NE

SP

ANNUAL REPORT2003 - 04

H I N D U S T A N C O N S T R U C T I O N C O L T D

H I N D U S T A N C O N S T R U C T I O N C O L T D

Hncon HouseLal Bahadur Shastri MargVikhroli (West)Mumbai 400 083IndiaTel: 91-22-2577 5959Fax: 91-22-2577 7568www.hccindia.com

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D E L H I M E T R O R A I L P R O J E C T

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H i g h l i g h t s2 0 0 3 0 4

HCC has become a Rs.1,000 crore company

Income from operations increased by 48.4 per cent from Rs.789.2 crorein 2002-03 to Rs.1171.4 crore in 2003-04. This is the highest annualrevenue in your company’s history

During 2003-04, HCC secured four new projects worth Rs.1,381 crore

During the year, three on-going projects have each yielded revenueexceeding Rs.100 crore

Profit before depreciation, interest and tax (PBDIT) increased by 21.1per cent from Rs.118.3 crore in 2002-03 to Rs.143.3 crore in 2003-04

Interest outgo has reduced by 10.6 per cent from Rs. 42.1 crore in 2002-03 to Rs.37.6 crore in 2003-04

Profit after tax (PAT) has increased by 24.5 per cent from Rs. 28.6 crorein 2002-03 to Rs. 35.7 crore in 2003-04

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ANDHRA PRADESH

1. Civil works for Bhadrachalam PaperBoard

2. Civil works, earthen Dam and 225M highchimney for Ramagundam Super ThermalPower Project

3. Vizag Monolith and West Wall Protection4. Godavari Barrage at Rajahmundry5. Papavinasam dam6. Chimney at Vijaywada7. Environmental Engineering works at

Hyderabad8. Substructure of bridge over river

Godavari South Central Railway9. Vijaywada Tunnel Works10. Sileru Tunnel Works11. D.B.K. Railway Project12. Superstructure for Railway Bridge

across Godavari13. Godavari Lift Irrigation Scheme

ASSAM

14. Brahmaputra Bridge at Amingaon andTezpur

15. Civil works for Refinery at Guwahati

BIHAR/JHARKHAND

16. Sone Barrage17. Ganga Bridge at Mokameh18. Civil works for Barauni Thermal Power

Plant19. Chandil Dam20. Crossing over river Ganga for BSEB21. Panchet Powerhouse for DVC22. Icha Dam23. Grand Trunk Road Improvement Project,

Package VB24. Rail cum road bridge across river Ganga

at Munger.

BHUTAN

25. Kurichu Hydroelectric Dam Project26. Tala Hydroelectric Project, Package C-127. Tala Hydroelectric Project, Package C-4

DELHI

28. Water and sewage Treatment Plants.29. Delhi Metro Rail Project from Vishwa

Vidyalaya Station to ISBT station

GOA

30. Goa Barge Berth at Marmugoa

GUJARAT

31. Kandla Oil Jetty for Kandla Port Trust,Kandla

32. 180M high Chimney at Wanakbori33. Narmada Drift Project34. Tapi Road Bridge35. Kakrapar Atomic Power Project36. Natural Draught Cooling Towers at

Kakrapar37. Two Cooling Towers at Gandhinagar for

Gujarat State Electricity Board38. Gujarat State Highways Project, Phase I,

Package 2 – Mahesana to Palanpur39. Periodic renewal of Mahesana –

Radhanpur Road & Bhuj – BhachauRoad.

40. Saurashtra Branch Canal Pumping Scheme.

41. Gujarat State Highways Project, PhaseIIA, Package GSHP- 6 – Mahesana toPalanpur

HARYANA

42. Road Bridge at Palwai43. Panipat Chimney44. Hathnikund Barrage at Yamunanagar

HIMACHAL PRADESH

45. Power Tunnel and UndergroundPowerhouse for Chamera Hydel PowerProject

46. Head Race Tunnel for Nathpa JhakriJoint Venture hydroelectric project

JAMMU & KASHMIR

47. Spillway, Dam and Powerhouse for SalalHydel Project

48. Udhampur - Srinagar - Baramulla RailLine Project, Laola - Qazigund section

KARNATAKA

49. Tunnel and Powerhouse at Sharavati50. Dockwork for MPT at Mangalore51. Kadra Dam52. Karnataka State Highways Project,

