ANNUAL REPORT 2013 - 14 LANCO INFRATECH … Our reputation for impeccable project management...

ANNUAL REPORT 2013 - 14LANCO INFRATECH LIMITED

With a core mandate of “Always Inspiring” driving our business mandate, it’s not surprising

that our initiatives come with the imperative of far reaching outcomes. Our customary far-

sightedness has helped us understand the dynamics of challenging environments and

accordingly align ourselves to consolidate and deliver. Across our business interests - EPC,

Power, Solar, Natural Resources, Infrastructure, Property Development - our goal is one of

consolidation and consistencies. An outcome-oriented approach has enabled us to reach this

far. In these challenging times, we have persevered with the conviction that our long-term

strategies will have a positive impact on all those we are associated with and the world at large.

EPC

POWER CSRSOLAR

NATURALRESOURCES INFRASTRUCTURE

PROPERTYDEVELOPMENT

EPC

Our reputation for impeccable project management competencies has established us as the

first choice amongst leading enterprises for EPC projects. An ability to straddle a project from

“concept to commissioning” bringing together the crucial parameters of cost and quality has

earned us a rich portfolio of EPC projects.

With strong engineering competencies across industry verticals such as power, transmission,

industrial and transportation segments, our decade-old expertise in EPC is definitely one of

our many strengths.

POWER

Our proven prowess in power generation has made us one of the nation’s leading power

producers and one of largest private sector players in the Indian power trading market. We

have consolidated our strengths and integrated our presence across the value chain. This in

turn has facilitated us in capturing an elevated value addition across the businesses.

We currently have an installed capacity of 4722 MW and a capacity under construction of

4636 MW. One of our under construction project has recently signed a Long Term Power

Purchase Agreement of 25 years with UPPCL Discoms under Case 1 Bid.

SOLAR

Renewable energy is all about being sustainable, innovative and cost-effective, while catering

to the ever-increasing energy needs. Our goal of indigenizing alternate technologies with

the aim to reduce costs and achieve grid parity is manifested in our fully integrated strategy

- ‘Sand to Power’. We are focused on commercializing technologies for green and efficient

energy generation systems such as solar thermal and solar photovoltaic (PV).

Currently we have a solar farm development portfolio of 143 MW (Operating - 43 MW and

Under Construction - 100 MW).

NATURAL RESOURCES

The coal business has always been our key area of focus. Our strategic move towards ‘Project

Integration’ has enabled us to extend our natural resources’ operating portfolio and under-

development assets in India and across the globe. With more than 2 billion tonnes of coal

resources in our business portfolio, we are reckoned as one of the exclusive members among

the mine developers & operators in India.

The recent appointment as Mine Developer & Operator (MDO) by Steel Authority of India

Ltd., for the Tasra Coal Block including washery and captive power project has reiterated our

strengths in Natural Resources.

INFRASTRUCTURE

The successful execution and completion of impressive civil & urban projects has earned us

our prominent position in the Infrastructure development sector. Today, we are proving our

mettle in selective infrastructure projects by leveraging our EPC experience and construction

expertise.

The projects currently under our highway portfolio include two major National Highway (NH)

projects in the State of Karnataka and one project in the State of Uttar Pradesh.

PROPERTY DEVELOPMENT

Foraying into Property Development, we have created one of Hyderabad’s most desired

destinations - Lanco Hills. Conceptualized to be ‘a world within’, it is spread over 100 acres

and comprises of residential spaces, office space & IT SEZ, retail and entertainment options.

This USD 1.5 billion mega project owes its magnificence to the meticulous detailing by

renowned architects & consultants. With breathtaking vistas, esthetically landscaped gardens

and high-rise living, Lanco Hills is reckoned to be one of the world’s largest single-phase

development projects.

Board of Directors

Mr. L. Madhusudhan RaoExecutive Chairman

Mr. G. Venkatesh BabuManaging Director

Mr. P. AbrahamDirector

Mr. G. Bhaskara RaoExecutive Vice - Chairman

Mr. S. C. ManochaDeputy Managing Director

Dr. Uddesh Kumar KohliDirector

Mr. L. SridharVice - Chairman

Dr. Pamidi KotaiahDirector

Mr. R. KrishnamoorthyDirector

7

Contents Year at a Glance 9Directors’ Report 10Management Discussion and Analysis 16Report on Corporate Governance 32Abridged Financial Statements

Auditors’ Report 47Balance Sheet 54Statement of Profit and Loss Account 55Cash Flow Statement 56Notes to Abridged Financial Statements 56Consolidated Financial StatementsAuditors’ Report 79Balance Sheet 82Statement of Profit and Loss Account 83Cash Flow Statement 84Notes to Consolidated Financial Statements 85

Bankers and Financial Institution of the CompanyAllahabad Bank Andhra BankAxis Bank LimitedBank of Baroda Bank of MaharashtraCanara BankCentral Bank of India Corporation BankDena BankHDFC Bank Limited ICICI Bank LimitedIDBI Bank Limited Indian Overseas BankIDFC LimitedING Vysya Bank Limited Kotak Mahindra Bank Limited Life Insurance Corporation of India Oriental Bank of Commerce Punjab & Sind BankPunjab National BankSrei Equipment Finance Private Limited State Bank of Bikaner & JaipurState Bank of HyderabadState Bank of India State Bank of MysoreState Bank of PatialaSiemens Financial Services Private LimitedTATA Capital Financial Services LimitedCatholic Syrian Bank Limited The Jammu & Kashmir BankUnion Bank of IndiaUnited Bank of IndiaYes Bank Limited

Board of Directors

Mr. L. Madhusudhan Rao - Executive Chairman

Mr. G. Bhaskara Rao - Executive Vice-Chairman

Mr. L. Sridhar - Vice-Chairman

Mr. G. Venkatesh Babu - Managing Director

Mr. S. C. Manocha - Deputy Managing Director

Dr. Pamidi Kotaiah - Director

Mr. P. Abraham - Director

Dr. Uddesh Kumar Kohli - Director

Mr. R. Krishnamoorthy - Director

Chief Operating Officer Finance Mr. T. Adi Babu

Compliance Officer Mr. A. Veerendra Kumar

Auditors Brahmayya & Co.,(Registration No. - 000511S)Chartered Accountants48, Masilamani Road, Balaji Nagar, RoyapettahChennai - 600 014Tamil Nadu, India

Registered Office Plot No.4, Software Units Layout, HITEC CityMadhapur, Hyderabad – 500 081, Telangana, IndiaPhone: +91-40-4009 0400, Fax: +91-40-2311 6127E-mail: [email protected]: www.lancogroup.comCorporate Identity Number: L45200TG1993PLC015545

Corporate OfficeLanco House, Plot No. 397, Udyog Vihar, Phase-3Gurgaon–122 016, Haryana, IndiaPhone: +91-124-474 1000, Fax: +91-124-474 1878

Registrar & Share Transfer AgentAarthi Consultants Private Limited1-2-285, Domalguda, Hyderabad – 500 029 Telangana, India Phone: +91-40-2763 8111, 2763 4445 Fax: +91-40-2763 2184E-mail: [email protected]: www.aarthiconsultants.com

Corporate InformationAnnual Report 2013-2014

8

(` Crores) Change

PARTICULARS 2013-2014 2012-2013 (%)

Profit and Loss AccountGross Revenue 10,875.27 15,295.86 -29

Less: Elimination of Inter Segment Revenue 277.42 1,408.20 -80

Net Revenue 10,597.85 13,887.66 -24

Profit Before Depreciation, Interest and Taxation (PBITDA) 1,671.87 2,653.33 -37

Depreciation and Amortisation 1,171.91 1,125.81 4

Profit Before Interest and Taxation 499.96 1,527.52 -67

Eliminated Profit on transactions with Subsidiaries (15.05) (17.58) -14

Profit Before Interest and Taxation Plus Elimination 484.91 1,509.94 -68

Interest and Finance Charges 2,762.12 2,421.44 14

Profit / (Loss) Before Taxation, Exceptional Item Plus Elimination (2,277.21) (911.50) 150

Exceptional Item (179.26) - 100

Profit / (Loss) Before Taxation Plus Elimination (2,456.47) (911.50) 169

Provision for Taxation (Including Deferred Tax and MAT Credit Entitlement) (129.44) 179.62 -172

Profit / (Loss) After Tax (Before Minority Interest & Share of Profits from Associates) (2,327.03) (1,091.12) 113

Share of Minority Interest (115.64) (11.22) 931

Share of Profits / (Loss) from Associates (33.89) (2.88) 1,077

Profit / (Loss) After Tax (After Minority Interest and Share of Profits from Associates) Plus Elimination (2,245.28) (1,082.78) 107

Prior Period Items 43.50 (12.62) -445

Elimination of Profit on Transactions with Subsidiaries and Associates (14.90) 3.14 -575

Profit / (Loss) After Tax (After Minority Interest and Share of Profits from Associates) (2,273.88) (1,073.30) 112

Cash Profit (743.40) 232.92 -419

Cash Flow Cash from Operating Activities before Elimination 1,345.37 1,869.51 -28

Balance SheetShare Capital 239.24 239.24 0

Reserves & Surplus 1,218.30 3,433.22 -65

Minority Interest 837.48 934.18 -10

Net Worth Plus Minority 2,295.02 4,606.64 -50

Eliminated Profit on Transactions with Subsidiaries and Associates (Cumulative) 1,501.17 1,516.06 -1

Net Worth Plus Minority & Elimination 3,796.19 6,122.70 -38

Non Current Liabilities 34,354.22 30,971.56 11

Current Liabilities 14,194.93 15,243.06 -7

Total of Net Worth Plus Minority & Liabilities 50,844.17 50,821.26 0.05

Non Current Assets 40,253.03 39,333.96 2

Current Assets 10,591.14 11,487.30 -8

Total of Assets 50,844.17 50,821.26 0

Key indicatorsEarning Per Share (In `)

Basic (9.68) (4.58) 111

Diluted (9.68) (4.58) 111

No. of Employees 4,000 5,710 -30

Year at a glance - Consolidated

9

Dear Members,

Your Directors are pleased to present the Twenty First Annual Report on the Business and Operations of the Company together with the Audited Accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

(` Crores)

PARTICULARSCONSOLIDATED STANDALONE

Year ended March 31 Year ended March 312014 2013 2014 2013

INCOMERevenue from operations and other income 10,597.85 13,887.66 2,339.37 4,822.75

Profit Before Taxation (2,441.42) (893.92) (959.99) 10.23

Provision for Taxation (129.44) 179.62 - (3.11)

Net Profit after Taxation (2,311.98) (1,073.54) (959.99) 13.34

Less: Prior period items 43.50 (12.62) - -

Add: Share of Profit/(Loss) of Associates (33.89) (2.88) - -

Less: Elimination of Unrealized Profit on Transactions with Associate Companies

0.15 20.72 - -

Less: Share of Minority Interest (115.64) (11.22) - -

Net Profit/ (Loss) after Taxation, Minority Interest and Share of Profit/ (Loss) of Associates (Balance Carried to Balance Sheet)

(2,273.88) (1,073.30) (959.99) 13.34

Surplus brought forward 382.23 1,455.54 1,479.10 1,465.76

Balance carried to Balance Sheet (1,891.65) 382.23 519.11 1,479.10

DIRECTORS’ REPORT

OPERATIONS AND BUSINESS REVIEw

On a Consolidated basis, your Company has reported Gross Revenues of ` 10,597.85 Crores as against ` 13,887.66 Crores of Revenues registered in the previous year. Total Expenditure for the Year was ` 12,860.01 Crores as against ` 14,781.58 Crores in the previous year. The Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) amounted to ` 1,671.87 Crores while the same was ` 2,653.33 Crores for the previous year i.e. a decrease of 37%. The Profit before taxation stood at ` (2,441.42) Crores, a decrease of 173.11 % as compared to ` (893.92) Crores in the last year.

The Net Profit/(Loss) after Tax after adjustment of Minority Interest and Share of Profits of Associates was ` (2,273.88) Crores as against ` (1,073.30) Crores for the previous year.

Gross Interest and Finance charges on consolidated basis amounted to ̀ 2,762.12 Crores in comparison to ̀ 2,421.44 Crores due to increase in loans and Working Capital Requirements for Project Execution.

During the year your company sold 10 MW wind based power plant situated near Tirunalveli, Tamilnadu and recognised the profit on sale of assets of ` 8.99 Crores.

A detailed discussion on the results of the operations, financial condition and business review is included in the Management Discussion and Analysis section placed at Annexure-II to this Report.

CDR PACKAGE:

Corporate Debt Restructuring Empowered Group (CDR EG) in its meeting held on December 11, 2013 has approved the CDR package submitted by the Company and issued letter of approval on December 20, 2013. As on March 31, 2014 CDR related documents have been executed and creation of security has been completed partly and the balance is in the process.

The proposal is only for the Company and not for any of its subsidiaries and associates.

Terms of CDRl Re-schedule of Term loan and short term loans are having

moratorium period of 2 years from the cut off date of April 1, 2013 and are repayable in 30 quarterly instalments starting from June 30, 2015.

l Portion of CDR Working Capital Loans on the cut off date i.e. April 1, 2013, has been carved out as Working Capital Term Loan - I (WCTL- I). LC/ BC/ BG devolved from cut off date till December 31, 2013 has been carved out as Working Capital Term Loan - II (WCTL- II).

l Funded Interest on Term Loans, WCTL - I and WCTL - II can be funded for a period of 2 years from cut off date i.e. April 1, 2013 to March 31, 2015 and on regular Cash Credit limit for an initial period of 6 months from cut off date i.e. April 1, 2013 to

Annual Report 2013-2014

10

September 30, 2013 is converted into Funded Interest Term Loan (FITL). Interest on FITL to be paid on monthly basis from April 30, 2013.

l ` 2,500 Crores Priority Loan sanctioned with a moratorium period of 2 years at an interest rate of 12.5% and is repayable in 18 quarterly instalments starting from June 30, 2015.

l Rate of interest on restructured facilities being 11% p.a. to be increased in a stepped up manner up to 16% p.a. starting from financial year 2016-17.

l Waiver of penal charges from the cut-off date to the date of implementation of the package.

l The Company shall raise funds by sale of assets/divestment of shares in SPV’s/securitisation/QIP/IPO etc. to repay the above restructured facilities under CDR scheme.

In relation to the amount outstanding as at March 31, 2014 against the loans restructured by the CDR lenders, a total amount of ` 2,224.89 Crores would qualify for the conversion into 354.50 Crores shares at the sole discretion and on demand of the CDR lenders.

In terms of CDR Package, the promoters brought into the company as unsecured loan a total amount of ` 152.00 Crores and the same would qualify for the conversion into 24.40 Crores shares at the sole discretion of the promoters.

The CDR gives your Company critical support to tide over the present difficult business environment. The decision of the banks to consider and approve CDR also reflects the faith these institutions have in the long term business model of the Company.

RESOLUTIONS PASSED THROUGH POSTAL BALLOT

During the reporting period, your Company had obtained shareholders approval by passing of resolutions through Postal Ballot. The results of the Postal Ballot were announced on April 17, 2014. The details of the resolutions passed through Postal Ballot forms part of the Report on Corporate Governance, annexed to this report.

AMEMDMENT TO MEMORANDUM AND ARTICLES OF ASSOCIATION

During the period under review, the Memorandum of Association of the Company was amended to increase the Authorised Share Capital of the Company from ` 500,00,00,000/- (Rupees Five Hundred Crores only) to ` 12,000,00,00,000/- (Rupees Twelve Thousand Crores only). This increase was necessitated to provide option to the CDR Lenders for conversion of loans into equity. The Articles of Association of the Company was also amended to reflect the increase of Authorised Capital and to provide option for buy-back of securities of the Company.

DIRECTORS

Mr. G. Bhaskara Rao and Mr. L. Sridhar retire by rotation at the ensuing Annual General Meeting and being eligible offer themselves for appointment. Dr. Pamidi Kotaiah retires by rotation at the ensuing

Annual General Meeting. Your Directors place on record their appreciations of the valuable contribution by Dr. Pamidi Kotaiah during his tenure as Director.

Mr. P. Abraham, Dr. Uddesh Kumar Kohli and Mr. R. Krishnamoorthy were appointed as Independent Directors of the Company in terms of Section 149 of the Companies Act, 2013.

The Company had received approvals from the Ministry of Corporate Affairs, Government of India, New Delhi, in respect of waiver from recovery of excess remuneration paid to Mr. L. Madhusudhan Rao, Executive Chairman and Mr. G. Bhaskara Rao, Executive Vice-Chairman, by the Company for the financial year 2012-13 and for payment of managerial remuneration to Mr. L. Madhusudhan Rao, Executive Chairman and Mr. G. Bhaskara Rao, Executive Vice-Chairman for the financial year 2013-14, by the Company.

Applications are being submitted to the Ministry of Corporate Affairs, Government of India, New Delhi, seeking approval for payment of managerial remuneration to Mr. L. Madhusudhan Rao, Executive Chairman, Mr. G. Bhaskara Rao, Executive Vice-Chairman, Mr. G. Venkatesh Babu, Managing Director and Mr. S.C. Manocha, Deputy Managing Director, for the period starting from April 01, 2014 till the tenure of their current appointment.

Dr. B. Vasanthan resigned as Director of the Company with effect from May 23, 2014.

DIVIDEND

Your Directors have not recommended dividend for the year ended March 31, 2014.

SUBSIDIARY COMPANIES

During the year under review, Tasra Mining & Energy Company Private Limited and Sirajganj Electric (Pvt) Limited had become subsidiaries of the Company. Further, Approve Choice Investments Limited, Apricus S.R.L, Bar Mount Trading (Pty.) Limited, Barrelake Investments (Pty.) Limited, Belara Trading (Pty.) Limited, Caelamen (Pty.) Limited, Dupondius (Pty.) Limited, Gamblegreat Trading (Pty.) Limited, Lexton Trading (Pty.) Limited, Lanco Rocky Face Land Holdings LLC and Lanco Tracy City Land Holdings LLC, had ceased to be Subsidiaries of the Company. Also during the reporting period, Lanco Teesta Hydro Power Limited, Subsidiary of the Company had changed its status from Private Limited to Public Limited Company.

The Ministry of Corporate Affairs vide their General Circular No. 2/2011, dated February 08, 2011 had granted general exemption to the Companies under Section 212(8) of the Companies Act, 1956 from the requirement to attach detailed financial statements of each subsidiary. The detailed financial statements and audit reports of each subsidiary are available for inspection at the Registered Office of the Company during office hours and upon written request from shareholder(s), your Company will arrange to send the financial statements of subsidiary companies to the said shareholder(s).

In terms of the Ministry of Corporate Affairs, General Circular 08/2014 No.1/19/2013-CL-V, dated April 04, 2014, the Auditors Report and Board’s Report in respect of financial years that commenced earlier

Directors’ Report

11

than April 01, 2014 shall be governed by the relevant provisions/Schedules/rules of the Companies Act, 1956. The financial information of the Subsidiaries of the Company was provided accordingly.

INVESTOR EDUCATION AND PROTECTION FUND

During the year under review, pursuant to Section 205C and other applicable provisions of the Companies Act, 1956, an amount of ` 1,16,640/- (Rupees One Lakh Sixteen Thousand Six Hundred and Forty only) was transferred to Investor Education and Protection Fund, with respect to share application money remained unclaimed for a period of 7 years by the unsuccessful bidders of the Initial Public Offering (IPO) of the Company.

HEALTH, SAFETY AND ENVIRONMENT

Lanco has taken up a very good initiative in implementing a world-class Health, Safety & Environment (HSE) Management System by implementing British 5 Star Safety Programs. The entire leadership supported this initiative and sites personnel were instrumental in giving a perfect shape to this new initiative.

The group has started its process improvement programs in HSE and is in process to bring out a compliance based tool to enhance the HSE performance across the group.

Lanco’s HSE performance is realized with an excellent recognition of our efforts in HSE and its sustenance. The world renowned “Sword of Honour” by British Safety Council, UK was conferred to Lanco’s Tanjore Site soon after getting awarded with 5-Star rating. Also, Lanco’s HSE culture got further boost as Kondapalli & Anuppur sites won the Prestigious “Prashansha Patra” conferred by National Safety Council of India (NSCI). Other sites, which have participated in various HSE awards and won during the year, make us proud. A brief description is below:

Company AwardLanco Infratech Limited- EPC Division

l NSCI Safety Awards, “Prashansha Patra” to Anuppur Site

Lanco Tanjore Power Company Limited

l “Sword of Honour” by British Safety Council

l Environment protections and management award from Government of Tamilnadu

l CII 4 Star ESH Awards, Southern RegionLanco Amarkantak Power Limited

l NSCI Safety Awards, “Prashansha Patra”

Udupi Power Corporation Limited

l CII 4 Star ESH Awards, Southern Region

l Golden Peacock “Environment Management Award”

Lanco Kondapalli Power Limited

l NSCI Safety Awards, “Prashansha Patra”

FIxED DEPOSITS

Your Company has not accepted fixed deposits falling within the provisions of Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975, during the year under review.

AUDITORS

The Auditors of the Company, Brahmayya & Co., Chartered Accountants, (Firm Registration No. 000511S) retire at the conclusion of the ensuing Annual General Meeting of the Company and have confirmed their willingness and eligibility for appointment for the four consecutive years and have also confirmed that their appointment, if made, will be within the limits prescribed under the Companies Act, 2013.

COST AUDITORS

DZR & Co., Cost and Management Accountants have been reappointed as the Cost Auditors for the year ending March 31, 2014, as recommended by the Audit Committee. The Cost Audit Report for the year ended March 31, 2013 was due for filing on September 30, 2013 and was filed on September 29, 2013.

DISCLOSURE OF PARTICULARS wITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN ExCHANGE EARNINGS AND OUTGO

Your Directors present the abridged accounts under Section 219 of the Companies Act, 1956. Pursuant to the Companies (Central Government’s) General Rules and Forms, 1956 read with Section 219(1)(b)(iv) of the Companies Act, 1956, the Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 have not been provided. However, these particulars are available for inspection at the Registered Office of the Company and upon written request from a shareholder, we will arrange to mail these details.

DISCLOSURE ON COMPANY’S EMPLOYEES STOCK OPTION PLANS

The Employees Stock Option Plan - 2006 and the Employees Stock Option Plan–2010 were approved by shareholders by passing Special Resolutions in the Extraordinary General Meeting held on June 07, 2006 and Annual General Meeting held on July 31, 2010, respectively.

The required information pursuant to Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, is enclosed as Annexure-I to this Report.

PARTICULARS OF EMPLOYEES

Your Directors present the abridged accounts under Section 219 of the Companies Act, 1956. Pursuant to the Companies (Central Government’s) General Rules and Forms, 1956 read with Section 219(1)(b)(iv) of the Act, the Particulars of Employees as required by Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 have not been provided. However, these particulars are available for inspection at the Registered Office of the Company and upon written request from a shareholder, we will arrange to mail these details.


12

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis as required under Clause 49 of the Listing Agreement is enclosed as Annexure-II to this Report.

CORPORATE GOVERNANCE

In compliance with the conditions of Corporate Governance, pursuant to Clause 49 of the Listing Agreements with Stock Exchanges, the Report on Corporate Governance with the Certificate from a Practicing Company Secretary certifying compliance in this regard forms part of this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

As required by Section 217(2AA) of the Companies Act, 1956, your Directors hereby confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures are made from the same;

(ii) we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the profit/loss of the Company for the period;

(iii) we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) we have prepared the annual accounts on a going concern basis.

INFORMATION ON AUDITORS’ QUALIFICATIONS:

The information and explanations of your Directors on the qualifications by the Auditors on Abridged and Consolidated Statements are as follows:

l Qualification on reorganization of Investments in Power SPV’s:

The qualification by the Auditor is not about deviation from the Accounting Standards but on the pending approval of the lenders for the shares transfer to wholly owned subsidiaries. To meet the business requirements of augmenting the equity funding from private equity investors, strategic investors, the Power Holding Company structure was created and shares were transferred to the wholly owned subsidiaries. The share transfer does not alter the financial statements at the consolidated level/standalone level. The Company’s investment as of March 30, 2012 in various subsidiaries and associates was transferred to wholly owned step down subsidiaries and to an associate of wholly owned step down subsidiary aggregating to ` 6,815.51 Crores that require lenders and customer approvals. Management has received many such approvals aggregating to 88% in value, of the lenders consenting to the restructuring, the management is confident of receiving balance approvals

from lenders and customer in near future and has taken the effect of these transfers while preparing these consolidated financial results.

The delay in getting the balance lenders approval is only procedural and the Management is confident of getting the same.

The Company is hopeful of resolving the qualification during current financial year 2014-15.

The above Qualification is also a qualification in Abridged Stand alone Financial Statements.

l Qualification on Revenue Recognition by a step down subsidiary:

The qualification by the Auditor is not about deviation from the Accounting Standards but on the interpretation of the realisability of the revenue. There is a dispute between a step down subsidiary company and a customer on the method of tariff determination apart from other issues.

During the financial year, Appellate Tribunal for Electricity, India ordered the HERC (state regulatory commission of the customer) to re-determine the tariff as per HERC Tariff Regulations, 2008 and CERC Regulations, 2009 where no specific operational or financial norms have been specified in the HERC Tariff Regulations. The power tariff determination under HERC Regulations by and large follows the same principles and methodology of tariff determination as per the CERC Regulations.

Relied upon the legal opinions obtained and taking into consideration the latest APTEL order, the management opines that there is no significant uncertainty in recoverability of the recognised revenue for the power supplies made as per the judicial orders. In addition to that the Management is confident of obtaining the tariff approvals in near future and the rate to be determined by HERC will be the same rate as adopted by the step down subsidiary company on provisional basis as per the CERC norms.

l Qualification on Capitalization of Borrowing cost by step down subsidiary:

Due to non availability/non allocation of natural gas by Government of India to the step down subsidiary Company’s Phase-III Project and considering present economic conditions of Power Sector, the step down subsidiary company has made an application to the Ministry of Corporate Affairs (MCA) requesting to provide relaxation from Accounting Standard - 16 and allow the Company to capitalize the borrowing costs till commencing its commercial operations. The application is under consideration of MCA.

The management is of the opinion that the Government of India is likely to respond positively on the said request by considering the specific problems being faced by Gas based power plants in the country.

Directors’ Report

13

l Qualification on Unaudited financials of SPV’s consideration in Consolidation:

The qualification by the Auditor is not about deviation from the Accounting Standards but on considering some of the foreign subsidiary companies non-audited financials in the consolidation.

Out of those, some subsidiary companies were acquired by the company in February, 2011. These companies were “under administrator” before acquisition. On account of this, audited financial statements were not available for 2008-09 and 2009-10. After acquisition, audit was completed for 5 years and audit for the current year is under progress.

The remaining entities are either non-material/non-operational during the year and audit for all these entities is under process.

Hence forth the management is expecting the audited financials of these companies in time and consolidation can be done with the audited accounts which will avoid the qualification in future.

ACKNOwLEDGEMENT AND APPRECIATION

Your Directors take this opportunity to thank all the stakeholders including Shareholders, Financial Institutions, Banks, Customers, Suppliers, Service Providers and Regulatory and Governmental Authorities for their consistent co-operation. Your Directors also wish to place on record the sincere appreciation of the hard work, dedication and commitment of Employees at all levels. We look forward to your continued support in the future.

For and on behalf of the Board

L. Madhusudhan Rao G. Venkatesh BabuExecutive Chairman Managing DirectorDIN - 00074790 DIN - 00075079

Place: GurgaonDate: August 14, 2014


14

Annexure I - Disclosure in compliance with Clause 12 of the SEBI (Employee Stock Option Scheme) and (Employee Stock Purchase Scheme) Guidelines, 1999, as amendedS. No. Description Employee Stock Options Plan 2006

1 Total Number of Options under the plan 11,11,80,960

2 Options granted during the year NIL

3 Pricing Formula The options issued by the ESOP Trust shall be at Par Value subject to the adjustments for corporate actions such as Bonus, Consolidation and Split.

4 Options vested as of March 31, 2014 6,97,63,125

5 Options Exercised during the year 1,50,24,047

6 The total number of shares arising as a result of exercise of option (As of March 31, 2014) 6,42,16,468

7 Options lapsed during the year 22,14,305

8 Variation of Terms of options upto March 31, 2014 NIL

9 Money realised by exercise of Options during the year (in `) 36,50,843

10 Total Number of options in force as on March 31, 2014 5,43,59,980

11 Employee wise details of options granted to

(i) Senior Management during the Year NIL

(ii) Employees holding 5% or more of the total number of options granted during the year

NIL

(iii) Identified employees who were granted option during any one year, equal to or exceeding 1% of the issued capital (excluding warrants and conversions) of the Company at the time of grant.

NIL

12 Diluted Earnings Per Share pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20

(4.08)

13 Where the Company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognised if it had used the fair value of the options. The impact of the difference on profits and on EPS of the Company.

Since these options were granted at a nominal exercise price, intrinsic value on the date of grant approximates the fair value of options.

14 Weighted average exercise prices and weighted average fair values of options seperately for options whose exercise price either equals or exceeds or is less than the market price of the stock.

Exercise Price ` 0.243 Per Option.

No new options were granted during the year.

15 A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted average information:

NA

(a) risk free interest rate

(b) expected life

(c) expected volatility

(d) Expected dividends, and

(e) the price of the underlying share in market at the time of option grant.

Directors’ Report

15

ECONOMIC REVIEw

Global

The world economic activity, led by advanced economies, improved in the second half of 2013 and is expected to improve further in 2014-15. World GDP grew at a pace of 3% in 2013 and global growth is expected to increase to 3.6% in 2014 and 3.9% in 2015. In advanced economies, growth is expected to increase to 2.3% vis-à-vis 1.3% in 2013. Growth in the developing economies is expected to be at 5% in 2014 as against 4.7% in 2013.

GDP Growth Rates (%)Country 2012 2013 2014(E)USA 2.8 1.9 2.8UK 0.3 1.8 2.9China 7.7 7.7 7.5Japan 1.4 1.5 1.4Euro Area -0.7 -0.5 1.2World 3.2 3.0 3.6

(Source: World Economic Outlook, IMF April 2014)

India

India’s GDP grew at a modest rate of 4.7% during the year 2013-14. Continued struggle with high inflation, high interest rates, infrastructure constraints and lack of policy reforms pushed the nation’s growth rate to sub five percent for the second straight year. The growth rate in the previous year was 4.5%. Agriculture grew at a pace of 4.7% for the year whilst ‘Mining and Quarring’ and Manufacturing contracted by 1.4% and 0.7% respectively.

India Industry Growth Rates (%) FY13 FY14

1. Agriculture, forestry and fishing 1.4 4.7

2. Mining and quarrying -2.2 -1.4

3. Manufacturing 1.1 -0.7

4. Electricity, gas and water supply 2.3 5.9

5. Construction 1.1 1.6

6. Trade, hotels, transport and communication

5.1 3.0

7. Financing, insurance, real estate and business services

10.9 12.9

8. Community, Social and personal services

5.3 5.6

Gross Domestic Product 4.5 4.7

(Source: Central Statistical Organisation, India)

COMPANY REVIEw

Lanco Infratech Limited (Lanco) is amongst the largest private independent power producers in the country and one of India’s leading business entities. We possess more than 25 years of experience in the fields of Engineering, Procurement and Construction (EPC), Power, Solar, Natural Resources and Infrastructure. The company is emerging as one of the top private sector power developers in India.

Installed Power Capacity

Power Capacities under Construction

Power Capacities under

Development4,722 MW* 4,636 MW 6,840 MW

*732 MW getting ready for operations

The country witnessed a continued slowdown in economic activity during the year 2012-13 and Lanco being amongst the nation’s largest players in the infrastructure sector, too got affected by the continued slowing economy. During the year 2013-14, Lanco Infratech Ltd initiated the process of Corporate Debt Restructuring (CDR) for the Standalone Company, Lanco Infratech Limited. The company opted for CDR as due to a significant unforeseen drop in the level of its operations due to the deteriorating external business environment, the company was not able to generate the requisite cash flows to meet its obligations to vendors and service providers, hence it became imperative to restructure the company’s debt. The CDR proposal does not include restructuring of debt for any of the subsidiaries of the company. The primary objective of restructuring is to assist the company to bring back the EPC operations to normal levels of business and make overdue payments.

Lanco Infratech provides EPC services to the infrastructure sector with prime focus on the power sector. The company is heavily involved in the construction of power plants and other infrastructure projects. The company’s EPC revenues got affected due to various unresolved issues especially in the power sector. The envisaged growth in the power sector has been affected due to factors like unavailability of fuel, both coal and gas, unviable power tariffs not reflecting the true cost of generation, delays in obtaining vital clearances, poor financial and commercial health of the State Electricity Boards leading to lower power procurement by SEBs, high interest rates and weakening Indian Rupee. These have all resulted in a continued slowdown in the sector with more projects being shelved than being announced. The slowing pace of infrastructure development in the country affected the business of the company and its cash flows. The company’s plans to raise long term capital for infusion into the business were also affected because of investor apathy towards investing in the sector both as private equity and primary market investors. Hence the company had to opt for the option of corporate debt restructuring.

During the year 2013-14, Lanco Infratech Ltd initiated the process of Corporate Debt Restructuring (CDR) for the Standalone Company, Lanco Infratech Limited. The CDR proposal does not include restructuring of debt for any of the subsidiaries of the company. The primary objective of restructuring is to assist the company to bring back the EPC operations to normal levels of business and make payments to overdue vendors and service providers.

However given the vital role the power sector plays in the growth of the nation, the government has introduced several measures aimed at alleviating the concerns that are hampering the growth of the sector. Some of the initiatives include financial restructuring package for State Electricity Boards, signing new fuel supply agreements and

Annexure II - MANAGEMENT DISCUSSION AND ANALYSISAnnual Report 2013-2014

16

formulating new standard bidding documents etc. Recognising the need to improve their financial health, some states have hiked electricity tariffs. Given the favourable demand supply dynamics, the outlook for the power sector is encouraging especially for the private developers as majority of the upcoming capacity will be developed by the private sector.

The company is confident that with the help of the restructuring exercise, it will return to optimum level of operations. The Corporate Debt Restructuring Empowered Group (CDR EG) approved the CDR proposal at its meeting held on December 11, 2013 and the scheme is being implemented. As on March 31, 2014 CDR related documents have been executed and creation of security has been completed partly and the balance is in the process.

Salient features of the restructuring proposal approved under CDR system-

l Re-schedule of Term loan and short term loans are having moratorium period of 2 years from the cut off date of April 1, 2013 and are repayable in 30 quarterly instalments starting from June 30, 2015.

l Portion of CDR Working Capital Loans on the cut off date i.e. April 1, 2013, carved out as Working Capital Term Loan - I (WCTL- I). LC/ BC/ BG devolved from cut off date till December 31, 2013 has been carved out as Working Capital Term Loan - II (WCTL- II).

l Funded Interest on Term Loans, WCTL - I and WCTL - II can be funded for a period of 2 years from cut off date i.e. April 1, 2013 to March 31, 2015 and on regular Cash Credit limit for an initial period of 6 months from cut off date i.e. April 1, 2013 to September 30, 2013 is converted into Funded Interest Term Loan (FITL). Interest on FITL to be paid on monthly basis from April 30, 2013.

l ` 2,500 Crores Priority Loan sanctioned with a moratorium period of 2 years at an interest rate of 12.5% and is repayable in 18 quarterly instalments starting from June 30, 2015.

l Rate of interest on restructured facilities being 11% p.a. to be increased in a stepped up manner up to 16% p.a. starting from financial year 2016-17.

l Waiver of penal charges from the cut-off date to the date of implementation of the package

In relation to the loans restructured by the CDR lenders a total amount to ` 2,224.89 Crores would qualify for the conversion of 354.50 Crores shares at the sole discretion and on demand of the

CDR lenders.

In terms of CDR scheme the promoters brought into the company as unsecured loan a total amount to ` 152.00 Crores and the same would qualify for the conversion of 24.40 Crores shares at the sole discretion of the promoters.

The CDR gives your Company critical support to tide over the present difficult business environment. The decision of the banks to consider and approve CDR also reflects the faith these institutions have in the long term business model of the Company.

INDUSTRY REVIEw – DEVELOPMENTS AND OUTLOOK

POwER

The total installed generation capacity in India as of end FY14 stood at 243.03 GW. Out of the total installed generating capacity, 59.8% was coal based, 16.7% was hydro and 9.0% was gas based.

All India Installed Generation Capacity (As on 31-03-2014)

Thermal Nuclear Hydro RES Grand

Coal Gas Diesel Total Renewable (MNRE) Total

MW 145273 21782 1200 168255 4780 40531 29463 243029

Percentage 59.8 9.0 0.5 69.2 2.0 16.7 12.1 100.0

(Source: CEA)

The total electricity generation in India during FY14 was at 966.38 Billion Units (BUs) versus 912.06 BUs in FY13, an increase of 5.96% YoY.

Electricity Generation during April 2013 to March 2014 (BU)

Type FY13 FY14 % ChangeThermal 761 792 4Hydro 114 135 18Nuclear 33 34 4Bhutan Import 5 6 17All India 912 966 6

(Source: CEA)

The generating capacity addition during 2013-14 stood at 17,825 MW as against 20,623 MW in 2012-13, a decline of 13.57% YoY.

Generation Capacity Addition during FY14 (Mw)

Type FY13 FY14 % ChangeThermal 20122 16767 -17Hydro 501 1058 111Nuclear 0 0 NAAll India 20623 17825 -14

(Source: CEA)

All India Installed Generation Capacity (Mw) – Region wise (As on 31-03-2014)Region Thermal Nuclear Hydro RES Grand

Coal Gas Diesel Total TotalNorthern 35284 5281 13 40578 1620 16331 5730 64258Western 58020 10139 17 68176 1840 7448 9925 87389Southern 26583 4963 939 32485 1320 11398 13127 58330Eastern 25328 190 17 25535 0 4113 417 30066North-East 60 1209 143 1411 0 1242 253 2906Islands 0 0 70 70 0 0 10 80All India 145273 21782 1200 168255 4780 40531 29463 243029

(Source: CEA)

Management Discussion and Analysis

17

The western region has the highest installed capacity with 35% of the nation’s total installed capacity followed by the northern region at 26% of the total installed capacity.

All India Installed Generation Capacity (Mw) – Sector wise (As on 31-03-2014)Sector Thermal Nuclear Hydro RES Grand

Coal Gas Diesel Total TotalCentral 45925 7066 0 52991 4780 10355 0 68126State 53828 6548 603 60979 27482 3727 92188Private 45520 8168 597 54286 2694 25736 82715All India 145273 21782 1200 168255 4780 40531 29463 243029

(Source: CEA)

The share of the states in the total installed capacity is the highest at 38% followed by the private sector at 34%.

Capacity Addition Targets in the 12th Plan

Type/Sector Central State Private TotalThermal 14878 13922 43540 72340Hydro 6004 1608 3285 10897Nuclear 5300 0 0 5300Total 26182 15530 46825 88537

(Source: CEA)

The 12th plan targets a capacity addition of 88,537 MW with 53% of the capacity being added by the private sector.

Achievements up to March 2014 during the 12th Plan

Type/Sector Central State Private TotalThermal 6683 7233 22973 36889Hydro 1288 102 169 1559Nuclear 0 0 0 0Total 7971 7335 23142 38448Achievement % 30 47 49 43

(Source: CEA)

All India yearly Coal Consumption for Power Generation (Utilities)

Year Coal Consumption Million Tonnes

2008-09 3552009-10 3672010-11 3872011-12 4182012-13 4552013-14 488

(Source: CEA)

All India Annual per Capita consumption of Electricity

Year Per Capita Consumption (kwh)

2007-08 7172008-09 7342009-10 7792010-11 8192011-12 8842012-13 917

(Source: CEA)

Transmission Lines added during April 2013 to March 2014 (ckms)

Voltage Level FY13 FY14

+/- 500 KV HVDC 0 0

765 KV 1209 4637

400 KV 11361 7777

220 KV 4537 4334

All India 17107 16748

(Source: CEA)

All India Transformation Capacity Addition during April 2013 to March 2014 (MVA)

Voltage Level FY13 FY14

+/- 500 KV HVDC 3750 0

765 KV 24000 34000

400 KV 16795 9630

220 KV 19120 13700

All India 63665 57330

(Source: CEA)


18

OUTLOOK

The power sector will continue to play a central role in the country’s growth story. As can been seen from the data given above, out of the 12th plan target capacity addition of 88,537 MW, 53% of the capacity is estimated to be added by the private sector. Although recently the sector has witnesses a slowdown in its envisaged growth path, several measures such as structural reforms in domestic fuel availability and power distribution are being planned to alleviate the concerns that are hampering the growth of the sector.

Some of the initiatives introduced recently to address the issues hampering the sector are-

1. State Electricity Board (SEB) financial restructuring package: A healthy distribution sector is imperative for the long term growth of the whole industry. Keeping this in mind, the government had introduced the SEB debt restructuring package in 2012 aimed at improving the financial health of the discoms by easing their debt burden. Subsequently, a number of states including Uttar Pradesh, Rajasthan, Haryana and Tamil Nadu have opted in for the restructuring exercise. The restructuring package for discoms will increase cash flow to the SEBs which will in turn help power generators as increased cash flows will enable the discoms to procure more electricity for meeting the growing demand.

2. Compensatory tariff for External/Uncontrollable factors: The regulators have allowed compensatory tariff for some developers for reasons beyond the developers’ control which led to an unforeseen increase in the price of inputs that was not captured in the bid tariffs. This is a positive development for the whole sector and has allayed both developer and investor concerns.

3. CCEA approval for coal supply mechanism to power developers: Under the mechanism approved by the Cabinet Committee on Economic Affairs (CCEA), Coal India is to sign Fuel Supply Agreements (FSA) for a total capacity of 78,000 MW including cases of tapering linkage, which are likely to be commissioned by 31.03.2015. Actual coal supplies would however commence when long term Power Purchase Agreements (PPAs) are tied up. To meet FSA obligations which cannot be met by domestic coal, CIL may import coal and supply the same to the willing Thermal Power Plants (TPPs) on cost plus basis. TPPs may also import coal themselves as well. Higher cost of imported coal is to be considered for pass through as per modalities suggested by CERC. As of end FY14, Coal India had signed close to 160 new FSAs.

4. Standard Bidding Documents: During the 2013-14, the Empowered Group of Ministers cleared standard bidding documents for Case II thermal plants. As fuel has been made a pass through, the new Case II bidding norms will take care of risk associated with fuel price volatility and fuel availability.

Given the favourable demand supply dynamics, the outlook for the power sector is encouraging especially for the private developers as a majority of the upcoming capacity will be developed by the private sector.

SOLAR

Amongst the various renewable energy resources, solar energy is considered to have the highest potential in the country. The Jawaharlal Nehru National Solar Mission (JNNSM) was launched in January 2010 to make India a global leader in solar energy. As per the National Tariff Policy of January 2011, solar specific Renewable Purchase Obligation (RPO) is envisaged to increase from a minimum of 0.25 percent in 2012 to 3 percent in 2022.

The solar power capacity requirement for RPO compliance by 2022 is illustrated below-

Year Energy Demand

(MUs)

Solar RPO (%)

Solar Energy Requirement (MUs) for RPO

compliance

Solar Capacity Requirement for RPO compliance

(Mw)2013-14 1,095,555 0.50% 5,478 3,2912018-19 1,544,936 2.25% 34,761 20,8852021-22 1,894,736 3.00% 56,842 34,152

(Source: Government of India, Ministry of New and Renewable Energy)

The nation would need an installed solar capacity of approximately 34,000 MW in order to achieve the 3% RPO compliance by 2022.

RESOURCES

Coal generated power will continue to be the major source of energy for the nation. With the current per capita commercial primary energy consumption in India at about 350 kgoe/year well below that of developed countries, energy usage in India is expected to rise. The increasing demand for energy will be driven by an expanding economy, improvements in infrastructure, rising population and enhanced standard of living. As of April 2014, the geological resources of coal in the country have been estimated to be a cumulative total of 301.56 billion tonnes with the state of Jharkhand having the highest resources at 80,716 million tonnes (MTs) followed by the state of Orissa at 75,073 MTs.

Cumulative geological resources of coal-

Proved (MT)

Indicated (MT)

Inferred (MT)

Total (MT)

All India 1,25,909 1,42,506 33,149 3,01,564

(Source: Government of India, Ministry of Coal)

INFRASTRUCTURE

According to the planning commission, infrastructure investment should be on average almost 10% of GDP during the twelfth plan in order to attain a 9% real GDP growth rate.

Projected Investment in Infrastructure during the Twelfth Five Year Plan

Year Base Year FY12 Total 12th PlanGDP at FY07 Prices (` Crs) 6,314,265 41,190,063Infrastructure Investment as % of GDP

8.37% 9.95%

Infrastructure Investment (` Crs in FY07 Prices)

528,316 4,099,239

Infrastructure Investment (` Crs in Current Prices)

721,781 6,579,463

(Source: Planning Commission, Government of India)


19

BUSINESS REVIEw

EPC*Order book

(As of end March 2014)Revenues (FY14) EBIDTA (FY14)

₹ 26,178 Cr ₹ 2,368 Cr ₹ -393 Cr

Order book (As of end March 2013)

Revenues (FY13) EBIDTA (FY13)

₹ 26,284 Cr ₹ 5,382 Cr ₹ 785 Cr

* Including Solar EPC

Lanco with its unique ‘concept to commissioning’ EPC execution model offers Engineering, Procurement and Construction services in the infrastructure business segments of power projects, transmission, transportation, industry and large scale building projects. The total EPC order book (including Power and Solar Projects) as at end FY14 stood at ` 262 billion.

For the year 2013-14, revenue for the EPC division was ` 2,368 crores and EBITDA was ` -393 crores. The revenue for the year was less than the normal level due to the deteriorating external business environment which led to a slowdown in the execution of infrastructure projects. Lower revenue led to lower recovery of fixed costs affecting the margins. Also due to delays in execution of contracts the cost associated with price escalations, claims of the service providers, subcontractors and upward revision of estimated cost, comprising of provision for expected loses on some ongoing projects and additional costs in recently completed/discontinued projects resulted in losses for the year.

Key Developments in 2013-14l Completed construction and start of commercial operations of

81 km NH4 road project in Karnataka (Hoskote)

l Successful bidder of the prestigious EPC Contract for establishing “1 x 660 MW Super Critical Ennore Thermal Power Station Expansion Project” by Tamil Nadu Generation and Distribution Corporation Limited.

MAJOR PROJECTS UNDER ExECUTION

Externall EPC of 2x600 MW Annupur Thermal Power Project for Moser

Baer

l BOP of 3x660 MW Koradi Thermal Power Project for Mahagenco

l EPC of 2x125 MW Akaz Gas Power Project for Government of Iraq

Internal (All EPC Contract Projects)l 2x660 MW Amarkantak Thermal Power Project

l 2x660 MW Vidarbha Thermal Power Project

l 2x660 MW Babandh Thermal Power Project

l 500 MW of Teesta Hydro Power Project

l 76 MW Mandakini Hydro Power Project

POwER*

Installed Power Capacity (As of end March 2014)


4,722 MW** ₹ 7,561 Cr ₹ 2,318 Cr

Installed Power Capacity (As of end March 2013)


4,732 MW** ₹ 8,663 Cr ₹ 1,926 Cr

* Including Solar

**732 MW Kondapalli Phase 3 getting ready for operations

Lanco Infratech is one of the largest independent private producers in the country with an installed capacity 4,722 MW and the capacity under construction of 4,636 MW. Out of the current installed capacity, 64% is coal based, 34% is gas based and 2% is renewables including hydro. During the year, Lanco Babandh (2*660 MW under construction plant) signed a Long Term Power Purchase Agreement (25 years) with Uttar Pradesh Power Corporation Limited Discoms and Rajasthan discoms respectively for supply of power under Case 1 Bid.

PERFORMANCE OF THE PROJECTS UNDER OPERATION

Kondapalli Phase-I

The gas based power station located in Andhra Pradesh with an installed capacity of 368 MW has a long term Power Purchase Agreement (PPA) with Andhra Pradesh discoms. Fixed charges are recoverable based on alternative fuel based availability under the PPA. The unit has tied up fuel supply arrangements with GAIL. Performance of the plant during the year is as follows-

Gross generation (MUs) Plant Load Factor (PLF %)FY13 FY14 FY13 FY14

1,768 1,441 55 45

Generation during the year compared to the previous year was lower by 327 MUs on account of lower availability of gas as well as carrying out major inspection works. The unit was however able to recover full fixed charge based on availability of natural gas and naphtha.

Kondapalli Phase-II

The gas based power station located in Andhra Pradesh has an installed capacity of 366 MW has tied up fuel supply with RIL (KG-D6). Performance of the plant during the year is as follows-


664 0 21 0

The generation for the year ended March 2014 was nil on account of non supply of gas from KG-D6.

Kondapalli Phase-III

The 732 MW gas based unit could not get commissioned during the year due to non supply of gas.


20

Tanjore

Gas based power station located in Tamil Nadu with an installed capacity of 120 MW. The plant has a long term PPA with Tamil Nadu with fuel supply arrangement with GAIL. Performance of the plant during the year is as follows-


893 733 85 70

PLF is lower year on year due to short supply of gas by GAIL.

Amarkantak Unit-I

Domestic coal based power station located in Chhattisgarh with an installed capacity of 300 MW. The unit started supplying power under a long term PPA to Madhya Pradesh effective December 2012, hence there has been a significant increase in gross generation during the year over the previous year. The plant also maintained an availability factor of 96% during the year. Performance of the plant during the year is as follows-


1,798 2,259 68 86

Amarkantak Unit-II

Domestic coal based power station unit located in Chhattisgarh with an installed capacity of 300MW. Performance of the plant during the year is as follows-


1,351 0 51 0

There was nil generation during the year due to non availability of linkage coal as well as regulatory issues. Unit two’s PPA with PTC for supply of power to HPGCL (Haryana) was terminated for non-compliance of certain PPA covenants. The litigation hearings are currently being held. Linkage coal supply was suspended by Coal India due to the non existence of a PPA. Supply of power using non linkage sources was not considered prudent as the tariff being paid by the customer was not workable.

