Draft Letter of Offer

September 23, 2015

For our Equity Shareholders only

JMC PROJECTS (INDIA) LIMITED

The Company was originally incorporated as Civen Construction Private Limited on June 5, 1986 under the Companies Act, 1956 with its registered office at Ahmedabad.

Subsequently on December 10, 1987, the name was changed to Joshi & Modi Constructions Private Limited. The name was further changed to JMC Projects (India) Private

Limited on January 21, 1994 and was subsequently converted into a Public Limited Company in the name of JMC Projects (India) Limited on February 4, 1994.

Registered Office: A-104, Shapath-4, Opposite Karnavati Club, S.G.Road, Ahmedabad – 380 051, India Tel: +91-79-3001 1500, Fax: +91-79-3001 1700

Mumbai Office: 6th Floor, Kalpataru Synergy, Opp. Grand Hyatt, Santacruz (East), Mumbai 400055, Maharashtra, India

Tel: +91 22 30051500, Fax: +91 22 30051555

Contact Person: Mr. Suresh Savaliya, Company Secretary and Compliance Officer, E-mail: s.savaliya@jmcprojects.com, Website: www.jmcprojects.com

Promoter of the Company: Kalpataru Power Transmission Limited

FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF JMC PROJECTS (INDIA) LIMITED

(THE “COMPANY” OR THE “ISSUER”) ONLY

ISSUE OF [●] FULLY PAID-UP EQUITY SHARES OF FACE VALUE OF ` 10 EACH (“RIGHTS EQUITY SHARES”) FOR CASH AT A PRICE OF ` [●] PER EQUITY SHARE INCLUDING A SHARE PREMIUM OF ` [●] PER EQUITY SHARE AGGREGATING UPTO ` 15,000 LACS TO OUR EXISTING EQUITY SHAREHOLDERS ON A RIGHTS BASIS IN THE RATIO OF [●] FULLY PAID-UP EQUITY SHARE(S) FOR EVERY [●] FULLY

PAID-UP EQUITY SHARE(S) HELD BY THE EXISTING EQUITY SHAREHOLDERS ON THE RECORD DATE, I.E. [●] (“THE ISSUE”). THE ISSUE

PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARE. FOR FURTHER DETAILS, PLEASE SEE THE SECTION “TERMS OF THE

ISSUE” ON PAGE 153 OF THE DRAFT LETTER OF OFFER. THE ENTIRE ISSUE PRICE FOR THE EQUITY SHARE IS PAYABLE ON

APPLICATION.

GENERAL RISKS

Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in the Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in the Issue. For taking an investment decision,

investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities being offered in the Issue have not been

recommended or approved by Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of the Draft Letter of Offer.

Investors are advised to refer to the section “Risk Factors” on page 9 of the Draft Letter of Offer, before making an investment in the Issue.

ISSUER’S ABSOLUTE RESPONSIBILITY

The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that the Draft Letter of Offer contains all information with regard to the Issuer

and the Issue, which is material in the context of the Issue, that the information contained in the Draft Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes the

Draft Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING

The existing Equity Shares are listed on the BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”), (together the “Stock Exchanges”). We have received “in-principle” approvals from BSE and NSE for listing the Rights Equity Shares to be allotted in the Issue vide their letters dated [●] and [●],

respectively. For the purposes of the Issue, the Designated Stock Exchange is BSE.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

Inga Capital Private Limited

Naman Midtown

21st Floor, ‘A’ Wing Senapati Bapat Marg, Elphinstone (West)

Mumbai – 400 013

Maharashtra, India Tel. No. : +91 22 4031 3489

Fax No. : +91 22 4031 3379

E-mail: jmc.rights@ingacapital.com Investor Grievance E-mail: investors@ingacapital.com

Website: www.ingacapital.com

Contact Person: Ashwani Tandon SEBI Registration No: INM000010924

Link Intime India Private Limited

Pannalal Silk Mills Compound

L.B.S. Marg

Bhandup (West), Mumbai - 400 078 Maharashtra, India

Tel No.: +91 22 61715400

Fax No.: +91 22 2596 0329 Email: jmc.rights@linkintime.co.in

Investor Grievance E-mail: jmc.rights@linkintime.co.in

Website: www.linkintime.co.in Contact Person: Dinesh Yadav

SEBI Registration: INR000004058

ISSUE PROGRAMME

ISSUE OPENS ON

LAST DATE FOR RECEIPT OF

REQUEST FOR SPLIT

APPLICATION FORMS

ISSUE CLOSES ON

[●] [●] [●]

http://www.jmcprojects.com/

TABLE OF CONTENTS

SECTION I – GENERAL ............................................................................................................................. 1

DEFINITIONS AND ABBREVIATIONS .............................................................................................. 1

NOTICE TO OVERSEAS SHAREHOLDERS ....................................................................................... 6

CERTAIN CONVENTIONS, USE OF FINANCIAL, INDUSTRY AND CURRENCY OF

PRESENTATION ................................................................................................................................... 7

FORWARD LOOKING STATEMENTS................................................................................................ 8

SECTION II - RISK FACTORS .................................................................................................................. 9

SECTION III- INTRODUCTION ............................................................................................................. 29

SUMMARY OF THE ISSUE ................................................................................................................ 29

SUMMARY OF FINANCIAL INFORMATION .................................................................................. 30

GENERAL INFORMATION ................................................................................................................ 33

CAPITAL STRUCTURE ...................................................................................................................... 37

OBJECTS OF THE ISSUE .................................................................................................................... 42

SECTION IV –STATEMENT OF TAX BENEFITS ............................................................................... 51

SECTION V -OUR MANAGEMENT ....................................................................................................... 63

SECTION VI – FINANCIAL INFORMATION ...................................................................................... 68

ACCOUNTING RATIOS AND CAPITALISATION STATEMENT ................................................ 131

STOCK MARKET DATA FOR EQUITY SHARES .......................................................................... 133

MATERIAL DEVELOPMENTS ........................................................................................................ 135

SECTION VII – LEGAL AND OTHER INFORMATION ................................................................... 136

OUTSTANDING LITIGATIONS AND DEFAULTS ........................................................................ 136

GOVERNMENT AND OTHER APPROVALS .................................................................................. 142

OTHER REGULATORY AND STATUTORY DISCLOSURES ....................................................... 143

SECTION VIII – OFFERING INFORMATION ................................................................................... 153

TERMS OF THE ISSUE ..................................................................................................................... 153

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................. 188

DECLARATION ...................................................................................................................................... 190

1

SECTION I – GENERAL

DEFINITIONS AND ABBREVIATIONS

Definitions

In the Draft Letter of Offer, unless the context otherwise requires, the terms defined and abbreviations expanded

below shall have the same meaning as stated in this section. References to statutes, rules, regulations, guidelines

and policies will be deemed to include all amendments and modifications notified thereto.

Company Related Terms

Term Description

“our Company”, “the Company”,

“the Issuer Company” and “the

Issuer”

JMC Projects (India) Limited

“we”, “us” and “our” Our Company and its Subsidiaries and Joint Ventures including entities

controlled through contractual arrangements, except as the context

otherwise requires.

Articles/ AoA/ Articles of

Association

Our articles of association, as amended

Auditors Our statutory auditors, M/s. Kishan M. Mehta & Co, Chartered

Accountants (Firm’s Registration No.105229W)

Board of Directors/Board Our board of directors or any duly constituted committees thereof

CFO Chief Financial Officer of our Company

Directors Directors of our Company

Equity Shares Equity shares of face value of ` 10 each of our Company Group Companies Group Companies includes such companies as covered under the

applicable accounting standards and also other companies as considered

material by the board of our Company.

