24, 2006 2007 License Officer,
Project, Bilaspur, under Himachal
Himachal Pradesh Section Pradesh
12(1) of
the
Contract
Labour
(Regulatio
n and
Abolition)
Act, 1970

Labour License in LH/144/2005-D3 August August 28, Labour Licensing

relation to Project August 29, 2005 29, 2007 License Officer and
of four Laning of 2006 under Assistant
NH-1, Section Labour
Kancheepuram 12(1) of Officer,
the Chennai
Contract
Labour
(Regulatio
n and
Abolition)
Act, 1970

349
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
Labour License in CLA/C/196/2205/DLC (S) June 10, June 9, Labour Licensing
relation to 2006 2007 License Officer, New
Moolchand under Delhi
Underpass Section
Project, New Delhi 12(1) of
the
Contract
Labour
(Regulatio
n and
Abolition)
Act, 1970

Labour License for ALCD:CLA:LCN July 12, July 11, Labour Licensing
Harihar site in 01-2005-06 2005 2007 License Officer,
Karnataka under Karnataka
Section
12(1) of
the
Contract
Labour
(Regulatio
n and
Abolition)
Act, 1970

Labour License in L46(38)/2003/ALC-I June 6, June 9, Labour Regional

relation to Sone 2006 2007 License Labour
River Project, under Commissioner
Patna Section , Patna
12(1) of
the
Contract
Labour
(Regulatio
n and
Abolition)
Act, 1970
for not
more than
300
workmen
on any
given day

Labour License in 536/D-1/2006 Decemb December Labour Licensing

relation to er 31, 31, 2007 License Officer,
construction of 2006 under Nagpur
bridge flyover at Section
Khopa, Nagpur 12(1) of the
Contract
Labour
(Regulation

350
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
and
Abolition)
Act, 1970
for not more
than 150
workmen on
any given
day

Labour License in 30/06 May 31, May 30, Labour Licensing

relation to GPPL 2006 2007 License Officer,
Pipapavav Project under Gujarat
Section
12(1) of the
Contract
Labour
(Regulation
and
Abolition)
Act, 1970
for not more
than 150
workmen on
any given
day

Labour License in ALC/ADP/L:24 B/2006 August August Labour Licensing

relation to 11, 10, 2007 License Officer and
construction 2006 under Assistant
activities in MTF Section Labour
area, Jamnagar 12(1) of the Commissioner
Contract , Adipur
Labour (Kutch)
(Regulation
and
Abolition)
Act, 1970
for not more
than 3,000
employees
on any
given day

Labour License in 4/2003-A/H August August Labour Assistant

relation to doing 23, 21, License Labour
work for four -2006 -2007 under Commissioner
landing of NH- 4, section 8(1) , Hubli
KM 340 to 404 in of the
establishment of interstate
National Highway migrant
Authority of India, workman
Karnataka (Regulation
of

351
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
Employmen
t and
Conditions
of Service)
Act, 1979
for not more
than 13
workmen on
any given
day

Labour License in 93/2001-AH July 24, Septembe Labour Assistant

relation to Hubli- 2006 r -23, License Labour
Haveri rd project- 2007 under Commissioner
construction of section 8(1) , Hubli
NH-4 Hubli of the
Haveri Road interstate
migrant
workman
(Regulation
of
Employmen
t and
Conditions
of Service)
Act, 1979
for not more
than 13
workmen on
any given
day

Labour License for ALC-II/46 (07)/2006 February February Labour Regional

construction of 21, 2006 20, 2007 License Labour
Viaduct and 4 under Commissioner
stations on section 8(1) , New Delhi
Vishwavidyalay- of the
Jahangirpuri interstate
Corridor, New migrant
Delhi workman
(Regulation
of
Employmen
t and
Conditions
of Service)
Act, 1979
for not more
than 500
workmen on
any given
day

352
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
Labour License for 40/L-40/2004-AJK August Septembe Labour Assistant
Chenab River 31, r 21, 2007 License Labour
Project 2006 under Commissioner
section 8(1) , Jammu
of the
interstate
migrant
workman
(Regulation
of
Employmen
t and
Conditions
of Service)
Act, 1979
for not more
than 200
workmen on
any given
day

Labour license in 46(L-1) 2006/ACH/JK April 27, April 26, Section Assistant
relation to work in 2006 2007 12(1) of the Labour
Udhampur, Jammu Contract Commissioner
Labour , Udhampur
(Regulation
and
Abolition)
Act, 1970
Labour License for 119736 May 22, May, 21, Section Assistant
G.H.C.L. Virawal May 18, 2006 2006 2007 12(1) of the Commissioner
(Gujarat) Contract , Junaghadh
Labour
(Regulation
and
Abolition)
Act, 1970
Labour License in M.46/(264)06-B2 Septemb Septembe Section Licensing
relation to project er 18, r 17, 2007 12(1) of the Officer,
in Trichur, 2006 Contract Trichur
Chennai Labour
(Regulation
and
Abolition)
Act, 1970
Certificate of BCWR/3/2005- ALC-I April 25, April 24, Certificate Regional
Registration in 2003 2007 of Labour
relation to the Registration Commissioner
Sone River Project under sub (Central),
section 3 of Patna
Section 7 of
the Building
and Other

353
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
Constructio
n workers
(Regulation
of
Employmen
t and
Conditions
of Service
Act) 1990

Certificate of 18660066712 June 19, - Value Assistant

Registration under 2006 Added tax Commissioner
Assam Value of Taxes,
Added Tax Rules, Guwahati
2005 (Unit D)

Certificate of GWD/CST/2932 March Until Central Assistant

Registration as 31, 2006 cancelled Sales Tax Commissioner
dealer under of Taxes,
Central Sales Tax Guwahati
(Registration and (Unit D)
Turnover) Rules,
1957 (Assam)

Certificate of GWD/ETX/0026 July 12, - Entry Tax Assistant

Registration under 2006 Commissioner
Assam Entry of Taxes,
Rules, 2001 Guwahati,
Unit-D

Certificate of 27270000333V April 1, - Sales Department of

Registration under 2006 Tax/Value Sales Tax,
Maharashtra Added Tax Government
Value Added Tax of
Act, 2002 Maharashtra

Certificate of 27270000333C April 1, - Central Department

Registration under 2006 sales Tax of Sales Tax,
the Central Sales Government
Tax (Registration of
and Turnover) Maharashtra
Rules, 1957
(Maharashtra)

Certificate of 28350106430 April 1, - Value Commercial-

Registration under 2003 Added Tax al Tax Officer,
Andhra Pradesh China Waltair
Value Added Tax, Circle,
2005 Vishakhapatn
am

Certificate of 28350106430 April 1, - Central Commercial-

354
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
Registration under 2003 Sales Tax al Tax Officer,
he Central Sales China Waltair
Tax (Registration Circle,
and Turnover) Vishakhapatn
Rules 1957 am
(Andhra Pradesh)
Certificate of 10240639007 April 1, - Value Assistant
Registration under 2005 Added Tax Commissi-
Section 19 of oner of
Bihar Value Commercial
Added Tax Taxes,
Ordinance, 2005 Sasaram
Circle,
Sasaram

Certificate of 10240639104 April 1, - Central Assistant

Registration under 2005 Sales Tax Commissi-
Central Sales Tax oner of
(Registration and Commercial
Turnover Rules), Taxes,
1957 (Bihar) Sasaram
Circle,
Sasaram

Certificate of 119429/GST January January Sales Tax Assessing

Registration under 18, 2005 17, 2010 Officer,
section 6 of Udhampur
Jammu and
Kashmir General
Sales Tax Act,
1962 (in the name
of M/s. Chenab
Bridge Project
Undertaking)

Certificate of TIN 01911190406 - - Sales Tax Assessing

Registration under Authority,
Jammu and Udhampur
Kashmir General
Sales Tax Act,
1962 (in the name
of M/s. Chenab
Bridge Project
Undertaking)

Certificate of 119494/GST Novemb Novembe Sales Tax Assessing

Registration under er 30, r 29, 2010 Authority,
section 6 of 2005 Udhampur
Jammu and
Kashmir General
Sales Tax Act,
1962

355
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
(in the name of
the Company)
Certificate of 1101044/97-98 Septemb - Sales Tax Commercial
Registration under er 12, Tax Officer,
Tamil Nadu 1997 Chennai
General Sales Tax
Act 1959

Certificate of 3326110144 January - Value Department of

Registration under 1, 2007 Added Tax Commercial
Tamil Nadu Value Taxes, Tamil
Added Tax Act, Nadu
2006

Certificate of 5190402/CST (Central) January Until Central Assessing

Registration under 18, 2005 cancelled Sales Tax Officer,
the Central Sales Udhampur
Tax (Registration
and Turnover)
Rules 1957
(in the name of
M/s. Chenab
Bridge Project
Undertaking)
(Jammu and
Kashmir)

Certificate of 01231190780 Novemb Until Sales Tax Assessing

Registration under er 30, cancelled Officer,
Central Sales Tax 2005 Udhampur
(Registration and
Turnover Rules)
1957 (in the name
of the Company)

Certificate of 07670255844 April 1, - Sales Department of

Registration under 2005 Tax/Value Sales Tax,
Delhi Value Added Tax Government
Added Tax of Delhi
Act,2004

Certificate of 07670255844 - - Central Department of

Registration under Sales Tax Sales Tax,
Central Sales Tax Government
Act, 1957 (Delhi) of Delhi

Certificate of 30780305650 Novemb - Sales Commercial

Registration under er 29, Tax/Value Tax Officer,
Goa Value Added 2006 Added Tax Mapusa
Tax Act, 2005

Certificate of B/CST/5637 Novemb - Central Commercial

356
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
Registration under er 29, Sales Tax Tax Officer,
Central Sales Tax 2006 Mapusa
(Registration and
Turnover) Rules,
1957 (Goa)

Certificate of 24210700104 April 1, - Value Commercial

Registration under 2006 Added Tax Tax Officer,
Gujarat Value Bharuch
Added Tax Act,
2003

Certificate of 24710700104 July 1, - Central Commercial

Registration under 2002 Sales Tax Tax Officer,
Central Sales Tax Bharuch
(Registration and
Turnover) Rules,
1957 (Gujarat)

Certificate of BLP-GST-3097 April 11, Until Sales Assessing

Registration under 2005 cancelled Tax/Value Officer,
Himachal Pradesh Added Tax Bilaspur
General Sales Tax
Rules, 1970,

Certificate of CST-3092 (Central) April 11, Until Central Assessing

Registration under 2005 cancelled Sales Tax Officer,
Central Sales Tax Bilaspur
(Registration and
Turnover) Rules,
1957 (Himachal
Pradesh)

Certificate of 19670047031 April 1, - Value Commercial

Registration under 2003 Added Tax Tax
West Bengal Department,
Value Added Tax West Bengal
Act, 2003

Certificate of 19670047225 April 1, - Central Commercial

Registration under 2003 Sales Tax Tax
Central Sales Tax Department,
Act, 1957 (West West Bengal
Bengal)

Certificate of 32072033204 - - Sales Commercial

Registration under Tax/Value Tax Officer,
Kerala Value Added Tax Ernakulam
Added Tax Act,
2003

Certificate of 0720C003320 - - Central Commercial

357
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
Registration under Sales Tax Tax Officer,
Central Sales Tax Ernakulam
Act, 1957 (Kerala)

Certificate of 29830087001 April 1, - Sales Registering

Registration under 2003 Tax/Value Authority,
of the Karnataka Added Tax Karnataka
Value Added Tax
Act, 2003
Certificate of 30773908 February - Central Assistant
Registration under 23, 1996 Sales Tax Commissioner
Central Sales Tax of
Act, 1957 Commercial
(Karnataka) Taxes,
Mangalore

Certificate of 718816 Septemb - Central Department of

Registration under er 12, Sales Tax Commercial
Central Sales Tax 1997 Taxes,
(Registration and Chennai
Turnover) Rules, ,
1957 (Tamil Nadu)

Certificate of 19670047128 April 1, - Sales Tax Commercial

Registration under 2003 Tax
West Bengal Sales Department,
Tax Act, 1994 West Bengal

LICENCES FOR EXPLOSIVES

License to Possess E/HQ/JK/22/52 (E37592) August March 31, Chief

Explosives and use October 9, 2006 14, 2006 2008 Controller of
subject for use Explosives,
under the Nagpur
provisions of
Explosives Act,
1884 and rules
made thereunder.
(With respect to
premises situated
at survey 52,
village Sangaldan,
Tehsil Gool,
Udhampur, Jammu
and Kashmir)

License to Possess P/SC/KA/14/1133 June 21, December Joint Chief

Explosives and use (P34362) 2006 31, 2007 Controller of
subject for use July 14, 2003 Explosives,
under the Chennai

358
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
provisions of
Explosives Act,
1884 and rules
made thereunder.
(Renewal)
(Existing
petroleum/service
station/consumer
pump at Solur Vill,
Devanholi Tal,
s.No. 12/3,
Bangalore)

CONSENT/APPROVALS

Consent for 106/KSPCB/EO/BNG(N)/I Septemb June 30, Environmenta

operation of the NR-120028/DEO/AEO- er 2, 2007 l Officer,
plant under section 2/APC/2006-2007/2656 2006 Karnataka
21 of the Air State Pollution
(Prevention and September 2, 2006 Control Board
Control of
Pollution) Act,
1981.

(Description of
chimney:
Attached to 160
TPH Hot Mixing
Plant
Attached to 40
KVA D.G. Set
Attached to 125
KVA D.G. Set
200 TPH Crusher
Section
Attached to 600
KVA D.G. Set-2
Nos.)

CERTIFICATION

Certificate of No. B-001059 April 1, March 31, Company Government

Recognition, September 7, 2006 2006 2009 has been of India,
according status of accorded Ministry of
Two Star Export the status Commerce
House to the of Two and Industry
Company Star (Office of the
Export Joint Director
House in General of
accordance Foreign
with the Trade)
provisions

359
 Name of Number and Date Validity Period Purpose Granting
License/Registrati Of Registration/License Authority
Fron To
on Authority
of the
Foreign
Trade
Policy,
2004-09

360
 OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue

The Board has, pursuant to resolution passed at its meeting held on November 28, 2006, authorised the
Issue subject to the approval by the shareholders of the Company under Section 81(1A) of the Companies
Act.

The shareholders have authorised the Issue by a special resolution in accordance with Section 81(1A) of the
Companies Act, passed at the Extra-Ordinary General Meeting of the Company held on December 22, 2006
at Mumbai.

Prohibition by SEBI

The Company, the Directors, the Promoters, Directors or the person(s) in control of the Promoters, the
Company’s subsidiaries and affiliates and companies with which the Directors are associated with as
directors have not been prohibited from accessing or operating in capital markets under any order or
direction passed by SEBI.

Eligibility for the Issue

We are eligible for the Issue as per Clause 2.2.2 of the SEBI Guidelines as explained under Clause 2.2.2 of
the SEBI Guidelines which states as follows:
“2.2.2 An unlisted company not complying with any of the conditions specified in Clause 2.2.1 may make
an initial public offering (IPO) of equity shares or any other security which may be converted into or
exchanged with equity shares at a later date, only if it meets both the conditions (a) and (b) given below:

(a) (i) The issue is made through the book-building process, with at least 50% of the issue size
being allotted to the Qualified Institutional Buyers (QIBs), failing which the full
subscription monies shall be refunded.

OR

(a)(ii) The “project” has at least 15% participation by Financial Institutions/ Scheduled
Commercial Banks, of which at least 10% comes from the appraiser(s). In addition to
this, at least 10% of the issue size shall be allotted to QIBs, failing which the full
subscription monies shall be refunded

AND

(b) (i) The minimum post-issue face value capital of the company shall be Rs. 10 crores.

OR

(b) (ii) There shall be a compulsory market-making for at least 2 years from the date of listing of
the shares , subject to the following:

(a) Market makers undertake to offer buy and sell quotes for a minimum depth of 300 shares;

(b) Market makers undertake to ensure that the bid-ask spread (difference between
quotations for sale and purchase) for their quotes shall not at any time exceed 10%;

361
 (c) The inventory of the market makers on each of such stock exchanges, as of the date of
allotment of securities, shall be at least 5% of the proposed issue of the company.)”

We are an unlisted company not complying with the conditions specified in Clause 2.2.1 of the SEBI
Guidelines and are therefore required to meet both the conditions detailed in clause 2.2.2(a) and clause
2.2.2(b) of the SEBI Guidelines.
• We are complying with Clause 2.2.2(a)(i) of the SEBI Guidelines and at least 60% of the Net
Issue are proposed to be Allotted to QIBs (in order to comply with the requirements of Rule
19(2)(b) of the SCRR) and in the event we fail to do so, the full subscription monies shall be
refunded to the Bidders.

• We are complying with the second proviso to Clause 11.3.5(i) of the SEBI Guidelines and Non-
Institutional Bidders and Retail Individual Bidders will be allocated up to 10% and 30% of the Net
Issue respectively.

• We are also complying with Clause 2.2.2(b)(i) of the SEBI Guidelines and the post-issue face
value capital of the Company shall be Rs. 874,650,000 which is more than the minimum
requirement of Rs. 10 crore (Rs. 100 million).

Hence, we are eligible for the Issue under Clause 2.2.2 of the SEBI Guidelines.

Further, in accordance with Clause 2.2.2A of the SEBI Guidelines, we shall ensure that the number of
prospective allottees to whom the Equity Shares will be Allotted will be not less than 1,000.

Further, the Issue is subject to the fulfilment of the following conditions as required by Rule 19(2)(b)
SCRR:

• A minimum 2,000,000 Equity Shares (excluding reservations, firm Allotments and promoters
contribution) are offered to the public;

• The Net Issue size, which is the Issue Price multiplied by the number of Equity Shares offered to
the public, is a minimum of Rs. 1,000 million; and

• The Issue is made through the Book Building method with allocation of 60% of the Net Issue size
to QIBs as specified by SEBI.

DISCLAIMER CLAUSE

AS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEEN

SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF
THE DRAFT RED HERRING PROSPECTUS TO SEBI SHOULD NOT, IN ANY WAY, BE
DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY
SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL
SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED
TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS
EXPRESSED IN THE DRAFT RED HERRING PROSPECTUS. THE BOOK RUNNING LEAD
MANAGER, ENAM FINANCIAL CONSULTANTS PRIVATE LIMITED, CLSA INDIA
LIMITED, SBI CAPITAL MARKETS LIMITED, JM MORGAN STANLEY PRIVATE LIMITED
HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING
PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI
(DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000 AS FOR THE TIME
BEING IN FORCE. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN
INFORMED DECISION FOR MAKING AN INVESTMENT IN THE PROPOSED ISSUE.

362
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS
PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF
ALL RELEVANT INFORMATION IN THE DRAFT RED HERRING PROSPECTUS, THE THE
BOOK RUNNING LEAD MANAGER AND THE CO BOOK RUNNING LEAD MANAGERS ARE
EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY
DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS
THIS PURPOSE, THE BOOK RUNNING LEAD MANAGER AND CO BOOK RUNNING LEAD
MANAGERS, ENAM FINANCIAL CONSULTANTS PRIVATE LIMITED, CLSA INDIA
LIMITED, JM MORGAN STANLEY PRIVATE LIMITED AND SBI CAPITAL MARKETS
LIMITED, HAVE FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED
JANUARY 8, 2007 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS)
REGULATIONS, 1992 WHICH READS AS FOLLOWS:

“(I) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO

LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH
COLLABORATORS ETC. AND OTHER MATERIALS, MORE PARTICULARLY REFERRED
TO IN THE ANNEXURE, IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED
HERRING PROSPECTUS PERTAINING TO THE SAID ISSUE.

(II) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE
COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT
VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE,
PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE
DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY
THE COMPANY, WE CONFIRM THAT:

A) THE DRAFT RED HERRING PROSPECTUS FORWARDED TO SEBI IS IN

CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT
TO THE ISSUE;

B) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO
THE GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT
AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY
COMPLIED WITH; AND

C) THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE

TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-
INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE.

(III) BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED
HERRING PROSPECTUS ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH
REGISTRATIONS ARE VALID.

(IV) WHEN UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE WORTH

OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS.

(V) WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN

OBTAINED FOR INCLUSION OF ITS SECURITIES AS PART OF PROMOTERS
CONTRIBUTION SUBJECT TO LOCK-IN AND THE SECURITIES PROPOSED TO FORM
PART OF THE PROMOTERS CONTRIBUTION SUBJECT TO LOCK-IN, WILL NOT BE
DISPOSED/SOLD/TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING
FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH THE SEBI
TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT
RED HERRING PROSPECTUS.”

All legal requirements pertaining to the Issue will be complied with at the time of filing of the Red Herring

363
Prospectus with the RoC in terms of section 60B of the Companies Act. All legal requirements pertaining
to the issue will be complied with at the time of registration of the Prospectus with the RoC in terms of
section 56, section 60 and section 60B of the Companies Act.

The filing of the Draft Red Herring Prospectus does not, however, absolve the Company from any
liabilities under section 63 and section 68 of the Companies Act or from the requirement of obtaining such
statutory and other clearances as may be required for the purpose of the proposed Issue. SEBI further
reserves the right to take up at any point of time, with the Book Running Lead Manager and Co Book
Running Lead Managers, any irregularities or lapses in the Draft Red Herring Prospectus.

Disclaimer from the Company, the BRLM and the CBRLMs

Investors that bid in the Issue will be required to confirm and will be deemed to have represented to the
Company, and the Underwriters and their respective directors, officers, agents, affiliates and
representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals
to acquire Equity Shares of the Company and will not Issue, sell, pledge or transfer the Equity Shares of the
Company to any person who is not eligible under applicable laws, rules,

The Company, the Directors, the BRLM and the CBRLMs accept no responsibility for statements made
otherwise than in this Draft Red Herring Prospectus or in the advertisements or any other material issued by
or at instance of the above mentioned entities and anyone placing reliance on any other source of
information, including our website, www.afcons.com, would be doing so at his or her own risk.

The BRLM and the CBRLMs accept no responsibility, save to the limited extent as provided in the
Memorandum of Understanding entered into among the BRLM, the CBRLMs and the Company dated
January 8, 2007 and the Underwriting Agreement to be entered into among the Underwriters and the
Company.

All information shall be made available by the Company, the BRLM and the CBRLMs to the public and
investors at large and no selective or additional information would be available for a section of the
investors in any manner whatsoever including at road show presentations, in research or sales reports or at
bidding centres etc.

Neither the Company nor the Syndicate is liable to the Bidders for any failure in downloading the Bids due
to faults in any software/hardware system or otherwise.

