KALPATARU POWER TRANSMISSION LIMITED · KALPATARU POWER TRANSMISSION LIMITED ... There are no other facts in relation to the Group and the Equity Shares, the omission of which would,

Preliminary Placement Document Not for Circulation

Serial Number___________ Dated April 29, 2010

KALPATARU POWER TRANSMISSION LIMITED (Incorporated with registration no. 04-4281 in the Republic of India with limited liability under the Companies Act, 1956)

Kalpataru Power Transmission Limited (the "Company" or "KPTL") is issuing up to [●] equity shares of the Company with a face value of Rs.10 each (the "Equity Shares") at a price of Rs.[●] per Equity Share (the "Issue Price") aggregating Rs.[●] million (the "Issue").

ISSUE IN RELIANCE UPON CHAPTER VIII OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED.

THIS ISSUE AND THE DISTRIBUTION OF THIS PRELIMINARY PLACEMENT DOCUMENT IS BEING DONE IN RELIANCE UPON CHAPTER VIII OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED (THE "SEBI REGULATIONS"). THIS PRELIMINARY PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR, AND DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTORS OTHER THAN QUALIFIED INSTITUTIONAL BUYERS (AS DEFINED IN THE SEBI REGULATIONS) ("QIBs").

Invitations, offers and sales of Equity Shares shall only be made pursuant to the Preliminary Placement Document together with the Bid cum Application Form and the Confirmation of Allocation Note. See "Issue Procedure." The distribution of this Preliminary Placement Document or the disclosure of its contents without our prior consent, to any person, other than QIBs and persons retained by QIBs to advise them with respect to their purchase of Equity Shares, is unauthorized and prohibited. Each prospective investor, by accepting delivery of this Preliminary Placement Document agrees to observe the foregoing restrictions, and to make no copies of this Preliminary Placement Document or any documents referred to in this Preliminary Placement Document.

This Preliminary Placement Document has been prepared by the Company solely for providing information in connection with the proposed issue of the Equity Shares described in this Preliminary Placement Document.

This Preliminary Placement Document has not been reviewed by Securities and Exchange Board of India ("SEBI"), the Bombay Stock Exchange Limited (the "BSE"), the National Stock Exchange Limited (the "NSE" and, together with the BSE, the "Stock Exchanges") or any other regulatory or listing authority and is intended solely for QIBs. This Preliminary Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies in India, and will not be circulated or distributed to the public in India or any other jurisdiction and will not constitute a public offer in India or any other jurisdiction. The Issue proposed to be made pursuant to this Preliminary Placement Document is meant solely for QIBs on a private placement basis.

Investments in equity and equity-related securities involve a degree of risk and prospective investors should not invest any funds in this Issue unless they are prepared to take the risk of losing all or part of their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. Each prospective investor is advised to consult its advisers about the particular consequences to it of an investment in the Equity Shares being issued pursuant to this Preliminary Placement Document.

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The information on the Company’s website, on the websites of any of the Global Coordinators and Bookrunners or any website directly or indirectly linked to such websites does not form part of this Preliminary Placement Document and prospective investors should not rely on such information.

All of the Company's outstanding Equity Shares are listed on the BSE and the NSE. As at February 23, 2010, the trading day immediately following the day on which the resolution of the board of the directors of the Company (the "Board" or the "Board of Directors") to approve the Issue was adopted, the closing price of the Equity Shares on the BSE and the NSE was Rs.1,046.30 and Rs.1,039.85, respectively. Applications shall be made for the listing of the Equity Shares offered through this Preliminary Placement Document on the BSE and the NSE. The Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of the Company or the Equity Shares.

YOU MAY NOT AND ARE NOT AUTHORIZED TO (1) DELIVER THE PRELIMINARY PLACEMENT DOCUMENT TO ANY OTHER PERSON OR (2) REPRODUCE SUCH PRELIMINARY PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER. ANY DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SEBI REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.

A copy of this Preliminary Placement Document has been delivered to the Stock Exchanges. A copy of the Placement Document will be filed with the Stock Exchanges. A copy of the Placement Document will also be delivered to the Securities and Exchange Board of India (the "SEBI") for record purposes.

The Equity Shares have not been nor will be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and they may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold outside the United States in offshore transactions in reliance on Regulation S under the Securities Act ("Regulation S"). See further the section below entitled "Selling Restrictions".

This Preliminary Placement Document is dated April 29, 2010.

Global Coordinators and Bookrunners

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NOTICE TO INVESTORS

The Company has furnished, and accepts responsibility for the information contained in this Preliminary Placement Document and to the best knowledge and belief of the Company, having made all reasonable enquiries, confirms that this Preliminary Placement Document contains all information with respect to the Company and its subsidiaries (the "Group") and the Equity Shares which is material in the context of this Issue. The statements contained in this Preliminary Placement Document relating to the Group and the Equity Shares are, in every material respect, true and accurate and not misleading, the opinions and intentions expressed in this Preliminary Placement Document with regard to the Group and the Equity Shares are honestly held, have been reached after considering all relevant circumstances, are based on information presently available to the Group and are based on reasonable assumptions. There are no other facts in relation to the Group and the Equity Shares, the omission of which would, in the context of the Issue, make any statement in this Preliminary Placement Document misleading in any material respect. Further, all reasonable enquiries have been made by the Company to ascertain such facts and to verify the accuracy of all such information and statements.

The Global Coordinators and Bookrunners have not separately verified the information contained in this Preliminary Placement Document (financial, legal or otherwise). Accordingly, none of the Global Coordinators and Bookrunners nor any of their respective members, employees, counsel, officers, directors, representatives, agents or affiliates makes any express or implied representation, warranty or undertaking, and no responsibility or liability is accepted, by the Global Coordinators and Bookrunners, as to the accuracy or completeness of the information contained in this Preliminary Placement Document or any other information supplied in connection with the Equity Shares issued pursuant to the Issue. Each person receiving this Preliminary Placement Document acknowledges that such person has not relied on the Global Coordinators and Bookrunners nor on any person affiliated with the Global Coordinators and Bookrunners in connection with its investigation of the accuracy of such information or its investment decision, and each such person must rely on its own examination of the Company and the merits and risks involved in investing in the Equity Shares. Prospective investors should not construe anything in this Preliminary Placement Document as legal, business, tax, accounting or investment advice.

No person is authorized to give any information or to make any representation not contained in this Preliminary Placement Document and any information or representation not so contained must not be relied upon as having been authorized by or on behalf of the Company or the Global Coordinators and Bookrunners. The delivery of this Preliminary Placement Document at any time does not imply that the information contained in it is correct as at any time subsequent to its date.

The information on the Company’s website, on the websites of any of the Global Coordinators and Bookrunners or any website directly or indirectly linked to such websites

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does not form part of this Preliminary Placement Document and prospective investors should not rely on such information.

The Equity Shares have not been approved, disapproved or recommended by the U.S. Securities and Exchange Commission, any state securities commission in the United States or the securities commission of any non-U.S. jurisdiction or any other U.S. or non-U.S. regulatory authority. None of these authorities has passed on or endorsed the merits of this Issue or the accuracy or adequacy of this Preliminary Placement Document. Any representation to the contrary is a criminal offence in the United States and may be a criminal offence in other jurisdictions.

The distribution of this Preliminary Placement Document and the issue of the Equity Shares in certain jurisdictions may be restricted by law. As such, this Preliminary Placement Document does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has been taken by the Company or the Global Coordinators and Bookrunners which would permit an offering of the Equity Shares or distribution of this Preliminary Placement Document in any jurisdiction, other than India, where action for that purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Preliminary Placement Document nor any other offering materials in connection with the Equity Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction.

In making an investment decision, investors must rely on their own examination of the Company and the terms of this Issue, including the merits and risks involved. Investors should not construe the contents of this Preliminary Placement Document as legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to business, legal, tax, accounting and related matters concerning this Issue. In addition, none of the Company or the Global Coordinators and Bookrunners 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 applicable legal, investment or similar laws or regulations. Each purchaser of the Equity Shares in this Issue is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in the Company under Indian law, including Chapter VIII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended (the "SEBI Regulations") and is not prohibited by the SEBI from buying, selling or dealing in securities. Each purchaser of Equity Shares in this Issue also acknowledges that it has been afforded an opportunity to request from the Company and review information relating to the Company and the Equity Shares.

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This Preliminary Placement Document contains summaries of certain terms of certain documents, which summaries are qualified in their entirety by the terms and conditions of such documents.

REPRESENTATIONS BY INVESTORS

All references to "you" in this section are to the prospective investor in the Issue.

By subscribing to any Equity Shares under the Issue, you are deemed to have represented and warranted to the Company and the Global Coordinators and Bookrunners, and acknowledged and agreed as follows:

• you are a QIB as defined in regulation 2(1)(zd) of the SEBI Regulations having a valid and existing registration under the applicable laws and regulations of India and undertake to acquire, hold, manage or dispose of any Equity Shares that are allocated to you for the purposes of your business in accordance with Chapter VIII of the SEBI Regulations;

• if you are a QIB not resident in India that you are (i) a foreign institutional investor as defined in the SEBI (Foreign Institutional Investor) Regulations, 1995 and registered with SEBI under applicable laws in India (an "FII") or (ii) a sub-account which is not a foreign corporate or foreign individual, and have a valid and existing registration with SEBI under applicable law. If you are Allotted Equity Shares pursuant to the Issue, you shall not, for a period of one year from the date of Allotment, sell the Equity Shares so acquired except on the Stock Exchanges;

• you are aware that the Equity Shares have not been and will not be registered under the SEBI Regulations or under any other law in force in India. This Preliminary Placement Document has not been verified or affirmed by the SEBI or the Stock Exchanges and will not be filed with the Registrar of Companies, Gujarat, at Ahmedabad (the "Registrar of Companies"). This Preliminary Placement Document has been filed with the Stock Exchanges for record purposes only and has been displayed on the websites of the Company and the Stock Exchanges;

• you are entitled to subscribe for the Equity Shares under the laws of all relevant jurisdictions which apply to you and that you have fully observed such laws and obtained all such governmental and other consents in each case which may be required thereunder and complied with all necessary formalities;

• you are entitled to acquire the Equity Shares under the laws of all relevant jurisdictions and that you have all necessary capacity and have obtained all necessary consents and authorities to enable you to commit to this participation in the Issue and to perform your obligations in relation thereto (including, without limitation, in the case of any person on whose behalf you are acting, all necessary consents and authorities to agree

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to the terms set out or referred to in the Preliminary Placement Document) and will honor such obligations;

• neither the Company nor the Global Coordinators and Bookrunners are making any recommendations to you, advising you regarding the suitability of any transactions it may enter into in connection with the Issue and that participation in the Issue is on the basis that you are not and will not be a client of the Global Coordinators and Bookrunners and that the Global Coordinators and Bookrunners have duties or responsibilities to you for providing the protection afforded to their clients or customers or for providing advice in relation to the Issue and is in no way acting in a fiduciary capacity;

• all statements other than statements of historical fact included in this Preliminary Placement Document, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company's business), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and environment in which the Company will operate in the future. You should not place undue reliance on forward-looking statements, which speak only as at the date of this Preliminary Placement Document. The Company assumes no responsibility to update any of the forward-looking statements contained in this Preliminary Placement Document;

• you are aware and understand that the Equity Shares are being offered only to QIBs and are not being offered to the general public and the Allotment of the same shall be on a discretionary basis;

• you have made, or been deemed to have made, as applicable, the representations set forth under the section titled "Selling Restrictions – Certain Transfer Restrictions" of this Preliminary Placement Document;

• you have been provided a serially numbered copy of the Preliminary Placement Document and Placement Document and have read them in their entirety;

• that in making your investment decision, (i) you have relied on your own examination of the Company and the terms of the Issue, including the merits and risks involved; (ii) you have made your own assessment of the Group, the Equity Shares and the terms of the Issue based on such information as is publicly available; (iii) you have consulted your own independent advisors or otherwise, including tax advisers, have satisfied

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yourself concerning without limitation, the effects of local laws and taxation matters; (iv) you have relied solely on the information contained in this Preliminary Placement Document and no other disclosure or representation by the Company or any other party; and (v) you have received all information that you believe is necessary and appropriate in order to make an investment decision in respect of the Company and the Equity Shares;

• you have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Equity Shares and you and any accounts for which you are subscribing the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares; (ii) will not look to the Company and/or the Global Coordinators and Bookrunners for all or part of any such loss or losses that may be suffered; (iii) are able to sustain a complete loss on the investment in the Equity Shares; (iv) have no need for liquidity with respect to the investment in the Equity Shares; and (v) have no reason to anticipate any change in your or their circumstances, financial or otherwise, which may cause or require any sale or distribution by you or them of all or any part of the Equity Shares;

• that where you are acquiring the Equity Shares for one or more managed accounts, you represent and warrant that you are authorized in writing, by each such managed account to acquire the Equity Shares for each managed account and to make (and you hereby make) the representations, warranties, acknowledgements and agreements herein for and on behalf of each such account reading the reference to "you" to include such accounts;

• you are not a Promoter and are not a person related to the Promoters, either directly or indirectly and your Bid does not directly or indirectly represent the Promoters or promoter group or persons relating to the Promoters;

• you have no rights under a shareholders' agreement or voting agreement with the Promoters or persons related to the Promoters, no veto rights or right to appoint any nominee director on the Board of Directors other than such rights acquired in the capacity of a lender which shall not be deemed to be a person related to the Promoter;

• you have no right to withdraw your Bid after the Bid Closing Date;

• you are eligible to Bid and hold Equity Shares so Allotted and together with any Equity Shares held by you prior to the Issue, you further confirm that your holding upon the issue of the Equity Shares shall not exceed the level permissible as per any applicable regulation;

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• the Bids submitted by you would not eventually result in triggering a tender offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended (the "Takeover Code");

• to the best of your knowledge and belief together with other QIBs in the Issue that belong to the same group or are under common control as you, the Allotment under the Issue shall not exceed 50% of the Issue. For the purposes of this representation:

(a) the expression 'belongs to the same group' shall derive meaning from the concept of 'companies under the same group' as provided in sub-section (11) of Section 372 of the Companies Act, 1956 of India, as amended (the "Companies Act"); and

(b) 'control' shall have the same meaning as is assigned to it by clause (c) of sub-Regulation 1 of Regulation 2 of the Takeover Code;

• you are aware that if you, together with any other QIBs belonging to the same group or under common control, are Allotted more than 5% of the Equity Shares in this Issue, our Company will be required to disclose your name, along with the name of such other Allottees and the number of Equity Shares Allotted to you and to such other Allottees on the website of the Stock Exchanges and you consent to such disclosure being made by our Company. For the purposes of this representation, ‘belonging to the same group’ and ‘control‘ shall have the meaning set forth in a) and b) above;

• you shall not undertake any trade in the Equity Shares credited to your Depository Participant account until such time that the final listing and trading approval for the Equity Shares is issued by the Stock Exchanges;

• you are aware that applications have been made to the Stock Exchanges for in-principle approval for listing and admission of the Equity Shares to trading on the Stock Exchanges' market for listed securities and that the applications for the final listings and trading approvals will be made only after the Allotment and therefore there can be no assurance that such final approvals will be obtained on time or at all;

• you are aware and understand that the Global Coordinators and Bookrunners will have entered into a placement agreement with the Company (the "Placement Agreement") whereby the Global Coordinators and Bookrunners have, subject to the satisfaction of certain conditions set out therein, undertaken to use their reasonable efforts to procure subscriptions for the Equity Shares to be issued pursuant to the Issue;

• that the contents of this Preliminary Placement Document are exclusively the responsibility of the Company and that neither the Global Coordinators and Bookrunners nor any person acting on their behalf has or shall have any liability for any information, representation or statement contained in this Preliminary Placement

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Document or any information previously published by or on behalf of the Company and will not be liable for your decision to participate in the Issue based on any information, representation or statement contained in this Preliminary Placement Document or otherwise. By participating in this Issue, you agree to the same and confirm that you have neither received nor relied on any other information, representation, warranty or statement made by or on behalf of the Global Coordinators and Bookrunners or the Company or any other person and neither of the Global Coordinators and Bookrunners nor the Company nor any other person will be liable for your decision to participate in the Issue based on any other information, representation, warranty or statement that you may have obtained or received;

• that the only information you are entitled to rely on, and on which you have relied in committing yourself to acquire the Equity Shares is contained in this Preliminary Placement Document, such information being all that you deem necessary to make an investment decision in respect of the Equity Shares and that you have neither received nor relied on any other information given or representations, warranties or statements made by any of the Global Coordinators and Bookrunners or the Company and neither the Global Coordinators and Bookrunners nor the Company will be liable for your decision to accept an invitation to participate in the Issue based on any other information, representation, warranty or statement;

• you agree to indemnify and hold the Company and the Global Coordinators and Bookrunners harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations and warranties in this section "Representations by Investors". You agree that the indemnity set forth in this paragraph shall survive the resale by or on behalf of the managed accounts of the Equity Shares to be issued pursuant to the Issue;

• that the Company, the Global Coordinators and Bookrunners and others will rely on the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to the Global Coordinators and Bookrunners on their own behalf and on behalf of the Company and are irrevocable;

• all statements other than statements of historical fact included in this Preliminary Placement Document, including, without limitation, those regarding our Company‘s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to our products), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future. You should not place and

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have not placed undue reliance on forward-looking statements, which speak only as at the date of this Preliminary Placement Document. Our Company assumes no responsibility to update any of the forward-looking statements contained in this Preliminary Placement Document;

• that you are eligible to invest in India under applicable law, including the Foreign Exchange Management (Transfer or Issue of Security by Person Resident Outside India) Regulations, 2000, as amended from time to time, and have not been prohibited by the SEBI from buying, selling or dealing in securities;

• that you are a sophisticated investor who is seeking to purchase the Equity Shares for your own investment and not with a view to distribution;

• any dispute arising in connection with the Issue will be governed by and construed in accordance with the laws of the Republic of India, and the courts in Mumbai, India shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Preliminary Placement Document;

• that (i) an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment; (ii) you have sufficient knowledge, sophistication and experience in financial and business matters so as to be capable of evaluating the merits and risk of the purchase of the Equity Shares; and (iii) you are experienced in investing in private placement transactions of securities of companies in a similar stage of development and in similar jurisdictions and have such knowledge and experience in financial, business and investments matters that you are capable of evaluating the merits and risks of your investment in the Equity Shares; and

• you understand that the Global Coordinators and Bookrunners do not have any obligation to purchase or acquire all or any part of the Equity Shares purchased by you in the Issue or to support any losses directly or indirectly sustained or incurred by you for any reason whatsoever in connection with the Issue, including non-performance by the Company of any of its respective obligations or any breach of any representations or warranties by the Company, whether to you or otherwise;

• the Global Coordinators and Bookrunners have not provided you with any tax advice or otherwise made any representations regarding the tax consequences of the Equity Shares to be issued pursuant to the Issue (including but not limited to the Issue and the use of the proceeds therefrom); you will obtain your own independent tax advice from a reputable service provider and not rely on the Global Coordinators and Bookrunners when evaluating the tax consequences in relation to the Equity Shares to be issued pursuant to the Issue (including but not limited to the Issue and the use of the proceeds therefrom); you waive and agree not to assert any claim against any of the Global Coordinators and Bookrunners with respect to the tax aspects of the Equity Shares to

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be issued pursuant to the Issue or as a result of any tax audits by tax authorities, wherever situated;

• you confirm that, either: (i) you have not participated in or attended any investor meetings or 'presentations by the Company or its agents ("Company Presentations") with regard to the Company or the Issue; or (ii) if you have participated in or attended any Company Presentations: (a) you understand and acknowledge that the Global Coordinators and Bookrunners may not have knowledge of the statements that the Company or its agents may have made at such Company Presentations and are therefore unable to determine whether the information provided to you at such Company Presentations may have included any material misstatements or omissions, and, accordingly you acknowledge that the Global Coordinators and Bookrunners have advised you not to rely in any way on any information that was provided to you .at such Company Presentations, and (b) confirm that, to the best of your knowledge, you have not been provided any material information that was not publicly available; and

• that each of the representations, warranties, acknowledgements and agreements set out above shall continue to be true and accurate at all times up to and including the Allotment of the Equity Shares in the Issue;

OFFSHORE DERIVATIVE INSTRUMENTS

Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of Regulation 15A(1) of the SEBI (Foreign Institutional Investors) Regulations, 1995, as amended, an FII or its sub-account including the FII affiliates of the Global Coordinators and Bookrunners may issue or otherwise deal in offshore derivative instruments such as participatory notes, equity-linked notes or any other similar instruments against underlying securities (all such offshore derivative instruments are referred to herein as "P-Notes") listed or proposed to be listed on any stock exchange in India only in favor of those entities which are regulated by any relevant regulatory authorities in the countries of their incorporation or establishment subject to compliance of "know your client" requirements. An FII or sub-account including the FII affiliates of the Global Coordinators and Bookrunners shall also ensure that the P-Notes are issued after compliance with "Know your client" norms, and no further issue or transfer of any instrument referred to above is made to any person other than a regulated entity. P-Notes have not been and are not being offered or sold pursuant to this Preliminary Placement Document. This Preliminary Placement Document does not contain any information concerning P-Notes, including, without limitation, any information regarding any risk factors relating thereto.

Any P-Notes that may be issued are not securities of the Company and do not constitute any obligation of, claims on or interests in the Company. The Company has not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes, or in the preparation of any disclosure related to the P-Notes. Any P-Notes that may be offered are

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issued by, and are the sole obligations of, third parties that are unrelated to the Company. The Company does not make any recommendation as to any investment in P-Notes and does not accept any responsibility whatsoever in connection with the P-Notes. Any P-Notes that may be issued are not securities of the Global Coordinators and Bookrunners and do not constitute any obligations or claims on the Global Coordinators and Bookrunners. FII affiliates of the Global Coordinators and Bookrunners may purchase, to the extent permissible under law, Equity Shares in the Issue, and may issue P-Notes in respect thereof.

Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate disclosures as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any P-Notes or any disclosure related thereto. Prospective investors are urged to consult with their own financial, legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including whether P-Notes are issued in compliance with applicable laws and regulations.

DISCLAIMER CLAUSE OF THE STOCK EXCHANGES

As required, a copy of this Preliminary Placement Document has been submitted to the Stock Exchanges. the Stock Exchanges do not in any manner:

• warrant, certify or endorse the correctness or completeness of any of the contents of the Preliminary Placement Document

• warrant that the Company’s Equity Shares will be listed or will continue to be listed on the Stock Exchanges; or

• take any responsibility for the financial or other soundness of the Company, its promoters, its management or any scheme or project of the Company;

and it should not for any reason be deemed or construed to mean that this Preliminary Placement Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquires any securities of the Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against Stock Exchanges whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

We publish our financial statements in Rupees. We prepare our financial statements in accordance with Indian generally accepted accounting principles ("Indian GAAP") and the Companies Act. Our audited consolidated financial statements as of and for the fiscal years ended 2007, 2008 and 2009 have been included in this Preliminary Placement Document and are referred to herein as the "Audited Consolidated Financial Statements". KPTL's, JMC's and SSLL's unaudited condensed interim financial statements as of and for the nine months ended December 31, 2009 and December 31, 2008 have also been included in this Preliminary Placement Document.

In this Preliminary Placement Document, unless otherwise indicated or the context otherwise requires, all references to:

• "you", "offeree", "purchaser", "subscriber", "recipient", "investors" and "potential investor" are to the prospective investors in the Issue;

• "KPTL", the "Company", "we", "our", "us" or similar terms are to Kalpataru Power Transmission Limited, on a standalone basis, except in relation to any financial information contained herein where all references to "we", "our", "us" or similar terms are to Kalpataru Power Transmission Limited and its subsidiaries, taken as a whole;

• "India" are to the Republic of India and its territories and possessions;

• the "Government" are to the Governments of India, Central or State, as applicable;

• "United States" are to the United States of America and its territories and possessions;

• "Algerian Dinar" are to the lawful currency of the People's Democratic Republic of Algeria;

• "Rs." and "Rupees" are to the lawful currency of the Republic of India;

• "Turkish Lira" are to the lawful currency of the Republic of Turkey;

• "USD", "US$" and "US dollars" are to the lawful currency of the United States of America;

• a particular year are to the calendar year ended on December 31; and

• a particular fiscal year are to the fiscal year ended on March 31.

Indian GAAP differs in certain significant respects from International Accounting Standards ("IAS")/International Financial Reporting Standards ("IFRS") and generally accepted accounting principles followed in the United States ("U.S. GAAP"). Accordingly, the degree

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to which the financial statements prepared in accordance with Indian GAAP included in this Preliminary Placement Document will provide meaningful information is entirely dependent on the reader's level of familiarity with the respective accounting practices. We do not provide a reconciliation of our financial statements to IAS/IFRS or U.S. GAAP financial statements or a summary of the principal differences between Indian GAAP, IAS/IFRS and U.S. GAAP relevant to our business. See "Risk Factors — Risks Related to the Equity Shares and This Issue — Significant differences exist between Indian GAAP and other accounting principles with which investors may be more familiar."

Any discrepancies in the tables included herein between the amounts listed and the totals thereof are due to rounding off.

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INDUSTRY AND MARKET DATA

Information regarding market position, growth rates and other industry data pertaining to our business contained in this Preliminary Placement Document consists of estimates based on data reports compiled by professional organizations and analysts, data from other external sources and our knowledge of the markets in which we compete. The statistical information included in this Preliminary Placement Document relating to the power transmission and distribution, construction and other industries has been reproduced from various trade, industry and government publications and websites. This data is subject to change and cannot be verified with complete certainty due to limits on the availability and reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. In many cases, there is no readily available external information (whether from trade or industry associations, government bodies or other organizations) to validate market-related analysis and estimates, so we rely on internally developed estimates. While we have compiled, extracted and reproduced this data from external sources, including third parties, trade, industry or general publications, we accept responsibility for accurately reproducing such data. However, none of us or the Global Coordinators and Bookrunners have independently verified this data and none of us or the Global Coordinators and Bookrunners make any representation regarding the accuracy of such data. Similarly, while we believe our internal estimates to be reasonable, such estimates have not been verified by any independent sources and none of us or the Global Coordinators and Bookrunners can assure potential investors as to their accuracy.

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FORWARD-LOOKING STATEMENTS

Certain statements contained in this Preliminary Placement Document that are not statements of historical fact constitute "forward-looking statements". All statements regarding our expected financial condition and results of operations, business, plans and prospects are forward-looking statements. These forward-looking statements include statements as to our business strategy, our revenue and profitability, planned projects and other matters discussed in this Preliminary Placement Document regarding matters that are not historical facts. These forward-looking statements and any other projections contained in this Preliminary Placement Document (whether made by us or any third party) are predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. 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 our expectations include, among others:

• changes in competitors’ pricing and other competitive strategies;

• general economic and political conditions and changes, and changes in laws and regulations that apply to the Indian or global power transmission, distribution, construction, pipelines, logistics and real estate industries, including with respect to excise duties and environmental regulations;

• our ability to successfully implement our strategies, our growth and expansion plans and technological changes;

• the loss of any significant customers;

• government and business conditions globally and in India;

• changes in prices of raw materials, bought out items and fuel;

• changes in interest rates and exchange rates;

• our ability to obtain financing needed to repay maturing obligations and to fund expansion in a timely manner and on satisfactory terms and conditions;

• our ability to execute our projects, including our exposure to liability claims, contract disputes and hazards; and

• the other risk factors discussed in this Preliminary Placement Document, including those set forth under "Risk Factors".

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Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under "Management’s Discussion and Analysis of Financial Condition and Results of Operations," "Industry" and "Business."

Investors can generally identify forward-looking statements by terminology such as "may," "will," "could," "should," "would," "expect," "plan," "propose," "seek," "target," "intend," "anticipate," "aim," "believe," "can," "contemplate," "estimate," "predict," "potential" or "continue" and the negative of such terms or other comparable terminology. Except as required by law, we undertake no obligation to update or revise any forward-looking statements after the date of this Preliminary Placement Document or to conform these statements to actual results or to changes in our expectations.

The forward-looking statements contained in this Preliminary Placement Document are based on the beliefs of management, as well as the assumptions made by and information currently available to management. Although we believe that the expectations reflected in such forward-looking statements are reasonable at this time, we 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. If any of these risks and uncertainties materialize, or if any of our underlying assumptions prove to be incorrect, our actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent written and oral forward-looking statements attributable to us are expressly qualified in their entirety by reference to these cautionary statements.

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ENFORCEMENT OF CIVIL LIABILITIES

The Company is a limited liability company incorporated under the laws of India. All of the directors of the Company (the "Directors") and senior management are residents of India and a substantial portion of the assets of the Company and such persons are located in India. As a result, it may not be possible for investors to effect service of process upon the Company or such persons outside India, or to enforce judgments obtained against such parties outside India.

Recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of the Code of Civil Procedure, 1908, of India on a statutory basis. Section 13 of the Civil Code provides that foreign judgments shall be conclusive regarding any matter directly adjudicated upon, except:

• where the judgment has not been pronounced by a court of competent jurisdiction;

• where the judgment has not been given on the merits of the case;

• where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognize the law of India in cases to which such law is applicable;

• where the proceedings in which the judgment was obtained were opposed to natural justice;

• where the judgment has been obtained by fraud; and

• where the judgment sustains a claim founded on a breach of any law then in force in India.

Under the Civil Code, a court in India shall, upon the production of any document purporting to be a certified copy of a foreign judgment, presume that the judgment was pronounced by a court of competent jurisdiction, unless the contrary appears on record.

India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court, within the meaning of such Section, in any country or territory outside India which the Government has by notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not being of the same nature as amounts payable in respect of taxes, other charges of a like nature or of a fine or other penalties.

Each of the United Kingdom, Singapore and Hong Kong have been declared by the Government of India (the "Central Government") to be reciprocating territories for the

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purposes of Section 44A, but the United States has not been so declared. A judgment of a court of a country which is not a reciprocating territory may be enforced only by a suit upon the judgment and not by proceedings in execution. Such a suit has to be filed in India within two years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. Execution of a judgment or repatriation outside India of any amounts received is subject to the approval of the Reserve Bank of India (the "RBI"). It is unlikely that a court in India would award damages on the same basis as a foreign court if an action was brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if that court were of the view that the amount of damages awarded was excessive or inconsistent with public policy. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI to execute such a judgment or to repatriate outside India any amount recovered. It is uncertain as to whether an Indian court would enforce foreign judgments that would contravene or violate Indian law.

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TABLE OF CONTENTS

Page

Summary .................................................................................................................................... 9 Summary of the Issue ............................................................................................................... 11 Risk Factors ............................................................................................................................. 15 Market Price Information ......................................................................................................... 54 Exchange Rates ........................................................................................................................ 56 Use of Proceeds ........................................................................................................................ 57 Capitalization ........................................................................................................................... 58 Dividend Policy ....................................................................................................................... 59 Selected Historical Financial Information of KPTL ................................................................ 61 Selected Historical Consolidated Financial Information of JMC ............................................ 65 Selected Historical Consolidated Financial Information of SSLL .......................................... 69 Management’s Discussion and Analysis of Financial Condition and Results of Operations .. 72 Industry .................................................................................................................................... 99 Business ................................................................................................................................. 119 Regulations and Policies ........................................................................................................ 159 Board of Directors and Senior Management ......................................................................... 173 Organisational Structure and Principal Shareholders ............................................................ 186 Legal Proceedings .................................................................................................................. 194 Issue Procedure ...................................................................................................................... 202 Placement and Lock-Up ......................................................................................................... 215 Selling Restrictions ................................................................................................................ 219 Indian Securities Market ........................................................................................................ 226 Description of the Equity Shares ........................................................................................... 239 Taxation ................................................................................................................................. 250 Independent Accountants ....................................................................................................... 255 General Information ............................................................................................................... 256 Declaration ............................................................................................................................. 258 Index to Financial Statements ................................................................................................ F-1

1

DEFINITIONS

Definitions of Certain Capitalized Terms Used in this Preliminary Placement Document

The following list of defined terms is intended for the convenience of the reader only and is not exhaustive.

Term or Abbreviation Description

General or Company-related

Annual General Meeting ................................. Annual General Meeting of the Company

Articles, Articles of Association ..................... Articles of Association of the Company

Board, Board of Directors ............................... The board of directors of the Company

BU ................................................................... Billion Units

Central Government ........................................ The Government of India

Chairman ......................................................... The Chairman of the Board of the Company

Company, KPTL, "we", "our" or "us" ............ Kalpataru Power Transmission Limited, on a standalone basis except in relation to any financial information contained herein, where all references to "we", "our", "us" or similar terms are to Kalpataru Power Transmission Limited and its subsidiaries, taken as a whole

CPI .................................................................. Consumer Price Index

Directors .......................................................... The directors of the Company

Equity Shares .................................................. The equity shares of the Company of Rs.10 each, unless otherwise specified in the context thereof

EOU ................................................................ Export Oriented Unit

FYP ................................................................. Five Year Plan

IAS .................................................................. International Accounting Standards

ICAI ................................................................ Institute of Chartered Accountants of India

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IFRS ................................................................ International Financial Reporting Standards

India ................................................................ The Republic of India

Indian GAAP .................................................. Generally accepted accounting principles followed in India

JMC ................................................................. JMC Projects (India) Limited

JV .................................................................... Joint Venture

KV ................................................................... Kilovolts

Kwh ................................................................. Kilo watt hour

Listing Agreements ......................................... Refers to the Company's listing agreements with any of the Stock Exchanges

LME ................................................................ London Metal Exchange

Management .................................................... Management of the Company

MMT ............................................................... million metric tons

MTs ................................................................. Metric tons

MW ................................................................. Mega Watts

Promoters ........................................................ See "Organizational Structure and Principal Shareholders" for details

U.S. GAAP...................................................... Generally accepted accounting principles followed in the United States of America

WPI ................................................................. Wholesale Price Index

Issue-related

Allocated, Allocation ...................................... The determination of QIBs for the purposes of inviting submission of Bid cum Application Forms, done in consultation with the Global Coordinators and Bookrunners and in compliance with Chapter VIII of the SEBI Regulations

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Allotment ........................................................ The issue of Equity Shares pursuant to the Issue to the successful QIBs

Bid ................................................................... An indication of QIBs’ interest, including all revisions and modifications of interest, as provided in the Bid cum Application Form to subscribe for Equity Shares of the Company under this Issue

Bid Closing Date ............................................. As may be determined by the Company in consultation with the Global Coordinators and Bookrunners

Bidding Period ................................................ The period between the Bid Opening Date and the Bid Closing Date

Bid Opening Date ........................................... April 29, 2010

Bid cum Application Form ............................. The form pursuant to which a QIB shall submit a Bid

BSE ................................................................. Bombay Stock Exchange Limited

CAN, Confirmation of Allocation Note.......... Note or advice or intimation to QIBs inviting such QIBs to submit a Bid cum Application Form for Allotment of Equity Shares after discovery of the Issue Price

Cut off Price .................................................... The Issue Price finalized by the Company in consultation with the Global Coordinators and Bookrunners

Depositories Act.............................................. The Depositories Act, 1996

Depository Participant .................................... A depository participant as defined under the Depositories Act

Designated Date .............................................. [●], 2010

Escrow Cash Account ..................................... Special account into which payment of application money shall be made by the QIBs

FIIs .................................................................. Foreign Institutional Investors as defined in the SEBI (Foreign Institutional Investor)

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Regulations, 1995 and registered with SEBI under applicable laws in India.

Floor Price ....................................................... Rs.1,074.19, which has been calculated in accordance with Regulation 85 of the SEBI Regulations

Global Coordinators and Bookrunners ........... Morgan Stanley India Company Private Limited, Nomura Financial Advisory and Securities (India) Private Limited, IDFC Capital Limited and Collins Stewart Inga Private Limited

Issue ................................................................ The offer and sale of Equity Shares to QIBs, pursuant to Chapter VIII of the SEBI Regulations. Equity Shares are being offered and sold outside the United States in offshore transactions in reliance on Regulation S.

Issue Price ....................................................... A price per Equity Share of Rs.[●]

Issue Size ........................................................ The issue of [●] Equity Shares aggregating to Rs.[●] million

JMC Lock-up Period ....................................... 90 days from the date of Allotment

JMC Shares ..................................................... Equity shares of JMC with a face value of Rs.10 each

Lock-up Period................................................ 180 days from the date of Allotment

Open Offer ...................................................... Public announcement to acquire additional shares by an acquirer

Pay-in Date...................................................... The last date for payment as specified in the CAN sent to QIBs

Placement Agreement ..................................... The placement agreement entered into between the Global Coordinators and Bookrunners and the Company dated April 29, 2010

Promoter Lock-up Period ................................ 180 days from the date of Allotment

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Promoter Shares .............................................. The Equity Shares held by each Promoter

QIB .................................................................. A Qualified Institutional Buyer as defined under Regulation 2(1)(zd) of the SEBI Regulations

QIP .................................................................. Qualified Institutional Placement

Regulation S .................................................... Regulation S under the Securities Act

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

Stock Exchanges ............................................. Each of the BSE and the NSE

Regulatory

BOCWA .......................................................... Building and Other Construction Workers Welfare Cess Act, 1996

Companies Act ................................................ The Companies Act, 1956 of India, as amended

CLRA .............................................................. Contract Labour (Regulation and Abolition) Act, 1970

FEMA ............................................................. The Foreign Exchange Management Act, 1999 of India, as amended

Income Tax Act............................................... The Income Tax Act, 1961 of India, as amended

Insider Trading Regulations ............................ SEBI (Prohibition of Insider Trading) Regulations, 1992

MEF ................................................................ Ministry of Environment and Forests

NSE ................................................................. The National Stock Exchange of India Limited

RBI .................................................................. Reserve Bank of India

Registrar of Companies................................... Registrar of Companies, Gujarat, at Ahmedabad

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SCRA .............................................................. Securities Contracts (Regulation) Act, 1956, as amended

SCRR .............................................................. Securities Contracts (Regulation) Rules, 1957, as amended

SEBI ................................................................ The Securities and Exchange Board of India

SEBI Act ......................................................... The Securities and Exchange Board of India Act, 1992, as amended

SEBI Regulations ............................................ SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended

Takeover Code ................................................ SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended

Industry-related

APDRP ............................................................ Accelerated Power Development and Reform Programme

BOOM............................................................. Build, own, operate and maintain

BOOT .............................................................. Build, own, operate and transfer

BOT................................................................. Build, operate and transfer

BPCL............................................................... Bharat Petroleum Corporation Limited

CACMAI......................................................... Conductor and Cable Manufacturers Association of India

CEA................................................................. Central Electricity Authority

CERC .............................................................. Central Electricity Regulatory Commission

CERs ............................................................... Certified Emission Reductions

CNC ................................................................ Computerized Numerically Controlled

CTU................................................................. Central Transmission Utility

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EPC ................................................................. Engineering, Procurement And Construction

FDI .................................................................. Foreign Direct Investment

GAIL ............................................................... GAIL (India) Limited

GSPL ............................................................... Gujarat State Petronet Limited

HMEL ............................................................. HPCL-Mittal Energy Limited

HPCL .............................................................. Hindustan Petroleum Corporation Limited

HVAC ............................................................. High Voltage Alternate Current

HVDC ............................................................. High Voltage Direct Current

IEEMA ............................................................ Indian Electrical and Electronic Manufacturer’s Association

IOCL ............................................................... Indian Oil Corporation Limited

iPMs ................................................................ In-house project management system

IPTC ................................................................ Independent Private Transmission Company

MCR ................................................................ Mustard Crop Residue

MSEDCL ........................................................ Maharashtra State Electricity Distribution Company Limited

NHAI............................................................... National Highways Authority of India

NHPC .............................................................. National Hydroelectric Power Corporation

NTPC .............................................................. National Thermal Power Corporation Limited

O&M ............................................................... Operate and maintain

OPGW ............................................................. Optical ground wire

PCBs ............................................................... Pollution Control Boards

PGCIL ............................................................. The Power Grid Corporation of India Limited

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PPA ................................................................. Power Purchase Agreement

PPP .................................................................. Public Private Partnership

REC ................................................................. Rural Electrification Corporation

RGGVY .......................................................... Rajiv Gandhi Grameen Vidyutikaran Yojna

RRVPN ........................................................... Rajasthan Rajya Vidyut Prasaran Nigam Limited

RSWC ............................................................. Rajasthan State Warehousing Corporation

SEBs ................................................................ State Electricity Boards

SERCs ............................................................. State Electricity Regulatory Commissions

Sonelgaz .......................................................... National Society for Electricity and Gas in Algeria

SREI ................................................................ SREI Infrastructure Finance Limited

State Governments .......................................... The governments of the various states of India

SSLL ............................................................... Shree Shubham Logistics Limited

STT ................................................................. Securities Transaction Tax

STUs ............................................................... State Transmission Utilities

T&D ................................................................ Transmission and Distribution

UNFCCC......................................................... United Nations Framework Convention on Climate Change

WBA ............................................................... Wheeling and Banking Agreement

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SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and the financial statements that appear elsewhere in this Preliminary Placement Document. In addition, you should carefully consider the risks discussed under "Risk Factors" for an understanding of the risks associated with the purchase of the Equity Shares.

We believe we are one of India's largest engineering, procurement and construction companies that provides integrated design, engineering, testing, fabrication, erection and construction services to the power transmission industry. We are also a provider of engineering, procurement and construction ("EPC") services to power transmission utilities outside of India, particularly in Africa, the Middle East and Southeast Asia. We also provide EPC services to power distribution utilities in India and overseas. In addition, we construct cross-country oil and gas pipeline networks in India and also generate biomass energy, primarily from mustard crop residue ("MCR"). Our manufacturing capacity has doubled in the last four years from 54,000 metric tons ("MTs") to 108,000 MTs in response to rising demand in the power sector. In January 2009, we secured our largest transmission export order to date, of approximately US$250 million, from the Ministry of Energy and Water, Kuwait. Additionally, in April 2010 we were awarded a contract to develop, operate and maintain a 100km 400KV/200KV transmission project by Haryana Vidyut Prasaran Nigam Ltd, on a BOOT basis. For the year ended March 31, 2009, Kalpataru Power Transmission Limited ("KPTL") had total income on a standalone basis of Rs.18.8 billion (US$369.0 million) and for the nine-months ended December 31, 2009, had total income on a standalone basis of Rs.17.6 billion (US$377.0 million). As of December 31, 2009, KPTL had an order book of Rs.49.5 billion (US$1.1 billion), or to supply approximately 205,000 MTs of tower supplies and 8,500 kilometers of 132 KV to 765KV transmission lines. As of December 31, 2009, KPTL's order book comprised 53% domestic transmission lines, 33% overseas transmission lines, 7% oil and gas pipelines and 7% distribution management systems, by value. Since December 31, 2009, the Company has received orders of approximately Rs.7.9 billion (US$170.9 million).

Our Competitive Strengths

We believe that our, JMC's and SSLL's primary competitive strengths include the following:

• One of the largest and fastest growing specialized EPC companies in India engaged in the design, manufacturing and construction of power transmission lines with a strong international presence;

• End to end solutions for oil and gas pipelines;

• Presence of JMC in civil contracting across various sectors of the infrastructure space;

• Fully integrated end to end power transmission business capabilities;

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• Operational efficiency;

• Strong financial position and leveraging capabilities;

• Highly qualified employee base and proven management team; and

• State of the art facilities at our agricultural logistics parks.

Our Strategies

Our goal is to maintain and consolidate our position, and that of each of our subsidiaries, as a leading service provider to clients in the industries in which we and our subsidiaries specialize. We and our subsidiaries intend to achieve our goal by implementing the following key business strategies:

• Maintain a sustainable and diversified business model;

• Focus on large scale projects, end to end turnkey solutions;

• Building capabilities to enter new business segments;

• Expanding into international markets that fit within our strategic vision;

• Presence in the logistics and warehousing value chain;

• Focus on operation and process standardization; and

• Selective bidding with a focus on effective project management.

The Registered Office of KPTL is located at Plot No. 101, Part III, GIDC Estate, Sector-28, Gandhinagar- 382 028, India and the Corporate Office is located at Kalpataru Synergy, Opposite Grand Hyatt Vakola, Santa Cruz (East), Mumbai 400 055, India.

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SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue:

Company ........................................................... Kalpataru Power Transmission Limited.

Issue size ........................................................... [●] Equity Shares of the Company of Rs.10 each.

Closing Date………………………………... [●], 2010, being the date of Allotment of the Equity Shares issued pursuant to the Issue

Floor Price………………………………….. Rs.1,074.19 per Equity Share

Issue Price ......................................................... Rs.[●] per Equity Share.

Eligible Investors .............................................. QIBs as defined in Regulation 2(1)(zd) of the SEBI Regulations and not excluded pursuant to Regulation 86(1)(b) of the SEBI (ICDR) Regulations to whom the Preliminary Placement Document and the Bid cum Application Form is circulated and who are eligible to Bid and participate in the Issue. The list of QIBs to whom the Preliminary Placement Document and Bid cum Application Form is delivered shall be determined by the Company and the Global Coordinators and Bookrunners at their sole discretion.

Equity Shares issued and outstanding immediately prior to and after the Issue ...........

26,500,000 Equity Shares issued and outstanding immediately prior to the Issue. Immediately after the Issue, [●] Equity Shares will be issued and outstanding.

Listing ............................................................... The Company shall make applications to each of the Stock Exchanges to obtain in-principle approvals for the listing of the Equity Shares on the Stock Exchanges.

Lock-up ............................................................. The Company has agreed with the Global Coordinators and Bookrunners that, subject to certain exemptions, it will not for a period commencing the date hereof and ending 180

12

days after the date of Allotment, offer, issue, contract to issue, issue or offer any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any Equity Shares or any securities convertible into or exercisable for Equity Shares Equity Shares, without, in each case, the prior written consent of the Global Coordinators and Bookrunners.

In addition, the Company has agreed with the Global Coordinators and Bookrunners that, subject to certain exemptions, it will not for a period commencing the date hereof and ending 90 days from the date of Allotment, directly or indirectly, offer, lend, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any JMC Shares or any securities convertible into or exercisable for JMC Shares, without, in each case, the prior written consent of the Global Coordinators and Bookrunners. However, the foregoing restrictions do not apply to any transaction contemplated above, provided, the post-issue equity share holding of the Company in JMC is at least 51%.

JMC has agreed with the Global Coordinators and Bookrunners that, subject to certain exemptions, JMC will not for a period commencing the date hereof and ending 90 days after the date of Allotment, offer, issue, contract to issue, issue or offer any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any JMC Shares or any securities convertible into or exercisable for JMC Shares (including,

13

without limitation, securities convertible into or exercisable or exchangeable for JMC Shares, without, in each case, the prior written consent of the Global Coordinators and Bookrunners. However, the foregoing restrictions do not apply to issue of capital by JMC, provided, the post-issue equity share holding of the Company in JMC is at least 51%.

The Promoters have agreed with the Global Coordinators and Bookrunners that, subject to certain exemptions, the Promoters will not for a period commencing the date hereof and ending 180 days after the date of Allotment, directly or indirectly, offer, lend, sell, pledge, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any Promoter Shares or any securities convertible into or exercisable for Promoter Shares, without, in each case, the prior written consent of the Global Coordinators and Bookrunners.

See "Placement and Lock-Up – Lock-Up".

Transferability Restriction ................................ The Equity Shares being allotted pursuant to this Issue shall not be sold for a period of one year from the date of Allotment except on a recognized Stock Exchange in India.

Use of Proceeds ................................................. The gross proceeds from the Issue will be Rs. [●] million. The net proceeds of the Issue (after deduction of fees, commissions and expenses) are expected to total approximately Rs.[●] million. Such proceeds are intended to be used by the Company for capital expenditure, expansion of manufacturing capacity (transmission line towers), long-term investment in public private partnership ("PPP"), build, own and transfer ("BOT"),

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build, own, operate and transfer ("BOOT") and build, own, operate and maintain ("BOOM") projects, development of engineering, procurement and construction ("EPC") services, further investment in existing divisions and subsidiaries, working capital and such other purposes as may be permissible under applicable laws and government policies, including strategic initiatives such as investment and/or acquisitions. Please see section titled "Use of Proceeds".

Ranking ............................................................. The Equity Shares being issued shall be subject to the provisions of the Company's Memorandum and Articles and shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividends. The shareholders will be entitled to participate in dividends and other corporate benefits, if any, declared by the Company after the Closing Date, in compliance with the Companies Act. Shareholders may attend and vote in shareholders' meetings on the basis of one vote for every Equity Share held. See the section titled "Description of the Shares".

Security Codes for the Equity Shares ............... ISIN: INE220B01014

BSE Code: 522287

NSE Code: KALPATPOWR

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RISK FACTORS

Investing in the Equity Shares offered hereby involves a high degree of risk. You should carefully consider the following factors, as well as other information contained in this Preliminary Placement Document (including the financial statements and related notes thereto included elsewhere in this Preliminary Placement Document), before making an investment in the Equity Shares. The occurrence of any of the following events, or risks that are currently not known or are now deemed immaterial, could have a material adverse effect on our business, financial condition, results of operations and prospects and cause the market price of the Equity Shares to fall significantly and all or part of your investment may be lost. Unless otherwise stated below, we are not in a position to specify or quantify the financial or other implications of any of the risks mentioned herein.

Risks related to our business

Given the long-term nature of many of our projects, we face various implementation risks. We may incur liquidated damages for time overruns pursuant to our contracts, which may adversely affect our financial condition and results of operations.

Most of the projects that we undertake are by their nature long term and, consequently expose us to a variety of implementation risks, including construction delays, delay or disruption in supply of raw materials, delays in acquisition of land, unanticipated cost increases, cost overruns, adverse weather conditions, natural disasters, labor disputes, disputes with contractors or with our joint venture ("JV") or consortium partners, accidents, changes in government priorities and policies, changes in market conditions, delays in obtaining the requisite licenses, permits and approvals from the relevant authorities and other unforeseeable problems and circumstances. While we believe that we have successfully managed the implementation risks we have faced in the past, including by appointing project managers at our sites and project coordinators at our headquarters and by obtaining progress reports periodically, there can be no assurance that we will be able to continue to effectively manage any future implementation risks, which may or may not be of a nature familiar to us and, further, ineffective or inefficient project management could increase our costs and expenses, and thus adversely affect our profitability. Our future results of operations may be adversely affected if we are unable to effectively manage the implementation risks we face.

Due to the nature of our business, our projects typically require a long gestation period and substantial capital outlay before completion and may take months or years before positive cash flows can be generated, if at all. As part of our growth strategy, we may seek to acquire businesses, technologies and products, but we may fail to complete such acquisitions or realize the anticipated benefits of such acquisitions and may incur costs that could negatively affect our business.

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Time is often of the essence in our projects. We typically enter into contracts which provide for liquidated damages for time overruns. Additionally, in some contracts, in case of delay due to our fault or because of defective work done by us, clients may have the right to appoint a third party to complete the work and to deduct additional costs or charges incurred for completion of the work from the contract price payable to us. Further, our contracts typically provide that our clients may be required to obtain statutory approvals for rights of way and make payments of crop and tree compensation, increasing the risks of idling of resources and delay, as well as increasing our liabilities. In case we are unable to meet the performance criteria as prescribed by the clients and if liquidated damages are levied, our financial condition could be adversely affected.

As most of our international power transmission projects and JMC's civil contracting projects are on a fixed-price basis, we are exposed to significant pricing risks that could cause us to incur losses.

We design and construct most of our international power transmission projects, some of our domestic transmission and distribution projects and our civil contracting projects on a fixed-price contract basis. The Company derived 58.7%, 51.9% and 39.6% of its total income on a standalone basis in the years ended March 31, 2009, 2008 and 2007, respectively, from fixed-price contracts. Under these contracts, we generally agree to provide EPC and civil contracting services for the project on a fixed-price basis, subject to limited variations, such as to reflect changes in the client's project requirements.

For our fixed-price contracts, although we generally enter into forward contracts to hedge our exposure to price variation for raw materials, such as aluminum and zinc, or enter into back-to-back supplier contracts for other materials and, in certain projects, our scope of work excludes the procurement of certain raw materials, we are still exposed to significant pricing risks from the time a bid is made until the time the contract is fully performed or executed.

Notwithstanding the above, in some of our fixed-price contracts for international projects, we may provide for limited price contingencies based on, among other things, anticipated changes in prices of certain raw materials, such as aluminum and zinc, based on commodities indices such as the London Metal Exchange ("LME") or the Indian Electrical and Electronic Manufacturers' Association ("IEEMA"), as a result of inaccuracy of the price variation formula, including as a result of inappropriate choice or significant variations in indices, time lag in application or price variation ceiling limits, we continue to be exposed to price variation risk.

Our contracts with customers may contain price variation or escalation clauses that provide for either reimbursement by the client in the event of a variation in the prices of key raw materials or a formula that splits the contract into pre-defined components for materials, labor and fuel and links the escalation in amounts payable by the client to predefined price indices. Claims for contract valuation are often subject to lengthy arbitration or litigation proceedings.

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Under such circumstances, we may have to use significant additional working capital to ensure successful execution of such projects. Further, we may also face counterclaims initiated against us by certain clients in connection with our project claims. If we are held liable for any of these counterclaims, we will incur write-downs and charges against our earnings to an extent that a reserve may not be established. Even if we do not lose such counterclaims we may not be successful in our claim for contract valuation.

As a result of the above, we are exposed to risks of price variation of raw material, bought out items, fuel and labor in these fixed-price contracts, as well as other factors that may increase our costs.

Our business is substantially dependent on the award of projects by a limited number of significant clients from whom we derive a significant portion of our revenues.

Our Power Transmission Business is concentrated on projects undertaken by large Indian power companies, such as PCGIL (with which a substantial majority of our Indian projects are undertaken), state transmission utilities, foreign power utilities and international EPC contractors. Our Power Distribution Business is dependent upon Rural Electrification Corporation ("REC") -sponsored electrification projects and distribution improvement schemes, which are undertaken by state distribution utilities, the Power Grid Corporation of India Limited ("PGCIL") or National Thermal Power Corporation Limited ("NTPC") on behalf of the state distribution utilities. Our Infrastructure Business is dependent upon projects undertaken by Indian oil and gas companies, such as Bharat Petroleum Corporation Limited ("BPCL"), GAIL (India) Limited ("GAIL"), Gujarat State Petronet Limited ("GSPL"), Hindustan Petroleum Corporation Limited ("HPCL") and Indian Oil Corporation Limited ("IOCL"). Our Civil Contracting Projects Business is dependent upon projects undertaken for the National Highways Authority of India ("NHAI"), municipal corporations and real estate developers.

Our business therefore requires that we continue to maintain pre-qualified status with key clients and that we are not disqualified from future projects that these clients may award. Our major clients vary from period to period depending on the demand and the completion schedule of projects. KPTL's five largest clients in the years ended March 31, 2009, 2008 and 2007, accounted for 62%, 58% and 69% of our total income, respectively. Of these, PGCIL accounted 24%, 23% and 38% of our total income in the years ended March 31, 2009, 2008 and 2007, respectively. The loss of a significant client or a number of significant clients or projects from such clients for any reason, including as a result of disqualification or dispute, may have an adverse effect on our results of operations.

We face significant competition in our business from Indian and international EPC companies, infrastructure development companies and civil contracting companies.

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We operate in an intensely competitive environment. Our competition depends on whether the project is in the power transmission or distribution industry or in the infrastructure or civil contracting sectors. It also depends on the size, nature and complexity of the project and the geographical region in which the project is to be executed. We compete against major Indian, Asian and European EPC companies, as well as infrastructure development companies and civil contracting companies. While service quality, technical capability, performance record and experience, health and safety records and availability of qualified personnel are strongly considered in client decisions, price is the major factor in most tender awards. Further, size, scheduling and complexity of certain large scale projects preclude participation by smaller and less sophisticated engineering and construction companies.

In our Power Transmission Business in India, our major competitors include KEC International Limited, Larsen & Toubro Limited, Jyoti Structures Limited, Associated Transrail Structures Ltd. and Tata Projects Limited. Outside of India, our major competitors include KEC International Limited, Energoinvest, D.D., Hyundai Engineering and Construction Company Limited, National Contracting Company Limited and a number of Chinese power transmission companies.

In our Power Distribution Business, our major competitors include ABB Limited, AREVA Limited, Nagarjuna Construction Company Limited, IVRCL Infrastructures and Projects Limited, Reliance Energy Limited, Tata Projects Limited, Subhash Projects and Marketing Limited, Larsen & Toubro Limited, KEC International Limited and Vijai Electricals Limited, as well as a number of regional companies.

In our Infrastructure Business, our major competitors include Punj Lloyd Limited, Dodsal Private Limited, Larsen & Toubro Limited, Gammon India Limited, Jayhind Projects India Ltd. and Essar Constructions Limited.

In our Civil Contracting Projects Business, JMC competes against Larsen & Toubro Limited, Simplex Infrastructure Limited, Shapoorji Pallonji and Co. Limited, BL Kashyap and Sons Limited, Era Constructions Limited, Nagarjuna Construction Company Limited and Gannon Dunkerley and Co. Limited, Gammon India Limited, Hindustan Construction Company Limited and IVRCL Infrastructures and Projects Limited and many regional civil contracting companies.

In our Logistics and Warehousing Business, SSLL competes against National Bulk Handling Corporation, National Collateral Management Services Limited and Star Agri-warehousing & Collateral Management Ltd. as well as a number of regional companies.

Some of our competitors are larger than us and have greater financial resources. They may also benefit from greater economies of scale and operating efficiencies. As a result, our competitors may be able to present lower bids for contracts than we do, causing us to win

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fewer tenders. We cannot assure you that we, JMC or SSLL (as the case may be) can continue to compete effectively with competitors in the future.

We are exposed to significant construction risks for our lump sum contracts that could cause us to incur losses.

For our lump sum contracts, as compared with unit price contracts, an increase in the quantity of material, fuel and labor required to execute the project, could cause the actual expense to us for executing the project to vary from the assumptions underlying our bid for such contract, which could expose us to increases in our actual costs and as such reduced profit margins or losses. KPTL derived 20.48%, 15.2% and 15.80% of its total income on a standalone basis in the years ended March 31, 2009, 2008 and 2007 from lump sum contracts respectively. Variations in the quantity of material, fuel and labor from that estimated by us could be caused by various factors, including:

• unanticipated changes in engineering or design of the project;

• unanticipated site conditions, including soil, terrain and weather;

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

• suppliers' or subcontractors' failure to perform; and

• inaccurate field surveys or estimations of variables by our tender estimation team.

Unanticipated costs or delays in performing a part of any contract, including without limitation, fixed price, turnkey or lump sum contracts, can increase our pricing exposure or can have compounding effects by increasing the cost of performing the contract. These variations and risks may result in reduced profitability or losses on projects.

Subcontracted projects can be delayed on account of the subcontractor’s performance, resulting in delayed payments.

We subcontract work on the majority of our projects. When we subcontract, payments from our clients depend on our subcontractors’ performance. A completion delay on the part of a subcontractor, for any reason, could result in delayed payment to us. The execution risks we face in subcontracted projects include:

• our subcontractors may not be able to complete the project construction on time, within budget or to the specifications and standards that have been set in the contracts;

• our subcontractors may not be able to obtain adequate working capital or other financing on favorable terms as and when required to complete construction;

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• where we subcontract, we may not be able to pass on certain risks to subcontractors such as unforeseen site and geological conditions which may make the site unsuitable for the project;

• as we expand geographically, we may have to use subcontractors with whom we are not familiar, which could increase the risk of cost overruns, construction defects and failures to meet scheduled completion dates; and

• where we subcontract work, we remain responsible for the subcontracted work which means clients still have recourse to us in respect of actions, omissions and defects by our subcontractors.

Increased costs for raw materials, bought out items and fuel, and interruptions in their availability, may adversely affect our results of operations.

Our business is significantly affected by the availability, cost and quality of the raw materials, bought out items and fuel, which we need to construct and develop our projects. Our principal raw materials include steel, zinc, aluminum conductors, diesel oil, concrete, cement, reinforcement bars, electrodes and valves, and in our Biomass Energy Business (as defined herein), mustard crop residue ("MCR") and cotton sticks. The prices and supply of these and other raw materials, bought out items and fuel depend on factors not within our control, including general economic conditions, competition, production levels, transportation costs and import duties. Although we generally provide for price contingencies in our contracts to limit our exposure, if, for any reason, our primary suppliers of raw materials, bought out items and fuel should curtail or discontinue their delivery of such materials to us in the quantities we need or at prices that are competitive or expected by us, our ability to meet our material requirements for our projects could be impaired, our construction schedules could be disrupted, or our earnings and business could suffer.

We are dependent on third-party transportation providers for the supply and delivery of our raw material, bought out items and fuel, and an interruption or delay in deliveries, or an unexpected increase in costs, could adversely affect us.

We typically use third-party transportation providers for the supply of most of our raw materials and for deliveries of our products to our customers. Transportation costs have been steadily increasing. Continued increases in transportation costs may have an adverse effect on our business and results of operations. In addition, transportation strikes by members of truckers' unions and shipping delays have had in the past, and could have in the future, an adverse effect on our receipt of supplies and our ability to deliver our products and services. Disruptions or other problems related to transportation and deliveries of products to our projects may adversely affect our results of operations.

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Projects included in our order book may be delayed, modified or cancelled, which could harm our cash flow position, revenues and income.

Our order book may not necessarily indicate future income, including as a result of unanticipated variations or scope or schedule adjustments, which could adversely affect our results of operations. We cannot guarantee that the revenues anticipated in our order book will be realized, or, if realized, will be realized on time or result in profits. In addition, for those contracts that do not provide for guaranteed payments, it is possible that contracting parties may default on amounts owed. Any delay, cancellation or payment default could harm our cash flows, revenues or earnings.

For some of the contracts in our order book, our clients are obliged to perform or take certain actions, such as securing of the right of way, clearance of forest, timely supply of owner supplied material, securing of required licenses or permits, timely payments of advances or opening of letters of credit, timely approval of designs and supply chain vendors and shifting of existing utilities. If a client does not perform all such actions in a timely manner or at all and the possibility of such failure is not provided for in the contract, our operations and our results of operations may be adversely affected.

Because we generate income and incur expenses in multiple currencies, due to operations in foreign countries, exchange rate movements may cause us to incur losses when hedging on our exchange rate exposure is not sufficient and we are subject to political, economic, regulatory and other risks of doing business in those countries.

Fluctuations in currency exchange rates influence our results of operations. We report our financial results in Indian rupees, while significant portions of our total income and expenses are denominated, generated or incurred in currencies other than Indian rupees. We incur expenditure and also procure materials in a number of currencies, such as the US dollar, Euro, UAE Dirham, Kuwait Dinar, Djibouti Franc, South Africa Rand, Kenya Shilling Algerian Dinar, Ethiopian Birr, Philippine Peso, Qatari Riyal and Zambian Kwacha. In the years ended March 31, 2009, 2008 and 2007, approximately 27.1%, 28.3% and 26.1% of KPTL's total income on a standalone basis, respectively, was denominated in foreign currencies, while 9.1%, 12.1.1% and 16.8% of KPTL's total expenditures on a standalone basis, respectively, were denominated in foreign currencies.

As of December 31, 2009, KPTL had foreign currency borrowings aggregating Rs.821 million (US$17.6 million). Further, our future capital expenditures, including any imported equipment and machinery, may be denominated in currencies other than Indian rupees. Therefore, a decline in the value of the Indian rupee against such other currencies could increase the Indian rupee cost of servicing our debt or making such capital expenditures. The exchange rate between the Indian rupee and the US dollar and the Euro has varied substantially in recent years and may continue to fluctuate significantly in the future.

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Although we closely follow our exposure to foreign currencies, including on a contract-by-contract basis, and selectively enter into hedging transactions in an attempt to reduce the risks of currency fluctuations, these activities are not always sufficient to protect us against incurring potentially large losses if currencies fluctuate significantly. Moreover, our ability to hedge during the period between our bid submission and the award of the contract is also limited and may not be effective in reducing our risks.

In addition, as many of our clients are governmental entities, we are subject to additional risks, such as risks associated with uncertain political and economic environments and government instability, as well as legal systems, laws and regulations that are different from the legal systems, laws and regulations that we are familiar with in India, and which may be less established or predictable than those in more developed countries. We could be subject to expropriation or deprivation of assets or contract rights, foreign currency restrictions, exchange rate fluctuations and unanticipated taxes or encounter potential incompatibility with foreign joint venture partners or consortium members. Our failure to manage successfully our geographically diverse operations could impair our ability to react quickly to changing business and market conditions and comply with industry standards and procedures.

A significant part of our business transactions are with government entities or agencies which present particular risks.

Our Power Transmission, Power Distribution and Infrastructure businesses are dependent on development projects undertaken by governments and large Indian and international power or oil and gas utilities, many of which are directly or indirectly owned or controlled by either the government of the relevant country or relevant government organizations. Our businesses are also dependent on civil engineering businesses undertaken by governmental authorities funded by governments or international and multilateral development financial institutions. There could be delays on our 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 organization. We also face the risk of non-payment or delay in the collection of receivables from government owned or controlled entities and financial institutions. Our operations involve significant working capital requirements and a non-payment or delayed collection of our receivables could significantly adversely affect our financial condition, liquidity and results of operations. The amount of KPTL receivables (sundry debtors) outstanding for a period of more than six months were Rs.3,502.50 million (excluding retention money) as of December 31, 2009.

Government contracts generally also contain unilateral termination provisions in favor 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 us with reasonable notice. In the event that one or more of our material contracts is terminated, our business and results of operations may be adversely affected.

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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 and/or JMC's financial condition and results of operations.

Demand for our EPC services depends on government policies and budgetary allocations in the power and oil and gas pipeline sectors.

Demand for our EPC services in the power and oil and gas pipeline sectors is primarily dependent on sustained economic development in the regions where we operate and government policies relating to infrastructure development. It is also significantly dependent on budgetary allocations made by governments to these sectors, as well as funding provided by international and multilateral development financial institutions for power and infrastructure businesses. Investments by private sector companies in infrastructure businesses is dependent on the potential economic returns from such projects and is therefore linked to government policies relating to private sector participation and the sharing of risks and returns from such projects. Adverse changes in government policies or budgetary allocations could harm our business and results of operations.

Demand for our EPC products and services, such as towers, lines, substations, distribution networks and pipelines, is particularly sensitive to the level of development, production and transportation activity of, and the corresponding capital spending by, power, oil and gas transportation companies. Income derived from the power transmission and distribution and oil and gas pipeline segments accounted for 99.99%, 99.96% and 99.99% of our total income in the years ended March 31, 2009, 2008 and 2007, respectively. We expect that these segments will continue to account for a significant majority of our total income and profit in the future.

Global oil and gas prices have an influence on capital expenditures in the energy industry. Oil and gas prices are subject to significant fluctuations in response to relatively minor changes in the supply of and demand for oil and gas, market uncertainty and a variety of other factors that are beyond our control. Sustained volatility of oil and gas prices can also cause capital expenditures to be postponed or cancelled. Historically, the markets for oil and gas have been volatile and are likely to continue to be volatile in the future.

A reduction in capital investment in the power or oil and gas sectors due to any of these factors or for any other reason could have an adverse effect on our results of operations and financial condition.

A breakdown or non-availability of machines and equipment may adversely affect our results of operations.

In our businesses, we are required to procure various machines and equipment, such as Computerized Numerically Controlled ("CNC") fabrication machines, tension stringing

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equipment, pipe layers, welding machines and earth moving equipment. We have a limited ability to pass on increases in machine and equipment maintenance and running costs, including those resulting from a breakdown or temporary non-availability of machines and equipment. Unanticipated increases in equipment costs may also adversely affect our results of operations.

Further, any significant operational problems or the loss of our machines and equipment for an extended period of time could also adversely affect our results of operations.

We may be required to write off certain of our investments in subsidiaries or joint ventures.

We have made, and may continue to make, certain capital investments, loans, advances and other commitments to support certain of our subsidiaries and joint ventures. These investments and commitments have included capital contributions to enhance the financial condition or liquidity position of our subsidiaries and joint ventures. If the business and operations of these subsidiaries and joint ventures deteriorate, our investments may be required to be written down or written off or further capital injections may be required to be made. Additionally, certain loans or advances may not be repaid or may need to be restructured, or we may be required to outlay capital under our commitments to support such companies.

We may incur liabilities as a result of non-performance of our consortium or joint venture partners.

We selectively enter into consortium arrangements and joint ventures in our businesses. Under the contracts we enter through consortium arrangements or joint ventures, we are generally jointly and severally liable with our joint venture or consortium partners for, among other things, breaches or non-performance of contract. The inability of a partner to continue with a project, due to financial or legal difficulties or otherwise, could result in us being required to bear increased and, at times, sole responsibility for the completion of the project and bear a greater share of the financial risk of the project. In the event that a claim, arbitration award or judgment is awarded against the joint venture or the consortium, we may be responsible for the entire judgment. Since our partners are generally foreign entities, there is a risk that we may not be able to obtain compensation or indemnification from such partners. See also "Legal Proceedings — Litigation involving the Company".

If we are unable to retain or recruit key personnel or maintain uninterrupted relationships with our subcontractors of labor, our business could suffer.

Our senior management and key managerial personnel, many of whom have decades of experience with us and in the industries in which we operate, are difficult to replace. Any loss or interruption of the services of such key personnel, or our inability to recruit qualified additional or replacement personnel, could adversely affect our business. In addition, certain aspects of our production processes depend upon highly skilled employees. As a result of

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economic growth and increased activity in the businesses in which we operate in India and overseas, we may be unable to find or retain skilled personnel in sufficient numbers to satisfy our requirements. This risk may be exacerbated by governmental policies and mandates to hire a local labor force, which may not be as skilled or available at rates commensurate with our operations in other geographical areas.

We also regularly contract with subcontractors and third parties for the provision of labor for our projects, including international projects. We are dependent on these subcontractors and third parties, and if they experience disruptions related to their work force, including strikes and work stoppages, those disruptions may have an adverse effect on our business and results of operations. We cannot assure you that skilled labor, whether hired through subcontracts, third parties or directly, will continue to be available at reasonable rates and in the areas in which we execute our projects. As a result, we may be required to mobilize additional resources at a greater cost to us to ensure the adequate performance and delivery of contracted services.

If we are unable to expand or utilize our tower manufacturing capacity or become unsuccessful in outsourcing the fabrication of towers when required, our results of operations could be adversely affected.

Demand for the manufacture of transmission line towers has been steady and increasing in recent years. For the three years ended March 31, 2009, we have had a capacity utilization rate of as high as 96%. To serve this sector effectively, meet tight completion schedules demanded by clients, and execute additional contracts to sustain growth of our business, we may need to expand our manufacturing capacity through a combination of new plants or expansion of existing plants, or otherwise increase the supply of towers for our projects through outsourcing the fabrication of towers from third parties. If we are unable to do so or are unable to utilize our tower manufacturing capacities at optimum levels, our business operations could be constrained and our growth could be adversely affected.

Increasing levels of compensation for employees and workers in India may reduce our international competitive advantage and result in lower profit margins.

Levels of compensation for employees and workers in India have historically been significantly lower than levels of compensation outside of India for comparably skilled professionals and unskilled workers, which has been one of our competitive strengths in our international projects. However, recent significant compensation increases in India could reduce some of this competitive advantage and may negatively affect our profit margins. Employee and worker levels of compensation in India are increasing at a faster rate than outside of India, which could result in increased salary costs of engineers, managers and other professionals and workers. We may need to continue to increase the levels of our employee and worker compensation to remain competitive and manage attrition. Any such increase could have an adverse effect on our business and results of operations.

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Labor disputes could affect our operations.

Our operations depend upon the productivity of our labor force. While we generally have good relations with our employees, there can be no assurance that there will not be any major labor related dispute in the future. In the event of any labor dispute, our operations and results of operations could be adversely affected.

Our insurance coverage may not adequately protect us against certain operational risks to or claims by our employees, and we may be subject to losses that might not be covered in whole or in part by existing insurance coverage.

We maintain insurance for a variety of risks, including, among others, for risks relating to fire, burglary and certain other losses and damage to buildings, plants, machinery, inventory and office equipment, loss of cash in transit and loss or damage of incoming and outgoing materials and finished goods by water, road and railway. We also carry director and officer liability insurance. In addition, we generally carry workers' compensation and accident and medical insurance for our operations. Under many of our contracts with customers, we are required to obtain insurance for the projects undertaken by us, and as such regularly purchase specific business operations insurance policies for individual projects. However, in some cases, we may not have obtained the required insurance or such insurance policies may have lapsed prior to the completion of the project. Further, we may not have obtained insurance cover for some of our projects that do not require us to maintain insurance.

There are various other types of risks and losses for which we are not insured, such as loss of business, environmental liabilities and natural disasters, because they are either uninsurable or not insurable on commercially acceptable terms. We also do not carry any key man insurance. Should an uninsured loss or a loss in excess of insured limits occur, we could incur liabilities, lose capital invested in that property or lose the anticipated future income derived from that business or property, while remaining obligated for any indebtedness or other financial obligations related to our business. Any such loss could result in an adverse effect to our financial condition.

Delays or defaults in customer payments could result in reduction of our profits.

Because of the nature of our contracts, we sometimes commit resources to projects prior to receiving advances, progress related or other payments from the customer in amounts sufficient to cover expenditures as they are incurred. Delays in customer payments may require us to make a working capital investment. If a customer defaults in making payments on a project on which we have devoted significant resources or if a project in which we have invested significant resources is delayed, cancelled or does not proceed to completion, it could have an adverse effect on our operating results.

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We face significant price competition in our Power Transmission, Power Distribution and Civil Engineering Projects businesses, which may adversely affect our profitability.

Contracts in our Power Transmission, Power Distribution and Civil Engineering Projects businesses are generally awarded following a competitive bidding process and satisfaction of prescribed pre-qualification criteria. While service quality, technical capability, health and safety records, availability of qualified personnel, responsiveness to client demands, as well as reputation and experience, are important considerations in client decisions, price is the major factor in most tender awards. For most of the contracts for which we or JMC tender, once the qualified bidders clear the technical requirements, the contract is awarded based on the lowest price of the contract quoted by the prospective bidders as evaluated by the client. As a result of this competition, we and JMC face intense margin pressure, which could have an adverse effect on our and/or JMC's financial condition and prospects.

The nature of our construction business exposes us to liability claims and contract disputes and our insurance coverage and backup guarantees may not adequately protect us, which may have an adverse effect on our business.

We are involved in large projects where design or construction failures can result in substantial injury or damage to third parties. We could face significant claims for damages if a project suffers defects in the quality of our design, construction, engineering or planning, our subcontractors' workmanship, our supply chain vendors' products or in the event that our project management techniques fail. Any liability in excess of our insurance limits, reserves or backup guarantees from our vendors and subcontractors could result in additional costs, which would reduce our profits. Faults in construction might also require repair work, which may not be foreseen or covered by our insurance. In addition, if there is a customer dispute regarding our performance or workmanship, the customer may delay or withhold payment to us. If we were ultimately unable to collect on these payments, our profit margins would be adversely affected.

We may also be subject to claims resulting from defects arising from engineering, procurement and construction services provided by us within the warranty periods provided by us, which range from 12 to 24 months from the date of commissioning. We are generally required to furnish performance guarantees valid up to the expiry of the respective warranty periods, in amounts between 5.0% to 15.0% of the contract values to ensure performance of the contracts by us. Actual or claimed defects in procured equipment or construction quality could give rise to claims, liabilities, costs and expenses, relating to loss of life, personal injury, damage to property, damage to equipment and facilities, pollution, inefficient operating processes, loss of production or suspension of operations. These performance guarantees provided by us may not be returned to us, which could adversely affect our financial condition and results of operations.

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Our operations and JMC's operations are subject to hazards such as theft and other risks and could expose us and/or JMC to liabilities, loss in revenues and increased expenses.

Our operations and JMC's operations are subject to hazards inherent in providing EPC services and civil engineering services, such as risks of theft, vandalism, equipment failure, work accidents, fire or explosion, including hazards that may cause injury and loss of life, severe loss or damage to and destruction of property and equipment and environmental damage. Improper handling of materials and machines used in our operations and JMC's operations can also result in accidents.

Our and JMC's policy of covering these risks through contractual limitations of liability, indemnities and insurance may not always be effective. In some of the jurisdictions in which we operate, environmental, health and workers' compensation liability may be assigned to us as a matter of law. Supply chain vendors and subcontractors may not have adequate financial resources to meet their indemnity and other obligations to us or JMC. Losses may derive from risks not addressed in our and JMC's indemnity agreements or insurance policies, or it may no longer be possible to obtain adequate insurance against some risks on commercially reasonable terms. A failure to effectively cover ourselves or JMC against these risks could expose us and JMC to substantial costs and potentially lead to losses. Additionally, the occurrence of any of these risks may also divert management's attention and resources and adversely affect public perception about our operations and JMC's operations and the perception of our and JMC's suppliers, clients and employees, leading to an adverse effect on our and JMC's business, results of operations and financial condition.

Corrupt practices or improper conduct may delay the development of a project and affect our results of operations.

The industries in which we and our subsidiaries operate are not immune to the risks of corrupt practices. Such corruption may include bribery, deliberate poor workmanship or the deliberate supply of low quality materials. If we, or any other person involved in any of the projects, is the victim of or involved in any such corruption, our, or our subsidiaries', ability to complete the relevant projects as planned may be disrupted thereby materially affecting our business, financial condition and results of operations.

Adverse weather conditions could affect our business and results of operations.

We have business activities that could be adversely affected by severe weather, particularly in India, Africa and the Middle East. Incidences of severe weather conditions may require us to evacuate personnel or curtail services, may damage our equipment or our facilities, or require us to suspend our operations, preventing us from maintaining our contract schedules or generally reducing our productivity and profitability. Our operations are also adversely affected by difficult working conditions, including extremely high temperatures during

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summer months and heavy rain during monsoons, which could restrict our ability to carry on construction activities and fully utilize our resources.

We do not own the trademark appearing on the cover page of this Preliminary Placement Document. If this trademark does not continue to be available to us, our business and financial condition could be harmed.

The trademark appearing on the cover page of this Preliminary Placement Document is held by Kalpataru Properties Private Limited. Although Kalpataru Properties Private Limited has historically permitted us to use this trademark, we cannot assure you that it will continue to do so in the future.

Additionally, since we have no right, title, other ownership or interest in the trademark or other intellectual property rights, our ability to enforce them may be unavailable or limited in some circumstances. If we fail to successfully obtain or enforce intellectual property rights, our competitive position could suffer, which could harm our business and financial condition.

We could be adversely affected if we fail to keep pace with technical and technological developments in the industries in which we work.

Our recent experience indicates that clients are increasingly developing larger, more technically complex projects across various sectors. To meet our clients’ needs, we and our subsidiaries must continuously update existing, and develop new, technology for our EPC services and JMC's infrastructure and civil contracting services. In addition, rapid and frequent technology and market demand changes can often render existing technologies and equipment obsolete, requiring substantial new capital expenditures and/or write downs of assets.

Our or JMC's failure to anticipate or to respond adequately to changing technical, market demands and/or client requirements could adversely affect our business and financial results.

Additional Risks Applicable to Our Biomass Energy Business

Our Biomass Energy Business is subject to the availability and pricing of MCR and the difficulties of MCR collection and storage.

The availability, pricing and efficient collection of MCR are subject to a number of risks. These risks include:

• our biomass energy plants are located in Rajasthan, which has been prone to frequent and severe droughts. The occurrence of such droughts in the future could affect the availability of MCR;

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• any change in cropping patterns could affect the availability of MCR since no single crop is sown on more than 25-30% of the usual 50-km radius area in every season, and as such the production of MCR is limited;

• MCR has diverse uses, for example, as a fuel in brick kilns, for briquette manufacturing and for mixing with fodder, and these competing uses may mean that relatively little MCR remains available for consumption in our biomass energy plants;

• MCR is highly combustible and unpredictable after the rainy season, and has a tendency to solidify, which results in very poor flow through the feeders;

• MCR may be laden with dust and may be mixed with moisture, which increases our production and raw material costs; and

• since MCR can only be harvested once per year over a three month time period, we are required to purchase and store sufficient amounts of MCR to manage our inventory for energy generation for more than eight months each year, which increases the risk of fire and other damage to MCR.

MCR is a corrosive and volatile compound, which can lead to costly repairs and other expenditures.

We use MCR as fuel for the boiler in our biomass energy plants. MCR has a very high volatile content and is very light in weight. Its alkali and chlorine compounds are highly corrosive, which damages the high temperature areas in the boilers' superheaters. In addition, the ash fusion temperature of the high alkali ash is very low, which results in heavy deposits of ash in the furnace water walls, reducing the efficiency of the furnace. We have invested significantly on modifications to our boilers, but cannot assure you that significant additional expenditures as a result of repairs, modifications or otherwise may not be required.

Adequate clean ground water may not always be available for the production of biomass energy.

Each of our biomass energy plants requires approximately 1,200 cubic meters of water per day. A sufficient quantity of good quality ground water, particularly at the center of the mustard plant growing area, may not always be available. Mustard plant is grown where rainfall intensity is low. Ground water levels surrounding our energy plants have generally been decreasing, and a continued supply of water may not always be available. As a result, our biomass energy business is particularly susceptible to water shortages. As a result of drought conditions in Rajasthan, which meant that we were unable to draw on our usual water sources, we were forced to shut down our Tonk biomass energy plant on April 14, 2010. We anticipate that the plant will reopen in July 2010, but there can be no assurance that this will be the case, nor can there be any assurance that there will not be future closures to our biomass energy plants should drought conditions recur in the future.

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Inadequate delivery of CERs may adversely affect profitability.

We have entered into a contract with a Dutch governmental agency, Senter Novem, for the sale of Certified Emission Reductions ("CERs") resulting from the power generation at our biomass plant. While the power generation from the MCR depends upon the availability of sufficient raw material and water, we are obliged to deliver the CERs at the agreed delivery schedule. In the event that we fail to deliver the required number of CERs within the specified delivery schedule, then Senter Novem is entitled to adequate compensation for any CER that is not ultimately delivered. The issue of adequate compensation will be interpreted between our Company and Senter Novem in good faith and applied, taking into account the specific circumstances and risks of the project and best efforts taken by our Company to achieve the relevant delivery schedule. This may adversely affect our financial condition and results of operations.

We have entered into a contract with Atmosphere, Germany ("Atmosphere") for the delivery of gold standard CERs in relation to our Tonk biomass energy plant. If Atmosphere fails to purchase such CERs then we will have to sell the CERs to another purchaser and there can be no assurance that we will be able to do so at the same level as provided for in the contract with Atmosphere. If we receive a lower price for the CERs then this may adversely affect our financial condition and results of operations.

Additional Risks Applicable to Our Infrastructure Business

We have limited experience in execution and operation of projects on a BOOT basis and the risks associated with BOOT projects could adversely affect our financial results.

Historically, the bulk of infrastructure projects in India have been item rate contracts. However, the trend is moving towards PPP through Build, Own, Operate and Transfer ("BOOT") projects and arrangements. Such contracts involve different business risks as profitability depends upon the amount of revenue generated from completed projects during the concession period. We plan to selectively bid for BOOT projects in order to realize greater added value on construction projects and revenues from BOOT projects over their concession periods. In making such bids, our analysis of revenue generation may not be accurate and in the event that the actual revenues generated do not match the assumptions made when bidding for a project, we may not be able to fully recover our costs or generate a profit from the project.

While BOOT projects may offer the potential benefit of high operating margins, the risks associated with BOOT projects are substantial, including the risk of incorrect forecasts at the bid stage concerning revenues to be derived from the constructed facility during the concession period and the risk of extended exposure to fluctuating economic conditions. Adverse deviations between actual volumes and projected volumes, delays in completion of related project components and increases in execution costs and interest costs, could result in

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significant loss of revenue. JMC could face substantial losses if it inaccurately forecasts the return from the BOOT projects.

JMC may be adversely affected by claims under the Land Acquisition Act, 1894.

JMC handles various types of major and minor road projects. With the exception of BOOT contracts, all of JMC's contracts with the Central and/or State Government expressly provide that the responsibility for obtaining the right of way for the roads under a project lies with the Central and/or State Government. While the Central and/or State Government may obtain land clearances on which these projects are implemented, JMC may not have copies of supporting documentation for the land acquisition. In the event that affected landowners seek to bring claims objecting to the acquisition of their land for a particular road, it is possible that the landowners may also make claims against JMC or join JMC as a party to these proceedings. In case of such claims, while we believe that JMC would not be liable to pay any compensation (as right of way is to be provided by the client), JMC faces a risk of delay in project implementation or other intangible losses such as loss of reputation or distraction of management time.

Additional Risks Applicable to our Logistics and Warehousing Business

Amenities and transportation infrastructure near SSLL's agricultural logistics parks may be closed, relocated, terminated, delayed or not completed.

There is no assurance that amenities, transportation infrastructure and public transport services near SSLL's agricultural logistics parks will not be closed, relocated, terminated, delayed or completed. If such an event were to occur, it will adversely impact the accessibility of SSLL's agricultural logistics parks. This may adversely affect SSLL's financial condition and results of operations.

Renovation or redevelopment works or physical damage to SSLL's agricultural logistics parks may disrupt the operations of the agricultural logistics parks.

The quality and design of SSLL's agricultural logistics parks has a direct influence over the demand for storage space in the parks. The agricultural logistics parks may need to undergo renovation or redevelopment works from time to time to retain their competitiveness and may also require unforeseen ad hoc maintenance or repairs in respect of faults or problems that may develop over structural defects or other parts of buildings or because of new planning laws or regulations. The costs of maintaining logistics properties and the risk of unforeseen maintenance or repair requirements tend to increase over time as the building ages. The business and operations of our agricultural logistics parks may suffer some disruption and it may not be possible to collect the full rate of, or, as the case may be, any storage income on space affected by such renovation or redevelopment works.

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In addition, physical damage to the agricultural logistics parks resulting from fire or other causes may lead to a significant disruption to SSLL's business and operations and, together with the foregoing, may result in an adverse impact on SSLL's financial condition and results of operations.

SSLL may be adversely affected by downturns in harvesting of agricultural products and commodities due to adverse weather conditions, natural disasters and other factors.

Our Logistics and Warehousing Business is dependent upon the successful harvesting and production cycles of various agricultural products and commodities and as a result is subject to seasonal variations. Such harvesting and production cycles may be adversely impacted by unfavorable local weather patterns, natural disasters and disease or crop pests. SSLL's operations may be adversely affected by the occurrence of any such events which impact the harvesting and production cycles of the agricultural products and commodities which are handled at SSLL's agricultural logistics parks.

SSLL is exposed to a range of development and construction risks relating to the development and asset enhancement projects of its agricultural logistics parks.

SSLL may undertake, and the properties that SSLL has an interest in, may from time to time be the subject of, development or asset enhancement initiatives. The construction and development of a new agricultural logistics park usually takes six to twelve months to complete, depending on their size and complexity. The implementation of a development project or asset enhancement initiative, as well as the time and costs required to complete a development project or asset enhancement initiative may be adversely affected by various factors, including, but not limited to:

• delays or inability to obtain all necessary zoning, land use, building, development and other required governmental and regulatory licenses, permits, approvals and authorizations;

• constructions risks, which include, delays in construction and cost overruns whether from variation to original design plans or any other reason, a shortage or increase in the cost of construction and building materials, equipment or labor as a result of rising commodity prices or inflation or otherwise, inclement weather conditions, unforeseen engineering, environmental or geological problems, defective materials or building methods, default by contractors and other third party service and goods providers of their obligations, or financial difficulties faced by such persons, disputes between counterparties to a construction or construction related contract, work stoppages, strikes, accidents, among others;

• the failure to resolve squatter and related settlement issues or otherwise;

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• the need to make significant capital expenditures without receiving revenue from these properties until future periods;

• possible shortage of available cash to fund construction and capital improvements and the related possibility that financing for these capital improvements may not be available on acceptable terms or at all; and

• uncertainties as to demand or a loss of demand by third parties for the agricultural logistics park after construction or asset enhancement work has begun, whether resulting from a downturn in the economy, a change in the surrounding environment of the project or otherwise.

We cannot assure you that any or all of the current or future development or asset enhancement projects affecting the agricultural logistics parks in which SSLL has an interest, will be completed within the anticipated time frame or budget, if at all, whether as a result of the factors specified above or for any other reason. The inability to complete a major development or asset enhancement project within the anticipated time frame and budget could have a material adverse effect on SSLL's business, financial condition, results of operations and prospects. In addition, significant pre-operating costs may be incurred and we cannot assure you that these costs can be recovered within a brief period or at all, and there may be a substantial length of time before a development or asset enhancement project generates revenues and positive cash flows. The failure to adequately prepare for pre-operating costs could adversely affect SSLL's businesses, financial condition, results of operations and prospects.

SSLL is exposed to risks relating to commodity trading and hedging

SSLL's hedging arrangements using commodity futures/forwards are based on assumptions that the futures/forward contract prices and cash market prices in these commodities move up or down with a positive correlation. If this were not the case, then SSLL could be exposed to losses on its hedging transactions which may have a material adverse effect on SSLL's businesses, financial condition, results of operations and prospects.

SSLL is unable to hedge its exposure to price fluctuations relating to certain commodities for which forward contracts are not available on the exchange. As a result, SSLL is unable to hedge its exposure against price fluctuations in certain commodity markets, and adverse changes in price in these markets could have a material adverse effect on SSLL's businesses, financial condition, results of operations and prospects.

Government regulation could in turn limit the availability of SSLL's hedging options, or place restrictions on its ability to trade in certain commodities. In this event, SSLL may not be able to provide adequate hedging against its exposures to price fluctuations in certain commodities markets and/or may not be able to trade in certain commodities markets in

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adequate quantities. Both of these outcomes may have a material adverse effect on SSLL's businesses, financial condition, results of operations and prospects.

SSLL is exposed to risks in its role as broker between banks and borrowers which may expose SSLL to financial losses should any of the borrowers default on their obligations in certain circumstances.

SSLL acts as a broker on behalf of banks to connect them with borrowers who pledge goods in exchange for commodities funding. One of the workstreams associated with this role is the requirement to carry out due diligence on the borrowers. Under the service provider agreements with the banks, if SSLL fails to carry out our due diligence with due care and attention, and the borrower defaults, then SSLL may be held responsible to indemnify the bank.

Should SSLL be held responsible in such a manner and have to make payments to any of the banks under such indemnities then these payments may have a material adverse effect on SSLL's financial condition, results of operations and prospects. Additionally, the default of a borrower for whom SSLL had arranged the loan may damage SSLL's reputation in the marketplace which could in turn have a further material adverse effect on its businesses, financial condition, results of operations and prospects.

Risk associated with SSLL's activity as a collateral manager.

SSLL acts as a collateral manager for certain banks. Under these arrangements SSLL has responsibilities including the certification of the quality and quantity of goods to be pledged, as well as the certification of the fitness of warehouse in which the goods are to be stored. This role may also involve testing of the commodity from time to time and a resultant responsibility to inform the bank of any deterioration in the condition of the goods.

In the event that a borrower defaulted on a loan and the pledged goods were found to be inadequate to provide collateral for the outstanding sums, SSLL may be liable to indemnify the bank for any losses that they suffered as a result of its failure to carry out its role as collateral manager with due care and skill. Both the exposure to such liabilities, and the reputational damage which may occur in such circumstances, may have a material adverse effect on SSLL's businesses, financial condition, results of operations and prospects.