The policy (as adopted by the Board of our Company vide resolution

dated September 11, 2015) to define the materiality requirement for a

company to be considered as a Group Company of our Company is as

follows:

“A Company shall be considered to be Material for purpose of its

inclusion as a Group Company in terms of the requirements of SEBI

(ICDR) Regulations, 2009 if and only if it fulfils any of the following

criteria’s:

a) Subsidiary companies of the JMC. or

b) Group companies as per applicable accounting standards, being Accounting Standard 18, as mentioned in our

financial statements for fiscal year 2015 or annual

financial statements or

c) Company in which JMC hold 20% or more equity shares with voting rights or

d) Any other company or companies, as the Board may identify as Group Companies of the JMC.”

Joint Ventures Kurukshetra Expressway Private Limited, JMC - Associated JV,

Aggrawal - JMC JV, JMC - Sadbhav JV, JMC - Taher Ali JV (Package I,

II & III), JMC - PPPL JV, KPTL-JMC-Yadav JV, JMC - GPT JV and JMC - CHEC JV

Memorandum/ MoA/

Memorandum of Association

The memorandum of association of our Company, as amended

Mumbai Office 6th Floor, Kalpataru Synergy, Opp. Grand Hyatt, Santacruz (East),

Mumbai- 400055

2

Promoter Kalpataru Power Transmission Limited

Promoter Group Persons and entities constituting the promoter group of our Company in

terms of Regulation 2(1)(zb) of the SEBI ICDR Regulations

Registered Office A-104, Shapath - 4, S. G. Road, Opp. Karanavati Club, Ahmedabad-

380051, Gujarat.

Subsidiaries Brij Bhoomi Expressway Private Limited, JMC Mining and Quarries

Limited, Wainganga Expressway Private Limited, and Vindhyachal

Expressway Private Limited

Issue Related Terms

Term Description

Abridged Letter of Offer The abridged letter of offer to be sent to the Equity Shareholders with

respect to the Issue in accordance with the SEBI ICDR Regulations

Allotment/ Allot/ Allotted Allotment of Rights Equity Shares pursuant to the Issue

Allottee(s) Persons to whom Right Equity Shares will be Allotted pursuant to the

Issue

Application

Unless the context otherwise requires, refers to an application for

Allotment of Rights Equity Shares in this Issue

Application Money Aggregate amount payable in respect of the Equity Shares applied for in

the Issue at the Issue Price

Application Supported by Blocked

Amount/ ASBA

The application (whether physical or electronic) used by ASBA Investors

to make an application authorizing the SCSB to block the amount payable

on application in ASBA Account

ASBA Account Account maintained with a SCSB and specified in the CAF or plain paper

application, as the case may be, for blocking the amount mentioned in the

CAF, or the plain paper application, as the case may be

ASBA Investor/ASBA Applicant Equity Shareholders proposing to subscribe to the Issue through ASBA

process and:

(a) Who are holding our Equity Shares in dematerialized form as on the Record Date and have applied for their Rights Entitlements and/ or

additional Equity Shares in dematerialized form;

(b) Who have not renounced their Rights Entitlements in full or in part; (c) Who are not Renouncees; and (d) Who are applying through blocking of funds in a bank account

maintained with SCSBs.

All QIBs and other Investors whose application value exceeds ` 2 lacs complying with the above conditions may participate in this Issue through

the ASBA process only

Bankers to the Issue [●]

Composite Application Form/ CAF The form used by an Investor to make an application for the Allotment of

Rights Equity Shares in the Issue

Consolidated Certificate In case of holding of Equity Shares in physical form, the certificate that

would be issued for the Rights Equity Shares Allotted to 1 folio

Controlling Branches of the SCSBs Such branches of the SCSBs which coordinate with the Lead Manager,

the Registrar to the Issue and the Stock Exchanges, a list of which is

available on www.sebi.com

Designated Stock Exchange BSE

Designated Branches Such branches of the SCSBs which shall collect application forms used

by ASBA Investors and a list of which is available on www.sebi.com

Draft Letter of Offer/DLOF The draft letter of offer dated September 23, 2015 filed with SEBI for its

observations which does not contain complete particulars of the Issue

Equity Shareholders/ Eligible

Equity Shareholder(s)

A holder/beneficial owner of our Equity Shares as on the Record Date

Investor(s) The Equity Shareholders(s) on the Record Date, applying in this Issue,

and the Renouncees who have submitted an Application to subscribe to

the Issue

Inga Inga Capital Private Limited

3

Term Description

Issue/ Rights Issue Issue of [●] Equity Shares of face value of ` 10 each for cash at a price of ` [●] per Equity Share including a share premium of ` [●] per Equity Share aggregating up to ` 15,000 lacs to our existing Equity Shareholders on a rights basis in the ratio of [●] Equity Shares for every [●] Equity

Shares held by them on the Record Date

Issue Closing Date [●]

Issue Opening Date [●]

Issue Price ` [●] per Rights Equity Share Issue Size Amount up to ` 15,000 lacs Issue Proceeds The gross proceeds to be raised through this Issue

Lead Manager Inga Capital Private Limited

Letter of Offer The final letter of offer to be filed with the Stock Exchanges after

incorporating the observations received from the SEBI on the Draft Letter

of Offer

Listing Agreement The listing agreements entered into between us and the Stock Exchanges

Net Proceeds The Issue Proceeds less the Issue related expenses. For further details,

please see section “Objects of the Issue” on page 42 of the Draft Letter of

Offer.

Non-ASBA Investor Investors other than ASBA Investors who apply in the Issue otherwise

than through the ASBA process

Non-Institutional

Investors Investor, including any company or body corporate, other than a Retail

Individual Investor and a QIB

Qualified Foreign Investors/ QFI Qualified Foreign Investor as defined under the Securities and Exchange

Board of India (Foreign Portfolio Investors) Regulations, 2014 (as

amended), registered with SEBI under applicable laws in India. A

Qualified Foreign Investor may buy, sell or otherwise continue to deal in

securities without registration as Foreign Portfolio Investors subject to

compliance with conditions specified in the SEBI (Foreign Portfolio

Investors) Regulations, 2014

QIBs or Qualified Institutional

Buyers

Qualified institutional buyers as defined under Regulation 2(1)(zd) of the

SEBI ICDR Regulations

Record Date [●]

Refund Banker [●]

Registrar to the Issue/ Registrar

and Transfer Agent/ RTA/Registrar

Link Intime India Private Limited

Renouncee(s) Any person(s) who has/ have acquired Rights Entitlements from Equity

Shareholders

Retail Individual Investors Individual Investors who have applied for Rights Equity Share for an

amount not more than ` 2 lacs (including HUFs applying through their Karta)

Rights Entitlement The number of Rights Equity Share that an Investor is entitled to in

proportion to the number of Equity Shares held by the Investor on the

Record Date

RightsEquity Shares Equity Shares of the Company to be allotted pursuant to this Rights Issue.

SAF(s) Split Application Form(s)

SCSB(s) A Self Certified Syndicate Bank, registered with SEBI, which acts as a

banker to the Issue and which offers the facility of ASBA. A list of all

SCSBs is available at http://www.sebi.gov.in

Stock Exchange(s) BSE and NSE, where our Equity Shares are presently listed

Working Days Any day, other than Saturdays and Sundays, on which commercial banks

in Mumbai are open for business, provided however, for the purpose of

the time period between the Issue Closing Date and listing of the

Securities on the Stock Exchanges, “Working Days” shall mean all days

excluding Sundays and bank holidays in Mumbai in accordance with the

SEBI circular no. CIR/CFD/DIL/3/2010 dated April 22, 2010

4

Conventional and General Terms/ Abbreviations/ Industry Related Terms

Term Description

Act/ Companies Act The Companies Act, 1956 and the notified provisions of the Companies

Act, 2013

AGM Annual General Meeting

AS Accounting Standards notified pursuant to the Companies (Accounting

Standards) Rules, 2006, as amended

BSE BSE Limited

CAGR Compounded Annual Growth Rate

Companies Act 1956 The Companies Act, 1956, as amended

Companies Act 2013 The Companies Act, 2013, to the extent notified

CDSL Central Depository Services (India) Limited

DBD Drawee Bill Discounting

Depositories Act The Depositories Act, 1996, as amended

Depository A depository registered with SEBI under the SEBI (Depositories and

Participant) Regulations, 1996

Depository Participant/ DP A depository participant as defined under the Depositories Act

DIN Director Identification Number

DP ID Depository Participant Identity

EC Extension Counter

EGM Extra-Ordinary General Meeting

EPS Earnings per Share

FBD Foreign Bills Discounting Limited

FCL Foreign Currency Loan

FDI Foreign Direct Investment

FEMA The Foreign Exchange Management Act, 1999, including the regulations

framed thereunder, as amended

FII Foreign Institutional Investor as defined under the Securities and

Exchange Board of India (Foreign Institutional Investors) Regulations,

1995 (as amended) and registered with SEBI and as repealed by Foreign

Portfolio Investors defined under the SEBI (Foreign Portfolio Investors)

Regulations, 2014. A Foreign Institutional Investor or a sub account may

buy, sell or otherwise continue to deal in securities without registration as

Foreign Portfolio Investors subject to compliance with conditions

specified in the SEBI (Foreign Portfolio Investors) Regulations, 2014.

