IVRCL INFRASTRUCTURES AND PROJECTS LIMITED ANNUAL REPORT 2009-2010 DIRECTOR'S REPORT To The Members The Directors have pleasure in presenting the 23rd Annual Report and Audited Accounts for the financial year ended 31st March 2010. 1. FINANCIAL RESULTS (Rs. in million) Year ended Year ended 31.03.2010 31.03.2009 Gross Turnover 54,944.22 49,830.92 Profit before Interest, 5,467.77 4,516.95 Depreciation, Extraordinary items & Tax Less: Interest & Finance Charges 1,636.56 1,306.14 Less: Depreciation 542.84 473.05 Profit before tax (PBT) 3,288.37 2,737.76 Provision for tax 1,177.21 478.07 Profit after tax (PAT) 2,113.13 2,259.69 Balance brought forward from previous 3,082.03 2,086.88 year/Adjustment Profit available for appropriation 5,195.16 4,346.57 Appropriations: Transfer to General 500.00 600.00 Reserve Special Reserve (Taxation) - 375.00 Debenture Redemption Reserve 315.29 100.00 Proposed Dividend 213.61 186.91 Corporate Dividend Tax (Net) 36.30 2.63 Sum total of Appropriations 1,065.20 1,264.54 Balance carried to Balance Sheet 4,129.96 3,082.03 Paid-up Capital 534.02 267.01 Reserves and Surplus 17,998.57 17,838.76 2. DIVIDEND: Your Directors have pleasure in recommending a dividend of 40% i.e. Rs.0.80/- ps per share of Rs.2/ - each (last year Rs.1.40/- per share of Rs.2/- each) on 267,009,858 equity shares of Rs.2/- each for the financial year ended 31st March, 2010 on the enhanced equity consequent to the bonus issue. The dividend pay out for the year under review is in accordance with the Company's policy of suitably rewarding the shareholders besides keeping in view the Company's need for capital, its growth plans and the intent to finance such plans through internal accruals to the maximum. 3. BONUS SHARES: The Company issued Bonus Shares in the ratio of 1:1 during March, 2010 as approved by the Members in the Extra-ordinary General Meeting held on 08.03.2010. Consequently, the paid-up equity share capital of the Company stands increased from Rs. 26.70 crores to Rs. 53.40 crores and the number of equity shares of Rs. 2/- increased from 13,35,04,929 to 26,70,09,858. 4. RESERVES: It is proposed to transfer Rs.500.00 million to the General Reserves of the Company, constituting 24% of the profits made during the year. Further, it is proposed to transfer Rs.315.29 million to Debenture Redemption Reserve. 5. REVIEW OF PERFORMANCE: The financial year 2009-10 is a year of moderate growth. Your company achieved a gross turnover of Rs.54,944.22 million for the year ended 31st March, 2010 as against Rs.49,830.92 million for the previous financial year, registering an incremental turnover of Rs.5,113.30 million and recording a growth rate of 10% over the previous year. The Earnings before Interest, Depreciation, Taxes and Amortisation (EBIDTA) at Rs.5,467.77 million are 9.95% of the Gross Turnover for the year under review as against 9.06% for the previous financial year and this rate of gross profit compares well with those of similar other companies. 6. ORDER BOOK POSITION: The Order Book has increased during the year to Rs.1,68,865.40 million as on 31st March 2010, and has increased further to Rs. 2,33,558 million as on date. Sl. Particulars Orders on hand % No. (Rs. in million) 1. Water Division 97,737.85 57.88 2. Buildings Division 32,153.21 19.04 3. Transportation Division 31,095.00 18.41 4. Power Division 7,879.34 4.67 TOTAL 168,865.40 100.00 7. FUTURE OUTLOOK: The negative effects of global recessionary conditions are being attenuated by various countries through huge investments in infrastructure and India is no exception in this regard. Hence, your directors are confident that the present environment of investments in infrastructure by the State and Central Governments assures growth of operations of your Company, so as not only to maintain the growth rates achieved in earlier years but also surpass the same. 8. SUBSIDIARIES: The statement pursuant to Sec.212 of the Companies Act is at Annexure B. The summarized financial performance of the subsidiaries is at Annexure C. HINDUSTAN DORR-OLIVER LIMITED For the financial year ending 31st March 2010, the company achieved a turnover of Rs.8,711.46 million, an increase of 66.80% compared to previous year. The Profit after tax has increased from Rs.301.60 million to Rs.555.17million, an increase of 84% resulting an EPS of Rs.7.71 ps on Rs.2/-share. The order book of the Company as on 31st March 2010 is Rs.13,680 million. The company declared a dividend of 0.80 ps per share of Rs.2/- each on the increased equity capital on account of 1:1 bonus issue made during the year. IVRCL ASSETS & HOLDINGS LTD., (IVRCL A&H) IVRCL ASSETS & HOLDINGS LTD., (IVRCL A&H), formerly IVR Prime Urban Developers Ltd, has amalgamated with itself IVR Strategic Resources & Services Ltd and IVRCL Water Infrastructures Ltd, pursuant to the orders of the Hon'ble High Court of Andhra Pradesh under sections 391-394 of the Companies Act, 1956, in order to consolidate real estate and infrastructure development business of the combined entity. The Appointed Date of amalgamation is April 1, 2009 and the Effective Date is 26th February, 2010. Consequent to the amalgamation of IVR Strategic Resources & Services Ltd, and IVRCL Water Infrastructures Ltd, with IVRCL A & H, the Company's BOOT projects of Salem Tollways Ltd, Kumarpalyam Tollways Ltd, Jalandhar Amritsar Tollways Ltd, IVRCL Building Products Ltd, Chennai Water Desalination Ltd, First STP Ltd, Alkor Petroo Ltd etc., became subsidiaries of IVRCL A & H. As per the swap ratio stipulated in the approved Scheme, IVRCL A & H issued 59,463,572 equity shares to the Company. As a result, the shareholding of the Company in IVRCL A & H increased from 62.35% to 80.46%. Subsequent to this, IVRCL A & H issued Bonus Shares in the ratio of 1:2. The name of IVR Prime Urban Developers Ltd has been changed to IVRCL ASSETS & HOLDINGS LIMITED in order to reflect the restructured activities of the Company. For the financial year ending 31st March 2010, the company has achieved a turnover of Rs.1431.10 million. IVRCL Chengapalli Tollways Ltd and IVRCL Holdings & Services Pte.Ltd, Singapore have been incorporated as subsidiaries of the Company on 3rd February, 2010 and 30th December, 2009 respectively. The financial information for the purpose of consolidation have been prepared by the management which are un-audited, in view of short accounting period and no significant volume of operations and turnover and hence the documents under section 212 (1) of the Companies Act, 1956 have not been attached. 9. CONSOLIDATION OF ACCOUNTS: In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-27 on Financial Reporting of Interests in Joint Ventures, your Directors have pleasure in attaching the Consolidated Financial Statements presented by your Company which forms part of the Annual Report and Accounts. Profit after tax and minority interest as per the consolidated accounts is Rs. 2,156.02 million considering the combined profits net of losses of all the subsidiaries, joint ventures and after eliminating unrealized profits from intra-group transactions to the tune of Rs. 2,155.55 million. 10. ISSUE OF FOREIGN CURRENCY CONVERTIBLE BONDS: The Foreign Currency Convertible Bonds (FCCBs) of the value of US $ 65.00 million have been issued by the company and listed on the Singapore Stock Exchange and are liable to be converted into company's equity shares at an exercise price of Rs.117.02 per share of Rs.2/- each considering an exchange rate of Rs.45.84 per dollar. The bonds of the value of US $ 57.40 million were converted into 11,243,024 shares. There was no conversion of bonds as equity shares during the financial year 2009-10. Bonds of the value of US $ 7.60 million convertible into 2,977,270 shares are outstanding as on 31.03.2010. In terms of the FCCB Issue, the Company shall redeem the Bonds at 142.80% of the principal amount on 9th December, 2010, unless previously converted, redeemed or purchased. 11. ISSUE OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES: On 30.09.2009 the company allotted 150 unsecured debentures of face value of Rs.10,00,000/- each for a period of 15 months, to the following, aggregating to Rs.15.00 Crores with a coupon rate of 8.75% p.a. payable on maturity and the same were listed on NSE under the Wholesale Debt Segment. S. Name No. of Amount No. Debentures (In Rs.) 1. State Bank of Indore (SBI) 100 10,00,00,000 2. State Bank of Mysore (SBM) 50 5,00,00,000 On 27.11.2009 the company allotted 1050 secured redeemable non-convertible debentures of face value of Rs.10,00,000/- each for a period of 17 months, aggregating to Rs.105.00 Crores to the following banks with a coupon rate of 8.85% p.a. payable yearly and balance 5 months on maturity and the same were listed on NSE under the Wholesale Debt Segment. The company executed the Debenture Trust Deed. S. Name No. of Amount No. Debentures (In Rs.) 1. Federal Bank Limited 100 10,00,00,000 2. Dena Bank 100 10,00,00,000 3. Allahabad Bank 50 5,00,00,000 4. Corporation Bank 50 5,00,00,000 5. UCO Bank 100 10,00,00,000 6. Bank of Baroda 200 20,00,00,000 7. Bank of India 250 25,00,00,000 8. Central Bank of India 200 20,00,00,000 12. EMPLOYEE STOCK OPTION SCHEMES: Your Company is the first company to introduce stock options in the construction sector. The earlier two ESOP Plans viz., IVRCL ESOP 2000 and IVRCL ESOP 2004 have been fully utilized. IVRCL ESOP 2007 Scheme: The members approved granting of 4,200,000 options at the Annual General Meeting held on 7th September 2007, underlying 4,200,000 shares of Rs.2/- each. The company is yet to grant these options to the employees. The members approved the amendment to the scheme at the Annual General Meeting held on 9th September 2009, modifying the terms relating to Price and Time Limit. The Scheme as modified is valid upto 6th September, 2013. 13. PUBLIC DEPOSITS: There are no outstanding public deposits as on 31st March, 2010. 14. DIRECTORS: Mr. R. Balarami Reddy, Mr. K.Ashok Reddy and Mr. T.N.Chaturvedi retire at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. The Notice convening the Annual General Meeting includes the proposals for re-appointment of Directors. 15. CORPORATE GOVERNANCE: Your Directors report that your Company is compliant with the Corporate Governance requirements as per Clause 49 of the Listing Agreement with the Stock Exchanges. The certificate issued by M/s. Chaturvedi & Partners, Chartered Accountants is included in the Annual Report along with the report on Corporate Governance. The Management Discussion and Analysis of the previous year's performance is also provided in the Annual Report. The Ministry of Corporate Affairs announced the Corporate Governance Voluntary Guidelines 2009 as well as Corporate Social Responsibility Voluntary Guidelines 2009 which set out tone for good practices which may be voluntarily adopted by the Corporates. The Company is looking into adoption of the same voluntarily. 16. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to the requirement under section 217 (2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed that:- i) in the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures; ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2010 and of the profit of the Company for the financial year ended on that date. iii) the Directors 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) the Directors have prepared the annual accounts of the Company on a 'going concern' basis. 17. AUDITORS: M/s. Chaturvedi & Partners and M/s. Deloitte Haskins & Sells, the Joint Statutory Auditors, retire at the ensuing annual general meeting and are eligible for reappointment. The Company received confirmation that their appointment, if made, would be within the limits prescribed under Sec.224(1B) of the Companies Act, 1956. Audit of Accounts of Dubai Branch Office: The Company has availed exemption from audit of financial statements of Dubai Branch as required under section 228 of the Companies Act, 1956 for the year ended March 31, 2010 by virtue of Rule 3 of Companies (Branch Audit Exemption) Rules, 1961. 