Phase I, Package U3

KERALA

53. Tanker Terminal and Fertiliser Berth atCochin

54. Dam across Kulamavu55. Dam of Peppara56. Dam across Idamalayar57. Double Curvature Arch Dam at Idduki

and Dam across river Cheruthoni58. Lower Periyar Tunnel Power Project59. Dam across Moozhiyar and Veluthodu,

(Kakkad)60. Sebarigiri Dam61. Wellington Bridge Works, Cochin62.. Lower Periyar Dam and Powerhouse63. Brahmapuram Diesel Power Plant

MADHYA PRADESH/CHATTISGARH

64. Satpura TPS65. Tons Road Bridge66. Bhilai Steel Plant67. Tons Hydel Project, Lot I & II68. Road Bridge over Indravati River69. Bailadila Project

MAHARASHTRA

70. Gas Turbine Project and LPG Station atUran

71. Bhandup Complex72. Reactor building, main building and

other structures for BARC73. SSSF Project at Tarapur74. Sina Aqueduct75. Panvel Creek Bridge76. Barvi Expansion Project77. Bridges over Vasai Creek at Western

Railway78. Bhorghat Tunnel for Central Railway79. Factory civil works for Premier

Automobiles Limited80. Ambernath/Ulhasnagar STP81. Water Treatment Plant, Pune82. Underground Powerhouse for Koyna

Project

H C C ’ s C O N T R I B U T I O NT O N A T I O N B U I L D I N G

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83. Kolkewadi Dam84. Bridge over River Ulhas85. Trombay Chimney Works86. Nhava Sheva WTP Works, Raigadh87. Tunnel between Sewri and Futka

for MCGB88. Koyna Stage IV Powerhouse Complex89. Tunnel between E Moses Road and

Ruparel College, Mumbai90. Aerated Lagoons at Ghatkopar and

Bhandup, Mumbai91. Bandra Effluent and Influent Disposal

Works, Mumbai92. Housing Complex for Kharghar,

NaviMumbai93. Construction of Concrete Spillway for

Gosikhurd Spillway Dam, Nagpur94. Construction on Mumbai-Pune

Expressway, Section B chowk, Adoshi95. Construction of High Level Tunnel at

Ghatkopar, Mumbai96. Construction of a Water Supply Tunnel

from Bhandup to Charkop, Mumbai97. Bandra – Worli Sea Link Project –

Construction of a Cable stayed bridge. 98. Four laning of Satara – Kolhapur –

Maharashtra State border section ofNH-4, Package V.

99. Lake City Hill Station DevelopmentProject

ORISSA

100. Dam at upper Kolab101. Road Bridge across Mahanadi102. Syphones at Kuakhai and Khushbhadra103.Naraj Barrage, New Cuttack104. 4-laning of Chandikhole-Paradip

section of NH-5A, Package OR (Paradip)

PUNJAB105. 140 M high chimney at Ropar106. Rail Coach factory at Kapurthala

RAJASTHAN

107. Foundation, structures and other civilworks for Rajasthan Atomic PowerProject, Kota Units I & II.

108. Chambal Bridge at Dholpur109. Rajasthan Atomic Power Project Units

3 & 4110. Rajasthan Atomic Power Project,

Units 5&6

TAMIL NADU

111. Civil Works for Kadamparai PumpedStorage Project

112. Lower Mettur Barrages, substructureand powerhouse

113. Ore Berth, Oil Jetty, Trawler Wharf atChennai

114. Sewage Treatment Plant atKoyambedu, Chennai

115. Upper Nirar Tunnel116. Navamalai Tunnel117. Ennore Port-rock quarrying and

transportation works118. Breakwater Construction for New Port

at Ennore, Chennai119. Mass Rapid Transit System, Chennai 120. Kudankulam Nuclear Power Project,

Units 1&2 – Package III121. Kudankulam Nuclear Power Project,

Units 1&2 – Package C6122. Tirupur Water Supply Project

UTTAR PRADESH/UTTARANCHAL

123. Maneri Bhali Hydel Project124. Civil works for Narora Atomic Power

Project125. Rihand Dam126. Civil works and Chimney for Rihand

STPP127. Sharda and Ghogra Barrages128. Yamuna Hydel Project129. Gomti Aqueduct130. Sai Aqueduct131. Varanasi Bridge132. Malvika Steel Works133. Dhauliganga Hydroelectric Project,