FPI Foreign Portfolio Investor as defined under the Securities and Exchange

Board of India (Foreign Portfolio Investors) Regulations, 2014 (as

amended), registered with SEBI under applicable laws in India

Fiscal Year/ Fiscal Period of 12 months ended March 31 of that particular year

FIPB Foreign Investment Promotion Board, Ministry of Finance, GoI

FVCI Foreign Venture Capital Investors as defined under the Securities and

Exchange Board of India (Foreign Venture Capital Investors)

Regulations, 2000 (as amended) registered with SEBI under applicable

laws in India

GAAP Generally Accepted Accounting Principles

GoI Government of India

HUF Hindu Undivided Family

ICAI Institute of Chartered Accountants of India

IFRS International Financial Reporting Standards

IFSC Indian Financial System Code

ISIN International Securities Identification Number

IT Act The Income Tax Act, 1961, as amended

Indian GAAP Generally accepted accounting principles followed in India

LTLR Long Term Lending Rate

MICR Magnetic Ink Character Recognition

Mutual Fund/ MF A mutual fund registered with SEBI under the SEBI (Mutual Funds)

Regulations, 1996

5

Term Description

NAV Net Asset Value

NECS National Electronic Clearing Services

NEFT National Electronic Funds Transfer

NR Non-Resident

NRI Non-Resident Indian

NRE Account Non-Resident External Account

NRO Account Non-Resident Ordinary Account

NSDL National Securities Depository Limited

NSE National Stock Exchange of India Limited

OCB Overseas Corporate Body

p.a. Per Annum

PAN Permanent Account Number under the IT Act

PAT Profit After Tax

PBD Purchase Bill Discounting Limit

PBT Profit Before Tax

PC Packing Credit

PCFC Pre Shipment Credit in Foreign Currency

RBI Reserve Bank of India

Registrar of Companies/ RoC Registrar of Companies, Ahmedabad

Regulation S Regulation S under the Securities Act

Rupees/ INR/ `/ Rs. Indian Rupees RTGS Real Time Gross Settlement

SEBI Securities and Exchange Board of India

SEBI Act Securities and Exchange Board of India Act, 1992

SEBI ICDR Regulations/ SEBI

Regulations

Securities and Exchange Board of India (Issue of Capital and Disclosure

Requirements) Regulations, 2009, as amended

SEBI Merchant Bankers

Regulations

Securities and Exchange Board of India (Merchant Bankers) Regulations,

2012, as amended

Securities Act U.S. Securities Act of 1933, as amended

Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of

Shares and Takeovers) Regulations, 2011, as amended

U.S./ US/ USA/United States United States of America

WCDL Working Capital Demand Loan

The words and expressions used but not defined herein shall have the same meaning as is assigned to such terms

under the Companies Act, as amended, the Securities Contracts (Regulation) Act, 1956, the Depositories Act,

1996 and the rules and regulations made thereunder.

6

NOTICE TO OVERSEAS SHAREHOLDERS

The distribution of the Draft Letter of Offer and the issue of Right Equity Shares on a rights basis to persons in

certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions.

Persons into whose possession the Draft Letter of Offer, Letter of Offer, Abridged Letter of Offer or CAF may

come are required to inform them about and observe such restrictions. We are making this Issue of Equity

Shares on a rights basis to the Equity Shareholders as on Record Date and will dispatch the Letter of Offer/

Abridged Letter of Offer and CAFs to such Eligible Equity Shareholders who have provided an Indian address.

Overseas shareholders, who have not updated our records with their Indian address or the address of their duly

authorized representative in India, prior to the date on which we propose to dispatch the Letter of Offer /

Abridged Letter of Offer and CAFs, shall not be sent the Letter of Offer / Abridged Letter of Offer and CAFs.

No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for

that purpose, except that the Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the

Rights Equity Shares may not be offered or sold, directly or indirectly, and the Letter of Offer/ Abridged Letter

of Offer and CAFs may not be distributed in any jurisdiction, except in accordance with legal requirements

applicable in such jurisdiction. Receipt of the Draft Letter of Offer will not constitute an offer in those

jurisdictions in which it would be illegal to make such an offer and, under those circumstances, the Draft Letter

of Offer must be treated as sent for information only and should not be acted upon for subscription to Rights

Equity Shares and should not be copied or redistributed. Accordingly, persons receiving a copy of the Draft

Letter of Offer should not, in connection with the issue of the Rights Equity Shares, distribute or send the same

in or into the United States or any other jurisdiction where to do so would or might contravene local securities

laws or regulations. If the Draft Letter of Offer is received by any person in any such territory, or by their agent

or nominee, they must not seek to subscribe to the Rights Equity Shares referred to in the Draft Letter of Offer.

Envelopes containing CAF should not be dispatched from any jurisdiction where it would be illegal to make an

offer, and all persons subscribing for the Equity Shares in this Issue must provide an Indian address.

Any person who makes an application to acquire Equity Shares offered in this Issue will be deemed to have

declared, represented, warranted and agreed that he is authorised to acquire the Rights Equity Shares in

compliance with all applicable laws and regulations prevailing in his jurisdiction. We, the Registrar, the Lead

Manager or any other person acting on behalf of us reserve the right to treat any CAF as invalid where we

believe that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory

requirements and we shall not be bound to allot or issue any Equity Shares in respect of any such CAF. Neither

the delivery of the Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any

implication that there has been no change in the Company’s affairs from the date hereof or that the information

contained herein is correct as at any time subsequent to the date of the Draft Letter of Offer.

The contents of the Draft Letter of Offer should not be construed as legal, tax or investment advice.

Prospective investors may be subject to adverse foreign, state or local tax or legal consequences as a result

of the offer of Equity Shares. As a result, each investor should consult its own counsel, business advisor

and tax advisor as to the legal, business, tax and related matters concerning the offer of Equity Shares. In

addition, neither our Company nor the Lead Manager is making any representation to any offeree or

purchaser of the Equity Shares regarding the legality of an investment in the Equity Shares by such

offeree or purchaser under any applicable laws or regulations.

7

CERTAIN CONVENTIONS, USE OF FINANCIAL, INDUSTRY AND CURRENCY OF

PRESENTATION

Certain Conventions

References in the Draft Letter of Offer to “India” are to the Republic of India and the “Government” or the

“Central Government” is to the Government of India (“GoI”) and to the ‘US’ or ‘U.S.’ or the ‘United States’ are

to the United States of America and its territories and possessions.