Udupi

Coal based power plant located in Karnataka having an installed capacity of 1200 MW. The plant maintained an availability factor of 75% during the year 2013-14. The availability was less than optimal due to non availability of coal. Performance of the plant during the year is as follows-


6,423 6,806 76* 65

*One unit was operational for only a part of the year hence PLF is higher

PLF was lower year on year due to shortage of coal.

Anpara

Located in Uttar Pradesh with an installed capacity of 1200 MW, the unit has a long term PPA with Uttar Pradesh discoms for 1100 MW of supply. During the year, the unit also started supplying 100 MW of power to Tamil Nadu discoms starting June 2013. Performance of the plant during the year is as follows-


3,979 6,919 38 66

The plant maintained an availability factor of 72% during the year. There has been a significant increase in PLF during the year 2013-14 due to improvement in coal handling and infrastructure facilities at the plant and better operational performance after the initial stabilisation period.

Budhil

Hydro based power plant is located in Himachal Pradesh with an installed capacity of 70MW. Plant was commissioned in May 2012 and performance of the plant during the year is as follows-


155 221 30 36

PLF was low during the year due to maintenance work. The company has signed an agreement with Tejassarnika Hydro Energies Private Limited, a subsidiary of Hyderabad based Greenko Energies limited to divest 100% stake in the asset.

PROGRESS OF THE PROJECTS UNDER CONSTRUCTION (As at end March 2014) AS % OF BILLING Project Name Percentage

Completion (%)

Expected Commissioning

DateAmarkantak 3&4 (1320 MW) 67 FY16Vidarbha (1320 MW) 24 FY17Babandh (1320 MW) 33 FY17Kondapalli III (732 MW) 98 FY15Teestha (500 MW) 48 FY17Phata Byung (76 MW) 62 FY17Moser Baer (2&600 MW) 77 FY15Mahagenco (3*660 MW BOP) 73 FY16Akaz (2*125 MW) 96 FY15

SOLAR

Lanco Solar is one of the largest solar power players in the country today that provides solutions across the entire Solar Power Value Chain. The Company has expertise in managing the entire life cycle of any type of solar project development. As of end March 2014, the solar EPC order book was ₹ 2,949 Cr with 57% of orders from external parties. The major solar plants under construction include Lanco’s 100 MW solar thermal power plant at Chinnu in Rajasthan. The order book also includes a 100 MW solar thermal power plant being developed by Lanco for KVK energy ventures private limited


21

also at Chinnu in Rajasthan. The company is also setting up a fully-integrated manufacturing project for high-purity Polysilicon, silicon ingots/ wafers and modules in a SEZ facility at Chhattisgarh. The project is the first of its kind in India with a targeted capacity of 300MWp/year. The plant has an operational module line with a 75 MW capacity. The company is in the process of setting up a 1,800 MT polysilicon facility and 100 MW wafer facility and plans to enter into solar cell manufacturing as well. Foray into manufacturing not only supports the company’s internal requirements, but also reduces margin volatility through the business cycles.

Performance of all solar generating capacity of 41 MW during the year is as follows-


56 60 16 17

RESOURCES

The Natural Resources business of the Lanco currently consists of the following assets-

1. Griffin Coal Mine

The Griffin Coal Mining Company Pty Ltd is based in Collie, located approximately 220 kilometres south east of Perth, Western Australia’s capital city. The Company is the largest individual supplier of coal to Western Australia’s industrial coal market. With coal resources of approximately 1.1 billion tonnes, coal from Griffin caters to the export markets as well. Production at the mine during the year 2013-14 was 2.83 MT with sales of 2.95 MT. Steps are underway to reach the short term production target of 5 MT by March 2015. Capacity enhancement program with capacity being raised from current to 15 MTPA is in the planning phase. The company also recently received environmental clearance for developing a new berth (Berth 14 A) at Bunbury port for export of coal from Griffin.

2. Mahatamil Project

Gare Palma Sector- 2 Coal Block jointly allocated to TNEB (74%) and MSMC (26%) awarded to Lanco Infratech Limited for Mines Development and Operations along with the development of end use thermal power plant for TNEB share of coal. 23% of the coal produced will go to the state of Maharashtra and the remaining coal (77%) will be used to generate power. Out of the total power produced, 37.5% of the power will go to the state of Chattisgarh as home state share and the remaining power will be shared between Tamil Nadu state and Lanco in a 50:50 ratio. Coal mining fees of ` 112/Ton is to be paid by Lanco. Lanco targets the coal mine capacity to be developed to produce over 20 MTPA of coal output and approximately ~2000 MW of power plant. According to the geological report prepared by Mineral Exploration Corporation of India Ltd, the geological reserves of the block are around 1 Billion Ton with extractable reserves as per the mine plan of around 655 MT. The mining and mine closure plan were submitted to the Ministry of Coal (MoC) in October 2013 for approval and presentation made

to the expert committee of MoC. A revised mining plan was submitted to MoC in April 2014 after receiving some comments and final approval is expected shortly. The application for forest clearance has also been submitted. The suitable site for the power plant has been identified in Raigarh district.

3. Tasra Open Cast Project

Tasra Opencast coal project (Tasra OCP) was awarded to Lanco by Steel Authority of India Limited (SAIL) for Mine Development and Operations. The project includes setting up of 4 MTPA mine infrastructure, 3.5 MTPA Washery and a captive power plant (CPP) of 300 MW capacity based on the secondary coal from the Washery. Tasra OCP was allocated to SAIL for captive use and detailed exploration of mine has been completed by MECL and CMPDI (Govt. of India enterprise) and estimated extractable coking coal reserves are around 100 million tons. The project is located in well-established Jharia coal-fields region of District Dhandbad, Jharkhand and has a life span of around 28 years. Captive Power Project of 300 MW capacity will be setup under a JV company between Lanco (74%) and SAIL (26%). With this project, Lanco as MDO will develop and operate 4 MTPA coal production capacity, 3.5 MTPA washery capacity, and add around 300 MW of coal based power capacity to its existing business portfolio. For Tasra Coal Block, key project approvals like Mining Plan, Environmental Clearance etc are already in place. No forest land is involved. For Tasra Washery, approved ToR is available and Environmental Impact Assessment Report has been prepared. For Tasra Power Project suitable site has been identified and development activities shall be initiated.

INFRASTRUCTURE

ROAD INFRASTRUCTURE PORTFOLIO:

The road portfolio of the company currently consists of the following assets:

Project Status82 km Neelamangla Junction (Bangalore) – Devihalli (NH-48)

Operational; Collected ₹ 44 Cr in toll revenue during the year FY14

81 Km of Mulbagal – Hoskote – Bangalore (NH-4)

Commissioned in December 2013; Collected ₹ 15 Cr in toll revenue during the year FY14

283 km - Aligarh- Kanpur (NH-91) Achieved financial closure, construction to start after obtaining necessary clearances

REAL ESTATE

Located in Hyderabad, Lanco Hills is the group’s lone foray into property development. The project comprises of residential space, office space, IT SEZ and non SEZ space, retail and hospitality space and is spread over a land parcel of 100 acres. During the year 2013-14, revenue from operations increased by 17% to ₹ 196 Cr.


22

CONSOLIDATED FINANCIAL REVIEw

SEGMENT REVIEw

Revenues

(₹ Crores)Segment Revenue

FY14 Contribution to Total

Revenues

FY13 Contribution to Total

Revenues

YoY growth

(%)(a) EPC &

Construction*2,368 22% 5,382 35% -56%

(b) Power* 7,561 69% 8,663 57% -13%(c) Property

Development196 2% 168 1% 17%

(d) Infrastructure 0 0% 0 0%(e) Resources 681 6% 954 6% -29%(f ) Unallocated 93 1% 93 1% 0%Total 10,899 100 15,260 100 -29%Less: Inter Segment Revenue

277 1,408 -80%

Net Sales/Income from Operations

10,622 13,852 -23%

* Including Solar

Lanco Infratech’s total segmental revenue (post elimination of inter-segment revenue) decreased by 23% during 2013-14. This was primarily due to fall in EPC and Construction revenues and power segment revenues. The share of the power segment in the total revenue before inter segment revenue in FY14 was 69% vis-à-vis 57% in FY13. Power revenues declined by 13% YoY due to fuel supply and regulatory issues. The share of EPC and Construction segment in the total revenue declined to 22% in FY14 against 35% in FY13. Prior to elimination, the revenue for 2013-14 decreased by 29%. The property development segment witnessed a 17% growth in revenue for 2013-14.

SEGMENT PROFITS

(₹ Crores)

Segment Results (Profit(+)/Loss(-) before tax and interest from each segment)

FY14 FY13 YoY growth

(%)(a) EPC & Construction* -497 686 -172%

(b) Power* 1,411 1,099 28%

(c) Property Development 16 2 746%

(d) Infrastructure 0 0

(e) Resources -556 -301 85%

(f ) Unallocated -44 -12 266%

Total 330 1,474 -78%

Less: Inter Segment Profit on transactions with Subsidiaries

-15 -18 -17%

Total 345 1,491 -77%

* Including Solar

Consolidated segmental profit before interest and taxes and before elimination of inter-segment profit on transactions with subsidiaries declined by 78% in FY14 against FY13. The profit from the EPC & Construction segment decreased by 172% as there has been a slowdown in execution of projects affecting both revenues and profits. The segmental profit before tax and interest from the power vertical increased by 28% during the year.

FINANCIAL REVIEw

Principles of Consolidation

The financial statements of the Company and its subsidiaries have been consolidated on a line by line basis. This is done by adding together the book values of like items of assets, liabilities, income and expenses and after eliminating intra-group balances, transactions and the unrealized profits/losses on intra-group transactions. Unrealised losses resulting from intragroup transactions are eliminated to the extent that cost can be recovered.

The consolidated financial statements are drawn up by using uniform accounting policies for like transactions and other events in similar circumstances. These are then presented to the extent possible in the same manner, as the Company’s individual financial statements.

The financial statements of the subsidiaries are consolidated from the date on which effective control is transferred to the company, till the date such control exists. The difference between the cost of investments in subsidiaries over the company’s share of book value of subsidiaries’ net assets on the date of acquisition is recognized as goodwill or capital reserve in the consolidated financial statements.

Equity method of accounting is followed for investments in Associates in accordance with Accounting Standard (AS) 23 – Accounting for Investments in Associates in Consolidated Financial Statements. In this case, goodwill/capital reserve arising at the time of acquisition and share of profit or losses after the date of acquisition are included in carrying amount of investment in associates.

Unrealized profits and losses resulting from transactions between the company and its associates are eliminated to the extent of company’s interest. Unrealised losses resulting from transactions between the company and its associates are also eliminated, unless the cost cannot be recovered. Investments in associates, made for temporary purposes, are not considered for consolidation and are accounted for as investments.

Putting it simply, while consolidating the subsidiary company, the elimination takes place at the top line where the entire amount of revenue and expenditure is eliminated. In the case of associate consolidation, the entire revenue is recognised. But the profit or loss earned from the associate is eliminated proportionately to the holding in the associate. This adjustment is for the profit and loss account. For adjustment to the balance sheet in case of subsidiaries, the amount equal to profit or loss eliminated will be net off against fixed assets. In the case of associates, it will be net off against investments. Essentially, it is an adjustment which does not impact the cash flow.


23

ANALYSIS OF PROFIT AND LOSS ACCOUNT

(₹ Crores)FY14 FY13 YoY growth %

1 (a) Income from operations 10,103 12,883 -22%(b) Income from power trading 539 2,188 -75%(c) Other operating income 66 76 -14%Total income from operations (Gross) 10,707 15,147 -29%Less: Elimination of intersegment operating income 277 1,408 -80%Total income from operations (Net) 10,430 13,739 -24%

2 Expenses(a) Cost of materials consumed 6,336 6,469 -2%(b) Purchase of traded goods 530 2,161 -75%(c) Subcontract cost 169 561 -70%(d) Construction, transmission, site and mining expenses 1,061 1,319 -20%(e) Change in inventories of finished goods and work in progress -151 -454 -67%(f ) Employee benefits expense 385 618 -38%(g) Depreciation & amortisation expenses 1,172 1,126 4%(h) Other expenses 225 482 -53%Total expenses 9,727 12,283 -21%

3 Profit/(loss) from operations before other income, foreign exchange fluctuations, finance costs, prior period items & exceptional items (1-2)

703 1,456 -52%

4 Other income 168 149 13%5 Add: Eliminated profit on transactions with subsidiaries -15 -18 -14%6 Profit/(loss) from ordinary activities before foreign exchange fluctuations,

finance costs, prior period items & exceptional items plus elimination (3+4+5)856 1,587 -46%

7 (Gain)/loss on foreign exchange fluctuations (Net) 371 77 378%8 Finance costs 2,762 2,421 14%9 Profit/(loss) from ordinary activities after finance costs but before prior period

items & exceptional Items plus elimination (6-7-8)-2,277 -912 150%

10 Exceptional items -179 100%11 Profit/(loss) from ordinary activities before tax, prior period items plus

elimination (9+10)-2,456 -912 169%

12 Tax expense -129 180 -172%13 Net profit/(loss) from ordinary activities after tax but before prior period items plus

elimination (11-12)-2,327 -1,091 113%

14 Extraordinary Item (net of tax expense) -15 Net profit/(loss) for the period before prior period items plus elimination (13+14) -2,327 -1,091 113%

Less : Prior Period Items 44 -13 -445%16 Net profit/(loss) for the period plus elimination -2,371 -1,078 120%

Less : Minority interest -116 -11 931%Add: Share of profit/(loss) of associates -34 -3 1077%

17 Net profit/(loss) for the period plus elimination after Minority and share profit/(loss) of associates

-2,289 -1,070 114%

18 Less: elimination of profit on transactions with subsidiaries and associates

-15 3 -575%

19 Net profit/(loss) after taxes, minority interest and share of profits/(loss) of associates (17-18)

-2,274 -1,073 112%

20 Cash profit (17 + 2(g) + deferred tax – MAT credit + forex loss- forex gain)

-743 233 -419%

21 Profit (+)/Loss (-) from ordinary activities before tax (11 – 5) -2,441 -894 173%

l Gross Revenue before eliminations (including other income) declined by 29% YoY to ₹ 10,875 Crores in FY14 from ₹ 15,296 Crores in FY13

l Reported loss of ₹ 2,274 Crores in FY14 vs. loss of ₹ 1,073 Crores in FY13

l Forex loss of ₹ 371 Crores in FY14 vs. Forex loss of ₹ 78 Crores in FY13.


24

There was a reported loss of ` 2,274 crores due to losses in the EPC division, losses at Griffin coal mine and losses in some operating power plants that were hampered by fuel supply and regulatory issues. The EPC division suffered due to a slowdown in the economic environment that in turn affected its operations and revenues. Griffin coal mine is currently in the expansion phase where the capacity enhancement program from the current production of 3 MTPA to 15 MTPA is underway. The performance of Lanco’s gas based power plant at Kondapalli was affected due to non supply of gas. One unit of Lanco Amarkantak (300MW thermal plant) could not operate due to regulatory issues.

Revenues from Operations

The consolidated net revenue from our operations decreased by 24% during 2013-14. This was primarily on account of decrease in revenue from contract operations by 48% during the year due to slowdown in EPC activity because of a slowing economy. Income from sale of electrical energy declined by 13% during the year as some operating plants suffered due to lack of fuel supply and regulatory issues. Income from property development increased by 16% during the year.

(₹ Crore)FY14 FY13 YoY

Growth %Contract Operations 2,097 4,038 -48%Property Development 193 166 16%Management Consultancy 3 3 0%Operations and Maintenance 5 5 -9%Electrical Energy 7,405 8,558 -13%Coal 679 947 -28%Other Goods 36 8 347%Income from Lease Rentals 2 0 380%Other Operating Income 11 13 -20%Net Revenue from Operations 10,430 13,739 -24%

Other Income

Other income for FY14 increased by 13% over FY13 led primarily by an increase in interest income.

(₹ Crore)FY14 FY13 YoY

Growth %Interest Income 144 95 51%Dividend Income 1 2 -37%Net Gain on sale of investments

0 0 -80%

Other Non Operating Income 22 51 -56%Total 168 149 13%

ExPENDITURE

There was a 21% decline in total expenditure for the year 2013-14. There was 75% de-growth in purchase of traded goods primarily power purchase. Power trading division (NETS) traded 2089 million units in 2013-14, lower by 66% YoY. Subconctract costs declined by 70% during the year and employee benefit expenses declined by 38% YoY.

(₹ Crore)

ExPENSES FY14 % of Total FY14

Expenses

FY13 % of Total FY13

Expenses

YoY Growth

%

Cost of Materials Consumed

6,336 71% 6,469 58% -2%

Purchase of Traded Goods

530 6% 2,161 19% -75%

Subcontract Cost 169 2% 561 5% -70%

Construction, Transmission, Site and Mining Expenses

1,061 12% 1,319 12% -20%

(Increase)/Decrease in Inventories of Finished Goods and Construction/Development Work in Progress

-151 -2% -454 -4% -67%

Employee Benefits Expenses

385 4% 618 6% -38%

Other Expenses 595 7% 560 5% 6%

Total Expenses 8,926 11,234 -21%

Cost of Material Consumed

The total cost of material decreased by 15% during 2013-14. This was due a fall in EPC related activity during the year. The cost of gas for power consumption decreased by 21% in FY14 over FY13 due to fall in gas supply for power plants especially at Kondapalli.

(₹ Crore)FY14 % of

TotalFY13 % of

TotalYoY

Growth %

Construction Material Consumed

1,903 30% 2,249 35% -15%

Property Development Cost

208 3% 188 3% 11%

Coal for Power Generation

3,316 52% 2,916 45% 14%

Gas for Power Generation

629 10% 797 12% -21%

Oil (HFO, LDO & HSD) for Power Generation

33 1% 67 1% -51%

Other consumables for Power Generations

22 0% 22 0% -2%

Raw Materials Consumed - Coal Mining

180 3% 202 3% -11%

Raw Materials Consumed - Solar Modules

45 1% 29 0% 57%

Total 6,336 6,469 -2%


25

Purchase of Traded Goods

Purchase of traded goods is mainly on account of power purchased for power trading. Power trading division (NETS) traded 2089 million units in 2013-14, lower by 66% YoY.

Sub-Contract Cost

Sub-contract cost represents the construction work sub-contracted to other parties.

Construction, Transmission, Site and Mining Expenses

Construction, transmission, site and mining decreased by 20% over the previous year primarily due to a decrease in coal mining and transportation cost by 24% YoY and a decrease in transmission charges by 74% YoY.

(₹ Crore)

FY14 % of Total

FY13 % of Total

YoY Growth

%

Equipment/Machinery Hire charges

200 19% 147 11% 36%

Transmission Charges 31 3% 116 9% -74%

Repairs, Operations and Maintenance

168 16% 223 17% -25%

Consumption of Stores and Spares

54 5% 49 4% 11%

Insurance 47 4% 54 4% -13%

Electricity 12 1% 18 1% -32%

Security Charges 24 2% 28 2% -14%

Coal Mining & transportation Cost

473 45% 620 47% -24%

Others 55 5% 65 5% -16%

Total 1061 1319 -20%

Employee Benefits Expenses

During the year 2013-14, employee benefits expenses decreased by 38% over the previous year. The decrease was on account of fall in the total number of employees in the group due to a slowdown in the development of future projects as a result of a slowdown in economic activity in the country.


TotalFY13 % of

TotalYoY

Growth %Salaries, allowances and benefits to employees

353 88% 549 87% -36%

Contribution to provident fund and other funds

16 4% 22 3% -25%

Employee Stock Option Charge

6 2% 19 3% -67%

Recruitment and training 2 1% 5 1% -53%Staff welfare expenses 21 5% 36 6% -42%

399 632 -37%


TotalFY13 % of

TotalYoY

Growth %Less: Transferred to Development cost

13 12 9%

Less: Transferred to CWIP (Other Direct Cost)

0 1 -100%

Total 385 618 -38%

Other Expenses

Other expenses increased by 6% compared with the previous year. Net loss on foreign exchange fluctuations for the year FY14 was `

371 crores compared with ` 77 crores in FY13, an increase of 378%. Out of the total other expenses, net loss on foreign exchange fluctuations comprise 61% of the total. Consultancy and other professional charges declined by 69% year on year.


TotalFY13 % of

TotalYoY

Growth %Rent 43 7% 58 10% -25%Rates and taxes 15 2% 23 4% -34%Donations 3 1% 8 1% -57%Repairs and Maintenance:

0% 0%

Office Building 0 0% 0 0% 131%Others 5 1% 11 2% -59%Marketing and selling expenses

2 0% 0 0% 500%

Office maintenance 11 2% 18 3% -40%Insurance 6 1% 13 2% -57%Printing and stationery 3 0% 4 1% -36%Consultancy and other professional charges

38 6% 119 21% -69%

Directors sitting fee 1 0% 1 0% -10%Electricity charges 5 1% 4 1% 12%Net Loss on sale of investments

0 0% 0 0%

Current Investments 0 0% 0 0%Long Term Investments 0 0% 0 0%Net Loss on Foreign Exchange Fluctuations

371 61% 77 13% 378%

Remuneration to auditors (As Auditor):

0% 0%

Audit Fee 3 0% 2 0% 18%Tax audit fees 0 0% 0 0% -6%Remuneration to auditors (In other capacity):

0% 0 0%

Taxation Matters 0 0% 0 0%Management Services 0 0% 0 0%Company Law matters 0 0% 0 0%Other Services (Certification)

0 0% 0 0% -31%


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TotalFY13 % of

TotalYoY

Growth %Reimbursement of expenses to Auditors

0 0% 0 0% -43%

Travelling and conveyance

37 6% 78 13% -52%

Communication expenses

8 1% 11 2% -27%

Net Loss on Sale of fixed assets

16 3% 19 3% -16%

Provision for Losses of Subsidiary Companies

0 0% 0 0%

Share of Loss in a partnership firm/Limited Liability Partnership

0 0% 0 0%

Provision for Advances/claims/debts

15 2% 68 12% -78%

Business Promotion & Advertisement

5 1% 16 3% -66%

Miscellaneous expenses 25 4% 48 8% -49%0% 0%

609 100% 579 100% 5%Less: Recovery of Common Expenses

10 8 19%

Less: Transferred to Development cost

2 5 -69%

Less: Transferred to CWIP (Other Direct Cost)

0 2 -100%

Less: Elimination of Cost on Intercompany Management Consultancy Income

3 4 -31%

Total 595 560 6%

Finance Cost & Depreciation/Amortisation

Finance costs increased by 14% during the year and depreciation and amortisation expenses also increased by 4% for the year.

Provision for Taxation

The current tax/MAT payable declined by 53% during the year.

(₹ Crores)

FY14 FY13 YoY Growth

%Current Tax/Minimum Alternate Tax (MAT) Payable

38 80 -53%

Less: MAT Credit Entitlement 0 -73 -100%

Net Current Tax 38 153 -75%

Relating to Previous Years 9 0 -70016%

Deferred Tax -176 27 -762%

Total Tax Expense -129 180 -172%

Share of Profit/Loss of Associates

The share of loss of associates stood at ̀ 33.89 crores against a loss of ` 2.88 crores in the previous year.

Share of Minority Interest

Share of minority interest represents the interest of minority shareholders in various companies. Share of minority interest in FY14 was a loss of ` 116 crores against a loss of ` 11 crores in FY13.

Profit After Tax

Reported loss for the year 2013-14 was ` 2274 crores against a loss of ` 1073 crores in the previous year. Adjusted loss (Reported loss plus profit eliminated) for the year was ` 2289 crores against an adjusted loss of ` 1070 crores in the previous year.

Cash Profit

Cash profit is the profit the Company has earned after adjusting for non-cash expenditures like depreciation, forex gain/loss, deferred tax, MAT credit entitlement and adding eliminated profit. Cash loss for the year FY14 was ` 743 crores versus a cash profit of ` 233 crores in the previous year.

(₹ Crores)FY14 FY13 YoY

growth (%)

Reported PAT -2,274 -1,073 112%Add: Depreciation 1,172 1,126 4%Add: Deferred Tax -176 27 -761%Less: MAT Credit 0 -73 -100%Add: Forex Loss/(Gain) 371 77 378%Add: Profit Eliminated -15 3 -575%Less: Exceptional Item -179Cash Profit -743 233 -419%

ANALYSIS OF BALANCE SHEET

Sources of Fund(₹ Crores)

FY14 FY13 YoY Growth

%Shareholders’ FundsShare Capital 239 239 0%Reserves and Surplus 1218 3433 -65%Minority Interest 837 934 -10%Non Current LiabilitiesLong Term Borrowings 30120 26004 16%Deferred Tax Liabilities (net) 461 641 -28%Other Long Term Liabilities 3071 3605 -15%Long Term Provisions 703 721 -3%Current LiabilitiesShort Term Borrowings 4757 5623 -15%Trade Payables 4112 4515 -9%Other Current Liabilities 5130 4922 4%Short Term Provisions 197 184 7%Total 50844 50821 0%


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Shareholder’s Fund

The total shareholder’s fund decreased by 60% during FY 2013-14 mainly on account of a decrease in reserves and surplus. Reserves and Surplus fell by 65% during the year due to a loss for the full year. The losses mainly come from the EPC segment where there was a slowdown in activity and Griffin coal mines which is currently under the expansion phase.

Minority Interest

The minority interest decreased by 10% during the year.

Net worth

The net worth of the Company, as at March 31, 2014 and as at March 31, 2013, is as under

(₹ Crores)

FY 14 FY 13

1 Share Capital 239 239

2 Reserves & Surplus 1218 3433

3 Shareholders’ Fund (1+2) 1458 3672

4 Eliminated Profit on Transactions with Subsidiaries and Associates

1501 1516

5 Shareholders’ Fund plus Elimination (3+4) 2959 5189

6 Minority Interest 837 934

7 Networth plus Elimination (5+6) 3796 6123

Borrowings

Total Borrowings include Long Term, Short Term and Current Maturities of Long Term Borrowings. Total borrowings increased by 8% for the year while long term borrowings increased by 16%. There was a decrease of 15% in short term borrowings.

(₹ Crores)

FY14 FY13 YoY Growth %

Long Term Borrowings 30,120 26,004 16%

Current Maturities of Long Term Borrowings

1,828 2,342 -22%

Short Term Borrowings 4,757 5,623 -15%

Total 36,705 33,969 8%

Current Liabilities (Excluding Borrowings)

(₹ Crores)

FY14 FY13 YoY growth

(%)Current Liabilities as per Balance Sheet 14,195 15,243 -7%

Less: Short Term Borrowings 4,757 5,623 -15%

Less: Current Maturities of Long Term Borrowings

1,828 2,342 -22%

Total 7,610 7,279 5%

Current liabilities (excluding borrowings) increased by 5% during the year.

Application of Funds


Growth %Fixed Assets 35789 34755 3%Non Current Investments 3006 2896 4%Deferred Tax Assets (net) 42 37 14%Long Term Loans and Advances 574 909 -37%Other Non Current Assets 842 737 14%Sub Total 40253 39334 2%Current AssetsCurrent Investment 1 6 -90%Inventories 3121 3098 1%Trade Receivables 3959 4658 -15%Cash and Bank Balances 579 573 1%Short Term Loans and Advances 2587 2960 -13%Other Current Assets 344 193 78%Sub Total 10591 11487 -8%Total 50844 50821 0%

Fixed Assets

The total fixed assets of the company increased by 3% during 2013-14.

Investments

Total investments (current and non-current) increased by 4% during the year.


Growth %Non-Current Investments 3006 2896 4%Current Investment 1 6 -90%Total 3007 2902 4%

Investments Break-Up


Growth %Investment in Equity Instruments 83 100 -17%Investment in Preference Shares 2913 2,787 5%Non Trade Investments 10 9 13%Investment in Mutual Funds (Unquoted)

1 6 -90%

Total 3006 2902 4%

Current Assets (Excluding Investments)


Growth %Inventories 3121 3098 1%Trade Receivables 3959 4658 -15%Cash and Bank Balances 579 573 1%Short Term Loans and Advances 2587 2960 -13%Other Current Assets 344 193 78%Total 10591 11482 -8%

Current assets (excluding current investments) decreased by 8% during the year. Trade receivables decreased by 15% during the year. As at March 31, 2014 the Group has receivables from various


28

State Electricity Utility companies and other customers against sale of power aggregating to ` 2824 crores (` 2972 crores as at March 31, 2013). Based on internal assessment and various discussions had with the customers, the management is confident of recovery of receivables. Cash and bank balance as at end FY14 was ` 579 crores.

Loans and Advances


Growth %Long Term 574 909 -37%Short Term 2,587 2,960 -13%Total 3,161 3,870 -18%

Loans and advances decreased by 37% during the year. Total advances declined by 18 during 2013-14.

Net Current Assets


Growth %Current Assets (excluding investments)

10591 11482 -8%

Current Liabilities (excluding borrowings & current maturities)

7610 7279 5%

Net Current Assets 2981 4203 -29%

Analysis of Cash Flow Statement

(₹ Crores)Cash Flow FY14 FY13Net Cash Flow from Operating Activities 1,360 1,887Net Cash Flow from Financing Activities -1,923 -987Net Cash Flow (used in) Investing Activities 717 -1,617(preliminary fixed assets)Net increase in Cash and Cash Equivalents 155 -717

Cash Flow From Operating Activities

Net cash flow from operating activities was ₹ 1,360 crores during 2013-14.

Cash Flow From Financing Activities

Net cash flow from financing activities stood at an outflow of ₹ 1,923 crores during 2013-14. Interest paid during the year was ₹ 3,703 crores.

Cash Flow (Used In) Investing Activities

Net cash generated in investing activities during FY14 was ₹ 717 crores. The amount spent on purchase of fixed assets (including Capital Advances) during the year was ₹ 147 crores and amount spent on purchase of non-current investments was ₹ 35 crores.

Key Financial Data of Major Operating Companies

(₹ Crores)

Particulars LITL Amarkantak Anpara Kondapalli Tanjore Udupi Griffin Hills NETSIncomeIncome 2,236 624 2,261 565 245 3,006 679 196 912

Other Income 103 39 2 23 29 54 2 0.6 25

Total 2,339 663 2,263 588 276 3,060 681 196 937ExpenditureConstruction/ Development/ Generation Expenses 2,314 376 1,517 534 184 1,772 877 172 906

Administrative and Other Expenses 240 15 10 19 5 33 190 6 20

EBITDA -214 272 736 35 88 1,255 -386 18 11EBITDA to Total Income (%) -9 41 33 6 34 41 -57 9 1Interest and Finance Charges 628 299 624 159 12 905 110 68 1

Depreciation 117 146 245 97 19 320 174 3 0.45

Exceptional Items - - - 92 - - - - -

Profit before Tax -960 -173 -133 -313 57 30 -670 -52 9Provision for Taxation

- Current Tax - 12 6 - 3

- Relating to prior years - - - 0.30 - - 44 0.14 -

- Minimum Alternate Tax Credit Entitlement - - - - - -

- Deferred Tax (Net) -47 - -25 -0.6 -100 - - -0.08

- Fringe Benefit Tax - - - - - - - - -

Net Profit before prior period -960 -126 -133 -288 46 124 -714 -52 7Prior period items

Net profit -960 -126 -133 -288 46 124 -714 -52 7


29

Risks and Mitigation

We follow stringent risk management practices to ensure smooth functioning of the Company’s business operations. The following are the probable risks and the mitigation plan for each risk:

S. No.

Risk Description Mitigation Plan

1. Project Implementation Delays

1. Regular meetings and close follow up for the agreed schedule

2. Ensuring deployment of required resources and supply materials as per the project schedule

3. Collection of adequate and accurate market data to ensure timely implementation

2. Recovery of receivables for power supplied

1. Regular follow-up with State Electricity Boards

3. Adequate and regular Fuel Supply (Coal and Gas)

1. Pursuing with MoPNG/GAIL/Govt. of India for allocation/supply of contracted quantity of gas

2. Bridging deficit quantity of coal from e-auction/open market/imports

3. Synchronizing commissioning of plants under construction with the availability of fuel

4. Delays in obtaining necessary clearances, land acquisition etc.

1. Regular follow up with concerned regulatory authorities providing them with project updates

2. Regular interaction with local population and employing confidence building measures through CSR

5. Delay in Financial Closure for greenfield and brownfield projects

1. Regular follow up with financial institutions

2. Follow up with regulatory authorities to expedite the grant of necessary project approvals

6. Power Evacuation Infrastructure

1. Follow-up with MoEF for necessary clearances.

2. Follow-up with PGICL for setting up pooling stations within the stipulated time.

3. Making interim arrangements for power evacuation using existing infrastructure until dedicated lines are set up

4. Synchronizing commissioning of plants under construction with the availability of transmission corridor

7. Slowdown in real estate market

1. Increasing use of customer referrals to boost sales

2. Using well established channel partners for marketing

3. Organising site visits

S. No.

Risk Description Mitigation Plan

8. Power plants operating at Suboptimal levels

1. Following regular maintenance schedule

2. Providing necessary technical training to personnel and employing expert external assistance if needed

9. Open Capacities 1. Participation in all upcoming Case 1/Case 2 bids

10. Higher Interest Cost 1. Exploring and availing cheaper source of funds

2. Regular follow up with debtors and monitoring of cash flows

11. Loss on account of foreign exchange fluctuation

1. Review of forex exposure on a regular basis

2. Hedging as per ‘Lanco Group Forex Risk Management policy’

In the normal course of its business operations, the company faces various macro-economic risks and risks that are inherent in operating a large infrastructure business. The risks that the company faces are also dynamic in nature. The major risks that the company faces related to project implementation delays to a unsupportive macro environment, inadequate fuel supply, difficulties in land acquisition, delays in achieving financial closure for future projects, efficient operation of operating projects, foreign exchange fluctuation risks etc. At Lanco Infratech, stringent risk management practices are followed to manage and overcome these risks to ensure smooth functioning of the Company’s business operations. The areas of potential risk are regularly monitored and necessary action is taken to mitigate their effect.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Lanco Foundation is the CSR arm of the Lanco Group. The Foundation operates in 14 locations across 12 states in India. Its programmes range across various sections of the society. Some of these are: Education, Health, Drinking Water, and Disability.

Education-

During the year 2013-14, a total of ten location were covered with 2,925 school kits and 1,70,294 note books distributed.

Health

Under the health segment, 179 villages and 2,96,650 beneficiaries were covered across the southern, central and northern regions. The Lanco Mobile Health Service (LMHS) has 18 units in operation. The number of actual per day beneficiaries was 1009 against the per day plan beneficiaries target of 990, an achievement rate of 102%. Under LMHS, 8,756 camps were conducted during the year. In the regions that LMHS operates, the percentage of its outreach vis-à-vis the population of the area was 33.5%. (Total registrations as on 31st March 2014 of 106026 vs. population of 316577).

Drinking water

The foundation also has 31 functional water plants in 9 locations that benefitted 15,763 households. The number of households registered


30

under the drinking water scheme is 15,863. A total number of 5,95,95,156 litres of water was distributed during the year.

Disablity

During the year 2013-14, under the outreach based program, a total of 39 Artificial Limb Fitting Centre (ALFC) screening camps were held in the states of Andhra Pradesh, Chattisgarh, Karnataka, Odisha and Tamil Nadu with a total number of 1795 people screened. During the year 2013-14, a total of 27 Artificial Limb Fitting Centre (ALFC) distribution camps were held in the states of Andhra Pradesh, Chattisgarh, Karnataka, Odisha and Tamil Nadu with a total number of 781 people covered.

Under the center based program, a total of 707 people were screened during the year with a total number of 533 people covered.

Blood donation camps were held at 17 locations during the year FY14 with the number of donors at 933.

Budget Allocation and Utilisation (FY14)

# Programme Budget For 2013-14 (`)

Utilisation as on

31.03.2014 (`)

% of Utilisation

Against Annual

Plan1 Education 1,16,29,364 26,03,900 22.39

2 Health 2,18,01,896 1,64,51,497 75.46

3 Drinking Water 93,56,644 72,59,758 77.59

4 Disability 1,03,18,100 42,64,359 41.33

5 H O Programme 63,00,000 6,15,912 9.78

Total Programme Cost 5,94,06,004 3,11,95,426 52.51

6 Management Cost 1,54,59,720 1,62,30,997 104.99

Total 7,48,65,724 4,74,26,423 63.35

AwARDS

Lanco Tanjore:l Good green governance award for the year 2012, as winners

in the infrastructure level 2 category for maintaining the environmental standards

l Lanco Tanjore Power Company awarded FIVE star Rating by British Safety Council

l Greentech safety Award 2013, in Gold Category in Power Gas based Sector by Greentech Foundation

l Received Sword of Honour from British Council, the highest safety award

l Company bagged British Sword of Honour Award, from British Council for HSE

l First place in Medium scale, 5 star rating for Excellent EHS practices from CII

l 4 Star rating Excellent Commitment in EHS Practices & Policies, from CII

Lanco Hills:l TV 5 Business Leader 2012 award, for outstanding performance

in luxury home segment

Lanco Kondapalli:l Energy Conversation award at Both State Level & National

Level, by NREDCAP in December 2013

l National Level first prize among Gas based power plants in December 2013

Udupi Power:l First place in Infrastructure Power category, 4 Star rating for

excellent commitment in EHS, given by CII

Lanco Amarkantak:l Winner of Golden Peacock Award for HSE for the year 2013

l Greentech Safety Award 2013 in Gold Category in Thermal Power Sector, given by Greentch Foundation

l 12th Annual Greentech Safety Award in “Gold Category, by Greentech Foundation

l Golden Peacock Occupational Health & Safety Award’ for the year 2013 given by MOS for Information & Broadcasting

Lanco Foundationl Outstanding CSR award in Infrastructure Sector by Think Media

Lanco Anparal Power Line award for Best Thermal Power project.


31

The Company’s Report on Corporate Governance for the year ended March 31, 2014 is presented by the Directors:

I. MANDATORY REQUIREMENTS

1. COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE

The Company has set for itself the-

Mission of “Development of Society through Leadership, Entrepreneurship and Ownership”

Vision of “Most Admired Integrated Infrastructure Enterprise”

The Company firmly believes that Mission and Vision can be realized only by adopting highest standards of Corporate Governance.

The Company is committed to conduct business in a manner which would result in enhancing value to all its Stakeholders. The Company believes that this value enhancement process is possible only by adhering to the principles of Corporate Governance. The Company has put in place systems and practices which enable it to conduct its business in line with the best practices elsewhere in the country and the world, but is also continuously striving to improve such systems and practices. The Company believes in the principles of transparency and disclosures to the extent these do not compromise on its competitiveness.

2. BOARD OF DIRECTORS (‘THE BOARD’)

(i) Composition of the Board

The Board of Directors has been constituted with an optimum mix of Executive, Non-Executive and Independent Directors to clearly demarcate functions of governance and management. As on date, the Board comprises of 10 (ten) Directors out of which 4 (four) are Executive Directors and 6 (six) are Non-Executive Directors. Out of the 6 (six) Non-Executive Directors, 5 (five) are Independent Directors making the current composition in conformity with the provisions of the Companies Act, 1956 and the Listing Agreements.

None of the Non-Executive Directors has any pecuniary relationship or transaction with the Company.

All the Directors have made adequate disclosures regarding their Directorships, Chairmanships and Memberships on the Board/Committees of the Board of other Public Companies. By virtue of the disclosures made, none of the Directors hold Chairmanships of more than 5 (five) Committees and memberships of more than 10 (ten) Committees across all Public Companies.

(ii) Number of Memberships in Boards of other Public Companies and Chairmanships/ Memberships in Committees of Boards of other Public Companies :

Name, Designation and Director Identification

Number (DIN)

Category of Directorship

Number of Memberships in Boards of other

Public Companies

Number of Chairmanships in

Committees of Boards of other Public Companies

Number of Memberships of


Mr. L. Madhusudhan Rao Executive ChairmanDIN: 00074790

Executive 14 2 1

Mr. G. Bhaskara Rao Executive Vice-ChairmanDIN: 00075034

Executive 14 2 4

Mr. L. SridharVice-ChairmanDIN: 00075809

Non-Executive 14 0 3

Mr. G. Venkatesh Babu Managing DirectorDIN: 00075079

Executive 14 0 8

Mr. S.C. ManochaDeputy Managing DirectorDIN: 00007645

Executive 3 0 0

Dr. Pamidi KotaiahDirectorDIN: 00038420

Non-Executive & Independent

10 4 3

REPORT ON CORPORATE GOVERNANCEAnnual Report 2013-2014

32

Name, Designation and Director Identification

Number (DIN)

Category of Directorship

Number of Memberships in Boards of other

Public Companies

Number of Chairmanships in


Number of Memberships of


Mr. P. AbrahamDirectorDIN: 00280426


12 0 1

Dr. Uddesh Kumar Kohli DirectorDIN: 00183409


6 2 5

Dr. B. Vasanthan*DirectorDIN: 01621698


1 0 0

Mr. R. KrishnamoorthyDirectorDIN: 05292993


4 1 2

Note: Mr. L. Madhusudhan Rao, Mr. G. Bhaskara Rao and Mr. L. Sridhar are related inter-se.

* Dr. B. Vasanthan resigned from the Board on May 23, 2014.

The profile of the Board of Directors forms part of this Report.

(iii) Meetings and attendance during the year

The Board meets at least once in a quarter, inter alia, to review quarterly results. The notice and agenda of the Board Meetings are served well in advance to accommodate addition of any other item(s) in the Agenda.

During the financial year 2013-14, 10 (ten) Board Meetings were held. These meetings were held on May 29, 2013, July 22, 2013, July 26, 2013, August 07, 2013, September 27, 2013, November 11, 2013, December 23, 2013, February 01, 2014, March 07, 2014 and March 08, 2014.

The attendance of each Director at the Board Meetings during the financial year 2013-14 as well as at last Annual General Meeting is as under:

Name of the Director Number of Board Meetings held

Number of Board Meetings attended

Attendance at the last Annual General Meeting*

Mr. L. Madhusudhan Rao 10 9 YesMr. G. Bhaskara Rao 10 10 YesMr. L. Sridhar 10 9 YesMr. G. Venkatesh Babu 10 9 YesMr. S.C. Manocha 10 10 YesDr. Pamidi Kotaiah 10 9 YesMr. P. Abraham 10 2 NoDr. Uddesh Kumar Kohli 10 9 YesDr. B. Vasanthan** 10 0 NoMr. R. Krishnamoorthy 10 8 Yes

*Last Annual General Meeting was held on September 27, 2013.

** Dr. B. Vasanthan resigned from the Board on May 23, 2014.

3. COMMITTEES OF BOARD

In compliance with the Listing Agreements, the Board has set up committees assigning specific roles and responsibilities by delegating its power to ensure speedy resolution of diverse issues.

(i) Audit Committee

a. Brief description of Terms of Reference

The Terms of Reference of Audit Committee include the following scope and responsibilities:

1. Oversight of the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;

Report on Corporate Governance

33

2. Recommendation for appointment, remuneration and terms of appointment of auditors of the company;

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;

4. Reviewing, with the management, the annual financial statements and auditor’s report thereon before submission to the board for approval, with particular reference to:

a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013

b. Changes, if any, in accounting policies and practices and reasons for the same

c. Major accounting entries involving estimates based on the exercise of judgment by management

d. Significant adjustments made in the financial statements arising out of audit findings

e. Compliance with listing and other legal requirements relating to financial statements

f. Disclosure of any related party transactions

g. Qualifications in the draft audit report

5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval;

6. Reviewing, with the management, the statement of uses/application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;

7. Review and monitor the auditor’s independence and performance, and effectiveness of audit process;

8. Approval or any subsequent modification of transactions of the company with related parties;

9. Scrutiny of inter-corporate loans and investments;

10. Valuation of undertakings or assets of the company, wherever it is necessary;

11. Evaluation of internal financial controls and risk management systems;

12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;

13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;

14. Discussion with internal auditors of any significant findings and follow up there on;

15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board;

16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;

17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;

18. To review and oversee the functioning of the Whistle Blower mechanism;

19. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;

20. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

21. To review the following information:

i. Management discussion and analysis of financial condition and results of operations;

ii. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;

iii. Management letters/letters of internal control weaknesses issued by the statutory auditors;

iv. Internal audit reports relating to internal control weaknesses; and

v. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee.


34

b. Composition

The Audit Committee comprises of 3 (three) Independent Directors and 1 (one) Executive Director, the Chairman being an Independent Director. The members of the Audit Committee are below:

Dr. Pamidi Kotaiah Chairman

Dr. Uddesh Kumar Kohli Member

Mr. R. Krishnamoorthy Member

Mr. G. Bhaskara Rao Member

c. Meetings and Attendance during the year

During the financial year 2013-14, 7 (seven) Meetings were held. These meetings were held on May 23, 2013, May 29, 2013, July 22, 2013, August 07, 2013, November 11, 2013, February 01, 2014 and February 28, 2014.

The attendance of the members during the financial year 2013-14 is given below:

Name of the Director Number of Meetings held Number of Meetings attended

Dr. Pamidi Kotaiah 7 7

Dr. Uddesh Kumar Kohli 7 7

Mr. R. Krishnamoorthy 7 6

Mr. G. Bhaskara Rao 7 7

(ii) Remuneration Committee


The terms of reference of the Remuneration Committee inter-alia include the determination of remuneration packages for the Executive and Non-Executive Directors of the Company.

b. Composition

The Remuneration Committee comprises of 3 (three) Non-Executive Independent Directors as below:

Dr. B. Vasanthan* Chairman

Dr. Pamidi Kotaiah Member

Mr. R. Krishnamoorthy Member



During the financial year 2013-14, 1 (one) meeting was held on May 29, 2013.

The attendance of the Members during the financial year 2013-14 is given below:

Name of the Director Number of Meetings held Number of Meetings attended

Dr. B. Vasanthan * 1 0

Dr. Pamidi Kotaiah 1 1

Mr. R. Krishnamoorthy 1 1


Remuneration Policy

Remuneration Committee recommends the remuneration for the Executive Directors of the Company. Such recommendation is then approved by the Board and Shareholders. Prior approval of shareholders is also obtained in case of remuneration to Non-Executive Directors.

The remuneration paid to Executive Directors is determined keeping in view the industry benchmark, the relative performance of the Company to the industry performance, and macro-economic review on remuneration packages of CEOs of other organisations. Perquisites and other allowances are paid according to the policy of the Company as applicable to employees.


35

Independent Non-Executive Directors are appointed for their professional expertise in their individual capacity as Independent Professionals/Business Executives. Independent Non-Executive Directors receive sitting fees for attending the meeting of the Board and Board Committees.

d. Details of Remuneration to all the Directors for the financial year 2013-14

(` in Lakhs)

Name of the Director Salary Perquisites and

Allowances

Commission/ Performance

Bonus

Sitting Fees

Number of Stock Options granted

Term of appointment

ending on

Mr. L. Madhusudhan Rao 0.00 78.77 Nil Nil Nil 31.03.2016

Mr. G. Bhaskara Rao 0.00 85.94 Nil Nil Nil 31.03.2016

Mr. G. Venkatesh Babu 250.00 131.26 28.13 Nil Nil 23.06.2016

Mr. S.C. Manocha 172.50 0.42 15.75 Nil Nil 13.08.2015

Mr. L. Sridhar Nil Nil Nil 2.20 Nil N.A.

Dr. Pamidi Kotaiah Nil Nil Nil 3.20 Nil N.A.

Mr. P. Abraham Nil Nil Nil 0.60 Nil N.A.

Dr. Uddesh Kumar Kohli Nil Nil Nil 3.20 Nil N.A.

Dr. B. Vasanthan* Nil Nil Nil Nil Nil N.A.

Mr. R. Krishnamoorthy Nil Nil Nil 3.00 Nil N.A.


e. Shareholding of Non-Executive Directors as on March 31, 2014

S. No. Name of Director Number of shares held

1. Mr. L. Sridhar 4,51,43,587

2. Dr. Pamidi Kotaiah 95,555

3. Mr. P. Abraham 5,170

4. Dr. Uddesh Kumar Kohli 1,69,050

5. Dr. B. Vasanthan* 28,500

6. Mr. R. Krishnamoorthy NIL


(iii) Shareholders/Investors Grievance Committee


The Committee is responsible, inter alia, for redressal of shareholders’ complaints, approval of share transfers and transmissions, issue of share certificates and duplicate share certificates, liasioning with the registrars and share transfer agents etc.,

b. Composition

The Committee comprises of 2 (two) Non-Executive Directors and 1 (one) Executive Director, the Chairman being a Non-Executive Director. The members of the Committee are below:

Mr. L. Sridhar Chairman

Mr. G. Venkatesh Babu Member

Dr. B. Vasanthan * Member



During the financial year 2013-14, 2 (two) meetings were held. These meetings were held on May 29, 2013 and November 11, 2013.


36

The attendance of the Members during the financial year 2013-14 is given below:

Name of the Director Number of Meetings held Number of Meetings attendedMr. L. Sridhar 2 2Mr. G. Venkatesh Babu 2 2Dr. B. Vasanthan * 2 0


d. Name and Designation of Compliance Officer

Mr. A. Veerendra Kumar, Company Secretary is the Compliance Officer of the Company.

e. Details of Complaints/ Requests received, resolved and pending during the Financial Year 2013-14During the Quarter Received Resolved Pending01.04.2013 - 30.06.2013 0 0 001.07.2013 - 30.09.2013 1 1 001.10.2013 - 31.12.2013 0 0 001.01.2014 - 31.03.2014 3 3 0Total 4 4 0

4. GENERAL BODY MEETINGS

(i) Location, Date and Time of Last three Annual General Meetings and Special Resolutions passed thereat:

Year Location Date & Time2012-13 Marigold Hotel by Greenpark, Greenlands, Begumpet,

Hyderabad - 500016, Telangana, IndiaSeptember 27, 20133.30 p.m.