18. PARTICULARS OF EMPLOYEES: The information required under Section 217(2A) of the Companies Act, 1956 and the Rules made thereunder is provided in Annexure forming part of the Report. In terms of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure, except Mr. E.Sudhir Reddy, Chairman & Managing Director, is related to any Director of the Company. 19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: Conservation of Energy, which is an on going process in the Company's activities. The core activity of the company is civil construction which is not an energy intensive activity. There is no information to be furnished regarding Technology Absorption as your Company has not undertaken any research and development activity in any manufacturing activity nor any specific technology is obtained from any external sources which needs to be absorbed or adapted. Innovation is a culture in the Company to achieve cost efficiency in the construction activity to be more and more competitive in the prevailing environment and the effect of the same cannot be quantified. The particulars of expenditure and earnings in Foreign currency is furnished in item No.B-12 Notes to Accounts in Schedule 19. 20. INDUSTRIAL RELATIONS: The Company enjoyed cordial relations with the employees during the year under review and the Management appreciates the employees of all cadres for their dedicated services to the Company, and expects continued support, higher level of productivity for achieving the targets set for the future. 21. ACKNOWLEDGMENTS: The Directors wish to express their appreciation of the support and co- operation of the Central and the State Governments, bankers, financial institutions, suppliers, associates and subcontractors, and expects the same in future as well for sustaining the growth rates achieved in the past. For and on behalf of the Board Place: Hyderabad E. Sudhir Reddy Date : May 29, 2010 Chairman & Managing Director Note: The company applied for exemption from annexing the Audited statement of accounts, the reports of the Board of Directors and Auditors of the subsidiary companies as required under Section 212(8) of the Companies Act, 1956. The company has since received the exemption from Central Government vide letter No.47/201/2010-CL-III dated June 4, 2010. Accordingly, the documents as per Section 212(1) are not annexed. As required by the said letter, the information on subsidiary companies is furnished in Annexure B to this Report. Shareholders who wish to have a copy of the full report and accounts of the subsidiaries will be provided the same on receipt of a written request from them. These documents will be put up on the company's web site www.ivrcl.com and will also be available for inspection at the Registered Office of the company on any working day during the business hours. MANAGEMENT DISCUSSION AND ANALYSIS Industry Overview: India is a fast-growing economy with a dynamic and robust financial system. The government has identified infrastructure as a key driver for 9-10 per cent growth during the 12th Plan ending 2017. The Prime Minister's mid term appraisal of the 11th five-year plan suggests that investment in infrastructure during the 12th plan would need to be of the order of about $1025 billion to achieve a share of 9.95 percent as a proportion of GDP. While this is twice the 11th five-year plan's infrastructure investment of $500 billion, 50% of the one trillion dollar investment is expected to be from the private sector. This huge investment plan clearly points to the fact that infrastructure would continue to be the growth engine for the economy in the near future. Therefore, the strategy for infrastructure development will involve a combination of public investment supplemented by private investments wherever feasible. The mix will vary from sector to sector and region to region. Infrastructure sector remains to be the main focus for the government as it has received 46% of total planned allocation in this year's budget with a provision of Rs.1,73,552 crore for upgrading infrastructure in both rural and urban areas. Major emphasis has been given to development of high quality physical infrastructure such as roads, ports, airports and railways. Allocation of Rs.40 billion towards the development of rural roads is in line with previous budgets with Rs.99.9 billion for planned spending on national highways. Though allocations for the roads and highways sector have been provided, implementation may be slow due to policy ambiguity at the state and central government levels and delays on account of land acquisition. The refinance facility provided by IIFCL to banks will improve the credit availability for infrastructure projects such as BOT road projects undertaken by the private sector and facilitate in achieving financial closure for projects. Among the government initiatives, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is qualitatively different aiming to scale up planned and integrated development of urban infrastructure and services involving a series of reforms over a seven year program (2006-12), covering 63 mission cities with an envisaged investment of over Rs.1,000 billion. JNNURM, as a reform driven agenda, has been instrumental in laying foundation with over 70 percent of the projects sanctioned for improving basic urban services like water supply, sewerage, storm water drainage and solid waste management. So far, 297 projects worth Rs.347.61 billion have been sanctioned for these sectors. Another government initiative with objectives similar to the JNNURM is the Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT), launched in 2005 to improve civic services in 5,098 cities / towns (those not covered under the JNNURM). Since its inception, a total of 691 projects worth Rs.123.85 billon in 558 towns have been approved under the UIDSSMT. Like the JNNURM, water supply projects have been accorded the highest priority under the UIDSSMT as well. A total of 367 water supply projects comprising about 53 percent of the total projects have been approved at a cost of Rs.70.64 billion. While the launch of such novel and progressive schemes as the JNNURM and UIDSSMT provide a platform for developing and sustaining urban infrastructure services, besides opening up opportunities for companies as ours for water and environment based projects. IVRCL - Forging ahead by unlocking value: On the backdrop of the impetus provided by infrastructure growth thus throwing up immense opportunities for the construction sector, your Company has continued to exhibit its remarkable acumen and success in bagging projects in a cross section sectors taking its order book to Rs.2,33,558 Million combined while sustaining its strong financials track record. while we are consistently making efforts to increase our presence in the core sectors of the infrastructure space, the company has continued its dominating presence in the water and irrigation segments. The execution of projects and translation into revenues has also kept pace. Moreover, our strong customer focused approach and our belief in managing our fundamentals well has kept us ahead. Aside of being a market leader in Water, IVRCL' s integrated business in irrigation and its continued presence in transportation, buildings & industrial construction and Power Transmission contracts has ensured the bagging of some of the very large and prestigious projects, besides continuing to get regular orders in other areas as well. Of its total order book as of now, 47% comprises water projects, 31% of roads and highways, 16% of buildings works, and the balance 6% of power and other projects. The Company's continued interest and foray into emerging lines of businesses such as oil & gas, hydropower, railways, mining and power generation hold much promise for the Company in the coming years. WATER: Orders are flowing for water and waste water treatment industry and the Indian water treatment industry is estimated to be about Rs. 20 Billion and growing at 15 to 20 % annually including the Rs 12 Billion industrial water treatment sector and Rs 8 Billion point of consumption market which involves localized water treatment. The water industry size in India is about Rs.60 billion and the industrial water and waste water treatment market size would be around Rs.30 billion and the drinking water purification market would total around Rs.20 billion.. The growth rates in the last 3 years have hovered in the vicinity of 18-20 percent. The global market would be about $ 50 billion. Good Water management is crucial to overcome the water crisis that threatens our country. We must create an infrastructure that ensures sustainable water supply for the country's agricultural, industrial and domestic use. To IVRCL, Water continues to be the dominant business vertical which provides every solution for all types of water and sanitation needs. With an enviable track record and proven capabilities and credentials in the industry, IVRCL continues to be uniquely positioned to take harness tremendous opportunities in the water sector. We are capturing the potential in this vertical by investing in constructing, owning and operating water projects across the country. With the ever increasing water demand be it for irrigation, drinking or industrial purposes, several states in India such as, Madhya Pradesh, Uttar Pradesh Karnataka and Rajasthan to name a few, have launched massive irrigation schemes, reservoirs projects, drinking water schemes comprising treatment plants and vast pipeline systems to augment their available water resources effectively. Hence irrigation systems, infrastructure for drinking water and industrial water and recycling of waste water shall continue to remain the long term demand drivers. Irrigation - IVRCL continues to be the undisputed leader in irrigation projects across the country. IVRCL has in the recent times, bagged some significant projects including the Kosi Canal System in Bihar, besides pursuing potential opportunities emerging in other states as well. While we are currently executing major irrigation projects in Andhra Pradesh, namely, Telugu Ganga Stage-3, Sripad Sagar Stage-II; Phase-1, Kalwakurthi Lift Irrigation Scheme-Package 28 and Koil Sagar Stages 1 & 2 and the HNSS Phase-1, Pranahitha-Chevella Lift Irrigation Scheme-Package No.20-for drawal / lifting of 25 TMC of water from Foreshore of SRSP Reservoir to Balancing Reservoir and Package No.9 - for drawal and lifting of 6.00 TMC of water in 120 days from Mid Manair to Upper Manair Reservoir, work on the Lift Scheme from Thotapally Reservoir to Gouravelly Reservoir including tunnel and other allied works near Regonda in Karimnagar District, is also currently under progress. In Madhya Pradesh, the Company has been progressing on schedule on Punasa Lift Irrigation Scheme with a distribution network of pipelines and Lower Goi Project including a dam and canal and its distribution network for command area of about 13760 Ha. on turnkey basis including the O&M of completed commissioned scheme for 1 year. This is in addition to the ongoing works undertaken for Narmada Valley Development Department comprising of execution of 51 km of main canal and over 250 km of distribution network for a command area of over 20700 ha. The Indira Sagar project is the toughest amongst all other Packages under Indirasagar & nearby Omkareswar Packages, under NVDA. The alignment of this portion of the canal runs in the hilly terrain & valleys. Generally the alignment of the gravity canals follows a specific contour all along the foot of the hill. But in this particular case, the canal runs on the top of the hills, which is a special feature. Further in this canal there are 5 nos of 'D' shaped tunnels of 6.0 M dia for a length of 5 Kms, 12 nos of Aqueducts having a total length of 2.5 Km & about 83 no. of CM & CD works