Financial Data

Unless stated otherwise, the financial data in the Draft Letter of Offer is derived from our financial statements

prepared in accordance with Indian GAAP. Our fiscal year commences on April 1 of each year and ends on

March 31 of the succeeding year, so all references to a particular “Fiscal Year” or “Fiscal” are to the 12 month

period ended on March 31 of that year. Our audited consolidated and audited standalone financial statements for

the Fiscal 2015 and Fiscal 2014 the (“Financial Statements”) and limited reviewed unaudited standalone

financial statement for the quarter ended June 30, 2015 that appear in the Draft Letter of Offer have been

prepared by our Company in accordance with Indian GAAP, applicable standards and guidance notes specified

by the Institute of Chartered Accountants of India, applicable accounting standards prescribed by the Companies

(Accounting Standards) Rules, 2006 and other applicable statutory and / or regulatory requirements. For further

details of such financial statements, see the section “Financial Information” on page 68 of the Draft Letter of

Offer.

We publish our financial statements in Indian Rupees.

In the Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed

are due to rounding off, and unless otherwise specified, all financial numbers in parenthesis represent negative

figures. Numerical values have been rounded off to two decimal places.

Unless stated otherwise, throughout the Draft Letter of Offer, all figures have been expressed in Rupees in lacs.

Currency of Presentation

All references in the Draft Letter of Offer to “Rupees”, “`”, “Rs.”, “Indian Rupees” and “INR” are to Indian Rupees, the official currency of India.

Please Note:

One Lacs is equal to 100 thousand

One crore is equal to 10 million/100 Lacs

8

FORWARD LOOKING STATEMENTS

Certain statements in the Draft Letter of Offer that are not statements of historical fact constitute ‘forward

looking statements’. Investors can generally identify forward-looking statements by terminologies such as

“will”, “may”, “aim”, “is likely to result”, “believe”, “expect”, “continue”, “anticipate”, “estimate”, “intend”,

“plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “pursue” and similar

expressions or variations of such expressions, that are “forward looking statements”. Similarly, statements that

describe our objectives, strategies, plans or goals are also forward-looking statements. By their nature, forward-

looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the

predictions, forecasts, projections and other forward-looking statements will not be achieved.

All forward looking statements are subject to risks, uncertainties and assumptions about us that could cause

actual results to differ materially from those contemplated by the relevant forward-looking statement. Important

factors that could cause actual results to differ materially from plans, objectives, estimates, intentions and

expectations expressed in such forward looking statements include, but are not limited to:

Non-compliance with specific obligations under the financing agreements of our Company.

Delays in completion of construction of current and future projects leading to cost overruns;

Non-performance of obligations by our joint venture partners;

Disruption of operations of one or more of our projects and inability of our Company to collect toll on time or at all.

Our ability to attract and retain qualified personnel;

Changes in laws and regulations relating to the industry in which we operate;

General economic and business conditions in the markets in which we operate;

Increasing competition in or other factors affecting the industry;

The performance of the financial markets in India and globally; and

Our ability to manage risks that arise from these factors.

For a further discussion of factors that could cause our actual results to differ, please see the sections “Risk

Factors”. By their nature, certain market risk disclosures are only estimates and could be materially different

from what actually occurs in the future. As a result, actual future gains or losses could materially differ from

those that have been estimated.

The forward-looking statements contained in the Draft Letter of Offer are based on the beliefs of management,

as well as the assumptions made by, and information currently available to, management of our Company.

Whilst our Company believes that the expectations reflected in such forward-looking statements are reasonable

at this time, it cannot assure investors that such expectations will prove to be correct. Given these uncertainties,

Investors are cautioned not to place undue reliance on such forward-looking statements. Neither we nor the Lead

Manager nor any of it’s respective affiliates, employees or directors make any representation, warranty or

prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-

looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the

most likely or standard scenario. Neither we nor the Lead Manager nor any of their respective affiliates or

employees or directors have any obligation to update or otherwise revise any statements reflecting

circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the

underlying assumptions do not come to fruition. In accordance with SEBI/ Stock Exchanges requirements, our

Company and the Lead Manager will ensure that Investors in India are informed of material developments until

the time of the grant of listing and trading permissions by the Stock Exchanges for the Equity Shares allotted

pursuant to this Issue.

9

SECTION II - RISK FACTORS

An investment in our Equity Shares involves a degree of risk. You should consider all information in the Draft

Letter of Offer, including the risks and uncertainties described below, before making an investment in our

Equity Shares. Investors should carefully consider all the information contained in the section titled “Financial

Information” on page 68 of the Draft Letter of Offer for the information related to the financial performance of

our Company. If any of the following risks or any of the risks and uncertainties discussed in the Draft Letter of

Offer or other risks that are not currently known or are now deemed immaterial, actually occur, our business,

cash flow, financial condition and results of operations could suffer, the trading price of our Equity Shares

could decline and you may lose all or part of your investment.

The risk set out in the Draft Letter of Offer may not be exhaustive and additional risk and uncertainties not

presently known to us, or which may arise or may become material in the future. Further, some events may have

a material impact from a qualitative perspective rather than a quantitative perspective and may be material

collectively rather than individually. Investors are advised to read the risk factors carefully before taking an

investment decision in this offering. Before making an investment decision, investors must rely on their own

examination of the offer and us.

Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the

financial or other implication of any of the risks described in this section.

INTERNAL RISK FACTOR

1. There are legal proceedings currently outstanding involving our Company, our Subsidiaries and our Joint Ventures. Any adverse decision may render us liable to liabilities/penalties and may adversely affect our

business, results of operations and profitability.

Our Company, our Subsidiaries and our Joint Ventures are involved in certain legal proceedings and claims in

relation to taxation incidental to our business and operations. These legal proceedings are pending at different

levels of adjudication before various courts and tribunals. Any adverse decision may render us liable to

liabilities/penalties and may adversely affect our business, results of operations and profitability. A summary of

material legal and other proceedings involving our Company, our Subsidiaries and Joint Ventures are given in

the following table:

Type of Proceedings Number of cases Amount to the extent

quantifiable (` in lacs) Civil Proceedings 28 12,601.00

Criminal Proceedings 6 520.00

Total 34 13,121.00

For further details, please refer “Outstanding Litigations and Defaults” on page 136 of the Draft Letter of Offer.

2. Our Company has given sponsor support undertakings and guarantee in relation to certain debt facilities provided to our Subsidiaries and Joint Ventures, which, if called upon, may materially and adversely affect

our business, results of operations, cash flows and financial condition.

Our Company has given certain sponsor support undertakings and guarantee in favour of our Subsidiaries and

Joint Ventures in relation to certain liabilities including debt facilities availed by them. As per the standalone

Financial Statements, the guarantee outstanding as of March 31, 2015 was ` 19,921.21 lacs. In the event these guarantees are enforced, our business, prospects, results of operations, cash flow and financial condition may be

adversely affected. Additionally, in the event that any of the guarantees provided by us is revoked, the lenders

for such facilities may require alternate guarantees, repayment of amounts outstanding under such facilities, or

even terminate such facilities. We may not be successful in procuring guarantees satisfactory to the lenders, and

as a result may need to repay outstanding amounts under such facilities or seek additional sources of capital,

which could affect our business, prospects, results of operations, cashflows and financial condition.

3. The financing arrangements entered into by our Company with some of our lenders imposes requirement of obtaining consent from such lenders for issuing further securities and accordingly for undertaking the Issue.

We have entered into agreements and arrangements with certain banks and financial institutions for long-term

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and short-term borrowings and we are subject to certain restrictive covenants. Under the terms of certain of our

Company’s debt agreements, our Company is required to send intimation to its lenders or obtain prior consent

from its lenders for, inter alia, change in the capital structure of our Company, making any change in

ownership, control or management and issuance of further securities. For the purpose of undertaking this Issue,

we have applied to our lenders for their prior consent and no objection to proceed with this Issue, in terms of the

financing arrangements executed with such lenders. We are yet to receive the no objection from any of our

lenders.