Special Resolutions passed, if any1. Subject to the approval of the Central Government, to waive the recovery of the amount paid for the financial year 2012-13 to

Mr. L. Madhusudhan Rao, Executive Chairman in excess of remunerations limits prescribed in Section 309 read with Schedule XIII of the Companies Act, 1956.

2. Subject to the approval of the Central Government, to waive the recovery of the amount paid for the financial year 2012-13 to Mr. G. Bhaskara Rao, Executive Vice-Chairman in excess of remunerations limits prescribed in Section 309 read with Schedule XIII of the Companies Act, 1956.

3. To waive the recovery of the amount paid for the financial year 2012-13 to Mr. G. Venkatesh Babu, Managing Director in excess of remunerations limits prescribed in Section 309 read with Schedule XIII of the Companies Act, 1956.

4. To waive the recovery of the amount paid for the financial year 2012-13 to Mr. S.C. Manocha, Deputy Managing Director in excess of remunerations limits prescribed in Section 309 read with Schedule XIII of the Companies Act, 1956.

5. Subject to the approval of the Central Government, for payment of remuneration to Mr. L. Madhusudhan Rao, Executive Chairman with effect from April 01, 2013 upto March 31, 2016.

6. Subject to the approval of the Central Government, for payment of remuneration to Mr. G. Bhaskara Rao, Executive Vice-Chairman with effect from April 01, 2013 upto March 31, 2016.

7. Payment of remuneration to Mr. G. Venkatesh Babu, Managing Director for a period of 3 (three) years with effect from April 01, 2013.

8. Payment of remuneration to Mr. S.C. Manocha, Deputy Managing Director with effect from April 01, 2013 upto August 13, 2015.2011-12 Marigold Hotel by Greenpark, Greenlands, Begumpet,

Hyderabad – 500016, Telangana, IndiaSeptember 27, 20123.30 p.m.

Special Resolutions passed, if anyNo Special Resolution passed2010-11 Green Park Hotel, Greenlands, Begumpet, Hyderabad – 500

016, Telangana, India.September 30, 20113.30 p.m.

Special Resolutions passed, if anyNo Special Resolution passed


37

(ii) Special Resolution(s) passed through Postal Ballot: Yes

The following Special Resolutions were passed through Postal Ballot dated April 17, 2014.

The details of the Voting Pattern are as follows:

Special Resolutions:

1. Restructuring of Debts of the Company under CDR Mechanism.

Total No. of Valid Postal Ballot Forms received : 916

Total No. of Valid Votes : 174,09,25,768Particulars Voted for the Resolution Voted against the Resolution not PolledNo. of Votes (percentage) 174,06,57,463 (99.99%) 2,13,749 (0.01%) 54,556 (0.00%)No. of Members 853 49 14No. of Invalid Votes: 43,572Result: Passed as Special Resolution

2. Alteration of Articles of Association of the Company.



3. Creation of Security on the Assets of the Company.



4. Increase in the borrowing powers of the Company.



5. Option to CDR Lenders for conversion of Debt into Equity Shares.




38

6. Issue of Equity Shares to CDR Lenders on preferential basis on conversion of 10 (Ten) percent of working Capital Term Loan 1 (wCTL 1) into Equity Shares of the Company.



7. Issue of Equity Shares to CDR Lenders on preferential basis on conversion of 20 (Twenty) percent of Priority Loan into Equity Shares of the Company.



8. Issue of Equity Shares to CDR Lenders on preferential basis on conversion of Restructured Term Loan (RTL), Balance working Capital Term Loan 1 (wCTL 1), working Capital Term Loan 2 (wCTL 2) and Funded Interest Term Loan (FITL) into Equity Shares of the Company.



9. Issue of Equity Shares on Preferential Basis to the Promoters of the Company.


Total No. of Valid Votes : 174,09,23,368Particulars Voted for the Resolution Voted against the Resolution not PolledNo. of Votes (percentage) 174,04,90,551 (99.98%) 3,45,672 (0.02%) 87,145 (0.00%)No. of Members 761 110 39No. of Invalid Votes : 43,572Result: Passed as Special Resolution

(iii) Persons who conducted the Postal Ballot exercise:

The Postal Ballot aforesaid was conducted by Mr. Srikrishna S Chintalapati, KBG Associates, Practising Company Secretaries, Hyderabad.

(iv) whether any Special Resolution is proposed to be conducted through Postal Ballot: No

(v) Procedure for Postal Ballot:

Postal Ballot procedure as stipulated under Section 192A of the Companies Act, 1956, read with the Companies (Passing of Resolutions by Postal Ballot) Rules, 2011.


39

5. DISCLOSURES

(i) Materially Significant Related Party Transactions

There are no materially significant related party transactions having potential conflicts with the interests of the Company at large.

(ii) Compliances

The Company has duly complied with all rules, regulations, terms of the agreements prescribed/entered with Stock Exchange(s), SEBI or any other statutory authority on any matter related to capital markets, during the last three years.

(iii) whistle Blower Mechanism

With a view to implement the highest ethical standards in the course of business, the Company has formed and adopted a whistle blower policy which provides a platform for reporting concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct. Directors, employees, vendors or any person having dealings with the Company may report non-compliance to the Chairman of Audit Committee, who reviews the report. Confidentiality is maintained of such reporting and it is ensured that the whistle blowers are not subjected to any discrimination. No person was denied access to the Audit Committee.

(iv) Compliance with mandatory requirements and adoption of the non-mandatory requirements

There has been complete compliance with mandatory requirements and in respect of non-mandatory requirements, disclosures have been made to the extent of adoption.

6. MEANS OF COMMUNICATIONS

The Company’s quarterly, half-yearly and annual financial results are put on the Company’s website www.lancogroup.com. The results are also published in newspapers that include Financial Express and Vaartha. The official news releases and presentations made to investors and analysts are also made available on the website of the Company.

Green Initiative in Corporate Governance

In order to show its contribution to the “Green initiative in the Corporate Governance” taken by Ministry of Corporate Affairs, the Company has been sending all communications including annual reports through email to those shareholders, who have registered their e-mail id with their depository participant/Company’s Registrar and Share Transfer Agent other than those who have specifically chosen to receive documents in physical form.

Further, the members are requested to register and update their e-mail addresses with their Depository Participant to ensure that the Annual Report and other documents reach them on their preferred e-mail.

7. GENERAL SHAREHOLDERS INFORMATION

(i) Annual General Meeting

Date and Time September 26, 2014 at 3.30 p.m.Venue Marigold Hotel By Greenpark, Greenlands, Begumpet, Hyderabad – 500 016, Telangana, India.

(ii) Financial Calendar for the Year 2014-15 (Tentative)

Particulars Tentative ScheduleFinancial reporting for the quarter ending June 30, 2014 On or before August 14, 2014Financial reporting for the half-year ending September 30, 2014 On or before November 14, 2014Financial reporting for the quarter ending December 31, 2014 On or before February 14, 2015Financial reporting for the year ending March 31, 2015 On or before May 30, 2015Annual General Meeting for the year ending March 31, 2015 Before September 30, 2015

(iii) Book Closure Dates : September 13, 2014 to September 26, 2014 (both days inclusive)

(iv) Dividend Payment Date : Not Applicable.

(v) Listing on Stock Exchanges

The Equity Shares of the Company are listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).

The Company has paid the listing fees for the year 2014-15 to both the stock exchanges. There are no arrears of listing fees with any of the said stock exchanges till date.


40

(vi) Stock Code

Exchange CodeNational Stock Exchange of India Limited Stock Code: LITLBSE Limited Stock Code: LITL

Scrip Code: 532778Demat ISIN Number – for NSDL/CDSL INE785C01048

(vii) Stock Market Price Data relating to equity shares listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).

The monthly high and low stock quotations of equity shares of the Company on NSE and BSE during the year 2013-14 was as under:

(In `)Month NSE BSE

HIGH LOw HIGH LOwApril, 2013 12.40 10.30 12.39 10.30May, 2013 11.55 9.10 11.58 9.15June, 2013 10.05 5.95 9.64 6.00July, 2013 7.50 4.95 7.63 4.96August, 2013 5.85 4.90 5.84 4.96September, 2013 6.50 5.00 6.45 5.00October, 2013 7.25 5.30 7.21 5.34November, 2013 7.10 5.55 7.10 5.57December, 2013 8.05 6.00 8.08 5.91January, 2014 8.80 6.70 8.74 6.73February, 2014 8.00 6.25 7.96 6.26March, 2014 7.30 6.25 7.28 6.25

(viii)

8000 50

40

30

20

10

0

7500

7000

6500

6000

5500

5000

4500

4000

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Jan-

14

Feb-

14

Mar

-14

S&P CNx NIFTY LITL

26000 50

40

30

20

10

0

24000

22000

20000

18000

16000

14000

12000

Apr

-13

May

-13

Jun-

13

Jul-1

3

Aug-

13

Sep-

13

Oct

-13

Nov

-13

Dec

-13

Jan-

14

Feb-

14

Mar

-14

SENSEx LITL

Stock Performance in comparison to BSE SensexStock Performance in comparison to NSE S & P CNx NIFTY

(ix) Registrar & Share Transfer Agent

M/s. Aarthi Consultants Private Limited, 1-2-285, Domalguda, Hyderabad – 500 029, Telangana, India. Ph: +91-40-2763 8111, 27634445, Fax: +91-40-27632184, E-mail: [email protected], Website: www.aarthiconsultants.com

(x) Share Transfer System

The shareholders are advised to contact the Registrar and Share Transfer Agent at their address for effecting transfer of shares.


41

(xi) Distribution of Shareholding as on March 31, 2014Nominal Value of Shareholding (in `) No. of Members Percentage No. of Shares Percentage of totalUp to 500 1,52,252 59.42 3,32,53,983 1.38501 – 1,000 45,430 17.73 3,86,12,390 1.601,001 – 2,000 27,644 10.79 4,40,74,667 1.832,001 – 3,000 9,532 3.72 2,49,69,636 1.043,001 – 4,000 4,755 1.86 1,73,44,689 0.724,001 – 5,000 4,237 1.65 2,02,65,176 0.845,001 – 10,000 6,608 2.58 4,99,66,223 2.0810,001 and above 5,753 2.25 217,93,18,156 90.51Total 2,56,211 100.00 240,78,04,920 100.00

Shareholding Pattern of the Company as on March 31, 2014Category of Shareholder Number of Shares held Percentage of ShareholdingPromoter and Promoter Group 168,93,22,783 70.16Mutual Funds 50,13,769 0.21Financial Institutions(FIs)/Banks 4,36,18,069 1.81Bodies Corporate 10,88,10,572 4.52Foreign Institutional Investors(FIIs) 8,63,78,894 3.59Non-Resident Indians(NRIs)/Foreign Companies 2,24,25,620 0.93Others (Public) 45,22,35,213 18.78Total 240,78,04,920 100.00

Shareholding Pattern

NRIs/Foregin Companies

0.93% FIIs 3.59%

Bodies Corporate

4.52%

FIs/Banks 1.81%

Mutual Funds 0.21%

Promoter and Promoter Group

70.16%

Other (Public) 18.78%

(xii) Dematerialisation of Shares and Liquidity

About 99.99% of the outstanding equity has been in dematerialised form as on March 31, 2014.

(xiii) Outstanding Convertible Instruments

As of March 31, 2014, there are no outstanding convertible instruments.

(xiv) Equity Shares in Suspense Account

The disclosure as required under Clause 5A of the Listing Agreement is given below:

a. Aggregate number of shareholders and the outstanding shares in the suspense account lying at the beginning of the year: 42 shareholders and outstanding Equity Shares are 31,040.

b. Number of shareholders who approached issuer for transfer of shares from suspense account during the year: Nil

c. Number of shareholders to whom shares were transferred from suspense account during the year: Nil

d. Aggregate number of shareholders and the outstanding shares in the suspense account lying at the end of the year: 42 shareholders and outstanding Equity Shares are 31,040.

The voting rights on these equity shares shall remain frozen till the rightful owner of such shares claims the shares.


42

(xv) Plant Locations of Lanco Infratech Limited

a. Wind Energy Project at Chikkasidavanahalli Village, Chitradurga District, Karnataka;

b. Solar Energy Project at Bhadrada Village, Tehsil Sami, Patan District, Gujarat;

c. Solar Energy Project at Chadiyana Village, Tehsil Sami, Patan District, Gujarat;

d. Solar Energy Project at Charanka Village, Tehsil Saltanpur, Patan District, Gujarat;

Plant Locations of Subsidiary Companies

a. Lanco Kondapalli Power Limited Kondapalli IDA, Kondapalli – 521 228, Ibrahimpatnam Mandal, Krishna District, Andhra Pradesh;

b. Lanco Tanjore Power Company Limited Karuppur Village, Thiruvidaimaruthur Taluk, Tanjore District, Tamil Nadu;

c. Lanco Amarkantak Power Limited Pathadi Village, P.O.-Tilkeja, Korba District, Chattisgarh - 495 667;

d. Lanco Mandakini Hydro Power Private Limited Village & Post-Rampur, Rudraprayag District, Uttarakhand - 246471;

e. Lanco Teesta Hydro Power Limited Teesta VI HEP, Subin Khor, South Sikkim;

f. Lanco Budhil Hydro Power Private Limited Village Kharamukh, P.O. Garola, Teh. Bharmour, District Chamba, Himachal Pradesh – 176 309;

g. Lanco Hydro Power Limited IKU II : Saleg Village, Tehsil Dharamshala, Kangra District, Himachal Pradesh; Baner III : Jai Village, Tehsil Palampur, Kangra District, Himachal Pradesh;

h. Lanco Thermal Power Limited Upper Khauli : Salli Village, Tehsil Shahpur, Kangra District, Himachal Pradesh; Drinidhar : Bhiora Village, Tehsil Sihunta, Chamba District, Himachal Pradesh;

i. Lanco Anpara Power Limited Phase I : Anpara Village, Sonebhadra District, Uttar Pradesh; Phase II : Bhognipur, Rambhai Nagar District, Uttar Pradesh;

j. Udupi Power Corporation Limited Kolachuru, Yelluru Village, Pilar Post – 574 113, Udupi District, Karnataka;

k. Lanco Solar Private Limited Solar Manufacturing Plant : Village - Mehrumkhurd, Chawardhal, Dist Rajnandgaon, Chattisgarh; Solar PV Project : Village Lathi, Tehsil – Pokaran, District Jaisalmer, Rajasthan;

l. Khaya Solar Projects Private Limited Askandra Village, Nachna – II Tehsil Nachana, Jaisalmer District, Rajasthan;

m. Diwakar Solar Projects Limited Askandra Village, Nachna – II Tehsil Nachana, Jaisalmer District, Rajasthan;

(xvi) Address for Correspondence

Registered Office:

Plot No. 4, Software Units Layout, HITEC City, Madhapur, Hyderabad – 500 081, Telangana, India Phone: +91-40-40090400, Fax: +91-40-23116127, Email:[email protected], Website: www.lancogroup.com

Profile of Board of Directors

Mr. L Madhusudhan Rao, Executive Chairman has more than 21 years of varied experience in the industrial field. He is amongst the most successful and admired young entrepreneurs of corporate India. After obtaining his B. Tech from Siddhartha Engineering College, Vijayawada and M. Tech (Design Engineering) from PSG College of Technology, Coimbatore, and MS (Industrial Engineering) from Wayne State University in Detroit, United States, he joined the team involved in building up Lanco Industries Limited near Tirupati, Andhra Pradesh. In the year 1992, he became the Managing Director of Lanco Industries Limited. In 2002, he became Chairman of Lanco Infratech Limited.

Mr. G. Bhaskara Rao, Executive Vice-Chairman has more than 36 years of industrial and entrepreneurial experience. He is one of the founder members of the Lanco Group of enterprises. He has executed various construction projects, including dams, bridges and roads. He was instrumental in organizing and implementing the ductile iron pipes manufacturing project by Lanco Kalahasthi Castings Limited. He has a B.E. (Production) Degree from S.V. University, Tirupati and an M.E (Machine Design) Degree from the Indian Institute of Science, Bangalore.

Mr. L Sridhar, Vice-Chairman has experience of working with ‘Acon Building Constructions’ in San Jose, United States. He worked as Joint Managing Director of Lanco Infratech Limited from 1997 to 2003. He has done his B.E. (Civil Engineering) from Siddaganga Institute of Engineering in Tumkur, Karnataka and MS (Construction Management in Civil Engineering) from University of Eastern Michigan, United States.

Mr. G. Venkatesh Babu, Managing Director has rich experience in Commercial Banking, Corporate Advisory, Merger and Acquisitions, Project Finance, Equity Capital Markets, HR and Infrastructure initiatives. He had worked with Indbank & Credit Agricole Indosuez (Calyon) and then had two years of entrepreneurial stint before joining Lanco. He currently looks after Lanco Group’s finance functions and is a member of Lanco’s Strategy Team. He focuses on Lanco’s strategic partnership and growth initiatives. He is extensively involved in financing of Lanco Group’s projects and overseeing the resources function of all the Group companies. He is a Bachelor of Commerce from Madras Christian College, Chartered Accountant and Cost and Management Accountant.

Mr. S.C. Manocha, Deputy Managing Director is a Mechanical Engineer and a Management Graduate. He has several additional qualifications including project management, financial management, labour laws, welding engineering, construction and planning


43

of thermal power plants, planning management and project management from reputed Institutes across India. He has over 36 years of rich experience in key positions with leading corporates. His expertise includes pre-project planning, project planning, key negotiations, departmental clearances, finalising equipment and service providers, financial modeling, business strategy, marketing intelligence and strategic alliances.

Mr. P. Abraham, Director is a retired officer from the Indian Administrative Service. He did his M.A. from Andhra University and Diploma in Systems Management from the Bajaj Institute, Mumbai. He was awarded the United Nations Industrial Development Organisation Fellowship to study the promotion of Industries with special emphasis on export-oriented industries in Europe. During his 35 years of service in the Indian Administrative Service, he held a number of executive positions with the Central and State governments such as Secretary, Ministry of Power, GoI, Special Secretary, Ministry of Defence, Additional Secretary, Ministry of Defence, GoI, Chairman of Maharashtra State Electricity Board, Commissioner of Industries, the GoAP, Iron and Steel Controller, Ministry of Steel, GoI, Chairman and Managing Director, Maharashtra State Textile Corporation and Member, Union Public Service Commission. He was also awarded with Life time achievement award in 2011 in power by council of power utilities by Ministry of Power. He has authored several books on the power sector reforms with focus on distribution.

Dr. Pamidi Kotaiah, Director is a Gold Medalist in MA (Economics) from Andhra University. He worked in Andhra University, Reserve Bank of India (RBI), National Bank for Agriculture and Rural Development (NABARD) and served as Executive Chairman of NABARD between 1992-1998. He also worked as short term Consultant with multilateral institutions including the International fund for Agricultural Development (IFAD), Rome, The Food and Agricultural Organization of the United Nations (FAO) and the World Bank on various Missions to several countries in Asia and Africa. He has over 50 years of experience in the fields of Banking, Finance, Management, Project Appraisals/Analysis, Corporate governance etc. including Board level experience for over 25 years. He was awarded the ‘Doctor of Letters’ by Andhra University in 1997 in recognition of

his special contribution in the areas of finance and development. He was also awarded the Special Honour Award in 1996 by the World Association of Small and Medium Enterprises in recognition of his special contribution towards the promotion of small and medium enterprises.

Dr. Uddesh Kumar Kohli, Director holds B.E. (Hons.) degree from the Indian Institute of Technology, Roorkee, a Post-Graduate Diploma in Industrial Administration from the Manchester University, UK and Ph.D. in Economics from the Delhi School of Economics. Dr. Kohli has been Chairman and Managing Director of Power Finance Corporation Limited, and has worked with the Planning Commission, Government of India, reaching the position of Advisor (Additional Secretary level).

Dr. Kohli, is presently the Chairman Emeritus of Construction Industry Development Council and Chairman of Construction Industry Arbitration Council & Engineering Council of India and Senior Adviser, Global Compact, United Nations. He has carried out international assignments for Asian Development Bank, United Nations Industrial Development Organization, United Nations Development Programme and United Nations Office for Project Services.

Dr. Kohli’s areas of expertise include development planning, finance, project formulation, appraisal, sustainability and monitoring, power/energy planning, corporate governance, corporate social responsibility, training and human resource development.

Mr. R. Krishnamoorthy, Director is a Fellow Member of the Institute of Cost and Management Accountants of India and an S.A.S. (Commercial) of the Indian Audit & Accounts Department. He is a Science graduate in Maths, from the University of Madras. He has a total experience of more than 35 years, out of which 30 years has been in Power Sector. He was a Member of Central Electricity Regulatory Commission and Delhi Electricity Regulatory Commission and had served Power Finance Corporation Limited for more than 15 years, at various positions and retired as its Chairman and Managing Director. He also worked with National Hydroelectric Power Corporation (NHPC) and Mineral Exploration Corporation, Nagpur.

Annual Declaration by CEOPursuant to Clause 49(I)(D)(ii) of the Listing Agreement

As the Managing Director of Lanco Infratech Limited, as required by Clause 49(I)(D)(ii) of the Listing Agreement executed with the National Stock Exchange of India Limited and BSE Limited, I hereby declare that all the Board Members and Senior Management Personnel of the Company have affirmed compliance with the Company’s Code of Conduct and Ethics for the Financial Year 2013-14.

For LANCO INFRATECH LIMITED

Place: Gurgaon G. Venkatesh BabuDate: July 01, 2014 Managing Director

II. NON-MANDATORY REQUIREMENTSThe Chairman of the BoardThe Chairman of the Board is an Executive Chairman and hence the provisions for non-executive Chairman are not applicable. All other requirements of the Board during the year have been complied with.Remuneration CommitteeAll the requirements of the Remuneration Committee during the year have been complied with.whistle Blower PolicyThe Company has established a Whistle Blower mechanism and has adopted a Whistle Blower Policy, the details of which are given under Disclosures forming part of this Report.Code for prevention of Insider TradingThe Company has comprehensive guidelines on prevention of Insider Trading, known as ‘the Lanco Infratech Limited Code of Conduct for Prevention of Insider Trading’, which is in compliance with the SEBI (Prohibition of Insider Trading) Regulations, 1992.


44

Corporate Governance Compliance CertificateTo the Members of M/s Lanco Infratech Limited

We have examined the relevant records of M/s. Lanco Infratech Limited for the purpose of certifying compliance of the conditions of the Corporate Governance under Clause 49 of the Listing Agreement with the Stock Exchanges for the financial year ended 31st March, 2014. We have obtained all the information and explanations which to the best of my knowledge and belief are necessary for the purposes of Certification.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to the procedure and implementation process adopted by the Company for ensuring the compliance of the Conditions of the Corporate Governance. This Certificate is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the Management has conducted the affairs of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with all the mandatory conditions of Corporate Governance as stipulated in the said Listing Agreement(s).

For KBG Associates Company Secretaries

Srikrishna S ChintalapatiPlace: Hyderabad PartnerDate: July 01, 2014 C.P. No. 6262

Chief Executive Officer (CEO) and Chief Financial Officer (CFO) Certification

ToThe Board of Directors ofLANCO INFRATECH LIMITEDWe, the undersigned, in our respective capacities as the Managing Director and Chief Operating Officer Finance of Lanco Infratech Limited (“the Company”), to the best of our knowledge and belief certify that:a) We have reviewed Financial Statements and the Cash Flow Statements for the Year ended 31st March, 2014 and based on our knowledge

and belief:I. these statements do not contain any materially untrue statements or omit any material fact or contain statements that might be

misleading;II. these statements together present a true and fair view of the Company’s affairs and are in compliance with the existing Accounting

Standards, applicable Laws and Regulations.b) We further state that to the best of our knowledge and belief, there are no transactions entered into by the Company during the year

which are fraudulent, illegal or violative of the Company’s Code of Conduct.c) We are responsible for establishing and maintaining internal controls and for evaluating the effectiveness of the same over the Financial

Reporting of the Company and have disclosed to the Auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which they are aware and the steps we have taken and propose to take to rectify these deficiencies.

d) We have indicated, wherever applicable, to the Auditors and Audit Committee:I. significant changes, if any, in internal control over financial reporting during the year;II. significant changes, if any, in Accounting Policies made during the year and that the same have been disclosed in the notes to the

financial statements; andIII. instances of significant fraud of which we have become aware and the involvement therein, if any, of the Management or an

Employee having a significant role in the Company’s internal control system over financial reporting.

For Lanco Infratech Limited

T. Adi Babu G. Venkatesh Babu Chief Operating Officer Finance Managing DirectorPlace: GurgaonDate : May 23, 2014


45

Abridged Financial Statements


ToThe Board of Directors of Lanco Infratech Limited

The accompanying abridged financial statements, which comprise the abridged Balance Sheet as at March 31, 2014, abridged Profit & Loss Account and abridged Cash Flow Statement for the year then ended and related notes and other explanatory information are derived from the audited financial statements of Lanco Infratech Limited (‘the Company’) as at and for the year ended March 31, 2014. We expressed a qualified audit opinion on those financial statements in our report dated May 23, 2014 (see below). Those financial statements and the abridged financial statements do not reflect the effects of events that occurred subsequent to the date of our report on those financial statements.

The abridged financial statements do not contain all the disclosures required by the accounting principles generally accepted in India, including Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”) applied in the preparation of the audited financial statements of the Company. Reading the abridged financial statements, therefore, is not a substitute for reading the audited financial statements of the Company.

Management’s responsibility for the abridged financial Statements

Management is responsible for the preparation of a summary of the audited financial statements on the basis described in Note 2.

Auditor’s Responsibility

Our responsibility is to express an opinion on the abridged financial statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810, “Engagements to Report on Summary Financial Statements” issued by the Institute of Chartered Accountants of India.

Opinion

In our opinion, the abridged financial statements derived from the audited financial statements of the Company for the year ended March 31, 2014 are a fair summary of those financial statements, on the basis described in Note 2. However, the abridged financial statements are unadjusted to the equivalent extent as the audited financial statements of the Company as at and for the year ended March 31, 2014.

The non-adjustment of the audited financial statements is described in our qualified audit opinion in our report dated May 23, 2014. Our qualified audit opinion is based on the following facts.

a) Reorganization of investments has been undertaken by the Company during the year ended March 31, 2012 as described in Note 23. The Company’s investment as of March 30, 2012 in various subsidiaries and associates was transferred to wholly owned step down subsidiaries and to an associate of wholly owned step down subsidiary aggregating to ` 6,815.51 Crores that require lenders and customer approvals. Management has received many such approvals aggregating to 88% in value, of the lenders consenting to the restructuring, the management is confident of receiving balance approvals from lenders and customer in near future and has taken the effect of these transfers while preparing these financial statements. In case of any of these residual approvals are not granted, the management will have to revisit the structure and the consequential impact would then be recorded in these financial statements, pending the final outcome of residual lenders and customer approvals, we are unable to comment on the consequential effects of the foregoing should such approvals not be received on these financial statements. This had also been qualified in our audit report for the year ended March 31, 2012 and March 31, 2013.

Our qualified audit opinion states that, except for the effects of the described matters, those financial statements give a true and fair view of the state of affairs of the Company as at March 31, 2014, and of its results of operations and its cash flows for the year then ended in accordance with the accounting principles generally accepted in India.

Emphasis of Matters

Without qualifying our opinion on the audited financial statements in our audit report dated May 23, 2014, Emphasis of matter have been included and those were based on the following facts.

a) Note 25 to the financial statements, regarding the adequacy of disclosure concerning the Company’s ability to meet its financial obligations including loans, overdue loans, unpaid interest and ability to fund obligations pertaining to operations including unpaid creditors and investments in ongoing projects for ensuring normal operations. During the year, the Company incurred a Net Loss of ` 959.99 Crores and has loans aggregating ` 174.57 Crores falling due over next twelve months period which also includes unpaid dues of the Company as at March 31, 2014. These matters require the Company to garner such additional cash flows to fund the operations as well as the investment obligations towards on-going projects comprising various power and other infrastructure projects notwithstanding the current level of low implementation activities. The Company approached Corporate Debt Restructuring (CDR) Cell with a scheme

Independent Auditors’ Report on Abridged Financial StatementsAbridged Financial Statements

47

seeking certain reliefs in relation to repayment timelines of loans and accumulated unpaid interest and additional funding for its operations. Further this restructuring envisages certain sacrifices from lenders and commitments from Company in terms of infusion of additional funds through divestment of existing assets. During the year, CDR Empowered Group approved the Debt Restructuring Scheme. The Company is in the process of completing required obligations under the scheme to enable infusion of additional funds from lenders. However, the financial statements have been prepared under the assumption, considering the management assessment to recover the dues from various State Electricity Boards and management plan to get requisite funding from various other sources including the CDR scheme in respect of which the CDR lenders have started their partial disbursements. These submissions and assertions by the management as evaluated by lenders envisage that the Company has the ability to garner the required cash flows, which have not been independently assessed by us. Relying on the above, no adjustments have been made in these financial statements.

b) Note 26 to the financial statements, in relation to the carrying value of assets held by Lanco Anpara Power Limited (LAnPL), a step down subsidiary of the Company. Though LAnPL has been incurring losses ever since the commencement of commercial operations and accumulated losses incurred so far eroded the net worth significantly, taking into consideration LAnPL management’s assessment of the situation including efforts towards seeking revision in tariff etc pending before the regulators, the management of the Company is of the view that the carrying value of Assets of LAnPL is realizable at the value stated therein. Accordingly no adjustments have been made in the accompanying financial statements.

Our opinion is not qualified in the above matters.

For Brahmayya & Co.,Chartered Accountants

Firm Registration No. 000511S

Lokesh VasudevanPlace: Gurgaon PartnerDate: May 23, 2014 Membership No. 222320


48

To

The Members of Lanco Infratech Limited

Report on Financial Statements

We have audited the accompanying financial statements of Lanco Infratech Limited (“the Company”), which comprise the Balance Sheet as at March 31 2014, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting standards notified under the Companies Act, 1956 (‘the Act’) read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.


Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

Basis for Qualified Opinion

Attention is invited to Note 49 to the financial statements, which explain the reorganising undertaken by the management during the year ended March 31, 2012. The Company’s investment as of March 30, 2012 in various subsidiaries and associates was transferred to wholly owned step down subsidiaries and to an associate of wholly owned step down subsidiary aggregating to ̀ 6,815.51 Crores that require lenders and customer approvals. Management has received many such approvals aggregating to 88% in value, of the lenders consenting to the restructuring, the management is confident of receiving balance approvals from lenders and customer in near future and has taken the effect of these transfers while preparing these financial statements. In case of any of these residual approvals are not granted, the management will have to revisit the structure and the consequential impact would then be recorded in these financial statements, pending the final outcome of residual lenders and customer approvals, we are unable to comment on the consequential effects of the foregoing should such approvals not be received on these financial statements. This had also been qualified in our audit report for the year ended March 31, 2012 and March 31, 2013.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matter described in the Basis for Qualified Opinion Paragraph, the financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;

b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and

c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matters

Attention is invited to

a) Note 51 to the financial statements, regarding the adequacy of disclosure concerning the Company’s ability to meet its financial

Independent Auditor’s ReportAbridged Financial Statements

49

obligations including loans, overdue loans, unpaid interest and ability to fund obligations pertaining to operations including unpaid creditors and investments in ongoing projects for ensuring normal operations. During the year, the Company incurred a Net Loss of `

959.99 Crores and has loans aggregating ` 174.57 Crores falling due over next twelve months period which also includes unpaid dues of the Company as at March 31, 2014. These matters require the Company to garner such additional cash flows to fund the operations as well as the investment obligations towards on-going projects comprising various power and other infrastructure projects notwithstanding the current level of low implementation activities. The Company approached Corporate Debt Restructuring (CDR) Cell with a scheme seeking certain reliefs in relation to repayment timelines of loans and accumulated unpaid interest and additional funding for its operations. Further this restructuring envisages certain sacrifices from lenders and commitments from Company in terms of infusion of additional funds through divestment of existing assets. During the year, CDR Empowered Group approved the Debt Restructuring Scheme. The Company is in the process of completing required obligations under the scheme to enable infusion of additional funds from lenders. However, the financial statements have been prepared under the assumption, considering the management assessment to recover the dues from various State Electricity Boards and management plan to get requisite funding from various other sources including the CDR scheme in respect of which the CDR lenders have started their partial disbursements. These submissions and assertions by the management as evaluated by lenders envisage that the Company has the ability to garner the required cash flows, which have not been independently assessed by us. Relying on the above, no adjustments have been made in these financial statements.

b) Note 52 to the financial statements, in relation to the carrying value of the assets held by Lanco Anpara Power Limited (LAnPL), a step down subsidiary of the Company. Though LAnPL has been incurring losses ever since the commencement of commercial operation and accumulated losses incurred so far eroded the net worth significantly, taking into consideration LAnPL management’s assessment of the situation including efforts towards seeking revision in tariff pending before the regulator, the management of the Company is of the view that the carrying value of the asset of LAnPL is realizable at the value stated therein. Accordingly no adjustments have been made in these financial statements.

Our opinion is not qualified in the above matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”), issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

c) the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) except for the matter described in the Basis for Qualified Opinion Paragraph, in our opinion, the balance sheet, statement of profit and loss and cash flow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013; and

e) on the basis of written representations received from the directors as on 31 March 2014, and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For Brahmayya & CoChartered AccountantsFirm’s Registration Number: 000511S

Lokesh VasudevanPlace : Gurgaon PartnerDate : May 23, 2014 Membership Number: 222320


50

The Annexure referred to in our report to the members of Lanco Infratech Limited (‘the Company’) for the year ended March 31, 2014. We report that:

1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) Fixed assets have been physically verified by the management during the year in accordance with a planned programme of verifying them once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

2. (a) The management has conducted physical verification of inventory at reasonable intervals during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them.

(b) The procedure of physical verification of stock followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3. (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii) (a) to (d) of the Order are not applicable to the Company and hence not commented upon.

(b) According to the information and explanations given to us, the Company has taken unsecured loan, from the holding Company, covered in the register maintained under section 301 of the Companies Act, 1956. The year-end balance of such loan is ` 152.00 Crores.

(c) In our opinion, the rate of interest and terms and conditions of such loans are prima facie not prejudicial to the interest of the Company.

(d) In respect of aforesaid loan taken from the holding Company, the Principal is not due for repayment and the interest is not being accrued as the same is pending for approval of CDR Lenders.

4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas.During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company in respect of these areas.

5. (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301 of the Act have been so entered.

(b) In respect of transactions made in pursuance of contracts and arrangements exceeding the value of Rupees five lakhs entered into during the financial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time.

6. The Company has not accepted any deposits from the public.

7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business.

8. We have broadly reviewed the cost records maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records under Section 209(1)(d) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been maintained.

9. (a) The Company is regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it except delays in few cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty, Excise Duty, Cess and Other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable except in below stated case.

Annexure to the Independent Auditor’s ReportAbridged Financial Statements

51

Name of the Statue Nature of the Due Amount (` Crores)

Period to which the amount relates

The Building and Other Construction Workers Welfare Cess Act, 1996 (Cess Act)

Labour Building and Other Construction Workers Welfare Cess (BOCWWC)

0.21 F.Y 2012- 13

0.01 May’ 2013 – July’2013

(c) According to the information and explanations given to us, there are no material dues of Wealth Tax and Cess which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of Income Tax, Sales Tax and Service Tax, have not been deposited by the Company on account of disputes:

Name of the statute Nature of dues Amount (` in

Crores)


Forum where dispute is pending

Income Tax Act, 1961 Income Tax 3.74 Assessment year 2009-10 Commissioner of Income Tax (Appeals) Hyderabad.

Income Tax Act, 1961 Income Tax 0.11 Assessment year 2010-11 Commissioner of Income Tax (Appeals) Hyderabad.

Income Tax Act, 1961 TDS 0.02 Assessment Year 2012-13 Commissioner of Income Tax (Appeals) Delhi.

Income Tax Act, 1961 Income Tax 1.97 Assessment Year 2002-03 Income Tax Appellate Authority, Hyderabad.

Income Tax Act, 1961 Income Tax 2.06 Assessment Year 2003-04 Income Tax Appellate Authority, Hyderabad.

Income Tax Act, 1961 Income Tax 2.26 Assessment Year 2003-04 High Court, Hyderabad.Andhra Pradesh Tax on Entry of Goods Act, 2001

Entry Tax 0.02 Financial Year 2007-08 Commercial Tax Officer, Begumpet

Andhra Pradesh General Sales Tax Act, 1956

Sales Tax 0.03 Financial Year 2001-02 The Sales Tax Appellate Tribunal, Hyderabad

Andhra Pradesh Value Added Tax Act, 2005

Sales Tax 0.01 Financial Year 2009-10 The Appellate Deputy Commissioner CT, Panjagutta-Hyderabad

Tamil Nadu Value Added Tax, 2006

Sales Tax (including penalty)

0.38 Financial Year 2007-08 The Appellate Deputy Commissioner CT, Chennai

Tamil Nadu Value Added Tax, 2006

Sales Tax 0.89 Financial Year 2010-11 Joint Commissioner (North) Chennai.

Himachal Pradesh Value Added Tax, 2005

Works Contract Tax & Input Tax Credit

3.42 Financial Year 2008-09 Additional Excise and Taxation Commissioner cum Appellate Authority– Shimla.

Bihar Value Added Tax Act, 2005

Sales Tax 1.08 Financial Year 2007-08 Joint Commissioner of Commercial Taxes (Appeals)– Patna.

Maharashtra Value Added Tax Act, 2002/ Central Sales Tax Act, 1956

Sales Tax/ Central Sales Tax

2.34 Financial Year 2009-10 Deputy Commissioner of Sales Tax, Issue Based Audit- Mumbai.

Central Sales Tax Act, 1956 Central Sales Tax 0.20 Financial Year 2011-12 Assistant Commissioner (CT) Chennai.Central Sales Tax Act, 1956 Central Sales Tax 0.01 Financial Year 2012-13 Assistant Commissioner (CT) Chennai.The Finance Act, 1994 Service Tax 0.14 April 2005-March 2008 Customs, Central Excise and Service

Tax Appellate Tribunal, Bangalore.The Finance Act, 1994 Service Tax 0.16 June 2005-August 2008 Customs, Central Excise and Service

Tax Appellate Tribunal BangaloreThe Finance Act, 1994 Service Tax 12.92 June 2007-March 2008 Customs, Central Excise and Service

Tax Appellate Tribunal Hyderabad.The Finance Act, 1994 Service Tax 3.86 June 2007-July 2008 Customs, Central Excise and Service

Tax Appellate Tribunal Bangalore.The Finance Act, 1994 Service Tax 15.47 April 2005-March 2008 Customs, Central Excise and Service

Tax Appellate Tribunal, Bangalore.The Finance Act, 1994 Service Tax 0.38 July 2008 - September

2009Customs, Central Excise and Service Tax Appellate Tribunal Hyderabad.

The Finance Act, 1994 Service Tax 6.58 April 2008-June 2009 Commissioner of Service Tax Delhi.


52

Name of the statute Nature of dues Amount (` in

Crores)


Forum where dispute is pending

The Finance Act, 1994 Service Tax 8.98 July 2009-March 2010 Customs, Central Excise and Service Tax Appellate Tribunal Bangalore.

The Finance Act, 1994 Service Tax 0.11 October 2009- February 2011

Customs, Central Excise and Service Tax Appellate Tribunal Hyderabad.

The Finance Act, 1994 Service Tax 64.42 April 2010- March 2011 Commissioner of Service Tax, Delhi.The Finance Act, 1994 Service Tax 0.48 March 2011-March 2012 Commissioner of Service Tax Delhi.The Finance Act, 1994 Service Tax 0.00** April 2008- March2009 Commissioner of Custom Central

Excise and Service Tax, Hyderabad.

** Amount involved is ` 16,927/-

10. The Company has no accumulated losses as at the end of the financial year and has incurred cash losses during the current financial year covered by our audit but not in the immediately preceding financial year.

11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not paid principal and interest of ` 96.89 Crores and ` 50.99 Crores respectively to banks and financial institutions as at the balance sheet date.

12. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion, the Company is not a chit fund/ nidhi/ mutual benefit fund/ society. Accordingly the provisions of Clause 4 (xiii) of the Order are not applicable to the Company.

14. In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of Clause 4 (xiv) of the Order are not applicable to the Company.

15. According to the information and explanations given to us, the Company has given guarantee for loans taken by others from bank or financial institutions, the terms and conditions whereof in our opinion are not prima facie prejudicial to the interest of the Company.

16. Based on the information and explanations given to us by the management, term loans disbursed, including Priority Loan under CDR scheme have been utilized for the purposes of CDR Scheme cash flows envisaged as approved by lenders under the CDR package.

17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company taking cognizance of the extension of times granted to parties from whom amounts were due in relation to reorganisation mentioned in Note 49 of the financial statements and placing reliance on the reasonable assumptions made by the Company for the classification of long term and short term usages of funds, we are of the opinion that prima facie, no funds raised on short-term basis have been used for long-term investment.

18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act.

19. The Company did not have any outstanding debentures during the year.

20. The Company has not raised any money by public issues and accordingly, provisions of Clause 4(xx) of the Order are not applicable to the Company.

21. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Brahmayya & CoChartered AccountantsFirm’s Registration Number: 000511S

Lokesh VasudevanPlace : Gurgaon PartnerDate : May 23, 2014 Membership Number: 222320


53

Abridged Balance Sheet as at March 31, 2014Abridged Balance Sheet as at March 31, 2014(` Crores)

March 31, 2014 March 31, 2013I EQUITY AND LIABILITIES

1 Shareholders' Funds (a) Paid-up Share Capital (i) Equity 239.24 239.24 (b) Reserves and Surplus (i) Capital Reserves (Including Share Options Outstanding Account and FCMITD) 1,914.08 1,912.44 (ii) Revenue Reserves 1.46 1.46 (iii) Surplus 519.11 1,479.10

2,673.89 3,632.242 Non-current liabilities (a) Long-term Borrowings 4,011.50 1,087.67 (b) Other Long-term Liabilities 4,760.92 5,890.15 (c) Long-term Provisions 41.09 57.55

8,813.51 7,035.373 Current Liabilities (a) Short-term Borrowings 1,646.16 3,060.73 (b) Trade Payables 2,307.94 2,563.12 (c) Other Current Liabilities 3,685.21 3,489.47 (d) Short-term Provisions 54.86 45.49

7,694.17 9,158.81TOTAL 19,181.57 19,826.42

II ASSETS4 Non-current assets (a) Fixed assets (i) Tangible Assets(Original cost less depreciation) 1,028.47 1,112.83 (ii) Intangible Assets (Original cost less amortisation) 4.78 7.46 (iii) Capital Work-In-Progress 3.76 55.41 (b) Non-current Investments 8,295.61 7,297.33 (Book Value of Quoted Investments ` 6.47 Crores {Previous year ` 6.47 Crores}) (Market Value of Quoted Investments ` 6.73 Crores{ Previous year `6.42 Crores}) (c) Deferred Tax Assets (Net) 17.75 17.75 (d) Long-term Loans and Advances 1,585.68 1,208.26 (e) Other Non-Current Assets 543.73 428.97

11,479.78 10,128.015 Current assets (a) Inventories 1,422.44 1,311.40 (b) Trade Receivables 1,700.87 2,386.61 (c) Cash and Cash Equivalents 122.63 54.65 (d) Short-term Loans and Advances 4,374.61 5,922.78 (e) Other Current Assets 81.24 22.97

7,701.79 9,698.41TOTAL 19,181.57 19,826.42

Summary of Significant Accounting Policies 2.1

The accompanying notes and other explanatory information are an integral part of the Abridged Financial Statements.As per our report on Abridged Financial Statements of even date.

For and on behalf of the Board of Directors of Lanco Infratech Limited

For Brahmayya & Co L. Madhusudhan Rao G. Venkatesh BabuFirm Registration No. 000511S Executive Chairman Managing DirectorChartered Accountants DIN - 00074790 DIN - 00075079

per Lokesh Vasudevan T. Adi Babu A. Veerendra KumarPartner Chief Operating Officer Finance Company SecretaryMembership No. 222320

Place: Gurgaon Place: GurgaonDate: May 23, 2014 Date: May 23, 2014Note:- Complete Balance Sheet, Statement of Profit and Loss, other statements and notes thereto prepared as per the requirements of Schedule VI to the Companies Act, 1956 are available at the Company’s website at www.lancogroup.com


54

The accompanying notes and other explanatory information are an integral part of the Abridged Financial Statements.As per our report on Abridged Financial Statements of even date.

For and on behalf of the Board of Directors of Lanco Infratech Limited



Place: Gurgaon Place: GurgaonDate: May 23, 2014 Date: May 23, 2014

Abridged Profit and Loss Account for the year ended on March 31,2014(` Crores)

March 31, 2014 March 31, 2013I. INCOME

Revenue from Operations* 2,236.40 4,741.11Other Income 102.97 81.64Total Income 2,339.37 4,822.75

II. ExpenditureCost of Materials Consumed 1,798.46 2,597.38Purchase of Traded Goods - 289.06Subcontract Cost 363.39 852.03Construction, Transmission and Site Expenses 117.70 157.39Change in Construction Work in Progress (151.47) (342.99)Employee Benefits Expense 185.60 365.66Finance Cost 627.73 600.32Depreciation and Amortisation Expense 117.24 127.49Other Expenses 239.81 166.18Total Expenditure 3,298.46 4,812.52

III. Profit before Tax (I - II) (959.09) 10.23IV. Exceptional items (0.90) -V. Profit before tax (III+IV) (959.99) 10.23VI. Tax Expense

Deffered Tax - (3.11)Total Tax Expense - (3.11)

VII. Profit after Tax for the Period (V-VI) (959.99) 13.34VIII. Earnings Per Equity Share - (Face value of share ` 1 /-) :

Basic (`) (4.08) 0.06Diluted (`) (4.08) 0.06* Details of Revenue from Operations:Particulars March 31, 2014 March 31, 2013

` Crores ` CroresI. Contract Operations 2,096.39 4,287.40II. Sale of Products 78.62 379.60III. Revenue from services provided 54.89 62.41IV. Other Operating Revenue 6.50 11.70

Total 2,236.40 4,741.11Summary of Significant Accounting Policies 2.1


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Abridged Cash Flow Statement for the year ended on March 31, 2014(` Crores)

March 31, 2014 March 31, 2013

1. Cash flows from/(used in) Operating Activities (182.68) 209.76

2. Cash flows from Investing Activities 60.80 (245.00)

3. Cash flows from Financing Activities 198.34 (39.08)

4. Net (decrease)/Increase in Cash and Cash Equivalents 76.46 (74.33)

5. Cash and Cash Equivalents at the beginning of the period 36.84 111.17

6. Cash and Cash Equivalents at the end of the period 113.30 36.84

As per our report on Abridged Financial Statements of even date.For and on behalf of the Board of Directors of Lanco Infratech Limited




Notes to Abridged financial statements for the year ended March 31, 20141. Corporate Information

Lanco Infratech Limited is an integrated infrastructure developing company. The company provides engineering, procurement, construction, commissioning and project management services on a turnkey basis to the power Sector for thermal (coal fired and gas fired) and hydro power plants as well and also construction of highways, power plants, water supply and irrigation projects including dam, tunnels etc. The Company is also into generation of energy from wind and solar power plants.

2. Basis of preparation

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis.

The accounting policies have been consistently applied by the company are consistent with those used in the previous year.

2.1 Summary of significant accounting policies

i. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.

ii. Revenue Recognition

Revenue is recognized based on the nature of activity to the extent it is probable that the economic benefits will flow to the Company and revenue can be reliably measured.

The company collects service tax, sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the company. Hence, they are excluded from revenue.

The following specific recognition criteria must also be met before revenue is recognised.

EPC and Construction Services

For EPC and construction contracts, contract prices are either fixed or subject to price escalation clauses.

Revenues are recognised on a percentage of completion method measured on the basis of stage of completion


56

Dividends

Revenue is recognised when the shareholders’ right to receive payment is established by the Balance sheet date.

iii. Tangible Fixed Assets

Tangible assets are stated at cost, less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of tangible assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Assets under installation or under construction as at the Balance Sheet date are shown as Capital Work in Progress.

The activities necessary to prepare an asset for its intended use or sale extend to more than just physical construction of the asset. It may also include technical (DPR, environmental, planning, Land acquisition and geological study) and administrative work such as obtaining approvals before the commencement of physical construction.

The company adjusts exchange differences arising on translation/settlement of long term foreign currency monetary items pertaining to the acquisition of a depreciable asset to the cost of the asset and depreciates the same over the remaining life of the asset.

iv. Intangible Fixed Assets

Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

v. Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. Net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

which is as per joint surveys and work certified by the customers.

Profit is recognised in proportion to the value of work done (measured by the stage of completion) when the outcome of the contract can be estimated reliably.

The estimates of contract cost and the revenue thereon are reviewed periodically by management and the cumulative effect of any changes in estimates in proportion to the cumulative revenue is recognised in the period in which such changes are determined. When the total contract cost is estimated to exceed total revenues from the contract, the loss is recognised immediately.

Amounts due in respect of price escalation claims and/or variation in contract work are recognized as revenue only if the contract allows for such claims or variations and/or there is evidence that the customer has accepted it and are capable of being reliably measured.

Liquidated Damages / Penalty as per the contracts / Additional Contract Claims under the contract entered into with Vendors and Contractors are recognised at the end of the contract or as agreed upon.

Sale of Power

Revenue from sale of energy is recognized on the accrual basis in accordance with the provisions of Power Purchase Agreement. Claims for delayed payment charges and any other claims, which the company is entitled to under the Power Purchase Agreement, are accounted for in the year of acceptance.