in the main canal. The Punasa Lift irrigation Project is a comprehensive Project where at the water from the Indirasagar Dam will be lifted in 3 stages into 3 new balancing reservoirs and from there the distribution of the water to the fields will be done by closed conduits of different sizes and types. The Project has been progressing extremely well and the Company has achieved early completion of the Milestone Progress of that approved in the Construction Program and for this feat, IVRCL has been awarded the Incentive for the two consecutive Milestone periods and an appreciation certificate by the client. The Company has bagged a project of the ERM of the Kosi Canal System including settling basin from the Water Resources Department, Bihar. Other significant works bagged this year are the Construction of the Dhom Balkawadi Project in Satara Irrigation Project Circle in Maharashtra and the SRSP Rehabilitation and Odernisation work of the Sriramsagar project in Andhra Project. Based on its core experience in the irrigation sector, the company will continue to pursue and undertake large irrigation projects across the country. Our on-going irrigation projects are: * LIS Link VII - Package No.20 - Investigation, Design and execution of Lift irrigation Scheme for drawl / lifting of 25 TMC of water from Foreshore of SRSP Reservoir to Balancing Reservoir near Masani (V), Nizamabad Mandal & District by water conveyor system with all associated components on EPC Turnkey System. * IFFC from SRSP-LIS Link III - Package No.9 - Investigation, Design and execution of Lift irrigation Scheme for drawl and lifting of 6.00 TMC of water in 120 days from Mid Manair reservoir at Siricilla Village to Upper Manair Reservoir at Narmal Village,Karimnagar district . by water conveyor system with all associated components on EPC Turnkey System. * Execution of Punasa Lift Irrigation Scheme including its distribution network by pipelines down to 40 Ha. Chak of Culturable Command Area (CCA) of about 35008 Ha. On Turnkey basis and O&M of completed commissioned scheme for 1 year.. * Investigation, Design and Execution of Lift Scheme from Thotapally Reservoir to Gouravelly Reservoir including Tunnel and other allied works near Regonda (V), Husnabad (M) of Karimnagar District * Execution of Lower Goi Project including Dam, Canal and its distribution network upto 40 Hac. Chak for Irrigation culturable command area of about 13760 Ha. On Turnkey Basisand maintenance of comlete commissioning for one year. * Investigation, Design, and execution of Kaleswaram LIS with allied works lifting of 4.50 TMC of water from Godavari River near Kanepally (V) of Kaleswaram, Mahadevpur(V), Karimnagar Dist to feen an ayacut of 45,000 acres. Water Supply & Environment Projects - The competency and capability of IVRCL as a major player in the water infrastructure sector is once again proven with the Company completing some important water projects this year and bagging several more during this year. The Company has successfully completed the Clear Water Sump and Pumping Station for the UWSEI Project for Indore Municipal Corporation and Some of the significant projects completed during the year under review in the Water Sector include the: * Design, Construction, Commissioning, Operation and Maintanance Clear Water Sump and Pumping Station.for UWSEI Project, Indore Municipal Corporation, Indore * Construction, Supply and installation of Water distribution system, clear water reservoir & water towers, domestic waste water collection system & pump station, Industrial waste water collection system & pump station and related mechanical and electrical works in Brandix Apparel City Pvt. Ltd., SEZ Vizag. * Providing CWSS to Tsunami affected coastal habitations in Kanyakumari District - Project No.36. for TWAD Board, Tamil Nadu * Sujlam Suflam package PM -4A (Godhara City) Regional Water Supply Scheme - for Gujarat Water Supply and Sewerage Board, Vadodara * Execution & O&M of the work of Village Distribution system with PSP & CWT with associated civil works for village distribution of 78 villages of Bhainsroadgarh & Ramganjmandi tehsil of Ramganjmandi Pachpahar water supply project-Packages I & IV on single responsibility Turnkey Basis with 5 years O&M for PHED,, Kota, Rajasthan: IVRCL' s position as the most versatile player in water infrastructure projects is once proved with the bagging of the one of the most prestigious water projects of the year, namely the Construction of Tunnel from Gundovali to Bhandup Complex in Mumbai for Municipal Corporation of Grater Mumbai, which has not only added a feather in its cap but has taken the company to greater heights in water projects. * Other major water projects that the Company has bagged during the year are the Hogenakkal Water Supply and Fluorosis Mitigation Project-Package I - for Tamil Nadu Water Supply And Drainage Board, Tamil Nadu which includes Intake Works, Raw Water Pumping Station, Treatment Plant, Treated Water Pumping Station, Booster Pumping Station, Pumping Mains, MADAM Master Balancing Reservoir and Allied Works; Replacement of Two Nos. of 1800 mm dia riveted Tansa Mains from Tansa to Tarali by one No.2750 mm dia M.S all welded Pipeline in the for Municipal Corporation of Grater Mumbai, and the construction of Intake well cum Raw water pump house including coffer dam, substations, raw water pumping equipments, rising mains, WTP at Rukka, clear water pumping equipments at Rukka, Transmission mains to different UGRs and ESRs construction UG reservoirs, distribution networks all complete job for Ranchi Water Supply Project under JNNURM on Turnkey Basis for Drinking Water & Sanitation Department, Jharkhand Major works bagged by the company and under execution during the year are: * Construction of Tunnel from Gundovali to Bhandup Complex in Mumbai for Municipal Corporation of Grater Mumbai, Mumbai, Maharashtra * Replacement of Two Nos. of 1800 mm dia riveted Tansa Mains from Tansa to Tarali by one No.2750 mm dia M.S all welded Pipeline in the HE outside city division (Section - II from Jamboli to Chinchavali for Municipal Corporation of Grater Mumbai, Mumbai, Maharashtra * Detailed Survey, design & drawing including construction of Intake well cum Raw water pump house including coffer dam, approach gangway & substations at pumping points all complete with supplying, installation and commissioning of raw water pumping equipments, rising mains, WTP at Rukka, clear water pumping equipments at Rukka, Transmission mains to different UGRs and ESRs construction UG reservoirs, distribution networks all complete job for Ranchi Water Supply Project under JNNURM on Turnkey Basis for Drinking Water & Sanitation Department, Jarkhand * Hogenakkal Water Supply and Fluorosis Mitigation Project-Package I-Intake Works, Raw Water Pumping Station, Treatment Plant, Treated Water Pumping Station, Booster Pumping Station, Pumping Mains, MADAM Master Balancing Reservoir and Allied Works for Tamil Nadu Water Supply And Drainage Board, Tamil Nadu * BWSSB Project II - Contract W1 Raw Water Transmission System under JICA for Bangalore Water Supply & Sewerage Board, Bangalore, Karnataka * Surveying, Collection of Hydrological data, Design, Detailed Engineering, Construction, Supply, Installation, commissioning of Multi Villages 15.60 MLD capacity Surface Water Supply Scheme for Arsenic - affected habitations / villages under Simri & Buxar blocks of Buxar District on Turnkey Basis for Public Health Engineering Department, Bihar * CW & Water System Civil work package from NTPC - Tamilnadu Energy Company Limited Power Project (Vallur Thermal Power Project) (2x500 MW + 1x500MW) for NTPC Tamilnadu Energy Company Ltd., Chennai, Tamil Nadu * CW Pump House CW Ducts (Civil) and Cold Water Channel Package for Harduagunj Power Plant Extension project (2x250 MW) for Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited, Lucknow * Construction Contract for Nano Spurline project (12' and 6' = 33 Kms.) for Gujarat State Petronet Limited, Gandhinagar, Gujarat * Installation, Operation and Maintenance of Crude and Finished product Tankages facility at Paradip Refinery Project, Paradip (Orissa) on BOOT Basis for Indian Oil Corporation Limited, New Delhi Under sewerage treatment projects, the company has won the contract for the Survey, Investigation, Design, Construction, Testing & Commissioning of Sewerage works in Sewerage District of Allahabad City for Uttar Pradesh Jal Nigam, Allahabad Providing Sewerage System to Erstwhile Bommanahalli CMC areas (Zone 4F) under KMRP - Slice No.GBS 4F for Bangalore Water Supply & Sewerage Board, Bangalore, Karnataka and Constuction of the 70 mld capacity sewage treatment plant at Kharghar, Navi Mumbai. Chennai Desalination - The Chennai Sea Water Desalination Project of 100 MLD Capacity, being executed for Chennai Metro and the first of its kind in the country is fast nearing completion and having successfully completed the commercial trials, the plant will be commissioned shortly. IVRCL recognizes the immense potential of desalination as a major water source for the country and is focusing on desalination as a major watter source for the people and industries in the coastal regions of the country. Industrial Water Projects - As a pure play market leader in the water EPC space in India, besides continuing its thrust on irrigation schemes and water distribution projects, IVRCL, has carved out a niche for itself in the industrial water solutions having executed works for NTPC, NLC and TNEL in the past. The Company has completed the turnkey project undertaken in the SEZ of Brandix Apparel City Pvt. Ltd.at Visakhapatnam, comprising supply and installation of water distribution system, clear water reservoir & water towers, domestic waste water collection system & pump station, Industrial waste water collection system & pump station and related mechanical and electrical works. With this project, the Company qualifies to execute similar turnkey water projects of larger magnitude for SEZs, Industrial Parks etc. Currently, under this segment, the Company is executing the Circulating Water system for NTPC - TNEL 2 x 500 MW & 1 X 500 MW Power Project in Tamil Nadu. IVRCL would continue to focus on this segment of water projects and very soon emerge a pure play industrial water company in Industrial high purity water solutions, Waste Water Treatment & Recirculation Systems and Industrial Effluent Treatment Solutions. TRANSPORTATION: The most outstanding achievement of the Company during the year in the Transportation sector has been the completion and commissioning of two of the three National Highway BOT projects undertaken by the Company. We have completed the Kumarapalyam-Chengapalli Stretch of NH-47 in the state of Tamil Nadu, the first of the BOT highways projects closely followed by the second project, namely Jallandhar -Aamritsar on NH-1 in Punjab. The CODs have been received and toll collection has commenced for both the projects. The third BOT Highway projects, namely Salem-Kumarapalyam on NH-47 is nearing completion and is to be commissioned very soon. IVRCL has achieved the distinction of having clocked over 21 million accident-free man hours and has been rewarded by NHAI for this remarkable feat. Other key projects completed by the Company during the year include the Madurai to Kanyakumari from Km 42.00 to Km 80.00 Contract Packages NS-40 (TN) for NHAI; Rehabilitation and Upgrading of Mungeli to Pondi Section in Chhattisgarh - for Public Works Department and Integrated Improvement cum Performance Based Maintenance on Alwar to Sikandra Road in Rajasthan (AS) for RIDCOR, Government of Rajasthan. About new highways projects: With the renewed impetus and determination of the government to speed up the implementation of the NHDP projects on a fast track basis and key highway projects on the anvil, including the mega highways projects, 6-laning of 4-laned roads, expressways and port connectivity projects, IVRCL is strongly