Any inability to comply with the covenants under our financing arrangements or to obtain necessary consents

required thereunder may lead to the termination of our credit facilities, levy of penal interest, acceleration of all

amounts due under such facilities and the enforcement of any security provided. If the obligations under any of

our financing agreements are accelerated, we may have to dedicate a substantial portion of our cash flow from

operations to make payments under such financing documents, thereby reducing the availability of cash for our

working capital requirements and other general corporate purposes.

4. Increases in interest rates may materially impact our results of operations.

Our business requires a significant amount of working capital to finance the purchase of construction materials,

submission of earnest money deposit and other work on our construction projects before payment is

received from clients. We also avail term loans to meet our capital expenditure requirements.

Increases in interest expense may have an adverse effect on our results of operations and financial

condition. Our current debt facilities carry interest at variable rates as well as fixed rates with the provision for

periodic reset of interest rates. As of March 31, 2015, a major portion of our indebtedness was subject

to variable interest rates.

Although we may exercise the right available to our Company to terminate the current debt financing

arrangement on the respective reset dates and enter into new financing arrangements, there can be no assurance

that we will be able to do so on commercially reasonable terms, that its counterparties will perform their

obligations, or that these agreements, if entered into, will protect us fully against interest rate risk.

5. Our contingent liabilities that have not been provided for could materially and adversely affect our financial condition and cash flows.

On the basis of the consolidated Financial Statements as at March 31, 2015, we had the following contingent

liabilities, which were not provided for:

(` in Lacs) Particulars 2014-15

A Bank Guarantees 6.50

B Guarantees given in respect of performance of contracts of Joint Ventures Entities &

Associates in which company is one of the member / holder of substantial equity

17671.21

C Guarantee given in favour of a subsidiary for Loan obtained by them 2250.00

D Claims against the Company not acknowledged as debts (Refer note below) 263.02

E Show Cause Notice Issued by Service Tax Authorities 5406.00

F Trichy Madurai Road Project Royalty Matter 39.87

G Disputed Income Tax Demand in appeal before Appellate Authorities (Excludes Amount

of Rs. 1794.13 (P.Y. Rs. 1794.13) considered in [I] hereinafter)

7610.29

H Disputed Income Tax Demand of Joint Ventures in appeal before Appellate Authorities

(Excludes Amount of Rs. 214.70 (P.Y. Rs. 196.21) considered in [I] hereinafter)

8.77

I Disputed VAT Demand in appeal before Appellate Authorities 4428.61

J Income Tax (Net of Deferred Tax) on the claim made of the deductions u/s. 80-IA (4) of

the Income Tax Act, 1961. (Refer note 28)

2488.32

For other contingent liabilities, in addition to the above, see the section “Financial Information” on page 68 of

the Draft Letter of Offer. If any of these contingent liabilities materialize, our profitability, cash flows could be

adversely affected.

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6. We rely on construction contracts awarded by our clients for our revenues, which may be subject to variation or renegotiation in the scope of work by these clients. Any cost, if not reimbursed by our client, incurred in

excess of our contract value or anticipated revenues due to such restructuring or renegotiation could reduce

our profits.

We rely on construction contracts awarded by our clients for our revenues. In some of the contracts, we may

have limited ability to negotiate the terms of contracts which means that many terms in the agreement tend to

favour the client including, variation or renegotiation in the scope of work. Such variation and renegotiation of

projects may lead to delays which may lead to additional costs associated with cost increases in construction

materials and equipment, unless these contracts contain price escalation clauses. Any cost, if not reimbursed

by our client, incurred in excess of our contract value or anticipated revenues could result in additional costs,

which would reduce our profits. If we do not achieve expected turnover, margins or suffers losses on one or

more of these contracts, this could reduce our total income or cause us to incur losses.

7. We operate in a highly competitive market. If we are unable to win engineering construction projects, both large and small, or compete with competitors, we could fail to increase, or maintain, our volume of order

intake and our results of operations may be materially adversely affected.

We face competition from other market players, which is determined by size, nature, complexity and

location of projects, proximity of materials to the local market, the availability of subcontractors,

construction workers and local economic conditions. While some of our competitors may have greater

resources in specific areas like capital, labour, equipment, technology, other resources, more extensive or

sophisticated marketing capabilities and at times may apply those resources and capabilities more

successfully than we do, the pricing policies of competitors may have an adverse effect on demand for our

services. Further, our ability to win projects is dependent on a number of factors including our ability to show

experience in executing large projects and to demonstrate that we have strong engineering capabilities in

executing technically complex projects. For many large construction contracts and infrastructure

development projects, we may not always meet the pre-qualification criteria on a standalone basis. We

face competition from other bidders in a similar position to us looking for suitable joint venture

partners with whom to partner in order to meet the pre-qualification requirements. If we are unable to partner

with other players, we may lose the opportunity to bid for, and therefore fail to increase or maintain its volume

of new construction contract orders or new projects. There can be no assurance that we can continue to

effectively compete with our competitors in the future, and failure to compete effectively may have an adverse

effect on our business, financial condition, cash flows and results of operations.

8. Delays in completion of our current and future projects and cost overrun could have adverse effect on our business prospects and results of operations.

We have faced delays in completion of certain of our projects and are expected to face delays in completion for

certain of our projects which are under development. The scheduled completion targets for our projects are

estimates and are subject to delays as a result of, among other things, unforeseen engineering problems,

force majeure events, issues arising out of right of way, unavailability of financing, unanticipated cost

increases or changes in scope and inability in obtaining certain property rights or government

approvals. Typically, our projects are subject to specific completion schedule requirements. We also

provide performance guarantees to our clients which require us to complete projects within a specified

time frame. Failure to adhere to contractually agreed timelines for reasons other than for force majeure

events and counter-party defaults could lead to forfeiture of security deposits, result in us requiring to pay

liquidated damages or our performance guarantees being invoked. There can be no assurance that our projects

will be completed in the time expected. We cannot assure you that all potential liabilities that may arise from

delays or that the damages, if any, that may be claimed from third parties for such delay, shall be adequate to

cover any loss of profits resulting from such delays.

We have encountered delays and cost overrun in many of our projects. For instance, in two of our metro projects

being executed with Bangalore Metro Rail Corporation Limited (“BMRCL”) and Delhi Metro Rail Corporation

Limited (DMRC), there has been signification delays on account of delay in handing over of land and delay in

releasing drawings etc. We cannot assure you that similar delays will not occur in the future. Such delays could

have adverse effects on our cash flows, business, results of operations and financial condition.

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9. A major portion of our assets have been charged under our financing arrangements. A default under any of the financing arrangements may compel the bank to sell the asset to recover its loan, which may lead to

fewer assets available to us to avail further bank facilities, which may affect our financial condition,

cash flow and results of operations.

We maintain bank facilities and term loans with banks and other financial institutions to provide us with

general working capital and operational flexibility in connection with our business. We also receive funds

from banks and other financial institutions pursuant to infrastructure project specific loans.

In the event of a default by us on our financing agreements, our charged assets could be seized, leaving us with

fewer assets with which to operate our business, adversely affecting our business prospects. This could

also result in us having difficulty obtaining further working capital through borrowings from these or

other lenders given our lack of substantial additional security capable of being charged and affect financial

condition, cash flows and results of operations.

10. Part of our Company's business transactions are with government entities or agencies which present particular risks.

Part of our Company’s business is dependent on development projects undertaken by government entities or

agencies.There could be delays in projects with these authorities and institutions due to changes in government

policies or initiatives, changes in budgetary allocation or the insufficiency of funds on the part of the

government or government organizations. Our Company also faces the risk of non- payment or delay in

the collection of receivables from government owned or controlled entities and financial institutions. Our

Company's operations involve significant working capital requirements and a non-payment or delayed collection

of receivables could significantly adversely affect our Company's financial condition, liquidity and results of

operations.

Further the contracts awarded to us by government entities are based on standard forms and may contain terms

that favour the government entity. Government contracts generally also contain unilateral termination

provisions in favour of the government. The provisions generally state that the government has the right to

terminate the contract for convenience, without any reason, at any time after providing the company with

reasonable notice. In the event that one or more of our Company's material contracts is terminated, our

business and results of operations may be adversely affected.