Regulatory, Legal and Tax Risks

We and our subsidiaries operate in a highly regulated environment, and the government policies, laws and regulations affecting the sectors in which we and our subsidiaries operate and related industries, could adversely affect our operations and our profitability.

All of our and our subsidiaries' businesses are regulated by the Central Government and State Governments in India, as well as by the governments of the countries in which we operate.

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See "Regulations and Policies" for a description of laws and regulations applicable to us in India. The regulatory framework in India is evolving and regulatory changes could have an adverse effect on our business, results of operations and financial condition. Non-compliance with any regulation may also lead to penalties, revocation of our or our subsidiaries' permits or licenses or litigation.

Future government policies and changes in laws and regulations in India and elsewhere may adversely affect our and our subsidiaries' business and operations, and restrict our and our subsidiaries' ability to do business in our or our subsidiaries' existing and target markets. The timing and content of any new law or regulation is not in our control and such new law or regulation could have an adverse effect on our business, results of operations and financial condition.

Regulatory changes in the foreign countries in which we or our subsidiaries operate may require us or our subsidiaries to, among other things, obtain licenses or permits in order to bid on contracts or conduct operations or enter into a consortium arrangement, joint venture, agency or similar business arrangement with local individuals or businesses in order to conduct business in those countries. These laws and regulations may also encourage or mandate the hiring of local contractors and require foreign contractors to employ citizens of, or purchase supplies from within, the relevant country. In addition, we may become involved in proceedings with regulatory authorities that may require us or our subsidiaries to pay fines, comply with more rigorous standards or other requirements or incur capital and operating expenses for compliance with such laws and regulations.

We and our subsidiaries require regulatory approvals in the ordinary course of business, and the failure to obtain them in a timely manner or at all may adversely affect our or our subsidiaries' operations.

We and our subsidiaries require regulatory approvals, sanctions, licenses, registrations and permissions for operating our and our subsidiaries' businesses, some of which expire from time to time. We and our subsidiaries generally apply for renewals of such regulatory approvals, sanctions, licenses, registrations and permissions, prior to or upon their expiry. However, we cannot assure you that we or our subsidiaries will obtain all regulatory approvals, sanctions, licenses, registrations and permissions that we or our subsidiaries may require in the future, or receive renewals of existing or future approvals, sanctions licenses, registrations and permissions in the time frames required for our or our subsidiaries' operations or at all, which could adversely affect our or our subsidiaries' business.

Compliance with, and changes in, environmental, health and safety laws and regulations may adversely affect our financial condition and results of operations.

We and our subsidiaries are subject to environmental, health and safety regulations. See "Regulations and Policies". Governments may take steps towards the adoption of more

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stringent environmental, health and safety regulations, and we cannot assure you that we or our subsidiaries will be at all times in full compliance with these regulatory requirements. For example, these regulations can often require us or our subsidiaries to purchase and install expensive pollution control equipment or make changes to our existing operations to limit any adverse impact or potential adverse impact on the environment or the health and safety of employees, and any violation of these regulations, whether or not accidental, may result in substantial fines, criminal sanctions, revocations of operating permits or a shutdown of our facilities, including our galvanizing facility, biomass energy plants and SSLL's agricultural logistics parks. Due to the possibility of unanticipated regulatory developments, the amount and timing of future expenditures to comply with regulatory requirements may vary substantially from those currently anticipated. If there is any unanticipated change in the environmental, health and safety regulations we or our subsidiaries are subject to, we or our subsidiaries may need to incur substantial capital expenditures to comply with such new regulations. Our and our subsidiaries' costs of complying with current and future environmental, health and safety laws and our or our subsidiaries' liabilities arising from failure to comply with applicable regulatory requirements may adversely affect our business, financial condition and results of operations.

Taxes and other levies imposed by the Central or State Governments, as well as other financial policies and regulations, may have an adverse effect on our business, financial condition and results of operations.

We and our subsidiaries in India are subject to taxes and other levies imposed by the Central or State Governments in India, including customs duties, excise duties, central sales tax, state sales tax, labor cess, service tax, income tax, value added tax and other taxes, duties or surcharges introduced on a permanent or temporary basis from time to time. The central and state tax scheme in India is extensive and subject to change from time to time. Any adverse changes in any of the taxes levied by the Central or State Governments may adversely affect our competitive position and profitability. Currently we enjoy certain tax benefits, such as benefits under Section 80-IA of the Indian Income Tax Act, 1961, as amended, relating to infrastructure development projects, which enables the effective rates of the loans incurred by such entities to be lower and decreases the effective tax rate compared to the tax rates that we estimate would have been applicable if these incentives had not been available. We cannot assure you that such tax incentives will continue to be available in the future. Changes in or elimination of such tax incentives could adversely affect our financial condition and results of operations.

Our revenues are subject to a significant number of tax regimes and changes in the legislation governing the rules implementing them or the regulators enforcing them could negatively and adversely affect our results of operations.

We currently have operations, project offices and staff in 9 countries around the world (excluding India). Consequently, we are subject to the jurisdiction of a significant number of

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tax authorities and regimes. The revenues recorded and income earned in these various jurisdictions are taxed on differing bases, including net income actually earned, net income deemed earned and revenue-based tax withholding. The final determination of our tax liabilities involves the interpretation of local tax laws, tax treaties and related authorities in each jurisdiction, as well as the significant use of estimates and assumptions regarding the scope of future operations and results achieved and the timing and nature of income earned and expenditures incurred. Changes in the operating environment, including changes in tax law and currency/repatriation controls, could impact the determination of our tax liabilities for any given tax year.

Risks related to our Company

We have broad discretion in the use of the net proceeds of this Issue and you may not necessarily agree with how we use such proceeds.

Subject to compliance with applicable laws and regulations, we intend to use the net proceeds received from the Issue for capital expenditure, expansion of manufacturing capacity (transmission line towers), long-term investment in PPP, BOT, BOOT and BOOM projects, development of EPC services, further investment in existing divisions and subsidiaries, working capital and such other purposes as may be permissible under applicable laws and government policies, including strategic initiatives such as investment and/or acquisitions. As of the date of this Preliminary Placement Document, we have not entered into any letter of intent or any definitive commitment or agreement for any material acquisition or strategic relationship. Additionally, we have not identified a specified project or end use for which the funds shall be utilized. In accordance with the policies set up by our Board, the management of the Company (the "Management") will have flexibility in deploying the proceeds received by us from the Issue.

Furthermore, our funding requirements and the deployment of the net proceeds of this Issue is based on management estimates and has not been independently appraised by any institution or organization. We may have to revise our estimates from time to time due to various factors including market conditions and, consequently, our funding requirements may also change. This may also result in the rescheduling of the expenditure programs and an increase or decrease in our proposed expenditure plans.

We may undertake acquisitions, investments and strategic relationships in the future which may pose management and integration challenges.

We may make acquisitions, investments and strategic relationships in the future as part of our growth strategy in India and overseas. These acquisitions, investments and strategic relationships, may not necessarily contribute to our profitability and may divert the attention of Management or require us to assume high levels of debt or contingent liabilities, as part of such transactions. In addition, we could experience difficulty in combining operations and

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cultures and may not realize the anticipated synergies or efficiencies from such transactions. These difficulties could disrupt our ongoing business, distract Management and employees and increase our expenses.

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

We have experienced high growth in recent years and expect our businesses to continue to grow significantly, including internationally. Although we plan to continue to expand our scale of operations, we may not grow at a rate comparable to our growth rate in the past. Even then, we expect our future growth to place significant demands on Management and operations and require us to continuously evolve and improve our financial, operation and other internal controls across the organization. In particular, continued expansion increases the challenges involved in:

• maintaining high levels of project control and management, and client satisfaction;

• recruiting, training and retaining sufficient skilled management and technical and marketing personnel;

• adhering to health, safety and environment and quality and process execution standards that meet client expectations;

• operating in jurisdictions where we have limited experience;

• funding ongoing operations and future growth;

• preserving a uniform culture, values and work environment in operations within and outside India; and

• developing and improving our internal administrative systems, particularly our financial, operation and other internal control systems.

There can be no assurance that we will not suffer from capital constraints, operational difficulties or difficulties in expanding existing business and operations and training an increasing number of personnel to manage and operate the expanded business. In addition, there can be no assurance that our expansion plans will not adversely affect our existing operations. Any inability to manage our growth may have an adverse effect on our business and results of operations.

In addition, the projects undertaken by us are increasing in scale and complexity. We must continue to improve our project management system and supporting infrastructure, such as our information technology and human resources systems and training programmes, in order to ensure that we will be able to continue to successfully execute large, complex projects on a timely basis. There can be no assurance that we will be able to improve our project

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management system and supporting infrastructure at a rate commensurate with the increase in size and complexity of the projects that we undertake, and any resulting impairment in our project management and execution capabilities may have a material adverse effect on our business, financial condition, results of operations and future prospects.

We may not be successful in implementing our strategies.

The success of our business will depend greatly on our ability to implement our business and strategies effectively. See "Business–Our Strategies." Even if we have successfully executed our business strategies in the past, there can be no assurance that we will be able to execute our strategies on time and within the estimated budget, or that we will meet the expectations of targeted customers. We expect our strategies to place significant demands on our management and other resources and require us to continue developing and improving our financial, operating and other internal controls. Our inability to manage our business and strategies could have an adverse effect on our business, financial condition and profitability.

We have high working capital and capital expenditure requirements. If we experience insufficient cash flows or are unable to borrow funds to meet working capital, capital expenditure and other requirements, there may be an adverse effect on our results of operations.

Our business requires a significant amount of working capital and capital expenditures. Significant amounts of working capital could be required to finance the purchase of materials and the performance of engineering, construction and other work on projects before progress payments are received from clients. Significant amounts of capital expenditures are required to purchase, maintain and update plant, warehouses and equipment that are important to our provision of products and services in our businesses. Generally, payments from clients are linked to completion milestones or are made monthly, and are spread out over the execution period of the contract. Consequently, there could be situations where the total funds available may not be sufficient to fulfill our commitments, and hence we may need to incur additional indebtedness in the future or utilize cash flows from operations and other activities to satisfy our working capital and capital expenditure needs. If we experience insufficient cash flows or are unable to borrow funds on a timely basis or at all to meet working capital, capital expenditure and other requirements, there may be an adverse effect on our results of operations.

Our working capital requirements may increase to the extent that payment terms in our contracts include reduced advance payments, retention monies, back-ended payments, or are otherwise less favorable to us. Our working capital and capital expenditure requirements have increased in recent years, because we have had to advance funds to complete projects and as a result of significant growth in our operations. All of these factors may result, or have resulted, in an increase in the amount of our receivables and short-term borrowings.

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Continued increases in working capital and capital expenditure requirements may have an adverse effect on our financial condition and results of operations.

It is customary in the industries in which we and certain of our subsidiaries operate to provide letters of credit, bank guarantees or performance bonds in favor of clients to secure obligations under our contracts. If we are unable to provide sufficient collateral to secure the letters of credit, bank guarantees or performance bonds, our ability to enter into new contracts could be limited. Providing security to obtain letters of credit, bank guarantees and performance bonds increases our working capital needs and limits our ability to provide new bonds, guarantees and letters of credit, and to repatriate funds or pay dividends. We may not be able to continue obtaining new letters of credit, bank guarantees, and performance bonds in sufficient quantities to meet our business requirements.

Our Company has delayed in creation of security over our secured redeemable non-convertible debentures which could trigger a cross-default and/or a cross-acceleration under our other financing documents

Our Company has issued secured redeemable non-convertible debentures ("NCDs") having a face value of Rs.1 million each, collectively aggregating to Rs.700 million, which were to be secured in favor of the trustees to the NCD holders within three months from the date of allotment of the NCDs (i.e. July 15, 2009). However, as of the date of this Preliminary Placement Document, our Company has not created any security over the NCDs on account of which, our Company may be required to pay interest at the rate of 2% per annum over and above the coupon rate applicable to the outstanding NCDs (i.e. 9.55% per annum). In addition, our Company has not delivered the NCD certificates to the NCD holders within the period prescribed under the Companies Act.

While our Company has requested the NCD holders for an extension of time for creation of security until May 31, 2010, and has filed an application before the Company Law Board, Mumbai on April 15, 2010 for an extension of time for delivery of the NCD certificates by a period of nine months (i.e. up to July 15, 2010), we cannot assure you that the NCD holders will not choose to enforce their rights to the penal interest specified above or that the penalties prescribed under the Companies Act will not be imposed on us. In addition, a default in terms of the creation of security on the NCDs could trigger a cross default under our other debt arrangements in addition to penalties and acceleration of amounts due under such instrument.

Calls on outstanding guarantees or drawdowns on letters of credit issued in relation to any one of our projects could adversely affect our financial condition.

Almost all of our EPC and oil and gas pipeline projects and JMC's civil contracting projects are covered by advance payment guarantees, bid guarantees, retention money guarantees or letters of credit issued by banks and other financial institutions. Some of these guarantees and

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letters of credit are substantial. A call on one or more of these guarantees or drawdown on letters of credit could adversely affect our banking relationships and financial results. As of December 31, 2009, we had a principal amount of Rs.25.9 billion outstanding under our letters of credit and bank guarantees.

Our substantial variable rate indebtedness may adversely affect our profitability.

As of December 31, 2009, Rs.6,814.5 million, or 81.8% of KPTL's total indebtedness, consisted of variable rate debt. Increases in interest rates on our variable rate debt may increase our financing costs. Our term loans and working capital facilities denominated in rupees, as well as in foreign currencies, have variable interest rates linked to LIBOR and other bank lending rates. Such bank lending rates have increased recently and these and any further increases would increase our financing costs and may adversely affect our profitability.

The agreements and instruments governing our existing indebtedness and the agreements we expect to enter into governing our future debt contain and will contain restrictions and limitations that could significantly impact our ability to operate our business.

We are subject to risks normally associated with debt financing. The agreements and instruments governing our existing indebtedness and the agreements we expect to enter into governing our future debt contain and may contain restrictions and limitations, such as restrictions on issuance of new Equity Shares, change in control, incurring further indebtedness, creating further encumbrances on our assets, disposing of our assets, effecting any scheme of amalgamation or restructuring, altering our capital structure, materially changing our shareholding, undertaking guarantee obligations, withdrawing monies brought in by our Promoters, partners, relatives and friends or Directors, declaring dividends or incurring capital expenditures beyond certain limits. In addition, some of these borrowings may contain financial covenants. Under the terms of some of these agreements, lenders may also have the right to nominate Directors on our board. We cannot assure you that we will be able to comply with these financial or other covenants or that we will be able to obtain the consents necessary to take the actions we believe are necessary to operate and grow our business.

A default under one debt instrument could lead to a termination which may also trigger cross-defaults under our other debt instruments in addition to penalties and acceleration of amounts due under such instrument. An event of default under any debt instrument, if not cured or waived, could have an adverse effect on our business, financial condition and results of operations.

The Company will be controlled by its Promoters as long as they own a majority of the Equity Shares, and the other shareholders will be unable to affect the outcome of shareholder voting during such time.

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As of March 31, 2010 the Promoters, including the promoter group, owned approximately 63.7% of the issued and outstanding equity share capital of the Company and will own approximately [●]% immediately following this Issue. As a result, the Promoters exercise significant control over most matters requiring approval by shareholders, including the ability to appoint the majority of the members of the Board, in accordance with the Companies Act and the Articles of Association of the Company, and significant corporate transaction. This control could delay, defer or prevent a change in control, impede a merger, consolidation, takeover or other business combination involving us, or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company even if that was in the best interests of the Company. The interests of the Promoters may be different from the interests of the other investors, and you may not agree with actions the Promoters may take. Further, the extent of the Promoters' shareholding in the Company may result in delay or prevention of a change of management or control of the Company, even if such a transaction may ultimately be beneficial to the other shareholders.

The Company has entered into, and will continue to enter into, related party transactions

The Company has entered into a shareholders' agreement with respect to its interests in JMC Projects (India) Limited ("JMC"). The Company has also provided loans to its affiliates JMC, Shree Shubham Logistics Limited ("SSLL"), Energy Link and Amber. Additionally, the Company has a lease agreement with Kalpataru Properties Private Limited for use of its facilities in Mumbai. The Company has also granted rights to use its space for telecommunication towers and hoarding rights in Kalpataru Habitat to Durable Trading Company Private Limited, and promotion rights in the same to Yurgdharm Real Estate Developers Private Limited. While we believe that all transactions have been conducted on an arm's-length basis, there can be no assurance that the Company could not have achieved more favorable terms had such transactions not been entered into with related parties.

Furthermore, certain decisions concerning our operations or financial structure may present conflicts of interest among our Promoters, Directors, executive officers and other shareholders. Transactions with our affiliates could result in conflicting interests. Our Promoters, Directors and executive officers may have an interest in pursuing transactions that, in their judgment, enhance the value of their equity investment, even though such transactions may involve risks to other shareholders. We cannot assure you that we will be able to address these or other conflicts of interest in an impartial manner.

We have a number of contingent liabilities and our profitability could be adversely affected if any of those contingent liabilities materializes.

We have certain contingent liabilities and our financial condition and profitability could be adversely affected if any of these contingent liabilities materialize. Our contingent liabilities as of December 31, 2009 aggregated Rs.3,827.2 million (U.S.$82.0 million) on a consolidated basis and primarily consist of, but are not limited to, guarantees given in respect

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of performance of contracts of joint ventures, guarantees given to banks and amounts relating to disputed show cause notices. If any of these contingent liabilities materialize, our profitability may be adversely affected.

Risks related to our business in India

The extent and reliability of Indian infrastructure could adversely affect our results of operations and financial condition.

India's physical infrastructure is less developed than that of many developed nations. Any congestion or disruption in our port, rail and road networks, electricity grid, communication systems or any other public facility could disrupt our normal business activity. Any deterioration of India's physical infrastructure would harm the national economy, disrupt the transportation of goods and supplies, and add costs to doing business in India. These problems could interrupt our business operations, which could adversely affect our business, prospects, financial condition and results of operations.

Instability in financial markets could materially and adversely affect our results of operations and financial condition.

The Indian economy and financial markets are significantly influenced by worldwide economic, financial and market conditions. Any financial turmoil, especially in the United States of America, Europe or China, may have a negative impact on the Indian economy. Although economic conditions differ in each country, investors' reactions to any significant developments in one country can have adverse effects on the financial and market conditions in other countries. A loss in investor confidence in the financial systems, particularly in other emerging markets, may cause increased volatility in Indian financial markets.

The current global financial turmoil, an outcome of the sub-prime mortgage crisis, which originated in the United States of America, has led to a loss of investor confidence in worldwide financial markets. Indian financial markets have also experienced the contagion effect of the global financial turmoil. Any prolonged financial crisis may have an adverse impact on the Indian economy, which could adversely affect our business, prospects, financial condition and results of operations price of the Equity Shares.

Terrorist attacks, civil disturbances and regional conflicts as well as natural calamities in India and the rest of the world may have an adverse effect on our business and on the market for securities in India.

Certain events that are beyond our control, such as terrorist attacks and other acts of violence or war, including those involving India, the United Kingdom, the United States or other countries, may adversely affect worldwide financial markets and could potentially lead to a severe economic recession, which could adversely affect our business, results of operations, financial condition and cash flows, and more generally, any of these events could lower confidence in India's economy. Southern Asia has, from time to time, experienced instances

45

of civil unrest and political tensions and hostilities among neighboring countries. Political tensions could create a perception that there is a risk of disruption of services provided by India based companies, which could have an adverse effect on our business, future financial performance and price of the Equity Shares. Furthermore, if India were to become engaged in armed hostilities, particularly hostilities that are protracted or involve the threat or use of nuclear weapons, our operations might be significantly affected.

India has from time to time experienced social and civil unrest and hostilities, including riots, regional conflicts and other acts of violence. Events of this nature in the future could have a material adverse effect on our ability to develop our business. This could adversely affect our business, prospects, financial condition and results of operations.

In addition, India has experienced floods, earthquakes, tsunamis, cyclones and droughts in recent years. Such natural catastrophes could disrupt our operations and production and construction capabilities. We cannot assure prospective investors that such events will not occur in the future or that our results of operations and financial condition will not be adversely affected.

Political instability or changes in the Government could impact the liberalization of the Indian economy and adversely affect economic conditions in India generally.

The Central Government has traditionally exercised and continues to exercise influence over many aspects of the economy. Our business and the market price and liquidity of the Equity Shares may be affected by interest rates, changes in Government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India. The Central Government has in recent years sought to implement economic reforms and the current government has implemented policies and undertaken initiatives that continue the economic liberalization policies pursued by previous governments. There can be no assurance that liberalization policies will continue in the future. The rate of economic liberalization could change, and specific laws and policies affecting foreign investment and other matters affecting investment in our securities could change as well. Any significant change in such liberalization and deregulation policies could adversely affect business and economic conditions in India, generally, and our business, prospects, financial condition and results of operations, in particular.

Government regulation of foreign ownership of Indian securities may have an adverse effect on the price of the Equity Shares.

Foreign ownership of Indian securities is subject to Government regulation. Under foreign exchange regulations currently in effect in India, the RBI must approve the sale of the Equity Shares from a non-resident of India to a resident of India if the sale is not through a Stock Exchange and does not meet the requirements of the RBI Circular dated October 4, 2004, as amended. The RBI must approve the conversion of the Rupee proceeds from any such sale

46

into foreign currency and repatriation of that foreign currency from India unless the sale is made on a stock exchange in India through a stock broker at the market price. As provided in the foreign exchange controls currently in effect in India, the RBI will approve the price at which the Equity Shares are transferred based on a specified formula, and a higher price per share may not be permitted. Required approval from the RBI or any other government agency may not be obtained on terms favorable to a non-resident investor in a timely manner or at all. Because of possible delays in obtaining requisite approvals, investors in the Equity Shares may be prevented from realizing gains during periods of price increases or limiting losses during periods of price declines.

Any downgrading of India's debt rating by an international rating agency could have a negative impact on our business.

Any adverse revisions to India's credit ratings for domestic and international debt by international rating agencies may adversely impact our ability to raise additional financing, and the interest rates and other commercial terms at which such additional financing may be available. This could have an adverse effect on our business and future financial performance, our ability to obtain financing for capital expenditures and the trading price of the Equity Shares.

Our growth is dependent on the Indian economy.

Our performance and the growth of our business are dependent on the performance of the Indian economy. India's economy could be adversely affected by a general rise in interest rates, currency exchange rates, adverse conditions affecting food and agriculture, commodity and electricity prices or various other factors. A slowdown in the Indian economy could adversely affect our business, including our ability to implement our strategies. The Indian economy is currently in a state of transition and it is difficult to predict the impact of certain fundamental economic changes upon our business. Conditions outside India, such as slowdowns in the economic growth of other countries or increases in the price of oil, have an impact on the growth of the Indian economy, and government policy may change in response to such conditions. While recent governments have been keen on encouraging private participation in the industrial sector, any adverse change in policy could result in a slowdown of the Indian economy. Additionally, these policies will need continued support from stable regulatory regimes that stimulate and encourage the investment of private capital into industrial development. Any downturn in the macroeconomic environment in India could adversely affect the price of the Equity Shares, our business, prospects, financial condition and results of operations.

A decline in India's foreign exchange reserves may affect liquidity and interest rates in the Indian economy, which could adversely affect us.

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According to a report published by Reuters and released by the RBI, India’s foreign exchange reserves totaled US$252 billion as of March 31, 2009. A decline in this reserve could adversely affect the value of the Indian rupee and could result in reduced liquidity and higher interest rates, which, in turn, could adversely affect our future financial performance and the market price of the Equity Shares.

Our ability to raise foreign capital may be constrained by Indian law.

As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies. Such regulatory restrictions limit our financing sources and hence could constrain our ability to obtain financing on competitive terms and refinance existing indebtedness. In addition, we cannot assure you that the required approvals will be granted to us without onerous conditions, if at all. Limitations on raising foreign debt may have an adverse effect on our business growth, financial condition and results of operations.

There are provisions in Indian law that may delay, deter or prevent a future takeover or change in control. Although these provisions have been formulated to ensure that interests of investors/shareholders are protected, these provisions may also discourage a third party from attempting to take control over us. Consequently, even if a potential takeover would result in the purchase of the Equity Shares at a premium to their market price or would otherwise be beneficial to our stakeholders, it is possible that such a takeover would not be attempted or consummated because of Indian takeover regulations.

The Indian economy has had a sustained period of high inflation

The majority of our direct costs are incurred in India. India has experienced very high levels of inflation during the period between 2008 and 2009. In the event of a high rate of inflation, our costs, such as salaries, travel costs and related allowances, which are typically linked to general price levels, may increase. However, we may not be able to increase the prices set in our fixed-price contracts agreed for the provision of our products and services sufficiently to preserve operating margins. Accordingly, high rates of inflation in India could increase our employee costs and decrease our operating margins, which could have an adverse effect on our results of operations.

An outbreak of an infectious disease or any other serious public health concerns in Asia or elsewhere could have an adverse effect on our business and results of operations.

The outbreak of an infectious disease or any other serious public health concern such as swine influenza around the world could have a negative impact on economies, financial markets and business activities worldwide, which could have a material adverse effect on our business. Although, we have not been adversely affected by such outbreaks, we can give no assurance that a future outbreak of an infectious disease among humans or animals or any other serious public health concern will not adversely affect our business, prospects, financial condition and results of operations.

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Investors may have difficulty enforcing foreign judgments against us or our Management.

We are a limited liability company incorporated under the laws of India. All of the Directors and executive officers named herein are residents of India and a substantial portion of our assets and all such persons are located in India. As a result, it may not be possible for investors to effect service of process upon us or such persons outside India or enforce judgments obtained against such parties outside India. See "Enforcement of Civil Liberties".

There may be less information available about companies listed on Indian securities markets compared with information that would be available if we were listed on securities markets in developed countries.

There may be differences between the level of regulation and monitoring of the Indian securities markets and the activities of investors, brokers and other participants and that of the markets in the United States and other more developed countries. SEBI is responsible for approving and improving disclosure and other regulatory standards for the Indian securities markets. SEBI has issued regulations and guidelines on disclosure requirements, insider trading and other matters. There may, however, be less publicly available information about companies listed on an Indian securities market compared with information that would be available if that company was listed on a securities market in a developed country.

Rights of shareholders under Indian law may be more limited than under the laws of other jurisdictions.

Our Articles of Association and Indian law govern our corporate affairs. Legal principles related to these matters and the validity of corporate procedures, directors' fiduciary duties and liabilities and shareholders' rights may differ from those that would apply to a company in another jurisdiction. Shareholders' rights under Indian law may not be as extensive as shareholders' rights under the laws of other countries or jurisdictions. Investors may have more difficulty in asserting their rights under the laws of other countries or jurisdictions.

We may not hold, or may not be able to prove that we hold, good title to our real estate assets.

The difficulty of obtaining title guarantees in India means that title records provide only for presumptive rather than guaranteed title. The original title to lands may often be fragmented, and land may have multiple owners. Certain properties may have irregularities of title, such as non-execution or non-registration of conveyance deeds and inadequate stamping and may be subject to encumbrances and litigation of which we may not be aware.

We may not be able to assess or identify all risks and liabilities associated with our properties, such as faulty or disputed title, unregistered encumbrances or adverse possession rights, improperly executed, unregistered or insufficiently stamped conveyance instruments in the property’s chain of title, ownership claims of family members of prior owners, or other defects that we may not be aware of. This is because of the various practical difficulties in

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verifying the title of a prospective seller or lessor of property. This is, in part, because the process of updating land records may be time consuming and result in errors and inaccuracy. Further, multiple property registries exist in India, which makes verification of title difficult.

Indian law recognizes the ability of persons to effectuate a valid mortgage on an unregistered basis by the physical delivery of original title documents to a lender. Adverse possession under Indian law also arises upon 12 years of occupation to valid ownership rights as against all parties, including Government entities that are landowners, without the requirement of registration of ownership rights by the adverse possessor. In addition, Indian law recognizes the concept of a Hindu undivided family, whereby all family members jointly own land and must consent to its transfer, including minor children, without whose consent a land transfer may be challenged by such non-consenting family member. Our title to land may be defective as a result of a failure on our part, or on the part of a prior transferee, to obtain the consent of all such persons. As each transfer in a chain of title may be subject to these and other defects, our title over land may be subject to defects of which we are not aware.

As a result, any acquisition of land made by us in reliance on our assessment of such risks is subject to risks and potential liabilities arising from the inaccuracy of the information upon which our risk assessment is based.

Additionally, title insurance is not commercially available in India to guarantee title in respect of land. This means that we are unable to insure against a risk of losses arising from the defects of title mentioned above, and such losses may have an adverse effect on our businesses, financial condition and results of operations.

Legal disputes in respect of land title can take several years and considerable expense to resolve if they become the subject of court proceedings and their outcome can be uncertain. Under Indian law, a title document is generally not effective, and may not be admitted as evidence in court, unless it has been registered with the applicable land registry and applicable stamp duty has been paid in respect of such title document. The failure of prior landowners to comply with such requirements may result in our failing to have acquired valid title with respect to that land. If we are unable to resolve such disputes, we may lose our interest in the land and we may have to make payments to the claimants as compensation.

Any failure to obtain good title to a particular plot of land may materially prejudice the success of a development and may in turn have a material adverse effect on our businesses, financial condition and results of operations.

Risks related to the Equity Shares and this Issue

There may not be an active or liquid market for the Equity Shares, which may cause the price of the Equity Shares to fall and may limit your ability to sell the Equity Shares.

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The Issue Price of the Equity Shares in this Issue will be determined by the Company in consultation with the Global Coordinators and Bookrunners based on the Bids received in compliance with Chapter VIII of the SEBI Regulations, and it may not necessarily be indicative of the market price of the Equity Shares after this Issue is complete. You may be unable to resell the Equity Shares at or above the Issue Price and, as a result, you may lose all or part of your investment. The price at which the Equity Shares will trade after this Issue will be determined by the marketplace and may be influenced by many factors, including:

• our financial results and the financial results of the companies in the businesses we operate in;

• the history of, and the prospects for, our business and the sectors and industries in which we compete;

• an assessment of our management, our past and present operations, and the prospects for, and timing of, our future revenues and cost structures;

• the present state of our development; and

• the valuation of publicly traded companies that are engaged in business activities similar to ours.

In addition, the Indian stock market has from time to time experienced significant price and volume fluctuations that have affected the market prices for the securities of Indian companies. As a result, investors in the Equity Shares may experience a decrease in the value of the Equity Shares regardless of our operating performance or prospects.

The market price of the Equity Shares may fluctuate due to the volatility of the Indian securities market.

The Indian securities markets are smaller and can be more volatile than securities markets in more developed economies. The Indian Stock Exchanges have in the past experienced substantial fluctuations in the prices of listed securities and the price of the Equity Shares has been volatile. For example, our stock price on the BSE ranged from a low of Rs.327.0 on April 1, 2009 to a high of Rs.1,226.60 on January 20, 2010. As at February 23, 2010, the trading day immediately following the day on which the resolution of the Board to approve the Issue was adopted, the closing price of the Equity Shares on the BSE and the NSE was Rs.1,046.30 and Rs.1,039.85, respectively.

The Indian Stock Exchanges have experienced temporary exchange closures, broker defaults, settlement delays and strikes by brokerage firm employees. In addition, the governing bodies of the Indian stock exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements. Furthermore, from time to time, disputes have occurred between listed companies and stock exchanges and

51

other regulatory bodies, which in some cases may have had a negative effect on market sentiment.

The price of the Equity Shares may be highly volatile after the Issue.

The price of the Equity Shares on the Indian Stock Exchanges may fluctuate after this Issue as a result of several factors, including: volatility in the Indian and global securities market; operations and our performance; performance of our competitors and the perception in the market about investments in the EPC sector; adverse media reports on us or the Indian EPC sector; changes in the estimates of our performance or recommendations by financial analysts; significant developments in India's economic liberalization and deregulation policies; and significant developments in India's fiscal and environmental regulations. There can be no assurance that the prices at which the Equity Shares are admitted to trading will correspond to the prices at which the Equity Shares have traded historically or will trade in the market subsequently.

Future issues or sales of the Equity Shares may significantly affect the trading price of the Equity Shares.

The future issue of Equity Shares by the Company or the disposal of Equity Shares by any of the Company's major shareholders or the perception that such issuance or sales may occur may significantly affect the trading price of the Equity Shares. The Company, its Promoters and JMC have, for the duration of the Lock-up Period, the Promoter Lock-up Period and the JMC Lock-up Period, respectively, agreed, subject to certain exemptions, not to, amongst other things, issue, offer, sell, contract to sell, pledge or otherwise transfer or dispose of any Equity Shares, Promoter Shares or JMC Shares, respectively, without, in each case, the prior written consent of the Global Coordinators and Bookrunners. Subject to these restrictions, no assurance may be given that the Company will not issue Equity Shares or that such shareholders will not dispose of, encumber or pledge the Promoter Shares or the JMC Shares, respectively, in the future.

There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a shareholder's ability to sell, or the price at which it can sell, Equity Shares at a particular point in time.

We are subject to a daily circuit breaker imposed by all stock exchanges in India which does not allow transactions beyond certain volatility in the price of the Equity Shares. This circuit breaker operates independently of the index based market wide circuit breakers generally imposed by SEBI on Indian Stock Exchanges. The percentage limits on our circuit breakers are set by the NSE and the BSE. Neither the NSE not the BSE inform us of the percentage limit of such circuit breakers and may change it without our knowledge. This circuit breaker effectively limits the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, there can be no assurance regarding your ability to sell the

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Equity Shares or the price at which you may be able to sell the Equity Shares at a particular point in time.

There is no guarantee that the Equity Shares will be listed on the BSE and the NSE in a timely manner or at all, and any trading closures at the BSE and the NSE may adversely affect the trading price of the Equity Shares.

In accordance with Indian law and practice, permission for listing and trading of the Equity Shares issued pursuant to the Issue will not be granted until after those Equity Shares have been issued and allotted. Approval will require all other relevant documents authorizing the issuing of Equity Shares to be submitted. There could be a failure or delay in listing the Equity Shares on the BSE and the NSE. Any failure or delay in obtaining the approval would restrict your ability to dispose of the Equity Shares.

Significant differences exist between Indian GAAP and other accounting principles with which investors may be more familiar.

As stated in the reports of our independent auditors included in this Preliminary Placement Document, our financial statements are prepared and presented in conformity with Indian GAAP, consistently applied during the periods stated and no attempt has been made to reconcile any of the information given in this Preliminary Placement Document to any other principles or to base it on any other standards. Indian GAAP differs from accounting principles and auditing standards with which prospective investors may be familiar in other countries.

We do not provide a reconciliation of our financial statements to IAS/IFRS or U.S. GAAP or a summary of principal differences between IAS/IFRS and U.S. GAAP relevant to our business. Furthermore, we have not quantified or identified the impact of the differences between Indian GAAP and IAS/IFRS or between Indian GAAP and U.S. GAAP as applied to our financial statements. As there are significant differences between and IAS/IFRS and between Indian GAAP and U.S. GAAP, there may be substantial differences in our results of operations, cash flows and financial position if we were to prepare our financial statements in accordance with and IAS/IFRS or U.S. GAAP instead of Indian GAAP. The significant accounting policies applied in the preparation of our Indian GAAP financial statements are as set forth in notes to our financial statements included in this Preliminary Placement Document. Prospective investors should review the accounting policies applied in the preparation of our financial statements, and consult their own professional advisors for an understanding of the differences between Indian GAAP and IAS/IFRS and between Indian GAAP and U.S. GAAP and how they might affect the financial information contained in this Preliminary Placement Document.

You may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.

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Sale of Equity Shares by any holder may give rise to tax liability in India, as discussed in the section titled "Taxation".

The Equity Shares in the Issue are subject to restrictions on transfers.

Pursuant to the SEBI Regulations, for a period of 12 months from the date of the issue of Equity Shares in the Issue, QIBs subscribing to the Equity Shares in the Issue may only sell their Equity Shares on the NSE or the BSE and may not enter into any off market trading in respect of these Equity Shares. We cannot be certain that these restrictions will not have an impact on the price and liquidity of the Equity Shares.

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MARKET PRICE INFORMATION

As of March 31, 2010, 26,500,000 of Equity Shares were issued and outstanding.

The Equity Shares are listed on the BSE and the NSE. As the Equity Shares are actively traded on the BSE and the NSE, the stock market data has been given separately for each of these Stock Exchanges.

The high and low closing prices recorded on the BSE and the NSE and the number of Equity Shares traded on the days such high and low prices were recorded, for fiscal year 2008, 2009 and 2010, are stated below:

BSE

Year ending

March 31 High (Rs.) Date of High

Volume on date of high

(no. of shares) Low (Rs.) Date of Low

Volume on date of low

(no. of shares)

Average price for the

year (Rs.) 2008 2,012.6 November 19, 2007 4,233 1,038.55 March 25, 2008 26,378 1,478.23

2009 1,148.55 April 2, 2008 61,630 227.5 December 8, 2008 75,090 628.65

2010 1,226.60 January 20, 2010 12,779 327.0 April 1, 2009 15,031 849.02

Source: http://www.bseindia.com. High and low prices are based on the daily closing prices

NSE

Year ending

March 31 High (Rs.) Date of High

Volume on date of high

(no. of shares) Low (Rs.) Date of Low

Volume on date of low

(no. of shares)

Average price for the

year (Rs.) 2008 2,003.9 November 19, 2007 6,007 1,015.5 March 25, 2008 16,222 1,475.77

2009 1,120.85 April 2,2008 94,955 227.45 March 6, 2009 12,819 625.32

2010 1,224.05 January 20, 2010 41,822 329.35 April 1, 2009 68,156 848.94

Source: http://www.nse-india.com. High and low prices are based on the daily closing prices

The high and low closing prices recorded on the BSE and the NSE and the number of Equity Shares traded on the days such high and low prices were recorded, for during the last six months, are stated below:

BSE

Month, Year High (Rs.) Date of High

Volume on date of

high (no. of shares) Low (Rs.) Date of Low

Volume on date of low (no. of shares)

Average price for the month (Rs.)

March 2010............. 1,074.0 March 3, 2010 24,949 1,004.05 March 17, 2010 4,902 1,038.54

February 2010 ........ 1,159.1 February 1, 2010 10,304 990.0 February 26, 2010 41,977 1,075.33

January 2010 .......... 1,226.6 January 20, 2010 12,779 1,042.25 January 29, 2010 4,386 1,157.17

December 2009 ...... 1,129.4 December 22, 2009 13,549 920.85 December 1, 2009 1,311 1,032.69

November 2009 ...... 941.45 November 18, 2009 2,855 885.75 November 27, 2009 1,991 917.78

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October 2009 .......... 1,004.3 October 17, 2009 50,519 831.55 October 6, 2009 5,377 897.14


NSE

Month, Year High (Rs.) Date of High

Volume on date of

high (no. of shares) Low (Rs.) Date of Low

Volume on date of low (no. of shares)

Average price for the month (Rs.)

March 2010........... 1,070.25 March 2, 2010 143,832 1,003.8 March 17, 2010 18,571 1,037.27

February 2010 ...... 1,154.1 February 1, 2010 33,076 997 February 26, 2010 113,551 1,074.75

January 2010 ........ 1,224.05 January 20, 2010 41,822 1,033.35 January 28, 2010 15,198 1,155.42

December 2009 .... 1,126.95 December 22, 2009

37,015 917.55 December 1, 2009 27,289 1,032.07

November 2009 .... 954.3 November 3, 2009 101,133 887.5 November 27, 2009 6,118 917.95

October 2009 ........ 1,001.6 October 17, 2009 84,174 828.5 October 6, 2009 18,042 896.01


Details of the volume of business transacted during the last six months on the BSE and NSE:

Period BSE NSE March 2010.......................................................................... 182,354 377,466 February 2010 ..................................................................... 140,829 353,980 January 2010 ....................................................................... 334,177 466,722 December 2009 ................................................................... 636,398 1,142,306 November 2009 ................................................................... 136,056 303,299 October 2009 ....................................................................... 308,272 931,203 Source: http://www.bseindia.com and http://www.nse-india.com

The following table provides certain market price and other information of the Equity Shares for February 23, 2010, the first working day immediately following the Board meeting approving the Issue.

BSE (Rs. except Volume)

NSE (Rs. except Volume)

Open High Low Close Volume Open High Low Close Volume 1,046.10 1,065.00 1,031.05 1,046.30 37,118 1,051.00 1,070.00 1,028.00 1,039.85 2,359

Source: http://www.bseindia.com and http://www.nse-india.com

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EXCHANGE RATES

Fluctuations in the exchange rate between the Rupee and the US dollar will affect the US dollar equivalent of the Rupee price of the Equity Shares on the Stock Exchanges and, as a result, are likely to affect the market price of the Equity Shares. This Preliminary Placement Document contains translations of certain Rupee amounts into US dollar amounts at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the Rupee amounts represent such US dollar amounts or could be, or could have been, converted into US dollars at the rates indicated or at all.

The following table sets forth, for the periods indicated, certain information with respect to the exchange rate between the Rupee and the US dollar (in Rupees per US dollar) for the periods indicated.

Exchange Rate − Rs. Per US$ Period End Average High Low Year ended March 31, 2008 ................................................... 39.97 40.24 43.15 39.27 Year ended March 31, 2009 ................................................... 50.95 45.87 52.06 39.89 Year ended March 31, 2010 ................................................... 45.14 47.42 50.53 44.94 Month Ended: October 31, 2009 .................................................................... 46.96 46.72 47.86 45.91 November 30, 2009 ................................................................ 46.48 46.57 47.13 46.09 December 31, 2009 ................................................................ 46.68 46.63 46.85 46.22 January 31, 2010 .................................................................... 46.37 45.96 46.65 45.36 February 28, 2010 .................................................................. 46.23 46.33 46.81 46.02 March 31, 2010 ...................................................................... 45.14 45.50 46.02 44.94 Source: RBI

Unless otherwise indicated, all translations from Rupees to US dollars as of March 31, 2009 have been made on the basis of the RBI reference rate of Rs.50.95 = US$1.00 and all translations from Rupees to US dollars as of December 31, 2009 have been made on the basis of the RBI reference rate of Rs.46.68 = US$1.00. No representation is made that the Rupee amounts actually represent such US dollar amounts or could have been or could be converted into US dollars at the rates indicated, any other rate or at all.

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USE OF PROCEEDS

The total proceeds of the Issue will be Rs.[●] million. After deducting the Issue expenses of approximately Rs.[●] million, the net proceeds of the Issue will be approximately Rs.[●] million.

Purpose of the Issue

Subject to compliance with applicable laws and regulations, we intend to use the net proceeds received from the Issue for capital expenditure, expansion of manufacturing capacity (transmission line towers), long-term investment in PPP, BOT, BOOT and BOOM projects, development of EPC services, further investment in existing divisions and subsidiaries, working capital and such other purposes as may be permissible under applicable laws and government policies, including strategic initiatives such as investment and/or acquisitions. As of the date of this Preliminary Placement Document, we have not entered into any letter of intent or any definitive commitment or agreement for any material acquisition or strategic relationship. Additionally, we have not identified a specified project or end use for which the funds shall be utilized.

In accordance with the policies set up by the Board of Directors, Management will have flexibility in deploying the proceeds received by us from the Issue. Pending utilization for the purpose, described above, we intend to temporarily invest funds in creditworthy instruments, including money market mutual funds and deposits with banks. Such investments would be in accordance with the investment policies approved by the Board from time to time.

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CAPITALIZATION

The following table shows as at March 31, 2009:

• Our actual capitalization; and

• Our adjusted capitalization, to give effect to the issuance and Allotment of Equity Shares by us in this Issue at a price of Rs.[●] per Equity Share.

This table should be read in conjunction with our Audited Consolidated Financial Statements as of and for the year ended March 31, 2009, the related notes and "Management’s Discussion and Analysis of Financial Condition and Results of Operations", "Risk Factors" and the other financial information contained elsewhere in this Preliminary Placement Document.

As at March 31, 2009

As Adjusted for the Issue Actual (Rs. millions) (US$ millions) (Rs. millions) (US$ millions)

Total debt .................................................................................... 9,451.4 185.5 [●] [●] Shareholders’ funds Share capital ............................................................................... Shares par value Rs.10 each outstanding: ........................... 265.0 5.2 [●] [●] Reserves & surplus ..................................................................... 8,433.0 165.5 [●] [●] Total capitalization ..................................................................... 18,149.4 356.2 [●] [●]

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DIVIDEND POLICY

Under the Companies Act, unless the Board recommends the payment of a dividend, the shareholders at a general meeting have no power to declare any dividend. The shareholders at a general meeting may declare a lower, but not higher, rate of dividend than that recommended by the Board. Dividends are generally declared as a percentage of the par value of the Equity Shares. The dividend recommended by the Board and approved by the shareholders at a general meeting is distributed and paid to shareholders in proportion to the paid-up value of their Equity Shares as on the record date for which such dividend is payable. In addition, as is permitted by KPTL's Articles of Association, the Board may declare and pay interim dividends. Under the Companies Act, dividends can only be paid in cash to shareholders listed on the register of shareholders on the date which is specified as the "record date" or "book closure date". No shareholder is entitled to a dividend while any lien in respect of unpaid calls on any of such shareholder’s shares is outstanding.

KPTL distributed cash dividends on the Equity Shares in respect of the last three fiscal years. In fiscal 2007, KPTL paid a cash dividend on the Equity Shares totaling Rs.198.75 million. In fiscal 2008, KPTL paid a cash dividend on the Equity Shares totaling Rs.198.75 million, and in fiscal 2009 KPTL paid a cash dividend on the Equity Shares totaling Rs.198.75 million. The following table sets forth the aggregate number of outstanding shares entitled to dividends, as well as cash dividend per share paid on the Equity Shares during each of the fiscal years indicated:

Year ended March 31, 2009



Face Value of Equity Share* (Rs. per Equity Share) .............................. 10.0 10.0 10.0 Final Dividend on Equity Shares (Rs. millions) ...................................... 198.75 198.75 198.75Dividend per Equity Share (Rs.) .............................................................. 7.50 7.50 7.50Dividend Rate (%) .................................................................................... 75.00 75.00 75.00Dividend Tax (Rs. millions) ..................................................................... 33.78 33.78 33.78 Note: * On increased share capital of 26,500,000 Equity Shares, after the issuance of one bonus Equity Share for each Equity Share allotted

on April 24, 2006 and issuance of 4,777,000 Equity Shares through a QIP on September 7, 2006.

SEBI has, by way of a circular dated February 18, 2000 issued a directive that shares issued by companies should be pari passu in all respects including dividend entitlement.

Currently, KPTL pays a dividend distribution tax of 15.0%, a surcharge of 10.00% on the dividend distribution tax and an educational cess of 3.0% on both the tax and the surcharge. These taxes are not payable by the shareholders nor are they withheld or deducted from the dividend payments set forth above. See "Taxation" for a summary of certain Indian tax consequences of dividend distributions to holders and beneficial owners of the Equity Shares.

KPTL does not have a formal dividend policy. Dividend amounts are determined from year to year in accordance with the Board’s assessment of its earnings, cash flow, financial condition and other factors prevailing at the time, which amount is subject to shareholder

60

approval. The amounts paid as dividends in the past are not necessarily indicative of the dividend policy of the Company or of dividend amounts, if any, in the future.

61

SELECTED HISTORICAL FINANCIAL INFORMATION OF KPTL

The selected financial information as of and for the three years ended March 31, 2009 set forth below have been derived from KPTL's audited standalone financial statements and as of and for the nine-month periods ended December 31, 2009 and 2008 have been derived from KPTL's unaudited condensed interim financial statements, included elsewhere in this Preliminary Placement Document. The financial information included in this Preliminary Placement Document does not reflect our results of operations, financial position and cash flows for the future and our past operating results are no guarantee of our future operating performance. Our Audited Consolidated Financial Statements, KPTL's audited standalone financial statements and KPTL's unaudited condensed interim financial statements are prepared and presented in accordance with Indian GAAP. For a summary of our significant accounting policies and the basis of the presentation of our financial statements, refer to the notes to the Audited Consolidated Financial Statements included in this Preliminary Placement Document.

The selected financial and operational data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements included in this Preliminary Placement Document.

Profit and Loss Account

(Standalone) Year ended March 31,

(Standalone) Nine-months ended

December 31,

2009 2009 2008 2007 2009 2009 2008

(US$) (Rs.) (Rs.) (Rs.) (US$) (Rs.) (Rs.) (In millions, except share and per share data) Income: Sales & Services (Gross) ................

375.6 19,136.2 17,682.0 15,669.6 384.1 17,933.9 13,461.4

Less: Excise Duty ............................ 6.1 311.2 306.2 421.2 7.5 349.0 217.5 Sales & Services (Net) .................... 369.5 18,825.0 17,375.8 15,248.5 376.6 17,584.9 13,243.9 Other Income ................................... 6.0 307.6 214.9 124.7 5.6 264.9 240.1 Provision for Diminution in value of Investments reversed ....................... 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Increase (Decrease) in Stocks: - Transmission Division .................. 10.2 517.8 (110.7) 173.4 7.2 342.1 532.6 - Real Estate Division ...................... 0.0 0.0 (0.7) (0.6) 0.0 0.0 0.0 Total ................................................. 385.7 19,650.3 17,479.3 15,545.9 389.4 18,191.9 14,016.6 Expenditure: Material Cost ................................... 209.9 10,694.7 8,575.2 7,892.3 169.9 7,929.0 7,645.9 Employees’ Emoluments ................ 21.3 1,086.2 905.8 716.1 25.9 1,208.3 778.0 Manufacturing & Operating Expenses ..........................................

82.9 4,224.8 3,830.3 3,168.4 113.0 5,276.0 2,908.1

Administrative, Selling & Other Expenses ..........................................

21.8 1,109.7 1,413.4 1,001.7 25.4 1,190.7 839.9

Financial Expenses .......................... 20.7 1,055.9 521.0 433.3 16.9 784.7 712.4

62

Depreciation .................................... 5.4 273.6 218.5 168.1 5.9 273.9 197.4 Less: Transferred to Revaluation Reserve ............................................

0.0 0.5 0.5 0.5 0.0 0.3 0.3

Total ................................................. 362.0 18,444.5 15,463.8 13,379.4 357.0 16,662.3 13,081.3 Profit Before Tax ........................... 23.7 1,205.8 2,015.5 2,166.5 32.4 1,529.6 935.4 Provision for Taxation: Current Tax...................................... 4.3 219.0 479.6 536.3 8.1 378.6 183.0 Fringe Benefit Tax .......................... 0.2 11.9 10.2 16.9 0.0 0.0 10.8 Deferred Tax (Net) ......................... 0.6 30.8 26.2 18.4 0.4 20.3 29.3 0.0 Net Profit After Tax ...................... 18.5 944.1 1,499.5 1,595.0 23.9 1,130.7 712.3 Balance Brought Forward ............... 62.8 3,199.2 2,132.9 984.5 80.5 3,759.3 3,199.2 Less: Prior Year’s Adjustment ........ 0.0 (0.4) (0.7) (0.5) 0.0 (1.3) 0.0 Add: Prior Year’s Income tax ......... 0.0 (1.1) 0.0 (13.5) 0.0 (1.0) (1.1) Amount Available for Appropriation ................................

81.3 4,141.8 3,631.7 2,565.4 104.4 4,887.7 3,910.4

Appropriations: 0.0 Proposed Dividend .......................... 3.9 198.8 198.8 198.8 0.0 0.0 0.0 Add: Corporation Tax on Dividend ..........................................

0.7 33.8 33.8 33.8 0.0 0.0 0.0

Transfer to Debentures Redemption Reserve .......................

0.6 30.0 0.0 0.0 0.0 0.0 0.0

Transfer to General Reserve ........... 2.4 120.0 200.0 200.0 0.0 0.0 0.0 Balance Carried over to Balance Sheet ................................................

73.8 3,759.3 3,199.2 2,132.9 104.4 4,887.7 3,910.4

Total ................................................. 81.3 4,141.8 3,631.7 2,565.4 104.4 4,887.7 3,910.4 No. of Equity Shares at the end of the year ........................................ 26,500,000 26,500,000 26,500,000 26,500,000 26,500,000 26,500,000 26,500,000 Basic/diluted earning per Equity Share ................................................

0.7 35.6 56.6 65.3 0.9 42.7 26.9

Balance Sheet Data

(Standalone) As of March 31,

(Standalone) Nine-months ended as of December 31,

2009 2009 2008 2007 2009 2009 2008

(US$ millions)

(Rs. millions)

(Rs. millions)

(Rs. millions)

(US$ millions)

(Rs. millions)

(Rs. millions)

Sources of Funds: Share Capital ................................... 5.2 265.0 265.0 265.0 5.7 265.0 265.0 Reserves & Surplus ......................... 159.1 8,104.5 7,412.7 6,159.3 198.3 9,256.2 8,104.8 Total ................................................. 164.3 8,369.5 7,677.7 6,424.3 204.0 9,521.2 8,369.8 Loans Funds: Secured Loans .............................. 95.3 4,854.4 2,958.5 3,367.1 125.0 5,836.8 5,911.5 Unsecured Loans ............................. 33.2 1,692.7 300.0 0.0 53.4 2,491.5 1,605.9 Deferred Tax.................................... 2.5 128.0 97.2 76.4 3.2 148.3 126.5 Total ................................................. 295.3 15,044.5 11,033.4 9,867.8 385.6 17,997.8 16,013.7 Application of Funds: Fixed Assets: Gross Block ..................................... 70.5 3,590.9 2,959.7 2,567.5 93.4 4,358.4 3,459.7 Less: Depreciation ........................... 19.8 1,006.9 732.9 517.1 27.1 1,267.0 928.3 Net Block ......................................... 50.7 2,584.0 2,226.9 2,050.4 66.2 3,091.4 2,531.4

63

Capital Work in Progress ................ 2.0 100.0 19.3 41.2 6.7 312.3 52.3 Total ................................................. 52.7 2,683.9 2,246.2 2,091.6 72.9 3,403.7 2,583.7 Investments ...................................... 24.9 1,268.3 1,475.1 2,189.2 27.1 1,265.1 1,252.4 Current Assets, Loans & Advances: Accrued Value of Work Done ........ 69.7 3,553.2 2,856.8 1,747.4 102.9 4,802.7 3,499.8 Inventories ...................................... 46.5 2,368.9 1,537.0 1,582.7 59.0 2,754.6 2,849.6 Sundry Debtors ................................ 191.8 9,771.6 6,506.8 5,370.5 280.4 13,090.8 9,065.9 Cash & Bank Balances ................... 8.7 445.2 891.7 936.5 9.3 433.1 1,036.4 Loans & Advances .......................... 61.2 3,118.3 1,511.8 1,210.5 99.2 4,631.2 2,938.8 Total ................................................. 378.0 19,257.1 13,304.1 10,847.6 550.8 25,712.4 19,390.5 Less: Current Liabilities & Provisions: Current Liabilities ........................... 141.6 7,214.3 5,131.0 4,549.5 245.7 11,469.4 6,560.2 Provisions ....................................... 18.7 950.4 861.1 711.7 19.6 914.1 652.7 Total ................................................. 160.2 8,164.7 5,992.1 5,261.2 263.3 12,383.54 7,212.9 Net Current Assets .......................... 217.7 11,092.4 7,312.0 5,586.5 285.5 13,328.9 12,177.6 Miscellaneous Expenditure ............. 0.0 0.0 0.0 0.5 0.0 0.0 0.0 Total ................................................. 295.3 15,044.5 11,033.4 9,867.8 385.6 17,997.8 16,013.7

Other Data

(Standalone) Year ended, / As of March 31,

(Standalone) Nine-months ended, / As of December 31,

2009 2009 2008 2007 2009 2009 2008

(US$ millions)

(Rs. millions)

(Rs. millions)

(Rs. millions)

(US$ millions)

(Rs. millions)

(Rs. millions)

EBITDA (In millions)(1) .................. 46.4 2,364.5 2,603.5 2,601.9 50.7 2,378.5 1,716.5 EBITDA/Total Income (%)(2) .......... 12.56 12.56 14.98 17.06 13.45 13.53 12.96 Earnings Per Equity Share: – Basic ............................................. 0.7 35.6 56.6 65.3 0.9 42.7 26.9 – Diluted .......................................... 0.7 35.6 56.6 65.3 0.9 42.7 26.9 Dividend per Equity Share .............. 0.1 7.5 7.5 7.5 0.0 0.0 0.0 Book Value Per Equity Share ......... 6.2 314.5 289.5 242.2 7.6 357.1 316.4 Net Loans / Total Capital(3) ............. 0.41 0.41 0.22 0.25 0.44 0.44 0.41

Notes

(1) We define EBITDA as our earnings before depreciation, gains or losses from extraordinary items, interest, deferred taxes and taxation. Our definition of EBITDA may differ from similarly titled calculations of other companies. EBITDA is not an Indian GAAP, U.S. GAAP or IAS/IFRS measure. You should not consider EBITDA as an alternative to net income/(loss) or cash flows from operating activities as an indicator of our operating performance or as a measure of liquidity. EBITDA does not represent funds available for management’s discretionary use. A reconciliation of EBITDA to Profit After Tax is provided below:

(Standalone) Year ended March 31, (Standalone) Nine-months ended

December 31,

2009 2009 2008 2007 2009 2009 2008

(US$ millions)

(Rs. millions)

(Rs. millions)

(Rs. millions)

(US$ millions)

(Rs. millions)

(Rs. millions)

EBITDA ......................... 46.4 2,364.5 2,603.5 2,601.9 50.7 2,378.5 1,716.5 Less: Depreciation .......... 5.4 273.2 218.0 167.6 5.9 273.5 197.0

64

Less: Prior Period Items ...............................

0.0 (1.5) (0.7) (14.0) 0.0 (2.3) (1.1)

Less: Interest .................. 17.4 886.9 370.6 281.8 12.4 577.6 585.2 Less: Provision for Deferred Tax ..................

0.6 30.8 26.2 18.4 0.4 20.3 29.3

Less: Provision for Taxation ..........................

4.5 230.9 489.8 553.2 8.1 378.6 193.8

Profit After Tax .............. 18.5 944.1 1,499.5 1,595.0 23.9 1,130.7 712.3

(2) Calculated as EBITDA divided by Total Income.

(3) Net Loans/Total Capital is not a measure of performance under Indian GAAP and you should not consider Net Loans/Total Capital as alternatives to Total Loans and Total Funds Employed (in each case as determined in accordance with Indian GAAP) as the bases for measuring the ratio of our total debt to our total funds available.

Net Loans has been computed by subtracting Cash & Bank Balances from Total Loans and is calculated as follows:

(Standalone) As of March 31, (Standalone) As of December 31, 2009 2009 2008 2007 2009 2009 2008 (US$

millions) (Rs.

millions) (Rs.

millions) (Rs.

millions) (US$

millions) (Rs.

millions) (Rs.

millions) Total Loans ...................................... 128.5 6,547.1 3,258.5 3,367.1 178.4 8,328.3 7,517.3 Less: Cash & Bank Balances (excluding margin money) ............. 8.7 443.2 891.7 920.4 9.3 433.1 1,034.9 Net Loans ......................................... 119.8 6,103.9 2,366.8 2,446.7 169.1 7,895.1 6,482.4

Total Capital is Total Funds Employed without considering Deferred Tax Liability (Net) and is calculated as follows:

(Standalone) As of March 31, (Standalone) As of December 31, 2009 2009 2008 2007 2009 2009 2008

(US$ millions)

(Rs. millions)

(Rs. millions)

(Rs. millions)

(US$ millions)

(Rs. millions)

(Rs. millions)

Total Funds Employed ................. 295.3 15,044.5 11,033.4 9,867.8 385.6 17,997.8 16,013.7 Less: Deferred Tax Liability ........ 2.5 128.0 97.2 76.4 3.2 148.3 126.5 Total Capital ................................. 292.8 14,916.6 10,936.2 9,791.4 382.4 17,849.5 15,887.2

65

SELECTED HISTORICAL FINANCIAL INFORMATION OF JMC

The selected financial information as of and for the three years ended March 31, 2009 set forth below have been derived from JMC's audited standalone financial statements and for the nine-month periods ended December 31, 2009 and 2008 have been derived from JMC's unaudited condensed interim financial statements included elsewhere in this Preliminary Placement Document. This financial information does not reflect JMC’s results of operations, financial position and cash flows for the future and its past operating results are no guarantee of its future operating performance. JMC's audited standalone financial statements and unaudited condensed interim financial statements are prepared and presented in accordance with Indian GAAP.

The selected financial and operational data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations ― Results of Operations of JMC" and JMC's financial statements included in this Preliminary Placement Document.


(Standalone) For the year ended March 31,

(Standalone) For the nine months ended December 31,

2009 2009 2008 2007 2009 2009 2008 (US$

millions) (Rs.

millions) (Rs.

millions) (Rs.

millions) (US$. in millions)

(Rs. millions)

(Rs. millions)

Income:

Income from Operations ........................................ 256.9 13089.8 9149.9 5002.1 200.4 9356.9 9458.8 Other Income .......................................................... 2.1 104.6 56.4 17.9 1.8 86.1 77.4 Increase/(Decrease) in Work in Progress……... (4.1) (210.3) 239.6 42.7 1.0 44.3 211.2 Total ........................................................................ 254.9 12984.1 9445.9 5062.7 203.2 9487.3 9747.4 Expenditure: Cost of Material ...................................................... 109.5 5581.2 4419.2 2208.9 75.2 3512.3 4528.1 Work Charges ......................................................... 44.3 2259.2 1519.6 840.9 33.8 1577.3 677.8 Construction expenses ............................................ 47.3 2409.2 1650.3 1028.4 50.6 2358.4 2652.8 Payment to Employees ........................................... 17.4 886.8 606.9 310.8 15.0 702.0 648.6 Other Expenses ....................................................... 13.8 705.3 481.8 250.4 12.3 567.3 480.4 Total ........................................................................ 232.3 11841.7 8677.8 4639.4 186.9 8717.3 8987.7 Depreciation ........................................................... 5.9 298.3 165.5 68.7 5.5 257.9 213.3 Interest .................................................................... 6.4 324.6 125.6 101.8 4.4 207.0 226.2 Profit / (Loss) Before Taxation ........................... 10.3 519.5 476.9 252.9 6.3 305.1 320.2 Provision for Deferred Tax Liability/(Assets) ....... (0.7) (37.0) 34.1 85.4 (0.2) (8.2) 10.2 Provision for Taxation ............................................ 3.6 181.1 129.1 2.8 2.3 109.2 98.7 Fringe Benefit Tax ................................................. 0.2 7.7 6.6 4.1 0.0 0.0 6.6 Profit/(Loss) After Tax ........................................... 7.2 367.6 307.2 160.5 4.2 204.1 204.7 Balance Brought Forward ...................................... 5.1 262.2 35.2 0.0 11.5 538.1 262.2 Prior Period Expenses…………………………. 0.1 5.4 0.4 1.6 0.0 0.6 0.0 Amount Available for Appropriation ................ 12.2 624.4 342.0 158.9 15.7 741.6 466.9 Appropriations:

66

Proposed Dividend ................................................. 1.0 51.4 48.5 18.1 0.2 7.7 7.6 Corporate Dividend Tax ......................................... 0.2 8.7 8.2 3.1 0.0 1.3 1.3 Transfer to General Reserve .................................. 0.5 26.2 23.0 0.0 0.0 0.0 0.0 Balance Carried Over to Balance Sheet ................. 10.6 538.0 262.2 137.7 15.5 732.6 458.0

Balance Sheet


millions) (Rs.

millions) (Rs.

millions) (Rs.


(Rs. millions)

(Rs. millions)

Sources of Funds:

Shareholders Funds:

Share Capital ....................................................... 8.5 433.9 433.9 181.4 4.7 217.7 433.9 Reserves & Surplus ................................................ 31.5 1601.6 1299.0 1055.7 46.1 2155.7 1494.7 Total ........................................................................ 40.0 2035.5 1732.9 1237.1 50.8 2373.4 1928.6 Loan Funds: Secured Loans ..................................................... 34.3 1748.3 1109.6 572.3 33.6 1567.3 1771.8 Unsecured Loans .................................................... 4.3 216.0 18.3 56.4 5.3 245.7 245.9 Total ........................................................................ 38.6 1964.3 1128.0 628.7 38.8 1813.0 2017.7 Deferred Tax Liability ............................................ 1.5 77.0 114.0 83.3 1.5 68.8 124.1 Total ........................................................................ 80.1 4076.8 2974.8 1949.1 91.1 4252.2 4070.4 Application of Funds: Fixed Assets: Gross Block ............................................................ 57.1 2907.5 2310.4 1265.2 65.3 3046.2 2853.1 Less: Depreciation .................................................. 13.8 705.3 430.8 288.7 20.5 955.9 627.4 Net Block ................................................................ 43.3 2202.2 1879.6 976.5 44.8 2090.5 2225.7 Capital Work in Progress ....................................... 0.4 20.3 14.9 0.0 1.4 63.2 16.6 Total ........................................................................ 43.7 2222.5 1894.5 976.5 46.1 2153.7 2242.3 Investments ............................................................. 0.7 34.2 13.1 5.1 1.4 65.7 24.5 Deferred Tax Asset 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Current Assets, Loans & Advances: Inventories .............................................................. 15.9 808.5 1030.5 290.4 16.7 779.6 1068.1 Sundry Debtors ....................................................... 84.8 4319.5 2698.4 1674.6 106.1 4951.8 3869.5 Cash & Bank Balances ........................................... 2.3 117.5 161.6 415.7 1.6 74.9 92.6 Loans & Advances ................................................. 12.9 658.8 589.2 258.8 21.9 1024.5 885.3 Total ........................................................................ 115.9 5904.3 4479.8 2639.4 146.3 6830.8 5915.5 Less: Current Liabilities & Provisions: Liabilities ................................................................ 74.7 3804.2 3234.8 1575.0 96.5 4506.6 3916.8 Provisions .............................................................. 5.8 295.8 205.3 97.0 6.4 301.0 214.1 Total ........................................................................ 80.5 4100.0 3440.0 1672.0 103.0 4807.6 4130.9 Net Current Assets ................................................. 35.4 1804.3 1039.7 967.4 43.3 2023.2 1784.6 Miscellaneous Expenditure .................................... 0.3 15.9 27.5 0.0 0.2 9.6 19.0 Total ........................................................................ 80.1 4076.9 2974.8 1949.1 91.1 4252.2 4070.4

67

Other Data

(Standalone) For the year ended / As of March 31,

(Standalone) For the nine months ended/ As of December 31,

2009 2009 2008 2007 2009 2009 2008 (US$

millions) (Rs.

millions) (Rs.

millions) (Rs.


Rs. millions)

Rs. millions)

EBITDA (In millions)(1) ..................................... 22.6 1,142.4 768.0 423.3 16.5 770.0 759.7 EBITDA/Total Income (%)(2) ............................ 8.9 8.8 8.1 8.3 8.1 8.1 7.8 Earnings Per Share: – Basic ................................................................ - 19.3 16.1 12.7 - 10.0 10.8 – Diluted ............................................................. - 19.3 15.9 12.7 - 10.0 10.8 Net Loans / Total Capital(3) ................................................... 0.5 0.5 0.4 0.3 0.4 0.4 0.5

Note: (1) JMC defines EBITDA as its earnings before depreciation, gains or losses from extraordinary items, interest,

deferred taxes and taxation. JMC’s definition of EBITDA may differ from similarly titled calculations of other companies. EBITDA is not an Indian GAAP, U.S. GAAP or IAS/IFRS measure. You should not consider EBITDA as an alternative to net income/(loss) or cash flows from operating activities as an indicator of JMC’s operating performance or as a measure of liquidity. EBITDA does not represent funds available for management’s discretionary use. A reconciliation of EBITDA to Profit After Tax is provided below:

(Standalone For the year ended March 31,


2009 2009 2008 2007 2009 2009 2008 (US$

millions) (Rs.

millions) (Rs.

millions) (Rs.


(Rs. millions)

(Rs. millions)

EBITDA ........................................................... 22.6 1,142.4 768.0 423.3 16.5 770.0 759.7 Less: Depreciation ........................................... 5.9 298.3 165.5 68.7 5.5 257.9 213.3 Less: Interest .................................................... 6.4 324.6 125.6 101.8 4.4 207.0 226.2 Less: Provision for Deferred Tax .................... (0.7) (37.0) 34.1 85.4 (0.2) (8.2) 10.2 Less: Provision for Taxation ........................... 3.8 188.8 135.6 7.0 2.3 109.2 105.3 Profit / (Loss) After Tax .................................. 7.2 367.6 307.2 160.5 4.2 204.1 204.7


(3) Net Loans/Total Capital are not measures of performance under Indian GAAP and you should not consider Net Loans/Total Capital as alternatives to Total Loans and Total Funds Employed (in each case as determined in accordance with Indian GAAP) as the bases for measuring the ratio of JMC’s total debt to its total funds available.


(Standalone) As of March 31,

(Standalone) As of December 31,

2009 2009 2008 2007 2009 2009 2008 (US$

millions) (Rs.

millions) (Rs.

millions) (Rs.


(Rs. millions)

(Rs. millions)

Total Loans.................................................. 38.6 1,964.4 1,128.0 628.7 38.8 1,812.9 2,017.7 Less: Cash & Bank Balances (excluding margin money) ........................................................

1.5

106.8

69.0

99.9

1.6

73.8

20.7

Net Loans ........................................................ 37 1,857.6 1,060.0 528.7 37.3 1,739.1 1,997.0

68



millions) (Rs.

millions) (Rs.

millions) (Rs.


(Rs. millions)

(Rs. millions)

Total Funds Employed .............................. 80 4,076.8 2,974.8 1,949.1 91.1 4,252.2 4,070.5 Less: Deferred Tax Liability ..................... 1.5 77.0 114.0 83.3 1.5 68.8 124.1 Total Capital .............................................. 78.0 3,999.8 2,860.8 1,865.8 89.6 4,183.4 3,946.4

69

SELECTED HISTORICAL FINANCIAL INFORMATION OF SSLL

The selected financial information as of and for the three years ended March 31, 2009 set forth below have been derived from SSLL's audited standalone financial statements and for the nine-month periods ended December 31, 2009 and 2008 have been derived from SSLL's unaudited condensed interim financial statements included elsewhere in this Preliminary Placement Document. This financial information does not reflect SSLL's results of operations, financial position and cash flows for the future and its past operating results are no guarantee of its future operating performance. SSLL's audited standalone financial statements and unaudited condensed interim financial statements are prepared and presented in accordance with Indian GAAP.

The selected financial and operational data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations ― Results of Operations of SSLL" and SSLL's financial statements included in this Preliminary Placement Document.




2009 2009 2008 2007 2009 2009 2008 (US$

millions) (Rs.

millions) (Rs.

millions) (Rs.


(Rs. millions)

(Rs. millions)

Income:

Sales & Services ..................................................... 11.0 559.6 308.5 1.8 13.0 606.4 379.4 Increase/Decrease in stock ..................................... (1.0) (49.5) 93.3 13.3 3.0 140.3 45.3 Other Income .......................................................... 0.1 2.8 5.8 0.0 0.1 5.1 2.2 Total ........................................................................ 10.1 512.8 407.7 15.1 16.1 751.8 426.9 Expenditure: Purchase for trading goods ..................................... 9.2 467.2 367.7 13.3 14.8 693.1 392.6 Operating Expenses ................................................ 0.1 4.7 4.1 0.3 0.1 5.4 4.2 Employee Emolument ............................................ 0.2 10.9 5.4 0.7 0.6 26.1 7.9 Administrative, Selling & Other Expenses ............ 0.2 9.5 7.6 2.3 0.3 15.4 6.7 Total ........................................................................ 9.7 492.3 384.8 16.6 15.9 740.0 411.4 Depreciation ........................................................... 0.0 1.7 0.8 0.0 0.1 6.1 1.3 Interest .................................................................... 0.3 14.9 13.7 0.0 0.9 43.7 11.2 Other Expenses ....................................................... 0.0 0.2 0.2 0.0 0.0 0.1 0.2 Profit / (Loss) Before Taxation ........................... 0.1 3.6 8.3 (1.6) (0.8) (38.2) 2.9 Provision for Deferred Tax Liability/(Assets) ....... 0.0 1.2 0.9 (0.5) (0.3) (11.9) 1.0 Provision for Taxation ............................................ 0.0 0.4 1.9 0.0 0.0 0.0 0.0 Fringe Benefit Tax ................................................. 0.0 0.3 0.3 0.0 0.0 0.0 0.2 Profit/(Loss) After Tax ........................................... 0.0 1.7 5.2 (1.1) (0.6) (26.2) 1.8 Prior Period Income ............................................... 0.0 0.1 0.0 0.0 0.0 0.0 0.0 Balance Brought Forward ...................................... 0.1 3.4 (1.1) 0.0 0.1 5.2 3.4 Amount Available for Appropriation ................ 0.1 5.2 4.1 (1.1) (0.5) (21.0) 5.1 Appropriations: Proposed Dividend ................................................. 0.0 0.0 0.6 0.0 0.0 0.0 0.0

70

Corporate Dividend Tax ......................................... 0.0 0.0 0.1 0.0 0.0 0.0 0.0 Balance carried over to Balance Sheet……… ...... 0.1 5.2 3.4 (1.1) (0.5) (21.0) 5.1

Balance Sheet Data


millions) (Rs.

millions) (Rs.

millions) (Rs.


(Rs. millions)

(Rs. millions)

Sources of Funds: Shareholders Funds: Share Capital ........................................................ 6.7 340.0 220.0 86.6 7.3 340.0 340.0 Reserves & Surplus .............................................. 0.1 5.2 3.4 0.0 (0.5) (0) 5.1 Total ...................................................................... 6.8 345.2 223.4 86.6 6.8 319.0 345.1 Secured Loans ...................................................... 15.6 794.7 69.6 0.0 20.5 955.1 436.6 Unsecured Loans .................................................. 0.7 33.1 190.7 0.0 9.4 440.8 143.2 Total ...................................................................... 16.2 827.8 260.4 0.0 29.9 1,395.9 579.8 Deferred Tax Liability .......................................... 0.0 1.7 0.4 0.0 0.0 0.0 1.4 Total ...................................................................... 23.1 1,174.7 484.1 86.6 36.7 1,735.8 926.3 Application of Funds: Fixed Assets: Gross Block .......................................................... 10.0 510.3 169.4 57.8 24.5 1,146.0 499.4 Less: Depreciation ................................................ 0.0 2.5 0.8 0.0 0.2 8.7 2.1 Net Block .............................................................. 10.0 507.7 168.6 57.8 24.4 1,137.3 497.3 Capital Work in Progress ..................................... 12.1 616.7 47.1 0.0 6.6 309.4 225.3 Total ...................................................................... 22.1 1,124.4 215.7 57.8 31.0 1,446.7 722.6 Deferred Tax Asset 0.0 0.0 0.0 0.5 0.0 10.3 0.0 Current Assets, Loans & Advances: Inventories ............................................................ 1.1 57.6 106.7 13.3 4.2 197.9 152.0 Sundry Debtors ..................................................... 1.3 66.8 79.6 1.3 1.6 74.0 5.9 Cash & Bank Balances ......................................... 0.3 13.7 26.1 14.1 0.4 18.8 16.9 Loans & Advances ............................................... 1.0 49.3 72.2 2.1 1.5 70.1 73.8 Total ...................................................................... 3.7 187.4 284.5 30.7 7.7 360.8 248.6 Less: Current Liabilities & Provisions: Liabilities .............................................................. 2.7 136.5 15.3 3.5 2.2 102.9 44.8 Provisions ............................................................ 0.0 0.7 0.8 0.0 0.0 0.0 0.2 Total ...................................................................... 2.7 137.1 16.1 3.5 2.2 102.9 44.9 Net Current Assets ............................................... 1.0 50.2 268.5 27.3 5.5 257.9 203.7 Miscellaneous Expenditure .................................. 0.0 0.0 0.0 1.1 0.0 21.0 0.0 Total ...................................................................... 23.1 1,174.7 484.1 86.6 36.5 1,735.8 926.3

Other Data

(Standalone) For the year ended / As of March 31,

(Standalone) For the nine months ended/ As of December 31,

2009 2009 2008 2007 2009 2009 2008 (US$

millions) (Rs.

millions) (Rs.

millions) (Rs.


Rs. millions)

Rs. millions)

EBITDA (In millions)(1) ..................................... 0.4 20.3 22.8 (1.5) 0.3 11.7 15.4 EBITDA/Total Income (%)(2) ............................ 0.1 3.9 5.6 (10.2) 0.0 1.6 3.6 Earnings Per Share: – Basic ................................................................ 0.0 0.09 0.59 (0.4) 0.0 (1.31) 0.10 – Diluted ............................................................. 0.0 0.09 0.59 (0.4) 0.0 (1.31) 0.10 Net Loans / Total Capital(3) ................................................... 0.0 0.7 0.5 (0.2) 0.0 0.8 0.6 Notes: (1) SSLL defines EBITDA as its earnings before depreciation, gains or losses from extraordinary items, interest,

deferred taxes and taxation. SSLL’s definition of EBITDA may differ from similarly titled calculations of other

71

companies. EBITDA is not an Indian GAAP, U.S. GAAP or IAS/IFRS measure. You should not consider EBITDA as an alternative to net income/(loss) or cash flows from operating activities as an indicator of SSLL’s operating performance or as a measure of liquidity. EBITDA does not represent funds available for management’s discretionary use. A reconciliation of EBITDA to Profit After Tax is provided below:



2009 2009 2008 2007 2009 2009 2008 (US$

millions) (Rs.

millions) (Rs.

millions) (Rs.


(Rs. millions)

(Rs. millions)

EBITDA ............................................. 0.4 20.3 22.8 (1.5) 0.3 11.7 15.4 Less: Depreciation ............................. 0.0 1.7 0.8 0.0 0.1 6.1 1.3 Less: Prior Period Items ................... 0.0 0.1 0.0 0.0 0.0 0.0 0.0 Less: Interest ..................................... 0.3 14.9 13.7 0.0 0.9 43.7 11.2 Less: Provision for Deferred Tax ..... 0.0 1.2 0.9 (0.5) (0.3) (11.9) 1.0 Less: Provision for Taxation ............ 0.0 0.7 2.2 0.0 0.0 0.0 0.2 Profit / (Loss) After Tax ................... 0.0 1.6 5.2 (1.1) (0.6) (26.2) 1.8


(3) Net Loans/Total Capital are not measures of performance under Indian GAAP and you should not consider Net Loans/Total Capital as alternatives to Total Loans and Total Funds Employed (in each case as determined in accordance with Indian GAAP) as the bases for measuring the ratio of SSLL’s total debt to its total funds available.



millions) (Rs.

millions) (Rs.

millions) (Rs.


(Rs. millions)

(Rs. millions)

Total Loans.............................................. 16.2 827.8 260.4 0.0 29.9 1,395.9 579.8

Less: Cash & Bank Balances (excluding margin money) .....................

0.1 2.9 15.4 14.1 0.2 8.8 6.2

Net Loans ................................................ 16.2 825.0 244.9 (14.1) 29.7 1,387.1 573.5



millions) (Rs.

millions) (Rs.

millions) (Rs.


(Rs. millions)

(Rs. millions)

Total Funds Employed ........................ 23.1 1,174.7 484.1 86.6 36.7 1,714.9 926.3

Less: Deferred Tax Liability ............... 0.0 1.7 0.4 0.0 0.0 0.0 1.4

Total Capital ........................................ 23.0 1,173.0 483.7 86.6 36.7 1,714.9 924.9

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Audited Consolidated Financial Statements as of and for the years ended March 31, 2009, 2008 and 2007, including the schedules, annexes and notes thereto and the reports thereon, which appear elsewhere in this Preliminary Placement Document. Our Audited Consolidated Financial Statements consolidate the results of KPTL, JMC, SSLL, Energylink (India) Limited, Amber Real Estate Limited and Kalpataru SA (Proprietary) Limited. See "— Relationship with JMC" and "— Relationship with SSLL" for a discussion of our relationships with JMC and SSLL, respectively. We prepare our financial statements in accordance with Indian GAAP, which differs in certain material respects from IAS/IFRS and U.S. GAAP.

Overview

We believe we are one of India's largest engineering, procurement and construction companies that provides integrated design, engineering, testing, fabrication, erection and construction services to the power transmission industry. We are also a provider of EPC services to power transmission utilities outside of India, particularly in Africa, the Middle East and Southeast Asia. We also provide EPC services to power distribution utilities in India and overseas. In addition, we construct cross-country oil and gas pipeline networks in India and also generate biomass energy, primarily from MCR.

For the year ended March 31, 2009, Kalpataru Power Transmission Limited ("KPTL") had total income on a standalone basis of Rs.18.8 billion (US$369.0 million) and for the nine-months ended December 31, 2009, had total income on a standalone basis of Rs.17.6 billion (US$377.0 million). As of December 31, 2009, KPTL had an order book of Rs.49.5 billion (US$1.1 billion), or to supply approximately 205,000 MTs of tower supplies and 8,500 kilometers of 132 KV to 765KV transmission lines.

We present our results in six business segments:

• transmission and distribution division (relating to our Power Transmission Business and our Power Distribution Business);

• real estate division (relating to our Real Estate Business);

• biomass energy division (relating to our Biomass Energy Business);

• infrastructure division (relating to our Infrastructure Business);

• contract division (relating to our Civil Contracting Projects Business); and

• others (relating to, primarily, our Logistics and Warehousing Business).

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These segments do not include the results of the real estate business conducted by any of our affiliates.

Factors Affecting Our Results of Operations

Our financial condition and results of operations are affected by numerous factors, including the following, which are of particular importance:

Government policies, budgetary allocations and capital expenditure plans of public sector companies in our transmission and distribution and infrastructure business segments

Demand for our and JMC's services in the power, oil and gas and civil contracting sectors is primarily dependent on sustained economic development in the regions in which we and JMC operate and government policies relating to infrastructure development. It is also significantly dependent on budgetary allocations made by governments to these sectors, as well as funding provided by Indian, international and multilateral development finance institutions for power, oil and gas and infrastructure projects. Investments by private sector companies in infrastructure projects are dependent on the potential returns from such projects and are therefore linked to government policies relating to private sector participation and the sharing of risks and returns from such projects.

The Government's focus on, and sustained increase in, budgetary allocation for the infrastructure sector and the development of a comprehensive infrastructure policy that encourages greater private sector participation, as well as increased funding by international and multilateral development financial institutions for infrastructure projects in India, have resulted in, and are expected to continue to result in, the development of several large infrastructure projects. In addition, the significant growth of the Indian economy and population has resulted in significant demand for factories and buildings, residential townships and commercial and residential complexes.

Our, and our subsdiaries', ability to continue to capitalize on such increased activities in the power, oil and gas, civil contracting and warehousing and logistics sectors is key to our results of operations.

Competitive environment

We and JMC operate in an intensely competitive environment. Competition depends on whether the project is in the power transmission or distribution business or in the civil contracting business. It also depends on the size, nature and complexity of the project and the geographical region in which the project is to be executed. We and JMC compete against major Indian, Asian and European EPC and infrastructure development companies and their regional operating entities, as well as smaller regional EPC and infrastructure development companies. See "Business ― Competition."

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Contracts in our Power Transmission Business, Power Distribution Business, Infrastructure Business and Civil Contracting Projects Business are generally awarded following a competitive bidding process and satisfaction of prescribed pre-qualification criteria. While service quality, technical capability, health and safety records, availability of quality personnel, responsiveness to client specifications, as well as reputation and experience, are important considerations in client decisions, price is the major factor in most tender awards. For most of the contracts we or JMC tender for, once the prospective bidders clear the technical requirements of a tender, the contract is awarded based on the lowest price of the contract quoted by the qualified bidders and evaluated by the client. As a result, the competitive environment in the businesses we and JMC operate in affects our results of operations.

Variations on assumptions underlying our fixed-price and lump sum contracts

KPTL derived 58.7%, 51.9% and 39.6% of its total income on a standalone basis in the years ended March 31, 2009, 2008 and 2007, respectively, from fixed-price and/or lump sum contracts. Under the terms and conditions of such fixed-price and lump sum contracts, we generally agree to a fixed price for providing EPC services for the project contracted to us, subject to contract variations, to reflect, among others, changes in the client's project requirements and other price or quantity contingencies. See "Business ― Business Processes." Our actual expense in executing a fixed-price or lump sum contract may vary substantially from the assumptions underlying our bid for several reasons. Our ability to manage our costs in line with the assumptions used in pricing these contracts significantly affects our results of operations.

Market price of key materials and bought out items

Our results of operations are subject to the availability, cost and quality of a number of key materials and bought out items that we need to construct and develop our projects and properties. Our principal raw materials include, among others, steel angles, zinc, cement, diesel oil, concrete, reinforcement bars, aluminum conductors, electrodes, coating materials, valves and other materials, and in our biomass energy business, MCR and cotton stalks. Bought out items in our Power Distribution Business include poles, protection equipment, conductors and cables, electrical items, structural items, hardware, insulators, distribution transformers, switches and fuses, distribution boxes, energy meters, lighting arrestors, GI and stay sets, capacitors, power transformers, vacuum circuit breakers, control and relay panels, current transformers and potential transformers, capacitor banks, isolators, batteries and chargers. See "Business ― Raw Materials, Bought Out Items and Fuel." The prices and supply of these and other raw materials, bought out items and fuel depend on factors not within our control, including general economic conditions, competition, production levels, transportation costs and import duties. We typically enter into forward contracts to hedge our exposure to price variation for aluminum and zinc, two of our significant raw materials and, in many power transmission, distribution and infrastructure tenders, provide for contract price

75

variation based on indices such as the Wholesale Price Index ("WPI") and IEEMA or LME or the Conductor and Cable Manufacturers Association of India ("CACMAI").

Order book

The level of our order book affects the management of our business in terms of the utilization of our resources. Our results of operations are dependent upon the number and value of new contracts we enter into in India and overseas.

Our order book comprises anticipated contract revenues from the uncompleted portion of existing contracts (which are defined as contracts for which a letter of intent or letter of award has been received and as signed contracts for which all pre-conditions to entry into force have been met). The amount of our order book does not necessarily indicate future income related to performance of that work. Owing to changes in project scope and schedule, we cannot predict with certainty when or if the order book will be performed and will generate revenues. In addition, even when a project proceeds on schedule, it is possible that contracting parties may default and fail to pay amounts owed. There may also be delays associated with collection of receivables from our clients.

Capabilities to execute projects

Our ability to execute projects in a planned, cost-efficient and timely manner, provide quality construction and other services, and manage and maintain resources, including skilled personnel, labor, equipment and key materials, are important factors affecting our results of operations. In addition, our results of operations are also dependent upon the financial and legal management of our projects, such as optimal tax structures, timely payment of taxes and duties and compliance with local laws and regulations. The amount of idling time on a project, whether as a result of factors caused by us or factors beyond our control, affects our results of operations.

Geographically widespread operations

We have substantial international operations, including operations in Africa, the Middle East and Southeast Asia that we either conduct directly or through project-specific joint ventures or consortia with foreign partners. Outside of India, we currently have project offices in Algeria, Djibouti, Ethiopia, the Philippines, UAE, Kenya, South Africa, Nepal and Kuwait. Our revenue outside India accounted for 15.8%, 18.5% and 24.9% of our total income on a consolidated basis in the years ended March 31, 2009, 2008 and 2007, respectively. We expect our international operations to continue to grow and provide for a substantial portion of our total income. Our foreign operations are subject to additional variables, including uncertain local costs, foreign duties and taxes, uncertain political and economic environments, government instability and legal systems, laws and regulations that are different from the legal systems, laws and regulations that we are familiar with in India, and which may be less established or predictable than those in more developed countries. In addition, we could be

76

subject to expropriation or deprivation of assets or contract rights, foreign currency restrictions, exchange rate fluctuations and unanticipated taxes or encounter potential incompatibility with foreign joint venture partners or consortium members.

Relationship with JMC and SSLL

KPTL currently owns 53.01% and 80.0% of JMC and SSLL, respectively, which makes JMC and SSLL our subsidiaries and requires us to consolidate their financial statements with our financial statements. See "― Financial Condition, Liquidity and Capital Resources ― Contractual Obligations and Commercial Commitments." Consequently, our results of operations are affected by the results of operations and business of both JMC and SSLL. See "Business ― JMC's Business" and "Business ― SSLL's Business".

Results of Operations

The following table sets forth selected consolidated financial data from our profit and loss statement, the components of which are expressed as a percentage of total income, for the periods indicated.

For the year ended March 31, 2009 2008 2007

(Rs. in millions)

(US$ in millions)

(% of Total

Income) (Rs. in

millions)

(% of Total

Income) (Rs. in

millions)

(% of Total

Income) Income: Sales & Services (Gross) ............................................................ 32,771.9 643.2 99.1 27,054.7 99.4 16,403.0 100.8 Less: Excise Duty ........................................................................ 311.2 6.1 0.9 306.2 1.1 421.2 2.6 Sales & Services (Net) ................................................................ 32,460.7 637.1 98.2 26,748.5 98.3 15,981.9 98.2 Other Income ............................................................................... 346.1 6.8 1.1 251.0 0.9 123.0 0.8 Increase (Decrease) in Stocks: - Transmission Division .............................................................. 517.7 10.2 1.6 (110.7) (0.4) 173.4 1.1 - Construction Division ............................................................... (209.4) (4.1) (0.6) 239.7 0.9 (0.5) - - Other .......................................................................................... (49.5) (1.0) (0.2) 92.7 0.3 254.7 1.6 Total ............................................................................................. 33,065.6 649.0 100.0 27,221.2 100.0 16,280.2 100.0 Expenditure: Material Cost ............................................................................... 16,712.0 328.0 50.5 13,226.7 48.6 8,212.7 50.5 Employees’ Emoluments ............................................................ 1,988.0 39.0 6.0 1,522.2 5.6 777.1 4.8 Manufacturing & Operating Expenses ........................................ 8,804.8 172.8 26.6 6,973.3 25.6 3,398.8 20.9 Administrative, Selling & Other Expenses ................................. 1,916.5 37.6 5.8 1,954.1 7.2 1,,048.0 6.5 Financial Expenses ...................................................................... 1,368.8 26.9 4.1 673.5 2.5 441.2 2.7 Depreciation ................................................................................ 576.4 11.3 1.7 387.0 1.4 182.1 1.1 Less: Transferred to Revaluation Reserve .................................. 0.5 0.0 0.0 0.5 0.0 0.5 0.00 Total ............................................................................................. 31,366.0 615.6 94.9 24,736.0 90.9 14,059.4 86.4

Profit Before Tax ....................................................................... 1,699.6 33.4 5.1 2,485.2 9.1 2,220.8 13.6 Provision for Taxation: Current Tax.................................................................................. 401.2 7.9 1.2 610.5 2.2 538.0 3.3 Fringe Benefit Tax ...................................................................... 19.9 0.4 0.1 17.2 0.1 17.6 0.1 Deferred Tax................................................................................ (4.3) (0.1) (0.0) 60.8 0.2 34.6 0.2 Net Profit After Tax .................................................................. 1,282.8 25.2 3.6 1,796.7 6.6 1,630.6 10.0

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Income. We derive income from sales, erection of towers and work contract receipts in our transmission and distribution division, real estate division, biomass energy division, contract receipt division and infrastructure division and trading commodities and warehousing charges in our logistics and warehousing division. Our other income consists of miscellaneous income such as interest income, certified emission reduction receipts, insurance claim payments, share of profits in joint ventures and liabilities written back. Income also comprises increase/(decrease) in stocks. For a discussion of the revenue recognition policies applicable to each of our divisions, see "– Critical Accounting Policies."