Stage I, Lot 2 – Construction ofunderground powerhouse

134.Construction of a cable-stayed bridge atNaini, Allahabad

WEST BENGAL

135. Farakka Barrage136. Mahananda Barrage137. Kolkata Metro railway Tunnel and

subway structures138. Teesta Barrage139. Haldia Docks Project140. Environmental Engineering Works at

Kolkata141. Kalyani Bridge142. Earthworks for Farakka STPP

143. Dauk Barrage144. One 220 M high RCC Chimney for

Kolaghat TPS145. Underwater cutting of protective

shield and sheet piles in front of intakegates for KTPP

146.Golden Quadrilateral road project -National Highway from Kolaghat toKharagpur

147. Purulia Pumped Storage Project, WestBengal

� �NEW PROJECTSPROJECTS INPROGRESS

Contents

CHAIRMAN’S LETTER

COMPANY INFORMATION

MANAGEMENT DISCUSSION AND ANALYSIS

CORPORATE GOVERNANCE

NOTICE

DIRECTORS’ REPORT

AUDITORS’ REPORT

FINANCIALS

CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL DETAILS OF SUBSIDIARY

COMPANIES

5

7

9

21

33

36

43

46

61

77

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Cover Photograph: Delhi Metro Rail Project

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Dear Shareholders

T A L A H Y D R O E L E C T R I C P R O J E C T , B H U T A N

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03 04 5

Dear Shareholders

In more ways than one, 2003-04 has been a good year for your

company. Hindustan Construction Company Limited (HCC) has

become a Rs.1,000 crore entity.

Income from operations increased by 48 per cent from Rs.789 crore

in 2002-03 to over Rs.1,171 crore in 2003-04. This is the highest

annual revenue in your company’s history.

Those who are unfamiliar with the industry could claim that given India’s excellent GDP

growth of 8.1 per cent, crossing the Rs.1,000 crore mark is ‘par for the course’ for your

company. That would not be quite accurate. Although the economy has done well on the

back of a 9 per cent plus growth in agriculture and an 8.5 per cent growth in services,

infrastructure industries have not grown as much as they should have. For instance, growth

in electricity generation has been 3.7 per cent in April-December 2003; cement production

has risen by only 5.8 per cent, compared to 7.3 per cent a year earlier; and the construction

industry as a whole has increased by 6 per cent, versus 7.3 per cent in April-December 2002.

Therefore, your company’s top-line growth has occurred in an environment where

infrastructure growth has been less than expected. In fact, India is at a cross-road. To

generate GDP growth in excess of 7 per cent per year over the next decade will require

substantial increase in infrastructure investment. Conversely, without double-digit growth in

infrastructure industries and construction, it is difficult — if not impossible — to get an

average annual GDP growth of over 7 per cent in the next decade.

As it was last year, the one growth area in infrastructure has been roads. The National

Highways Authority of India (NHAI) has plans for four-laning 14,286 kilometres of roads,

which includes the Golden Quadrilateral and the North-South, East-West highways.

On 31 March 2004, 3,322 kilometres of these highways have been completed, while 4,118

kilometres are under construction and 6,733 kilometres remain to be built. So, there is

considerable headroom in this sector — and HCC has been aggressively leveraging this

opportunity.

Today, your company has 11 major transportation projects, which have accounted for 33 per

cent of HCC’s income for 2003-04. Of these, 9 are road-cum–bridge projects.

While the growth of road infrastructure has been godsend for the construction industry, it

has come with a price. Traditionally, the margins on road projects have been less than those

on other major construction activities. This difference, however, has got exacerbated in the

last few years. Simply put, there are far too many construction companies bidding for NHAI’s

contracts; and, in comparison, there aren’t enough contracts to go around.

Consequently, there is a pronounced tendency for all construction companies to bid at

extremely fine rates. Lower margins, per se, would not have been a cause of concern had

Chairman’s letter

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03 04 6

there been very significant increases in the volume of such projects. Unfortunately, that is still

not the case.

There is yet another issue that faces construction majors such as your company. In order to

have the capability to execute diverse and complex projects, HCC has had to steadily invest

in equipment. In 1999-00, our gross block in equipment was Rs.261 crore; by 2003-04, it has

become Rs.475 crore. This growing pool of equipment needs to be utilised in order to earn

a decent return on investment — which has also prompted HCC to overweigh its portfolio in

favour of transportation, despite its lower margins.