Sale of CoalRevenue from the sale of coal is recognized when the substantial risks and rewards of ownership are transferred to the buyer as per the respective agreements and revenue can be reliably measured.

Carbon CreditsRevenue from sale of Verified Emission Reductions (VERs) and Certified Emission Reductions (CERs) is recognized on sale of eligible credits.

Insurance ClaimsInsurance claims are recognized on actual receipt / acceptance of the claim.

Management ConsultancyIncome from project management / technical consultancy is recognized as per the terms of the agreement on the basis of services rendered.

Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.


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vi. Depreciation / Amortisation:

Tangible Assets:-

Depreciation is provided using the Straight Line Method as per the useful lives of the assets estimated by the management, or at the rates prescribed under schedule XIV of the Companies Act, 1956 whichever is higher. Assets costing ` 5000 or less are fully depreciated in the year of acquisition.

Leasehold land is amortised over the period of the lease.

Leasehold improvements included in “furniture and fixtures” are amortized over the period of lease or estimated useful life whichever is shorter.

Certain project related assets including temporary structures are depreciated over the respective estimated project periods. Depreciation on ‘Wooden Scaffoldings’ is provided at 100%, and ‘Metal Scaffoldings’ is written off over a period of 3 years, which are grouped under plant and machinery.

In respect of additions / deletions to the fixed assets / leasehold improvements, depreciation is charged from the date the asset is ready to use / up to the date of deletion.

Depreciation on adjustments to the historical cost of the assets on account of reinstatement of long term borrowings in foreign currency, if any, is provided prospectively over the residual useful life of the asset.

The company has used the following rates to provide depreciation on its fixed assets.

Rates (SLM)Buildings 3.34%Plant and Equipment 4.75% to 11.31%Furniture and Fixtures 6.33%Vehicles 9.50%Office Equipment 4.75%,16.21%Lease hold land Over the period of leaseLease hold improvements Over the period of lease

or estimated useful life, whichever is shorter

Temporary Structures

- Wooden Scaffoldings

- Metal Scaffoldings

- Other Temporary structures

100%

33.33%

Over the respective estimated project period

Intangible Assets:-

Computer Software is amortized over an estimated useful life of 4 years.

vii. Investments

Investments, that are readily realisable and intended to be held for not more than one year from the date on

which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

viii. Inventories

Construction materials, raw materials, Consumables, Stores and Spares are valued at lower of cost and net realizable value. Cost is determined on weighted average cost method.

Construction Work-in-progress related to project works is valued at lower of cost or net realizable value, where the outcome of the related project is estimated reliably. Cost includes cost of materials, cost of borrowings and other related overheads.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

ix. Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest, exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other costs that an entity incurs in connection with the borrowing of funds.

x. Claims

Claims for duty drawback are accounted for on accrual basis:

i. Where there is reasonable assurance that the enterprise will comply with the conditions attached to them; and

ii. Where such benefits have been earned by the enterprise and it is reasonably certain that the ultimate collection will be made.

xi. Employee Benefits

i. Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contributions are charged to the statement of profit and loss for the year when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.


58

ii. Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

iii. Retention bonus liability is provided for on the basis of an actuarial valuation on projected unit credit method at the end of each financial year.

iv. Compensated absences are provided for on the basis of an actuarial valuation on unit credit method at the end of each financial year.

v. Actuarial gains/losses are immediately taken to statement of profit and loss and are not deferred.

vi. The amount of Non-current and Current portions of gratuity, retention bonus and compensated absences is classified as per the actuarial valuation at the end of each financial year.

xii. Foreign Currency Transactions

Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Differences

Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of the company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

Exchange difference arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to acquisition / construction of a depreciable capital asset, are capitalized and depreciated over the balance life of the asset and in other cases are accumulated in a “Foreign Currency Monetary Item Translation Difference Account” in the company’s financial statements and amortised over the balance period of such long term asset or liability, by recognition as income or expense in each of such period. For this purpose, the

company treats a foreign monetary item as “long term foreign currency monetary item”, if it has a term of 12 months or more at the date of its origination.

Forward Exchange Contracts not intended for trading or speculation purposes

In case of forward exchange contracts or any other financial instruments that is in substance a forward exchange contract to hedge the foreign currency risks the premium or discount arising at the inception of the contract is amortised as expenses or income over the life of the contract. Exchange differences arising on such contracts are recognized in the period in which they arise.

Derivative Instruments

Losses(net of gains) on account of outstanding Forward exchange contracts which are on account of firm commitments and / or in respect of highly probable forecast transaction on balance sheet date are accounted on Mark to Market basis keeping in view of the principle of prudence. The same is as per ICAI announcement on derivatives.

As per the ICAI Announcement, accounting for derivative contracts, other than those covered under (AS) - 11, Accounting for the Effects of Changes in Foreign Exchange Rates are marked to market on a portfolio basis, and the net loss is charged to the income statement. Net gains are ignored.

xiii. Leases

Operating Lease

As Lessee

Assets acquired on leases where a significant portion of the risks and rewards of ownership is retained by the lessor are classified as operating leases. Lease rentals are charged to the Statement of profit and loss on straight line basis over the lease term.

As Lessor

Assets given on leases where a significant portion of the risks and rewards of ownership is retained by the lessor are classified as operating leases. Lease rentals are recognised in the statement of profit and loss on accrual basis.

Finance Lease

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are recognised as finance cost in the statement of


59

profit and loss. Lease management fees, legal charges and other initial direct costs are capitalised.

If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

xiv. Earnings per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue; share split; and reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

xv. Employee Stock Option Scheme

The Company has formulated an Employees Stock Option Scheme to be administered through a Trust. The scheme provides that subject to continued employment with the company, employees of the company and its subsidiaries are granted an option to acquire equity shares of the company that may be exercised within a specified period. The company follows the intrinsic value method for computing the compensation cost for all options granted which will be amortized over the vesting period. ESOP has been accounted as per the SEBI guidelines and guidance note issued by ICAI.

xvi. Taxes on Income

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the applicable tax laws. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax

assets can be realised. In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date the company re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

xvii. Minimum Alternative Tax (MAT)

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT Credit Entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal Income Tax during the specified period.

xviii. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if

a) The company has a present obligation as a result of past event,

b) A probable outflow of resources is expected to settle the obligation; and

c) The amount of the obligation can be reliably estimated

Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. Reimbursement


60

expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.

Contingent liability is disclosed in case of

a) A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;

b) A present obligation arising from past events, when no reliable estimate is possible;

c) A possible obligation arising from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company where the probability of outflow of resources is not remote.

Contingent assets are neither recognized, nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.

Liquidated Damages / Penalty as per the contracts / Additional Contract Claims under the contract entered into with Vendors and Contractors are recognised at the end of the contract or as agreed upon.

xix. Cash and Cash equivalents:

Cash and cash equivalents comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

xx. Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the company does not include depreciation and amortization expense, finance costs and tax expense.

3 Cash and Cash Equivalents(Note No 19 of Financial Statements)

(` Crores)March 31, 2014 March 31, 2013

Cash and cheques on Hand 0.08 0.14Balances with Banks - On Current Accounts 113.22 36.70

113.30 36.84

4 Exceptional Items(Note No 30 of Financial Statements)

During the year an exceptional items of ` (0.90) Crores includes reversal of promoter directors salary and the sacrifice towards reduction in interest for the six months period ended September 30, 2013 as adjusted for the interest payments made during the period to the lenders and expenditure incurred relating to CDR scheme approved by CDR EG on December 20, 2013 by considering cutoff date of April 1, 2013. The future sacrifice envisaged under the scheme is not determinable as the Company’s obligation to compensate such sacrifice to the lenders is contingent upon fulfilling of various future conditions whose outcome is currently uncertain.

5 Earning Per Share (EPS)(Note No 31 of Financial Statements)


Total Operations for the yearNet Profit/(Loss) for calculation of basic EPS (A) (959.99) 13.34Net Profit/(Loss) as above (959.99) 13.34Add : Interest on Loan convertible into equity shares (Net of tax) 245.56 -Net Profit/(Loss) for calculation of diluted EPS (B) (714.43) 13.34Weighted Average Number of Equity Shares for Basic EPS (C) 235.02 234.13Effect of dilution :Stock options under ESOP* - 0.16Convertible loan into equity shares* 378.90 -Weighted Average Number of Equity Shares for Diluted EPS (D) 613.92 234.29Basic EPS on the basis of Total Operations (A)/(C) (4.08) 0.06Diluted EPS on the basis of Total Operations* (B)/(D) (4.08) 0.06

*Diluted EPS when anti dilutive is restricted to basic EPS.


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6 Disclosure pursuant to Accounting Standard 7 (Revised) –“Construction Contracts”(Note No 32 of Financial Statements)


Amount of contract revenue recognised as revenue during the period 2,091.98 4,042.22The aggregate amount of costs incurred and recognised profits (less recognised losses) upto the reporting date

29,394.63 27,231.13

Amount of customer advances outstanding for contracts in progress 6,452.95 7,244.46Retention amount due from customers for contracts in progress 1,479.63 1,434.42Gross amount due from customers for contract works as an asset 1,074.08 922.06Gross amount due to customers for contract works as a liability 638.09 257.68

7 Cost Estimates(Note No 33 of Financial Statements)

Due to delays in execution of contracts the cost associated with price escalations, claims of the service providers, subcontractors and upward revision of estimated cost, comprising of provision for expected losses on some ongoing projects and additional costs in recently completed / discontinued projects has resulted in losses for the year. The Company continues to pursue certain entitlements from the clients for suitable compensation.

8 Employee Benefits(Note No 34 of Financial Statements)

Defined Benefit Plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary for each completed year of service subject to a maximum of ` 0.15 Crores. The plan for the same is unfunded.

(` Crores)Gratuity

March 31, 2014 March 31, 2013 Net Employee benefit expense recognized in the employee costCurrent service cost 1.74 2.27Interest cost on benefit obligation 0.81 0.97Expected return on plan assets - -Net actuarial (gain)/loss recognized in the year (0.91) (1.35)Net benefit expense 1.64 1.89Balance SheetBenefit asset/liabilityPresent value of defined benefit obligation 9.73 9.96Fair value of plan assets - -Plan asset / (liability) (9.73) (9.96)(Assets) / Liability recognized in the balance sheetChange in the present value of the defined benefit obligationOpening defined benefit obligation 9.96 11.95Current service cost 1.74 2.27Interest cost 0.81 0.97Actuarial (gain) / loss on obligation (0.91) (1.35)Benefits paid (2.15) (1.81)Benefit transferred in 0.82 -Benefit transferred out (0.54) (2.07)Closing defined benefit obligation 9.73 9.96AssumptionsDiscount Rate (%) 8.79 8.14Attrition Rate 19.00 19.00Expected rate of salary increase (%) 6.00 6.00Expected Average Remaining Service (years) 4.02 4.06

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


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Amounts of Defined benefit plan for the current and previous four periods are as follows(` Crores)

Present value of Defined benefit

obligation

Surplus / (deficit)

Experience adjustments on plan liabilities

Experience adjustments on

plan assets March 31, 2014 9.73 (9.73) 0.62 - March 31, 2013 9.96 (9.96) 1.35 - March 31, 2012 11.95 (11.95) 1.11 - March 31, 2011 11.94 (11.94) 0.28 - March 31, 2010 7.39 (7.39) 1.44 -

Information is furnished to the extent available out of earlier actuarial certificates.

Defined Contribution Plans

In respect of the defined contribution plan (Provident Fund), an amount of ` 6.02 Crores (Previous year : `10.50 Crores) has been recognized as expenditure in the Statement of Profit and Loss.

In respect of the State Plans (Employee State Insurance), an amount of ` 0.0029 Crores (Previous year : `0.01 Crores) has been recognized as expenditure in the Statement of Profit and Loss.

Other Employee Benefits

During the year the Company has (reversed)/provided retention bonus of ` (10.73) Crores (Previous Year: ` 8.00 Crores). The provision for compensated absences as per actuarial valuation as at March 31, 2014 is ` 23.70 Crores (March 31, 2013 is ` 27.18 Crores).

9 Employee Stock Option Scheme(Note No 35 of Financial Statements)

The Company has till March 31, 2014 allotted 1.11 Crores (March 31, 2013: 1.11 Crores) equity shares of ` 10 each to LCL Foundation (ESOP - Trust) towards the Employee Stock Option Plan 2006 (The plan) which was formulated by the Company. The plan provides for grant of stock options of equity shares of the Company to employees of the Company and its subsidiaries subject to continued employment with the Company or group.

Each option comprises of one equity share which will vest on annual basis at 20% each over five years and shall be capable of being exercised within a period of ten years from the date of first annual vesting.

Each option granted under the above plans entitles the holder to one equity share of the Company at an exercise price, which is approved by the compensation committee.

The plan is in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999.

Consequent to the splitting of Equity Share of ` 10 each into 10 equity shares of ` 1 each in the year 2009-10, the number of shares allotted to the trust and the options granted, forfeited, exercised are disclosed at ` 1 each.

A summary of the status of the Company’s plan is given below:

Particulars March 31, 2014 March 31, 2013 No. Crores Weighted

Average Exercise Price (`)

No. Crores Weighted Average Exercise

Price (`)Outstanding at the beginning of the year 2.38 0.24 3.66 0.24Granted during the year - - - -Forfeited during the year (0.22) - (0.23) -Exercised during the year (1.50) 0.24 (1.06) 0.24Expired during the year - - - -Outstanding at the end of the year 0.65 0.24 2.38 0.24Exercisable at the end of the year 0.37 0.24 1.53 0.24

The weighted average share price for the period over which stock options were exercised was ` 6.74 (March 31, 2013 ` 13.33)


63

The details of exercise price for stock options outstanding at the end of the year are:

Grant No. (Grant Date) March 31, 2014Range of

Exercise Price (`)

Number of Options

outstanding (Crores)

Weighted average

remaining contractual life of options (in

years)

Weighted Average

Exercise Price (`)

Grant 1 (24.06.2006) 0.24 0.01 - 0.24Grant 2 (02.07.2007) 0.24 0.10 - 0.24Grant 3 (26.09.2007) 0.24 0.01 - 0.24Grant 4 (24.04.2008) 0.24 0.04 0.07 0.24Grant 5 (04.07.2008) 0.24 0.09 0.26 0.24Grant 6 (01.11.2008) 0.24 0.01 0.59 0.24Grant 7 (19.02.2009) 0.24 0.01 0.89 0.24Grant 8 (29.07.2009) 0.24 0.11 1.33 0.24Grant 9 (27.01.2010) 0.24 0.03 1.83 0.24Grant 10 (30.04.2010) 0.24 0.02 2.08 0.24Grant 11 (13.08.2010) 0.24 0.21 2.37 0.24Grant 12 (12.11.2010) 0.24 0.01 2.62 0.24

0.65

Grant No. (Grant Date) March 31, 2013Range of Exercise

Price (`)Number

of Options outstanding

(Crores)

Weighted average

remaining contractual life of options (in years)

Weighted Average Exercise

Price (`)

Grant 1 (24.06.2006) 0.24 0.01 - 0.24 Grant 2 (02.07.2007) 0.24 1.06 0.25 0.24 Grant 3 (26.09.2007) 0.24 0.03 0.49 0.24 Grant 4 (24.04.2008) 0.24 0.14 1.07 0.24 Grant 5 (04.07.2008) 0.24 0.28 1.26 0.24 Grant 6 (01.11.2008) 0.24 0.02 1.59 0.24 Grant 7 (19.02.2009) 0.24 0.01 1.89 0.24 Grant 8 (29.07.2009) 0.24 0.24 2.33 0.24 Grant 9 (27.01.2010) 0.24 0.06 2.83 0.24 Grant 10 (30.04.2010) 0.24 0.05 3.08 0.24 Grant 11 (13.08.2010) 0.24 0.44 3.37 0.24 Grant 12 (12.11.2010) 0.24 0.04 3.62 0.24

2.38

The Company has calculated the compensation cost based on the intrinsic value method i.e. the excess of previous closing price of underlying equity shares on the date of the grant of options over the exercise price of the options given to employees under the employee stock option schemes of the Company and is recognised as deferred stock compensation cost and is amortised on a straight line basis over the vesting period of the options. The Company is using Black Sholes Model for calculating fair values of ESOP granted for determining impact of the fair value method of accounting of employee compensation in financial statement, the impact on net income and earnings per share is provided below:

Particulars March 31, 2014 March 31, 2013 Net Income - As reported ` Crores (959.99) 13.34Add: ESOP Cost under Intrinsic Value Method ` Crores 4.50 14.25Less : ESOP Cost under Fair Value Method (Black Sholes) ` Crores 4.41 14.55Net Income – Proforma ` Crores (959.90) 13.04Basic Earnings per Share:As reported (4.08) 0.06Proforma (4.08) 0.06


64

Diluted Earnings per Share:As reported (4.08) 0.06Proforma (4.08) 0.06

The weighted average fair value of stock options granted during the year was N/A (Previous Year N/A) of share of `1 each.

Assumptions : March 31, 2014 March 31, 2013 Weighted average share price (in `) NA NA Exercise Price (in `) NA NA Expected Volatility NA NA Historical Volatility NA NA Life of the options granted (Vesting and exercise period) in years NA NA Expected dividends (in `) NA NA Average risk-free interest rate NA NA Expected dividend rate NA NA

10 Leases(Note No 36 of Financial Statements)

Operating Lease : Company as lessee

The Company has entered into certain cancellable and non-cancellable operating lease agreements mainly for office premises. The lease rentals charged during the year and maximum obligations on long term non-cancellable operating lease payable as per the agreements are as follows :


Lease rentals charged during the year Under Cancellable Leases 15.55 14.39Under Non-Cancellable Leases - 11.55

Future minimum lease payments under Non Cancellable LeasesNot later than one year - 7.95

11 Related Party Transactions(Note No 37 of Financial Statements)

a) Names of Related Parties and description of relationship.

i. Names of related parties over which control existsS.No Holding Company1 Lanco Group Limited (LGL)

S.No Subsidiary Companies1 Amrutha Power Private Limited (APPL) 20 Lanco Budhil Hydro Power Private Limited (LBHPPL)2 Arneb Power Private Limited(ArPPL) 21 Lanco Enterprise Pte. Ltd, China(LEPL)3 Bhanu Solar Projects Private Limited (BSPPL) 22 Lanco Hills Technology Park Private Limited (LHTPPL)4 Bhola Electricity (Pvt) Limited (BEPL) 23 Lanco Holding Netherlands B.V5 Carpenter Mine Management PTY Ltd 24 Lanco Hydro Power Limited (Formerly known as Lanco

Hydro Power Private Limited)(LHPL)6 Coral Orchids Private Limited (COPL) 25 Lanco Infratech (Mauritius) Limited (LIML)7 Cordelia Properties Private Limited 26 Lanco Infratech Nepal Private Limited8 Cressida Properties Private Limited 27 Lanco International Pte Limited(LInPL)9 Deimos Properties Private Limited 28 Lanco IT P.V. Investments B.V. 10 Dione Properties Private Limited 29 Lanco Kanpur Highways Limited (LKHL)11 Diwakar Solar Projects Limited (DSPL) 30 Lanco Kondapalli Power Limited (LKPL)12 Emerald Orchids Private Limited 31 Lanco Mandakini Hydro Energy Private Limited (LMHEPL)13 Green Solar SRL 32 Lanco Power International Pte. Limited(LPIPL)14 Helene Power Private Limited 33 Lanco Power Limited (LPL)15 JH Patel Power Project Private Limited (JhPL) 34 Lanco Rambara Hydro Power Private Limited 16 Jupiter Infratech Private Limited (JIPL) 35 Lanco Resources Australia Pty. Limited (LRAPL)17 Khaya Solar Projects Private Limited(KSPPL) 36 Lanco Resources International Pte Limited (LRIPL)18 Lanco Amarkantak Power Limited (LAPL) 37 Lanco Solar Energy Private Limited (LSEPL)19 Lanco Anpara Power Limited (LAnPL) 38 Lanco Solar Holding Netherlands B.V.


65

39 Lanco Solar Holdings LLC 60 Nix Properties Private Limited.40 Lanco Solar International GMBH 61 Omega Solar Projects Private Limited41 Lanco Solar International Limited (LSIL) 62 Orion Solar Projects Private Limited42 Lanco Solar International Pte Limited(LSIPL) 63 P.T Lanco Indonesia Energy (LInE)43 Lanco Solar International USA Inc. 64 Pasiphae Power Private Limited44 Lanco Solar Power Projects Private Limited

(LSPPPL)65 Pearl Farms Private Limited (PFPL)

45 Lanco Solar Private Limited (LSPL) 66 Portia Properties Private Limited (PPPL)46 Lanco Solar Services Private Limited(LSSPL) 67 Sabitha Solar Projects Private Limited47 Lanco SP P.V. Investments B.V. 68 Sirajganj Electric (Pvt.) Limited(SEPL)48 Lanco Tanjore Power Company Limited (LTPCL) 69 Solarfi SP0649 Lanco Teesta Hydro Power Limited (LTHPL) 70 Solarfi SP0750 Lanco Thermal Power Limited (LTPL) 71 Spire Rotor Private Limited (SRPL)51 Lanco US P.V. Investments B.V. 72 Tasra Mining & Energy Company Private Limited(TMECPL)52 Lanco Virgin Islands I, LLC 73 Telesto Properties Private Limited (TePPL)53 Lanco Wind Power Private Limited (LWPPL) 74 The Griffin Coal Mining Company Pty Ltd(GCMCPL)54 LE New York - LLC 75 Thebe Properties Private Limited (ThPPL)55 Leda Properties Private Limited (LPPL) 76 Udupi Power Corporation Limited (UPCL)56 Mahatamil Mining and Thermal Energy Limited

(MMTEL)77 Uranus Infratech Private Limited (UIPL)

57 Mercury Projects Private Limited (MPPL) 78 Uranus Projects Private Limited (UPPL)58 National Energy Trading and Services Limited

(NETS)79 Western Australia Coal Terminal Pty Ltd

59 Neptune Projects Private Limited (NPPL)

ii. Name of other related parties with whom transactions were carried outS.No Fellow Subsidiary1 Lanco Babandh Power Limited (LBPL)S.No Enterprises where Singnificant Influence Exists1 Ananke Properties Private Limited (AnPPL) 12 Lanco Hoskote Highway Limited(LHHL)2 Avior Power Private Limited (AvPPL) 13 Lanco Vidarbha Thermal Power Limited (LVTPL)3 Basava Power Private Limited (BPPL) 14 Mimas Trading Private Limited (MTPL)4 Bay of Bengal Gateway Terminal Private Limited

(BBGTPL)15 Mirach Power Limited (MiPL)

5 Belinda Properties Private Limited (BePPL) 16 Phoebe Trading Private Limited (PTPL)6 Bianca Properties Private Limited (BiPPL) 17 Pragdisa Power Private Limited (PrPPL)7 Charon Trading Private Limited (CTPL) 18 Regulus Power Private Limited (RPPL)8 Genting Lanco Power (India) Limited 19 Siddheswara Power Private Limited9 Himavat Power Limited (HPL) 20 Tethys Properties Private Limited (TPPL)10 KVK Energy Ventures Private Limited(KEVPL) 21 Vainateya Power Private Limited (VPPL)11 Lanco Devihalli Highways Limited(LDHL) 22 Vasavi Solar Power Private Limited (VSPPL)

S.No Key Management Personnel1 Sri L.Madhusudhan Rao (Chairman) (LMR) 3 Sri G.Venkatesh Babu (Managing Director) (GVB)2 Sri G.Bhaskara Rao (Vice Chairman) (GBR) 4 Mr. S.C. Manocha (Whole Time Director) (SCM)

S.No Relatives of Key Management Personnel1 Sri L.Sridhar (Brother of LMR) (LS)

S.No Enterprises owned or significantly influenced by Key Management Personnel or their relatives1 Chatari Hydro Power Private Limited (CaPTL) 7 Lanco Horizon Properties Private Limited (LHrPPL)2 Cygnus Solar Projects Private Limited (Formerly

Callisto Trading Private Limited.)(Csppl)8 Lanco Kerala Seaports Private Limited (LKSPL)

3 Himachal Hydro Power Private Limited (HHPPL) 9 Lanco Transport Network Company Private Limited (LTNCPL)

4 Lanco Bay Technology Park Private Limited (LBTPL) 10 LCL Foundation (LCL)5 Lanco Enterprise Private Limited(LEnt PL) 11 Nekkar Power Private Limited (NePPL)6 Lanco Foundation (LF) 12 Ravi Hydro Electric Private Limited (RHEPL)

13 Lanco Rani Joint Venture (LR)


66

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31,

201

3 H

oldi

ng C

ompa

ny

Sub

sidi

ary

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pani

es

Fel

low

Sub

sidi

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s E

nter

pris

e w

here

Si

gnifi

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Influ

ence

Ex

ists

Key

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onne

l R

elat

ives

of K

ey

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agem

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onne

l

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rpris

es o

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d or

sign

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fluen

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by k

ey

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agem

ent

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onne

l or t

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rela

tives

Pa

rty

Nam

e A

mou

nt

Part

y N

ame

Am

ount

Pa

rty

Nam

e A

mou

nt

Part

y N

ame

Am

ount

Pa

rty

Nam

eA

mou

nt

Part

y N

ame

Am

ount

Pa

rty

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e A

mou

nt

Rent

Rec

eive

dLT

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0.20

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ract

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vice

s Re

nder

edLA

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3.51

LBPL

349.

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405.

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1.62

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8.42

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5.14

1,21

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349.

8841

3.54

1.62

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ract

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hare

d Se

rvic

es P

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(Ava

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485.

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onat

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d LF

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ager

ial R

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3.99

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3.45

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/ (S

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b)

Sum

mar

y of

tran

sact

ions

with

rela

ted

part

ies

are

as fo

llow

s:


70

(` C

rore

s) N

atur

e of

Tra

nsac

tion

For

the

Year

End

ed M

arch

31,

201

3 H

oldi

ng C

ompa

ny

Sub

sidi

ary

Com

pani

es

Fel

low

Sub

sidi

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s E

nter

pris

e w

here

Si

gnifi

cant

Influ

ence

Ex

ists

Key

Man

agem

ent

Pers

onne

l R

elat

ives

of K

ey

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agem

ent

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onne

l

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rpris

es o

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d or

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ifica

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in

fluen

ced

by k

ey

man

agem

ent

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onne

l or t

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Nam

e A

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nt

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y N

ame

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ount

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rty

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e A

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y N

ame

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ount

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rty

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eA

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y N

ame

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ount

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rty

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e A

mou

nt

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agem

ent C

onsu

ltanc

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e Ch

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k Co

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pera

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aint

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98

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0.00

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(87.

19)

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(13.

20)

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0)U

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4)(2

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00(4

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le) o

f Goo

ds/

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erU

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(5.6

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nd A

dvan

ces

give

n/(t

aken

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ing

the

year

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80

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r Cor

pora

te D

epos

its

give

n/(t

aken

) /(re

fund

ed)

durin

g th

e ye

ar

UPC

L22

0.00

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L28

.48

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PL11

3.40

LSEP

L39

.66

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L28

.67

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19.1

7N

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(59.

86)

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(633

.78)

(272

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8Pu

rcha

se o

f Fix

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sset

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0.68

LBPL

0.00

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18LA

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000.

680.

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18Sa

le o

f Fix

ed A

sset

sLA

nPL

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120.

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28

b)

Sum

mar

y of

tran

sact

ions

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rela

ted

part

ies

are

as fo

llow

s:


71

(` C

rore

s) N

atur

e of

Tra

nsac

tion

For

the

Year

End

ed M

arch

31,

201

3 H

oldi

ng C

ompa

ny

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sidi

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pani

es

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low

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nter

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e w

here

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gnifi

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l

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by k

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onne

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e A

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y N

ame

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ount

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rty

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e A

mou

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y N

ame

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ount

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rty

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eA

mou

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y N

ame

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ount

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rty

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e A

mou

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orat

e G

uara

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n Be

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of

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ted

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ies

UPC

L4,

969.

33LB

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232.

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0.90

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52.8

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licat

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284.

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ter C

orpo

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09LH

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8LH

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325.

90M

PPL

238.

56U

PCL

220.

00O

THER

S25

.17

1,53

0.72

28.4

8Ba

lanc

e Re

ceiv

able

at

the

year

end

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ns a

nd

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nces

LRIP

L59

.83

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L2.

0561

.88

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nce

Rece

ivab

le a

t the

ye

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nd-O

THER

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rade

Re

ceiv

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s an

d O

ther

Re

ceiv

able

s)

LTPL

2,48

6.78

LBPL

196.

25LV

TPL

82.7

9LR

14.0

1LI

nPL

623.

72LH

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6O

THER

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17O

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784.

63O

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234,

895.

1319

6.25

116.

7815

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Bala

nce

Paya

ble

at th

e ye

ar e

nd-In

ter C

orpo

rate

D

epos

its

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L20

0.00

LSEP

L15

4.34

NET

S59

.86

414.

20Ba

lanc

e Pa

yabl

e at

the

year

en

d-O

THER

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rade

Pay

able

s an

d O

ther

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able

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1,50

4.70

LBPL

1,47

4.24

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L93

2.11

GVB

0.00

LEnt

PL2.

42U

PCL

727.

16H

PL73

9.07

LF1.

49LI

nPL

725.

08Pr

PPL

308.

51O

THER

S0.

21O

THER

S1,

874.

28VP

PL29

0.59

PTPL

0.95

4,83

1.22

1,47

4.24

2,27

1.23

0.00

4.12

b)

Sum

mar

y of

tran

sact

ions

with

rela

ted

part

ies

are

as fo

llow

s:


72

12 Segment Reporting(Note No 38 of Financial Statements)

Segment information under Accounting Standard- 17 “ Segment Reporting” has not been presented in these financial statements as the same has been presented in the Consolidated Financial Statements of the Company.

13 Capital and Other Commitments(Note No 39 of Financial Statements)


a) Investment Commitment in Subsidiaries and Associates 4,919.69 3,395.37 b) Company has a commitment to invest in three of its subsidiaries as promoter support.

Since it is need based, amount can't be quantified.

14 Contingent Liabilities - Not probable and therefore not provided for(Note No 40 of Financial Statements)


Corporate guarantees given to Financial Institutions, Banks on behalf of other group companies 13,618.21 15,249.17Income Tax Demands disputed by the Company relating to disallowances made in various assessment proceedings, under appeal

10.15 3.84

Claims against the Company not acknowledged as debt 15.61 11.00Sales Tax/Entry Tax Demands disputed by the Company, under appeal 8.37 0.44Service Tax demands disputed by the Company relating to applicability of service tax to various services, under appeal

116.18 113.02

15 Forward Contracts(Note No 41 of Financial Statements)


Details of Forward Cover for amount outstanding as on Balance sheet dateFor Buy (USD 0.58 Crores) (March 31, 2013 : 1.16 Croers) 34.94 62.89

Details of Unhedged Foreign Currency ExposureMarch 31, 2014

Currency Exchange Rate Amount in Foreign Currency

(Crores)

Amount in INR

(Crores) Trade Receivables USD 60.10 14.59 876.97

AUD 55.71 0.12 6.76Trade Payables USD 60.10 23.02 1,383.61

EURO 82.58 0.07 5.43Advance to Suppliers USD 44.94 13.27 596.15

EURO 68.18 0.00 0.17GBP 86.45 0.00 0.05

Advance from Customers USD 45.15 34.65 1,564.60Loans Receivable USD 60.10 3.59 215.52Foreign Currency Term Loan USD 60.10 9.62 577.97

EURO 82.58 0.17 14.12


73

March 31, 2013Currency Exchange Rate Amount in

Foreign Currency (Crores)

Amount in INR

(Crores) Trade Receivables USD 54.39 14.08 765.53Trade Payables USD 54.39 18.51 1,006.56

EURO 69.54 0.09 6.40Advance to Suppliers USD 44.66 14.01 625.62

EURO 67.36 0.01 0.46GBP 86.45 0.00 0.05

Advance from Customers USD 44.69 32.97 1,473.43Loans Receivable USD 54.39 1.10 59.83Foreign Currency Term Loan USD 54.39 13.95 758.65

EURO 69.54 0.19 13.15

16 Deferral/capitalisation of Exchange Difference(Note No 42 of Financial Statements)

In line with the Notification dated December 29, 2011 issued by the Ministry of Corporate Affairs, The Company has selected the option given in Paragraph 46A of the Accounting Standard – 11, “The Effects of Changes in Foreign Exchange Rates”, the foreign exchange (gain) / loss arising on revaluation of long term foreign currency monetary items in so far as they relate to the acquisition of depreciable capital assets to be depreciated over the balance life of such assets and in other cases the foreign exchange (gain) / loss to be amortised over the balance period of such long term foreign currency monetary items. On availment of option under this notification, foreign exchange difference remains unamortized is ` 75.17 Crores (March 31, 2013 : ` 35.46 Crores).

17 Disclosure of Loans and Advances to Subsidiaries, Associates, Joint Ventures and Others (Pursuant to Clause 32 of the Listing Agreement)(Note No 43 of Financial Statements)

(` Crores)Name of the Company Amount outstanding as at Maximum amount

outstanding during the year March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013

Subsidiaries Lanco Hydro Power Limited # 196.19 - 196.19 -Lanco Amarkantak Power Limited # 78.43 19.17 99.63 500.00Lanco Solar Private Limited 4.50 6.00 6.00 6.00Mercury Projects Private Limited - 238.56 255.24 250.58Lanco Power Limited - 109.90 109.90 119.90Lanco Power Limited # 112.08 611.19 611.19 1,340.19Lanco Hydro Power Limited - - 6.77 -Lanco Thermal Power Limited - - 13.07 -Lanco Kanpur Highways Limited - - 104.49 -Lanco Resources International Pte Limited 206.52 59.83 369.75 60.26Lanco Hills Technology Park Private Limited 421.66 119.90 421.66 119.90Lanco Hills Technology Park Private Limited # 206.00 206.00 206.00 207.50Udupi Power Corporation Limited - - - 20.00Udupi Power Corporation Limited # - 220.00 220.00 308.06Lanco Wind Power Private Limited # 2.75 2.05 2.75 2.05Lanco Budhil Hydro Power Private Limited - - 344.45 -AssociatesLanco Hoskote Highway Limited 164.20 28.48 265.03 28.48Lanco Devihalli Highways Limited 53.97 - 87.80 -

# Lower than bank rate


74

18 Disclosures required under Sec. 22 of MSMED Act 2006 under the Chapter on Delayed Payments to Micro,Small and Medium Enterprises(Note No 44 of Financial Statements)


Principal amount remaining unpaid to any supplier as at the end of the year 2.05 2.33

Interest due on the above amount 0.07 0.16

Amount of interest paid in terms of Section 16 of the MSMED Act, 2006. - -

Amount of payments made to the suppliers beyond the appointed day during the year 0.05 0.12

Amount of interest due and payable for the delay in making the payment but without adding the interest specified under Act

0.00 0.00

Amount of interest accrued and remaining unpaid at the end of the year 0.07 0.16

19 CIF Value of Imports(Note No 45 of Financial Statements)

(` Crores)

March 31, 2014 March 31, 2013

EPC, Construction goods and Traded goods 846.35 1,536.83

Capital Goods - 5.65

846.35 1,542.48

20 Expenditure In Foreign Currency (Accrual Basis)(Note No 46 of Financial Statements)


Technical Consultation Fee 8.41 8.64

Contract Expenditure 52.31 251.32

Travel 6.17 5.54

Interest on Foreign Currency Term Loan 9.56 15.52

Others 13.43 9.62

89.88 290.64

21 Imported and Indigenous Raw Materials, Components and Spare parts consumed(Note No 47 of Financial Statements)

(` Crores)March 31, 2014 March 31, 2014 March 31, 2013 March 31, 2013

% of Total Consumption

` Crores % of Total Consumption

` Crores

Raw MaterialsImported 48% 850.62 57% 1,443.51Indigenous 52% 935.88 43% 1,088.90

100% 1,786.50 100% 2,532.41Components Indigenous 100% 11.96 100% 64.97

100% 11.96 100% 64.97Spare PartsImported - - 3% 0.38Indigenous 100% 6.44 97% 13.49

100% 6.44 100% 13.87


75

22 Earnings In Foreign Exchange (Accrual Basis)(Note No 48 of Financial Statements)


Interest 10.75 3.49

Contract Receipts 85.31 306.6496.06 310.13

23 (Note No 49 of Financial Statements)

(a) On March 30, 2012, the Company has put in place two level power holding company structure wherein Lanco Power Limited (LPL) a wholly owned subsidiary of the Company as the power holding vehicle for the Group. LPL has further two wholly owned subsidiaries namely Lanco Thermal Power Limited(LTPL) and Lanco Hydro Power Limited (LHPL)as thermal power holding company and hydro power holding company respectively.

(b) As approved by the members vide their resolution dated March 19, 2010 the Company has sold its shareholding in some of its Subsidiaries and Associate Companies (hereinafter referred as ‘related entities’) to its wholly owned step down subsidiaries i.e. Lanco Thermal Power Limited, Lanco Hydro Power Limited and to an associate, Regulus Power Private Limited (an erstwhile subsidiary) on March 30, 2012 for total cash consideration amounting to ` 6,815.51 Crores. As of March 31, 2014 ` 2,644.22 Crores (March 31, 2013 ̀ 2,701.35 Crores) representing the balance amount of consideration for sale of shares is receivable from the above entities subject to realisation.

(c) As a result of the above change, one of the associate company namely Lanco Babandh Power Limited, consequent to the sale of its equity shares to an associate i.e. Regulus Power Private Limited, has become an associate of an associate.

(d) The aforesaid transfer of shares in various subsidiaries and associates requires lenders / customer approvals. Pending the receipt of approvals, the Company has recorded the sale of investments in related entities in the financial statements. During the year, the management has obtained approvals from the most of the lenders and the management is confident of receiving the residual approvals and share transfer is in progress. In case such approvals are not received, the loans given by the lenders to the respective related entities may become due if the Company still wants to pursue transfer of shares, or the sold investments will be purchased back by the company. Based on legal advice, the management is of the opinion that they have complied with relevant laws and regulations.


The Company has entered into transactions with related parties, including some of its associates namely Lanco Vidarbha Thermal Power Limited (LVTPL), Himavat Power Limited (HPL), Lanco Hoskote Highway Limited (LHHL), Lanco Devihalli Highways Limited (LDHL), Vainateya Power Private Limited (VPPL) and Lanco Babandh Power Limited (LBPL) (fellow Subsidiary) whose details are shown in summary of the transactions with related parties, under note no. 37. The Company along with Lanco Group Limited (Holding Company) and through various intermediate companies holds the remainder of shares in these associates and LBPL. In case of LVPTL, LBPL and HPL, the Group holds cumulative compulsorily convertible preference shares which when exercised for conversion as per the terms of these shares would result in these companies becoming subsidiaries of the Company or its step down subsidiaries.


The Company has commitments to support its various ongoing projects. These commitments require the Company to garner such additional cash flows to fund the operations as well as investment obligations to ongoing projects. The management is actively considering the aspects like dilution of stake in subsidiary companies, disposal of non-core assets for which necessary steps have already been taken which alongwith CDR scheme approved by CDR EG would bring in additional cash flow into the system to meet the obligations.


One of the Company’s step down subsidiary Lanco Anpara Power Limited (LAnPL) has been incurring losses ever since the commencement of commercial operations and accumulated losses incurred so far eroded the net worth significantly, taking into consideration LAnPL management’s assessment of the situation including efforts towards seeking revision in the tariff etc. pending before the regulators, the management of the Company is of the view that the carrying value of Assets of LAnPL is realizable at the value stated therein.


The Company has not paid principal amount of ` 96.89 Crores (March 31, 2013 : ` 572.42 Crores) and interest amount of ` 50.99 Crores (March 31, 2013 : ` 43.50 Crores) as at March 31, 2014.


76


No Duty Drawback claims recognised during the year (March 31, 2013: ` 0.70 Crores) as deduction from the construction materials consumed.


Previous year figures have been regrouped/reclassified where ever necessary, to conform to those of the current year.


On excersing of the option available under Revised Schedule VI to prepare the financials in Crores rounded off to two decimals, the amounts / numbers below fifty thousands in the financials are appearing as zero.

As per our report on Abridged Financial Statements of even date.For and on behalf of the Board of Directors of Lanco Infratech Limited





77


Consolidated Financial Statements

Independent Auditor’s ReportTo

The Board of Directors of Lanco Infratech Limited

Report on Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Lanco Infratech Limited (“the Company”) and its subsidiaries (collectively referred as “Group”), which comprise the consolidated Balance Sheet as at March 31, 2014, and the consolidated Statement of Profit and Loss and consolidated Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the group in accordance with accounting principles generally accepted in India; this includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.


Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accompanying consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s preparation and presentation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

Basis for Qualified Opinion


a. Note 37 to the consolidated financial statements, which explain the restructuring undertaken by the management during the year ended March 31, 2012. The Company’s investment as of March 30, 2012 in various subsidiaries and associates was transferred to wholly owned step down subsidiaries and to an associate of wholly owned step down subsidiary aggregating to ` 6,815.51 Crores that require lenders and customer approvals. Management has received many such approvals aggregating to 88% in value, of the lenders consenting to the restructuring, the management is confident of receiving balance approvals from lenders and customer in near future and has taken the effect of these transfers while preparing these consolidated financial statements. In case of any of these residual approvals are not granted, the management will have to revisit the structure and the consequential impact would then be recorded in the consolidated financial statements, pending the final outcome of lenders and customer approvals, we are unable to comment on the consequential effects of the foregoing should such approvals not be received on these consolidated financial statements. This had also been qualified in our Audit report for the years ended March 31, 2013 and March 31, 2012.

b. Note 53 to the consolidated financial statements, which explains the management’s assessment with respect to litigation around power purchase agreement of one of the power generating units of Lanco Amarkantak Power Limited (LAPL), a step down subsidiary of the Company and recognition of revenue of ` Nil for the year ended March 31, 2014 (` 195.24 Crores till March 31, 2014) realisability of which is dependent upon settlement of the aforesaid litigation. Due to the uncertainty over the recoverability of these balances, we are unable to comment upon any consequential impact on these consolidated financial statements. This had also been qualified in our Audit report for the years ended March 31, 2013 and March 31, 2012.

c. Note 52 to the consolidated financial statements where Lanco Kondapalli Power Limited (LKPL), a step down subsidiary of the Company has capitalised borrowing costs amounting to ̀ 169.52 Crores for the period July 1, 2013 to March 31, 2014, incurred on a plant which is substantially complete, pending commissioning in respect of which, LKPL has to secure the supply of requisite natural gas and given circumstances, LKPL has approached Ministry of Corporate Affairs (MCA) seeking a relaxation from the applicability of provisions of AS 16 to continue the capitalisation


79

of borrowing costs. However, in our opinion, the capitalisation of such expense is not in accordance with the relevant Accounting Standard. Had the aforesaid expenditure not been capitalised, loss of the Group (Net of Minority Interest) for the year ended March 31, 2014 would have been higher by ` 100.02 Crores.

d. Note 38 to the consolidated financial statements, include financial results of Lanco Resources International Pte Limited (LRIPL) and its subsidiaries and certain subsidiaries of Lanco International Pte Limited (LIPL) whose consolidated accounts reflect total assets of ` 7,406.72 Crores as at March 31, 2014, the total revenue of ` 790.01 Crores and total loss of ` 716.75 Crores for the year then ended March 31, 2014. These financial statements and other financial information have been prepared by the management and which have not been audited and our opinion is based solely on the management accounts. We are unable to comment on adjustments that may have been required to the consolidated financial statements, had such consolidated accounts been audited.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion Paragraph, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2014;

b) in the case of the Consolidated Statement of Profit and Loss, of the loss for the year ended on that date; and

c) in the case of the Consolidated Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter


a. Note 41 to the consolidated financial statements, regarding the adequacy of disclosure concerning the Company’s ability to meet its financial obligations including loans, overdue loans, unpaid interest and ability to fund obligations pertaining to operations including unpaid creditors and investments in ongoing projects for ensuring normal operations. During the year, the Group incurred a Net Loss of ` 2,273.88 Crores and has loans aggregating ` 2,972.69 Crores falling due over next twelve months period which also includes unpaid dues of the Group as at March 31, 2014. These matters require the Company to garner such additional cash flows to fund the operations as well as the investment obligations towards on-going projects comprising various power and other infrastructure projects notwithstanding the current level of low implementation activities. The Company approached Corporate Debt Restructuring (CDR) Cell with a scheme seeking certain reliefs in relation to repayment timelines of loans and accumulated unpaid interest and additional funding for its operations. Further this restructuring envisages certain sacrifices from lenders and commitments from Company in terms of infusion of additional funds through divestment of existing assets. During the year, CDR Empowered Group approved the Debt Restructuring Scheme. The Company is in the process of completing required obligations under the scheme to enable infusion of additional funds from lenders. However, the consolidated financial statements have been prepared under the assumption, considering the management assessment to recover the dues from various State Electricity Boards and management plan to get requisite funding from various other sources including the CDR scheme in respect of which the CDR lenders have started their partial disbursements. These submissions and assertions by the management as evaluated by lenders envisage that the Company has the ability to garner the required cash flows, which have not been independently assessed by us. Relying on the above, no adjustments have been made in these consolidated financial statements

b. Note 52 to the consolidated financial statements, regarding the uncertainty of the availability of natural gas to operate Phase-II and Phase-III power plants of Lanco Kondapalli Power Limited (LKPL), a step down subsidiary of the Company. In view of the said uncertainty, LKPL has approached its lenders of Phase-III for re-scheduling the Commercial Operation Date (COD) and repayment of project loans, which is awaiting sanction. Pending availability of requisite gas required for commencing the operations no impact has been assessed on these consolidated financial results on the eventual availability of gas to operate the Phase-II and Phase-III power plants, which is indeterminable at this point of time.

c. Note 55 to the consolidated financial statements, which explains additional advances of ` 540.67 Crores made by Lanco Amarkantak Power Limited (LAPL), a step down subsidiary of the Company, in accordance with the change in terms of the Engineering, Procurement & Construction (EPC) contract awarded to the Company, which requires approval from the respective lenders. However, this gets eliminated while preparing these consolidated financial statements. The management is confident of obtaining the requisite lenders approval for the changes in the terms of the EPC Contract or adjust the same upon resumption of EPC activities.

d. Note 57 to the consolidated financial statements, in relation to revenue recognition of Udupi Power Corporation Limited (UPCL), a step down subsidiary of the Company on provisional basis pending determination of final tariff by Central Electricity Regulatory Commission (CERC) and consequent non-confirmation of balances representing the trade receivables for which the statutory auditors of UPCL have drawn attention in their audit report as an emphasis of matter


80

e. Note 61 to the consolidated financial statements, in relation to the carrying value of the assets held by Lanco Anpara Power Limited (LAnPL), a step down subsidiary of the Company. Though LAnPL has been incurring losses ever since the commencement of commercial operation and accumulated losses incurred so far eroded the net worth significantly, taking into consideration LAnPL management’s assessment of the situation including efforts towards seeking revision in tariff pending before the regulator, the management of the Company is of the view that the carrying value of the asset of LAnPL is realizable at the value stated therein. Accordingly no adjustments have been made in these consolidated financial statements.

f. Note 66 to the consolidated financial statements, which explains the matter in Lanco Teesta Hydro Power Limited (LTHPL), a step down subsidiary of the Company relating to proceedings pending with Maharashtra Electricity Regulatory Commission (MERC) regarding tariff revision of Long Term Power Purchase Agreement (PPA) with Maharashtra State Electricity Distribution Company Limited (MSEDCL) and the time and consequential cost overrun of the project and the management’s plans to meet the cost overrun of the project. There has been an extension of Commercial Operation Date (COD) due to the circumstances beyond the control of the Company resulting in extended execution of the Hydropower project. In the opinion of the management, the execution of the project with the increased cost and extended timelines for bringing the assets to its intended use is still viable even taking into account the current level of low implementation activities which does not amount to interruption thus continued to capitalise all the costs including interest. Pending resolution of matters concerning the proceedings relating to PPA and achieving the required financial closure for funding the cost overrun, no adjustments have been carried out to the carrying value of asset.

g. Note 40 to the consolidated financial statements, which explains the applicability of notification issued by CERC in relation to rates of depreciation to accounting for regulated and non-regulated operations in respect of which the Company has sought clarifications and guidance from Ministry of Corporate Affairs, Government of India.

h. Note 71 to the consolidated financial statements, which explains land dispute at Lanco Hills Technology Park Private Limited (LHTPPL), a subsidiary of the Company, the ultimate outcome of these matters cannot presently be determined. Management, based upon its assessment and legal advice obtained, is confident of the outcome of the matter in its favour.

i. Note 68 to the consolidated financial statements, which explains the management’s view with respect to the impact of unprecedented flash floods in Uttarakhand that seriously affected Lanco Mandakini Hydro Energy Private Limited (LMHEPL), a step down subsidiary of the Company implementing a Hydel Power Project of 76 MW capacity. The insurance survey has been completed and the claims have been lodged with the insurer. In the assessment of management, the potential damage to the carrying value of asset is unlikely to exceed the expected insurance claim. Relying on the assessment of the management of LMHEPL which have not been independently evaluated by us, no adjustments have been made in these consolidated financial statements.

Our opinion is not qualified in respect of the above matters

Other Matter

To the extent stated in the paragraphs (a) to (c) below, we did not audit the financial statements of certain component entities that comprise the Group and are included in the consolidated financial statements.

a. We did not audit the financial statements of certain subsidiaries, whose audited financial statements reflect total assets of `12,780.21 Crores as at March 31, 2014 and total revenue of `3,980.10 Crores for the year ended March 31, 2014. The audited financial statements and other financial information for these subsidiaries have been audited by other auditors whose reports have been furnished to us, and our opinion on these consolidated financial statements is based solely on the reports of the other auditors.

b. We did not audit the financial statements of certain associates, whose audited financial statements reflect the Group’s share of loss of `18.88 Crores for the year ended March 31, 2014. The audited financial statements and other financial information for these associates have been audited by the other auditors whose reports have been furnished to us, and our opinion on these consolidated financial statements is based solely on the reports of the other auditors.

c. We did not audit the financial statements of certain associates, whose financial statements reflect the Group’s share of loss of ` 1.57 Crores for the year ended March 31, 2014. The financial statements and other financial information of these associates have been prepared by the management and our opinion on these consolidated financial statements is based solely on the management accounts.