The following table sets forth our total revenue on a segment basis and our total income for the periods indicated:

For the year ended March 31, 2009 2008 2007

(Rs. in millions)

(US$ in millions)

(% of Total

Income) (Rs. in

millions)

(% of Total

Income) (Rs. in

millions)

(% of Total

Income) Revenue: Transmission and distribution division .............................. 16,645.0 326.7 50.7 15,081.4 55.9 13,266.0 82.4 Contract receipts .................................................................. 13,224.7 259.6 40.3 9,245.1 34.2 978.0 6.1 Infrastructure division ......................................................... 1,723.8 33.8 5.3 1,832.9 6.8 1,465.0 9.1 Biomass energy division ..................................................... 540.8 10.6 1.7 396.2 0.6 283.6 1.8 Real estate division ............................................................. 1.0 0.0 0.0 5.7 0.0 4.4 0.0 Others .................................................................................. 567.1 11.1 1.7 308.2 1.1 3.0 0.0 Unallocable .......................................................................... 104.4 2.0 0.4 130.1 0.5 110.0 0.7 Total Revenue* .................................................................. 32,806.8 643.9 100.0 26,999.5 100.0 16,110.0 100.0 *comprising "sales" and "other income".

Our income from our transmission and distribution segment is derived from our operations within and outside India. Our Indian operations generated Rs.11,404.1 million, Rs.10,075.4 million and Rs.9,254 million of income, while our international operations generated Rs.5,189.6 million, Rs.5,005.9 million, Rs.4,012 million of income, in our transmission and distribution division in the years ended March 31, 2009, 2008 and 2007, respectively. Our income from our real estate, biomass energy and infrastructure divisions and from contract receipts has all historically been generated from within India.

The amount of income we receive for a particular project during a period is dependent on the stage of the project at that time and the nature and level of activity involved during that stage.

Expenditure. Our expenditure consists of material cost, employees' emoluments, manufacturing and operating expenses, administrative, selling and other expenses, financial expenses and depreciation.

Material cost consists primarily of costs of materials consumed or used in our projects, such as steel, zinc, aluminum conductors, accessories and components and other materials used in our business. Material costs also include purchase costs of MCR and cotton stalks for our

78

biomass energy generation. Any amortization or depletion in the value of the inventory of these materials and equipment are also recorded under material cost.

Employees' emoluments consists of employee compensation, such as salaries, wages, bonuses, gratuities and other statutory benefits paid, including contributions to provident funds and other funds and employees' welfare expenses.

Our manufacturing and operating expenses consist of manufacturing and operating expenses, such as erection and sub-contracting expenses, work charges and composite work charges, repairs and maintenance of plant and machinery, buildings and others, vehicle/equipment running and hire charges, freight and forwarding expenses, job charges, stores, spares and tools consumed, power and fuel and electricity charges, security expenses, testing expenses, pollution control expenses, real estate development expenses and other operating expenses.

Our administrative, selling and other expenses consist of performance warranties and defect liability expenses, taxes, duties and cess, service tax, insurance charges, rents, traveling expenses, exchange rate variation, legal and professional expenses, telecommunication expenses, service charges, general expenses, stationery, printing and drawing expenses, vehicle maintenance charges, selling expenses, conveyance expenses, office expenses, loss on investments and share of loss in joint ventures, loss caused by theft, damage and fire, computer expenses, audit fees, rates and taxes and other miscellaneous expenses.

Our financial expenses include financial charges and interest. Financial charges include letter of credit charges, Export Credit Guarantee Corporation charges, bank guarantee and other commissions, foreign exchange charges on principal and interest payments, bank processing fees, exchange rate variance on finance and other charges. Our interest represents interest on term loans and working capital borrowings.

The table below sets out the taxes, other than income tax and fringe benefit tax, to which we are subject in India:

Tax Rates Remarks Wealth tax .................................................................................. 1% on net wealth − Service tax levied on services provided ..................................... 12.24% −

Excise duty ................................................................................ 18.12% - 20.35% On clearance of goods from EOU to domestic tariff area

16.32% On clearance of goods from domestic tariff area

Customs duty on imports (including countervailing duty and cess) ........................................................................................... 27.5% - 36.7% − State sales tax ............................................................................. 4% - 12.5% Varies from State to State Central sales tax ......................................................................... 4% Applicable on inter-state transactions Value added tax ......................................................................... 4% - 12.5% Varies from State to State Works contract tax levied on material (including labour) consumed during execution of works contract ........................... 4% - 12.5% Varies from State to State Entry tax .................................................................................... 1% - 12.5% − Workers welfare cess on construction work .............................. 1% In certain States

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Depreciation is provided at the rate prescribed in Schedule XIV of the Companies Act, 1956, on a straight-line basis for all our depreciable fixed assets, except:

• depreciation pertaining to assets of our research and development centre and export oriented unit ("EOU") are provided on the written down value method;

• depreciation on the plant and machinery at our biomass energy plants is provided at a rate higher than the prescribed rate for continuous process plant, considering the useful life of plant supported by technical evaluation;

• in the case of revalued assets, the difference between depreciation based on revaluation and depreciation charged on historical cost is recouped out of the revaluation reserve; and

• depreciation on international project assets is provided at the rates as per the requirements of foreign law which are generally higher than the depreciation as prescribed under Schedule XIV of the Companies Act, 1956.

Our depreciation expense represents a comparatively small proportion of our total income. While the absolute value of our depreciation expense may increase in the future, we believe that it will continue to remain a comparatively small component of our total income.

The following table provides the depreciation rates for our assets:

Depreciation Rate (%) Assets Written Down Value Method Straight Line Method Factory buildings .......................................................................... 10.0% 3.3% Office buildings ............................................................................ 5.0% 1.6% Plants & machinery ....................................................................... 27.8% 10.3% Electrical installation .................................................................... 13.9% 4.8% Furniture, fixture and office equipment ........................................ 13.9% - 40.0% 4.7% - 16.2% Vehicles ........................................................................................ 20.0% - 30.0% 7.1% - 11.3%

Taxation: We are subject to income tax by the Central Government. The following table sets forth the income tax to which we are subject in India:

Tax

Transmission and Distribution Division (EOU

only)

Transmission and Distribution (Other than

EOU), Infrastructure, Real Estate Divisions and all

other income Biomass Division Income Tax ........................... Income is exempt from tax

under section 10B of the Income Tax Act, 1961, up to March 31, 2011

33.22% Income is exempt from tax under section 801A of the Income Tax Act, 1961, for 10 consecutive years out of 15 years beginning from April 1, 2005 in the case of the Ganganagar plant and from

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April 1, 2009 in the case of the Tonk plant

We provide for both current taxes and deferred taxes. Tax on income for the current period is determined on the basis of estimated taxable income and tax credit computed in accordance with the provisions of applicable law. Deferred tax arises mainly due to the timing differences between accounting income and the estimated taxable income for the period and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date. Our deferred tax liability is recognized net of deferred tax assets.

Year Ended March 31, 2009 Compared to Year Ended March 31, 2008

Our results of operations for the year ended March 31, 2009 were particularly affected by the following factors:

• the global financial crisis, an outcome of the sub-prime mortgage crisis, which originated in the United States of America, has led to a loss of investor confidence in worldwide financial markets and commodity prices peaking in the first half of the year and falling to unprecedented lows in the latter half of the year. The global financial crisis had an impact on budgetary allocations made by governments in the sectors in which we operate, as well as funding provided by Indian, international and multilateral development finance institutions for power, oil and gas and infrastructure projects. See "Factors Affecting Our Results of Operations - Government policies, budgetary allocations and capital expenditure plans of public sector companies in our transmission and distribution and infrastructure business segments";

• we increased our manufacturing capacity by 24,000 metric tons ("MT") to 108,000 MTs;

• JMC's contract receipt division grew by 43.0% on account of its strong order book position;

• we secured our largest transmission export order to date, of approximately US$250 million, from the Ministry of Energy and Water, Kuwait; and

• further diversification into the logistics and warehousing division.

Income. Our total sales and services, net of excise duty, increased by 21.4% to Rs.32,460.7 million in the year ended March 31, 2009 from Rs.26,748.5 million in the year ended March 31, 2008. This increase was attributable to an increase in income in our power transmission and distribution and biomass energy divisions and contract receipts offset by a minor decrease in income in our infrastructure division. Income from the transmission and distribution, biomass energy and infrastructure divisions and contract receipts accounted for

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approximately 50.7%, 1.6%, 5.3% and 40.3%, respectively, of our total income for the year ended March 31, 2009. Our total revenue for the year ended March 31, 2009 from within India was Rs.27,401.5 million, as compared to total income from outside of India of Rs.5,189.6 million.

Transmission and distribution division. Revenue from the transmission and distribution division increased by 10.4% to Rs.16,645.0 million in the year ended March 31, 2009 from Rs.15,081.0 million in the year ended March 31, 2008. Our tower production capacity for the year ended March 31, 2009 was 108,000 MTs as against 84,000 MTs in the preceding year. This increase in revenue from the transmission and distribution division was primarily attributable to increased execution of power transmission projects, which was partially facilitated by our increased production capacity, as well as an increase in the number of new EPC contracts entered into by us. In addition, this increase was a result of the increased execution of distribution projects.

Biomass Energy Division. Revenue from the biomass energy division increased by 36.5% to Rs.540.8 million in the year ended March 31, 2009 from Rs.396.2 million in the year ended March 31, 2008. This increase was directly attributable to higher plant load factor, available working days during the period and sales of carbon credits.

Infrastructure Division. Revenue from the infrastructure division decreased by 6.0% to Rs.1,723.8 million in the year ended March 31, 2009 from Rs.1,832.9 million in the year ended March 31, 2008. This decrease was primarily due to the delayed award of the 48" Vijaypur Dadri pipeline project which has resulted in the revenues from such project being recognized in the next financial period.

Contract Receipts. Revenue from contract receipts increased by 43.0% to Rs.13,224.7 million in the year ended March 31, 2009 from Rs.9,245.1 million in the year ended March 31, 2008. This increase was primarily attributable to a strong order book and higher revenues from ongoing multiple projects during this period.

The increase in closing stock over opening stock for the transmission and distribution division of 135.8% to Rs.899.0 million as of March 31, 2009 from Rs.381.3 million as of March 31, 2008, was as a result of an increase in finished goods, semi-finished goods and work in progress, including fabricated tower parts and fabricated and galvanized tower parts.

Expenditure. Material cost increased by 26.3% to Rs.16,712.0 million for the year ended March 31, 2009 from Rs.13,226.7 million for the year ended March 31, 2008, primarily due to increased consumption of materials as a result of an increase in sales, as well as an increase in the prices of materials. Steel, aluminum conductors and zinc accounted for a majority of the material cost.

Employees' emoluments increased by 30.6% to Rs.1,988.0 million for the year ended March 31, 2009 from Rs.1,522.2 million for the year ended March 31, 2008, primarily as a result of

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an increase in the salary, wages and bonuses and an increase in the number of employees which was required due to an increased volume of work.

Manufacturing and operating expenses increased by 26.3% to Rs.8,804.8 million for the year ended March 31, 2009 from Rs.6,973.3 million for the year ended March 31, 2008, primarily due to increases in work charges, composite work charges and erection and sub-contracting expenses on account of increased operational activities.

Administrative, selling and other expenses decreased by 1.9% to Rs.1,916.5 million for the year ended March 31, 2009 from Rs.1,954.0 million for the year ended March 31, 2008, primarily due to decreases in service tax and miscellaneous expenses.

Financial expenses increased by 103.2% to Rs.1,368.8 million for the year ended March 31, 2009 from Rs.673.6 million for the year ended March 31, 2008, primarily due to an increase in utilization of our working capital facilities, increased levels of long-term loans, exchange rate variation impact on foreign currency loan liabilities and growth in our business which led to increased interest expenses, bank commissions and charges.

Depreciation increased by 48.9% to Rs.576.4 million for the year ended March 31, 2009 from Rs.387.0 million for the year ended March 31, 2008, primarily due to the substantial investment we made in plant and machinery during this period. During the year ended March 31, 2009, we invested Rs.1,152.7 million in additions to gross block plant and machinery.

Taxation. Our total tax liability for the year ended March 31, 2009 was Rs.416.8 million, representing an effective tax rate of 24.5%, compared to a tax liability of Rs.688.5 million, representing an effective tax rate of 27.7%, for the year ended March 31, 2008. We provided for or paid Rs.401.3 million of current tax for the year ended March 31, 2009 as compared to Rs.610.5 million of current tax for the year ended March 31, 2008. The lower tax liability for the year ended March 31, 2009 was primarily attributable to an increase in revenue in our export oriented unit, which is exempted from tax and also due to a reversal of a deferred tax liability of JMC.

Net Profit. Our net profit decreased by 28.6% to Rs.1,282.7 million for the year ended March 31, 2009 from Rs.1,796.5 million for the year ended March 31, 2008, primarily due to the factors discussed above, higher commodity prices, increased working capital cycle and adverse foreign currency movements.

Year Ended March 31, 2008 Compared to Year Ended March 31, 2007

Our results of operations for the year ended March 31, 2008 were particularly affected by the following factors:

• we secured an Rs.9.9 billion project from Maharashtra State Electricity Distribution Company Limited ("MSEDCL") to execute feeder separation work in the state of

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Maharashtra;

• we secured our first order for supply of towers from the United States and Canada;

• capital expenditure of over Rs.1.5 billion to cater for increased project execution demand from a strong consolidated order book; and

• the full year consolidation of JMC and SSLL.

Income. Our total sales and services, net of excise duty, increased by 67.4% to Rs.26,748.5 million in the year ended March 31, 2008 from Rs.15,981.9 million in the year ended March 31, 2007. This increase was attributable to an increase in income in our power transmission and distribution, infrastructure and biomass energy divisions and in contract receipts. Income from the transmission and distribution, biomass energy and infrastructure divisions and contract receipts accounted for approximately 55.9%, 1.5%, 6.8% and 34.2%, respectively, of our total income for the year ended March 31, 2008. Our total revenue for the year ended March 31, 2008 from within India was Rs.21,849.8 million, as compared to total income from outside of India of Rs.5005.9 million.

Transmission and distribution division. Revenue from the transmission and distribution division increased by 13.7% to Rs.15,081.0 million in the year ended March 31, 2008 from Rs.13,266.0 million in the year ended March 31, 2007. This increase in revenue from the transmission and distribution division was primarily attributable to increased execution of power transmission and distribution projects, which was facilitated an increase in the number of new EPC contracts entered into by us.

Biomass Energy Division. Revenue from the biomass energy division increased by 39.5% to Rs.396.2 million in the year ended March 31, 2008 from Rs.284.0 million in the year ended March 31, 2007. This increase was directly attributable to higher plant load factor and available working days during the period.

Infrastructure Division. Revenue from the infrastructure division increased by 25.1% to Rs.1832.9 million in the year ended March 31, 2008 from Rs.1,465.0 million in the year ended March 31, 2007. This increase was directly attributable to execution of an increased number of infrastructure projects during this period.

Contract Receipts. Revenue from contract receipts increased to Rs.9,245.1 million in the year ended March 31, 2008 from Rs.978.0 million in the year ended March 31, 2007. This increase was primarily attributable to the consolidation of the revenues of JMC which occurred during this period and also due to the strong order book position of JMC.

The decrease in closing stock over opening stock for the transmission and distribution division of 22.5% to Rs.381.3 million as of March 31, 2008 from Rs.491.9 million as of

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March 31, 2007, was as a result of a decrease in levels of finished goods, semi-finished goods and scrap.

Expenditure. The increase in expenditure witnessed in the year ended March 31, 2008 as compared to the year ended March 31, 2007 was primarily due to the impact of consolidation of JMC with effect from February 5, 2007 and SSLL with effect from March 18, 2007.

Material cost increased by 61.1% to Rs.13,226.7 million for the year ended March 31, 2008 from Rs.8,212.7 million for the year ended March 31, 2007, due to consolidation and to increased consumption of materials as a result of an increase in sales, as well as an increase in the prices of materials. Steel, aluminum conductors and zinc accounted for a majority of the material cost.

Employees' emoluments increased by 95.9% to Rs.1,522.2 million for the year ended March 31, 2008 from Rs.777.1 million for the year ended March 31, 2007, due to consolidation and as a result of an increase in the salary, wages and bonuses as a result of the increase in the number of employees, including casual contract workers, as well as higher salary and wage levels.

Manufacturing and operating expenses increased by 105.2% to Rs.6,973.3 million for the year ended March 31, 2008 from Rs.3,399.0 million for the year ended March 31, 2007, primarily due to consolidation and also due to increases in composite work charges, electricity charges, erection and sub-contracting expenses and vehicle and equipment running and hire charges.

Administrative, selling and other expenses increased by 86.0% to Rs.1,954.0 million for the year ended March 31, 2008 from Rs.1,050.4 million for the year ended March 31, 2007, primarily due to consolidation and also due to increases in taxes, duties and cess, service tax, miscellaneous expenses, bad debts written off, performance warranties and defect liability expenses and the incurrence of losses on outstanding contracts for foreign exchange and commodity derivatives.

Financial expenses increased by 53.4% to Rs.673.6 million for the year ended March 31, 2008 from Rs.439.1 million for the year ended March 31, 2007, primarily due consolidation and also due to an increase in utilization of our working capital facilities and growth in our business which led to increased interest expenses, bank commissions and charges.

Depreciation increased by 112.5% to Rs.387.0 million for the year ended March 31, 2008 from Rs.182.1 million for the year ended March 31, 2007, primarily due to consolidation and also due to the substantial investment we made in plant and machinery during this period. During the year ended March 31, 2008, we invested Rs.1,233.1 million as additions to gross block of plant and machinery.

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Taxation. Our total tax liability for the year ended March 31, 2008 was Rs.688.5 million, representing an effective tax rate of 27.7%, compared to a tax liability of Rs.590.2 million, representing an effective tax rate of 26.6%, for the year ended March 31, 2007. We provided for or paid Rs.610.5 million of current tax for the year ended March 31, 2008 as compared to Rs.538.0 million of current tax for the year ended March 31, 2007.

Net Profit. Our net profit increased by 10.2% to Rs.1,796.5 million for the year ended March 31, 2008 from Rs.1,630.3 million for the year ended March 31, 2007, primarily due to the factors discussed above.

Nine-months Ended December 31, 2009 Compared to Nine-months Ended December 31, 2008

Our results of operations for the nine-months ended December 31, 2009 were particularly affected by the following factors:

• strong order book and continued to execute orders of a high value in the power generation and transmission and infrastructure divisions, including the execution of high value projects for the Ministry of Energy and Water, Kuwait;

• non-availability of work fronts from clients of JMC;

• the global slowdown in the real estate sector; and

• the increase in SSLLs warehousing capacity and a higher volume of commodity trading transactions during this period.

KPTL

KPTL's total income increased by 32.4% to Rs.17,849.8 million in the nine-months ended December 31, 2009 from Rs.13,484.2 million in the nine-months ended December 31, 2008. This increase was attributable to an increased number of transmission and distribution and infrastructure projects undertaken by KPTL during this period. Total income from the transmission and distribution, biomass energy and infrastructure divisions accounted for approximately 82.0%, 2.2% and 15.8%, respectively, of KPTL's total income for the nine-months ended December 31, 2009.

KPTL's total expenditure increased by 27.4% to Rs.16,662.3 million in the nine-months ended December 31, 2009 from Rs.13,081.2 million in the nine-months ended December 31, 2008. This increase was primarily attributable to increases in erection and sub-contracting expenses, employee's emoluments and other expenditure and was in line with the increase of revenues described above.

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KPTL's tax expenses for the nine-months ended December 31, 2009 was Rs.398.9 million, representing an effective tax rate of 26.1% compared to a tax liability of Rs.223.1 million, representing an effective tax rate of 23.8%, for the nine-months ended December 31, 2008.

KPTL's net profit increased by 58.7% to Rs.1,130.6 million for the nine-months ended December 31, 2009 from Rs.712.4 million for the nine-months ended December 31, 2008.

JMC

JMC's total income decreased by 1.0% to Rs.9,443.0 million in the nine-months ended December 31, 2009 from Rs.9,536.2 million in the nine-months ended December 31, 2008. JMC's total expenditure also decreased by 2.6% to Rs.9182.2 million in the nine-months ended December 31, 2009 from Rs.9,427.2 million in the nine-months ended December 31, 2008. This decrease was primarily attributable to a decrease in construction expenses on account of the decreased income described above.

JMC's tax expenses for the nine-months ended December 31, 2009 was Rs.101.0 million, representing an effective tax rate of 33.1% compared to a tax liability of Rs.115.5 million, representing an effective tax rate of 36.1%, for the nine-months ended December 31, 2008.

JMC's net profit decreased by less than 0.2% to Rs.204.2 million for the nine-months ended December 31, 2009 from Rs.204.7 million for the nine-months ended December 31, 2008.

SSLL

SSLL's total income increased by 60.0% to Rs.606.4 million in the nine-months ended December 31, 2009 from Rs.379.4 million in the nine-months ended December 31, 2008. SSLL's total expenditure also increased by 86.3% to Rs.789.9 million in the nine-months ended December 31, 2009 from Rs.424.0 million in the nine-months ended December 31, 2008. This increase was primarily attributable to increase in overheads and finance costs on account of additions to warehousing capacity.

SSLL made a net loss after tax of Rs.26.2 million for the nine-months ended December 31, 2009 from a net profit of Rs.1.8 million for the nine-months ended December 31, 2008.

Financial Condition, Liquidity and Capital Resources

We broadly define liquidity as our ability to generate sufficient funds from both internal and external sources to meet our obligations and commitments. In addition, liquidity includes the ability to obtain appropriate equity and debt financing and loans and to convert into cash those assets that are no longer required to meet existing strategic and financial objectives. Therefore, liquidity should be viewed together with capital resources that consist of current or potentially available funds for use in achieving long-range business objectives and meeting debt service and other commitments.

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We have historically financed our working capital and capital expenditure requirements primarily through funds generated from our operations and financing from banks and other financial institutions in the form of term loans and working capital facilities. Our business requires a significant amount of working capital and capital expenditure. In many cases, significant amounts of our working capital are required to finance the purchase of materials and the performance of our contracts and other work before payments are received. Significant amounts of capital are also required to purchase plant and machinery for our operations. We believe that we will have sufficient capital resources from our operations, net proceeds of this Issue and other loans and borrowings to meet our capital requirements for at least the next 12 months.

Cash Flows

The table below summarizes our consolidated cash flows in the years ended March 31, 2009 and 2008:

Year ended March 31,

2009 Year ended March 31,

2008 (Rs. in millions)

Net cash from/(used in) operating activities ................................. (2,091.3) 439.9 Net cash (used in) investing activities ........................................... (1,568.1) (189.9) Net cash from/(used in) financing activities ................................. (3,776.0) (188.5) Net increase in cash and cash equivalents ..................................... 116.5 61.5

Net cash and cash equivalents increased to Rs.116.5 million as of March 31, 2009 from Rs.61.5 million as of March 31, 2008.

Operating Activities. Net cash used in operating activities increased to Rs.2,091.2 million for the year ended March 31, 2009 from net cash generated in operating activities of Rs.439.9 million for the year ended March 31, 2008, primarily as a result of increased levels of trade and other receivables.

Investing Activities. Net cash used in investing activities increased to Rs.1,568.2 million for the year ended March 31, 2009 from Rs.190.0 million for the year ended March 31, 2008, primarily as a result of purchases of fixed assets due to ongoing project execution requirements.

Financing Activities. Net cash from financing activities increased to Rs.3,776.0 million for the year ended March 31, 2009 from net cash used in financing activities of Rs.188.5 million for the year ended March 31, 2008, primarily as a result of an increase in long- and short-term borrowings on account of increased business activities and working capital requirements.

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Capital Expenditures

For the years ended March 31, 2009, 2008 and 2007, we spent Rs.2,700.8 million, Rs.1,651.82 million and Rs.1,274.14 million, respectively, on capital expenditures. The increase in the capital expenditure for the year ended March 31, 2009 was comprised of expansion of manufacturing capacity and additional of construction equipment to meet ongoing erection project requirements.

We expect to continue to invest in improving and modernizing our plants and machinery and construction equipment over the next several years. We may also, from time to time and in the course of expanding our international presence, consider making equity investments in, acquisitions of or mergers with companies in targeted international markets, as well as enter into strategic alliances in related businesses.

Indebtedness

As of March 31, 2009, we had total outstanding indebtedness of Rs.9,451.4 million, of which Rs.7,530.0 million was secured and the remainder was unsecured. The following table presents KPTL's secured indebtedness and certain of its characteristics as of March 31, 2009:

Name of Lender Type of Debt

Amount of Debt Outstanding

(millions) Rate of Interest Collateral Repayment schedule

Various ................................. Term loan Rs.13.44 Various Secured against vehicles 36 equal monthly instalments

EXIM Bank .......................... Term loan Rs.83.33 12.50% All movable fixed assets of transmission line

tower plant at sector 28, Gandhinagar

3 equal annual instalments commencing

October 29, 2008

EXIM Bank .......................... Term loan Rs.77.65 11.00% Specific movable fixed assets related to the

infrastructure division

34 equal monthly instalments commencing

April 20, 2008 Oriental Bank of Commerce Term loan Rs.83.30 9.50% All movable fixed assets

of transmission line tower plant at sector 28,

Gandhinagar

3 equal annual instalments commencing

November 6, 2008

Oriental Bank of Commerce Term loan Rs.58.52 8.50% Freehold land and immovable properties, specific movable plant

and machinery of biomass power plant situated at Padampur

14 half yearly equal instalments commencing

October 12, 2004

ICICI Bank ........................... Term loan U.S.$4.42 3M Libor + 150 bps

Movable and immovable plant and machinery of biomass power plant

situated at Uniara

21 quarterly equal instalments commencing

January 4, 2008

Life Insurance Corporation of India .................................

Debentures Rs.800 12.50% First pari passu charges on fixed assets of transmission and

infrastructure division, including land and

building of company exclusive of assets

3 equal annual instalments at the end of

5th, 6th and 7th year commencing December

26, 2013

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charged to the financial institution and bank

Consortium of Indian Bank, Oriental Bank of Commerce, State Bank of India, Union Bank of India and EXIM Bank ......................................

Working Capital

Rs.3,272.32 5% - 11% Stocks, stores and spares, book debts and bills receivable and all

other movable assets and further secured by all movable fixed assets

except charged to others of the factory premises and godown situated at

Gandhinagar or wherever else pertaining

to transmission and distribution and

infrastructure division and by simple mortgage over land and building

situated at sector-28 and sector 25, at

Gandhinagar.

Payable on Demand

Citibank ................................ Working Capital/(Bill Discounting)

Rs.149.70 10.00% Current assets and all movable assets at project

sites premises and godowns of the sites for execution of work under

GFSS-II of MSEDCL

90-150days from the date of discounting of

the bill

Oriental Bank of Commerce Working Capital/(Bill Discounting)

Rs.90.97 10.00% Current assets and all movable assets at project

sites premises and godowns of the sites for execution of work under

GFSS-II of MSEDCL

90 days from the date of discounting of the bill

The following table presents KPTL's unsecured indebtedness and certain of its characteristics as of March 31, 2009:



(millions) Rate of Interest Repayment due Life Insurance Corporation of India ............................................

Commercial Paper Rs.500 9.80% August 7, 2009

IDBI Bank................................... Short-term loan Rs.500 14.00% August 3, 2009 IDBI Bank................................... Short-term loan Rs.500 11.75 September 8, 2009 BNP ............................................ Overdraft and

bill discounting facility Rs.192.67 4%-6% Payable on demand

The following table presents JMC's secured indebtedness and certain of its characteristics as of March 31, 2009:



(millions) Rate of Interest Collateral Repayment schedule

Various .............................. Working capital Rs1055.5 From Note (1) Renewed annually

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demand loans 11.50% to 13.00%

The Bank of Rajasthan Ltd. .....................................

Term loan Rs.388.6 11.75% Note (2) Repayment from March 2009 in 36 installments

Standard Chartered Bank Term loan Rs.50.4 12.40% Note (2) Repayment in 36 monthly installments from October

2008 Oriental Bank Of Commerce .........................

Term loan Rs.220.2 12.25% Note (2) Repayment in 16 equal quarterly installments from

quarter March 2010 Indian Bank ....................... Term loan Rs.13.9 12.25% Note (2) Repayment in 16 equal

quarterly installments from quarter March 2010

Various .............................. Hire purchase loans

Rs.19.6 From 6.25% to 12.50%

Hypothecation of the underlying assets

Repayment in installments

Notes:

(1) The working capital facilities are secured by a first charge against hypothecation of stock, stock in process, store and spares, bills receivables, book debts and other movables except, in the case of security provided by a Joint Venture in which JMC is a member, in which case, a second charge on current assets and receivables in favor of a bank for a bank guarantee of Rs. 5,000 Lakhs and except a first charge over machinery and equipment financed by other term loans and further secured by second pari passu security charged on machinery and equipment financed by others for term loans and a first charge on the office premises of JMC.

(2) The term loans are secured by a first charge on specific plant and machinery.

The following table presents JMC's unsecured indebtedness and certain of its characteristics as of March 31, 2009:

Name of Lender Type of Debt Amount of Debt

Outstanding (millions) Rate of Interest Repaid Allahbad Bank ............................ Commercial paper Rs.200.0 10.45% July 2009

The following table presents SSLL's secured indebtedness and certain of its characteristics as of March 31, 2009:



(millions) Rate of Interest Collateral Repayment schedule Various .......................... Term loan Rs.0.97 12.50% Secured against

vehicles 48 monthly instalments

Union Bank of India ...... Term loan Rs.685.03 BPLR-1%, 10.75%

Secured against land and warehousing

complexes, hypothecation on the equipment and other

fixed assets

24 quarterly instalments

Union Bank of India ...... Working capital Rs.103.84 BPLR-1%, 10.75%

Hypothecation of stock and book debts, movable machinery and further secured

by lands and warehousing complexes

On demand

HDFC Bank Limited ..... Overdraft facility Rs.4.85 FDR+2.00% Secured against FDR On demand

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Debt Service

We expect to service our indebtedness primarily from operating profit. For the years ended March 31, 2009, 2008 and 2007, 30.6%, 15.1% and 10.9%, respectively, of our operating profit was applied to cover our financing costs.

Contractual Obligations and Commercial Commitments

The following table summarizes KPTL's contractual obligations on a standalone basis as of March 31, 2009 and the effect such obligations and commitments are expected to have on KPTL's liquidity and cash flows in future periods.

Contracted Obligations As of March

31, 2009 Less than 1

year 1–3 years 3-5 years More than 5

years

(Rs. in millions) Long term debt ······························ 1,341.4 215.8 269.3 323.0 533.3 Short term debt ······························ 5,205.7 5,205.7 - - - Purchase and other obligations (1) ·· 245.9 245.9 - - -

Note:

(1) Our purchase obligations only include our capital expenditure obligations and do not include any other obligations or commitments, including for purchases of materials or for lease payments.

Contingent Liabilities

The table below sets out material contingent liabilities that have not been provided for as of December 31, 2009:

Liabilities Amount

(Rs. in millions) Bank Guarantees ................................................................................................................................ 250.7 Claims against the Company not acknowledged as debt .................................................................... 240.1 Bonds/undertakings given by the Company for concessional duty/exemption to customs ................ 157.4 Show Cause Notice issued/demanded by the Service Tax/Entry Tax/CST/Stamps authority, disputed by the Company .................................................................................................................. 558.8 Benefit of countervailing duty under Custom Law disputed by the department ................................ - Penalty for delayed payment of Service Tax disputed before Appellate authority already stayed unconditionally .................................................................................................................................. 12.0 Guarantees on behalf of a Subsidiary................................................................................................. 135.5 Corporate guarantee given to bank for service provider activity ....................................................... 719.8 Guarantee given in respect of performance of contracts of Joint Venture entities in which Company is a member ....................................................................................................................... 1,467.2 Corporate guarantee for equipment hiring ......................................................................................... 285.7 Total ................................................................................................................................................... 3,827.2

Off Balance Sheet Commitments and Arrangements

We are generally required to furnish performance guarantees valid up to the expiry of the respective warranty periods, in amounts between 5% to 15% of the contract values to ensure

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performance of the contracts by us. In most of our contracts, such performance guarantees approximate 10% of the contract values. The validity of guarantees and warranties given by us generally extend for 12 months to 24 months after the date of the completion of the contract by us. We are liable for replacement of defective portions of our products and services and for rectifying the defects, if any, during the warranty periods under the terms of the contracts, and we provide for 1.5% of the contract receipts to meet such warranty liabilities. As of March 31, 2009, KPTL had reserved Rs.664.0 million for provision of such warranties and guarantees.

The expenses incurred during a warranty period after completion of the work are debited from the provision for performance warranties and defect liability expenses on our balance sheet. If the expenses incurred are lower than the provision, then on settlement of the final bill and on release or receipt of the contract performance guarantee from the customer, such excess provision is reversed and reflected as income on our profit and loss statement. Any expenditure beyond such provision is debited from the profit and loss account as and when it is incurred by us.

Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss related to adverse changes in market prices, including commodities risk, interest rate risk and foreign currency exchange risk. We are exposed to each of these risks in the normal course of our business.

Commodities Risk

We closely follow our exposure to price fluctuations of commodities on a contract-by-contract basis and selectively enter into hedging transactions in an attempt to reduce the risks of price fluctuations, these activities are not always sufficient to protect us against incurring potentially large losses if the prices of raw materials or fuel we use in our operations increase significantly in the future. Given that we hold our inventories for up to three months, our exposure to price fluctuations of commodities is exacerbated.

Interest Rate Risk

We have fixed and floating rate indebtedness and thus we are exposed to market risk as a result of changes in interest rates. As of December 31, 2009, Rs.6,814.5 million, or 81.8%, of KPTL's total indebtedness consisted of variable rate debt obligations, with original maturities ranging from 12 months to 7 years. We undertake debt obligations in the ordinary course of business including to finance capital expenditures and working capital needs. Increases in interest rates increase the cost of new debt and the interest cost of outstanding variable rate borrowings. We do not currently use any derivative instruments to modify the nature of our debt so as to manage our interest rate risk.

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Foreign Currency Exchange Rate Risk

Changes in currency exchange rates influence our results of operations. We report our financial results in Indian rupees, while significant portions of our total income and expenses are denominated, generated or incurred in currencies other than Indian rupees. We incur expenditures and also make procurements in a number of currencies at any one time, such as US dollar, Euro, UAE Dirham, Kuwait Dinar, Djibouti Franc, South Africa Rand, Kenya Shrilling, Algerian Dinar, Ethiopian Birr, Philippine Peso, Qatari Riyal and Zambian Kwacha. In the years ended March 31, 2009, 2008 and 2007, 27.1%, 28.3% and 26.1% of KPTL's total income on a standalone basis, respectively, was denominated in foreign currencies, while approximately 9.1%, 12.1% and 16.8% of KPTL's total expenditures on a standalone basis, respectively, was denominated in foreign currencies. To the extent that our income and expenditures are not denominated in Indian rupees, and even though we enter into foreign exchange hedging contracts from time to time, exchange rate fluctuations could affect the amount of income and expenditure we record.

As of December 31, 2009, we had foreign currency borrowings aggregating Rs.821 million. Further, our future capital expenditures, including any imported equipment and machinery, may be denominated in currencies other than Indian rupees. Therefore, a decline in the value of the Indian rupee against such other currencies could increase the Indian rupee cost of servicing our debt or making such capital expenditures.

Although we closely follow our exposure to foreign currencies on a contract-by-contract basis and selectively enter into hedging transactions in an attempt to reduce the risks of currency fluctuations, these activities are not always sufficient to protect us against incurring potentially large losses if currencies fluctuate significantly. Moreover, our ability to hedge during the period between our bid submission and the award of the contract is also limited and may not be effective in reducing our risks.

Significant Accounting Policies

Revenue recognition

• Transmission and Distribution: Sales are recognized on delivery of materials. Sales includes excise duty and export benefits being duty entitlement pass book credits but excluding sales tax. Erection and works contract revenue for work completed are recognized on percentage of completion method based on completion of the physical portion of the contract work. When it is probable that the total contract cost will exceed the total contract revenue, the expected loss is recognized immediately.

• Real Estate: We recognize revenue at the time of transfer of significant risks and rewards of ownership to the buyer on executing an agreement for sale and estimated cost of completion against sales recognized, wherever applicable, is provided for in the

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profit and loss account. Advances received against booking of units appear as current liabilities.

• Biomass Energy: We recognize revenue on supply of electricity generated to the customer.

• Infrastructure: Revenue is recognized by adding the aggregate cost and proportionate profit margin using the percentage of completion method. Percentage of completion is determined as a proportion of cost incurred as of a specific date to the total estimated contract cost.

• Construction: Running account bills for work completed are recognized on percentage of completion method based on completion of physical portion of the contract work. Income on account of claims and extra item work is recognized to the extent we expect, with reasonable certainty, receipts or acceptance from the client. When it is probable that the total contract cost will exceed the total contract revenue, the expected loss is recognized immediately.

• Warehousing: revenue generated from warehousing facility under arrangements with National Collateral Management Services Ltd. ("NCMSL") is recognized as per warehouse utilization by the customer at prescribed rates by the National Commodity and Derivatives Exchange on the basis of 60% of revenue earned through NCMSL as franchisee of the warehouses. Revenue from cold storage and warehousing (other than above) is typically recognized as per prevailing rules and regulations of the local mandi/market, for storage of commodities. If at the end of the year, revenue remains to be booked it is accounted for as accrued income under the accruals system of accounting.

• Other income: dividends are recorded when the right to receive payment is established. Interest income is recognized on a time proportion basis.

Inventories.

• Transmission and distribution: raw materials, semi-finished goods, finished goods, scraps, construction work in progress and construction and other store spares and tools and trading goods are stated at lower of cost and net realizable value. The cost of inventories was computed on a first in first out (FIFO) basis but the implementation of SAP changed this to the weighted average method with effect from April 1, 2009 which has a nominal impact on the inventories.

• Real estate: finished and semi-finished inventory are stated at lower of cost and net realizable value. Cost is computed on average cost basis which includes payments made against agreement to purchase land, development cost direct and attributable towards

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the specific real estate project and cost of borrowings as stated in note 1L to our Audited Consolidated Financial Statements.

• Biomass Energy: fuel and stores, spares and tools are stated at lower of cost and net realizable value. The cost of fuel is computed on weighted average basis and stores, spares and tools are computed on a FIFO basis.

• Infrastructure: construction material and stores, spares and tools are valued at lower of cost or net realizable value. The cost is computed on a FIFO basis.

• Construction: construction material, stores and spares are valued at lower of cost or net realizable value. Cost includes cost of purchase and other expenses incurred in bringing inventory to their respective present location and condition. Cost is determined using the FIFO method of inventory valuation. Work in progress is valued at lower of cost and net realizable value. In cases where work is completed but a running account bill cannot be raised due to contractual conditions, the work in progress is valued at contract rates.

• Warehousing: trading goods are stated at the lower of cost and net realizable value. The cost of inventories is computed on a FIFO basis.

Investments

Long term investments are stated at cost after deducting the provision for diminution in value, if any, other than of a temporary nature. Current investments are stated at lower of cost or fair value.

Retirement Benefits

Gratuity liability is provided under a defined benefit plan, under group gratuity cash accumulation scheme of the Life Insurance Corporation of India under an irrevocable trust. Our liability towards gratuity is determined on the basis of actuarial valuation done by an independent actuary. Contribution to the Provident Fund and the Superannuation Fund, other than a defined contribution plan, are charged to the profit and loss account. Provision for leave encashment liability is made on actuarial valuation as at the balance sheet date. All other short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

Excise/Custom Duty

Liability for excise and custom duty in respect of materials lying in factory/bonded premises is accounted for as and when they are cleared/debonded.

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Deferred Revenue Expenses

Preliminary expenses incurred before March 31, 2003 are amortized over a period of five years and incurred after March 31, 2003 are charged to revenue.

Foreign Currency Transactions. Transactions in foreign currencies are accounted for at the exchange rate prevailing at the date of the transaction.

Assets and liabilities remaining unsettled at the end of the year are translated at the exchange rate prevailing at the end of the year and the difference is adjusted to the respective accounts in the profit and loss account. The exchange gain or loss between forward exchange contract rate and exchange rate at the date of transaction are recognized in the profit and loss account over the life of the contract.

Translation of overseas jobs/branches of a non-integral foreign operation are translated as follows:

• Assets and liabilities, at rates prevailing at the end of the year;

• Income and expenses, at the average rate for the year, and

• Resulting exchange differences are accumulated in the foreign currency translation reserve account.

In respect of foreign currency option contracts for which hedges are entered into, the cost of these contracts, if any, is expensed over the period of the contract. Any profit or loss arising on settlement or cancellation of currency options is recognized as income or expense for the period in which settlement or cancellation takes place.

Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of such assets. All other borrowing costs are recognized as expense in the period in which they are incurred.

Impairment of Assets

The carrying amount of assets is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the assets is estimated. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and recognized in compliance with AS-28.

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Taxes on Income

Tax on income for the current period is determined on the basis of estimated taxable income and tax credit computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognized on timing difference between the accounting income and the estimated taxable income for the period and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

Deferred tax assets which arise mainly on account of unabsorbed losses or unabsorbed depreciation are recognized and carried forward only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.

Fringe benefits tax is measured at the specified rates on the value of fringe benefits in accordance with the provisions of section 115 WC of the Income Tax Act, 1961.

Commodity Hedging

In order to hedge risk on purchases of material exposed to commodity price risk, we enter into forward contracts in the futures market. We do not enter into such hedging contracts or transactions for speculative purposes. The hedging transactions are used only for the purpose of managing exposure to commodity price risks. The income and gain/loss arising on this account are recorded at the time of settlement/cancellation whether during the year or the succeeding year and are adjusted as part of cost of the respective material.

Accounting for project mobilization expenses

Expenditure incurred on mobilization and creation of facilities for site is written off in proportion to work done at the respective sites so as to absorb such expenditure during the tenure of the contract.

Use of Estimates

The presentation of financial statements requires certain estimates and assumptions. These estimates and assumptions affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual result and estimates are recognized in the period in which the results are known /materialized.

Provisions, contingent liabilities and contingent assets

Provisions involving a substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and that probability requires an outflow of resources.

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A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no disclosure is made.

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INDUSTRY

Unless otherwise indicated, the information in this section is derived from a combination of various official and unofficial publicly available materials and sources of information. It has not been independently verified by the Company, the Global Coordinators and Bookrunners or their respective legal or financial advisors, and no representation is made as to the accuracy of this information, which may be inconsistent with information available or compiled from other sources. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but their accuracy, completeness, underlying assumptions and reliability cannot be assured. Accordingly, investment decisions should not be based on such information.

Overview of the Indian Economy

India, the world’s largest democracy in terms of population (1,157 million people) had a GDP on a purchasing power parity basis of approximately US$3,561 billion in 2009. This makes it the fourth largest economy in the world after the United States of America, China and Japan. (Source: CIA "World Factbook")

In 1991, the Central Government initiated a series of comprehensive macroeconomic and structural reforms to promote economic stability and growth. The key policy reforms that were initiated by the Central Government were focused on implementing fundamental economic reforms, deregulation of industry, accelerating foreign investment and pushing forward a privatization program for disinvestment in public sector units. Consequent to the reforms, India’s economy registered robust growth with an average real GDP rate of approximately 7.77% over the period fiscal 2003 to fiscal 2007. (Source: XIth FYP)

For fiscal year 2009, India had a GDP real growth rate of 6.5%, as compared to 7.4% in fiscal 2008 and 9.0% in fiscal 2007. (Source: CIA "World Factbook")

The Indian Infrastructure Opportunity

The Indian economy is based on planning through successive five year plans ("FYPs", each an "FYP") that set out targets for economic development in various sectors, including the infrastructure sector. The XIth FYP aims at a sustainable GDP growth rate of 9.00%, but there is general consensus that infrastructure inadequacies would constitute a significant constraint in realizing this development potential. To overcome this constraint, an ambitious program of infrastructure investment, involving both public and private sector, is being developed for the XIth FYP. Infrastructure spending targets for the XIth FYP were revised from 4.60% to 7.50% of GDP representing an increase of over 140.00% compared to the Xth FYP.

The program strengthens and consolidates recent infrastructure initiatives, such as the Bharat Nirman for building rural infrastructure, as well as sectoral initiatives, such as the National

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Highways Development Programme, the Airport Financing Plan, the National Maritime Development Programme and the Jawaharlal Nehru National Urban Renewal Mission. Given the scale of infrastructure spending, the Central Government is encouraging private sector participation through public private partnership projects.

Overview of the Indian Power Sector

The growth in demand for power in India has generally been higher than the gross domestic product growth rate. According to the Indian Ministry of Power, as of March 2009, Indian power supply needed to grow at approximately more than 7.00% annually to keep pace with gross domestic product growth at 8.00% per annum. (Source: Ministry of Power, April 2009)

Demand for engineering, procurement and construction services in the power transmission lines and power distribution businesses is largely dependent on development, demand and new investments in the power generation, transmission and distribution sectors. As of June 2009, India faced an energy shortage of approximately 9.5% of total energy requirements and 13.8% of peak demand requirements. (Source: CEA, "Power Scenario at a Glance", July 2009)

The global downturn that began in mid-2008 slowed down the level of industrial growth and in turn slowed the year on year growth for demand for electricity to 4.7%, against an average growth of 9% in the previous five years. (Source: Crisil Research Report, "State of the Industry")

Further, despite a significant increase in recent years, per capita consumption of power in India continues by a large margin to be below that in other economies, as noted by the International Energy Agency in "Key World Energy Statistics" (2008).

A key risk to the continued growth of the Indian economy is inadequate infrastructure. The Central Government has identified the power sector as a key sector of focus to promote sustained industrial growth by embarking on an aggressive mission – "Power for All" by 2012. According to the Integrated Energy Policy report issued by the Planning Commission, India would require additional capacity of approximately 73-86 GW by 2012, 159-190 GW by 2017 and 278–341 GW by 2022, respectively, based on normative parameters in order to sustain a 8.00-9.00% GDP growth rate (Source: IEP, Expert Committee on Power).

Power Generation

According to the CEA, as of February 28, 2010, India’s power generation systems had an installed capacity of around 157,229 Mega Watts ("MW") as against 147,965 MW as of February 28, 2009 (each excluding captive generation capacity). Thermal power plants powered by coal, gas, naphtha or oil accounted for 64.6% of total power capacity in India as of February 28, 2010, hydroelectric stations for 24.7% and others (including renewable sources of energy and nuclear stations) accounted for 10.6%. As of February 28, 2010,

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Central Public Sector Undertakings accounted for approximately 34%, various state entities accounted for 52.5% and private sector companies accounted for approximately 13.5%, of total power generation capacity.

The Central Government has adopted a system of successive five year plans that set out targets for economic development in a number of sectors, including the power sector. Each successive five year plan has increased power generation capacity addition targets. The Ministry of Power has projected an installed capacity of 212,000 MW by 2012. The XIIth FYP envisages Rs.4,951 billion of investment into the power generation sector, building on Rs.5,917 billion of investment proposed in the XIth FYP.

The XIth FYP envisaged a planned additional capacity of 78,700 MW, although these targets have not been met. An additional 92.5 GW generation capacity is envisaged in the XIIth FYP.

Installed Capacities

The all-India installed capacity for electric power generation increased from 147,965 MW as on February 28, 2009 to 157,229 MW as on February 28, 2010. All India power generation increased from 704.5 billion units ("BU") in Fiscal 2008 to 723.6 BU in Fiscal 2009. (Source: Crisil Research Report, "State of the Industry")

The 17th Electric Power Survey ("EPS") carried out by CEA has projected a peak demand of 152,746 MW and an energy requirement of 969 billion Kilo watt hours ("Kwh") by 2011-2012, an increase from 93,547 and 648 billion kWh respectively in 2006-2007. This represents the requirement for substantial augmentation of power generation capacity. We believe that investment in the power generation sector would lead to increased investment in the power transmission and distribution sector as well.

The table below shows projected installed capacity additions in the regions and for the periods stated:

2009-10 2010-11 2011-12 2012-13 2013-14 Total Central ............................................... 2,305 4,876 5,321 4,748 4,995 22,245 State ................................................... 2,999 2,479 3,055 2,030 3,207 13,770 Private ................................................ 3,560 3,920 3,615 8,880 10,060 30,035 Total ................................................... 8,864 11,275 11,991 15,658 18,262 66,050

Source: Crisil Research Report "State of the Industry"

Transmission

Transmission of electricity is typically defined as the bulk transfer of power over a long distance at a high voltage generally 132 kilovolts ("KV") and above. A reliable transmission and distribution system is important for the proper and efficient transfer of power from generating stations to load centers. A transmission and distribution ("T&D") system is typically comprised of transmission lines, sub-stations, switching stations, transformers, and

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distribution lines. As the Central Government plans to increase installed power generation capacity to 224,906 MW by 2012 from the present level of 157,229 MW, this would facilitate an expansion of the regional transmission network and inter-regional capacity to transmit power. Inter-regional transmission networks are required because power generation sources are unevenly distributed in India and power needs to be carried over large distances to areas where load centers and demand exist.

In order to ensure the reliable supply of power and the optimal utilization of generating capacity, a T&D system is organized in a grid, which interconnects various generating stations and load centers. This ensures uninterrupted supply of power to a load center, even if there is a failure at the local generating station, or a maintenance shutdown. In addition, power can be transmitted through an alternate route, if a particular section of the transmission line is unavailable.

Traditionally, the Central Government has focused on investment into power generation and in the process the T&D segment has attracted significantly less investment. As a result of this, and the fact that India's electricity generation resources are distributed unevenly, there is a critical requirement for a reliable transmission system within the Indian power sector, a fact which has been recognized by the XIth FYP which proposed Rs.1,400 billion of investment in the transmission sector, with the XIIth FYP proposing Rs.2,400 billion of investment. Investment in the transmission sector has seen the total length of transmission lines in India increase from 2.50 million circuit kilometers in 1980-81 to 6.94 million circuit kilometers in 2006-07. (Source: Crisil Research Report 'State of the Industry')

The table below shows the growth in the power transmission sector since the VIth FYP:

Transmission Lines (ckm)

At the end of 400 KV Transmission lines 220 KV Transmission lines Central State JV/Pvt Total Central State JV/Pvt Total 6th Plan .......................................... 1,831 4,198 6,029 1,641 44,364 46,005 7th Plan ......................................... 13,068 6,756 19,824 4,560 55,071 59,631 8th Plan ......................................... 23,001 13,141 36,142 6,564 73,036 79,600 9th Plan ......................................... 29,345 20,033 49,378 8,687 88,306 96,993 10th Plan ....................................... 50,992 24,730 75,722 9,444 105,185 114,629 11th Plan up to March 2010 .......... 35,010 28,772 3,571 97,353 10,272 117,506 321 128,099

Sub-Stations (MVA)

At the end of 400 KV Transmission lines 220 KV Transmission lines Central State JV/Pvt Total Central State JV/Pvt Total 6th Plan ............................ 715 8,615 9,330 500 36,791 37,291 7th Plan ........................... 6,760 14,820 21,580 1,881 51,861 53,742 8th Plan ........................... 17,340 23,525 40,865 2,566 81,611 84,177 9th Plan ........................... 23,575 36,805 60,380 2,866 113,497 116,363 10th Plan ......................... 40,455 52,487 92,942 4,276 152,221 156,497

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11th Plan up to March 2010 ................................ 58,595 57,832 116,427 4,776 182,909 1,440 189,125

In India, the T&D system is a 3-tier structure comprising distribution networks, state grids, and regional grids. These distribution networks and state grids are primarily owned and operated by respective State Electricity Boards ("SEBs") or State Governments (through state electricity departments). Most inter-state transmission links are owned and operated by PGCIL, though some are jointly owned by the concerned SEBs. In addition, PGCIL owns and operates many inter-regional transmission lines (part of the national grid) to facilitate the transfer of power from a region of surplus to one with a deficit. These regional grids also facilitate the optimal scheduling of maintenance outages and better coordination between power plants. At present there are five regional grids operating in India - Northern, Eastern, Western, Southern and North-eastern region.

These regional grids will be gradually integrated to form a national grid, whereby power in a region of surplus can be transferred to another, resulting in the optimal utilization of capacity generation. For instance, the Eastern region currently has the largest power surplus, whilst the Northern region, currently has a deficit. The current total inter-regional transmission capacity is 20,570 MW. With the proposed addition of 16,630 MW, the total inter-regional transmission capacity is expected to be 37,200 MW by the end of the XIth FYP. Based on the updated XIth FYP, the projected power exchange requirement load flows among various regions for 2011-12 is as set forth below:

Load flows for 2011-12 for peak demand and availability (surplus/deficit)

Region Winter (MW) Monsoon (MW) Summer (MW) Northern ................................................... (7,870) 1,220 (2,600) Western .................................................... (4,460) (5,630) (6,300) Southern ................................................... (2,620) (1,340) (1,360) Eastern ..................................................... 12,510 1,700 6,420 North-Eastern ........................................... 2,440 4,050 3,840

Source: National Electricity Plan - Transmission

Load flows for 2011-12 for off-peak demand and availability (surplus/deficit)

Region Winter (MW) Monsoon (MW) Summer (MW) Northern ...................................................... (5,880) ― (4,280) Western ....................................................... 340 (2,090) ― Southern ...................................................... ― ― ― Eastern ........................................................ 5,390 700 3,000 North-Eastern .............................................. 150 1,390 1,280


Inter-regional transmission capacity planned is set forth in table below:

By Fiscal 2012 (MW) North-Easterm-North ................................................................. 4,000 North-Eastern-East .................................................................... 1,000 East-North .................................................................................. 3,500

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East-West ................................................................................... 5,700 North-West 5,500 West-South ................................................................................ 1,000 Total ........................................................................................... 20,700


According to CEA, to implement the development of the transmission network as envisaged up to 2012, the estimated quantity of materials required is as follows:

Estimated quantity of material requirement during 2005-2012 Million Tons Steel for Towers ................................................................................................................................................ 2.83 Zinc ................................................................................................................................................................... 0.18 Aluminum for conductor and earth wires ......................................................................................................... 0.97 Steel for conductor and earth wires ................................................................................................................... 0.51 Recent Developments

With a view to accelerating the growth of transmission infrastructure in India, the Central Government has permitted private companies to invest in the power transmission space, either through a joint venture with PGCIL or via an independent private transmission company based on competitive bidding.

There have been a number of other factors in recent years which are leading to increased investment in the power industry and private sector participation in it:

• Regulatory reforms

The Electricity Act, 2003 (the "Electricity Act") was enacted in order to simplify the legislation governing the electricity generation, transmission and distribution sectors and to introduce reforms aimed at addressing systemic deficiencies in the Indian power industry. The key provisions of the Act allow for delicensing of power generation, open access to power transmission and distribution, restructuring of state electricity boards, compulsory metering of consumers and increased penalties for the theft of electricity. The Electricity Act also included provisions to facilitate captive power plants. However, the pace of implementation of these reforms has varied across states.

The Electricity Act, in combination with the National Tariff Policy introduced in January 2006, also mandates that all future power purchases by distribution licensees must be based on competitive bidding in order to obtain the benefits of reduced capital costs and efficiency of operations.

Recent regulatory reforms include rules and provisions relating to interstate trading in electricity in order to promote competition and several entities have started trading operations or have applied for trading licenses.

• National grid

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In order to optimize the utilization of generation capacity through the exchange of power between surplus and deficit regions and exploit the uneven distribution of hydroelectric potential across various regions, the Central Government, in 1981, approved a plan for setting up a national grid. The plan envisaged the setting-up of high-voltage transmission links across various regions, in order to enable the transfer of power from surplus to deficit regions.

The process of setting-up the national grid was initiated with the formation of the central sector power generating and transmission companies, NTPC, National Hydroelectric Power Corporation Limited ("NHPC") and PGCIL. PGCIL was made responsible for planning, constructing, operating and maintaining all inter-regional links and taking care of the integrated operation of national and regional grids. The national grid, when fully operational, is expected to have a total inter-regional transmission capacity of 37,150 MW. It is expected to be fully operational by around 2012. Setting up a national grid requires the gradual strengthening and improvement of regional grids and their progressive integration, through extra high voltage and high voltage direct current ("HVDC") transmission lines.

A national grid would enable optimal utilization of energy resources by facilitating a uniform thermal-hydel mix among various regions. The national grid, when fully operational (expected by 2012), is expected to have a total inter-regional transmission capacity of 37,150 MW.

• Grid discipline

Grid discipline involves maintaining the grid frequency within tolerance limits (49.2-50.3 Hz) and complying with the directions of the Regional Load Dispatch Centres (RLDCs), with respect to load dispatch and drawing of power.

However, in the absence of adequate incentives and disincentives, RLDCs are unable to enforce the directives. Further, load management, through load shedding or backing down by each of the constituents, is an important aspect of the operation of a grid system. Inadequate load dispatch and communication facilities often result in lack of co-ordination with respect to the scheduling of load and generation between states.

In 1999, the Central Electricity Regulatory Commission (the "CERC") drafted the Indian Grid Code, which, along with the incentives and disincentives notified under the Availability-Based Tariff Order, is expected to induce better grid discipline among the various grid constituents.

Unscheduled interchange charges are levied on defaulting entities which overdraw/underdraw from the grid and disturb the grid balance. Previously, the charges had been escalated up to Rs.10 per unit of excess capacity drawn. However, in order to improve the grid stability recently, the CERC reduced the band (i.e. from 50.5-49.0 Hz to 50.3-49.2 Hz), and charges to Rs.7.3 per unit of excess units drawn.

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• Private investments in transmission

In 1998, the Central Government enacted the Electricity Laws (Amendment) Act, which recognized transmission as an independent activity (distinct from generation and distribution), and allowed private investments in the sector.

According to the Government policy, the State Transmission Utilities (the "STUs"), SEBs or their successor entities and PGCIL will identify transmission projects for the intra-state and inter-state/inter-regional transmission of power, respectively. The STUs and Central Transmission Utility ("CTU") will invite private companies to implement these projects through an independent private transmission company ("IPTC") or on a joint venture basis. The IPTC would be selected through an international competitive bidding process. The primary criteria for selection would be the quoted transmission service charges and the technical, managerial and financial capabilities of the bidders. In the case of joint venture companies, the CTU and STUs could own an equity stake of up to 26%. Joint venture partners could also be selected on the basis of an international competitive bidding process. Further, the primary selection criteria would be the technical and financial strength of the bidders. Transmission service charges would be determined on a cost plus basis under the supervision of the CERC or State Electricity Regulatory Commissions ("SERCs"). The IPTC’s role will be limited to the construction, ownership and maintenance of transmission lines. Operations of the grid, including load dispatch, scheduling and monitoring, will be undertaken by the STUs and the CTU at the intra-state and inter-state/inter-regional level, respectively. The CTU and STUs will be involved in the development phase for obtaining project approvals and various regulatory and statutory clearances (such as environment and forest clearance and securing right-of-way), and will transfer the same to the selected private companies.

• Distribution reforms

To improve distribution, the Government formulated the Accelerated Power Development Reform Programme (APDRP). This programme aims to improve the financial viability of state power utilities, reduce aggregate technical and commercial losses to around 10%, improve customer satisfaction, and increase reliability and quality of power supply.

Under this programme, loans, grants and incentives are offered to States pursuing distribution reforms. It addresses the problems faced by States at a micro level (consumer, feeder, substation) as well as macro level (circle, state national), entailing intervention at six stages. These funds are utilized to upgrade and modernize their sub-transmission and distribution (below 33 kV or 66 kV) networks.

To December 2008, the Government had sanctioned 571 projects, amounting to Rs.170.33 billion to strengthen and upgrade sub-transmission and distribution systems of the various States. The States have utilized Rs.126.07 billion. An amount of Rs.28.79 billion has also

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been released to nine States for achieving reduction in cash losses under the incentive component of the programme.

Projected Energy Demand

The projected energy demand in India is as tabulated below:

State/Year 2011-12 (billion kWh)

2016-17 (billion kWh)

2021-22 (billion kWh)

Northern Region ................................................. 294.84 411.51 556.77 Western Region .................................................. 294.86 409.81 550.02 Southern Region ................................................. 253.44 380.07 511.66 Eastern Region ................................................... 111.80 168.94 258.22 North-Eastern Region ......................................... 13.33 20.94 37.00 Islands………………………………………... 0.38 0.60 0.85 Total ................................................................... 968.66 1,391.87 1,914.51

Source: Crisil Research Report "State of the Industry"

The table below sets forth the development of PGCIL's power transmission network for the periods show:

VIIIth FYP IXth FYP Xth FYP XIth FYP Transformation cap (MVA) ................. 23,331 34,288 59,417 96,037 Transmission network (Ckm) ............... NA 40,289 59,461 94,797 No. of substations ................................. 54 68 104 138 Inter-regional cap (MW) ....................... NA 5,000 14,100 37,000

Source: PGCIL and CEA: "Presentation on Transmission System Requirement For The 12th Plan (20012-17)"

It is proposed to add transmission lines in the XIth FYP as set forth in the table below:

XIth FYP Year Ckm Ckm 765 kV ..................................................................................................................... 3,200 3,200 400 kV ..................................................................................................................... 44,440 44,440 HVDC Bi-pole (MW) .............................................................................................. — — HVDC BtB (MW) ................................................................................................... — — HVDC +/- 600 kV ................................................................................................... 3,600 3,600 HVDC +/- 500 kV ................................................................................................... 1,800 1,800

Source: CEA: "Presentation on Transmission System Requirement For The 12th Plan (20012-17)"

An investment of Rs.705 billion has been planned in this sector. PGCIL and private sector capital outlays in the XIth FYP is given below:

(Rs. in billions) XIth FYP PGCIL’s Outlay ........................................................................................................................... 282.58 Private Sector participation .......................................................................................................... 111.85 Total Central Sector .................................................................................................................. 394.43

Source: Ministry of Power website

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Private Investments in Transmission

In 1998, the Central Government enacted the Electricity Laws (Amendment) Act, which recognized transmission as an independent activity (distinct from generation and distribution), and allowed private investment in the sector.

According to Government policy, the state transmission utilities (STUs, SEBs or their successor entities) and the central transmission utilities (CTU, PGCIL) will identify transmission projects for the intrastate and inter-state/inter-regional transmission of power respectively. The STUs and CTU will invite private companies to implement these projects through an IPTC, or on a joint venture basis.

The IPTC would be selected through an international competitive bidding process. The primary criteria for selection would be the quoted transmission service charges and the technical, managerial and financial capabilities of the bidders. In the case of joint venture companies, the CTU and STUs could own an equity stake of up to 26%. Joint venture partners could also be selected on the basis of an international competitive bidding process. The primary selection criteria would be the technical and financial strength of the bidders. Transmission service charges would be determined on a cost-plus basis, under the supervision of the CERC or SERCs.

The role of IPTC will be limited to the construction, ownership and maintenance of transmission lines. Operations of the grid, including load dispatch, scheduling and monitoring, will be undertaken by the STUs and the CTU at the intra-state and inter-state/inter-regional level, respectively. The CTU and STUs will be involved in the development phase for obtaining project approvals and various regulatory and statutory clearances (such as environment and forest clearance and securing right-of-way), and will transfer the same to the private companies selected.

Distribution

Power distribution is a critical link between power generation and transmission and end users of power. As a result of high T&D and commercial losses and weak financial health of SEBs, the investments in such sector have historically been less and the growth and maintenance of distribution systems in India has been poor. The XIth FYP and the XIIth FYP, however, envisaged Rs.3,091 billion and Rs.4,001 billion in investment in power distribution.

To improve distribution of power, the Central Government has formulated the APDRP. The objectives of this program are improving the financial viability of state power utilities, reduction of aggregate technical and commercial losses to around 10%, improving customer satisfaction, increasing reliability and quality of power supply. The APDRP has two components — the investment and the incentive component. Under the investment component, the Government provides assistance worth 50% of the project cost, of which 25% is a grant and 25% is a loan. The balance 50% has to be arranged by the utilities either

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through internal resource generation or from financial institutions or from other sources of funds. Special category states such as Jammu & Kashmir, Himachal Pradesh, Uttaranchal and Sikkim receive full assistance from the Central Government out of which 90 per cent is grant and the remaining 10 per cent is loan. Priority is given to projects from those States who have committed themselves to a time-bound program of reforms as elaborated in the Memorandum of Understandings and Memorandum of Agreements and are progressing on those commitments. These funds will be utilized for upgrading and modernizing their sub-transmission and distribution (below 33 KV or 66 KV) networks.

The table below sets for the proposed budgetary allocation for APDRP for the periods indicated:

Years (Rs. m) Part-A (loan) Part-B (loan) Part-C&D (grant) Total FY09 ................................................................ 3,250 - 250 3,500 FY10 ................................................................. 35,000 22,500 2,500 60,000 FY11 ................................................................. 61,750 35,500 6,000 103,250 FY12 ................................................................. - 42,000 7,020 49,020 Total ................................................................. 100,000 100,000 15,770 215,770

Source: Infraline

To further strengthen the pace of rural electrification and with an objective to electrify all villages and rural households in five years, the Central Government launched Rajiv Ghandhi Grameen Vidyutikaran Yojna ("RGGVY"). RGGVY aims to create rural electricity distribution backbone through providing for sub-stations, distribution transformers and decentralized distribution generation system where grid supply is not feasible. The RGGVY scheme identified that 112,400 villages and over 56% of rural households were still to be electrified which required huge investment. The Central Government also redefined the scope of village electrification for the purposes of the scheme and as per the revised definition, over 125,000 villages are to be electrified. The Central Government recognized that in Arunachal Pradesh, Bihar, Jharkhand, Meghalaya, Uttar Pradesh less than 75% of villages were electrified, while in Assam, Chhatisgarh, Manipur, Orissa, Uttaranchal and West Bengal less than 95% but more than 75% villages were electrified. As per the scheme, the Central Government would provide 90% capital subsidy and make available soft loans to SEBs through REC. It was estimated that for electrifying 125,000 villages, providing rural electrification for households below the poverty line and for augmenting backbone network in already electrified villages having un-electrified villages, a capital cost of Rs.812.5 million, Rs.315 million and Rs.462 million respectively totaling Rs.1,625 million is required. The RGGVY scheme estimated total Central Government subsidies amounting to Rs.1,475 million.

The table below sets forth the committed spend under RGGVY for the periods indicated:

No. of Xth FYP XIth Plan Total Projects .......................................................................... 235 338 573 Districts .......................................................................... 234 300 534

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Un-electrified villages .................................................... 68,673 49,826 118,499 Intensive electrification of electrified villages ............... 111,936 243,005 354,941 BPL* households (m) .................................................... 8.3 16.37 24.67 Project cost (Rs m) ......................................................... 97,329 214,359 311,688

*Below poverty line . Source: RGGVY, as on March 30, 2010

Implementation of RGGVY scheme:

As on April 23, 2010, progress of the RGGVY scheme as reported on the RGGVY Scheme Website is as follows: 573 projects for 587 districts have been sanctioned covering 27 states at the cost of Rs.263.5 billion covering 118,499 un-electrified villages.

Overview of the International Markets

Besides the burgeoning demand in the Indian markets, demand emanates from Africa for lump-sum turnkey transmission work. However, information on upcoming orders in the international markets is not readily available or reliable.

The table below shows new electricity generating capacity and investment by region for the period 2005-2030:

Investment in electricity sector (US$ billions)

Capacity

additions (GW) Generation Transmission Distribution Total OECD ................................ 2,041 2,248 578 1,414 4,240 North America ................... 932 953 314 711 1,979 - United States ................... 750 794 249 567 1,609 Europe ................................ 928 1,014 159 507 1,680 Pacific ................................ 181 281 105 196 582 - Japan ............................... 65 129 47 82 259 Transition Economies ...... 329 285 67 237 590 - Russia .............................. 153 149 25 88 263 Developing Countries ...... 2,717 2,653 1,196 2,598 6,446 Developing Asia ................ 1,824 1,965 908 1,974 4,847 - China ............................... 1,089 1,170 579 1,258 3,007 - Indonesia ......................... 84 83 33 71 187 - India ................................ 330 408 176 383 967 Middle East ........................ 335 166 73 158 396 Africa ................................. 216 203 89 193 484 - North Africa ..................... 73 154 29 62 246 Latin America .................... 342 320 126 274 719 - Brazil ............................... 98 127 39 86 252 World ................................ 5,087 5,186 1,841 4,249 11,276 - European Union .............. 862 925 137 429 1,491

Source: World Energy Outlook 2006

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The Indian Construction Sector

Contract Types Used in the Indian Construction Industry

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

BOT Infrastructure Development

Overview of BOT Infrastructure Development Projects

Infrastructure development projects in India are typically BOT projects, which are becoming increasingly important in the development of India’s infrastructure. We intend to participate in these projects both as an investor in the project vehicles and as a contractor. Our infrastructure development business typically involves BOT projects which are characterized by three distinct phases:

• Build – contracting with a Governmental entity for the construction of an infrastructure project and securing financing to construct the project;

• Operate – operating the infrastructure asset during an agreed concession period, maintaining and managing the asset for the agreed concession period and earn revenues through charges, fees, tolls or annuities generated from the asset; and

• Transfer – after the expiration of the agreed concession period, transferring ownership and operation of the infrastructure asset to a Governmental entity.

Build- Own-Operate- Transfer ("BOOT") Infrastructure Development

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

Funded Infrastructure Development

Many construction projects in India are funded by the Government, State Government or by Governmental organizations. Projects commonly developed through this development model include irrigation systems, electrification and highways. Contracts are entered into for the construction and operation of the projects being developed. Funded construction projects typically fall into one or more combinations of the following categories:

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• Lump sum or turnkey contract, which provides for a single price for the total amount of work, subject to variations pursuant to changes in the client’s project requirements. The client supplies all the information relating to the project, including designs and drawings. Based on such information, contractors are required to estimate the quantities of various items, such as raw materials, and the amount of work that would be needed to complete the project, and then prepare a bill of quantities ("BOQ") to arrive at the price to be quoted;

• Item rate contract, which is a contract in which the price of each item is presented in a BOQ furnished by the client. In item rate contracts the client supplies all the information, including the design, drawings and a BOQ; and

• Percentage rate contract requires a contractor to quote a percentage above, below or at par with the estimated cost furnished by the client. In percentage rate contracts, the client supplies all the information such as design, drawings and BOQ with the estimated rates for each item of the BOQ.

These contracts typically contain price variation or escalation clauses that provide for either reimbursement by the client in the event of a variation in the price of key raw materials, or a formula that links the escalation in amounts payable by the client to pre-defined price indices published periodically by RBI or the Government. In contracts that do not include such price variation or escalation clauses, the contractor faces the risk of the increase of prices of key raw materials and other inputs during the project execution period.

General BOT/BOOT Agreement Provisions

Counterparties in most infrastructure developments are Government entities, and contractors have only a limited ability to negotiate the standard terms of Government contracts. There are generally no caps on liabilities of the contractor, and it is not always clear whether the contractor is liable for consequential and/or economic loss to a client. Further, infrastructure contracts awarded by the Government and State Governments may include provisions which enable the client to terminate the contract without cause following provision of notice. Performance guarantees are common features of such contracts and are typically unconditional and payable on demand, and can be invoked by the client in accordance with the terms of such contracts. If a project is delayed without the default of the contractor, the contract usually provides for a grace period for completion equal to the length of such delay. The contracts also usually provide for liquidated damages to be paid by the contractors in case of delays in the execution of the project or delays in achieving certain milestones during the execution of the project. The contractors are responsible for obtaining all approvals required under environmental and labor laws and for complying with them.

Certain project agreements include provisions that could provide third parties with rights that, if exercised, would adversely affect the business operations and financial conditions of

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contractors. Such rights include: the right of Government entities to take over BOT project facilities after paying the appropriate compensation; the right of Government entities to control toll rates; the rights of third parties to be indemnified under certain circumstances; and "step-in" and substitution rights by certain lenders with respect to project assets.

The projects usually provide for an advance payment of 5% to 15% of the overall contract price and the projects are to be completed in an average of two to three years. Contracts also typically provide for a security deposit and a performance guarantee to be given by the contractors which range from 5% to 10% of the contract value. The deposits or guarantees are provided either by way of irrevocable bank guarantees, cash deposits or retention by the Government entity of a particular percentage out of the amounts payable on monthly basis. These would be partly refunded at the completion of the project and partly at the end of the defect liability period which may extend up to three years.

Toll Collection, Annuity and Other Revenue Arrangements

Following a successful project bid and the completion of the construction phase of BOT/BOOT projects, contractors assume the role of the operator of the relevant infrastructure asset during a pre-determined concession period. During the concession period, the operator maintains and manages the asset and earns revenues through charges, fees, tolls or annuities generated from the asset. The levels of charges, fees, tolls, or annuities that may be generated from any particular asset are usually set out in the relevant project agreements or in certain notifications by such Government entities.

In toll road projects, the terms on which the operator may collect toll revenues are decided by the Government entity that has granted the relevant BOT/BOOT concession at the bidding stage, the toll rates without the prior written consent of such Government entity. The toll rates set by the Government entities, who may give greater consideration to various socio-economic goals of the Government, rather than to the efficiencies of the operator’s business. Although business circumstances may materially change over the life of one or more of an infrastructure project, the operator may not have the ability to modify their agreements to reflect such changes or negotiate satisfactory alternate arrangements.

Operation and Maintenance ("O&M") Agreements

Typically an O&M contract is issued for operating and maintaining facilities. This could be in sectors such as water, highways, buildings and power. The contract specifies routine maintenance activities to be undertaken at a predetermined frequency as well as break-down maintenance during the contract period.

While the operator is paid for the routine maintenance based on the quoted rates which are largely a function of manpower, consumables and maintenance equipment to be deployed at the site, any breakdown maintenance is paid for on a cost-plus basis.

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Overview of the Indian Oil and Gas Pipeline Sector

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

The demand for and the supply of natural gas in India is also expected to increase in the next several years. Increased demand for natural gas in India is also expected to result in the need for an extensive gas transportation pipeline infrastructure.

India's regime permitting 100% foreign direct investment in exploration, refining, petroleum and gas pipelines and marketing is favorable for investment.

Opportunities in the Pipeline Construction Industry

India is currently the third largest oil consumer in the Asia-Pacific region after China and Japan. Demand for petroleum, in absolute terms, is expected to be 195 million tons for the years 2011-12. Pipelines transport only 30% of the petroleum products consumed by Indian industry, in spite of being cheaper than railway, coastal tanker and road transportation which account for 40%, 12% and 18%, respectively.

Set out below are expected upcoming pipeline construction projects in India:

Upcoming Pipeline Projects (India) Length (Kms) Cost (INR Bn) GAIL...................................................................................................................... 6,483 261.33 IOCL ...................................................................................................................... 781 11.22 GSPL ..................................................................................................................... 450 9.45 HPCL ..................................................................................................................... 300 6.05 RGTIL ................................................................................................................... 3,030 181.80

Source: IDBI Capital Market Services

Set out below are expected upcoming pipeline construction projects worldwide, by region:

Region Proposed Pipeline Development (000's of km) Australia ...................................................................................................................... 16.0 Africa ........................................................................................................................... 18.0 Latin America .............................................................................................................. 35.0 Middle East .................................................................................................................. 43.0 Europe .......................................................................................................................... 45.0 North America ............................................................................................................. 73.0 Asia .............................................................................................................................. 94.0

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Source: Simdex

Overview of the Indian Infrastructure Sector

The infrastructure sector covers the services of transportation (railways, roads and road transportation, ports, and civil aviation), communications (telecommunications and postal services), electricity and other services such as water supply and sanitation, solid waste management, and urban transport. Construction activity is an integral part of a country’s infrastructure and industrial development and hence can rightly be termed as the basic input for socio-economic development. Its presence and contribution is critical in terms of providing opportunities for direct and indirect employment.

In the course of the liberalization of the Indian economy, the Central Government has placed a priority on infrastructure development and emphasized involvement of private capital and management in order to respond to the growing demand for new infrastructure projects. Accordingly, the financing of infrastructure development has largely shifted to the private sector, primarily through the use of PPPs, which are based on a partnership between the public and the private sectors for the purpose of delivering a project or service traditionally provided by the public sector.

The Government agencies with responsibilities for different infrastructure sectors include NHAI, NTPC, NHPC and PGCIL. These agencies’ investment budgets are included in the FYPs.

The Road Sector in India

The Indian road network, at approximately 3.32 million kilometers in length, is the second longest road network in the world after that of the United States of America. For the purpose of management and administration, roads in India are divided into the following categories: (1) "Expressways" which are intended to facilitate long distance inter-city/state passenger and freight traffic across the country at an average speed of at least 80 kilometers per hour, (2) "National Highways" which are intended to facilitate medium and long distance inter-city/state passenger and freight traffic across the country, (3) "State Highways" which are supposed to carry traffic along major centers within each state, (4) "Major District Roads" which have the secondary function of linking main roads with rural roads and (5) "Other District Roads" and "Village Roads" which provide villages accessibility to meet the social needs of such villages and also the means to transport agriculture produce from villages to nearby markets.

Roads form the most common mode of transportation and are the main arteries for travelling across India. This share has improved significantly from 32% of passenger traffic and 12% of freight as of 1950- 51. The National Highways, which account for less than 2% of the total road network in India, carry nearly 40% of the total road traffic. Vehicle numbers have been

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growing at an average of 10.2% per annum over the last five years.(Source: http://nhai.org/roadnetwork.htm)

Out of 66,590 kilometers of the National Highways network, only 10% of the total length consists of roads with at least four-lanes, 55% of the total length consists of roads with two-lanes and 35% of the total length consists of roads with a single/intermediate lane only. The need for expansion and improvement of roads in India is widely recognized due to the usage cost for vehicles (including fuel and maintenance) which is 20% higher on average than in most countries due to poor road conditions. In addition, the average distance covered on highways per day in India is significantly lower than in developed countries. A large number of traffic deaths each year are attributable to poor road conditions. (Source: http://nhai.org/roadnetwork.htm)

Planned Investment in roads by the Government

Financial Year 2010 Financial Year 2011 Financial Year 2012 (in Rs. Billion) National Highways .................................. 341 403 470 State Roads .............................................. 253 290 355 Rural Roads ............................................. 85 92 98 NE Roads ................................................. 11 11 12

Source: Planning Commission

Opportunities in the Civil Construction Sector

According to IHS Global Insight, US$175 billion was spent on construction in India in 2007 after growing 156% since 2005. Out of US$175 billion, US$140 billion was spent on non-residential, and the remaining US$35 billion was spent on residential construction. Construction spending is expected to increase to US$370 billion by the end of 2013, with residential totaling US$63 billion and nonresidential registering US$307 billion. This represents a compound annual growth rate of 13.3%.

The construction sector is also the second largest employer in the country following agriculture, employing 18 million people directly and 14 million indirectly.

One of the reasons for the growth in the past decade has been India’s success in the IT/ITES sector, leading to growth in per capita income levels, which in turn is fuelling demand for housing, office space and commercial facilities, such as shopping malls and hotels adding to the overall investment in construction activities. The IT/ITES sector registered an 18% growth in 2008–2009. The commercial market is expected to grow at a compound annual growth rate of 20%-22% over the next five years. The IT/ITES sector is expected to require 150 million square feet of commercial office space by 2010. Also, a boom in the retailing industry will act as another growth driver for the construction industry. Rising consumerism with the doubling of disposable income, growth in organized retailing and entry of international retailers have led to a boom in retailing. The contribution of organized retail to

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the retail industry grew from 2% in 2003 to 4%-5% in 2007. Organized retail is expected to grow at a compound annual growth rate of 19% over the next five years. The share of organized retail in terms of sales expected to reach 5.6% by 2010. By 2010, 220 million square feet of new retail space will be required. The number of malls in India is expected to increase from 105 in 2006 to 600 in 2010.

Overview of the Indian Logistics and Warehousing Sector

India is one of the largest producers of fruits and pulses, accounting for approximately 15% of world production. The country is also second largest producer of wheat, paddy, sugarcane and vegetables. Market surplus of fruits and vegetables is as much as 88% and market surplus for food grains is almost 60%, but due to perishability and poor logistic and warehousing infrastructure, farmers must sell it immediately. As per various reports, the storage capacity in the country against production of vegetables and fruits stood at 12% as against the international average of 50%.

At present, India's agriculture and manufacturing sectors account for 25% and 27% of GDP respectively. There is an estimated requirement of 150 million metric tons ("MMT") of cold and dry warehousing capacity. At present the Indian supply chain is dominated by disorganized players with several intermediaries, adding wastage from farm to consumer via retailer, processor or exporter where each level is unaware of the requirements of the next level, leading to disconnection between farmer and processor. Further, an absence of any structured market hampers discovery of correct price and availability of consistent quality of produce.

According to a KPMG and Associated Chamber of Commerce and Industry report, poor warehousing infrastructure causes 30%-40% of agricultural produce waste every year in India which results in losses of approximately Rs.550 billion. Against the requirement of over 31 million tonnes of cold storage, India currently has a capacity of nearly 21.7 million tonnes, leading to a loss of about 40% of agri-produce, post harvest. The report further emphasizes that cold storage facilities are available mostly for single commodities such as potato, orange, apple, grapes, pomegranate and flowers resulting in poor capacity utilization. The report also said that the current Indian cold chain market is worth US$2.6 billion with a capacity to grow to US$12.4 billion by 2015.

Warehousing business in India is dominated by public sector namely entities, Food Corporation of India ("FCI"), Central Warehousing Corporation ("CWC") and the State Warehousing Corporations ("SWCs"). FCI has a capacity of 24.40 MMT, the CWC and the SWCs have a total capacity of 30 MMT. While FCI predominantly caters to storage requirements of commodities procured by the Government under the Public Distribution System; the CWC and the SWCs cater to the other segments of the industrial sector for storage.

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Warehousing Growth

2007-2008 2008-2009 2009-2010 2010-2011 (Estimate) (Estimate) Market Size (US$ Billion) ............................................. 20 28 40 55 Capacity (MMT) ............................................................ 60 66 76 91

Source: IDBI Capital Market Services

The reports of the Expert Committee on Strengthening and Development of Agricultural Marketing have pegged the investment requirement in the logistics and warehousing industry at Rs.5,400 crore for dry storage and Rs.27,000 crore for cold storage.

As part of the Central Government's warehousing services development initiatives, the Warehousing Development and Regulation Act 2007 ("WDRA") will benefit secondary markets and actual growers of agricultural commodities as handling, assaying and certification at one place will minimize the risk of transportation and quality loss. The enactment of WDRA will benefit the farmers, as they will be able to sell the produce to commission agents at a price determined by market forces.

Introduction of goods and service tax will allow corporations to avoid having to own warehouses in different parts of the country. Companies are expected to employ logistics and warehousing companies to manage their supply and distribution chain, which will ultimately lead to a growth in the logistic and warehousing sector. The Indian warehousing industry is expected to become a US$77 billion industry by fiscal year 2011 with a storage capacity of 110 MMT by the end of fiscal year 2011.

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BUSINESS

Overview

We believe we are one of India's largest engineering, procurement and construction companies that provides integrated design, engineering, testing, fabrication, erection and construction services to the power transmission industry. We are also a provider of engineering, procurement and construction ("EPC") services to power transmission utilities outside of India, particularly in Africa, the Middle East and Southeast Asia. We also provide EPC services to power distribution utilities in India and overseas. In addition, we construct cross-country oil and gas pipeline networks in India and also generate biomass energy, primarily from mustard crop residue ("MCR"). Our manufacturing capacity has doubled in the last four years from 54,000 metric tons ("MTs") to 108,000 MTs in response to rising demand in the power sector. In January 2009, we secured our largest transmission export order to date, of approximately US$250 million, from the Ministry of Energy and Water, Kuwait. Additionally, in April 2010 we were awarded a contract to develop, operate and maintain a 100km 400KV/200KV transmission project by Haryana Vidyut Prasaran Nigam Ltd, on a BOOT basis. For the year ended March 31, 2009, Kalpataru Power Transmission Limited ("KPTL") had total income on a standalone basis of Rs.18.8 billion (US$369.0 million) and for the nine-months ended December 31, 2009, had total income on a standalone basis of Rs.17.6 billion (US$377.0 million). As of December 31, 2009, KPTL had an order book of Rs.49.5 billion (US$1.1 billion), or to supply approximately 205,000 MTs of tower supplies and 8,500 kilometers of 132 KV to 765KV transmission lines. As of December 31, 2009, KPTL's order book comprised 53% domestic transmission lines, 33% overseas transmission lines, 7% oil and gas pipelines and 7% distribution management systems, by value. Since December 31, 2009, the Company has received orders of approximately Rs.7.9 billion (US$170.9 million).

We undertake civil contracting projects in various infrastructure sectors through our subsidiary, JMC Projects (India) Limited ("JMC"), in which we owned a 53.01% stake as at December 31, 2009. JMC is a public limited company and its equity shares are listed on the Bombay Stock Exchange Limited ("BSE") and the National Stock Exchange of India Limited ("NSE"). JMC is primarily engaged in construction contracting for infrastructure and power (including construction of bridges, flyovers, highways and captive power plants), industrial (including agrochemicals, petrochemicals and heavy engineering) and buildings (including construction of commercial complexes, hospitals, hotels, information-technology parks, plant and factories and turnkey execution involving mechanical and electrical engineering, high voltage alternate current ("HVAC"), fire fighting, architectural and landscaping). In March 2010, JMC was awarded its first build, own, operate and transfer ("BOOT") project, a four lane highway between Rohtak and Bawal in Haryana, in consortia with SREI Infrastructure Finance Limited ("SREI"). The project will have a concession period of 27 years, including the construction period. For the year ended March 31, 2009, JMC had total income on a standalone basis of Rs.13.2 billion (US$259.1 million) and for the nine-months ended

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December 31, 2009, JMC had total income on a standalone basis of Rs.9.4 billion (US$201.4 million). As of December 31, 2009, JMC had an order book of Rs.26.6 billion (US$569.8 million) representing an increase of 27.4% as compared JMC's order book of Rs.20.9 billion (US$522.9) as of March 31, 2008. As of December 31, 2009, JMC's order book comprised 49% factories and buildings, 27% power projects and 24% infrastructure projects, by value. Since December 31, 2009, JMC has received orders of approximately Rs.3.6 billion (US$77.9 million).

We provide logistics and warehousing services for agricultural commodities through our subsidiary, Shree Shubham Logistics Limited ("SSLL"), in which we owned an 80.0% stake as at December 31, 2009. SSLL offers end-to-end logistics solutions in western India to all the commodity stakeholders in the agricultural sector including, but not limited to warehousing, cold storage services and third party logistics. For the year ended March 31, 2009, SSLL had total income on a standalone basis of Rs.562.31 million (US$11.0 million) and for the nine-months ended December 31, 2009, SSLL had total income on a standalone basis of Rs.606.44 million (US$13.0 million).

We undertake real estate project developments in India through our subsidiaries Energylink (India) Limited and Amber Real Estate Ltd.

For the year ended March 31, 2009, we had total income on a consolidated basis of Rs.32.8 billion (US$643.8 million). As of December 31, 2009, we had a consolidated order book of Rs.76.1 billion (US$1.6 billion). Additionally, since December 31, 2009, we received orders totaling Rs.11.6 billion (US$251.0 million). See "— Our Power Transmission Business — Selected Current Projects and Work Orders", "— Our Power Distribution Business — Selected Current Projects and Work Orders" and " — Our Infrastructure Business — Selected Current Projects and Work Orders".

Our EPC Services Business

In our EPC services to the power transmission industry (our "Power Transmission Business"), we design, test, fabricate, erect and string transmission towers, having completed over 800,000 MTs of tower supplies and over 13,000 kilometers of 132 KV to 800 KV transmission lines as of February 28, 2010 and with an annual installed tower fabrication capacity of 108,000 MTs. In addition to EPC services in India, we have executed EPC contracts or exported transmission line towers to countries in Asia Pacific, Africa, the Americas, Australia, the Middle East and Europe, and to some of the world's leading EPC companies. As of December 31, 2009, our order book in power transmission and distribution projects was Rs.49.5 billion (US$1.1 billion), representing approximately 205,000 MTs of tower supplies and 8,500 kilometers of 132 KV to 765 KV transmission lines. We have a testing and research and development center for the testing of towers of up to 1200 KV, up to 85 meters in height, up to 95 MTs in weight and up to 27 meters × 27 meters of base width. Our testing station is equipped with a tower crane to conduct helicopter simulation.

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In our EPC services to the power distribution industry (our "Power Distribution Business"), we engineer, procure and construct distribution networks in rural India, electrifying villages and hamlets which entails the construction of 33 KV substations and 11 to 33 KV lines and poles, and the provision of service connections in such villages and hamlets. To date, we have completed projects for the electrification of over 8,000 villages in the States of Uttar Pradesh, West Bengal, Bihar, Rajasthan, Maharashtra and Uttaranchal and over 90 villages in Kenya.

In our EPC services to oil and gas pipelines (our "Infrastructure Business"), we have completed the construction of over 1,800 kilometers of pipeline networks of 8" to 48" in diameter as of March 31, 2010 and we are presently executing over 350 kilometers of pipeline networks in India of 8" to 48" in diameter worth Rs.1.15 billion (US$24.6 million) including SV station work. As of December 31, 2009, we have made investment worth Rs.1.15 billion (US$24.6 million) in equipment bases to execute large value projects for oil and gas pipelines.

Our Civil Contracting Projects Business

We undertake civil contracting projects through our subsidiary JMC (our "Civil Contracting Projects Business"). In our Civil Contracting Projects Business, we execute projects in infrastructure and power (including bridges, flyovers, highways and captive power plants), industrial (including agrochemicals, petrochemicals and heavy engineering) and buildings (including commercial complexes, hospitals, hotels, information-technology parks, plant and factories and turnkey execution involving mechanical and electrical engineering, HVAC, fire fighting, architectural and landscaping). We are presently executing civil engineering work for power plants, including the installation of boiler-turbine-generators, coal handling, switchyard and other work with a contract value of Rs.7 billion (US$150.0 million) as of December 31, 2009. Additionally, we have been awarded contracts by the National Highways Authority of India ("NHAI") to construct a four lane highway between Rohtak and Bawal in Haryana on a BOOT basis, in consortia with SREI. In our Civil Contracting Projects Business we have a strong team of qualified manpower and, as of December 31, 2009, an equipment base of Rs.2.93 billion (US$62.8 million).

Our Logistics and Warehousing Business

Our logistics and warehousing business is undertaken through our subsidiary SSLL (our "Logistics and Warehousing Business"). In our Logistics and Warehousing Business, we have a presence in almost the entire logistics and warehousing value chain including warehousing, cold chains, commodity funding, collateral management, testing and certification, fumigation, pest control, commodity trading, exports, retail and other business support services. We own and operate 12 agricultural logistics parks in Rajasthan and Gujarat with a total storage capacity of more than 189,000 MTs. 6 of our 12 agricultural logistics parks are accredited with the National Commodity & Derivatives Exchange by

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which we can ensure optimum utilization of our storage capacity and corresponding higher rates of revenue. We have entered into a strategic partnership with the Rajasthan State Warehousing Corporation ("RSWC") under which we shall operate 38 agricultural logistics parks on a revenue sharing basis and which will have a total storage capacity of 405,000 MTs.