Disclaimer in Respect of Jurisdiction

This Issue is being made in India to persons resident in India (including Indian nationals resident in India
who are majors, HUFs, companies, corporate bodies and societies registered under the applicable laws in
India) and authorised to invest in shares, Mutual Funds, Indian financial institutions, commercial banks,
regional rural banks, co-operative banks (subject to RBI permission), or trusts under the applicable trust
law and who are authorised under their constitution to hold and invest in shares, permitted insurance
companies and pension funds and to permitted Non-Residents including Eligible NRIs, FIIs and eligible
foreign investors. This Draft Red Herring Prospectus does not, however, constitute an invitation to
subscribe to Equity Shares Issued hereby in any other jurisdiction to any person to whom it is unlawful to
make an Issue or invitation in such jurisdiction. Any person into whose possession this Draft Red Herring
Prospectus comes is required to inform himself or herself about and to observe, any such restrictions. Any
dispute arising out of this Issue will be subject to the jurisdiction of appropriate court(s) in Mumbai only.

No action has been or will be taken to permit a public issuing in any jurisdiction where action would be
required for that purpose, except that the Draft Red Herring Prospectus had been filed with SEBI for
observations. Accordingly, the Equity Shares, represented thereby may not be Issued or sold, directly or
indirectly, and this Draft Red Herring Prospectus may not be distributed, in any jurisdiction, except in
accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this Draft

364
Red Herring Prospectus nor any sale hereunder shall, under any circumstances, create any implication that
there has been no change in the Company’s affairs from the date hereof or that the information contained
herein is correct as of any time subsequent to this date.

The Equity Shares have not been and will not be registered under the U.S. Securities Act 1933, as
amended (the “Securities Act”) or any state securities laws in the United States and may not be
Issued or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as
defined in Regulation S of the Securities Act), except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act.

Disclaimer clause of the BSE

BSE has given vide its letter dated [●], permission to us to use BSE’s name in the Red Herring Prospectus
as one of the stock exchanges on which our securities are proposed to be listed. BSE has scrutinised the
Draft Red Herring Prospectus for its limited internal purpose of deciding on the matter of granting the
aforesaid permission to us. BSE does not in any manner:

• Warrant, certify or endorse the correctness or completeness of any of the contents of the Draft Red
Herring Prospectus; or

• Warrant that this Company’s securities will be listed or will continue to be listed on BSE; or

• Take any responsibility for the financial or other soundness of this Company, its promoters, its
management or any scheme or project of this Company;

and it should not for any reason be deemed or construed to mean that the Draft Red Herring Prospectus has
been cleared or approved by BSE. Every Person who desires to apply for or otherwise acquires any
securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall
not have any claim against BSE whatsoever by reason of any loss which may be suffered by such Person
consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or
omitted to be stated herein or for any other reason whatsoever.

Disclaimer clause of the NSE

As required, a copy of the Draft Red Herring Prospectus has been submitted to NSE. NSE has given in its
letter no. [●]dated [●], 2006, permission to us to use NSE’s name in the Red Herring Prospectus as one of
the stock exchanges on which our securities are proposed to be listed, The NSE has scrutinised the Draft
Red Herring Prospectus for its limited internal purpose of deciding on the matter of granting the aforesaid
permission to us. It is to be distinctly understood that the aforesaid permission given by NSE should not in
any way be deemed or construed to mean that the Draft Red Herring Prospectus has been cleared or
approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of
any of the contents of the Draft Red Herring Prospectus; nor does it warrant that our securities will be listed
or will continue to be listed on the NSE; nor does it take any responsibility for the financial or other
soundness of the Company, its promoters, its management or any scheme or project of this Company.

Every Person who desires to apply for or otherwise acquires any of our securities may do so pursuant to
independent inquiry, investigation and analysis and shall not have any claim against NSE whatsoever by
reason of any loss which may be suffered by such Person consequent to or in connection with such
subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other
reason whatsoever.

Filing

A copy of this Draft Red Herring Prospectus has been filed with SEBI at SEBI Bhavan, G Block, 3rd Floor,
Bandra Kurla Complex, Bandra (E),Mumbai 400 051.

365
A copy of the Red Herring Prospectus, along with the documents required to be filed under Section 60B of
the Companies Act, will be delivered for registration to the RoC and a copy of the Prospectus required to
be filed under Section 60 of the Companies Act will be delivered for registration with RoC situated at
Mumbai.

Listing

Applications have been made to the BSE and the NSE for permission for listing of the Equity Shares being
issued through this Draft Red Herring Prospectus.

If the permission to deal in and for an official quotation of the Equity Shares is not granted by any of the
Stock Exchanges, the Company shall forthwith repay, without interest, all moneys received from the
applicants in pursuance of this Draft Red Herring Prospectus. If such money is not repaid within eight days
after the Company becomes liable to repay it (i.e. from the date of refusal or within 15 days from the date
of Bid/Issue Closing Date, whichever is earlier), then the Company shall, on and from expiry of 8 days, be
liable to repay the money, with interest at the rate of 15% per annum on application money, as prescribed
under Section 73 of the Companies Act.

The Company shall ensure that all steps for the completion of the necessary formalities for listing and
commencement of trading at both the Stock Exchanges mentioned above are taken within seven working
days of finalisation of the basis of allotment for the Issue.

Impersonation

Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the
Companies Act, which is reproduced below:

“Any person who:

(a) Makes in a fictitious name, an application to a company for acquiring or subscribing for,
any shares therein, or

(b) Otherwise induces a company to allot, or register any transfer of shares, therein to him, or
any other person in a fictitious name

shall be punishable with imprisonment for a term which may extend to five years.”

Consents

Consents in writing of: (a) the Directors, the Company Secretary and Compliance Officer, the auditors, the
legal advisors, the Bankers to the Issue; and (b) the Book Running Lead Manager, the Co Book Running
Lead Managers, the Syndicate Members, the Escrow Collection Banks and the Registrar to the Issue to act
in their respective capacities, have been obtained and would be filed along with a copy of the Red Herring
Prospectus with the RoC as required under Sections 60 and 60B of the Companies Act and such consents
have not been withdrawn up to the time of delivery of the Draft Red Herring Prospectus for registration
with the RoC.

In accordance with the Companies Act, 1956 and the Securities and Exchange Board of India (Disclosure
and Investor Protection) Guidelines 2000, CC Chokshi & Co., and JC Bhatt Chartered Accountants, the
Company’s Auditors have given their written consent to the inclusion of their report in the form and
context in which it appears in the Draft Red Herring Prospectus and such consent and report has not been
withdrawn up to the time of delivery of the Draft Red Herring Prospectus for registration with the RoC.

Expert Opinion

We have not obtained any expert opinions.

366
Issue Related Expenses

The expenses of this Issue include, among others, underwriting and management fees, selling commission,
printing and distribution expenses, legal fees, statutory advertisement expenses and listing fees. The
estimated expenses of the Issue are as follows:

Activity Expense Expense (% of Expense (% of

(in Rs. million) total expenses) Issue Size)
Lead management fee and underwriting [•] [•] [•]
commissions*
Advertising and marketing expenses* [•] [•] [•]
Printing and stationery* [•] [•] [•]
Registrar’s fee* [•] [•] [•]
Legal Fees* [•] [•] [•]
Total estimated Issue expenses* [•] [•] [•]
*
Will be completed after finalisation of the Issue Price.

The listing fee, and all expenses with respect to the Issue will be borne by us.

Fees Payable to the Book Running Lead Manager, Co Book Running Lead Managers and Syndicate
Members

The total fees payable to the Book Running Lead Manager, Co Book Running Lead Managers and the
Syndicate Member (including underwriting commission and selling commission) will be as stated in the
Engagement Letter with the BRLM and the CBRLMs, a copy of which is available for inspection at the
administrative office of the Company located at Afcons House, 16, Shah Industrial Estate, Veera Desai
Road, Azad Nagar, P.O. Post Box No. 11978, Andheri (W) Mumbai 400 053.

Fees Payable to the Registrar to the Issue

The fees payable to the Registrar to the Issue for processing of application, data entry, printing of
CAN/refund order, preparation of refund data on magnetic tape, printing of bulk mailing register will be as
per the Memorandum of Understanding signed with the Company, a copy of which is available for
inspection at the registered office of the Company.

The Registrar to the Issue will be reimbursed for all out-of-pocket expenses including cost of stationery,
postage, stamp duty and communication expenses. Adequate funds will be provided to the Registrar to the
Issue to enable it to send refund orders or allotment advice by registered post/speed post/under certificate of
posting.

Particulars regarding Public or Rights Issues during the Last Five Years

We have not made any public or rights issues during the last five years.

Issues otherwise than for Cash

Except as stated in the section entitled “Capital Structure” on page 29 of this Draft Red Herring Prospectus
and “History and Corporate Matters” on page 108 of this Draft Red Herring Prospectus, the Company has
not issued any Equity Shares for consideration otherwise than for cash.

Commission and Brokerage paid on Previous Issues of the Equity Shares

Since this is the initial public issue of the Company’s Equity Shares, no sum has been paid or has been

367
payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for
any of the Equity Shares since the Company’s inception.

Companies under the Same Management

There is no other company under the same management within the meaning of erstwhile Section 370 (1B)
of the Companies Act, other than the subsidiaries, joint ventures, associates, Promoters and Promoter group
companies, details of which companies are provided in the sections entitled “History and Certain Corporate
Matters” and “Our Promoters” beginning on pages 108 and 139 of this Draft Red Herring Prospectus.

Promise vs. Performance – Last Issue of Group/Associate Companies

There has been no public issue by any of the Group/Associate Companies in the last five years except as
mentioned in the section titled “Our Promoters” beginning on page 139 in this Draft Red Herring
Prospectus.

Outstanding Debentures or Bonds

The Company does not have any outstanding debentures or bonds.

Outstanding Preference Shares

The Company does not have any outstanding preference shares other than those mentioned in the section
titled “Capital Structure” beginning on page 29 in this Draft Red Herring Prospectus.

Stock Market Data of our Equity Shares

This being an initial public issue of the Company, the Equity Shares are not listed on any stock exchange.

Purchase of Property

Except as stated in the “Objects of Issue” in this Draft Red Herring Prospectus, and save in respect of the
property purchased or acquired or to be purchased or acquired in connection with the business or activities
contemplated by the objects of the Issue, there is no property which has been purchased or acquired or is
proposed to be purchased or acquired which is to be paid for wholly or partly from the proceeds of the
present Issue or the purchase or acquisition of which has not been completed on the date of this Draft Red
Herring Prospectus, other than property, in respect of which:

• The contract for the purchase or acquisition was entered into in the ordinary course of business,
nor was the contract entered into in contemplation of the Issue, nor is the issue contemplated in
consequence of the contract; or

• The amount of the purchase money is not material.

Except as stated in this Draft Red Herring Prospectus, the Company has not purchased any property in
which any of its Promoter and/or Directors, have any direct or indirect interest in any payment made
thereunder.

Mechanism for Redressal of Investor Grievances

The Memorandum of Understanding between the Registrar to the Issue, and the Company will provide for
retention of records with the Registrar to the Issue for a period of at least one year from the last date of
dispatch of letters of allotment, demat credit, refund orders to enable the investors to approach the Registrar
to the Issue for redressal of their grievances.

All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such

368
as name, address of the applicant, application number, number of shares applied for, amount paid on
application, Depository Participant, and the bank branch or collection centre where the application was
submitted.

Disposal of Investor Grievances by the Company

The Company estimates that the average time required by the Company or the Registrar to the Issue for the
redressal of routine investor grievances shall be ten working days from the date of receipt of the complaint.
In case of non-routine complaints and complaints where external agencies are involved, the Company will
seek to redress these complaints as expeditiously as possible.

The Company has appointed Mr. P.R. Rajendran, Company Secretary as the Compliance Officer and he
may be contacted in case of any pre-Issue or post-Issue-related problems. He can be contacted at the
following address:

Afcons Infrastructure Limited

Afcons House
16, Shah Industrial Estate, Azad Nagar P.O.,
Post Box No. 11978, Andheri (W), Mumbai 400 053
Tel: (91 22) 6677 3100
Fax: (91 22) 2673 0047
E-mail: ipo@afcons.com

Changes in Auditors

There have been no changes of the auditors in the last three years.

Capitalisation of Reserves or Profits

Except as disclosed in this Draft Red Herring Prospectus, we have not capitalised our reserves or profits at
any time during the last five years.

Revaluation of Assets

The Company has not revalued its assets in the last five years.

369
 TERMS OF THE ISSUE

The Equity Shares being issued are subject to the provisions of the Companies Act, our Memorandum and
Articles, the terms of this Draft Red Herring Prospectus, the Red Herring Prospectus and the Prospectus,
Bid cum Application Form, the Revision Form, the CAN and other terms and conditions as may be
incorporated in the allotment advices and other documents/ certificates that may be executed in respect of
the Issue. The Equity Shares shall also be subject to laws, guidelines, notifications and regulations relating
to the issue of capital and listing of securities issued from time to time by SEBI, the Government of India,
Stock Exchanges, ROC, RBI and/ or other authorities, as in force on the date of the Issue and to the extent
applicable.

Authority for the Issue

The Board has, pursuant to resolution passed at its meeting held on November 28, 2006, authorised the
Issue subject to the approval by the shareholders of the Company under Section 81(1A) of the Companies
Act.

The shareholders have authorised the Issue by a special resolution in accordance with Section 81(1A) of the
Companies Act, passed at the Extra-Ordinary General Meeting of the Company held on December 22, 2006
at Mumbai.

Ranking of Equity Shares

The Equity Shares being issued shall be subject to the provisions of our Memorandum and Articles and
shall rank pari-passu with the existing Equity Shares of our Company including rights in respect of
dividend. The Allottees in receipt of Allotment of Equity Shares under this Issue will be entitled to
dividends and other corporate benefits, if any, declared by the Company after the date of Allotment.

Mode of Payment of Dividend

We shall pay dividends to our shareholders as per the provisions of the Companies Act.

Face Value and Issue Price

The face value of the Equity Shares is Rs. 10 each and the Issue Price is Rs. [●] per Equity Share. At any
given point of time there shall be only one denomination for the Equity Shares.

Compliance with SEBI Guidelines

We shall comply with all disclosure and accounting norms as specified by SEBI from time to time.

Rights of the Equity Shareholder

Subject to applicable laws, the equity shareholders shall have the following rights:

− Right to receive dividend, if declared;

− Right to attend general meetings and exercise voting powers, unless prohibited by law;
− Right to vote on a poll either in person or by proxy;
− Right to receive offers for rights shares and be allotted bonus shares, if announced;
− Right to receive surplus on liquidation;
− Right of free transferability; and
− Such other rights, as may be available to a shareholder of a listed public company under the
Companies Act, the terms of the listing agreement executed with the Stock Exchanges, and our

370
 Company’s Memorandum and Articles.

For a detailed description of the main provisions of our Articles relating to voting rights, dividend,
forfeiture and lien and/or consolidation/splitting, please refer to the section titled “Main Provisions of Our
Articles of Association” on page 405 of the Red Herring Prospectus.

Market Lot and Trading Lot

In terms of Section 68B of the Companies Act, the Equity Shares shall be Allotted only in dematerialised
form. As per the SEBI Guidelines, the trading of our Equity Shares shall only be in dematerialised form.
Since trading of our Equity Shares is in dematerialised form, the tradable lot is one Equity Share. Allotment
in this Issue will be only in electronic form in multiples of [●].

Jurisdiction

Exclusive jurisdiction for the purpose of this Issue is with the competent courts/authorities in Mumbai,
Maharashtra, India.

Nomination Facility to Investor

In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint
Bidders, may nominate any one person in whom, in the event of the death of sole Bidder or in case of joint
Bidders, death of all the Bidders, as the case may be, the Equity Shares Allotted, if any, shall vest. A
person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall
in accordance with Section 109A of the Companies Act, be entitled to the same advantages to which he or
she would be entitled if he or she were the registered holder of the Equity Share(s). Where the nominee is a
minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become
entitled to Equity Share(s) in the event of his or her death during the minority. A nomination shall stand
rescinded upon a sale of equity share(s) by the person nominating. A buyer will be entitled to make a fresh
nomination in the manner prescribed. Fresh nomination can be made only on the prescribed form available
on request at the Registered Office of our Company or to the Registrar and Transfer Agents of our
Company.

In accordance with Section 109B of the Companies Act, any Person who becomes a nominee by virtue of
Section 109A of the Companies Act, shall upon the production of such evidence as may be required by the
Board, elect either:

• To register himself or herself as the holder of the Equity Shares; or

• To make such transfer of the Equity Shares, as the deceased holder could have made.

Further, the Board may at any time give notice requiring any nominee to choose either to be registered
himself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of
ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable
in respect of the Equity Shares, until the requirements of the notice have been complied with.

Since the Allotment of Equity Shares in the Issue will be made only in dematerialised form, there is no
need to make a separate nomination with us. Nominations registered with respective depository participant
of the applicant would prevail. If the investors require to change their nomination, they are requested to
inform their respective depository participant.

Minimum Subscription

If our Company does not receive the minimum subscription of 90% of the Issue, including devolvement of
underwriters within 60 days from the Bid/Issue Closing Date, our Company shall forthwith refund the
entire subscription amount received. If there is a delay beyond 8 days after our Company becomes liable to

371
pay the amount, our Company shall pay interest prescribed under Section 73 of the Companies Act.

Further in terms of Clause 2.2.2A of the SEBI Guidelines, we shall ensure that the number of prospective
allottees to whom Equity Shares will be Allotted will not be less than 1,000.

The Equity Shares have not been and will not be registered under the US Securities Act of 1933 (the
“Securities Act”) or any state securities laws in the United States and may not be offered or sold
within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in
Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other
jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in
any such jurisdiction, except in compliance with the applicable laws of such jurisdiction.

372
 ISSUE STRUCTURE

The present Issue of 1,60,65,000 Equity Shares Rs. 10 each, at a price of Rs. [●] for cash aggregating Rs.
[●] million is being made through the 100% Book Building Process.

QIBs Non- Retail Employee

Institutional Individual Reservation
Bidders Bidders Portion
Number of Equity At least 9,446,220 Equity Minimum of Minimum of Up to 321,300
Shares* Shares 1,574,370 4,723,110 Equity Shares.
Equity Shares Equity Shares
or Issue Size or Issue Size
less allocation less allocation
to QIB Bidders to QIB Bidders
and Retail and Non-
Individual Institutional
Bidders. Bidders.
Percentage of Issue At least 60% of Net Issue Minimum of Minimum of Up to
Size available for Size being allocated. 10% of Net 30% of Net 3,213,000
allotment/allocation However, up to 5% of the Issue or the Net Issue or the Net Equity Shares.
QIB Portion shall be Issue less Issue less
available for allocation allocation to allocation to
proportionately to Mutual QIB Bidders QIB Bidders
Funds only. and Retail and Non-
Individual Institutional
Bidders. Bidders.
Basis of Proportionate as follows: Proportionate Proportionate Proportionate
Allotment/Allocation
(a) [●] Equity Shares shall
if respective category
be allocated on a
is oversubscribed
proportionate basis to
Mutual Funds; and
(b) [●] Equity Shares shall
be allotted on a
proportionate basis to all
QIBs including Mutual
Funds receiving allocation
as per (a) above.
Minimum Bid Such number of Equity Such number of [•] Equity [•] Equity
Shares that the Bid Equity Shares Shares. Shares.
Amount exceeds Rs. that the Bid
100,000. Amount
exceeds Rs.
100,000.
Maximum Bid Such number of Equity Such number of Such number of There is no
Shares not exceeding the Equity Shares Equity Shares restriction on
Issue, subject to not exceeding whereby the the maximum
applicable limits. the Issue Bid Amount Bid Amount.
subject to does not exceed
applicable Rs. 100,000.
limits.
Mode of Allotment Compulsorily in Compulsorily Compulsorily Compulsorily
dematerialised form. in in in
dematerialised dematerialised dematerialised

373
 QIBs Non- Retail Employee
Institutional Individual Reservation
Bidders Bidders Portion
form. form. form.
Bid Lot [●] Equity Shares in [●] Equity [●] Equity [●] Equity
multiples of [●] Equity Shares in Shares in Shares in
Shares multiples of [●] multiples of [●] multiples of
Equity Shares Equity Shares [●] Equity
Shares
Trading Lot One Equity Share One Equity One Equity One Equity
Share Share Share
Who can Apply ** Public financial NRIs, Resident Individuals Eligible
institutions as specified in Indian (including Employees as
Section 4A of the individuals, HUFs, NRIs) on [●]
Companies Act, FIIs HUF (in the applying for
registered with SEBI, name of Karta), Equity Shares
scheduled commercial companies, such that the
banks, mutual funds corporate Bid Amount
registered with SEBI, bodies, does not exceed
multilateral and bilateral scientific Rs. 100,000 in
development financial institutions value.
institutions, venture societies and
capital funds registered trusts.
with SEBI, foreign
venture capital investors
registered with SEBI,
state industrial
development corporations,
insurance companies
registered with Insurance
Regulatory and
Development Authority,
provident funds (subject
to applicable law) with
minimum corpus of Rs.
250 million and pension
funds with minimum
corpus of Rs. 250 million
in accordance with
applicable law.

Terms of Payment QIB Margin Amount shall Margin Amount Margin Margin
be payable at the time of shall be payable Amount shall Amount shall
submission of Bid cum at the time of be payable at be payable at
Application Form to the submission of the time of the time of
Syndicate Member. Bid cum submission of submission of
Application Bid cum Bid cum
Form to the Application Application
Syndicate Form to the Form to the
Member. Syndicate Syndicate
Member. Member.

Margin Amount At least 10% of Bid Full Bid Full Bid Full Bid
Amount Amount on Amount on Amount on
bidding bidding bidding

374
* Subject to valid Bids being received at or above the Issue Price. In terms of Rule 19 (2)(b) of the
SCRR, this is an Issue for less than 25% of the post–Issue capital, therefore, the Issue is being
made through the 100% Book Building Process wherein at least 60% of the Net Issue shall be
allocated to Qualified Institutional Buyers on a proportionate basis out of which 5% shall be
available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be
available for allottment on a proportionate basis to QIBs and Mutual Funds, subject to valid bids
being received from them at or above the Issue Price. If at least 60% of the Net Issue cannot be
allocated to QIBs, then the entire application money will be refunded forthwith. Further, not less
than 10% of the Net Issue will be available for allocation on a proportionate basis to Non-
Institutional Bidders and not less than 30% of the Net Issue will be available for allocation on a
proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above
the Issue Price. Under-subscription, if any, in any category, except the QIB Portion, would be
allowed to be met with spill-over from any other category or combination of categories at the
discretion of our Company in consultation with the BRLM, the CBRLMs and the Designated
Stock Exchange.

** In case the Bid cum Application Form is submitted in joint names, the investors should ensure that
the demat account is also held in the same joint names and are in the same sequence in which they
appear in the Bid cum Application Form.