Our opinion is not qualified in respect of this matter.

For Brahmayya & Co.Chartered Accountants

Firm registration Number: 000511S

Lokesh VasudevanPlace: Gurgaon PartnerDate: May 23, 2014 Membership Number: 222320


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The accompanying notes and other explanatory information are an integral part of the Financial Statements.As per our report of even date.

For and on behalf of the Board of Directors ofLanco Infratech Limited




Consolidated Balance Sheet as at March 31, 2014(` Crores)

Notes As at March 31, 2014

As at March 31, 2013

I. EQUITY & LIABILITIESShareholders' FundsShare Capital 3 239.24 239.24Reserves and Surplus 4 1,218.30 3,433.22

1,457.54 3,672.46Minority Interest 837.48 934.18Non Current LiabilitiesLong Term Borrowings 5 30,120.19 26,004.34Deferred Tax Liabilities (net) 6.1 460.63 641.07Other Long Term Liabilities 7 3,070.79 3,605.28Long Term Provisions 8 702.61 720.87

34,354.22 30,971.56Current LiabilitiesShort Term Borrowings 9 4,756.66 5,622.51Trade Payables 10 4,111.55 4,514.53Other Current Liabilities 11 5,130.00 4,921.76Short Term Provisions 8 196.72 184.26

14,194.93 15,243.06TOTAL 50,844.17 50,821.26

II. ASSETSNon Current AssetsFixed Assets Tangible Assets 12 21,702.85 22,542.23 Intangible Assets 13 51.58 78.07 Capital Work in Progress 14 13,985.97 12,091.49 Intangible Assets under Development 15 48.91 42.97

35,789.31 34,754.76

Non Current Investments 16 3,005.52 2,896.05Deferred Tax Assets (net) 6.2 41.91 36.67Long Term Loans and Advances 18 573.94 909.11Other Non Current Assets 19 842.35 737.37

40,253.03 39,333.96Current AssetsCurrent Investment 17 0.57 5.55Inventories 20 3,121.34 3,097.58Trade Receivables 19.1 3,959.36 4,657.62Cash and Bank Balances 21 579.34 572.81Short Term Loans and Advances 18 2,586.82 2,960.45Other Current Assets 19.2 343.71 193.29

10,591.14 11,487.30TOTAL 50,844.17 50,821.26

Summary of Significant Accounting Policies 2.1


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Consolidated Statement of Profit and Loss for the year ended March 31, 2014(` Crores)

Notes For the year ended

March 31, 2014

For the year ended

March 31, 2013I. INCOME

Revenue from Operations 22 10,430.03 13,738.80Other Income 23 167.82 148.86Total Revenue (I) 10,597.85 13,887.66

II. EXPENSESCost of Materials Consumed 24 6,335.90 6,469.20Purchase of Traded Goods 25 529.88 2,161.25Subcontract Cost 169.16 560.87Construction, Transmission, Plant/Site and Mining Expenses 26 1,061.47 1,318.64(Increase)/Decrease in Inventories of Finished Goods and Construction/Development Work in Progress

27 (151.11) (454.05)

Employee Benefits Expenses 28 385.33 618.45Other Expenses 29 595.35 559.97Total Expenses (II) 8,925.98 11,234.33

III. Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) (I-II) 1,671.87 2,653.33Finance Cost 30 2,762.12 2,421.44Depreciation and Amortisation Expense 31 1,171.91 1,125.81

IV. Profit/(Loss) before Exceptional, Prior Period Items, Minority Interest, Share of Profit of Associates and Tax

(2,262.16) (893.92)

V. Exceptional Items 36 (179.26) -VI. Profit/(Loss) before Prior Period Items, Minority Interest, Share of Profit of

Associates and Tax (IV+V)(2,441.42) (893.92)

VII. Tax ExpenseCurrent Tax/Minimum Alternative Tax (MAT) Payable 37.64 79.85Less: MAT Credit Entitlement - (73.10)Net Current Tax 37.64 152.95Relating to Previous Years 9.39 (0.01)Deferred Tax (176.47) 26.68Total Tax Expense (VII) (129.44) 179.62

VIII. Profit/(Loss) after Taxation but before Prior Period Items, Minority Interest and Share of Profit of Associates (VI-VII)

(2,311.98) (1,073.54)

IX. Prior Period Items 35 43.50 (12.62)X. Net Profit/(Loss) after Taxation, before Minority Interest and Share of Profit of

Associates (VIII-IX)(2,355.48) (1,060.92)

Add : Share of Profit/(Loss) of Associates (33.89) (2.88)Less: Elimination of Unrealised Profit on Transactions with Associate Companies 0.15 20.72

XI. Net Profit/(Loss) after Taxation and Share of Profit of Associates before Minority Interest

(2,389.52) (1,084.52)

Less: Share of Minority Interest (115.64) (11.22)XII. Net Profit/(Loss) after Taxation, Minority Interest and Share of Profit of Associates

(Balance Carried to Balance Sheet)(2,273.88) (1,073.30)

XIII. Earnings Per Equity Share - (Face value of share ` 1/-) 32Basic (`) (9.68) (4.58)Diluted (`) (9.68) (4.58)Summary of Significant Accounting Policies 2.1


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Consolidated Cash Flow Statement for the year ended March 31, 2014






(` Crores)For the Year

Ended March 31, 2014

For the Year Ended

March 31, 2013A. CASH FLOW FROM/(USED IN) OPERATING ACTIVITIES

Profit/(Loss) Before Exceptional, Prior Period Items, Minority Interest, Share of Profit of Associates and Tax

(2,262.16) (893.92)

Adjustments for:Depreciation and Amortisation 1,171.91 1,125.81(Profit) on Sale of Investments (net) (0.04) (0.05)(Profit)/Loss on Sale of Fixed Assets (net) (15.60) 13.62Unrealised Loss on Foreign Exchange Fluctuations (Net) 303.56 14.66Liabilities and Provisions no longer required written back (0.67) (2.88)Provision for Advances/Claims/Debts 15.23 68.33Employee Stock Option Charge during the year 6.35 19.37Interest Income (143.98) (95.10)Dividend Income (1.35) (2.15)Interest Expenses 2,762.12 2,421.44Cash Generated Before Working Capital Changes 1,835.37 2,669.13Movement In Working Capital(Decrease)/Increase in Trade Payables (694.71) 857.55(Decrease)/Increase in Provisions (100.22) 86.43(Decrease) in Other Liabilities (248.74) (637.68)(Increase)/Decrease in Trade Receivables 668.77 (1,024.73)(Increase)/Decrease in Inventories 108.92 (185.78)(Increase)/Decrease in Loan and Advances (excluding Capital Advances) (71.98) 175.83(Increase)/Decrease in Other Assets (146.70) 52.17Cash Generated From Operations 1,350.71 1,992.92Direct Taxes Paid 9.71 (105.83)Net Cash Flow From Operating Activities 1,360.42 1,887.09

B. CASH FLOW FROM/(USED IN) INVESTING ACTIVITIESPurchase of Fixed Assets (including Capital Advances) (124.87) (1,864.53)Proceeds from Sale of Fixed Assets 65.07 50.23Purchase of Non - Current Investments (158.19) (118.92)Sale/(Purchase) of Current Investments (Net) 4.98 32.06Inter Corporate Deposits Received Back/(Given) 27.11 (129.88)Redemption of Bank Deposits 121.93 42.83Advance for Investment Refunded 594.88 283.34Dividend Income Received 1.35 2.15Interest Income Received 185.17 85.47Net Cash Flow From/(Used) in Investing Activities 717.43 (1,617.25)

C. CASH FLOW FROM/(USED IN) FINANCING ACTIVITIESProceeds from Short - Term Borrowings (Net) 44.78 1,183.75Proceeds from Long Term Loan 3,200.98 3,899.62Repayment of Long Term Loan (1,484.23) (2,607.94)Proceeds/(Repayment) of Minority Interest 18.95 (6.48)Interest Paid (3,703.66) (3,455.98)Net Cash Flow (Used in) Financing Activities (1,923.18) (987.03)Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) 154.67 (717.19)Cash and Cash Equivalents at the beginning of the year 231.90 949.09Cash and Cash Equivalents at the end of the year 386.57 231.90Components of Cash and Cash EquivalentsCash and cheques on Hand 0.45 0.58Balances with Banks - On Current Accounts 383.21 182.58 - On Deposit Accounts 2.91 48.74Cash and cash Equivalent as per Note 21 386.57 231.90

Notes:1 The above cash flow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard-3 on Cash Flow

Statements as notified under Section 211(3C) of the Companies Act, 1956.2 Previous year’s figures have been regrouped and reclassified to confirm to those of the current year.


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1. Corporate Information

Lanco Infratech Limited (‘LITL’ or ‘the Company’) and its subsidiaries (hereinafter collectively referred to as ‘Group’) are engaged in the business of Construction, Engineering, Procurement and Commissioning (EPC), Infrastructure Development, Power Generation, Power Trading, Property Development, Development of Expressways and Exploration, Mining & Marketing of Coal.

EPC and Construction Business

The Company and certain entities of the Group are involved in development of infrastructure facilities including Engineering, Procurement and Commissioning Services for Power Plants, Industrial Structures, Water supply, Mass housing, Institutional Buildings and Expressways.

Power Business

The Company and certain entities of the Group are involved in the generation of power. The entities are separate special purpose vehicles formed, which have entered into Power Purchase Agreements with electricity distribution companies of the respective state governments and power trading entities and other customers. National Energy Trading and Services Limited (NETS), is involved in the power trading activity.

Property Development Business

Lanco Hills Technology Park Private Limited (LHTPPL) is involved in the development of an integrated IT park named Lanco Hills in approximately 100 acres of land at Manikonda, Hyderabad part of an exclusive “Knowledge Corridor” being promoted by the Government of Andhra Pradesh. The project consists of IT office space, residential buildings, luxury premier hotels, retail and commercial complex.

Resources (Coal) Business

Griffin Coal Mining Company Pty Ltd (GCM) and Carpenter Mine Management Pty Ltd (CMM) are incorporated and operating in Australia. These company’s principal activities are the exploration, mining and marketing of coal.

Solar PV Business

One entity in the group is an integrated player across the Solar Photovoltaic (PV) Value Chain Starting from Manufacturing of Polysilicon to Development of Solar Farms.

2. Basis of preparation

The financial statements have been prepared to comply in all material respects with the Accounting Standards notified by Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis.

Notes and other explanatory information to Consolidated Financial Statements for the year ended March 31, 2014

The accounting policies have been consistently applied by the group and are consistent with those used in the previous year.

Principles of Consolidation

The financial statements of the Company and its subsidiaries have been consolidated on a line by line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances, transactions and the unrealized profits/losses on intra-group transactions. Unrealised losses resulting from intragroup transactions are eliminated to the extent cost can be recovered. The consolidated financial statements are drawn up by using uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible in the same manner as the Company’s individual financial statements.

The financial statements of the subsidiaries are consolidated from the date on which effective control is transferred to the company till the date such control exists. The difference between the cost of investments in subsidiaries over the book value of the subsidiaries’ net assets on the date of acquisition is recognized as goodwill or capital reserve in the consolidated financial statements.

Equity method of accounting is followed for investments in Associates in accordance with Accounting Standard (AS) 23 – Accounting for Investments in Associates in Consolidated Financial Statements, wherein goodwill/capital reserve arising at the time of acquisition and share of profit or losses after the date of acquisition are included in carrying amount of investment in associates. Unrealized profits and losses resulting from transactions between the company and Associates are eliminated to the extent of the company’s interest in the associate. Unrealised losses resulting from transactions between the company and Associates are also eliminated unless cost cannot be recovered. Investments in Associates, which are made for temporary purposes, are not considered for consolidation and accounted for as investments.

The financial statements of the group companies and associates used for the purpose of consolidation are drawn up to same reporting date as that of the Company i.e. year ended March 31, 2014.

As per Accounting Standard 21 notified by Companies (Accounting Standards) Rules, 2006 (as amended) Consolidated Financial Statements, only the notes involving items which are material need to be disclosed. Materiality for this purpose is assessed in relation to the information contained in the consolidated financial statements. Further, additional statutory information disclosed in separate financial statements of the subsidiary and/or a parent having no bearing on the true and fair view of the consolidated financial statements need not be disclosed in the consolidated financial statements.


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Entities considered for consolidation

The financial statements of the following subsidiaries (including the step down subsidiaries) and associates have been considered for consolidation:-

Sr. No. Name of company Country of

Incorporation

March 31, 2014 March 31, 2013

Relationship

Percentage of

Ownership Interest

Relationship

Percentage of

Ownership Interest

1 Lanco Power Limited (LPL) India Subsidiary of LITL 100.00% Subsidiary of LITL 100.00%2 Lanco Thermal Power Limited (LTPL) India Subsidiary of LPL 100.00% Subsidiary of LPL 100.00%3 Lanco Kondapalli Power Limited (LKPL) India Subsidiary of LTPL 59.00% Subsidiary of LTPL 59.00%4 Lanco Tanjore Power Company Limited (LTPCL) India Subsidiary of LTPL 58.45% Subsidiary of LTPL 58.45%5 Lanco Amarkantak Power Limited (LAPL) India Subsidiary of LTPL 100.00% Subsidiary of LTPL 100.00%6 Udupi Power Corporation Limited (UPCL) India Subsidiary of LTPL 100.00% Subsidiary of LTPL 100.00%7 Lanco Anpara Power Limited (LAnPL) India Subsidiary of LTPL 100.00% Subsidiary of LTPL 100.00%8 Arneb Power Private Limited (ArPPL) India Subsidiary of LPL 93.75% Subsidiary of LPL 93.75%9 Portia Properties Private Limited (PPPL) India Subsidiary of LTPL 99.99% Subsidiary of LTPL 99.99%10 Lanco Hydro Power Limited (LHPL) India Subsidiary of LPL 100.00% Subsidiary of LPL 100.00%11 Lanco Teesta Hydro Power Limited (LTHPL) (Formerly

Lanco Teesta Hydro Power Private Limited (LTHPPL))India Subsidiary of LHPL 100.00% Subsidiary of LHPL 100.00%

12 Lanco Budhil Hydro Power Private Limited (LBHPPL) India Subsidiary of LHPL 100.00% Subsidiary of LHPL 100.00%13 Lanco Mandakini Hydro Energy Private Limited (LMHEPL) India Subsidiary of LHPL 100.00% Subsidiary of LHPL 100.00%14 Lanco Rambara Hydro Private Limited (LRHPL) India Subsidiary of LHPL 100.00% Subsidiary of LHPL 100.00%15 Diwakar Solar Projects Limited (DSPL) India Subsidiary of LITL 100.00% Subsidiary of LITL 100.00%16 Lanco Solar Energy Private Limited (LSEPL) India Subsidiary of LITL 100.00% Subsidiary of LITL 100.00%17 Lanco Solar Services Private Limited (LSSPL) India Subsidiary of LSEPL 100.00% Subsidiary of LSEPL 100.00%18 Lanco Solar Private Limited (LSPL) India Subsidiary of LSEPL 100.00% Subsidiary of LSEPL 100.00%19 Khaya Solar Projects Private Limited (KSPPL) India Subsidiary of LSEPL 100.00% Subsidiary of LSEPL 100.00%20 Bhanu Solar Projects Private Limited (BSPPL) India Subsidiary of LSEPL 100.00% Subsidiary of LSEPL 100.00%21 Lanco Solar Power Projects Private Limited (LSPPPL) India Subsidiary of LSEPL 100.00% Subsidiary of LSEPL 100.00%22 Orion Solar Projects Private Limited (OSPPL) India Subsidiary of LSPPPL 100.00% Subsidiary of LSPPPL 100.00%23 Pasiphae Power Private Limited (PPPL) India Subsidiary of LSPPPL 100.00% Subsidiary of LSPPPL 100.00%24 Sabitha Solar Projects Private Limited (SSPPL) India Subsidiary of LSPPPL 100.00% Subsidiary of LSPPPL 100.00%25 Helene Power Private Limited (HPPL) India Subsidiary of LSPPPL 100.00% Subsidiary of LSPPPL 100.00%26 Omega Solar Projects Private limited (OSPPL) India Subsidiary of LSEPL 51.00% Subsidiary of LSPPPL 100.00%27 Lanco Wind Power Private Limited (LWPPL) India Subsidiary of LITL 100.00% Subsidiary of LITL 100.00%28 Amrutha Power Private Limited (APPL) India Subsidiary of LWPPL 100.00% Subsidiary of LWPPL 100.00%29 Spire Rotor Private Limited (SRPL) India Subsidiary of LWPPL 100.00% Subsidiary of LWPPL 100.00%30 Emerald Orchids Private Limited (EOPL) India Subsidiary of LWPPL 85.71% Subsidiary of LWPPL 85.71%31 JH Patel Power Project Private Limited (JhPL) India Subsidiary of LWPPL 99.94% Subsidiary of LWPPL 99.94%32 National Energy Trading and Services Limited (NETS) India Subsidiary of LITL 99.83% Subsidiary of LITL 99.83%33 Mahatamil Mining and Thermal Energy Limited (MMTEL) India Subsidiary of LITL 73.90% Subsidiary of LITL 73.90%34 Mercury Projects Private Limited (MPPL) India Subsidiary of LITL 100.00% Subsidiary of LITL 100.00%35 Tasra Mining & Energy Company Private Limited India Subsidiary of LITL 100.00% - -36 Lanco Hills Technology Park Private Limited (LHTPPL) India Subsidiary of LITL 79.14% Subsidiary of LITL 79.14%37 Uranus Projects Private Limited (UPPL) India Subsidiary of LITL 99.97% Subsidiary of LITL 99.97%38 Jupiter Infratech Private Limited (JIPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00%39 Uranus Infratech Private Limited (UIPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00%40 Leda Properties Private Limited (LPPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00%41 Coral Orchids Private Limited (COPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00%42 Thebe Properties Private Limited (ThPPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00%43 Cressida Properties Private Limited (CrPPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00%44 Nix Properties Private Limited (NiPPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00%45 Cordelia Properties Private Limited (CPPL) India Subsidiary of UPPL 99.98% Subsidiary of UPPL 99.98%46 Deimos Properties Private Limited (DePPL) India Subsidiary of UPPL 99.99% Subsidiary of UPPL 99.99%


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Incorporation

March 31, 2014 March 31, 2013

Relationship

Percentage of

Ownership Interest

Relationship

Percentage of

Ownership Interest

47 Dione Properties Private Limited (DPPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00%48 Neptune Projects Private Limited (NPPL) India Subsidiary of UPPL 99.72% Subsidiary of UPPL 99.72%49 Pearl Farms Private Limited (PFPL) India Subsidiary of UPPL 99.99% Subsidiary of UPPL 99.99%50 Telesto Properties Private Limited (TePPL) India Subsidiary of UPPL 99.98% Subsidiary of UPPL 99.98%51 Lanco International Pte Limited (LIPL) Singapore Subsidiary of LITL 100.00% Subsidiary of LITL 100.00%52 Lanco Enterprise Pte Limited (China) China Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00%53 Lanco Infratech Nepal Private Limited (LINPL) Nepal Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00%54 LE New York - LLC (LENY) New York Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00%55 Lanco Power International Pte Limited (LPIPL) Singapore Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00%56 Lanco Solar International Pte Limited (LSIPL) Singapore Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00%57 Lanco Solar Holding Netherland B.V Utrecht (LSHNBV) Netherlands Subsidiary of LSIPL 100.00% Subsidiary of LSIPL 100.00%58 SolarFi SP 07 (SSP 07) France Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00%59 SolarFi SP 06 (SSP 06) France Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00%60 Lexton Trading (Pty.) Limited (LxTPL) South Africa - - Subsidiary of LSHNBV 100.00%61 Approve Choice Investments (Pty.) Limited (ACIL) South Africa - - Subsidiary of LxTPL 55.00%62 Bar Mount Trading (Pty.) Limited (BMTPL) South Africa - - Subsidiary of LxTPL 100.00%63 Barrelake Investments (Pty.) Limited (BIPL) South Africa - - Subsidiary of LxTPL 80.00%64 Belara Trading (Pty.) Limited (BTPL) South Africa - - Subsidiary of LxTPL 80.00%65 Caelamen (Pty.) Limited (CPL) South Africa - - Subsidiary of LxTPL 100.00%66 Dupondius (Pty.) Limited (DPL) South Africa - - Subsidiary of LxTPL 80.00%67 Gamblegreat Trading (Pty.) Limited (GTPL) South Africa - - Subsidiary of LxTPL 55.00%68 Lanco Solar International Limited (LSIL UK) United

KingdomSubsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00%

69 Lanco Solar International GMBH (LSI GMBH) Germany Subsidiary of LSIL UK 100.00% Subsidiary of LSIL UK 100.00%70 Lanco Solar International US Inc. (LSI USA) USA Subsidiary of LSIL UK 100.00% Subsidiary of LSIL UK 100.00%71 Lanco Rocky Face Land Holdings LLC (LRFLH) USA - - Subsidiary of LSI USA 100.00%72 Lanco Tracy City Land Holdings LLC (USA) (LTCLH) USA - - Subsidiary of LSI USA 100.00%73 Lanco IT PV Investments B.V. (LITPV) Netherlands Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00%74 Apricus S.R.L (ASRL) Italy - - Subsidiary of LITPV 100.00%75 Green Solar SRL (GSSRL) Italy Subsidiary of LITPV 100.00% Subsidiary of LITPV 100.00%76 Lanco US PV Investments B.V.(LUSPV) Netherlands Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00%77 Lanco Solar Holdings LLC (USA) (LSH USA) USA Subsidiary of LUSPV 100.00% Subsidiary of LUSPV 100.00%78 Lanco Virgin Islands- 1 LLC (LVI) USA Subsidiary of LSH USA 100.00% Subsidiary of LSH USA 100.00%79 Lanco SP PV 1 Investments B.V.(LSPPV) Netherlands Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00%80 Lanco Resources International Pte Limited (LRIPL) Singapore Subsidiary of LITL 100.00% Subsidiary of LITL 100.00%81 Lanco Holding Netherland B.V (LHNBV) Netherlands Subsidiary of LRIPL 100.00% Subsidiary of LRIPL 100.00%82 P.T Lanco Indonesia Energy (LInE) Indonesia Subsidiary of LHNBV 100.00% Subsidiary of LHNBV 100.00%83 Lanco Resources Australia Pty. Limited (LRAPL) Australia Subsidiary of LRIPL 100.00% Subsidiary of LRIPL 100.00%84 The Griffin Coal Mining Company Pty Limited (GCM) Australia Subsidiary of LRAPL 100.00% Subsidiary of LRAPL 100.00%85 Carpenter Mine Management Pty Limited (CMM) Australia Subsidiary of LRAPL 100.00% Subsidiary of LRAPL 100.00%86 Western Australia Coal Terminal Pty Ltd(WAC) Australia Subsidiary of LRAPL 100.00% Subsidiary of LRAPL 100.00%87 Lanco Infratech (Mauritius) Limited (LIML) Mauritius Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00%88 Bhola Electricity Pvt Ltd Bangladesh Subsidiary of LITL 100.00% Subsidiary of LITL 100.00%89 Sirajganj Electric Pvt Limited Bangladesh Subsidiary of LITL 100.00% - -90 Lanco Kanpur Highways Limited (LKHL) India Subsidiary of LITL 99.99% Subsidiary of LITL 99.99%91 Lanco Vidarbha Thermal Power Limited (LVTPL) India Associate of LTPL 26.68% Associate of LTPL 26.68%92 Genting Lanco Power (India) Private Limited (GLPIPL) India Associate of LITL 26.00% Associate of LITL 26.00%93 Himavat Power Limited (HPL) (Formerly Himavat

Power Private Limited (HPPL))India Associate of LTPL 26.67% Associate of LTPL 26.67%

94 Pragdisa Power Private Limited (PrPPL) India Associate of LITL 26.00% Associate of LITL 26.00%95 Vainateya Power Private Limited (VPPL) India Associate of LITL 26.00% Associate of LITL 26.00%


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Incorporation

March 31, 2014 March 31, 2013

Relationship

Percentage of

Ownership Interest

Relationship

Percentage of

Ownership Interest

96 Avior Power Private Limited (AVPPL) India Associate of LITL 26.00% Associate of LITL 26.00%97 Mirach Power Private Limited (MiPL) India Associate of LITL 26.00% Associate of LITL 26.00%98 Lanco Hoskote Highway Limited (LHHL) India Associate of LITL 26.42% Associate of LITL 26.42%99 Lanco Devihalli Highways Limited (LDHL) India Associate of LITL 26.10% Associate of LITL 26.10%100 Bay of Bengal Gateway Terminal Private Limited (BBGTPL) India Associate of LITL 26.00% Associate of LITL 26.00%101 Charon Trading Private Limited (CTPL) India Associate of LTPL 34.00% Associate of LTPL 34.00%102 Mimas Trading Private Limited (MTPL) India Associate of LTPL 50.00% Associate of LTPL 50.00%103 Ananke Properties Private Limited (AnPPL) India Associate of LITL 26.03% Associate of LITL 26.03%104 Tethys Properties Private Limited (TPPL) India Associate of LITL 26.03% Associate of LITL 26.03%105 Bianca Properties Private Limited (BiPPL) India Associate of LITL 26.03% Associate of LITL 26.03%106 Belinda Properties Private Limited (BePPL) India Associate of LITL 26.03% Associate of LITL 26.03%107 Phoebe Trading Private Limited (PTPL) India Associate of LTPL 34.00% Associate of LTPL 34.00%108 Basava Power Private Limited (BPPL) India Associate of MPPL 26.00% Associate of MPPL 26.00%109 Siddheswara Power Private Limited (SiPPL) India Associate of MPPL 26.00% Associate of MPPL 26.00%110 Regulus Power Private Limited (RPPL) India Associate of LTPL 45.10% Associate of LTPL 45.10%111 DDE Renewable Energy Pvt. Ltd. (DREPL) India Associate of LSEPL 49.00% Associate of LSEPL 49.00%112 Electromech Maritech Pvt. Ltd. (EMPL) India Associate of LSEPL 49.00% Associate of LSEPL 49.00%113 Finehope Allied Engg. Pvt. Ltd. (FAPPL) India Associate of LSEPL 38.00% Associate of LSEPL 38.00%114 KVK Energy Ventures Pvt. Ltd. (KEVPL) India Associate of LSEPL 49.00% Associate of LSEPL 49.00%115 Newton Solar Private Limited (NSPL) India Associate of LSEPL 26.00% Associate of LSEPL 26.00%116 Saidham Overseas Pvt. Ltd (SOPL) India Associate of LSEPL 35.00% Associate of LSEPL 35.00%117 Vasavi Solar Power Pvt Ltd (VSPPL) India Associate of LSEPL 49.00% Associate of LSEPL 49.00%

2.1 Summary of significant accounting policies

i. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in India (Indian GAAP) requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates.

ii. Revenue Recognition

Revenue is recognized based on the nature of activity to the extent it is probable that the economic benefits will flow to the group and revenue can be reliably measured.

The group collects service tax, sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the group. Hence, they are excluded from revenue. The following specific recognition criteria must also be met before revenue is recognized:

EPC and Construction Services

For EPC and construction contracts, contract prices are either fixed or subject to price escalation clauses.

Revenues are recognised on a percentage of completion method measured on the basis of stage of completion which is as per joint surveys and work certified by the customers.

Profit is recognised in proportion to the value of work done (measured by the stage of completion) when the outcome of the contract can be estimated reliably.

The estimates of contract cost and the revenue thereon are reviewed periodically by management and the cumulative effect of any changes in estimates in proportion to the cumulative revenue is recognised in the period in which such changes are determined. When the total contract cost is estimated to exceed total revenues from the contract, the loss is recognised immediately.

Amounts due in respect of price escalation claims and/or variation in contract work are recognized as revenue only if the contract allows for such claims or variations and/or there is evidence that the customer has accepted it and are capable of being reliably measured.

Liquidated Damages/Penalty as per the contracts/Additional Contract Claims under the contract entered into with Vendors and Contractors are recognised at the end of the contract or as agreed upon.


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Sale of Power

Revenue from sale of energy is recognized on the accrual basis in accordance with the provisions of Power Purchase Agreement. Claims for delayed payment charges and any other claims, which the entities in the group are entitled as per the Power Purchase Agreement, are accounted for in the year of acceptance.

Revenue from sale of infirm power is recognized on accrual basis as per the Central Electricity Regulatory Commission (CERC) norms.

In the case of LBHPPL the sale of energy by the plant is accounted net of 12% free power in the shape of royalty given to Government of Himachal Pradesh as per Implementation Agreement dated November 22, 2005.

Sale of Solar Modules

Revenue is recognized based on the sale of Module to the extent it is probable that the economic benefits will flow to the Group and revenue can be reliably measured.

Carbon Credits

Revenue from sale of Verified Emission Reductions (VERs) and Certified Emission Reductions (CERs) is recognized on sale of the eligible credits.

Property Development

Revenue from real estate under development is recognised upon transfer of significant risks and rewards of ownership of such real estate, as per the terms of the contracts entered into with buyers, which generally coincides with the firming of the agreement for sale and when the buyer’s investment is adequate enough to demonstrate a commitment to pay.

In accordance with the Guidance Note on Recognition of Revenue by Real Estate Developers issued by the Institute of Chartered Accountants of India (the “ICAI”) the Revenue from sale of residential and commercial properties is recognized on the “percentage of completion method”. Percentage of completion is determined on the basis of actual project cost (including cost of Land) incurred thereon to total estimated project cost, where the actual cost is 25 percent or more of the total estimated project cost. Where the total cost of a contract, based on technical and other estimates is expected to exceed the corresponding contract value, such expected loss is provided for.

In case it is unreasonable to expect ultimate collection from sale of residential units, the revenue recognition is postponed to the extent of uncertainty involved.

For determining whether it is unreasonable to expect ultimate collection, the entities in the group considers the evidence of the buyer’s commitment to make the complete payment. Where the ability to assess the

ultimate collection with reasonable certainty is lacking at the time of all significant risks and rewards of ownership are transferred to the buyer, revenue recognition is postponed to the extent of uncertainty involved.

Sale of Coal

Revenue from the sale of coal is recognized when the substantial risks and rewards of ownership are transferred to the buyer as per the respective agreements and revenue can be reliably measured.

Insurance Claims

Insurance claims are recognized on acceptance/actual receipt of the claim.

Management Consultancy

Income from project management/technical consultancy is recognized as per the terms of the agreement on the basis of services rendered.

Interest

Revenue is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividends

Revenue is recognised when the shareholders’ right to receive payment is established by the balance sheet date.

iii. Tangible Fixed Assets

Tangible fixed assets are stated at cost, less accumulated depreciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of tangible fixed assets which takes substantial period of time to get ready for its intended use are also included to the extent they relate to the period till such assets are ready to be put to use. Assets under installation or under construction as at the Balance Sheet date are shown as Capital Work in Progress.

The activities necessary to prepare an asset for its intended use or sale extend to more than just physical construction of the asset. It may also include technical (DPR, environmental, planning, Land acquisition and geological study) and administrative work such as obtaining approvals before the commencement of physical construction.

The Ministry of Corporate Affairs, Government of India vide its Notification No. GSR 225(E) dated March 31, 2009 has announced Companies Accounting Standards (Amendment) Rules 2009 prescribing changes to Accounting Standard 11 on ‘The Effects of Changes in Foreign Exchange Rates’ and further amended by notification dated 29 December 2011.


89

Pursuant to the above mentioned notifications, the group & its associates have selected the option given in Paragraph 46A of the Accounting Standard – 11,” The Effects of Changes in Foreign Exchange Rates” with effect from April 1, 2011, the foreign exchange (gain)/loss arising on revaluation on long term foreign currency monetary items in so far as they relate to the acquisition of depreciable capital assets to be depreciated over the balance life of such assets and in other cases the foreign exchange (gain)/loss to be amortised over the balance period of such long term foreign currency monetary items. LKPL, LAPL, LAnPL, UPCL, LSPL, LHTPPL, LTPCL, LRAPL and the company had already exercised the option given in para 46 of the Accounting Standard - 11 in respect of accounting periods commencing on or after 7th December, 2006.

iv. Mining Assets

Deferred overburden

During the commercial production stage of open pit operations, production stripping costs comprises the accumulation of expenses incurred to enable access to the coal seam, and includes direct removal costs (inclusive of an allocation of overhead expenditure) and machinery and plant running costs.

Production stripping costs are capitalised as part of an asset, if it can be demonstrated that it is probable that future economic benefits will be realised, the costs can be reliably measured and the entity can identify the component of the ore body for which access has been approved. The asset is called Capitalised Overburden.

The capitalised overburden asset is amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity. The units of production method shall be applied for amortisation.

Production stripping costs that do not satisfy the asset recognition criteria are expensed.

Exploration and evaluation

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortisation of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to the operational activities in a particular area of interest. Where a decision is made to proceed with development in respect of a particular area of interest, the relevant

exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.

Mine Development

Development expenditure is recognised at cost less accumulated amortisation and any impairment losses. Where commercial production in an area of interest has commenced, the associated costs are amortised over the estimated economic life of the mine on a units of production basis.

Changes in factors such as estimates of proved and probable reserves that affect unit of production calculations are dealt with on a prospective basis.

v. Intangible Fixed Assets

Intangible fixed assets are recognized when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably.

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible fixed asset when the entities in the group can demonstrate:

- The technical feasibility of completing the intangible fixed asset so that it will be available for use or sale;

- Its intention to complete the asset and use or sell it;

- its ability to use or sell the asset;

- how the asset will generate probable future economic benefits;

- the availability of adequate resources to complete the development and to use or sell the asset; and

- The ability to measure reliably the expenditure attributable to the intangible fixed asset during development.

Any expenditure so capitalized is amortised over the period of expected future sales from the related project.

The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, and otherwise when events or changes in circumstances indicate that the carrying value may not be recoverable.

Intangible assets under installation or under construction as at the Balance Sheet date are shown as Intangible assets under development.

vi. Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating units (CGU) net selling price and its value in use. The


90

recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. Net selling price is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

vii. Depreciation/Amortisation:

Tangible Fixed Assets:-

Depreciation is provided using the Straight Line Method as per the useful lives of the assets estimated by the management, or at the rates prescribed under schedule XIV of the Companies Act, 1956 whichever is higher. Assets costing ` 5,000/- or less are fully depreciated in the year of acquisition.

Leasehold land is amortised over the period of the lease.

Leasehold improvements included in “furniture and fixtures”` are amortized over the period of lease or estimated useful life whichever is shorter.

Certain project related assets including temporary structures are depreciated over the respective estimated project periods. Depreciation on ‘Wooden Scaffoldings’ is provided at 100%, and ‘Metal Scaffoldings’ is written off over a period of 3 years, which are grouped under plant and machinery.

In case of GCM, depreciation/amortization of the mining assets is charged in proportion to the depletion of the economically viable mineral reserves i.e. extraction of coal from the mines.

In case of LTPL and LHPL, Pursuant to order Nos. 45/3/2011-CL-III & 45/5/2010-CL-III, from the Ministry of Corporate Affairs, Government of India, LTPL and LHPL are depreciating Hydraulic Works and Plant & Machinery at 2.57% and 2.71% per annum respectively.

In respect of additions/deletions to the fixed assets/leasehold improvements, depreciation is charged from the date the asset is ready to use/up to the date of deletion.

Depreciation on adjustments to the historical cost of the assets on account of reinstatement of long term borrowings in foreign currency, if any, is provided prospectively over the residual useful life of the asset.

Intangible Fixed Assets:-

Computer Software is amortized over an estimated useful life of 4 years. Briquetting Technology Asset is amortized over an estimated useful life of 20 years. Third party contribution for port is amortized over an estimated useful life of 3 - 4 years.

viii. Investments

Investments, those are readily realisable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. However, provision for diminution in value is made to recognise a decline other than temporary in the value of the investments.

ix. Inventories

Construction materials, raw materials, Consumables, Stores and Spares and Finished Goods are valued at lower of cost and net realizable value. Cost is determined on weighted average cost method.

Construction Work-in-progress related to project works is valued at lower of cost or net realizable value, where the outcome of the related project is estimated reliably. Cost includes cost of materials, cost of borrowings and other related overheads.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

In case of LHTPPL, Development Work-in-progress related to project works is valued at cost or estimated net realizable value whichever is lower, till such time the outcome of the related project is ascertained reliably and at contractual rates thereafter. Cost includes cost of land, cost of materials, cost of borrowings to the extent it relates to specific project and other related project overheads.

x. Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest, exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other costs that an entity incurs in connection with the borrowing of funds.

xi. Duty Drawback Claims

Claims for duty drawback are accounted for on accrual basis.

- Where there is reasonable assurance that the


91

enterprise will comply with the conditions attached to them; and

- Where such benefits have been earned by the enterprise and it is reasonably certain that the ultimate collection will be made.

xii. Employee Benefits

Employee benefits are charged to the statement of Profit and Loss for the year and for the projects under construction stage are capitalised as other direct cost in the Capital Work in Progress/Intangible asset under development

i. Retirement benefits in the form of Provident Fund are a defined contribution scheme and the contributions are recognised, when the contributions to the respective funds are due. There are no other obligations other than the contribution payable to the respective funds.

ii. Gratuity liability is defined benefit obligations and is provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

iii. Retention bonus is other defined long term employee benefit obligation and its liability is provided for on the basis of an actuarial valuation at the end of each financial year.

iv. Compensated absences are provided for on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year.

v. Actuarial gains/losses are immediately taken to statement of profit and loss and are not deferred or giving the effect in other direct cost in the Capital Work in Progress/Intangible asset under development.

vi. The amount of Non-current and Current portions of employee benefits is classified as per the actuarial valuation at the end of each financial year.

xiii. Foreign Currency Transactions

Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a

foreign currency are reported using the exchange rates that existed when the values were determined.

Exchange Differences

Exchange differences arising on the settlement of monetary items, or on reporting such monetary items of group at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

Exchange difference arising on reporting of long term foreign currency monetary items at rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to acquisition/construction of a depreciable capital asset, are capitalized and depreciated over the balance life of the asset and in other cases are accumulated in a “Foreign Currency Monetary Item Translation Difference Account” in the group’s financial statements and amortised over the balance period of such long term asset or liability, by recognition as income or expense in each of such period foreign currency monetary items. For this purpose, the group treats a foreign monetary item as “long term foreign currency monetary item”, if it has a term of 12 months or more at the date of its origination.

Forward Exchange Contracts not intended for trading or speculation purposes

Forward exchange contracts or any other financial instruments that is in substance a forward exchange contract to hedge the foreign currency risks the premium or discount arising at the inception of the contract is amortised as expenses or income over the life of the contract. Exchange differences arising on such contracts are recognized in the period in which they arise.

Derivative Instruments

As per the ICAI Announcement, accounting for derivative contracts, other than those covered under (AS) - 11, Accounting for the Effects of Changes in Foreign Exchange Rates are marked to market on a portfolio basis, and the loss is charged to the statement of profit and loss. Gains are ignored.

Translation of Non Integral Foreign Operations

Financial statements of non-integral foreign operations are translated as under:

i) Assets and Liabilities both monetary and non-monetary are translated at the rate prevailing at the end of the year.

ii) Income and expense items are translated at exchange rates at the dates of the transactions

Exchange differences arising on translation of non


92

integral foreign operations are accumulated in the foreign currency translation reserve until the disposal of such operations.

xiv. Leases

Operating Lease

As Lessee

Assets acquired on leases where a significant portion of the risks and rewards of ownership is retained by the lessor are classified as operating leases. Lease rentals are arrived on straight line basis and charged to the Statement of profit and loss on accrual basis.

As Lessor

Assets given on leases where a significant portion of the risks and rewards of ownership is retained by the lessor are classified as operating leases. Lease rentals are recognised in the statement of profit and loss on accrual basis.

Finance Lease

Finance leases, which effectively transfer to the group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are recognised as finance costs in the statement of profit and loss. Lease management fees, legal charges and other initial direct costs are capitalised.

If there is no reasonable certainty that the group will obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.

xv. Earnings per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

The weighted average number of equity shares outstanding during the period is adjusted for events of bonus issue; share split; and reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

xvi. Employee Stock Option Scheme

The group has formulated an Employees Stock Option

Scheme to be administered through a Trust. The scheme provides that subject to continued employment with the company or the group, employees of the company and its subsidiaries are granted an option to acquire equity shares of the company that may be exercised within a specified period. The group follows the intrinsic value method for computing the compensation cost for all options granted which will be amortized over the vesting period.

xvii. Taxes on Income

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the applicable tax laws. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the entities in the group has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date the entities in the group re-assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The entities in the group writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

xviii. Minimum Alternative Tax (MAT)

MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the entities in


93

the group will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT Credit Entitlement. The entities in the group reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that entities in the group will pay normal Income Tax during the specified period.

xix. Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if

a) The entities in group have a present obligation as a result of past event,

b) A probable outflow of resources is expected to settle the obligation; and

c) The amount of the obligation can be reliably estimated

Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. Reimbursement expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain that the reimbursement will be received.

Contingent liability is disclosed in case of

a) A present obligation arising from past events, when it is not probable that an outflow of resources will be required to settle the obligation;

b) A present obligation arising from past events, when no reliable estimate is possible;

c) A possible obligation arising from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company where the probability of outflow of resources is not remote.

Contingent assets are neither recognized, nor disclosed.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.

Liquidated Damages/Penalty as per the contracts/Additional Contract Claims under the contract entered into with Vendors and Contractors are recognised at the end of the contract or as agreed upon.

xx. Warranty provisions

Provisions for warranty-related costs are recognized when the product is sold or service provided. Provision is based on Industry/historical experience. The estimate of such warranty-related costs is revised annually.

xxi. Operations and Maintenance

Certain power related subsidiaries of the group had entered into Long Term Maintenance Agreement (LTMA) for maintenance of the main plant and Long Term Assured Parts Supply Agreement (LTAPSA) for supply of parts for planned and unplanned maintenance over the term of the agreement. Based on the obligation, amounts payable under the agreements are charged to Statement of profit and loss considering the actual Factored Fired Hours of the Gas Turbines during the year on the basis of average factored hour cost including Customs Duty applicable at the current prevailing rate. Periodical minimum payments are accounted as and when due based on contractual obligations.

xxii. Cash and Cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

xxiii. Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the group has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The group measures EBITDA on the basis of profit/(loss) from continuing operations. In its measurement, the company does not include depreciation and amortization expense, finance costs and tax expense.


94

3 Share Capital

(` Crores)As at

March 31, 2014As at

March 31, 2013Authorised 500 (March 31, 2013: 500) Crores Equity Shares of ` 1/- each 500.00 500.00 Issued, Subscribed and Paid Up 240.78 (March 31, 2013: 240.78) Crores Equity Shares of ` 1/- each, Fully Paid Up 240.78 240.78 Less: Amount recoverable from LCL - Foundation (ESOP Trust) 1.54 1.54

239.24 239.24

3.1 Reconciliation of the shares outstanding at the beginning and at the end of the reporting period

As at March 31, 2014 As at March 31, 2013 No. Crores ` Crores No. Crores ` Crores

Equity Shares of ` 1/- each, Fully paid upAt the beginning of the year 240.78 240.78 240.78 240.78 At the end of the year 240.78 240.78 240.78 240.78

3.2 Terms/Rights attached to Equity Shares

The company has only one class of equity shares having a par value of `1/- Per share. Each Holder of equity shares is entitled to one vote per share.

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

3.3 Shares held by holding company

As at March 31, 2014 As at March 31, 2013 No. Crores ` Crores No. Crores ` Crores

Equity Shares of ` 1/- each fully paid up held byLanco Group Limited, the holding company 135.37 135.37 135.37 135.37

3.4 Details of Shareholder holding more than 5% shares of the company

As at March 31, 2014 As at March 31, 2013 No. Crores % Holding in

the Class No. Crores % Holding in the

Class Equity Shares of ` 1/- each held byLanco Group Limited, the holding company 135.37 56.22 135.37 56.22

The above information represents ownership of shares as per register of share holders/members.

3.5 Details of Shares Reserved for issue under Options

For details of shares reserved for issue under Employee Stock Options (ESOP) plan of the company, Refer Note 43.

During the year the Company’s proposal to restructure the debt has been approved by the Corporate Debt Restructuring Empowered Group (CDR EG) vide letter of approval dated December 20, 2013. The company executed Master Restructuring Agreement (MRA) on December 27, 2013. As a result of this the lenders of CDR have a right to convert restructured debt into equity shares at the sole discretion and on demand as per the agreed terms in the MRA.

In relation to the loans restructured by the CDR lendors a total amount to ` 2,224.89 Crores would qualify for the conversion of 354.50 Crores shares at the sole discretion of the CDR lendors.

In relation to the promoters contribution a total amount to ` 152.00 Crores would qualify for the conversion of 24.40 Crores shares at the sole discretion of the promoters.


95

4 Reserves and Surplus #

(` Crores)As at

March 31, 2014As at

March 31, 2013Capital Reserve *As at the commencement of the year 754.48 806.44 Add/(less): Additions/Utilisations during the year (23.22) (51.96)

731.26 754.48 Capital Redemption ReserveAs at the commencement of the year 16.77 16.77 Add: Additions during the year - -

16.77 16.77 Securities Premium AccountAs at the commencement of the year 1,852.72 1,821.15 Add : Premium on account of ESOPs exercised 42.79 31.57

1,895.51 1,852.72 Share Option Outstanding AccountEmployee Stock Options (ESOP) Outstanding (net of ESOP Suspense) at the commencement of the year

55.43 63.88

Add: ESOP Costs recognised during the year 6.70 23.12 Less: Transfer to Security Premium on account of ESOPs exercised 42.79 31.57

19.34 55.43 General ReserveAs at the commencement of the year 117.10 117.14 Less: Amount transferred to capital reserve during the year - 0.04

117.10 117.10 Foreign Currency Translation ReserveAs at the commencement of the year 254.49 186.19 Add: Addition During the year 75.48 68.30

329.97 254.49 Surplus in the Statement of Profit and LossAs at the commencement of the year 382.23 1,455.54 Add/Less:- Profit/(Loss) for the year (2,273.88) (1,073.30)Less : Appropriations Transfer to General Reserves - (0.00) Preference Dividend and Dividend Distribution Tax - 0.02 Total Appropriations - 0.01 Net Surplus in the Statement of Profit and Loss (1,891.65) 382.23

1,218.30 3,433.22

* On consolidation - after netting off goodwill on consolidation of ` 353.10 (March 2013: 353.09) Crores. Additions/Utilisations includes ` 23.20 (March 2013 : 18.23) Crores on conversion of the opening values with year end forex rates.

# Reserves & Surplus before intra group elimination ` 2,719.46 (March 2013 : ` 4,949.28) Crores. Refer Note 33.


96

5 Long Term Borrowings

(` Crores) Non Current Current Maturities





Rupee Term Loans Secured From Banks 13,631.49 10,443.09 962.80 795.80 From Financial Institutions 8,714.60 8,628.63 661.37 493.08

Unsecured From Banks - 422.24 - 254.59 From Financial Institutions 318.87 - - 300.00

Foreign Currency Term Loans Secured From Banks 6,463.49 5,627.20 133.42 375.01 From Financial Institutions 5.80 15.75 11.60 10.50

Deferred Payment Liabilities - Secured # 832.20 850.60 - -

Finance Lease Obligations - Secured 1.74 1.44 32.77 77.60

Hypothecation Loans - Secured From Banks - - 3.82 10.85 From Others - 15.39 22.71 24.55

Loans and Advances from Related Parties (Note 46) Unsecured - Other Loans and Advances 152.00 - - -

30,120.19 26,004.34 1,828.49 2,341.98 Amount disclosed under the head "Other Current Liabilities" (Note 11)

(1,828.49) (2,341.98)

Net Amount 30,120.19 26,004.34 - -

# Represents future consideration payable in respect of acquisition of step down subsidiaries GCM & CMM.

The Board of Directors of the company in its meeting held on July 27, 2013 had accorded its approval for restructure of the debts of the Company under Corporate Debt Restructuring (CDR) Mechanism of the Reserve Bank of India. The proposal is only for the company and not for any of its subsidiaries and associates. CDR Empowered Group (CDR EG) in its meeting held on December 11, 2013 has approved the CDR scheme submitted by the Company and issued letter of approval on December 20, 2013. As on March 31, 2014 CDR related documents have been executed and creation of security has been completed partly and the balance is in the process. On restructuring by CDR the following Loans have been recorded in the books under Long Term Borrowings as on March 31, 2014.

i. ` 967.90 Crores of Cash Credit has been carved out as Working Capital Term Loan - I (WCTL- I).

ii. ` 553.46 Crores amount of LC/BC/BG devolved from cutoff date till December 31, 2013 has been carved out as Working Capital Term Loan - II (WCTL- II).

iii. ` 293.51 Crores of Funded Interest on Term Loans, WCTL- I and WCTL- II can be funded for a period of 2 years from cutoff date i.e. April 1, 2013 to March 31, 2015 and on regular Cash Credit limit for an initial period of 6 months from cutoff date i.e. April 1, 2013 to September 30, 2013 is converted into Funded Interest Term Loan (FITL). Interest on FITL to be paid on monthly basis from April 30, 2013.

iv. ` 273.03 Crores loan has been availed out of ` 2,500.00 Crores Priority Loan sanctioned with a moratorium period of 2 years.

v. ` 299.87 Crores amount of LC/BC/BG devolved from cutoff date till December 31, 2013 has been converted to Foreign Currency Non - Resident (Bank) Loan (FCNR(B)).