focusing on highways as an opportunity asset creation and bidding for selective highways projects, including some of the mega highways being notified by NHAI. The Company has bagged three more DBFOT projects. These are 4 - Laning of Indore - Jhabua - Gujarat / MP Border section of NH-59 ; 6 -Laning on Chengapalli to start of Coimbatore Bypass and 4 laning on end of Coimbatore Bypass to TN / Kerala Border Section of NH-47 in the State of Tamil Nadu under NHDP Phase II and 4 - Laning of Baramati-Phaltan Road and Phaltan-Lonand Shirwal Road. Your Company scores a first once again by being the first company in the country to undertake the construction of a state of the art Automotive Test Track for the National Automotive Testing and R&D Infrastructure Project, New Delhi. The Company has bagged the contract for the construction of automotive test tracks for NATRAX-Pitampur and GARC-Chennai for involving import of high end track laying technology and special equipment for Germany specially for this project. Some of the major works bagged by the company and under execution during the year are: * Balance work of Rehabilitation, strengthening and 4 Laning of Bhogpur to Mukerian section of NH1A from Km.26.00 to Km.70.00 in the State of Punjab (Contract Package No.NS-38 (PB) for National Highways Authority of India, New Delhi * Improvement / Upgradation of Darbhanga - Kamtaul - Basaitha - Madhwapur Road for Road Construction Department, Government of Bihar, Patna * Reconstruction of Tsunami affected Bridge connecting Keezhamanakudi - Melamanakudi villages in Kanyakumari District for Highways Department, Chennai, Tamil Nadu. * Construction of ROB at Bonakal Yard Jaggaihpet - Wyra Road in Khazipet - Vijaywada Section in Khammam District for Roads & Buildings Department, Khammam, Andhra Pradesh * Construction of pre tippling, empties yard etc. for the Augmentation of Railway infrastructure for Rastriya Ispat Nigam Limited (RINL), Visakhapatnam Steel Plant, Visakhaptnam, Andhra Pradesh * Construction of Bridge across Malaprabha River near Munavalli on Arabhavi - Challikeri Road in Saudatti Taluk in Belgaum District for Karnataka Road Development Corporation Limited, Bangalore, Karnataka BOT Highway Projects: * 4 Laning of Indore - Jhabua - Gujarat / MP Border section of NH-59 from Km.9.500 to Km.171.000 on BOT (Toll) basis under Phase III in the State of Madhya Pradesh for National Highways Authority of India, New Delhi * 6 Laning from Km.102.035 to Km.144.740 on Chengapalli to start of Coimbatore Bypass and 4 laning from Km.170.940 to Km.183.060 on end of Coimbatore Bypass to TN / Kerala Border Section of NH-47 in the State of Tamilnadu under NHDP Phase II on DBFOT (Toll) Basis (Package No.NS-II / BOT / TN-08) for National Highways Authority of India, New Delhi * Four Laning of Baramati - Phaltan Road SH10 (Ch.42/400 to 64/300) and Phaltan - Lonand Shirwal Road SH70 (Ch.136/00 to 80/00) (total length=77.900 Kms.) on DBFOT Basis for National Highways Authority of India, New Delhi * Development of Truck Terminal at Patalganga MIDC Industrial Estate (Maharashtra) on DBFOT Basis for Maharashtra Industrial Development Corporation, Mumbai, Maharashtra BUILDINGS AND INDUSTRIAL STRUCTURES: The Company has, during the year successfully completed several diverse projects such as the EPC Contract for TATA Cummins Ltd. Plant at Phaltan, District Satara in Maharashtra, EURO-IV Project of Chennai Petroleum Corporation Limited at Chennai, Tamil Nadu for Engineers India Ltd and for a Blast Furnace - 2 area for Integrated Steel Plant for Ramsarup Lohh Udyog Limited, Kolkata, besides undertaking works for Guru Gobind Singh Refinery Project of M/s. HPCL - Mittal Energy Limited at Bathinda in Punjab; civil, structural and associated UG Piping works of MS Quality Up-gradation project at Guwahati Refinery in Assam And Construction of TELCON Factory at Kharagpur, West Bengal for Telco Construction Equipment Company Ltd. consisting of various factory Sheds like Excavator Assembly, Dumper assembly, Paint house etc. Major works completed by the Company during the year are: * Construction of Seawoods Estate Phase-II, Part-II Housing in Sectors 54, 56 & 58 (Part) at Nerul, Navi Mumbai for CIDCO, Mumbai, Maharashtra * EPC Contract for TATA Cummins Limited (TCL) Plant at Phaltan, District Satara (Maharashtra) for TATA Cummins Ltd., Jamshedpur, Jharkhand. * Construction of type II & I Quarters, RPF Barrack, Trainning Center, Admin. Bldg. for SEC Rly. Zonal Head Qrtrs., GM's Bunglow, other service Bldg., along with allied infrastructure for new Zonal Headquarters including HVAC for South East Central Railway, Bilaspur (Package-II) for South East Central Railway, Bilaspur. * Construction of NeST Towers at Technopark Campus, Thiruvananthapuram for Network Systems & Technologies (P) Ltd * Building works for implementation of EURO-IV Project of Chennai Petroleum Corporation Limited at Chennai, Tamilnadu for Engineers India Limited, New Delhi * Construction of Civil work for Blast Furnace - 2 area for Integrated Steel Plant at Karagpur for Ramsarup Lohh Udyog Limited, Kolkata, West Bengal Continuing its foray in industrial works, the Company has achieved a remarkable feat in successfully bagging several contarcts in the industrial sector ranging from Design and Construction for all Main Civil Works for complete External Coal Handling System and Complete Structural works for Coastal Gujarat Power Limited, in Mundra and Complete Civil & Structural works for Coal Handling Plant package for Rihand Super Thermal Power Project, Stage-III (2x500 MW) at NTPC-Rihand to Civil and Structural works of ECU Unit for Brahmaputra Petrochemical Complex of M/s. Brahmaputra Cracker and Polymer Limited at Lepetkata, Assam (Part-A) for Brahmaputra Cracker and Polymer Limited, Dibrugarh, Assam.and the Makeup Water System Package for 1980 MW Tiroda Thermal Power Project, Tiroda, dist. Gondia, Maharashtra for Adani Power Maharashtra Limited, Gondia, Maharashtra, besides the Construction of Civil & Structural works for the Uranium Process Plant at Tummalapalle in Kadapa District in Andhra Pradesh. Among the major residential, institutional and technical building projects awarded to the copmapny and currently under execution are Construction of 5 Building Towers with Parking Plus Twenty One Floors in Kakade City, Karve Nagar, Pune Extension of Bihar Vidhan Sabha and Secretariat Complex at Patna for Building Construction Department, Patna, Bihar Refinery Township Phase-II & III for Paradip Refinery Project near Paradip, Orissa for Indian Oil Corporation Limited, Shatabdi Hospital Building (Phase -2), C.J.S.M. Medical University Campus Lucknow for Uttar Pradesh Rajkiya Nirman Nigam Limited, Lucknow Undergraduate Lecture Theatre Complex at FCI campus University of Allahabad, Allahabad for RITES Limited IMGEOS Project Buildings and development of infrastructure at NSRC Campus, Shadnagar, Mahboobnagar Dist., AP. Computer Centre and Computer Science & Engineering Complex including Internal PH Works & PVC Conduit System for Electrical works for IIT Bombay, Powai, Mumbai for Dept. of Atomic Energy Construction of Hepatobilory Disease & Lever Transplant Building at SGPGL, Lucknow for Uttar Pradesh Rajkiya Nirman Nigam Limited, Lucknow. The major buildings and industrisl project works won by the Company during the year are: * Design and Construction for all Main Civil Works for complete External Coal Handling System and Complete Structural works including Design, Fabrication, Erection and Construction for Mundra, Gujarat for Coastal Gujarat Power Limited, Mumbai, * Extension of Bihar Vidhan Sabha and Secretariat Complex at Patna for Building Construction Department, Patna, Bihar * Complete Civil & Structural works for Coal Handling Plant package for Rihand Super Thermal Power Project, Stage-III (2x500 MW) at NTPC-Rihand for FLSmidth Pvt. Ltd, Chennai * Civil works for +/- 500 KV, 2500 MW HVDC Terminal Stations at Mundra and Mohinderbagh for Adani Power Limited, Mumbai * Construction of Quarters, Estate Office & Hospital of Refinery Township Phase-II & III for Paradip Refinery Project near Paradip, Orissa for Indian Oil Corporation Limited, New Delhi * Construction of All India Institute of Ayurveda (under Department of Ayush, Ministry of Health & Family Welfare) at Sarita Vihar, New Delhi for HSCC (India) Limited, New Delhi * Civil and Structural works of ECU Unit for Brahmaputra Petrochemical Complex of M/s. Brahmaputra Cracker and Polymer Limited at Lepetkata, Assam (Part-A) for Brahmaputra Cracker and Polymer Limited, Dibrugarh, Assam. * Construction of Civil, Miscellaneous Structural & Architectural works of Make-up Water Pump House and other Associated structures required for Make- up Water System Package for 1980 MW Tiroda Thermal Power Project, Tiroda, dist. Gondia, Maharashtra for Adani Power Maharashtra Limited, Gondia, Maharashtra * Construction of IMGEOS Project Buildings and development of infrastructure at NSRC Campus, Shadnagar, Mahboobnagar Dist., AP., Package -1: Construction IMGEOS & NDEM Building (Composite Contract inclusive of Civil, PH, Electrical, HVAC and other allied works) for National Remote Sensing Centre, Hyderabad, Andhra Pradesh * Construction of Computer Centre and Computer Science & Engineering Complex including Internal PH Works & PVC Conduit System for Electrical works for IIT Bombay, Powai, Mumbai for Dept. of Atomic Energy * Offsite Building (Part-A), for Phase - III Refinery Project of M/s. Mangalore Refinery & Petrochemical Ltd. at Mangalore, Karnataka for Mangalore Refinery & Petrochemicals Limited * Construction of Civil & Structural works at UCIL Project-Tummalapalle for Hindustan DORR-Oliver Limited, Mumbai * RCC Building and Sheds at proposed LPG Terminal of Visakh terminals Resitment Project at Visakhapatnam, Andhra Pradesh, Hindustan Petroleum Corporation Limited, Chennai * Expansion of Factory Building (PEB), Civil, Plumbing, Electrical, HVAC, Fire Fighting, Telecommunication and Land Scape for Parker Hannifin India Pvt. Ltd.at Mahape, Navi Mumbai for Parker Hannifin India Pvt. Limited, Mumbai * RCC Buildings, Foundations, Superstructure, Electrical works & Equipment foundations at Black Oil Terminal, Visakhapatnam for Hindustan Petroleum Corporation Limited, Chennai - Under infrastructure development projects the Company is successfully progeressing with ONGC Petro Additions Limited (OPAL)- Petrochemical Complex in Dahej SEZ in Gujarat comprising infrastructure development of an integrated green field petrochemical complex over an area of 508 hectares involving borrowed earth filling of around 2.0 m and infrastructure development 532 ha of land including water and sewage treatment facilities, storm water drainage and flood protection system of 37 km; water supply and sewer network, rain water harvesting system, boundary wall and fencing of 11 km, internal road network of 50 km, administrative office building and a world class guest house facility etc spread over an area of 10000 sq m. The removal of existing earth is 3.72 million cum and filling quantity is 8.65 million cum. IVRCL has achieved the distinction of having clocked over 5 million accident - free man hours and has been rewarded by ONGC for this remarkable feat. Power Transmission: Against this backdrop of a vast opportunity in the field of power transmission and distribution, IVRCL shall continue to focus and strengthen its presence in the power transmission sector particularly in cross country transmission lines, substations, distribution systems and railway traction works and IVRCL will continue to pursue opportunities in these segments. The Company has completed Constructing and erecting on Turnkey basis 132 KV. Chikali-Dusarbid Line to proposed 132 KV Sub Station 33 KV Single Circuit Line for Khadakpurna Project Division. * While work on the 765 KV Single Circuit Transmission Line; which is part of 765 KV Seoni-Wardha Transmission Line associated with Western Region System Strengthening