Bidding/Issue Programme

BID/ISSUE OPENS ON [●]

BID/ISSUE CLOSES ON [●]

Bids and any revision in Bids shall be accepted only between 10 a.m. and 3 p.m. (Indian Standard Time)
during the Bidding Period as mentioned above at the bidding centres mentioned on the Bid cum
Application Form except that on the Bid /Issue Closing Date, the Bids shall be accepted only between 10
a.m. and 1 p.m. (Indian Standard Time) and uploaded until such time as permitted by the BSE and the
NSE on the Bid /Issue Closing Date.

The Company reserves the right to revise the Price Band during the Bidding/Issue Period in accordance
with SEBI Guidelines. The cap on the Price Band should not be more than 20% of the floor of the Price
Band. Subject to compliance with the immediately preceding sentence, the floor of the Price Band can
move up or down to the extent of 20% of the floor of the Price Band advertised at least one day prior to the
Bid /Issue Opening Date.

In case of revision in the Price Band, the Issue Period will be extended for three additional days after
revision of Price Band subject to the Bidding Period/Issue Period not exceeding 10 days. Any revision
in the Price Band and the revised Bidding Period/Issue Period, if applicable, will be widely
disseminated by notification to the BSE and the NSE, by issuing a press release, and also by
indicating the change on the web sites of the BRLM, the CBRLMs and at the terminals of the
Syndicate.

375
 ISSUE PROCEDURE

Book Building Procedure

In terms of Rule 19 (2)(b) of the SCRR, this is an Issue for less than 25% of the post–Issue capital of the
Company, therefore, the Issue is being made through the 100% Book Building Process wherein at least
60% of the Net Issue shall be allocated to Qualified Institutional Buyers on a proportionate basis out of
which 5% shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder
shall be available for allocation on a proportionate basis to QIBs and Mutual Funds, subject to valid bids
being received from them at or above the Issue Price. If at least 60% of the Net Issue cannot be allocated to
QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% of the Net
Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than
30% of the Net Issue will be available for allocation on a proportionate basis to Retail Individual Bidders,
subject to valid bids being received at or above the Issue Price.

Bidders are required to submit their Bids through the Syndicate. Further, QIB Bids can be submitted only
through Syndicate Members. In case of QIB Bidders, the Company in consultation with the BRLM and the
CBRLMs may reject Bids at the time of acceptance of Bid cum Application Form provided that the reasons
for rejecting the same shall be provided to such Bidder in writing. In case of Non-Institutional Bidders and
Retail Individual Bidders and Employee Reservation Portion, our Company will have a right to reject the
Bids only on technical grounds.

Investors should note that allotment of Equity Shares to all successful Bidders will only be in the
dematerialised form. Bidders will not have the option of getting allotment of the Equity Shares in
physical form. The Equity Shares on allotment shall be traded only in the dematerialised segment of
the Stock Exchanges.

Bid cum Application Form

Bidders shall only use the specified Bid cum Application Form bearing the stamp of a member of the
Syndicate for the purpose of making a Bid in terms of this Draft Red Herring Prospectus. The Bidder shall
have the option to make a maximum of three Bids in the Bid cum Application Form and such options shall
not be considered as multiple Bids. Upon the allocation of Equity Shares, dispatch of the CAN, and filing
of the Prospectus with the ROC, the Bid cum Application Form shall be considered as the Application
Form. Upon completing and submitting the Bid cum Application Form to a member of the Syndicate, the
Bidder is deemed to have authorised our Company to make the necessary changes in the Red Herring
Prospectus and the Bid cum Application Form as would be required for filing the Prospectus with the ROC
and as would be required by ROC after such filing, without prior or subsequent notice of such changes to
the Bidder.

The prescribed colour of the Bid cum Application Form for various categories is as follows:

Category Colour of Bid cum Application

Form
Indian public, NRIs applying on a non repatriation basis [●]
Non-Residents, Eligible NRIs, FVCIs, FIIs etc applying on a [●]
repatriation basis
Eligible Employees [●]

Who can Bid?

• Indian nationals resident in India who are majors in single or joint names (not more than three);

• Hindu Undivided Families or HUFs, in the individual name of the Karta. The Bidder should

376
 specify that the Bid is being made in the name of the HUF in the Bid cum Application Form as
follows: “Name of Sole or First bidder: XYZ Hindu Undivided Family applying through XYZ,
where XYZ is the name of the Karta”. Bids by HUFs would be considered at par with those from
individuals;

• Companies, corporate bodies and societies registered under the applicable laws in India and
authorised to invest in the equity shares;

• Mutual Funds;

• Indian Financial Institutions, commercial banks, regional rural banks, co-operative banks (subject
to RBI regulations and the SEBI Guidelines and regulations, as applicable;

• Venture Capital Funds registered with SEBI;

• Foreign Venture Capital Investors registered with SEBI;

• State Industrial Development Corporations;

• Trusts/societies registered under the Societies Registration Act, 1860, as amended, or under any
other law relating to Trusts/societies and who are authorised under their constitution to hold and
invest in equity shares;

• Eligible NRIs on a repatriation basis or a non-repatriation basis subject to applicable laws;

• FII registered with SEBI, on a repatriation basis;

• Scientific and/or Industrial Research Organisations authorised to invest in equity shares;

• Insurance Companies registered with Insurance Regulatory and Development Authority, India;

• A permitted by the applicable laws, Provident Funds with minimum corpus of Rs. 250 million and
who are authorised under their constitution to hold and invest in equity shares;

• Pension Funds with minimum corpus of Rs. 250 million and who are authorised under their
constitution to hold and invest in equity shares; and

• Multilateral and Bilateral Development Financial Institutions.

As per existing RBI regulations, OCBs are prohibited from investing in this Issue.

Note: The BRLM, the CBRLMs and Syndicate Member shall not be entitled to subscribe to this Issue in
any manner except towards fulfilling their underwriting obligations. However, associates and affiliates of
the BRLM, the CBRLMs and Syndicate Members may subscribe for Equity Shares in the Issue, including
in the QIB Portion and Non-Institutional Portion where the allocation is on a proportionate basis.

The information below is given for the benefit of the Bidders. The Company, the BRLM and the
CBRLMs are not liable for any amendments or modification or changes in applicable laws or
regulations, which may occur after the date of this Draft Red Herring Prospectus. Bidders are
advised to make their independent investigations and ensure that the number of Equity Shares Bid
for do not exceed the applicable limits under laws or regulations.

Bids by Mutual Funds

An eligible Bid by a Mutual Fund shall first be considered for allocation proportionately in the Mutual
Fund Portion. In the event that the demand is greater than [●] Equity Shares, allocation shall be made to
Mutual Funds proportionately, to the extent of the Mutual Fund Portion. The remaining demand by the

377
Mutual Funds shall, as part of the aggregate demand by QIBs, be available for allocation proportionately
out of the remainder of the QIB Portion, after excluding the allocation in the Mutual Fund Portion.

As per the current regulations, the following restrictions are applicable for investments by mutual funds:

No mutual fund scheme shall invest more than 10% of its net asset value in the Equity Shares or equity
related instruments of any company provided that the limit of 10% shall not be applicable for investments
in index funds or sector or industry specific funds. No mutual fund under all its schemes should own more
than 10% of any company’s paid-up share capital carrying voting rights.

In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund
registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be
treated as multiple Bids provided that the Bids clearly indicate the scheme concerned for which the Bid has
been made.

Bids by NRIs

1. Bid cum application forms have been made available for NRIs at our registered /corporate office,
members of the Syndicate of the Registrar to the Issue.

2. NRI applicants may please note that only such applications as are accompanied by payment in free
foreign exchange shall be considered for Allotment. The NRIs who intend to make payment
through Non-Resident Ordinary (NRO) accounts shall use the form meant for Resident Indians.

Bids by FIIs

As per the current regulations, the following restrictions are applicable for investments by FIIs:

The issue of Equity Shares to a single FII should not exceed 10% of our post-Issue issued capital Equity
Shares. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts, the investment on
behalf of each sub-account shall not exceed 10% of our total issued capital or 5% of our total issued capital
in case such sub-account is a foreign corporate or an individual. Under the current foreign investment
policy applicable to us foreign equity participation up to 100% is permissible under the automatic route. As
of now, the aggregate FII holding in us cannot exceed 24% of our total issued capital. With the approval of
the Board and the shareholders by way of a special resolution, the aggregate FII holding can go up to
100%. However, as on this date, no such resolution has been recommended to the shareholders of the
Company for adoption.

Subject to compliance with all applicable Indian laws, rules, regulations guidelines and approvals in terms
of regulation 15A(1) of the Securities Exchange Board of India (Foreign Institutional Investors)
Regulations 1995, as amended, an FII or its sub account may issue, deal or hold, off shore derivative
instruments such as Participatory Notes, equity-linked notes or any other similar instruments against
underlying securities listed or proposed to be listed in any stock exchange in India only in favour of those
entities which are regulated by any relevant regulatory authorities in the countries of their incorporation or
establishment subject to compliance of “know your client” requirements. An FII or sub-account shall also
ensure that no further downstream issue or transfer of any instrument referred to hereinabove is made to
any person other than a regulated entity.

Bids by SEBI registered Venture Capital Funds and Foreign Venture Capital Investors

As per the current regulations, the following restrictions are applicable for SEBI registered Venture
Capital Funds and Foreign Venture Capital Investors:

The SEBI (Venture Capital) Regulations, 1996 and the SEBI (Foreign Venture Capital Investor)
Regulations, 2000 prescribe investment restrictions on venture capital funds and foreign venture capital
investors registered with SEBI. Accordingly, whilst the holding by any individual venture capital fund

378
registered with SEBI in one company should not exceed 25% of the corpus of the venture capital fund, a
Foreign Venture Capital Investor can invest its entire funds committed for investments into India in one
company. Further, Venture Capital Funds and Foreign Venture Capital Investors can invest only upto
33.33% of the investible funds by way of subscription to an initial public offer.

Maximum and Minimum Bid Size

(a) For Retail Individual Bidders: The Bid must be for a minimum of [●] Equity Shares and in
multiples of [●] Equity Share thereafter, so as to ensure that the Bid Price payable by the Bidder
does not exceed Rs. 100,000. In case of revision of Bids, the Retail Individual Bidders have to
ensure that the Bid Price does not exceed Rs. 100,000. In case the Bid Price is over Rs. 100,000
due to revision of the Bid or revision of the Price Band or on exercise of Cut-off option, the Bid
would be considered for allocation under the Non-Institutional Bidders portion. The Cut-off option
is an option given only to the Retail Individual Bidders indicating their agreement to Bid and
purchase at the final Issue Price as determined at the end of the Book Building Process.

(b) For Other Bidders (Non-Institutional Bidders and QIBs): The Bid must be for a minimum of
such number of Equity Shares such that the Bid Amount exceeds Rs. 100,000 and in multiples of
[●] Equity Shares thereafter. A Bid cannot be submitted for more than the Issue Size. However,
the maximum Bid by a QIB investor should not exceed the investment limits prescribed for them
by applicable laws. Under existing SEBI guidelines, a QIB Bidder cannot withdraw its Bid
after the Bid/ Issue Closing Date and is required to pay QIB Margin upon submission of Bid.

In case of revision in Bids, the Non-Institutional Bidders, who are individuals, have to ensure that
the Bid Amount is greater than Rs. 1,00,000 for being considered for allocation in the Non-
Institutional Portion. In case the Bid Amount reduces to Rs. 1,00,000 or less due to a revision in
Bids or revision of the Price Band, Bids by Non-Institutional Bidders who are eligible for
allocation in the Retail Portion would be considered for allocation under the Retail Portion. Non-
Institutional Bidders and QIBs are not allowed to Bid at ‘Cut-off’.

(c) For Employee Reservation Portion: The Bid must be for a minimum of [●] Equity Shares and in
multiples of [●] Equity Shares thereafter. The maximum Bid in this category by an Eligible
Employee cannot exceed the size of the Issue.

Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or
maximum number of Equity Shares that can be held by them under applicable law or regulation or
as specified in this Draft Red Herring Prospectus.

Information for the Bidders:

(a) The Company will file the Red Herring Prospectus with the RoC at least 3 (three) days before the
Bid/Issue Opening Date.

(b) The Company, the BRLM and the CBRLMs shall declare the Bid/ Issue Opening Date, Bid/ Issue
Closing Date and Price Band at the time of filing the Red Herring Prospectus with RoC and also
publish the same in three widely circulated newspapers (one each in English, Hindi and Marathi).
This advertisement, subject to the provisions of Section 66 of the Companies Act shall be in the
format prescribed in Schedule XX–A of the SEBI DIP Guidelines, as amended vide SEBI Circular
No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

(c) The members of the Syndicate will circulate copies of the Red Herring Prospectus along with the
Bid cum Application Form to potential investors.

(d) Any investor (who is eligible to invest in our Equity Shares) who would like to obtain the Red
Herring Prospectus and/ or the Bid cum Application Form can obtain the same from our registered
office or from any of the members of the Syndicate and should approach any of the BRLM, the

379
 CBRLMs or Syndicate Members or their authorised agent(s) to register their bids.

(e) The Members of the Syndicate shall accept Bids from the Bidders during the Issue Period in
accordance with the terms of the Syndicate Agreement.

(f) The Bids should be submitted on the prescribed Bid cum Application Form only. Bid cum
Application Forms should bear the stamp of the members of the Syndicate. Bid cum Application
Forms, which do not bear the stamp of the members of the Syndicate, will be rejected.

(g) The Bidding/ Issue Period shall be for a minimum of three working days and not exceeding seven
working days. In case the Price Band is revised, the revised Price Band and the Bidding/ Issue
Period will be published in three national newspapers (one each in English and Hindi) and one
Marathi newspaper and the Bidding/ Issue Period may be extended, if required, by an additional
three days, subject to the total Bidding/ Issue Period not exceeding 10 working days.

(h) The Price Band has been fixed at Rs.[●] to Rs. [●] per Equity Share of Rs. 10 each, Rs. [●] being
the lower end of the Price Band and Rs. [●] being the higher end of the Price Band. The Bidders
can bid at any price with in the Price Band, in multiples of Re. 1 (One).

(i) The Company in consultation with the BRLM and the CBRLMs, reserve the right to revise the
Price Band, during the Bidding Period, in accordance with SEBI Guidelines. The higher end of the
Price Band should not be more than 20% of the lower end of the Price Band. Subject to
compliance with the immediately preceding sentence, the lower end of the Price Band can move
up or down to the extent of 20% of the lower end of the Price Band disclosed in the Red Herring
Prospectus.

(j) In case of revision in the Price Band, the Bidding/ Issue Period will be extended for three
additional days after revision of Price Band subject to a maximum of 10 working days. Any
revision in the Price Band and the revised Bidding/ Issue Period, if applicable, will be widely
disseminated by notification to BSE and NSE, by issuing a public notice in three widely circulated
newspapers (one each in English and Hindi) and one Marathi newspaper, and also by indicating
the change on the websites of the BRLM and the CBRLMs and at the terminals of the Syndicate
Members.

(k) The Company in consultation with the BRLM and the CBRLMs, can finalise the Issue Price
within the Price Band in accordance with this clause, without the prior approval of, or intimation,
to the Bidders.

Method and Process of Bidding

(a) Each Bid cum Application Form will give the Bidder the choice to bid for up to three optional
prices (for details refer to the paragraph titled “Bids at Different Price Levels” on page 381 within
the Price Band and specify the demand (i.e., the number of Equity Shares Bid for) in each option.
The price and demand options submitted by the Bidder in the Bid cum Application Form will be
treated as optional demands from the Bidder and will not be cumulated. After determination of the
Issue Price, the maximum number of Equity Shares Bid for by a Bidder at or above the Issue Price
will be considered for allocation/Allotment and the rest of the Bid(s), irrespective of the Bid Price,
will become automatically invalid.

(b) The Bidder cannot bid on another Bid cum Application Form after Bids on one Bid cum
Application Form have been submitted to any member of the Syndicate. Submission of a second
Bid cum Application Form to either the same or to another member of the Syndicate will be
treated as multiple Bids and is liable to be rejected either before entering the Bid into the
electronic bidding system, or at any point of time prior to the allocation or Allotment of Equity
Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, the
procedure for which is detailed under the paragraph titled “Bids at Different Price Levels and

380
 Revision of Bids” on page 381.

(c) The Members of the Syndicate will enter each Bid option into the electronic bidding system as a
separate Bid and generate a Transaction Registration Slip, (“TRS”), for each price and demand
option and give the same to the Bidder. Therefore, a Bidder can receive up to three TRSs for each
Bid cum Application Form.

(d) During the Bidding/Issue Period, Bidders may approach the members of the Syndicate to submit
their Bid. Every member of the Syndicate shall accept Bids from all clients / investors who place
orders through them and shall have the right to vet the Bids, subject to the terms of the Syndicate
Agreement and the Red Herring Prospectus.

(e) Along with the Bid cum Application Form, all Bidders will make payment in the manner
described under the paragraph titled “Terms of Payment and Payment into the Escrow Accounts”
on page 388.

Bids at Different Price Levels and Revision of Bids

(a) The Bidder can bid at any price within the Price Band in multiples of Re. 1 (One). The Bidder has
to bid for the desired number of Equity Shares at a specific price. Retail Individual Bidders and
Eligible Employees applying for a maximum Bid in any of the bidding options not exceeding Rs.
100,000 may bid at Cut-off Price. However, bidding at Cut-off Price is prohibited for QIB, Non-
Institutional Bidders and Eligible Employees bidding in excess of Rs. 100,000 and such Bids shall
be rejected.

(b) Retail Individual Bidders and Eligible Employees who bid at the Cut-Off Price agree that they
shall purchase the Equity Shares at any price within the Price Band. Retail Individual Bidders and
Eligible Employees bidding at Cut-Off Price shall deposit the Bid Price based on the higher end of
the Price Band in the Escrow Account. In the event the Bid Price is higher than the subscription
amount payable by the Retail Individual Bidders and Eligible Employees, who Bid at Cut off Price
(i.e., the total number of Equity Shares allocated in the Issue multiplied by the Issue Price), the
Retail Individual Bidders and Eligible Employees, who Bid at Cut off Price, shall receive the
refund of the excess amounts from the Escrow Account.

(c) In case of an upward revision in the Price Band announced as above, Retail Individual Bidders and
Eligible Employees who had bid at Cut-off Price could either (i) revise their Bid or (ii) make
additional payment based on the higher end of the Revised Price Band (such that the total amount
i.e., original Bid Price plus additional payment does not exceed Rs. 1,00,000, if such Bidder wants
to continue to bid at Cut-off Price), with the Syndicate Member to whom the original Bid was
submitted. In case the total amount (i.e., original Bid Price plus additional payment) exceeds Rs.
1,00,000 for Retail Individual Bidders the Bid will be considered for allocation under the Non-
Institutional Portion in terms of this Draft Red Herring Prospectus. If, however, such Bidder does
not either revise the Bid or make additional payment and the Issue Price is higher than the higher
end of the Price Band prior to revision, the number of Equity Shares bid for shall be adjusted
downwards for the purpose of Allotment, such that the no additional payment would be required
from such Bidder and such Bidder is deemed to have approved such revised Bid at Cut-off Price.

(d) In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders
and Eligible Employees who have bid at Cut-off Price could either revise their Bid or the excess
amount paid at the time of bidding would be refunded from the Escrow Account.

(e) In the event of any revision in the Price Band, whether upwards or downwards, the minimum
application size shall remain [●] Equity Shares irrespective of whether the Bid Price payable on
such minimum application is not in the range of Rs. 5,000 to Rs. 7,000.

381
(f) During the Bidding/ Issue Period, any Bidder who has registered his or her interest in the Equity
Shares at a particular price level is free to revise his or her Bid within the Price Band using the
printed Revision Form, which is a part of the Bid cum Application Form.

(g) Revisions can be made in both the desired number of Equity Shares and the Bid price by using the
Revision Form. Apart from mentioning the revised options in the revision form, the Bidder must
also mention the details of all the options in his or her Bid cum Application Form or earlier
Revision Form. For example, if a Bidder has Bid for three options in the Bid cum Application
Form and he is changing only one of the options in the Revision Form, he must still fill the details
of the other two options that are not being revised, in the Revision Form. The members of the
Syndicate will not accept incomplete or inaccurate Revision Forms.

(h) The Bidder can make this revision any number of times during the Bidding Period. However, for
any revision(s) in the Bid, the Bidders will have to use the services of the same member of the
Syndicate through whom he or she had placed the original Bid.

(i) Bidders are advised to retain copies of the blank Revision Form and the revised Bid must be made
only in such Revision Form or copies thereof.

(j) Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft
for the incremental amount, if any, to be paid on account of the upward revision of the Bid. The
excess amount, if any, resulting from downward revision of the Bid would be returned to the
Bidder at the time of refund in accordance with the terms of the Red Herring Prospectus. In case
of QIB Bidders, the members of the Syndicate shall collect the payment in the form of cheque or
demand draft for the incremental amount in the QIB Margin Amount, if any, to be paid on account
of the upward revision of the Bid at the time of one or more revisions by the QIB Bidders.

(k) When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised
TRS from the members of the Syndicate. It is the responsibility of the Bidder to request for
and obtain the revised TRS, which will act as proof of his or her having revised the previous
Bid.

Bids and revisions of Bids must be:

(a) Made only in the prescribed Bid cum Application Form or Revision Form, as applicable (White
colour for Resident Indians, Blue colour for NRIs and FIIs and applying on repatriation basis, Pink
colour for Bidders under Employee Reservation portion).

(b) Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions
contained herein, in the Bid cum Application Form or in the Revision Form. Incomplete Bid cum
Application Forms or Revision Forms are liable to be rejected.

(c) For Retail Individual Bidders, the Bid must be for a minimum of [●] Equity Shares and in
multiples of [●] Equity Shares thereafter subject to a maximum Bid Amount of Rs. 100,000.

(d) For Non-Institutional Bidders and QIB Bidders, Bids must be for a minimum of such number of
Equity Shares that the Bid Price exceeds or equal to Rs. 100,000 and in multiples of [●] Equity
Shares thereafter. Bids cannot be made for more than the Issue Size. Bidders are advised to ensure
that a single Bid from them should not exceed the investment limits or maximum number of
shares that can be held by them under the applicable laws or regulations.

(e) NRIs for a Bid Price of up to Rs. 100,000 would be considered under the Retail Portion for the
purposes of allocation and Bids for a Bid Price of more than Rs. 100,000 would be considered
under Non-Institutional Portion for the purposes of allocation; by other eligible Non Resident
Bidders for a minimum of such number of Equity Shares and in multiples of [●] Equity Shares
thereafter that the Bid Price exceeds Rs. 100,000.

382
(f) Bids by Non Residents, NRIs, FIIs and Foreign Venture Capital Funds registered with SEBI on a
repatriation basis shall be in the names of individuals, or in the names of FIIs but not in the names
of minors, OCBs, firms or partnerships, foreign nationals (excluding NRIs) or their nominees.