In addition, documentary closure or completion of government contracts, including the release of

performance guarantees and final acceptance notices, generally takes a significant amount of time and is subject

to material delays, which also adversely affects our Company's financial condition and results of operations.

11. We are dependent on our suppliers for adequate and timely supply of key raw materials at competitive rates and generally do not enter into any long term supply contracts with our suppliers. If

our Company is unable to procure the requisite quantities of construction materials in time and

at commercially acceptable prices, the performance of its financial results and business prospects could

be adversely affected.

We purchase significant amount of raw materials, including steel, cement, admixture, aggregates, sand, binding

wires, bitumen etc. for its construction operations. Cost of material consumed in Fiscal 2015 was ` 85,926.48 lacs. While our Company maintains relations with many different suppliers in order to avoid such risks, the

unavailability of such resources could materially disrupt our operations. In addition, the unavailability and

fluctuations in costs of raw materials could significantly affect our operating costs and consequently reduce

our profitability. Accordingly, we cannot assure you that we would be able to procure raw materials in

a timely manner and at competitive prices or that we will not be affected in the event of any shortfall of supply,

which may adversely affect our business. The contracts entered into by us with our clients normally include

clauses permitting us to recover the cost of escalations in the price of materials and labour. However, such

variation clauses normally link the additional amounts which we can recover to levels of increase in specified

published indices. We cannot assure you that the additional amounts which we should recover from clients in

respect of the increased cost of materials will be the full amount of such increased costs borne by us.

Although we normally provide a margin in our estimates for increases in labour and material costs and

other contingencies, significant cost overruns may still occur, and could adversely affect our business, results of

operations and profitability.

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12. Changes in the scope of work may result in disputes, which could have a material and adverse impact on the profits from that project.

In certain cases, we may be required to perform additional work on a project that is beyond the stated scope of

the contract. We may not receive adequate remuneration for the same, or payments in respect of the same may

be delayed or may not be commensurate with the quantum of work performed, which may have a material

adverse effect on our profits. Further, in certain contracts we may be required to execute modified work

order as directed by the client which may not have been agreed upon at the time of execution of the contract.

This process may result in disputes and may result in delayed or inadequate payments. This could have

an adverse effect on our profits.

13. We have high working capital requirements. If we are unable to generate sufficient cash flows to allow us to make required payments on our debt or fund working capital requirements, there may be an adverse effect on

our results of operations.

Our Company has high working capital requirements. In many cases, significant amounts of working capital are

required to finance the purchase of materials and the performance of engineering, construction and other work

on projects before payments are received from clients.

Our working capital requirements may increase if, under certain contracts, payment terms do not include

advance payments or such contracts have payment schedules that shift payments toward the end of a

project or otherwise increase our working capital burden. . We have in the past experienced delays in

receipt of our dues from few clients; all of these factors may result, or have resulted, in increase in our

working capital needs.

It is customary in the industry in which we operate to provide Bank guarantee in favour of clients to secure

various obligations under the contract. These may extend, wholly or partly, during the contract period and even

after the date of completion of the project for an additional period of upto 6 to 12 months. The clients may

invoke such Bank guarantees if the contractual obligations are not met which may have a material adverse effect

on our business, results, operations and financial conditions.This may also effect company’s ability to get fresh

working capital in the business.

14. Failure to adhere to agreed contractual conditions with clients could adversely affect our reputation and/or expose us to financial liabilities.

Our contracts are subject to specific requirements on programme, quality and other conditions with appropriate

contractual remedies for non-performance of our obligations. Any default of these obligations unless accepted

by the client/s could cause damage to our reputation and / or affect the financial outcomes on the affected

contract/s. In the past three years some of our clients, have deducted certain amounts from our final bill.

15. Certain of our working capital facilities are under renewal.

Our working capital facilities gets renewed every year and as on date certain of our working capital facilities are

under renewal. We have availed working capital facilities from a consortium of eight banks. Of the aforesaid

working capital facilities, we have received renewed sanction letters from two banks and are in the process of

obtaining renewal from the remaining six banks. Though we have initiated the process for renewal of such

facilities we cannot assure you by when and at what terms, the working capital facilities will get renewed, at all.

In case any of our banks do not renew the facilities it may adversely affect our Objects of the Issue, our cash

flows which may in turn affect our business, results of operations and profitability.

16. We have in the past not been, and continue to not be, compliant with certain covenants, in relation to certain loan agreements, which have resulted and potentially could result in an event of default under the respective

loan agreements and cross-defaults under other instruments, thereby accelerating our obligations under our

debt facilities.

We enter into loan agreements, with various lenders for the financing of our projects and other purposes, which

require us to comply with certain financial as well as non-financial covenants, during the currency of the

respective loans. In respect of most of these loan agreements, in case of an event of default, the lenders have the

right to, inter alia, declare all the amounts outstanding, including interest, with respect to that loan immediately

due and payable (subject to the expiry of any applicable cure periods), exercise their rights pursuant to cross-

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default and cross-acceleration provisions under such loan agreements, guarantees or instruments and enforce

their security created in their favour.

Any acceleration, cross acceleration, enforcement of security and / or guarantee, trigger of a cross-default or

declaration of a cross-default under the financing agreements entered into by our Company or any of our

Subsidiaries or Joint Ventures may have a material adverse effect on our business, prospects, cash flows and

financial condition

As of March 31, 2015, as per the standalone Financial Statements, our borrowings (aggregate of long-term

borrowings, short-term borrowings and current maturities of long-term borrowings) were ` 66,881.89 lacs.

There have been, in the recent past, certain breaches of financial covenants under the loan agreements of our

Company, which may have resulted in an event of default under the financing agreements and a cross-default

under other loan agreements. Additionally, we are currently not in compliance with some of the financial

covenants under the loan agreements of our Company which in some cases has resulted in, and may result in, a

notice of default and acceleration being served on us. Such actions by the lender shall and may continue to in the

future cause a material adverse effect on our business, prospects and financial condition.

There is no assurance that we shall not be in breach of any covenants in the future under our current or future

financing agreements and that such breach will not cause a material adverse effect on our business, prospects

and financial condition or cause the cessation of our business as a going concern. While the lenders may not

have declared an event of default under any of our financing agreements where there have been defaults

(irrespective of their knowledge of such defaults) and though we continue to service our debts on their

respective due dates, we cannot assure you that the lenders will not seek to enforce their rights in respect of any

past, present or future breaches or that we will be able to obtain any waivers from any or all lenders. In the

absence of waivers for any non-compliance of the covenants, irrespective of payments of any penalties by us,

we may continue to be in default of the covenants and our lenders have the right to accelerate payment of all

amounts outstanding under the relevant loan agreements and declare such amounts immediately due and payable

together with accrued and unpaid interest. Any such action by our lenders to declare us in default may trigger

cross-default clauses under other loan agreements, including loan agreements of our Company, and would have

a material adverse effect on our business, prospects, cashflows, financial condition and results of operations.

17. Our expansion into new geographic areas, including expanding our operations and making new investments overseas, poses various risks associated with changes in political, economic, regulatory, law amongst various

other risks associated with doing business.

Our business (in relation to our international projects) is subject to risks and challenges generally associated

with international operations and investments. These risks and challenges include risks with respect to interest

rate and foreign currency fluctuations, different tax and regulatory environments (particularly with respect to the

provision of financial services and direct investment), changes in social, political and economic conditions, the

need to recruit personnel combining product skills and local market knowledge, obtaining the necessary

clearances and approvals to set up business and competing with established players in these regions and cost

structures in international markets, including those in which we and the companies in which we have

investments operate, that are significantly different from those that we have experienced in India. Additionally,

we may evaluate international expansion opportunities through capital investment in other projects.