Hence, your company’s more modest growth in profits -— especially in comparison

with growth of income — has to be viewed in this context. Even so, HCC’s profit

before depreciation interest and tax (PBDIT) has increased by 21 per cent from Rs.118 crore

in 2002-03 to almost Rs.143 crore in 2003-04; and profit after tax (PAT) has grown by 25 per

cent from Rs.28.6 crore in 2002-03 to Rs.35.7 crore in 2003-04.

Large construction companies like HCC, therefore, face a conundrum. If they limit themselves

to a few highly specialised projects, they may achieve a higher margin, but at the cost of low,

even negligible top-line growth. Conversely, if they opt for more projects to utilise their

capital and manpower and maximise cash flows, then they face a distinct possibility of lower

average margins. HCC has quite consciously opted for the latter strategy. It is our belief that

infrastructure growth is on the upswing and that, going forward, lower margins will be

partly compensated by higher volumes.

Your company has also been in discharging its corporate social responsibilities. We have

actively promoted HIV-AIDS awareness programmes at our construction sites. HCC is one of

the founding companies of the World Economic Forum’s Disaster Resource Network (DRN)

whose objective is to contribute skilled technical resources in response to major disasters.

Your company has also successfully used fly-ash — a pollutant from thermal power plants —

to produce concrete for its various projects.

As an ardent believer of both democracy and development, I feel the need to make a

comment. We should be proud of our electoral process. However, for almost two months

prior to the polls— after the Election Commission’s “Model Code of Conduct” kicks in —

virtually all government funded development work comes to a standstill. For instance, no

construction projects are decided upon or awarded during this period; arbitration decisions

are not implemented; and extreme risk aversion becomes the norm. Probity does not mean

inaction. For a country that seeks rapid development, there has to be a way to continue

taking economic decisions during the time of elections.

Let me end by expressing my confidence about the growth of the Indian economy. I clearly

see our country on a higher growth path, which should increase the pace as well as the

volume of construction activities. With its equipment, skilled manpower and expertise in

various areas of construction, HCC is well positioned to take advantage of this growth.

Thank you for your support,

Ajit Gulabchand

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Ajit GulabchandChairman & Managing Director

Y H MalegamRajas R DoshiBhalchandra R SuleD M PopatRam P GandhiDr.N A Kalyani Fred Moavenzadeh Sharad M.KulkarniNirmal P.Bhogilal K G Tendulkar (Executive Director, Operations)M D Khattar (Executive Director, Technical & Business Development)R G Vartak

Vithal P Kulkarni

K S Aiyar & Co, Chartered Accountants

Mulla & Mulla & Craigie Blunt & CaroeKanga & Co

ICICI Bank LtdCanara BankPunjab National BankOriental Bank of CommerceIndian BankState Bank of IndiaGlobal Trust Bank LtdIDBI Bank LtdFederal Bank LtdState Bank of PatialaUnion Bank of IndiaING Vysya Bank LimitedExim BankUTI Bank LtdBank of IndiaBank of Bahrain & Kuwait B.S.C.

MCS Ltd, Sri Venkatesh BhawanPlot No 27, Road No 11, Andheri (East), Mumbai 400 093

Hincon HouseLal Bahadur Shastri MargVikhroli (West)Mumbai 400 083

03 04 7

BOARD OF DIRECTORS

COMPANY SECRETARY

AUDITORS

ADVOCATES AND SOLICITORS

BANKERS

REGISTRAR AND SHARE TRANSFER AGENTS

REGISTERED OFFICE

Company Information

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03 04 888

P U R U L I A P U M P E D S T O R A G E P R O J E C T , W E S T B E N G A L

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03 04 9

2003-04 has been a landmark year for HindustanConstruction Co. Ltd (HCC) as its revenues surpassedRs.1000 crore for the first time, with income fromoperations increasing by 48.4% per cent from Rs.789.2crore in 2002-03 to Rs.1171.4 crore in 2003-04. During thelast year itself, the Company had propelled to a newgrowth path.This process accelerated substantially in 2003-04 .

At first glance, it might look as if the significant increase inHCC’s revenues has been largely due to the unprecedented8.1 per cent GDP growth that India has achieved in 2003-04. No doubt, if this growth momentum continues in thefuture, there would be much larger scope for biginfrastructure projects — which is HCC’s core activity.However, the fact is that despite India attaining its highestgrowth since the advent of liberalisation, infrastructuredid not perform all that well. Table 1 gives the growth ofinfrastructure industries for April-December, and showsthat the growth rates have been either marginally orsignificantly lower in 2003 compared to the correspondingperiod in 2002.