(g) In single name or in joint names (not more than three, and in the same order as their Depository
Participant details).

(h) Thumb impressions and signatures other than in the languages specified in the Eighth Schedule to
the Constitution of India must be attested by a Magistrate or a Notary Public or a Special
Executive Magistrate under official seal.

Bids by Eligible Employees

The Bid must be for a minimum of [●] Equity Shares and in multiples of [●] Equity Shares thereafter.
Bidders under the Employee Reservation Portion can apply for a maximum of the size of the Issue. The
allotment in the Employee Reservation Portion will be on a proportionate basis. Bidders under the
Employee Reservation Portion applying for a maximum Bid in any of the bidding options not exceeding
Rs. 100,000 may bid-at Cut off Price.

For the purpose of the Employee Reservation Portion, Eligible Employee means permanent employees of
the Company incorporated in India who are Indian Nationals, are based in India and are physically present
in India on the date of submission of the Bid- cum-Application Form.

Bids under Employee Reservation Portion by Eligible Employees shall be

a) Made only in the prescribed Bid cum Application Form or Revision Form (i.e. Pink colour Form).

b) The Bid must be for a minimum of [●] Equity Shares and in multiples of [●] Equity Shares
thereafter. The maximum Bid in this category by an Eligible Employee cannot exceed the size of
the Issue.

c) Eligible Employees, as defined above, should mention their Employee Number at the relevant
place in the Bid cum Application Form

d) The sole/ first bidder should be Eligible Employees as defined above.

e) Only Eligible Employees would be eligible to apply in this Issue under the Employee Reservation
Portion.

f) Bids by Eligible Employees will have to bid like any other Bidder. Only those bids, which are
received at or above the Issue Price, would be considered for allocation under this category.

g) Eligible Employees who apply or bid for securities of or for a value of not more than Rs. 100,000
in any of the bidding options can apply at Cut-Off. This facility is not available to other Eligible
Employees whose minimum Bid Amount exceeds Rs. 100,000.

h) Bid/ Application by Eligible Employees can be made also in the “Net Issue to the Public” and
such bids shall not be treated as multiple bids.

i) If the aggregate demand in this category is less than or equal to [●] Equity Shares at or above the
Issue Price, full allocation shall be made to the Eligible Employees to the extent of their demand.

j) Under-subscription, if any, in the Employee Reservation Portion will be added back to the Net
Issue to the Public, and the ratio amongst the investor categories will be at the discretion of the

383
 Company, the BRLM and the CBRLMs. In case of under-subscription in the Net Issue, spill over
to the extent of under-subscription shall be permitted from the Employee Reservation Portion.

k) If the aggregate demand in this category is greater than 1,158,790 Equity Shares at or above the
Issue Price, the allocation shall be made on a proportionate basis. For the method of proportionate
basis of allocation, refer to para “Basis of Allotment” on page 394 of this Draft Red Herring
Prospectus.

l) This is not an issue for sale within the United States of any equity shares or any other security of
the Company. Securities of the Company, including any offering of its equity shares, may not be
offered or sold in the United States in the absence of registration under U.S. securities laws or
unless exempt from registration under such laws.

Electronic Registration of Bids

(a) The Members of the Syndicate will register the Bids using the on-line facilities of BSE and NSE.
There will be at least one on-line connectivity in each city, where a stock exchange is located in
India and where Bids are being accepted.

(b) The BSE and NSE will offer a screen-based facility for registering Bids for the Issue. This facility
will be available on the terminals of the Members of the Syndicate and their authorised agents
during the Bidding Period. Syndicate Members can also set up facilities for off-line electronic
registration of Bids subject to the condition that they will subsequently upload the off-line data file
into the on-line facilities for book building on a half hourly basis. On the Bid Closing Date, the
Members of the Syndicate shall upload the Bids till such time as may be permitted by the Stock
Exchanges. This information will be available with the BRLM and the CBRLMs on a regular
basis.

(c) The aggregate demand and price for Bids registered on the electronic facilities of BSE and NSE
will be uploaded on a half hourly basis, consolidated and displayed on-line at all bidding centres
and the website of BSE and NSE. A graphical representation of consolidated demand and price
would be made available at the bidding centres during the Bidding Period.

(d) At the time of registering each Bid, the members of the Syndicate shall enter the following details
of the investor in the on-line system:

• Name of the investor.

• Investor Category – Individual, Corporate, NRI, FII, or Mutual Fund etc.
• Numbers of Equity Shares bid for.
• Bid price.
• Bid cum Application Form number.
• Whether Margin Amount has been paid upon submission of Bid cum Application Form.
• Depository Participant Identification Number and Client Identification Number of the
beneficiary account of the Bidder.

(e) A system generated TRS will be given to the Bidder as a proof of the registration of each of the
bidding options. It is the Bidder’s responsibility to obtain the TRS from the members of the
Syndicate. The registration of the Bid by the member of the Syndicate does not guarantee that the
Equity Shares shall be allocated/Allotment either by the members of the Syndicate or our
Company.

(f) Such TRS will be non-negotiable and by itself will not create any obligation of any kind.

(g) In case of QIB Bidders, members of the syndicate also have the right to accept the bid or reject it.
However, such rejection should be made at the time of receiving the bid and only after assigning a

384
 reason for such rejection in writing. In case on Non-Institutional Bidders and Retail Individual
Bidders who Bid, Bids would not be rejected except on the technical grounds listed on page 391.

(h) The permission given by BSE and NSE to use their network and software of the Online IPO
system should not in any way be deemed or construed to mean that the compliance with various
statutory and other requirements by our Company and/or the BRLM and the CBRLMs are cleared
or approved by BSE and NSE; nor does it in any manner warrant, certify or endorse the
correctness or completeness of any of the compliance with the statutory and other requirements
nor does it take any responsibility for the financial or other soundness of the Company, our
Promoter, our management or any scheme or project of our Company.

(i) It is also to be distinctly understood that the approval given by BSE and NSE should not in any
way be deemed or construed that this Draft Red Herring Prospectus has been cleared or approved
by the BSE and NSE; nor does it in any manner warrant, certify or endorse the correctness or
completeness of any of the contents of this Draft Red Herring Prospectus; nor does it warrant that
the Equity Shares will be listed or will continue to be listed on the BSE and NSE.

(j) Only bids that are uploaded on the online IPO system of the NSE and BSE shall be considered for
allocation/ Allotment. In case of discrepancy of data between the BSE or the NSE and the
members of the Syndicate, the decision of the BRLM and the CBRLMs based on the physical
records of Bid Application Forms shall be final and binding on all concerned.

GENERAL INSTRUCTIONS

Do’s:

(a) Check if you are eligible to apply;

(b) Read all the instructions carefully and complete the applicable Bid cum Application Form;

(c) Ensure that the details about Depository Participant and Beneficiary Account are correct as
Allotment of Equity Shares will be in the dematerialised form only;

(d) Ensure that the Bids are submitted at the bidding centres only on forms bearing the stamp of a
member of the Syndicate;

(e) Ensure that you have been given a TRS for all your Bid options;

(f) Submit revised Bids to the same member of the Syndicate through whom the original Bid was
placed and obtain a revised TRS;

(g) Where Bid(s) is/ are for Rs. 50,000/- or more, each of the Bidders, should mention their
Permanent Account Number (PAN) allotted under the IT Act. The copies of the PAN Card or
PAN allotment letter should be submitted with the Bid cum Application form. If you have
mentioned “Applied for” or “Not Applicable”, in the Bid cum Application Form in the section
dealing with PAN number, ensure that you submit Form 60 or 61, as the case may be, together
with permissible documents as address proof;

(h) Ensure that the Demographic Details (as defined hereinbelow) are updated, true and correct in all
respects;

(i) Ensure that the name(s) given in the Bid cum Application Form is exactly the same as the name(s)
in which the beneficiary account is held with the Depository Participant. In case the Bid cum
Application Form is submitted in joint names, ensure that the beneficiary account is also held in
same joint names and such names are in the same sequence in which they appear in the Bid cum
Application Form.

385
Don’ts:

(a) Do not bid for lower than the minimum Bid size;

(b) Do not bid/ revise Bid price to less than the lower end of the Price Band or higher than the higher
end of the Price Band;

(c) Do not bid on another Bid cum Application Form after you have submitted a Bid to the members
of the Syndicate;

(d) Do not pay the Bid Price in cash, by money order or by postal order or by stockinvest;

(e) Do not send Bid cum Application Forms by post; instead submit the same to a member of the
Syndicate only;

(f) Do not bid at Cut Off Price (for QIB Bidders and Non-Institutional Bidders);

(g) Do not fill up the Bid cum Application Form such that the Equity Shares bid for exceeds the Issue
Size and/ or investment limit or maximum number of Equity Shares that can be held under the
applicable laws or regulations or maximum amount permissible under the applicable regulations;

(h) Do not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this
ground.

Instructions for Completing the Bid cum Application Form

Bidders can obtain Bid cum Application Forms and / or Revision Forms from the members of the
Syndicate.

Bidder’s Depository Account and Bank Details

Bidders should note that on the basis of name of the Bidders, Depository Participant’s name,
Depository Participant-Identification number and Beneficiary Account Number provided by them in
the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository the
demographic details including address, Bidders bank account details, MICR code and occupation
(hereinafter referred to as ‘Demographic Details’). These Bank Account details would be used for
giving refunds to the Bidders. Hence, Bidders are advised to immediately update their Bank Account
details as appearing on the records of the depository participant. Please note that failure to do so
could result in delays in despatch/ credit of refunds to Bidders at the Bidders sole risk and neither
the BRLM and the CBRLMs or the Registrar or the Escrow Collection Banks nor the Company shall
have any responsibility and undertake any liability for the same. Hence, Bidders should carefully fill
in their Depository Account details in the Bid cum Application Form.

IT IS MANDATORY FOR ALL THE BIDDERS TO GET THEIR EQUITY SHARES IN

DEMATERIALISED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORY
PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND
BENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION FORM. INVESTORS
MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS
EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD.
IN CASE THE BID CUM APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT
SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME
JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE BID
CUM APPLICATION FORM.

These Demographic Details would be used for all correspondence with the Bidders including mailing of the

386
CANs/Allocation Advice and printing of Bank particulars on the refund orders or for refunds through
electronic transfer of funds, as applicable. The Demographic Details given by Bidders in the Bid cum
Application Form would not be used for any other purpose by the Registrar to the Issue.

By signing the Bid cum Application Form, the Bidder would be deemed to have authorised the depositories
to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its
records.

In case of Bidders receiving refunds through electronic transfer of funds, delivery of refund
orders/allocation advice/CANs may get delayed if the same once sent to the address obtained from
the depositories are returned undelivered. In such an event, the address and other details given by
the Bidder in the Bid cum Application Form would be used only to ensure dispatch of refund orders.
Please note that any such delay shall be at the Bidders sole risk and neither the Company, the
Registrar, Escrow Collection Bank(s) nor the BRLM nor the CBRLMs shall be liable to compensate
the Bidder for any losses caused to the Bidder due to any such delay or liable to pay any interest for
such delay.

In case no corresponding record is available with the Depositories, which matches three parametres,
namely, names of the Bidders (including the order of names of joint holders), the Depository Participant’s
identity (DP ID) and the beneficiary’s identity, then such Bids are liable to be rejected.

The Company in its absolute discretion, reserves the right to permit the holder of the power of attorney to
request the Registrar that for the purpose of printing particulars on the refund order and mailing of the
refund order/CANs/allocation advice/ refunds through electronic transfer of funds, the Demographic
Details given on the Bid cum Application Form should be used (and not those obtained from the
Depository of the Bidder). In such cases, the Registrar shall use Demographic Details as given in the Bid
cum Application Form instead of those obtained from the depositories.

Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and net of
bank charges and / or commission. In case of Bidders who remit money through Indian Rupee drafts
purchased abroad, such payments in Indian Rupees will be converted into US Dollars or any other
freely convertible currency as may be permitted by the RBI at the rate of exchange prevailing at the
time of remittance and will be dispatched by registered post or if the Bidders so desire, will be
credited to their NRE accounts, details of which should be furnished in the space provided for this
purpose in the Bid cum Application Form. The Company will not be responsible for loss, if any,
incurred by the Bidder on account of conversion of foreign currency.

As per the RBI regulations, OCBs are not permitted to participate in the Issue.

There is no reservation for Non Residents, NRIs, FIIs and foreign venture capital funds and all Non
Residents, NRI, FII and foreign venture capital funds applicants will be treated on the same basis
with other categories for the purpose of allocation.

Bids under Power of Attorney

In case of Bids made pursuant to a power of attorney or by limited companies, corporate bodies, registered
societies, a certified copy of the power of attorney or the relevant resolution or authority, as the case may
be, along with a certified copy of the Memorandum of Association and Articles of Association and/or bye
laws must be lodged along with the Bid cum Application Form. Failing this, the Company reserves the
right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefor.

In case of Bids made pursuant to a power of attorney by FIIs, a certified copy of the power of attorney or
the relevant resolution or authority, as the case may be, along with a certified copy of their SEBI
registration certificate must be lodged along with the Bid cum Application Form. Failing this, the Company
reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any

387
reason therefor.

In case of Bids made by insurance companies registered with the Insurance Regulatory and Development
Authority, a certified copy of certificate of registration issued by Insurance Regulatory and Development
Authority must be lodged along with the Bid cum Application Form. Failing this, the Company reserves the
right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefor.

In case of Bids made by provident funds with minimum corpus of Rs. 250 million (subject to applicable
law) and pension funds with minimum corpus of Rs. 250 million, a certified copy of certificate from a
chartered accountant certifying the corpus of the provident fund/ pension fund must be lodged along with
the Bid cum Application Form. Failing this, the Company reserves the right to accept or reject any Bid in
whole or in part, in either case, without assigning any reason thereof.

The Company in its absolute discretion, reserve the right to relax the above condition of simultaneous
lodging of the power of attorney along with the Bid cum Application form, subject to such terms and
conditions that the Company, the BRLM and the CBRLMs may deem fit.

PAYMENT INSTRUCTIONS

Escrow Mechanism

The Company, and the members of the Syndicate shall open Escrow Accounts with one or more Escrow
Collection Bank(s) for the collection of the Bid Amount payable upon submission of the Bid cum
Application Form and for amounts payable pursuant to allocation in the Issue.

The Escrow Collection Banks will act in terms of the Red Herring Prospectus and the Escrow Agreement.
The Escrow Collection Bank (s) for and on behalf of the Bidders shall maintain the monies in the Escrow
Account. The Escrow Collection Bank(s) shall not exercise any lien whatsoever over the monies deposited
therein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow
Collection Bank(s) shall transfer the funds equivalent to the size of the Issue from the Escrow Account, as
per the terms of the Escrow Agreement, into the Public Issue Account with the Banker(s) to the Issue. The
balance amount after transfer to the Public Issue Account shall be held for the benefit of the Bidders who
are entitled to refunds. Payments of refund to the Bidders shall also be made from the Refund Account are
per the terms of the Escrow Agreement and the Draft Red Herring Prospectus.

The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been established as
an arrangement between the Company, and the members of the Syndicate, the Escrow Collection Bank(s)
and the Registrar to the Issue to facilitate collections from the Bidders.

Terms of Payment and Payment into the Escrow Accounts

Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on
allocation/Allotment as per the following terms.

1. Each category of Bidders i.e., QIB Bidders, Non-Institutional Bidders, Retail Individual Bidders
and Eligible Employees, shall provide the applicable Margin Amount, with the submission of the
Bid cum Application Form draw a cheque or demand draft for the maximum amount of his/ her
Bid in favour of the Escrow Account of the Escrow Collection Bank(s) (for details refer to the
paragraph titled “Payment into Escrow Account” on page 389 below) and submit the same to the
member of the Syndicate to whom the Bid is being submitted. Bid cum Application Forms
accompanied by cash shall not be accepted. The Margin Amount payable by each category of
Bidders is mentioned under the section titled “Issue Structure” on page 373. The maximum Bid
price has to be paid at the time of submission of the Bid cum Application Form based on the
highest bidding option of the Bidder.

2. Where the Margin Amount applicable to the Bidder is less than 100% of the Bid Price, any

388
 difference between the amount payable by the Bidder for Equity Shares allocated/allotted at the
Issue Price and the Margin Amount paid at the time of Bidding, shall be payable by the Bidder no
later than the Pay-in-Date, which shall be a minimum period of 2 (two) days from the date of
communication of the allocation list to the members of the Syndicate by the BRLM and the
CBRLMs. If the payment is not made favouring the Escrow Account within the time stipulated
above, the Bid of the Bidder is liable to be cancelled.

3. The payment instruments for payment into the Escrow Account should be drawn in favour of:

• In case of Resident QIB Bidders: “[●]”

• In case of non-resident QIB Bidders: “[●]”
• In case of Resident Bidders: “[●]”
• In case of Non Resident Bidders: “[●]”
• In case of Eligible Employees: “[●]”

4. In case of Bids by NRIs applying on repatriation basis, the payments must be made through Indian
Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on application
remitted through normal banking channels or out of funds held in Non-Resident External (NRE)
Accounts or Foreign Currency Non-Resident (FCNR) Accounts, maintained with banks authorised
to deal in foreign exchange in India, along with documentary evidence in support of the
remittance. Payment will not be accepted out of Non-Resident Ordinary (NRO) Account of Non-
Resident Bidder bidding on a repatriation basis. Payment by drafts should be accompanied by
bank certificate confirming that the draft has been issued by debiting to NRE Account or FCNR
Account.

5. In case of Bids by FIIs, the payment should be made out of funds held in Special Rupee Account
along with documentary evidence in support of the remittance. Payment by drafts should be
accompanied by bank certificate confirming that the draft has been issued by debiting to Special
Rupee Account.

6. Where a Bidder has been allocated a lesser number of Equity Shares than the Bidder has Bid for,
the excess amount, if any, paid on bidding, after adjustment towards the balance amount payable
on the Equity Shares allocated\ will be refunded to the Bidder from the Refund Account.
7. On the Designated Date and no later than 15 days from the Bid/ Issue Closing Date, the Escrow
Collection Bank shall also refund all amounts payable to unsuccessful Bidders and also the excess
amount paid on Bidding, if any, after adjusting for allocation/Allotment to the Bidders.
8. Payments should be made by cheque, or demand draft drawn on any Bank (including a Co-
operative Bank), which is situated at, and is a member of or sub-member of the bankers’ clearing
house located at the centre where the Bid cum Application Form is submitted. Outstation
cheques/bank drafts drawn on banks not participating in the clearing process will not be accepted
and applications accompanied by such cheques or bank drafts are liable to be rejected. Cash/
Stockinvest/Money Orders/ Postal orders will not be accepted.

Payment by Stockinvest

In terms of the Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-04 dated
November 5, 2003, the option to use the stockinvest instrument in lieu of cheques or bank drafts for
payment of Bid money has been withdrawn. Hence, payment through stockinvest would not be accepted in
this Issue.

OTHER INSTRUCTIONS

Joint Bids in the case of Individuals

389
Bids may be made in single or joint names (not more than three). In the case of joint Bids, all payments will
be made out in favour of the Bidder whose name appears first in the Bid cum Application Form or Revision
Form. All communications will be addressed to the First Bidder and will be dispatched to his or her address
as per the Demographic Details received from the Depository.

Multiple Bids

A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares
required. Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the
same. Bid/ Application by Eligible Employees can be made also in the “Net Issue to the Public” and such
bids shall not be treated as multiple bids.

In this regard, the procedures which would be followed by the Registrar to the Issue to detect multiple
applications are given below:

1. All applications with the same name and age will be accumulated and taken to a separate process
file which would serve as a multiple master.

2. In this master, a check will be carried out for the same PAN. In cases where the PAN is different,
the same will be deleted from this master.

3. The Registrar will obtain, from the depositories, details of the applicant’s address based on the DP
ID and Beneficiary Account Number provided in the Bid-cum-Application Form and create an
address master.

4. The addresses of all the applications in the multiple master will be strung from the address master.
This involves putting the addresses in a single line after deleting non-alpha and non-numeric
characters i.e. commas, full stops, hash etc. Sometimes, the name, the first line of address and pin
code will be converted into a string for each application received and a photo match will be carried
out amongst all the applications processed. A print-out of the addresses will be taken to check for
common names. The applications with same name and same address will be treated as multiple
applications.

5. The applications will be scrutinised for DP ID and Beneficiary Account Numbers. In case
applications bear the same DP ID and Beneficiary Account Numbers, these will be treated as
multiple applications.

6. Subsequent to the aforesaid procedures, a print out of the multiple master will be taken and the
applications physically verified to tally signatures as also father’s/ husband’s names. On
completion of this, the applications will be identified as multiple applications.

In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund
registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be
treated as multiple Bids provided that the Bids clearly indicate the scheme concerned for which the Bid has
been made.

The Company reserves the right to reject, in our absolute discretion, all or any multiple Bids in any or all
categories.

Permanent Account Number or PAN

Where Bid(s) is/ are for Rs. 50,000 or more, the Bidder or in the case of a Bid in joint names, each of the
Bidders, should mention his/ her Permanent Account Number (PAN) allotted under the I.T. Act. The copy
of the PAN card or PAN allotment letter is required to be submitted with the Bid-cum-Application
Form. Applications without this information and documents will be considered incomplete and are liable to

390
be rejected. It is to be specifically noted that Bidders should not submit the GIR number instead of
the PAN as the Bid is liable to be rejected on this ground. In case the Sole/First Bidder and Joint
Bidder(s) is/are not required to obtain PAN, each of the Bidder(s) shall mention “Not Applicable” and in
the event that the sole Bidder and/or the joint Bidder(s) have applied for PAN which has not yet been
allotted each of the Bidder(s) should Mention “Applied for” in the Bid cum Application Form. Further,
where the Bidder(s) has mentioned “Applied for” or “Not Applicable”, the Sole/First Bidder and each of
the Joint Bidder(s), as the case may be, would be required to submit Form 60 (Form of declaration to be
filed by a person who does not have a permanent account number and who enters into any transaction
specified in rule 114B), or, Form 61 (form of declaration to be filed by a person who has agricultural
income and is not in receipt of any other income chargeable to income tax in respect of transactions
specified in rule 114B), as may be applicable, duly filled along with a copy of any one of the following
documents in support of the address: (a) Ration Card (b) Passport (c) Driving License (d) Identity Card
issued by any institution (e) Copy of the electricity bill or telephone bill showing residential address (f)
Any document or communication issued by any authority of the Central Government, State Government or
local bodies showing residential address (g) Any other documentary evidence in support of address given in
the declaration. It may be noted that Form 60 and Form 61 have been amended vide a notification
issued on December 1, 2004 by the Ministry of Finance, Department of Revenue, Central Board of
Direct Taxes. All Bidders are requested to furnish, where applicable, the revised Form 60 or 61, as
the case may be.