Scheme is briskly progressing, as the highest capacity transmission line work undertaken by the Power Division, the completion of this work will qualify the Division to take up all types of transmission line projects including those of 1200KV capacity and the Triple and Quadruple conductor configured lines in future. Some of the major orders bagged by the Company during the year are: * Detailed Engineering, Manufacturing, Supply, Supervision, Erection, Testing, Commissioning and Putting into Commercial use of Pump - Turbine, Generator - Motor & Associated Equipments for Koyna Left Bank Power Station (2x40 MW) for Water Resources Department, Mumbai * Supply & Services Contract for Tower Package-A3 under Transmission System Associated with Pallatana GBPP & Bongaigaon TPS in North Eastern Region for i) 400 KV D/C Silchar-Melhrihat (New) Transmission line & 132 KV D/C Melhrihat (new) - Melhrihat (Mizoram) Interconnecting Transmission Line, including River crossing Towers for PGCIL for Power Grid Corporation of India Limited, Gurgaon, Haryana. * Supply & Services Contract for Tower Package - A1 for i) 400 KV D/C Quad Line from Gurgaon (PG Sec 71) - Manesar (18 Kms.) ii) Delinking of Agra - Samaypur and Samaypur - Gurgaon 400 KV Line from Samaypur (1.5 Kms) and making a direct link from Agra to Gurgaon associated with Northern Region Strengthening Sscheme (NRSS) - XIII, iii) 400 KV D/C Maneswar - Neemrana- Bhiwadi (150 Kms.) Transmission Line associated with NRSS-XV and iv) LILO of 400 KV S/C Bhiwadi - Bassi at Kotputli (15 Kms) associated with NRSS - XV for Power Grid Corporation of India Limited, Gurgaon, Haryana. * Shifting / Modification of 400 KV D/C Agra - Agra (UPPTCL), 220 KV D/C Agra - Auraiya and 400 KV S/C Kanpur - Ballabhgarh Transmission Lines Package (Deposit work) for Power Grid Corporation of India Limited, New Delhi The state-of-the-art Transmission Line Tower manufacturing facility at Nagpur in Maharashtra, set up as strategic backward integration measure, is under production and has commenced exports as well besides expanding its portfolio with diversification into related products. Overseas Operations: Having firmly established in the core sectors with a healthy order book in the Indian market, your Company, IVRCL has ventured into overseas to explore and tap the infrastructure construction potential with prime focus on the Middle East and African markets. The Company has commenced its operations in the Middle East with an initial focus on Water and Power Transmission projects and has also set up an office in Dubai to oversee the operations and to identify new sectors and projects. Presently IVRCL, Dubai Region is executing several district cooling projects for EMPOWER which is a government entity and one of the biggest district cooling system providers in UAE. The Company is in talks with Stellar, one of the biggest cooling system solution technology providers in the world to bid for more complex and high value works including Abu Dhabi New Airport Cooling System and similar works of TRANSCO, FEWA, AL RAYAN, B K GULF etc. The company is currently targeting business in Abu Dhabi, Dubai and other emirates of UAE, besides exploring opportunities in Oman, Syria and Saudi Arabia. While the Company has been receiving several enquiries from local agencies and international construction companies to associate in large construction projects, the Company is evaluating the projects on selective basis. The Company is also looking at the emerging opportunities in the African countries as well and initially targeting to take up some Water and Power Transmission projects in countries like Kenya, Botswana, Uganda and Nigeria. RESTRUCTURING OF OPERATIONS: The challenges thrown out by the complex environment ridden with near- recessionary economic conditions and downturn in the real-estate sector, coupled with great opportunities in new infrastructure projects, have made the management to stop, look ahead and proceed with reorganization of its operations at the group level. The policies of the Government are encouraging Public Private Participation for construction of various infrastructure projects which presumes mopping up of huge resources by private sector for actively participating in the Nation building activities. While IVRCL has all along been improving its net worth through internal accruals and fresh infusion of equity to qualify itself for bidding for new and bigger projects and has invested about Rs 850 crores of such resources raised during the previous five years, either by way of debt or equity in these new projects, it is considered all the more necessary that these long-gestation projects should not impact the financials of the flagship Company and hamper the growth process recorded over the last decade. The options available were evaluated and it was considered necessary that the group should slowly and steadily come out of the real estate sector without having any adverse impact on the ongoing projects; utilize the latent valuations of the land holdings to improve liquidity either by sale or otherwise to raise further monies for investment into infrastructure projects being declared open by the Government in various sectors including railways, oil & gas, mining, ports etc., and to ensure that the core competence of the flag-ship IVRCL is further strengthened to effectively manage the construction of these new projects. All said and done, the financial viability of the long-gestation BOT infrastructure projects is a challenging task before the Government as well as the individual participating Companies requiring huge capital and innovative financial models. From this point of view, IVRCL's management has evaluated the various risks and with the approval of all stake holders, identified that investments in these projects should be managed independent of the project execution capabilities of the Company so that while executing these investment oriented projects, the group can attract talent from outside either by way of joint-ventures or otherwise. As a first step, IVRCL's investments in various BOT and BOOT projects through two of its wholly owned subsidiaries viz., IVRCL Strategic Resoursces Ltd., and IVRCL Water Infrastructures LTd., have been amalgamated with IVR Prime Urban Developers Ltd. (whose name has been subsequently changed to IVRCL Assets & Holdings Ltd so as to reflect the new orientation given to its operations) in consideration of the shareholdings in the said Company. The details of the amalgamations have else-where been detailed in the analysis of accounts in this report. In this process, IVRCL shall continue to be a project-executing entity while IVRCLA&H shall concentrate on raising monies for the new projects and effective investment thereof evaluating the long term risks and addressing the same from time to time effectively to the best advantage of all stakeholders. As a result of the reorganization, the networth of IVRCL Assets & Holdings Ltd., has gone up to about Rs.2300 crores in which IVRCL holds more than 80% equity-an increase from 62% before reorganization. It is expected that the positive results of the reorganization will be more visible during the course of next few years. New Sectors - Leveraging Core Competencies in Emerging Sectors: Infrastructure development across specific sectors such as sea water desalination, power generation, hydropower, oil and gas, ports, mining, railways freight corridors and industrial infrastructure construction are some of the key sectors poised for a big leap forward and contribute over 60 per cent of the revenues of the construction business in the coming years. Having firmly established in the major infrastructure sectors, namely water, roads, buildings and power, your Company is briskly foraying into these emerging sectors by leveraging its core competencies as a value addition to its existing business areas. A brief overview of IVRCL' s entry into these sectors is given below: Railways The Indian Railways is one of the largest railway systems in the world under a single management and manages more than 63,000 km of railway tracks. The Government of India has decided to invest about $5 billion to enhance the rail routes in India and has formulated a well-planned strategy to reduce bottlenecks and boost the railways capacity to match to the requirements. With major capacity expansion plans have been lined up and infrastructure is being improved through priority projects such as the dedicated freight corridor, construction of new lines, gauge conversion works, high speed passenger corridors, rail-port connectivity projects, corridor hinterland projects, construction of private sidings and inland container terminals, besides the modernization of major railway stations. The massive investments for the proposed Railway works including the proposed Dedicated Freight Corridor comprising 2762 km of new railway lines along the western and eastern corridors being envisaged by the Indian Railways and RVNL projects in the pipeline provide a tremendous opportunity for your Company to participate in these works either on its own or by a joint venture route and thereby enhance its credentials in the railways sector. Having bagged and executing some orders for the prestigious Bangalore Metro work, the Company is also focusing on the other upcoming metro rail projects comprising elevated viaducts and stations and underground tunnels as well in major cities apart from focusing on the port connectivity and high speed railway projects being proposed across the country as highly potential projects in the railways in the coming years. Hydro Power: The hydel - thermal power mix in India currently stands in favour of thermal power at 25:75 as against the global mix of 40:60. However, the government's thrust on hydel power can be gauged from the fact that 36 percent of the planned capacity addition during the Eleventh five year plan is in hydel power. Under the 50,000 MW Hydro Initiative by 2012, which aims at developing 162 schemes, the preliminary feasibility reports have been completed. Having successfully completed the Bhilangana Hydel Project in Uttaranchal, IVRCL has bagged EPC Contract for 2 X 40 MW Koyna Left Bank Power Station including erection testing and commissioning of Pump Turbine, Generator - Motor and associated equipment. Having bagged this project, the Company is targeting to undertake hydro projects involving civil, hydro - mechanical and electro - mechanical projects of larger capacities and simultaneously exploring on taking up BOT projects on a selective basis. Ports: With 12 major ports and 187 minor ports, 7,517 km long Indian coastline plays a pivotal role in the maritime transport helping in the international trade. Traffic handled at major ports during April 2008 to January 2009 is recorded to be 436686 units. The ports in India offer tremendous scope for international maritime transport both for passenger and cargo handling. The Government of India targets to increasing the cargo handling capacity of major ports by two folds to reach 1.5 billion metric tons by the year 2012. Further, 111 shipping and inland water transport projects entailing an investment of Rs 400 billion are expected to be completed by 2025. With such tremendous potential in this sector, IVRCL is venturing into on-shore and off-shore port works on EPCM basis and is also looking at viable BOT projects in this sector. The Company has been pre-qualified to bid for constructing and operating two berths in Visakhapatnem Port. If successful, while IVRCL would take up the construction of the berths, IVRCL A & H would operate them. Plans are being drawn up to take up similar projects including the construction and operation of a full fledged port on long term concession basis. Power Generation: India is today at the cusp of a vast opportunity in power generation, transmission, and distribution. The target of over 150,000 MW of hydel power germination is yet