We may be unsuccessful in developing and implementing policies and strategies that will be effective in

managing these risks. Our failure to manage these risks successfully could adversely affect our business,

operating results and financial condition. Furthermore, we may face competition in other countries from

companies that have more experience with operations in such countries or with international operations

generally. If we are unable to successfully develop or manage our international operations, it may limit our

ability to grow our international business.We may not be able to successfully manage our expansion outside

India owing to various risks, which could have a material adverse effect on our business, prospects, financial

condition and results of operations.

18. We are exposed to various risks at our sites all over India which could result in additional liabilities and/or costs to us.

Our operations are subject to several hazards such as risk of equipment failure, work accidents that may cause

injury and loss of life, severe damage to and /or destruction of property and equipment and / or environmental

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damage.

During the provision of our engineering and construction services, we undertake liabilities relating to design,

engineering, materials, workmanship, construction and maintenance during defect liability period etc. Claims

from the client could arise for a perceived default of our obligations. We provide our competitive tenders after

considering reasonable and assessed costs towards performance of contractual obligations including where

considered necessary and where mandated, specific insurance coverage. In case of any failure by us in the actual

execution of these obligations, we would be liable to claims alleging default of the obligation.

Where the risk mitigation through appropriate insurance coverage or provision of assessed costs for complying

with its obligations is found insufficient, we may be called upon to compensate the claimant/s for such costs

which were not assessed or insured against or provided for and could affect the financial condition and have a

material adverse effect on our business.

19. Our Company has witnessed negative cash flows from investing activities and financing activities on a standalone basis. Any negative cash flows in the future could adversely affect our results of operations and

financial condition.

Our cash flows for the Fiscal Year ending March 31, 2015 and March 31, 2014 on a standalone basis are

summarised below:

(Amount in ` lacs) Particulars Fiscal 2015 Fiscal 2014

Net cash flow from operating activities (7,166.42) 12,914.80

Net cash flow from investing activities (6,790.52) (10,469.86)

Net cash flow from financing activities 13,214.13 (2,673.85)

If we do not maintain positive cash flow, we cannot assure you that we will be able to sustain our growth or

achieve profitability in future periods.

20. We deploy a large workforce at our project sites and staff at offices. Demands and / or group activity by any of these groups including work stoppages and other forms of industrial action could result in delays and

additional costs affecting our operating results

As of August 31, 2015, we employed a staff of approximately 2,281 employees. In addition, we have a large

number of site based staff, piece rate and temporary contract labour on our project sites.

We have not experienced any major disruption in our work in the past, due to size of our workforce. However,

there can be no assurance that we will not experience future major disruptions to our operations due to disputes

or other problems with our work force, which may adversely affect our business and results of operations. The

number of contract labourers varies from time to time based on the nature and extent of work contracted. We

also enter into contracts with independent contractors to complete specified assignments. Contract labourers

engaged at the project sites are governed by minimum wages regulations that are fixed by local government

authorities. Any upward revision of wages required by such governments to be paid to such contract labourers,

or offer of permanent employment or the unavailability of the required number of contract labourers, may

adversely affect our business and results of operations.

21. Our road BOOT projects under development or implementation require a medium to long gestation period and ample capital outlay before we realise any benefits or returns on investments. We could encounter

problems that impair our ability to generate revenue from our operating projects or substantially increase the

costs and the time required to develop such projects, as well as our ability to complete and generate revenue

from, our projects under development. We may not be able to recover our intended returns from our

investments due to various problems that may be encountered by such projects.

Our road BOOT projects typically have a long gestation period and require substantial capital infusion at

periodic intervals before their completion and it may take months or even years before positive cash flows can

be generated, if at all. The development, implementation, conversion, relocation and operation of infrastructure

projects involves various risks, including, among others, land acquisition risk, regulatory risk, construction risk,

time delays in completion of projects, escalations in estimated project cost, financing risk, raw material risk,

commodities price risk and the risk that these projects may ultimately prove to be unprofitable.

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We may be adversely affected if the completion or commencement of operation of our projects under

development or implementation or the conversion or relocation of existing projects is delayed due to any of the

following (a) the contractors hired may not be able to complete the construction of projects on time, within

budget or to the specifications and standards set out in contracts with them; (b)engineering problems, including

defective plans and specifications; (c) shortages of, and price increases in, energy, materials, skilled and

unskilled labour, and inflation in key supply markets; (d) changes in laws and regulations, or in the

interpretation and enforcement of laws and regulations of such countries including India and Ethopia, among

others, applicable to projects under development; (e) weather interferences, fire, natural disasters or delays; (f)

geological, construction, excavation, regulatory and equipment problems with respect to operating projects and

projects under development; (g) drawings for the sites on which projects are expected to be developed may not

be accurate as these drawings are generally quite dated; we may not be able to obtain adequate working capital

or other financing to complete construction of and to commence operations of our projects; we may not be able

to recover the amounts invested in our or their projects if the assumptions contained in the feasibility studies for

these projects do not materialise; our roads customers may not use our toll roads in the expected quantities or at

all or may not pay in full or at all, governmental approvals and other approvals that are required for completion,

expansion or operation of our projects may be delayed or denied; environmental risk, including rehabilitation

and resettlement costs; and other unanticipated circumstances or cost increases. Any failure in the development,

financing, implementation or operation of any material new project or existing project by us or a company in

which we invest is likely to materially and adversely affect our business, prospects, financial condition and

results of operations.

22. Some of the trademarks that we use, are yet to be applied for registration in our name and we may, consequently, be unable to defend any infringement of our intellectual property rights. Further, some of the

trademarks that we use belong to a third-party and may not be registered, or licensed to us or may be licensed

to us on term not favourable to us. We may be liable for infringement and/or passing off of intellectual

property.

We believe that one of the factors of our success is our brand and we use several trademarks in connection with

our business. While we are yet to file applications for registration of the (1) trademark and logo under

classes 19, 36 and 37 and (2) trademark JMC Projects (India) Ltd under classes 19, 36 and 37 in terms of the

provisions of the Trade Marks Act, 1999, the process of registration in India is time-consuming and there can be

no assurance that we will be granted the trademark, soon or at all. If we are unable to obtain the requisite

registration, intellectual property like or similar to ours may be used by others including our competitors,

thereby diluting our brand value and our goodwill. Further, the trade mark ‘Kalpataru’, that we use belongs to a

third-party and may not be registered, and not duly licensed to us. In addition, our ability to defend any

infringement of our intellectual property rights may be hampered by lack of registration since we will only be

able to initiate proceedings for passing-off, which could adversely affect our brand, our goodwill and business

prospects.

23. We have entered into and may in the future enter into related party transactions.

We have in the course of our business entered into, and will continue to enter into, transactions with related

parties. Our Company has entered into several related party transactions with our Promoter and our Subsidiaries,

including in relation to inter-corporate loans. For more information regarding our related party transactions, see

“Financial Information” beginning on page 68 of the Draft Letter of Offer. We cannot assure you that we will

receive similar terms in our related party transactions in the future.

While we believe that all of our related party transactions are in compliance with applicable law, we cannot

assure you that we could not have achieved more favourable terms had such transactions been entered into with

unrelated parties. Further, the Companies Act, 2013 has brought into effect significant changes to the Indian

company law framework including specific compliance requirements such as obtaining prior approval from

audit committee, board of directors and shareholders for certain related party transactions. We cannot assure you

that such transactions, individually or in the aggregate, will not affect our reputation, business, results of

operations and financial condition.

24. The failure of a joint venture partner to perform its obligations could impose additional financial and performance obligations resulting in reduced profits or, in some cases, significant losses from the joint

venture.