UNIQUE IDENTIFICATION NUMBER - MAPIN

Unique Identification Number (“UIN”)

With effect from July 1, 2005, SEBI had decided to suspend all fresh registrations for obtaining UIN and
the requirement to contain/ quote UIN under the SEBI MAPIN Regulations/Circulars vide its circular
MAPIN/Cir-13/2005. However, in a recent press release dated December 30, 2005, SEBI has approved
certain policy decisions and has now decided to resume registrations for obtaining UINs in a phased
manner. The press release states that the cut off limit for obtaining UIN has been raised from the existing
limit of trade order value of Rs. 100,000 to Rs. 500,000 or more. The limit will be reduced progressively.
For trade order value of less than Rs. 500,000 an option will be available to investors to obtain either the
PAN or UIN. These changes are, however, not effective as of the date of this Draft Red Herring Prospectus
and SEBI has stated in the press release that the changes will be implemented only after necessary
amendments are made to the SEBI MAPIN Regulations.

GROUNDS FOR REJECTIONS

In case of QIB Bidders, the Company in consultation with the BRLM and the CBRLMs may reject Bids
provided that the reasons for rejecting the same shall be provided to such Bidder in writing. In case of Non-
Institutional Bidders and Retail Individual Bidders who Bid, the Company have a right to reject Bids based
on technical grounds.

Bidders are advised to note that Bids are liable to be rejected inter alia on the following technical grounds:

• Amount paid does not tally with the amount payable for the highest value of Equity Shares bid for;

• Age of First Bidder not given;

• In case of partnership firms, Equity Shares may be registered in the names of the individual
partners and no firm as such shall be entitled to apply;

• Bid by persons not competent to contract under the Indian Contract Act, 1872 including minors,
insane persons;

• PAN photocopy/PAN communication/ Form 60 or Form 61 declaration along with documentary

evidence in support of address given in the declaration, not given if Bid is for Rs. 50,000 or more;

391
• GIR number furnished instead of PAN;

• Bids for lower number of Equity Shares than specified for that category of investors;

• Bids at a price less than lower end of the Price Band;

• Bids at a price more than the higher end of the Price Band;

• Bids at Cut Off Price by Non-Institutional and QIB Bidders and Bidders in Employee Reservation
Portion bidding in excess of Rs. 100,000

• Bids for number of Equity Shares which are not in multiples of [●];

• Category not ticked;

• Multiple Bids as defined in this Draft Red Herring Prospectus;

• In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant
documents are not submitted;

• Bids accompanied by Stockinvest/money order/postal order/cash;

• Signature of sole and / or joint Bidders missing;

• Bid cum Application Forms does not have the stamp of the BRLM, the CBRLMs, or Syndicate
Members;

• Bid cum Application Forms does not have Bidder’s depository account details;

• Bid cum Application Forms are not delivered by the Bidders within the time prescribed as per the
Bid cum Application Forms, Bid/Issue Opening Date advertisement and the Red Herring
Prospectus and as per the instructions in the Red Herring Prospectus and the Bid cum Application
Forms;

• In case no corresponding record is available with the Depositories that matches three parametres
namely, names of the Bidders (including the order of names of joint holders), the Depositary
Participant’s identity (DP ID) and the beneficiary’s account number;

• Bids for amounts greater than the maximum permissible amounts prescribed by the regulations;

• Bids by QIBs not submitted through members of the Syndicate;

• Bids by OCBs;

• Bids by US persons other than “qualified institutional buyers” as defined in Rule 144A of the
Securities Act or other than in reliance on Regulation S under the Securities Act; and

• Bids by any persons outside India if not in compliance with applicable foreign and Indian laws.

Price Discovery and Allocation

(a) After the Bid/Issue Closing Date, the BRLM and the CBRLMs will analyse the demand generated
at various price levels.

392
(b) The Company in consultation with the BRLM and the CBRLMs shall finalise the “Issue Price”.

(c) The allocation to QIBs will be atleast 60% of the Net Issue and allocation to Non-Institutional and
Retail Individual Bidders will be 10% and 30% of the Net Issue, respectively, on a proportionate
basis, in a manner specified in the SEBI Guidelines and this Draft Red Herring Prospectus, in
consultation with the Designated Stock Exchange, subject to valid bids being received at or above
the Issue Price.

(d) Under-subscription, if any, in the Non-Institutional category and the Retail Individual category
would be met with spill over from any other category at the sole discretion of the Company and
the in consultation with the BRLM and the CBRLMs. However, if the aggregate demand by
Mutual Funds is less than [●] Equity Shares, the balance Equity Shares available for allocation in
the Mutual Fund Portion will first be added to the QIB Portion and be Allotted proportionately to
the QIB Bidders. In the event that the aggregate demand in the QIB Portion has been met,
undersubscription, if any, would be allowed to be met with spill-over from any other category or
combination of categories at the discretion of the Company, in consultation with the BRLM, the
CBRLMs and the Designated Stock Exchange.

(e) Under-subscription, if any, in the Employee Reservation Portion will be added back to the Retail
Portion.

(f) Allocation to Eligible NRIs, FIIs, foreign venture capital funds registered with SEBI applying on
repatriation basis will be subject applicable law and the terms and conditions stipulated by the
RBI.

Signing of Underwriting Agreement and RoC Filing

(a) The Company, the BRLM, the CBRLMs and the Syndicate Member shall enter into an
Underwriting Agreement on finalisation of the Issue Price and allocation(s) /Allotment to the
Bidders.

(b) After signing the Underwriting Agreement, the Company would update and file the updated Red
Herring Prospectus with RoC, which then would be termed ‘Prospectus’. The Prospectus would
have details of the Issue Price, Issue size, underwriting arrangements and would be complete in all
material respects.

(c) The Company will file a copy of the Prospectus with the RoC in terms of Section 56, Section 60
and Section 60B of the Companies Act.

(d) The Company will issue a statutory advertisement after the filing of the Prospectus with the RoC.
This advertisement, in addition to the information that has to be set out in the statutory
advertisement, shall indicate the Issue Price. Any material updates between the date of Red
Herring Prospectus and the date of Prospectus will be included in such statutory advertisement.

Issuance of CAN

(a) Upon approval of the basis of Allotment by the Designated Stock Exchange, the BRLM, the
CBRLMs or Registrar to the Issue shall send to the members of the Syndicate a list of their
Bidders who have been allocated/ Allotted Equity Shares in the Issue. The approval of the basis of
Allotment by the Designated Stock Exchange for QIB Bidders may be done simultaneously with
or prior to the approval of the basis of allocation for the Retail and Non-Institutional Bidders.
However, investors should note that the Company shall ensure that the date of Allotment of the
Equity Shares to all investors in this Issue shall be done on the same date.

(b) The BRLM, the CBRLMs or members of the Syndicate would dispatch a CAN to their Bidders
who have been allocated Equity Shares in the Issue. The dispatch of a CAN shall be deemed a

393
 valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the
Equity Shares allocated to such Bidder. Those Bidders who have not paid the entire Bid Amount
into the Escrow Account at the time of bidding shall pay in full the amount payable into the
Escrow Account by the Pay-in Date specified in the CAN.

(c) Bidders who have been allocated/Allotted Equity Shares and who have already paid the Bid
Amount into the Escrow Account at the time of bidding shall directly receive the CAN from the
Registrar to the Issue subject, however, to realisation of his or her cheque or demand draft paid
into the Escrow Account. The dispatch of a CAN shall be deemed a valid, binding and irrevocable
contract for the Bidder to pay the entire Issue Price for the Allotment to such Bidder.

(d) The Issuance of CAN is ‘Subject to “Allotment Reconciliation and Revised CANs” as set forth
herein.

Notice to QIBs: Allotment Reconciliation and Revised CANs

After the Bid/Issue Closing Date, an electronic book will be prepared by the Registrar on the basis of Bid
applications received. Based on the electronic book, QIBs will be sent a CAN on or prior to [●], 2007,
indicating the number of Equity Shares that may be Allotted to them. This CAN is subject to the basis of
final Allotment, which will be approved by the Designated Stock Exchange and reflected in the physical
book prepared by the Registrar. Subject to SEBI Guidelines, certain Bid applications may be rejected due
to technical reasons, non-receipt of funds, cancellation of cheques, cheque bouncing, incorrect details, etc.,
and these rejected applications will be reflected in the reconciliation and basis of Allotment as approved by
the Designated Stock Exchange and specified in the physical book. As a result, a revised CAN may be sent
to QIBs and the allocation of Equity Shares in such revised CAN may be different from that specified in the
earlier CAN. It is not necessary that a revised CAN will be sent. QIBs should note that they may be
required to pay additional amounts, if any, by the Pay-in Date specified in the revised CAN, for any
increased Allotment of Equity Shares. The CAN will constitute the valid, binding and irrevocable contract
(subject only to the issue of a revised CAN) for the QIB to pay the entire Issue Price for all the Equity
Shares allocated to such QIB. The revised CAN, if issued, will supersede in entirety the earlier CAN.

Designated Date and Allotment of Equity Shares

(a) The Company will ensure that the Allotment of Equity Shares is done within 15 days of the
Bid/Issue Closing Date. After the funds are transferred from the Escrow Account to the Public
Issue Account on the Designated Date, the Company would ensure the credit to the successful
Bidders depository account. Allotment of the Equity Shares to the allottees shall be within two
working days of the date of Allotment.

(b) In accordance with the SEBI Guidelines, Equity Shares will be issued, and Allotment shall be
made only in the dematerialised form to the allottees. Allottees will have the option to re-
materialise the Equity Shares, if they so desire, as per the provisions of the Companies Act and the
Depositories Act.

Investors are advised to instruct their Depository Participant to accept the Equity Shares
that may be allocated/Allotted to them pursuant to this Issue.

BASIS OF ALLOTMENT

A. For Retail Individual Bidders

• Bids received from the Retail Individual Bidders at or above the Issue Price shall be
grouped together to determine the total demand under this category. The Allotment to all
the successful Retail Individual Bidders will be made at the Issue Price.

394
 • The Net Issue size less Allotment to Non-Institutional and QIB Bidders shall be available
for Allotment to Retail Individual Bidders who have bid in the Issue at a price that is
equal to or greater than the Issue Price.

• If the aggregate demand in this category is less than or equal to [●] Equity Shares at or
above the Issue Price, full Allotment shall be made to the Retail Individual Bidders to the
extent of their valid Bids.

• If the aggregate demand in this category is greater than [●] Equity Shares at or above the
Issue Price, the Allotment shall be made on a proportionate basis up to a minimum [●].
For the method of proportionate basis of Allotment, refer below.

B. For Non-Institutional Bidders

• Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped
together to determine the total demand under this category. The Allotment to all
successful Non-Institutional Bidders will be made at the Issue Price.

• The Net Issue size less Allotment to QIBs and Retail Portion shall be available for
Allotment to Non-Institutional Bidders who have bid in the Issue at a price that is equal
to or greater than the Issue Price.

• If the aggregate demand in this category is less than or equal to [●] Equity Shares at or
above the Issue Price, full Allotment shall be made to Non-Institutional Bidders to the
extent of their demand.

• In case the aggregate demand in this category is greater than [●]Equity Shares at or above
the Issue Price, Allotment shall be made on a proportionate basis up to a minimum of 16
Equity Shares. For the method of proportionate Basis of Allotment refer below.

C. For Employee Reservation Portion

The Bid must be for a minimum of [●]Equity Shares and in multiples of [●]Equity Shares
thereafter. The allotment in the Employee Reservation Portion will be on a proportionate basis.
Bidders under the Employee Reservation Portion applying for a maximum Bid in any of the
bidding options not exceeding Rs. 100,000 may bid-at Cut off Price.

• Bids received from the Eligible Employees at or above the Issue Price shall be grouped
together to determine the total demand under this category. The allocation to all the
successful Eligible Employees will be made at the Issue Price.

• If the aggregate demand in this category is less than or equal to [●] Equity Shares at or
above the Issue Price, full allocation shall be made to the Employees to the extent of their
demand.

• If the aggregate demand in this category is greater than [●] Equity Shares at or above the
Issue Price, the allocation shall be made on a proportionate basis up to a minimum of [●]
Equity Shares and in multiple of [●] Equity Shares thereafter. For the method of
proportionate basis of allocation, refer below.

• Only Eligible Employees eligible to apply under Employee Reservation Portion.

D. For QIBs

• Bids received from the QIB Bidders at or above the Issue Price shall be grouped together

395
 to determine the total demand under this portion. The Allotment to all the QIB Bidders
will be made at the Issue Price.

• The QIB Portion shall be available for Allotment to QIB Bidders who have bid in the
Issue at a price that is equal to or greater than the Issue Price.

• Allotment shall be undertaken in the following manner:

(a) In the first instance allocation to Mutual Funds for up to 5% of the QIB Portion
shall be determined as follows:

(i) In the event that Mutual Fund Bids exceeds 5% of the QIB Portion,
allocation to Mutual Funds shall be done on a proportionate basis for
up to 5% of the QIB Portion.

(ii) In the event that the aggregate demand from Mutual Funds is less than
5% of the QIB Portion then all Mutual Funds shall get full Allotment to
the extent of valid bids received above the Issue Price.

(iii) Equity Shares remaining unsubscribed, if any, not allocated to Mutual

Funds shall be available for Allotment to all QIB Bidders as set out in
(b) below;

(b) In the second instance Allotment to all QIBs shall be determined as follows:

(i) In the event that the oversubscription in the QIB Portion, all QIB
Bidders who have submitted Bids above the Issue Price shall be
Allotted Equity Shares on a proportionate basis for up to 95% of the
QIB Portion.

(ii) Mutual Funds, who have received allocation as per (a) above, for less
than the number of Equity Shares Bid for by them, are eligible to
receive Equity Shares on a proportionate basis along with other QIB
Bidders.

(iii) Under-subscription below 5% of the QIB Portion, if any, from Mutual

Funds, would be included for allocation to the remaining QIB Bidders
on a proportionate basis.

• The aggregate Allotment to QIB Bidders shall not be less than [●] Equity Shares.

Illustration of Allotment to QIBs and Mutual Funds (“MF”)

A. Issue Details

Sr. No. Particulars Issue details

1 Issue size 200 million equity shares
2 Allocation to QIB (60%) 120 million equity shares
Of which:
a. Allocation to MF (5%) 6 million equity shares
b. Balance for all QIBs including MFs 114 million equity shares
3 No. of QIB applicants 10
4 No. of shares applied for 500 million equity shares

396
B. Details Of QIB Bids

S.No Type of QIB bidders# No. of shares bid for (in million)
1 A1 50
2 A2 20
3 A3 130
4 A4 50
5 A5 50
6 MF1 40
7 MF2 40
8 MF3 80
9 MF4 20
10 MF5 20
Total 500
# A1-A5: ( QIB bidders other than MFs), MF1-MF5 ( QIB bidders which are Mutual Funds)

C. Details of Allotment to QIB Bidders/ Applicants

(Number of equity shares in million)

Type of Shares Allocation of 6 million Allocation of balance 114 Aggregate
QIB bid for Equity Shares to MF million Equity Shares to allocation to
bidders proportionately (please QIBs proportionately MFs
see note 2 below) (please see note 4 below)
(I) (II) (III) (IV) (V)
A1 50 0 11.40 0
A2 20 0 4.56 0
A3 130 0 29.64 0
A4 50 0 11.40 0
A5 50 0 11,40 0
MF1 40 1.2 9.12 10.32
MF2 40 1.2 9.12 10.32
MF3 80 2.4 18.24 20.64
MF4 20 0.6 4.56 5.16
MF5 20 0.6 4.56 5.16
500 6 114 51.64

Please note:

1. The illustration presumes compliance with the requirements specified in this Draft Red
Herring Prospectus in the section titled “Issue Structure” beginning on page 373.

2. Out of 120 million Equity Shares allocated to QIBs, 6 million (i.e. 5%) will be allocated
on proportionate basis among 5 Mutual Fund applicants who applied for 200 shares in
QIB category.

3. The balance 114 million Equity Shares (i.e. 120 - 6 (available for MFs)) will be allocated
on proportionate basis among 10 QIB applicants who applied for 500 Equity Shares
(including 5 MF applicants who applied for 200 Equity Shares).

4. The figures in the fourth column titled “Allocation of balance 114 million Equity Shares

397
 to QIBs proportionately” in the above illustration are arrived as under:

• For QIBs other than Mutual Funds (A1 to A5)= No. of shares bid for (i.e. in
column II) X 114 / 494

• For Mutual Funds (MF1 to MF5)= [(No. of shares bid for (i.e. in column II of
the table above) less Equity Shares allotted ( i.e., column III of the table above)]
X 114/494

• The numerator and denominator for arriving at allocation of 114 million shares
to the 10 QIBs are reduced by 6 million shares, which have already been
Allotted to Mutual Funds in the manner specified in column III of the table
above.

Method of Proportionate Basis of Allotment in the Issue

In the event of the Issue being over-subscribed, the Company shall finalise the basis of Allotment in
consultation with the Designated Stock Exchange. The Executive Director (or any other senior official
nominated by them) of the Designated Stock Exchange along with the BRLM, the CBRLMs and the
Registrar to the Issue shall be responsible for ensuring that the basis of Allotment is finalised in a fair and
proper manner.

The Allotment shall be made in marketable lots, on a proportionate basis as explained below:

a) Bidders will be categorised according to the number of Equity Shares applied for.

b) The total number of Equity Shares to be Allotted to each category as a whole shall be arrived at on
a proportionate basis, which is the total number of Equity Shares applied for in that category
(number of Bidders in the category multiplied by the number of Equity Shares applied for)
multiplied by the inverse of the over-subscription ratio.

c) Number of Equity Shares to be Allotted to the successful Bidders will be arrived at on a

proportionate basis, which is total number of Equity Shares applied for by each Bidder in that
category multiplied by the inverse of the over-subscription ratio.

d) In all Bids where the proportionate Allotment is less than [●] Equity Shares per Bidder, the
Allotment shall be made as follows:

• The successful Bidders out of the total Bidders for a category shall be determined by
draw of lots in a manner such that the total number of Equity Shares Allotted in that
category is equal to the number of Equity Shares calculated in accordance with (b) above;
and

• Each successful Bidder shall be Allotted a minimum of [●] Equity Shares.

e) If the proportionate Allotment to a Bidder is a number that is more than [●]but is not a multiple of
one (which is the market lot), the decimal would be rounded off to the higher whole number if that
decimal is 0.5 or higher. If that number is lower than 0.5, it would be rounded off to the lower
whole number. Allotment to all Bidders in such categories would be arrived at after such rounding
off.

f) If the Equity Shares allocated on a proportionate basis to any category are more than the Equity
Shares Allotted to the Bidders in that category, the remaining Equity Shares available for
Allotment shall be first adjusted against any other category, where the Allotted shares are not
sufficient for proportionate Allotment to the successful Bidders in that category. The balance

398
 Equity Shares, if any, remaining after such adjustment will be added to the category comprising
Bidders applying for minimum number of Equity Shares.

PAYMENT OF REFUND

Bidders must note that on the basis of name of the Bidders, Depository Participant’s name, DP ID,
Beneficiary Account number provided by them in the Bid-cum-Application Form, the Registrar will obtain,
from the Depositories, the Bidders’ bank account details, including the nine digit Magnetic Ink Character
Recognition (“MICR”) code as appearing on a cheque leaf. Hence Bidders are advised to immediately
update their bank account details as appearing on the records of the Depository Participant. Please note that
failure to do so could result in delays in despatch of refund order or refunds through electronic transfer of
funds, as applicable, and any such delay shall be at the Bidders’ sole risk and neither the Company, the
Registrar, Escrow Collection Bank(s), Bankers to the Issue nor the BRLM nor the CBRLMs shall be liable
to compensate the Bidders for any losses caused to the Bidder due to any such delay or liable to pay any
interest for such delay.

Mode of making refunds

The payment of refund, if any, would be done through various modes as given hereunder:

1. ECS – Payment of refund would be done through ECS for applicants having an account at any of
the following fifteen centres: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh,
Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and
Thiruvananthapuram. This mode of payment of refunds would be subject to availability of
complete bank account details including the MICR code as appearing on a cheque leaf, from the
Depositories. The payment of refunds is mandatory for applicants having a bank account at any of
the abovementioned fifteen centres, except where the applicant, being eligible, opts to receive
refund through NEFT, direct credit or RTGS.

2. Direct Credit – Applicants having bank accounts with the Refund Banker(s), as mentioned in the
Bid cum Application Form, shall be eligible to receive refunds through direct credit. Charges, if
any, levied by the Refund Bank(s) for the same would be borne by the Company.

3. RTGS – Applicants having a bank account at any of the abovementioned fifteen centres and
whose refund amount exceeds Rs. 1 million, have the option to receive refund through RTGS.
Such eligible applicants who indicate their preference to receive refund through RTGS are
required to provide the IFSC code in the Bid-cum-application Form. In the event the same is not
provided, refund shall be made through ECS. Charges, if any, levied by the Refund Bank(s) for
the same would be borne by the Company. Charges, if any, levied by the applicant’s bank
receiving the credit would be borne by the applicant.

4. NEFT (National Electronic Fund Transfer) – Payment of refund shall be undertaken through
NEFT wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC),
which can be linked to a Magnetic Ink Character Recognition (MICR), if any, available to that
particular bank branch. IFSC Code will be obtained from the website of RBI as on a date
immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever
the applicants have registered their nine digit MICR number and their bank account number while
opening and operating the demat account, the same will be duly mapped with the IFSC Code of
that particular bank branch and the payment of refund will be made to the applicants through this
method. The process flow in respect of refunds by way of NEFT is at an evolving stage and hence
use of NEFT is subject to operational feasibility, cost and process efficiency.

5. For all other applicants, including those who have not updated their bank particulars with the
MICR code, the refund orders will be despatched under certificate of posting for value up to Rs.
1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such
refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection

399
 Banks and payable at par at places where Bids are received. Bank charges, if any, for cashing such
cheques, pay orders or demand drafts at other centres will be payable by the Bidders.

Letters of Allotment or Refund Orders

We shall give credit to the beneficiary account with depository participants within two working days from
the date of the finalisation of basis of allocation. Applicants residing at 15 centres where clearing houses
are managed by the RBI, will get refunds through ECS only except where applicant is otherwise disclosed
as eligible to get refunds through direct credit & RTGS. We shall ensure despatch of refund orders, if any,
of value up to Rs.1,500 by “Under Certificate of Posting”, and shall dispatch refund orders above Rs.1,500,
if any, by registered post or speed post at the sole or First Bidder’s sole risk within 15 days of the Bid/Issue
Closing Date. Applicants to whom refunds are made through electronic transfer of funds will be send a
letter through ordinary post intimating them about the mode of credit of refund within 15 days of closure of
Bid/ Issue.