Our Biomass Energy Generation Business

In our biomass energy generation business (our "Biomass Energy Business"), we operate two biomass energy generation plants, one in the Ganganagar district of Rajasthan which has a capacity to generate 7.8 MW power and the other in the Tonk district of Rajasthan which has a capacity to generate 8 MW power, by combusting MCR and cotton stalks as fuel. We have entered into long-term power purchase agreements ("PPAs") and wheeling and bankings agreements ("WBAs") for all the power generated at our biomass energy generation plants as well as a long-term agreement for the sale of carbon credits and we have received gold standard certification to obtain greater benefits from certified emissions reductions ("CERs") generated by our Tonk plant.

Our Real Estate Business

We undertake real estate project developments in India through our subsidiaries Energylink (India) Limited, Amber Real Estate Ltd and Saicharan Properties Ltd (our "Real Estate Business"). In January 2010, we commenced construction on an IT park located in Thane, built on approximately 11,500 square meters which is expected to be completed in November 2011. Additionally, we expect to commence construction of a retail and commercial project at Indore in December 2010 on approximately 12,600 square meters of land.

Our Competitive Strengths

We believe that our, JMC's and SSLL's primary competitive strengths include the following:

One of the largest and fastest growing specialized EPC companies in India engaged in the design, manufacturing and construction of power transmission lines with a strong international presence

We believe we are one of the largest and fastest growing specialized EPC companies in India engaged in the design, testing, fabrication, erection and construction of power transmission lines. We fabricated over 93,484 MTs of towers and strung 1,501 kilometers of transmission lines in the year ended March 31, 2009, as compared to 79,531 MTs of towers and over 977 kilometers of transmission lines in the year ended March 31, 2008, or an increase of 17.5% and 53.6%, respectively. We fabricated 85,885 MTs of towers and strung over 944 kilometers of transmission lines for the nine-months ended December 31, 2009, as compared to 64,095 MTs of towers and over 988 kilometers of transmission lines in the nine-months ended December 31, 2008, or an increase of 34.0% and a decrease of 4.5%, respectively. As of December 31, 2009, we are engaged to supply more than 205,000 MTs of towers and 8,500

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kilometers of transmission lines. In addition, in our Power Distribution Business, we have electrified over 8,000 villages, and in our Infrastructure Business, we have constructed over 1,100 kilometers of pipeline networks of 8" to 30" in diameter as of December 31, 2009 and we are presently executing over 1,000 kilometers of pipeline networks of 8" to 48" in diameter.

As a result of the increase in our fabrication capacity and the execution of EPC contracts, including the growth of our Power Distribution Business our income from our transmission and distribution division segment increased to Rs.16.6 billion for the year ended March 31, 2009 from Rs.15.2 billion for the year ended March 31, 2008, an increase of 9.5% and increased to Rs.14.4 billion for the nine-months ended December 31, 2009 from Rs.11.7 billion for the nine-months ended December 31, 2008, an increase of 23.6%. In addition, due to our significant fabrication and execution capacities, we enjoy economies of scale and operating efficiencies, which contribute towards maintaining and increasing our profit margins.

We have successfully executed transmission line tower projects in Africa, the Americas, Australia, the Middle East and Southeast Asia. We have also supplied transmission line towers to international EPC contractors or power utilities in more than 28 countries in Asia Pacific, Africa, the Americas, the Middle East, Australia and Europe. In the five years ended December 31, 2009, we have been engaged by 23 clients outside of India to carry out 49 power transmission projects in 17 countries. Our experience and operations in these regions enable us to capitalize on our local experience, establish contacts with local clients and suppliers and gain familiarity with local working conditions. In India, our significant clients for our Power Transmission Business include the Power Grid Corporation of India Limited ("PGCIL") and State Electricity Boards ("SEBs"), while outside of India we have worked on power transmission projects for the National Society for Electricity and Gas ("Sonelgaz") in Algeria, TRANSCO in Abu Dhabi and the Philippines, ZESCO Limited in Zambia, ABB in Germany and Downer EDi and John Holland in Australia. As a result of our work experience, we are ordinarily pre-qualified to bid for EPC projects in the transmission sector for projects tendered by those clients.

In the years ended March 31, 2009, 2008 and 2007, revenue from our operations outside India constituted 15.8%, 18.5% and 24.9%, respectively, of our total income on a consolidated basis. For the nine-months ended December 31, 2009, income from our operations outside India constituted 42.7% of our total income on a standalone basis. As of December 31, 2009, 33.0% of our order book comprises international orders. Our operations are spread across several geographic regions, which enables us to focus on projects and regions where we can be most competitive and profitable, while maintaining an appropriate level of contractual and geo-political risk, and decrease our dependence on the economy of, or project activity in, any particular country or region.

End to end solutions for oil and gas pipelines

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We continue to remain focused on our Infrastructure Business which has built a strong base in the industry, having executed pipeline projects aggregating over 1,800 kilometers in India. Additionally, we have plans to target higher end business in the oil and gas sector, including EPC contracts for setting up pipelines and related facilities in India and overseas, contracts for onshore and offshore oilfield facilities such as gas gathering stations, gas collection stations and oil collection stations, and contracts for the operation and maintenance of cross-country pipelines and related facilities.

We have built up a strong team of highly experienced and well-known individuals in the pipeline industry in India. In addition, we have made significant investment in the skills of our oil and gas pipeline workforce, for instance through our dedicated welder training center at Gandhinagar where welders are trained for zero defect, cross-country and down-hill welding. During Fiscal Year 2009, more than 18,500 hours of training was given to our workforce.

Along with an experienced team, we have made significant investments in specialized pipeline equipment, consisting of pipe layers, excavators, dozers, welding machines, boring machines and bending machines worth Rs.1.15 billion (US$24.6 million), enabling us to take advantage of opportunities for EPC contracts for oil and gas pipelines for clients such as GAIL (India) Limited ("GAIL"), Indian Oil Corporation Limited ("IOCL"), Hindustan Petroleum Corporation Limited ("HPCL"), Bharat Petroleum Corporation Limited ("BPCL"), Gujarat State Petronet Limited ("GSPL"), Reliance and HPCL-Mittal Energy Limited ("HMEL") in India. Our owned equipment base, which can be supplemented for project-specific requirements by rented equipment, can be deployed to execute oil and gas pipeline projects in eight to ten spreads on up to six concurrent projects.

Our Infrastructure Business has built a strong base in the industry, having executed pipeline projects aggregating over 1,800 kilometers in India. Additionally, we have plans to target higher end business in the oil and gas sector, including EPC contracts for setting up pipelines and related facilities in India and overseas, contracts for onshore and offshore oilfield facilities such as gas gathering stations, gas collecting stations and oil collecting stations, and contracts for the operation and maintenance of cross-country pipelines and related facilities.

Our project experience to date in oil and gas pipelines, our well-respected team and reserve pool of skilled workers and our equipment base place us well to take advantage of such end-to-end pipeline opportunities in India and overseas.

Presence of JMC in civil contracting across various sectors of the infrastructure space

Our subsidiary JMC has presence in civil contracting across various sectors of the infrastructure space, namely factories and buildings, civil contracting for power generation, bridges and highways. Over the last 4 years, JMC's revenue has seen a compound annual growth rate of 53.9% and JMC has also increased its presence across India.

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Our capital expenditure (gross block) in JMC has increased to Rs.2942.4 million as of March 31, 2009 which provides a platform for further growth. We have diversified successfully into civil construction work relating to power plants, roads and bridges in the last two years. As of 31 December, 2009, over 50% of our order book consists of orders relating to power plant and infrastructure projects.

We have also moved up the value chain from EPC contracting to BOOT and we have secured our first contact on BOOT basis, a four lane highway between Rohtak and Bawal in Haryana, in consortia with SREI.

Fully integrated end to end power transmission business capabilities

We have fully integrated operations in the power transmission business, with design, engineering, testing, fabrication, erection and construction capabilities. We have significant experience and expertise in the design and engineering of towers, with a staff of over 45 design engineers. We have one of the largest tower testing stations in India to test up to 1200 KV towers, with 27 meters × 27 meters of base width and 85 meters of height. Our testing station is equipped with a tower crane to conduct helicopter simulation. We also have one of the largest single-site tower fabrication capacities in India of 108,000 MTs per annum. We also own 12 tension stringing equipment machines and multiple tools and tackles. Our erection and construction expertise is as a result of significant experience in completing over 800,000 MTs of tower supplies and 13,000 kilometers of transmission lines. We are also gaining operation and maintenance experience in the power transmission sector where we are paid for routine maintenance of such projects. These fully integrated operations in the power transmission business, from design and engineering to fabrication and erection, operation and maintenance, help us to manage costs, diversify our revenue streams and maintain profit margins.

Operational efficiency

We operate in highly competitive and price sensitive industries. We believe that the optimal utilization of capacity, financial, human and other resources is a key element for achieving success in these industries. We focus in particular on the following areas:

• Plant and factories: we utilize our existing capacities at approximately 90% and without any major shutdown or labor problems for the past 5 years. Our fabrication plants use 16 CNC machines to provide high quality punching, drilling, cutting and stamping. We also galvanize steel according to our clients' specifications with 80 to 130 microns of zinc coating at our temperature controlled galvanizing baths. With increased domestic and international demand we have doubled our capacity in the past five years to 108,000 MTs from 54,000 MTs.

• Project management: we have qualified project management teams and considerable experience in executing power transmission and distribution and infrastructure projects

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within tight time schedules, in extreme climatic conditions, difficult terrain and in diverse political and economic environments. We leverage our experience and relationships to staff our projects with cost-efficient and skilled labor. As a result, the majority of our projects are completed on time.

• Costs: we manage our low costs of operations through a number of operating measures and initiatives. We conduct extensive diligence and employ a selective bidding process that enables us to procure projects at competitive rates. As a result of our design, engineering and project execution expertise, we believe we are able to provide cost efficient products which also meet design and safety criteria.

• People management: we invest significantly in the training and development of our workforce. During Fiscal Year 2009, more than 18,500 hours of training was given to our workforce. In particular, we invest in our employees through training at our training center, Kalpa-Vriksha, where new staff of KPTL, JMC and SSLL in India are trained through a rigorous 35-day induction program. A virtual site has been created to give them the practical knowledge before they commence work. We also focus on their behavioral aspects such as personality development and communication skills. Through our training center, we provide a platform to our employees to upgrade their competencies, knowledge, skills and attitudes. As a result of the training we provide, and other workforce incentives, we have a low turnover of key staff.

We believe that these measures and initiatives provide us with significant competitive advantages owing to the fact that we are well positioned to deal with construction and execution risks in an intensely competitive and price sensitive industry.

Strong financial position and leveraging capabilities

KPTL had net worth of Rs.8.35 billion (US$163.9 million) at March 31, 2009. KPTL's total debt:equity ratio as of March 31, 2009 was 0.79:1 as a result of our continuous focus on working capital management and our profit retention policy. We have been assigned a PR1+ plus rating by Credit Analysis and Research Limited for our short term paper and an AA rating for our long term non-convertible debentures and, further, we have been assigned a business rating of 5A2 by Dun & Bradstreet India. We are fiscally conservative because of the nature of the industries in which we operate, and as a result of our desire to protect our margins from any unforeseen events. We carve out 1.5% of our total revenue as a provision for warranties and guarantees. As of March 31, 2009, KPTL had reserved Rs.664.0 million for provision of such warranties and guarantees. We have low finance costs with, as of December 31, 2009, a total indebtedness of Rs.8.33 billion, an 8.54% weighted-average annual interest rate on indebtedness and an interest cost to sales of 3.22%.

As a result of our initiatives and focus on working capital management and finance costs and expenses, we are able to reduce capital costs and improve our results of operations.

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Highly qualified employee base and proven management team

We believe that a competent employee base is a key competitive advantage. As of December 31, 2009, the total workforce of the KPTL and JMC comprised more than 5,000 individuals, of which over 4,000 were full-time employees, approximately 13% were engineers and approximately 17% held engineering diplomas. In the last five years, we have recruited over 600 engineers and over 170 managers. The skills and diversity of our employees gives us the flexibility to respond best to the needs of our clients. We are dedicated to the development of the expertise and know-how of our employees and continue to invest in them to ensure that they have the training and skills needed to deliver in today's challenging environment.

In addition, our management team is well-qualified and experienced in the industry. We believe that this has played a key role in the development of good corporate governance, effective internal controls and accounting policies, strong employee relations, and stable subcontractor and supply chain relationships.

State of the art facilities at SSLL's agricultural logistics parks

SSLL's agricultural logistics parks are driven by state of the art facilities and are designed to maximize storage space. Key specifications and design parameters of SSLL's warehouses and logistics parks are as follows:

• Pure aluminum foil and polyethylene roof insulation and insulation on walls to reduce heat conduction and providing the correct storage temperature;

• a minimum of 7 meters of clear eaves height;

• raised plinth level to avoid rodent entry and water seepage and to facilitate direct mechanized container loading;

• turbo ventilators for optimum air circulation;

• heavy duty weigh bridges; and

• wide access and estate roads with one way traffic movement avoiding vehicle congestion.

By designing SSLL's warehouses and logistics parks in this way, we maximize space utilization and provide operational efficiency with minimum resource requirements.

Our Strategies

Our goal is to maintain and consolidate our position, and that of each of our subsidiaries, as a leading service provider to clients in the industries in which we and our subsidiaries

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specialize. We and our subsidiaries intend to achieve our goal by implementing the following key business strategies:

Maintain a sustainable and diversified business model

Our mission has been to create a sustainable and diversified business model in order to increase shareholder value and grow our revenues. We continue to follow a diversified strategy for growth focused on EPC contracting for various infrastructure sectors (set out below), which we believe have high potential for growth and where we believe we enjoy competitive advantages:

• diversification of sectors in which we operate and diversification of projects within the sectors in which we operate;

• maintain appropriate mix of orders between fixed price and variable to mitigate against commodity price fluctuations;

• maintain a diverse client base between the public and private sectors;

• maintain an appropriate mix of domestic and international orders to mitigate against geographical exposures;

• maintain an appropriate range of contract durations, for instance 12-, 24- and 36-month contracts;

• opportunities in the logistics and warehousing sectors through our subsidiary SSLL; and

• focus on BOOT opportunities in the sectors in which we operate.

We believe this strategy will mitigate our reliance on the growth of any one industry or particular country or region from one or few clients, will complement our business and provide us with growth opportunities.

Focus on large scale projects, end to end turnkey solutions

We have built up the strength to successfully execute large value projects, for instance we executed 1,150 kilometers of transmission line work for PGCIL. In our Power Distribution Business we have secured an Rs.9.9 billion (US$219.3 million) project from the Maharashtra State Electricity Distribution Company Limited ("MSEDCL") to execute feeder separation work in the state of Maharashtra.

Our recent successes in securing approximately US$250 million through power transmission projects with the Ministry of Electricity and Water, Kuwait, and the award of our first BOOT project in consortia with SREI demonstrate our ability to bid for, and succeed in being

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appointed on, such large value projects. We have also secured power transmission orders worth Rs.11.9 billion (US$263.6 million) from Maharashtra State Electricity Transmission Company Limited to be executed over a 3 year period. In our Infrastructure Business we are executing orders worth Rs.3.85 billion to construct 551 Kilometers of cross country pipeline.

We intend to continue to focus on such large scale projects and the provision of end to end solutions on these, and other turnkey, projects. For instance, we have recently moved into providing operate and maintain ("O&M") services whereby we not only provide design, manufacturing and construction services but also operate and maintain the asset on an ongoing basis.

Building capabilities to enter new business segments

In over 24 years of operations, we have developed significant capabilities in project management and execution in diverse sectors, such as power transmission, power distribution and construction of oil and gas pipelines. We have constructed almost 13,000 kilometers of domestic and international power transmission lines on both public and private projects which has given us considerable experience in the management of complex projects. We have also acquired capabilities, through JMC, in the construction of factories, buildings, power and infrastructure projects. In doing so, we are pre-qualified with many large and reputed companies in India and overseas. In addition, over the last three years, we have outlaid total capital expenditure of Rs.3.5 billion (US$75.7 million) on equipment including for our subsidiary JMC. Through ownership and leasing, we ensure that we have sufficient equipment to be able to deliver on our planned projects. We believe our project management and execution capabilities and experience in diverse sectors and diverse projects, our financial strength and our experienced management will enable us to explore new business opportunities, such as the development of road and railway line projects on a BOOT basis and the provision of O&M services which will serve to diversify both our business and revenue streams. For instance, we are already looking at opportunities for railway electrification and civil contracting projects on a BOOT basis. In addition, we intend to pursue business opportunities such as electricity transmission and distribution on a BOOT basis and the construction of pipelines for the transportation of water and other materials, either directly or together with JMC. In April 2010, we were awarded a contract by Haryana Vidyut Prasaran Nigam Ltd. for the development of 100km of transmission lines and four substations on a BOOT basis. We believe these new businesses will provide diversity in our revenue generation in the future as income from such projects will be on an annuity basis, as well as reduce our dependence on our power transmission and distribution businesses. BOOT projects of this nature will also reduce our exposure to the potential risks associated with Government spending on public projects.

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Expanding into international markets that fit within our strategic vision

Our objective is to expand and enhance our presence from countries and regions where we have previously developed a strong base of successful operations to other countries and regions where our international experience can provide cost and operational advantages. We also intend to focus on additional opportunities in countries where we have executed projects or delivered tower supplies by leveraging our execution capabilities, business experience and cost advantages. In the five years ended December 31, 2009, we have been engaged by 23 international clients to carry out 49 power transmission projects in 17 countries. We have also supplied towers to international EPC contractors or power utilities in Asia Pacific, Africa, the Americas, the Middle East and Australia.

Africa is a key region for our international focus. In Africa, we have constructed, or are constructing, power transmission networks in Algeria, Zambia, Djibouti and Ethiopia, and have exported towers to Nigeria, Zambia, Tanzania, Kenya, Djibouti, South Africa and Ethiopia. Further, we have submitted bids or undertaken business development initiatives in other African countries such as Botswana, Egypt, Mozambique, Ghana, Tanzania and Morocco. We intend to pursue a significant role in power transmission and infrastructure development in Africa. In order to accomplish this initiative, we have incorporated subsidiaries in South Africa and Nigeria, where we perceive opportunities for future growth and development.

Outside of Africa, we have constructed, or are constructing, power transmission networks in the Philippines, Kuwait, Qatar, the United Arab Emirates, Nepal and Turkey, and have exported towers to Indonesia, Malaysia, the Philippines, Thailand, Vietnam and Bangladesh in Asia; United Arab Emirates, Iraq, Saudi Arabia and Syria in the Middle East; Peru, Canada, the United States of America in the Americas; and Australia.

In order to take full advantage of the opportunities presented by the international markets, we intend to continue to form consortia and joint ventures with partners with complementary strengths in the international markets in which we seek to expand. By forming consortia and joint ventures with partners with complementary strengths we can take advantage of higher value infrastructure opportunities and opportunities in international markets in which we would not otherwise have been able to participate, for instance due to specific local barriers to entry.

Presence in the logistics and warehousing value chain

SSLL offers end-to-end logistics solutions to commodity stakeholders, handling operations such as warehousing, cold storage, commodity funding, collateral management, testing and certification, commodity trading, exports, retail and other business support services. Our presence in almost the entire logistics and warehousing value chain gives us significant

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competitive advantage and places us well to take advantage of the anticipated substantial growth in the Indian logistics industry.

Focus on operation and process standardization

Operation and process standardization is a critical element of our continued success, particularly where there is a significant number of transactions. The quality management systems of our design, tower test, manufacture, supply, construction and installation activities, our EOU division and our distribution management system division have all been approved by ISOQAR to ISO 9001:2008. The environmental management system of our EOU division has been approved by ISOQAR to ISO 14001:2004 for the activity of manufacture and supply of transmission lines and telecom tower parts. The quality management system of our infrastructure division has been certified by RINA to ISO 9001:2000 for the activities of laying cross-country pipelines and assorted facilities on an EPC basis.

In April 2009, we implemented SAP which integrates our logistics with finance and accounts processes. To date, we have implemented the following financial and accounts modules: financial accounting, controlling, financial supply chain management and project systems and we have implemented the following logistics modules: material management, sales and distribution, production and planning and quality management. We have also implemented a document management system to safeguard against any loss of physical documents. The process standardization for these modules includes detailed user manuals for the standardized processes. We have successfully rolled out SAP to a majority of our domestic and international projects.

Since April 2009, JMC has designed, developed and implemented an integrated in-house project management system ("iPMs") with a focus on key operational areas such as budgeting, planning, procurement, stores, sub-contracting and client billing. The iPMs will enable us to synchronize and integrate complex and diverse activities of our projects across India. It will also provide JMC's management with a useful tool for better project monitoring and control.

Selective bidding with a focus on effective project management

In each business area in which we operate, we seek to bid for projects on a selective basis, based on our due diligence. We have developed an experienced bidding team, and conduct extensive due diligence on project-, client- and country-specific risks and uncertainties. We endeavor to factor such risks and uncertainties in our bids and contracts to manage and allocate risks and uncertainties in a manner that reduces our financial exposure.

We believe that our transmission and distribution, civil contracting, infrastructure and real estate divisions have developed a reputation for undertaking challenging construction projects and completing projects within specified schedules. We intend to continue to focus on performance and effective project management in order to maximize client satisfaction and margins. Our global experience enables our engineering teams to incorporate best practices

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from different geographic regions. We leverage our designs and project management tools to increase productivity and maximize asset utilization in capital intensive construction activities. Through our comparatively lower cost of operations in India, we continue to optimize operating and overhead costs to maximize our operating margins.

In addition, to facilitate efficient decision making and to deliver satisfactorily on commitments to our clients in all five business segments in which we operate, we intend to continue to strengthen the information and communication technology infrastructure for our operations.

Company History

Our Company was incorporated in the State of Gujarat on April 23, 1981 as H.T. Power Structure Private Limited under the Companies Act. The name of our Company was changed to H.T. Power Structure Limited by way of a shareholders' resolution dated November 22, 1993 and a fresh certificate of incorporation consequent on change of name was issued by the Registrar of Companies, Gujarat on December 20, 1993.

The name of our Company was changed to Kalpataru Power Transmission Limited by way of a shareholders' resolution dated December 20, 1993 and a fresh certificate of incorporation consequent on change of name was issued by the Registrar of Companies, Gujarat on January 4, 1994.

We completed our initial public offering in December 1994 and are listed on the BSE and the NSE. Between February 2005 and February 2007 we acquired a 53.01% shareholding in JMC, a public company also listed on the BSE and the NSE. In January 2007, we acquired an 80.0% shareholding in SSLL, a public limited company.

Our Power Transmission Business

Engineering, Procurement and Construction Services

In our Power Transmission Business, we design, engineer, test, fabricate, erect and string transmission lines. These services include:

Design and Engineering Services. We design and engineer transmission towers based on a number of variables such as geographical terrain, wind zone, soil type and condition, and transmission capacity. We also design foundations for towers. We employ over 45 experienced design engineers who have access to design and three-dimensional drafting and analysis software such as PLS-TOWER, PLS CADD, BOCAD, AUTOCAD and iTOWER. We use this software to:

• optimize the use of mild- and high-tensile steel to enable weight and volume efficiency for maximizing cost savings;

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• generate three-dimensional drawings for fabrication and shop sketches, to be used to manufacture towers;

• design foundations; and

• develop sag templates and generate sag tension charts.

As a result of our design and engineering expertise, we believe we are able to provide clients with stronger and more efficiently designed towers, which utilize less raw materials and, as such, are more weight-efficient, and yet are able to withstand required stress.

Tower Testing and Research and Development Services. We provide tower testing services at our own tower testing station at Punadra, Gujarat. We have tested over 200 towers at our testing station, and have the capacity to test up to 1200KV towers of up to 85 meters in height, up to 95 MTs in weight and up to 27 meters × 27 meters of base width. Our testing station is equipped with a tower crane to conduct helicopter simulation. We believe that our tower testing station is one of the largest in India. Power transmission towers are highly determinant structures and a number of assumptions are made in their design. As a result, tower testing is critical to ensure that towers meet the desired performance criteria. To test a tower, it is erected on the test bed and load is applied at various points of the tower through electrically driven wire ropes and pulley blocks. We have tested towers for companies such as Powerlink Queensland, Australia; Sumitomo Corporation, Japan; Egat Public Company Limited, Thailand; EEPCO, Ethiopia; EDD Djibouti; Trans Allaghany, United States of America; National Grid Corporation of the Philippines and Transco, the Philippines; Transco, Abu Dhabi; MEW, Kuwait; NEA, Nepal and Sonelgaz, Algeria.

Manufacturing Facilities. We fabricate towers, based on our designs or designs provided by third parties, at our two fabrication plants at Gandhinagar, Gujarat. Currently, we are one of the largest fabricators of lattice steel towers, with a capacity of 108,000 MTs per annum. In August 2005, we commissioned a 100% EOU, which is ISO 14001: 2004 certified, with a tower fabrication capacity of 30,000 MTs per annum, increasing our production capacity from 54,000 MTs per annum to 84,000 MTs per annum. In October 2008 we added capacity at our main plant for 24,000 MTs per annum by which our production capacity has increased to 108,000 MTs. Despite our increase in production capacity, we currently operate at approximately 90% of production capacity and, if required, we may, as we have in the past, also outsource the production of towers to third parties. Our fabrication plants use 16 computerized numerically controlled ("CNC") machines to provide high quality punching, drilling, cutting and stamping. We also galvanize steel according to our clients' specifications with 80 to 130 microns of zinc coating at our temperature controlled galvanizing baths.

Construction of Transmission Lines, Including Survey, Foundation, Erection and Stringing Services. Construction of transmission lines includes conducting surveys over multiple types of terrain, including rivers and other water bodies, hills and deserts, laying of concrete

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foundations for the towers, erecting towers on the foundations, fitting insulator and other hardware, optical ground wire ("OPGW") and stringing of conductors and cables. We are equipped with 31 tension stringing equipment machines, capable of handling up to 8 and 16 tons and pulling quadruple conductors and OPGW. In India, we are currently constructing over 6,000 kilometers of lines, and outside of India, we are currently constructing over 2,000 kilometers of extra high voltage lines.

Selected Current Projects and Work Orders

The following table sets forth significant international ongoing projects and work orders, including for sales of towers as of March 31, 2010:

Client Name Line Name/ Project Description Power (KV)

Length (kms)

Tonnage (MTs)

Expected Completion

Date / Period Project Value Ministry of Electricity and Water. (MEW), Kuwait

Supply and installation of 400 kV D/C Subbiya S/S to Sulaibya "Z" to Fintas "Z" to Jabrieh "Z" transmission line

400 172 23500 January 2011 KD 69,492,024

Sonelgaz, Algeria Supply and erection of 220 KV DC/SC and 60 KV DC/SC Various transmission lines. Lot - 3 (total 5 lines)

220 DC/SC and 60

144.3 3140 December 2010

€12,557,170.89 and Algerian Dinar 392,204,021.22

TRANSCO, Abu Dhabi

Supply and erection of 400kV and 132kV Overhead Transmission Line for Power Supply to Fujairah Industries.

400 and 132

30 5089 March 2011 AED 112,713,470

Ethiopian Electric Power Corporation, Ethiopia

Supply and erection of 230 KV Ethiopia-Djibouti Power Interconnection Project-Contract EDPIP-A1-Ethiopia.

230 208 4950 August 2010 €15,942,965.11 and Ethiopian Birr

53,090,617

Electricite de Djiboutie

Supply and erection 230/63 KV Ethiopia-Djibouti Power Interconnection Project-Contract EDPIP-A1-Djibouti.- (Electricite de DJIBOUTI )

230/63 161 3,000 July 2010 €11,515,346.75 and Djiboutian Franc -

37,523,878

Nepal Electricity Authority, Nepal

Supply and erection of 220 KV S/C on D/C Khimti-Dhalkebar transmission line

220 75 2,600 June 2010 US$ 8,064,031.40 and NPR 144,988,275

Eskom, South Africa

Supply and erection of 400 kV S/C Ingula Loop- Out Connection transmission line

400 12 545 June 2010 ZAR 29,915,633

The following table sets forth significant Indian ongoing projects and work orders, including for sales of towers as of March 31, 2010:


Length (kms)

Tonnage (MTs)

Expected Completion

Date / Period Project Value

(Rs. in millions) West Bengal State Electricity Board, Kolkatta

Kakdeep and Kachuberia transmission line at Sagar Island

220 3.7 780 July 2010 621.4

Maharashtra State Electricity Transmission

Supply and erection of lines for strategic EPC alliance covering turnkey execution

220 and 132

1,211 25,630 December 2012 5,998.6

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Length (kms)

Tonnage (MTs)

Expected Completion

Date / Period Project Value

(Rs. in millions) Corporation Limited., Mumbai Maharashtra State Electricity Transmission Corporation Limited., Mumbai

Supply and erection of lines for strategic EPC alliance covering turnkey execution

220 and 132

1,338 23,858 December 2012 5,858.2

Power Grid Corporation of India Ltd., New Delhi

Silwar-Satna and Satna-Bina transmission lines

765 413 31,965 May 2011 3,770.7

Essar Power Transmission Company Limited, Noida

Mahan-Sipat and Vindhyachal-Korba at Siddhikala-Mahan and Gandhar at Jhanour-Essar, Hazira

400 432 24,981 March 2012 3,420

North East Transmission Company Ltd

Churaibari-Silcher-Khelerihat section of Palatana-Bongaigaon transmission line

400 158 10,791 November 2011 2,109.4

Tamil Nadu Electricity Board, Chennai

ARASUR transmission line on a turnkey basis

400 110 6,180 July 2011 1,542.5


Biswanath Chariyali–Agra line for Gopalganj-Gorakhpur section

800 181 15,337 February 2012 1,409.9

Rajasthan Rajya Vidyut Prasaran Nigam Ltd, Jaipur

Chhabra TPS-Bhilwara transmission lines on turnkey basis

400 303 12,387 June 2010 1,146.6


Kaithal-Meerut transmission line 400 168 13,131 May 2010 1,057.2

Selected Completed Projects and Work Orders

The following table sets forth significant completed projects and work orders, including for supplies of towers:


Length (kms)

Tonnage (MTs)

Completion Date

Project Value (Rs. in millions)

RRVPNL, Jaipur

Jaipur-Merta and Merta-Jodhpur transmission line

400 312 8,974 September 2004 984.8

Power Grid Corporation of India Ltd.

Bipole Ballia-Bhiwadi transmission line

500 254 9,773 March 2010 981.9

PowerLinks, New Delhi

Siliguri-Purnea transmission line 400 162 12,319 February 2006 847.9


Lakhisarai-Patna section of Kahalgaon–Patna–Balia transmission line

400 124 8,410 April 2007 814.7


Bipole Ballia-Bhiwadi transmission line

500 198 9,398 March 2010 811.2

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Nagda-Jhalod transmission line 400 166 6,769 February 2008 803.4

Powergrid Corporation of India Ltd.

Tala-Siliguri transmission line 400 214 10,912 December 2006 768.4

Madhya Pradesh Power Transmission Co. Ltd., Jabalpur

Various transmission lines 220 442 10,384 March 2010 753.1

Adani Power Pvt Ltd.

Mundra Power Station at Dehgam transmission line

400 195 8,000 August 2009 752.1


Seoni-Khandwa transmission line 400 115 7,258 June 2008 735.3


Balia–Lucknow transmission line 400 120 4,385 May 2007 709.6

West Bengal State Electricity Board, Kolkatta

Purulia-Durgapur transmission line 400 70 4,260 January 2007 690


Talcher-Sompeta electrode line 500 326 15,331 January 2003 679.5


Sipat–Seoni transmission line 765 179 9,499 April 2008 650.5

Andhra Pradesh State Electricity Board, Hyderabad

Srisailam-Hyderabad and Srisailam-Vijayawada transmission line

440 410 14,420 October 2000 646

Our Power Distribution Business

Domestic Projects

In 2005, in order to benefit from the increasing focus of the Ministry of Power on rural electrification in India (see "Industry — Overview of the Indian Power Sector - Distribution") we commenced our Power Distribution Business. In our Power Distribution Business, we engineer, procure and construct power distribution networks in rural India, electrifying villages and hamlets.

We have completed the electrification of over 8,000 villages as of December 31, 2009. These power distribution projects require supplies of concrete poles, conductors, insulators, structures, cables, energy meters, distribution transformers, lighting arrestors, stay sets, transformers, vacuum circuit breakers, control and relay panels, capacitor banks, isolators and batteries. As of December 31, 2009 out of these 27 projects we had completed an aggregate 50,543 kilometers of 11/33 KV lines, over 740,000 poles, over 32,000 distribution transformer centers and over 270,000 individual connections. It also entails the establishment of 29 new 33 KV substations and the augmentation of 28 existing 33 KV substations.

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International Projects

In July 2006, we secured our first international rural power distribution project by securing an order from Kenya Power & Lighting Co. Ltd for the electrification of over 90 villages in Mount Kenya and Nairobi. We have completed the electrification of over 90 villages in Kenya as of December 31, 2009.


The following table sets forth our significant ongoing projects and work orders as of March 31, 2009:

Client Location Line Name/ Project Description Power (KV)

Number of Villages Covered

Scheduled Completion

Date

Order Value (Rs. in

millions) Maharashtra State Electricity Distribution Company Ltd., Mumbai

Maharashtra Feeder separation program - GFSS-II in Nashik Zone

11 2,323 June 2010 2814.7

Maharashtra State Electricity Distribution Company Ltd., Mumbai

Maharashtra Feeder separation program- GFSS-II in Satara Circle

11 945 June 2010 1,561.80

Powergrid Corporation of India Ltd., Guurgaon

Bihar RGGVY work in Patna-Nalanda District

11 613 April 2010 789.45

Uttarakhand Power Corporation Ltd., Dehradun

Uttarakhand RGGVY work in Pithoragarh District

11 138 June 2010 759.60

Ajmer Vidyut Vitran Nigam Ltd., Ajmer

Rajasthan Feeder renovation program in Udaipur

11 77 feeders June 2010 439.40


Rajasthan RGGVY work in Rajsamand District

11 132 May 2010 327.30


Rajasthan Feeder renovation program in Nagaur

11 75 feeders June 2010 279


Maharashtra RGGVY work in Nandurbar District

11 224 June 2010 198.40


Rajasthan Feeder renovation program in Ajmer

11 22 feeders June 2010 141.70

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Client Location Line Name/ Project Description Power (KV)



Date

Order Value (Rs. in


Maharashtra RGGVY work in Dhule District 11 583 June 2010 143.90


Rajasthan Feeder renovation program in Ajmer

11 22 feeders June 2010 112


The following table sets forth our significant recently completed projects and work orders:

Client Location Line Name/ Project Description Power



Date

Order Value (Rs. in


Maharashtra Feeder Separation Program -GFSS-I in Kolhapur-Pune Zone

11 2,053 December 2009

2,651.30


Maharashtra Feeder Separation Program- GFSS-I in Nashik Zone

11 1,277 August 2009 1,226.80

Madhyanchal Vidyut Vitaran Nigam Ltd, Lucknow

Uttar Pradesh RGGVY work in Shahjahanpur District

11 764 April 2009 796.90

Madhyanchal Vidyut Vitaran Nigam Ltd, Lucknow

Uttar Pradesh RGGVY work in Barabanki District

11 614 March 2009 857

Our Infrastructure Business

Our Infrastructure Business currently includes the construction of cross-country oil and gas pipelines. As we leverage on our experience in constructing such pipelines, we may diversify into the construction of other infrastructure projects. JMC also engages in infrastructure projects and constructs highways, flyovers and metro stations. See "— Our Civil Contracting Projects Business."

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Our Pipeline Construction Services

Pipeline construction is equipment intensive. We own, operate and maintain a fleet of specialized equipment, including, as of December 31, 2009, over 50 pipe layers, 28 excavators, 6 dozers and 139 welding machines, as well as boring machines and bending machines. With this equipment and our previous execution experience we are now independently capable of executing cross country gas pipeline projects of up to 48" in diameter.

The construction of an inter-state pipeline network involves a number of complex sequential operations along the designated pipeline right-of-way. The sequence of these operations is usually the same for all onshore pipelines, but personnel and equipment may vary widely depending upon factors such as the size of the pipeline, the time required for completion, general climatic conditions, seasonal weather patterns, the number of road and railway crossings, the number and size of river crossings, terrain considerations and extent of rock formations. The major operations consist of clearing and grading the right-of-way, excavation, hauling the pipe to the place of laying, bending, lining up the succeeding joints, performing various welding operations, non-destructive inspection of welds, lowering the pipes into the ditch, backfilling the ditch, installing mainline valve stations, conducting hydro testing and performing final clean up. For laying pipes under rivers and roads, special methods such as horizontal directional drilling techniques are used. These require very sophisticated equipment including horizontal direction drilling rigs.

Selected Ongoing Projects and Work Orders

The following table sets forth our significant ongoing projects and work orders as of March 31, 2010:

Client Name Location Type of

Arrangement Project Details

Expected Completion Date

and Period Project Value

(Rs. in millions HPCL-MITTAL Pipelines Ltd.

Gujarat, Rajasthan Single bidder Mundra Bathinda Pipeline Project 425 km x 28" diameter; 120 km x 30" diameter; 6.3 km x 48" diameter

August 2010 3,850.0

GAIL (India) Ltd. MP, UP, Rajasthan Consortium with JSC Zangas

Vijaypur Dadri Pipeline Project 165 kms x 48" diameter

May 2010 2,399.9

Indian Oil Corporation Ltd.

Haryana, UP Consortium with JSC Zangas

Dadri Panipat Pipeline Project 132 kms x 30" diameter

June 2010 519.4

GAIL GAS Limited Rajasthan Single bidder CNG and City Gas Distribution Project - Pipeline Laying and Associated Works for Kota City

January 2011 199

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Client Name Location Type of

Arrangement Project Details

Expected Completion Date

and Period Project Value

(Rs. in millions 23.50 km x 10", 12.40 km x 8", 2 km x 6"and 3.0 km x 4"


The following table sets forth our significant completed projects and work orders as of December 31, 2009:

Client Name Location Project Details Completion Date Project Project Value

(Rs. in millions GAIL (India) Ltd. Maharashtra 74 km x 30"

diameter November 2008 Panvel - Dabol

Pipeline Project 1,810.4

Bharat Oman Refineries Limited

MP 427 km x 24" diameter

December 2008 Vadinar Bina Pipeline Project

1,392.7

Bharat Petroleum Corporation Ltd, through JSC Zangas

Rajasthan, U.P, Haryana and Delhi

389 km x 16" diameter and 56 km x 8" diameter

April 2007 Mumbai - Manmad Manglya Pipeline

Extension Project to PiIyala/ Bijwasan

864.6

GAIL (India) Ltd. Rajasthan and M. P 110 km x 18" diameter

May 2007 Vijaypur Kota Pipeline Project

318

Reliance Gas Transportation Infrastructure Ltd.

Gujarat 28 km x 28" diameter and 1.3 km x 12" diameter

November 2008 Hazira Spur Pipelines Project

276.32

STG Gamon Consortium

Maharashtra 15 km x 30" diameter and 15 km x 24" diameter

May 2007 Dahej Uran Pipeline Project

227.5

Gujarat State Petronet Limited, through JSC Zangas

Gujarat Station work May 2005 Mora Node Integration Project

Station Work

125.4

Our Civil Contracting Projects Business

We undertake our Civil Contracting Projects Business through our subsidiary JMC. In our Civil Contracting Projects Business, we execute projects in infrastructure and power (including bridges, flyovers, highways and captive power plants), industrial (including agrochemicals, petrochemicals and heavy engineering) and buildings (including commercial complexes, hospitals, hotels, information-technology parks, plant and factories and turnkey execution involving mechanical and electrical engineering, HVAC, fire fighting, architectural and landscaping). We intend to pursue further opportunities in each of these project areas, through JMC, in particular the road and railway construction projects on a BOOT or annuity basis.

We have a diversified client portfolio, including the NHAI, Indian public sector undertakings, state public works departments and established private sector companies as clients.

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JMC is ISO 9001:2008 certified from TUV SUD Management Services of Germany for its quality management system for construction of industrial, institutional, power and infrastructure projects.

For the year ended March 31, 2009, JMC had total income of Rs.13.2 billion (US$259.1 million) and for the nine-months ended December 31, 2009 had total income of Rs.9.4 billion (US$201.4 million). As of December 31, 2009, JMC had an order book of Rs.26.6 billion (US$569.8 million). Total paid-up, issued and outstanding capital of JMC, as of December 31, 2009, was Rs.217.7 million (US$4.7 million), of which we currently hold 53.01%. We may, however, acquire additional equity shares of JMC in the future.

Over the last two decades, JMC has executed a variety of projects in the following sectors:

• Infrastructure and power: bridges, flyovers and underpasses, bus terminals, railway stations, drainage works, effluent treatment plants, highways, heliports, eater supply and treatment plants, marine works and captive power plants;

• Industrial: agrochemicals, automobiles, cement and steel, paints, chemicals and petrochemicals, electronics, heavy engineering, textiles, pharmaceuticals and sugar; and

• Buildings: commercial complexes, hotels and hostels, hospitals and health centers, high-rise buildings, institutional buildings, information technology parks, multiplexes and shopping malls, research and development centers, residential campus, townships, educational institutes and sports complexes.

In addition to core civil construction, JMC has executed design and build projects, EPC and turnkey projects including specialized services such as HVAC, electrical, fire fighting, elevators, structural work, glazing and building automation. JMC has recently been focusing on large value projects, providing value added services. JMC has identified "Balance of Plant" business as a key growth area in the power infrastructure sector and intends to commence working on civil and structural work in this area in the near term.

Business Process

In our civil contracting projects business, JMC enters into contracts primarily through a competitive bidding process, which often requires a pre-qualification process especially for public sector projects. Before a tender is submitted, JMC performs preliminary due diligence at the proposed project site. Once the tender is accepted by the client, it is converted into a letter of intent or a letter of award, and a project manager and the project team are identified. Detailed project planning occurs to estimate resources, cost of completion and profitability. Once all of these items are determined and after final negotiations, a construction contract is signed with the client.

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Resources are then mobilized at the project site and execution of work is started. Construction begins when the client hands over the site, plans and drawings to our on-site team. The project execution work is carried out as per the plan and the on-going requirements of the client. The quality control and safety, health and environment efforts at the site offices are further supplemented by the efforts from the regional office and the head office by way of technical and quality audits as to cost and time parameters as well as client satisfaction.

Construction, Project Management, Supervision and Organizational Functions

JMC executes projects across the various sectors of construction. As of February 28, 2010, JMC had 69 project sites under construction. The methodology of construction depends upon the nature of the project (e.g., the construction methodology would be different for a highway project than for a building project). JMC's sites are managed by on-site project managers who are experienced engineers and are assisted by other engineers in charge of project planning, construction and plant operations and maintenance. Each site is supervised and controlled by one of the regional offices in Bangalore, Chennai, Secunderabad, Mumbai, Kolkatta and New Delhi. Each regional office is managed by a technical director and supported by senior members of management.

JMC utilizes advanced computerized facilities and software programs to connect the project sites, regional offices and head office. Monthly progress reports are generated from each project site to its relevant regional office, where project coordinators evaluate progress and make necessary adjustments to the schedule, design and resources.


The following table sets forth significant ongoing projects and work orders for our Civil Contracting Projects Business as of December 31, 2009:

Civil Contracting Projects - Factories and Buildings

Client Name Location Project Details Expected Completion

Date Project Value (Rs. in

millions Provident Housing Ltd.

Karnataka Construction of multi-storied building and infrastructure, Provident Welworh City

June 2012 3,553

Vedanta Alumina Ltd

Orissa Construction of township and other site development work

September 2010 1,189

Office of the Executive Engineer Rehabilitation and RetroFilling Division

New Delhi Multipurpose Air-conditioned Indoor Stadium. Facilities for netball and 400m x 8 lane synthetic athletic track at Thyagraj Sorts Complex at Thyagraj Nagar, New Delhi

May 2010 1088

Jai Prakash Associates Ltd.

Uttar Pradesh Civil work for town center (Phase-I) at Jaypee Green 18th Golf Course, Greater Noida

July 2010 1,070

Government of India, Central Public Works Department

New Delhi Indoor cycling velodrome at Indira Gandhi Stadium Complex

May 2010 972

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Date Project Value (Rs. in

millions Classic Mall Development Co. Ltd.

Chennai Civil work for construction of shopping mall multiplex, hotel and office building, Chennai

April 2010 640

Information Technology Park

Karnataka Civil work for multi tenant building (MTB-1 ) at International Tech Park, SEZ, Banglore

December 2010 580

Lumbini Construction Ltd.

Andhra Pradesh SLN Terminus by Lumbini November 2010 545

Civil Contracting Projects – Roads and Bridges


Date and Period Project Value (Rs. in

millions NHAI Tamil Nadu Four-laning and strengthening of the

existing two lane National Highway no. 45-B from Tovarankurchi to Maurai

May 2010 2,980

NHAI Tamil Nadu Four-laning and strengthening of the existing two lane National Highway no. 45-B from Trichy Bypass end to Tovarankurchi

May 2010 2,604

Maharashtra State Road Development Corporation

Maharashtra Construction of flyover/elevated road opposite Panvel Bus Depot on old Mumbai-Pune National Highway

December 2011 1,443

Madhya Pradesh Road Development Corporation Ltd.

Madhya Pradesh Mandleshwar-Kasarwad, Kasrawad- Khargone road and Banher-Mharashtra Border road

May 2010 907

Indore Municipal Corporation

Madhya Pradesh Water Supply Projects Lot-2 June 2010 528

Civil Contracting Projects – Power



millions Jindal Power Ltd. Chhattisgarh Civil, structural and architectural

work package for main power block, Raigarh, Chhattisgarh

August 2012 3,335

Bharat Heavy Electrical Ltd.

Gujarat Main power block and expansion project at Sikka Jamnagar

August 2010 1,748

Reliance Infrastructure Ltd.

Madhya Pradesh 6 x 600 MW ultra mega power projects, Sasan, Madhya Pradesh

March 2012 1,323

Utility Energytech Engineers Private Ltd.

West Bengal Construction of general civil work package I and II and permanent stores at Raghunathpur

October 2010 1,064

ElECON Engineering Co Ltd.

Uttar Pradesh Civil coal handling plant at Daadri, Uttar Pradesh

May 2010 900

NTPC Thermal Power Plant

Maharashtra Construction Of complete civil work on turnkey basis required for coal handling plant package for 2 x 500 MW Maudha super thermal power plant

January 2012 864

Reliance Infrastructure Ltd.

Maharashtra 1 x 300 MW coal based group power project at Butibori GCW-1, Nagpur

March 2012 667

Utility Energytech Engineers Private Ltd.

Haryana 2 x 600 MW Hisar thermal power project, Hisar, Haryana

September 2010 615

BGR Energy Rajasthan Civil Work For 2 x 600 MW August 2010 610

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millions Systems Ltd. Kailisindh thermal power project at

Jhalwar, Rajashtan ALSTOM Projects ( I ) Ltd.

Gujarat Main civil work at 370 MW CCPP at Utran, Surat

April 2010 526


The following table sets forth significant completed projects and work orders undertaken by our Civil Contracting Projects Business:

Client Name Location Project Details Completion

Date Project Value

(Rs. in millions Wipro Limited Andhra

Pradesh, Karnataka, Vizag

Construction of software facilities at Bangalore, Vizag, and Hyderabad.

September 2006

861

Delhi Metro Rail Corporation

New Delhi Construction of 6 elevated station buildings at New Delhi.

December 2006

746

HSCC ( I ) Ltd. Himachal Pradesh

Construction of 500-bed hospital complex for Dr. Rajendra Prasad Medical College at Tanda, Himachal Pradesh

August 2006 476

Chennai Metropolitan Development Authority

Chennai Bus terminus March 2003 459

Larson & Tubro Ltd - ECC Construction Group

Gujarat Four-laning and strengthening of Ahmedabad–Mehsana Road project

March 2004 451

Yamuna Bridge Project, Division-III Public Works Department, Government of NCT of Delhi

New Delhi Construction of integrated complex for Delhi Judicial Academy, National Law School and National Institute of Meditation and Conciliation at New Delhi.

December 2009

443

HSCC ( I ) Ltd. New Delhi Construction of Post Graduate Institute for Medical Education and Research and associated works at Dr. Ram Manohar Lohia Hospital, New Delhi.

November 2008

439

Mumbai Metropolitan Region Development Authority

Maharashtra Construction of flyover for Maharashtra State Road Development Corporation Ltd. at CST Airport Junction, Santacruz, Mumbai

March 2009 425

Maruti Udyog Ltd. Haryana Factory building at Manesar, Gurgaon. September 2007

387

Power Grid Corporation Ltd.

Haryana Office building at Gurgaon, Haryana September 2003

383

Infosys Technologies Ltd.

Maharashtra and Karnataka

Construction of IT parks at Bangalore and Pune.

June 2002 355

Indian Institute Of Management

Gujarat Construction of International Management Development Centre at Ahmedabad

December 2006

320

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In September 2009, JMC was ranked the 15th largest company out of India's top 25 infrastructure companies by revenues by the Economic Times, based on consolidated revenues. Additionally, in June 2008, JMC was ranked 6th amongst "India’s Fastest Growing Small Companies" by Business Today.

For further information about our Civil Contracting Projects Business, please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations of JMC" and "Organizational Structure and Principal Shareholders - Our Relationship With And Investment In JMC Projects (India) Limited"

Our Logistics and Warehousing Business

Through our subsidiary, SSLL, we own and operate 12 agricultural logistics parks located at Vatva (Ahmedabad), Sriganganagar, Bikaner, Kota, Merta (Nagaur), Alwar, and Jodhpur in Rajasthan and at Deesa (Banaskantha), Unjha (Mehsana) and Rajkot in Gujarat, with a total storage capacity of more than 189,000 MTs.

SSLL was incorporated in January 2007 as "Shree Shubham Logistics Private Limited" and subsequently converted into a public limited company in April 2007. Between 2007 and 2008, we acquired an 80.0% shareholding in SSLL. SSLL was created to serve the needs of the agri-commodity storage sector with ambient and temperature-controlled warehousing across India.

Through SSLL, we have presence in almost the entire logistics and warehousing value chain:

• Storage and Preservation: Cold and Dry Warehouse Chains: our storage and preservation facilities are located at strategic locations for the convenience of our customers. We have a storage capacity of more than 189,000 MTs across our existing agricultural logistics parks. All our facilities are equipped with an electronic weigh bridge;

• Analysis and Certification: Our analysis and certification laboratories provide, among others, inspection and sampling services, testing and grading services, pre-shipment and shipment services and pest control and fumigation services;

• Collateral Management Services: We assist both borrowers and lenders in setting up financing structures. Services include monitoring of physical collateral security, local custody and handling of title;

• Commodity Funding Services: We have associations with various finance institutions for our commodity funding services, the aim of which is to assist the borrower to obtain finance on the produce and stock which is stored at our agricultural logistics parks; and

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• Commodity Procurement, Trading and Export Services: We provide procurement, trading and export services for various types of commodities to corporate customers either for self consumption or trade requirements.

The Government of Rajasthan has taken various initiatives to help farmers of the State. In addition to the storage and preservation services, there is a unique public private partnership ("PPP") between Rajasthan State Warehousing Corporation ("RSWC") and SSLL which will offer a comprehensive range of services including weighing, cleaning, grading and sorting, procurement, transportation, testing and certification and arranging finance. Through this strategic tie up, SSLL will manage 38 RSWC agricultural logistics parks with a storage capacity of around 405,000 MTs and will upgrade all the RSWC agricultural logistics parks with the latest technology and equipment including electronic weigh bridges, warehouse management software and testing, analysis and certification laboratories.

For the year ended March 31, 2009, SSLL had total income of Rs.562.31 million (US$11.0 million) and for the nine-months ended December 31, 2009, SSLL had total income of Rs.606.44 million (US$13 million).

Our Biomass Energy Business

We have diversified into power generation using renewable and non-conventional energy sources, such as agricultural waste and crop residues in the State of Rajasthan. We set up a power generation plant in Ganganagar district of Rajasthan in August 2003 which has a capacity to generate 7.8 MW power and a second power generation plant in the Tonk district of Rajasthan in November 2006 which has capacity to generate 8 MW power. We believe the Ganganagar plant was the second plant in India to receive United Nations Framework Convention on Climate Change ("UNFCCC") registration, and the first plant in India to receive carbon credits under the Clean Development Mechanism of the Kyoto Protocol. The Tonk plant has also received UNFCCC registration, gold standard registration and receives carbon credits under the Clean Development Mechanism of the Kyoto Protocol. We have entered into a contract with a Dutch governmental agency, Senter Novem, for the sale of carbon credits resulting from power generation at our Ganganagar biomass plant and with Atmosfair in Germany for the sale of carbon credits resulting from power generation at our Tonk biomass plant . We have recognized the receipt of Rs.57.82 million of carbon credits for the year ended March 31, 2009 and Rs.44.17 million of carbon credits for the nine-months ended December 31, 2009.

We also believe we are Rajasthan's first biomass-based independent power producer. We believe our biomass energy plants benefit the local economy, since we generate power from agricultural waste and provide local farmers with a way to sell what otherwise would be waste material. In addition, the plants offer employment opportunities to the local workforce.

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Our Ganganagar plant uses MCR and cotton stalks as raw material to generate power. Our Tonk plant uses only MCR. As mustard and cotton are harvested only in April through June and November through December, respectively, to ensure sufficient and continuous supply of raw materials, we purchase and store substantial quantities of MCR and cotton stalks. We intend to keep between three and six months' capacity for each plant in order to ensure a sufficient supply of raw material. We have established collection centers in the areas of supply of agricultural waste to enhance our ability to collect the required raw material.

We have entered into two long term PPAs with Rajasthan Rajya Vidyut Prasaran Nigam Limited ("RRVPN") and two WBAs with RRVPN and three distribution companies operating in the regions of Jaipur, Jodhpur and Ajmer cities, as permitted by the State of Rajasthan's non-conventional energy policy. Sales of power generated by the plants to large industrial consumers within the State of Rajasthan are permitted under existing policies and regulatory framework. We sold approximately 106 million units in the year ended March 31, 2009 and approximately 81 million units in the nine-months ended December 31, 2009.

Joint Ventures and Consortium Arrangements

For most projects, we bid as the sole contractor, taking full responsibility for all aspects of the project, including, if required, the selection and supervision of subcontractors. On some larger or more technically complex projects, we may participate in project-specific joint ventures or consortium arrangements with other EPC companies to share risks and combine financial, technical and other resources. We seek one or more such partners opportunistically when a project requires local content, equipment, manpower or other resources beyond those we have available to complete work in a timely and efficient manner or when we wish to share risks and combine resources on a particularly large project.

In a single-project joint venture or consortium arrangement, each member of the joint venture or consortium shares the risks and revenues of the project, according to a predetermined agreement. Such agreements generally identify the work to be performed by each party, procedures for managing the partnership, the manner in which profits and losses will be shared by the parties, the equipment, personnel or other assets that each party will make available to the partnership and the method by which any disputes will be resolved. Although joint ventures and consortia often impose joint and several liabilities on the partners, we seek to ensure that such liabilities are contractually limited to the scope of work of each party in the joint venture or consortium. These single-purpose joint ventures and consortia are for the duration of the contract, and are terminated when the project is completed.

As of December 31, 2009, we had entered into the following joint venture or consortium arrangements:

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Other Party Type of

Arrangement Project Description Completion Date Project Value JSC Zangas, Russia ................................ Consortium Vijaypur Dadri Pipeline Project May 2010 2,399.9 JSC Zangas, Russia ................................ Consortium Dadri Panipat Pipeline Project June 2010 519.4 Techno Electric & Engineering Limited ...................................................

Joint venture 400 KV/220 KV GSS project and associated schemes/work-Rajasthan

NA NA

Techno Electric & Engineering Limited ...................................................

Joint venture 400 KV/ 220 KV GSS project and Associated schemes/work-Rajasthan

NA NA


Joint venture 220 KV S/C Sikar (400 KV) and 220/132 KV GSS and associated schemes/work-Rajasthan

NA NA


Joint venture Power Transmission Project- Haryana

NA NA


Joint venture Thermal power project-Rajasthan NA NA

Alfnar Construction Company ............... Joint venture Power Transmission project - Saudi Arabia

NA NA

Business Processes

Our EPC contracts expose us to significant construction and cash flow risks. To mitigate these risks, we have developed risk controls that include selective bidding on projects, efficient project management and disciplined cash flow management. We believe that our past ability to manage these risks has been a key factor in our ability to provide solutions for our clients.

Our EPC services business varies in a number of aspects, including, among others, price, quantity and scope. Our EPC contracts generally provide for one or more of the following provisions:

• Variable-price provisions: Contracts which entail supply of certain materials with price escalation clauses, where a variation in the price of labor or raw materials, such as steel, aluminum or zinc, is reimbursed, fully or to a limited degree, based on labor or commodities indices such as the Wholesale Price Index (WPI), the Consumer Price Index ("CPI"), IOCL, the Indian Electrical and Electronic Manufacturers' Association ("IEEMA"), the London Metal Exchange (the "LME") or Conductor and Cable Manufacturers Association of India ("CACMAI");

• Fixed-price provisions: Contracts which entail supply of certain materials without price escalation clauses, where management of raw materials is critical to maintaining our material costs; to manage our risks and exposure with respect to these contracts, we selectively enter into hedging contracts for materials such as aluminum and zinc;

• Lump Sum provisions: Contracts which entail a single or lump sum price for the total amount of work, subject to variations pursuant to changes in the client's project requirements; the client provides all material information relating to the project to

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enable us to estimate quantities of materials and labor to be used to execute the project, and as such determine our bid price;

• Unit price provisions: Contracts which require us to quote prices for each individual item listed on the bill of quantities prepared by the client at the time of the bid; any variation in the quantity of actual bill of quantities items against the amount tendered is compensated at the price provided for at the time of the bid in the bill of quantities;

• Turnkey provisions: Contracts which entail our providing the full range of EPC services, from designing and engineering through providing finished products; and

• Specified scope provisions: Contracts which require us to provide a limited range of services, such as a contract relating to just fabrication of towers or just construction services; such projects generally entail other parties providing the other services or supplies.

For infrastructure and real estate development projects, we may enter into three types of contracts:

• Cash contracts: Contracts where all materials and other costs are incurred by us or the client and we are paid in cash for the execution of the project;

• BOOT contracts: Contracts where we (either individually or as a member of a consortium) invest in public infrastructure development projects such as highways or bridges, and arrange for the financing of and incur all expenditure related to the project; we own, maintain and manage the project assets for a stipulated concession period granted by the government authorities during which we receive revenues from the project assets in the form of toll charges and ridership fees, as well as from granting commercial and/or lease rights to such assets; and

• BOOT contracts on annuity payment methods: Contracts where we incur the costs of constructing and maintaining the project and are paid predetermined amounts by the client, semi-annually or annually.

Turnkey Projects

Most of our international turnkey projects are fixed-price contracts in which there is an all-inclusive fixed price for the project but with clauses for compensation in case of variations of quantities of materials used. At present, the only international projects for which the contracts fix an all-inclusive fixed lump-sum price for the project without quantity variation provisions, other than for variation in route length, are the Sonelgaz projects in Algeria. As the contractor of a turnkey project, we are generally responsible for all aspects of the project. We usually guarantee completion by a scheduled acceptance date with liquidated damages in the event schedules are not met as a result of circumstances within our control. The client usually

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retains responsibility for obtaining all necessary construction and operating permits and right of way and for operating the facility after delivery. While turnkey contracts entail business and financial risks, notably by requiring us to absorb some of the cost overruns if they occur, they enable us to efficiently determine the EPC sequence for a project and deploy our resources more efficiently, potentially allowing us to capture these efficiencies in the form of improved profit margins.

Material Supply Contracts

Our contracts may also vary depending on the source of the materials. In some contracts we supply the materials. Other contracts are owner-supplied contracts, in which the client supplies some or all of the materials to us and we carry out design and/or construction only. For contracts in which we supply labor or materials, procurement of labor or certain items may be subject to price variation provisions based on indices and rates, such as the WPI for reinforcement bars and cement, LME index for aluminum or zinc in international contracts, CPI index for labor, IOCL rates for diesel, IEEMA or CACMAI indices for steel angles and certain other products. Generally, we do not have any flexibility to choose indices; however, in certain contracts funded by multilateral agencies we can negotiate an index of our preference.

With respect to contracts for which the client provides the materials to us, we are generally required to account for the materials and send a reconciliation of the materials used at the conclusion of work on the contract. If we have used more materials than agreed under the contract due to a miscalculation of the amount of materials required or for other reasons, we must make up the shortfall, either through a reduction in our final bill or through replenishment of the stock of materials from our stores.

Price Variations and Effects on Contract Price

Even with respect to variable price contracts, we may not always be able to recoup the full cost of the raw materials used. For example, the price variation formula for a raw material may not be accurate due to a deficiency in the formula. In addition, there may be a delay between the time at which the cost of the raw material increases and the time the relevant index reflects such increase. Finally, the index itself may be inaccurate and may not accurately reflect our cost of purchasing the relevant raw material. Any of these may impact upon the final contract price and may reduce or affect our margin.

Performance Guarantees

In most of our contracts, we provide a performance guarantee (in the form of a bank guarantee) to the client of between 5%-15% of the value of the contract at the outset of the work. When the work on the contract has been completed and the client acknowledges its completion, the client provides a provisional acceptance certificate to us. Typically, a few months following delivery of the provisional acceptance certificate a final acceptance

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certificate or taking over certificate is delivered to us by the client, along with the return of the performance guarantee. The performance guarantee is kept until this time so that the client can ensure that there have been no defects in our work. These performance guarantees are project- rather than client-specific, and are therefore returned 12 months after the completion of each project, irrespective of how many other projects we continue to undertake for such client. We generally retain insurance coverage until the delivery of the final acceptance certificate.

Project Warranties

In most of our EPC contracts we provide warranties for a period of 12 to 18 months after the date of completion of the contract by us. We make provisions in our reserves for expenses expected to be incurred for the provision of such warranties in an amount equal to 1.5% of the contract receipts. As of March 31, 2009, KPTL had reserved Rs.664.0 million for provision of such warranties and guarantees.

Project Execution

EPC projects involve various activities, depending on the scope of engagement on a specific project, either as an EPC or turnkey contractor or as a principal contractor or as a subcontractor responsible for specific segments of a project. These activities include project management, engineering design for the proposed project or specific parts of a project, procurement of equipment and materials from third party manufacturers, construction activities, and commissioning/start-up services. Financing costs for our working capital and for any initial expenses on our project execution scope are borne by us and are considered when calculating the contract's value.

Design and Engineering

Prior to the construction of a project in our power transmission, distribution or infrastructure businesses, detailed engineering is needed if the contract is an EPC contract. We are typically provided with a basic engineering design package containing all data needed by a competent contractor to perform procurement and construction for the project. In India, PGCIL typically provides transmission tower designs. See "— Our Power Transmission Business — Engineering, Procurement and Construction Services — Design and Engineering Services" for the design and engineering services we provide in our Power Transmission Business and "— Our Infrastructure Business — Our Pipeline Construction Services" for engineering services we provide in our Infrastructure Business.

Procurement

Because material procurement plays such a critical part in the success of any project, we retain experienced staff to carry out material procurement activities. On EPC contracts undertaken by us, material procurement is especially critical to the timely completion of

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construction. We maintain sophisticated material procurement, tracking and control systems which enable effective monitoring for our purchases.

We typically order the materials required for a project, such as steel, zinc, aluminum conductors, cement, diesel oil, concrete, reinforcement bars, electrodes, coating material, valves and other materials to be used in the project, immediately following the execution of the project contract to ensure availability of such materials when required under the project schedule and to decrease the possibility of price levels fluctuating from those assumed or provided for in our tender bid. For our international projects, we generally enter into hedging arrangements with suppliers of zinc and aluminum required for our projects. Bought out items in our distribution business projects include concrete poles, protection equipment, conductors and cables, electrical items, structural items, hardware, insulators, distribution transformers, switches and fuses, distribution boxes, energy meters, lighting arrestors, galvanized iron and stay sets, capacitors, power transformers, vacuum circuit breakers, control and relay panels, current transformers and potential transformers, capacitor banks and isolators, among others.

Construction Services

In our EPC contracts, other than in our Power Transmission Business, the field construction typically commences once the basic engineering and design aspects are finalized and a substantial portion of the materials has been ordered. In our Power Transmission Business, construction commences after we have fabricated the tower stubs, with mobilizing our key work force and construction machinery to the site of work. The key construction activities involved in a project depend on the nature and scope of the project. See "— Our Power Transmission Business — Engineering, Procurement and Construction Services — Construction of Transmission Lines, including Survey, Foundation, Erection and Stringing Services" for the construction services we provide in our Power Transmission Business and "— Our Infrastructure Business — Our Pipeline Construction Services" for the construction services we provide in our Infrastructure Business. For each of our projects, in addition to our on-site project managers, we appoint a project coordinator at our head office to coordinate and overlook the progress of work.

Pre-qualification and the Bidding Process

In selecting contractors for major projects, clients generally limit the tender to contractors they have pre-qualified based on several criteria, including experience, technical capability and performance, reputation for quality, safety record, financial strength and size of previous contracts in similar projects. Pre-qualification is key to our winning projects and we continue to focus on achieving pre-qualification. We endeavor to become directly qualified for projects that we propose to bid for. In the event that we do not qualify directly for a project, for instance due to the size of the project, we typically operate through consortiums with other relevant experienced and qualified contractors to participate in such projects.

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Because of the high cost and management resources required in preparing a bid on a large contract, we only bid on selected projects. Each project is carefully analyzed and, prior to bidding, we estimate the costs and analyze the financial and legal aspects of the project. In evaluating bid opportunities, we consider such factors as the client's reputation and financial strength, the geographic location and the difficulty of the work, whether financing arrangements for the proposed project have been finalized, our current and projected workload, the likelihood of additional work, the project's cost and profitability estimates, and our competitive advantage relative to other likely bidders. The bid estimate forms the basis of a project budget against which performance is tracked through a project cost system, enabling management to monitor projects continuously. Price competitiveness of the bid, among qualified parties, is generally the most important and determinant selection criterion.

We cannot predict with any degree of certainty the frequency, timing or location of new contract awards. Until the final selection, negotiations continue with the client on matters such as specific engineering, guaranteed technical and performance parameters, the construction schedule and financial and other contractual terms and conditions.

Research and Development ("R&D")

We have in-house R&D teams carrying out various types of work including customization of imported equipment for local conditions, design and development of specialized plants as required by planners of the construction techniques for projects, development of spare parts and tools to improve equipment maintenance and longevity, operational efficiency, cost reduction and timely availability, improvement of equipment, design, development, fabrication and sourcing of construction accessories to expedite construction time and reduce costs and improvement in construction processes, increasing mechanization and automation to reduce waste of construction materials and consumables and improving productivity and efficiency. The R&D teams also consider the use of alternative construction materials to improve quality and reduce costs and utilize computer aided design techniques in the fields of structural analysis and design.

Raw Materials, Bought Out Items and Fuel

Our principal raw materials include, among others, steel angles, zinc, cement, diesel oil, concrete, reinforcement bars, aluminum conductors, electrodes, coating materials, valves and other materials, and in our Biomass Energy Business, MCR and cotton stalks. Bought out items in our Power Distribution Business include poles, protection equipment, conductors and cables, electrical items, structural items, hardware, insulators, distribution transformers, switches and fuses, distribution boxes, energy meters, lighting arrestors, GI and stay sets, capacitors, power transformers, vacuum circuit breakers, control and relay panels, current transformers and potential transformers, capacitor banks, isolators, batteries and chargers. Fuel costs for operating our construction and other equipment also constitute a significant part of our operating expenses. We source these and other construction materials from a large

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number of independent suppliers, based on demands and specifications that correspond to the needs of a given project.

The prices and supply of these and other raw materials and fuel depend on factors not within our control, including general economic conditions, competition, production levels, transportation costs and import duties. Although we typically enter into forward contracts to hedge our exposure to price variation for aluminum and zinc, two of our significant raw materials and, in many power transmission, distribution and infrastructure tenders, provide for contract price variation based on WPI and IEEMA or LME or CACMAI indices if, for any reason, our primary suppliers of raw materials or fuel should curtail or discontinue their delivery of such materials to us in the quantities we need or at prices that are competitive or expected by us, our ability to meet our material requirements for our projects could be impaired, our construction schedules could be disrupted and our business could suffer.

In order to hedge risk on purchases of material exposed to commodity price risk, we enter into forward contracts in the futures market. We do not enter into such hedging contracts or transactions for speculative purposes. The hedging transactions are used only for the purpose of managing exposure to commodity price risks.

Competition

We operate in an intensely competitive environment. Our competition depends on whether the project is in the power transmission or distribution industry or in the infrastructure sector. It also depends on the size, nature and complexity of the project and the geographical region in which the project is to be executed. We compete against major Indian, Asian and European EPC companies, as well as infrastructure development companies. While service quality, technical capability, health and safety records, availability of qualified personnel, responsiveness to client demands, as well as reputation and experience are important considerations in client decisions, price is the major factor in most tender awards. Further, size, scheduling and complexity of certain large scale projects preclude participation by smaller and less sophisticated engineering and construction companies.

Our competitors in the power transmission business in India include KEC International Limited, Larsen & Toubro Limited, Jyoti Structures Limited and Tata Projects Limited. Outside of India, our major competitors include KEC International Limited, Energoinvest, D.D., Hyundai Engineering and Construction Company Limited, National Contracting Company Limited and a number of Chinese power transmission companies.

In our Power Distribution Business, our major competitors include Nagarjuna Construction Company Limited, IVRCL Infrastructures and Projects Limited, Reliance Energy Limited, Tata Projects Limited, Subhash Projects and Marketing Limited, Larsen & Toubro Limited, KEC International Limited and Vijai Electricals Limited, as well as a number of regional companies.

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In our Infrastructure Business, our major competitors include Punj Lloyd Limited, Dodsal Private Limited, Larsen & Toubro Limited, Gammon India Limited, Kai Hind Projects Ltd. and Essar Constructions Limited.

In our Civil Contracting Projects Business, JMC competes against Larsen & Toubro Limited, Simplex Infrastructure Limited, Shapoorji Pallonji and Co. Limited, BL Kashyap and Sons Limited, Era Constructions Limited, Nagarjuna Construction Company Limited and Gannon Dunkerley and Co. Limited, Gammon India Limited, Hindustan Construction Company Limited and IVRCL Infrastructures and Projects Limited and many regional civil construction companies.

In our Logistics and Warehousing Business, SSLL competes against Star Agri Warehousing and Collateral Management Limited, National Bulk Handling Corporation, National Collateral Management Services Limited and many regional logistics and warehousing companies.

Intellectual Property

We have our own proprietary software, such as certain application, design and anti-virus software, for which we hold software registrations. Our group company, Kalpataru Limited, holds the copyright to the trademark appearing on the cover page of this Placement Document.

Properties

We own or lease the following properties:

Location Nature of Right in

the Property Address Use of property Termination Date of Rights in Property

Grandhinagar Gujarat Leasehold Property Plot No. 101, Part – III G.I.D.C. Estate Sector 28 Grandhinagar - 382028

Registered Office and Factory

August 2080

Grandhinagar Gujarat Leasehold Property Plot No. 102 G.I.D.C. Estate Sector 28 Grandhinagar – 382028

Registered Office and Factory

June 2080

Grandhinagar Gujarat Leasehold Property Plot No. A/4/1, Electric Estate G.I.D.C. Estate Sector 25 Grandhinagar

EOU November 2096

Grandhinagar Gujarat Leasehold Property Plot No. A/4/2 and A/5, Electric Estate G.I.D.C. Estate Sector 25 Grandhinagar

EOU May 2081

Grandhinagar Gujarat Rental Property E-17, Sector 25 Grandhinagar

Storage of Tower Material and Other Raw Material

December 2010

Mumbai Maharastra Owned Property 16 Flats at "Kalpataru Estate" Andherei (East)

Staff/Residential Not Applicable

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Mumbai – 400 093 Flats

Punadra Gujarat Owned Property Suevey No. 130/1, 130/4, 134/1 and 143/1 Vill, Punadra Tal. Prantij, Dist. Sabarkantha

Research and Development Centre

Not Applicable

Ahmedabad Gujarat Owned Property 36, Swapnalok Apartment Nr. Low Garden Ellishbridge, Ahmedabad

Guest House Not Applicable

Ganganagar Rajasthan Owned Property Chak 27BB Tehsil Padampur Dist. Sri Granganagar Rajasthan – 335 041

Power Generation Plant

Not Applicable

Uniara Rajasthan Owned Property Near Village Khatoli Tehsil Uniara, Dist. Tonk Rajasthan – 304 023

Power Generation Plant

Not Applicable

Environmental and Health and Safety Matters

We believe that we are generally in compliance with applicable environmental laws and regulations. We are involved in environmental proceedings in the ordinary course of business but have not been subject to any major environmental claims. We are not currently a party to any environmental proceedings which, if adversely determined, would reasonably be expected to have a material adverse effect on our financial condition or results of operations.

We are committed to internationally accepted best practices and comply with applicable health, safety and environmental legislation and other requirements in our operations in different jurisdictions. To ensure effective implementation of our practices, we seek to identify all hazards at every project at the beginning of our work on a project, evaluate the associated risks and institute and monitor appropriate controls and methods.

We believe that all accidents and occupational health hazards can be prevented through systematic analysis and control of risks and by providing appropriate training to employees, subcontractors and communities. We encourage our employees to work constantly and proactively towards eliminating or minimizing the impact of hazards to people and the environment. We believe the adoption of occupational health and safety procedures is an integral part of our operations.

We have also demonstrated our commitment to protecting the environment by minimizing pollution, waste and optimizing fuel consumption towards continual improvement of its environmental performance.

Employees

As of December 31, 2009, the total workforce of KPTL and JMC comprised more than 5,000 individuals, of which over 4,000 were full-time employees. None of our employees are represented by any labor or workers' union. During the operation of our plants, projects and

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agricultural logistics parks, we also procure the services of individuals on daily wages. We believe that we have good relations with our employees and workers. We believe that we have not experienced any material labor unrest or work stoppage due to labor problems in the last 24 years.

We have also established an employee welfare trust for our employees. We continue to place an emphasis on our training programs, safety awareness and competence building. The average length of service of our top 25 managers is greater than ten years, which results in significant accumulation of experience and the benefit of teamwork.

Our Company, through its representatives, has entered into a wage agreement, valid from January 1, 2008 to December 31, 2010, with our permanent workers, unskilled, semi-skilled, skilled, at our factory located at Plot No. 101, G.I.D.C. Estate, Sector-28, Gandhinagar, Gujarat, who are represented by a seven member non-statutory works committee. Pursuant to negotiations between our Company and the works committee, we have agreed to increase the basic salary and several other perquisites such as medical facilities and provide for an annual bonus of 20% with an upper limit of Rs.7,500 per permanent worker.

Insurance

We maintain insurance for a variety of risks, including, among others, for risks relating to fire, burglary and certain other losses and damage to buildings, plant, vehicles, machinery, inventory and office equipment, loss of cash in transit and loss or damage of incoming and outgoing materials and finished goods by water, road and railway. We also carry director and officer liability insurance, which covers directors' and officers' liability for manufacturing and erection of transmission lines, real estate development and power generation. In addition, we carry workers' compensation and accident and medical insurance for our Indian operations. Under many of our contracts with customers, we are required to obtain insurance for the projects undertaken by us, as such regularly purchase specific business operations insurance policies for individual projects.

Credit Risk

We currently generate a significant portion of our operating revenues from customers in the public sector. The payment obligations of certain of these customers are typically secured by letters of credit and, in certain cases the projects are funded by multilateral funding agencies such as the World Bank, the Asian Development Bank, the African Development Bank and, in certain cases, by Central Government Budgetary Allocation through REC/Power Finance Corporation. We also typically receive advances from customers against order inflows and payments are based on completion milestones defined in its contracts. In general, however, we bear the risk of credit default by customers.

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Safety and Corporate and Social Responsibility

We give the utmost importance to safety standards at all of our working locations. At manufacturing units, power plants and all project sites, mandatory procedures are in place to ensure the safety of personnel and equipment. In order to ensure the safety and health of our work force and to create safety awareness, we undertake internal safety audits, safety week celebrations to raise awareness of safety and mock drills to assess emergency and disaster management preparedness.

Preservation and promotion of the environment is of fundamental concern to us in all our business activities. We have installed flux regeneration plant, acid and white fume extractors, eco-ventilator fans and other technologies at its manufacturing facilities to maintain good working condition and to make them more environmental friendly. At the request of our customers, we fumigate our export supplies and dull finishing of products to avoid reflection when installed at site. With participate in the plantation and development of green areas development for Gujarat Industrial Development Corporation and Gujarat Urban Development Corporation. In addition we have been accredited with ISO 14001 for our Environment Management System by Intertek Quality Registrar PLC, U.K.

We also undertake various community welfare measures. The main focus of social welfare and community development measures are on healthcare, child development and promoting cultural activities.

We undertake community development programmes by sponsoring government and non-government organizations such as the Rotary Club of Gandhinagar, Gandhinagar Cultural Forum and Kalrav, in the field of healthcare and child development programmes.

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REGULATIONS AND POLICIES

The following description is a summary of the relevant regulations and policies as prescribed by the Central Government that are applicable to us. The information detailed in this chapter has been obtained from publications available in the public domain. The regulations set out below are not exhaustive, and are only intended to provide general information to the investors and are neither designed nor intended to be a substitute for professional legal advice.

There are no specific regulations in India governing our industry. Set forth below are certain significant legislations and regulations that generally govern this industry in India:

General

The Company is engaged in the business of engineering, procurement and construction in the power transmission and distribution industry and provides integrated design, testing, fabrication, erection and construction services to the power transmission and distribution industry in India as well as overseas. The Company is also engaged in the engineering, procurement and construction of inter-state oil and gas pipeline networks and in the production of biomass energy. For the purpose of the businesses undertaken by the Company, we are required to obtain licenses and approvals depending upon the prevailing laws and regulations as applicable.

Industrial/Labor Laws

Employees are generally subject to the terms of their employment contracts with their employer, which contracts are regulated by the provisions of the Indian Contract Act, 1872.

Factories Act, 1948

The Factories Act defines a 'factory' to cover any premises which employs ten or more workers and in which manufacturing process is carried on with the aid of power and covers any premises where there are at least 20 workers who may or may not be engaged in an electrically aided manufacturing process. Each State Government has rules in respect of the prior submission of plans and their approval for the establishment of factories and registration and licensing of factories.

The Factories Act provides that the occupier of a factory, i.e. the person who has ultimate control over the affairs of the factory and in the case of a company, any one of the directors, must ensure the health, safety and welfare of all workers especially in respect of safety and proper maintenance of the factory such that it does not pose health risks, the safe use, handling, storage and transport of factory articles and substances, provision of adequate instruction, training and supervision to ensure workers' health and safety, cleanliness and safe working conditions. Persons who design, manufacture, import or supply articles for use in a

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factory must ensure the safety of the workers in the factory where the articles are used. If the safety standards of the country where the articles are manufactured are above Indian safety standards, the articles must conform to the relevant foreign standards. There is a prohibition on employing children below the age of fourteen years in a factory.

If there is violation of any provisions of the Factories Act or rules framed thereunder, the occupier and manager of the factory may be punished with imprisonment for a term up to two years and/or with a fine up to Rs.100,000 or both, and in case of such violation continuing after conviction, with a fine of up to Rs.1,000 per day of violation. In case of a contravention which results in death or serious bodily injury, the fine shall not be less than Rs.25,000 in the case of an accident causing death, and Rs.5,000 in the case of an accident causing serious bodily injury. In case of contravention after a prior conviction, the term of imprisonment increases up to three years and the fine would be Rs.300,000 and in case such contravention results in death or serious bodily injury the fine would be a minimum of Rs.35,000 and Rs.10,000, respectively.

Payment of Gratuity Act, 1972

The Payment of Gratuity Act, 1972 (the "Gratuity Act") prescribes compulsory gratuity payable by all factories and establishments where 10 or more persons are employed. Under the Gratuity Act, an employee in a factory is deemed to be in 'continuous service' for a period of at least 240 days in a period of 12 months or 120 days in a period of six months immediately preceding the date of reckoning, whether or not such service has been interrupted during such period by sickness, accident, leave, absence without leave, lay-off, strike, lock-out or cessation of work not due to the fault of the employee. An employee who has been in continuous service for a period of five years will eligible for gratuity upon his retirement, superannuation, death or disablement. The maximum amount of gratuity payable shall not exceed Rs.350,000.

Payment of Bonus Act, 1965

The Payment of Bonus Act, 1965 (the "Payment of Bonus Act") prescribes a minimum and maximum bonus payable annually by factories and every other establishment employing 20 or more persons. Under the Payment of Bonus Act, an employee in a factory who has worked for at least 30 working days in a year is eligible to be paid bonus. The minimum bonus to be paid to each employee is the higher of 8.33% of the salary or wage or Rs.100, and must be paid irrespective of the existence of any allocable surplus. If the allocable surplus exceeds minimum bonus payable, then the employer must pay bonus proportionate to the salary or wage earned during that period, subject to a maximum of 20% of such salary or wage. The maximum bonus payable must not exceed Rs.700. 'Allocable surplus' is defined as 67% of the available surplus in the financial year, before making arrangements for the payment of dividend out of profit of the Company. Contravention of the Act by a company will be punishable by proceedings for imprisonment up to six months or a fine up to Rs.1,000

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or both against those individuals in charge at the time of contravention of the Payment of Bonus Act.

Maternity Benefit Act, 1961

The Maternity Benefit Act, 1961 (the "Maternity Benefit Act") provides that a woman who has worked for at least 80 days in the 12 months preceding her expected date of delivery is eligible for maternity benefits. Under the Maternity Benefit Act, a woman working in a factory may take leave for six weeks immediately preceding her scheduled date of delivery and for this period of absence she must be paid maternity benefit at the rate of the average daily wage. The maximum period during which a woman shall be paid maternity benefit is 12 weeks. Women entitled to maternity benefit are also entitled to medical bonus of Rs.250. Contravention of the Maternity Benefit Act is punishable by imprisonment up to one year and/or a fine up to five thousand rupees.

Minimum Wages Act, 1948

The State Governments may stipulate the minimum wages applicable to a particular industry. The minimum wages generally consist of a basic rate of wages, cash value of supplies of essential commodities at concession rates and a special allowance, the aggregate of which reflects the cost of living index as notified in the Official Gazette. Workers are to be paid for overtime at overtime rates stipulated by the appropriate State Government. Any contravention may result in imprisonment of up to six months or a fine of up to Rs.500.

Workmen's Compensation Act, 1923

The Workmen's Compensation Act, 1923 mandates compensation for accidents and occupational diseases to workmen who are not covered under the Employees State Insurance Act, 1948 and is applicable to factories, mines, plantations, transport establishments and construction work If personal injury is caused to a workman by accident during employment, his employer would be liable to pay him compensation. However, no compensation is required to be paid if the injury did not disable the workman for three days or the workman was at the time of injury under the influence of drugs or alcohol, or the workman wilfully disobeyed safety rules. Where death results from the injury the workman is liable to be paid the higher of 50% of the monthly wages multiplied by the prescribed relevant factor (which bears an inverse ratio to the age of the affected workman, the maximum of which is 228.54 for a worker aged 16 years) or Rs.80,000. Where permanent total disablement results from injury the workman is to be paid the higher of 60% of the monthly wages multiplied by the prescribed relevant factor or Rs.90,000. The maximum wage which is considered for the purposes of reckoning the compensation is Rs.4,000.

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Contract Labour (Regulation and Abolition) Act, 1970

Contract labor refers to a system where a principal employer hires labor through an intermediary contractor or who uses a contractor who uses his own labor. The Company uses the services of contractors who in turn employ contract labor whose number exceeds 20 in respect of some of the sites. Accordingly, the Company is regulated by the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 (the "CLRA") which requires the Company to be registered as a principal employer and prescribes certain obligations with respect to welfare and health of contract labor.

The CLRA vests the responsibility on the principal employer of an establishment to which the CLRA applies to make an application to the registered officer for registration of the establishment. In the absence of registration, contract labor cannot be employed in the establishment. Likewise, every contractor to whom the CLRA applies is required to obtain a license and not to undertake or execute any work through contract labor except under and in accordance with the license issued.

To ensure the welfare and health of the contract labor, the CLRA imposes certain obligations on the contractor in relation to establishment of canteens, rest rooms, drinking water, washing facilities, first aid, other facilities and payment of wages. However, in the event the contractor fails to provide these amenities, the principal employer is under an obligation to provide these facilities within a prescribed time period. Penalties, including both fines and imprisonment, may be levied for contravention of the provisions of the CLRA.

Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996

The Central Government has enacted the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (the "BOCWA") as a comprehensive central legislation governing construction workers. The BOCWA aims at regulating the employment and conditions of service of construction workers and to provide for their health, safety and financial health, among other welfare measures. Under the BOCWA, every employer employing ten or more building workers for building or construction work in the past 12 months must apply for registration under the BOCWA.

The BOCWA vests the responsibility of providing for immediate assistance in case of accidents, old age pension, loans for construction of houses, premia for group insurance, financial assistance for education, to meet medical expenses, maternity benefits beneficiaries with the Building and Other Construction Workers Welfare Board under the BOCWA.

The Central Government has notified the Building and other Construction Workers (Regulation of Service and Conditions of Service) Central Rules, 1998 which elaborate on the health and safety measures that must be taken in relation to construction workers.

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Building and Other Construction Workers' Welfare Cess Act, 1996

The Building and Other Construction Workers Welfare Cess Act, 1996 came into force with effect from August 19, 1996 to provide for the levy and collection of cess on the costs of construction incurred by the employer. Such cess is collected in order to augment the resources of the building and other construction workers welfare board constituted under the BOCWA. Under the BOCWA, such cess amount is levied and collected from the employer, within 30 days of the completion of a construction project, at such rate not exceeding 2% but not less than 1% of the cost of the construction of such project.

Other Industrial/Labour Laws and Regulations

Other labor laws and regulations that may be applicable to the Company include the following:

• Industries (Development and Regulation) Act, 1951;

• Employees' State Insurance Act, 1948;

• Employees' Provident Funds and Miscellaneous Provisions Act, 1952;

• Payment of Wages Act, 1936;

• Industrial Disputes Act, 1947 and Industrial Disputes (Central) Rules, 1957;

• Relevant shops and commercial establishments statutes; and

• Inter-state Migrant Workmen Act, 1979.

Environmental Regulations

We may be subject to laws and regulation concerning environmental protection in each of the countries we operate in, irrespective of whether or not we have offices in that country. We believe that we comply in all material respects with laws and regulations concerning environmental protection applicable to us in such countries. There are currently no proceedings pending or, to the best of our knowledge, threatened against us or any of our Directors or executive offices in relation to environmental regulations.

We have established water and air pollution control systems at our plants. Our environmental compliance program is administered internally by our project department and our engineering department and includes monitoring, measuring and reporting compliance, establishing safety programs and training our personnel in environmental and safety matters.

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Pollution Laws in India

Our business is subject to certain central, state and local regulations designed to protect the environment. Among other things, these laws regulate the environmental impact of construction and development activities, emission of air pollutants and discharge of chemicals into surrounding water bodies. The basic purpose of these statutes is to control, abate and prevent pollution.

These various environmental laws give primary environmental oversight authority to the Ministry of Environment and Forest ("MEF"), the Central Pollution Control Board ("CPCB") and the State Pollution Control Board ("SPCB"). The MEF is the key national regulatory agency responsible for policy formulation, planning and co-ordination of all issues related to environmental protection. The CPCB is the law enforcing body at the national level. It enforces environmental legislation, coordinates the activities of "State Pollution Control Committees", establishes environmental standards and plans and executes a nationwide programme for the prevention, control and abatement of pollution.

The Environment Impact Assessment Notification S.O. 1533, issued on September 14, 2006 (the "EIA Notification") under the provisions of Environment (Protection) Act 1986, prescribes that new construction projects require prior environmental clearance of the MEF. The environmental clearance must be obtained from the MEF according to the procedure specified in the EIA Notification. No construction work, preliminary or other, relating to the setting up of a project can be undertaken until such clearance is obtained.

The application to the MEF is required to be accompanied by a project report which should include an Environmental Impact Assessment Report and an Environment Management Plan. The Impact Assessment Authority ("IAA") evaluates the report and plan submitted. Such assessment is required to be completed within a period of 90 days from receipt of the requisite documents from the project developer/manager. Thereafter, a public hearing has to be completed and a decision conveyed within 30 days.

The management, storage and disposal of hazardous wastes is regulated by the Hazardous Waste Management Rules, 1989 (the "Rules") made under the EPA. Under these Rules, Pollution Control Boards ("PCBs") established in the relevant state are empowered to grant authorization for collection, treatment, storage and disposal of hazardous waste, either to the occupier or the operator of the facility. A similar regulatory framework is also established with respect to bio-medical waste under the Bio-Medical Waste (Management and Handling) Rules, 1998.

In addition, the MEF looks into Environment Impact Assessment. The MEF receives proposals for expansion, modernization and setting up of projects and the impact which such projects would have on the environment is assessed by the MEF before it grants clearances for the proposed projects.

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Water (Prevention and Control of Pollution) Act, 1981

The Water (Prevention and Control of Pollution) Act, 1981 (the "Water Act") prohibits the use of any stream or well for the disposal of polluting matter, in violation of standards set down by the SPCB. The Water Act also provides that the consent of the SPCB must be obtained prior to opening of any new outlets or discharges, which is likely to discharge sewage or effluent.

In addition, the Water Cess Act, 1977 requires a person carrying on any industry which involves the use of water to pay a cess in this regard. The person in charge is to affix meters of certain prescribed standards in order to measure and record the quantity of water consumed by such industry. Furthermore, a monthly return showing the amount of water consumed in the previous month must also be submitted.

Air (Prevention and Control of Pollution) Act, 1981

Air (Prevention and Control of Pollution) Act, 1981 (the "Air Act") under which any individual, industry or institution responsible for emitting smoke or gases by way of use as fuel or chemical reactions must apply in a prescribed form and obtain consent from the SPCB prior to commencing any activity. The SPCB is required to grant, or refuse, consent within four months of receipt of the application. The consent may contain conditions relating to specifications of pollution control equipment to be installed.

Within a period of four months after the receipt of the application for consent, the SPCB shall, by an order in writing, and for reasons to be recorded in the order, grant the consent applied for subject to such conditions and for such period as may be specified in the order, or refuse consent.

Hazardous Wastes (Management and Handling) Rules, 1989

The Hazardous Wastes (Management and Handling) Rules, 1989 (the "Rules") provide that the occupier and the operator of the facility that treats hazardous wastes to properly collect, treat, store or dispose the hazardous wastes without adverse effects on the environment. Moreover, they must take steps to ensure that persons working on the site are given adequate training and equipment for performing their work. When an accident occurs in a hazardous site or during transportation of hazardous wastes, then the relevant SPCB has to be immediately alerted. If, due to improper handling of hazardous waste, any damage is caused to the environment, the occupier or the operator of the facility must pay for the necessary remedial and restoration expenses.