to be achieved. By the year 2012, India requires an additional 100,000 MW of generation capacity. A huge capital investment is required to meet this target. This has welcomed numerous power generation, transmission, and distribution companies across the globe to establish their operations in the country under the PPP program. There are strong opportunities in transmission network ventures - additional 60,000 circuit kilometers of transmission network is expected by 2012 with a total investment opportunity of about US$ 200 billion. IVRCL, backed by its experience and proven credentials in the transmission sector would focus on projects of enhanced capacities of 1200 MW in transmission. Having completed water projects and currently executing coal handling plants, the Company would initially bid for BOP works and very soon move on executing turnkey power plant projects. The Company is also looking at entering into thermal and gas-based power generation and evaluating selective projects. Mining: India is endowed with significant mineral resources and in view of the immense potential offered by the mining sector, the Company is actively venturing into this sector leveraging on its existing experience and resources. The Company has executed a mining project in the over burden of over 2 million tons in one year for Singareni Collereies Company Limited. It possesses heavy earth moving equipment and trained manpower. Besides, IVRCL has within its fold Hindustan Dorr Oliver with proven abilities in mineral beneficiation including design & fabrication of coal washeries / beneficiation plants. The Company has eminent mining experts, as Consultants to advice on mining projects. The company has submitted expression of interest in joint venture with reputed overseas companies for some large coal and mineral mining projects in the country. Oil and Gas: The deregulation of the oil and gas sector has opened up new investments across the upstream and downstream segments. While exploration and production activity is on the rise, transport infrastructure and storage facilities for oil and gas are a must to meet energy needs of our economy. India has natural gas resources and the country's gas production is expected at around 44 billion cubic meter (BCM) per annum by 201112 and 54 BCM by 2014-15 from current level of 8 BCM per annum. The construction of pipelines for gas is also proceeding at a fast clip. The government is planning to set up a national gas highway authority to develop pipeline infrastructure in the country. The ministry is targeting a natural gas pipeline networks to 40-50 km per thousand sq km from the current 3.29 km per thousand square km. IVRCL through its subsidiary, IVRCL A&H has taken a 37.5 per cent stake in the concession project for development of crude/product tankages facilities at Paradip Refinery Project, Paradip, Orissa of Indian Oil Corporation Limited (IOC) on Build, Own, Operate and Transfer (BOOT) basis and will be the joint venture partner in the special purpose vehicle, IOT Utkal Energy Services Ltd., which has been set up for the implementation of this project. The remaining 62.5 per cent share holding is held by Indian Oil Tanking Limited. The project involves Installation, Operation & Maintenance of approx. 1.4 million kilolitres of tankages for crude oil, petroleum products. LPG and sulphur and associated facilities at Paradip Refinery Project in Orissa which is expected to go on stream during 2012. The concession period will be 15 years after commissioning. The total project cost is estimated at around Rs. 3000 crores. EPC services will be provided by IOT and IVRCL, while Operations and Maintenance will be undertaken by IOT. The Company would be targeting similar ventures as well as EPC contracts in underground storage projects, utilities and off-sites, terminals and large pipeline works. Strategic Alliances to Strengthen Pre Qualifications IVRCL has entered into Joint Venture Agreements and project specific consortium agreements and MOUs for strategic alliances with several reputed Indian and foreign partners with proven track record and credentials of technical expertise to enable it to pre-qualify and to keep it in a vantage point as a Lump Sum Turn Key (LSTK) Infrastructure Development Company and to add value to our Front End Engineering and Design (FEED) capabilities in the new and emerging infrastructure sectors. Risk Management The Company is committed to high standards of business conduct and risk management. All engineering projects and construction undertakings involve risks; while some risks are insurable and avoidable, certain risks can only be managed by latest project management techniques. At IVRCL, risk avoidance and risk management for projects is handled by the Project Monitoring Cell (PMC), which monitors the on going projects at all sites across the country on a regular basis combined with frequent visits to work sites. The PMC reports on the progress or about any perceived risk of each project to the Chief Operating Committee (COC) comprising senior management member of the company. The COC in turn accesses projects associated with such risk perception and initiates prompt action to avoid or mitigate any such risks. Also, members of the senior management comprising Business Heads, Regional Heads and Project Managers are provided with frequent training programs on Risk Management associated with construction risks, contractual risks, design risks, and potential risk treatment measures and strategies to ensure that potential risks are recognized and forecast beforehand and mitigated so that project progress remains un-impacted. The company has engaged professional services and documented various risks involved and developed a structure for systematic management of various risks in construction. In the process, the company has in place risk mitigation and de risking strategies covering environmental, regulatory, economic, operational, financial,, technical, legal and strategy risks. IVRCL is committed to risk management with the objective to: * Protect the Company's assets. * Achieve the targeted and sustainable business growth. * Avoid sudden and major surprises with respect to the overall business and control environment. * Ensure the compliance with applicable, legal regulatory and strategy requirements. Internal Control Systems Our Company has laid enormous significance to developing internal control systems relating to all aspects of the business such as procurement, project execution, finance and management information systems as we realize that the current levels of growth and volume can only be sustained efficiently with appropriate systems and procedures in place. At the time of going to the press, our Company is on the threshold of developing a site cost control software that would be integrated with corporate functions to provide a seamless and real time data of all variables relating to a project site thus enabling timely decision making for optimized operations. Our Project Monitoring Cell (PMC) has already proved its worth by systematic analysis and MIS generated for management decisions which are operations related. Our Best Asset - Our People: While we do believe that our best asset has been our people and have always realized the importance of human capital and valued it highly as an infrastructure company, We are aware of the challenge in attracting the best of talent to join us and in retaining the people endowed with the critical mass accumulated over the years in IVRCL and despite the current scenario, our attrition rate amongst our top management is negligible. We have in place a well drawn out HR Policy and a working environment encouraging innovation, cost reduction and a time bound completion of projects, measures targeted to emerge as a merit driven organization in these challenging times. We are the foremost among companies in the Indian construction industry with Employee Stock Options (ESOPs) facility to its employees, whereby a record 3.5 million shares have been allotted till date. Going forward, we want to enable a team culture at all levels, while encouraging employees to change orbits to ramp up their career path We are truly blessed to be in a business that has such a positive impact on human life. IVRCL is a corporate entity that has been growing at a phenomenal pace on the foundation of work that improves the quality of life and the standard of living of people. Our water projects, be it drinking water supply schemes, industrial water schemes, irrigation projects or desalination projects are fulfilling a basic need of the populace. Environment projects in the areas of water treatment, sewage treatment and solid waste management are critical to the sustenance of our environment and the survival of human life on Earth. So far, we have executed close to 20000 km of pipelines for drinking water and made canals for irrigation. A lot more will be done in the near future. Our power projects especially rural electrification works have brought about a sea-change in the quality of life of people in pertinent locations. We have more than 250 work sites all over India which have generated employment, indirectly contributing to social upliftment and greatly benefiting the local economy. Apart from the above, we have also undertaken several initiatives in our constant endeavor to enhance human living. We offer primary education facilities at several of our construction sites. We also operate a school in the Srikakulam district of Andhra Pradesh. In conclusion, while IVRCL will continue expanding its presence geographically and growing at a consistent pace, we are focusing creating and developing innovative models for infrastructure development. By virtue of our pan-India presence, we are transferring the best practices from one part to the other. We believe that our abiding vision, the strength of our human capital and our commitment to build a better world of enduring values will continue to inspire us as we strive to make it happen. There is so much we do. There is so much more we want to do. Expect much more from us. FINANCIAL CONDITION AND RESULTS OF OPERATIONS Over View: The financial statements have been prepared in compliance with the requirements of the Companies Act, 1956, guidelines issued by the Securities and Exchange Board of India and Generally Accepted Accounting Principles (GAAP) in India. The management of IVRCL accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably present the state of affairs on the Balance Sheet date and profits of the Company for the year ended on that date. The Company achieved a marginal growth in terms of revenue in Fiscal 2010. The CAGR of revenue for last five years is 30%. The Company's total revenue increased to Rs.55,078 million i.e. increased by 9.9% over fiscal 2009 and Net Profit (PAT) decreased to Rs.2,113 million, by 6.5% over fiscal 2009. Financial Performance: A summary of the Company's financial position as at March 31, 2010 and 2009 is given below: March % March % Growth 31, 2010 31, 2009 % Sources of funds: Share capital 534.02 1.5 267.01 0.8 100.00 Reserves & Surplus 17,998.57 51.7 17,838.76 55.4 0.9 Total Shareholders' 18,532.59 53.2 18,105.77 56.2 2.4 funds Secured loans 12,688.05 36.5 10,184.82 31.6 24.6 Unsecured loans 3,445.18 9.9 3,795.43 11.8 (9.2) Total Loan funds 16,133.23 46.4 13,980.25 43.4 15.4 Deferred tax 124.77 0.4 117.41 0.4 6.3 liability 34,790.59 100.0 32,203.43 100.0 8.0 Application of funds: Fixed assets 6,017.15 17.3 5,402.48 16.8 11.4 Investments 6,137.96 17.6 3,892.03 12.1 57.7 Current assets, 2,446.76 7.0 2,093.49 6.5 16.9 loans & advances Inventories Sundry debtors 19,445.24 55.9 13,430.21 41.8 44.8 Cash & bank 1,643.62 4.7 1,008.68 3.1 62.9 balances Other current 16,863.51 48.5 14,292.51 44.4 44.8 assets Loans & advances 6,605.80 19.0 9,318.73 28.9 (29.1) 47,004.93 40,143.62 17.1 Current liabilities & provisions Current liabilities 23,924.16 68.8 16,795.14 