Therefore, HCC’s achieving almost 48 per cent growth inrevenues has more to do with the company’s competitivedrive to get greater business than merely riding on an

overall economic upswing. HCC has increased its revenuegrowth in a period when the industry witnessed adecrease in growth — which indicates an improvement inits competitiveness and market share.

Equally, it is important to emphasise that despite adecrease in the growth rate for construction during 2003-04, the level of growth still remains healthy, and there arereasons to be genuinely optimistic about the prospects ofthe industry. Indeed, 2003-04 saw considerable activity intransportation projects — comprising roadways andbridges — which has been the fastest growing segmentwithin construction. And there is considerable scope in thisarea in the future. The National Highway Authority ofIndia (NHAI) has plans for four-laning 14,286 kilometres ofroads, which includes the Golden Quadrilateral and theNorth-South, East-West highways. On 31 March 2004,3,322 kilometres of these highways have been completed,while 4,118 kilometres are under construction and 6,733kilometres remain to be built. One can, therefore, expectmany new road projects in the near future if NHAI has tomeet its planned target. That aside, there is much to do forstate highways.

Power is the other area where there ought to beconsiderable scope in the future. Based on therecommendations of the Tenth Five-Year Plan announcedin 2002, new electricity generation projects are expectedto produce an additional 41,110 MW of generatingcapacity. Of this, 25,417 MW is to consist of new thermalcapacity, while 14,493 is hydro. Today, only 3,547 MW ofthe new thermal capacity has been commissioned and13,316 MW is under construction. Thus, over 8,500 MW ofthermal power generation still remains to be developedthrough new projects. Similarly only 1,950 MW out of theplanned hydro capacity has been commissioned. As inroads, there is huge scope for new projects if the PlanningCommission’s targets are to be met.

Management Discussion & Analysis

1

1INFRASTRUCTURE INDUSTRY

Electricity generation

Electricity generation

Coal production

Cement production

Finished steel production

Construction industry

3.8%

4.5%

9.7%

10.0%

7.3%

3.7%

4.1%

5.8%

6.9%

6.0%

Apr-Dec 2002

GROWTH IN

Apr-Dec 2003

GROWTH OF INFRASTRUCTURE INDUSTRIESAPR-DEC 2003 VS. 2002

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Before reviewing the projects undertaken during 2003-04,it is important to outline HCC’s overall turnover fromproject portfolio, and how this has changed in the lasttwo years. Chart A shows that while transportationremains the dominant segment, there has been asubstantial increase in water supply and irrigationprojects, which has led to reduction in excessive relianceon power. Within the power segment, there is a distinctshift away from hydro (or hydel) to nuclear projects

Having said this, it is necessary to highlight the fact thatthe year has seen a growth in margin pressuresthroughout the industry. There were many factorscontributing to this.

� First, although the country saw a number of newprojects, these were not in line with the increase innumber of players in the industry. Consequently, supplyoutstripped demand, and intense competition drove downprices of works. Moreover, construction companies whichwere facing payment problems in projects initiated bystate governments, chose to de-risk their portfolios bybidding for projects with central government ormultilateral agency funding — which have lower risks ofdefault. Thus, there has been even more competition inbidding for such projects. � Second, there is a distinct change in the type of projectson offer. The primary growth area in infrastructure is roadworks — which are typically low value added, low marginprojects.� Third, construction companies have been adverselyaffected by the steep increase in steel prices. Most projectshave in-built agreements on escalation costs, which takeinto account increase in raw material prices. However,most such contracts have a formula based on WholesalePrice Index (WPI) as a proxy. During 2003-04 the actualincrease in raw material costs in construction was muchsteeper than the increase in WPI. According to the

In the last few years we had stated our objective of notpromoting indiscriminate growth and confining to 15 to20 medium or large infrastructure projects for moreefficient project management. While principles ofprofitability and effective monitoring still exists, thestrategy of limiting the number of projects is undergoingsome change. This requires explanation.

As mentioned earlier, there are more and more players inall fields of construction — including HCC’s speciality areas,such as hydel. When this is juxtaposed with a not so rapidgrowth in the country’s infrastructure spends, theconsequence is falling margins. In a milieu of reducingmargins, there are two choices: either to stay with theprinciple of focusing only on 15-20 medium to large sizeprojects, and run the risk of lower profit growth; or to takeup new projects — albeit with lower margins — andthereby drive profits and cash flows. In today’s scenario,HCC has opportunistically chosen the second option. Inaddition to the profitability issue, there is also need toincrease the number of projects because of the increase inthe underlying infrastructure in terms of equipment andhuman capital. Different projects require different types

Construction Industry Development Council (CIDC), theConstruction Cost Index increased by 7.7 per cent in 2003-04 while the WPI increased only by 4.5%. Thus,margins were squeezed yet again .