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We had entered into a joint venture agreement and may enter into various joint ventures with construction

companies as part of our business. The success of these joint ventures depends on the satisfactory performance

by our joint venture partners and fulfilment of their obligations. If our joint venture partners fail to perform these

obligations satisfactorily, the joint venture may be unable to perform adequately or deliver its contracted

services. In this case, we may be required to make additional investments and/or provide additional services to

ensure adequate performance and delivery of the contracted services because we are subject to joint and several

liabilities as a member of the joint venture in a number of projects. These additional obligations could result in

reduced profits or, in some cases, losses for us. The inability of a joint venture partner to continue with a project

due to financial or legal difficulties could mean that we would bear increased and possibly sole responsibility for

the completion of the project and bear a concomitant increase in the financial risk of the project.The aforesaid

factors may adversely affect our business and results of operations.

25. On fixed-price, lump sum or item-rate contracts, we are exposed to increases in the cost of construction materials, fuel, and equipment.

Under fixed-price or lump sum contracts, we typically agree to a fixed price for providing civil construction for

the part of the project contracted to us.

Under these contracts, additional costs associated with cost increases in construction materials, fuel, equipment,

and materials are borne by us, unless these contracts contain price escalation clauses. Similarly, we bear the

additional cost associated with quantities of construction materials, fuel, equipment and materials exceeding

estimates and assumptions. The prices and supply of these construction materials depend on factors beyond our

control, including general economic conditions, competition, production levels, transportation costs and import

duties. Some of our construction contracts either contain limited or no price escalation clauses covering these

additional costs.

Under item-rate contracts, we agree to provide certain construction activities at a rate specified in the relevant

bill of quantity, or “BOQ”. The BOQ is an estimate of the quantity of activities involved and these quantities

may be varied by the parties during the course of the project. Although the additional costs associated with

actual quantities exceeding estimated quantities may not pass to our Company entirely, we however, bear the

risk associated with actual costs for construction activities exceeding the agreed upon rate, unless these item-rate

contracts contain price escalation clauses.

For fixed-price or lump sum or item-rate contracts, we may bear additional cost if actual expenses vary

substantially from the assumptions underlying its bid and forecasted budget for reasons related to the following:

unanticipated changes in engineering design of the project;

drawings and technical information provided by clients, and on which bids were based, are not accurate;

unforeseen design and engineering construction conditions, site and geological conditions, resulting in delays and increased costs;

inability by the client to obtain requisite environmental and other approvals;

delays associated with the delivery of equipment and materials to the project site;

unanticipated increases in equipment costs;

delays caused by local and seasonal weather conditions; and

suppliers’ or sub-contractors’ failure to perform their obligations in a timely manner.

As fixed price or lump sum and item-rate contracts also tend to be fixed-time contracts, we bear the risk of

unanticipated delays other than for force majeure events.

Unanticipated costs or delays in performing part of a contract and/or unanticipated increases in the price of

construction materials, fuel, equipment, and materials can have a compounding effect by increasing costs of

performing other parts of the contract. There may also be a higher risk of delay created by the fact that

construction contracts are sometimes divided into multiple parts to be simultaneously performed by us and joint

venture partners.

These risks generally inherent to the construction industry may result in lower profits than originally estimated

and may result in reduced profitability or losses on our projects.

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26. We depend on sub-contractors for timely and successful completion of certain parts of our projects and failure on the part of our sub-contractors to perform their obligations in a timely manner or at all could

adversely affect our ability to complete projects in a timely manner at commercially viable terms.

We depend on sub-contractors for timely and successful completion of certain part of our projects and failure on

the part of our sub-contractors to perform their obligations in a timely manner or at all could adversely affect our

ability to complete projects in a timely manner at commercially viable terms or at all, which in turn could

subject us to time and cost overruns, defaults under the contracts for such projects and loss of revenue and

profitability.

We assign work to various subcontractors to assist us depending on the area, type, duration and size of our

projects. We attempt to ensure that the services performed by our subcontractors are of a high standard

as full responsibility to the customer for all construction projects rests with us (although the subcontractor is

responsible to us for its work). There is no assurance that the quality of work performed by such

subcontractors will always be of a sufficiently high standard. Further, the use of subcontractors exposes us to

various risks over which we may have little or no control, including the possibility that a subcontractor may fail

or otherwise become unable to perform or complete projects, or that projects may otherwise be delayed or

defective.

Even when we sub-contract work, it remains responsible for the sub-contracted work which means clients still

have recourse to our Company for actions, omissions and defects by sub-contractors. In some cases, our

Company may not receive guarantees or indemnities from sub-contractors as to timely completion, cost

overruns, or additional liabilities which means that it assumes the risk of delayed or reduced payments,

liquidated damages or penalty amounts, or contract termination by the client. Our Company also assumes

liability for defects in connection with any work done by sub-contractors. Hence, any failure on the part of our

sub-contractors to perform their obligations in a timely manner or at all could adversely affect our operations,

financial condition and cash flows.

27. We depend on machinery and equipment to implement our projects. We order these machinery and equipment from various parts of the world. Any manufacturing defect or break down or poor maintenance

systems of the machinery may cause strain on our machinery and lead to delays in implementation of our

projects.

We depend on machinery and equipment to implement our projects. We order these machinery and equipment

from various parts of the world. Any manufacturing defect or break down or poor maintenance systems of the

machinery may cause strain on our machinery and lead to delays in implementation of our projects and loss of

performance. In addition, technology advancements could result in lower future utilization of equipment, which

may have an adverse impact on our business, operations and profitability.

28. During the tenure of the project, the creditworthiness of our clients may weaken, which may affect their paying capacity and may lead to delays in our payments.

The key risk associated with construction companies, such as ours, is the creditworthiness and the

paying capacity of the clients. If the client does not have adequate funds, it could delay our projects or even

lead to cancellation of the project. Moreover, we may or may not get any compensation if payments due to us

are delayed, which may have an adverse effect on our liquidity.

29. Demand for our services is dependent on growth in infrastructure and general economic conditions.

Demand for our services is largely dependent on general economic conditions, growth in infrastructure and

economic cycle. Our business is also directly affected by changes in government spending and capital

expenditures by our clients. Any change or downturn that leads to decreased spending on construction projects

including privately funded infrastructure projects, could adversely affect our business and our results of

operations.

30. Revenue from toll collections for our toll based projects are dependent on various factors, including, actual traffic volume as compared to our forecasted traffic volumes, traffic saturation and toll leakage.

When preparing the tender for a toll based project, particularly to determine the bid undertaking for such toll

based project or contract, we forecast the traffic volume for the road in order to arrive at our expected revenue

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over the concession period or the contract period, as applicable. In such instances, if the actual traffic volume is

significantly less than the forecasted traffic volume, the revenue generated from the toll based project may be

lower than the anticipated revenue. We forecast the traffic volume for toll based projects based on the data

provided by external agencies engaged by us such as traffic consultants and in-house team of professionals. The

forecasting of traffic volumes is based on various assumptions, and we cannot assure you that such forecasts

will be accurate. While most of our toll-based concession agreements provide for an extension of the concession

period if the actual traffic volumes are significantly lower than the target traffic (as per the concession

agreement) projected for the project, we cannot assure you that the concession period will be actually extended.

Toll roads that are part of projects operated by us may experience high levels of traffic and congestion at certain

times of the day or days of the week. Although we may consider possible solutions and take appropriate steps to

ease traffic flow and reduce congestion on such roads, there can be no guarantee that the saturation problems

will be resolved under conditions that are economically satisfactory to us. This could lead to user dissatisfaction

and could potentially reduce the traffic volume which may adversely affect our results of operations, cash flows,

business and financial condition.

Further, our collection of toll is primarily dependent on the integrity of toll collection systems, our internal

control and checks and internal audit systems and willingness to pay toll fees. While we have in place an

internal audit and an integrated toll collection system, the level of revenues derived from collection of tolls may

be reduced by leakage through toll evasion, theft, fraud or technical defaults in our toll systems or forced

violations by users of our toll roads. If toll collection is not properly monitored, leakage may reduce our toll

revenue. Further, toll collection errors may amount to a loss of revenue as there is an inherent risk of under-

collection of toll fees given that most users of toll roads pay in cash. Any significant failure by us to control

leakage in toll collection systems could have an