Enforcement of Laws

PCBs, which are vested with diverse powers to deal with water and air pollution, have been set up in each state to enforce this regulatory framework. The SPCBs are responsible for

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setting the standards for maintenance of clean air and water, directing the installation of pollution control devices in industries and undertaking inspection to ensure that industries are functioning in compliance with the standards prescribed. These authorities also have the power of search, seizure and investigation if the authorities are aware of or suspect pollution that is not in accordance with such regulations. All industries and factories are required to obtain consent orders from the SPCBs, which indicate that the factory or industry in question is functioning in compliance with the pollution control norms. These consent orders are required to be renewed annually. Violations of relevant environmental regulations are punishable by monetary fines and imprisonment for company officers and controlling persons.

Indian environmental regulations also require a company to file an environment impact assessment report with the SPCB and the MEF before undertaking a project entailing the construction, development or modification of any plant, system or structure. If the SPCB approves the project, the matter is referred to the MEF for its final determination. The estimated impact that a project would have on the environment is carefully evaluated before granting clearances. When granting clearance, conditions can be imposed and variations to the proposed project can be directed by the approving authorities.

Excise Regulations

The Central Excise Act, 1944 seeks to impose an excise duty on specified excisable goods which are produced or manufactured in India. However, the Government has the power to exempt certain specified goods from such excise duty, by notification. The rate at which the said duty is sought to be imposed is contained in the Central Excise Tariff Act, 1985.

The Electricity Act, 2003

The Electricity Act, 2003, was enacted to consolidate the laws relating to the generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to the development of the power industry. These include promoting competition; protecting interests of consumers and supply of electricity to all areas; rationalization of electricity tariff; ensuring transparent policies regarding subsidies; promotion of efficient and environmentally benign policies; the constitution of the Central Electricity Authority (the "CEA") and the Regulatory Commissions; and the establishment of Appellate Tribunal and for matters connected therewith or incidental thereto.

Transmission

Transmission being a regulated activity, involves intervention of various players. The Central Government is responsible for facilitating transmission and supply, particularly, inter-state, regional and inter-regional transmission. The Electricity Act, 2003 ("Electricity Act") vests the responsibility of efficient, economical and integrated transmission and supply of electricity with the Central Government and empowers it to make region-wise demarcations of the country for the same. In addition, the Central Government will facilitate voluntary

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inter-connections and coordination of facilities for the inter-state, regional and inter-regional generation and transmission of electricity. The CEA is required to prescribe certain grid standards under the Electricity Act and every transmission licensee must comply with such technical standards of operation and maintenance of transmission lines. In addition, every transmission licensee is required to obtain a license from the Central Electricity Regulatory Commission ("CERC") and the respective SERC, as the case may be. The CERC has, by way of a notification dated May 26, 2009 issued the CERC (Procedure, Terms and Conditions for grant of Transmission License and other related matters) Regulations, 2009 (the "Transmission License Regulations"). The Transmission License Regulations while laying down the procedure for the grant of license provides that no person shall be eligible for grant of license unless selected through bidding under the guidelines for competitive bidding, a state owned or controlled company identified as a project developer, or a generating company which has established the dedicated transmission line, and intends to use the same as main transmission line and part of the inter-State transmission system. In case the licensee has been selected in accordance with the guidelines for competitive bidding, transmission charges shall be adopted by the CERC in accordance with section 63 of the Electricity Act. The licensee is to pay fees in accordance with the CERC (Payment of Fees) Regulations, 2008. The license shall remain in force for 25 years unless revoked earlier. The Electricity Act requires the Central Government to designate one government company as the central transmission utility ("CTU"), which would be deemed as a transmission licensee. Similarly, each state government is required to designate one government company as state transmission utility ("STU"), which would also be deemed as a transmission licensee. The CTU and STUs are responsible for transmission of electricity, planning and co-ordination of transmission system, providing non-discriminatory open-access to any users and developing a coordinated, efficient and integrated inter-state and intra-state transmission system respectively. The Electricity Act prohibits CTU and STU from engaging in the business of generation or trading in electricity. Under the Electricity Act, the Central Government was empowered to establish the National Load Dispatch Centre ("NLDC") and Regional Load Dispatch Centres ("RLDCs") for optimum scheduling and dispatch of electricity among the RLDCs. The RLDCs are responsible for (a) optimum scheduling and dispatch of electricity within the region, in accordance with the contracts entered into with the licensees or the generating companies operating in the region; (b) monitoring grid operations; (c) keeping accounts of the quantity of electricity transmitted through the regional grid; (d) exercising supervision and control over the inter-state transmission system; and (e) carrying out real time operations for grid control and dispatch of electricity within the region through secure and economic operation of the regional grid in accordance with the grid standards and grid code.

The transmission licensee is required to comply with the technical standards of operation and maintenance of transmission lines as specified by CEA, building maintaining and operating an efficient transmission system, providing non-discriminatory open access to its transmission system for use by any licensee or generating company on payment of transmission charges and surcharge in accordance with the Electricity Act. The Electricity

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Act allows Independent Power Producers open access to transmission lines. The provision of open access is subject to the availability of adequate transmission capacity as determined by the central/State transmission utility. The Electricity Act also lays down provisions for intra-State transmission, where State commission facilitate and promote transmission, wheeling and inter-connection arrangements within its territorial jurisdiction for the transmission and supply of electricity by economical and efficient utilization of electricity. On March 16, 2009, the Ministry of Power laid down the procedure for seeking approval for constructing, maintaining and operating dedicated transmission lines. Under the said procedure, the applicant, being a private transmission company or a generating company, is required to:

• cause such transmission scheme to be published in the official gazette and in at least two local daily newspapers along with a notice of the date, before which any interested person may make a representation on such scheme;

• take into consideration objections/representations, before finalizing the optimal route alignment;

• submit a certificate along with application under Section 164 of the Electricity Act; and

• submit to the central electricity authority newspaper publications of the scheme, authenticated maps showing the details of the selected route alignment of the transmission lines and justification of the selection of the route alignment.

Electricity Rules, 2005

The Electricity Rules, 2005 were framed under the Electricity Act, 2003 and lay down the requirements of a captive generating plant.

The Electricity Regulatory Commissions Act, 1998

The Electricity Regulatory Commissions Act, 1998 provides for the establishment of a CERC and SERCs, rationalization of electricity tariff, transparent policies regarding subsidies, promotion of efficient and environmentally benign policies and for matters connected therewith or incidental thereto.

National Electricity Policy, 2005

Under Section 3 of the Electricity Act, 2003, the Central Government has notified the National Electricity Policy ("NEP") on February 12, 2005.

The key objectives of the NEP are laying guidelines for accelerated development of the power sector, providing supply of electricity to all areas and protecting interests of consumers. The NEP aims at providing access to electricity to all households in next five years and electrification of all villages by 2007. In addition, the NEP seeks to ensure that the entire

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demand for availability of power is met by 2012 and also, per capita availability of electricity is increased to over 1,000 units by 2012.

With respect to the transmission of electricity, the NEP recognizes the need to augment the transmission capacity in view of the massive increase planned in generation. The NEP places the responsibility on the Central Transmission Utility ("CTU") for the national and regional transmission system planning and development and on State Transmission Utility ("STU") for the intra-state transmission system. The CTU is required to coordinate with the STUs for eliminating transmission constraints in cost effective manner. The NEP lays down that the network expansion should be planned and implemented keeping in view the anticipated transmission needs that would be incident on the system in the open access regime. It further states that the prior agreement with the beneficiaries would not be a pre-condition for network expansion and CTU and STU should undertake network expansion after identifying the requirements in consultation with stakeholders and after taking due regulatory approvals.

The NEP states that certain special mechanisms would be created to encourage private investment in transmission sector so that sufficient investments are made for achieving the objective of demand to be fully met by 2012.

Key legislation, namely the Essential Commodities Act, 1955 and various State Agricultural Produce Marketing Regulation Acts have inhibited the development of free and competitive trade in agricultural commodities, including warehousing, forward and future markets and the free production, storage, movement and marketing of agricultural commodities, in particular those commodities which are covered by liberalized international trade agreements. The aim of the legislation was to encourage the private sector to play a role in creating a competitive market structure, to take full advantage of trade liberalization and to ensure a remunerative price to farmers for the produce.

The State Government alone is empowered to initiate the process of setting up a regulated market in a particular area for certain commodities.

Regulation of Foreign Investment

FEMA Regulations

Foreign investment in India is governed primarily by the provisions of the Foreign Exchange Management Act, 1999 of India, as amended (the "FEMA") which relates to regulation primarily by the RBI and the rules, regulations and notifications thereunder, and the policy prescribed by the Department of Industrial Policy and Promotion, Government of India which is regulated by the FIPB.

The RBI, in exercise of its power under the FEMA, has notified the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 ("FEMA Regulations") to prohibit, restrict or regulate, transfer by or issue security to a

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person resident outside India. As laid down by the FEMA Regulations, no prior consent and approval is required from the RBI, for foreign direct investment ("FDI") under the "automatic route" within the specified sectoral caps. In respect of all industries not specified as FDI under the automatic route, and in respect of investment in excess of the specified sectoral limits under the automatic route, approval for such investment may be required from the FIPB and/or the RBI.

Real Estate

Urban Land (Ceiling and Regulation) Act, 1976

The Urban Land (Ceiling and Regulation) Act, 1976 prescribes the limits to urban areas that can be acquired by a single entity. It has however been repealed in some states and union territories under the Urban Land (Ceiling and Regulation) Repeal Act, 1999. Further, land holdings are subject to the Land Acquisition Act, 1894 which provides for the compulsory acquisition of land by the Central Government or State Government for certain public purposes, including planned development and town and rural planning. However, any person having an interest in such land has the right to object to such compulsory acquisition and the right to compensation.

Transfer of Property Act, 1882

The transfer of immovable property, between living persons, as opposed to the transfer of property by the operation of law, is governed by the Transfer of Property Act, 1882 which establishes the general principles relating to the transfer of property, including among other things, identification of the categories of property that are capable of being transferred, the persons competent to transfer property, the validity of restrictions and conditions imposed on the transfer and the creation of contingent and vested interest in the property.

Registration Act, 1908

The Registration Act, 1908 (the "Registration Act") was enacted with the object of providing public notice of the execution of documents affecting transfer of interest in immovable property. The purpose of the Registration Act is the conservation of evidence, assurances, title, and publication of documents and prevention of fraud. It details the formalities for registering an instrument. Section 17 of the Registration Act identifies documents for which registration is compulsory and includes, among other things, any non-testamentary instrument which purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, in immovable property of the value of one hundred rupees or more, and a lease of immovable property for any term exceeding one year or reserving a yearly rent. A document will not affect the property comprised in it, nor be treated as evidence of any transaction affecting such property (except as evidence of a contract in a suit for specific performance or as evidence of part performance

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under the Transfer of Property Act, 1882, or as collateral), unless it has been registered under the Registration Act.

The Indian Stamp Act, 1899

Under the Indian Stamp Act, 1899 (the "Stamp Act") duty needs to be paid on all documents specified under the Stamp Act and at the rates specified in the Schedules thereunder. The rate of stamp duty varies from state to state. The applicable rates for stamp duty on these instruments, including those relating to conveyance, are prescribed by state legislation. Instruments chargeable to duty under the Stamp Act which are not duly stamped are incapable of being admitted in court as evidence of the transaction contained therein. The Stamp Act also provides for the impounding of instruments which are insufficiently stamped or not stamped at all. Instruments which have not been properly stamped can be validated by paying a penalty of up to 10 times the total duty payable on such instrument.

The Easements Act, 1882

The law relating to easements is governed by the Easements Act, 1882 (the "Easements Act"). The right of easement is derived from the ownership of property and is defined under the Easements Act to mean a right which the owner or occupier of land possesses for the beneficial enjoyment of that land and which permits him to do or to prevent something from being done in respect of certain other land not his own. Under this law an easement may be acquired by the owner of immovable property, i.e. the dominant owner, or on his behalf by the person in possession of the property. Such a right may also arise out of necessity or by virtue of a local custom.

Biomass Energy

India has an exclusive Ministry for Non-Conventional Energy Sources (the "MNES"). In 1980, the Commission on Alternative Sources of Energy was set up to look into feasibility of tapping into sources of renewable energy. In 1982, a separate Department of Non-Conventional Energy Sources was created under the aegis of Ministry of Energy for promoting activities relating to development, trial and induction of variety of renewable energy technologies for use in different sectors. In 1992 the MNES started functioning as a separate Ministry to develop all areas of renewable energy. Policy guidelines were issued by the MNES to all the States during the mid Nineties with a view to promote commercial development and private investment in this sector. The guidelines pertain to areas such as provision of facilities for wheeling, banking, third party sale, and buy-back of electricity. Nine states have introduced renewable energy policies following the establishment of MNES guidelines.

Specifically with respect to biomass energy, there are many policies and programs which have been formulated by the Central and State Governments.

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The National Electricity Policy has been launched and the Central Government has encouraged the setting up of non-conventional sources of power such as biomass to increase the power generation capacity. The National Electricity Policy states that there is need for private participation and states that, "to attract adequate private investments in power sector, return on investment will need to be provided at par with, if not preference to, investment opportunities in other sectors."

State Policies and Programs

The government of Rajasthan has introduced policies for the purchase of energy produced from renewable sources, including biomass.

Other Laws and Regulations

The Customs Act, 1962

The Customs Act, 1962 (the "Customs Act") came into force on February 1, 1963 and was enacted for the purpose of consolidating and amending the law relating to customs along with the levy of duty of customs. The Customs Act stipulates provisions relating to, inter alia, clearance of imported goods and export goods, goods which are not cleared, goods warehoused or transshipped within 30 days after unloading, for storage of imported goods in warehouses pending clearance and for goods in transit, subject to prescribed conditions.

All imports into India are subject to duties under the Customs Act at the rates specified under the Customs Tariff Act, 1975. However, the Indian Government has the power to exempt certain specified goods from excise duty by notification.

Certain other laws and regulations that may be applicable to the Company include fiscal laws and regulations including the I.T. Act, Central Excise Act, 1944, the Customs Tariff Act, 1975, the Central Sales Tax Act, 1956 and state sales tax laws, as applicable.

International Commercial Terms ("Incoterms")

Incoterms are standard trade definitions most commonly used in international sales contracts, devised and published by the International Chamber of Commerce ("ICC"). The ICC introduced the first version of Incoterms in 1936. Most contracts made after January 1, 2000 will refer to the latest edition of Incoterms, which came into force on that date. Unless the parties decide otherwise, earlier versions of Incoterms are still binding if incorporated in contracts that are unfulfilled and are dated before January 1, 2000. The latest version of Incoterms is designed to bring Incoterms into line with the latest developments in commercial practice. Correct use of Incoterms goes a long way to providing legal certainty upon which mutual confidence between business partners must be based. Among the best known Incoterms are EXW (Ex works), FOB (Free on Board), CIF (Cost, Insurance and Freight), DDU (Delivered Duty Unpaid), and CPT (Carriage Paid To).

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BOARD OF DIRECTORS AND SENIOR MANAGEMENT

KPTL's corporate governance bodies comprise the Board of Directors, the Audit Committee, the Nomination and Compensation Committee and the Shareholders Grievances Committee.

The Board of Directors is responsible for KPTL's general management and approves its strategic and operational plans. The Board of Directors also has the overall responsibility for the administration of KPTL's day-to-day activities.

Under its Articles of Association KPTL is required to have not less than three Directors and not more than twelve Directors. KPTL currently has 11 Directors on its Board. The minimum and maximum number of Directors may be increased or decreased by an ordinary resolution of the Company's shareholders, subject to the provisions of the Company's Articles of Association and the Companies Act.

Board of Directors

The Board of Directors has the ultimate responsibility for the management and administration of KPTL's affairs, unless otherwise directed by the Articles of Association, or Indian law. Mofatraj P. Munot is the Chairman of the Board of the Company (the "Chairman"), Pankaj Sachdeva is the Managing Director and Manish Mohnot is the Executive Director of the Company. The remaining Directors are Non-Executive Directors.

Composition of the Board

The Board of Directors consists of 11 Directors of which nine are Non-Executive and two are Executive Directors. The Chairman is a Non-Executive Promoter Director, and besides him there is one further Promoter Director, six Non-Executive Independent Directors and one Non-Executive Director. The Board structure is in compliance with Clause 49 of the Listing Agreements.

The following table sets forth the composition of KPTL's Board of Directors as of the date of this Preliminary Placement Document.

Name Position Age Mofatraj P. Munot ...................................................................... Non-Executive (Promoter) Chairman 65 Pankaj Sachdeva ......................................................................... Managing Director 48 Manish Mohnot .......................................................................... Executive Director 37 Parag M. Munot .......................................................................... Non-Executive (Promoter), Director 40 Sajjanraj Mehta .......................................................................... Non-Executive (Independent) Director 58 Vimal Bhandari .......................................................................... Non-Executive (Independent) Director 51 Shitin Desai ................................................................................ Non-Executive (Independent) Director 63 Narayan K. Seshadri ................................................................... Non-Executive (Independent) Director 53 K. V. Mani .................................................................................. Non-Executive Director 66 Satya Pal Talwar ......................................................................... Non-Executive (Independent) Director 71 Mahendra G. Punatar ................................................................. Non-Executive (Independent) Director 74

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The business address of all KPTL's Directors is 101, Part III, G.I.D.C. Estate, Sector -28, Gandhinagar-382 028, Gujarat, India.

The following are brief biographies of KPTL's Directors:

Mofatraj P. Munot ......... Mofatraj P. Munot is the founder and promoter of the Kalpataru group of companies. He has been the Chairman and a Non-Executive Promoter Director of the Company since 1989. He has more than 44 years of experience in the fields of real estate, property development, civil contracting and various other industries. He currently also serves as the Chairman of Kalpataru Limited and is the ex-President of the Maharashtra Chamber of Housing Industry.

Pankaj Sachdeva ........... Pankaj Sachdeva is currently Managing Director of the Company. He has obtained a Bachelor of Electrical Engineering and Post-Graduate Diploma in Export Management. He has 28 years of experience in the power generation, transmission and distribution industry including project management and marketing. From July 2008 to May 2009, he served as the Deputy Managing Director of the Company. Prior to joining the Company, he served in various positions at ABB Ltd. for six years.

Manish Mohnot ............. Manish Mohnot is a Chartered Accountant and Cost and Works Accountant with 14 years of experience in infrastructure, power, oil, gas, port and other related sectors. He is Executive Director of the Company.

Parag M. Munot ............ Parag M. Munot has been a Promoter Director of the Company since 1991. He received his M.B.A. from the Carnegie Mellon University and has approximately 15 years of experience in real estate and property development. He currently also serves as an executive director of Kalpataru Limited and its affiliate entities.

Sajjanraj Mehta ............. Sajjanraj Mehta is an Independent Non-Executive Director of the Company. He has been on the Board of the Company since 1998. He is a Chartered Accountant with more than 33 years of experience. He is a consultant in the fields of foreign exchange, taxation and corporate affairs and strategy.

Vimal Bhandari ............. Vimal Bhandari has been an Independent Director of the Company since 2002. He is a Chartered Accountant with more than 23 years of experience in the financial services sector. He currently serves as the Country Manager for Aegon India Private Limited. He has also served as an executive director of IL&FS Limited.

Shitin Desai ................... Shitin Desai was appointed as an Independent, Non-Executive Director of the Company on March 31, 2006. He is a graduate in commerce from the University of Mumbai and has more than 25 years of experience in the financial services industry. He is a member of the Federation of Indian

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Chambers of Commerce and Industry. He currently also serves as the executive vice chairman of DSP Merrill Lynch.

Narayan K. Seshadri ..... Narayan K. Seshadri is a Chartered Accountant and runs his own investment advisory and management services company in the name of Halcyon Resources & Management. Prior to this, he was head of accounting of M/s. Arthur Andersen. He was appointed as an Independent Director of the Company on January 29, 2007.

K. V. Mani .................... K. V. Mani is currently a Non-Executive Director of the Company. He has obtained a bachelor's degree in engineering from the Coimbatore Institute of Technology, University of Madras and an M.B.A. from the International Management Institute, Geneva. He has nearly 44 years of experience in the transmission industry, primarily in construction, project management and overseas marketing. From January 2001 to May 2009 he served as the Managing Director of the Company. Before joining the Company, he was Executive Director and President of KEC International Limited. He is a member of the All India Management Association and is a Fellow of the Institution of Engineers.

Satya Pal Talwar ........... Satya Pal Talwar is a Certified Associate of the Indian Institute of Bankers and a Member of the Indian Council of Arbitration. He is a senior advisor of Yes Bank Ltd and is ex-Deputy Governor of RBI. He joined the Board of the Company as an Independent Director on January 30, 2009.

Mahendra G. Punatar .... Mahendra G. Punatar is currently a Non-Executive, Independent Director of the Company. He has obtained a master's degree in structural engineering from the University of Michigan and has more than 49 years of experience in designing transmission line towers, production and planning. From December 1987 until January 2001, he served as the Managing Director of the Company. Thereafter, until June 2005, he was the Executive Vice Chairman of the Company. He currently also serves as a Director of JMC and is a member of the audit committee and the remuneration committee of JMC.

In accordance with KPTL's Articles of Association, the Board can appoint an Alternate Director pursuant to the provisions of the Companies Act.

Directors' Interests

The total interests of the Directors in the Company's Equity Shares as of March 31, 2010 are set out in the table below:

Name of the Shareholder Number of Equity Shares held as of December 31, 2009 Mofatraj P. Munot ............................................................................................... 1,964,186 Pankaj Sachdeva .................................................................................................. Nil Manish Mohnot ................................................................................................... Nil

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Parag M. Munot ................................................................................................... 2,189,594 Sajjanraj Mehta ................................................................................................... 2,000 Vimal Bhandari ................................................................................................... Nil Shitin Desai ......................................................................................................... Nil Narayan K. Seshadri ............................................................................................ Nil K. V. Mani ........................................................................................................... Nil Satya Pal Talwar .................................................................................................. Nil Mahendra G. Punatar .......................................................................................... 1,400

All the Directors, including Independent Directors, may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or a Committee thereof as well as to the extent of other remuneration or commission and reimbursement of expenses payable to them under the Articles of Association. The Managing Director and Executive Director will be interested to the extent of remuneration paid to them for services rendered as officers or employees of the Company. All the Directors, including Independent Directors, may also be deemed to be interested to the extent of Equity Shares, if any, already held by or that may be subscribed for and allotted to them.

As of December 31, 2009, no loans were granted by the Company to, or guarantees provided to the benefit of, the Company's Directors. There is no pecuniary relationship or transaction of the Company with any Non-Executive Director.

Remuneration of KPTL's Directors

K.V. Mani, Managing Director

K.V. Mani was Managing Director of the Company until May 31, 2009 and his employment with the Company was governed by the terms of an agreement dated April 4, 2008. The terms of employment and remuneration of K.V. Mani for the year ended March 31, 2009 included:

Particulars Remuneration Salary and Perquisites .................................................................................................................................... Rs.18,112,660 Commission on Net Profits ............................................................................................................................ Rs.10,609,483* Sitting Fees ..................................................................................................................................................... - Contribution to Provident Fund ..................................................................................................................... Rs.1,440,000

*K.V. Mani was entitled to receive remuneration (including commission on net profits) not exceeding 2.5% of the net profits of the Company.

K.V. Mani is currently a Non-Executive Director of the Company.

Pankaj Sachdeva, Deputy Managing Director until May 31, 2009, Managing Director from June 1, 2009

Pankaj Sachdeva is currently the Managing Director of the Company and under the terms of an agreement with the Company dated July 7, 2008, the terms of employment and remuneration of Pankaj Sachdeva for the year ended March 31, 2009 include:

Particulars Remuneration

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Salary and Perquisites .................................................................................................................................... Rs.9,349,877 Commission on Net Profits ............................................................................................................................ Rs.874,194 Sitting Fees ..................................................................................................................................................... - Contribution to Provident Fund ..................................................................................................................... Rs.734,323

Manish Mohnot, Executive Director

Manish Mohnot is currently an Executive Director of the Company. Under the terms of an agreement with the Company dated April 4, 2008, the terms of employment and remuneration of Mr. Mohnot for the year ended March 31, 2009 include:

Particulars Remuneration Salary and Perquisites .................................................................................................................................... Rs.6,606,246 Commission on Net Profits ............................................................................................................................ Rs.4,222,700 Sitting Fees ..................................................................................................................................................... - Contribution to Provident Fund ..................................................................................................................... Rs.576,000

Remuneration details of KPTL's non-Executive Directors

None of KPTL's Non-Executive Directors are entitled to receive any salary or perquisites. However, they receive sitting fees. Details of the sitting fees paid for the year ended March 31, 2009 are set out below:

Name of Director Amounts (Rs.) Mofatraj P. Munot ............................................................................................................................................. 140,000 Mahendra G. Punatar ........................................................................................................................................ 60,000 Parag M. Munot ................................................................................................................................................. 120,000 Sajjanraj Mehta ................................................................................................................................................. 140,000 Vimal Bhandari ................................................................................................................................................. 120,000 Shitin Desai ...................................................................................................................................................... 60,000 Narayan K Seshadri .......................................................................................................................................... 100,000 S.P. Talwar ........................................................................................................................................................ 20,000

The Company has passed special resolutions at its meeting on July 29, 2009 to permit it to pay up to 1% of net profit of the Company as commission to its Non-Executive, Non-Promoter Directors for a period of five years, which shall start with effect from Fiscal 2010, as may be decided by the Board of Directors. Compensation of Directors

For the year ended March 31, 2009, the Company paid an aggregate compensation to its Executive Directors of Rs.77.49 million.

Corporate Governance

KPTL's corporate governance policies recognize the accountability of the Board and the importance of transparency to all its constituents, including employees, customers, investors and the regulatory authorities and of demonstrating that the shareholders are the ultimate beneficiaries of its economic activities.

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KPTL's corporate governance philosophy encompasses not only regulatory and legal requirements, including the SEBI guidelines in respect of corporate governance, but also other practices aimed at a high level of business ethics, effective supervision and enhancement of value for all shareholders. The Board's role, function, responsibility and accountability are clearly defined. In addition to its primary role of monitoring corporate performance, the function of the Board includes approving a business plan, reviewing and approving annual budgets and borrowing limits, fixing exposure limits and ensuring that KPTL's shareholders are kept informed about its plans, strategies and performance. To enable the Board of Directors to discharge these responsibilities effectively, Management provides detailed performance reports to the Board on a quarterly basis.

The Board of Directors also functions through various committees such as the Audit Committee, the Nomination and Compensation Committee and the Shareholders' Grievances Committee. These committees meet on a regular basis.

Board Committees

Audit Committee

The Audit Committee was constituted by the Directors vide their Board meeting held on June 28, 2001. The purpose of the Audit Committee is to ensure the objectivity, credibility and correctness of the Company's financial reporting and disclosure processes, internal controls, risk management policies and processes, tax policies, compliance and legal requirements and associated matters. The Audit Committee currently consists of four Non-Executive Directors, three of whom are Independent Directors, and one of whom is a Promoter Director. The Audit Committee members who are Independent Directors are Sajjanraj Mehta (Chairman), Vimal Bhandari and Narayen K. Seshadri, whilst Mofatraj P. Munot is the Promoter Director. The Audit Committee was constituted in accordance with the requirements under Section 292A of the Companies Act and Clause 49 of the Listing Agreements.

The terms of reference of the Audit Committee are broadly as set out below:

• oversight of the Company's financial reporting process and disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible;

• recommending to the Board the appointment, reappointment and, if required, the replacement or removal of the statutory auditor, and the fixing of audit fees;

• reviewing with Management, the annual financial statements before submission to the Board for approval, with particular reference to:

- matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956;

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- changes, if any, in accounting policies and practices and reasons for the same;

- major accounting entries involving estimates based on the exercise of judgment by Management;

- significant adjustments made in the financial statements arising out of audit findings;

- compliance with listing and other legal requirements relating to financial statements;

- disclosure of any related party transactions; and

- qualifications in the draft audit report;

• reviewing, with Management, the quarterly financial statements before submission to the Board for approval;

• reviewing, with Management, performance of statutory and internal auditors and adequacy of the internal control systems;

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

• discussions with internal auditors regarding any significant findings and follow up thereon;

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

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

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

The CFO is a regular invitee and statutory and internal auditors are invited as and when required. The Company Secretary is the secretary of the committee.

The Audit Committee has reviewed the financial condition and results of operations forming part of the management discussion and analysis and other information as mentioned in para II (E) of Clause 49 of the Listing Agreements.

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Nomination and Compensation Committee

The Nomination and Compensation Committee was constituted by the Directors vide their Board meeting held on June 28, 2001. The Nomination and Compensation Committee's goal is to ensure that the Company attracts and retains highly qualified employees in accordance with its business plans, that the Company fulfils its ethical and legal responsibilities to its employees, and that management compensation is appropriate. The Company's Nomination and Compensation Committee consists of Mofatraj P. Munot (Chairman), Sajjanraj Mehta and Vimal Bhandari, all of whom are Non-Executive Directors. During the year ended March 31, 2009, the Nomination and Compensation Committee met twice. The functions of the Compensation Committee include to determine the remuneration, review performance and such other matters as may from time to time be required by any statutory, contractual or other regulatory requirements to be attended to by the Nomination and Compensation Committee.

Although non-mandatory in terms of the Listing Agreements, the Nomination and Compensation Committee reviews, assesses and recommends the appointment of executive Directors from time to time, periodically reviews the remuneration package of the executive Directors and recommends suitable revisions to the Board.

Remuneration of employees largely consists of base remuneration, perquisites and performance incentives. The components of the total remuneration vary for different cadres and are governed by industry pattern, qualification and experience of the employee, responsibilities handled by him and individual performance.

The objectives of the remuneration policy are to motivate employees to excel in their performance, recognize their contribution, and retain talent in the organization and reward merit.

Shareholders' Grievance Committee

The Shareholders' Grievance Committee was constituted by the Directors vide their Board meeting held on June 28, 2001. This Committee is responsible for the smooth functioning of the share transfer process as well as redress of shareholder grievances. The Company's Shareholders' Grievance Committee consists of Parag Munot as Chairman, Pankaj Sachdeva and K. V. Mani. During the year ended March 31, 2009, two meetings of the Shareholders' Grievance Committee were held. The main function of the committee is to review and provide redress of shareholders' complaints relating to areas such as share transfers, failure to receive dividends and failure to receive copies of the Company's financial statements. The Committee also reviews the issuance of duplicate share certificates, the issuance of certificates after share splits, consolidations and renewals and the transmission of shares, which actions are executed by a committee of senior executives as delegated by the Board.

Mr. Bajrang Ramdharani, Company Secretary is the Compliance Officer.

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During the financial year Fiscal Year 2009, the Company received 11 complaints which were resolved on time and no complaint remained pending at the year end. The status of complaints is periodically reported to the Committee and Board in their respective meetings.

The Board has delegated the powers of approving transfers and transmission of shares, issue of duplicate shares, issue of certificates after split/consolidation/renewal and transmission of shares, to a committee of senior executives. The committee met 11 times during the year. There were no transfers pending as at March 31, 2009.

Policy on disclosures and internal procedure for prevention of insider trading

Regulation 12 (1) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 applies to us and our employees, which require us to implement a code of internal procedures and conduct for the prevention of insider trading. KPTL has already implemented an employee trading policy in line with the SEBI Regulations issued in this regard.

Nominee Directors

Nominee Directors may be appointed by financial institutions as lenders or holders of a substantial interest in the share capital of the Company. The power to appoint them must be contained in contractual arrangements between the Company and such financial institution. Nominee Directors may be nominated to the Board and hold office only for so long as the Company owes any money to the relevant institution or for so long as the relevant institution holds debentures in the Company. As at December 31, 2009 the Board did not have any Nominee Director. Nominee Directors can only be removed at the discretion of the financial institution nominating them and not by the Board. Additionally, at the option of the financial institution such Nominee Directors shall not be liable to retirement by rotation of Directors.

Senior Management

In addition to the Board of Directors as set forth above, the following are members of KPTL's senior management. All members of the senior management are employees on a full time basis.

Name of Director Position Age (in years as of

December 31, 2009) D. B. Patel ..................................................... President and CEO (Domestic Transmission Line Projects) 52 B. K. Satish .................................................... President and CEO (Distribution Projects) 57 Kamal K. Jain ................................................ President and Chief Financial Officer 53 Gyan Prakash ................................................. President and CEO (Pipeline Projects) 53 N. Sai Mohan ................................................. President and CEO (Overseas Project) 61 R. L. Keshwani .............................................. Deputy President (Overseas Project) 63 Anand Chopra ............................................... Senior Vice President (Commercial) Biomass Energy

Division 55

V. D. Radadia ................................................ Senior Vice President (Production) 55 M. C. Mehta................................................... Senior Vice President (Special Projects) 56 Kishor Mal Chhajer ....................................... Senior Vice President (Finance & Accounts) 59 M.A. Baraiya ................................................. Senior Vice President (Human Resources and

Administration) 47

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S. Ayyadurai .................................................. Senior Vice President (Construction) 49 S. Mukharjee ................................................. Senior Vice President (Overseas Projects) 55 Anup Aggrawal ............................................. Senior Vice President (Infrastructure) 48 Sandip Sharma ............................................... Chief Marketing - Pipeline Projects 53

The following are brief biographies of KPTL's senior management.

D. B. Patel .......................... D. B. Patel is the President and CEO (Domestic Transmission Line Projects). He has obtained a bachelor’s degree in engineering from the Gujarat University, and has more than 25 years of experience in production, planning and construction of transmission lines. His annual compensation for the year ended March 31, 2009 was Rs.6.47 million.

B. K. Satish ........................ B. K. Satish is the President and CEO (Distribution Projects). B. K. Satish has obtained an M. Tech. in civil engineering from the Indian Institute of Technology, Chennai and has more than 31 years of experience in designing and marketing for transmission projects. He joined KPTL in 1987 as a senior manager. His annual compensation for the year ended March 31, 2009 was Rs.6.47 million.

Kamal K. Jain..................... Kamal K. Jain is the President and Chief Financial Officer. He is a commerce graduate from the University of Rajasthan and a Chartered Accountant with more than 25 years of experience in the fields of finance, logistics, administration, accounting and taxation. He currently also serves as a director of JMC and is a member of the shareholders grievances and remuneration committees of JMC. He is also director of SSLL, Energylink (India) Limited and Adeshwar Infrabuild Limited. His annual compensation for the year ended March 31, 2009 was Rs.6.47 million.

Gyan Prakash ..................... Gyan Prakash is the President and CEO (Pipeline Projects). He has held this position since May 21, 2004. He obtained a bachelors degree in engineering from the Harcourt Butler Technological Institute, Kanpur. Prior to joining the Company, he was the executive director of Richanshruti Consultants Private Limited, Mumbai. He has more than 29 years of experience in oil and gas pipeline and related projects, design and engineering of projects like gas transmission and distribution system, liquid pipeline system, LPG and ethylene pipeline system and operations and maintenance. He also has expertise in business development/marketing. His annual compensation for the year ended March 31, 2009 was Rs.20.33 million.

N. Sai Mohan ..................... N. Sai Mohan is the President (Overseas Projects). He has obtained a bachelor’s degree in Electrical Engineering from the A.C. College of Engineering and Technology, Tamil Nadu and a masters in Industrial Engineering from Malaysia and has more than 23 years of experience in turnkey projects of transmission line in India and other countries such

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as Indonesia, Malaysia and the Middle East. N. Sai Mohan was previously General Manager (International Projects) at KEC International Limited. His annual compensation for the year ended March 31, 2009 was Rs.6.47 million.

R. L. Keshwani .................. R. L. Keshwani is the Deputy President (Overseas Projects). He has obtained a bachelor’s degree in Metallurgical Engineering in 1972 & Master degree in Management in 1980 from Loughborough University UK. and has more than 30 years of experience in power transmission lines, sub-stations and power distribution in India and overseas. Mr. R. L. Keshwani was previously working at KEC International Limited. He joined us in April, 2009.

Anand Chopra .................... Anand Chopra is the Senior Vice President (Commercial) and head of the Biomass Energy Division. He has a bachelor’s degree in commerce from Government College, Bharatpur, Rajasthan. He has more than 28 years of experience in commercial matters. His annual compensation for the year ended March 31, 2009 was Rs.3.60 million.

V. D. Radadia ..................... V. D. Radadia is the Senior Vice President (Production). He has a diploma in mechanical engineering from Laghdhirsihji Engineering College, University of Saurashtra and has more than 23 years of experience in production and planning. His annual compensation for the year ended March 31, 2009 was Rs.4.70 million.

M. C. Mehta ....................... Until March 6, 2010, M. C. Mehta was the Senior Vice President (Special Projects). He has a bachelor’s degree in civil engineering from the Sardar Patel Engineering College, University of Mumbai and more than 30 years of experience in the transmission line industry, testing and project planning. Since March 6, 2010, he is President and CEO of KPTL's wholly-owned subsidiary Kalpataru Power Transmission USA INC. His annual compensation for the year ended March 31, 2009 was Rs.3.40 million.

K. M. Chhajer .................... Kishor Mal Chhajer is the Senior Vice President Accounts & Financial. He is a Commerce Graduate from the University of Rajasthan and a Chartered Accountant with more than 34 years of experience in the fields of finance and accounting. His annual compensation for the year ended March 31, 2009 was Rs.3.63 million.

M.A. Baraiya ...................... M.A. Baraiya is the Senior Vice President (Human Resources and Administration). He has held this position since January, 2006. He has obtained his bachelors degree in social science with a gold medal in 1983 from the Gujarat Vidyapith and also has obtained a masters degree in social work from the Gujarat Vidyapith. Prior to joining the Company, M.A Baraiya was employed as Senior Vice President of Cadila Pharmaceuticals Limited. M.A. Baraiya has more than 23 years

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experience in human resource management and logistics. His compensation March 31, 2009 was Rs.4.01 million.

S. Ayyadurai ...................... S. Ayyadurai is the Senior Vice President (Construction). S. Ayyadurai has obtained a masters degree in arts in history from the Murugappa Polytechnic, Chennai and has also obtained a post graduate diploma in business administration from the Annamalai University, Chennai. He is the head of the construction of our domestic transmission lines business. He has more than 23 years experience in execution of various projects in different terrains. His annual compensation for the year ended March 31, 2009 was Rs.4.43 million.

S. Mukharjee ...................... Subhasish Mukharjee is the Senior Vice President (Overseas Projects). He has obtained a bachelors degree in Mechanical Engineering from Jadavpur University, Kolkata. Prior to joining the company in October 2006, was General Manager with KEC International Ltd. He has more than 32 years experience in execution of various projects in different terrains. His annual compensation for the year ended March 31, 2009 was Rs.3.80 million.

Anup Aggarwal .................. Anup Aggarwal is the Senior Vice President (Infrastructure Projects). He has obtained a bachelors degree in Mechanical Engineering from Delhi College of Engineering, Delhi, India. Prior to joining the Company in October 2009, Anup Aggarwal was employed as the Bharat Petroleum Corporation Ltd. as Deputy General Manager (Engineering and Projects) with Bharat Petroleum Corporation Ltd. and additionally as Vice President – Bharat Oman Refineries Ltd. Anup Aggarwal has more than 25 years experience in Pipeline project. He joined KPTL in October 2009.

Sandip Sharma ................... Sandip Sharma is the Chief of Marketing (Pipeline Projects). He has obtained a bachelors degree in mechanical engineering from the University of Bangalore. Prior to joining the Company in 2004, Sandip Sharma was employed as the director of marketing of Saw Pipes Limited. Sandip Sharma has more than 26 years experience in marketing and business development in oil and gas transmission and distribution sectors, project planning, project management and various other activities related in oil and gas pipeline projects and business. His annual compensation for the year ended March 31, 2009 was Rs.5.24 million

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Compensation of KPTL's senior management

KPTL paid aggregate remuneration and granted benefits to its senior management listed above of Rs.79.05 million in fiscal 2009, Rs.52.90 million in fiscal 2008 and Rs.36.69 million in fiscal 2007.

Interests of KPTL's Senior Management

The total interests of the senior management in the Company's Equity Shares as of March 31, 2010 are set out in the table below:

Name of Senior Management Number of Equity Shares D. B. Patel ......................................................................................................................................................... 300 B. K. Satish ........................................................................................................................................................ 297 Kamal K. Jain .................................................................................................................................................... 100 Gyan Prakash ..................................................................................................................................................... - N. Sai Mohan ..................................................................................................................................................... - R.L. Keshwani…………………………………………………………………………………………….. - Anand Chopra…………………………………………………………………………………………….. - V. D. Radadia .................................................................................................................................................... - M.C. Mehta………………………………………………………………………………………………... 100 Kishore Mal Chhajer……………………………………………………………………………………… 30 M. A. Baraiya .................................................................................................................................................... - S. Ayyadurai………………………………………………………………………………………………. - S. Mukharjee………………………………………………………………………………………………. - Anup Aggarwal……………………………………………………………………………………………. - Sandip Sharma…………………………………………………………………………………………… 1,550

Transactions with Senior Management

There have been no transactions during the current or previous fiscal year of the Company between the Company and any of its senior management, which, because of their unusual nature or the circumstances in which they have been entered into, are or should be required to be disclosed in the Company's accounts or approved by its shareholders and there are no such transactions during an earlier fiscal year which remain in any respect outstanding or unperformed.

The Company has entered into an agreement with Richanshruti Consultants Private Limited ("Richanshruti") and Gyan Prakash whereby Richanshruti has released Gyan Prakash from the service agreement between Richanshruti and Gyan Prakash dated March 31, 2004 on payment of compensation for the same by the Company to Richanshruti. The agreement states that a compensation amount of Rs.150,000 per month shall be paid by the Company. The agreement is effective up to March 31, 2012.

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ORGANISATIONAL STRUCTURE AND PRINCIPAL SHAREHOLDERS

The Company was incorporated in the State of Gujarat on April 23, 1981 as H.T. Power Structure Private Limited under the Companies Act. The name of the Company was changed to H.T. Power Structure Limited by way of a shareholders resolution dated November 22, 1993 and a fresh certificate of incorporation consequent on change of name was issued by the Registrar of Companies, Gujarat on December 20,1993.

The name of the Company was changed to Kalpataru Power Transmission Limited by way of a shareholders resolution dated December 20, 1993 and a fresh certificate of incorporation consequent on change of name was issued by the Registrar of Companies, Gujarat on January 4, 1994.

The Registered Office of the Company is located at Plot No. 101, Part III, GIDC Estate, Sector-28, Gandhinagar- 382 028, India and the Corporate Office is located at Kalpataru Synergy, Opposite Grant Hyatt, Vakola, Santa Cruz (East), Mumbai 400 055, India.

The Company made an initial public offering of its Equity Shares in December 1994 and its Equity Shares are listed on both the BSE and the NSE. As at March 31, 2010 the Promoters and the promoter group have an aggregate 63.68% shareholding in the Company.

KPTL's Principal Shareholders

The following table contains information as of March 31, 2010 concerning the ownership of the Equity Shares by KPTL's Promoters and each person who we know beneficially owns 1% or more of the Equity Shares:

Category Name No. of Shares % of Shares Promoter's Holding: Indian Promoters ........................................ Parag Mofatraj Munot 2,189,594 8.26 Mofatraj Pukharaj Munot 1,964,186 7.41 4,153,780 15.67 Promoter Group K C Holdings Pvt Ltd 4,198,400 15.84 Kalpataru Constructions Private Limited 4,670,000 17.62 Kalpataru Properties Pvt. Ltd 2,675,000 10.09 Tara Kanga 310,826 1.17 11,854,226 44.73 Sub Total 16,008,006 60.40 Institutional Investors: Mutual Funds and UTI ............................... ICICI Prudential Infrastructure Fund 626,706 2.36 Venture Capital Funds ............................... IDBI Trusteeship Services Limited(India

Advantage Funds 1,514,000 5.71

Insurance Companies ................................. ICICI Prudential Life Insurance Company 710,756 2.68 FIIs .............................................................. Mirae Asset Investment Management Co. Ltd 273,681 1.03

Sub Total 3,125,143 11.78 Grand Total 19,133,149 72.18

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Main Objects

The main objects of the Company as set out in Clause III of the Memorandum of Association of the Company include the following:

• carrying on the business of constructing, erecting, galvanizing and supplying transmission line towers and related parts and accessories;

• galvanizing, electroplating and finishing all materials;

• any business related to mechanical, electrical and consulting engineering;

• entering into contracts and agreements;

• buying and selling, importing and exporting any parts and equipment;

• to build, construct, equip, acquire, maintain and sell any buildings, factories, sheds, ware-house, workshops, docks, roads, bridges, provide terminals and administer terminals, industrial estates, housing, constructions, buildings, ports, sub-ways, express ways, tunnels, shopping complexes or centers;

• to carry on the business of generation, transmission, distribution, storage, conservation of energy through thermal, hydro, wind, solar energy or any other conventional or non-conventional sources of energy;

• to acquire on lease, outright purchase or otherwise lands, to develop them, to construct or build buildings, houses, industrial estates or any type of construction work and to improve, decorate and furnish them and maintain flats and other related activities for the same;

• to carry on the business of designing, setting up, erecting, maintaining, repairing, improving and operating or managing in India or abroad, pipes, pipelines, cross country piping systems, jetties, all other kinds of onshore and offshore port facilities, storage and distribution terminals, storage and distribution terminals and transportation of natural gas, crude oil, petroleum products;

• to act as a technical advisors, consultants for undertaking market survey, techno-economic feasibility reports, basic know-how, design, installations and commissioning services, providing skill training by setting up an institute for the same;

• to build construct, acquire, erect, install, operate, maintain, develop, promote, manage, repair, administer, provide, infrastructural facilities for ports, jetties, warfs, piers, docks, embankments, rail infrastructure, cargo and terminals;

188

• to engage in the business of manufacturers, dealers, importers, exporters, in all kinds of pollution treatment plants/equipments, water pollution, water treatment plants, water management for industries, government, semi government and municipal corporation; and

• to engage in setting up of common effluent treatment plant ("CETP") in industrial estates for various small to big industries.

These main objects along with other objects set out in the Memorandum of Association enable the Company to undertake its existing and proposed activities.

KPTL's Principal Subsidiaries

100%

Operating Subsidiaries Operating Divisions

100%

0%

100%

100%

0%

53.01%100%

0%

100%

80%

0%

100%

0%

100%

0%

Kalpataru Power Transmission Limited

Energy Link (India) Ltd

Amber Real Estate Ltd

Shree Shubham Logistics Limited

Kalpataru Power Transmission Nigeria Ltd

JMC Projects (India) Limited

Kalpataru Power Transmission

USA Inc

Kalpataru Power Transmission (Mauritius) Ltd

Power Transmission & Distribution

Oil & Gas Pipelines

JMC Mining and Quarries Ltd

Bio Mass Energy Generation

Saicharan Properties, Ltd.

Adeshwar Infrabuild Ltd.

74.9%

Kalpataru SA (Proprietary) Ltd

JMC Projects (India) Limited

Background and Corporate History

JMC was incorporated on June 5, 1986 and is a civil contracting and infrastructure services company which is involved in the construction of:

• commercial/ residential buildings, software parks;

• industrial structures / factories, power plant civil works; and

• infrastructure projects such as roads, bridges, underpasses and metro stations.

JMC is a public limited company and its equity shares are listed on the BSE and NSE.

Board of Directors

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The following table sets forth the composition of the board of directors of JMC as of the date of this Placement Document.

Name of Director Position Age D. R. Mehta ......................................................................... Chairman and Independent Director 72 Hemant Modi ....................................................................... Vice Chairman & Managing Director 54 Suhas Joshi .......................................................................... Managing Director, Buildings and Factories 55 Mahendra G. Punatar .......................................................... Independent Director 74 Ramesh Sheth ..................................................................... Independent Director 76 Manish Mohnot ................................................................... Director 37 Kamal K. Jain ...................................................................... Director 53

Acquisition of Interests in JMC

Pursuant to a share purchase agreement dated October 14, 2004, an open offer in December 2004, subscription to rights issues in 2005, 2006 and 2009, KPTL increased its stake on a periodic basis to 53.01% as at December 31, 2009.

In 2009, JMC made a rights issue of 36,28,058 equity shares of Rs.10 each for cash at a premium of Rs.100 per equity share to the existing equity shareholders of JMC in the ratio of one equity share for every five equity shares held on the record date of July 31, 2009, aggregating Rs.399,086,000.

JMC's Principal Shareholders

The following table contains information as of March 31, 2010 concerning the ownership of JMC shares by its Promoters and each person who they know beneficially owns 1% or more of its equity shares:

Category Name No. of Shares % of Shares Promoter's Holding: Indian Promoters Kalpataru Power Transmission Ltd. 11,540,247 53.01 Hemant Modi 400,801 1.84 Promoter Group Sub Total 11,941,048 54.85 Non-Promoter: Institutional Investors: Mutual Funds and UTI Birla Sun Life Trustee Company Pvt Limited A/C Birla Sun

Life Long Term Advantage Fund - Series 1 371,575 1.71

Other 587,586 2.70 FIIs/Banks Acacia Partners, LP 713,028 3.28 Acacia Institutional Partners, LP 315,601 1.45 Wellington Management Company, LLP A/C Bay Pond Mb 301,853 1.39 Others 319,815 1.46 Sub Total 2,609,458 11.99 Others: Private Corporate Bodies 1,122,571 5.16 Individuals & Clearing members

NROs/OCBs Dr Sanjeev Arora 284,475 1.31

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Others 5,639,934 25.91 Sub Total 7,046,980 32.38 Grand Total 21,597,486 99.22

KPTL's Transactions with JMC

The Company has entered into the following related party transactions with JMC in the period April 1, 2009 to December 31, 2009.

Particulars Amount (in Rs. millions) Rent received ......................................................................................................................................................... 5.45 Share allotment in rights issue .............................................................................................................................. 211.45 Redemption of preference shares by JMC ............................................................................................................ 222.20 Dividend received from JMC ................................................................................................................................ 32.64

Main Objects

The main objects of JMC as set forth in its Memorandum of Association, inter alia, are:

• To undertake or carry on in India or elsewhere in the world, whether independently or in joint venture with any other person(s), either as engineers or contractor or sub-contractor or builder or owner or developer, the business of designing, development, construction, maintenance, operation, renovation, demolition, reconstruction, erection, installation, commissioning, furnishing, finishing, decoration, fabrication, surveying, investigation, testing, grouting, digging, excavation, repairing , alteration, restoration of :

- industrial plants, buildings, structures, commercial complexes, residential buildings, malls, multiplexes, theaters, auditoriums, information technology and software parks, business and industrial parks, amusement & entertainment parks, convention & conference centers, hotels, clubs, hospitals, educational and institutional buildings, townships, housing colonies, research and development centers, Special Economic Zones, sports complexes, warehouses, storage depots, training centers, leisure parks;

- roads, highways, super highways, expressways, culverts, dams, tramways, water tanks, canals, reservoirs, structures, drainage & sewage works, water distribution & filtration systems, laying of pipelines, docks, harbors, piers, irrigation works, foundation works, power plants, railway terminus, bus terminus, bridges, tunnels, powerhouse whether surface or underground, flyovers, water treatment plants, effluent treatment plants, underpass, subways, airports, heliports, ports, runways, transmission line(s) towers, telecommunication facilities, water, oil and gas pipe line, sanitation and sewerage system, solid waste management system or any other public utilities of similar nature;

191

- rail system, mass rapid transit system, light rain transit system, rapid bus systems, Inland Container Depot (ICD) and Central Freight Station (CFS);

- turnkey jobs including engineering, procurement, construction or commissioning (EPC) projects; and

- any other facility that may be notified in future as infrastructure facility either by the state Governments and/or the Central Government or any other appropriate authority or body.

• To undertake and carry on the business of providing financial assistance by way of subscription to or investing in the Equity Shares, preference shares, debentures, bonds including providing long term and short term loans, lease-finance, subscription to fully convertible bonds, non convertible bonds, partially convertible bonds, optional convertible bonds etc., giving guarantees or any other financial assistance as may be conducive for development, construction, operation, maintenance etc., of infrastructure projects in the fields of road, highway, power generation and for power distribution or any other form of power, telecommunication services, bridge(s), airport(s), ports, rail system(s), water supply, irrigation, sanitation and sewerage system(s) or any other public facility of similar nature that may be notified in future as infrastructure facility either by the State Governments and/or the Central Government or any other appropriate authority or body.

• To purchase, acquire, take on lease or in exchange, hire or otherwise, any immovable and/or movable property and/or any rights or privileges in respect thereof and further to construct, develop, maintain, operate, sell, exchange, improve, manage, lease out, mortgage, dispose off or turn to account and/or otherwise to deal with all or any such movable or immovable property, rights and privileges thereof, upon any terms and for any consideration as may thought fit.

• To carry on the business of any or all the objects of the company by way of entering into an agreement with the central Government or a state Government or a local authority or any other statutory body on Build-Operate-Transfer (BOT) or on Build-Own-Operate-Transfer (BOOT) basis, Build-own-Lease-Transfer (BOLT) scheme wherein the company will provide the necessary and crucial components of infrastructure system and/ or own them for a stipulated period, maintain or operate the same and to lease the asset of necessary and crucial components of the infrastructure for maintenance and operation and shall ultimately transfer to the Government bodies or authorities.

• To carry on the business of purchase, extract, produce, manufacture, supply or sale of all kinds of materials and stores for the purpose of any of the aforesaid objects.

192

• To carry on business of consultancy in the field of civil, mechanical, electrical, industrial or any other discipline of engineering.


Background and Corporate History

SSLL was incorporated on January 19, 2007 as "Shree Shubham Logistics Private Limited" and subsequently converted into a public limited company on April 20, 2007 and is an operator of agricultural logistics in Rajasthan and Gujarat. SSLL has presence in almost the entire logistics and warehousing value chain including storage and preservation, analysis and certification, collateral management services, commodity funding services and commodity procurement, trading and export services.

Board of Directors

The following table sets forth the composition of the board of directors of SSLL as of the date of this Placement Document.

Name of Director Position Age Manish Mohnot ................................................................................................................. Director 37 Aditya Bafna ..................................................................................................................... Executive Director 28 Shubhendra Kumar Bafna ................................................................................................. Executive Director 26 Sumitra Bafna .................................................................................................................... Promoter Director 54 Kamal Jain ......................................................................................................................... Director 53

SSLL Principal Shareholders

The following table contains information as of March 31, 2010 concerning the ownership of SSLL's shares by its Promoters and each person who they know beneficially owns 1% or more of its equity shares:

Category Name No. of Shares % of Shares Promoter's Holding: Indian Promoters .................................................. Kalpataru Power Transmission Ltd. 16,000,000 80.00 Aditya Bafna 1,627,400 8.14 Shubhendra Kumar Bafna 1,033,000 5.17 18,660,400 93.30 Promoter Group .................................................... Riddhi Bafna 372,500 1.86 Mamta Bafna 663,500 3.32 Others 303,600 1.52 1,339,600 6.70 Grand Total ........................................................ 20,000,000 100.00

KPTL's Transactions with SSLL

The Company has entered into the following related party transactions with SSLL in the period April 1, 2009 to December 31, 2009.

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Particulars Amount (in Rs. millions) Salary to Executive Directors 3.24 Rent 1) Holding Company 2) Kalpataru Theatres P. Ltd. 0.25 Interest Holding Company 30.67

KPTL's Other Subsidiaries

The table below sets forth KPTL's shareholdings in other Subsidiaries as of March 31, 2010:

Name Nature of Business Jurisdiction of Incorporation % of Shares JMC Mining and Quarries Ltd. ........ Raw material supplies India 100.00 (indirect through JMC

Projects (India) Ltd.) Energylink (India) Ltd. ..................... Residential projects India 100.00 Saicharan Properties Ltd. ................. Real estate development India 100.00 (indirect through

Energylink (India) Ltd.) Amber Real Estate Ltd. .................... Real estate development

(IT parks) India 100.00

Kalpataru Power Transmission (Mauritius) Ltd. ................................

Investment company Mauritius 100.00

Kalpataru SA (Proprietary) Ltd. ....... Power transmission South Africa 74.90 Kalpataru Power Transmission Nigeria Ltd. ......................................

Power transmission Nigeria 100.00

Adeshwar Infrabuild Ltd. ................. Cement manufacturing and dealing

India 100.00

Kalpataru Power Transmission USA INC. ......................................... Power transmission United States 100.00

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LEGAL PROCEEDINGS

Except as described below, the Company and / or its Subsidiaries are not involved in any legal proceedings, and no proceedings are threatened, which may have, or have had, during the 12 months preceding the date of this Preliminary Placement Document, a material adverse effect on the business, properties, financial condition or operations of the Company and its Subsidiaries.

The Company and its Subsidiaries are involved in litigation in the ordinary course of business. The Company believes that the number of proceedings in which the Company and its Subsidiaries are involved in is not unusual for companies of their size in the context of doing business in India. In addition, two criminal cases have been instituted against certain Directors of the Company.

Litigation involving the Company

1. Mackro Enerji Tele-Koinunikasyan Insaat Taahhut Ve Tic Limited. Sti ("Mackro") filed a case bearing number 2003/569 in Ankara, Turkey at the Ankara Eighth Principal Court of Law's Commercial Bench seeking an injunction on payments being made by the Turkish Electricity Generation Transmission A-S, Turkey ("TEIAS") to a consortium (the "Consortium") consisting of the Company and Barmek Insaat ve Tesisat A.S ("Barmek") for the recovery of various outstanding amounts allegedly due to Mackro from Barmek. The court granted the injunction restraining payments by TEIAS to the Consortium. A reply on merit was filed on behalf of the Company in October 2003, inter alia, contending that the Company, though a member of the Consortium, is not liable to make payment of dues of the other member, i.e. Barmek, since its role is restricted to supply of the transmission line and parts thereof. Pursuant to an out of court settlement between Mackro and Barmek, the injunction was lifted on November 7, 2003 and Mackro issued a 'No Dues' / 'No Claims' certificate to the Company. Subsequently, Barmek failed to discharge its payment obligation in terms of the settlement and as a result, Mackro obtained an order of injunction on January 21, 2004 against the payments that were due from TEIAS to the Consortium subject to Mackro depositing 70 billion Turkish Lira, being 15% of the claim amount of 469 billion Turkish Lira, with the court. As on date, Mackro has not yet deposited 70 billion Turkish Lira with the court and the case is currently pending.

2. The Company was awarded a contract by National Thermal Power Corporation Limited ("NTPC") for the supply and erection of a 400 KV Indore-Asoj transmission line on June 30, 1986. NTPC's division was subsequently transferred to PGCIL which obtained all the rights pertaining to the contract. The terms of the contract provided that the prices for supply were to be exclusive of sales tax, excise tax and other levies. Additionally, the contract provided that all advantages under modified value added tax would be passed on to PGCIL and if such advantages cannot be passed on to PGCIL,

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excise tax at 12% would be payable by PGCIL even though the Company would have to pay higher excise duty. The Company supplied tower parts and paid excise duty thereon and PGCIL paid the Company excise duty at the rate of 12%. PGCIL subsequently claimed a refund of the excise duty from the Company on the grounds that the Company had obtained a refund from the excise authorities and invoked arbitration proceedings by way of a notice dated October 6, 1999, seeking a balance of excise duty to be refunded with interest due thereon on account of non payment / delayed payment of Rs. 23,608,299 and further interest thereon on the grounds of wrongful withholding of the excise duty amount. The Company disputed these allegations on the basis that the claim is allegedly barred by limitation and the excise duty refunded to the Company is not further refundable to PGCIL as the same was paid by the Company at a fixed rate of 12%. On March 6, 2005, the arbitral tribunal recommended that the parties resolve the matter amicably, preferably in terms of the formula suggested by the arbitral tribunal with the Company paying the principal amount of excise duty actually received by it with simple interest from the date of filing the claim, November 28, 2001. The parties have not yet reached a settlement and the arbitration proceedings are currently pending.

3. The Company had entered into a subcontract with Groupment Sioudan Impac ("GSI") for construction of a 400 KV transmission line from El Khemis to Berrouaghia for Sonelgaz, Algeria. On account of an alleged unforeseen delay in execution of the project, GSI incurred idling cost on men and machineries. Upon completion of the construction, GSI claimed that the extra cost incurred on account of idling of workmen and resources and stoppage of works was attributable to the Company. The Company alleged that it was not liable for the extra cost as the claim was not covered by the contract. Pursuant to meetings between the Company and GSI on December 28, 2007 and December 29, 2007, a memorandum of understanding was signed between the parties whereby it was agreed that the extra claim of GSI would be reviewed by the Company and would be further deliberated in the next meeting. At this meeting on January 22, 2008, it was agreed that although the claim of GSI was not tenable in terms of the contract, the Company, as a goodwill gesture, would offer a lump sum payment of DA 10 million as full and final settlement to GSI. GSI thereafter filed a petition before EL Cheraga Court, Algeria against the Company. The EL Cheraga Court by way of an order dated April 7, 2008 froze the Company's bank accounts with BNP Paribas Bank to the extent of GSI's claim. The Company has filed an appeal before the Cherega Tribunal and, as requested by the Company, the Tribunal rejected the submitted expert report on the grounds that it was superficial, and appointed a new expert, by way of an Order dated April 13, 2009. The expert has submitted his report before the Cherega Tribunal stating that the Company need not pay any amount to GSI except for DA 10 million offered by the Company as a gesture of goodwill. The matter is currently pending before the Cherega Tribunal.

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4. By way of an order dated December 20, 2005, the Commissioner, Central Excise, Ahmedabad-III (the "Order") had disposed of a show cause notice dated June 2, 2005 and held that the Company is liable to pay Rs. 11,360,559 of service tax. The Company had already paid, under protest, service tax of Rs. 11,626,813. Therefore, an amount of Rs. 266,254 had been paid by the Company over and above what was due. The Order specifically provided that the service tax already paid by the Company should be adjusted against the amount of Rs. 11,360,559. However, the Commissioner had imposed a penalty of Rs. 12,000,000 under section 78 of the Finance Act, 1994 holding that the amounts were paid belatedly, and a further sum of Rs. 29,200 has been imposed as penalty under section 76 of the Finance Act, 1994. The Company has appealed the Order before the Customs, Excise and Service Tax Appellate Tribunal. The Customs, Excise and Service Tax Appellate Tribunal, by its order dated April 20, 2006, has dispensed with the condition of pre-deposit of penalty amount and allowed the stay petition.

5. By way of an order dated October 20, 2008, the Deputy Commissioner of Commercial Tax, Patliputra circle, Patna had. inter alia, raised a demand of tax against the Company for the year 2007-08 amounting to Rs. 12,990,735 and a penalty of Rs. 5,600 under the provisions of the Bihar Value Added Tax Act, 2005 on account of disallowing the works contract tax certificate for Rs. 22,259,073 and tax charged of Rs.4,423,951 on freight and insurance income. The Company has appealed the aforesaid order, specifically against the tax of Rs.4,423,951 charged on freight and insurance income, before the Joint Commissioner of Commercial Taxes (Appeal), Central Division, Patna. The matter is currently pending adjudication. The Company has also filed a writ petition before the Bihar High Court at Patna to give direction to the Sales Tax Authority, Patna to grant the credit of works contract tax deducted at source on the basis of the works contract tax certificate submitted to the Assessing Officer, Deputy Commissioner of Commercial Taxes, Patliputra, Patna. While accepting the petition, the Bihar High Court has directed the Sales Tax Authority, Patna to remedy the failure to grant the credit of works contract tax and file a counter affidavit by March 23, 2010. The Sales Tax Authority, Patna has asked for an extension of time to allow the credit on the basis of the works contract tax certificate and file the counter affidavit.

6. The Company had received an assessment order dated March 31, 2009 for assessment year 2005-06 from the Deputy Commissioner of Commercial Tax (Corporate-2) Ahmedabad, inter alia raising a demand of tax amounting to Rs. 105,609,199, interest thereon amounting to Rs. 57,028,967 and a penalty amounting to Rs. 10,560,919 under the Central Sales Tax Act, 1956 (the "Demand"). The Demand was raised on account of non-submission of C-forms / E-1 Form to charge a concessional rate of tax at the time of assessment. The Company has appealed the order dated May 13, 2009 before the Joint Commissioner of Commercial Taxes (Appeal), Ahmedabad Unit-I, Gujarat

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praying for an extension of time for submission of C-forms / E-1 forms. Subsequently, the Company submitted the C-form / E-1 forms before the Commissioner of Commercial Taxes (Appeal), Ahmedabad Unit-I, Gujarat and accordingly the revised demand of tax was Rs 38.25 million, including interest and penalty. The hearing of the appeal before the Commissioner of Commercial Taxes (Appeal), Ahmedabad Unit-I, Gujarat is completed and is currently pending adjudication.

7. The Company had received an assessment order dated March 31, 2009 for assessment year 2005-06 from the Deputy Commissioner of Commercial Tax (Corporate-2) Ahmedabad, inter alia, raising a demand of tax amounting to Rs. 19,669,270, interest thereon amounting to Rs. 6,804,717 and a penalty amounting to Rs. 7,560,796 under the Gujarat Sales Tax Act, 1969 (the "Gujarat Demand"). The Gujarat Demand was raised due to disallowing the tax purchase from Gujarat Energy Transmission Corporation Limited. The Company has appealed the order on May 13, 2009 before the Commissioner of Commercial Taxes (Appeal), Ahmedabad Unit-I, Gujarat, along with proof of tax paid purchases, praying for grant of the credit of tax paid purchases. The Commissioner of Commercial Taxes (Appeal), Ahmedabad Unit-I, Gujarat accepted the proof of tax paid purchases which resulted in a refund of Rs. 0.7 million to the Company. The hearing of the appeal before the Commissioner of Commercial Taxes (Appeal), Ahmedabad Unit-I, Gujarat is completed and is currently pending adjudication.

Criminal litigation involving the Directors of the Company

1. Haroon Patel has filed a First Incident Report ("FIR") bearing number 66/09 with the D. N. Nagar Police Stateion, Andheri West. The FIR has been filed in relation to alleged forgery of property related documentation at the Tehsildar's office at Andheri. The documentation pertains to Kalpataru Estate, a property located at Andheri East, which is owned and was developed by M/s. Habitat, a firm at which Mofatraj P. Munot is a partner. A criminal report bearing number 268 of 2009 has been filed before the D. N. Nagar Police Stateion, Andheri West and the investigation is currently ongoing.

2. Uday Kathe has filed a criminal case under Sections 406 and 420 of the Indian Penal Code, 1860 against Parag M. Munot and certain directors of Ascent Orchards Private Limited before the Court of the Metropolitan Magistrate at Bandra. The complaint is in relation to a cheque of Rs. 1,200,000 which was issued as security by Uday Kathe in favor of Parag M. Munot for the performance of certain obligations. However, on account of such non-performance, the cheque was deposited with the bank for encashment pursuant to which, this complaint was filed by Uday Kathe before the Court of the Metropolitan Magistrate at Bandra. The investigation in relation to this complaint is currently ongoing.

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Litigation involving JMC Projects (India) Limited

1. The work for construction of a plant for manufacturing color television glass shells at village Chhavaj, near Bharuch, Gujarat (the "Project") was awarded to JMC by Videocon Industries Limited ("VIL") pursuant to a letter of intent dated September 1, 2004. However, the completion of the Project was delayed by 12 months. Subsequently, the consultants to the Project, M. N. Dastur & Co. Private Limited, certified JMC's final bill amounting to Rs.15.5 million, in addition to the extra items executed by JMC, amounting to Rs.2.05 million. However, VIL refused to pay this bill and raised claims against JMC relating to financial losses on account of loss of business opportunities due to the alleged delay on the part of JMC in completion of the Project. By way of a notice dated December 22, 2006, VIL raised various claims aggregating to approximately Rs. 50 million. JMC, by way of its reply dated February 2, 2007 inter alia, alleged that the delay was on account of various lapses and acts of omission on the part of VIL and called upon VIL to pay damages amounting to Rs. 64,267,482 within 15 days from the receipt thereof and stated that failing which dispute and references would be referred to M. N. Dastur & Co. Private Limited in accordance with the terms of the contract. However, as M. N. Dastur & Co. Private Limited failed to render an award within the prescribed period, the dispute was referred for arbitration before Mr. Justice G. T. Nanavati, Mr. Justice S. P. Kurdukar and Mrs. Justice Sujata Manohar (Retd.) on July 10, 2007. The proceedings have been ongoing since September 2007 and the matter is currently pending. The amount claimed by our Company pursuant to these proceedings is Rs. 55.8 million with interest at 18% p.a. from the date when this amount became due and payable while the amount of the counter claim by VIL is Rs. 74 million.

2. The work of construction of commercial buildings at Plot No. C21 & C36 at Bandra Kurla Complex, Mumbai was awarded to JMC by Videsh Sanchar Nigam Limited (now known as Tata Communication Limited) ("TCom") on January 30, 2007. The contract value was Rs.409.7 million and the stipulated period of completion was 13 months. The contract was terminated by TCom on July 6, 2007 due to the alleged non-compliance of the terms of the contract by JMC. JMC has alleged that the termination was illegal and unlawful and in violation of the terms of the contract and by way of a notice dated August 2, 2007 raised various claims aggregating to Rs. 93.8 million plus interest at 9% from September 17, 2007. TCom, by way of a letter dated September 24, 2007 (the "Letter") disputed the claims of JMC and raised a claim of Rs. 39.8 million against JMC for liquidated damages, expenses incurred/ to be incurred by TCom on account of termination of contract and recovery from the final bill submitted by JMC. In the Letter TCom also advised JMC to make the payment of Rs. 39.8 million, failing which TCom would encash the bank guarantees submitted by JMC, which was a greater amount than what was claimed by TCom. Thereafter, JMC, by way of a letter dated September 27, 2007 expressed its desire to refer the dispute to arbitration and on October 1, 2007 made the payment of Rs.39.8 million to TCom. A technical report was submitted by a

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technical commissioner so as to verify the status of the work as on the date of termination. The matter is currently pending before the arbitral tribunal consisting of Mr. Kirti Dave (techno legal consultant), Mr. N. V. Merani (Principal Secretary (Retired) Government of Maharashtra) and Mr. Justice Mr. H. Suresh (Retd.).

3. JMC Projects (India) Limited ("JMC") was awarded a contract for civil and structural work by ACCO Industries Private Limited in February 2000. The stipulated period for completion of this contract was six months from the date of award of the contract. However, the scope of work provided for under the contract was not completed within the stipulated period, as a result of which JMC incurred additional expenditure towards execution of the contract. Consequently, on April 18, 2000 JMC invoked the arbitration clause under the contract and initiated arbitral proceedings claiming payment of dues amounting to Rs.8,466,217. Subsequently, ACCO Industries Private Limited merged with BASF India Limited ("BASF"), which is currently pursuing the proceedings. On October 15, 2004, BASF filed a counter claim for alleged damages amounting to Rs.67.02 million. The arbitrator, by way of its award dated January 27, 2007 rejected the claims of JMC and BASF. Subsequently on July 27, 2007, BASF filed an application before the 19th City Civil Court, Mirzapur, Ahmedabad under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the aforesaid award. JMC has filed its reply before the 19th City Civil Court, Mirzapur, Ahmedabad on January 1, 2008. The matter is pending further hearing.

4. The Additional Director General, Ahmedabad ("ADG") had issued a show cause cum demand notice dated October 22, 2008 ("SCN") to JMC Projects (India) Limited ("JMC") in relation to (i) a demand and recovery of service tax amounting to Rs. 70,731,967 under Section 73 of the Finance Act, 1994; (ii) a demand and recovery of interest at the appropriate rate for delay in payment of such service tax in accordance with Section 75 of the Finance Act, 1994; and (iii) imposition of penalty under Sections 76 and 78 of Finance Act, 1994.

By way of the SCN, the ADG has alleged that JMC had opted for the composition scheme of works contract for payment of service tax at a concessional rate of 2% (4% from February 28, 2008) including education cess and higher education cess from the date of enactment of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 (June 1, 2007) on ongoing projects. However, prior to June 1, 2007, JMC was paying service tax by categorizing such services either under 'commercial or industrial construction service' or under 'construction of complex service' at the effective rate specified in Section 66 of the Finance Act, 1994. However, the ADG concluded that a service which was already provided for which service tax was already paid under any category of taxable service prior to June 1, 2007 was not eligible to exercise the option of the composition scheme of works contract for payment of service tax in view of sub-Rule (3) of Rule 3 of Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007. Accordingly, the ADG has held that the service

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tax on 34 contracts of JMC, under execution as on June 1, 2007, was being paid on consideration received. As per sub-Rule (3) of Rule 3 of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, the benefit of payment of service tax at a concessional rate of 2% was not available on such contracts and JMC was required to pay service tax at the nominal rate specified in Section 66 of the Finance Act on the value of taxable service determined as per the provisions of Rule 2A of the Valuation Rules read with Section 67 of the Finance Act on the consideration received during the period of June 1, 2007 to July 31, 2008 on the services provided under the aforesaid 34 contracts and has quantified the alleged short payment of service tax at Rs. 70,731,967. JMC replied to the SCN on May 18, 2009 after which, on December 14, 2009, the ADG issued an addendum to the SCN on the ground that the change of categorization of service from 'commercial or industrial construction services' to works contract services was not permitted and accordingly, the demand was revised to Rs. 205,391,319.

5. JMC is currently involved in certain disputes in relation to VAT liability for the assessment years 2005-06, 2006-07, 2007-08 and 2008-09.

For assessment year 2005-06, JMC has been re-assessed by the Joint Commissioner of Commercial Taxes – Administration of Rs. 2,640,000, thereby disallowing a deduction of composition of tax ("COT") purchases from the total turnover of JMC on February 28, 2009.

For assessment years 2006-07 and 2007-08, JMC has been re-assessed, pursuant to an order passed by the Joint Commissioner of Commercial Taxes – Appeals on September 30, 2009, with a VAT liability of Rs. 104,747,000. JMC has filed an appeal before the Karnataka Appellate Tribunal on December 10, 2009 in relation to the order passed by the Joint Commissioner of Commercial Taxes – Appeals and the dispute is currently pending before the Karnataka Appellate Tribunal. The Karnataka Appellate Tribunal, by way of its order dated March 15, 2010 has granted a stay in favor of JMC.

For assessment year 2008-09, the Commercial Tax Officer (Enforcement X) had assessed and issued a demand notice dated November 7, 2009 for a total liability of Rs. 89,270,000. JMC ha admitted liability for Rs. 2,700,000. The disputed liability of Rs. 86,570,000 included interest and penalty, on account of a difference of VAT at 8.50% on iron and steel and a disallowance of deduction of COT purchases. Subsequently, JMC approached the Joint Commissioner of Commercial Taxes – Appeals and on re-assessment the Joint Commissioner of Commercial Taxes – Appeals by way of an order dated March 25, 2010, dismissed the appeal and upheld the order passed the Commercial Tax Officer (Enforcement X). JMC has filed an appeal on January 23, 2010 before the Karnataka Appellant Tribunal, in relation to this order of the Joint Commissioner of Commercial Taxes – Appeals.

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Litigation involving Shree Shubham Logistics Limited

1. Shree Shubham Logistics Limited ("SSLL") had purchased industrial land from Jagdev Singh, Satyadev Singh, Sukhvir Singh and Lalita Devi (collectively referred to as the "Sellers"). On September 17, 2007, an application under Section 42 read with Sections 175 and 177 of the Rajasthan Tenancy Act, 1955 was submitted by the Tehsildar, Alwar before the Sub-Divisional Officer, Ramgarh, alleging that the land purchased by SSLL belonged to a scheduled cast and that the land was acquired with the intention of sale to a non-reserved category. It was therefore prayed that the land in question revert back as 'government land'. The Sub-Divisional Officer by way of its order dated February 5, 2008 declared the land to be government land without giving notice to SSLL or the Sellers. SSLL appealed to the Revenue Appellate Authority, Alwar, in relation to the aforesaid order of the Sub-Divisional Officer. The Revenue Appellate Authority, Alwar by way of its order dated August 20, 2008 upheld the order of the Sub-Divisional Officer. Subsequently, SSLL filed an appeal on March 19, 2009, in relation to the order of the Revenue Appellate Authority before the Division Bench, Revenue Board, Ajmer, pursuant to which the Division Bench, Revenue Board, Ajmer by way of its order dated April 1, 2009 upheld the order of the Revenue Appellate Authority. SSLL has filed an appeal before the High Court of Rajasthan. The High Court of Rajasthan, by way of an interim order dated May 11, 2009 has ordered maintenance of a status quo on the land.

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ISSUE PROCEDURE

Set forth below is a brief summary intended to present a general outline of the procedure relating to the bidding, payment, Allocation and Allotment of Equity Shares in the Issue. The procedure followed in the Issue may differ from the one mentioned below and prospective investors are assumed to have appraised themselves of such procedure from the Company or the Global Coordinators and Bookrunners. Prospective investors are advised to inform themselves of any restrictions or limitations that may be applicable to them. For further details, see "Selling Restrictions".

Summary of SEBI Regulations for a QIP

The Issue is being made to QIBs in reliance upon Chapter VIII of the SEBI Regulations, pursuant to which this Issue is being made, a listed company in India may issue equity shares provided that:

• a special resolution approving the Qualified Institutional Placement ("QIP") has been passed by the shareholders of the Company;

• equity shares of the same class of such company are listed on a stock exchange in India that has nation-wide trading terminals for a period of at least one year prior to the date of issuance of notice to its shareholders for convening the meeting to pass the special resolution;

• such company complies with the minimum public shareholding requirements set out in the listing agreement with the stock exchange referred to above; and

• At least 10% of the equity shares issued to QIBs must be allotted to mutual funds, provided that, if this portion, or any part thereof to be allotted to mutual funds remains unsubscribed, it may be allotted to other QIBs. A QIB has been specifically defined under Regulation 2 (1)(zd) of the SEBI Regulations and not otherwise excluded pursuant to Regulation 86(1)(b).

Investors are not allowed to withdraw their Bids after the closure of the Issue.

There is a minimum pricing requirement under the SEBI Regulations. The issue price of the equity shares shall not be less than the average of the weekly high and low of the closing prices of the related equity shares quoted on the stock exchange during the two weeks preceding the relevant date.

The "relevant date" referred to above means the date of the meeting in which the Board of Directors or the committee of Directors duly authorized by the Board decides to open the Issue and "stock exchange" means any of the recognized stock exchanges on which the

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Equity Shares are listed and on which the highest trading volume in such Equity Shares has been recorded during the two weeks immediately preceding the relevant date.

Equity shares must be allotted within twelve months from the date of the shareholders’ resolution approving the QIP. The equity shares issued pursuant to the QIP must be issued on the basis of preliminary placement document and a placement document that shall contain all material information including the information specified in Schedule XVIII of the SEBI Regulations. The preliminary placement document is a private document provided to less than 50 investors through serially numbered copies and is required to be placed on the website of the concerned stock exchanges and of the issuer with a disclaimer to the effect that it is in connection with an issue to QIBs and no offer is being made to the public or to any other category of investors. A copy of the preliminary placement document is required to be filed with the SEBI for record purposes within 30 days of the allotment of the securities to QIBs.

Pursuant to the provisions of Section 67 of the Companies Act, for a transaction that is not a public offering, an invitation or offer may not be made to more than 49 persons.

The minimum number of allottees for each QIP shall not be less than:

• two, where the issue size is less than or equal to Rs.2.5 billion; and

• five, where the issue size is greater than Rs.2.5 billion.

No single allottee shall be allotted more than 50% of the issue size.

QIBs that belong to the same group or that are under common control shall be deemed to be a single allottee.

The aggregate of the proposed QIP and all previous QIPs made in the same financial year shall not exceed five times the net worth of the issuer as per the audited balance sheet of the previous financial year. The issuer shall furnish a copy of the preliminary placement document to each stock exchange on which its Equity Shares are listed.

Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of Allotment except on the floor of a recognized stock exchange in India.

The Company has received the in-principle approval of the Stock Exchanges under Clause 24(a) of the Listing Agreements. The Company has also filed a copy of this Preliminary Placement Document with the Stock Exchanges.

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Issue Procedure

2. The Company and the Global Coordinators and Bookrunners shall circulate the serially numbered Preliminary Placement Document either in electronic form or physical form to a maximum of 49 QIBs.

3. The Global Coordinators and Bookrunners shall deliver to the QIBs a Bid cum Application Form. The list of QIBs to whom the Bid cum Application Form is delivered shall be determined by the Company in consultation with the Global Coordinators and Bookrunners. Unless this Preliminary Placement Document and the Bid cum Application Form is numbered serially and addressed to a particular QIB, no invitation to subscribe shall be deemed to have been made. Even if such documentation were to come into the possession of any person other than the intended recipient, no offer or invitation to offer shall be deemed to have been made to such person.

4. QIBs may submit the Bids through the Bid cum Application Form during the Bidding Period to the Global Coordinators and Bookrunners.

5. QIBs would have to indicate the following in the Bid:

(a) Complete official name of the QIB to whom Equity Shares are to be Allotted;

(b) Number of Equity Shares;

(c) Price at which they offer to apply for the Equity Shares, provided that the QIBs may also indicate that they are agreeable to submit a Bid in respect of the Equity Shares at "Cut-off Price" which shall be any price as may be determined by the Company in consultation with the Global Coordinators and Bookrunners at or above the minimum price calculated in accordance with Regulation 85 of the SEBI Regulations (the "Floor Price"), which for this Issue, is Rs.1,074.19; and

(d) Depository account details to which the Equity Shares should be credited.

Note: Each eligible sub account of an FII will be considered as an individual QIB and separate forms would be required from each such sub account for submitting Bids. Applications by various schemes/funds of a mutual fund will be treated as one application from such mutual fund.

6. Once the duly filled Bid cum Application Form is submitted by the QIB, the same is not permitted to be withdrawn after the Bid Closing Date. The Bid Closing Date shall be notified to the Stock Exchanges and the QIBs shall be deemed to have been given notice of such date after the receipt of the Bid cum Application Form.

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7. Upon the receipt of Bid cum Application Form, the Company in consultation with the Global Coordinators and Bookrunners, shall decide the Issue Price which shall be at or above the Floor Price and the number of Equity Shares to be issued. The Company shall notify the Stock Exchanges of the Issue Price. On determining the Issue Price and the QIBs to whom Allocation shall be made, such QIBs shall be sent the Confirmation of Allocation Note ("CAN") along with a serially numbered Placement Document either in electronic form or through physical delivery. The decision of the Company in this regard shall be at its sole and absolute discretion. The CAN shall contain details like the number of Equity Shares allocated to the QIB, the details of the amounts payable by the QIB for Allotment in its name and the Pay-In Date as applicable to the respective QIB. The dispatch of the CAN by the Company shall be deemed to constitute a binding obligation on each QIB to pay the entire Issue Price for all the Equity Shares allotted to such QIB.

8. QIBs shall make payment of the application monies to the Escrow Cash Account by the Pay-In-Date as specified in the CAN sent to the respective QIBs only through electronic transfer.

9. Upon receipt of the application monies from the QIBs, the QIP Committee of the Company will approve the Allotment pursuant to a resolution. The Company shall not allot Equity Shares to more than 49 QIBs to whom an invitation or offer has been made. The Company will inform the Stock Exchanges of the details of the Allotment.

10. After the Allotment and prior to crediting the Equity Shares into the Depository Participant accounts of the QIBs, the Company shall apply for the listing approvals of the Stock Exchanges for the Equity Shares.

11. After receipt of the in principle listing approvals of each of the Stock Exchanges, the Company shall credit the Equity Shares into the Depository Participant accounts of the QIBs in accordance with the details submitted by the QIBs in the Bid cum Application Form.

12. After such credit of the Equity Shares, the Equity Shares would be listed and admitted for trading on the Stock Exchanges.

13. The Equity Shares that have been Allotted and credited to the Depository Participant accounts of the QIBs shall be eligible for trading on the Stock Exchanges only upon the receipt of the trading permissions from the Stock Exchanges.

14. The Stock Exchanges shall notify the trading permissions, which are ordinarily available on their websites, and the Company shall communicate the receipt of the trading permissions from the Stock Exchanges to the Global Coordinators and Bookrunners. The Company and the Global Coordinators and Bookrunners shall not be responsible for any delay or non-receipt of the communication of the trading

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permissions from either of the Stock Exchanges or any loss arising from such delay or non-receipt. Upon receipt of such permission, the Company shall intimate to the Global Coordinators and Bookrunners and each of the Bidders who have been Allotted Equity Shares in the Issue.

Qualified Institutional Buyers

Only QIBs as defined in Regulation 2 (1)(zd) of the SEBI Regulations, and not otherwise excluded pursuant to Regulation 86 (1)(b) of Chapter VIII of the SEBI Regulations, are eligible to invest.

Currently, under Regulation 2 (1)(zd) of the SEBI Regulations, a QIB means:

• a mutual fund, venture capital fund and foreign venture capital investor registered with SEBI;

• a foreign institutional investor and sub-account (other than a sub-account which is a foreign corporate or foreign individual), registered with SEBI;

• a public financial institution as defined in section 4A of the Companies Act;

• a scheduled commercial bank;

• a multilateral and bilateral development financial institution;

• a state industrial development corporation;

• an insurance company registered with Insurance Regulatory and Development Authority ("IRDA");

• a provident fund with minimum corpus of Rs.250 million;

• a pension fund with minimum corpus of Rs.250 million;

• National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Central Government published in the Gazette of India; and

• Insurance funds setup and managed by army, navy or air force of the Union of India.

Please note that pursuant to amendments to the SEBI Regulations, a sub-account of an FII that is a foreign corporate or foreign individual is no longer included under the definition of a QIB.

Under Regulation 86 (1)(b) of the SEBI Regulations, no Allotment shall be made, either directly or indirectly, to any QIB who is a promoter or any person related to the promoter(s)

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of the Company. For this purpose, any QIB who has all or any of the following rights shall be deemed to be a person related to the promoters:

• rights under a shareholders’ agreement or voting agreement entered into with promoters of the Company or persons related to the promoters of the Company;

• veto rights; or

• the right to appoint a nominee director on the Board of the Company,

unless a QIB has acquired any of these rights in its capacity as a lender to the Company and such QIB does not hold any shares in the Company.

FIIs are permitted to participate through the portfolio investment scheme in this Issue.

FIIs are permitted to participate in the QIP subject to compliance with all applicable law and such that the shareholding of the FIIs does not exceed specified limits as prescribed under applicable laws in this regard.

No single FII can hold more than 10% of the post Issue paid-up capital of the Company. In respect of an FII investing in the Equity Shares on behalf of its sub accounts, the investment on behalf of each sub account shall not exceed 10% of the Company’s total issued capital or 5% of the total issued capital of the Company in case such sub account is a foreign corporate or an individual.

Currently, the aggregate FII holding in the Company cannot exceed 24% of the total issued capital of the Company.

The Company and the Global Coordinators and Bookrunners are not liable for any amendments or modification or changes in applicable laws or regulations, which may occur after this Preliminary Placement Document is filed with the Stock Exchanges. QIBs are advised to make their independent investigations and satisfy themselves that they are eligible to Bid. QIBs are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or regulation or as specified in this Preliminary Placement Document. Further, QIBs are required to satisfy themselves that their Bids would not eventually result in triggering a tender offer under the Takeover Code.

A minimum of 10% of the Equity Shares issued to QIBs must be allotted to mutual funds, provided that, if this portion or any part thereof be allotted to mutual funds remains unsubscribed, it may be allotted to other QIBs.

Note: Affiliates or associates of the Global Coordinators and Bookrunners, who are QIBs, may participate in the Issue in compliance with applicable laws.

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Application and Bidding

Bid cum Application Form

QIBs shall only use the serially numbered Bid cum Application Form supplied by the Global Coordinators and Bookrunners in either electronic form or by physical delivery for the purpose of making a Bid (including the revision thereof) in terms of this Preliminary Placement Document.

By making a Bid (including the revision thereof) for Equity Shares pursuant to the terms of this Preliminary Placement Document, each QIB will be deemed to have made the following representations and warranties and the representations, warranties and agreements made under the sections and paragraphs "Notice to Investors — Representations by Investors", "Selling Restrictions" and "Certain Transfer Restrictions" of this Preliminary Placement Document:

• The QIB confirms that it is a Qualified Institutional Buyer in terms of Regulation 2 (1)(zd) of the SEBI Regulations, have a valid and existing registration under the applicable laws in India (as applicable) and is eligible to participate in this Issue;

• The QIB confirms that it is not a Promoter and is not a person related to the Promoters, either directly or indirectly, and its Bid does not directly or indirectly represent the Promoter or Promoter group or persons related to the Promoters of the Company;

• The QIB confirms that it has no rights under a shareholders' agreement or voting agreement with the promoters or persons related to the promoters, no veto rights or right to appoint any nominee director on the Board of the Company other than that acquired in the capacity of a lender not holding any Equity Shares of the Company which shall not be deemed to be a person related to the promoters;

• The QIB has no right to withdraw its Bid after the Bid Closing Date;

• The QIB confirms that if allotted Equity Shares pursuant to the Issue, the QIB shall not, for a period of one year from Allotment, sell the Equity Shares so acquired otherwise than on the floor of any recognized stock exchange in India;

• The QIB confirms that the QIB is eligible to Bid and hold Equity Shares so allotted and together with any Equity Shares held by the QIB prior to the Issue. The QIB further confirms that the holding of the QIB, does not and shall not, exceed the level permissible as per any applicable regulations applicable to the QIB;

• The QIB confirms that the Bids would not eventually result in triggering a tender offer under the Takeover Code;

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• That to the best of its knowledge and belief together with other QIBs in the Issue that belong to the same group or are under common control, the Allotment to the QIB shall not exceed 50% of the Issue Size. For the purposes of this statement:

(a) The expression "belongs to the same group" shall be interpreted by applying the concept of "companies under the same group" as provided in sub-section (11) of Section 372 of the Companies Act; and

(b) "Control" shall have the same meaning as is assigned to it by clause (1)(c) of Regulation 2 of the Takeover Code.

• The QIBs shall not undertake any trade in the Equity Shares credited to its Depository Participant account until such time that the final listing and trading approvals for the Equity Shares are issued by the Stock Exchanges.

QIBS WOULD NEED TO PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION FORM. QIBS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, ELIGIBLE SUB-ACCOUNTS OF AN FII WOULD BE CONSIDERED AS AN INDEPENDENT QIB.

Demographic details such as address and bank account will be obtained from the Depositories as per the Depository Participant account details given above.

The submission of an Bid cum Application Form by a QIB shall be deemed a valid, binding and irrevocable offer for the QIB to pay the entire Issue Price for its share of Allotment (as indicated by the CAN) and becomes a binding contract on the QIB, upon issuance of the CAN by the Company in favor of the QIB.

Submission of Bid cum Application Form

All Bid cum Application Forms shall be duly completed with information including the name of the QIB, the price and the number of Equity Shares bid. The Bid cum Application Form shall be submitted to the Global Coordinators and Bookrunners either through electronic form or through physical delivery at any of the following addresses:

Name: Morgan Stanley India Company Private Limited Address: Forbes Building, Charanjit Rai Marg, Fort Mumbai 400 001 Contact Person: Mr Jayesh Jamsandekar Email address: [email protected] Phone: +91 22 2209 7017

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Fax: +91 22 2209 6568

or

Name: Nomura Financial Advisory & Securities India Private Limited Address: Ceejay House, Level 11, Plot F, Shivsagar Estate Dr. Annie Besant

Road Worli Mumbai – 400 018 India Contact Person: Mr Rohan Lamba Email address: [email protected] Phone: +91 22 4037 4037 Fax: +91 22 4037 4111

or

Name: IDFC Capital Limited Address: Naman Chambers, C-32, G Block, Bandra Kurla Complex, Bandra

(East), Mumbai 400 051, India Contact Person: Mr Hiren Raipancholia Email address: [email protected] Phone: +91-22-66222600 Fax: +91-22-66222501

or

Name: Collins Stewart Inga Private Limited Address: A-404, Neelam Centre, Hind Cycle Road, Worli, Mumbai 400 030,

India Contact Person: Mr. Ashwani Tandon Email address: [email protected] Phone: +91 22 2498 2919 Fax: +91 22 2498 2956

The Global Coordinators and Bookrunners shall not be required to provide any written acknowledgement of the Bid. Submission of Bid cum Application Form by a QIB shall be deemed to be a valid, binding and irrevocable offer from the QIB to pay the entire Issue Price for its shares of Allotment (as indicated by the CAN) and shall become a binding contract between the QIB and the Company upon issuance of CAN by the Company in favor of the QIB.