In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI DIP
Guidelines, the Company further undertakes that:

• Allotment of Equity Shares will be made only in dematerialised form within 15 days from the
Bid/Issue Closing Date;

• The Company shall pay interest at 15% per annum (for any delay beyond the 15 day time period
as mentioned above), if Allotment is not made, refund orders are not dispatched and/or demat
credits are not made to investors within the 15 day time prescribed above.

The Company will provide adequate funds required for dispatch of refund orders or allotment advice to the
Registrar to the Issue.

Refunds will be made by cheques, pay-orders or demand drafts drawn on a bank appointed by us, as an
Escrow Collection Bank and payable at par at places where Bids are received. Bank charges, if any, for
encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders.

DISPOSAL OF APPLICATIONS AND APPLICATION MONEYS AND INTEREST IN CASE OF

DELAY

The Company ensures dispatch of Allotment advice, refund orders (except for Bidders who receive refunds
through electronic transfer of funds and give benefit to the beneficiary account with Depository Participants
and submit the documents pertaining to the Allotment to the Stock Exchanges within two working days of
date of Allotment of Equity Shares.

In case of applicants who receive refunds through ECS, direct credit or RTGS, the refund instructions will
be given to the clearing system within 15 days from the Bid/ Issue Closing Date. A suitable communication
shall be sent to the bidders receiving refunds through this mode within 15 days of Bid/ Closing Date, giving
details of the bank where refunds shall be credited along with amount and expected date of electronic credit
of refund.

The Company shall use best efforts to ensure that all steps for completion of the necessary formalities for
listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to
be listed, are taken within seven working days of Allotment.

In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI Guidelines,
the Company further undertakes that:

• Allotment of Equity Shares shall be made only in dematerialised form within 15 (fifteen) days of
the Bid/Issue Closing Date;

400
• Dispatch of refund orders or in a case where the refund or portion thereof is made in electronic
manner, the refund instructions are given to the clearing system within 15 (fifteen) days of the
Bid/Issue Closing Date would be ensured; and

• The Company shall pay interest at 15% (fifteen) per annum for any delay beyond the 15 (fifteen)-
day time period as mentioned above, if Allotment is not made and refund orders are not dispatched
or if, in a case where the refund or portion thereof is made in electronic manner, the refund
instructions have not been given to the clearing system in the disclosed manner and/or demat
credits are not made to investors within the 15 (fifteen)-day time prescribed above as per the
guidelines issued by the Government of India, Ministry of Finance pursuant to their letter No.
F/8/S/79 dated July 31, 1983, as amended by their letter No. F/14/SE/85 dated September 27,
1985, addressed to the stock exchanges, and as further modified by SEBI’s Clarification XXI
dated October 27, 1997, with respect to the SEBI Guidelines.

UNDERTAKINGS BY OUR COMPANY

We undertake the following:

• That the complaints received in respect of this Issue shall be attended to by us expeditiously;

• That all steps will be taken for the completion of the necessary formalities for listing and
commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be
listed within seven working days of finalisation of the basis of Allotment;

• That funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed
shall be made available to the Registrar to the Issue by the Issuer.

• That where refunds are made through electronic transfer of funds, a suitable communication shall
be sent to the applicant within 15 days of the Bid/ Issue Closing Date, as the case may be, giving
details of the bank where refunds shall be credited along with amount and expected date of
electronic credit of refund.

• That the certificates of the securities/ refund orders to the non-resident Indians shall be despatched
within specified time; and

• That no further issue of Equity Shares shall be made till the Equity Shares offered through this
Draft Red Herring Prospectus are listed or until the Bid monies are refunded on account of non-
listing, under-subscription etc.

The Company shall not have recourse to the Issue proceeds until the approval for trading of the Equity
Shares from all the Stock Exchanges where listing is sought has been received.

Utilisation of Issue proceeds

Our Board certifies that:

• All monies received out of the Issue shall be credited/transferred to a separate bank account other
than the bank account referred to in sub-section (3) of Section 73 of the Companies Act;

• Details of all monies utilised out of Issue shall be disclosed under an appropriate head in our
balance sheet indicating the purpose for which such monies have been utilised;

• Details of all monies utilised out of the funds received from Employee Reservation Portion shall
be disclosed under an appropriate head in the balance sheet of the Company, indicating the

401
 purpose for which such monies have been utilised;

• Details of all unutilised monies out of the Issue, if any shall be disclosed under the appropriate
head in the balance sheet indicating the form in which such unutilised monies have been invested;

• Details of all unutilized monies out of the funds received from the Employee Reservation Portion
shall be disclosed under a separate head in the balance sheet of the Company, indicating the form
in which such unutlilised monies have been kept.

Withdrawal of the Issue

The Company in consultation with the BRLM and the CBRLMs reserve the right not to proceed with the
Issue at anytime including after the Bid/ Issue Opening Date, without assigning any reason thereof. In
terms of the SEBI Guidelines, QIB Bidders shall not be allowed to withdraw their Bid after the Bid/Issue
Closing Date.

EQUITY SHARES IN DEMATERIALISED FORM WITH NSDL OR CDSL

As per the provisions of Section 68B of the Companies Act, the Allotment of Equity Shares in this Issue
shall be only in a de-materialised form, (i.e., not in the form of physical certificates but be fungible and be
represented by the statement issued through the electronic mode).

In this context, two agreements have been signed among the Company, the respective Depositories and the
Registrar to the Issue:

a) Agreement dated [●]with NSDL, the Company and the Registrar to the Issue;

b) Agreement dated [●] with CDSL, the Company and the Registrar to the Issue.

All Bidders can seek allotment only in dematerialised mode. Bids from any Bidder without relevant details
of his or her depository account are liable to be rejected.

a) A Bidder applying for Equity Shares must have at least one beneficiary account with either of the
Depository Participants of either NSDL or CDSL prior to making the Bid.

b) The Bidder must necessarily fill in the details (including the Beneficiary Account Number and
Depository Participant’s identification number) appearing in the Bid cum Application Form or
Revision Form.

c) Allotment to a successful Bidder will be credited in electronic form directly to the beneficiary
account (with the Depository Participant) of the Bidder

d) Names in the Bid cum Application Form or Revision Form should be identical to those appearing
in the account details in the Depository. In case of joint holders, the names should necessarily be
in the same sequence as they appear in the account details in the Depository.

e) If incomplete or incorrect details are given under the heading ‘Bidders Depository Account
Details’ in the Bid cum Application Form or Revision Form, it is liable to be rejected.

f) The Bidder is responsible for the correctness of his or her Demographic Details given in the Bid
cum Application Form vis-à-vis those with his or her Depository Participant.

g) Equity Shares in electronic form can be traded only on the stock exchanges having electronic
connectivity with NSDL and CDSL. All the Stock Exchanges where our Equity Shares are
proposed to be listed have electronic connectivity with CDSL and NSDL.

402
h) The trading of the Equity Shares of the Company would be in dematerialised form only for all
investors in the demat segment of the respective Stock Exchanges.

Communications

All future communications in connection with Bids made in this Issue should be addressed to the Registrar
to the Issue quoting the full name of the sole or First Bidder, Bid cum Application Form number, Bidders
Depository Account Details, number of Equity Shares applied for, date of bid form, name and address of
the member of the Syndicate where the Bid was submitted and cheque or draft number and issuing bank
thereof.
Investors can contact the Compliance Officer or the Registrar to the Issue in case of any pre-Issue or post-
Issue related problems such as non-receipt of letters of allotment, credit of allotted shares in the respective
beneficiary accounts, refund orders etc.

403
 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES

Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of GoI and FEMA.
While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign
investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in
which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign
investment is freely permitted in all sectors of Indian economy up to any extent and without any prior
approvals, but the foreign investor is required to follow certain prescribed procedures for making such
investment. As per current foreign investment policies, foreign investment in the construction and
engineering sector is permitted under the automatic route.

By way of Circular No. 53 dated December 17, 2003, the RBI has permitted FIIs to subscribe to shares of
an Indian company in a public offer without the prior approval of the RBI, so long as the price of the equity
shares to be issued is not less than the price at which the equity shares are issued to residents.

Transfers of equity shares previously required the prior approval of the FIPB. However, vide a RBI circular
dated October 4, 2004 issued by the RBI, the transfer of shares between an Indian resident and a non-
resident does not require the prior approval of the FIPB or the RBI, provided that (i) the activities of the
investee company are under the automatic route under the foreign direct investment (FDI) Policy and
transfer does not attract the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 (ii) the non-resident shareholding is within the sectoral limits under the FDI policy, and
(iii) the pricing is in accordance with the guidelines prescribed by the SEBI/RBI.

Subscription by foreign investors (NRIs/FIIs)

There is no reservation for Non Residents, NRIs, FIIs, foreign venture capital funds, multi-lateral and
bilateral development financial institutions and any other foreign investor. All Non Residents, NRIs, FIIs
and foreign venture capital funds, multi-lateral and bilateral development financial institutions and any
other foreign investor applicants will be treated on the same basis with other categories for the purpose of
allocation.

As per existing regulations, OCBs cannot participate in the Issue.

The Equity Shares have not been and will not be registered under the US Securities Act of 1933 (the
Securities Act) or any state securities laws in the United States and may not be offered or sold within
the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S
under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act.

The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other
jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in
any such jurisdiction, except in compliance with the applicable laws of such jurisdiction.

The above information is given for the benefit of the Bidders. The Company, the BRLM and the
CBRLMs are not liable for any amendments or modification or changes in applicable laws or
regulations, which may occur after the date of this Draft Red Herring Prospectus. Bidders are
advised to make their independent investigations and ensure that the number of Equity Shares Bid
for do not exceed the applicable limits under laws or regulations.

404
 MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

Capitalised terms used in this section have meaning that has been given to such terms in the Articles of
Association of Afcons Infrastructure Limited.

Pursuant to Schedule II of the Companies Act and SEBI Guidelines, the main provisions of the Articles of
Association of Afcons Infrastructure Limited are set forth below:

APPLICABILITY OF TABLE A

Article 1 provides that “all regulations of Table A in the First Schedule to the Companies Act, 1956 shall
be deemed to be incorporated with these Articles and to apply to the Company in so far as they are not
inconsistent with the provisions of the following Articles.”

SHARE CAPITAL

Increase and Reduction of Capital

Article 4 provides that “the Company is authorised to increase or reduce the capital of the Company and to
divide the shares in the capital for the time being into one or more classes, and to attach thereto respectively
such preferential priority, qualified or special rights, privileges or conditions as may be determined by or in
accordance with the Articles of Association of the Company for the time being in force, and to vary,
modify or abrogate any such rights, privileges or conditions in such manner as may, for the time being be
permitted by the Act, or provided by the Articles of Association of the Company.”
Article 6 provides that “the Company may from time to time, by Ordinary Resolution increase the share
capital by such sums to be divided into shares of such amount as may be specified in the Resolution.”

Power to issue Preference Shares

Article 5(A)(i) provides that “the Company shall have the power to issue preference shares which shall not
be redeemable beyond the period of redemption specified under the Act and the resolution authorising such
issue shall prescribe the manner, terms and conditions of redemption.”

Article 5(A)(ii) provides that “the Company shall have the power to issue preference shares which are or at
the option of the Company or of the preference shareholders, would be convertible into equity shares on
such terms and conditions as may be provided in the terms of issue and at the premium or at a discount as
may be laid down thereunder.”

Article 5(B) provides that “on the issue of Redeemable Preference Shares under the provisions of Articles
5(A) hereof the following provisions shall take effect:

(a) no such shares shall be redeemed except out of the profits of the Company which would otherwise
be available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of
the redemption;

(b) no such shares shall be redeemed unless they are fully paid;

(c) the premium, if any, payable on redemption must have been provided for out of the profits of the
Company or the Company’s Share Premium Account before the shares are redeemed;

(d) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there
shall, out of profits which would otherwise have been available for dividend, be transferred to a
reserve fund, to be called the “Capital Redemption Reserve Account”, a sum equal to the nominal
amount of the shares redeemed and the provisions of the Act, relating to the reduction of the share
capital of the Company, shall, except as provided in Section 88 of the Act, apply as if the Capital
Redemption Reserve were paid-up share capital of the Company.”

405
Article 5(C) provides that,

“(a) subject to the provisions of the Act and all other applicable provisions of law, the Company may
issue shares, either equity or any other kind with non-voting rights and the resolutions authorising
such issue shall prescribe the terms and conditions applicable to the issue of such shares;

(b) if the shares to be so issued are redeemable, the resolution authorising such issue shall prescribe
the manner, terms and conditions of redemption. The Company shall subject to and in accordance
with all applicable provisions of the Act, have power to make payment out of Capital of the
Company f9r the purpose of such redemption.”

CONSOLIDATION, SUB-DIVISION AND CANCELLATION OF SHARES

Consolidation, sub-division and cancellation of shares

Article 7 provides that “the Company may by Ordinary Resolution

(a) consolidate and divide all or any of its share capital into shares of large amount than its existing
shares;

(b) sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the
Memorandum, subject nevertheless to the provisions of clause (4) of sub-section (1) Section 94 of
the Act;

(c) cancel any share which at the date of the passing of the resolution have not been taken or agreed to
be taken by any person;

New shares created are part of original capital

Article 8 provides that, “except so far as otherwise provided by the conditions of issue or by these presents,
any capital raised by the creation of new shares shall be considered part of the original capital and shall be
subject to the provisions herein contained with reference to the payment of calls and instalments, transfer
and transmission, forfeiture, lien, surrender, voting and otherwise.”

Application amount payable on shares

Article 9 provides that, “the amount payable on application on each share of the Company shall be such
sum as the Board may determine at the time of issue of such shares.”

Powers of the Company when reducing share capital

Article 10 provides that, “the Company may from time to time by Special Resolution, subject to
confirmation by the Court, and subject to the provisions of Sections 100 to 104 of the Act, reduce its share
capital in any way, and in particular, without prejudice to the generality of the foregoing power, by

(a) extinguishing or reducing the liability on any of its shares in respect of share capital not paid up,
or

(b) cancelling either with or without extinguishing or reducing liability on any of its shares, any paid-
up capital which is lost or is unrepresented by available assets, or

(c) paying off, either with or without extinguishing or reducing liability on any of its shares, any paid-
up share capital which is in excess of the wants of the Company;

406
and Capital may be paid off upon the footing that it may be called up again or otherwise, and paid-up
capital may be cancelled as aforesaid, without reducing the nominal amount of the .shares by the like
amount, to the intent that the unpaid and callable Capital shall be increased by the like amount.”

Variation of rights

Article 11 provides that, “If at any time the share capital of the Company is divided into different classes of
shares, then the rights attached to any class of, shares, may, subject to the provisions of Section 106 of the
Act, be varied with

(a) the consent of the holders of at least three-fourths of the issued shares of that class; or

(b) the sanction of a special resolution passed at a separate meeting of the holders of those shares.

and all the provisions hereinafter contained as to general meetings (including the provisions relating to
quorum at such meetings) shall mutatis mutandis apply to every such meeting.”

SHARES

Register of Members

Article 12 provides that, “the Company shall cause to be kept a Register and index of Members in
accordance with Section 150 and 151 of the Act. The Company shall be entitled to keep is any State or
Country outside India a Branch Register of Members resident in that State or Country.”

Rights issue of shares

Article 13 provides that

“(a) subject to the provisions of the Act where at any time after the expiry of two years from the
formation of the Company or the expiry of one year from the allotment of shares made for the first
time after its formation whichever is earlier, it is proposed to increase the subscribed capital of the
Company by allotment of further shares whether out of unissued share capital or out of increased
share capital, then such further shares shall be offered to the persons who at the date of the offer,
are holders of the equity shares of the Company, in proportion, as nearly as circumstances admit,
to the capital paid up on these shares at the date. Such offer shall be made by a notice specifying
the number of shares offered and limiting a time not being less than fifteen days from the date of
the offer within which the offer, if not accepted, will be deemed to have been declined. Such offer
shall be deemed to include a right exercisable by the person concerned to renounce the shares
offered to him or any of them in favour of any other person and the notice referred to in this clause
shall contain a statement of this right. However, this shall not be deemed; (a) to extend the time
within which the offer should be accepted; or (b) to authorize any person to exercise the right of
renunciation for a second time, on the ground that the person whose favour the renunciation was
first made declined to take the shares comprised in the renunciation. After the expiry of the time
specified in the notice aforesaid or on receipt of earlier intimation from the person to whom such
notice is given that he declines to accept the shares offered, the Board may dispose of them in such
manner as they think most beneficial to the Company;

(b) Notwithstanding anything contained in the preceding sub-clause the Company may

(i) by a special resolution; or

(ii) where no such special resolution is passed, if the votes cast whether on show of hands, or
on a poll as the case may be, in favour of the proposal contained in the resolution moved
in that general meeting (including the casting vote, if any, of the Chairman) by members
who, being entitled so to do, vote in person, or where proxies are allowed, by proxy

407
 exceed the votes, if any, cast against the proposal by members so entitled and voting and
the Central Government is satisfied, on an application made by the Board in this behalf,
that the proposal is most beneficial to the Company.

offer further shares to any person whether or not such person, at the date of the offer, are the
holders of the equity shares of the Company.”

Increase of subscribed capital on exercise of option attached to debentures issued or loans raised by the
Company

Notwithstanding anything contained in sub-clause (a) above, but subject, however, to Section 81(3) of the
Act, the company may increase its subscribed capital on exercise of an option attached to the debentures
issued or loans raised by the Company to convert such debenture or loans into shares, or to subscribe for
shares in the Company.

Provided that the terms of the issue of debentures or the terms of such loans include a term for such option
and such term:

(a) Either has been approved by the Central Government before the issue of debentures or the raising
of the loans in conformity with Rules, if any, made by that Government in this behalf;

(b) In the case of debentures or loans or other than debentures issued to, or loans obtained from the
Government or any institution specified by the Central Government in this behalf, has also been
approved by the special resolution passed by the Company in General Meeting before the issue of
loans.”

Shares to be numbered progressively

Article 14 provides that, “the Shares in the Capital of the Company shall be numbered progressively
according to their several denominations, and except in the manner hereinbefore provided, no share shall be
sub-divided. Every forfeited or surrendered share shall continue to bear the number by which the same was
originally distinguished.”

Shares to be under the control of Board of Directors

Article 15 provides that, “Subject to the provisions of the Act and these Articles, the shares shall be under
the control of the Board and they may allot or otherwise dispose of the same to such persons, on such terms
and conditions, and either at a premium or at par, or (subject to the provisions of Section 79 of the Act) at a
discount and at such times, as the Board may think fit. The Board with the sanction of the Company in the
General Meeting can give to any persons the option or right to call for any shares either at par or premium
during such time and for such consideration as the directors think fit, and may issue and allot shares in the
capital of the Company on payment in full or part of any property sold and transferred or for any services
rendered to the Company in the conduct of its business and any shares which may be so allotted may be
issued as fully paid up shares and if so issued, shall be deemed to be fully paid shares. Provided that option
or right to call shares shall not be given to any person or persons without the sanction of the Company in
the General Meeting.”

Allotment of shares other than for cash

Article 16 provides that, “Subject to the provisions of the Act and these Articles, the Board may allot and
issue shares in the capital of the Company as payment for any property sold, or transferred, or for services
rendered to the Company in the conduct of its business, and any, shares which may be so issued shall be
deemed to be fully paid up shares.”

Application for and allotment of shares to constitute membership in the Company

408
Article 17 provides that “an application signed by or on behalf of an applicant for shares in the Company,
followed by an allotment of any shares, shall be acceptance of shares within the meaning of these Articles,
and every person who thus or otherwise accepts any shares and whose name is on the Register of Members,
shall, for the purpose of these Articles, be a member.”

Outstanding money to be paid on shares to constitute debt due to the Company

Article 18 provides that “the money (if any) which the Board shall, on allotment of any shares being made
by them require or direct to be paid by way of deposit, call or otherwise in respect of any shares, shall
immediately on the insertion of the name of the allottee in the Register of Members as the name of the
holder of such shares, become a debt due to and recoverable by the Company from the allottee thereof and
shall be paid by him accordingly.”

Article 19 provides that, “if by the conditions of allotment of any share the whole or any part of the amount
or issue price thereof shall be payable by ‘instalments, every such instalment shall when due, be paid to the
Company by the person, who for the time being and from time to time, shall be the registered holder of the
share or his legal representatives.”

Article 20 provides that, “every member or his heirs, legal representatives, executors and administrators
shall pay to the Company the proportion of the Capital represented by his share or shares, which may for
the time being remain unpaid thereon, in such amounts at such time or times and in such manner, as the
Board shall from time to time in accordance with the Company’s regulations require or fix for the payment
thereof.”

Article 21 provides that, “the joint holders of a share shall be severally as well as jointly liable for the
payment of all installment and calls due in respect of such shares.”

No person to be recognized by the Company as holding any share upon any trust

Article 22 provides that “Except as required by law, no person shall be recognised by the Company as
holding any share upon any trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any share or except only as by these regulations or by law
otherwise provided any other rights in respects of any share, except an absolute right to the entirety thereof
as the registered holder.”

CERTIFICATES

Member entitled to share certificate

Article 24 provides that,

“(a) every Member or allottee of shares shall be entitled without payment to receive one certificate
specifying the name of the person in whose favour it is issued, the shares to which it relates and
the amount paid-up thereon. Such certificate shall be issued only in pursuance of a resolution
passed by the Board and on surrender to the Company of its letter of allotment or its fractional
coupons of requisite value, save in case of issues against letters of acceptance or of renunciation or
in case of issue of bonus shares. The Company shall complete and have ready for delivery such
certificates within three months from the date of allotment, unless conditions of issue thereof
provide otherwise, or within two months of the receipt of allocation of registration of transfer,
transmission, subdivision, consolidation or renewal of any of its shares as the case may be. Every
such certificate shall be issued under the seal of the Company, which shall be affixed in the
presence of two Directors or persons acting on behalf of the Board under a duly registered power
of attorney and the Secretary or some other persons appointed by the Board for the purpose, and
two Directors or their attorneys and the Secretary or other person shall sign the share certificate.

409
 Particulars of every share certificate issued shall be entered in the Register of Members against the
name of the person to whom it has been issued, indicating the date of issue.”

(b) any two or more joint allottees or owners of a share shall, for the purpose of this Article, be treated
as a single member, and the certificate of any share, which may be the subject of joint ownership,
may be delivered to any one of such joint allottees or owners on behalf of all of them. For any
further certificate the Board shall be entitled,’ but shall not be bound to prescribe a charge not
exceeding such sum as may be prescribed by law.

(c) a Director may sign a share certificate by affixing. his signature thereon by means of any machine,
equipment or other mechanical means, such as engraving in metal or lithography, but not by
means of a rubber stamp, provided that the Director shall be responsible for the safe custody of
such machine, equipment or other material used for the purpose.