52.2 42.4 Provisions 445.29 1.2 439.56 1.4 1.3 24,369.45 17,234.70 41.1 Net current assets 22,635.48 65.1 22,908.92 71.1 (1.2) 34,790.59 100.0 32,203.43 100.0 8.0 1. SHARE CAPITAL: The authorized share capital of the Company consists of 275,000,000 equity shares of Rs.2/- each amounting to Rs.550,000,000 and 25,000,000 preference shares of Rs.2/- each amounting to Rs.50,000,000. During the year, the Company increased the equity share capital by Rs.267.01 million on account of issue of bonus shares is the ratio of 1:1. The total paid up share capital as at March 31, 2010 stood at Rs.534.02 million. A statement showing movement of share capital is given below: March 31, 2010 March 31,2009 Equity Rs. Equity Rs. Shares Million Shares Million (No.) (No.) Balance at the beginning 133,504,929 267.01 133,489,929 266.98 Issue of Bonus Shares 133,504,929 267.01 - - Shares issued upon conversion of options as under: ESOP 2000 plan - - 15,000 0.03 Balance at the end 267,009,858 534.02 133,504,929 267.01 2. RESERVES AND SURPLUS Security Premium Account: A statement of movement in the security premium account is given below: (Rs. in million) March 31, March 31, 2010 2009 Balance-beginning of the year 10,602.83 10,622.79 Add: Premium on allotment under ESOP - 5.30 Redemption premium provision on FCCBs (25.26) (25.26) Balance-end of the year 10,577.57 10,602.83 Revaluation Reserve: The revaluation reserve amount of Rs.28.41 million as on March 31, 2010 represents the reserve arising due to revaluation of some land and building done during the year 2001-02 as reduced by the depreciation on revalued portion of the assets till March 31,2010. General Reserve: Out of the profits for the year Rs.500 million has been transferred to general reserve, Rs 315.29 million to Debenture Redemption Reserve and balance of Rs.1,047.93 million (after providing for dividend and tax thereon) has been retained in the profit and loss account. The total Shareholder funds of the Company increased to Rs.18,533 million as of March 31, 2010 from Rs.18,106 million as of the previous year end. The book value per share having face value Rs.2/- increased to Rs.69.41 as of the year end compared to Rs.67.81 as of the previous year end(post bonus issue) registering an increase of 2.36%. 3. SECURED LOAN: The details of Secured Loans are discussed below: (Rs. in million) March 31, March 31, 2010 2009 Non-Convertible Debentures 3,050.00 2,000.00 Term Loan 535.37 539.40 Working Capital Loans: Project Specific 1,653.66 1,926.85 From Consortium banks 7,449.02 5,718.57 Total 12,688.05 10,184.82 During the year, the Company raised Secured, Non-Convertible Debentures of Rs 1,050 million for repayment of some high cost debts and to meet the working capital requirements. The Company has taken term loans to finance purchase of plant, machinery, equipment and vehicles specific to certain projects and for the Company as a whole. The Company has availed Project-specific working capital loans for certain major projects to meet the working capital requirements of those specific projects. The Company has also availed working capital loans from a ten-member consortium banks to finance infrastructure projects where no project- specific funding have been done. The limits are optimally operated with all the member banks in the consortium duly meeting the requirements of these banks in compliance with the terms of the loan agreements with them. 4. UNSECURED LOAN: The details of Unsecured Loans are discussed below: (Rs. in million) March 31, March 31, 2010 2009 Banks & others 2,953.97 3,409.94 Non-Conertible Debentures 150.00 - Foreign Currency Convertible Bonds 341.21 385.49 Total 3,445.18 3,795.43 The Company has availed short term unsecured loan of Rs.2,953.97 million (Rs.3,409.94 million during last year) from some banks, financial institutions during the year to bridge temporary needs in the ordinary course of business. All these loans are due for repayment with in the current financial year ending March 2011. During the year none of the holders of Foreign Currency Convertible Bonds (FCCB) have exercised their option for conversion into equity shares. The amount of FCCBs outstanding as on March 31, 2010 remained unchanged at US$ 7.60 million, the increase in the value of INR is only because of the exchange difference accounted as on the Balance Sheet date. The Company has also issued short-term unsecured, Non-Convertible Debentures of Rs 150.00 million to banks to manage some urgent working capital need. The overall Long-term and Short-term borrowings of the Company (other than FCCB) increased from Rs 13,594.76 million as on March 31, 2009 to Rs 15,792.02 million in the current year representing an increase of 16.16%. 5. FIXED ASSETS: (Rs. in million) March 31, March 31, Growth(%) 2010 2009 Land 361.48 361.30 0.1 Building 732.42 726.09 0.9 Plant & Machinery 5,040.12 4,334.47 16.3 Motor Vehicles 955.31 830.74 37.1 Other Assets 412.44 370.90 64.9 Gross book value 7,501.77 6,623.50 13.3 Less: Accumulated Depreciation 1,837.83 1,416.53 29.7 Net block 5,663.94 5,206.97 8.8 Add: Capital work-in-progress 353.21 195.51 80.7 Net fixed assets 6,017.15 5,402.48 11.4 Depreciaton 542.84 473.05 14.8 Depreciation as a % of revenue 1.0% 1.0% Depreciation as a % of gross block 7.2% 7.1% Accumulated depreciation as a % of 24.5% 21.4% gross block During the year, the Company has invested Rs.878.27 million (net) towards the addition to fixed assets as compared to addition of Rs.2,447.54 million during the previous year. 6. DEFERRED TAX ASSETS & LIABILITIES: The Company accounts for deferred tax in compliance with the Accounting Standard 22 issued by the Institute of Chartered Accountants of India. The Company has recognised deferred tax expenses of Rs.7.36 million during the year. Net deferred tax liability represents timing differences in the financial and tax books arising mainly from deprecation on assets, provision for debtors and advances etc.. The net deferred tax liability has increased from Rs.117.41 million as on March 31, 2009 to Rs 124.77 million as on March 31, 2010. 7. INVESTMENTS: The major investments of the Company are in the subsidiaries IVRCL Assets & Holdings Limited and Hindustan Dorr-Oliver Limited. During the year, the investment in domain companies in specific sectors like Water and, Transportation i.e. in IVRCL Water Infrastructures Limited and IVRCL Strategic Resources Limited were transferred to IVRCL Assets & Holding Limited through a process of amalgamation. The Company got allotment of equity shares in IVRCL Assets & Holdings Limited as consideration. Total investments in subsidiaries as at March 31, 2010 stood at Rs.6,113.20 million as against investments as at March 31, 2009 Rs.3,867.46 million. The details of investments in subsidiary Companies as on March 31,2010 and the movements in the investment account during the year is given below: Company March Additions Deletions March % of 31, 2009 31, 2010 holding Hindustan Dorr-Oliver 642.15 15.38 - 657.53 55.28 Ltd IVRCL Assets & 400.22 4,521.03 - 4,921.25 80.46 Holdings Ltd IVRCL Water 853.55 - 853.55 - - Infrastructures Ltd IVRCL Strategic 1,868.02 - 1,868.02 - - Resources Ltd Alkor Petroo Ltd 70.10 - 70.10 - - IVR Enviro Projects 29.25 - - 29.25 97.49 Pvt. Ltd. Salem Tollways Ltd 0.50 500.00 - 500.50 - Other Subsidiaries 3.67 1.00 - 4.67 - Total 3,867.46 6,113.20 Additions in case of IVRCL Assets & Holdings Ltd and deletions in case of IVRCL Water Infrastructures Ltd and IVRCL Strategic Resources Ltd mainly comprises shares allotted as a consideration on amalgamation of the above Companies as per the Scheme of Merger approved by the Hon'ble High Court of Andhra Pradesh. The revenues, Profit after tax and net worth of subsidiaries are as given below: A B C D E F G Hindustan 8,711.46 5,222.55 66.8% 555.17 301.60 84.1% 2,033.14 Dorr-Oliver Ltd IVRCL Assets 1,431.10 751.76 90.4% (63.99) 85.86 - 22,884.75 & Holdings Ltd IVRCL PSC Pipes 0.05 1.34 - (1.79) (0.11) - 0.07 Pvt. Ltd. IVR Enviro 0.03 0.16 - (1.42) (1.48) - 20.66 Projects Pvt. Ltd. IVRCL Steel 0.03 0.03 - - - - 0.48 Constructions & Services Ltd A = Revenue March 31, 2010 B = Revenue March 31, 2009 C = Revenue Growth% D = Profit after tax March 31, 2010 E = Profit after tax March 31, 2009 F = Profit after tax Growth% G = Net worth March 31, 2010 IVRCL Assets & Holdings Ltd.: The subsidiary is an infrastructure company focussing on development which include road, water, oil tankage facility, truck parking terminals and real estate projects. Originally, the Company was formed as a SPV to develop premier deluxe apartments and villas in a prime location in Hyderabad. Subsequently, the Company ventured into development of megamalls, hotels etc in cities like Chennai, Bangalore, Pune, Hyderabad and NCR. Recently on merger of the domain companies of IVRCL in Water and Road infrastructures with the subsidiary, it has become more of an asset holding company. Hindustan Dorr-Oliver Limited: The subsidiary is engaged in the business of providing Engineering & Turnkey solutions, Technology and EPC installations in liquid solid separation applications in various industry segments like mineral processing and benefication, Pulp and paper processing, fertiliser & chemical and environmental management. During the last financial year, the Company has acquired 100% equity of Sheffield, UK based 180 years old Engineering Company, Davymarkham Ltd. involved in the design, manufacture and assembly of large equipment for mining, power generation, oil, gas and nuclear sectors through its wholly owned subsidiary in UK, IMCO(22010) Ltd. 8. SUNDRY DEBTORS: Sundry debtors amount to Rs.19,445.24 million (as reduced by provision for doubtful debts) as at March 31, 2010 as compared with amount of Rs.13,430.21 million as at March 31, 2009. These debtors are considered good and realisable. Debtors including unbilled revenue amounts to Rs. 27,293.94 million as at March 31, 2010 as compared to Rs.20,229.19 million as at March 31, 2009. Debtors and unbilled revenue are at 49.7% of revenues for the year ended March 31, 2010, as compared to 40.6% for the previous year, representing an outstanding of 181 days and 148 days of revenues for the respective years. 9. CASH & CASH EQUIVALENTS (Rs.in million) March 31, March 31, 2010 2009 Cash/Cheques on hand 18.04 80.51 Bank balances: Current Accounts 1,427.09 664.75 Fixed Deposit-Margin 6.08 4.21 Fixed Deposit-Others 192.41 259.21 1,643.62 1,008.68 Cash/Cheques on hand comprises cash balances in project sites, regional offices and head office required to meet day to day needs of the growing business. Balances in current accounts Rs.1,427.09 million are spread over project sites at various locations to meet day to day requirements of the project management and major portion includes client bill proceeds received and deposited at the year end but realised subsequent to the balance sheet date. 10. OTHER CURRENT ASSETS: The amount under this heading mainly consist of: Unbilled Revenue - Rs.7,848.70 million (Rs.6,798.98 million) This represents amounts to be billed to some of the contractee clients in respect of revenue earned under the percentage completion method, followed by the Company, as reduced by that portion of such revenue already billed and receivable from those clients. This unbilled revenue recoverable is a dynamic figure every quarter in as much as the revenue earned is arrived at every quarter under the same method duly adjusting in those quarters the billed revenue as well as the unbilled revenue carried over from the corresponding previous quarter. Retention Money - Rs.5,476.34 million (Rs.4,292.00 million) The account represents the amounts retained by the clients towards performance security as a guarantee for satisfactory performance of the infrastructure projects developed by the Company. The Company has not received any demand for claim from any of the clients and hence all these amounts are treated as good for recovery except an amount of Rs20.21 million considered doubtful of recovery. Other deposits - Rs. 2,827.67 (Rs.2,661.25 million) This mainly consists of deposit lying with Government departments like Sales tax, Electricity Board, Telephones etc and EMD with the clients. 