97

A. Rupee Term Loan from Banks & Financial Institutions #

(` Crores)

S. No. Subsidiary/Company Name

Amount of Loan

From Banks* From Financial Institutions*

1 Lanco Infratech Limited (LITL) - the Company 2,852.46(103.51)

64.29(75.00)

Security & Terms and Conditions

a) from banks

1. Term Loan of ` 666.68 Crores (March 31, 2013 : ` 676.83 Crores, out of which ` 254.59 Crores is Current), WCTL- I of ` 967.90 Crores (March 31, 2013 : Nil) , WCTL- II of ` 553.46 Crores (March 31,2013 : Nil), FITL of ` 293.51 Crores (March 31, 2013 : Nil) classified as long term borrowings as per the CDR package approved by CDR EG and Master Restructuring Agreement (MRA) dated December 27, 2013. These loans are having charge on the TRA of the Company and first pari passu charge on fixed assets and current assets (present and future) of the Company except assets with exclusive charge. Further, this loan is secured by pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fixed asset of 13 SPVs/Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. These loans are having moratorium period of 2 years from the cutoff date of April 1, 2013 and are repayable in 30 quarterly installments staring from June 30, 2015. Further Land admeasuring 924 acres (approx.) held by one of the step down subsidiary is offered as collateral security for ̀ 400.00 Crores of the Term Loan and/or shares of subsidiary held by another subsidiary are offered as collateral security for ` 216.68 Crores of Term Loan.

2. Priority Loan of ` 273.03 Crores (March 31, 2013 : Nil) classified as long term borrowings as per the CDR package approved by CDR EG and MRA dated December 27, 2013. These loans are having priority charge on the Trust and Retention Account (TRA) of the company and first pari passu charge on fixed assets and current assets (present and future) of the Company except assets with exclusive charge. Further, this loan is secured by pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fixed asset of 13 SPVs/Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. These loans are having moratorium period of 2 years from the cutoff date of April 1, 2013 and are repayable in 18 quarterly installments staring from June 30, 2015.

3. ` Nil (March 31, 2013: `13.15 Crores, out of which ` 3.30 Crores is Current) was secured by way of mortgage on the immovable assets pertaining to the wind turbine generator project and hypothecation of movable assets both present and future of the project on first charge basis.

4. ` 46.62 Crores, Term Loan availed from Non-CDR lender, out of which ` 4.89 Crores is Current (March 31, 2013: `18.98 Crores, out of which ̀ 4.89 Crores is Current) is secured by way of mortgage on immovable assets pertaining to solar projects and hypothecation of movable assets both present and future of the project on first charge basis, which is being repaid in 48 quarterly installments ending on September 30, 2023.

5. ` 51.26 Crores, Term Loan availed from Non-CDR lender, out of which ` 6.41 Crores is Current (March 31, 2013: ` 71.38 Crores, out of which ̀ 16.05 Crores is current) are secured by way of mortgage on the immovable assets pertaining to the solar power projects and hypothecation of movable assets of those projects on first charge basis. Out of which ` 48.71 Crores is currently being repaid in 55 structured quarterly installments ending on March 20, 2025 and ` 2.54 Crores is being repaid in 57 structured quarterly installments ending on December 31, 2025.

b) from financial institutions

1. ` 64.29 Crores, all Non-Current (March 31, 2013: `75.00 Crores, out of which ` 32.14 Crores is Current) is having charge on the TRA of the Company and first pari passu charge on fixed assets and current assets (present and future) of the Company except assets with exclusive charge. Further, this loan is secured by pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fixed asset of 13 SPVs/Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. This loan is having moratorium period of 2 years from the cutoff date i.e. April 1, 2013 and is repayable in 30 structured quarterly installments staring from June 30, 2015.

The Company has not paid Principal amount of `10.32 Crores and Interest amount of ` 29.65 Crores as at March 31, 2014.


98

(` Crores)


Amount of Loan


2 Lanco Amarkantak Power Limited (LAPL) 2,629.77(2,553.30)

3,350.59(3,122.14)


Indian Rupee Term Loans from Banks and Financial Institutions represent the loans taken for all units which are secured by way of first charge ranking pari-passu on all immovable properties, both present and future and by way of hypothecation of all movable properties and assets, present and future and also by pledge of equity shares held by promoters. The equity shares to the extent of 77% in case of Unit I & II and 51% in case of Unit III & IV of the Promoter Company have been pledged for loans borrowed. Further certain loans are also covered by personal guarantee of certain directors and promoters of LAPL. The term loans are repayable over 12 years in quarterly installments.

Pursuant to Common Loan Agreement(s) dated August 4, 2005, June 19, 2006, March 21, 2012 and May 23, 2012 between LAPL and its Senior Debt "B " Lenders, the Lenders shall at any time after the Commercial Operation Date have the right to convert their respective portion of outstanding Senior Rupee Debt B Facility into fully paid up equity share value of `10 each. The outstanding amount of Senior Rupee Debt B facility as on March 31, 2014 is ` 195.24 Crores.

IIDFC’s term loan to the extent of ` 285 Crores is secured by way of charge on all movable and immovable properties of LAPL ranking paripassu with all other term lenders. The balance amount of ` 565 Crores is secured by second charge on the movable properties of Unit I & II of LAPL and pledge of 20% paid up shares of the LAPL held by Promoters.

The loan is repayable in 12 years in quarterly installments from 6 months post the Scheduled Commercial Operation Date (SCOD) or actual COD which-ever is earlier. The loan is secured by first pari-pasu charge on the immovable properties both present and future and by way of hypothecation of all movable properties and assets, present and future and also by pledge of equity shares held by promoters. The equity shares to the extent of 77% in case of Unit I & II and 51% in case of Unit III & IV of LAPL have been pledged for loans borrowed. Further certain loans are also covered by personal guarantee of certain directors and promoters of LAPL. The term loans are repayable over 12 years in quarterly installments. Pending approval of request made for extension of COD of Unit 3&4 from Lenders, LAPL classified the current maturities of Term Loans as non current Liabilities.

The LAPL has not paid the Principal amount of ` 95.55 Crores and Interest of ` 329.35 Crores as at March 31, 2014.

3 Lanco Kondapalli Power Limited (LKPL) 1695.74(1,654.06)

908.48(818.16)


Indian Rupee Term Loans from Banks and Financial institutions for phase II & III, are repayable in 48 equal quarterly instalments commencing after 6 months from project completion date. LKPL is in the process of rescheduling term loan pertaining to Life Insurance Corporation of India (LIC), pending the same the principal repayment for the next 12 months has been classified as Current maturities with regard to LIC Phase - III Term Loan.

Term loans availed from Banks and Financial Institutions for phases II and Phase III are secured by a pari passu first charge on all immovable properties of LKPL both present and future, all the tangible moveable properties, including movable plant and machinery, machinery spares, equipments, tools and accessories both present and future relating to Phase - I, Phase - II and Phase - III projects, assignment by way of pari passu first charge on all the rights, title and interests to all the receivables, commissions, revenues of whatsoever nature and whatever arising, intangibles, goodwill, uncalled capital, the accounts and book debts, both present and future, the rights, title and interest under the Project Documents duly acknowledged and consented to by the relevant counter parties to such Project Documents all as amended, varied or supplemented from time to time, all the rights, title, interest, benefits, claims and demands whatsoever in the Government approvals and clearances, all the rights, title interest, benefits, claims and demands of the borrower in any letter of credit, guarantee, performance bonds indemnities and securities that may be furnished by the various counter parties under such Project documents, all insurance contracts and insurance proceeds, the rights, title and interest on the Letter of Credit, if any/Escrow account, Retention Accounts including Debt Service accounts (2 quarters), other reserves and any other bank accounts of the Borrower wherever maintained subject to working capital loan, if any, floating charge on all other assets, present and future, of the Borrower including but not limited to goodwill and general undertaking of the Borrower in favour of the Lenders; Pledge of the shares held by Sponsors and Shareholder(s) representing 51% of the issued and paid up share capital of the Borrower. All the aforesaid mortgages, charges, assignments and pledges shall in all respects of Phase II and Phase III lenders along with Working Capital lenders.

The LKPL has not paid principal amount of ` 43.16 Crores and interest amount of `17.39 Crores as at March 31, 2014.


99

(` Crores)


Amount of Loan


4 Lanco Tanjore Power Company Limited (LTPCL) 29.22(48.87)

-


Indian Rupee Loan from Banks is repayable in 40 quarterly instalments of ` 49 Crores each along with interest, from the date of loan, viz July 2005. The loan is secured by way of First Charge on pari passu basis on all the immovable properties of the company, both present and future situated at Karuppur village, near Kuttalam in Thiruvidaimaruthur Taluk, Tanjore district, Tamil Nadu and by way of hypothecation of all the movable properties of the LTPCL including its movable plant and machinery ,spares, tools, accessories and other movables, both present and future including book debts and future secured by personal guarantees of certain Promoters of the LTPCL.

5 Lanco Anpara Power Limited (LAnPL) 1,538.20(1,544.25)

2,279.57(2,302.98)


The repayment of Indian Rupee term loan has been restructured by the consortium of lenders from 64 (Sixty four) equal quarterly instalments to 60 (Sixty) quarterly structured unequal instalments along with interest from June 30, 2012. The same has been done to match the cash flows according to LAnPL. The above loan is secured as follows :1. A first mortgage/hypothecation and charge on all the immovable and movable properties (including all receivables, tangible and

intangible properties) of the project both present and future.2. A first charge/assignment/ security interest on rights, titles and interests of LAnPL in respect of all assets of the project.3. A first charge/assignment/security interest on rights, titles and interests of LAnPL in all project documents/contracts/ licenses

including insurance contracts pertaining to the project.4. A first charge/assignment/security interest of contractor guarantee, performance bonds and any letter of credit that may be

provided by any party under the project.5. A first charge/assignment/security interest on the irrevocable, no lien Trust and Retention Accounts (TRA) into which all cash

inflows from the project.6. Pledge of 61% of the fully paid up equity share capital of the project as collateral security.7. LAnPL has not paid principal amount of `12.68 Crores and interest amount of `129.13 Crores as at March 31, 2014.

6 Udupi Power Corporation Limited (UPCL) 2,316.22(2,489.92)

1,841.13(1,969.40)


In case of UPCL, Pursuant to Common Loan Agreement dated October 17, 2006 in respect of Senior Rupee Debt B between UPCL and its Lenders, each of the Senior rupee Debt B Lenders shall at any time after the COD, have the right to convert at their sole option the whole of the outstanding amount or any part of their respective portion of the Senior Rupee Debt B Facility into fully paid-up equity shares of the Borrower at par. The Sr. Rupee Debt A & Sr. Rupee Debt B loans from the Financial Institutions and Banks are secured by first/second ranking pari-passu Security interest created by UPCL as below: (i) mortgage and charge on the UPCL immovable properties present and future; (ii) hypothecation of UPCL movable properties and assets present and future including movable plant and machinery, machinery spares, tools and accessories, furniture, fixtures and vehicles; (iii) charge on UPCL operating cash flows, book debts and all the receivables and revenues from the project, all current assets, commissions and any other revenues of what so ever nature and wherever arising, present and future; (iv) charge of all intangible assets including but not limited to goodwill and uncalled capital, present and future; (v) assignment of/charge on (a) all right, title, interest, benefits, claims and demands what so ever in the project documents, all as amended, varied or supplemented from time to time; (b) all the rights, title, interest, benefits, claims and demands what so ever in the clearances and uncalled capital; (c) all the right, title interest benefits, claims and demands what so ever of UPCL in any letter of credit, guarantee, performance bond provided by any party to the project documents;(d) all insurance contracts/insurance proceeds; (vi) charge on the letter of credit, escrow accounts, trust accounts and other reserves and any other bank account wherever maintained. The above Loans are also secured by a Corporate Guarantee from the company. The Loans under Sr Debt B are also guaranteed by three of the persons of Promoter Group Company.

The UPCL has not paid Interest amount of `133.99 Crores as at March 31, 2014.

7 Lanco Thermal Power Limited (LTPL) 85.00(9.04)

-


Indian rupee bank term loan is repayable in 60 quarterly instalments beginning from June 30, 2015 and is secured by first charge on all the fixed assets of the LTPL and pledge of 0.73 Crores Equity Shares of LTPL held by Lanco Power Limited (LPL).The LTPL has not paid Interest amount of `2.57 Crores as at March 31, 2014.


100

(` Crores)


Amount of Loan


8 Lanco Hydro Power Limited (LHPL) 38.00(19.29)

-


Indian rupee bank term loan is repayable in 60 quarterly instalments beginning from June 30, 2014and is secured by first charge on all the fixed assets of the LHPL and pledge of 0.71 Crores Equity Shares of LHPL held by LPL.

The LHPL has not paid interest amount of `1.09 Crores as at March 31, 2014.

9 Lanco Mandakini Hydro Energies Private Limited (LMHEPL) 456.18(398.36)

-


Indian Rupee Term Loan from consortium of Lenders (Six Banks) - sanctioned loan of ` 581.48 Crores is repayable in 48 quarterly instalments along with interest, from December 2015 (including moratorium of one year). The loan is secured by Pledge/First pair passu Charge etc. of all movable & immovable assets of LMHEPL. The Loan is secured by pledge of the 76% of paid up Equity Share Capital of LMHEPL, the total shares pledged as on March 31, 2014, equivalent to 68.29%.

The LMHEPL has not paid the Interest of ` 4.31 Crores as at March 31,2014.

10 Lanco Budhil Hydro Power Private Limited (LBHPPL) 282.39(105.22)

102.73(110.22)


Indian Rupee term loan from Banks and financial institutions - Drawn loan of `275.51 Crores is repayable in quarterly instalments of ` 4.80 Crores, from December 01, 2009 for PNB (including moratorium of Six Months) and from March 01, 2010 for other Lenders (including moratorium of Nine Months). Indian rupee term loans from Banks are secured by pledge/ first pair passu charge etc. of all movable and immovable assets of LBHPPL. The loan is secured by pledge of the 30% of Paid up Equity Share Capital of LBHPPL held by the company (under process to be Transferred to LHPL). Additional Loan drawn from ICICI Bank Ltd. ` 185.00 Crores during FY 2013-14 and is repayable in 48 quarterly unstructured instalments from June 2015.

The LBHPPL has not paid principal amount of ` 6.02 Crores and interest amount of `17.55 Crores as at March 31, 2014.

11 Lanco Teesta Hydro Power Limited (LTHPL) 1,091.64(896.09)

829.18(723.81)


Indian Rupee Term Loan from Consortium of Lenders (Six Banks & Three Financial Institutions) - sanctioned loan of ` 2,400 Crores is repayable in 56 quarterly instalments, from August 2013. As per Rupee Facility Agreement, the instalments are due after 15 months of Scheduled Commercial Operation Date (COD), May 2012 i.e. from August 2013, repayable @ 1.50% of the disbursed amount in first eight quarterly instalments, at 1.625% of the disbursed amount in next eight quarterly instalments and the balance at 1.875% of disbursed amount in next forty quarterly instalments. Approval from all the lenders except REC and IIFCL towards the extension of COD, from May 2012 to May 2016 and cost overrun of ` 1,800 Crores, has been received as on March 31, 2014, so their repayment instalments have not been included in Current Maturities. Repayment due to REC and IIFCL, from whom the cost and time overrun approval is pending, has been considered as Current maturities of long term borrowings.

The loan is secured by First Charge on all movable/immovable assets of LTHPL. The loan is secured by pledge of 30% of Paid up Equity Share capital of LTHPL.

The LTHPL has not paid principal amount of `11.17 Crores and interest amount of ` 33.24 Crores as at March 31, 2014.

12 Lanco Hills Technology Park Private Limited (LHTPPL) 764.70(747.55)

-


(a) Indian Rupee Loan from Banks (Phase - I) are repayable in 4 yearly instalments of ` 93.75 Crores each, of which Punjab National Bank is on quarterly instalments of ̀ 3.75 Crores per quarter, from 31 December 2010. The loan is secured as first charge, ranking paripassu, by way of hypothecation of all receivables and movable assets, including plant, machinery equipment, machinery spares, tools, stores, furniture, fixtures, vehicles and other moveable assets, both present and future, and mortgage of 22.45 acres of Phase - I and together with building superstructures, amenities, infrastructure and other immovable assets present and future to be constructed/ developed thereon by LHTPPL. Further part of the loan has been guaranteed by corporate guarantee of the company.


101

(` Crores)


Amount of Loan


(b) Indian Rupee Loan from Banks (Phase II) are repayable in 10 half-yearly instalments of ` 75 Crores each, from June 30, 2015. The loan is Secured as first charge, ranking paripassu, by way of hypothecation of all receivables and movable assets including movable, plant, machinery, spares, tools, stores and accessories, furniture and fixtures, vehicles and building and other immovable assets both present and future of the Phase II of the project in 60.84 acres of land by way of equitable mortgage in Manikonda village with the development rights of the company pertaining to LHTPPL. Further part of the loan is secured by way of a third party guarantee by way of an equitable mortgage of land admeasuring 26.39 acres at Siruseri village, Tamilnadu State as collateral security pertaining to Lanco Horizon Pvt Ltd. Further part of the loan is secured by pledge of LHPL shares held by LPL. Further part of the loan has been guaranteed by corporate guarantee of the company.

The LHTPPL has not paid principal amount of ` 25.20 Crores and Interest amount of ` 62.48 Crores as at March 31, 2014.

13 Diwakar Solar Projects Limited (DSPL) 301.17(200.00)

-


(a) Indian Rupee Loan from bank - 80% of the loan is repayable in 48 quarterly unequal installments and balance 20% shall be paid in single instalment with a moratorium period of 12 months from the date of COD. The loan is secured by a way of pledge of 51% of total equity shares of the DSPL held by the Company, Corporate Guarantee of the company and by way of rank pari passu charge of project on all mortgages, charges, assignments and pledges as per the standard security package and is identified by and between consortium members and Letter of Credit /Escrow accounts, including inter- alia and by way of rank pari passu charge of project on all mortgages, charges, assignments and pledges as per the standard security package and is identified by and between consortium members and LC/Escrow accounts, inter- aliaFirst charge by way of mortgage on immovable properties, present & future, of the DSPL.First charge by way of hypothecation on all movables including movable plant and machinery, machinery spaces, tools and accessories, furniture, fixtures, vehicles, present & future, of the DSPL.First charge on all book debts, operating cash flows, receivables, commissions, revenues of whatsoever nature and wherever arising, of the of the DSPL.A first charge on all intangible assets, if any, of the DSPL including but not limited to good will, uncalled capital, present & future.

(b) The DSPL has not paid interest amount of ` 3.58 Crores as at March 31, 2014.

14 Khaya Solar Projects Private Limited (KSPPL) 50.69(52.82)

-


Indian Rupee Loan from bank is repayable in 56 quarterly structured instalments with a moratorium period of 6 months from the date of Commercial Operation Date (COD). The repayment started from September 30,2012. The loan is secured by way of pledge of shares of the KSPPL held by the LSEPL, Corporate Guarantee of the Company and are secured by way of first charge by way of hypothecation of KSPPL's movable assets, book debts, Intangible Assets, Letter of Credit/Escrow Account.

The KSPPL has not paid principal and interest amount of ` 0.50 Crore and ` 0.48 Crore respectively as at March 31, 2014.

15 Lanco Solar Private Limited (LSPL) 262.91(216.61)

-


(a) Indian Rupee Loan from Banks are repayable in 36 unequal quarterly instalments of 2.5% per Quarter for first 16 Quarters and 3% per Quarter for the Last 20 Quarters along with interest, after the date of expiry of 39 months from July 15, 2010. The loan is secured by way of pledge of shares of the LSPL held by the LSEPL, Corporate Guarantee of the Company and are secured by way of Hypothecation/Pledge/Mortgage/First Charge etc. of immovable properties both present and future, tangible movable properties including movable plant and machinery, machinery spares, tools and accessories, furniture, fixtures, vehicles, equipment, and all other movable fixed assets, both present and future, all the rights, title and interests of the Borrower in and to all the receivables, accounts, other bank accounts, retention accounts, book debts, operating cash flows, commissions, other revenues of whatsoever nature and wherever arising, and all intangible assets including but not limited to goodwill, uncalled capital, both present and future of the company pertaining to poly-silicon and wafer manufacturing plant with capacity of 1800 T and 100 MW respectively at Villages Mehrumkhurd and Chhawardal, Tehsil Rajnandgaon, District Rajnandgaon in the state of Chhattisgarh.

As per the 2nd Amendatory Loan Agreement dated February 06, 2014, the revised Commercial Operation Date is October 12, 2014 and the loan is repayable in 36 structured quarterly instalments commencing 12 months from Commercial Operational Date.

The LSPL has not paid interest of `3.45 Crores as at March 31, 2014.


102

(` Crores)


Amount of Loan


16 Udupi Power Corporation Limited (UPCL) 200.00(200.00)

-


In case of UPCL, a loan of ` 200 Crores has been availed from banks as Mezzanine Debt for which the collateral security is given by LITL by way of corporate guarantee and pledge of 0.13 Crore (` 10 each) shares of the company held by the promoters. None of the assets of UPCL is given as security for the said loan.

Total 14,594.29(11,238.89)

9,375.97(9,121.71)

# In the Company and at each SPV there are many loans and many lenders. The Carrying interest rate is as per the respective loan agreements entered at Company/SPV level which is linked to each of the Lender's Bank Rate +/- Spread as applicable.

* Previous Year figures are mentioned within the brackets.

B. Foreign Currency Loan from Banks and Financial Institutions #(` Crores)

S. No. Subsidiary / Company Name

Amount of Loan


1 Lanco Infratech Limited (LITL) - the Company 525.74(327.91)

-

Security & Terms and Conditions1) Foreign Currency Term Loans (Buyers Credit) from banks out of which ̀ 223.40 Crores is secured by way of mortgage on immovable

assets pertaining to solar projects and hypothecation of movable assets both present and future of the solar project and ` 2.47 Crores is having first pari passu charge on fixed assets and current assets (present and future) of the Company except assets with exclusive charge along with pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fixed asset of 13 SPVs / Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, company and its step down subsidiaries and associates. For the previous year (March 31, 2013 : ` 327.91 Crores) these loans were secured by way of first charge over the asset as additional security and / or secured as part of working capital limits from banks by way of first charge of hypothecation of stock / work in progress and entire current assets of the Company both present and future on pari passu basis or secured by way of mortgage on immovable assets pertaining to solar projects and hypothecation of movable assets both present and future of the project.

2) FCNR Loan from banks of ` 299.87 Crores (March 31, 2013 : Nil) is having first pari passu charge on fixed assets and current assets (present and future) of the Company except assets with exclusive charge. Further, this loan is secured by pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fixed asset of 13 SPVs / Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. These loans are having moratorium period of 2 years from the cutoff date i.e. April 1, 2013 and are repayable in 30 quarterly installments staring from December 31, 2015.

2 Lanco Amarkantak Power Limited (LAPL) 1,347.46(1,225.20)

-

Security & Terms and ConditionsForeign Currency Buyer’s Credit is secured by letter of under taking issued by LC Issuing Banks.


103

(` Crores)


Amount of Loan


3 Lanco Kondapalli Power Limited (LKPL) 202.78(218.68)

-

Security & Terms and ConditionsBuyers credit from Banks for Phase - III are secured by a pari passu first charge on all immovable properties of LKPL both present and future, all the tangible moveable properties, including moveable plant and machinery, machinery spares, equipments, tools and accessories both present and future relating to Phase - I, Phase - II and Phase - III projects, assignment by way of pari passu first charge on all the rights, title and interests to all the receivables, commissions, revenues of whatsoever nature and whatever arising, intangibles, goodwill, uncalled capital, the accounts and book debts, both present and future, the rights, title and interest under the Project Documents duly acknowledged and consented to by the relevant counter parties to such Project Documents all as amended, varied or supplemented from time to time, all the rights, title, interest, benefits, claims and demands whatsoever in the Government approvals and clearances, all the rights, title interest, benefits, claims and demands of the borrower in any letter of credit, guarantee, performance bonds indemnities and securities that may be furnished by the various counter parties under such Project documents, all insurance contracts and insurance proceeds, the rights, title and interest on the Letter of Credit, if any / Escrow account, Retention Accounts including Debt Service accounts (2 quarters), other reserves and any other bank accounts of the Borrower wherever maintained subject to working capital loan, if any, floating charge on all other assets, present and future, of the Borrower including but not limited to goodwill and general undertaking of the Borrower in favour of the Lenders; Pledge of the shares held by Sponsors and Shareholder(s) representing 51% of the issued and paid up share capital of the Borrower. All the aforesaid mortgages, charges, assignments and pledges shall in all respects of Phase - II and Phase - III lenders along with Working Capital lenders.


17.40(26.25)

Security & Terms and ConditionsForeign currency Loan from Bank is repayable in 40 quarterly instalments of approximately ` 0.27 Crores (equivalent to $ 0.05 Crores) each along with interest, from the date of loan, viz July 2005. The loan is secured by way of First Charge on pari passu basis on all the immovable properties of the LTPCL, both present and future situated at Karuppur village, near Kuttalam in Thiruvidaimaruthur Taluk, Tanjore district, Tamil Nadu and by way of hypothecation of all the movable properties of the LTPCL including its movable plant and machinery ,spares, tools, accessories and other movables, both present and future including book debts and future secured by personal guarantees of certain Promoters of LTPCL.Foreign currency Loan from Financial Institution is repayable in 40 quarterly instalments of approximately ` 2.65 Crores (equivalent to $ 0.48 Crores) each along with interest, from the date of loan, viz July 2005. The loan is secured by way of First Charge on pari passu basis on all the immovable properties of LTPCL, both present and future situated at Karuppur village, near Kuttalam in Thiruvidaimaruthur Taluk, Tanjore district, Tamil Nadu and by way of hypothecation of all the movable properties of LTPCL including its movable plant and machinery ,spares, tools, accessories and other movables, both present and future including book debts and future secured by personal guarantees of certain Promoters of LTPCL.

5 Lanco Hills Technology Park Private Limited (LHTPPL) 132.22(373.93)

-

Security & Terms and ConditionsForeign Currency Loan from Banks are repayable in 5 Half- yearly instalments of different amounts of USD 2.20,1.925,1.925, 2.750 and 2.20 crores, from March 29, 2012. The loan is secured by pledge of shares of the company held by M/s. Lanco Group Limited. Further, the balance outstanding as on balance sheet date has been guaranteed by corporate guarantee of LHPL. The LHTPPL has not paid principal amount of ` 132.22 Crores as at March 31, 2014.


-

Security & Terms and ConditionsForeign Currency Loan (Buyers Credit) from Banks availed by the LSPL is Part of total Rupee Term loan Sanctioned by the Banks and the loan is secured by way of pledge of shares of the LSPL held by the LSEPL, Corporate Guarantee of the company and are secured by way of hypothecation / Pledge / Mortgage / First Charge etc. of immovable properties both present and future, tangible moveable properties including moveable plant and machinery, machinery spares, tools and accessories, furniture, fixtures, vehicles, equipment, and all other movable fixed assets, both present and future, all the rights, title and interests of the Borrower in and to all the Receivables, Accounts, Other Bank Accounts, Retention Accounts, book debts, operating cash-flows, commissions, other revenues of whatsoever nature and wherever arising, and (ii) all intangible assets including but not limited to goodwill, uncalled capital, both present and future of the LSPL pertaining to poly-silicon and wafer manufacturing plant with capacity of 1800 T and 100 MW respectively at Villages Mehrumkhurd and Chhawardal, Tehsil Rajnandgaon, District Rajnandgaon in the state of Chhatisgarh.


104

(` Crores)


Amount of Loan


7 Lanco Resource International Pte Limited (LRIPL) 2,807.45(679.45)

-

Security & Terms and ConditionsLoan is secured by pledge of equity shares and charge over all present and future assets of LRIPL and its subsidiaries. The obligations are further supported by an irrevocable and unconditional, joint and several guarantee from the LRIPL and its subsidiaries as the case may be and Corporate Guarantee directly or indirectly from the company. The security shall be shared on Pari -passu basis with the lenders of existing acquisition facility and other SBLC issuers.

8 Lanco Resource Australia Pty Limited (LRAPL) 1,260.75(2,867.76)

-

Security & Terms and ConditionsRefer S. No. 7 of Long - Term Foreign Currency Loans from Banks and Financial Institutions above.

9 Apricus SRL -(18.14)

-

Security & Terms and ConditionsDuring the year this entity has been sold.Total 6,596.91

(6,002.22)17.40

(26.25) C. Deferred Payment Liability 832.20

(850.64)-

Security & Terms and ConditionsRefer S. No. 7 of Long - Term Foreign Currency Loans from Banks and Financial Institutions above.

D. Finance Lease Obligation - 34.51(79.04)

Security & Terms and ConditionsSecured by the Plant and Machinery taken under Finance Lease Agreement.

E. Hypothecation Loans 3.82(10.85)

22.71(39.94)

Security & Terms and ConditionsSecured by hypothecation of specific construction equipment/ vehicles acquired out of such loans. These loans are repayable on agreed monthly installments.

F. Unsecured Loans Nil(676.83)

318.87(300.00)

Security & Terms and Conditionsa) During the year unsecured loan converted as secured loan as per the CDR Terms.b) Term Loan availed from Non-CDR lender (Financial Institutions) , all Non-Current (March 31, 2013: ` 300.00 Crores, all Current) is

unsecured. However, collateral securities have been provided by way of pledge of shares of a subsidiary held by another subsidiary and also by pledge of shares of the Company held by one of the Promoters. Repayable in 8 quarterly installments starting from September 30, 2015.

G Other Loans & Advances 152.00(Nil)

-

Security & Terms and ConditionsOther Loans and Advances is the Unsecured loan of `152.00 Crores. (March 31, 2013 : Nil) payable only after approval of CDR lenders received from promoter company as promoter's contribution as per term and conditions of CDR package with conversion option into equity repayable at the end of 10 years after approval of the CDR lenders.

# In the Company and at each SPV there are many loans and many lenders. The Carrying interest rate is as per the respective loan agreements entered at Company / SPV level which is linked to each of the Lender's Bank Rate / LIBOR +/- Spread as applicable.

* Previous Year figures are mentioned within the brackets


105

6.1 Deferred Tax Liability (net)

(` Crores)As at

March 31, 2014As at

March 31, 2013Deferred Tax Liability Differences in Written Down Value in Block of Fixed Assets as per Tax & Financial Books 1,012.49 739.30 Recoverable from beneficiaries * (354.78) - Gross Deferred Tax Liability 657.71 739.30 Deferred Tax Asset Provision for Gratuity and Compensated Absences 4.26 3.75 Provision for Incentives and Exgratia - 0.09 Unabsorbed Depreciation-Carry forward losses as per Income Tax Act 1961 191.03 94.39 Provision for Other Disallowances 1.79 - Gross Deferred Tax Asset 197.08 98.23 Deferred Tax Liability (net) 460.63 641.07

* In case of UPCL, Deferred Tax Liability originated at the year end and reversing after the tax holiday period, falling within the tenure of Power Purchase Agreement and to the extent expected to be recovered through future tariff from power buyers, has been disclosed as recoverable from beneficiaries.

6.2 Deferred Tax Asset (net)

(` Crores)As at

March 31, 2014As at

March 31, 2013Deferred Tax Liability Differences in Written Down Value in Block of Fixed Assets as per Tax & Financial Books 74.91 74.89

Gross Deferred Tax Liability 74.91 74.89

Deferred Tax Asset Provision for Gratuity and Compensated Absences 12.51 12.13

Provision for Doubtful Debts 4.90 4.90

Provision for Lease Equalisation Reserve 1.80 1.80

Provision for Incentives and Exgratia 11.17 10.66

Carry Forward Losses as per the Income Tax Act 1961 64.76 64.71

Provision for Other Disallowances 21.68 17.36

Gross Deferred Tax Asset 116.82 111.56

Deferred Tax Asset (net) 41.91 36.67

7 Other Long Term Liabilities

(` Crores)



Trade Payables (including acceptances) 222.30 302.33

Others Amount payable in respect of Purchase of Fixed Assets/EPC contracts - 11.20

Advances from Customers 2,719.77 3,270.42

Other Liabilities 128.72 21.33

3,070.79 3,605.28


106

8 Provisions

(` Crores) Long Term Short Term





Provision for Leave Encashment 28.40 31.66 13.08 9.40 Provision for Gratuity 13.56 13.94 4.09 4.58 Provision for Bonus 0.41 0.38 6.37 3.34 Provision for Retention Bonus 17.54 32.31 7.46 14.69 Provision for Other Employee Benefits - - 0.11 7.84 Provision for Taxation (Net of Advance taxes) 0.23 0.27 59.26 66.68 Provision for Operations and Maintenance - - 11.26 23.83 Provision for Lease Equalisation 5.40 5.49 0.87 - Proposed Preference Dividend - - - 0.02 Provision for Mine restoration 192.02 285.22 5.34 5.46 Provision for warranty 445.05 351.60 - - Other Provisions * - - 88.88 48.42

702.61 720.87 196.72 184.26

* Includes Provision for Diminution in Value of Investments of ` 86.65 Crores for the year ended March 31, 2014 and Provision for the claim to be paid by GCM of ` 42.53 Crores for the year ended March 31, 2013.

9 Short Term Borrowings

(` Crores)As at

March 31, 2014As at

March 31, 2013Cash Credits and Working Capital Demand Loan from Banks (Secured) 2,855.54 3,519.37 Rupee Loans and Advances Secured From Banks 932.27 660.00 From Financial Institutions 105.96 - Unsecured From Banks 1.36 - From Others 19.00 - Foreign Currency Loans and Advances Secured- From Banks 837.31 1,441.19 Loans and Advances from Related Parties - Unsecured (Note 46) Rupee Loans and Advances 5.22 1.95

4,756.66 5,622.51

A. Cash Credits and Working Capital Demand Loan #(` Crores)


Amount of LoanFrom Banks*

1 Lanco Infratech Limited (LITL) - the Company 1,206.72(2,339.75)

Security & Terms and Conditions` 1,206.72 Crores is having first pari passu charge on fixed assets and current assets (present and future) of the Company except assets with exclusive charge as per the CDR scheme approved by CDR EG. Further, this loan is secured by pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fixed asset of 13 SPVs/Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. For the previous year (March 31, 2013 : ` 2,339.75 Crores) these loans were secured by a first charge by way of hypothecation of stock / work-in-progress and entire current assets of the Company both present and future, on pari passu basis with other working capital lenders under multiple banking arrangement. The Company has not paid principal amount of ` 86.57 Crores and Interest amount of ` 21.33 Crores as at March 31,2014.


107

(` Crores)S.

No. Subsidiary / Company NameAmount of Loan

From Banks*2 Lanco Kondapalli Power Limited (LKPL) 123.99

(68.53)Security & Terms and ConditionsCash Credits and Working Capital demand loan from Banks secured by way of charge on LKPL inventories, consumable stores, book debts and all the movable properties of LKPL including its movable plant and machinery, spares, tools, accessories and other movables both present and future and further secured by way of a equitable charge by deposit of title deeds of all the immovable properties of LKPL situated at Krishna District in the State of Andhra Pradesh, both present and future ranking pari passu with charges created for securing term loans of the LKPL and secured on a pari passu basis by way of registered mortgage of LKPL freehold properties in the State of Maharashtra and assignment of project contracts. Further secured by pledge of a portion of shares held by promoters. The Cash Credit is repayable on demand.


Security & Terms and ConditionsCash Credits and Working Capital demand loan from Banks is secured by hypothecation of stocks/ Work in Progress and other current assets both present and future on parri passu basis on movable and immovable properties and also guaranteed by certain directors / others in their personal capacity and by issue of Letter of Comfort by LTPCL. The Cash Credit is repayable on demand.

4 Lanco Amarkantak Power Limited (LAPL) 237.21(262.63)

Security & Terms and ConditionsCash Credit facilities from IDBI Bank Ltd to the extent of ` 145 Crores towards Fund Based limits and ` 70 Crores towards Non Fund Based Limits which are secured by way of a first charge on movables and immovable assets of Unit - I and Unit - II ranking pari passu with Other Lenders of Unit - I.Cash credit facilities from Canara Bank and Allahabad Bank to the extent of ` 135 Crores towards Fund Based limits and ` 71 Crores towards Non Fund based Limits which are secured by way of a first charge on movables assets of Unit - I and immovable assets of Unit - I ranking pari passu with Term Loan Lenders. The balance Non Fund based facilities of ` 78 Crores are secured by way of a second charge on movables assets of Unit - I and immovable assets of Unit - I.


Security & Terms and ConditionsCash Credits and Working Capital demand loan from Bank is Security given to Senior Rupee Debt A and Senior Rupee Debt B Lenders shall rank pari passu among the participating Senior Rupee Debt A and Senior Rupee Debt B Lenders and the Working Capital Lenders. The Security Interest in the context of Working Capital Lenders shall secure the working capital facility to a maximum extent of ` 690 Crores.

6 Lanco Anpara Power Limited (LAnPL) 505.44(428.73)

Security & Terms and ConditionsCash Credits and Working Capital demand loan Secured as follows:1. First pari-passu charge by way of hypothecation of entire Current Assets, namely, raw-materials, stock-in-process, semi-finished

goods, and finished goods, stores and spares including relating to plant and machinery (Consumable Stores & Spares), Bills Receivable and Book Debts and operating cash flows, revenues and receivables of the Project and all other movables of the Borrower, both present and future;

2. First ranking pari-passu charge on project assets both present and future ranking pari-passu with other working capital lenders;3. First pari-passu charge by hypothecation on all the movable fixed assets of the Company, both present & future;4. First pari-passu charge by way of equitable charge on all the immovable fixed assets of the Company, both present & future;5. First pari-passu charge/assignment/security interest of contractor guarantees, performance bonds and any letter of credit that

may be provided by any party under the project;6. First pari-passu charge/assignment/security interest of rights, titles and interest of the company in all project documents/

contracts/licenses including insurance contracts pertaining to the project.7 Lanco Solar Energy Private Limited (LSEPL) 282.11

(145.43)Security & Terms and Conditions(i) Cash Credits from Andhra Bank sanctioned to the extent of `75.00 Crores towards the Fund Based and `150.00 Crores towards

the Non Fund Based limit are secured by first charge on current assets of the LSEPL ranking pari passu charge with other member banks under multiple banking arrangements.

(ii) Cash Credits from Central Bank of India sanctioned to the extent of `75.00 Crores towards the Fund Based and `275.00 Crores towards the Non Fund Based limit are secured by first Pari Passu charge on all Current Assets.


108

(` Crores)S.

No. Subsidiary / Company NameAmount of Loan

From Banks*Total 2,855.54

(3,519.37) # In the Company and at each SPV there are many loans and many lenders. The Carrying interest rate is as per the respective loan

agreements entered at Company / SPV level which is linked to each of the Lender's Bank Rate +/- Spread as applicable.* Previous Year figures are mentioned within the brackets.

B. Rupee Term Loan from Banks / Financial Institutions #(` Crores)


Amount of Loan



100.00(Nil)

Security & Terms and ConditionsIDBI Bank : 1. First charge on all assets (movable & immovable) of UPCL, pari-passu with Sr. Debt A and Sr. Debt B lenders and fund based working capital lenders. Collateral : Exclusive charge on pledge of shares to the extent of `160 Crores (16 Crores share of `10 each) and Third party Guarantee : Corporate Guarantee of the company.Bank of India : 1. First paripassu charge on all the project assets. The security ranks pari passu amongst Sr. Debt A and fund based WC Lenders. 2. UPCL should give an undertaking to the effect that Lenders (Sanctioning RTL for meeting Revenue GAP) would have a pari passu charge on Differential arrears to be received from the ESCOM's for the revised bills from November 2010 onwards the same would be utilised towards repayment of Lenders (Sanctioning RTL for meeting the revenue Gap). 3. Corporate Guarantee of the company. 4.Collateral : Exclusive charge on pledge of shares of UPCL to the extent of `150 Crores. (15 Crores shares of `10/- each) held by promoter / group companies.ICICI Bank Limited : 1. First paripassu charge on all the project assets. The security ranks pari passu amongst Sr. Debt A and fund based WC Lenders. 2. UPCL should give an undertaking to the effect that Lenders (Sanctioning RTL for meeting Revenue GAP) would have a pari passu charge on Differential arrears to be received from the ESCOM's for the revised bills from November 2010 onwards and the same would be utilised towards repayment of Lenders (Sanctioning RTL for meeting the revenue Gap). Exclusive charge on pledge of shares of UPCL to the extent of `31.90Cr. (3.19 Crores shares of `10/- each) held by promoter / group companies Axis Bank : 1.Subservient charge to Sr Debt A, Sr Debt B, Revenue gap Funding & Working Capital Lenders on project assets (Movable & Immovable) including but not limited to current assets, receivables, cash flows etc. 2.Corporate Guarantee of the company.PFC: First charges on pari passu basis on current assets and fixed assets of UPCL to be provided within 2 months from the date of first disbursement.The closing balance includes ` 24.55 Crores (March 31, 2013: Nil) being the installments due and not paid.

2 Lanco Amarkantak Power Limited (LAPL) 250.00(250.00)

-

Security & Terms and ConditionsAndhra Bank Short Term Rupee term loan of ̀ 250 Crores availed for Unit V & VI is secured by Mortgage of 100.55 acres of lease hold land and also pledge of 2.77 crores Equity shares of ̀ 10/- each of LTPCL held by LTPL. Further this loan is also covered by personal guarantees of certain directors and promoters of the LAPL.

3 National Energy Trading Services (NETS) 12.27(Nil)

-

Security & Terms and ConditionsLoans against fixed deposits is repayable on or before the maturity date of the fixed deposit .

4 Lanco Kanpur Highways Limited (LKHL) Nil(100.00)

-

Security & Terms and ConditionsThe loan is secured by Unconditional and irrevocable corporate guarantee of the company. The loan is repayable in bullet repayment at the end of six months.

5 Mercury Projects Private Limited (MPPL) - 5.96(Nil)

Security & Terms and ConditionsLoan from Financial Institution is repayable on demand. The loan is secured by collateral security of Equipment's given by the Company against the Agreements. Total 932.27

(660.00)105.96

(Nil)


109

C. Foreign Currency Loan from Banks #(` Crores)


Amount of LoanFrom Banks*

1 Lanco Infratech Limited (LITL) - the Company 101.29(506.78)

Security & Terms and ConditionsForeign Currency Loans (Buyers Credit) from banks of ` 101.29 Crores having first pari passu charge on fixed assets and current assets (present and future) of the Company except assets with exclusive charge along with pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fixed asset of 13 SPVs / Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. For the previous year (March 31, 2013: ` 506.78 Crores), these loans were secured as part of working capital limits from banks by way of first charge of hypothecation of stock/work in progress and entire current assets of the company both present and future on pari passu basis under multiple banking arrangement.


Security & Terms and ConditionsThe Security shall rank pari-passu amongst the lenders providing non-fund based facilities for the project upto a limit of `750 Crores, but shall, however, be second and subsequent to the first / second ranking pari-passu charges created thereon in favour of Sr. Debt A and Sr. Debt B lenders.


Security & Terms and ConditionsForeign Currency Loan (Buyers Credit) from Banks is taken out from Company's credit limits.

4 Lanco Solar Energies Private Limited (LSEPL) 13.11(101.65)

Security & Terms and ConditionsBuyers Credit from Banks are secured as part of working capital limits from banks by way of first charge of hypothecation of stock/work in progress and entire current assets of the LSEPL both present and future, on pari passu basis and second charge on movable and immovable properties and also guaranteed (Corporate Guarantee) by Company as collateral security is held by Andhra Bank.Total 837.31

(1,441.19) # In the Company and at each SPV there are many loans and many lenders. The Carrying interest rate is as per the respective loan

agreements entered at Company / SPV level which is linked to each of the Lender's Bank Rate / LIBOR +/- Spread as applicable.* Previous Year figures are mentioned within the brackets.