(d) the Company shall be entitled to charge such sum as the Board may decide for issuing certificates
for shares in numbers other than the marketable lot.”

Replacement of certificates

Article 25 provides that

“(a) no certificate of any share or shares shall be issued either in exchange for those which are sub-
divided or consolidated or in replacement of those which are defaced, torn or old, decrepit, worn
out, or where the cages on the reverse for recording transfers have been duly utilised unless the
certificate in lieu of which it is issued is surrendered to the Company.

(b) when a new share certificate has been issued in pursuance of clause (a) of this Article, it shall state
on the face of it and against the stub or counterfoil to the effect that it is “Duplicate issued in lieu
of share certificate No …………….” Sub-divided / replaced1on consolidation of shares.

(c) If a share certificate is Lost or destroyed, a new certificate in lieu thereof shall be issued only with
the prior consent of the Board and on such terms, if any, as to evidence and indemnity as also to
the payment of out-of-pocket expenses incurred by the Company in investigating evidence, as the
Board thinks fit.

(d) when a new share certificate has been issued in pursuance of clause (c) of this Article, it shall state
on the face of it and against the stub or counterfoil to the effect that it is “Duplicate issued in lieu
of share certificate No ………….”. The word “Duplicate” shall be stamped or punched in bold
letters across the face of the share certificate. Every certificate issued pursuant to clause (a) or (c)
of this Article shall be issued without payment of fees, if the Directors so decide, or on payment of
fees (not exceeding Rs.2 for each certificate). Provided that no fee shall be charged for issue of
new certificates in replacement of those which are defaced, torn or old, decrepit, worn out, or
where the the cages on reverse for recording transfers have been duly utilized.

(e) where a new share certificate has been issued in pursuance of clause (a) or clause (c) of this
Article, particulars of every such Share certificate shall be entered in a Register of Renewal and
Duplicate Certificates indicating against the name of the persons to whom the certificate is issued,
the number and date of issue of the share certificate in lieu of which the new certificate is issued
and the necessary changes indicated in the Register of Members by suitable cross reference in the
“Remarks” Column.

(f) Notwithstanding anything contained in Article 25(c) of the Articles of Association of the
Company, the Board may at their discretion charge and recover the stamp duty ,that may be
payable on share certificates issued in replacement of those that are torn, defaced, lost or destroyed
or issued on splitting or consolidation of share certificates into denominations other than

410
 marketable lots and such payment shall be made by the shareholders receiving the certificates
prior to the issue of share certificates.”

The provisions of this Article shall mutatis mutandis apply to debentures of the Company.

JOINT HOLDERS OF SHARES

Article 26 provides that, “if any shares stand in the names of two or more persons, the person first named in
the Register of Members shall, ,as regards receipt of dividends or service of notices and all or any other
matters connected with the Company, except voting at meetings and the transfer of the shares, be deemed
the sole holder thereof.”

Article 27 provides that, “in the case of death of any one or more of the persons named in the Register of
Members as jointholders of any share, the survivors or survivor shall be the only persons or person
recognised by the Company as having any title to or interest in such share but nothing herein contained
shall be taken to release the estate of a jointholder from any liability on shares held by him jointly with any
other person.”

UNDERWRITING AND BROKERAGE

Article 30 provides that, “subject to the provisions of Section 76 of the Act, the Company may at any time
pay a commission to any person in consideration of his subscribing or agreeing to subscribe (whether
absolutely or conditionally) for any shares or debentures in the Company, or procuring, or agreeing to
procure subscription (whether absolute or conditional) for any shares in or debentures of the Company, but
so that the commission shall not exceed in the case of shares five per cent of the price at which the shares
are issued and in the case of debentures two and a half per cent of the price at which the debentures are
issued, or such higher rates as may be permissible under any statutory provision for the time being in force.
Such commission may be satisfied by payment of cash or by allotment of fully or partly paid shares or
partly in one way and partly in the other.”

TRANSFER AND TRANSMISSION OF SHARES

Register of transfer

Article 33 provides that, “the Company shall keep a “Register of Transfer” and therein shall be fairly and
distinctly entered particulars of every transfer or, transmission of any share.”

Instrument of transfer

Article 34 provides that, “the instrument of transfer shall be in writing and all the provisions of Section 108
of the Act, and or any statutory modification thereof for the time being shall be duly complied with in
respect of all transfer of shares.”

Procedure for transfer

Article 35 provides that, “the instrument of transfer duly stamped and executed by the Transferor and the
Transferee shall be delivered to the Company in accordance with the provisions of the Act. The instrument
of Transfer shall be accompanied by .such evidence as the Board may required to prove the title of
Transferor and his right to transfer the shares and every registered instrument of transfer shall remain in the
custody of the Company until destroyed by order of the Board. The Transferor shall be deemed to be the
holder of such shares until the name of the Transferee shall have been entered in the Register of Members
in respect thereof. Before the registration of a transfer the certificate or certificates of the shares must be
delivered to the Company.”

411
Board’s power to refuse transfer

Article 37 provides that, “subject to the provisions of Section 111A of the Act, and save and except in
respect of any shares or debentures held by any Financial Institution in the Company, the Board may at its
own absolute and uncontrolled discretion or in exceptional circumstance when it is felt that the transferee
is not a desirable person from the larger point of view of the interest of the Company as a whole, decline to
register or acknowledge any transfer of shares or debentures or any other scrip or security whether fully
paid or not, (notwithstanding that the proposed transferee be already a member) and assigning reasons for
such refusal, but in such cases it shall, within one month from the date on which the instrument of transfer
was lodged with the Company, send to the transferee and the transferor notice of refusal provided that the
registration of a transfer shall not be refused on the ground that the transferor being either alone or jointly
with any other person or persons, indebted to the Company on any account whatsoever except where the
Company has exercised its right of lien on the shares.”

Transfer of partly paid shares

Article 38 provides that, “where, in the case of partly paid share, an application for registration is made by
the transferor, the transfer shall not be registered unless the Company gives notice of the application to the
Transferee in accordance with the provisions of Section 110 of the Act.”

Title to shares of deceased member

Article 39 provides that “the executors or administrators or holders of a Succession Certificate or the legal
representatives of a deceased member (not being one of two or more joint-holders) shall be the only
persons recognised by the Company as having any title to the Shares but shall not be bound to recognise
such executors or administrators or holders of a Succession Certificate or the legal representatives unless
they shall have first obtained Probate or Letters of Administration or Succession Certificate, as the case
may be, from a duly constituted Court in the Union of India; provided that in any case where the Board in
its absolute, discretion thinks fit, the Board may dispense with production of Probate or Letters of
Administration or Succession Certificate, upon such terms as to indemnity or otherwise as the Board in its
absolute discretion may think necessary and register the name of any person who claims to be absolutely
entitled to the shares standing in the name of a deceased member, as a member.”

Transmission of shares

Article 40 provides that, “subject to the provisions of the Act and Articles 27 and 39 any person becoming
entitled to a share in consequence of the death, lunacy, bankruptcy, insolvency of any member or by any
lawful means other than by a transfer in accordance with these Articles, may, with the consent of the Board
(which it shall not be under any obligation to give) and upon producing such evidence that he sustains the
character in respect of which he proposes to act under this Article or of such title as the Board thinks
sufficient, either be registered himself as the holder of the share or elect to hive some person nominated by
him and approved by the Board registered as such holder; provided nevertheless, that if such person shall
elect to have his nominee registered, he shall testify his election by executing in favour of his nominee an
Instrument of Transfer in accordance with the provisions herein contained, and until he does so, he shall be
freed from any liability in respect of such shares. This clause is hereinafter referred to as the “Transmission
Clause.”

Board’s right to refuse transmission of shares

Article 41 provides that, “the Board shall subject to the provisions of Article 37 hereof have the same right
to refuse to register a person entitled by transmission to any shares or his nominee, as if he were the
transferee named in the case of transfer presented for registration.”

Company’s limitation of liability

412
Article 43 provides that, “The Company shall incur no liability or responsibility whatever in consequence
of its registering or giving effect to any transfer of shares made or purporting to be made by any apparent
legal owner thereof (as shown or appearing in the Register of Members) to the prejudice of persons having
or claiming any equitable right, title or interest to or in the said shares, notwithstanding that the Company
may have had notice of such equitable right, title or interest or notice prohibiting registration of such
transfer and may have entered such notice or referred thereto,. in any book of the Company, and the
Company shall not be bound or required to regard or attend or give effect to any notice which may he given
to it of any equitable right, title or interest or be under any liability whatsoever for refusing or neglecting so
to do, though it may have been entered or referred to in some book of the Company, but the Company shall
nevertheless be at liberty to regard and attend to any such notice and give effect thereto if the Board shall
so think fit.”

No fee payable on transfer or transmission of shares

Article 44 provides that, “The Company shall not charge any fee in respect of the transfer or transmission
of any number of shares.”

Applicability to debentures

Article 45 provides that, “the provisions of these Articles, as far as applicable, shall mutatis mutandis apply
to the transfer of or transmission by operations of law of the right to debentures, if any, of the Company.”

CALLS

Board’s power to make calls

Article 46 provides that, “the Board may, from time to time by resolution passed at a meeting of the Board
and not by a circular resolution, make such calls as they think fit upon the members in respect of all
moneys unpaid on the shares held by them respectively (whether on account of nominal value of the shares
or by way of premium) and not by the conditions of allotment thereof made payable at fixed times, and
each member shall pay the amount of every call so made on him to the persons and at the times and places
specified by the Board. A call may be made payable by instalments.”

Registered holders of shares to pay installments

Article 47 provides that, “if by the conditions of allotment of any shares the whole or part of the amount or
issue price thereof shall be payable by instalments; every such instalment shall, when due, be paid to the
Company by the person who for the time being shall be the registered holder of the share or his legal
representatives.”

Limitation on making calls

Article 48 provides that, “No call shall be made payable within two months after the last preceding call was
payable. All calls shall be made on a uniform basis on all shares falling under the same class. For the
purpose of this Article shares of the same nominal value on which different amounts have been paid up
shall not be deemed to fall under the same class.”

Notice for calls

Article 50 provides that, “notice of not less than fourteen days in respect of any call shall be given
specifying the date, time and place of payment and to whom such call shall be paid, provided that, before
the time for payment of such call shall elapse, the Board may in its discretion by notice in writing to the
members, revoke the same.”

413
Calls made at fixed times

Article 51 provides that, “if by the terms of issue of any share or otherwise. any amount is payable at any
fixed time or by instalments at fixed times, whether on account of the nominal amount of the share or by
way of premium, every such amount or instalment shall be payable, as if it were a call duly made by the
Board and payable on the date on which by the terms of issue, such sum becomes payable, and of which,
due notice has been given. In case of non-payment of such sum, all the relevant provisions herein contained
as to payment of interest and expenses, forfeiture or otherwise shall apply, as if such sum had become
payable by virtue of a call duly made, and notified.”

Calls when not paid on time

Article 52 provides that “if the sum payable in respect of any call or installment be not paid on or before the
day appointed for payment thereof, the holder for the time being or the allottee of the share in respect of
which the call shall have been made or the instalment shall be due, shall pay interest on such sum from the
day appointed for payment thereof, to the time of actual payment, at such rate as may from time to time be
fixed by the Board; but nothing in this Article shall render it obligatory upon Board to demand or recover
any interest from any such member.”

Liability of joint holders

Article 54 provides that “the Joint holders of a share shall be jointly and severally liable to pay all calls in
respect thereof.”

Payment of calls in advance

Article 56 provides that, “the Board may, if they think fit, agree to and receive from any members willing
to pay in advance. the same the whole or any part of the amounts payable on their respective shares beyond
the sums actually called up; and upon the amount being so paid in advance or upon so much thereof as,
from time to time, and at any time, exceeds the amount of the calls then made upon and due in respect of
the shares on account of which such advance payment has been made, the Board may pay or allow interest
at such rate, as the member paying such sum in advance and the Board agree upon. The Board may further
agree to repay at any time the amount so paid in advance or may at any time repay the same upon giving to
the member three months notice in writing. The member making such advance payment shall not, however,
be entitled to any voting rights in respect of the money so paid by him or to participate in profits until the
same would, but for such payment, become presently payable.”

Applicability to debentures

The provisions of this Article shall mutatis mutandis apply to the calls on debentures of the Company.

FORFEITURE

Failure to pay calls

Article 57 provides that, “if any member fails to pay any call or instalment of a call, on or before the day
appointed for the payment of the same, the Board may at any time thereafter, during such time as the call or
instalment remains unpaid, serve a notice on such member requiring him to pay the same, together with any
interest that may have accrued, and all expenses that may have been incurred by the Company by reason of
such nonpayment.”

Article 58 provides that, “the notice shall name a day (not being earlier than the expiry of fourteen days
from the date of service of the notice) and a place or places, on and at which, such call or instalment and
such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of non-
payment at or before the time and at the place appointed, the shares in respect of which the call was made
or instalment is payable, will be liable to be forfeited.”

414
Forfeiture of shares

Article 59 provides that, “If the requirement of any such notice as aforesaid is not complied with any share
in respect of which such notice has been given may, at any time thereafter before payment by the member
to the Company of such calls or instalments, interest and expenses or other moneys due in respect thereof,
forfeit such shares by a resolution of the Board to that effect. Such forfeiture shall include all dividends
declared in respect of the forfeited shares and not actually paid before the forfeiture.”

Notice of forfeiture

Article 60, provides that “when any share shall have been so forfeited, notice of the forfeiture shall be
given to the member in whose name it stood immediately prior to the date thereof and an entry to that effect
shall forthwith be made in the Register of Members, provided however, that the failure to give the notice or
to make such entry as aforesaid will not in any way invalidate the forfeiture.”

Forfeited shares are property of the Company

Article 61 provides that “Any share so forfeited shall be deemed to be the property of the Company and the
Board may sell, re-allot or otherwise dispose of the same in such manner as they think fit.”

Article 62 provides that, “the Board may at any time before any shares so forfeited shall have been sold,
reallotted or otherwise disposed of, annul the forfeiture thereof as a matter of grace and favour and not as of
right, upon such terms and conditions as they may think fit.”

Liability of member whose shares have been forfeited

Article 63 provides that, “any member whose shares have been forfeited shall, notwithstanding such
forfeiture, be liable to pay, and shall forthwith pay to the Company all calls, installments, interest, expenses
and other moneys owing upon or in respect of such shares at the time of forfeiture together with interest
thereon from the time of forfeiture until payment, at such rate as the Board may determine and the Board
may enforce the payment of whole or any part thereof if they think fit, but shall not be under any obligation
to do so.”

Consequence of forfeiture

Article 64 provides that, “The forfeiture of a share shall result in the extinction of all interest in, and also all
claims and demands made against the Company in respect of the share and all other rights incident to the
share, except only such of those rights as are by these articles expressly saved.”

LIEN

Company to have no lien on fully paid shares and debentures

Article 70 provides that, “the Company shall have no lien on its fully paid shares/debentures. In the case
partly paid up shares/debentures, the Company shall have a first and paramount lien thereon, in respect of
all moneys (whether presently payable or not) or called, or payable at a fixed time, in respect of such
shares/debentures, and no equitable interests in any share shall be created except upon footing that and
condition that this Article will have full effect. sSuch lien shall extend to all dividends and bonuses from
time to time declared and payable in respect of the shares/debentures. Unless otherwise agreed, the
registration of a transfer of shares/debentures shall operate as a waiver of the Company’s lien, if any, on
such shares/debentures. The directors may at any time declare any share/debenture wholly or in part to be
exempt from this provision.”

415
Enforcement of lien by the Board

Article 71 provides that, “for the purpose of enforcing such lien, the Board may sell the shares subject
thereto, in such manner as they may think fit, but no sale shall be made unless the sum in respect of which
the lien exists, is presently payable and until notice in writing of the intention to sell shall have been served
on such member or the person or persons entitled by transmission to the shares, and default have been made
by him or them in payment of the sum payable as aforesaid, for seven days after despatch of such notice.”

SHARE WARRANTS

Issue of Share Warrants

Article 74 provides that, “the Company may issue share warrants subject to, and in accordance with, the
provisions of Section 114 and 115 of the Act and accordingly the Board may in its discretion, with respect
to any share which is fully paid up, on application in writing signed by the person registered as holder of
the share, and authenticated by such evidence (if any) as the Board may from time to time, require as to the
identity of the person signing the application and on receiving the certificate (if any) of the share, and the
amount of the stamp duty on the warrant and such fee as the Board may from time to time prescribe, issue a
share warrant.”

DEMATERIALISATION OF SECURITIES

Article 79 A provides that, “notwithstanding contained in these Articles;

(a) the shareholders/debenture holders of the Company shall be entitled to dematerialize its existing
shares, debentures and other securities, rematerialize its securities held in the Depository and the
Company shall offer fresh shares, debentures and other securities for subscription in a
dematerialized form pursuant to the Depositories Act and the rules framed there under, if any

(b) every Person subscribing to or holding securities of the Company shall have the option to receive
security certificates or to hold the securities with a Depository.

(c) the share in the capital shall be numbered progressively according to their several denominations.
Provided that the provisions relating to progressive numbering shall not apply to the shares of the
Company which are dematerialized or may be dematerialized in future or issued in future in
dematerialized form. Every forfeited or surrendered share shall continue to bear the number by
which the same was originally distinguished.

(d) every person subscribing to shares, debentures or other securities offered by the Company shall
have the option to receive such shares, debentures or securities in physical form or to hold the
same with a Depository in dematerialized form. Such a person who is the Beneficial owner of the
securities can at any time opt out of a depository, if permitted and in the manner provided by law
and the Company shall, in the manner and within the time prescribed, issue to the Beneficial
owner the required Certificates.

(e) in case of transfer of shares, debentures and other marketable securities, where the Company has
not issued any certificate and where such shares, debentures or securities are being held in an
electronic and fungible form by a Depository, the provisions of the Depositories Act shall apply.

(f) If the shares of the Beneficial owner are held with a Depository, the Company shall intimate such
Depository, the details of allotment of the security, and on receipt of the information, the
Depository shall enter in its records, the names of the allottees as the Beneficial owner of the
security.

(i) a Depository shall be deemed to be the registered owner of the securities for the purposes
of effecting transfer of ownership of security on behalf of the Beneficial Owner.

416
 (ii) save as otherwise provided in (i) above, the Depository as the registered owner of the
securities shall not have any voting rights or any other rights in respect of the securities
held by it. Such voting rights shall be vested with the Beneficial owner of the shares of
the Company.

(g) Beneficial owner deemed as absolute owner. Save as herein otherwise provided, the Company
shall be entitled to treat the persons whose name appears as the Beneficial owner of the shares,
debentures and other securities in the records of the Depository as the absolute owner thereof as
regard receipt of dividends or bonus on shares, interest/premium on debentures and other
securities and repayment thereof or for service of notices and all or any other matters connected
with the Company and accordingly the Company shall not (except as ordered by the Court of
competent jurisdiction or as by law required) be bound to recognize any benami trust or equity or
equitable, contingent or other claim to or interest in such shares, debentures or other securities as
the case may be, on the part of any other person whether or not it shall have express or implied
notice thereof but the Board shall be entitled at their sole discretion to register any share in the
joint names of any two or more persons or the survivors or the survivors of them.

(i) the Company shall cause to keep a Register and Index of Members and Register and Index of
Debenture holders in accordance with Section 151 and 152 of the Act respectively, and the
Depositories Act, with details of shares and debentures held material and dematerialized forms in
any media as may be permitted by law including in any form of electronic media. Notwithstanding
anything in these Articles to the contrary, the Register and Index of Beneficial owners maintained
by a Depository under Section 11 of the Depositories Act shall be deemed to be the Register and
Index of Members for the purposes of the Act. The Company shall have the power to keep in any
state or country outside India a branch of Register of Members resident in that state or country.

(j) notwithstanding anything in these Articles to the contrary, the Register and Index of Beneficial
owners maintained by a Depository under Section 11 of the Depositories Act shall be deemed to
be the Register and Index of Debenture holders for the purposes of the Act.

(k) nothing contained in Section 108 of the Act or these Articles shall apply to the transfer of shares,
debentures or other securities effected by the transferor or transferee, both of whom are entered as
Beneficial owners in the records of the Depository, provided that in respect of the shares,
debentures and other securities held by the Depository on behalf of a Beneficial owner, Sections
153, 153A, 153B, 187B, 187C and 372A of the Act, shall not apply.

(l) Issue of Certificates, if required, in the case of dematerialised shares/debentures/other

securities and rights of Beneficial owner of such shares/debentures/other securities.
Notwithstanding anything contained in these Articles, certificate, if required, for dematerialised
share, debenture and any other security shall be issued in the name of the Depository and all the
provisions contained in these Articles in respect of the rights of a member/debenture holder of the
Company shall mutatis mutandis apply to the Depository as if it were a Member/debenture
holder/security holder excepting that and notwithstanding that the Depository shall have been
registered as the holder of a dematerialised share, debenture and any other security, the person
who is the Beneficial owner of such shares, debentures and other securities shall be entitled to all
the rights (other than those set out in these Articles) available to the registered shares, debentures
and other securities, in the Company as set out in the other provisions of these Articles.

GENERAL MEETINGS

Annual General Meeting

Article 80 provides that, “Subject to the provisions contained in Section 166 and 210 of the Act, as far as
applicable, the Company shall, in each year hold, in addition to any other meetings, and General Meeting as
its Annual General Meeting and shall specify the meeting as such in the notice calling it, and not more than

417
fifteen months shall elapse between the date of one Annual General Meeting of the Company and that of
the next; provided further, that if the Registrar of Companies may for any special reason extend the time,
within which any Annual General meeting (not being the first Annual General Meeting) shall be held by a
period not exceeding three months, then such Annual General Meeting may be held, within such extended
period;

Article 81 provides that, “Every Annual General Meeting shall be called for a time during business hours,
on a day that is not a public holiday and shall be held either at the registered office of the Company or at
some other place within the city, town or village in which the registered office of the Company is situated,
as the Boart may determine.”

Extraordinary General Meeting

Article 82 provides that, “All meetings of the Company other than the Annual General Meetings shall be
called “Extraordinary General Meeting.”

Article 83 provides that, “The Board may whenever they think fit, convene an “Extraordinary General
Meeting.”

Procedures for Extraordinary General Meetings.

Article 84 provides that, “the Board shall on the requisition of such number of members of the Company as
is specified in Section 169 of the Act forthwith proceed duly to call an Extraordinary General Meeting of
the Company and in the case of such requisition, the provisions of the said Section shall have effect.”

Article 85 provides that, “any valid requisition so made by members shall state the object or objects of the
meeting proposed to be called, and shall be signed by the requisitionists and be deposited at the registered
office of the Company provided that such requisition may consist of several documents in like form each
signed by one or more requisitionists.”