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Pricing and Allocation

Build up of the book

The QIBs shall submit their Bids (including the revision of thereof) through the Bid cum Application Form within the Bidding Period to the Global Coordinators and Bookrunners who shall maintain the book.

Price discovery and allocation

The Company, in consultation with the Global Coordinators and Bookrunners, shall finalize the Issue Price of the Equity Shares which shall be at or above the Floor Price.

After finalization of the Issue Price, the Company shall update this Preliminary Placement Document with the Issue details and file the final Placement Document with the Stock Exchanges.

Method of Allocation

The Company shall determine the Allocation for the purposes of sending CANs, in consultation with the Global Coordinators and Bookrunners on a discretionary basis, in compliance with Chapter VIII of the SEBI Regulations.

Bids received from the QIBs at or above the Issue Price shall be grouped together to determine the total demand. The Allocation to all such QIBs will be made at the Issue Price. Allocation shall be determined at the sole and absolute discretion of the Company in consultation with the Global Coordinators and Bookrunners to a maximum of 49 QIBs. Allocation to Mutual Funds for up to a minimum of 10% of the Issue Size shall be undertaken subject to valid Bids being received at or above the Issue Price.

THE DECISION OF THE COMPANY AND THE GLOBAL COORDINATORS AND BOOK RUNNERS IN RESPECT OF ALLOCATION SHALL BE BINDING ON ALL QIBS. QIBS MAY NOTE THAT ALLOCATION OF SHARES IS DISCRETIONARY AND QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID BIDS AT OR ABOVE THE ISSUE PRICE. NEITHER THE COMPANY NOR THE GLOBAL COORDINATORS AND BOOK RUNNERS IS OBLIGED TO ASSIGN ANY REASONS FOR SUCH NON-ALLOCATION.

Confirmation of Allocation Note ("CAN")

Based on the Bids received, the Company in consultation with the Global Coordinators and Bookrunners, in its sole and absolute discretion, decide the list of QIBs to whom the serially numbered CAN shall be sent containing details of the Equity Shares allocated to them and the details of the amounts payable by them by the Pay-In Date for Allotment of the Equity Shares in their respective names. Additionally, the CAN would include details of the bank account

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for transfer of funds to be done electronically, the Pay-In Date as well as the probable designated date ("Designated Date"), being the date of credit of the Equity Shares to the investor’s account, as applicable to the respective QIBs.

The eligible QIBs would also be sent a serially numbered Placement Document either in electronic form or by physical delivery, along with a serially numbered CAN.

The dispatch of the serially numbered Placement Document and the CAN by the QIB shall be deemed a valid, binding and irrevocable contract for the QIB to furnish all details that may be required by the Company and the Global Coordinators and Bookrunners and to pay the entire Issue Price for all the Equity Shares allocated to such QIB.

QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be allocated/allotted to them pursuant to this Issue.

Bank Account for Payment of Application Money

The Company has opened a special bank account (the "Escrow Cash Account") with Standard Chartered Bank (the "Payment Collection Bank") in terms of the arrangement between the Company, the Global Coordinators and Bookrunners and the Payment Collection Bank. The QIB will be required to deposit the entire amount payable for the Equity Shares allocated to it by the Pay-In Date as mentioned in the respective CAN.

If the payment is not made favoring the Escrow Cash Account within the time stipulated in the CAN, the Bid of the QIB and the CAN is liable to be cancelled.

In case of cancellations or default by the QIBs, the Company, in consultation with the Global Coordinators and Bookrunners, has the right to reallocate the Equity Shares at the Issue Price among existing or new QIBs at its sole and absolute discretion.

Payment Instructions

The payment of application money shall be made by the QIBs in the name of "KPTL-QIP Escrow Account" as per the payment instructions provided in the CAN.

QIBs may make payment only through electronic fund transfer.

Note: Payment of the amounts through cheques will be rejected.

Designated Date and Allotment of Equity Shares

The Company will endeavor to complete the Allotment of Equity Shares by the probable Designated Date for those QIBs who have paid subscription money as stipulated in the respective CANs. The Equity Shares will not be allotted unless the QIBs pay the Issue Price in the Escrow Cash Account as stated above.

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Equity Shares will be issued and Allotment shall be made only in the dematerialized form to the allottees. Allottees will have the option to re-materialize the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act, 1996 (the "Depositories Act").

The Company reserves the right, at its sole and absolute discretion, to cancel the Issue at any time up to Allotment without assigning any reasons whatsoever.

Following Allotment and credit of Equity Shares into the QIBs Depository Participant account, the Company would apply for the trading permissions from the Stock Exchanges.

The Payment Collection Bank shall not release the monies lying to the credit of the Escrow Cash Account to the Company until such time that the Company delivers to the Payment Collection Bank the trading permissions of the Stock Exchanges for the Equity Shares offered in this Issue.

In the event of any delay in the Allotment or credit of Equity Shares, or receipt of trading or listing approvals or cancellation of the Issue, no interest or penalty would be payable by the Company or the Global Coordinators and Bookrunners.

In the event that the Company is unable to issue and allot the Equity Shares offered in the Issue or on cancellation of the Issue, the money received from you shall be refunded to you.

Submission to SEBI

The Company shall submit the Placement Document to SEBI within 30 days of the date of Allotment for record purposes.

Other Instructions

Permanent Account Number or PAN

Each QIB should mention its Permanent Account Number (PAN) allotted under the I.T. Act. The copy of the PAN card or PAN allotment letter is required to be submitted with the Bid cum Application Form. Applications without this information will be considered incomplete and are liable to be rejected. It is to be specifically noted that applicant should not submit the GIR number instead of the PAN as the Bid cum Application Form is liable to be rejected on this ground.

KPTL's Right to Reject Bids

The Company, in consultation with the Global Coordinators and Bookrunners, may reject Bids, in part or in full, without assigning any reasons whatsoever. The decision of the Company and the Global Coordinators and Bookrunners in relation to the rejection of a Bid shall be final and binding.

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Equity Shares in dematerialized form with NSDL or CDSL

The Allotment of Equity Shares in this Issue shall be only in a de-materialized form, (i.e., not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode).

A QIB applying for Equity Shares must have at least one beneficiary account with either of the Depository Participants of NSDL or CDSL prior to making the Bid.

Allotment to a successful QIB will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the QIB.

Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with the NSDL and the CDSL. All the stock exchanges where the Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL.

The trading of the Equity Shares would be in dematerialized form only for all QIBs in the demat segment of the respective Stock Exchanges.

The Company will not be responsible or liable for the delay in the credit of Equity Shares due to errors in the Bid cum Application Form or on part of the QIBs.

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PLACEMENT AND LOCK-UP

Placement Agreement

The Global Coordinators and Bookrunners have entered into the Placement Agreement with the Company, pursuant to which the Global Coordinators and Bookrunners have agreed to place, on a reasonable efforts basis, up to such number of Equity Shares, the aggregate subscription amount of which shall be Rs.[●] million, to QIBs, pursuant to Chapter VIII of the SEBI Regulations.

The Placement Agreement contains customary representations and warranties, as well as indemnities from the Company and is subject to termination in accordance with the terms contained therein.

Applications shall be made to list the Equity Shares issued pursuant to the Issue and admit them to trading on the Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for such Equity Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which holders of the Equity Shares will be able to sell their Equity Shares.

This Preliminary Placement Document and the Placement Document has not been, and will not be, registered as a prospectus with the Registrar of Companies and, no Equity Shares will be offered in India or overseas to the public or any members of the public in India or any other class of investors, other than QIBs.

In connection with the Issue, the Global Coordinators and Bookrunners (or their respective affiliates) may, for their own accounts, enter into asset swaps, credit derivatives or other derivative transactions relating to the Equity Shares at the same time as the offer and sale of the Equity Shares, or in secondary market transactions. As a result of such transactions, the Global Coordinators and Bookrunners may hold long or short positions in such Equity Shares. These transactions may comprise a substantial portion of the Issue and no specific disclosure will be made of such positions. Affiliates of the Global Coordinators and Bookrunners may purchase Equity Shares and be allocated Equity Shares for proprietary purposes and not with a view to distribution or in connection with the issuance of P-Notes. See section titled "Offshore Derivative Instruments (P-Notes)".

Lock-up

The Company has agreed with the Global Coordinators and Bookrunners that it will not for the duration of the Lock-Up Period, without the prior written consent of the Global Coordinators and Bookrunners, directly or indirectly:

• offer, issue, contract to issue, issue or offer any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any Equity Shares or any securities convertible into or

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exercisable for Equity Shares (including, without limitation, securities convertible into or exercisable or exchangeable for Equity Shares which may be deemed to be beneficially owned), or file any registration statement under the Securities Act, with respect to any of the foregoing; or

• enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, any of the economic consequences associated with the ownership of any of the Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares (regardless of whether any of the transactions described above is to be settled by the delivery of Equity Shares or such other securities, in cash or otherwise); or

• deposit Equity Shares with any other depositary in connection with a depositary receipt facility; or

• publicly announce any intention to enter into any transaction falling within any of the above or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a issue or offer or deposit of Equity Shares in any depositary receipt facility or publicly announce any intention to enter into any transaction falling within any of the above.

The above restrictions do not apply to (a) the issuance of any Equity Shares pursuant to this Issue; and (b) any issuance, offer, sale, delivery or any other transfer or transaction of a kind referred to above of any Equity Shares under or in connection with the employee stock option scheme or any other stock incentive and other employee ownership or benefit plans including, for the avoidance of doubt, any issuance, offer, sale or any other transfer or transaction of a kind referred to above of any Equity Shares in connection with the exercise of any options or similar securities, as disclosed in this Preliminary Placement Document, and as will be disclosed in the Final Placement Document and as may exist on the date hereof, provided they have been approved by the Board.

In addition, the Company has undertaken to the Global Coordinators and Bookrunners that we will not for the duration of the JMC Lock-up Period, without the prior written consent of the Global Coordinators and Bookrunners:

• directly or indirectly, offer, lend, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any of JMC Shares or any securities convertible into or exercisable for JMC Shares or file any registration statement under the U.S. Securities Act, with respect to any of the foregoing, or

• enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, any of the economic consequences associated with the

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ownership of any of the JMC Shares or any securities convertible into or exercisable or exchangeable for JMC Shares (regardless of whether any of the transactions described above is to be settled by the delivery of JMC Shares or such other securities, in cash or otherwise), or

• deposit JMC Shares with any other depositary in connection with a depositary receipt facility, or

• publicly announce any intention to enter into any transaction falling within any of the above or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or deposit of JMC Shares in any depositary receipt facility or publicly announce any intention to enter into any transaction falling within any of the above.

The foregoing restrictions do not apply to any transaction contemplated within any of the above, provided, the post-issue equity share holding of the Company in JMC is at least 51%.

JMC has undertaken to the Global Coordinators and Bookrunners that it will not for the duration of the JMC Lock-up Period, without the prior written consent of the Global Coordinators and Bookrunners, directly or indirectly:

• offer, issue, contract to issue, issue or offer any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any JMC Shares or any securities convertible into or exercisable for JMC Shares (including, without limitation, securities convertible into or exercisable or exchangeable for JMC Shares which may be deemed to be beneficially owned), or file any registration statement under the Securities Act, with respect to any of the foregoing; or

• enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, any of the economic consequences associated with the ownership of any of the JMC Shares or any securities convertible into or exercisable or exchangeable for JMC Shares (regardless of whether any of the transactions described above is to be settled by the delivery of JMC Shares or such other securities, in cash or otherwise); or

• deposit JMC Shares with any other depositary in connection with a depositary receipt facility; or

• publicly announce any intention to enter into any transaction falling within any of the above or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a issue or offer or deposit of JMC Shares in any depositary receipt facility or publicly announce any intention to enter into any transaction falling within any of the above.

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The above restrictions do not apply to issue of capital by JMC, provided, the post-issue equity share holding of the Company in JMC is at least 51%.

The Promoters have agreed that, in relation to the Promoter Shares, during the Promoter Lock-up Period, they will not, without the prior written consent of the Global Coordinators and Bookrunners:

• directly or indirectly, offer, lend, sell, pledge, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, any Promoter Shares or any securities convertible into or exercisable for Promoter Shares or file any registration statement under the Securities Act, with respect to any of the foregoing; or

• enter into any swap or other agreement or any transaction that transfers, in whole or in part, directly or indirectly, any of the economic consequences associated with the ownership of any of the Promoter Shares or any securities convertible into or exercisable or exchangeable for Promoter Shares (regardless of whether any of the transactions described in above is to be settled by the delivery of Promoter Shares or such other securities, in cash or otherwise); or

• deposit Promoter Shares with any other depositary in connection with a depositary receipt facility; or

• publicly announce any intention to enter into any transaction falling within any of the above or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or deposit of Promoter Shares in any depositary receipt facility or publicly announce any intention to enter into any transaction falling within ay of the above.

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SELLING RESTRICTIONS

Certain Distribution and Solicitation Restrictions

The distribution of this Preliminary Placement Document and the offer, sale or delivery of the Equity Shares is restricted by law in certain jurisdictions. Persons who come into possession of this Preliminary Placement Document are advised to take legal advice with regard to any restrictions which may be applicable to them and to observe such restrictions. This Preliminary Placement Document may not be used for the purpose of an offer or sale in any circumstances in which such offer or sale is not authorized or permitted.

United States of America

The Equity Shares are being offered and sold outside of the United States in reliance on Regulation S. The Equity Shares have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.

In addition, until 40 days after the first date upon which the Equity Shares were bona fide offered to the public, an offer of the Equity Shares within the United States by a dealer may violate the registration requirements of the Securities Act.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), an offer of the Equity Shares to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to the Equity Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that an offer of Equity Shares to the public in that Relevant Member State at any time may be made:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than Euro 43,000,000 and (3) an annual net turnover of more than Euro 50,000,000, as shown in its last annual or consolidated accounts; or

(c) in any other circumstances which do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive,

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provided that no such offer of Equity Shares shall result in the requirement for the publication by the Company or any of the Placement Agents of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an "offer of the Equity Shares to the public" in relation to any Equity Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe the Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

United Kingdom

This Preliminary Placement Document is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified Investors") that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This Preliminary Placement Document and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this Preliminary Placement Document or any of its contents.

Hong Kong

The Equity Shares in this Issue have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than to "professional investors" as defined in the Securities and Futures Ordinance, or in circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32) of the Laws of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No person has issued or had in its possession for the purposes of issue, and will issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Equity Shares in this Issue which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Equity Shares in this Issue which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571) of the laws of Hong Kong and any rules made thereunder.

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Singapore

This Preliminary Placement Document has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act, Cap. 289 of Singapore (the "SFA") and accordingly, the Equity Shares may not be offered or sold, nor may the Equity Shares be the subject of an invitation for subscription or purchase, nor may the Preliminary Placement Document or any other document or material in connection with the offer or sale, or invitation for subscription or purchase of the Equity Shares be circulated or distributed, whether directly or indirectly, to any person in Singapore other than (a) to an institutional investor (as defined in Section 4A of the SFA) pursuant to Section 274 of the SFA, (b) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to an offer referred to in Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (c) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Equity Shares are acquired by persons who are relevant persons specified in Section 276 of the SFA, namely:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

the shares, debentures and units of shares and debentures of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust has acquired the Equity Shares pursuant to an offer made under Section 275 of the SFA except:

(1) to an institutional investor (under Section 274 of the SFA) or to a relevant person as defined in Section 275(2) of the SFA, or any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights or interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets and further for corporations, in accordance with the conditions specified in Section 275(1A) of the SFA;

(2) where no consideration is or will be given for the transfer;

(3) where the transfer is by operation of law; or

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(4) as specified in Section 276(7) of the SFA.

Switzerland

No Equity Shares in this Issue will be publicly offered or distributed in Switzerland. Equity Shares in this Issue shall be offered in Switzerland privately only to a select circle of investors without the use of any public means of information or advertisement. This Preliminary Placement Document does not constitute an offer prospectus within the meaning of Art. 652a of the Swiss Code of Obligations. It has not been filed with or approved by any Swiss regulatory authority or stock exchange. The Equity Shares in this Issue will not be registered in Switzerland or listed at any Swiss stock exchange. This Preliminary Placement Document may not be distributed or used in Switzerland without our prior written approval.

India

This Preliminary Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies in India and the Equity Shares will not be offered or sold directly or indirectly, to the public or any members of the public in India or any other class of investors other than QIBs.

United Arab Emirates

This Preliminary Placement Document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose.

By receiving this Preliminary Placement Document, the person or entity to whom it has been issued understands, acknowledges and agrees that this Preliminary Placement Document has not been approved by the U.A.E. Central Bank, the U.A.E. Ministry of Economy and Planning or any other authorities in the U.A.E., nor has the placement agent, if any, received authorization or licensing from the U.A.E. Central Bank, the U.A.E. Ministry of Economy and Planning or any other authorities in the United Arab Emirates to market or sell securities within the United Arab Emirates. No marketing of any financial products or services has been or will be made from within the United Arab Emirates and no subscription to any securities, products or financial services may or will be consummated within the United Arab Emirates. It should not be assumed that the placement agent, if any, is a licensed broker, dealer or investment advisor under the laws applicable in the United Arab Emirates, or that it advises individuals resident in the United Arab Emirates as to the appropriateness of investing in or purchasing or selling securities or other financial products. The interests in the Equity Shares may not be offered or sold directly or indirectly to the public in the United Arab Emirates. This does not constitute a public offer of securities in the United Arab Emirates in accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as amended) or otherwise.

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By receiving this Preliminary Placement Document, the person or entity to whom it has been issued understands, acknowledges and agrees that the Equity Shares have not been and will not be offered, sold or publicly promoted or advertised in the Dubai International Financial Centre other than in compliance with laws applicable in the Dubai International Financial Centre, governing the issue, offering or sale of securities. The Dubai Financial Services Authority has not approved this Preliminary Placement Document nor taken steps to verify the information set out in it, and has no responsibility for it.

Nothing contained in this Preliminary Placement Document is intended to constitute investment, legal, tax, accounting or other professional advice. This Preliminary Placement Document is for your information only and nothing in this Preliminary Placement Document is intended to endorse or recommend a particular course of action. You should consult with an appropriate professional for specific advice rendered on the basis of your situation.

Australia

This Preliminary Placement Document does not constitute a prospectus or other disclosure document under the Corporations Act 2001 (Cth) ("Australian Corporations Act") and does not purport to include the information required of a disclosure document under the Australian Corporations Act. This Preliminary Placement Document has not been lodged with the Australian Securities and Investments Commission ("ASIC") and no steps have been taken to lodge it as such with ASIC. Any offer in Australia of the Equity Shares in this Issue under this document may only be made to persons who are "sophisticated investors" (within the meaning of section 708(8) of the Australian Corporations Act), to "professional investors" (within the meaning of section 708(11) of the Australian Corporations Act) or otherwise pursuant to one or more exemptions under section 708 of the Australian Corporations Act so that it is lawful to offer the Offering Shares in Australia without disclosure to investors under Part 6D.2 of the Australian Corporations Act.

Any offer of Equity Shares in this Issue for on-sale that is received in Australia within 12 months after their issue by the Company under the QIP is likely to need prospectus disclosure to investors under Part 6D.2 of the Australian Corporations Act, unless such offer for on-sale in Australia is conducted in reliance on a prospectus disclosure exemption under section 708 of the Australian Corporations Act or otherwise. Any persons acquiring Equity Shares in this Issue should observe such Australian on-sale restrictions.

United Arab Emirates

This Preliminary Placement Document and the information contained herein does not constitute, and is not intended to constitute, a public offer of securities in the United Arab Emirates ("UAE") and accordingly should not be construed as such. The Equity Shares in this Issue are only being offered to a limited number of sophisticated investors in the UAE who are willing and able to conduct an independent investigation of the risks involved in an

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investment in such Equity Shares in this Issue, upon their specific request. The Equity Shares in this Issue have not been approved or licensed or registered with the UAE Central Bank or any other relevant licensing authorities or governmental agencies in the UAE and no transaction will be concluded in the UAE. This Preliminary Placement Document is for the use of the named addressee only and should not be given or shown to any other person (other than employees, agents or consultants in connection with the addressee’s consideration thereof).

Dubai International Financial Centre

This Preliminary Placement Document relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority. This document is intended for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other person. The Dubai Financial Services Authority has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The Dubai Financial Services Authority has not approved this document nor taken steps to verify the information set out in it, and has no responsibility for it. The securities to which this document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Equity Shares in this Issue offered should conduct their own due diligence on the Equity Shares in this Issue. If you do not understand the contents of this document you should consult an authorized financial adviser.

Japan

The Equity Shares in this Issue have not been and will not be registered in Japan pursuant to Section 4, Paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended, the "FIEL") in reliance upon the exemption from the registration requirements as provided for in "ha" of Section 2, Paragraph 3, Item 2 of the FIEL ("Limited Number Investor Private Placement"), and the Equity Shares in this Issue may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person residing in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or resale, directly or indirectly, in Japan or to any resident of Japan, except in accordance with the Limited Number Investor Private Placement, or otherwise except in compliance with the FIEL and other applicable laws and regulations of Japan.

Certain Transfer Restrictions

Resales of Equity Shares by QIBs, except on recognized stock exchanges, are not permitted for a period of one year from the date of allotment, pursuant to Chapter VIII of the SEBI Regulations. Because the following additional restrictions will apply, purchasers of Equity Shares are advised to consult their own legal counsel prior to making any offer, sale, resale, pledge or transfer of the Equity Shares.

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Regulation S Equity Shares

Each purchaser of the Equity Shares, by accepting delivery of this Preliminary Placement Document and those Equity Shares, will be deemed to have represented, agreed and acknowledged that:

1. It is purchasing the Equity Shares outside the United States in an offshore transaction in accordance with Regulation S under the Securities Act.

2. It is relying on this Preliminary Placement Document and not on any other information or the representation concerning the Company and the Equity Shares and none of the Company nor any other person responsible for this document or any part of it or the Global Coordinators and Bookrunners will have any liability for any such other information or representation.

3. The Company, the Global Coordinators and Bookrunners, their respective affiliates, and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements.

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INDIAN SECURITIES MARKET

The information in this section has been extracted from publicly available documents from various sources, including officially prepared materials from SEBI, the BSE and the NSE and has not been independently verified by the Company, the Trustee, the Registrar, Principal Agent, the Global Coordinators and Bookrunners or their affiliates or advisers.

The Indian Securities Market

India has a long history of organized securities trading. In 1875, the first stock exchange was established in Mumbai.

Stock Exchange Regulation

India's stock exchanges are regulated primarily by the Securities and Exchange Board of India ("SEBI"), as well as by the Government acting through the Ministry of Finance, Stock Exchange Division, under the Securities Contracts (Regulation) Act 1956 as amended ("SCRA") and the Securities Contracts (Regulation) Rules, 1957 ("SCRR"). The SCRA and the SCRR along with the rules, bye-laws and regulations of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership and the manner in which contracts are entered into, settled and enforced between members.

The Securities and Exchange Board of India Act 1992 granted powers to SEBI to regulate the Indian securities markets, including stock exchanges and other intermediaries in the capital markets, to promote and monitor self-regulatory organizations, to prohibit fraudulent and unfair trade practices and insider trading and to regulate substantial acquisitions of shares and takeovers of companies. SEBI has also issued guidelines and regulations concerning minimum disclosure requirements by public companies, rules and regulations concerning investor protection, insider trading, substantial acquisition of shares and takeovers of companies, buyback of securities, delisting of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, mutual funds, foreign institutional investors ("FIIs"), credit rating agencies and other capital market participants.

SEBI has also set up a committee for the review of Indian securities laws, which has proposed a draft Securities Bill. The draft Securities Bill, if enacted in its present form may result in a substantial revision in the laws relating to securities transactions in India. The Companies Bill, 2009 has been introduced in the Lok Sabha on August 3, 2009.

Listing

The listing of securities on recognized Indian stock exchanges is regulated by the SCRA, the SCRR and the listing agreement of the respective stock exchanges, under which the governing body of each stock exchange is empowered to suspend trading of or dealing in a listed security for breach of a company's obligations under such agreement, subject to the

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company receiving prior notice of such intent of the stock exchange and upon granting a hearing in the matter.

In the event that a suspension of a company’s securities continues for a period in excess of three months, the company may appeal to the Securities Appellate Tribunal established under the Securities and Exchange Board of India Act, 1992, as amended (the "SEBI Act") to set aside the suspension. SEBI has the power to vary or set aside the decision of stock exchange decisions in this regard. SEBI also has the power to amend such listing agreements and the bye-laws of the stock exchanges in India.

The Listing Agreements have recently been amended to provide that all listed companies other than those mentioned below will be required to ensure minimum level of public shareholding at 25% of the total number of issued shares of a class or kind for the purpose of continuous listing. However, the companies mentioned below will be required to maintain the minimum level of public shareholding at 10 % of the total number of issued shares of a class or kind for the purpose of continuous listing:

1. where the company offers or has in the past offered a particular class or kind of its shares to the public to the extent of at least 10% of the issue size in terms of Rule 19(2)(b) of the Securities Contracts (Regulations) Rules, 1957; and

2. where the number of outstanding listed shares of any class or kind of the company are two crore or more and the market capitalization of such company in respect of shares of such class or kind is Rs.10,000 million or more.

The provisions of the Securities and Exchange Board of India (Delisting of Shares) Regulations, 2009, as amended (the "Delisting Regulations") and the SCRR govern voluntary and compulsory delisting of equity shares of listed Indian companies from any of the recognized stock exchanges. A company may voluntarily delist from a stock exchange provided that (a) the securities of the company have been listed for a minimum period of three years on any recognized stock exchange, (b) the delisting has been approved by two-thirds of the public shareholders, and (c) the company, the promoter and/or the director of the company provide an exit opportunity and purchase the outstanding securities from those holders who wish to sell them at a price determined in accordance with the Delisting Regulations, provided further that the condition in (c) above may be dispensed with by SEBI if the securities remain listed on the NSE or the BSE.

In the event a company seeks to voluntarily delist from a stock exchange, it is required to provide an exit opportunity to the other shareholders (the "Delisting Offer") and seek the in-principle approval of the stock exchange. This exit opportunity involves a price discovery process known as the "book building process". A Delisting Offer can be launched by any promoter seeking to delist the securities of the company. The Delisting Offer needs to be supported by a resolution approved by the Board of Directors and a resolution approved by three-fourths of the shareholders of the listed company through a postal ballot. In addition,

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the special resolution of the shareholders can be acted upon if, and only if, the votes cast by public shareholders in favor of the proposal amount are at least two times the number of votes cast by public shareholders against it (promoters and holders of depository receipts are considered non-public shareholders). Following the approval of the shareholders, the promoter would issue a public announcement (i.e. a public notice) in relation to the Delisting Offer. The offer price shall have a floor price which shall be determined in the manner provided in the Delisting Regulations.

The Delisting Regulations and the SCRR empower the stock exchanges to delist the securities of companies on certain grounds, including if a company is incurring losses during the preceding three consecutive years and has negative net worth; the trading in the securities of the company has remained suspended for a minimum period of six months; the securities of a company have remained infrequently traded during the preceding three years; the company or any of its promoters or directors have been convicted for failure to comply with any provisions of the SEBI Act or the Depositories Act or rules and regulations made thereunder and awarded a punishment of not less than three years; or there has been failure to raise the public shareholdings within a specified time to the minimum level applicable to the company under its listing agreement. Any order for compulsory delisting can be made only after considering representations received from aggrieved persons. These guidelines also provides that in the event that the securities of a company are delisted by a stock exchange, the fair value of securities shall be determined by an independent valuer appointed by the stock exchange from a panel of experts selected by the stock exchange. If a listed company is delisted by the stock exchange, the listed company can file an appeal before the Securities Appellate Tribunal. The Delisting Regulations do not permit the listing of Shares once delisted for a period of 5 years (in a voluntary delisting) and 10 years (if the stock exchanges initiate the delisting).

Index Based Market Wide Circuit Breaker System

In order to restrict abnormal price volatility in any particular stock, SEBI has instructed stock exchanges to apply daily circuit breakers for most stocks, which do not allow transactions beyond a certain level of price volatility. An index based market-wide (equity and equity derivatives) circuit breaker system has been implemented and additionally, there are currently in place varying individual scrip-wise bands.

The index -based market-wide circuit breaker system (equity and equity derivatives) applies at three stages of the index movement, at 10%, 15% and 20%. These circuit breakers, when triggered, bring about a coordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the SENSEX of the BSE or NIFTY of the NSE, whichever is breached earlier.

The Indian stock exchanges can also exercise the power to suspend trading during periods of market volatility. Trading on Indian stock exchanges is subject to margin requirements imposed by stock exchanges that are required to be paid by stockbrokers. At the discretion of

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stock exchanges and under instructions from SEBI, stock exchanges can also impose ad hoc margins for specific stocks in the event of extreme volatility in price movements.

Disclosures under the Companies Act and Securities Regulations

Under the Companies Act 1956 ("Companies Act"), a public offering of securities in India must be made by means of a prospectus, which must contain information specified in the Companies Act and the SEBI Regulations, as amended. The prospectus must be filed with the registrar of companies having jurisdiction over the place where a company's registered office is situated. A company's directors and promoters may be subject to civil and criminal liability for misrepresentation in a prospectus. The Companies Act also sets forth procedures for the acceptance of subscriptions and the allotment of securities among subscribers and establishes maximum commission rates for the sale of securities. SEBI has issued detailed guidelines concerning disclosure by public companies and investor protection.

The ICDR Regulations permit companies to price their domestic issues of securities freely.

Public limited companies are required under the Companies Act and SEBI Regulations to prepare, file with the Registrar of Companies and circulate to their shareholders audited annual accounts which comply with the Companies Act's disclosure requirements and regulations governing their manner of presentation and which include sections pertaining to corporate governance, related party transactions and the management's discussion and analysis as required under the listing agreement. In addition, a listed company is subject to continuing disclosure requirements pursuant to the terms of its listing agreement with the relevant stock exchange. Accordingly, companies are now required to publish unaudited financial statements (subject to a limited review by the company's auditors) on a quarterly basis and are required to inform stock exchanges immediately regarding any stock price sensitive information.

The Institute of Chartered Accountants of India (the "ICAI") and SEBI have implemented changes which require Indian companies to account for deferred taxation, to consolidate their accounts with subsidiaries, to provide sector reporting, to increase their disclosure of related party transactions from April 1, 2001 and to account for investments in associated companies and joint ventures in consolidated accounts and interim financial reporting from April 1, 2002. As of April 1, 2003, accounting of intangible assets is also regulated by accounting standards set by ICAI and as of April 1, 2004 accounting standards regulate accounting for impairment of assets.

Indian Stock Exchanges

There are currently 19 stock exchanges in India. Most of the stock exchanges have their own governing board for self-regulation. A number of these exchanges had been directed by SEBI to file schemes for demutualization as a measure of moving towards greater investor protection. Vide its Order dated May 20, 2005, the SEBI has notified the BSE

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(Corporatisation and Demutualisation) Scheme, 2005. On August 29, 2005, SEBI notified the Corporatisation and Demutualisation Schemes of ten other stock exchanges.

The BSE and NSE together hold a dominant position among the stock exchanges in terms of the number of listed companies, market capitalization and trading activity.

NSE

The NSE was established by financial institutions and banks to provide nationwide, online, satellite-linked, screen-based trading facilities for market-makers and electronic clearing and settlement for securities including government securities, debentures, public sector bonds and units. The NSE was recognized as a stock exchange under the SCRA in April 1993 and commenced operations in the wholesale debt market segment in June 1994. The capital market (equities) segment commenced operations in November 1994 and operations in the derivatives segment commenced in June 2000. In February 2010, the average daily traded value of the capital market segment was Rs. 122.57 billion. As of February 2010, there were 1,461 companies trading on the NSE and the estimated market capitalization of stocks trading on the NSE was Rs. 57,553.05 billion. The NSE launched the NSE 50 index, now known as S&P CNX NIFTY, on April 22, 1996 and the Mid-cap Index on January 1, 1996. With a wide network in major metropolitan cities, screen based trading, a central monitoring system and greater transparency, the NSE has lately recorded high volumes of trading.

BSE

The BSE, the oldest stock exchange in India, was established in 1875. It has evolved over the years into its present status as the premier stock exchange of India. The BSE switched over to online trading from May 1995. As of February 28, 2010, the BSE had 1,014 members, comprising 173 individual members, 818 Indian companies and 23 foreign institutional investors. Only a member of the BSE has the right to trade in the stocks listed on the BSE. As of 28 February 2010, there were 4,970 listed companies trading on the BSE and the estimated market capitalization of stocks trading on the BSE was Rs.59035.14 billion. The average daily turnover on the BSE was Rs.41.25 billion in February 2010. Derivatives trading commenced on the BSE in 2000. The BSE has also wholesale and retail debt trading categories. Retail trading in government securities commenced in January 2003.

Internet-Based Securities Trading and Services

SEBI approved Internet trading in January 2000. Internet trading takes place through order routing systems, which route client orders to exchange trading systems for execution. Stockbrokers interested in providing this service are required to apply for permission to the relevant stock exchange and also have to comply with certain minimum conditions stipulated by the SEBI. The NSE became the first exchange to grant approval to its members for providing Internet-based trading services. Internet trading is possible on both the "equities" as well as the "derivatives" segments of the NSE and the BSE.

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Trading Hours

Trading on both the NSE and the BSE occurs from Monday through Friday, between 9:00 a.m. and 3:30 p.m. The NSE and the BSE are closed on public holidays. Pursuant to a circular dated October 23, 2009, the SEBI has permitted all the recognized stock exchanges to set their trading hours (in the cash and derivatives segments), subject to the conditions that, the trading hours are between 9 a.m. and 5 p.m. and such stock exchange has in place risk management systems and infrastructure commensurate to the trading hours.

Trading Procedure

In order to facilitate smooth transactions, in 1995, the BSE replaced its open outcry system with the BSE On-line Trading facility. This automated screen based trading system was put into practice nation-wide. This has enhanced transparency in dealings and has assisted considerably in facilitating settlement cycles and improving efficiency in back-office work.

Electronic trading was introduced in India by the NSE , which developed its technology in-house. The NSE introduced for the first time in India, fully automated screen based trading, which uses a modern, fully computerized trading system designed to offer investors across the length and breadth of the country a safe and easy way to invest. The NSE trading system, which is called the "National Exchange for Automated Trading" ("NEAT") is a fully automated screen based trading system, which adopts the principle of an order driven market. The derivatives turnover on the NSE has surpassed the equity market turnover. The turnover of derivatives on the NSE increased from Rs.23,654 million in 2000-2001 to Rs.110,104,822 million in 2008-2009.

Stock Market Indices

There is an array of indices of stock prices on the NSE. The popular indices are the S&P CNX Nifty, CNX Nifty Junior, S&P CNX Defty, S&P CNX 500, CNX Midcap and CNX 100.

The following two indices are generally used for tracking the aggregate price movements on the BSE.

• The BSE Sensitive Index, or Sensex, consists of listed shares of 30 large market capitalization companies. The companies are selected on the basis of market capitalization, liquidity and industry representation. Sensex was first compiled in 1986 with the fiscal year ended March 31, 1979 as its base year. This is the most commonly used index in India.

• The BSE 100 Index (formerly the BSE National Index) contains listed shares of 100 companies including the 30 companies in the Sensex. The BSE 100 Index was introduced in January 1989 with the fiscal year ended March 31, 1984 as its base year.

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Takeover Code

Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the Takeover Code which prescribes certain thresholds or trigger points that give rise to these obligations, as applicable. The Takeover Code is under constant review by the SEBI and was last amended in April 2010. Since the Company is an Indian listed company, the provisions of the Takeover Code will apply to acquisition of the Company's Equity Shares.

• The term "shares" is defined under the Takeover Code to mean equity shares or any other security, which entitles a person to receive shares with voting rights but does not include preference shares.

• Any acquirer (meaning a person who, directly or indirectly, acquires or agrees to acquire shares or voting rights in a company, or acquires or agrees to acquire control over a company, either by himself or with any person acting in concert with him) who acquires shares or voting rights that would entitle him to more than 5%, 10%, 14%, 54% or 74% of the shares or voting rights in a company is required to disclose the aggregate of his shareholding or voting rights in that company to the Company and to each of the stock exchanges on which the Company’s Equity Shares are listed at every such stage within two days of (i) the receipt of intimation of allotment of shares or (ii) the acquisition of shares or voting rights, as the case may be. Such company in turn is also required to disclose the same to the stock exchanges on which the Company’s Equity Shares are listed.

• A person who holds more than 15% of the shares or voting rights in any company is required to make an annual disclosure of his holdings to that company within 21 days of the financial year ending on 31 March (which in turn is required to disclose the same to each of the stock exchanges on which that company’s shares are listed). Further, any person who holds 15% or more but less than 55% or 55% or more but less than 75% of the shares or voting rights in any company is required to disclose any purchase or sale of shares aggregating 2% of the share capital of a company along with the aggregate shareholding after such acquisition or sale, to that company (which in turn is required to disclose the same to each of the stock exchanges on which the Company’s Equity Shares are listed) and to each of the stock exchanges on which the shares of the Company are listed within two days of (i) the receipt of intimation of the allotment of shares or (ii) the acquisition of shares or voting rights, as the case may be.

• Promoters or persons in control of a company are also required to make periodic disclosure of their holdings or the voting rights held by them along with persons acting in concert, in the same manner as above, annually within 21 days of the end of each financial year as well as from the record date for entitlement of dividends. The Company is also required to disclose the holdings of its promoters or persons in control

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as of March 31 of the respective year and on the record date fixed for the declaration of dividends to each of the stock exchanges on which its equity shares are listed. In addition, promoters or persons forming part of the promoter group of a company are also required to disclose to the Company the details of the shares of the Company pledged by them within 7 days of the creation, or invocation, of the pledge, as the case may be. The Company is, in turn, required to disclose the information to the stock exchanges within 7 days of receipt of such information, if during any quarter ending March, June, September and December of any year: (i) the aggregate number of pledged shares taken together with the shares already pledged during that quarter exceeds 25,000, or (ii) the aggregate total pledged shares taken together with the shares already pledged during that quarter exceeds 1% of the total shareholding or voting rights of the Company, whichever is lower.

• An acquirer who, together with persons acting in concert with him, acquires or agrees to acquire 15% or more (taken together with existing equity shares or voting rights, if any, held by it or by persons acting in concert with it) of the shares or voting rights of a company would be required to make a public announcement offering to acquire a further minimum of 20% of the shares of the Company at a price not lower than the price determined in accordance with the Takeover Code. Such offer has to be made to all public shareholders of a company (public shareholding is defined as shareholding held by persons other than the promoters) and within four working days of entering into an agreement for the acquisition of or of the decision to acquire shares or voting rights which exceed 15% or more of the voting rights in a company. A copy of the public announcement is required to be delivered on the date on which such announcement is published to SEBI, the company and the stock exchanges on which a company’s equity shares are listed.

• An acquirer who, together with persons acting in concert with him, has acquired 15%, or more, but less than 55% of the shares or voting rights in the shares of a company, cannot acquire additional shares or voting rights that would entitle him to exercise more than 5% of the voting rights (with post acquisition shareholding or voting rights not exceeding 55%) in any financial year ending on 31 March unless such acquirer makes a public announcement offering to acquire a further minimum of 20% of the shares of the company at a price not lower than the price determined in accordance with the Takeover Code.

• An acquirer who, together with persons acting in concert with him, if any, holds 55% or more but less than 75% of the shares or voting rights (or, where the company concerned obtained the initial listing of its shares by making an offer of at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the SCR Rules, less than 90 of the shares or voting rights in the company) in a company cannot acquire additional shares either by himself, or with, or through persons acting in concert, entitling him to exercise

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voting rights or voting rights unless such acquirer makes a public announcement offering to acquire a further minimum of 20% of the shares of the company at a price not lower than the price determined in accordance with the Takeover Code.

• However, such an acquirer may acquire, together with persons acting in concert with him, additional shares or voting rights that would entitle him to exercise up to 5% voting rights in a company, without making a public announcement as aforesaid if (i) the acquisition is made through open market purchase in normal segment on the stock exchange but not through bulk/block deal/negotiated deal/ preferential allotment, or the increase in the shareholding or voting rights of the acquirer is pursuant to a buyback of shares by a company; and (ii) the post acquisition shareholding of the acquirer together with persons acting in concert with him shall not increase beyond 75%

• Where an acquirer who (together with persons acting in concert) holds 55% or more, but less than 75% of the shares or voting rights (or, where the company concerned obtained initial listing of its shares by making an offer of at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the SCR Rules, less than 90% of the shares or voting rights) in the company, intends to consolidate its holdings while ensuring that the public shareholding in the target company does not fall below the minimum level permitted by the listing agreement with the stock exchanges, the acquirer may do so only through an Open Offer under the Takeover Code. Such Open Offer would be required to be made for the lesser of (i) 20% of the voting capital of the company, or (ii) such other lesser percentage of the voting capital of the company as would, assuming full subscription to the Open Offer, enable the acquirer (together with persons acting in concert), to increase the holding to the maximum level possible, i.e. up to the delisting threshold (75% or 90%, as the case may be).

• The mandatory public offer requirements prescribed by the Takeover Code have also been made applicable to acquisitions of global depositary receipts, where the holders of such global depositary receipts become entitled to exercise voting rights in any manner, on the underlying shares.

• In addition, regardless of whether there has been any acquisition of shares or voting rights in a company, an acquirer cannot directly or indirectly acquire control over a company (for example, by way of acquiring the right to appoint a majority of the directors or to control the management or the policy decisions of the company) unless such acquirer makes a public announcement offering to acquire a minimum of 20% of the shares of the company. In addition, the Takeover Code introduces the "chain principle" by which the acquisition of a holding company will obligate the acquirer to make a public offer to the shareholders of each of its subsidiary companies which is listed. However, the public announcement requirement will not apply to any change in control which takes place pursuant to a special resolution passed by way of postal ballot by shareholders. The Takeover Code sets out the contents of the required public

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announcements as well as the minimum offer price. The minimum offer price depends on whether the shares of the company are "Frequently" or "Infrequently" traded (as defined in the Takeover Code). In the case of shares which are frequently traded, the minimum offer price shall be the highest of:

(a) the negotiated price under the agreement for the acquisition of shares or voting rights in the company;

(b) the highest price paid by the acquirer or persons acting in concert with him/her for any acquisitions, including through an allotment in a public, preferential or rights issue, during the 26-week period prior to the date of the public announcement; or

(c) the average of the weekly high and low of the closing prices of the shares of the company as quoted on the stock exchange where the shares of the company are most frequently traded during the 26-week period prior to the date of the public announcement or the average of the daily high and low of the prices of the shares as quoted on the stock exchange where the shares of the company are most frequently traded during the two-week period prior to the date of the public announcement, whichever is higher.

• The Open Offer for the acquisition of a further minimum of 20% of the shares of a company has to be made by way of a public announcement which is to be made within four working days of entering into an agreement for the acquisition or the decision to acquire shares or voting rights exceeding the relevant percentages or within four working days after the decision to make any such change(s) is made which would result in acquisition of control.

• The Takeover Code provides that an acquirer who seeks to acquire any shares or voting rights which would result in the public shareholding in the target company being reduced to a level below the limit specified in the listing agreement with the stock exchange for the purpose of listing on a continuous basis, shall take the necessary steps to facilitate the compliance by the company with the relevant provisions of such listing agreement, within the time period mentioned therein. Further, the Takeover Code contains penalties for the violation of any provisions.

• The Takeover Code permits conditional offers as well as the acquisition and subsequent delisting of all shares of a company and provides specific guidelines for the gradual acquisition of shares or voting rights. Specific obligations of the acquirer and the board of directors of the target company in the offer process have also been set out.

• Pursuant to a recent amendment in the Takeover Code, the promoters or every person forming part of the promoter group is required to disclose the details of the shares of that company pledged by him to that company and invocation of pledge of shares of

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that company, within seven days of creation or invocation of such pledge. In turn, the company is required to inform the details of such invocation of pledge to the stock exchange on which its shares are listed, within seven days of receipt of the information during the quarter ending March, June, September and December of any year.

• SEBI has also recently amended the Takeover Code to provide an exemption from the regulation 10, 11 and 12 of the Takeover Code, providing for, inter alia the requirement of public announcement for acquiring 15%, 15-55% and 55-75%, as applicable, of the shares and voting rights in the company (as described in detail hereinabove) to the holders of ADRs and GDRs, unless the holders thereof become entitled to exercise the voting rights, in any manner on the underlying share or exchange such depository receipts with the underlying shares carrying voting rights.

• The general requirements to make such a public announcements do not, however, apply entirely to bailout takeovers when a promoter (i.e. a person or persons in control of the company, persons named in any offer document as promoters and certain specified corporate bodies and individuals) is taking over a financially weak company but not a "sick industrial company" pursuant to a rehabilitation scheme approved by a public financial institution or a scheduled bank. A "financially weak company" is a company which has at the end of the previous financial year accumulated losses which have resulted in the erosion of more than 50% but less than 100% of the total sum of its paid up capital and free reserves as at the beginning of the previous financial year. A "sick industrial company" is a company registered for more than five years which has at the end of any financial year accumulated losses equal to or exceeding its entire net worth.

• Acquirers making a public offer are also required to deposit a percentage of the total consideration for such offer in an escrow account. This amount will be forfeited in the event that the acquirer does not fulfill his/her obligations. The public offer provisions of the Takeover Code (subject to certain specified conditions), do not apply, inter alia, to certain specified acquisitions, including the acquisition of shares (i) by allotment in a public and rights issue subject to the fulfillment of certain conditions, (ii) pursuant to an underwriting agreement, (iii) by registered stockbrokers in the ordinary course of business on behalf of clients, (iv) in unlisted companies (unless such acquisition results in an indirect acquisition of shares in excess of 15% in a listed company), (v) pursuant to a scheme of arrangement or reconstruction including an amalgamation or demerger, under any law or regulation of India or any other country, (vi) pursuant to a scheme under Section 18 of the SICA, (vii) resulting from transfers between companies belonging to the same group of companies or between promoters of a publicly listed company and their relatives, provided the relevant conditions are complied with, (viii) through inheritance on succession, (ix) resulting from transfers by Indian venture capital funds or foreign venture capital investors registered with the SEBI, to their respective promoters or to other venture capital undertakings, (x) by companies

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controlled by the Indian Government unless such acquisition is made pursuant to a disinvestment process undertaken by the Indian Government or a State Government, (xi) pursuant to a change in control by the takeover/restoration of the management of a borrower company by a secured creditor under the terms of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (xii) by acquisition of shares by a person in exchange for equity shares received under a public offer made under the Takeover Code, and (xiii) in terms of guidelines and regulations relating to delisting of securities as specified by SEBI. The Takeover Code does not apply to acquisitions in the ordinary course of business by public financial institutions, either on their own account or as a pledgee. An application may also be filed with the SEBI seeking exemption from the requirements of the Takeover Code.

Minimum Level of Public Shareholding

All listed companies are required to ensure that their minimum level of public shareholding remains at or above 25%, however, this requirement does not apply to those companies who in the past had offered at least 10% of the issue size to the public pursuant to Rule 19(2)(b) of the SCRR, or to companies that have reached a size of 20 million or more in terms of the number of outstanding listed shares and Rs.10 billion or more in terms of market capitalization. Such listed companies are required to maintain the minimum level of public shareholding at 10% of the total number of issued shares of a class or kind for the purposes of listing. Failure to comply with this clause in the listing agreement may result in such the delisting of such listed company’s shares pursuant to the terms of the Delisting Regulations and may result in penal action being taken pursuant to the SEBI Act.

Insider Trading Regulations

The SEBI (Prohibition of Insider Trading) Regulations, 1992 (the "Insider Trading Regulations) require any person who holds more than 5% of the outstanding shares or voting rights in any listed company to disclose to the company the number of shares or voting rights held by such person on becoming such holder within two working days of:

• the receipt of intimation of allotment of shares; or

• the acquisition of the shares or voting rights, as the case may be.

On a continuous basis any person who holds more than 5% of the shares or voting rights in any listed company is required to disclose to the company the number of shares or voting rights held by such person and change in shareholding or voting rights (even if such change results in the shareholding falling below 5%) and any such change in such holding since last disclosure made, where such change exceeds 2% of the total shareholding or voting rights in the company. Such disclosure is required to be made within two working days of either: (i) the receipt of intimation of allotment of shares; or (ii) the acquisition or sale of shares or voting rights, as the case may be.

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Further, all directors and officers of a listed company are required to disclose to the company the number of shares or voting rights held and positions taken derivatives by such person in such company within two working days of becoming a director or officer of such company. All directors and officers of a listed company are also required to make periodic disclosures of their shareholding in the company as specified in the Insider Trading Regulations.

Depositories

In August 1996, the Indian Parliament enacted the Depositories Act which provides a legal framework for the establishment of depositories to record ownership details and effect transfers in electronic book -entry form. SEBI has framed the Securities and Exchange Board of India (Depositories and Participants) Regulations 1996 which provide for the formation of such depositories, the registration of participants as well as the rights and obligations of the depositories, participants, the company, the beneficial owners and the issuers. The depository system has significantly improved the operations of the Indian securities markets.

Trading of securities in book-entry form commenced in December 1996. In January 1998, SEBI notified scripts of various companies for compulsory dematerialized trading by certain categories of investors such as foreign institutional investors and other institutional investors and has also notified compulsory dematerialized trading in specified scripts for all retail investors. SEBI has subsequently significantly increased the number of scripts in which dematerialized trading is compulsory for all investors. Under the Depositories Act and guidelines issued by SEBI, the company shall give the option to subscribers/shareholders to receive the security certificates and hold securities in dematerialized form with a depositary.

However, even in the case of scripts notified for compulsory dematerialized trading, investors, other than institutional investors, may trade in and deliver physical shares on transactions outside the stock exchange where there are no requirements to report such transactions to the stock exchange and on transactions on the stock exchange involving lots of less than 500 securities.

Transfers of shares in book -entry form require both the seller and the purchaser of the Shares to establish accounts with depositary participants registered with the depositaries established under the Depositories Act. Upon delivery, the shares shall be registered in the name of the relevant depositary on the company's books and this depositary shall enter the name of the investor in its records as the beneficial owner, thus effecting the transfer of beneficial ownership. The beneficial owner shall be entitled to all rights and benefits of a shareholder and be subject to all liabilities in respect of his/her shares held by a depositary. Every person holding equity share capital of the company and whose name is entered as a beneficial owner in the records of the depository is deemed to be a member of the concerned company.

The Companies Act compulsorily provides that Indian companies making any initial public offerings of securities for or in excess of Rs.100 million should issue the securities in dematerialized form.

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DESCRIPTION OF THE EQUITY SHARES

Set forth below is certain information relating to the share capital of the Company including a brief summary of some of the provisions of the Memorandum and Articles of Association of the Company and the Companies Act relating to the rights attached to the Equity Shares.

General

The Company’s authorized share capital is Rs.350,000,000 divided into 35,000,000 Equity Shares of Rs.10 each.

Dividends

Under the Companies Act unless the Board recommends the payment of a dividend, the shareholders at a general meeting have no power to declare any dividend. Under the Company’s Articles, the Company in general meeting may, subject to Section 205 of the Companies Act declare dividends, to be paid to members according to their respective rights and interests in the profits but subject to any law of the time being in force and may fix the time for payment. The Company in general meeting may declare a lower, but not higher, dividend than that recommended by the Board. The profits of the Company, subject to any special rights relating thereto created or authorized to be created by the Memorandum or the Articles and subject to the provision of any law for the time being in force, shall be divisible among the members in proportion to the amount of capital paid-up on the Equity Shares held by them respectively. In addition, the Board may declare and pay interim dividends.

The dividends can only be paid in cash to shareholders listed on the register of shareholders on the date which is specified as the "record date" or "book closure date", and in case of unregistered transfers, where the instrument of transfer has been delivered to the Company for registration, the Company shall comply with Section 205 of the Companies Act by transferring such dividend to a special account unless the Company is authorized by the registered holder in writing to pay such dividend to the transferee mentioned in the instrument. No shareholder is entitled to a dividend while any amount is due from him to the Company either in respect of such Equity Shares or otherwise, either jointly or alone. This amount may be deducted from the interest or dividend payable to the shareholder without prejudice to any other remedy of the Company. However, once the amount is declared, there shall be no forfeiture of unclaimed dividends. Any dividend remaining unpaid or unclaimed after having been declared by the company shall be dealt with by the Company in accordance with Section 205A, 205B and 205C of the Companies Act.

Dividends must be paid by cheque or warrant sent through the post to the registered address of the member or person entitled, or in case of joint holders to that one first named in the register in respect of joint holding. Every such cheque shall be made payable to the order of the person to whom it is sent.

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Under the Companies Act, the Company may only pay a dividend in excess of 10% of paid-up capital in respect of any year out of the profits of that year after it has transferred to the reserves of the Company a percentage of its profits for that year ranging between 2.5% to 10% depending on the rate of dividend proposed to be declared in that year. The Companies Act further provides that if the profit for a year is insufficient, the dividend for that year may be declared out of the accumulated profits earned in previous years and transferred to reserves, subject to the following conditions: (i) the rate of dividend to be declared may not exceed the lesser of the average of the rates at which dividends were declared in the five years immediately preceding the year, or 10% of paid-up capital; (ii) the total amount to be drawn from the accumulated profits from previous years may not exceed an amount equivalent to 10% of paid-up capital and reserves and the amount so drawn is first to be used to set off the losses incurred in the financial year before any dividends in respect of preference or equity shares; and (iii) the balance of reserves after withdrawals must not be below 15% of paid-up capital.

Capitalization of Reserves

The Company’s Articles state that the Board of Directors of the Company may resolve that any moneys, investment or other assets forming part of the undivided profits of the Company standing to the credit of the reserve fund, including any sum transferred to such fund upon realization of capital gain on transfer of assets of the Company or any company and available for dividend or representing premium received on the issue of shares and standing to the credit of the share premium account be, subject to the provisions of Section 78 of the Companies Act, capitalized and distributed amongst such of the shareholders as would be entitled to receive the same if distributed by way of dividend and in the same proportion on the basis that they become entitled thereto as capital and that all or any part of such capitalized fund be applied on behalf of such shareholders in paying up in full either at par or at such premium as the resolution may provide, any unissued shares or debentures or debenture stock of the company which shall be distributed accordingly or in or towards payment of the uncalled liability on any issued shares or debentures or debenture stock, and that such distribution or payment shall be accepted by such shareholders in full satisfaction of their interest in the said capitalized sum.

Any issue of bonus shares would be subject to the guidelines issued by the SEBI in this regard. The relevant SEBI Regulations prescribe that no company shall, pending conversion of convertible securities, issue any shares by way of bonus unless similar benefit is extended to the holders of such convertible securities, through reservation of shares in proportion to such conversion. Further, for the issuance of such bonus shares a company should not have defaulted in the payment of interest or principal in respect of fixed deposits and interest on existing debentures or principal on redemption of such debentures. The declaration of bonus shares in lieu of dividend cannot be made. The bonus issue must be made out of free reserves built out of genuine profits or share premium account collected in cash only.

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Further, a company should have sufficient reason to believe that it has not defaulted in respect of the payment of statutory dues of the employees such as contribution to provident fund, gratuity and/or bonus.

The issuance of bonus shares must be implemented within six months from the date of approval by the board of directors or the shareholders, whichever is later.

Pre-Emptive Rights and Alteration of Share Capital

Subject to the provisions of the Companies Act, the Company, in general meeting, may increase its share capital by issuing new shares on such terms and with such rights as the Company, by action of shareholders in a general meeting, determines, which may vary from the original issue in terms of rights as to dividend, voting or otherwise in accordance with such rules and subject to such conditions as may be prescribed. In this regard, the laws require that for a company to Equity Shares in this Issue with differential voting rights the company must have had distributable profits in terms of the Companies Act for a period of three financial years and have not defaulted in filing annual accounts and annual returns for the immediately preceding three years. Whenever the capital of the company has been increased through such resolution, the directors shall comply with the provisions of Section 97 of the Companies Act.

As per Section 81 of the Companies Act, such new shares shall be offered to the persons, who at the date of the offer are holders of equity shares in the Company in proportion to the amount paid up on those shares at that date. The offer shall be made by notice specifying the number of shares offered and limiting a time, being not less than 30 days from the date of the offer within which such offer, if not accepted, will be deemed to have been declined. After such date the Board may dispose of the shares offered in respect of which no acceptance has been received, in such manner as they think most beneficial to the Company. The offer is deemed to include a right exercisable by the person concerned to renounce the shares offered to him in favor of any other person acceptable to the Board.

Under the provisions of Section 81(1A) of the Companies Act, new shares may be offered to any persons whether or not those persons include existing shareholders, in any manner whatsoever, if a special resolution to that effect is passed by the shareholders of the Company in a general meeting. Where no such special resolution is passed, if the vote cast (show of hands or on poll) in favor of the proposal contained in the resolution moved at the general meeting sanctioning the issue of such shares (including the casting vote, if any of the chairman) by members who, being entitled to do so vote in person, or where proxies are allowed by proxy, exceed the votes, if any, cast against the proposal by members so entitled and voting and the Central Government is satisfied, on an application made by the Board in that behalf that the proposal is most beneficial to the company. Notwithstanding this but subject to Section 81(3) of the Companies Act, the Company may increase its subscribed capital on exercise of an option attached to the debenture issued or loans raised by the

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Company to convert such debentures or loans into shares, or to subscribe for shares in the Company.

The Company can also alter its share capital by way of a reduction of capital subject to Sections 78, 80 and 100 to 105 of the Companies Act, or by undertaking a buy-back of shares under the prescribed SEBI Regulations and subject to the approvals and terms and conditions as prescribed under Section 77A, 77AA and 77B of the Companies Act.

The Articles of the Company provide that subject to Section 94 of the Companies Act, the Company, in a general meeting may consolidate or sub-divide its share capital, convert all or any of its fully paid-up shares into stock and reconvert that stock into fully paid-up shares of any denomination, sub-divide its shares or any of them into shares of smaller amounts than fixed by the Memorandum, so however, that in the sub-division the proportion between the amount paid and the amount, if any unpaid on each reduced share shall be the same as it was in the case of the shares from which the reduced share is derived, or cancel shares which have not been taken up by any person.

Preference Shares

Subject to Section 80 of the Companies Act, any new shares may be issued as preference shares which are or at the option of the company are liable to be redeemed, and the resolution authorizing such issue shall prescribe the manner, terms and conditions of redemption subject to the following the conditions: Under the Companies Act, the Company may issue redeemable preference shares but (i) no such shares shall be redeemed except out of profits of the Company which would otherwise be available for dividends or out of the proceeds of a fresh issue of shares made for the purposes of the redemption; (ii) no such shares shall be redeemed unless they are fully paid; (iii) the premium, if any, payable on redemption shall have been provided for out of the profits of the Company or out of the Company’s share premium account before the shares are redeemed; (iv) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there shall, out of profits which would otherwise have been available for dividends, be transferred to a reserve fund, to be called the Capital Redemption Reserve Account, a sum equal to the nominal amount of the shares redeemed; (v) subject to the provisions of Section 80 and 80A of the Companies Act, the redemption of preference shares hereunder may be effected in accordance with the terms and conditions of their issue and in the absence of any specific terms and conditions in that behalf, in such manner as the Directors may determine; and (vi) whenever the Company shall redeem any redeemable preference shares, the Company shall, within one month thereafter, give notice thereof to the Registrar of Companies as required by Section 95 of the Act. Preference shares must be redeemable before the expiry of a period of 20 years from the date of their issue.

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General Meetings of Shareholders

In accordance with Section 166 of the Companies Act, the Company must hold an Annual General Meeting of the Company (an "Annual General Meeting") each year within 15 months of the previous Annual General Meeting or within six months after the end of each accounting year, whichever is earlier, unless extended by the Registrar of Companies at the request of the Company for any special reason. Every member of the Company shall be entitled to attend every general meeting either in person or by proxy, and the auditor of the Company shall have the right to attend and to be heard at any general meeting on any part of the business which concerns him as auditor. The Board may convene an extraordinary general meeting of shareholders when necessary or at the request of a shareholder or shareholders holding in the aggregate not less than 10% of the issued paid-up capital of the Company in accordance with Section 169 of the Companies Act.

Written notices convening a meeting setting out the date, place and agenda of the meeting must be given to members at least 21 days prior to the date of the proposed meeting. A general meeting may be called after giving shorter notice if consent is received from all shareholders in the case of an Annual General Meeting, and from shareholders holding not less than 95% of the paid-up capital of the Company, in the case of any other general meeting. A document may be served by the Company on any member thereof and the notice of every meeting of the Company shall be given to every member in any manner authorized by and as provided in sections 53 and 172 of the Companies Act. The accidental omission to give notice of any meeting to or the non-receipt of any notice by the member or other person to whom it should be given shall not invalidate the proceedings at the meetings. Currently, the Company gives written notices to all members and, in addition, gives public notice of general meetings of shareholders in a daily newspaper of general circulation in Gandhinagar. General meetings are generally held in Gandhinagar.

A company intending to pass a resolution relating to matters such as, but not limited to, amendment in the objects clause of the Memorandum, buy-back of shares under the Companies Act, giving loans or extending guarantees in excess of limits prescribed under the Companies Act, and guidelines issued thereunder, is required to obtain the resolution passed by means of a postal ballot instead of transacting the business in the general meeting of the company. If the resolution is assented to by a requisite majority of shareholders by means of a postal ballot, it shall be deemed to have been duly passed at a general meeting convened in that behalf.

Voting Rights

Subject to the provisions of the Companies Act and the Articles, votes may be given either personally or by proxy, or in the case of a body corporate, a duly authorized representative under Section 187 of the Companies Act.

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At a general meeting, upon a show of hands, every member holding shares and entitled to vote and present in person has one vote. Before, or on the declaration of the result of the voting on any resolution on a show of hands, a poll may be ordered to be taken by the Chairman of the meeting by his own motion, and shall be ordered to be taken by him on a demand made in that behalf by the persons or person as may be provided by the Companies Act. This demand for a poll may be withdrawn at any time by the persons or person who made that demand. A poll demanded on any other question (not being a question relating to the election of the Chairman) shall be taken at such time not being later than forty eight hours from the time when the demand was made, as the Chairman may direct. The Chairman shall be sole judge for the validity of both a vote on a show of hands as well as a vote on a poll. The Chairman of the meeting has a casting vote.

A proxy may not vote the shares except on a poll. Ordinary resolutions may be passed by simple majority of those present and voting. Special resolutions require that the votes cast in favor of the resolution must be at least three times the votes cast against the resolution. The Companies Act provides that to amend the Articles a special resolution is required to be passed in a general meeting. Certain instances, including dissolutions, merger or consolidation of the Company, transfer of the whole or a significant part of the business of the Company to another company or taking over the whole of the business of any other company and, in any case where shareholding of public financial institutions and banks exceeds 25%, appointment of statutory auditors, require a special resolution.

A shareholder may exercise his voting rights by proxy to be given in the form required by the Articles of the Company. Any member entitled to vote at a meeting of the Company is entitled to appoint another person as his proxy to attend and vote on a poll instead of himself, but a proxy so appointed does not have the right to speak at the meeting. Every notice convening a meeting of the Company shall state that a member entitled to attend and vote at the meeting is entitled to appoint a proxy and that the proxy need not be a member of the Company. The instrument appointing a proxy is required to be lodged with the Company at least 48 hours before the time of the meeting in accordance with Schedule IX of the Companies Act as far as possible. Every member who is entitled to vote at the meeting shall be entitled from a period beginning 24 hours prior to the time fixed for the meeting and concluding at the end of the meeting, to inspect the proxies lodged at the meeting during business hours, provided that three days’ written notice is given to the Company. A shareholder may, by a single power of attorney, grant a general power of representation regarding several general meetings of shareholders. A corporate shareholder is also entitled to nominate a representative to attend and vote on its behalf at general meetings. A shareholder which is a legal entity may appoint an authorized representative who can vote in all respects as if a member both on a show of hands and a poll. However, no member shall be entitled to vote at any general meeting either personally or by proxy or as proxy for another member or be reckoned in a quorum while any call or other sum shall be due and payable to the

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Company in respect of any of the shares of such member or in respect of any shares on which the Company has or had exercised any right of lien.

Register of Shareholders and Record Dates

The Company is obliged to maintain a register of shareholders at its Registered Office in Gandhinagar. With the approval of its shareholders by way of a special resolution and with prior notice to the Registrar of Companies, Gujarat, the Company may maintain the register of shareholders at some other place in the same city. The register and index of beneficial owners maintained by a depositary under the Depositories Act is deemed to be an index of members and register and index of debenture holders. In the case of shares held in physical form, the Company registers transfers of shares on the register of shareholders upon lodgment of the share transfer form duly complete in all respects accompanied by a share certificate or, if there is no certificate, the letter of allotment in respect of shares transferred, together with duly stamped transfer forms. In respect of electronic transfers, the depository is the registered owner in the books of the Company and transfers shares by entering the name of the purchaser in its books as the beneficial owner of the shares. Every person holding securities of the company and whose name is entered as a beneficial owner in the records of the depository shall be deemed to be a member of the Company. The beneficial owner is entitled to all the rights and benefits as well as the liabilities with respect to the shares that are held by the depository. Transfer of beneficial ownership through a depository is exempt from any stamp duty but each depository participant may have its own depository charges. A transfer of shares by way of a stock transfer form attracts stamp duty at the rate of 0.25% of the transfer price.

For the purpose of determining the shareholders, the register may be closed for periods not exceeding 45 days in any one year or 30 days at any one time at such times, as the Board may deem expedient in accordance with the provisions of the Companies Act. Under the Listing Agreements of the Stock Exchanges on which the Company’s outstanding Shares are listed, the Company may, upon at least 15 days’ advance notice to such stock exchanges, set a record date and/or close the register of shareholders in order to ascertain the identity of shareholders. The trading of shares and the delivery of certificates in respect thereof may continue while the register of shareholders is closed.

Under the Companies Act, the Company is also required to maintain a register of debenture holders.

Annual Report and Financial Results

The Annual Report must be laid before the Annual General Meeting. This includes certain financial information about the Company such as the audited financial statements as of the date of closing of the financial year, a corporate governance section and management’s discussion and analysis, and is sent to the shareholders of the Company.

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Under the Companies Act, the Company must file the Annual Report with the Registrar of Companies within seven months from the close of the accounting year or within 30 days from the date of the annual general meeting, whichever is earlier. As required under the Listing Agreements with the Stock Exchanges, copies are required to be simultaneously sent to the Stock Exchanges. The Company must also publish its financial results in at least one English language daily newspaper circulating in the whole or substantially the whole of India and also in a newspaper published in the language of the region where the Registered Office of the Company is situated.

The Company files certain information on-line, including its Annual Report, six-month and quarterly financial statements and the shareholding pattern statement, in accordance with the requirements of the Listing Agreements and as may be specified by the SEBI from time to time.

Transfer of Shares

Shares held through depositories are transferred in the form of book entries or in electronic form in accordance with the regulations laid down by the SEBI. These regulations provide the regime for the functioning of the depositories and the participants and set out the manner in which the records are to be kept and maintained and the safeguards to be followed in this system. Transfers of beneficial ownerships of shares held through a depository are exempt from stamp duty. The Company has entered into an agreement for such depository services with National Securities Depository Limited and the Central Depository Services India Limited.

The SEBI requires that the Company’s Equity Shares for trading and settlement purposes be in book-entry form for all investors, except for transactions that are not made on a stock exchange and transactions that are not required to be reported to the stock exchange. The Company shall keep a book called the register of transfer in which every transfer or transmission of shares will be entered.

The shares are freely transferable, subject only to the provisions of the Companies Act, under which, if a transfer of shares contravenes the SEBI provisions or the regulations issued under it, or the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA"), or any other similar law, the Company Law Board may, on an application made by a company, a depository incorporated in India, an investor, the SEBI or other parties, direct a rectification of the register of members. If a company without sufficient cause refuses to register a transfer of shares within two months from the date on which the instrument of transfer is delivered to the company, the transferee may appeal to the Indian Company Law Board seeking to register the transfer of equity shares. The Company Law Board may, in its discretion, issue an interim order suspending the voting rights attached to the relevant equity shares before completing its investigation of the alleged contravention. Under the Companies (Second Amendment) Act, 2002, the Indian Company Law Board will be replaced with the National

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Company Law Tribunal. Further, under the Sick Industrial Companies (Special Provisions) Repeal Act, 2003, which is expected to come into force shortly, the SICA is sought to be repealed and the Board of Industrial and Financial Reconstruction, as constituted under the SICA, is to be replaced with the National Company Law Tribunal.

Pursuant to the Listing Agreements, in the event the Company has not effected the transfer of shares within one month or where the Company has failed to communicate to the transferee any valid objection to the transfer within the stipulated time period of one month, the Company is required to compensate the aggrieved party for the opportunity loss caused during the period of the delay.

The Companies Act provides that the shares or debentures of a publicly listed company shall be freely transferable. However, the Board may, subject to Section 111 of the Companies Act, at any time in their absolute and uncontrolled discretion by giving reasons decline to register shares. However, this may not be done on the grounds that the transferor is indebted to the Company on any account whatsoever. Notice of such refusal must be sent to the transferee within two months of the date on which the transfer was lodged with the company.

A transfer may also be by transmission. Subject to the provisions of the Company’s Articles, any person becoming entitled to shares in consequence of the death, lunacy, bankruptcy or insolvency of any member or by any lawful means other than by a transfer in accordance with these presents, may, with the consent of the Board, upon producing such evidence that he sustains the character in respect of which he proposes to act under the Article, or his title, as the Board thinks sufficient, be registered as a member in respect of such shares, or may, subject to the regulations as to transfer contained in the Articles, transfer such shares.

Acquisition by the Company of its own Shares

A company is prohibited from acquiring its own shares unless the consequent reduction of capital is effected by an approval of at least 75% of its shareholders, voting on the matter in accordance with the Companies Act and sanctioned by the High Court of Judicature in the city where the company’s registered office is located. Subject to certain conditions, a company is prohibited from giving, whether directly or indirectly and whether by means of a loan, guarantee, the provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person for any shares in the company or its holding company.

However, pursuant to the Companies Act by way of Section 77A, 77AA and 77B, a company has been empowered to purchase its own shares or other specified securities out of its free reserves, or the securities premium account or the proceeds of the issue of any shares or other specified securities (other than from the proceeds of an earlier issue of the same kind of shares or other specified securities proposed to be bought back) subject to certain conditions, including:

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• the buy-back should be authorized by the Articles of Association of the company;

• a special resolution has been passed in the general meeting of the company authorizing the buy-back;

• the buy-back is limited to 25% of the total paid-up capital and free reserves;

• the debt owed by the company is not more than twice the capital and free reserves after such buy-back; and

• the buy-back is in accordance with the Securities and Exchange Board of India (Buy-Back of Securities) Regulation, 1998.

The condition mentioned above in (ii) would not be applicable if the buy-back is for less than 10% of the total paid-up equity capital and free reserves of the company and provided that such buy-back has been authorized by the board of directors of the company. A company buying back its securities is required to extinguish and physically destroy the securities so bought back within seven days of the last date of completion of the buy-back. Further, a company buying back its securities is not permitted to buy back any securities for a period of one year from the buy-back and to issue securities for six months. Every buy-back must be completed within a period of one year from the date of passing of the special resolution or resolution of the Board, as the case may be.

A company is also prohibited from purchasing its own shares or specified securities through any subsidiary company, including its own subsidiary companies, or through any investment company (other than a purchase of shares in accordance with a scheme for the purchase of shares by trustees of or for shares to be held by or for the benefit of employees of the company) or if the company is defaulting on the repayment of deposit or interest, redemption of debentures or preference shares or payment of dividend to a shareholder or repayment of any term loan or interest payable thereon to any financial institution or bank, or in the event of non-compliance with certain other provisions of the Companies Act.

Liquidation Rights

Subject to the rights of creditors, of employees and of the holders of any other shares entitled by their terms of issue to preferential repayment over the shares, in the event of a winding-up of the Company, the holders of the shares are entitled to be repaid the amounts of capital paid up or credited as paid up on such shares. All surplus assets after payments due to employees, the holders of any preference shares and other creditors belong to the holders of the equity shares in proportion to the amount paid up or credited as paid up on such shares, respectively, at the commencement of the winding-up. In case assets available are insufficient to repay the whole of the paid up capital, the assets shall be so distributed such that the losses are borne to the extent possible by the shareholders in the ratio of capital contributed. In case any of the shares involve a liability to call or otherwise, any person may, within ten days after the

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passing of the resolution, by notice in writing direct the liquidators to sell his proportion and pay him the net proceeds and the liquidator shall, if practicable, act accordingly.

The division of assets on winding up, if thought expedient, may subject to the provisions of the Companies Act, be otherwise than in accordance with the legal rights of the contributories (except when unalterably fixed by the Memorandum) and in particular, any class may be given preferential or special rights which may be excluded altogether or in part but any contributory who is prejudiced by the same would have a right to dissent and possess ancillary rights as though such determination were a special resolution under Section 494 of the Companies Act.

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TAXATION

The information provided below sets out the possible tax benefits available to the shareholders in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of Equity Shares, under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the future, it may not choose to fulfill. It is not exhaustive or comprehensive and is not intended to be a substitute for professional advice. Investors are advised to consult their own tax consultant with respect to the tax implications of an investment in the Equity Shares particularly in view of the fact that certain recently enacted legislation may not have a direct legal precedent or may have a different interpretation on the benefits, which an investor can avail

The Indian Finance Minister has released the Direct Taxes Code Bill, 2009 ("DTC Bill") for public comment along with a discussion paper on August 12, 2009. The DTC Bill seeks to replace the Income Tax Act, 1961 of India, as amended (the "Income Tax Act"). The government’s intention is to make the DTC Bill effective from April 1, 2011. The DTC Bill may undergo changes upon receipt of comments and representations from various stakeholders, pursuant to which an amended DTC Bill is likely to be presented before the Indian Parliament. It is possible that the current provisions of the DTC Bill may undergo amendments based on the outcome of the public comments. Accordingly, it is currently unclear what effect the DTC Bill would have on investors in the Equity Shares.

Indian Taxation

The following is a summary of the material Indian tax consequences of owning and disposing of Equity Shares purchased in this Issue.

YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE INDIAN TAX IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF SHARES IN YOUR PARTICULAR SITUATION.

For these purposes, "Non-Resident" means a person who is not a resident in India. For purposes of the Income Tax Act, an individual is considered to be a resident of India during any financial year if he or she is in India in that year for:

(a) a period or periods amounting to 182 days or more; or

(b) a period or periods amounting to 60 days or more and within the four preceding years he/she has been in India for a period or periods amounting to 365 days or more; or

251

(c) in the case of a citizen of India who leaves India as a member of the crew of an Indian ship or for the purposes of employment outside India, the words "60 days" in paragraph (b) above shall be substituted by words "182 days"; or

(d) in the case of a citizen of India or a person of Indian origin living abroad who visits India, the words "60 days" in paragraph (b) above shall be substituted by words "182 days".

A company is resident in India if it is formed and incorporated in accordance with the Companies Act and has its registered office in India or the control and management of its affairs is situated wholly in India. A firm or other association of persons is resident in India except where the control and management of its affairs is situated wholly outside India.

The following is based on the provisions of Indian tax laws as of the date hereof, which are subject to change, possibly on a retrospective basis.

This summary is not intended to constitute a complete analysis of the Indian tax consequences to any particular Non-Resident holders. Individual tax consequences of an investment in Equity Shares may vary for Non-Residents in various circumstances, and potential investors should therefore consult their own tax advisers as to the tax consequences of such purchase, ownership and disposition under the tax laws of India, the jurisdiction of their residence and any tax treaty between India and their country of residence. The Income Tax Act is revised by the annual Finance Act every fiscal year. The provisions of the tax laws summarized below are based on the Finance Act 2009.

Taxation of Dividends

Dividends on shares received from an Indian company on which dividend distribution tax has been paid are exempt from tax in the hands of the shareholders. However, the Indian Company distributing dividends is subject to a distribution tax at the rate of 16.995%. Distributions of bonus shares and rights to subscribe for Equity Shares to Non-Residents are not a taxable event under Indian tax laws.

Income Tax Laws and Tax Treaty Benefits

The taxation of non resident in India shall be governed by the provisions of the Income Tax Act and the tax treaty between India and the jurisdiction of the Non Residents ("Tax Treaty"). As per Section 90 (2) of Income Tax Act, the provisions of Income Tax Act would apply to the extent they are more beneficial than the provisions of applicable tax treaty.

Taxation of Capital Gains

The Tax Treaty between India and countries like the U.S. and U.K. do not limit India’s ability to impose tax on capital gains. However, capital gains on the sale of Equity Shares purchased in this Issue by residents of certain other countries like Mauritius and Singapore will not be

252

taxable in India by virtue of the provisions contained in the Tax Treaty between India and these countries.

Equity Shares held by a Non-Resident investor for a period of more than 12 months shall be treated as long-term capital assets and the amount of gain on sale of such Equity Shares will be treated as long-term capital gain. If the Equity Shares are held for a period of 12 months or less than 12 months, the capital gain arising on the sale thereof is to be treated as short-term capital gain.

The amount of gain on the disposition of an equity share must be computed by converting the cost of acquisition and full value of the consideration received as a result of such disposition into the same foreign currency as was initially utilized for acquisition, and the capital gains so computed in foreign currency shall be reconverted into Rupees. In respect of securities of Indian Company, purchased in foreign currency, the cost of acquisition is not allowed to be increased on account of inflation i.e. Indexation benefit is not available in such a case.

Long-Term Capital Gains

In the event that the benefits of the Tax Treaty are not available to the Non Residents or the applicable Tax treaty permits the taxation of capital gain in India incidence of tax would be as follows:

• Long term capital gains being gains on sale of listed Indian securities held for a period of more than twelve months would not be taxable in India provided Securities Transaction Tax ("STT") has been paid on the same;

• Long term capital gains realized on sale of listed Indian securities not routed through a recognized stock exchange in India and therefore not subject to STT would be taxed at the rate of 10.56%. The rate for short term capital gains on such transactions for non resident companies is 42.23% and for FIIs is 31.67%.

• Long term capital gains on the sale of unlisted securities will be taxed at the rate of 21.12% and short term capital gains on such transaction shall be taxed at the rate of 42.23%.

Short-Term Capital Gains

• Short-term capital gains being gains on sale of listed Indian securities held for a period of twelve months or less will be taxed at the rate of 15.84% provided STT has been paid on the same;

• In the event that sale is otherwise than on a stock exchange and as a result no STT is paid, short-term gain is subject to tax at the rate of 42.23% in case of non resident company and 30.90% in case of non resident individual.

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STT

All transactions entered on a recognized stock exchange in India will be subject to STT levied on the transaction value.

Delivery based transactions

In case of purchase/sale of listed Equity Shares which is settled by way of actual delivery or transfer of the equity share, STT will be levied at the rate of 0.125% on both the buyer and seller of the equity share.

Non-delivery based transactions In case of sale of Equity Shares settled otherwise than by way of actual delivery or transfer of the equity share, STT will be levied at the rate of 0.025% on the seller of the equity share.

Taxability of STT

In case of income being treated as trading income, STT paid can be claimed as deductible expenditure in computing taxable income from business.

Characterization of the income of the Investor

It may be noted that there are contradicting judicial rulings on characterization of income of a fund regularly trading in shares and securities in India and the confusion is expected to be clarified by the revenue authorities by providing guidance for such characterization by way of a circular. Pending such clarification, in case the income of the Investor is characterized as business income and it is regarded to have a permanent establishment in India, the income could be taxed at the rate of 42.23%.

Tax Deduction at Source

Generally, tax, surcharge and education cess on the capital gain if any, are withheld at the source by the purchaser/person paying for the Equity Shares in accordance with the relevant provisions of the Income Tax Act.

Wealth Tax

No Indian wealth tax will be payable with respect to the Equity Shares.

The foregoing does not purport to be a complete analysis of the potential tax considerations relating to the Issue, and should not be construed as tax advice/opinion. Prospective investors should consult their own tax advisors as to the particular tax considerations applicable to them relating to the purchase, ownership and disposition of

254

the Equity Shares, including the applicability of the local tax laws or non-tax laws, any changes in applicable tax laws and any pending or proposed legislation or regulations.

255

INDEPENDENT ACCOUNTANTS

Our Audited Consolidated Financial Statements as of and for the year ended March 31, 2009 were prepared in accordance with Indian GAAP and which are so included in this Preliminary Placement Document in reliance on the report of Kishan M. Mehta & Co., Chartered Accountants and Deloitte Haskins & Sells, Chartered Accountants given on the authority of such firms as experts in auditing and accounting.

Our Audited Consolidated Financial Statements as of and for the two years ended March 31, 2007 and 2008 were prepared in accordance with Indian GAAP and which are so included in this Preliminary Placement Document in reliance on the report of Kishan M. Mehta & Co., Chartered Accountants given on the authority of that firm as experts in auditing and accounting.

KPTL's unaudited condensed interim financial statements as of and for the nine-month periods ended December 31, 2009 and 2008 were prepared in accordance with Indian GAAP and which are so included in reliance on the report of Kishan M. Mehta & Co., Chartered Accountants and Deloitte Haskins & Sells, Chartered Accountants given on the authority of such firms as experts in auditing and accounting.

JMC's unaudited condensed interim financial statements as of and for the nine-month periods ended December 31, 2009 and 2008 were prepared in accordance with Indian GAAP and which are so included in reliance on the report of Kishan M. Mehta & Co. and Sudhir N Doshi & Co given on the authority of such firms as experts in auditing and accounting.

SSLL's unaudited condensed interim financial statements as of and for the nine-month periods ended December 31, 2009 and 2008 were prepared in accordance with Indian GAAP and which are so included in reliance on the report of Kishan M. Mehta & Co. given on the authority of such firm as expert in auditing and accounting.

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GENERAL INFORMATION

1. Kalpataru Power Transmission Limited was incorporated under the laws of India on April 23, 1981. The Registered Office of Kalpataru Power Transmission Limited is 101, Part III, G.I.D.C. Estate, Sector -28, Gandhinagar, India and its registration number is 04-4281.

2. The Issue was authorized and approved by the Board of Directors on February 22, 2010 and approved by the shareholders through postal ballot proceedings dated April 10, 2010.

3. We shall apply for in-principle approval to list the Equity Shares on the BSE and the NSE.

4. Copies of KPTL's Memorandum and Articles of Association will be available for inspection during usual business hours on any weekday (except Saturdays and public holidays) at its Registered Office.

5. We have obtained all consents, approvals and authorizations required in connection with this Issue.

6. There has been no significant change in our financial or trading position since December 31, 2009, the date of our last published interim financial results.

7. Except as disclosed in this Preliminary Placement Document, there are no litigation or arbitration proceedings against or affecting us or our assets or revenues, nor are we aware of any pending or threatened litigation or arbitration proceedings, which are or might be material in the context of this Issue of Equity Shares.

8. Our auditors are Kishan M. Mehta & Co. and Deloitte Haskins & Sells, who have audited our Audited Consolidated Financial Statements for the year ended March 31, 2009 and have consented to the inclusion of their audit report in this Preliminary Placement Document and who have also reviewed KPTL's unaudited condensed interim financial statements for the nine-month periods ended December 31, 2009 and 2008 and have consented to the inclusion of their review report in this Preliminary Placement Document.

9. Kishan M. Mehta & Co. audited our Audited Consolidated Financial Statements for the years ended March 31, 2007 and 2008 and have consented to the inclusion of their audit reports in this Preliminary Placement Document.

10. JMC's auditors are Kishan M. Mehta & Co. and Sudhir N Doshi & Co who have reviewed JMC's unaudited condensed interim financial statements for the nine-month periods ended December 31, 2009 and 2008 and have consented to the inclusion of their review report in this Preliminary Placement Document.

257

11. SSLL's auditors are Kishan M. Mehta & Co. who have reviewed SSLL's unaudited condensed interim financial statements for the nine-month periods ended December 31, 2009 and 2008 and have consented to the inclusion of their review report in this Preliminary Placement Document.

12. The Company confirms that it is in compliance with the minimum public shareholding requirements as required under the terms of the Listing Agreements.

13. The Floor Price for the Issue is Rs.1,074.19.

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DECLARATION

All the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government or the regulations or guidelines issued by the Securities and Exchange Board of India, established under Section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Preliminary Placement Document is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or rules and regulations made or guidelines issued thereunder, as the case may be. The Company further certifies that all statements in this Preliminary Placement Document are true and correct.

Signed by:

Pankaj Sachdeva Manish Mohnot Bajrang Ramdharani Managing Director Executive Director GM-Finance & Company Secretary Kalpataru Power Transmission Limited Date: April 29, 2010 Place: Mumbai

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INDEX TO FINANCIAL STATEMENTS

Page

KPTL Audited Consolidated Financial Statements

Auditors' Report on Consolidated Financial Statements for the years ended March 31, 2007, March 31, 2008 and March 31, 2009

F-2

Audited Consolidated Balance Sheet as at March 31, 2009, 2008 and 2007 F-4

Audited Consolidated Profit and Loss Account for the years ended on March 31, 2009, 2008 and 2007 F-5

Cash Flow Statement for the years ended March 31, 2009, 2008 and 2007 F-17

Notes to the Financial Statements F-19

KPTL Reviewed Limited Condensed Unaudited Standalone Financial Statements

Review Report on the Unaudited Condensed Interim Financial Statements as at December31, 2009 and December 31, 2008 F-38

Condensed Unaudited Balance Sheet as at December 31, 2009 and 2008 F-39

Condensed Unaudited Profit and Loss Account for nine months ended on December 31, 2009 and 2008 F-40

Cash Flow Statement for the nine months ended December 31, 2009, 2008 and 2007 F-54


JMC Reviewed Limited Condensed Unaudited Standalone Financial Statements






SSLL Reviewed Limited Condensed Unaudited Standalone Financial Statements






F-2

Auditors’ Report on Consolidated Financial Statements for the years ended March 31, 2007, March 31, 2008 and March 31, 2009

To, The Board of Directors, Kalpataru Power Transmission Limited

1. We have examined the attached consolidated balance sheet of Kalpataru Power Transmission Limited (“the Company”) and its subsidiaries (collectively referred to as “the Group”) as at March 31, 2009 and the consolidated statements of profit and loss and cash flows for the year then ended and the related financial statements schedules (the “2009 consolidated financial statements”). M/s. Kishan M. Mehta & Co., Chartered Accountants, have examined the consolidated balance sheets of the Group as at March 31, 2008 and March 31, 2007 and the consolidated statements of profit and loss and cash flows for the years then ended and the related financial statements schedules (the “2008 and 2007 consolidated financial statements” and together with “2009 consolidated financial statements”, “ the Audited Consolidated Financial Statements”), all expressed in Indian Rupees to be included in the Preliminary Placement Document These Audited Consolidated Financial Statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these Audited Consolidated Financial Statements based on our examination.

2. We report that the figures disclosed in the attached Audited Consolidated Financial Statements are extracted from the annual audited consolidated financial statements of the Group as at and for the years ended March 31, 2009, March 31, 2008 and March 31, 2007, approved by the Board of Directors, regrouped wherever necessary and jointly audited by us for the year ended on March 31, 2009 and audited by M/s. Kishan M. Mehta & Co, Chartered Accountants for the years ended on March 31, 2008 and March 31, 2007, and in respect of which we have issued our audit reports dated June 1, 2009, May 28, 2008 and May 21, 2007 respectively to the Board of Directors of the Company. Accordingly any event subsequent to these dates have not been considered / adjusted for the said purpose. As stated by us in these reports, we conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

3. Financial statements / consolidated financial statements of certain subsidiaries which reflect total assets of Rs. 9879.25 million, Rs. 7030.38million and Rs. 126.53 million as at March 31, 2009, March 31, 2008 and March 31, 2007 respectively, total revenues of Rs. 13761.54 million, Rs. 9517.87million and Rs. 1.76 million for the year ended March 31, 2009, March 31, 2008 and March 31, 2007 respectively and net cash inflows / (outflows) of Rs. 21.73 million, Rs. (16.29) million and Rs.14.75 million for the year ended March 31, 2009, March 31, 2008 and March 31, 2007 respectively have been audited by one of us or one of us with another auditing firm.

4. We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets of Rs. 544.98 million, Rs. 10.58 million and Rs. 3647 million as at March 31, 2009, March 31, 2008 and March 31, 2007 respectively, total revenues of Rs. 55.29 million, Rs. 50.28 million and Rs. 5040 million for the year ended March 31, 2009, March 31, 2008 and March 31, 2007 respectively and net cash inflows / (outflows) of Rs. (0.28) million, Rs. 0.43 million and Rs. 328 million for the year ended March 31, 2009, March 31, 2008 and March 31, 2007 respectively. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us and our opinion is based solely on the reports of such other auditors.

5. We have relied on the unaudited financial statements of certain subsidiaries, whose financial statements reflect total assets of Rs. 5.98 million, Rs. NIL and Rs. NIL as at March 31, 2009, March 31, 2008 and March 31, 2007 respectively, total revenues of Rs. NIL, Rs. NILand Rs. NILfor the year ended March 31, 2009, 2008 and 2007 respectively and net cash inflows of Rs. 5.39 million, Rs. NILand Rs. NILfor the year ended March 31, 2009, March 31, 2008 and March

F-3

31, 2007 respectively. These unaudited financial statements have been furnished to us by the management and our report in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on such unaudited financial statements.

6. We report that the consolidated financial statements of the Group as at and for each of the years ended March 31, 2009, March 31, 2008 and March 31, 2007 have been prepared by the Company’s management in accordance with the requirements of Accounting Standard 21 - Consolidated Financial Statements notified by the Companies (Accounting Standards) Rules, 2006.

7. Based on our audit as conducted above and on consideration of reports of other auditors on separate financial statements and on the other financial information of the components and accounts furnished by the management and on the basis stated in paragraph 2 above, we are of the opinion that the Audited Consolidated Financial Statements give a true and fair view in conformity with the accounting principles generally accepted in India:

(i) in the case of the Consolidated Balance Sheets, of the state of affairs of the Group as at March 31, 2009, March 31, 2008 and March 31, 2007;

(ii) in the case of the Consolidated Profit and Loss Accounts, of the profit of the Group for the years ended on these dates; and

(iii) in the case of the Consolidated Cash Flows, of the cash flows of the Group for the years ended on these dates.

8. The amounts for the year ended and as at 31st March, 2009 expressed in U.S. Dollars, provided as supplementary information solely for the convenience of the reader, have been translated on the basis set forth in Note 25 of Schedule T forming part of the Audited Consolidated Financial Statements.

9. This report should not in any way be construed as a re-issuance or re-dating of any of the previous audit reports issued by us nor should this be construed as a new opinion on any of the financial statements referred to herein.