10 Trade Payables

(` Crores)As at

March 31, 2014As at

March 31, 2013 Trade Payables (including acceptances) 4,111.55 4,514.53

4,111.55 4,514.53

11 Other Current Liabilities

(` Crores)As at

March 31, 2014As at

March 31, 2013Current maturities of long term borrowings (Note 5) 1,828.49 2,341.98 Interest accrued but not due on borrowings 206.99 194.29 Interest accrued and due on borrowings 831.64 389.98 Unpaid Dividend - 0.02 Advances from Customers 1,552.14 1,438.40 Taxes Payable 81.54 80.83 Amount payable in respect of Purchase of Fixed Assets/EPC contracts 88.56 73.61 Salaries and Other Employee benefits Payable 163.03 148.46 Other Payables 377.61 254.19

5,130.00 4,921.76


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111

13 Intangible Assets

(` Crores)Particulars Computer

Software Other

Intangible Assets **

Total

Gross Block As at April 01, 2012 28.06 99.31 127.37 Additions 5.91 0.02 5.93 Adjustments - Exchange Difference 0.00 6.59 6.59 As at March 31, 2013 33.97 105.92 139.89 Additions 2.91 - 2.91 Disposals 0.67 - 0.67 Adjustments - Exchange Difference 0.00 (3.69) (3.69)- Others (Reclassification) 0.07 - 0.07 As at March 31, 2014 36.28 102.23 138.51 Depreciation As at April 01, 2012 15.01 16.19 31.20 Charged For the Period 8.95 21.47 30.42 Adjustments - Exchange Difference 0.00 0.20 0.20 As at March 31, 2013 23.96 37.86 61.82 For the Period 6.93 21.01 27.94 On Disposals 0.66 - 0.66 Adjustments - Exchange Difference 0.00 (2.22) (2.22)- Others (Reclassification) 0.06 - 0.06 As at March 31, 2014 30.28 56.65 86.94 Net Block As at March 31, 2013 10.01 68.06 78.07 As at March 31, 2014 6.00 45.58 51.58

** includes Briquetting technology asset & third party capital contribution for the port.

14 Capital Work In Progress

(` Crores)As at and Upto March 31, 2014

As at and Upto March 31, 2013

Asset Under Construction (Refer Note 56,76 and 80) 9,250.14 8,841.46 Other Direct CostSalaries, Allowances and Benefits to Employees 205.42 235.47 Contribution to Provident Fund and Other Funds 9.68 9.16 Grid Connection Charges 2.00 3.38 Staff Welfare Expenses 4.11 5.54 Rent 11.37 16.08 Rates and Taxes 14.15 19.15 Socio Economic Development Expenses 42.57 68.32 Repairs and Maintenance - Others 3.22 6.43 Office Maintenance 5.33 6.28 Insurance 56.28 84.50 Printing and Stationery 1.53 2.23 Consultancy and Other Professional Charges 132.81 161.33 Electricity, Water and Fuel Charges 1.31 1.64 Travelling and Conveyance 28.05 40.66 Communication Expenses 3.37 4.57


112



Project Allotment Expenses 29.63 30.32 Interest 3,767.23 3,965.55 Loss/(Gain) on Foreign Exchange Fluctuation (net) 465.33 225.40 Bank and Other Finance Charges 110.41 158.13 Depreciation 14.46 15.53 Trail Run Cost - Fuel Consumed - 99.51 Trail Run Cost - Finance Charges 0.99 - Miscellaneous Expenses 25.82 68.49

14,185.21 14,069.13 Less: Other Income Sale of Infirm Power - 90.27 Miscellaneous Income 41.44 45.39 Insurance Claim Received 58.52 2.73 Interest Received (Gross) on Deposits and Others 93.48 48.53

13,991.77 13,882.21 Less: Expenditure Apportioned over Cost of Fixed Assets 3.67 1,778.45 Less: Charged to Profit and Loss Account 2.13 12.27

13,985.97 12,091.49

15 Intangible Asset Under Development



Other Direct CostSalaries, Allowances and Benefits to Employees 8.68 7.49 Contribution to Provident Fund and Other Funds 0.10 0.10 Staff Welfare Expenses 0.07 0.05 Rent 0.92 0.58 Rates and Taxes 1.01 1.01 Repairs and Maintenance - Others 0.04 0.01 Office Maintenance 0.99 0.69 Insurance 0.25 0.25 Printing and Stationery 0.07 0.05 Consultancy and Other Professional Charges 2.93 2.93 Travelling and Conveyance 1.07 0.96 Communication Expenses 0.14 0.12 Project Allotment Expenses 0.06 0.06 Interest 24.58 20.97 Bank and Other Finance Charges 8.34 8.11 Depreciation 0.11 0.06 Miscellaneous Expenses 0.16 0.14

49.52 43.58 Less: Other Income Miscellaneous Income 0.48 0.48 Interest Received (Gross) on Deposits and Others 0.13 0.13

48.91 42.97


113

16 Non Current Investments(At Cost unless otherwise stated)

No. Crores (` Crores) As at

March 31, 2014As at

March 31, 2013As at

March 31, 2014As at

March 31, 2013 I Trade Investments(a) Investment in Equity Instruments(i) Investment in Associate Company (Unquoted)

(At cost plus share of profits/losses based on equity accounting)Equity Shares @ `10/- each fully paid upLanco Vidarbha Thermal Power Limited #

(After elimination of profit/(loss) of ` 2.91 (March 31, 2013: ` 2.91) Crores)

0.29 0.29 - -

Genting Lanco Power (India) Private Limited

(Including Share of profit/(loss) of ` 9.36 (March 31, 2013: ` 8.52) Crores)

0.05 0.05 11.47 10.63

Regulus Power private Limited

(Including Share of profit/(loss) of ` (0.0042) (March 31, 2013: ` (0.0042) Crore)

0.23 0.23 0.23 0.23

Himavat Power Limited

(Including Share of profit/(loss) of ` (0.0027) (March 31, 2013: (0.0027)) Crores & after elimination of profit/(loss) of ` 0.0073 (March 31, 2013: 0.0073) Crore)

0.00 0.00 - -

Pragdisa Power Private Limited

(After elimination of profit/(loss) of ` 0.0026 (March 31, 2013: ` 0.0026) Crore)

0.00 0.00 - -

Vainateya Power Private Limited (After elimination of profit/(loss) of ` 0.0026 (March 31, 2013: ` 0.0026) Crore)

0.00 0.00 - -

Avior Power Private Limited (After elimination of profit/(loss) of ` 0.0026 (March 31, 2013: ` 0.0026) Crore)

0.00 0.00 - -

Mirach Power Private Limited (After elimination of profit/(loss) of ` 0.0026 (March 31, 2013: ` 0.0026) Crore)

0.00 0.00 - -

Lanco Hoskote Highway Limited

(Including Share of profit/(loss) of ` (7.19) (March 31, 2013: ` (0.26)) Crore & after elimination of profit/(loss) of ` 10.61 (March 31, 2013: ` 8.71) Crores)

5.03 5.03 32.48 41.31

Lanco Devihalli Highways Limited

(Including Share of profit/(loss) of ` (17.41) (March 31, 2013: ` (7.74)) Crores & after elimination of profit/(loss) of ` 2.23 (March 31, 2013: ` 2.25) Crores)

4.59 4.59 26.27 35.92

Bay of Bengal Gateway Terminal Private Limited

(Including Share of profit/(loss) of ` (0.01) (March 31, 2013: ` (0.01)) Crore)

0.00 0.00 - -

Charon Trading Private Limited


0.03 0.03 0.30 0.30

Mimas Trading Private Limited


0.05 0.05 0.47 0.47


114


March 31, 2014As at

March 31, 2013As at

March 31, 2014As at

March 31, 2013 Ananke Properties Private Limited


0.10 0.10 0.92 0.92

Tethys Properties Private Limited


0.10 0.10 0.92 0.92

Bianca Properties Private Limited (Including Share of profit/(loss) of ` (0.12) (March 31, 2013: ` (0.12)) Crore)

0.10 0.10 0.92 0.92

Belinda Properties Private Limited (Including Share of profit/(loss) of ` (0.12) (March 31, 2013: ` (0.12)) Crore)

0.10 0.10 0.92 0.92

Phoebe Trading Private Limited


0.03 0.03 0.31 0.31

Basava Power Private Limited (After elimination of profit/(loss) of ̀ (0.0026) (March 31, 2013: ̀ (0.0026)) Crore)

0.00 0.00 - -

Siddheswara Power Private Limited (After elimination of profit/(loss) of ` (0.0026) (March 31, 2013: ` (0.0026)) Crore)

0.00 0.00 - -

DDE Renewable Energy Private Limited


0.00 0.00 - -

Electromech Maritech Private Limited


0.00 0.00 - -

Finehope Allied Engg. Private Limited


0.00 0.00 - -

KVK Energy Ventures Private Limited

(Including Share of profit/(loss) of ` Nil (March 31, 2013: ` (0.03)) Crore & after elimination of profit/(loss) of ` Nil (March 31, 2013: ` 0.35) Crore)

0.49 0.49 4.88 4.50

Newton Solar Private Limited

(After elimination of profit/(loss) of ` 0.0026 (March 31, 2013:` 0.0026) Crore)

0.00 0.00 - -

Saidham Overseas Private Limited


0.00 0.00 - -

Vasavi Solar Power Private Limited


0.00 0.00 - -

(ii) Investment in Other Company (Unquoted)Unique Corporate Consultants Pvt Ltd. 0.15 0.15 1.50 1.50Indian Energy Exchange 0.13 0.13 1.25 1.25

Sub Total (a) 82.84 100.10


115


March 31, 2014As at

March 31, 2013As at

March 31, 2014As at

March 31, 2013 (b) Investment in Preference Shares(i) Investment in Associate Company (Unquoted)

0.001% Cumulative Compulsory Convertible Preference Shares @ ` 10/- each fully paid upHimavat Power Limited


55.09 53.83 550.88 538.32

Mirach Power Private Limited


0.03 0.03 0.29 0.29

0.001% Optionally Convertible Cumulative Redeemable Preference shares @ ` 10/- each fully paid upAvior Power Pvt Ltd

(Including share of profit/(loss) of ` (0.0015) (March 31, 2013: ` (0.0015) Crore)

0.25 0.25 2.50 2.50

Ananke Properties Private Limited 3.30 3.28 66.12 65.72Belinda Properties Private Limited 3.30 3.28 65.92 65.92Bianca Properties Private Limited 3.30 3.28 65.92 65.72Tethys Properties Private Limited 3.30 3.28 65.92 65.72Charon Trading Private Limited 1.09 1.09 10.85 10.85Mimas Trading Private Limited 0.27 0.27 2.66 2.65Phoebe Trading Private Limited 0.27 0.27 3.15 2.65Regulus Power Private Limited 0.02 0.02 2.21 1.35Lanco Devihalli Highways Limited 1.40 - 14.03 -DDE Renewable Energy Private Limited

(Including Share of profit/(loss) of ` (1.43) (March 31, 2013: ` (0.53)) Crore & after elimination of profit/(loss) of ` (0.07) (March 31, 2013: ` 1.70) Crores)

0.74 0.74 5.21 6.18

Electromech Maritech Private Limited

(Including Share of profit/(loss) of ` (1.33) (March 31, 2013: ` (0.57)) Crore & after elimination of profit/(loss) of ` 0.01 (March 31, 2013: 2.04) Crores)

0.74 0.74 6.09 6.84

Finehope Allied Engineering Private Limited

(Including Share of profit/(loss) of ` (1.16) (March 31, 2013: ` (0.59)) Crore & after elimination of profit/(loss) of ` (0.33) (March 31, 2013: ` 0.86) Crore)

0.75 0.75 4.66 5.57

KVK Energy Ventures Private Limited 10.86 10.86 111.35 111.35Newton Solar Private Limited

(Including Share of profit/(loss) of ` (1.38) (March 31, 2013: ` (0.48)) Crore & after elimination of profit/(loss) of ` 0.35 (March 31, 2013: 0.90) Crore)

0.75 0.75 5.93 6.49

Saidham Overseas Private Limited

(Including Share of profit/(loss) of ` (0.68) (March 31, 2013: ` (0.29)) Crore & after elimination of profit/(loss) of ` 0.03 (March 31, 2013: ` 0.64) Crore)

0.75 0.75 4.24 4.60

Vasavi Solar Power Private Limited

(Including Share of profit/(loss) of ` (2.13) ((March 31, 2013: ` (1.20)) Crores & after elimination of profit/(loss) of ` (March 31, 2013: ` 0.07) Crores)

0.75 0.75 4.39 5.25


116


March 31, 2014As at

March 31, 2013As at

March 31, 2014As at

March 31, 2013 0.01% Redeemable Cumulative Convertible Preference Shares @ ` 10/- each fully paid upLanco Vidarbha Thermal Power Limited #

(Including Share of profit/(loss) of ` (1.69) (March 31, 2013: ` (1.69) Crores & after elimination of profit/(loss) of ` 79.81 (March 31, 2013: ` 78.24) Crores)

70.47 70.47 612.43 624.78

0.01% Cumulative Compulsory Convertible Preference Shares @ ` 10/- each, fully paid upLanco Vidarbha Thermal Power Limited # 1.36 - 13.64 -

(ii) Investment in Other Company (Unquoted)6% Optionally Convertible Redeemable Cumulative Preference shares @ ` 1/- each fully paid upClarion Power Corporation Limited 0.25 0.25 0.25 0.25Rithwik Energy Systems Limited 0.14 0.14 0.14 0.140.001% Cumulative Compulsory Convertible Preference Shares @ ` 10/- each fully paid upLanco Babandh Power Limited 122.17 112.20 1,221.70 1,122.040.01% Redeemable Cumulative Convertible Preference Shares @ ` 10/- each fully paid upLanco Horizon Properties Private Limited 7.25 7.21 72.51 72.19

Sub Total (b) 2,912.98 2,787.37Total Trade Investments (I) (a+b) 2,995.82 2,887.47

II Non Trade Investments(c) Investment in Equity Instruments

Investment in Other Company (Quoted)Equity Shares @ ` 10/- each fully paid upPower Finance Corporation Limited 0.02 0.02 5.02 5.02Rural Electrification Corporation Limited 0.00 0.00 0.99 0.99Indian Bank 0.00 0.00 0.06 0.06Andhra Bank 0.00 0.00 0.21 0.21Bank of Baroda 0.00 0.00 0.17 0.17Central Bank of India 0.00 0.00 0.02 0.02

Sub Total (c) 6.47 6.47(d) Investment in Debentures or Bonds (Unquoted)

of ` 0.10 Crores each, fully paid upCentral Bank of India 0.00 0.00 1.00 1.00

Sub Total (d) 1.00 1.00(e) Investment in Mutual Funds/ULIPs/Insurances

(Unquoted)Birla Sunlife Insurance Platinum Premier Plan 0.06 0.06 0.67 0.67MetLife-Met Smart One 0.00 0.00 0.05 0.05Star Union Dai-Ichi Life Insurance 1.03 -Canara HSBC OBC Insurance ISP 0.18 0.09MetLife-Met Suvidha Non Par Single 0.30 0.30

Sub Total (e) 2.23 1.11Total Non Trade investment (II) (c+d+e) 9.70 8.58Total Non Current Investments (I + II) 3,005.52 2,896.05Aggregate amount of Quoted Investments 6.47 6.47Market Value of Quoted Investments 6.73 6.42Aggregate amount of Non - Quoted Investments 2,999.05 2,889.58


117

Details of Shares pledged with Banks and Financial InstitutionsNo. Crores



Non Current Investment *Lanco Vidarbha Thermal Power Limited - Equity Shares 0.10 0.10Lanco Hoskote Highways Private Limited– Equity Shares 5.03 5.03Lanco Devihalli Highways Private Limited– Equity Shares 4.59 4.59DDE Renewable Energy Private Limited - Equity Shares 0.00 -Electromech Maritech Private Limited - Equity Shares 0.00 0.00Newton Solar Private Limited - Equity Shares 0.00 0.00Saidham Overseas Private Limited - Equity Shares 0.00 -Vasavi Solar Power Private Limited - Equity Shares 0.00 0.00Himavat Power Limited – Preference Shares 26.90 26.90DDE Renewable Energy Private Limited - Preference Shares 0.74 -Electromech Maritech Private Limited - Preference Shares 0.14 0.14Finehope Allied Engineering Private Limited - Preference Shares 0.14 0.14Newton Solar Private Limited - Preference Shares 0.14 0.14Vasavi Solar Power Private Limited - Preference Shares 0.14 0.14Saidham Overseas Private Limited - Preference Shares 0.74 -Lanco Vidarbha Thermal Power Limited - Preference Shares 33.33 28.49Lanco Babandh Power Limited - Preference Shares 70.62 70.62

* The above shares were pledged with Banks and Financial Institutions who have extended Loan & Credit Facilities to the respective investee companies.

# The Unencumbered shares in the investee company are being offered as collateral security to the CDR lenders of the company.

17 Current Investments(At lower of cost and fair value)


March 31, 2014As at

March 31, 2013As at

March 31, 2014 As at

March 31, 2013 Investment in Mutual Funds (Unquoted)Baroda Pioneer Liquid Fund - Daily Dividend - 0.01 - 5.00Birla Sunlife Cash Manager-Institutional Plan-Daily Dividend 0.00 0.00 0.01 0.01Canara Robeco-Treasury Advantage Retail Dividend Find 0.00 0.00 0.20 0.41Canara Robeco Income Fund -regular growth 0.01 0.00 0.13 0.01Canara Robeco Gold Saving Fund 0.00 0.00 0.20 0.09HDFC Liquid Fund - Premium Plan Growth 0.00 0.00 0.01 0.01HDFC Liquid Fund - Premium Plan Daily Dividend 0.00 0.00 0.02 0.02Total Current Investments 0.57 5.55


118

18 Loans and Advances (` Crores)

Non Current Current As at

March 31, 2014As at

March 31, 2013As at


March 31, 2013 Capital AdvancesSecured, Considered Good 0.50 0.57 - - Unsecured, Considered Good 75.59 161.95 - -

76.09 162.52 - - Security DepositSecured, Considered Good - 0.10 - - Unsecured, Considered Good 134.09 107.37 20.10 21.88 Doubtful 0.60 0.60 0.38 0.38

134.69 108.07 20.48 22.26 Less: Provision for doubtful Security Deposit 0.60 0.60 0.38 0.38

134.09 107.47 20.10 21.88 Loans & Advances to Related Party (Note 46)Advances for Investment 16.16 19.69 10.65 614.14 Prepaid Expense - 0.24 - - Loans Receivable 68.88 309.68 280.92 67.23 Advances Recoverable in Cash or in kind - - 65.80 68.29

85.04 329.61 357.37 749.66 Other Loans & Advances (Unsecured, Considered good otherwise stated)Advance Tax (Net of Provision for Tax) 29.28 21.39 123.81 195.91 Minimum Alternative Tax Credit Entitlement 19.17 19.17 23.13 23.13 Loans and Advances to Employees - 3.51 8.46 5.78 Advances for Investment 3.64 - - - Prepaid Expense 0.18 0.11 99.67 57.20 Cenvat/Vat/Service Tax Credit Receivable 44.49 41.39 174.58 166.36 Taxes Paid Under protest 0.20 0.20 4.53 7.52 Loans Receivable- Unsecured, Considered Good - - 2.38 2.38 Advances Recoverable in Cash or in kind Secured, Considered Good - - - 0.51 Unsecured, Considered Good 181.76 223.74 1,772.79 1,730.12 Doubtful - - 7.46 5.62

278.72 309.51 2,216.81 2,194.53 Less: Provision for doubtful Other Loans and Advances - - 7.46 5.62

278.72 309.51 2,209.35 2,188.91 573.94 909.11 2,586.82 2,960.45


119

19 Trade Receivables and Other Assets (` Crores)


March 31, 2014As at

March 31, 2013As at


March 31, 2013 19.1 Trade ReceivablesOutstanding for a period exceeding six months from the date they are due for payment Secured, Considered Good 111.74 116.04 Unsecured, Considered Good 1,039.58 938.43 Doubtful 12.07 5.17

- - 1,163.39 1,059.64 Less : Allowance for bad & doubtful debts 12.07 5.17

- - 1,151.32 1,054.47 Other Receivable Unsecured, Considered Good 604.25 525.51 2,808.04 3,603.15 Doubtful 2.42 2.41 - -

606.67 527.92 2,808.04 3,603.15 Less : Allowance for doubtful debts 2.42 2.41 -

604.25 525.51 2,808.04 3,603.15 Sub Total (A) 604.25 525.51 3,959.36 4,657.62

19.2 Other AssetsNon Current Bank Deposits (Note 21) 238.06 211.86 - - Unamortised Expenses 0.00 0.00 0.00 9.13 Unamortised Premium on Forward Contract - - 11.19 5.13 Unbilled Revenue - - 245.82 96.13 Interest Accrued on Deposits 0.04 0.00 85.70 81.98 Others - - 1.00 0.92

Sub Total (B) 238.10 211.86 343.71 193.29 Total (A + B) 842.35 737.37 4,303.07 4,850.91

20 Inventories(At lower of cost and net realisable value unless otherwise stated)

(` Crores) As at


March 31, 2013 Raw Materials (including Stock in transit ` 0.05 (March 31,2013 : ` 15.68)) Crores 258.14 290.71 Construction/Development Work In Progress 2,638.88 2,575.96 Finished Goods 12.05 45.60 Consumables, Stores and Spares (including Stock in transit ` 0.15 (March 31,2013 : ` 0.09)) Crores 212.27 185.31

3,121.34 3,097.58 Details of Closing Inventory Raw Materials Naptha 40.98 43.07 Coal 105.97 95.12 Oil - (HFO, LDO & HSD) 13.29 10.86 Material in Transit & Under Inspection 32.62 42.37 Semi Finished Goods 0.33 6.61 Solar Cells & other Solar Equipments 4.85 1.17 Steel 45.51 57.58 Inventory Others 14.59 33.93

258.14 290.71 Finished Goods Solar Modules 1.38 1.03 Coal 10.67 44.57

12.05 45.60


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21 Cash And Bank Balance (` Crores)


March 31, 2014As at

March 31, 2013As at


March 31, 2013 Cash and Cash EquivalentsBalances with Banks

-On Current Accounts 383.21 182.58 -On Deposit Accounts (Having Maturity less than 3 Months from date of deposit)

2.91 48.74

Cash on Hand 0.45 0.58 386.57 231.90

Other Bank BalancesOn Deposit Accounts**

Having Maturity more than 3 Months but less than or equal to 12 months from date of deposit

- - 24.96 80.64

Having Maturity more than 12 Months from date of deposit

236.16 187.68 62.59 72.32

On Margin Money Deposit Accounts * 1.90 24.18 105.22 187.95 238.06 211.86 192.77 340.91

Amount disclosed under other non Current assets (Note 19.2) (238.06) (211.86) - - 579.34 572.81

* The Margin Money Deposits are towards Letters of Credit and Bank Guarantees.

** Includes ` 365.93 (March 31, 2013 : 231.05) Crores deposits are under lien.

22 Revenue From Operations

(` Crores) For the Year Ended

March 31, 2014 March 31, 2013Contract Operations (A) 2,096.58 4,037.83 Property Development (B) 193.23 166.38 Sale of Services Management Consultancy 2.81 2.81 Operations and Maintenance 4.80 5.30 (C) 7.61 8.11 Sale of Products Electrical Energy 7,404.52 8,557.91 Coal 678.86 946.51 Other Goods 36.22 8.10 (D) 8,119.60 9,512.52 Other Operating Revenue Income from Lease Rentals 2.27 0.47 Other Operating Income 10.74 13.49 (E) 13.01 13.96 Revenue from Operations (A+B+C+D+E) 10,430.03 13,738.80


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23 Other Income (` Crores)

For the Year Ended March 31, 2014 March 31, 2013

Interest Income on Deposits and Margin money 22.64 35.11 Loans Receivable and Inter Corporate Deposits 55.72 40.55 Long Term Investments - 0.13 Others 65.63 19.31 Dividend Income on Current Investments 0.51 1.64 Long Term Investments 0.84 0.51 Net Gain on sale of Current Investments - 0.20 Long Term Investments 0.04 - Other Non-Operating Income (Net of expenses directly attributable to such Income)Insurance Claims Received/Receivable 3.32 9.97 Liabilities and Provisions no longer required written back 0.67 2.88 Net Profit/(Loss) on Sale of Assets 0.01 5.07 Miscellaneous Income 18.44 33.49

167.82 148.86

24 Cost of Materials Consumed (` Crores)


Construction Material Consumed 1,919.11 2,248.54 Property Development Cost 207.99 187.62 Coal for Power Generation 3,315.67 2,915.69 Gas and Naphta for Power Generation 629.23 797.27 Oil (HFO, LDO and HSD) for Power Generation 32.93 67.18 Other Consumables for Power Generations 21.93 22.46 Consumables for Coal Mining 179.93 201.68 Materials Consumed for Solar Modules & Solar Equipments 29.11 28.76

6,335.90 6,469.20

25 Purchase of Traded Goods (` Crores)


Power Purchase 529.88 2,161.25 529.88 2,161.25

26 Construction, Transmission, Plant/Site and Mining Expenses (` Crores)


Equipment/Machinery Hire charges 199.67 147.31 Transmission Charges 30.58 116.14 Repairs, Operations and Maintenance 167.83 222.61 Consumption of Stores and Spares 53.91 48.62 Insurance 46.58 53.73 Electricity 11.89 17.57 Security Charges 23.93 27.91 Coal Mining and transportation Cost 472.53 619.79 Others 54.55 64.96

1,061.47 1,318.64


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27 (Increase)/Decrease in Inventories of Finished Goods and Construction/Development Work in Progress


March 31, 2014 March 31, 2013 Finished Goods Inventories at the beginning of the year 45.60 31.85 Less : Inventories at the end of the year * 12.05 45.60

(A) 33.55 (13.75)Construction/Development Work in Progress Inventories at the beginning of the year 2,575.96 2,135.66 Add : Other Adjustments (Note 74) (1.67) - Less: Transfer to Fixed Assets 120.07 -

2,454.22 2,135.66 Less : Inventories at the end of the year * 2,638.88 2,575.96

(B) (184.66) (440.30) (Increase)/Decrease in inventories (A+B) (151.11) (454.05)

* For Details Note 20

28 Employee Benefits Expenses (` Crores)


Salaries, allowances and benefits to employees 352.52 549.17 Contribution to provident fund and other funds 16.42 22.03 Employee Stock Option Charge 6.35 19.37 Recruitment and training 2.47 5.26 Staff welfare expenses 20.97 36.18

398.73 632.01 Less: Transferred to Development cost 13.40 12.32 Less: Transferred to Capital work in progress - Other Direct Cost - 1.24

385.33 618.45

29 Other Expenses (` Crores)


Rent 42.84 57.50 Rates and taxes 14.83 22.64 Donations 3.23 7.56 Repairs and Maintenance - others 4.58 11.10 Marketing and selling expenses 2.12 0.35 Office maintenance 10.56 17.74 Insurance 5.78 13.43 Printing and stationery 2.62 4.09 Consultancy and other professional charges 37.53 119.45 Directors sitting fee 0.66 0.74 Electricity charges 4.79 4.29 Net Loss on sale of - Long Term Investments - 0.15 Net Loss on Foreign Exchange Fluctuations 370.67 77.49 Remuneration to auditors (As Auditor): Audit Fee 2.66 2.25 Tax audit fees 0.27 0.29 Remuneration to auditors in other capacity - Certification 0.03 0.05


123


Reimbursement of expenses to Auditors 0.23 0.40 Travelling and conveyance 37.19 77.92 Communication expenses 7.78 10.73 Net Loss on Sale of fixed assets and Assets write off 15.61 18.69 Provision for Advances/claims/debts 15.23 68.33 Business Promotion and Advertisement 5.32 15.64 Miscellaneous expenses 24.82 48.44

609.36 579.27 Less: Recovery of Common Expenses 9.87 8.29 Less: Transferred to Development cost 1.59 5.21 Less: Transferred to Capital Work in Progress - Other Direct Cost - 2.08 Less: Elimination of Cost on Intercompany Management Consultancy Income 2.55 3.72

595.35 559.97

30 Finance Cost (` Crores)


Interest 3,401.26 2,972.20 Other Borrowing Cost (Upfront Fees, Commitment Charges, LC commission etc.) 124.89 156.72 Exchange Difference to the extent considered as an adjustment to borrowing costs (11.97) 10.30

3,514.18 3,139.22 Less: Transferred to development cost 132.68 122.92 Less: Transferred to Capital Work in Progress - Other Direct Cost 619.38 594.86

2,762.12 2,421.44

31 Depreciation and Amortisation Expense (` Crores)


Depreciation on Tangible Assets 1,144.07 1,095.51 Amortisation on Intangible Assets 27.84 30.30

1,171.91 1,125.81

32 Earning Per Share (EPS)


March 31, 2014 March 31, 2013Net Profit/(Loss) after Taxation, Minority Interest and Share of profit of Associates (2,273.88) (1,073.30)Net Profit/(Loss) for calculation of basic EPS (A) (2,273.88) (1,073.30)

Net Profit as above (2,273.88) (1,073.30)Add : Interest on Loan convertible into equity shares (Net of tax) 245.56 - Net Profit/(Loss) for calculation of diluted EPS (B) (2,028.32) (1,073.30)

Weighted average number of Equity Shares for Basic EPS (C) 235.02 234.13 Effect of dilution : Stock options under ESOP * - 0.16 Convertible loan into equity shares* 378.90 - Weighted Average number of Equity shares for Diluted EPS (D) 613.92 234.29

Basic EPS (in `) (A)/(C) (9.68) (4.58)Diluted EPS (in `) * (B)/(D) (9.68) (4.58)

*Diluted EPS is anti dilutive hence restricted to basic EPS.


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33 Intra Group Turnover and Profits

The Group ‘Revenue from Operations’, ‘Net Profit after taxation, minority interest and share of profits of associates’, ‘Net Cash flow from Operating Activities’ and ‘Reserves and Surplus’ is after eliminating inter-company transactions as per Accounting Standard (AS) 21 “Consolidated Financial Statements” and Accounting Standard (AS) 23 “Accounting for Investments in Associates in Consolidated Financial Statements”. The impact of these eliminations on the said items is as under:


March 31, 2014 March 31, 2013Revenue from OperationsBefore Elimination 10,707.45 15,147.00 Less : Elimination of Intersegment Operating Income 277.42 1,408.20 After Elimination (As per Note 22) 10,430.03 13,738.80 Net Profit/(Loss) after taxation, minority interest and share of profits of associatesBefore Elimination (2,288.78) (1,070.16)Less : Elimination for current year (14.90) 3.14 After Elimination (2,273.88) (1,073.30)Net Cash flow from Operating ActivitiesBefore Elimination 1,345.37 1,869.51 Less : Elimination for current year (15.05) (17.58)After Elimination 1,360.42 1,887.09

(` Crores)As at

March 31, 2014As at

March 31, 2013Reserves and SurplusBefore Elimination 2,719.46 4,949.28 Less : Elimination for current year (14.90) 3.14 Less : Elimination for previous years 1,516.06 1,512.92 After Elimination (As per Note 4) 1,218.30 3,433.22

34 Effect of new subsidiaries acquired/disposed off subsidiaries on the Consolidated financial statementsThe effect of acquisition (including newly formed) of stake in subsidiaries on the consolidated financial statements is as under:-

(` Crores)Name of Subsidiary company Effect on Group

Profit/(Loss) after Minority

Interest for the year ended

March 31, 2014

Effect on Net Assets as at

March 31, 2014

Effect on Group Profit/(Loss) after Minority Interest

for the year ended March 31,

2013


March 31, 2013

Indian Subsidiaries Lanco Rambara Hydro Private Limited - - - 0.01 Tasra Mining & Energy Company Private Limited - 0.35 - - Foreign Subsidiaries Bhola Electricity Pvt Ltd - - - 0.02 Sirajgunj Electric Private Limited - 0.01 - -

- 0.36 - 0.03


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The effect of disposal of stake in subsidiaries on the consolidated financial statements is as under:-

(` Crores)Name of Subsidiary company Effect on Group

Profit/(Loss) after Minority

Interest for the year ended

March 31, 2014


March 31, 2014

Effect on Group Profit/(Loss) after Minority Interest

for the year ended March 31,

2013


March 31, 2013

Foreign Subsidiaries Lanco Solar Canada Limited - - (0.89) (0.95) Lexton Trading (Pty.) Ltd. (0.01) - - - Approve Choice Investments Ltd. - - - - Bar Mount Trading (Pty.) Ltd. - - - - Barrelake Investments (Pty.) Ltd. - - - - Belara Trading (Pty.) Ltd. - - - - Caelamen (Pty.) Ltd. - - - - Dupondius (Pty.) Ltd. - - - - Gamblegreat Trading (Pty.) Ltd. - - - - Lanco Rocky Face Land Holdings LLC (3.28) 3.29 - - Lanco Tracy City Land Holdings LLC (3.26) 3.27 - - Apricus S.R.L (0.27) (1.60) - -

(6.82) 4.97 (0.89) (0.95)

35 Prior period item for the year ended March 31, 2014 is due to positive difference of ` 17.65 Crores between the management financials and audited financials of GCM, CMM and LRAPL financials under Australian GAAP for the year ended March 31,2013. Further on review of property,plant and equipment opening balances during the year there was a prior period expenditure of ` 61.15 Crores. Net prior period item is ` 43.50 Crores.

Prior period item for the year ended March 31, 2013 is on account of foreign currency loans restatement.

36 Exceptional Item for the year ended March 31, 2014 includes :-

(` Crores)Particulars

Borrowing cost reduction due to sacrifice by Bankers, Reversal of promoter directors salary and net of CDR expenses on implementation of CDR

0.90

Provision for diminution in Investments value of LBHPPL, LHPL and LSIPL 86.65 Additional Transmission charges as per CERC order relating to one of the Subsidiary (LKPL) 91.71

Total 179.26

37 (a) On March 30, 2012, the Company has put in place two level power holding company structure wherein Lanco Power Limited (LPL) a wholly owned subsidiary of the Company as the power holding vehicle for the Group. LPL has further two wholly owned subsidiaries namely Lanco Thermal Power Limited (LTPL) and Lanco Hydro Power Limited (LHPL) as thermal power holding company and hydro power holding company respectively.

(b) As approved by the members vide their resolution dated March 19, 2010 the Company has sold its shareholding in some of its Subsidiaries and Associate Companies (hereinafter referred as ‘related entities’) to its wholly owned step down subsidiaries i.e. Lanco Thermal Power Limited, Lanco Hydro Power Limited and to an associate, Regulus Power Private Limited (an erstwhile subsidiary) on March 30, 2012 for total cash consideration amounting to ` 6,815.51 Crores. As of March 31, 2014 ` 2,644.22 Crores (March 31, 2013 ̀ 2,701.35 Crores) representing the balance amount of consideration for sale of shares is receivable from the above entities and the same has been eliminated while preparing the consolidated financial statements.

(c) As a result of the above change, one of the associate company namely Lanco Babandh Power Limited, consequent to the sale of its equity shares to an associate i.e. Regulus Power Private Limited, has become an associate of an associate.

(d) The aforesaid transfer of shares in various subsidiaries and associates requires lenders/customer approvals. Pending the receipt of approvals, the Company has recorded the sale of investments in related entities in the financial statements. During the year, the management has obtained approvals from the most of the lenders and the management is confident of receiving the residual approvals and share transfer is in progress. In case such approvals are not received, the loans given by the lenders to the respective


126

related entities may become due if the Company still wants to pursue transfer of shares, or the sold investments will be purchased back by the company. Based on legal advice, the management is of the opinion that they have complied with relevant laws and regulations.

38 The audit for the current financial year ended March 31, 2014 pertaining to LRIPL & its subsidiaries, LSIPL and its subsidiaries and LENY is under progress. Accordingly total assets of ` 7,406.72 Crores as at March 31, 2014, the total revenue of ` 790.01 Crores and net loss of `

716.75 Crores for the year ended March 31, 2014, have been taken from the financials prepared by the management under Indian GAAP.

39 During the year 2011-12 in line with the Notification dated December 29, 2011 issued by the Ministry of Corporate Affairs, the group had selected the option given in Paragraph 46A of the Accounting Standard – 11,” The Effects of Changes in Foreign Exchange Rates”, the foreign exchange (gain)/loss arising on revaluation of long term foreign currency monetary items in so far as they relate to the acquisition of depreciable capital assets to be depreciated over the balance life of such assets and in other cases the foreign exchange (gain)/loss to be amortised over the balance period of such long term foreign currency monetary items. On availment of option under this notification, foreign exchange difference remains unamortized is ` 1,036.84 (March 31, 2013 : 472.10) Crores.

40 The Group currently provides depreciation on assets at the rates specified in the Schedule XIV of the Companies Act, 1956. The Ministry of Corporate Affairs (MCA) vide its notification dated May 31, 2011, has clarified that companies engaged in the generation and supply of electricity can distribute dividend after providing for depreciation at rates/methodology notified by Central Electricity Regulatory Commission (CERC). As the Group has both regulated and non-regulated generating assets, the management has sought clarifications and guidance from the MCA on the applicability of the CERC rates for its regulated and non-regulated generating assets. Pending the clarification, existing depreciation rates continued for the year ended March 31, 2014.

41 As at March 31, 2014 the Group has receivables from various State Electricity Utility companies and other customers for sale of power aggregating to ` 2,823.45 Crores, net current liabilities of ` 1,775.30 Crores and current maturities of long term borrowings ` 1,828.49 Crores. Based on internal assessment and various discussions had with the customers, the management is confident of recovery of receivables. At present the Group’s operating assets are not generating envisaged revenues on account of various factors beyond the control of the company, such as short supply of coal, non availability of gas, pending tariff clarity and delayed payments from the customers is posing challenges for meeting the cash flow needs. However the Group has actively engaged in resolving in each of the aspects associated with the respective revenue generating units by effectively addressing the core issues which would enable a quick turnaround in the situation and the management is confident that the efforts would result in the operating units generating positive cash flows. The approved CDR scheme of the company and the aspects like inviting strategic investors, disposal of assets would also bring in the additional cash flows into the system. Cumulatively, the Group is confident that the initiatives narrated above would address the bottlenecks and make the operating units viable, augmenting the construction and EPC activity to normal level and thus does not foresee any eventual cash flow mismatch in terms of meeting its financial obligations including that of to the lenders, vendor and others and also will have adequate cash flows to support the implementation of ongoing projects which are capitalising interest and expenses during the period of construction including the current low level period of construction.

42 Employee BenefitsDefined Benefit Plans

The Group has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. In certain subsidiaries the scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following table summarizes the components of net benefit expense recognised in the Statement of Profit and Loss/Capital Work in Progress/Intangible Assets Under Development and amounts recognised in the Balance Sheet for the respective plans.

(` Crores)Gratuity

March 31, 2014 March 31, 2013Net Employee benefit expense recognized in the employee costCurrent service cost 3.51 4.24 Interest cost on benefit obligation 1.55 1.65 Expected return on plan assets (0.24) (0.21)Net actuarial (gain)/loss recognized in the year (1.43) (3.50)Net benefit expense 3.39 2.18


127

(` Crores)Gratuity

March 31, 2014 March 31, 2013Balance SheetBenefit asset/liabilityPresent value of defined benefit obligation 19.43 19.17 Fair value of plan assets 2.84 2.57 Plan asset/(liability) (16.59) (16.60)Change in the present value of the defined benefit obligationOpening defined benefit obligation 19.17 20.43 Current service cost 3.51 4.25 Interest cost 1.55 1.65 Actuarial (gain)/loss on obligation (1.61) (3.50)Benefits paid (3.48) (1.87)Benefit transferred in 0.96 - Benefit transferred Out (0.67) (1.79)Closing defined benefit obligation 19.43 19.17 Change in the fair value of plan assetsOpening fair value of plan assets 2.57 2.30 Expected return 0.24 0.21 Contributions by employer 0.25 0.10 Benefits paid (0.04) (0.06)Actuarial gain/(loss) (0.18) 0.02 Closing fair value of plan assets 2.84 2.57 Investment details of the plan assetsInvestment with Insurer 100% 100%AssumptionsDiscount Rate (%) 8.79 8 to 8.40Estimated Rate of Return on Plan Assets 9.00 9.00Attrition Rate 19.00 19.00Expected rate of salary increase (%) 6.00 6.00Expected Average Remaining Service (years) 4.02 4.06

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

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Amount of defined benefit plan for the current and previous four periods are as follows *(` Crores)

Present value of Defined benefit

obligation

Surplus/(deficit) Experience adjustments on plan liabilities

Experience adjustments on

plan assets March 31, 2014 19.43 16.59 1.43 - March 31, 2013 19.17 16.60 3.52 - March 31, 2012 20.43 17.98 1.41 - March 31, 2011 16.51 15.60 0.77 - March 31, 2010 9.55 8.76 0.90 -

* Information is furnished to the extent available within the group.

Defined Contribution PlansIn respect of the defined contribution plan (Provident fund), an amount of ` 12.29 (March 31, 2013 : ` 17.43) Crores has been recognized as expenditure in the Statement of Profit and Loss/Capital Work in Progress.

Other Employee BenefitsDuring the year the group has provided Retention Bonus of ` (6.47) (March 31, 2013 : ` 10.87) Crores.

The provision for compensated absences as per actuarial valuation as at March 31, 2014 is ` 41.48 (March 31, 2013 : ` 41.06) Crores.


128

43 Employee Stock Option Scheme

The Group has till March 31, 2014 allotted 1.11 (March 31, 2013: 1.11) Crores equity shares of ` 10/- each to LCL Foundation (ESOP - Trust) towards the Employee Stock option plan 2006 (The Plan) which was formulated by the Group. The plan provides for grant of stock options of equity shares of the Company to employees of the Company and its subsidiaries subject to continued employment with the Company or Group.

Each option comprises of one equity share which will vest on annual basis at 20% each over five years and shall be capable of being exercised within a period of six years from the date of first annual vesting.

Each option granted under the above plans entitles the holder to one equity share of the company at an exercise price, which is approved by the compensation committee.

The Plan is in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999.

Consequent to the splitting of Equity Share of ` 10 each into 10 equity shares of ` 1 each in the year 2009-10, the number of shares allotted to the trust and the options granted, forfeited, exercised are disclosed at ` 1 each.”

A summary of the status of the Company’s plan is given below:

Particulars March 31, 2014 March 31, 2013No. Crores Weighted

Average Exercise Price

(`)

No. Crores Weighted Average Exercise

Price (`)

Outstanding at the beginning of the year 2.38 0.24 3.66 0.24Granted during the year - - - 0.00Forfeited during the year (0.22) - (0.22) - Exercised during the year (1.50) 0.24 (1.06) 0.24Expired during the year - - - - Outstanding at the end of the year 0.65 0.24 2.38 0.24Exercisable at the end of the year 0.37 0.24 1.53 0.24

The weighted average share price for the period over which stock options were exercised was ` 7.28 (March 31, 2013 ` 13.33).

The details of exercise price for stock options outstanding at the end of the year are:

March 31, 2014Grant No. (Grant Date) Range of

Exercise PriceNumber


(Crores)

Weighted average

remaining contractual life of options (in

years)

Weighted average

exercise price

Grant 1 (24.06.2006) 0.24 0.01 0 0.24Grant 2 (02.07.2007) 0.24 0.10 0 0.24Grant 3 (26.09.2007) 0.24 0.01 0 0.24Grant 4 (24.04.2008) 0.24 0.04 0.07 0.24Grant 5 (04.07.2008) 0.24 0.09 0.26 0.24Grant 6 (01.11.2008) 0.24 0.01 0.59 0.24Grant 7 (19.02.2009) 0.24 0.01 0.89 0.24Grant 8 (29.07.2009) 0.24 0.11 1.33 0.24Grant 9 (27.01.2010) 0.24 0.03 1.83 0.24Grant 10 (30.04.2010) 0.24 0.02 2.08 0.24Grant 11 (13.08.2010) 0.24 0.21 2.37 0.24Grant 12 (12.11.2010) 0.24 0.01 2.62 0.24

0.65


129

March 31, 2013Grant No. (Grant Date) Range of Exercise

PriceNumber


(Crores)

Weighted average

remaining contractual life of options (in years)

Weighted average exercise

price

Grant 1 (24.06.2006) 0.24 0.01 - 0.24 Grant 2 (02.07.2007) 0.24 1.06 0.25 0.24 Grant 3 (26.09.2007) 0.24 0.03 0.49 0.24 Grant 4 (24.04.2008) 0.24 0.14 1.07 0.24 Grant 5 (04.07.2008) 0.24 0.28 1.26 0.24 Grant 6 (01.11.2008) 0.24 0.02 1.59 0.24 Grant 7 (19.02.2009) 0.24 0.01 1.89 0.24 Grant 8 (29.07.2009) 0.24 0.24 2.33 0.24 Grant 9 (27.01.2010) 0.24 0.06 2.83 0.24 Grant 10 (30.04.2010) 0.24 0.05 3.08 0.24 Grant 11 (13.08.2010) 0.24 0.44 3.37 0.24 Grant 12 (12.11.2010) 0.24 0.04 3.62 0.24

2.38

The Group has calculated the compensation cost based on the intrinsic value method i.e. the excess of previous closing price of underlying equity shares on the date of the grant of options over the exercise price of the options given to employees under the employee stock option schemes of the Group and is recognised as deferred stock compensation cost and is amortised on a straight line basis over the vesting period of the options. The group is using Black Sholes Model for calculating fair values of ESOP granted for determining impact of the fair value method of accounting of employee compensation in financial statement, the impact on net income and earnings per share is provided below:

March 31, 2014 March 31, 2013ParticularsNet Income - As reported ` Crores (2,273.88) (1,073.30)Add: ESOP Cost under Intrinsic Value Method ` Crores 6.35 19.37 Less : ESOP Cost under Fair Value Method (Black Sholes) ` Crores 2.62 19.60 Net Income – Proforma ` Crores (2,270.15) (1,073.53)Basic Earnings per Share:As reported (9.68) (4.58)Proforma (9.66) (4.59)Diluted Earnings per Share:As reported (9.68) (4.58)Proforma (9.66) (4.58)

The weighted average fair value of stock options granted during the year was N/A (Previous Year N/A) of share of ` 1 each.

Assumptions:- March 31, 2014 March 31, 2013Weighted average share price (in `) NA NA Exercise Price (in `) NA NA Expected Volatility NA NA Historical Volatility NA NA Life of the options granted (Vesting and exercise period) in years NA NA Expected dividends (in `) NA NA Average risk-free interest rate NA NA Expected dividend rate NA NA


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44 Leases

Finance Lease : As lessee

Assets acquired on finance lease mainly comprise Plant & Machinery which are used specifically for mining activities. The leases are non cancellable and non renewable. There is no escalation clause and majority of the lease expires in next 12 months.

The minimum lease rentals payable for the assets acquired under Finance Lease agreement and the present value of these rentals are as under:-

(` Crores) March 31, 2014 March 31, 2013

Minimum Lease Payments

Present Value of MLP

Minimum Lease Payments

Present Value of MLP

Future minimum lease payments and their present valuesNot later than one year 32.73 30.29 77.60 71.82 Later than one year and not later than five years 1.74 1.66 1.44 1.38 Later than five years - - - -

34.47 31.95 79.04 73.20 Less : Future finance charges 2.52 - 5.84 - Present value of Minimum Lease Payments 31.95 31.95 73.20 73.20

Operating Lease : As lessee

The group has entered into certain cancellable and non-cancellable operating lease agreements mainly for office premises. The lease rentals charged during the year and maximum obligations on long-term non-cancellable operating leases payable as per the agreements are as follows:-


Lease rentals charged during the year Under Cancellable Leases 22.53 28.55 Under Non-Cancellable Leases 9.07 20.33

Future minimum lease payments under Non Cancellable LeasesNot later than one year 3.97 16.55 Later than one year and not later than five years 2.01 3.10 Later than five years 0.28 -

There are no contingent rents in the lease agreement. The lease term is for 1 – 5 years and is renewable at the mutual agreement of both the parties. There is no escalation clause in the lease agreements (other than those disclosed above). There are no restrictions imposed by lease arrangements.

Operating Lease : As lessor

One of the entity in the group has given buildings on operating lease. The lease rentals receivables during the year and maximum outstandings on long term non- cancellable operating leases recievables as per the agreements are as follows :-


Future minimum lease rentals receivable under Non Cancellable LeasesNot later than one year 0.22 - Later than one year and not later than five years 5.35 -


131

45 Segment ReportingThe details of primary segment information for the year ended March 31, 2014 and March 31, 2013 are given below:

a) The segment report of LITL and its subsidiaries (the Group) has been prepared in accordance with Accounting Standard 17 “Segment Reporting” as notified under section 211(3C) of the Companies Act.”

b) The Group is currently focused on five business segments: EPC and Construction, Power, Property Development, Infrastructure and Resources.

c) In respect of secondary segment information, the Group has identified its geographical segments as (i) India, (ii) Singapore, (iii) Australia & (iv) Others. The secondary segment information has been disclosed accordingly.”

d) The business segments of the Group comprises of the following:Segment Details of BusinessEPC and Construction Construction of Industrial, Residential & Commercial Buildings and Roads etc., Engineering,

Procurement and Commissioning (EPC)Power Generation of power and trading in powerProperty Development Development of integrated properties comprising of commercial and residential buildingsInfrastructure Development of roads on Build, Operate and Transfer basis and other infrastructureResources Exploration, mining and marketing of coalOthers Residual activities

e) For the purpose of reporting, business segments are primary segments and the geographic segment is a secondary segment.

f) Segment wise Name of Companies

1 EPC and Construction1 Lanco Infratech Limited 4 Lanco Enterprise Pte Limited (China)2 Lanco Solar Energy Private Limited 5 Lanco Solar International Pte Limited3 Lanco International Pte Limited

2 Power1 Lanco Infratech Limited 26 Lanco Wind Power Private Limited 2 Lanco Power Limited 27 Amrutha Power Private Limited 3 Lanco Thermal Power Limited 28 Spire Rotor Private Limited 4 Lanco Kondapalli Power Limited 29 Emerald Orchids Private Limited 5 Lanco Tanjore Power Company Limited 30 JH Patel Power Project Private Limited 6 Lanco Amarkantak Power Limited 31 National Energy Trading and Services Limited 7 Arneb Power Private Limited 32 Portia Properties Private Limited8 Udupi Power Corporation Limited 33 Lanco Infratech Nepal Private Limited9 Lanco Anpara Power Limited 34 Lanco Power International Pte Limited10 Lanco Hydro Power Limited 35 Lanco Solar Holding Netherland B.V Utrecht11 Lanco Teesta Hydro Power Limited 36 SolarFi SP 0712 Lanco Budhil Hydro Power Private Limited 37 SolarFi SP 0613 Lanco Mandakini Hydro Energy Private Limited 38 Lexton Trading (Pty.) Limited *14 Lanco Rambara Hydro Power Private Limited 39 Approve Choice Investments (Pty.) Limited *15 Diwakar Solar Projects Limited 40 Bar Mount Trading (Pty.) Limited *16 Lanco Solar Services Private Limited 41 Barrelake Investments (Pty.) Limited *17 Lanco Solar Private Limited 42 Belara Trading (Pty.) Limited *18 Khaya Solar Projects Private Limited 43 Caelamen (Pty.) Limited *19 Bhanu Solar Projects Private Limited 44 Dupondius (Pty.) Limited *20 Lanco Solar Power Projects Private Limited 45 Gamblegreat Trading (Pty.) Limited *21 Orion Solar Projects Private Limited 46 Lanco Solar International Limited 22 Pasiphae Power Private Limited 47 Lanco Solar International GMBH23 Sabitha Solar Projects Private Limited 48 Lanco Solar International US Inc. 24 Helene Power Private Limited 49 Lanco Rocky Face Land Holdings LLC *25 Omega Solar Projects Private limited 50 Lanco Tracy City Land Holdings LLC (USA) *


132

51 Lanco IT PV Investments B.V. 56 Lanco Virgin Islands- 1 LLC52 Apricus S.R.L * 57 Lanco SP PV 1 Investments B.V.53 Green Solar SRL 58 Bhola Electricity Private Limited54 Lanco US PV Investments B.V. 59 Sirajganj Electric Private Limited55 Lanco Solar Holdings, LLC (USA)

3 Property Development 1 Lanco Hills Technology Park Private Limited 9 Nix Properties Private Limited 2 Uranus Projects Private Limited 10 Cordelia Properties Private Limited 3 Jupiter Infratech Private Limited 11 Deimos Properties Private Limited 4 Uranus Infratech Private Limited 12 Dione Properties Private Limited 5 Leda Properties Private Limited 13 Neptune Projects Private Limited6 Coral Orchids Private Limited 14 Pearl Farms Private Limited 7 Thebe Properties Private Limited 15 Telesto Properties Private Limited 8 Cressida Properties Private Limited

4 Resources1 Lanco Resources International Pte Limited 5 Western Australia Coal Terminal Pty Ltd2 Lanco Resources Australia Pty Limited 6 Mahatamil Mining and Thermal Energy Limited 3 The Griffin Coal Mining Company Pty Limited 7 Tasra Mining & Energy Company Private Limited4 Carpenter Mine management Pty Limited

5 Infrastructure 1 Lanco Infratech Limited 3 Lanco Kanpur Highways Limited2 Mercury Projects Private Limited

6 Others1 LE New York - LLC 3 P.T Lanco Indonesia Energy2 Lanco Holding Netherland B.V 4 Lanco Infratech (Mauritius) Limited

* During the year these companies had been sold/closed


133

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134

46 Related Party Transactions

a) Name of the related parties and description of relationship:Relation S. No. Related Party Name

Holding Company 1 Lanco Group Limited (LGL) Fellow Subsidiary 1 Lanco Babandh Power Limited (LBPL) Enterprises where Significant Influence Exists

1 Ananke Properties Private Limited(AnPPL)2 Avior Power Private Limited (AvPPL)3 Basava Power Private Limited (BPPL)4 Bay of Bengal Gateway Terminal Private Limited (BBGTPL)5 Belinda Properties Private Limited (BePPL)6 Bianca Properties Private Limited (BiPPL)7 Charon Trading Private Limited (CTPL)8 DDE Renewable Energy Private Limited (DREPL)9 Electromech Maritech Private Limited (EMPL)10 Finehope Allied Engg Private Limited (FAEPL)11 Genting Lanco Power (India) Private Limited (GLPIPL)12 Himavat Power Limited (HPL) 13 KVK Energy Ventures Private Limited (KEVPL)14 Lanco Devihalli Highways Limited (LDHL) 15 Lanco Hoskote Highway Limited (LHHL) 16 Lanco Vidarbha Thermal Power Limited (LVTPL) 17 Mimas Trading Private Limited (MTPL)18 Mirach Power Limited (MiPL) 19 Newton Solar Private Limited (NSPL)20 Phoebe Trading Private Limited (PTPL)21 Pragdisa Power Private Limited (PrPPL)22 Regulus Power Private Limited (RPPL) 23 Saidham Overseas Private Limited (SOPL)24 Siddheswara Power Private Limited (SiPPL)25 Tethys Properties Private Limited (TPPL)26 Vainateya Power Private Limited (VPPL)27 Vasavi Solar Power Private Limited (VSPPL)

Key Management Personnel 1 Sri L. Madhusudhan Rao (Chairman) (LMR)2 Sri G. Bhaskara Rao (Vice Chairman) (GBR)3 Sri G. Venkatesh Babu (Managing Director) (GVB)4 Sri S. C. Manocha (Whole Time Director) (SCM)

Relatives of Key Management Personnel

1 Sri L. Sridhar (Brother of LMR) (LS)

Enterprises owned or significantly influenced by key management personnel or their relatives