Article 86 provides that, “upon the receipt of any such requisition, the Board shall forthwith call an
Extraordinary General Meeting and if they do not proceed within twenty-one days from the date of the
requisition being deposited at the office to cause a meeting to be called on a day not later than forty-five
days from the date of deposit of the requisition, the requisitionists, or such of their number as represent
either a majority in value of the paid-up share capital held by all of them or not less than one-tenth of such
of the paid-up share capital of the Company as is referred to in Section 169(4)(a) of the Act; whichever is
less, may themselves call the meeting, but in either case any meeting so called shall be held within three
months from the date of the delivery of the requisition as aforesaid.”

Article 88 provides that, “the accidental omission to give notice to, or non-receipt of notice by, any member
or other person to whom it should be given shall not invalidate the proceedings at the meeting.”

Notice required for special resolutions

Article 89 provides that, “no General Meeting, Annual or Extraordinary, shall be competent to enter upon,
discuss or transact any item of business deemed to be special, unless notice thereof is given in the notice
convening the meeting.”

QUORUM

Article 90 provides that, “five members entitled to vote and present in person shall be a quorum for a
General Meeting. When more than one of the joint holders of a share are present, not more than one of
them shall be counted for ascertaining the quorum. Several executors or administrators of a deceased
person, in whose sole name the share stands, shall, for the purposes of this clause, be deemed joint holders
thereof.”

418
Article 92 provides that, “No business shall be transacted at any General Meeting, unless the quorum
requisite shall be present at the commencement of the business.”

CHAIRMAN

Article 93 provides that, “the Chairman of the Board shall be entitled to take the chair at every General
meeting. If there be no such Chairman, or if at any meeting, be shall not be present within fifteen minutes
after the time appointed for holding such meeting, or being present declines to take the chair, the Board
present may choose one of their number to be the Chairman, and in default of their doing so, the members
present shall choose one of the Board to be the Chairman, and if no Director present be willing to take the
chair, the members present shall on a show of hands, elect one of them to be the Chairman of the meeting.
If a poll is demanded on the election of the Chairman, it shall be taken forthwith in accordance with the
provisions of the powers of the Chairman under the said provisions. If some other person is elected
Chairman as a result of the poll, he shall be the Chairman for the rest of the meeting.”

Article 94 provides that, “no business shall be discussed at any General Meeting except election of the
Chairman, white the Chair is vacant.”

VOTING

Article 95 provides that, “no resolution submitted to a meeting, unless proposed by the Chairman of the
meeting, shall be discussed nor put to vote, until the same has been proposed by a member present and
entitled to vote at such meeting and seconded by another member present and entitled to vote at such
meeting.”

Article 96 provides that “at any General Meeting a resolution put to the vote of the meeting, shall, unless a
poll is demanded, be decided on a show of hands.”

Article 97 provides that, “a declaration by the Chairman that on a show of hands, a resolution has or has not
been carried either unanimously or by a particular majority, and an entry to that effect in the books
containing the minutes of the meetings of the Company, shall be conclusive evidence of the fact, without
proof of the number, or proportion of the votes cast in favour or against such resolution.”

Poll

Article 98 provides that

(1) Before or on the declaration of the result of the voting on any resolution on a show of hands, a poll
may be ordered to be taken by the Chairman of the meeting at his own motion, and shall be
ordered to be taken by him on a demand made in that behalf by any member or members present
in person or by proxy and holding shares in the Company

(a) which confer a power to vote on the resolution not being less than one tenth of the total
voting power in respect of the resolution, or

(b) on which an aggregate sum of not less than fifty thousand rupees has been paid up

(2) the demand for a poll may be withdrawn at any time by the person or persons who has made the
demand

Voting by representative

Article 112 provides that, “No member, not personally present, shall be entitled to vote on a show of hands,
unless such member is a company or corporation, present by a representative duly authorised under Section
187 of the Act, in which case, such representative may vote on a show of hands, as if, he were an individual
member of the Company.”

419
Voting by proxy

Article 113 provides that, “Any member of the Company entitled to attend and vote at a meeting of the
Company shall be entitled to appoint more than one proxy to attend on the same occasion. Votes may be
given either personally or by proxy, or in the case of a Company, or other corporation, by a representative
duty authorised as aforesaid.”

Deemed Registered Holder

Article 119 provides that, “Any person entitled under the transmission clause to transfer any shares, may
vote at the General Meeting in respect thereof, in the same manner as if he were the registered holder of
such shares, provided that, forty-eight hours at least, before the time of holding the meeting. or adjourned
meeting, as the case may be, at which he proposes to vote, he shall satisfy the Board of his right to transfer
such shares, unless the Board shall have previously admitted his right to vote at such meeting.”

Votes of joint members

Article 120 provides that, “Where there are joint registered holders of any share, any one of such persons
may vote at any meeting either personally or by proxy or by agent duly authorised under power of attorney
in respect of such share, as if he were solely entitled thereto; and if more than one of such joint holders be
present at any meeting, personally or by proxy or by an agent duly authorised under a power of attorney,
that one of the said persons so present, whose name stands first or higher as the case may be, on the
Register of Members in respect of such share shall alone be entitled to vote in respect thereof, but the other
or others of the joint holders shall be entitled to be present at the meeting, Provided always, that a person
present at any meeting personally, shall be entitled to vote in preference to a person present by an agent
duty authorised under a power of attorney or by proxy, although the name of such person present by an
agent or proxy, stands first or higher in the Register of Members in respect of such shares. Several executor
or administrators of a deceased member, in whose (deceased member’s) sole name any share stands, shall,
for the purpose of this clause, be deemed as joint holders thereof.”

DIRECTORS

Number of directors

Article 125 provides that, “the number of Directors of the Company shall not be less than three or more
than sixteen, excluding Alternate Directors.”

Appointment of alternate director

Article 126 provides that, “subject to the provisions contained in Article 125 hereof the Board shall have
power at any time and from time to time to appoint any other persons as and addition to the Board. The
Director so appointed as an additional director shall bold office only upto the date of the next Annual
General Meeting of the Company but he shall be eligible for re-election at such meeting.”

Article 127 provides that, “the Board of the Company may appoint an alternate Director to act for a
Director (hereinafter called “the Original Director”) during his absence for a period of not less than three
months from the State in which the registered office of the Company is situated. An alternate Director
appointed under this Article shall vacate office if and when the Original Director returns to the State in
which the registered office of the Company is situated. If the term of office of the original Director is
determined before he so returns to the State in which the registered office of the Company is situated, any
provision in the said Act or in these Articles for the automatic reappointment of retiring Directors in default
of another appointment shall apply to the Original Director but not to the alternate Director.”

420
Power to fill casual vacancies

Article 128 provides that, “subject to the provisions of Sections 262, 264 and 284 (5) of the Act, the Board
shall have power at any time and from time to time to appoint any other qualified person t9 be a Director to
fill a casual vacancy. Any person So appointed shall hold office until the date upto which the Director in
whose place he is appointed would have held office if it had not been vacated by him.”

Nominee directors

Article 129 provides that, “whenever the Board enter into a contract with any Central Government and/or
State Government, any bank or financial institution or any person or persons (hereinafter referred to as the
appointor) for borrowing any money or for providing any guarantee or security or for technical
collaboration or assistance or for underwriting or enter into any other arrangement whatsoever, the Board
shall have, subject to the provisions of Section 255 of the Act, the power to agree that such appointor shall
have the right to appoint or nominate by a notice in writing addressed to the Company, one or more
Directors on the Board for such period and upon such conditions as may be mentioned in the agreement
and that such Director or Directors may not be liable to retire by rotation nor be required to hold any
qualification shares. The Board may also agree that any such Director or Directors may be removed from
time to time by the appointor entitled to appoint or nominate them and the appointor may appoint another
or others in his or their place and also fill in any vacancy, which may occur as a result of any such Director
or Directors ceasing to hold that office for any reason whatsoever. The Directors appointed or nominated
under this Article shall be entitled to exercise and enjoy all or any of the rights and privileges exercised and
enjoyed by the Board of the Company including payment of remuneration and travelling expenses to such
Director or Directors as may be agreed by the Company with the appointor.”

Article 130 provides that, “notwithstanding anything to the contrary contained in these Articles, so long as
any moneys remain owing by the Company to any Financial Institution or Fund (hereinafter in this Article
referred to as “the Investors”) out of any loan/debenture assistance granted by them to the company or so
long as the Investors continue to hold debentures/shares in the Company as a result of underwriting or
private placement, or so long as any liability of the Company arising out of any Guarantee furnished by the
Investors on behalf of the Company remains outstanding, the Investors shall if so stipulated by them at the
time of granting the loan or acquiring shares or debentures or issuing a guarantee have a right to appoint
from time to time, any person or persons as a Director or Directors, whole-time or non-wholetime, (which
Director or Directors, is/are hereinafter referred to as “Nominee Director/s”) on the Board of the Company
and to remove from such office any person or persons so appointed and to appoint any person or persons in
his or their places.”

The Board of the Company shall have no power to remove from office the Nominee Directors. At the
option of the Investors such Nominee Directors shall not be required to hold any qualification share in the
Company. Also at the option of the Investors such Nominee Directors shall not be liable for retirement by
rotation. Subject as aforesaid, the Nominee Directors shall be entitled to the same rights and privileges and
be subject to the same obligations as any other Director of the Company.

The Nominee Directors so appointed shall hold the said office only so long as any moneys remain owing
by the Company to the Investors out of any loans/ debenture assistance or so long as the investors hold or
continue to hold Debentures/shares in the Company as a result of underwriting or private placement or the
liability of the Company arising out of the guarantee given as aforesaid is outstanding and the Nominee
Directors so appointed in exercise of the said power shall ipso facto vacate such office immediately the
moneys owing by the Company to the investors are paid off or on the Investors ceasing to hold Debentures/
shares in the Company or on the satisfaction of the liability of the Company arising out of the guarantee
furnished by the Investors.

421
Remuneration of directors

Article 133 provides that,

(1) “subject to the provisions of the Act, a Managing Director or Director, who is in the whole-time
employment of the Company may be paid remuneration either by way of monthly payment or at a
specified percentage of the net profits of the Company or partly by one way and partly by the
other;

(2) subject to the provisions of the Act, a Director who is neither in the whole time employment nor a
Managing Director may be paid remuneration either

(i) by way of monthly, quarterly or annual payment with the approval of the Central
Government if required;
(ii) by way of Commission if the Company by a special resolution authorises such payment;

(3) the fee payable to a Director for attending meetings of the Board or Committee thereof shall be the
maximum sum applicable to the Company as may be prescribed by law or by the Central
Government from time to time

Powers to add to board of directors

Article 137 provides that, “subject to Section 258 of the Act, the Company may by Ordinary Resolution
from time to time, increase or reduce the number of Directors within the limits fixed in that behalf by these
Articles, and may alter their qualifications and the Company may (subject to the provisions of Section 284
of the Act) remove any Director before the expiration of his period of office and appoint another qualified
person in his stead. The person so appointed shall hold office during such time as the Director in whose
place he is appointed would have held such office if he had not been removed.”

MANAGING DIRECTORS

Appointment of managing director

Article 139 provides that,

“(1) subject to provisions of the Articles hereof, the Board may from time to time appoint one or more
of their body to be the Managing Director or Managing Directors of the Company on such terms
as they may deem proper;

(2) the Managing Director or Managing Directors while he or they continue to hold the office, shall
not be subject to retirement by rotation and shall not be taken into account in determining the
retirement by rotation of Directors or the number of Directors to retire, but he or they shall be
subject to the same provisions as to resignation or removal as the other Directors of the Company
and he or they shall ipso facto immediately cease to be a Managing Director or Managing
Directors if he or they cease to hold the office of a Director or Directors for any cause;

(3) the remuneration of a Managing. Director or Managing Directors shall, subject to the provisions of
the Act and any contract between the Company and him or them, be from time to time fixed by the
Board, and may be by way of a fixed salary and/or commission on the profits of the Company
and/or in any other mode and may be in addition to the remuneration for attendance at Board
meetings as may be provided under any other clause;

(4) the Board may, from time to time, subject to the provisions of the Act entrust to and confer upon
the Managing Director for the time being, such of the powers exercisable by the Board under these
presents or by law, as they may think fit, and may confer such powers for such time and to be
exercised for such objects and purposes and upon such terms and conditions and with such

422
 restrictions, as they may think expedient, and they may confer such powers, either collaterally
with or to the exclusion of or in substitution for all or any of the powers of the Board, in that
behalf, and may from time to time revoke, withdraw, alter or vary all or any of such powers.”

WHOLETIME DIRECTORS

Article 140 provides that, “subject to the applicable provisions of the Act and these Articles, the Board may
from time to time, appoint one or more of their body to be a Whole-time Director or Wholetime Directors
of the Company for such term and subject to such terms and conditions they may think fit.”

PROCEEDINGS OF DIRECTORS

Meetings of directors

Article 141 provides that, “

“(1) the Directors may meet together for the despatch of business, adjourn and otherwise regulate their
meetings and proceedings, as they think fit;

(2) a meeting of the Board shall be held at least once in every three months and at least four such
meetings shall be held in every year;

(3) a Director may, and the Manager, or Secretary if any, shall, on the requisition of a Director,
summon a meeting of the Board

Committee of Directors

Article 148 provides that, “all acts done by any meeting of the Board or of a Committee of Directors, or by
any person acting as a director, shall notwithstanding that it may be afterwards discovered that there was
some defect in the appointment of one or more of such Directors, or of any person acting as aforesaid, or
that they or any of them were or was disqualified, be as valid as if, every such Director or such person has
been duly appointed and was qualified to be a Director. Provided that nothing herein contained shall be
deemed to give validity to acts done by a Director after his appointment has been shown to be invalid or to
have terminated.”

Powers of the board

Article 150 provides that, “subject to the provisions of the Act and these Articles, the Board of the
Company shall be entitled to exercise all such powers and to do all such acts and things as the Company is
authorised to exercise and do, provided that, the Board shall not exercise any power or do any act or thing
which is directed or required, whether by the Act or any other Act, or by the Memorandum of Association
of the Company or these presents or otherwise, to be exercised or done by the Company in General
Meeting, provided further, that in exercising any such power or doing any such act or thing, the Board shall
be subject to the provisions contained in this behalf in the Act or in any other Act or in the Memorandum of
Association of the Company or these presents or in any regulations not inconsistent therewith and duly
made thereunder including regulations made by the Company in General Meeting.”

Article 152 provides that, “subject to the provisions contained in Section 292 of the Act, the Board of the
Company shall exercise the following powers on behalf of the Company and they shall do so only by
means of resolutions passed At meetings of the Board viz

(a) the power to make calls on shareholders in respect of moneys unpaid on their shares;

(b) the power to issue debentures;

(c) the power to borrow moneys otherwise than on debentures;

423
(d) the power to invest the funds of the Company;

(e) and the power to make loans.

Provided that the Board may by a resolution passed at a meeting, delegate to any Committee of Directors
the Managing Director, or the Manager or any other principal officer of the Company, the powers (1) to
borrow moneys otherwise than on debentures, (2) to invest the funds of the Company and (3) to make
loans, to the extent hereinafter specified namely

(1) every resolution delegating the power to borrow moneys otherwise than on debentures, shall
specify the total amount outstanding at any one time upto which moneys may be borrowed by the
delegate;

(2) every resolution delegating the power to invest the funds of the Company, shall specify the total
amount to which the funds may be invested, and the nature of the investments which may be made
by the delegate;

(3) every resolution delegating the power to make loans shall specify the total amount upto which
loans may be made by the delegate, the purposes for which the loans may be made and the
maximum amount of loans which may be made for each such purpose in individual cases;

Nothing contained in this article shall be deemed to affect the right of the company in General Meeting to
impose restrictions and conditions on the exercise by the Board of any of the powers herein specified.

BORROWING POWERS

Article 153 provides that, “subject to the provisions of Section 58A, 292 and 293 of the Act the Board may,
from time to time at its discretion by resolution passed at a meeting of the Board, accept deposits from
members either in advance of calls or otherwise and generally raise or borrow or secure the payment of any
sum or sums of money for the purposes of the Company.”

Article 154 provides that, “the Board may raise or secure the repayment of such sum or sums in such
manner and upon such terms and conditions in all respects as they think fit, and in particular, by the issue
of bonds, perpetual or redeemable debentures or debenture stock or any mortgage, charge or other security
on the undertaking of the whole or any part of the property of the Company (both present and future)
including its uncalled capital for the time being. The Board shall exercise such power only by means of
resolutions passed at their meetings and not by circular resolutions.”

Article 155 provides that, “debentures, debenture stock, bonds and other securities may be made assignable
free from any equities between the Company and the person to whom the same may be issued”

Article 156 provides that, “any debentures, debenture stock, bonds or other securities may be issued at
discount, premium or otherwise, and may be issued on condition that they shall be convertible into shares
of any denomination, and with any special privileges as to redemption, surrender, drawings, allotment of
shares, attending (but not voting) at General Meetings of the Company, appointment of directors and
otherwise provided however, that no debentures with the right to conversion into or allotment of shares
shall be issued, except with the consent of the Company in General Meeting by a special resolution.”

AUDITORS

Article 164 provides that, “auditors of the Company shall be appointed at every Annual General meeting or
otherwise as the occasion may require and their appointment and re-appointment and the remuneration
payable to them shall be in accordance with the provisions of Section 224, 224A and 225 of the Act. The
qualifications and disqualifications of Auditors shall be as set out in Section 224 and 226 of the Act and

424
their powers and duties shall be as set out in Section 227 and 228 of the Act, in regard to audit of accounts
of any branch office of the Company, the provisions of Section 228 of the Act shall apply.”

425
 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

Copies of the following contracts which have been entered or are to be entered into by the Company (not
being contracts entered into in the ordinary course of business carried on by the Company or contracts
entered into more than two years before the date of this Draft Red Herring Prospectus) which are or may
be deemed material have been attached to the copy of this Draft Red Herring Prospectus delivered to the
Registrar of Companies, Maharashtra at Mumbai for registration. Copies of the abovementioned contracts
and also the documents for inspection referred to hereunder, may be inspected at the Registered and
Corporate Office of the Company located at Afcons House, 16, Shah Industrial Estate, Veera Desai Road,
Azad Nagar Andheri (W), Mumbai 400 053 from 10.00 a.m. to 4.00 p.m. on working days from the date of
this Draft Red Herring Prospectus until the date of closure of the Issue.

Material Contracts

1. Letter of Engagement dated January 6, 2007 for the appointment of Enam Financial Consultants
Private. Limited, CLSA India Limited, SBI Capital Markets Limited and JM Morgan Stanley
Private Limited from the Company appointing them as BRLM and CBRLMs.

2. Memorandum of Understanding dated January 8, 2007 between the Company, the BRLM and the
CBRLMs.

3. Memorandum of Understanding dated [●] 2007 between the Company and the Registrar to the
Issue.

4. Escrow Agreement dated [•] between the Company, BRLM, CBRLMs Escrow Collection Bank
and the Registrar to the Issue.

5. Underwriting Agreement dated [•] between the Company, BRLM, CBRLMs and the Syndicate
Members.

6. Syndicate Agreement dated [•] between the Company, BRLM, the CBRLMs and the Syndicate
Members.
B. Documents for Inspection

1. Certified copies of the updated Memorandum and Articles of Association of the Company as
amended from time to time.

2. Certificate of Incorporation of the Company dated November 22, 1976.

3. IPO resolutions.

4. The report of M/s C.C. Chokshi & Co., Chartered Accountants and Mr. J.C. Bhatt, Chartered
Accountant, the statutory auditors, dated Janaury 5, 2007 prepared as per Indian GAAP and
mentioned in this Draft Red Herring Prospectus together with copies of balance sheet and profit
and loss account of the Company referred to therein.

5. Consent from the Auditors for inclusion of their names as the statutory auditors and of their
reports on accounts in the form and context in which they appear in this Draft Red Herring
Prospectus.

6. The Tax Benefit Report dated Deecember 22, 2006 from the Company’s statutory auditors.

426
7. Consent of Directors, Legal Advisors to the Issue, the Syndicate Members, Registrars to the Issue,
Escrow Collection Banker, Banker to the Issue, Bankers to the Company, Company Secretary and
Compliance Officer as referred to in their specific capacities.

8. Resolution of the Members of Afcons passed at the Annual General Meeting held on September
28, 2006 appointing M/s C.C. Chokshi & Co., Chartered Accountants and Mr. J.C. Bhatt,
Chartered Accountant as statutory auditors for the year 2006-2007.

9. Agreement dated September 1, 2005, Board resolution dated November 28, 2006 and Shareholder
Resolution dated September 30, 2005 in relation to the appointment and remuneration of Mr. K.
Subrahmanian, Managing Director.

10. Agreement dated September 1, 2005, Board resolution dated November 28, 2006 and Shareholder
Resolution dated September 30, 2005 in relation to the appointment and remuneration of Mr. S.
Paramasivan, whole-time Director.

11. Agreement dated September 1, 2005, Board resolution dated November 28, 2006 and Shareholder
Resolution dated September 30, 2005 in relation to the appointment and remuneration of Mr. A.N.
Jangle, whole-time Director.

12. Due Diligence Certificate dated January 8, 2007 addressed to SEBI from the BRLM.

13. SEBI observation Letter Nos. [●] dated [●].

14. Initial listing application dated [●], 2007 and [●], 2007, for listing the Equity Shares of the
Company on NSE and BSE respectively.

15. In principle listing approvals dated [●] and [●] issued by NSE and BSE respectively.

16. Tripartite Agreement dated [●], 2007 the Company, NSDL and the Registrar to the Issue.

17. Tripartite Agreement dated [●] 2007 between the Company, CDSL and the Registrar to the Issue.

Any of the contracts or documents mentioned in this Draft Red Herring Prospectus may be amended or
modified at any time if so required in the interest of the Company or if required by the other parties,
without reference to the shareholders subject to compliance of the provisions contained in the Companies
Act and other relevant statutes.

427
 DECLARATION

We, hereby declare that all relevant provisions of the Companies Act, 1956 and the guidelines issued by the
Government or the guidelines issued by the Securities and Exchange Board of India established under
section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied
with and no statement made in this Draft Red Herring Prospectus is contrary to the provisions of the
Companies Act, 1956 or the Securities and Exchange Board of India Act, 1992 or Rules made there under
or guidelines issued, as the case may be. We further certify that all statements in this Draft Red Herring
Prospectus are true and correct.

SIGNED BY THE DIRECTORS OF THE COMPANY

_________________
C. P. Mistry
(Chairman)

_________________
K. Subrahmanian
(Managing Director)

_________________
P. S. Mistry

_________________
S. P. Mistry

__________________
J.J Parakh

_________________
A.N.Jangle

_________________
S. Paramasivan

_________________
A.H. Divanji

_________________
N. J. Jhaveri

_________________
N. D. Khurody*

_________________
P. N. Kapadia

* Signed through duly constituted power of attroney

Date: January 8, 2007

Place: Mumbai

428