11. LOANS AND ADVANCES: Tax deducted at source and advance tax net of provisions - Rs. 416.93 million (Rs.1,702.88 million) This mainly consists of tax deducted at source from contract revenue by the clients as per the provisions of the Income Tax Act, 1961 and advance tax paid as reduced by the income tax provisions made and assessed (undisputed). All undisputed liabilities have been fully adjusted against this account. During the year, tax deductions claimed under Section 80 IA of the Income Tax Act, 1961 in earlier years Rs 1,409.03 million have been charged off as tax expense and the special reserve created for the purpose, Rs 1,411.00 million has been credited back to the Profit & Loss Account. Loans to Subsidiaries - Rs. 2,810.47 million (Rs.4,499.02 million) These amounts as loans have been provided to the subsidiaries and their fellow subsidiaries for strategic business ventures. These loans are interest bearing and subsidiary wise details of loans are as follows: (Rs. in million) Particulars of Subsidiary March 31, March 31, 2010 2009 IVRCL Assets & Holdings Ltd 1,862.88 2,791.54 IVR Enviro Projects Pvt. Ltd 8.59 8.21 IVRCL Strategic Resources Ltd - 235.29 IVRCL Water Infrastructures Ltd - 473.57 Chennai Water Desalination Ltd - 9.55 Salem Tollways Ltd 0.28 501.86 IVRCL Building Products Ltd 223.50 183.87 Alkor Petroo Ltd 604.69 237.75 Other Subsidiaries 110.53 57.38 2,810.47 4,499.02 Advances recoverable in cash or in kind or for value to be received (Secured & Unsecured) - Rs.2,963.74 (Rs.2,544.90 million) The account represents advances paid to various suppliers, sub-contractors, labour contractors etc., which are partly adjusted in the subsequent periods and the balance would also be recovered from their bill of services or otherwise. Hence all these amounts outstanding are considered realisable/adjustable. 12. CURRENT LIABILITIES (Rs. in million) March 31, March 31, 2010 2009 Advances received from contractee clients 7,452.38 5,986.32 Sundry Creditors 15,601.17 10,452.25 Other liabilities 870.61 356.57 23,924.16 16,795.14 Advances received from Contractee-clients are the advances provided to the Company in the nature of short-term liabilities, which are recovered from client bills. Some of the advances bear an interest cost and others are interest free. The Company has also provided bank guarantees for some of these advances. Sundry Creditors represent amount due to suppliers, sub-contractors, labour contractors, back-to-back contractors and other service providers. Other liabilities mainly represent all statutory dues such as PF, ESI, TDS, Sales Tax etc payable by the Company relating to the month of March 2010. 13. PROVISIONS: Proposed dividend of Rs.213.61 million (Rs.186.91 million) represents the dividend recommended to the shareholders by the Board of Directors. This will be paid after the Annual General Meeting, upon approval by the shareholders. Provision for tax on dividend Rs.36.30 million (Rs.31.76 million) denotes taxes payable on dividends declared for the year ended March 31, 2010. Gratuity provision and Provision for Leave Encashment has been made as per the actuarial estimation and certification by an independent Actuary as per the requirement under Accounting Standard 15 (revised). 14. Results of Operations: The following table sets forth the income statement for the financial year ended March 31, 2010 and 2009. The components of expenses have been expressed as a percentage of total income for the years indicated. (Rs. in million) March 31, March 31, 2010 2009 Income from operations 54,944.22 49,830.92 Other income 155.06 299.13 Total income 55,099.28 50,130.05 Percentage growth(year to year) 9.91% - Construction expenses(Including Indirect tax) 46,302.46 42,784.19 Construction expenses as a 84.03% 85.35% percentage to total income Administration & other expenses 3,329.05 2,828.91 Administration & other expenses 6.04% 5.64% as a percentage to total income EBITDA 5,467.77 4,516.95 EBITDA- percentage to total income 9.92% 9.01% Interest & finance charges 1,636.56 1,306.14 Interest & finance charges as a 2.97% 2.61% percentage to total income Depreciation 542.84 473.05 Depreciation as a percentage to total income 0.99% 0.94% Profit before tax(PBT) 3,288.37 2,737.76 PBT-percentage to total income 5.97% 5.46% Provision for taxation 1,177.21 478.07 Provision for taxation as a 2.14% 0.95% percentage to total income Profit after tax(PAT) 2,111.16 2,259.69 PAT-percentage to total income 3.83% 4.51% A. Income Recognised: Gross work bills represent revenue earned till end March 2010, on long term construction contracts, where revenue is recognizable over time as the work progresses rather than at the completion of such contracts. It is an established principle that the contractee client has the legal right to require specific performance from the contractor to the effect the client acquire ownership claim to the contractors work-in-progress. In turn the contractor acquires legally enforceable rights to require the client to make payments progressively against the work executed/cost incurred in due performance of those contracts. Hence, the substance of the construction business activity is that revenue is earned continuously as the project progress. This principle is well established in the accounting standard, AS 7 (revised 2002) issued by the Institute of Chartered Accountants of India. The income from operation also includes sale of galvanized structures manufactured in the TLT factory and other products Rs.1,423.22 million. The Company continues to earn its major contract revenue from water and water related projects, which account for 57.05% of the total revenue. The other projects such as building and industrial structures accounted for 24.55%, transport infrastructures like roads, rail tracks and bridges 13.27% and power infrastructures like transmission lines, substations etc. 5.13%. B. Construction Expenses (Rs in million) March 31, March 31, % Increase 2010 2009 Construction & other materials 19,804.46 16,332.23 Sub-contractors work bills 10,845.38 13,512.52 Masonry & other works 11,559.60 9,914.87 Raw materials consumed (TLT factory) 406.63 246.26 Prime cost 42,616.07 40,005.88 6.5% Repairs & Maintenance 509.70 475.37 7.2% Machinery hire charges 1,075.64 1,066.52 0.9% Other Construction expenses 228.86 207.36 10.4% Indirect Tax 1,850.75 1,002.51 84.6% Total 46,281.02 42,757.64 8.2% The increase in prime cost i.e. construction materials, sub-contractors work bills and masonry & other works are in line with the increase in gross work bills. The major items of construction materials are steel, cement, pipes, oil and fuel etc. Increase in other construction expenses like Repairs & Maintenance, Machinery Hire Charges, Royalty and Lab Testing Charges are considered normal and are in line with the increase in revenue. C. Administration and other Expenses March 31, March 31, % Increase 2010 2009 Payment to employees & 2,025.57 1,953.09 3.7% employees related payments Travelling & conveyance 126.61 128.80 (1.7)% Printing & stationery 37.09 39.86 (6.9)% Communication expenses 51.33 53.00 (3.2)% Rates & taxes 49.47 48.62 1.7% Business promotion 9.07 6.75 34.4% Office maintenance 138.58 124.88 11.0% Rent 107.20 90.14 18.9% Advertisement & publicity 16.33 15.96 2.3% Legal & professional charges 180.24 188.69 (4.5)% Insurance 111.22 43.63 154.9 Other expenses/provisions 476.34 135.49 251.6% Total 3,329.05 2,828.91 17.7% Insurance expense is net of claims received. Insurance claim of Rs 74 million was accounted during the year ended March 2009, hence the variance in the insurance account. Other expenses/provisions in the current financial year includes bad debt and provisions accounted Rs 382.75 million as compared to Rs 61.44 million in the previous financial year. Increase/decrease in other heads of expenses are normal and in line with the increase in operation. D. Interest and Finance charges (Rs in million) March 31, March 31, Growth 2010 2009 Interest on fixed loans 806.01 419.14 92.3% Interest on other credit facilities 1,125.60 1,216.68 (7.5)% Bank & financing charges/other 232.96 271.55 (14.2)% interest Foreign exchange loss (44.27) 72.95 - Total 2,120.30 1,980.32 7.1% Less: Interest received 483.74 674.18 (28.2%) from banks & others Net Interest & finance charges 1,636.56 1,306.14 25.3% The increase in the Total Interest & finance cost by 7.1% is due to marginal increase in credit availment because of increased operations. Interest income represents interest earned on ICD given to subsidiaries and the deposits kept with banks for EMD etc. E. Depreciation and Amortisation - Rs 542.84 million (Rs.473.05 million): Depreciation on all assets have been provided at the rates and method as adopted in the previous year. There is no change in the accounting policy as regards charge of depreciation and the same is in compliance with the provisions of the Companies Act, 1956 and the relevant accounting standards. The increase in depreciation is in line with the additions to the gross block of fixed assets. 15. OPERATING PROFIT: The Company earned an operating profit (EBITDA) of Rs.5,467.77 million, representing 9.92% of the total income as compared to Rs.4,516.95 million, representing 9.01% of total income during the previous year. Overall savings in the prime cost i.e. material and labour cost has contributed to the improvement in EBITDA in the current financial year. Profit before tax(PBT) as a percentage to Total Income works out to 5.97% for the year when compared to 5.46% for the previous year. The increase in the PBT inspite of increase in administrative and finance cost is primary due to saving in construction expenses i.e.prime cost The Company has made provision for income tax for the year Rs.1,177.21 million as against Rs.478.07 million during the previous year. During the year, the Company has discontinued claim of deduction under Section 80 IA of the Income Tax Act, 1961 in view of the clarificatory amendment in the last Finance Act. Amount already claimed upto FY 2009 Rs 1,409.03 million has been charged off to the Profit & Loss Account during the year and an amount of Rs 1,411.00 million created as special reserve for the purpose has been credited back. Profit for the year after tax (PAT) as a percentage to Total Income works out to 3.83% when compared to 4.51% for the previous year. The disproportionate reduction in PAT is on account of increase in tax expense due to discontinuance of claim under section 80 IA. 16. LIQUIDITY: Cash Flow Statement: (Rs. in million) Year ended Year ended March 31, March 31, 2010 2009 Operating adjusted profit before 5,569.96 4,129.36 working capital changes Working capital changes (2,480.28) (2,914.29) Direct taxes paid (1,292.92) (1,018.34) Net cash generated from operations 1,796.76 196.73 Net cash from investing activities (1,277.68) (1,869.24) Net cash from financing activities 80.89 1,404.29 Net inc/dec in cash & cash equivalents 599.97 (268.22) The construction infrastructure industry is by its nature working capital intensive, and net investments in inventory and current assets amount to, on average, approximately six months of total income. The company had a compound annual growth rate in excess of 30% over the last five fiscal years. The increase in the current assets are mainly in the categories of sundry debtors and advances. There were also corresponding increase in the payables also hence the Company could achieve positive net cash generated from operations for last two consecutive years. Net cash used in investing activities mainly comprises of purchase of fixed assets and investment in subsidiaries.Net cash generated from financing activities comprises of inflow from long term and short term borrowings.