1 Chatari Hydro Power Private Limited (CaPTL)2 Cygnus Solar Projects Private Limited (Formerly Callisto Trading Private Limited.) (Csppl)3 Himachal Hydro Power Private Limited (HHPPL)4 Lanco Bay Technology Park Private Limited (LBTPL)5 Lanco Enterprise Private Limited (LEntPL)6 Lanco Foundation (LF)7 Lanco Horizon Properties Private Limited (LHrPPL)8 Lanco Kerala Seaports Private Limited (LKSPL)9 Lanco Transport Network Company Private Limited (LTNCPL)10 LCL Foundation (LCL)11 Nekkar Power Private Limited (NePPL)12 Ravi Hydro Electric Private Limited (RHEPL)13 Lanco Property Management Private Limited (LPMPL)14 Hastinapur Property Private Limited (HSPPL)15 Lanco Rani Joint Venture (LR)


135

b) Summary of transactions with related parties are as follows:(` Crores)

Nature of Transaction

March 31,2014Holding Company Fellow Subsidiary Enterprises

where Significant Influence Exists

Key Management Personnel

Relatives of Key Management

Personnel

Enterprises owned or significantly influenced by

key management personnel or their

relatives Party Name

Amount Party Name

Amount Party Name

Amount Party Name

Amount Party Name

Amount Party Name

Amount

Contract Services Rendered

LBPL 13.86 LHHL 18.76 LF 2.52KEVPL 14.74

13.86 33.50 2.52Shared Services Provided/(Availed)

LBPL 1.04 HPL 0.52

Interest Paid/(Received)

KEVPL (0.94) LEntPL (3.60)NSPL (2.16)DREPL (2.33)FAEPL (2.60)EMPL (2.63)SOPL (2.86)VSPPL (3.26)LDHL (7.11)LHHL (26.41)

(50.30) (3.60)Donations Paid LF 2.44Managerial Remuneration

GVB 4.09SCM 1.89GBR 0.86LMR 0.79

7.63Sitting Fee LMR 0.01 LS 0.03Receipts/Payments/Adjustments (Net)+(-)

LBPL (59.63) PrPPL 304.31 GBR 0.01 LEntPL 8.47VPPL 290.59 LR (0.89)OTHERS (3.61) LF (0.40)

(59.63) 591.29 0.01 7.18Purchase/(Sale) of Shares

HPL 12.04 GBR 0.01 LS 0.01RPPL 0.86LVTPL 0.02

- 12.92 0.01 0.01Share Application Money Paid/(Received) during the year

LBPL 99.66 LVTPL 13.64LDHL 6.82OTHERS 1.37SOPL (3.66)DREPL (10.40)

99.66 7.77Share Application Money Refunded by during the year

PrPPL 304.31VPPL 290.59

594.90Management Consultancy Services Rendered

LHHL 1.53LDHL 1.28

2.81


136

(` Crores)Nature of

Transaction March 31,2014

Holding Company Fellow Subsidiary Enterprises where Significant

Influence Exists



Personnel




Amount Party Name

Amount Party Name

Amount Party Name

Amount Party Name

Amount Party Name

Amount

Operation & Maintenance Services Rendered/(Availed)

DREPL 0.35EMPL 0.35FAEPL 0.35NSPL 0.35SOPL 0.35VSPPL 0.35GLPIPL (18.90)

(16.80)Other Expenses/(Incomes)/(Recoveries)

LBPL 0.09 LVTPL 0.11

Purchase/(Sale) of Goods/Power

LEntPL 2.84

Inter Corporate Deposits given/novated from (taken/refunded) during the year

LGL (152.00) LHHL 135.72 LEntPL 62.75LDHL 53.97

(152.00) 189.69 62.75

Purchase of Fixed Assets

LBPL 0.01 LDHL 0.26LVTPL 0.04HPL 0.00

0.01 0.30Sale of Fixed Assets LBPL 0.01 LDHL 0.63

LHHL 0.44HPL 0.11LVTPL 0.06

0.01 - 1.24Corporate Guarantee given to Banks/Financial Institutions on behalf of Related Parties (balance as at the year end)

LBPL 3,646.08 HPL 450.00LHHL 125.00LDHL 92.03OTHERS 86.06

3,646.08 753.09

Balance Receivable at the year end-Share Application Money

VPPL 15.21 PHPPL 0.15PrPPL 10.65 CHPPL 0.13OTHERS 0.60 NePPL 0.08

CaPTL 0.0326.46 0.39

Balance Receivable at the year end - Loans

LHHL 164.20 LEntPL 62.75LDHL 53.97VSPPL 23.70EMPL 18.66FAPPL 11.17NSPL 9.87DREPL 5.48

287.05 62.75


137

(` Crores)Nature of

Transaction March 31,2014

Holding Company Fellow Subsidiary Enterprises where Significant

Influence Exists



Personnel




Amount Party Name

Amount Party Name

Amount Party Name

Amount Party Name

Amount Party Name

Amount

Balance Receivable at the year end-Others (Trade Receivables,Interest receivable and Other Receivables)

LBPL 202.78 LVTPL 69.26 LR 14.02LHHL 68.69 LEntPL 4.15KEVPL 53.88 OTHERS 1.51VSPPL 3.48EMPL 1.35DREPL 0.94FAPPL 0.94NSPL 0.68SOPL 0.36CTPL 0.02OTHERS 12.32

202.78 211.92 19.68Balance Payable at the year end-ICD

LGL 152.00 SOPL 5.22

Balance Payable at the year end-Others (Trade Payables and Other Payables)

LBPL 1,525.06 LVTPL 933.15 SCM 0.00 LR 0.90HPL 756.71 GVB 0.00 LF 0.22KEVPL 248.34 LCL 0.14GLPIPL 14.79 LHrPPL 0.07VSPPL 1.14FAPPL 0.07NSPL 0.07EMPL 0.07LDHL 0.05LHHL 0.01OTHERS 5.16

1,525.06 1,959.56 0.01 1.33

(` Crores)March 31,2013

Nature of Transaction Fellow Subsidiary Enterprises where Significant Influence Exists



Personnel




Amount Party Name

Amount Party Name

Amount Party Name

Amount Party Name

Amount

Contract Services Rendered LBPL 349.88 LVTPL 405.27 LF 1.62KEVPL 33.46LHHL 8.27Others 2.71

349.88 449.71 1.62Shared Services Provided/(Availed) LBPL 1.10 HPL 0.55Interest Paid/(Received) KEVPL 2.13

EMPL (1.67)NSPL (1.67)VSPPL (1.85)


138





Personnel




Amount Party Name

Amount Party Name

Amount Party Name

Amount Party Name

Amount

FAEPL (2.54)DREPL (3.34)SOPL (4.39)LDHL (10.33)LHHL (21.50)

(45.16)Donations Paid LF 3.96Managerial Remuneration GBR 4.21

GVB 3.99LMR 3.45

- SCM 1.9713.62

Sitting Fee LMR 0.01 LS 0.04Receipts/Payments/Adjustments(Net)+(-) LBPL (478.44) LVTPL (268.07) GVB 0.00 LR 0.14

OTHERS (13.20) LF (1.75)LEntPL (2.42)

(478.44) (281.27) 0.00 (4.03)Purchase/(Sale) of Shares LBPL 44.55 HPL 12.05Share Application Money Paid during the year

LBPL 3.00 LDHL 7.21PrPPL 1.15VPPL 0.50

3.00 8.86Share Application Money Refunded during the year

PrPPL 10.79 NePPL 0.02Others 0.26

11.05 0.02Management Consultancy Services Rendered

LDHL 1.28LHHL 1.53

2.81Operation & Maintenance Services Availed GLPIPL (24.42)Other Expenses/(Incomes)/(Recoveries) HPL 0.06Inter Corporate Deposits given/(taken)/(refunded) during the year

LHHL 28.48

Purchase of Fixed Assets LBPL 0.00 LVTPL 0.18Sale of Fixed Assets LBPL 0.11 LVTPL 0.23

HPL 0.050.11 0.28

Corporate Guarantee given to Banks/Financial Institutions on behalf of Related Parties (balance as at the year end)

LBPL 3,232.71 HPL 370.90LHHL 358.92OTHERS 133.78

3,232.71 863.60Balance Receivable at the year end-Share Application Money

PrPPL 304.30 LHrPPL 0.32VPPL 305.78 NePPL 0.08RPPL 0.86 CaPTL 0.03PTPL 0.50 HSPPL 2.96PrPPL 10.65 LPMPL 0.58OTHERS 7.77

629.86 3.97


139





Personnel




Amount Party Name

Amount Party Name

Amount Party Name

Amount Party Name

Amount

Balance Receivable at the year end-Loans LHHL 193.37LDHL 72.90FAEPL 25.66VSPPL 23.70NSPL 20.99EMPL 20.37DREPL 19.79Others 0.13

376.91Balance Receivable at the year end-Others (Trade Receivables and Other Receivables)

LBPL 196.25 LVTPL 82.79 LR 14.01SOPL 59.71 OTHERS 1.17KEVPL 37.31DREPL 32.76LHHL 29.76FAEPL 2.07VSPPL 1.66NSPL 1.45EMPL 1.42HPL 0.27HPL 0.21CTPL 5.05OTHERS 4.23

196.25 258.69 15.18Balance Payable at the year end-Others (Trade Payables and Other Payables)

LBPL 1,474.24 LVTPL 932.12 GVB 0.00 LS 0.00 LEntPL 4.37HPL 739.07 LF 1.86PrPPL 308.51 OTHERS 0.21VPPL 290.59KEVPL 255.15GLPIPL 12.66VSSPL 2.64PTPL 0.95

1,474.24 2,541.69 0.00 0.00 6.44

47 Forward Contracts (` Crores)

Particulars March 31, 2014 March 31, 2013 Details of Forward Cover for amount outstanding as on Balance sheet dateFor Buy (Hedge for foreign currency loan repayment) USD 571.03 501.91 Details of Forward Cover for Firm Commitments and highly probable forecast transactionFor Sale (Against AUD) USD 856.61 244.80 Currency Swaps (Against CNY) USD 55.83 236.70


140

Details of Unhedged Foreign Currency Exposure Currency March 31, 2014Exchange Rate Amount in


Amount in INR (Crores)

Trade Payables EURO 82.58 0.08 6.71 Trade Payables USD 60.10 9.39 570.09 Secured foreign currency loans (Buyers Credit) EURO 82.58 0.19 15.73 Secured foreign currency loans (Buyers Credit) USD 60.10 44.33 2,664.43 Secured foreign currency term loans including interest USD 60.10 69.89 4,200.42 Advance from Customers USD 45.15 23.08 1,042.17 Trade receivables USD 60.10 10.57 635.50 Advances Recoverable in Cash or in kind (Advance to Supplier) USD 44.94 0.01 0.46 Advances Recoverable in Cash or in kind (Advance to Supplier) EURO 68.18 0.002 0.17 Advances Recoverable in Cash or in kind (Advance to Supplier) GBP 86.45 0.001 0.05 Net Exposure 7,863.37

Details of Unhedged Foreign Currency Exposure Currency March 31, 2013Exchange Rate Amount in


Amount in INR (Crores)

Trade Payables EURO 69.54 0.14 10.08 Trade Payables USD 54.39 11.92 648.10 Secured foreign currency loans (Buyers Credit) EURO 69.54 0.28 19.72 Secured foreign currency loans (Buyers Credit) USD 54.39 55.32 3,008.74 Secured foreign currency term loans including interest USD 54.39 72.43 3,939.28 Advance from Customers USD 44.90 25.01 1,123.06 Trade receivables USD 54.39 10.18 553.44 Advances Recoverable in Cash or in kind (Advance to Supplier) USD 44.68 0.16 7.21 Advances Recoverable in Cash or in kind (Advance to Supplier) EURO 69.54 0.01 0.48 Advances Recoverable in Cash or in kind (Advance to Supplier) GBP 81.80 0.00 0.05 Net Exposure 8,187.80

48 Movement in Provisions (` Crores)

Particulars March 31, 2014Mine

Restoration Operations & Maintenance

Warranties

(a) Balance as on 01.04.2013 290.67 23.83 351.60 (b) Additional Provision made during the year - - 56.54 (c) Provision reversed/used during the year 90.20 12.57 - (d) Foreign exchange rate variation (3.11) - 36.91 (e) Balance as on 31.03.2014 (a+b-c+d) 197.36 11.26 445.05

(` Crores) Particulars March 31, 2013

Mine Restoration Operations & Maintenance

Warranties

(a) Balance as on 01.04.2012 230.14 25.50 259.99 (b) Additional Provision made during the year 52.49 10.61 75.19 (c) Provision reversed/used during the year - 12.28 - (d) Foreign exchange rate variation 8.05 - 16.42 (e) Balance as on 31.03.2013 (a+b-c+d) 290.68 23.83 351.60


141

49 Capital and Other Commitments(` Crores)

March 31, 2014 March 31, 2013Estimated amount of contracts remaining to be executed on capital account and not provided for 21,015.46 19,667.54 Investment Commitment in Associates 2,327.34 2,453.22 Contractual obligations for purchase of coal under fuel supply agreement 41.74 10.45 Contractual obligation for Long Term Access for transmission of power 42.90 56.58

50 Contingent Liabilities - Not probable and therefore not provided for

(A) Claims disputed by Group * (` Crores) March 31, 2014 March 31, 2013

Duty Draw Back 7.28 7.28 Custom Duty 323.71 191.08 Sales tax Liability 8.37 5.69 Service tax Liability 121.45 113.04 Income tax Liability 11.50 5.01 Construction Cess under Building and Other Construction Workers Act, 1996 3.45 3.45 Others 34.90 30.29

* Tax demands disputed by the group, based on the internal assessment and/or legal opinion, management is confident that these matters will be decided in its favour.

(B) Company’s share of contingent liabilities of associate companies is ` 3.14 (March 31, 2013: ` 2.19) Crores.

(C) Bond for SEZ - In case of LSPL, Bond Cum Legal Undertaking for Special Economic Zone (SEZ) has been entered between LSPL and President of India acting through the Development Commissioner of Visakhapatnam SEZ and the Special Officer for ` 171.24 Crores. As per the terms and conditions of the Bond cum Legal Undertaking, LSPL shall be obligated to pay all duties chargeable on the goods imported if LSPL carries any operations other than authorized operations as per SEZ Act 2005. The amount of utilisation till March 31, 2014 is ` 116.95 (March 31, 2013: 115.49) Crores.

(D) Outstanding corporate guarantees - ` 4,407.45 (March 31, 2013: ` 4,101.61) Crores.

(E) During the year the company’s proposal to restructure the debt has been approved by the Corporate Debt Restructuring Empowered Group (CDREG) vide letter of approval dated December 20, 2013 (taking in to consideration April 01, 2013 as cutoff date). The company executed Master Restructuring Agreement (MRA) on December 27, 2013. The future sacrifice envisaged under the scheme is not determinable as the company’s obligation to compensate such sacrifice to the lenders is contingent upon fulfilling various future conditions whose outcome is currently uncertain.

(F) Claims not acknowledged as debts

(i) LKPL Phase - I is selling electric energy under a power purchase agreement (PPA) with Andhra Pradesh Power Co-ordination committee (APPCC), APPCC has raised certain disputes regarding the installed capacity and the reduction in tariff as per the PPA which are subjudice at present. As these matters are technical and interpretational in nature, the Management contends that it is not practicable to estimate the overall financial impact, if any, at this stage. Pending such disputes, LKPL has recognized revenue to the extent accepted by the APPCC as in earlier years. Further, the Management, based on its internal assessment and legal opinion, is confident that the above matters will be decided in its favour.

(ii) In case of LKPL, on December 15, 2005 APPCC raised a claim of liquidated damages amounting to ` 95.16 Crores towards alleged delay in commissioning of the Phase - I project as stipulated in PPA by LKPL and has unilaterally adjusted dues to extent of ` 46.25 Crores from the monthly tariff bill dated December 12, 2005 against this claim.

On June 13, 2011, Andhra Pradesh Electricity Regulatory Commission (APERC) passed an order stating that there was a delay in the commissioning of the Phase - I project and thus, the liquidated damages amounted to ̀ 74.87 Crores. However, it is held that such claim by APPCC is barred by limitation. Whilst the matter stood thus, APPCC adjusted another ` 62.69 Crores against the tariff bill dated June 13, 2011 and informed LKPL that an interest of ` 62.14 Crores accrued on their claim and demanded the balance amount of ` 28.07 Crores. LKPL filed appeal with Appellate Tribunal for Electricity (APTEL) against the order dated June 13, 2011 and APTEL by its order dated April 07, 2014 reserved the judgment.

The Management on the basis of a legal advice, is confident that the amounts so deducted are recoverable and no adjustments are required in respect of such dues recognized as receivable as at March 31, 2014.


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(iii) In case of LKPL, On March 13, 2012, APERC passed an order that the LKPL is entitled for reimbursements of Minimum Alternate Tax (MAT) for the periods April 2006 and onwards with consequential reliefs i.e. with interest at the rate prescribed in the PPA till the realization of the said amount. Pending acceptance by the Board, the revenue in respect of MAT reimbursements from April 2001 have been postponed. In respect of the claims prior to April 2006, LKPL has filed an appeal before APTEL and the same was allowed in favour of the LKPL. APPCC has filed an appeal before the Supreme Court and the Supreme Court has an interim arrangement as directed APPCC to pay 50% of the MAT computed by APERC for the period 2006 to 2009 directly to LKPL and remaining 50% to secure by way of Bank Guarantee. APERC also allowed the claim of LKPL from 2009 onwards. Upon appeal by APPCC, Supreme Court directed APPCC to pay 50% of MAT directly to LKPL and balance to secure by way of BG for the period 2009-12. However, the main case is pending.

(iv) In case of LTPCL Gail India Limited raised a claim of ` 2.44 Crores towards recovery of market rate for APM gas supplied beyond APM allocation for the period July 01, 2005 to March 31, 2010. Based on legal advice obtained, the Management is of the view that the above claims are not tenable and the same can be successfully contested and hence no provision has been made in the accounts. As per the direction of Delhi High Court, cases has been referred for the Arbitration. GAIL made an application to Supreme Court to merge all the cases with similar issue and be heard in Delhi High Court or by Supreme Court itself.

(v) In case of UPCL, a claim raised by one of the contractor amounting ` 143.17 Crores. The Management, based on its internal assessment, is confident that the claim is not tenable.

(vi) In case of LSEPL, with respect to two of its EPC Contracts for setting up of solar power plants, the customer of contractee has disputed the Commercial Operation Date (COD) which may result in to liquidated damages of ` 9.56 Crores (` 4.70 Crores towards contract with Newton Solar Private Limited and ` 4.86 Crores towards contract with DDE Renewable Energy Private Limited). As per EPC Contract terms the liquidated damages shall be borne by contractor, i.e. LSEPL. As the dispute is referred to and pending before arbitration, the same is not provided for in the books of the LSEPL.

(vii) The Griffin Coal Mining Company Pty Ltd (GCM) is currently mining through some leases that overlay land owned by a company Griffin Windfarm Holdings Pty Ltd (Griffin Windfarm). Griffin Windfarm used to be a related entity until Lanco Resources Australia acquired GCM. GCM maintains that any activity that may have occurred in the relevant area was done with the consent and agreement of Griffin Windfarm. GCM and the liquidators for Griffin Windfarm (Pricewaterhouse Coopers) have engaged in discussions with a view to resolving the matter but at this stage, no resolution has been reached. The matter is next listed for a directions hearing in the Warden’s Court on July 11, 2014.

51 In respect of the amounts billed by LKPL, for sale of electrical energy and for other claims up to June 15, 2003, APTRANSCO has retained certain amounts. Recognition of this revenue has been postponed till acceptance by APTRANSCO. LKPL has initiated proceedings in APERC for resolution of all such pending issues regarding outstanding amounts with APTRANSCO.

52 In case of LKPL, a) The Phase - III expansion is getting ready for operation and operations of Phase - II plant is stalled due to shortage of gas. LKPL has approached its phase - III lenders for reschedule of commercial operation date (COD) and repayment of project term loans. During the year majority of the lenders approved the proposal and the remaining lenders approvals are under process. LKPL is actively pursuing/making representations with various government authorities to secure the gas, which is in short supply now. LKPL is closely monitoring the macro situation and is evaluating various approaches/alternatives to augment the gas supply. The Management is confident that the Government of India (GOI) would take necessary steps/initiatives in this regard.b) During the period July 1, 2013 to March 31, 2014 LKPL has capitalised ` 169.52 crores borrowing costs incurred on loans pertaining to Phase - III plant which is yet to complete commissioning activities in respect of which, LKPL has to secure the supply of requisite natural gas. As the supply of natural gas is under the control of GOI and the present situation is beyond the control of LKPL, LKPL has approached Ministry of Corporate Affairs (MCA) seeking relaxation from the applicability of provisions of Accounting Standard - 16 to continue the capitalisation of borrowing costs.

53 a) In case of LAPL Unit - I, All the pending cases between LAPL, PTC, Madhya Pradesh Power Management Company (MPPMC) and Govt. of Madhya Pradesh were withdrawn jointly by all the parties by August 2013.

b) LAPL entered into a Power Purchase Agreement (“PPA”) with PTC India Ltd. (PTC) for sale of power generated from its Unit - II. PTC further signed a Power Sale Agreement (“PSA”) with Haryana Power Generation Corporation Limited (“HPGCL”) for sale of power purchased from LAPL. LAPL had terminated the aforesaid PPA, as PTC failed in its obligation under the PPA to obtain long term open access within the specified time which is a condition precedent to be fulfilled by PTC under the PPA. PTC has also initiated arbitration proceedings on the aforesaid termination to declare the PPA termination to be illegal, baseless, void and unsustainable. PTC has claimed compensation of ` 162.55 Crores and to reimburse for any charge/claim which HPGCL may claim from PTC and also to direct LAPL to pay PTC damages for the loss of business due to illegal termination of the PPA by LAPL. The Management is


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confident that the Arbitral Tribunal will award a suitable order in favour of LAPL reiterating the validity of termination of the PPA. The Arbitration proceedings are in process.

c) LAPL, thereafter, signed another PPA with Chhattisgarh State Power Trading Company Limited (“CSPTCL”) for sale of 35% of the capacity in accordance with the Implementation Agreement signed by LAPL with the Government of Chhattisgarh. LAPL filed an appeal and stay application with the Appellate Tribunal of Electricity (“APTEL”) against the order of the HERC dated February 02, 2011. The APTEL in its interim order dated March 23, 2011 granted a limited and conditional stay of the order and directed that 35% of the power generated from LAPL Unit - II should be sold to the state of Chhattisgarh and the balance power is to be sold to PTC.

d) As per interim order dated March 23, 2011 of APTEL, the LAPL started supplying power to PTC and CSPTCL w.e.f. May 7, 2011. APTEL passed the final order, dismissing the appeal of LAPL and remanding the matter to HERC and also directed HERC to grant an opportunity of being heard to CSPTCL while confirming the said interim order. Against the order of APTEL, LAPL filed a civil appeal along with an application for stay before the Hon’ble Supreme Court of India (SC). SC vide its order dated December 16, 2011 directed LAPL to continue supply of electricity in terms of the APTEL interim order and also directed HERC to fix/approve the tariff of sale and purchase of power for the period in dispute uninfluenced with any earlier orders. Further, SC also stayed further proceedings pending before HERC related to the petition filed by HPGCL challenging the termination of PPA. Pursuant to SC order, LAPL had filed an application to fix/approve the tariff for the dispute period before HERC. HERC by order dated October 17, 2012 determined the tariff and held that the cap tariff of ` 2.32/kWh would prevail for the power supplied to Haryana. On November 27, 2012, LAPL had filed an Interim Application (I.A) before SC praying to direct Haryana (HPGCL) to pay the outstanding amount and as well as to direct to pay for future based on the rate computed in accordance with the CERC Tariff Regulations, 2009 or alternatively direct CERC to re-determine the tariff as per CERC Tariff Regulations, 2009. On February 19, 2013, the SC passed an order directing LAPL to file an appeal in APTEL. On March 04, 2013, an appeal was filed in APTEL against HERC order dated October 17, 2012. APTEL has passed a judgement order on January 03, 2014 setting aside the HERC order dated October 17, 2012 and has directed HERC to re-determine the tariff as per HERC Tariff Regulations 2008. HERC has commenced the process of re-determination of tariff. HPGCL has filed an appeal before SC requesting to set aside APTEL order dated January 03, 2014. The SC has directed to list this case along with the appeal of LAPL. LAPL had recognized revenue on the basis of CERC Tariff Regulations, 2009, whereas the payments were released by PTC (Haryana) on the basis of erstwhile PPA capped tariff rate resulting in closing receivables being higher by ` 195.24 Crores. Pursuant to the APTEL judgement order dated January 03, 2014, LAPL has filed before HERC the necessary details of project cost and tariff computation based on HERC Tariff Regulations 2008. The Management based upon its assessment and legal advice obtained, is confident of the outcome of the matter in its favour and recovery of the above said receivables.

e) Pursuant to APTEL’s interim order dated March 23, 2011 directing LAPL to supply 35% power to Chhattisgarh, LAPL in terms of PPA dated January 12, 2011 with CSPTCL commenced power supply w.e.f. June 22, 2011. The said PPA with CSPTCL provides for 5% of the net power to be supplied at Energy Charges and 30% of the net power at Total Tariff (Fixed Charges + Energy Charges) computed as per CERC Tariff Regulations, 2009. LAPL had recognized revenue on the basis of CERC Tariff Regulations, 2009, whereas the payments were released by CSPTCL initially at a flat rate of ` 2.85/kWh and later at an arbitrary rate of ` 2.52/kWh and ` 2.46/kWh for FY 2011-12 and FY 2012-13 respectively resulting in closing receivables being higher by ` 32.25 Crores. Since the power supplied by LAPL to CSPTCL was in turn supplied by CSPTCL to CSPDCL (Discom of Chhattisgarh), LAPL requested the Chhattisgarh State Electricity Regulatory Commission(CSERC) to adjudicate on the petition filed by it under Section 86 (1) (f ) of the Electricity Act, 2003. CSERC has completed the hearings in the matter and order has been reserved. The Management based upon its assessment and legal advice obtained, is confident of the outcome of the matter in its favour and recovery of the above said receivables.

54 In case of LAPL, South Eastern Coalfields Limited (SECL), in line with the policy guidelines of Ministry of Coal (MoC) that were revised from time to time, reduced the quantity of linkage coal due to which the operations of Unit - II were significantly affected. LAPL and SECL have signed FSA as per the presidential directive in Aug 2013, and thereafter linkage coal supply has been totally stopped stating that the PPA is sub-judice as above. LAPL has already requested the Buyers to allow the power supply with alternative coal for which LAPL is yet to receive the response. Further, Unit - II was unable to source coal through e-auction/open market sources in view of non-receipt of outstanding receivables from the Buyers due to the above disputes. APTEL by its order dated January 03, 2014 has directed HERC to re-determine the tariff as per HERC Tariff Regulations, 2008, which is in advanced stage. Upon fixation of tariff by HERC, Unit - II would be in a position to receive the outstanding receivables for the past supplies and tariff determined for the future supplies would enable Unit - II to resume its operations effectively. As the process of tariff determination is in advanced stage, the Management is confident of resuming Unit - II operations very soon.

55 In case of LAPL, there are additional advances to the tune of ̀ 540.67 Crores made by LAPL to the Company (EPC Contractor) which are to be recovered from dues to EPC Contractor. As per the understanding with Company, LAPL has agreed to adjust the retention money of ` 367.95 Crores against Bank Guarantee towards the above said additional advances after obtaining the Lender’s approval. The process of Lenders approval is in progress and the management is confident of obtaining the same. In addition to this, an amount of ` 100.54 Crores is payable to the EPC Contractor of Unit 1 & Unit 2. The said balances eliminated while preparing these consolidated financials.


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56 In case of LAPL, The Government of India (Ministry of Power) issued a notification No.A-4/2011-IPC dated August 17, 2011, requiring all the existing eligible power projects, inter alia, to obtain Provisional Mega Project Status on satisfying certain conditions as stated in the said revised policy guideline for setting up of Mega Power Projects.

After obtaining the Provisional Mega Power Status, LAPL shall has to furnish security in the form of Fixed Deposit Receipt (FDR) for an amount equal to the Customs Duty Payable on imports. As Unit 3&4’s original Project Cost was estimated on Mega Status basis, LAPL had to approach Lenders for sanction of additional loan to meet this unexpected interim fund requirement which took quite some time and after receipt of loan sanction, LAPL started clearing the import materials lying at port. Subsequently, the Government permitted Bank Guarantees (BG) also as a form of security and LAPL, keeping in view the differential savings, desired to minimize the cost of Interest During Construction (IDC) by opting for furnishing of BG in the place of FDR. Accordingly, LAPL had again approached its Lenders for sanction of BG limits and awaits their sanction for this mid-way requirement. Meanwhile, the imported materials reached the port and got accumulated for clearance to the tune of ` 627.93 Crores which are included in Asset Under Construction.

Further to the above, certain midway regulatory changes in the form of Environment Compliance and stipulation of certain additional facilities by the authorities have resulted in re-orientation of layout leading to delay in project implementation and change of scope in the EPC Contract causing time and cost overrun of the project. LAPL approached its lead lender for appraising and sanction of the cost overrun funding and is confident of tying up the same with its lenders and completing the project as per the revised timelines. Even after considering the cost and time overrun as stated above, the project is viable keeping in view the increasing power tariffs with the ever increasing power demand. “

57 In case of UPCL, in line with the CERC Regulations, 2009 UPCL has filed petition for determination of tariff for both the units during the year. The final order for determination of Tariff of UPCL is issued by CERC on February 20, 2014. Appeals were filed by the Principal Buyers and UPCL independently after the Balance sheet date against the tariff order which is yet to be heard by the APTEL. Balances representing Sundry Debtors and the amount of Sales revenue recognized are based on final tariff order issued by CERC on February 20, 2014.

58 In the current year LAnPL has received ` 50.21 Crores towards Advance Loss of Profits (ALOP) & ` 7.66 Crores towards material damages after adjusting the interim payments by the insurance company in the previous years, as full and final settlement of the claim. Amount received against ALOP has been adjusted in Project Capital cost and amount received against Material damage & increased cost of working has been credited to Contractor.

59 In LAnPL UI charges has been accounted on the estimates of the management which is amounting to ` 35.65 Crores, pending invoicing of these charges from State Load Despatch Center (SLDC). The management does not expect any material difference affecting the current year’s financial statement due to the same.

60 LAnPL is in the process of setting up a new project (Anpara phase-II) of 2x660 MW at Bhognipur, U.P. The land for setting up of the Plant has been acquired and most of the approvals have been received. Advance of ` 286.91 Crores has also been given to EPC contractor for procurement of BTG equipment and the same has been funded from equity. The approval for linkage Coal is yet to be obtained pending which the Financial Closure is yet to be completed.

61 In case of LAnPL, The plant is operating at sub optimal levels since inception onwards due to initial stabilizing phase and on account of coal and infrastructure constraints. LAnPL is taking necessary steps and confident of improving the operating levels of the plant in future and would meet financial obligations as and when they arise. Due to non fulfillment of certain obligations by Uttar Pradesh State Power Distribution Companies (Buyers) under the PPA with LAnPL for sale of 1,100 MW power, LAnPL has terminated the PPA. LAnPL exercised the option available under PPA and filed petition before Uttar Pradesh Electricity Regulatory Commission (UPERC) for resolution of options. The management is confident of realising the carrying value of assets in the books.

62 In case of LAnPL, The Deputy Labour Commissioner, Sonebhadra (U.P.) has sent notices during year 2011 asking it to get registered under “Building & Other Construction Workers Act 1996” as well as submission of various documents. In response there of LAnPL has filed a writ petition with the Allahabad High Court restraining the Government to do any assessment/raise any demand on the LAnPL in respect thereof. The Hon’ble High Court vide its order dated May 31, 2011 has allowed LAPL application and has stayed issuance of any demand in the case concerned. Further any liability if any, accruing on this account shall be recovered from the EPC Contractor.

63 LAnPL filed a SLP before Hon’ble Supreme Court of India challenging the Order of High Court dated November 11, 2011 directing LAnPL to deposit transit fee with State of Uttar Pradesh (State). The Hon’ble Supreme Court Order vide dated January 31, 2012 has stayed any demand and recovery of transit fee. Further, the Hon’ble Supreme Court Order vide dated October 29, 2013 has modified the stay order that the State shall be free to recover transit fee for forest produce and any such recovery shall remain subject to the ultimate outcome of present petitions pending in the Court. Any liability, if any accruing on this account is recoverable from our Procurer “Uttar Pradesh Power Corporation Limited”.


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64 In case of LVTPL (an associate of the company), a Public Interest Litigation (PIL. No 78/2010) was initiated in Hon’ble Supreme Court in April 7, 2012 against Mumbai High Court Order, dated October 18, 2011, regarding a petition filed in public interest, challenging public hearing conducted for granting environment clearance, wherein it was ordered to continue the activity undertaken by LVTPL at its own risk and the PIL was dismissed by the Hon’ble Supreme Court on May 4, 2013. But LVTPL took a view to slowdown the execution of the project till all the required approvals are obtained. Second public hearing was held on June 20, 2012, consequent to which MPCB had submitted the proceedings to the MoEF on September 11, 2012. In the meeting the Expert Appraisal Committee (EAC) of Environmental Impact Assessment for Thermal Plants held on November 18, 2013, the company had presented the action plan for implementation and budgets regarding issues raised by public. The EAC, in its meeting held on December 16, 2013, recommended for revalidation of Environmental Clearance.

Factors stated above and various other factors beyond the control of LVTPL, have lead to substantial time and cost overrun. The management is establishing various measures to obtain the requisite clearance and satisfy conditions required as per the contractual obligations. LVTPL is also confident of obtaining timely operational and financial support from promoters and lenders for commissioning the project within targeted timelines. “

65 LTHPL has provided ` 4.72 Crores (March 31, 2013: ` 4.72 Crores) towards Environmental Cess in the books of accounts on import of goods from outside Sikkim as on Balance sheet date under the Sikkim Ecology Fund and Environmental Cess Act but the same has not been remitted to the Government of Sikkim as LTHPL has represented to the Government of Sikkim to waive the Cess on the project and LTHPL is awaiting the Government’s direction/order in this respect.

66 In case of LTHPL, due to delay in diversion of forest land, poor geology and earthquake, leading to substantial time and cost overrun, the LTHPL has requested the customer to revise the PPA Tariff for viability of the project. As there was no positive response from the customer, on June 20, 2012, the LTHPL terminated the PPA and filed a petition before regulatory commission for determining of revised tariff. To facilitate the revised tariff determination process, termination notice for PPA was withdrawn on October 18, 2013. In the petition, Hon’ble Commission is prayed to determine the provisional revised levelised tariff of ̀ 4.49 per unit as per the tariff calculations in accordance with CERC (Terms and Conditions of Tariff) Regulations, 2009 based on the revised estimated project cost of ̀ 5,453.91 Crores computed by the independent consultant (Tractable Engineering). LTHPL also prayed to approach the Hon’ble Commission for determination of final tariff following COD of the Project. LTHPL approached lenders for funding the cost overrun which is under consideration. The management is confident of getting the revised funding from the lenders, complete the project as per the revised timelines and resolution of PPA issues. The management is confident that even after considering the cost overruns and delays in execution there is viability in the project and hence does not foresee any requirement for adjustment for carrying value in the financial statements.

67 LBHPPL terminated the Power Purchase Agreement (PPA) entered with PTC India Limited (PTC). Haryana Power Generation Corporation Limited (HPGCL), the ultimate beneficiary (as PTC entered into a PSA with HPGCL), disputed the termination. HPGCL approached the Honorable HERC seeking inter alia that (i) the termination of the PPA be declared illegal and invalid and (ii) that both LBHPPL and PTC be directed to comply with their obligations qua HPGCL (“HPGCL Petition”). LBHPPL contended HERC jurisdiction. On August 25, 2011 the Hon’ble HERC passed its order holding that it has jurisdiction to hear the HPGCL Petition. LBHPPL filed an appeal in Appellate Tribunal for Electricity (APTEL). On August 09, 2012 Hon’ble APTEL held that HERC does not have jurisdiction. HPGCL & PTC both have challenged the decision of APTEL separately with Hon’ble Supreme Court of India. Petitions have been admitted by Hon’ble Supreme Court. The matter is pending with Hon’ble Supreme Court for hearing. Based on the Legal opinion obtained by LBHPPL, the management is confident that outcome of the matter in its favour.

68 In the case of LMHEPL, Considerable damage has been witnessed across the project site due to devastating flash floods occurred in the Rudraprayag district of Uttarakhand in the month of June, 2013. The LMHEPL Project is insured under CAR & ALOP policies to cover the damages including Act of God. Insurance Claims has been lodged with the insurer during the year. Management is confident that the potential damage to the carrying value of asset is unlikely to exceed the expected insurance claim.

69 In case of LTPL & LHPL has received a notice from Assistant Provident Fund Commissioner, Shimla regarding project work as a principal employer. The EPC contractor (company) is appearing before the PF authorities. Further any liability regarding the case will be borne by the contractor in align of EPC contract.

70 In case of NETS, During the year 2010-11 NETS had contracted with Madhya Pradesh Power Trading Company Ltd (MPPTCL), a supplier for purchase of power from May 2010 to March 2011 at pre determined prices. Due to the drastic fall in power demand arising out of widespread monsoons and change in law due to new UI Regulations (falling under the force majeure clause of the tender document) and consequential significant reduction in prices, the NETS could not schedule the sale of power onwards at the contracted price, after June, 2010. The NETS had accordingly suspended the contract in November 2010 and also proposed the customer to off-take power at the average prevailing market price and to extend the contract period beyond March 31, 2011 if the contracted power could not be sold by then. The supplier had not responded to the proposal, but has raised bills for compensation charges amounting to ` 86.55 Crores which has not been accepted by the NETS.


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During the year 2011-12, the supplier encashed the Letter of Credit of ` 5.00 Crores given by the NETS and has not refunded earnest money deposit of ` 0.25 Crore. The supplier also filed a petition before the Madhya Pradesh Electricity Regulatory Commission (MPERC) under section 86(1)(f ) of the Electricity Act, 2003, for adjudication of dispute with NETS. By order dated October 1, 2011, MPERC held that it has jurisdiction to adjudicate the dispute between licensees. The NETS filed an Appeal against the aforesaid order before the Appellate Tribunal of Electricity (APTEL). The Appeal was admitted on February 13, 2012 and further proceeding before the MPERC was stayed pending the appeal in APTEL.

Further, NETS filed I.A. 359 of 2012 on October 26, 2012 for dispose of the present Appeal. The Hon’ble APTEL on November 8, 2012, dismissed the appeal and vacated the interim stay order granted by it with a liberty to approach the Commission (MPERC) seeking appropriate relief according to law.

The Hon’ble Commission (MPERC) heard both the parties and obtained written submissions from both the parties. The Hon’ble Commission (MPERC) passed an order on December 31, 2013, stating that Madhya Pradesh Power Management Company Ltd (MPPMCL) (erstwhile Madhya Pradesh Power Trading Company Ltd) is entitled to receive reasonable compensation (` 14.06 Crores as calculated by the MPERC).

MPPMCL has raised an invoice dated March 12, 2014 for an amount of ` 9.06 Crores (i.e. after adjusting an amount of ` 5.00 Crores LC encashed by it, earlier), NETS has paid the invoice amount of ` 9.06 Crores. Accordingly the matter has been settled.

71 LHTPPL has obtained possession of land parcel of 100 acres at Manikonda, Hyderabad, as per the development agreement (‘the agreement’) dated November 6, 2006, entered with Andhra Pradesh Industrial Infrastructure Corporation (APIIC). The land has been obtained for developing residential and commercial space and amenities. The transfer of ownership to the LHTPPL of such land is subject to the fulfillment of the commitment to develop the land as stipulated in the agreement. Accordingly to the extent of development commitment already executed by the LHTPPL, proportionate land admeasuring 26.97 Acres has been transferred in favour of the LHTPPL on June 22, 2010. The management is hopeful to get the balance land transferred in the favour of LHTPPL in due course.

The ownership of the land obtained as above is disputed by various parties stating that the land belongs to Dargah and consequently being administered by the Wakf Board. The disputes are presently pending before at various levels of judiciary bodies. During the year 2010-11, The Andhra Pradesh Wakf Tribunal (‘the tribunal’) passed a temporary injunction against the LHTPPL and restrained the LHTPPL from alienating the land. The LHTPPL, in response to the temporary injunction, had filed review petitions in the High Court of Andhra Pradesh for setting aside the said injunction of the tribunal and the same was dismissed. Further the LHTPPL had appealed against the order of the High Court before the Hon’ble Supreme Court, which granted an interim stay against the orders of Honourable High Court of Andhra Pradesh and the WAKF Tribunal. Pending the final outcome of Appeal before the Supreme Court, the Management of the LHTPPL, on the basis of an expert legal opinion, is of the view that no adjustments are required in the financial statements in respect of such disputes.

72 In case of LHTPPL, Cash Flows from the operations have got affected due to ongoing legal matter regarding the title of the land which was sold by Government of Andhra Pradesh under Competitive bidding for cash consideration. Currently the short fall in cash flows are supported by the Company. Consequent to the interim order of the Hon’ble Supreme Court, the management is estimating that the cashflows required for the project implementation and business requirements would be met from the customer collections and if any short fall in the cash flows arises, will be supported by the Company. Based on the support from the company the management is confident of executing the on going project in the revised timeline.

73 In case of LHTPPL, As per the business plan, of the total 100 acres allotted, land admeasuring 13.56 acres had been earmarked for the development of residential properties, land admeasuring 6.00 acres had been emarked towards construction of Hanging Gardens, land admeasuring 29.08 acres has been earmarked for Special Economic Zone (SEZ) and land admeasuring 4.10 acres has been earmarked for Club house and shopping street. Out of the balance land admeasuring 47.26 acres, 1.6 acres has been converted into SEZ during the financial year and transferred the cost from Development Work in progress to Land under fixed Asset. The Balance 45.66 acres approximately will be classified under fixed assets, investment properties and inventories, as the case may be, based on ultimate end use pattern as per final business plan of the LHTPPL. Pending such reclassification the cost incurred on development of projects is included under the head “Development works in progress.”

74 Other adjustment in note 27 is pertaining to LHTPPL, which includes IT-6 Tower CENVAT Input Credit ` 3.19 Crores Charged to Development Work In Progress (DWIP), Expenses Transfer from SEZ profit centre to DWIP of ` 0.23 Crore and Transfer to Capital work in Progress of ` (5.09) Crores.

75 In case of LSPL, had filed an application for seeking an approval of the Central Government U/s 309 (5B) of the Companies Act, 1956 for waiver of recovery of excess remuneration paid to the Whole Time Director of the LSPL, during the period from 14.04.2010 to 31.03.2011.The application has been examined by the Ministry of Corporate Affairs (MCA) and approval for waiver of recovery of excess remuneration has not been granted. Consequently, the LSPL had recovered the excess remuneration paid to the Whole Time Director and complied with the directives of the Central Government of India.


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76 In view of the growing solar power generation market in India and the favorable policy initiatives for the growth of the sector, LSPL proposed to alter the scope and size of its project by increasing Polysilicon capacity from 1250 TPA to 1800 TPA and wafer manufacturing capacity from 80 MW to 100 MW and also add 75 MW of module line in addition to the existing facility, which is leading to delay in project implementation and change of scope in the EPC Contract causing time and increase in cost of the project. The Lead Lender to the Project, in consultation with the LSPL has assessed the project viability based on the revised project parameters. Based on the revised envisaged Project cost, along with independent assessment done by ITCOT Consultancy and Service Ltd (ITCOT stands for Industrial and Technical Consultancy Organization of Tamilnadu) ; the Project has been assessed to be technically feasible and financially viable. The management is confident of getting the revised funding from the lenders and complete the project. Hence the LSPL does not foresee any requirement for adjustment in carrying value of assets under construction as at March 31, 2014.

77 In case of LSEPL, some of the balances in Trade Receivables, Retention Money, Sundry Creditors and Advances are subject to confirmations and adjustments, if any. Such adjustments, in the opinion of the management, are not likely to be material and will be carried out as and when ascertained.

78 In case of LSPL, Capital advance includes an amount of ` 16.38 Crores paid to Chhattisgarh State Industrial Development Corporation Ltd (CSIDCL) for acquisition of Land for future expansion of poly-wafer-module project.

79 In case of DSPL, on account of various factors beyond the control of the DSPL (like non-availability of additional land, non-availability of Heat Transfer Fluid (HTF), re-designing of the Project, fluctuations in forex), the project has undergone substantial time and also cost overrun. The DSPL has filed petition with Central Electricity Regulatory Commission (CERC) for extension of Commercial Operation Date (COD) and to revise the Power Purchase Agreement (PPA) Tariff for viability of the project. As per the petition filed with the CERC, the DSPL requested CERC for revised COD of 18 clear months from the date of increased tariff approval received by the DSPL. The Management is confident of obtaining permissions/approval for the requests made in the petition filed before CERC and also raising fund for executing the project, hence the DSPL does not foresee any requirement for adjustment in carrying value of assets under construction as at March 31, 2014.

80 Incase of DSPL, Assets Under Construction includes Steam Turbine Generator amounting to ` 100.11 Crores, held as trust by the Original Equipment Manufacturer at warehouse outside India.

81 In case of GCM, Genbow Pty. Ltd- Forfeiture of Coal Mining Leases: On May 10, 2013, Warden Wilson handed down his judgment in respect of two preliminary questions before him, the principal one being whether, on a proper construction of the State Agreement and associated legislation, Griffin’s coal mining leases (CMLs) were exempt from the need to comply with the expenditure conditions under the 1978 Mining Act. The Warden confirmed Griffin’s view that Griffin’s CMLs are exempt from the requirement to comply with expenditure conditions under the 1978 Mining Act. The Warden accepted all of Griffin’s arguments in support of the contention. In essence, he accepted that the CMLs continue to be governed by the 1904 Mining Act by virtue of the State Agreement and associated legislation and nothing in Schedule 2 of the 1978 Mining Act affected this position. Griffin is now in the process of recovering a portion of its legal costs from Genbow Pty Ltd.”

82 In case of GCM, WR Carpenter Agriculture Pty Ltd - Land Access : This matter relates to a claim by WR Carpenter Agriculture Pty Ltd (WRC Ag) against Griffin Coal for compensation for mining claimed to be occurring on some coal mining leases that overlay land owned by WRC Ag. WRC Ag used to be a related entity until Lanco Resources Australia acquired GCM. Until that point WRC Ag knowingly allowed GCM to continue to mine through its land, which commenced in early 2009. On April 11, 2013, Warden Wilson ordered that Plaint 372079 be stayed until further order (on the basis of WR Carpenter having failed to comply with order 2 of the warden dated February 13, 2013) and that WRC Ag pay to the Director-General of Mines the amount of $192,463 to be held in trust as security for costs in plaint 372079. GCM has subsequently entered into an agreement with WRC Ag which will result in this claim being dismissed permanently.

83 In case of CMM, Department of Mines and Petroleum Vs CMM – Char Plant Magistrate’s Court proceedings : On October 23, 2008, an explosion occurred at the Ewington Trial Char Plant, located within a fenced compound on the GCM Ewington Mine, which resulted in a fitter working at the plant site that day, being badly burned.

On November 24, 2011, the State Solicitor’s Office (SSO) (on behalf of the Department of Mines and Petroleum) served GCM and CMM with prosecution notices alleging two charges against each of GCM and CMM for breach of the Mines Safety and Inspection Act 1994 (WA). The SSO discontinued one of the charges against CMM on 28 February 2012. After receiving prosecution disclosure in early 2012, GCM successfully negotiated that both charges be dropped against GCM in exchange for CMM pleading guilty to the remaining charge against it.

CMM was originally meant to be sentenced in December 2012 but the Magistrate raised some factual issues (mostly concerning plant operation and design) which the parties negotiated an agreed response to.

This matter has now been settled with the Magistrate handing down a fine of $100,000 to CMM on August 20, 2013.


148

84 The Company has entered into transactions with related parties, including some of its associates namely LVTPL, HPL, LHHL, LDHL, VPPL and LBPL (fellow Subsidiary) whose details are shown in summary of the transactions with related parties, under note 46. The Company along with Lanco Group Limited (Holding Company) and through various intermediate companies holds the remainder of shares in these associates and LBPL. In case of LVPTL, LBPL and HPL, the Group holds cumulative compulsorily convertible preference shares which when exercised for conversion as per the terms of these shares would result in these companies becoming subsidiaries of the Company or its step down subsidiaries. Regulus Power Private Limited (RPPL) and Ananke Properties Private Limited (APPL), associate of the step down subsidiary and associate of the company respectively, which have the associates/subsidiaries, do not prepare consolidated financial statements. LBPL is an associate of RPPL and Banas Thermal Power Private Limited (BTPPL) is a subsidiary of APPL. Under Indian GAAP, the Company is not required to consolidate these associates and LBPL.

85 On excersing of the option available under Revised Schedule VI to prepare the financials in Crores rounded off to two decimals, the amounts/numbers below fifty thousand in the financials are appearing as zero. Previous year figures have been regrouped/reclassified wherever necessary.

As per our report of even date.For and on behalf of the Board of Directors ofLanco Infratech Limited





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ivid

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151

NotesAnnual Report 2013-2014

CSR

Lanco FoundationThe fervent commitment to fulfil our responsibility as a conscious corporate citizen, has

proactively involved us with communities and those deprived of development. We have always

regarded them as equal stakeholders in growth & development in the locations that we work

and live. With an aim to make a definitive difference, Lanco Foundation has been initiating

various welfare & development programs across 13 locations in 11 Indian states.

Lanco Infratech LimitedRegistered Office:Plot No. 4, Software Units Layout, HITEC CityMadhapur, Hyderabad 500 081, Telangana, IndiaCorporate Office:Lanco House, Plot No. 397, Udyog Vihar, Phase-3Gurgaon 122 016, New Delhi Region, Indiawww.lancogroup.com

CIN No.: L45200TG1993PLC015545

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