10. The attached Audited Consolidated Financial Statements have been prepared solely for the purpose of inclusion in the Placement Document being prepared for the purpose of issue of equity shares to Qualified Institutional Bidders, in accordance with Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. Our report is for the above specific purpose only and should not be used for any other purpose without our prior written consent.

For Kishan M. Mehta & Co. For Deloitte Haskins & Sells Chartered Accountants Chartered Accountants (Firm Registration No. 105229W) (Firm Registration No. 117365W)

(Kishan M. Mehta) (Gaurav J. Shah) Partner Partner Membership No. 13707 Membership No. 35701

Place: Ahmedabad Place: Ahmedabad Date: 27th April 2010 Date: 27th April 2010

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KALPATARUPOWERTRANSMISSIONLIMITED Audited Consolidated Balance Sheet as at March 31, 2009, 2008 and 2007 SCHEDULE AS AT AS AT AS AT AS AT March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions SOURCES OF FUNDS : Shareholder's Funds:

Share Capital À' 5.2 265.0 265.0 265.0 Reserves & Surplus `B' 165.7 8,433.0 7,566.4 6,177.6

170.9 8,698.0 7,831.4 6,442.6 Minority Interest 18.6 947.1 822.1 624.7 Loan Funds :

Secured Loans `C' 147.6 7,529.8 4,149.9 3,953.7 Unsecured Loans `D' 37.7 1,921.6 316.7 32.5

185.3 9,451.4 4,466.6 3,986.2 Deferred Tax 4.0 205.9 210.3 158.3

TOTAL 378.8 19,302.4 13,330.4 11,211.8

APPLICATION OF FUNDS : Goodwill on Consolidation 1.6 83.2 83.2 83.2 Fixed Assets : È'

Gross Block 138.6 7,061.8 5,474.4 3,915.0 Less: Depreciation 34.0 1,730.9 1,177.8 817.0 Net Block 104.6 5,330.9 4,296.6 3,098.0 Capital Work in Progress 22.2 1,132.7 79.9 50.7

126.8 6,463.6 4,376.5 3,148.7 Investments 'F' - 5.1 355.9 1,392.1 Current Assets,Loans & Advances :

Inventories `G' 64.2 3,269.7 2,677.5 1,890.5 Accrued value of work done 69.7 3,553.2 2,856.8 1,747.4 Sundry Debtors `H' 278.0 14,160.1 9,332.1 6,999.4 Cash & Bank Balances Ì' 11.3 582.5 1,084.6 1,367.5 Loans & Advances `J' 67.2 3,424.0 1,995.5 1,458.0

490.4 24,989.5 17,946.5 13,462.8 Less:Current Liabilities & Provisions: `K'

Current Liabilities 216.7 11,052.2 8,438.0 6,095.8 Provisions 23.5 1,203.4 1,022.6 779.7

Total Current Liabilities and Provisions 240.2 12,255.6 9,460.6 6,875.5 Net Current Assets 250.2 12,733.9 8,485.9 6,587.3 Miscellaneous Expenditure `L' 0.2 16.6 28.9 0.5

TOTAL 378.8 19,302.4 13,330.4 11,211.8

Notes to the Accounts `T'

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KALPATARUPOWERTRANSMISSIONLIMITED

Audited Consolidated Profit and Loss Account for the years ended on March 31, 2009, 2008 and 2007 March 31, March 31, March 31, March 31, SCHEDULE 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions INCOME : Sales & Services-Gross `M' 643.2 32,771.9 27,054.7 16,403.0 Less : Excise Duty 6.1 311.2 306.2 421.2 Sales & Services-Net 637.1 32,460.7 26,748.5 15,981.8 Other Income `N' 6.7 346.1 251.0 123.0 Increase / (Decrease) in Stocks Ò'

a) Transmission & Distribution Division 10.3 517.7 (110.7) 173.4 b) Construction Division (4.1) (209.4) 239.7 (0.5) c) Others (0.9) (49.5) 92.7 2.5

TOTAL 649.1 33,065.6 27,221.2 16,280.2

EXPENDITURE : Material Cost

328.0 16,712.0 13,226.7 8,212.7

Employees' Emoluments `P' 39.0 1,988.0 1,522.2 777.1 Manufacturing & operating Expenses `Q' 172.8 8,804.8 6,973.0 3,398.8 Administrative, Selling & Other Expenses `R' 37.5 1,916.5 1,954.1 1,048.0 Financial Expenses `S' 26.9 1,368.8 673.5 441.2 Depreciation 11.3 576.4 387.0 182.1 Less: Transferred to Revaluation Reserve - 0.5 0.5 0.5 11.3 575.9 386.5 181.6 TOTAL 615.5 31,366.0 24,736.0 14,059.4

PROFIT BEFORE TAX 33.6 1,699.6 2,485.2 2,220.8 Provision for Taxation :

Current Tax 7.9 401.2 610.5 538.0 Fringe Benefit Tax 0.4 19.9 17.2 17.6 DeferredTax (0.1) (4.3) 60.8 34.6

NET PROFIT FOR THE YEAR AFTER TAXES 25.4 1,282.8 1,796.7 1,630.6 Minority Interest 3.4 173.3 147.7 17.1 NET PROFIT FOR THE YEAR AFTER TAX AND AFTER MINORITY INTEREST 22.0 1,109.5 1,649.0 1,613.5 Balance brought forward 65.9 3,356.6 2,151.1 984.5 Prior Year's Adjustment - 1.3 (1.0) (0.5) Prior Year's Income tax (0.1) (4.2) - (13.5) AMOUNT AVAILABLE FOR APPROPRIATION 87.8 4,463.2 3,799.1 2,584.0 APPROPRIATIONS :

Transfer of reserves for increased holding in subsidiary companies (0.3) (15.9) - - Transfer to Debentures Redemption Reserve 0.6 30.0 - - Corporate Tax on Interim Preference Share Dividend - 0.7 2.4 - Corporate Tax on Preference Share Dividend - 0.7 1.4 - Proposed Dividend on Equity Shares 3.9 198.8 198.8 198.8 Tax on Dividend on Equity Shares 0.7 37.0 39.9 33.8 Transfer to General Reserve 2.4 120.0 200.0 200.0

Balance carried over to Balance Sheet 80.5 4,091.9 3,356.6 2,151.4 TOTAL 87.8 4,463.2 3,799.1 2,584.0

No. Of equity shares at the end of the year 26,500,000 26,500,000 26,500,000 26,500,000 Weighted No. Of equity shares at the end of period 26,500,000 26,500,000 26,500,000 24,419,060 Profit for calculation of EPS ( Rs. In million) 21.8 1,109.4 1,648.9 1,613.2 Nominal value of Equity shares (Rs.) 0.2 10.0 10.0 10.0 Basic/Diluted earning per share (Rs.) 0.8 41.9 62.2 66.1

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SCHEDULESTO AND FORMING PART OF ACCOUNTS

SCHEDULE À' SHARE CAPITAL : March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions AUTHORISED : 30,000,000 ,(30,000,000),(30,000,000)Equity Shares of Rs. 10 each 5.9 300.0 300.0 300.0 TOTAL 5.9 300.0 300.0 300.0 ISSUED, SUBSCRIBED & PAID-UP: 5.2 265.0 265.0 265.0 Out of Above - - -

a) 14,186,500, (14,186,500)shares alloteed as fully paid up Bonus shares by Capitalisation out of general reserve, capital redemption reserve and share premium A/c. and

b) 3,060,000, (3,060,000),(3,060,000) shares allotted for consideration other than cash in earlier years - - -

TOTAL 5.2 265.0 265.0 265.0

SCHEDULE `B' RESERVES AND SURPLUS: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions REVALUATION RESERVE As per last Balance Sheet 0.1 5.5 6.0 6.4 Less: Transferred from Depreciation Account - 0.5 0.5 0.5

0.1 5.0 5.5 5.9

CAPITAL REDEMPTION RESERVE As per last Balance Sheet - - - 77.5 Less :- Transfer on Capitalisation - - - 77.5 - - - - SHARE PREMIUM As per last Balance Sheet 67.6 3,444.7 3,444.7 126.1 Add : Premium on Shares - - - 3,425.1 Less : Share issue expenses - - - 75.4 Less : Transfer on Capitalisation - - - 31.1 67.6 3,444.7 3,444.7 3,444.7 FOREIGN CURRENCY TRANSLATION RESERVE As per last Balance Sheet - - 1.0 1.4 Less : Transferred to Profit & Loss A/c - - (0.4) Less : During the year (0.4) (18.7) (1.7) (0.5) (0.4) (18.7) (1.1) 0.8 Add : Deficit Transferred to General Reserve 0.4 18.7 1.1 - - - - 0.8 DEBENTURES REDEMPTION RESERVE

Transferred from Profit & Loss Account 0.6 30.0 - GENERAL RESERVE : As per last Balance Sheet 14.9 759.6 574.8 374.8 Less : Gratuity Liability - 0.1 14.1 - Less : Foreign Currency Translation Reserve Balance (0.4) (18.7) (1.1) - Add : Transfer of Exchange rate Variation - 0.5 - - Add : Transferred from Profit & Loss Account 2.4 120.0 200.0 200.0

16.9 861.4 759.6 574.8

PROFIT & LOSS:

As per profit & loss account 80.5 4,091.9 3,356.6 2,151.4 TOTAL 165.7 8,433.0 7,566.4 6,177.6

SCHEDULE `C': SECURED LOANS March 31, March 31, March 31, March 31,

2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions

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A. TERM LOAN : I) From Financial Institutions & others (a) 12.5% Non- convertible debenture redeemable in three equal annual instalments at the end of

5th, 6th and 7th year from the date of allotment i.e. from 26th December 2008. Secured by First pari passu charge on fixed assets of transmission & infrastructure division( including land and building ) of the company,( exclusive of assets charged to FI and Bank for which NOC is given for the assets of T&D and Infra division only.

15.7 800.0 - -

(b) secured by hypothecation of specific plant & machineries - - - 167.8 II) From Banks (a) Secured by way of charge over freehold land & immovable properties, specific moveable plant &

machineries financed, of Bio-mass Power Plant situated at Padampur, Dist. Sri Ganganagar, Rajasthan

1.1 58.5 88.7 118.1

(b) Term Loan from banks secured by first charge on specific Plant & Machinery financed by them. 13.2 673.2 - - (c) Secured by way of charge over immovable moveable plant & machineries of Bio-mass Power

Plant situated at Uniara,Dist.Tonk, Rajasthan and second charge on current assets of the same. 4.4 225.2 209.7 252.8

(d) Secured against all plant & machinery of Export Oriented Undertaking plant and equitable mortgage of land and building situated at Sector-25, Gandhinagar.

- - 15.0 60.0

(e) Secured by way of hypothecation of all movable fixed assets of tranmission line tower plant at sector-28 Gandhinagar on pari pasu basis along with consortium bankers for working capital facilities stated hereunder.

3.3 166.6 250.0 250.8

(f) Secured by hypothecation of specific machineries & equipments relating to transmission line tower plant at sector-28, Gandhinagar - - - 11.7

(g) Secured by hypothecation of specific movable fixed assets relating to Infrastructure Division 1.5 77.7 120.0 - (h) Secured Against Vehicles 0.7 38.2 57.4 71.3 (i) Term loan from Bank is secured by way of first charge on all the movable and immovable

assets except some of the office premices but subject to prior charges created or to be created in favour of company's bankers and assets specifically charged and second charge on some of the office premices for which first charge is with consortium banker.

- - - 70.6

(j) The term loan from bank is secured by first charge on specific Plant & Machinery - - 252.8 -

(k) Secured against Lands and Warehousing Complexes thereon hypothecation on the equipments and other fixed assets

13.4 685.0 - -

(l) Secured against hypoteciation of the Equipments 0.2 7.9 - - (m) Secured by equitable mortgage by deposit of titile deeds of Land and Structure at Thane and

Corporate Guarantee of a Group Company. (Repayable within one year Rs.56,261,500/-) 2.2 112.5 - -

55.7 2,844.8 993.6 1,003.1 B. WORKING CAPITAL FACILITIES FROM BANKS: I. Secured in favour of consortium bankers by way of hypothecation of stocks, stores & spares,

book debts & bills receivables & further secured by all movable fixed assets except charged to others as stated herein above of the factories premises & go down situated at Gandhinagar or wherever else pertaining to transmission and distribution and infrastructure division & by simple mortgage over land & building situated at Sector - 28, Gandhinagar

64.2 3,272.3 1,773.1 2,457.9

II. Secured by way of hypothecation of all Current Assets of Biomass Power Plant situated at

Padampur, Rajasthan. - - - 32.7

III. Bill discounting facility from a bank, secured by first pari-passu charge of all movable assts at

Project sites premises & godowns of the sites for execution of work under GFSS-II of Maharashtra State Electricity Distribution Co. Ltd.

4.7 240.7 481.6 -

IV. Working capital facilities are secured in favour of consortium bankers, by way of first charge

against hypothecation of stocks of construction material, consumable store and spares, Bills Receivables, Book Debts and other movables except 2nd charge on Current assets & receivables in favour of a bank for Bank Guarantee of Rs. 50 Crores provided on behalf of Joint Venture in which company is one of the member, and except first charge over machinaries and equipments financed by others for term loans and further secured by second pari-passu charge on machinaries and equipments financed by others for term loans and first charge on the office premices of the company.

20.9 1,063.3 832.0 460.0

V. From HDFC bank against pledge of Commodities - - 65.5 - VI. Overdraft fromHDFC Bank against Fixed deposit receipt 0.1 4.9 4.1 - VII. Bank against Hypothecationof stock and Book Debts movable machinery and futher secured by

Lands and Warehousing Complexes 2.0 103.8 - -

91.9 4,685.0 3,156.3 2,950.6 TOTAL 147.6 7,529.8 4,149.9 3,953.7

F-8

SCHEDULE `D' UNSECURED LOANS: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions Short Term Loan From

a) Banks 23.4 1,192.8 300.0 - b) From Directors and Relatives (Interest free Loans) Bodies Corporate - - - 4.0 c) Others 14.0 712.8 - -

Fixex Deposits [Due within one year Rs. 7.3 Million, Rs. 10.3 Million, Rs. 19.9 Miliion] 0.3 16.0 16.7 28.5 TOTAL 37.7 1,921.6 316.7 32.5

SCHEDULE È' : FIXED ASSETS

[Amount in Rs.

Millions]

PARTICULARS GROSS BLOCK DEPRECIATION NET BLOCK AS AT

ADDITIONS SALES/ADJ. AS AT AS AT

FOR THE YEAR SALES/ADJ. AS AT AS AT AS AT

01/04/2006 31/03/2007 01/04/2006 31/03/20

07 31/03/2007 31/3/2006

Leasehold Land 55.7 60.6 0.0 116.3 0.0 0.0 0.0 0.0 116.3 55.7 Freehold Land 28.1 36.2 0.0 64.4 0.0 0.0 0.0 0.0 64.4 28.1 Buildings 137.9 145.9 0.0 283.7 19.7 8.6 0.0 28.4 255.4 118.2 Office premises 38.7 0.0 2.3 36.4 1.9 0.6 0.2 2.4 34.0 36.7 Store Building & sheds 33.0 22.9 1.8 54.0 10.5 2.0 1.4 11.1 43.0 22.5 Furniture 20.9 2.8 0.6 23.1 5.6 1.6 0.4 6.8 16.3 15.3 Machinery 1,855.5 1,082.5 26.0 2,912.0 452.7 191.8 13.3 631.2 2,280.9 1,402.8 Vehicles 79.7 49.9 7.1 122.4 26.1 11.6 4.7 33.0 89.4 53.6 Heavy Vehicles 44.9 25.1 0.4 69.6 36.3 4.0 0.3 40.0 29.6 8.5 Electrical Installation 28.3 7.8 0.0 36.1 9.0 2.2 0.0 11.2 24.9 19.4 Computer & Office Equipments 111.6 86.0 0.6 196.9 38.0 15.4 0.5 53.0 143.9 73.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL : 2,434.2 1,519.6 38.8 3,915.0 599.8 237.9 20.7 817.0 3,098.0 1,834.4

PARTICULARS GROSS BLOCK DEPRECIATION NET BLOCK

AS ON 01/04/2007 ADDITION DEDUCTION AS ON 31/03/2008 UPTO THE

PREVIOUS YEAR DURING THE

YEAR RECOUPED

TOTAL 31/03/2008

AS ON 31/03/2008 AS ON

31/03/2007

Leasehold Land 116.3 1.4 0.0 117.7 0.0 0.0 0.0 0.0 117.7 116.3 Office premises 36.5 0.3 16.0 20.8 2.5 0.5 1.9 1.1 19.7 34.0 Store Building 6.0 3.9 3.1 6.8 2.7 0.3 2.1 0.9 5.9 3.4 Freehold Land 64.4 92.1 0.0 156.5 0.0 0.0 0.0 0.0 156.5 64.4 Buildings 283.7 124.8 1.7 406.8 28.4 10.8 0.0 39.2 367.6 255.4 Plant & Machineries 2,997.1 1,233.1 26.7 4,203.5 652.7 322.5 12.2 963.0 3,240.4 2,344.4 Electric Installation 36.4 10.3 0.7 46.0 11.2 3.0 0.2 13.9 32.1 25.3 Furniture,Fixtures & Office Equipments

179.4 49.9 4.3 225.0 40.0 16.9 1.7 55.2 169.9 139.4

Vehicles 122.4 51.6 8.0 165.9 32.5 23.0 5.8 49.7 116.2 89.8 Heavy Vehicles 31.4 36.1 0.0 67.5 27.6 5.2 0.0 32.8 34.7 3.8 Computer 41.3 19.1 2.5 57.9 19.5 4.8 2.3 22.0 35.9 21.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 As at 31st March '2008 3,915.0 1,622.6 63.2 5,474.4 817.0 387.0 26.2 1,177.8 4,296.6 3,098.0 As at 31st March'2007 2,434.2 1,519.6 38.8 3,915.0 599.8 237.9 20.7 817.0 3,098.0 1,834.4

F-9


AS ON 01/04/2008 #ADDITION

ADJUSTMENTS DEDUCTION AS ON 31/03/2009 UPTO THE

PREVIOUS YEAR

#DURING THE YEAR

ADJUSTMENTS RECOUPED TOTAL

31/03/2009 AS ON

31/03/2009 AS ON

31/03/2008

Leasehold Land 117.7 - - 117.7 - - - - 117.7 117.7 Office Premises 20.8 - - 20.8 1.1 0.3 - 1.4 19.4 19.7 Store Building 6.8 3.1 0.2 9.7 0.9 0.2 0.1 1.0 8.7 5.9 Freehold Land 156.5 271.6 - 428.1 - - - - 428.1 156.5 Buildings 406.8 96.4 - 503.2 39.2 13.6 - 52.8 450.4 367.6 Plant & Machineries 4,203.5 1,152.8 46.1 5,310.2 963.0 496.4 25.5 1,433.9 3,876.3 3,240.4 Electric Installation 45.9 7.6 0.2 53.3 13.9 3.7 0.1 17.5 35.7 32.0 Furniture,Fixtures & Office Equipments 225.1 54.0 2.8 276.3 55.2 23.0 1.1 77.1 199.3 170.0 Vehicles 165.9 48.1 10.6 203.4 49.7 34.3 5.3 78.7 124.7 116.2 Heavy Vehicles 67.5 - 0.5 67.0 32.8 6.1 0.5 38.4 28.6 34.7

Computer 57.9

14.4 0.4 71.9 22.0 8.1 0.2 29.9 42.0 35.9 - - - - - - - - - -

As at 31st March.'2009 5,474.4 1,648.0 60.8 7,061.6

1,177.8 585.7 32.8

1,730.7 5,330.9

4,296.6 AS at 31st March. '2009 (USD in Million) 107.4 32.3 1.2 138.6 23.1 11.5 0.6 34.0 104.6 84.3

As at 31st March'2008 3,915.0 1,622.6 63.2 5,474.4 817.0 387.0 26.2

1,177.8 4,296.6

3,098.0 During the year 2008-09 addition includes Rs.296.6 million on account of translation reserve of fixed assets as non - integral foreign operation of the company and corresponding depreciation Rs. 93.2 million in depreciation during the year.

SCHEDULE `F' INVESTMENTS: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs.

Millions Millions Millions Millions (As verified, valued and certified by management)

(A) INVESTMENT IN SHARES : Quoted-Non Trade - Long Term (each share of Rs.10 fully paid unless otherwise stated) 97 (97) (75) Equity Shares of KEC International Ltd.

- - - -

6 (6) (Nil) Equity Shares of Octav Investment Ltd. - - - - 75 (75) (75) Equity Shares of KEC Infrastructure Ltd. - - - - 750 (750) (750) Equity Shares of Jyoti Structures Ltd. (each share of Rs.2/- fully paid) - - - - Nil (Nil) (50) Equity Shares of RPG Transmission Ltd. - - - - 50 (50) (50) Equity Shares of SPIC Ltd. - - - - 50 (50) (50) Equity Shares of Larsen & Toubro Ltd. (each share of Rs.2/- fully paid) - - - - 20 (20) (20) Equity Shares of Ultratech Cement Ltd. - - - - 100 (100) (100) Equity Shares of Transpower Engineering Ltd. - - - - 19,900 (19900) (19900) Equity Shares of Bank of India - 0.9 0.9 0.9 5,200 (5200) (5200) Equity Shares of Union Bank of India - 0.1 0.1 0.1 13,960 (13960) (13960) Equity Shares of Indian Bank - 1.3 1.3 1.3 48366 (48366) (Nil) Equity Shares of Power Grid Corporation of India Ltd. - 2.5 2.5 - Unquoted - Long Term - 14476 (14476) (14476) Equity Shares of Rs. 25/- each of Nutan Nagrik Sahakari Bank Ltd.

- 0.4 0.4 0.4

(In the above list the amount against some of the script is less than Rs.0.05 million, therefore it is appearing as NIL when rounded to one decimal)

Total (A) - 5.2 5.2 2.7

(B) INVESTMENT IN MUTUAL FUND: Unquoted - Current Investment - Non Trade Units Nil (10000000) (14959356) Birla FMP-Quarterly Series-2 Quartely Dividend - - 100.0 150.0

F-10

Nil (5047240 ) (Nil) Birla Sunlife Interval Income - Instl. Monthly Series-2 Div. - - 50.5 - Nil (4750413) (Nil) Birla Dynamic Bond Fund - Retail - Quarterly Dividend - Reinvestment - - 50.0 - Nil (10019193) (Nil) Birla Sunlife Interval Income - Instl. Monthly Series-1 Div. - - 100.2 - Nil (4998151 ) (Nil) Kotak Quarterly Interval Plan Series 2 - Dividend - - 50.0 - Nil (Nil) (15587) Standard Chartered Liquidity Manager Plus Daily Dividend - - - 15.6 Nil (Nil) (30661034) DWS Insta Cash Plus Fund IP - Daily Dividend Option - - - 307.1 Nil (Nil) (28283618) LIC MF Liquid Fund - Dividend Plan - - - 310.5 Nil (Nil) (30295491) ICICI Prudential FMP Series-35 Three Month Plan-B - - - 302.9 retail dividend Nil (Nil) (30000000) Reliance Fixed Horizon Fund II Qtrly Plan-Serice II - - - 303.3 Institutional Dividend Plan

Total (B) - - 350.7 1,389.4

TOTAL COST (A+B) - 5.2 355.9 1,392.1 Less : Provision against Diminution in Value of Investments - 0.1 - - TOTAL - 5.1 355.9 1,392.1

Notes: 1. Market value of Quoted Investments 0.2 11.1 13.1 5.4 2. Book value of Quoted Investments 0.1 4.8 4.8 2.7 3. Book value of Unquoted Investments - 0.4 351.0 1,389.5 SCHEDULE `G' INVENTORIES : March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions (As verified, valued and certified by management) a) Transmission & Distribution Division: Raw Materials & Components (including goods in transit Rs.105,779,623 (Rs.39,328,398) (Rs.65,072,513) 21.3 1,084.7 823.7 829.9

Finished Goods 10.9 553.2 281.1 357.8 Semi-finished Goods 3.6 184.4 94.2 125.1 Construction & others Stores, Spares & Tools 3.7 190.1 208.5 157.7 Construction Work-in-Progress 3.5 177.4 - - Scraps 0.3 13.0 6.0 9.1 43.3 2,202.8 1,413.5 1,479.6 b)Real Estate Division: Work in Progress 0.6 30.7 - - Finished Stock 0.1 6.7 6.7 7.3 0.7 37.4 6.7 7.3 c) Bio-Mass Energy Division Fuel-Agricultural Residues 1.6 81.9 41.1 35.0 Stores, Spares & Tools 0.4 19.2 18.1 12.8 2.0 101.1 59.2 47.8 d) Construction Construction Materials, Stores & Spares 13.0 663.9 678.4 178.8 Finished goods 0.1 3.3 - - Work in Progress 2.9 145.3 355.4 113.0 16.0 812.5 1,033.8 291.8

F-11

e) Infrastructure Division Construction Material,Stores,Spares & Tools (Including goods in transit Rs.7,646,337/-, NIL/-, 764,914/-)

1.1 58.3 57.7 48.0

1.1 58.3 57.7 48.0 f) Others Agro Commodities 1.1 57.2 106.6 13.3 Stores & Consumables - 0.4 - - Finished & Semi Finished Goods - - - 2.7 1.1 57.6 106.6 16.0 TOTAL 64.2 3,269.7 2,677.5 1,890.5

SCHEDULE `H' SUNDRY DEBTORS : March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions (Unsecured & considered good unless otherwise stated) Debts outstanding for a period exceeding six months (excluding retention money) 79.9 4,066.1 511.6 534.2 79.9 4,066.1 511.6 534.2 Other debts (including retention money wholly Rs.3,394.3 Million, Rs. 2,847.5 Million Rs. 1,919.6 Million) 198.1 10,094.0 8,820.5 6,465.2 TOTAL 278.0 14,160.1 9,332.1 6,999.4

SCHEDULE Ì' : CASH AND BANK BALANCES: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions Cash in hand 0.4 20.3 21.8 12.7 Cheques in hand/Transit - - 55.3 24.0 Balance with Scheduled Banks

On Current Accounts 1.9 97.7 347.5 326.4 On Deposit Accounts (Margin Money having lien by bankers) - 2.0 35.5 120.9 FDR With Bank pledged for Overdraft facility 0.2 10.9 10.6 - On Deposit Account 1.3 67.4 613.9 883.5

Balances with non-Scheduled Banks (includs under lien of bank 7.5 384.2 - - Rs.389.25 Lacs - (NIL) (NIL)(NIL) TOTAL 11.3 582.5 1,084.6 1,367.5

SCHEDULE `J' : LOANS AND ADVANCES: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions (Unsecured and considered good unless otherwise stated) Advances recoverable in cash or in kind or for value to be received

31.5 1,598.2 1,300.7 1,027.6

Advance Income Tax 2.1 109.4 80.3 36.7 VAT / Sales Tax /Entry Tax (Net-off provision) 1.5 78.4 36.6 - Other Current Assets 0.9 46.7 20.4 6.3 Accrued Income 0.5 27.1 6.0 5.4 Prepaid Expenses 6.4 327.7 304.4 171.1

F-12

Joint Ventures - Aggrawal JMC Joint Venture 0.6 29.1 7.9 - Security / Margin Deposits 9.2 469.8 161.7 175.9 Margin Money with Shrest Commodity - - - - Advance against Property - - - - Advance for Land & Property 14.5 737.6 77.5 35.0 TOTAL 67.2 3,424.0 1,995.5 1,458.0

SCHEDULE `K' : CURRENT LIABILITIES & PROVISIONS: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions CURRENT LIABILITIES :

Sundry Creditors 101.5 5,176.7 3,617.5 2,497.9 Unclaimed Matured Fixed Deposits - 0.3 0.7 0.4 Unclaimed FD Interest - 0.1 - - Unclaimed Share Application Money - - - 0.2 Acceptances/Bills Payable 1.0 51.2 - - Advances from customers 64.3 3,279.6 3,053.2 2,453.7 Other Liabilities 30.5 1,553.7 1,243.4 807.1 Payables under letter of Credit 17.7 901.1 458.7 329.2 Interest accrued but not due 0.1 5.6 9.1 7.3

VAT / Sales Tax Payable/TDS/Service tax liablity 1.6 81.9 53.7 - Unclaimed Dividend - 2.0 1.7 - (No amount is due for payment to Investor Equcation & Protection Fund) - 216.7 11,052.2 8,438.0 6,095.8 PROVISIONS FOR :

Proposed Dividend on Equity Shares 3.9 198.8 198.8 198.7 Proposed Dividend on Preference Shares - - - - Corporate Tax on Proposed Dividend 0.8 40.6 41.3 33.8 Taxes and Duties - - - 33.0 Current Taxation (Net of Advance Tax) - 1.6 0.3 53.7 Fringe Benefit Tax (Net of Advance Tax) - 0.3 0.2 - Leave Encashment 1.1 57.9 42.6 18.0 Gratuity 0.7 36.5 21.6 - Performance Warranties / Defect Liability Expenses 17.0 867.7 672.4 442.5

Outstanding Contracts for options - - 45.4 - 23.5 1,203.4 1,022.6 779.7 TOTAL 240.2 12,255.6 9,460.6 6,875.5

SCHEDULE `L': MISCELLANEOUS EXPENDITURE: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions (to the extent not written off or adjusted) Preliminary Expenses Carrying amount at the begining - - 0.7 1.0 Less :-Amortised during the year - - 0.5 0.5 - - 0.2 0.5 Pre - Operative Expenses - 0.6 1.1 -

F-13

Employee Compensation (ESOP) 0.5 27.6 33.1 - Less : Amortised during the year (0.1) (3.3) (5.5) - Less : Reversed during the year (0.2) (8.3) - - TOTAL 0.2 16.6 28.9 0.5 SCHEDULE `M': SALES & SERVICES: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions Sales, Erection & Works Contract Receipts

Transmission & Distribution Division 331.3 16,877.8 15,332.9 13,681.7 Real Estate Division - 0.6 5.6 1.3 Bio-Mass Energy Division 9.3 476.3 366.5 275.4 Infrastructure Division 33.8 1,719.8 1,827.4 1,465.4 Mining Product 0.6 29.7 34.9 2.2 Construction Division 256.9 13,089.9 9,149.8 976.7 Trading of Commodity 10.6 540.0 293.4 -

642.5 32,734.1 27,010.5 16,402.7 Warehousing Charges 0.2 11.1 10.1 0.3 Equipment Hire Charges - 0.6 - - Excise Duty / Jcci Refund & Rebate 0.3 17.7 31.1 - Material Processing Charges - - 0.4 - Service Provider Fees 0.2 8.4 2.6 - Exchange Rate Variation (Net) - - - - TOTAL 643.2 32,771.9 27,054.7 16,403.0

SCHEDULE `N': OTHER INCOME: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions Profit on Sale of fixed assets - 1.6 3.6 0.9 Share of Profit in JV 0.6 29.7 9.1 - Miscellaneous Income 0.9 43.5 16.4 9.2 Rent Received - 1.5 - - Certified Emission Reduction Receipts 1.1 57.8 9.0 8.5 Dividend from Current Investment 0.1 7.3 61.1 64.5 Dividend from Long Term Investment - 0.4 0.2 0.1 Vatav - Kasar - 0.5 1.5 - Bad Debts Recovered - - 0.4 - Liabilities Written Back 0.4 19.4 21.7 2.2 Insurance Claims 0.4 22.2 34.8 6.6 Interest Income (Gross) 3.2 162.2 93.2 31.0 (TDS.Rs. 13.13 Million, Rs.21.46 Million, Rs.7.6 Million) TOTAL 6.7 346.1 251.0 123.0

SCHEDULE Ò': INCREASE (DECREASE) IN STOCKS March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs.

F-14

Millions Millions Millions Millions a) Transmission & Distribution Division: STOCK AT CLOSE :

Finished Goods 10.9 553.2 281.1 357.8 Semi-finished Goods 3.6 184.4 94.2 125.1 Work in Progress 3.0 153.7 - - Scrap 0.2 7.7 6.0 9.1

17.7 899.0 381.3 492.0 STOCK AT COMMENCEMENT :

Finished Goods 5.5 281.1 357.8 205.8 Semi-finished Goods 1.8 94.2 125.1 92.3 Scrap 0.1 6.0 9.1 20.5

7.4 381.3 492.0 318.6 10.3 517.7 (110.7) 173.4

b) Construction Division: STOCK AT CLOSE :

Finished Goods - - - 7.4 Semi-finished Goods 2.9 146.0 355.4 -


Finished Goods - - - 7.9 Semi-finished Goods 7.0 355.4 115.7 -

7.0 355.4 115.7 7.9 (4.1) (209.4) 239.7 (0.5)

c) Other STOCK AT CLOSE :

Finished Goods 1.3 63.8 113.4 2.5 Semi-finished Goods - - - -


Finished Goods 2.2 113.3 20.7 - Semi-finished Goods - - -

2.2 113.3 20.7 - (0.9) (49.5) 92.7 2.5

TOTAL 5.3 258.8 221.7 175.4

SCHEDULE `P': EMPLOYEES EMOLUMENTS: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions Salaries, Wages, Bonus 34.0 1,733.1 1,312.2 696.5 Contribution to Providend & Other Funds (includes social security 2.5 127.1 97.1 33.4 and other benefits for overseas employees) - Employees Compensation (Net of Write Back) 0.1 5.9 5.5 - Employees' Welfare Expenses 2.4 121.9 107.4 47.2 TOTAL 39.0 1,988.0 1,522.2 777.1

SCHEDULE `Q': MANUFACTURING & OPERATING EXPENSES: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs.

F-15

Millions Millions Millions Millions Erection & Sub-contracting Exp. 71.8 3,660.2 3,349.6 2,767.5 Job charges 2.1 104.8 74.9 64.6 Power & Fuel 1.3 66.1 52.4 88.5 Repairs & Maintenance: - - - -

Plant & Machinery 9.5 485.2 381.3 16.1 Building and Others 0.3 15.2 10.9 10.5 Other 0.1 2.9 4.4 -

Work Charges 44.7 2,277.6 1,536.4 157.8 Composite Work Charges 22.9 1,166.3 778.3 - Electricity Chareges 1.2 60.4 41.3 - Security Expenses 0.9 47.1 31.9 3.9 Freight & Forwarding Expenses 4.6 236.1 231.0 166.1 Stores, Spares and Tools Consumed 1.6 83.6 66.2 62.2 Vehicle/ Equipment Running & Hire Charges 6.2 315.6 230.7 30.7 Testing Expenses 0.3 13.1 14.5 3.9 Pollution Control Expense 0.1 4.7 3.8 3.3 Other Operating Expenses 5.2 265.9 165.4 23.7 Pre-operative direct Expenses 0.3 17.4 - - - - - - Less : Transfer to Work In Progress (0.3) (17.4) - - - TOTAL 172.8 8,804.8 6,973.0 3,398.8

SCHEDULE `R': ADMINISTRATIVE, SELLING & OTHER EXPENSES: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions Insurance Charges 2.7 137.3 140.9 106.3 Vehicles Maintenance Charges 0.4 22.4 19.5 2.6 Rent 2.6 130.0 88.6 49.7 Rent Warehouses and Godown - - - - Rates & Taxes 0.1 5.3 9.1 13.6 Stationery,Printing & Drawing Expenses 0.6 29.4 27.7 15.0 Advertisement Expenses - 1.1 2.9 - Business Development Expenses - - - - Security Expenses - - - - Telecommunication Expenses 0.9 43.8 38.3 21.7 Travelling Expenses 2.5 127.5 101.7 58.5 Legal & Professional Expenses 1.4 72.7 72.6 81.5 Conveyance Expenses 0.3 15.5 10.2 4.3 Service Charges 0.8 39.2 45.5 37.6 Audit Fees 0.1 6.8 4.6 2.1 General Expenses 0.8 38.6 27.0 27.2 Office Expenses 0.3 14.0 6.7 1.8 Preliminary Exp. Written Off - 0.8 0.5 0.7 Miscellaneous Expenses 2.0 103.2 153.1 55.5 Charity & Donation - - - - Share issue expenses - 0.7 0.9 - Computer Expenses 0.2 8.6 7.4 - Taxes, Duties & Cess 11.3 573.7 453.6 198.9 Selling Expenses 0.4 22.2 17.4 0.2 Training Expenses - 2.3 3.3 -

F-16

Sundry Expenses - - - - Loss on sale of assets - 0.8 10.3 3.2 Bad Debts Written Off - 0.5 51.0 2.9 Loss on Investments ( Share of loss in JV firm ) 0.3 14.7 1.2 0.7 Balances Written Off - 1.2 4.6 1.8 Performance Warranties / Defect Liability Expenses 5.2 265.5 273.6 226.9 Loss by Theft/Damage/Fire 0.2 11.8 10.8 2.8 Service Tax 2.9 149.2 307.8 136.8 Exchange Rate Variation 1.5 77.7 16.7 (4.9) Carbon Credit Expenses - 0.6 0.9 0.6 Loss on Outstanding Contracts for options - - 45.4 - Foreign currency Transt.Expenses - - 0.3 - Provision for Diminution in value of Investments - 0.1 - - - - - Less : Transfer to Work In Progress - (0.7) - - TOTAL 37.5 1,916.5 1,954.1 1,048.0

SCHEDULE `S': FINANCIAL EXPENSES: March 31, March 31, March 31, March 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions Interest On Term Loans 2.7 137.2 77.2 54.7 Others 15.3 782.0 408.2 229.5 Bank Commission & Charges 3.6 184.2 149.4 141.6 Other Financial Expenses 0.9 45.9 38.7 13.2 22.5 1,149.3 673.5 439.0 Add : Exchange rate variation 4.6 232.1 - 2.2 Less : Transfer to Work In Progress (0.2) (12.6) - - TOTAL 26.9 1,368.8 673.5 441.2

F-17

KALPATARU POWER TRANSMISSION LTD.

CASH FLOW STATEMENT MARCH 31, MARCH 31, MARCH 31, MARCH 31, 2009 2009 2008 2007 USD Rs. Rs. Rs. Millions Millions Millions Millions A CASH FLOW FROM OPERATING ACTIVITIES:

Net profit before taxation, and extraordinary items 33.4 1,699.6 2,485.0 2,220.5 Adjustments for :

Depreciation 11.3 575.9 386.5 181.6 Interest Paid 18.0 919.2 485.5 284.2 Dividend Received (0.2) (7.7) (61.3) (64.6) Interest Received (3.2) (162.2) (93.3) (31.0) Amortisation of Preliminary and Share Issue Expenses - 0.8 0.5 0.5 Provision for Diminution in Investment - 0.1 - - Loss (-) Profit on sale of assets - (0.8) 6.7 2.3 Foreign Currency Translation Difference (0.4) (18.7) (2.0) (0.5) Gratuity Liability - (0.2) - - Transfer of Exchange Rate Difference - 0.5 - - Bad Debts Written Off - - - 2.9 Loss from Investments - - - 0.7

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 58.9 3,006.5 3,207.6 2,596.6

Adjustment for:

Trade and other Receivables (136.5) (6,952.9) (3,942.9) (3,175.2) Inventories (11.6) (592.2) (787.0) (495.4) Margin Deposits with Banks 1.4 72.1 74.7 61.9 Trade Payables 54.9 2,799.2 2,516.2 1,300.4

CASH GENERATED FROM / (USED IN) OPERATIONS (32.9) (1,667.3) 1,068.6 288.3

Income Tax Paid (8.3) (421.2) (627.7) (555.6)

Prior Year's Adjustment (0.1) (2.8) (1.0) (14.0)

CASH FLOW BEFORE EXTRAORDINARY ITEMS (41.3) (2,091.3) 439.9 (281.3)

NET CASH FLOW FROM / (USED IN) OPERATING ACTIVITIES (41.3) (2,091.3) 439.9 (281.3)

B. CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of fixed assets (52.8) (2,691.4) (1,651.8) (868.5) Sale of fixed assets 0.6 28.8 30.3 1.6 Investments in Shares - - (2.5) (1.3) Investment in Mutual Funds 6.9 350.7 1,038.8 (1,389.5) Investment in Subsidiaries - - - (504.0)

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Loans to Subsidiary and Others - - - (232.1) Interest Received on Loans & Deposits 3.2 162.2 93.3 31.0 Dividend Received 0.2 7.7 61.3 64.6 Deposits with Banks 10.7 546.5 269.6 (882.4) Preliminary & Pre-Operative Expenses 0.2 11.5 (28.9) (0.2) Adjustment of appropriation 0.3 15.9 - -

CASH FROM / (USED IN) INVESTING ACTIVITIES (30.7) (1,568.1) (189.9) (3,780.8)

C. CASH FLOW FROM FINANCING ACTIVITIES:

Change in Minority Interest (0.9) (48.3) 49.7 3,417.2 Share Application Money - - - 25.0 Proceeds from Term Borrowings 36.3 1,851.2 (9.5) 15.4 Repayment of Term Loan - - - (164.4) Working Capital Finance 30.0 1,528.8 205.7 1,154.8 Proceeds from Unsecured Loan 31.5 1,604.8 284.3 (27.4) Interest Paid (18.1) (922.7) (483.7) (282.6) Dividend Paid (3.9) (198.8) (198.8) (108.6) Corporate Dividend Tax (0.8) (39.1) (36.2) (15.2)

CASH FROM / (USED IN) FINANCING ACTIVITIES 74.1 3,775.9 (188.5) 4,014.2

D NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT 2.1 116.5 61.5 (47.9)

E. Opening Cash and Cash Equivalent 8.3 424.6 363.1 411.0

F. Closing Cash and Cash Equivalent 9.9 502.2 424.6 363.1

F-19

SCHEDULE `T’: NOTES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED ON 31st March, 2009, 31st March 2008 and 31st March 2007.

1. Significant Accounting Policies:

A. Basis of Preparation:

The Consolidated financial statements of Kalpataru Power Transmission Limited, (the Parent) and its subsidiaries collectively referred as (“the Group") are prepared in accordance with relevant accounting standards under the historical cost convention, except as stated in note C (i). The accounts have been prepared on accrual basis of accountancy in accordance with the accounting principles generally accepted in India.

B. Principles of Consolidation:

The financial statements of the subsidiary companies used in the consolidation are drawn upto the same reporting date as of the parent.

The consolidated financial statements have been prepared on the following basis:

(i) The financial statements of the parent and its subsidiaries have been combined on line-by-line basis by adding together, like items of assets, liabilities, income and expenses. Inter-company balances and transactions and unrealized profits or losses have been fully eliminated.

(ii) Interest in two jointly controlled entities have been reported by not using proportionate consolidation and the share of the profit/loss only from joint venture entities has been accounted for, for the reason, as explained in Note No. 6 (ii) of these accounts.

(iii) The excess of cost to the parent of its investments in subsidiary companies over its share of the equity of the subsidiary companies at the dates, on which the investments in the subsidiary companies are made, is recognized as “Goodwill” being an asset in the consolidated financial statements.

(iv) Minority interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the date on which investments are made by the parent in the subsidiary companies.

(v) During the year ended March 31, 2007, income and expenditure of subsidiaries from the date they became subsidiaries have been combined with that of the Company by taking the same on proportionate period basis from immediately available profit and loss account of preceding period i.e. from December 31, 2006 to March 31, 2007 in case of subsidiary, JMC Projects (India) Limited and from January 23, 2007, being the date of commencement of business to March 31, 2007 in case of subsidiary Shree Shubham Logistics Limited.

C. Fixed Assets:

(i) Fixed assets are stated at cost of acquisition/construction/revalued amount less accumulated depreciation less impairment losses if any.

(ii) Cost is inclusive of all identifiable expenditure incurred to bring the assets to their working condition for their intended use. When an asset is demolished, disposed off, destroyed the cost and related depreciations are removed from the books of accounts and the resultant profit or loss, is reflected in the profit & loss Account. Direct cost as well as related incidental expenses incurred on assets that are not yet ready for their intended use or not put to use as on the balance sheet date are stated as Capital Work In Progress.

D. Depreciation:

Depreciation is provided on the basis of straight-line method on all depreciable fixed assets at

F-20

the rate prescribed in Schedule –XIV of the Companies Act, 1956, on prorata basis except:

(i) Depreciation pertaining to assets of Research & Development Centre, export oriented unit, mining and quarries and operating leases are provided on the basis of written down value method.

(ii) Depreciation in bio-mass energy plants are provided on plant and machinery at a higher rate at 7.5% instead of the prescribed rate for continuous process plant considering the useful life of plant supported by technical evaluation and report.

(iii) In case of revalued assets the difference between the depreciation based on revaluation and the depreciation charged on historical cost is recouped out of revaluation reserve.

(iv) Depreciation on overseas projects assets is provided at the rates as per the requirement of law of respective foreign countries and as per such rates, depreciation provided in each overseas project is higher than the depreciation at prescribed rates under Schedule-XIV of the companies Act, 1956.

(v) During the year ended March 31, 2008 and 2009, deprecation on all the vehicles in the Group is provided at a higher rate at 15% instead of the prescribed rate, considering the useful life of vehicle based on technical evaluation of the management.

(vi) During the year ended March 31, 2009, considering the useful life based on technical evaluation by the management, higher rate than the prescribed rates are applied on a few shuttering items of machineries at 30%, office equipments at 12.5%, on all vehicles at 15% and remaining plant & machineries which are acquired on or after 1st October, 2005 at 12.5%.

(vii) During the year ended March 31, 2007 and 2008, certain plant & Machineries acquired on or after 1st October, 2005 are depreciated at the rate of 12.5%, considering the useful life of Plant & Machinery based on technical evaluation.

E. Revenue Recognition:

(i) Transmission & Distribution:

Sales are recognized on delivery of materials. Sales include excise duty and export benefits being Duty Entitlement Pass book credits but exclude Sales Tax.

Erection and Works Contract revenue for work completed are recognized on percentage of completion method based on completion of physical proportion of the contract work. When it is probable that total contract cost will exceed the total contract revenue, the expected loss is recognized immediately.

(ii) Real Estate:

Revenue is recognized at the time of transfer of significant risks and rewards of ownership to the buyer on executing agreement for sale and estimated cost of completion against Sales recognized, wherever applicable, is provided for in profit and loss account. Advances received against booking of units are appearing as current liabilities.

(iii) Bio-mass Energy:

Revenue is recognized on supply of electricity generated to the customer.

(iv) Infrastructure:

Revenue is recognized by adding the aggregate cost and proportionate margin using the percentage completion method. Percentage of completion is determined as a proportion of cost incurred to date to the total estimated contract cost.

F-21

(v) Construction:

Running Account Bills for work completed are recognized on percentage of completion method based on completion of physical proportion of the contract work. Income on account of claims and extra item work is recognized to the extent Group expects reasonable certainty about receipts or acceptance from the client. When it is probable that total contract cost will exceed the total contract revenue, the expected loss is recognized immediately.

(vi) Warehousing:

(a) Revenue from Warehousing facility under arrangement with National Collateral Management Services Limited (NCMSL) is recognized as per warehouse utilization by customers at prescribed rates by National Commodity & Derivatives Exchange Limited (NCDEX), on the basis of 60% of revenue earned through NCMSL in terms of the agreement of Group with them, on the basis of details of warehouse charges earned by them from the Warehouses of the Group as franchisee.

(b) Revenue from cold storage and other warehousing facility other than (vi)(a) above is recognized mainly as per prevailing rules and regulations of local mandi / market, for storage of commodities. However at the end of the year revenue, if any, remain to be booked is accounted for as accrued income under the accrual system of accounting.

(vii) Other income:

(a) Dividends are recorded when the right to receive payment is established.

(b) Interest income is recognized on time proportion basis.

F. Inventories:

(i) Transmission & Distribution:

Raw materials, semi-finished goods, finished goods, scraps, construction work in progress and construction and other store spare & tools and trading goods are stated at lower of cost and net realizable value. The cost of inventories is computed on FIFO basis.

(ii) Real Estate:

Finished and semi finished inventory are stated at lower of cost and net realisable value. Cost is computed on average cost basis which includes payments made against agreement to purchase land, development cost direct and attributable towards the specific real estate project and cost of borrowings as stated in note 1 L.

(iii) Biomass Energy:

Fuel and stores, spares & tools are stated at lower of cost and net realizable value. The cost of fuel is computed on weighted average basis and stores, spares & tools are computed on FIFO basis.

(iv) Infrastructure:

Construction material and stores, spares & tools are valued at lower of cost or net realizable value. The cost is computed on FIFO basis.

(v) Construction:

Construction material, stores and spares are valued at lower of cost or net realisable value. Cost includes cost of purchase and other expenses incurred in bringing inventory to their respective present location and condition. Cost is determined using FIFO

F-22

method of inventory valuation.

Work in process is valued at lower of cost and net realizable value. In case where work is completed but Running Account bill can not be raised on client due to contractual conditions, the work in progress is valued at contract rates.

(vi) Warehousing:

Trading goods are stated at lower of cost and net realizable value. The cost of inventories is computed on FIFO basis.

G. Investments:

Long term Investments are stated at cost after deducting the provision for diminution in value, if any, other than of a temporary nature. Current investments are stated at lower of cost or fair value.

H. Retirement Benefits:

(i) Gratuity liability is provided under a defined benefit plan, under Group Gratuity Cash Accumulation Scheme of the Life Insurance Corporation of India under irrevocable trust. The Group’s liability towards gratuity is determined on the basis of actuarial valuation done by an independent actuary.

(ii) Contributions to Provident Fund and Superannuation Fund and other defined contribution plan are charged to the Profit & Loss Account.

(iii) Provision for leave encashment liability is made on Actuarial valuation as at the balance sheet date.

(iv) All other short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

I. Excise/Custom Duty:

The liability for excise and custom duty in respect of materials lying in factory/bonded premises is accounted for as and when they are cleared/debonded.

J. Deferred Revenue Expenses:

Preliminary expenses incurred till March 31, 2003 are amortized over a period of five years and incurred after March 31, 2003 are charged to revenue.

K. Foreign Currency Transactions:

Translation of overseas jobs / branches of a non-integral foreign operation are translated: -

(i) Assets and liabilities at rates prevailing at the end of the year,

(ii) Income and expenses at the average rate for the year, and

(iii) Resulting exchange differences is accumulated in foreign currency translation reserve account.

In respect of foreign currency option contracts which are entered into hedge, the cost of these contracts, if any, is expensed cover the period of the contract. Any profit or loss arising on settlement or cancellation of currency options is recognized as income or expenses for the period in which settlement or cancellation takes place.

During the year ended on March 31, 2008 and 2009, transactions in foreign currency are

F-23

accounted for at the exchange rate prevailing on the date of transactions. Assets and liabilities, remaining unsettled at the end of the year are translated at the exchange rate prevailing at the end of the year and difference is adjusted to respective accounts in profit & loss account. The exchange gain or loss between forward exchange contract rate and exchange rate at the date of transaction are recognized in profit and loss account over the life of the contract.

During the year ended March 31, 2007, transactions in foreign currency are accounted for at the exchange rate prevailing on the date of transactions. Assets and liabilities except liabilities for acquisition of fixed assets, remaining unsettled at the end of the year are translated at the exchange rate prevailing at the end of the year and difference is adjusted to respective accounts in profit & loss account. In respect of liabilities incurred for acquisition of fixed assets, the year-end outstanding are translated at the year end rate of exchange and the difference is adjusted to the carrying cost of those fixed assets. The exchange gain or loss between forward exchange contract rate and exchange rate at the date of transaction are recognized in profit and loss account over the life of the contract.

L. Borrowing Cost:


M. Impairment of assets:

The carrying amount of assets is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the assets is estimated. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating units exceeds its recoverable amount. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and recognized in compliance with AS-28.

N. Taxes on Income:

(i) Tax on income for the current period is determined on the basis of estimated taxable income and tax credit computed in accordance with the provisions of the Income Tax Act, 1961.

(ii) Deferred tax is recognized on timing difference between the accounting income and the estimated taxable income for the period and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

(iii) Deferred tax assets which arise mainly on account of unabsorbed losses or unabsorbed depreciation are recognized and carried forward only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.

O. Commodity Hedging:

In order to hedge risk on purchases of material exposed to commodity price risk, the Group enters into forward contracts in future market. The Group does not enter into such hedging contracts or transactions for speculative purposes. The hedging transactions are used only for the purpose to manage exposure to commodity price risks. The income and gain/loss arising on this account are recorded at the time of settlement /cancellation whether during the year or succeeding year and are adjusted as part of cost of the respective material.

P. Accounting for Project Mobilization expenses:

Expenditure incurred on mobilization and creation of facilities for site is written off in proportion to work done at respective sites so as to absorb such expenditure during the tenure of the contract.

F-24

Q. Use of Estimates:

The presentation of financial statements requires certain estimates and assumptions. These estimates and assumptions affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known /materialized.

R. Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and that probability requires an outflow of resources.


2. Particulars of subsidiaries:

Name of the Subsidiaries With Effect From

Country of Incorporation

Percentage of voting

power as at March 31,

2009



2008



2007

Subsidiaries (held directly)

JMC Projects (India) Limited 06.02.2007 India 53.02% 52.19% 52.19%

Energylink (India) Limited 30.01.2007 India 100.00% 100.00% 100.00%


19.03.2007 India 80.00% 75.00% 64.91%

Amber Real Estate Limited 16.05.2008 India 100.00% - -

Kalpataru Power Trasmission (Nigeria) Limited

19.05.2008 Nigeria 100.00% - -

Kalpataru Power Transmission (Mauritius) Limited

08.01.2009 Mauritius 100.00% - -

Kalpataru SA (Pty) Limited 03.09.2008 South Africa 74.90% - -

Subsidiaries (held Indirectly)

JMC Mining & Quarries Limited, a subsidiary of JMC Projects ( India ) Limited

06.02.2007 India 53.02% 52.19% 52.19%

As At March 31, 2009

(US $ in Million)


(Rs. in Million )


(Rs. in Million )


(Rs. in Million)

3. Contingent Liabilities in respect of: (i) Bank guarantees 3.2 165.1 56.7 23.3 (ii) Claims against Group not

acknowledged as debt (Refer Note below)

3.9 197.9 155.6 94.6

(iii) Bonds/Undertaking given by Group for concessional duty/exemption to customs

4.4 222.6 350.0 350.0

(iv) Service tax/Entry Tax/Sales Tax/Royalty/ Stamps duty disputed 4.1 207.3 131.5 157.0 (v) Benefit of countervailing duty 0.2 5.7 5.7 5.7 under Custom Law disputed by the

department

F-25

(vi) Penalty for delayed payment of Service tax disputed before Appellate authority already stayed unconditionally

0.2 12.0 12.0 12.0

(vii) Guarantees/Letter of Comfort given in respect of loans provided to Subsidiary Company

2.5 126.1 215.1 15.1

(viii) Corporate Guarantee given to banks and others

16.7 851.5 - -

(ix) Guarantee given in respect of performance of contracts of Joint Ventures entities in which one of the subsidiary is one of the member.

27.9 1421.9 1788.1 -

Note: In case where the Group has raised claims on clients against which counter claims have been raised by clients, the excess of counter claims raised by the client over the amount of claims raised by Group are only considered in the above figures.

Total of contingent liabilities 63.1 3210.1 2714.7 657.7 4. The estimated amount of contracts

remaining to be executed on capital account not provided for :

33.2 1690.4 509.0 99.0

5. Payment to Managerial Personnel of the Group:

Salary 0.7 37.3 28.4 18.8 Contribution to Provident Fund 0.1 3.4 2.5 1.8 Commission 1.1 57.9 105.6 105.4

TOTAL 1.9 98.6 136.5 126.0

6. Joint Ventures

(i) The Group has entered into consortium Joint Venture named JMC-Associated JV, JMC-Tantia JV, JMC-Taher Ali JV, JMC- PPPL JV, JMC-MSKE JV, GIL-JMC JV under work sharing arrangement. The revenue for work done is accounted in accordance with the accounting policy followed by the Group as that of independent contractor to the extent work is executed.

(ii) In respect of contracts executed in Joint Ventures entities, the services rendered to the Joint Venture entities are accounted as income for the work done. The share of profit / loss in Joint Venture entities has been accounted for and the same is reflected as investments or current liabilities in books of the Group.

The list of Joint Venture entities :

Name of the Joint Venture Name of Venture Partner Method of Accounting Share of Interest

a. Aggrawal - JMC JV Dinesh Chandra Aggrawal Infracon Private Limited

Percentage of Completion 50%

b. JMC - Sadbhav JV Sadbhav Engineering Limited Percentage of Completion 50.50%

Details of proportionate share in the Assets, Liabilities, Income and Expenditure of the Group in its Joint Venture entities is given below:

(Rs. In Millions)

Agrawal JMC JV JMC Sadbhav JV

As at March

31, 2009

(US$ in Million)

As at March

31, 2009

As at March

31, 2008

As at March

31, 2007

As at March

31, 2009 (US$ in Million)

As at March

31, 2009

As at March 31,

2008


% of Holding 50.0% 50.0% 50.0% 50.5% 50.5% -

Assets 4.2 216.2 128.4 81.9 1.9 96.7 99.4 - Liabilities 4.0 201.6 126.6 91.5 2.7 104.8 100.8 -

Income 17.6 896.1 775.7 375.3 0.8 42.6 17.0 -

F-26

Expenditure 17.4 884.5 763.3 379.1 1.0 50.0 17.6 -

The aforesaid two Joint Venture Entities have not been consolidated using proportionate consolidation and only the share of profit / loss therein has been accounted for, as in view of the management, both the JV entities are formed for specific project and with a view to subsequent disposal on completion of specific projects in near future and accordingly they fall in the exception for proportionate consolidation as per para 29 of AS-27.

Year ended on March 31, 2007

The subsidiary, JMC Projects (India) Limited has entered into Joint Venture with Associated Environmental Engineers Private Limited in respect of execution of a contract. The Company’s share of interest in the Joint Venture is 51%. The Joint Venture has no independent assets and liabilities except for Trade receivables from client and payables to the venture partners in respect of work executed by them in their respective capacities. Due to non-availability of the site by the client the work has been suspended for more than 3 years. As there is no transaction for this project during last two accounting periods, no share of Profit or Loss for the period is considered in the above financial statements.

7. The disclosure as to provision for performance warranties/defect liability expenses is as under:


(US $ in Million)


(Rs. In Million)


(Rs. In Million)


(Rs. In Million)

Carrying amount at the beginning of the year 13.2 672.5 442.5 232.3

Add: Provision / Expenses during the year 7.2 365.8 310.1 283.1

Less: Reversal of provision on finality of Warranty & Guarantee (2.0) (100.3) (36.5) (26.7)

Less: Utilization during the year (1.2) (61.8) (43.9) (26.5)

Less: Excess expenses during the year (0.8) (8.5) - (19.7)

Carrying amount at the close of the year 16.4 867.7 672.2 442.5

8. In accordance with the AS-22, accounting for taxes on income, issued by the Institute of Chartered Accountants of India, net deferred tax liability from timing differences is accounted for using applicable current rate of tax.

Deferred Tax Liability As at March 31, 2009

(US$ in Millions)


(Rs. In Million)


(Rs. In Million)


(Rs. In Million)

Depreciation 5.5 280.4 238.4 198.4

Less: Deferred Tax Assets (i) U/s 43B of the IT Act,

1961 1.4 73.2 20.6 20.2

(ii) Others - 1.3 7.5 17.9

Net Deferred Tax Liability 205.9 210.3 160.4

9. Information in accordance with the requirement of the AS-7 issued by the Institute of Chartered Accountants of India as follows:-


(US$ in Million)

March 31, 2009 (Rs. in Million)

March 31,2008 (Rs. in Million)


(Rs. in Million)

1 .Amount of Contract Revenue Recognized as Revenue in the period

383.8 19557.0 15598.3 10186.8

2. Disclosure in respect of contract in progress at the Reporting Date

(a) Contract cost incurred & Recognized Profit less

697.7 35545.6 23132.2 12386.2

F-27

Recognized losses upto the reporting date

(b) Advance Received 45.0 2291.8 2909.9 2465.1 (c) Retention 31.1 1582.9 1417.5 802.7

3. Due to Customer - - - 4. Due from Customers 63.0 3207.5 2514.7 1351.0

10. Zinc and Aluminum are internationally traded commodities and prices refer from the quotations on the London Metal Exchange / London Metal Bullion Association. The Group faces commodities price risks arising from the time leg between the purchases of Zinc and Aluminum and sale of product. In order to hedge its exposure to commodity price risk, the Group enters into forward contracts in future market. The Group does not enter into such hedging contracts or transactions for speculative purposes. The hedging transactions are used only for the purposes to manage exposure to commodity price risks. The income and gain/loss arising on this account are recorded at the time of settlement / cancellation whether during this year or succeeding year and are adjusted as part of cost of the respective material.

11. Related Party disclosure as required by Accounting Standard -18 is as below:-

(a) List of related persons

(i) Associates:

• JMC-Associated • Aggrawal-JMC, • JMC-Sadbhav • JMC-Taher Ali, • JMC-PPPL, • JMC-Associated SJV • JMC-Tantia • JMC-MSKE-JV

(ii) Key Management Personnel and their relatives

Pankaj Sachdeva Managing Director (w.e.f June 01, 2009) Deputy Managing Director (upto May 31, 2009)

K.V. Mani - Managing Director (upto May 31, 2009) Ajay Munot - Executive Director (upto March 31, 2009) Manish Mohnot - Executive Director Hemant Modi - Vice Chairman & Managing Director Suhas Joshi - Managing Director M.D. Khattar - Managing Director (upto March 31, 2008) Aditya Bafna - Wholetime Director Shubhendra Bafna - Wholetime Director

• Late Mr. I.K. Modi - Relative of Key Managerial Personnel • Mrs. Suverna I Modi - Relative of Key Managerial Personnel • Late Mr. I.K. Modi - Relative of Key Managerial Personnel • Mrs. Suverna J. Modi - Relative of Key Managerial Personnel • Mrs. Sonal H. Modi - Relative of Key Managerial Personnel • Ms. Ami H. Modi - Relative of Key Managerial Personnel

(iii) Enterprises under significant influence and Relative of key management personnel:

• Shubham Industries • Kalpataru Properties Private Limited

F-28

• M/s Habitat • Property Solution (India) Private Limited • Yugdharam Real Estate Private Limited • Durable Trading Co. Private Limited • P.K.Velu & Co. Private Limited • Saicharan Properties Limited • Kalpataru Limited • Shubham International • Shubham Corporation • Shubham Agro • Kalpataru Theatres Private Limited • JMC Infrastructure Limited • SAI Consultant Engineers Private Limited • JMC Consultant & Developers Private Limited • JMC Construction

(b) The following transactions were carried out during the year with related parties in the ordinary course of business:

Rs. In Million)

Sr. No.

Particulars Financial Year Associates Key Managerial Personnel and their relatives

Enterprises under Significant Influence

Transactions during the Year

1

Reimbursement of expenses

F.Y. 2008-09 - - 3.6

(‐) (‐) (0.1)

F.Y. 2007-08 - - 2.2

F.Y. 2006-07 - - 0.4

2

Space usage charges received

F.Y. 2008-09 - - 0.1

(‐) (‐) (0.0)

F.Y. 2007-08 - - 0.0

F.Y. 2006-07 - - 0.1

3

Rent Paid

F.Y. 2008-09 - - 31.6

(‐) (‐) (0.6)

F.Y. 2007-08 - - 30.6

F.Y. 2006-07 - - 22.9

4

Hire Charges

F.Y. 2008-09 - - -

(‐) (‐) (‐)

F.Y. 2007-08 - - 0.1

F.Y. 2006-07 - - -

5

Interest received

F.Y. 2008-09 - - 1.1

(‐) (‐) (0.0)

F.Y. 2007-08 - - 0.9

F.Y. 2006-07 - - 0.3

6

Purchases of Flats

F.Y. 2008-09 - - -

(‐) (‐) (‐)

F.Y. 2007-08 - - 34.3

F.Y. 2006-07 - - 73.7

7

Rent Received

F.Y. 2008-09 - - 0.0

(‐) (‐) (0.0)

F.Y. 2007-08 - - 0.0

F-29

Rs. In Million)

Sr. No.



F.Y. 2006-07 - - 0.0

8

Purchase of Goods/ Assets F.Y. 2008-09

-

-

7.3

(‐) (‐) (0.1)

F.Y. 2007-08 - 2.1 21.6

F.Y. 2006-07 - 14.1 8.3

9

Salary & Commission F.Y. 2008-09

-

92.4

-

(‐) (1.8) (‐)

F.Y. 2007-08 - 126.3 -

F.Y. 2006-07 - 126.0 -

10

Sub-Contract charges received F.Y. 2008-09

2,457.3

-

-

(48.2) (‐) (‐)

F.Y. 2007-08 1,635.1 - -

F.Y. 2006-07 710.6 - -

11

Income from Services rendered F.Y. 2008-09

-

-

-

(‐) (‐) (‐)

F.Y. 2007-08 - - 0.1

F.Y. 2006-07 6.5 - -

12

Fixed Deposit Matured/Renewed F.Y. 2008-09

-

-

-

(‐) (‐) (‐)

F.Y. 2007-08 - - 0.1

F.Y. 2006-07 - - 0.4

13

Expenses on services received F.Y. 2008-09

-

-

-

(‐) (‐) (‐)

F.Y. 2007-08 - - -

F.Y. 2006-07 6.1 - -

14

Interest Paid

F.Y. 2008-09

-

-

-

(‐) (‐) (‐)

F.Y. 2007-08 - - 0.0

F.Y. 2006-07 - - 0.0

15

Loan/Deposit Repaid F.Y. 2008-09

-

-

230.5

(‐) (‐) (4.5)

F.Y. 2007-08 - - 110.2

F.Y. 2006-07 - - -

16

Loan Received F.Y. 2008-09

-

-

131.0

(‐) (‐) (2.6)

F.Y. 2007-08 - - -

F-30

Rs. In Million)

Sr. No.



F.Y. 2006-07 - 6.1 -

17

Share of Profit in Joint Venture F.Y. 2008-09

29.6

-

-

(0.6) (‐) (‐)

F.Y. 2007-08 - - -

F.Y. 2006-07 - - -

18

Share of Loss in Joint Venture F.Y. 2008-09

14.7

-

-

(0.3) (‐) (‐)

F.Y. 2007-08 - - -

F.Y. 2006-07 - - -

19

Dividend Paid F.Y. 2008-09

-

2.8

-

(‐) (0.1) (‐)

F.Y. 2007-08 - - -

F.Y. 2006-07 - - -

20

Advance Against Property F.Y. 2008-09

-

-

650.0

(‐) (‐) (12.8)

F.Y. 2007-08 - - -

F.Y. 2006-07 - - -

21

Security Deposit Against Rental Property

F.Y. 2008-09

-

-

321.6

(‐) (‐) (6.3)

F.Y. 2007-08 - - -

F.Y. 2006-07 - - -

Balance as on 31/03/2009

1

Debtors F.Y. 2008-09

422.5

-

13.8

(8.3) (‐) (0.3)

F.Y. 2007-08 117.5 - -

F.Y. 2006-07 - - -

2

Security Deposit Against Rental

Property F.Y. 2008-09

-

-

332.6

(‐) (‐) (6.5)

F.Y. 2007-08 - - 11.0

F.Y. 2006-07 - - 11.0

3 Advance Against Property F.Y. 2008-09

- - 650.0

(‐) (‐) (12.8)

F.Y. 2007-08 - - -

F.Y. 2006-07 - - -

4 Other Loans & Advances F.Y. 2008-09

120.5 - -

(2.4) (‐) (‐)

F.Y. 2007-08 186.1 - -

F.Y. 2006-07 - - -

5 Loan taken F.Y. 2008-09 - - 12.8

F-31

Rs. In Million)

Sr. No.



(‐) (‐) (0.3)

F.Y. 2007-08 - - -

F.Y. 2006-07 - 6.1 -

6 Current Liabilities F.Y. 2008-09

181.8 27.8 0.2

(3.6) (0.5) (0.0)

F.Y. 2007-08 515.1 - -

F.Y. 2006-07 199.1 0.5 -

*Figures are in bracket represents $ in Million for the year ended 2008-09

12. The disclosure requirement as per Accounting Standard 17 segment reporting is :

S.N. Particulars Segment (Rs. In Million)

T&D# RED# BM# INFRA# Contract

Receipts* Others Unallo cable Consolidated Year

(I) Business Segment

1 Revenue :

Net Sales & Services

F.Y. 2008-09

16,562.7

0.6

476.3

1,719.5 13,119.5 564.4 - 32,443.0

(325.1)

(0.0)

(9.3)

(33.7)

(257.5)

(11.1) ------(-) (636.8)

F.Y. 2007-08

15,027.2

5.6

365.9

1,827.4 9,184.7 306.5

- 26,717.4

F.Y. 2006-07

13,249.6

1.0

275.0

1,465.0 977.0 3.0

- 15,970.6

Other Operating Income

F.Y. 2008-09

31.0

-

6.7

4.3 103.5 2.8

- 148.2

(0.6)

(-)

(0.1)

(0.1)

(2.0)

(0.1) (-) (2.9)

F.Y. 2007-08

54.1

-

20.5

5.4 56.8 1.6

- 138.3

F.Y. 2006-07

16.4

-

-

-

-

-

- 16.4

Net Sales/Income

from Operation

F.Y. 2008-09

16,593.7

0.6

483.0

1,723.8 13,223.0 567.1

- 32,591.1

(325.7)

(0.0)

(9.5)

(33.8)

(259.5)

(11.1) (-) (639.7)

F.Y. 2007-08

15,081.3

5.6

386.4

1,832.9 9,241.4 308.2

- 26,855.8

F.Y. 2006-07

13,266.0

1.0

275.0

1,465.0 977.0 3.0

- 15,987.0

Add : Other Income

F.Y. 2008-09

51.3

0.4

57.8

-

1.7

-

104.4 215.7

(1.0)

(0.0)

(1.1)

(-)

(0.0) (-)

(2.0) (4.2)

F-32




F.Y. 2007-08

0.1

0.1

9.8

-

3.7

-

130.1 143.7

F.Y. 2006-07

-

3.4

8.6

-

1.1

-

109.9 122.9

Total F.Y. 2008-09

16,645.0

1.0

540.8

1,723.8 13,224.7 567.1

104.4 32,806.8

(326.7)

0.0

(10.6)

(33.8)

(259.6)

(11.1)

(2.0) (643.9)

F.Y. 2007-08

15,081.4

5.7

396.2

1,832.9 9,245.1 308.2

130.1 26,999.5

F.Y. 2006-07

13,266.0

4.4

283.6

1,465.0 978.1 3.0

109.9 16,109.9

2

Segment Result Before

Interest

F.Y. 2008-09

1,614.6

0.4

157.2

154.2 785.5 34.5

104.4 2,850.9

(31.7)

(0.0)

(3.1)

(3.0)

(15.4)

(0.7)

(2.0) (56.0)

F.Y. 2007-08

1,829.7

2.4

109.5

315.5 560.9 22.5

130.1 2,970.5

F.Y. 2006-07

2,127.0

(1.0)

92.0

116.0 62.0

-

109.0 2,505.0

Interest F.Y. 2008-09

1,151.3

(22.6)

F.Y. 2007-08 485.5

F.Y. 2006-07 284.0

Profit after Interest

F.Y. 2008-09

1,699.6

(33.4)

F.Y. 2007-08 2,485.1

F.Y. 2006-07 2,221.0

Extra Ordinary Item

-

3

Current Tax (including

FBT)

F.Y. 2008-09

421.2

(8.3)

F.Y. 2007-08 627.7

F.Y. 2006- 556.0

F-33




07

4

Deferred Tax F.Y. 2008-09

(4.3)

(0.1)

F.Y. 2007-08 60.8

F.Y. 2006-07 35.0

5

Net Profit after Tax

F.Y. 2008-09

1,282.7

25.2

F.Y. 2007-08 1,796.6

F.Y. 2006-07 1,630.0

6

Segment Asset

F.Y. 2008-09

17,438.5

408.2

730.7

2,333.8 8,075.7 2,220.1

458.7 31,665.5

(342.3)

(8.0)

(14.3)

(45.8)

(158.5)

(43.6)

(9.0) (621.5)

F.Y. 2007-08

11,792.1

118.8

725.9

1,854.9 6,444.2 569.1

1,220.4 22,725.5

F.Y. 2006-07

9,701.0

12.0

684.0

1,527.0 3,641.0 125.0

2,392.0 18,082.0

7

Segment Liability

F.Y. 2008-09

6,858.9

3.6

14.6

1,054.8 4,058.7 143.9

446.5 12,581.0

(134.6)

(0.1)

(0.3)

(20.7)

(79.7)

(2.8)

(8.8) (246.9)

F.Y. 2007-08

5,324.8

3.1

15.9

421.1 3,416.2 15.5

443.3 9,639.9

F.Y. 2006-07

4,980.0

4.0

23.0

153.0 1,654.0 4.0

- 6,818.0

Capital Employed ( 6 - 7 )

F.Y. 2008-09

10,579.6

404.6

716.1

1,279.0 4,017.0 2,076.2

12.2 19,084.6

(207.6)

(7.9)

(14.1)

(25.1)

(78.8)

(40.8)

(0.2) (374.6)

F.Y. 2007-08

6,467.3

115.8

710.1

1,433.8 3,028.0 553.6

777.0 13,085.6

F.Y. 2006-07

4,721.0

8.0

661.0

1,374.0 1,987.0 121.0

2,392.0 11,264.0

8

Capital Expenditure

F.Y. 2008-09

441.1

-

9.5

261.3 602.5 1,439.5

- 2,753.8

(8.7)

(-)

(0.2)

(5.1) (11.8) (28.3) (-

) (54.0)

F-34




F.Y. 2007-08

257.1

-

27.4

127.1 1,070.5 157.3

- 1,639.3

F.Y. 2006-07

409.0

-

326.0

280.0 104.0 59.0

- 1,178.0

9

Depreciation F.Y. 2008-09

135.6

0.1

46.0

91.5 300.6 2.1

- 575.9

(2.7) (0.0) (0.9) (1.8) (5.9) (0.0) (-

) (11.3)

F.Y. 2007-08

101.7

0.1

44.7

71.5 167.7 0.8

- 386.5

F.Y. 2006-07

88.0

-

30.0

50.0 14.0

-

- 182.0

(II) Geographical

Segment

Revenue

India F.Y. 2008-09

11,404.1

0.6

483.0

1,723.8 13,223.0 567.1

- 27,401.5

(223.8) (0.0) (9.5) (33.8) (259.5) (11.1) (-

) (537.8)

F.Y. 2007-08

10,075.4

5.6

386.4

1,832.9 9,241.4 308.2

- 21,849.8

F.Y. 2006-07

9,254.0

1.0

275.0

1,465.0 977.0 3.0

- 11,975.0

Outside India F.Y. 2008-09

5,189.6

-

-

-

-

-

- 5,189.6

(101.9)

(-)

(-)

(-) (-) (-) (-

) (101.9)

F.Y. 2007-08

5,005.9

-

-

-

-

-

- 5,005.9

F.Y. 2006-07

4,012.0

-

-

-

-

-

- 4,012.0

Total F.Y. 2008-09

16,593.7

0.6

483.0

1,723.8 13,223.0 567.1

- 32,591.1

(325.7)

(0.0)

(9.5)

(33.8)

(259.5)

(11.1) (-

) (639.7)

F.Y. 2007-08

15,081.3

5.6

386.4

1,832.9 9,241.4 308.2

- 26,855.7

F.Y. 2006-07

13,266.0

1.0

275.0

1,465.0 977.0 3.0

- 15,987.0

Figures are in bracket represents $ in Million for the year ended 2008-09

# T&D - Transmission & Distribution; RED - Real Estate; BM - Bio-mass Energy; INFRA - Infrastructure Contract receipts include mining receipt of JMC Mining and Quarries Ltd.

13. The foreign currency exposures of Group, which are not hedged, are as under:

F-35

(Rs.in Million ) 2008-2009 2007-2008 2006-2007

Euro /USD USD/Rs Euro / USD USD/Rs Euro/ USD USD/Rs

Receivables - - - 25.53 5.64 5.76 Payables 1.37 17.07 1.69 16.86 1.78 5.26

14 The parent has entered into consortium with JSC Zangas, Russia separately for four gas pipeline projects (i) Vijaipur to Kota, (ii) Panvel to Dabhol (iii) Vijaipur to Dadari & (iv) Dadari-Panipat in Infrastructure Division, sharing contract receipts. The contract receipts, common expenses, assets and liabilities have accordingly been accounted for in these accounts as per terms of separate consortium agreement based on unaudited accounts of all the consortium.

15. The Group significant leasing/ licensing arrangements/ (leasing arrangements) are mainly in respect of residential / office premises and equipments (operating lease). The aggregate lease rental payable on these leasing arrangements are charged as rent and equipment hire charges in these accounts amounting to for the year 2008-09 Rs.275.2 Million, 2007-08 Rs.166.7 Million, 2006-07 Rs.114.9 Million

These leasing arrangements are for a period not exceeding 5 years and are in most cases renewal by mutual consent, on mutually agreeable terms. Future lease rental payable in respect of assets on lease for not later than 1 year is for the year 2008-09 Rs.51.2 Million, 2007-08 Rs.6.8 Million, 2006-07 Rs.6.4 Million and for later than 1 year but not later than 5 years is for the year 2008-09 Rs.85.9 Million, 2007-08 Rs.6.9 Million, 2006-07 Rs.43.7 Million.

16. Interest income of the Group comprises of :

2008-09 (US $ in Million )

2008-09 (Rs .in Million)

2007-08 (Rs. In Million)

2006-07 (Rs .in Million)

a) Fixed Deposit with Banks 0.4 21.8 32.9 12.1

b) Margin Money with Banks 0.1 7.0 17.3 0.5

c) Inter-Corporate Deposits 1.5 76.7 37.1 15.0

d) Subsidiary Companies 0.9 47.8 12.1 5.5

e) Others 0.1 7.3 3.0 0.2

f) Clients accounts 0.0 0.5 1.3 -

g) Loan to EKMP 0.0 1.1 - -

3.0 162.2 103.77 33.3

17. Erection and Sub-Contracting expenses of Group comprises of:

2008-09 (US $ in Million )

2008-09 (Rs in

Million)

2007-08 (Rs in

Million)

2006-07 (Rs in Million)

a) Sub-contracting expenses 38.8 1977.1 2094.8 1715.1

b) Construction material & stores, spares Consumed

20.1 1025.3 854.5 635.1

c) Power & Fuel 2.8

144.0 109.6 104.0

d) Freight & Forwarding Expenses 3.0 151.4 52.0 59.1 e) Others 7.1 362.4 238.8 254.3

Total

71.8 3660.22 3349.7 2767.6

18. 47,77,000 equity shares of Rs.10/- each at a premium of Rs.717/- per share were issued to financial year 2006-07 to the Qualified Institutional Investors under Chapter XIII-A of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 for the purpose of capital expenditure,

F-36

working capital, development of EPC services, infrastructure business and real estate business as may be permissible under applicable laws and government policies, and for general corporate purposes, including strategic initiatives, such as strategic relationships, investments or acquisitions and improving the leveraging strength of the Group. The proceeds from the issue have been utilized for the said purpose as follows:

As at March 31, 2009 (US $ in Million )

As at March 31, 2009 (Rs. in Million)



Utilization in Working Capital 31.7 1612.7 1369.0 552.1

Investments in Subsidiary Companies

18.8 959.1 826.2 504.0

Capital Expenditure

8.4 425.7 68.6 71.4

Fixed Deposits with Banks - - 550.0 672.5

Investments in units of Mutual Funds

- - 350.0 1357.5

Inter Corporate Deposits - - 126.6 240.0

Investment in Real Estate Project 7.9 400.0 107.1 -

Share Issue Expenses

1.5 75.4 75.4 75.4

Total

68.3 3472.9 3472.9 3472.9

19. The Capital Work In Progress of Rs.11,32.7 million consists of the following activities:

As at March 31, 2009 (US $ in Million )




Transmission Line Tower 0.7 34.5 17.0 37.2

Software Development 1.1 56.3 - -

Biomass 0.0 1.1 2.3 4.0

Infrastructure 0.2 8.1 - -

Construction 0.4 20.3 14.9 9.5

Warehousing Development 12.1 616.7 45.7 -

Real Estate Development 7.8 395.8 - -

TOTAL 22.3 1132.8 79.9 50.7

20. Year ended march 31, 2009 the Group has changed the rates of depreciation on some of Office Equipments from 4.75% and 6.33% to 12.50% considering the useful life based on technical evaluation by management. Due to this the Group has charged additional depreciation of Rs.0.9 Million in the Profit & Loss A/c of the current year and consequently the Profits for the year is lower to that extent.

21. Pursuant to the retrospective amendment (with effect from December 7, 2006) to Accounting Standard (AS 11) on “Effects of changes in foreign exchange rates” vide GSR notification 225 (E) dated March 31, 2009, the Subsidiary M/s JMC Projects (India) Ltd has capitalized the exchange rate variation of Rs. 9.2 Million for the current year and the impact of depreciation thereon being Rs. 0.4 Million has been charged to Profit and Loss account of the F.Y. 2008-09. The aforesaid subsidiary has also capitalized the exchange variation loss of Rs. 0.5 Million for the financial year 2007-08 and the corresponding adjustment has been given in General Reserve. Depreciation on the fixed Assets relating to above amounting to Rs. 0.1 Million has also been charged to current year’s profit and loss account.

22. During the year the Group has recognized revenue of Rs.77.5 Million as amount of claim to the extent of expenditure by the Group, in view of the reasonable certainty of its realization.

F-37

23. As the figure disclosed in the Financial Statements are extracted from the audited accounts for the years ended March 31, 2007, 2008, and 2009, approved by the Board of Directors on May 19, 2007, May 26, 2008 and May 30,2009 respectively, and on which auditors have based their opinions dated May 21, 2007, May 28, 2008 and June 1,2009 respectively, any event subsequent to the said dates has not been considered/adjusted.

24. These financial statements have been prepared on the basis of the format of the financial statement for the year ended 2009. The financial statement for the year ended 2007 and 2008 have been reformatted to confirm to the year ended 2009. presentations.

25. The rate of exchange used for converting rupees into US Dollar is 1 US Dollar = Rs. 50.95.

F-38

Review Report on the Unaudited Condensed Interim Financial Statements as at December 31, 2009 and December 31, 2008

To, The Board of Directors, Kalpataru Power Transmission Limited

We have reviewed the accompanying unaudited condensed unconsolidated balance sheet of Kalpataru Power Transmission Limited (“the Company”) as at December 31, 2009 and December 31, 2008 and the related unaudited condensed unconsolidated statements of profit and loss and cash flows (“ the interim financial statements”) for the nine month period then ended. These interim financial statements are prepared in accordance with the requirements of Indian Accounting Standard 25 “Interim Financial Reporting”. These interim financial statements are the responsibility of the Company’s management and have been approved by the Board of Directors. Our responsibility is to issue a report on these interim financial statements based on our review.

We conducted our review of the interim financial statements in accordance with the Standard on Review Engagements (SRE) 2400, issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatement. A review is limited primarily to inquiries of Company personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Based on our review conducted as above and read with Note 13 to Schedule S regarding insertion of comparative balance sheet for the corresponding interim period instead of presenting balance sheet of the immediately preceding financial year, nothing has come to our attention that causes us to believe that the accompanying interim financial statements prepared in accordance with the applicable accounting standards and other recognized accounting practices and policies, contain any material misstatements.

These interim financial statements have been prepared solely for the purpose of inclusion in the Placement Document being prepared for the purpose of issue of equity shares to Qualified Institutional Bidders, in accordance with Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009. Our review report is for the above specific purpose only and should not be used for any other purpose without our prior written consent.

For Kishan M. Mehta & Co. For Deloitte Haskins & Sells Chartered Accountants Chartered Accountants (Firm Registration No. 105229W) (Firm Registration No. 117365W)

(Kishan M. Mehta) (Gaurav J. Shah) Partner Partner Membership No. 13707 Membership No. 35701

Place: Ahmedabad Place: Ahmedabad Date: 27th April 2010 Date: 27th April 2010

F-39

KALPATARU POWER TRANSMISSION LIMITED

CONDENSED UNAUDITED BALANCE SHEET

SCHEDULE AS AT AS AT AS AT 31/12/2009 31/12/2009 31/12/2008

USD in Million Rs. in Million Rs. in Million

SOURCES OF FUNDS :

Shareholder's Funds: Share Capital À' 5.7 265.0 265.0 Reserves & Surplus `B' 197.9 9,256.2 8,104.8

203.6 9,521.2 8,369.8

Loan Funds : Secured Loans `C' 125.1 5,836.9 5,911.5 Unsecured Loans `D' 53.4 2,491.5 1,605.9

178.5 8,328.4 7,517.4

Deferred Tax 3.3 148.3 126.5

TOTAL 385.4 17,997.8 16,013.7

APPLICATION OF FUNDS :

Fixed Assets : È' Gross Block 93.4 4,358.4 3,459.7 Less: Depreciation 27.2 1,267.0 928.3

Net Block 66.2 3,091.4 2,531.4

Capital Work in Progress 6.7 312.3 52.3

72.9 3,403.7 2,583.7

Investments F' 27.1 1,265.1 1,252.4

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Current Assets,Loans & Advances : Inventories `G' 58.9 2,754.6 2,849.6 Accrued value of work done 102.9 4,802.7 3,499.8 Sundry Debtors `H' 280.4 13,090.8 9,065.9 Cash & Bank Balances Ì' 9.3 433.1 1,036.4 Loans & Advances `J' 99.2 4,631.2 2,938.8

550.7 25,712.5 19,390.5

Less:Current Liabilities & Provisions: `K' Current Liabilities 245.7 11,469.4 6,560.2 Provisions 19.6 914.1 652.7

265.3 12,383.5 7,212.9

Net Current Assets 285.4 13,329.0 12,177.6

TOTAL 385.4 17,997.8 16,013.7

0.0 Notes to the Accounts `S'

KALPATARU POWER TRANSMISSION LIMITED CONDENSED UNAUDITED PROFIT & LOSS ACCOUNT

FOR 9 MONTHS FOR 9 MONTHS FOR 9 MONTHS

SCHEDULE ENDED ENDED ENDED 31/12/2009 31/12/2009 31/12/2008


INCOME :

Sales & Services-Gross `L' 384.1 17,933.9 13,461.4 Less : Excise Duty 7.5 349.0 217.5 Sales & Services-Net 376.6 17,584.9 13,243.9 Other Income `M' 5.6 264.9 240.1

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Increase(Decrease) in Stocks `N'

a) Transmission & Distribution Division: 7.2 342.1 532.6 TOTAL 389.4 18,191.9 14,016.6

EXPENDITURE :

Material Cost 169.9 7,929.0 7,645.9 Employees' Emoluments Ò' 25.9 1,208.4 778.0 Manufacturing & Operating Expenses `P' 113.0 5,276.0 2,908.1 Administrative, Selling & Other Expenses `Q' 25.4 1,190.7 839.9 Financial Expenses `R' 16.9 784.7 712.4 Depreciation 5.9 273.5 196.9

TOTAL 357.0 16,662.3 13,081.2

PROFIT BEFORE TAX 32.4 1,529.6 935.4 Provision for Taxation Current Tax 8.1 378.6 183.0 Fringe Benefit Tax - - 10.8 Deferred Tax 0.4 20.3 29.3

NET PROFIT FOR THE YEAR AFTER TAX 23.9 1,130.7 712.3

Balance brought forward 80.5 3,759.3 3,199.2

(Less) : Prior Year's adjustments (0.0) (1.3) - (Less) : Prior Year's Taxes (0.0) (1.0) (1.1) Balance carried over to Balance Sheet 104.4 4,887.7 3,910.4

No. of equity shares at the end of the year 26,500,000.0 26,500,000.0 26,500,000.0 Weighted No. of equity shares at the end of period 26,500,000.0 26,500,000.0 26,500,000.0 Profit for calculation of EPS (Rs.in Lacs) 23.9 1,130.7 712.3 Nominal value of Equity shares (Rs.) 10.0 10.0 10.0 Basic/diluted earning per share (Rs.) 0.9 42.7 26.9 Notes to the Accounts `S'

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SCHEDULES TO AND FORMING PART OF ACCOUNTS

31/12/2009 31/12/2009 31/12/2008 SCHEDULE À' SHARE CAPITAL : USD in Million Rs. in Million Rs. in Million

AUTHORISED : 30,000,000 (30,000,000) Equity Shares of Rs.10 each 6.4 300.0 300.0

6.4 300.0 300.0

ISSUED, SUBSCRIBED & PAID-UP:

26,500,000 (26,500,000) Equity Shares of Rs.10 each fully paid up 5.7 265.0 265.0

Out of above a) 14,186,500 (14,186,500) shares allotted as fully paid up Bonus shares by Capitalisation out of general reserve, capital redemption reserve and share premium account and b)3,060,000 (3,060,000) shares allotted for consideration other than cash. 5.7 265.0 265.0

SCHEDULE `B' RESERVES AND SURPLUS:

REVALUATION RESERVE As at the beginning of 1st of April 0.1 5.1 5.5 Less:Transferred from Depreciation Account 0.0 0.3 0.3 0.1 4.8 5.2 SHARE PREMIUM As per last Balance Sheet 73.8 3,444.7 3,444.7

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FOREIGN CURRENCY TRANSLATION RESERVE As at the beginning of 1st of April Less :- Transferred to Profit & Loss A/c Less :- During the year 0.5 23.5 (18.8)

0.5 23.5 (18.8) Add:- Deficit Transferred to General Reserve 18.8

0.5 23.5 0.0

DEBENTURES REDEMPTION RESERVE As at the beginning of 1st of April 0.6 30.0 - Add : Transferred from Profit & Loss Account

0.6 30.0 -

GENERAL RESERVE As at the beginning of 1st of April 18.5 865.5 763.3 Less : Transferred from Foreign Currency Translation Reserve - - 18.8

18.5 865.5 744.5 PROFIT & LOSS : As per profit & loss account 104.4 4,887.7 3,910.4

197.9 9,256.2 8,104.8

SCHEDULE `C': SECURED LOANS 31/12/2009 31/12/2009 31/12/2008


A. DEBENTURES (I)12.5% Non-convertible debentures from LIC , secured by first pari passu charge on fixed assets of transmission & infrastructure division including land & building of the Company,exclusive of assets charged to FI and Bank for which NOC is given for the assets of Transmission & Distribustion and Infrastructure divison, redeemable in three equal annual instalments 17.1 800.0 800.0 at the end of 5th, 6th and 7th year from the date of allotment from 26th December, 2008.

(II)9.55% Non-convertible debentures

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secured by first pari passu charge on fixed assets of

transmission & infrastructure division including land & building of the Company,exclusive of assets charged to FI and Bank for which NOC is given for the assets of Transmission & Distribustion and Infrastructure divison, redeemable in three equal annual instalments at the end of 3rd, 4th and 5th year from the date of allotment from 15th July, 2009. 15.0 700.0 -

B. TERM LOANS

From Banks (I) Secured by charge over freehold land and immovable properties,specific movable plant & machineries financed of Bio-mass Power Plant situated at Padampur, Dist. Sri Ganganagar, Rajasthan 1.0 44.5 73.2

(II) Secured by charge over immovable and movable plant & machineries of Bio-mass Power Plant situated at Uniara,Dist.Tonk, Rajasthan and second charge on current assets of the same. 3.6 167.6 227.5

(III) Secured by way of hypothecation of all movable fixed assets of tranmission line tower plant at sector-28, Gandhinagar on paripasu basis alongwith consortium of bankers for working capital facilities stated hereunder. 1.8 83.3 166.6

(IV) Secured by hypothecation of Specific movable fixed assets relating to Infrastructure Division 1.0 45.9 88.2

(V) Secured Against Vehicles 0.3 13.9 16.3

39.8 1,855.2 1,371.8 C. WORKING CAPITAL FACILITIES FROM BANKS: I. Secured in favour of consortium of bankers by hypothecation of stocks, stores and spares, book debts and bills receivables and all other movable assets and further secured by all movable fixed assets except charged to others as stated herein above of the factory premises and godown situated at Gandhinagar

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or wherever else pertaining to transmission & distribution

and infrastructure division and by simple mortgage over land and building situated at Sector-28, Gandhinagar 82.4 3,846.9 3,227.0

II. Secured in favour of Exim Bank as second charge by way of hypothecation of stocks, stores & spares, book debts & bills receivables of transmission line division. - - 500.0

III. Bill discounting facility secured by first pari-passu charge on current 2.9 134.8 812.7 assets and all movable assets at Project sites premises and godowns of the sites for execution of work under GFSS-II of Maharashtra State Electricity Distribution Co. Ltd.

125.1 5,836.9 5,911.5

SCHEDULE `D' UNSECURED LOANS:

a) Short Term Loan from Bank 26.6 1,240.2 1,315.2 b) Short Term Loan from Others 22.5 1,050.0 - c) Overdraft & Bill discounting facility from a Bank 4.3 201.3 290.7

53.4 2,491.5 1,605.9

SCHEDULE È' : FIXED ASSETS AS AT 31.12.2009 (AT COST) Rs.in Million


AS ON

01/04/2009

#ADDITIONS/ ADJUSTMENTS DURING THE

PERIOD DEDUCTIONS AS ON

31/12/2009 AS ON

01/04/2009 #DURING

THE PERIOD

DEDUCTIONS/ADJUTSMENTS DURING THE

PERIOD AS ON

31/12/2009 AS ON

31/12/2009

Leasehold Land 102.3 - - 102.3 - - -

- 102.3

Freehold Land 28.3 - - 28.3 - - -

- 28.3

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Buildings 416.3 10.0 - 426.3 51.8 10.0 - 61.8 364.5 Plant & Machineries 2,617.4 609.3 - 3.226.7 817.5 204.8 - 1,022.2 2,204.5

Electric Installation 36.9 3.3 0.1 40.1 10.4 1.7

0.0 12.0 28.2 Furniture, Fixtures & 244.1 102.8 0.9 346.0 68.5 27.5 0.3 95.8 250.2 Office Equipments Vehicles 145.6 46.7 3.6 188.7 58.7 18.0 1.6 75.2 113.5

As at 31st December.'2009 3,590.9 772.1 4.6 4.358.4 1,006.9 262.0 109 1,267.0 3,091.4 # Additions includes Rs.33.7 million on account of Translation Reserve of Fixed assets as Non-integral foreign operation of the Company and corresponding depreciation Rs.11.8

SCHEDULE È' : FIXED ASSETS AS AT 31.12.2008 Rs.in Million


AS ON

01/04/2008 ADDITIONS DEDUCTIONS TOTAL

31/12/2008 AS ON

01/04/2008 DURING THE

YEAR DEDUCTIONS TOTAL

31/12/2008 AS ON

31/12/2008

Leasehold Land 102.3 - - 102.3 - - - - 102.3 Freehold Land 28.3 - - 28.3 - - - - 28.3 Buildings 382.2 29.5 - 411.7 38.9 9.7 - 48.6 363.1 Plant & Machineries 2,104.2 430.9 18.4 2,516.7 603.3 154.3 8.7 748.8 1,767.8 Electric Installation 30.2 4.9 0.9 34.2 8.2 1.6 - 9.8 24.4 Furniture,Fixtures & 195.4 32.8 1.3 226.9 48.3 14.5 0.6 62.2 164.7 Office Equipments Vehicles 117.2 42.4 19.9 139.7 34.2 17.2 10.3 41.2 98.5 Foreign Currency Translation Reserve 17.7 (17.7)

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As at 31st March'2008 2,959.8 540.5 40.5 3,459.7 732.9 197.3 19.6 928.3 2,531.4

SCHEDULE `F' INVESTMENTS: 31/12/2009 31/12/2009 31/12/2008

USD in Million Rs. in Million Rs. in Million (As verified, valued and certified by the management) (A) IN SHARES : Quoted-Non Trade - Long Term (each share of Rs.10 fully paid unless otherwise stated)

Nil/- (97) Equity Shares of KEC International Ltd. - - 0.0

Nil/- (6) Equity Shares of Octav Investement Ltd. - - 0.0 ( Formerly MP Power Line Ltd.)

Nil/- (75) Equity Shares of Summit Securities Ltd. - - 0.0

Nil/- (750) Equity Shares of Jyoti Structures Ltd. - - 0.0 (each share of Rs.2 fully paid) Nil/- (50) Equity Shares of SPIC Ltd. - - 0.0

Nil/- (50) Equity Shares of Larsen & Toubro Ltd. - - 0.0 (each share of Rs.2 fully paid) Nil/- (20) Equity Shares of Ultratech Cement Ltd. - - 0.0

100 (100) Equity Shares of Transpower Engineering Ltd. 0.0 0.0 0.0

Nil/- (19,900) Equity Shares of Bank of India - - 0.9

Nil/- (5,200) Equity Shares of Union Bank of India - - 0.1

Nil/- (13,960 ) Equity Shares of Indian Bank - - 1.3 48,366 (48366) Equity Shares of Power Grid Corporation of India Ltd. 0.1 2.5 2.5 ( In the above list,the amount against some of the script is less than 0.05 million,therefore it is appearing as 0.0 when rounded to

F-48

one decimal.) 0.1 2.5 4.8

(C) INVESTMENTS IN SUBSIDIARIES Trade - Long Term (each share of Rs.10 fully paid unless otherwise stated) 11,540,247 (9,519,942) Equity Shares of JMC Projects (India) Ltd. 20.2 942.4 725.4 (Quoted ) Nil/- (1,100,000) 6% non commulative redeemable Preference - - 222.2 Shareof Rs.202/- each of JMC Projects (India) Ltd. (Unquoted) 16,000,000 (16,000,000 ) Equity Shares of Shree Shubham Logistics Ltd. 3.4 160.0 160.0 (Unquoted)

12,500,000 (12,500,000) 4% commulative redeemable Preference Shares 2.7 125.0 125.0 of Shree Shubham Logistics Ltd.(unquoted) 1,000,000 (1,000,000 ) Equity Shares of Energylink (India) Ltd. 0.2 10.0 10.0 (Unquoted) 990,000 (504,900) Equity Shares of Amber Real Estate Limited. 0.2 9.9 5.0 (Unquoted) 50,000 (Nil/-) Equity Shares of Adeshwar Infrabuild Limited. 0.0 0.5 - (Unquoted) 11,275 (Nil/-) Shares of Kalpataru Power Transmission (Mauritius) Ltd. 0.0 0.6 - (Unquoted) (each share of US $ 1 fully paid)

200,000 (Nil/-) Shares of Kalpataru Power Transmission (USA) Ltd. 0.2 9.3 - (Unquoted) (each share of US $ 1 fully paid)

374,500 (Nil/-) Ordinary Shares of Kalpataru SA (pty) Ltd.,South Africa 0.1 4.9 - (Unquoted) (each share of Rand 1 fully paid)

27.0 1,262.6 1,247.6 27.1 1,265.1 1,252.4

Less : Provision against Diminution in Value of Investments 0.0 0.0 0.0

27.1 1,265.1 1,252.4

Notes :- 1. Market value of quoted investments 39.5 1,842.0 565.9 2. Book value of quoted investments 20.2 944.9 730.2 3. Book value of unquoted investments. 6.9 320.2 522.2

F-49

SCHEDULE `G' INVENTORIES : 31/12/2009 31/12/2009 31/12/2008 USD in Million Rs. in Million Rs. in Million

(As verified, valued and certified by management)

a) Transmission & Distribution Division: Raw Materials & Components (including goods in 21.5 1,003.1 1,403.3 transit Rs.41.58 Million (Rs.145.26 Million ) Finished Goods 19.5 909.3 590.1 Semi-finished Goods 5.0 235.0 315.7 Construction & others Stores, Spares & Tools 6.0 279.6 208.2 Construction Work-in-Progress 2.1 97.4 186.0 Scraps 0.4 17.6 8.1

54.5 2,541.9 2,711.4

b)Real Estate Division: Finished Stock 0.1 6.7 6.7

0.1 6.7 6.7

c) Bio-Mass Energy Division Fuel-Agricultural Residues 1.6 76.7 85.7 Stores, Spares & Tools 0.4 20.4 19.5

2.0 97.1 105.2 d) Infrastructure Division Construction Material,Stores,Spares & Tools 2.3 108.9 26.3

58.9 2,754.6 2,849.6

SCHEDULE `H' SUNDRY DEBTORS :

(Unsecured & considered good unless otherwise stated) Debts outstanding for a period exceeding six 75.0 3,502.5 2,845.7 months (excluding retention money) (Doubtful Rs. NIL/- Previous year Rs.NIL/-)

75.0 3,502.5 2,845.7

F-50

Other debts (including retention money wholly Rs.4,115.95 Million 205.4 9,588.3 6,220.2 Previous Year Rs.2,437.68 Million )

280.4 13,090.8 9,065.9

SCHEDULE Ì' : CASH AND BANK BALANCES:

Cash in hand 0.4 17.2 15.3 Balances with Scheduled Banks On Current Accounts 2.8 130.8 415.7 On Deposit Accounts (Margin Money having lien by bankers) - - 1.4 On Deposit Accounts 0.0 0.3 393.6 Balances with non-Scheduled Banks [includs under lien of bank 6.1 284.8 210.4 Rs.38.95 Million (Rs.4.07 Million)]

9.3 433.1 1,036.4

SCHEDULE `J' : LOANS AND ADVANCES:

(Unsecured and considered good unless otherwise stated) Advances recoverable in cash or in kind or for value to be received 40.4 1,887.7 2,149.2 Loans to Subsidiaries 44.1 2,056.8 506.7 Accrued Income 3.3 154.4 113.3 Prepaid Expenses 3.3 152.7 70.8 Security Deposits 8.1 379.6 98.8

99.2 4,631.2 2,938.8

SCHEDULE `K' : CURRENT LIABILITIES & PROVISIONS: 31/12/2009 31/12/2009 31/12/2008


CURRENT LIABILITIES : Sundry Creditors 95.6 4,464.8 2,362.1

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Advances from customers 80.8 3,770.9 1,660.2 Other Liabilities 32.5 1,516.4 1,140.4 Payables under letter of Credit 27.2 1,268.4 686.0 Bills Payable 7.0 326.7 699.1 Interest accrued but not due 2.6 120.6 10.7 Unclaimed Dividend 0.0 1.6 1.7 (No amount is due for payment to Investor Education & Protection Fund)

245.7 11,469.4 6,560.2

PROVISIONS FOR : Leave Encashment 0.8 35.4 27.8 Gratuity 0.4 19.1 10.5 Performance Warranties 18.4 859.6 614.4

19.6 914.1 652.7

265.3 12,383.5 7,212.9

SCHEDULE `L': SALES & SERVICES:

Sales,Erection & Works Contract Receipts. Transmission & Distribution Division 314.8 14,696.2 11,863.2 Real Estate Division 0.1 3.8 0.6 Bio-Mass Energy Division 8.2 382.7 344.1 Infrastructure Division 59.5 2,779.2 1,237.2

382.6 17,861.9 13,445.1 Excise Duty/Jcci Refund & Rebate 1.5 72.0 16.3

384.1 17,933.9 13,461.4

SCHEDULE `M': OTHER INCOME:

Profit on Sale of fixed assets 0.0 0.3 0.1 Profit on Sale of Investment 0.2 9.5 - Miscellaneous Income 0.1 2.5 6.4 Certified Emission Reduction Receipts 0.9 44.2 43.8

F-52

Dividend from Current Investment - - 7.3 Dividend from Long Term Investment 0.0 0.2 0.1 Dividend from Subsidiaries 0.7 32.6 32.9 Liabilities Written Back 0.0 0.8 6.9 Insurance Claims 0.0 1.9 7.5 Rent Income 0.3 12.8 5.3 Provision for Diminution in value of Investments reversed 0.0 0.1 - Interest Income (Gross) 3.4 160.0 129.8

5.6 264.9 240.1

SCHEDULE `N': INCREASE (DECREASE) IN STOCKS 31/12/2009 31/12/2009 31/12/2008

USD in Million Rs. in Million Rs. in Million a) Transmission & Distribution Division: STOCK AT CLOSE : Finished Goods 19.5 909.3 590.1 Semi-finished Goods 5.0 235.0 315.7 Scrap 0.4 17.5 8.1 Work in Progress 1.7 79.3 -

26.6 1,241.1 913.9

STOCK AT COMMENCEMENT : Finished Goods 11.9 553.2 281.1 Semi-finished Goods 4.0 184.4 94.2 Scrap 0.2 7.7 6.0 Work in Progress 3.3 153.7 -

19.4 899.0 381.3

7.2 342.1 532.6

b) Real Estate Division: STOCK AT CLOSE : Finished Stock 0.1 6.7 6.7

0.1 6.7 6.7

STOCK AT COMMENCEMENT :

F-53

Finished Stock 0.1 6.7 6.7 0.1 6.7 6.7

7.2 342.1 532.6

SCHEDULE Ò': EMPLOYEES EMOLUMENTS:

Salaries, Wages, Bonus 23.2 1,082.2 692.2 Contributions to Provident & Other Funds (includes social security 1.0 46.5 45.8 and other benefits for overseas employees) Employees' Welfare Expenses 1.7 79.7 40.0

25.9 1,208.4 778.0

SCHEDULE `P': MANUFACTURING & OPERATING EXPENSES:

Erection & Sub-contracting Exp. 102.7 4,795.0 2,525.4 Job charges 1.7 79.2 75.6 Power & Fuel 1.0 45.2 48.2 Repairs & Maintenance: Plant & Machinery 0.2 10.3 15.8 Building 0.2 10.7 5.9 Other 0.1 3.2 3.1 Freight & Forwarding Expenses 4.9 230.6 148.7 Stores, Spares and Tools Consumed 1.6 76.1 56.5 Vehicle/ Equipment Running & Hire Charges 0.4 17.7 14.6 Testing Expenses 0.1 3.6 9.7 Pollution Control Expense 0.1 4.4 3.4 Other Operating Expenses - - 1.2

113.0 5,276.0 2,908.1

SCHEDULE `Q': ADMINISTRATIVE, SELLING & OTHER EXPENSES: 31/12/2009 31/12/2009 31/12/2008


Insurance Charges 1.8 81.7 76.4

F-54

Rent 2.4 109.9 67.5 Rates & Taxes 0.2 9.7 1.9 Stationery,Printing & Drawing Expenses 0.4 17.1 12.0 Telecommunication Expenses 0.5 25.4 19.0 Travelling Expenses 2.1 99.2 70.3 Legal & Professional Expenses 0.7 32.3 27.7 Service Charges 2.0 91.5 26.7 Audit Fees 0.0 2.3 2.1 General Expenses 0.6 29.9 27.8 Miscellaneous Expenses 5.1 239.4 87.6 Taxes & Duties 2.0 95.7 123.1 Loss on sale of assets 0.1 3.9 0.7 Loss on sale of Securities 0.0 0.0 - Balances Written Off - - 1.7 Performance Warranties Expenses 5.1 237.5 122.7 Loss by Theft/Damage/Fire 0.5 24.1 11.8 Service Tax 0.7 34.4 100.8 Exchange Rate Variation 1.1 51.6 59.5 Carbon Credit Expenses 0.1 5.1 0.6

25.4 1,190.7 839.9

SCHEDULE `R': FINANCIAL EXPENSES:

Interest On fixed period loans 2.9 133.2 44.0 Others 12.0 559.6 390.3 Bank Commission & Charges 4.0 184.7 109.2 Other Financial Expenses 0.5 22.4 18.1

19.4 899.9 561.6 Add / (Less) : Exchange rate variation (2.5) (115.2) 150.8

16.9 784.7 712.4

CASH FLOW STATEMENT Rs in Million

F-55

(Inflow / (Outflow))

FOR THE NINE MONTH

ENDED 31/12/2009 FOR THE NINE MONTH ENDED

31/12/2008

A NET CASH FLOW FROM/ (USED IN ) OPERATING ACTIVITIES 1,089.0 (3,070.1) B CASH FROM / (USED IN) INVESTING ACTIVITIES (2,106.8) (435.5) C CASH FROM / (USED IN) FINANCING ACTIVITIES 972.8 3,597.6 D NET INCREASE IN CASH AND CASH EQUIVALENT (44.8) 91.9 E Opening Cash and Cash Equivalent As at 1st April 442.7 338.8 F Closing Cash and Cash Equivalent 398.0 430.7 398.0

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SCHEDULE ‘S’

NOTES FORMING PART OF ACCOUNTS FOR THE PERIOD ENDED 31.12.2009 AND 31.12.2008


A. Basis of Accounting:

(i) The financial statements are prepared in accordance with relevant accounting standards under the historical cost convention, except as stated in note 1 B.

(ii) The accounts have been on accrual basis of accountancy in accordance with the accounting principles generally accepted in India.

B. Fixed Assets:

Fixed assets are stated at cost of acquisition/construction/revalued amount less accumulated depreciation.

C. Depreciation:

Depreciation is provided on the basis of straight-line method on all depreciable fixed assets at the rate prescribed in Schedule –XIV of the Companies Act, 1956, on prorata basis except:

(a) Depreciation pertaining to assets of Research & Development Centre and of Export Oriented Unit are provided on the basis of written down value method.

(b) Depreciation in Bio-mass Energy plants are provided on plant and machinery at a higher rate at 7.5% instead of the prescribed rate for continuous process plant considering the useful life of plant supported by technical evaluation and report.

(c) In case of revalued assets the difference between the depreciation based on revaluation and the depreciation charged on historical cost is recouped out of revaluation reserve.

(d) Depreciation on overseas projects assets are provided at the rates as per the requirement of law of respective foreign countries and as per such rates depreciation provided in each overseas project is higher than the depreciation at prescribed rates under Schedule-XIV of the companies Act, 1956.

(e) Depreciation on all the vehicles in the company is provided at a higher rate at 15% instead of the prescribed rate, considering the useful life of vehicles based on technical evaluation of the management.

D. Revenue Recognition:

(i) Transmission & Distribution Division:

Sales are recognized on delivery of materials. Sales includes excise duty and export benefits being Duty Entitlement Pass book credits but excludes Sales Tax.

Erection and Works Contract revenue for work completed are recognized on percentage of completion method based on completion of physical proportion of the contract work. When it is probable that total contract cost will exceed the total contract revenue, the expected loss is recognized immediately.

(ii) Real Estate Division:

Company recognize revenue at the time of transfer of significant risks and rewards of ownership to the buyer on executing agreement for sale and estimated cost of completion against Sales recognized, wherever applicable, is provided for in profit and loss account. Advances received against booking of units are appearing as current

F-57

liabilities.

(iii) Bio-mass Energy Division:

Company recognize revenue on supply of electricity generated to the customer.

(iv) Infrastructure Division :

Revenue is recognized by adding the aggregate cost and proportionate margin using the percentage completion method. Percentage of completion is determined as a proportion of cost incurred to date to the total estimated contract cost. When it is probable that total contract cost will exceed the total contract revenue, the expected loss is recognized immediately.

(v) Others

Dividends are recorded when the right to receive payment is established. Interest income is recognized on time proportion basis.

E. Inventories:

(i) Transmission & Distribution Division:

Raw Materials, Semi-finished goods, Finished goods, scraps and construction & other stores-spares & tools and trading goods are stated at lower of cost and net realizable value. The cost of inventories is computed on weighted average basis.

(ii) Real Estate Division:

Finished and semi-finished inventory are stated at lower of cost and net realizable value. Cost is computed on average cost basis which includes payments made against agreement to purchase land, development cost direct and attributable towards the specific real estate project and cost of borrowings as stated in note 1 K.

(iii) Biomass Energy Division:

Fuel and stores, spares & tools are stated at lower of cost and net realizable value. The cost of fuel, stores, spares & tools are computed on weighted average basis.

(iv) Infrastructure Division:

Construction material and stores, spares & tools are valued at lower of cost or net realizable value. The cost is computed on weighted average basis.

F. Investments:

Long term investments are stated at cost after deducting the provision for diminution in value, if any, other than of a temporary nature. Current investments are stated at lower of cost or fair value.

G. Retirement Benefits:

(i) Gratuity liability is provided under a defined benefit plan, under group Gratuity Cash Accumulation Scheme of the Life Insurance Corporation of India under irrevocable trust. The Company’s liability towards gratuity is determined on the basis of actuarial valuation done by an independent actuary.

(ii) Contribution to Provident Fund, a defined contribution plan is charged to Profit & Loss Account.

F-58

(iii) Provision for leave encashment liability is made on Actuarial valuation as at the Balance Sheet date.

(iv) All other short-term employee benefits are recognized as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

H. Excise/Custom Duty:

The liability for excise and custom duty in respect of materials lying in factory/bonded remises is accounted for as and when they are cleared/debonded.

I. Deferred Revenue Expenses:

Preliminary expenses incurred till March 31, 2003 are amortized over a period of five years and incurred after March 31, 2003 are charged to revenue.

J. Foreign Currency Transactions:

Transactions in foreign currency are accounted for at the exchange rate prevailing on the date of transactions. Assets and liabilities, remaining unsettled at the end of the period are translated at the exchange rate prevailing at the end of the period and difference is adjusted to profit & loss account. The exchange gain or loss between forward exchange contract rate and exchange rate at the date of transaction are recognized in profit and loss account over the life of the contract.

Translation of overseas jobs / branches of non-integral foreign operations: -

(a) Assets and liabilities at rates prevailing at the end of the year,

(b) Income and expenses at the average rate for the year, and

(c) Resulting exchange differences are accumulated in foreign currency translation reserve account.

In respect of foreign currency option contracts which are entered into to hedge, the cost of these contracts, if any, is expensed over the period of the contract. Any profit or loss arising on settlement or cancellation of currency options is recognized as income or expenses for the period in which settlement or cancellation takes place.

K. Borrowing Costs:


L. Impairment of assets:

The carrying amount of assets, is reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exist, the recoverable amount of the assets is estimated. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating units exceeds its recoverable amount. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and recognized in compliance with AS-28.

M. Taxes on Income:

(a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credit computed in accordance with the provisions of the Income Tax Act, 1961.

F-59

(b) Deferred tax is recognized on timing difference between the accounting income and the estimated taxable income for the period and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date.

(c) Deferred tax assets which arise mainly on account of unabsorbed losses or unabsorbed depreciation are recognized and carried forward only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.

N. Use of Estimates:

The presentation of financial statements requires certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Differences between the actual results and estimates are recognized in the period in which the results are known/materialized.

O. Provisions, Contingent Liabilities and Contingent Assets:

(i) Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and that probability requires an outflow of resources.

(ii) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no disclosure is made.

As at 31/12/2009

(Rs. Million)

As at 31/12/2008

(Rs. Million) 2. Contingent liabilities in respect of:

i) Bank guarantees 214.81

19.35

ii) Claims against company not acknowledged as debt 65.26 61.12

iii) Bonds/Undertaking given by company for concessional duty/exemption to customs

157.37 350.00

iv) Show Cause Notice issued/demand by the Service tax/Entry Tax/CST/ Stamps authority, disputed by the company

98.08 1.96

v) Benefit of countervailing duty under Custom Law disputed by the department

- 5.71

vi) Penalty for delayed payment of Service tax disputed before Appellate authority already stayed unconditionally

12.03 12.03

vii) Guarantees on behalf of a Subsidiary Company 120.43 211.00

viii) Corporate Guarantee for Equipment Hiring 285.68

9 months period ended 31.12.09


Qty. (Rs.in Million) Qty. (Rs.in Million)

3. Quantitative Particulars : (a) Capacities:

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Licenced capacity No Licence is required. Installed capacity (As certified by the Management) i) Transmission line towers and Steel structures (b) Actual production: Transmission line towers and steel Structures. (c) Generation of Electricity (Net of Captive Consumption)

1,08,000

85,885

81.37

- - -

1,08,000

64,095

76.83

- -

-

4. Particulars of:

(a) Finished Goods:

i) Transmission Line Towers & Steel Structures Opening Stock MT Closing Stock MT Turnover MT

10,332 14,178

82,038**

553.19 909.32

14696.19*

6,325 10,552

59,868**

281.05 590.11

11,863.23

ii) Real Estate (Flats) Opening Stock Nos. Closing Stock Nos.

1 1

6.67 6.67

1 1

6.67 6.67

iii) Bio-Mass Energy Sales of Electricity MU

81.37

382.75

76.83

344.14

(b) Raw materials & Components etc consumed:

i) Transmission & Distribution Division: Steel MT Zinc MT Components & Accessories etc.** MT

92,717 4,800

-

3,273.20

428.07 4,031.01

69,758 3,360

-

2,849.69

332.42 4,300.40

ii) Bio-mass Energy Division MT Agricultural residues

126,816 196.76 163.373 163.37

Notes :

*The value of turnover includes value of components, accessories, equipments and miscellaneous items connected with installation of transmission lines and sub-stations and those for rural electrification work and items purchased with the object of resale against specific projects/orders in transmission and distribution and amount of erection and works contracts receipts, tower testing and other services, scrap and duty entitlement passbook credits in transmission and distribution division.

**The quantities pertaining to components, accessories, equipments, and miscellaneous items are not included/or provided, as such items being dissimilar in nature and being in different unit of measurement like Nos., MT, KM, Pieces etc. and hence is not practicable to provide the same.

5. Provision of income tax including foreign tax is made after considering depreciation, deductions and allowances allowable under income tax regulations and is shown net of taxes paid as liability.

6. In the opinion of the management the balances shown under sundry debtors, accrued value of work done and loans and advances have approximately the same realizable value as shown in the accounts.

7. The disclosure as to provision for performance warranties in schedule “K” is :-

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Carrying amount at the beginning Add : Provision/Expenses during the Year Less : Reversal of Provision on finality of Warrantee & Guarantee Less : Utilisation during the year Less: Excess expenses during the year Carrying amount at the close

As at 31/12/2009

(Rs.in Million)

663.95

250.13 (12.68)

901.40

(35.72) (6.03)

859.65

As at 31/12/2008

(Rs.in Million)

545.74

184.73 (62.08)

668.39

(54.03) -

614.36

8. Information in accordance with the requirement of the AS-7 issued by the Institute of Chartered Accountants of India as follows


(Rs. in Million)


(Rs. in Million)

1. Amount of Contract Revenue Recognized as Revenue in the period

6,379.36

4,757.27

2 Disclosure in respect of contracts in progress at the Reporting Date

(i) Contract cost incurred & Recognized Profits lessrecognized losses upto the reporting date

1,4290.87 13,381.53

(ii) Advances Received 2,185.17 1,956.28

(iii) Retentions 1291.71 1,321.23

3 Due to Customers - -

4 Due from Customers 4509.79 2,892.64

9. The accounts of the foreign operations of the company’s overseas branches in Kuwait, Philippines, Algeria, Ethiopia, Abu Dhabi, Kenya, South Africa, Djibouti & Nepal have been incorporated on the basis of unaudited management accounts prepared locally at the respective branches.

10. Related Party disclosure as required by Accounting Standard -18 is as below:

(a) List of related persons

(i) Enterprises under significant influence: • Kalpataru Properties Private Limited • M/s. Habitat • Property Solution (India) Private Limited • Yugdharam Real Estate Private Limited • Durable Trading Co. Private Limited • P.K. Velu & Co. Private Limited • Kalpataru Limited.

(ii) Subsidiaries: • JMC Projects (India) Limited • Shree Shubham Logistics Limited • Energy Link (India) Limited

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• Saicharan Properties Limited • Amber Real Estate Limited • Kalpataru Power Transmission (Mauritius) Limited • Kalpataru South Africa (Pty) Limited • Kalpataru Power Transmission Nigeria Limited • Kalpataru Power Transmission USA Inc. • Adeshwar Infrabuild Limited

(iii) Key Management Personnel:

• K.V. Mani - Managing Director (Upto 31.05.2009) • Manish Mohnot - Executive Director • Pankaj Sachdeva - Managing Director (w.e.f. 01.06.2009)

(b) The following transactions were carried out with related parties in the ordinary course of business:

(Rs.in Million)

Sr. No.

Particulars Entities under

significant influence

Subsidiary Companies

Key Managerial Personnel

1 Reimbursement of expenses 1.40 - -

(1.57) - -

2 Space usage charges received - - -

(0.05) - -

3 Rent Paid 20.76 - -

(20.14) - -

4 Investment in Shares - 9.81 -

- (127.98) -

5 Interest received - 141.84 -

- (64.56) -

6 Loan given - 1724.85 -

- (1179.37) -

7 Loan repaid back - 441.00 -

- (777.39) -

8 Reimbursement of Exp. Received - - -

- (0.73) -

9 Rent Received - 5.42 -

- (5.47) -

10 Sale of Goods - - -

- (6.04) -

11 Hire Charges Paid - - -

- (0.08) -

12 Dividend Received - 32.64 -

- (32.27) -

13 Salary & Commission - - 33.66

- - (33.27)

14 Security Deposit at the period end 332.61 - -

(12.69) - -

15 Loan to Subsidiary Companies at the period end

- 2056.77 -

- (506.66) -

Figures in ( ) are for December 08 period ended.

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11. The disclosure requirement as per Accounting Standard 17 segment reporting is :-

S.N. Particulars Segment

TLD RED BM INFRA Unallocable Consolidated

(I) Business Segment

1 Revenue :

Sales & Services 14347 4 383 2779 17513

(11645) (1) (344) (1238) (-) (13228)

Other Operating Income 76 1 1 0 78

(26) (-) (7) (4) (-) (37)

Net Sales/Income from Operation 14423 5 384 2779 0 17591

(11671) (1) (351) (1242) (-) (13265)

Add : Other Income 20 0 44 2 193 259

(66) (-) (44) (-) (104) (214)

Total 14443 5 428 2781 193 17850

(11737) (1) (395) (1242) (104) (13479)

2 Segment Result Before Interest 1607 4 110 193 193 2107

(1181) (-) (110) (126) (104) (1521)

Interest 578

(585)

Profit after Interest 1529

(936)

Extra Ordinary Item -

(-)

3 Current Tax (including FBT) 380

(194)

4 Deferred Tax 20

(29)

5 Net Profit after Tax 1129

(713)

6 Segment Asset 23033 8 711 3586 3917 31255

(18371) (115) (726) (1991) (2023) (23226)

7 Segment Liability 11239 3 19 1613 532 13406

(6692) (3) (18) (504) (127) (7344)

Capital Employed 11794 5 692 1973 3385 17849

(11679) (112) (708) (1487) (1896) (15882)

8 Capital Expenditure 806 0 7 167 0 980

(Including CWIP) (301) (-) (5) (227) (-) (533)

9 Depreciation 144 0 35 94 0 273

(97) (-) (35) (65) (-) (197)

(II) Geographical Segment

Revenue 6941 5 384 2779 0 10108

India (8107) (1) (351) (1242) (-) (9701)

7482 0 0 0 0 7482

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S.N. Particulars Segment

Outside India (3564) (-) (-) (-) (-) (3564)

14423 5 384 2779 0 17591

Total (11671) (1) (351) (1242) (-) (13265)

� Figures in ( ) are for December-08 period.

Note:

(i) Geographical segment considered for disclosure are as follows:

Revenue within India includes sales and services to customers located within India.

Revenue outside India includes sales and services to customers located outside India.

(ii)

Segment revenue, results , assets & liaiblities of Research & Development Centre are considered as part of transmission division segment and consequently are considered as respective part of disclosure with transmission segment herein above.

12. Figures in brackets are pertaining to the 9 months period ended on 31.12.2008 and the same have been regrouped and/or rearranged wherever considered necessary.

13. The requirement of Indian Accounting Standard 25, “Interim Financial Reporting” is to include the balance sheet as of the end of the current interim period and a comparative balance sheet as of the end of the immediately preceding financial year. However, these interim financial statements are prepared for the purpose of inclusion in the “Placement Document” being prepared for the purpose of issue of Equity Shares to qualified institutional bidders. Hence, the comparative balance sheet as at December 31, 2008 is attached to the current period balance sheet as at December 31, 2009.

F-65

To, The Board of Directors,

JMC (Projects) India Ltd.

We have reviewed the accompanying unaudited condensed unconsolidated balance sheet of JMC (Projects) India Ltd. (“the Company”) as at December 31, 2009 and December 31, 2008 and the related unaudited condensed unconsolidated statements of profit and loss and cash flows (“ the interim financial statements”) for the nine month period then ended. These interim financial statements are prepared in accordance with the requirements of Indian Accounting Standard 25 “Interim Financial Reporting”. These interim financial statements are the responsibility of the Company’s management and have been approved by the Board of Directors. Our responsibility is to issue a report on these interim financial statements based on our review.


Based on our review conducted as above and read with Note 11 of Schedule 20 to the interim financial statements, regarding insertion of comparative balance sheet for the corresponding interim period instead of presenting balance sheet for the immediately preceding financial year, nothing has come to our attention that causes us to believe that the accompanying interim financial statements prepared in accordance with the applicable accounting standards and other recognized accounting practices and policies, contain any material misstatements.


For Sudhir N. Doshi & Co., For Kishan M. Mehta & Co. Chartered Accountants Chartered Accountants Firm Reg. No. (110496W) Firm Reg. No. (105229W) Sudhir N.Doshi Kishan M. Mehta Proprietor Partner M.No. 30539 M.No. 13707 Place: Ahmedabad Place: Ahmedabad Date: 27th April 2010 Date: 27th April 2010

F-66

JMC Projects (India) Ltd. Condensed Unaudited Balance Sheet

AS AT AS AT AS AT 31/12/2009 31/12/2009 31/12/2008

Schedule USD in Million Rs. in Million Rs. in Million SOURCES OF FUNDS

Shareholders' Funds Share Capital 1 4.7 217.7 433.9

Reserves & Surplus 2 46.1 2152.7 1494.7 Loan Funds Secured Loans 3 33.6 1567.3 1771.8

Unsecured Loans 4 5.2 245.7 245.9 Deferred Tax Liability 1.5 68.8 124.1

TOTAL 91.1 4252.2 4070.4

APPLICATION OF FUNDS Fixed Assets 5 Gross Block 65.3 3046.4 2853.1 Less : Depreciation 20.5 955.9 627.4 Net Block 44.8 2090.5 2225.7 Capital Work-in-Progress 1.4 63.2 16.6

46.1 2153.7 2242.3 Investments 6 1.4 65.7 24.5 Deferred Tax Assets Current Assets, Loans and Advances Current Assets Inventories 7 16.7 779.6 1068.1 Sundry Debtors 8 106.0 4951.8 3869.5 Cash and Bank balances 9 1.6 74.9 92.6 Loans and Advances 10 22.1 1024.5 885.3

146.4 6830.8 5915.5 Less : Current Liabilities and Provisions 11 Current Liabilities 96.5 4506.6 3916.8 Provisions 6.5 301.0 214.1

103.0 4807.6 4130.9 Net Current Assets 43.4 2023.2 1784.6 Miscellaneous Expenditure 12 0.2 9.6 19.0 (To the extent not written off or adjusted)

TOTAL 91.1 4252.2 4070.4

Difference 0 Notes to Accounts : 20 The Schedules referred to above and the Notes attached form an integral part of Statement of Accounts.

F-67

JMC Projects (India) Ltd. Condensed Unaudited Profit and Loss Account

For 9 months For 9 months For 9 months Ended Ended Ended

31/12/2009 31/12/2009 31/12/2008 Schedule USD in Million Rs. in Million Rs. in Million

INCOME Contract Receipts 200.4 9356.9 9458.8 Other Income 13 1.8 86.1 77.4 Inc. / (Dec.) in Work in Progress 14 1.0 44.3 211.2

203.2 9487.3 9747.4 EXPENDITURE Cost of Materials 15 75.2 3512.3 4528.1 Construction Expenses 16 84.4 3935.7 3330.5 Payment to Employees 17 15.0 702.0 648.7 Other Expenses 18 12.3 567.3 480.4 Interest and Finance Charges 19 4.5 207.0 226.2 Depreciation 5 5.5 257.9 213.3

196.9 9182.2 9427.2 Profit / (Loss) Before Tax 6.3 305.1 320.2 Provision for Current Tax 2.3 109.2 98.7 Provision for Fringe Benefit Tax - - 10.2 Provision for Deferred Tax (0.2) (8.2) 6.6 Profit / (Loss) After Tax 4.2 204.2 204.7 Balance brought forward from Previous year 11.5 538.1 262.2 Prior Period Adjustments Prior Period Expenses 0.0 0.6 - Amount Available For Appropriations 15.7 741.6 466.9 Appropriations Proposed Dividend on Preference Shares 0.2 7.7 7.6 Corporate Tax on Proposed Dividend on Preference Shares 0.0 1.3 1.3 TOTAL 0.2 9.0 8.9 Balance Carried to Balance Sheet 15.5 732.6 458.0 Basic Earning Per Share 0.2 9.97 10.79 Dilluted Earning Per Share 0.2 9.97 10.79 Notes to Accounts : 20 The Schedules referred to above and the Notes attached form an integral part of Statement of Accounts.

F-68

JMC Projects (India) Ltd.

Schedules forming part of Accounts

SCHEDULE - 1 AS AT AS AT AS AT

31/12/2009 31/12/2009 31/12/2008

SHARE CAPITAL USD in Million Rs. in Million Rs. in Million

Authorised :

2,47,50,000 (2,47,50,000) Equity Shares of Rs.10/- each

5.3 247.5 247.5 12,50,000 (12,50,000) Preference Shares of Rs. 202/- each

5.4 252.5 252.5

10.7 500.0 500.0

Issued, Subscribed and Paid up:

* 2,17,68,348 (1,81,40,290) Equity Shares of Rs.10/- each fully paid up - Refer c) 4.7 217.7 181.4

Nil, (12,50,000)6% Non Cumulative Redeemable Preference Shares of Rs. 202/- each - - 252.5

TOTAL 4.7 217.7 433.9

* of the above Equity shares:

a 115,40,247 (94,67,771) Equity shares fully paid up are held by the Holding company, Kalpataru Power Transmission Limited. b 25,19,850 (25,19,850) Equity Shares fully paid up have been issued as bonus shares by capitalisation of General Reserve and Security Premium Account in the year 2000-01. c The Company has reserved issuance of 10,00,000 (10,00,000) Equity Shares of Rs. 10/- each for offering the eligible employees of the Company under Employee Stock Option Plan (ESOP). During the

F-69

financial year 2007-08, the Company has granted 6,00,000 Options to the eligible employees at a price of Rs. 217/- each. The Options would vest over the period of 4 years from the date of grant based on specified criteria.

d During the period ended December 31, 2009, the Company has issued 36,28,058 equity shares by way of rights on equity shares in the ratio of 1:5, which have been allotted on 3rd October, 2009. e During the period ended December 31, 2009, 6% Non-Cumulative Redeemable Preference Shares of Rs. 202/- each, were redeemed on 3rd October, 2009 from the proceeds of fresh of equity shares on

right basis as referred in (c) above.

F-70




31/12/2009 31/12/2009 31/12/2008

RESERVES & SURPLUS USD in Million Rs. in Million Rs. in Million Securities Premium Account

As per last Balance Sheet 19.6 908.7 908.7

Add: Share Premium on Equity Shares, Issued and Subscribed during the year 7.8 362.8 - Less: Shares Issue expenses adjusted against securities premium

0.1 6.2

0.0

27.3 1,265.3 908.7

General Reserve As per last Balance Sheet 3.3 154.8 128.0

3.3 154.8 128.0

Profit and Loss Account Profit Transferred from Profit & Loss Account 15.5 732.6 458.0

TOTAL 46.1 2,152.7 1,494.7

F-71




31/12/2009 31/12/2009 31/12/2008

LOAN FUNDS : USD in Million Rs. in Million Rs. in Million

Secured Loans

A Term Loans: From Banks:*

- Oriental Bank of Commerce 4.9 227.7 182.0

- Karur Vysya Bank Ltd. # 0.3 16.2 -

- The Bank of Rajasthan Ltd. 6.2 288.6 399.7

- The Standard Chartered Bank 0.8 36.9 54.7

- Indian Bank 1.3 60.3 -

- Punjab National Bank 0.5 24.1 -

Loan against Vehicles / Equipments @ 0.3 14.5 22.5

14.3 668.3 658.9

B Working Capital Facility : $

From Banks: 19.3 899.0 1,112.9

33.6 1,567.3 1,771.8

Note: [*] Term Loan from Banks are secured by first charge on specific Plant & Machinery financed by them. @ Loan against Vehicle / Equipments are secured by way of charge on specific vehicles and equipments. [#] For the period ended as at December 31, 2008, term loan from bank is secured by way of first charge on all the movable and immovable assets except some of the office premises but subject to prior

charges created or to be created in favour of company's consortium bankers, a bank and fixed assets specifically charged and second charge on some of the office premises for which first charge is with consortium bankers.

[$] For the period ended as at December 31, 2009, working Capital facilities are secured in favour of consortium bankers, by way of first charge against hypothecation of stocks, work in progress, stores and spares, bills receivables, book debts and other movables except second charge on current assets and receivables in favour of a bank for Bank Guarantee of Rs. 5000 lacs provided on behalf of

F-72

Joint Venture in which the Company is one of the member and except first charge over machineries and equipments financed by others for term loans and further secured by second pari-pasu charge on machineries and equipments financed by others for term loans and first charge on the office premises of the Company. [$] For the period ended as at December 31, 2008, working Capital facilities are secured in favour of consortium bankers, by way of first charge against hypothecation of stocks of construction material, consumable stores and spares, bills receivables, book debts and other movables except second charge on current assets and receivables in favour of a bank for Bank Guarantee of Rs. 500 millions provided on behalf of Joint Venture in which the Company is one of the member , second pari-pasu charge on company's fixed assets and first charge on some of the office premises of the company.

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SCHEDULE - 4

Unsecured Loans

Short Term: Commercial Paper 2.1 100.0 -

Inter Corporate Deposits-From Holding Companies - - 43.4

Short Term Loan From Banks - - 196.0 Fixed Deposits 3.1 145.7 6.5

5.2 245.7 245.9

5.2 245.7 245.9

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SCHEDULE - 5

FIXED ASSETS as at December, 31, 2009

Description

Gross Block Depreciation Net Block

As at Additions / Deductions

/ As at As at Period ended Deductions

/ As at As at

1st April, 2009

Adjustments

Adjustments

31st December,

2009

1st April, 2009

31st December,

2009

Adjustments

31st December,

2009

31st December,

2009

Land 1.4 1.4 1.4

Office Buildings 19.8 1.9 21.7 1.1 0.2 1.3 20.4

Store Building 9.7 5.2 0.0 14.9 0.9 0.2 0.0 1.1 13.8

Plant & Machinery 2,645.8 127.6 11.2 2,762.2 605.6 237.4 5.1 837.9 1,924.3

Electrical Installation 15.7 0.2 0.0 15.9 6.8 1.2 0.0 8.0 7.9

Equipments 70.1 9.6 0.3 79.4 29.6 7.1 0.1 36.6 42.8

Furniture & Fixtures 29.5 0.2 0.3 29.4 8.4 1.4 0.2 9.6 19.8

Heavy Vehicles 62.6 0.8 0.2 63.2 34.4 4.5 0.2 38.7 24.5

Vehicles 53.0 7.5 2.2 58.3 18.6 5.9 1.8 22.7 35.6

TOTAL 2,907.6 153.0 14.2 3,046.4 705.4 257.9 7.4 955.9 2,090.5 Capital Work-in-Progress 20.3 45.7 2.8 63.2 63.2

FIXED ASSETS as at December, 31, 2008

Description

Gross Block Depreciation Net Block

As at Additions / Deductions /

As at As at Period ended Deductions/

As at As at

1st April,2008

Adjustments

Adjustments

31st December,20

08

1st April,2008

31st December,20

08

Adjustments

31st December,20

08

31st December,20

08

F-75

Land 1.4 1.4 1.4

Office Buildings 19.8 19.8 0.8 0.2 1.0 18.8

Store Building 6.8 2.5 0.1 9.2 0.9 0.1 0.1 0.8 8.4

Plant & Machinery 2,072.6 543.0 19.5 2,596.1 351.5 195.4 12.6 534.3 2,061.8

Electrical Installation 15.2 0.7 0.2 15.7 5.3 1.1 0.1 6.3 9.4

Equipments 57.2 9.8 0.3 66.7 21.9 5.3 0.1 27.1 39.5

Furniture & Fixtures 29.0 0.8 0.2 29.6 6.7 1.4 0.2 7.9 21.7

Heavy Vehicles 63.0 0.5 62.5 28.8 4.5 0.5 32.8 29.7

Vehicles 45.4 10.7 4.0 52.1 14.9 5.2 3.0 17.1 35.0

TOTAL 2,310.4 567.5 24.8 2,853.1 430.8 213.2 16.6 627.4 2,225.7 Capital Work-in-Progress 14.9 91.0 89.2 16.6 16.6

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31/12/2009 31/12/2009 31/12/2008 INVESTMENTS USD in Million Rs. in Million Rs. in Million

A. LONG TERM INVESTMENTS

In Equity Shares of Subsidiary Companies - Unquoted and Trade JMC Mining & Quarries Limited 0.1 5.0 5.0 5,00,000 (5,00,000) Equity Shares of Rs. 10/- each Fully paid up.

In Equity Shares - Unquoted and Trade Nutan Nagarik Sahakari Bank Limited 0.0 0.1 0.1

4,600 (4,600) Equity Shares of Rs. 25/- each fully paid up

Total (A) 0.1 5.1 5.1

B. CURRENT INVESTMENTS In Joint Ventures Aggrawal JMC JV 1.3 60.6 19.4

Total (B) 1.3 60.6 19.4

TOTAL (A + B) 1.4 65.7 24.5

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AS AT AS AT AS AT

31/12/2009 31/12/2009 31/12/2008

CURRENT ASSETS, LOANS AND ADVANCES : USD in Million Rs. in Million Rs. in Million

CURRENT ASSETS :

SCHEDULE - 7

INVENTORIES (As Valued, Verified and Certified by the Management)

Construction Materials, Stores & Spares 12.6 586.8 504.3

Work-in- Progress 4.1 192.8 563.8

TOTAL 16.7 779.6 1068.1

SCHEDULE - 8

SUNDRY DEBTORS (Unsecured and Considered Good Unless otherwise stated)

Over Six Months (Excluding Retention Money) 22.9 1070.8 373.2

Others [Including Retention Money of Million Rs. 851.12 (Rs.733.60)] 83.1 3881.0 3496.3

TOTAL 106.0 4951.8 3869.5

SCHEDULE - 9

CASH AND BANK BALANCES Cash on hand 0.2 11.2 12.8

Balance with Scheduled Banks

F-78

In Current Accounts 0.8 36.4 7.9

In Fixed Deposit Accounts 0.6 26.2 -

In Fixed Deposit Margin Money Accounts 0.0 1.1 71.9

TOTAL 1.6 74.9 92.6

SCHEDULE - 10

LOANS AND ADVANCES : (Unsecured and Considered Good Unless otherwise stated)

Loans to Employees 0.0 1.2 0.4

Aggrawal JMC Joint Venture

Advances recoverable in cash or in kind or for value to be received 6.0 280.6 435.8

Security / Earnest Money Deposits 0.7 33.8 67.6

Advance Income Tax (Net-off Provision) 4.4 203.8 131.8

Advance Fringe Benefit Tax (Net-off Provision) 0.1 2.6 -

VAT / Entry Tax (Net-off Provision) 2.4 109.8 5.5

Prepaid Expenses 4.6 212.8 217.9

Other Current Assets 3.8 177.5 21.7

Accrued Income 0.1 2.4 4.6

TOTAL 22.1 1024.5 885.3

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31/12/2009 31/12/2009 31/12/2008

CURRENT LIABILITIES AND PROVISIONS : USD in Million Rs. in Million Rs. in Million

CURRENT LIABILITIES : Sundry Creditors 46.9 2188.3 2213.6

Advances from Clients 32.1 1500.2 1302.6

Payables under Letter of Credit 4.7 221.7 59.6

Bills Payable 0.7 34.3 15.1

Interest Accrued but not due 0.1 3.3 18.8

Unclaimed Dividend 0.0 0.4 0.4

Unclaimed Matured Fixed Deposits 0.0 0.5 0.4

Unclaimed Fixed Deposits' Interest 0.0 0.0 0.0

Other Liabilities 8.9 417.6 306.3

VAT / Entry Tax Payable (Net-off Refund) 3.0 140.3 -

96.5 4506.6 3916.8

PROVISIONS : Provision for Defect Liability Period 5.6 262.2 183.2

Provision for Frienge Benefit Tax ( Net of Advance Tax) - - 0.3 Provision For Leave Encashment 0.5 22.3 19.5

Provision For Gratuity 0.4 16.5 11.1

6.5 301.0 214.1

TOTAL 103.0 4807.6 4130.9

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31/12/2009 31/12/2009 31/12/2008

MISCELLANEOUS EXPENDITURE : USD in Million Rs. in Million Rs. in Million (to the extent not written off or adjusted)

C. Deferred Employee Compensation Opening balance 0.3 15.9 27.5

Less : Reversed against Options Lapsed 0.0 1.3 -

Less : Amortised during the Period 0.1 5.0 8.5

0.2 9.6 19.0

TOTAL 0.2 9.6 19.0

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SCHEDULE - 13

31/12/2009 31/12/2009 31/12/2008

OTHER INCOME USD in Million Rs. in Million Rs. in Million

Interest 0.1 3.9 12.1

Profit on Sale of Assets (Net) 0.0 0.5 5.8

Share of Profit in Joint Ventures 0.8 38.5 14.3

Miscellaneous Receipts 0.7 31.6 28.8

Liabilities Written Back 0.1 5.5 7.9

Rentals on Machineries 0.0 1.5 0.1

Insurance Claims 0.1 4.6 8.4

TOTAL 1.8 86.1 77.4

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SCHEDULE - 14

31/12/2009 31/12/2009 31/12/2008

VARIATION IN STOCK USD in Million Rs. in Million Rs. in Million

STOCK-IN-TRADE (at Close) Work-in- Progress 4.0 186.6 563.8

4.0 186.6 563.8

STOCK-IN-TRADE (at Commencement) Work-in- Progress 3.0 142.3 352.6

3.0 142.3 352.6

TOTAL 1.0 44.3 211.2

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SCHEDULE - 15

31/12/2009 31/12/2009 31/12/2008

COST OF MATERIALS USD in Million Rs. in Million Rs. in Million

Opening Stock of Construction Materials and Stores 13.4 627.7 647.3

Add: Purchases 73.5 3432.0 4349.7

Less: Closing Stock of Construction Materials and Stores 11.7 547.4 468.9

TOTAL 75.2 3512.3 4528.1

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JMC Projects (India) Ltd. Schedules forming part of Accounts SCHEDULE - 16

31/12/2009 31/12/2009 31/12/2008 CONSTRUCTION EXPENSES USD in Million Rs. in Million Rs. in Million

Work Charges 33.8 1577.2 1693.3 Composite Work Charges 32.7 1526.1 677.8 Repairs & Maintainance - Machinery & Heavy Vehicles 6.7 312.3 363.2 Electricity Charges 1.0 45.8 42.3 Rent & Hire Charges 4.3 201.0 271.8 Security Expenses 0.8 37.4 35.4 Site Expenses 3.8 176.9 189.3 Defect Liability Period Expense 1.3 59.0 57.4 TOTAL 84.4 3935.7 3330.5

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SCHEDULE - 17 31/12/2009 31/12/2009 31/12/2008

PAYMENT TO EMPLOYEES USD in Million Rs. in Million Rs. in Million Salaries, Wages and Bonus 12.5 585.6 531.5 Staff Welfare Expenses 1.0 47.8 55.9 Company's Contribution to Provident Fund & Other Funds 1.1 50.1 46.4 Directors' Remuneration 0.3 15.1 10.5 Employees' Compensation (Net-off Written Back) 0.1 3.4 4.4

15.0 702.0 648.7 TOTAL 15.0 702.0 648.7

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JMC Projects (India) Ltd. Schedules forming part of Accounts SCHEDULE - 18

31/12/2009 31/12/2009 31/12/2008 OTHER EXPENSES USD in Million Rs. in Million Rs. in Million

Building & General Repairs 0.1 2.9 5.9 Vehicle Maintenance Charges 0.4 18.8 17.0 Travelling Expenses 0.5 23.7 25.7 Conveyance Expenses 0.1 3.7 3.6 Directors' Travelling Expenses 0.0 0.7 0.9 Insurance Charges 0.7 30.5 27.0 Printing & Stationery Expenses 0.2 9.3 10.1 Office Rent 0.9 43.7 24.7 Office Expenses 0.2 9.2 5.3 Postage & Telephone Charges 0.3 11.9 12.6 Bad Debts Written Off 0.0 0.1 - Professional & Legal Charges 0.8 38.2 23.4 Remuneration to the Auditors 0.1 2.5 2.2 Rates & Taxes 0.1 4.3 1.8 Taxes & Cess 6.7 314.1 276.7 Business Promotion Expenses 0.4 16.6 7.0 Advertisement Expenses 0.0 1.8 0.7 Computer & IT Expenses 0.2 7.4 5.6 Sundry Expenses 0.1 6.5 11.3 Training Expenses 0.2 7.9 2.1 Loss on Sale of Fixed Assets / Assets Lost 0.0 0.9 5.9 Loss on Invesment in Joint Ventures 0.3 12.4 10.7 Directors' Sitting Fees 0.0 0.2 0.2

TOTAL 12.3 567.3 480.4

SCHEDULE - 19 31/12/2009 31/12/2009 31/12/2008

INTEREST AND FINANCE CHARGES : USD in Million Rs. in Million Rs. in Million Interest On Term Loans / Working Capital 1.2 56.3 35.3 Interest - Others 2.4 111.5 127.5 Bank Guarantee Commission 0.6 29.3 22.9 Other Bank / Financial Charges 0.5 21.5 16.2 Exchange Rate Difference (Net) (0.2) (11.6) 24.3 TOTAL 4.5 207.0 226.2

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CASH FLOW STATEMENT

Rs. In Million

(Inflow / (Outflow))

FOR THE NINE MONTH ENDED ON 31/12/2009

FOR THE NINE MONTH ENDED ON 31/12/2008

A. NET CASH FLOW FROM / (USED IN) OPERATING ACTIVITY 336.1 (231.2)

B. NET CASH FROM / (USED IN) INVESTING ACTIVITIES (181.3) (535.2)

C. NET CASH FROM / (USED IN) FINANCING ACTIVITIES (187.8) 718.1

D. NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (33.1) (48.3)

E. OPENING BALANCE OF CASH & CASH EQUIVALENTS AS AT 1st APRIL 106.8 69.0

F. CLOSING CASH & CASH EQUIVALENTS 73.7 20.7

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SCHEDULE 20 SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS FOR THE PERIOD ENDED 31 ST DECEMBER, 2009

12. Significant Accounting Policies

(i) Accounting Convention

Financial statements are prepared in accordance with applicable Accounting Standards under the historical cost convention on accrual basis.

(ii) Use of Estimates

The presentation of financial statements requires certain estimates and assumptions. These estimates and assumptions affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual result and estimates are recognized in the period in which the results are known/materialized.

(iii) Revenue Recognition

(a) Construction contracts

Running Account Bills for work completed are recognized on percentage of completion method based on completion of physical proportion of the contract work. Income on account of claims and extra item work are recognized to the extent company expects reasonable certainty about receipts or acceptance from the client. When it is probable that total contract cost will exceed the total contract revenue, the expected loss is recognized immediately

(b) Others

Dividends are recorded when the right to receive the payment is established. Interest income is recognized in time proportionate basis.

(iv) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation less impairment losses, if any. Cost is inclusive of all identifiable expenditure incurred to bring the assets to their working condition for intended use. When an asset is disposed of, demolished, destroyed, the cost and related depreciation are removed from the books of accounts and resultant profit or loss, is reflected in the Profit & Loss Account. Direct cost as well as related incidental and identifiable expenses incurred on acquisiton of fixed assets that are not yet ready for their intended use or put to use as at the Balance Sheet date are stated as Capital Work in Process.

(v) Depreciation

For the period ended 31st Dec.2009, depreciation is provided on the straight line method on all depreciable assets at the rate prescribed in schedule XIV of the Companies Act, 1956 on pro-rata basis except that considering the useful life based on technical evaluation by the management, higher rate than the prescribed rates are applied on a few shuttering items of Machinery @ 30%, on office equipments @ 12.5%, on all vehicles @ 15% and on remaining Plant and Machineries which are acquired on or after 1st October,2005 @ 12.5%.

For the period ended 31st December 2008, depreciation is provided on the straight line method on all depreciable assets at the rate prescribed in schedule XIV of the Companies Act, 1956 on pro-rata basis except that considering the useful life based on technical evaluation by the management, higher rate than the prescribed rates are applied on Plant and Machineries acquired on or after 1st October,2005 @ 12.5% and on all vehicles @15%.

(vi) Impairment of Fixed Assets

The carrying cost of assets is reviewed at each balance sheet date to determine whether there is

F-89

any indication of impairment of assets. If any indication exists, the recoverable value of such assets is estimated. An impairment loss is recognized when the carrying cost of assets exceeds its recoverable value. If impairment loss is reversed if there has benn a change in the estimates used to determine the recoverable amount and recognised in compliance with AS - 28.

(vii) Investments

Investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the

(viii) Retirement Benefits

(a) Gratuity liability is covered by payment there of to Gratuity fund the defined benefit plan under Group Gratuity cash accumulation scheme of Life Insurance Corporation of India under irrevocable trust. The company's liability towards gratuity are determined on the basis of acturial valuation done by as independent actuary.

(b) Contribution to Provident Fund and Superannuation Fund, the defined contribution plans as per the schemes are charged to Profit & Loss Account.

(c) Provision for Leave encashment liability is made based on actuarial valuation as at the Balance Sheet date.

(d) All other short-term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

(ix) Inventories

(a) Construction material, stores and spares are valued at lower of cost or net realizable value. Cost include cost of purchase and other expenses incurred in bringing inventory to their respective present location and condition. Cost is determined using FIFO method of inventory valuation.

(b) Work in progress is valued at lower of cost or net realizable value. In case where work is completed but Running Account bill can not be raised on client due to contractual conditions, the work in progress is valued at contract rates.

(x) Provision for Taxes

(a) Current Tax:

Tax on income for the current period is determined on the basis of estimated taxable income and tax credit computed in accordance with provisions of the Income Tax Act, 1961.

(b) Deferred Tax:

Deferred Tax is recognized, on timing differences, being the difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. It is calculated using the applicable tax rates and tax laws that have been enacted or substantially enacted as on the balance sheet date. Deferred tax assets which arises mainly on account of unabsorbed losses or unabsorbed depreciation are recognized and carried forward only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred assets can be realized.

(xi) Foreign Currency Transaction

(a) Transactions denominated in Foreign Currency are recorded at the exchange rate prevailing on the date of transaction.

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(b) In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognized as income or expense over the life of the contract. Any income or expense on account of exchange rate difference either on settlement or on translation is recognized in profit and loss account.

(c) For the period ended 31st December 2009, Assets & Liabilities other than fixed assets remaining unsettled at the end of the year, other than covered by forward exchange contracts are translated at exchange rate prevailing at the end of the year and the difference is adjusted in profit & loss account

For the period ended 31st December 2008, Assets & Liabilities remaining unsettled at the end of the year, other than covered by forward exchange contracts are translated at exchange rate prevailing at the end of the year and the difference is adjusted in profit & loss account.

(xii) Borrowing Costs

Borrowing Costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that takes necessarily substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

(xiii) Provisions, Contingent Liabilities and Contingent Assets

Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and that probability requires an outflow of resources.


(xiv) Accounting for Project Mobilisation expenses

Expenditure incurred on mobilization and creation of facilities for site is written off in proportion to work done at respective sites so as to absorb such expenditure during the tenure of the contract.

(xv) Other Accounting Policies

Accounting Policies not specifically referred to are consistent with the generally accepted accounting practices.

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Notes forming part of Accounts :

13. Contingent Liabilities in respect of

(Rs. In Millions)

Particulars

As at 31st December,

2009 As at 31st

December, 2008 A. Bank Guarantees 5.9 1.5 B. Guarantee given in respect of financial assistance &

performance in favour of Subsidiary Company to bank & others.

15.1 15.1

C. Guarantee given in respect of performance of contracts of Joint Ventures entities in which company is one of the member.

1467.2 1651.5

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

174.8 144.8

E. Sales Tax, Service Tax, Income Tax and Royalty disputed

463.8 234.9

Note : In case where Company has raised the claims on clients against which counter claims have been raised by clients, the excess of counter claims raised by client over the amount of claims are only considered in the above figures.

2 The Net Deferred Tax Liability/ (Assets) as at 31st December, 2009 comprises the following : (Rs. in Millions)

Particulars

As at 31st December

2009 As at 31st

December, 2008 Deferred Tax Liabilities Depreciation 106.2 124.1 Deferred Tax Assets U/S 43 B and 40 (a) (ia) of Income Tax Act 37.4 - Net Deferred Tax (Assets) / Liabilities : (A-B) 68.8 124.1

3 Segmental Reporting The Company recognises construction as only business segment. Hence there are no

reportable segments under AS - 17. 4 Quantitative Particulars As the production in plant for manufacturing of RCC pipes is being captively used by the

company in its only activity of construction and since the company is engaged in construction activity, the provisions of Para 3 of Part II of Schedule VI of the Companies Act 1956 regarding quantitative details, are not applicable.

5 RELATED PARTY DISCLOSURE (A) Particulars of Subsidiary / Associates

Companies

(1) JMC Mining and Quarries Ltd. Wholly Owned Subsidiary Company (2) JMC - ASSOCIATED JV Joint Venture (3) AGGRAWAL - JMC JV Joint Venture (4) JMC - SADBHAV JV Joint Venture (5) JMC - TAHER ALI JV Joint Venture (6) JMC - PPPL JV Joint Venture (7) JMC - TANTIA JV Joint Venture (8) JMC - MSKE JV Joint Venture (9) Kalpataru Power Transmission Ltd. Holding Company (B) Key Management Personnel (KMP) Nature of Relationship (1) Mr. Hemant Modi Vice Chairman & Managing Director (2) Mr. Suhas Joshi Managing Director (C) Relatives of Key Management Personnel (RKMP) Nature of Relationship (1) Late Mr. I. K. Modi Relative of key Management Personnel (2) Mrs. Suverna I. Modi Relative of key Management Personnel (3) Mrs. Sonal H. Modi Relative of key Management Personnel (4) Ms. Ami H. Modi Relative of key Management Personnel (D) Enterprises over which significant influence exercised by

Key Management Personnel (EKMP)

Nature of Relationship (1) JMC Infrastructure Ltd. Controlled entity of Mr. Hemant Modi & Mr. Suhas Joshi (2) SAI Consulting Engineers Private Ltd. Controlled entity of Mr. Hemant Modi

F-92

(Rs. In Millions)

Particulars

As at 31st December,

2009 As at 31st

December, 2008 (3) J M Construction Controlled entity of Mr. Hemant Modi & Mr. Suhas Joshi (4) JMC Consultant & Developers Private Ltd. Controlled entity of Mr. Hemant Modi & Mr. Suhas Joshi (Rs. in Millions) Particulars of Transactions with Related Parties Holding

Company Subsidiary Company

Joint Venture

KMP / RKMP

EKMP

Purchase of Materials 12.0 0.1 (6.0) (18.2) (4.5) Contract Revenue 1799.0 (1745.7) Rent Received (0.1) Rent Paid 5.5 3.4 (5.1) (3.1) Reimbursement of expenses 0.4 (4.9) Managerial Remuneration 5.9 (6.3) Loans received during the year (367.5) Loans / deposits given / repaid during the year (325.7) (0.1) Fixed Deposits matured and renewed during the

year 2.7 Guarantees Given 15.1 (15.1) Outstanding balance included in Debtors 551.0 (468.1) (1.4) Outstanding balance included in Loans (Assets) 0.4 31.5 (11.9) Outstanding balance included in Unsecured Loan (43.4) Outstanding balance included in Liabilities 6.6 164.8 (20.2) (2.5) (194.5) Interest income 1.0 (0.9) Interest paid 0.0 (17.1) (0.0) Dividend Paid 32.6 2.8 (32.3) (2.7) Share of Profit in Joint Venture 38.5 (14.3) Share of Loss in Joint Venture 12.4 (10.7) Note: Figures shown in bracket represents corresponding amounts of previous period.

6 The disclosure in respect of Provision for Defect Liability Period Expenses is as under.

(Rs. in Millions) Particulars As at 31st

December 2009

As at 31st December, 2008

Carrying amount at the beginning of the Year 203.8 126.7 Add : Provision during the year 70.0 71.0 Less : Reversal of Provision during the year 11.0 5.6 Less : Utilisation during the year 0.5 8.9 Carrying amount at the end of the year 262.3 183.2

7. Provision of Income tax is made after considering depreciation, deduction and allowances allowable under Income Tax Act.

8. In the opinion of the management, the balances shown under sundry debtors and loans & advances have approximately the same realisable value as shown in accounts.

9. The Management is of the opinion that as on the Balance sheet date, there are no indications of a material impairment loss on Fixed Assets, hence, the need to provide for impairment loss does not arise.

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11. The requirement of Indian Accounting Standard 25, "Interim Financial Reporting" is to include the Balance Sheet as of the end of the current interim period and a comparative Balance Sheet as of the end of the immediately preceding financial year. However, these interim financial statements are prepared for the purpose of inclusion in the "Placement Document" being prepared for the purpose of issue of Equity Shares to qualified institutional bidders. Hence, the comparative Balance Sheet as at December 31, 2008 is attached to the current period Balance Sheet as at December 31, 2009

F-94

Review Report on the Unaudited Condensed Interim Financial Statements as at December 31,2009 and December 31,2008

To, The Board of Directors, Shree Shubham Logistics Limited

We have reviewed the accompanying unaudited condensed balance sheet of Shree Shubham Logistics Limited ("the Company") as at December 31, 2009 and December 31, 2008 and the related unaudited condensed statements of profit and loss and cash flows (" the interim financial statements") for the nine month period then ended. These interim financial statements are prepared in accordance with the requirements of Indian Accounting Standard 25 "Interim Financial Reporting". These interim financial statements are the responsibility of the Company's management and have been approved by the Board of Directors. Our responsibility is to issue a report on these interim financial statements based on our review.


Based on our review conducted as above and read with Note 10 of Schedule P to the interim financial statements regarding insertion of comparative balance sheet for the corresponding interim period instead of presenting balance sheet for the immediately preceding financial year, nothing has come to our attention that causes us to believe that the accompanying interim financial statements prepared in accordance with the applicable accounting standards and other recognized accounting practices and policies, contain any material misstatements.


For Kishan M. Mehta & Co. Chartered Accountants (Firm Reg. No. 105229W)

Kishan M. Mehta Partner Membership No. 13707

Place: Ahmedabad Date: 27th April 2010

F-95

SHREE SHUBHAM LOGISTICS LIMITED

CONDENSED UNAUDITED BALANCE SHEET

SCHEDULE AS AT AS AT AS AT

31/12/2009 31/12/2009 31/12/2008


SOURCES OF FUNDS :

Shareholder's Funds:

Share Capital À' 7.3 340.0 340.0

Reseve & Surplus (0.5) (21.0) 5.1

6.8 319.0 345.1

Loan Funds :

Secured Loans `B' 20.5 955.1 436.6

Unsecured Loans `C' 9.4 440.8 143.2

29.9 1395.8 579.8

Deferred Tax - - 1.4

TOTAL 36.7 1714.8 926.3

APPLICATION OF FUNDS :

Fixed Assets : `D'

Gross Block 24.5 1146.0 499.4

Less: Depreciation 0.2 8.7 2.1

Net Block 24.4 1137.3 497.3

Capital Work in Progress 6.6 309.4 225.3

31.0 1446.7 722.6

F-96

Investments

Deferred Tax Assets 0.2 10.3 -

Current Assets,Loans & Advances :

Inventories È' 4.2 197.9 152.0

Sundry Debtors `F' 1.6 74.0 5.9

Cash & Bank Balances `G' 0.4 18.8 16.9

Loans & Advances `H' 1.5 70.1 73.8

7.7 360.7 248.7

Less:Current Liabilities & Provisions: Ì'

Current Liabilities 2.2 102.9 44.8

Provisions 0.2

2.2 102.9 45.0

Net Current Assets 5.5 257.9 203.7

Miscellaneous Expenditure

Profit & Loss Account

TOTAL 36.7 1714.8 926.3

Notes to the Accounts `P'

The Schedules referred to above and the Notes attached form an integral part of Accounts.

F-97


CONDENCED UNAUDITED PROFIT & LOSS ACCOUNT

For 9 Months For 9 Months For 9 Months

Ended Ended Ended

SCHEDULE 31/12/2009 31/12/2009 31/12/2008


Rs. Rs.

INCOME :

Sales & Services `J' 13.0 606.4 379.4

Increase(Decrease) in Stocks 3.0 140.3 45.3

Other Income `K' 0.1 5.1 2.2

TOTAL 16.1 751.8 426.9

EXPENDITURE :

Purchase for Trading Goods 14.8 693.1 392.6

Operating Expenses `L' 0.1 5.4 4.2

Employees' Emoluments `M' 0.6 26.1 7.9

Administrative, Selling & Other Expenses `N' 0.3 15.4 6.7

Financial Expenses Ò' 0.9 43.8 11.4

Depreciation 0.1 6.1 1.3

Provision for Diminution in value

of Investments

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17.0 789.9 424.0

PROFIT BEFORE TAX (0.9) (38.2) 2.9

Provision for Taxation

Current Tax - - -

Fringe Benefit Tax - - 0.2

Deferred Tax (0.3) (11.9) 1.0

NET PROFIT FOR THE YEAR AFTER TAX (0.6) (26.2) 1.8

Balance brought forward 0.1 5.2 3.4

Prior Period Income tax

BALANCE CARRIED OVER TO BALANCE SHEET (0.5) (21.0) 5.1

Earning per share (Rs.) (0.03) (1.31) 0.10

Notes to the Accounts `P'

The Schedules referred to above and the Notes attached form an integral part of Accounts.

F-99

SCHEDULES TO AND FORMING PART OF ACCOUNTS

AS AT AS AT AS AT

SCHEDULE À' SHARE CAPITAL : 31/12/2009 31/12/2009 31/12/2008


AUTHORISED :

21000000 ( 21000000) Equity Shares

of Rs.10 each 4.5 210.0 210.0

16000000 (16000000) Preference Shares of Rs 10 each 3.4 160.0 160.0

TOTAL 7.9 370.0 370.0

ISSUED, SUBSCRIBED & PAID-UP:

20000000 (20000000 ) Equity Shares

of Rs.10 each fully paid up 4.3 200.0 200.0

( Out of above 16000000 (16000000) Equity Shares are held by

Holding Company , Kalpataru Power Transmission Ltd) and

(38,49,600 ) 38,49,600 Equity Shares were alloted as fully paid up

for Considerarion other than cash

14000000 (14000000) Preference Shares of Rs 10 each 3.0 140.0 140.0

( Note :- Preference Shares are cumulative reedaeemable entitled to

4 % Dividend & are reedamable)

TOTAL 7.3 340.0 340.0

F-100

SCHEDULE `B' SECURED LOANS: AS AT AS AT AS AT

31/12/2009 31/12/2009 31/12/2008


TERM LOAN :

From Banks

(a) Secured against Lands and Warehousing Complexes thereon 7.2 334.7 336.1

hypothecation on the equipments and other fixed assets)

(b) Foreign Currency Term Loan Secured against Lands and Warehousing Complexes 10.3 480.0

thereon hypothecation on the equipments and other fixed assets.

(b) Secured Against Vehicles 0.0 0.8 1.0

WORKING CAPITAL FACILITIES FROM:

Bank against pledge of Commodities - - 5.5

Bank against Hypothecation of stock and Book Debts 3.0 139.6 85.8

movable machinery and futher secured by Lands and Warehousing Complexes

Bank on Overdraft against Fixed deposit receipts - - 8.2

Total (A) 20.5 955.1 436.6

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SCHEDULE `C' UNSECURED LOANS: AS AT AS AT AS AT

31/12/2009 31/12/2009 31/12/2008


From Holding Company 9.4 440.8 143.2

Total (B) 9.4 440.8 143.2

SCHEDULE `D' : FIXED ASSETS As at 31-12-2009

PARTICULARS Gross Block DEPRECIATION NET BLOCK

As on 01-04-2009 Addition Deduction AS ON 31-12-09

Up to the Previous

year

During the year Recouped Total AS ON 31-12-00

Leasehold Land 8.2 0.0 0.0 8.2 0.0 0.0 0.0 0.0 8.2 Freehold Land 399.8 6.2 0.0 406.0 0.0 0.0 0.0 0.0 406.0 Buildings 86.9 602.3 0.0 689.2 1.0 4.8 0.0 5.8 683.5 Plant & Machineries 6.8 21.7 0.0 28.5 0.3 0.4 0.7 27.8 Furniture,Fixtures & 2.6 3.4 0.0 6.0 0.1 0.2 0.0 0.3 5.8 Office Equipments 0.0 0.0 0.0 0.0 Vehicles 4.2 0.0 0.0 4.2 0.9 0.5 0.0 1.4 2.8 Computer 1.7 2.1 0.0 3.8 0.2 0.3 0.0 0.6 3.3 As at 31st Dec.,2009 510.3 635.7 0.0 1,146.0 2.5 6.1 0.0 8.7 1,137.3

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SCHEDULE `D' : FIXED ASSETS As at 31-12-2008

PARTICULARS Gross Block DEPRECIATION NET BLOCK

As on 01-04-2008 Addition Deduction AS ON 31-12-08

Upto the Previous

year

During the year Recouped Total AS ON 31-12-08

Leasehold Land 8.2 0.0 0.0 8.2 0.0 0.0 0.0 0.0 8.2 Freehold Land 128.2 253.4 0.0 381.5 0.0 0.0 0.0 0.0 381.5 Buildings 24.6 65.8 0.0 90.3 0.3 0.5 0.0 0.8 89.5 Plant & Machineries 4.6 4.5 0.0 9.1 0.1 0.2 0.3 8.9 Furniture,Fixtures & 0.5 4.2 0.0 4.7 0.0 0.1 0.0 0.1 4.6 Office Equipments 0.0 0.0 0.0 0.0 Vehicles 2.7 1.5 0.0 4.2 0.3 0.4 0.0 0.8 3.4 Computer 0.6 0.7 0.0 1.3 0.0 0.2 0.0 0.2 1.0 As at 31st Dec.,2008 169.4 330.0 0.0 499.4 0.8 1.3 0.0 2.1 497.3

SCHEDULE È' INVENTORIES : AS AT AS AT AS AT

31/12/2009 31/12/2009 31/12/2008


(As verified, valued and certified by management)

Commodities 4.2 197.1 151.5

Stores & Consumables 0.0 0.8 0.5

TOTAL 4.2 197.9 152.0

SCHEDULE `F' SUNDRY DEBTORS :

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(Unsecured & considered good unless otherwise stated)

Debts outstanding for a period exceeding Six Months 0.0 0.8 1.5

Other Debts 1.6 73.2 4.4

TOTAL 1.6 74.0 5.9

SCHEDULE `G' : CASH AND BANK BALANCES:

Cash in hand 0.0 0.2 0.2

Balance with Scheduled Banks on Current Accounts 0.1 6.9 1.0

Fixed Deposit With Bank pledged for Overdraft facility 0.3 10.0 10.7

Fixed Deposit under lien for Margin Money 0.0 1.7 5.0

TOTAL 0.4 18.8 16.9

SCHEDULE `H' : LOANS AND ADVANCES:

(Unsecured and considered good unless otherwise stated)

Advances recoverable in cash or in kind or for value

to be received 1.2 55.3 62.1

Accrued Income 0.2 7.4 5.6

Prepaid Expenses 0.0 2.1 0.8

Security Deposits 0.0 0.8 0.8

Commodity Trading Margin Money 0.1 4.5 4.5

TOTAL 1.5 70.1 73.8

SCHEDULE Ì' : CURRENT LIABILITIES & PROVISIONS: AS AT AS AT AS AT

31/12/2009 31/12/2009 31/12/2008


CURRENT LIABILITIES :

Sundry Creditors 0.9 42.2 37.5

Advance From Customes 0.0 1.0

Other Liabilities 1.3 59.7 7.3

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2.2 102.9 44.8

PROVISIONS FOR :

Fringe Benefit Tax 0.2

TOTAL 2.2 102.9 45.0

SCHEDULE `J': SALES & SERVICES:

Sales 12.4 579.1 366.5

Warehousing Income 0.3 15.9 4.4

Cold Storage Income 0.1 2.6 3.0

Service Provider Fees 0.2 7.5 5.5

Weiging Scale Charges 0.0 0.3

Lab Income 0.0 1.0

Material Processing Income 0.0 0.0 0.0

Exchange Variation 0.0 0.0

TOTAL 13.0 606.4 379.4

SCHEDULE `K': Other Income:

Discount 0.1 3.7 0.7

Interest received on Margin money Deposits 0.0 1.4 1.5

TOTAL 0.1 5.1 2.2

SCHEDULE `L': OPERATING EXPENSES:

Power & Fuel 0.1 1.4 0.8

Repairs & Maintenance 0.0 0.5 0.4

Freight & Forwarding Expenses 0.0 0.3 0.4

Other Charges 0.0 0.4 0.4

Stores & Spares 0.0 0.8 0.1

Godown Rent 0.0 1.9 2.0

Water Charges 0.0 0.1 0.1

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TOTAL 0.1 5.4 4.2

SCHEDULE `M': EMPLOYEES EMOLUMENTS:

Salaries ,Wages & Bonus 0.6 25.4 7.9

Contribution to Provident & Other Funds 0.0 0.7

TOTAL 0.6 26.1 7.9

SCHEDULE `N': ADMINISTRATIVE, SELLING & OTHER EXPENSES: AS AT AS AT AS AT

31/12/2009 31/12/2009 31/12/2008


Insurance Charges 0.0 1.3 0.3

Rent 0.1 1.4 2.2

Stationery & Printing Expenses 0.0 0.8 0.2

Telecommunication Expenses 0.0 0.9 0.4

Travelling Expenses 0.1 2.6 0.5

Legal & Professional Fees & Expenses 0.0 0.3 0.1

ISO Certification charges 0.0 0.2 -

Carrige Out ward 0.0 0.7 0.2

Conveyance 0.0 0.5 0.3

Audit Fees 0.0 0.1 -

General Expenses 0.1 0.6 0.2

Miscellaneous Expenses 0.0 2.3 0.5

Service Tax 0.0 0.0 -

Advertisement Expenses 0.0 0.6 0.0

Brokerage & Commission 0.0 1.5 0.5

Computer expenses 0.0 0.1 0.0

Godown Shifting charges 0.0 0.4 0.1

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Sales Promotion Expenses 0.0 0.1 0.0

Gifts and Presentation

Membership Fees 0.0 0.2 0.0

Weight Shortage (Sales) 0.0 0.4 0.7

Share Issue Expenses - - 0.3

Postage & Telegram 0.0 0.2 0.0

Vehicle Expenses 0.2 0.2

TOTAL 0.3 15.4 6.7

SCHEDULE Ò': FINANCIAL EXPENSES:

Interest

On Term Loan 0.5 25.7 0.9

Others 0.4 18.0 10.3

Bank Commission & Charges 0.0 0.1 0.2

TOTAL 0.9 43.8 11.4

F-107


CASH FLOW STATEMENT INFLOW/(OUTFLOW) Rs in Million

For The 9 Months Ended

31/12/2009 For The 9 Months

Ended 31/12/2008

A. NET CASH FLOW FROM OPERATING ACTIVITIES (145.5) 35.6

B. CASH FLOW FROM INVESTING ACTIVITIES: (374.4) (477.9)

C. CASH FLOW FROM FINANCING ACTIVITIES: 524.4 428.0 D NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT 4.5 (14.2)

E. Opening Cash and Cash Equivalent as at 1st April 2.6 15.4 F. Closing Cash and Cash Equivalent 7.1 1.2

F-108


SCHEDULE “P” NOTES FORMING PART OF ACCOUNTS FOR THE PERIOD ENDED 31.12.2009 AND 31.12.2008:


A. (i) Basis of Accounting:

The financial statements are prepared in accordance with relevant accounting standards under the historical cost convention.

(ii) The accounts have been maintained on accrual basis.

B. Fixed Assets:

Fixed assets are stated at cost of acquisition less accumulated depreciation.

C. Depreciation:

(a) Depreciation is provided on the basis of straight-line method on all depreciable fixed assets at the rate prescribed in Schedule –XIV of the Companies Act, 1956, on prorata basis.

(b) Depreciation on all the vehicles in the company is provided at a higher rate 15% than the prescribed rate, considering the useful life of vehicles based on technical evaluation of the management.

D. Revenue Recognition:

(i) During the period ended 31.12.2009 revenue from warehousing facility under arrangement with National Collateral Management Services Ltd. (NCMSL) is recognized on the basis of 60%/65% (w.e.f. 13.07.2009) of revenue earned by NCMSL in terms of the agreement of Company with them, as per details of warehouse charges earned by them from the Warehouses of the Company.

During the period ended 31.12.2008 revenue from warehousing facility under arrangement with National Collateral Management Services Ltd. (NCMSL) is recognized as per warehouse utilization by customer at prescribed rates by National Commodity & Derivatives Exchange Ltd.(NCDEX), on the basis of 60% of revenue earned through NCMSL in terms of the agreement of company with them , on the basis of details of warehouse charges earned by them from the warehouses of the company as franchisee.

(ii) Revenue from Cold storage and other warehousing facility other than in D i) above is recognized mainly as per prevailing rules and regulations of Local mandi / market, for storage of commodities; however at the end of the year revenue, if any remain to be booked is accounted for as accrued income under the accrual system of Accounting.

(iii) Sales are recognized on delivery and excludes VAT.

E. Inventories:

Trading goods are stated at lower of cost and net realizable value. The cost of inventories is computed on FIFO basis.

F. Deferred Revenue Expenses:

Preliminary expenses incurred are charged to revenue.

G. Impairment of Assets :

The carrying amount of assets is reviewed at each balance sheet date to determine whether

F-109

there is any indication of impairment. If any such indication exist the recoverable amount of assets is estimated. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating units exceeds its recoverable amount, An impairment loss is reversed if there has been a change in estimate used to determine the recoverable amount and recognized in compliance with AS-28.

H. Taxes on Income:-

(a) Tax on income for the current period is determined on the basis of estimated taxable income and tax credit computed in accordance with the provisions of the Income Tax Act, 1961.

(b) Deferred tax is recognized on timing difference between the accounting Income and the estimated taxable income for the period and quantified using the tax rates and laws enacted or substantively enacted as on the balance Sheet date.

(c) Deferred tax assets which arise mainly on account of unabsorbed losses or unabsorbed depreciation are recognized and carried forward only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.

I. Commodity Hedging :

In order to hedge risk on purchases of material exposure to commodity price risk, the Company enters into forward contracts in future market. The Company does not enter into such hedging contracts or transactions for speculative purposes. The hedging transactions are used only for the purposes to manage exposure to commodity price risks. The income and gain/loss arising on this account are recorded at the time of settlement whether during the year or succeeding year and are adjusted as part of cost of the respective material.

J. Use of Estimates :

The presentation of financial statements requires certain estimates and assumptions. These estimates and assumption effect the reported amount of assets and liabilities on the date of financial statement and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

K. Accounting policies not specifically referred to are consistent with generally accepted accounting practices.

Contingent Liability in respect of

As At 31 .12.2008 Rs. Millions

As At 31 .12.2008 Rs. Millions

a) Corporate Guarantee Given to bank

719.7 657.9

b) Bank Guarantee given to NCDEX 30.0 Nil

c) Estimated amount of contracts to be executed

24.5 191.0

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15. Quantitative Particulars:

Trading Activity: -

Opening Stock :-

April to Dec.2009 April to Dec.2008 Qty (MT) Value in (Rs in

Million) Qty (MT) Value in (Rs in

Million) Jeera 359 37.2 Jeera - - Guar Seed 845 14.7 Guar Seed 5499.72 106.7 Guar Gum 77 3.2 Guar Gum - - Sugar 48 0.9 Sugar - - Others 50 1.2 Others - - 1379 57.2 5499.72 106.7

Purchases:-



Million) Mustard 9764 249.0 Mustard 3043.54 87.9 Jeera 2182 230.9 Jeera 1151.37 110.2 Guar Seed 3381 81.1 Guar Seed 7023.36 116.3 Guar Gum 716 36.7 Guar Gum 204.83 7.2 Sugar - - Sugar 3000.00 55.3 Others 4439 95.4 Others 627.6 15.6 20482 693.1 15050.7 392.5

Sales:-



Million) Mustard 8286 213.8 Mustard 2944.5 89.2 Jeera 1768 187.1 Jeera 998.69 103.6 Guar Seed 2180 43.7 Guar Seed 8732.59 166.9 Guar Gum 670 34.3 Guar Gum 139.7 5.0 Sugar 22 0.4 Sugar - - Others 4436 99.7 Others 69.62 1.8 17362 579.1 12885.1 366.5

Closing Stock :



Million) Mustard 1478 40.8 Mustard 96.9 2.5 Jeera 752 95.7 Jeera 153.94 15.5 Guar Seed 2046 51.2 Guar Seed 3783.32 62.1 Guar Gum 123 6.7 Guar Gum 65.05 2.8 Sugar 26 0.5 Sugar 3000.00 55.3 Others 46 2.2 Others 558.09 13.3 4471 197.1 7657.21 151.5

F-111

Surplus/ (Shortage) :-

April to Dec.2009 April to Dec.2008 Closing stock Qty (MT) Value in (Rs in

Million) Closing stock Qty (MT) Value in (Rs in

Million) Mustard - - Mustard (2.14) - Guar Seed - - Guar Seed (7.17) - Jeera (21) - Jeera 1.26 - Guar Gum - - Guar Gum .08 - Sugar - - Sugar - - Others (7) - Others .11 -

16. Provision of Income tax is not made in view of loss.

17. In the opinion of the management the balances shown under sundry debtors, & loans and advances have approximately the same realizable value as shown in the accounts.

18. Related Party disclosure as required by Accounting Standard -18 is as below:

(a) List of related persons :

(i) Holding Company:

(ii) Kalpataru Power Transmission Ltd Key Managerial Personnel:

Mr Aditya Bafna Executive Director.

Mr Shubhendra Bafna Executive Director.

(iii) Enterprises under significant influences of Key Managerial personnel and Relative of such personnel:-

Shubham Industries, Shubham International, Shubham Corporation,

Shubham Agro, Kalpataru Theatres Pvt Ltd

(b) The following transactions were carried out with related parties in the ordinary course of business:

( Rs. in Millions)

Sr.. No. Particulars

Type of Relationship

Transactions during the period 9 months ended

31.12.2009 Current Yr.

Balance Outstanding

As on31st Dec. 2009

Transaction during the period 9 months ended

31.12.2008

Balance Outstanding

As on 31st Dec.,2008

1 Rent Expenses a (i) 0.1 0.25(Cr) 0.1 0.1

2 Rent Expenses a (iii) 0.1 0.01(Cr) - -

3 Salary to Managerial Personnel.

a (ii) 3.2 .36(Cr) 3.2 .3

4 Interest a (i) 30.7 30.67(Cr) 20.3 20.3 (Cr.) 5 Unsecured Loan taken a (i) 568.0 440.8(Cr) 382.9 170.7 (Cr.) 6 Unsecured Loan repaid a(i) 191.00 450.7

F-112

19. In accordance with the AS-22, accounting for taxes on income, issued by the Institute of Chartered Accountants of India, net deferred tax Assets from timing differences is accounted for using applicable current rate of tax.

S.No Particulars As At 31.12.2009 As At 31.12.2008 (Rs in Million) (Rs in Million)

1. Deferred Tax Assets-C/f Losses and Allowances 24.6 0.2 2. Deferred Tax Assets-Others 0.4 0.5 3. Depreciation-Deferred Tax Liability 14.7 2.19

4. Deferred Tax Asset/(Liability)(1+2-3) 10.3 (1.4)

In view of the virtual certainty for set off of carried forward losses and allowances due to full fledged working of warehousing activity in near future, the deferred tax asset is recognized.

20. The 4% dividend on Cumulative Redeemable Preference Shares is in arrear for earlier period and during this period.

21. The Management is of the opinion that on the Balance Sheet date there are no indications of a material impairment loss on fixed assets hence the need to provide for impairment loss does not arise.


23. The requirement of Indian Accounting Standard 25, “Interim Financial Period” is to include the Balance Sheet as of the end of the current interim period and a comparative Balance Sheet as of the end of the immediately preceding financial year. However, these interim financial statements are prepared for the purpose of inclusion in the “Placement Document” being prepared for the purpose of issue of Equity Shares to qualified institutional bidders. Hence, the comparative Balance Sheet as at December 31, 2008 is attached to the current period Balance Sheet as at December 31, 2009.

REGISTERED OFFICE OF THE COMPANY

KALPATARU POWER TRANSMISSION LIMITED 101, Part III

G.I.D.C. Estate Sector -28

Gandhinagar India

GLOBAL COORDINATORS AND BOOKRUNNERS

Morgan Stanley India Company Private Limited

Nomura Financial Advisory & Securities (India) Private

Limited

IDFC Capital Limited

Collins Stewart Inga Private Limited

5F, 55-56 Free Press House Free Press Journal Marg

Nariman Point Mumbai – 400 021

India

Ceejay House, Level 11, Plot F, Shivsagar Estate

Dr. Annie Besant Road Worli

Mumbai – 400 018 India

Naman Chambers C32, G Block

Bandra-Kurla Complex Bandra (East)

Mumbai – 400 051 India

A-404 Neelam Centre Hind Cycle Road

Worli Mumbai – 400 030

India

LEGAL ADVISERS TO THE COMPANY

AZB & Partners Express Towers 23rd Floor

Nariman Point Mumbai – 400 021

India

LEGAL ADVISERS TO THE GLOBAL COORDINATORS AND BOOKRUNNERS

Luthra & Luthra Law Offices 704 - 706

7th Floor, Embassy Centre Nariman Point

Mumbai - 400 021 India

INTERNATIONAL COUNSEL TO THE GLOBAL COORDINATORS AND BOOKRUNNERS

Clifford Chance CC Asia Limited One George Street

19th Floor Singapore 049145

AUDITORS TO THE COMPANY

Kishan M. Mehta & Co., Chartered Accountants

6th Floor, Premchand House Annexe Ashram Road, Ahmedabad – 380 009

India

Deloitte Haskins & Sells, Chartered Accountants 3rd Floor, "Heritage"

Ashram Road, Ahmedabad – 380 014 India

Documents

KALPATARU POWER TRANSMISSION LIMITED · KALPATARU POWER TRANSMISSION LIMITED ... There are no other facts in relation to the Group and the Equity Shares, the omission of which would,