Like others in this business, HCC too has been affected bythis general trend, and its margins ( in percentage terms)have come under pressure. Operating margin (PBDIT/netincome) decreased from 17.5 per cent in 2002-03 to 13.5per cent in 2003-04. However, the company chose toaggressively expand its business volumes. Consequently,alongwith turnover, there has been a 24.5 per centincrease in net profit (PAT) as compared to previous year—which rose from Rs.28.6 crore in 2002-03 to Rs.35.7 crore in2003-04.

We are satisfied with our performance, especially with theability to continue securing new orders. Recognising thatthe external environment will continue to exert pressureon margins, HCC’s strategy focuses on growth andcontinuous improvements in productivity and operationalefficiencies.

In the course of this chapter, which shall discuss the statusof HCC’s projects that are being executed, its operationsand financial performance, always highlighting thecompany’s strategy and the changing businessenvironment.

03 04 10

Sales break-upA

33%

19%

9%6%

11%38%

36%

4%

Hydel Nuclear Power

Transportation Water Supply& Irrigation

Others

26%

18%

2 0 0 3 - 0 4 2 0 0 2 - 0 3

Projects

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equipments. HCC is increasingly looking at the possibilityof procuring used equipment and reconditioning it forfurther use, rather than buying new equipment andpaying higher depreciation and interest costs on it. TheCompany has put up, in-house, refurbishing as well asfabrication facilities at its workshop located in Tara. Theworkshop, built over an area of 50 acres, is equipped withthe most modern facilities for refurbishing and recyclingused equipment.

During 2003-04, HCC secured four new projects worthRs.1381 crore. Three of which are transportation projects,while one is an irrigation project. Details of these newcontracts are listed in Table 2.

During the year under review, HCC has been working on21 projects across different segments. While 13 of theseare independent projects, 8 are as joint venture partnersor associated contractors.

03 04 11

of equipment and as a construction company grows, sodoes its equipment pool. With further diversification intodifferent sectors, need for different types of equipmentsincreases. This had prompted a steady increase ininvestment in equipment by HCC over the last few years. In2003-04, the company’s investments in equipment arevalued at Rs 475 crore. (Please see Chart B).The need to‘sweat’ this equipment base has also prompted us to optfor more projects.

Today, your Company has put in place infrastructure forrevenues exceeding Rs.1000 crore. As HCC expands itsoperations further, there is an increasing need to becomemore capital intensive and adopt stringent quality control.Going forward, the Company intends to maintain itsexisting capital assets at optimum levels so thatinvestments can be channelised into specialized

1999-1999 2000-2001 2001-2002 2002-2003 2003-2004

GROSS INVESTMENTS IN EQUIPMENT (Rs crore)B

500

400

300

200

100

0

261302

371

436

475

1999-2000

NEW CONTRACTS SECURED (Rs. crore)

Godavari Lift Irrigation SchemePhase-1, Stage-1

Paradip port road connectivityproject

Udhampur-Srinagar-Baramullarailway line project

Rail-cum-road bridge acrossriver Ganga at Munger

720

328

169

164

2

1NAME OF PROJECT VALUE OFCONTRACT

T A L A H Y D R O E L E C T R I C P R O J E C T , B H U T A N

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HCC has expertise in all types of power projects—thermal,hydel and nuclear. There has been a pick up in Hydelprojects. HCC, however, could not secure any of these butis confident of securing new projects in this segment in thefuture. Whereas in nuclear power, HCC is concentrating onsuccessfully executing existing projects, before expandinginto new ones as it warrants heavy investments inequipments.

Tala Hydroelectr ic Project , BhutanThe Company is executing two orders for the Tala HydroElectric Power Authority (Bhutan). These includeconstruction of dam, intake, desilting chamber and partHead Race Tunnel (HRT). In package C1, construction ofthe HRT is complete while dam concreting is progressingwell in glacis liners, piers and divide walls. In package C4,while more than half the concrete lining is complete, theHRT excavation is almost completely done.

Dhaul iganga Hydroelectr ic Project , UttaranchalIn this project, HCC has a joint venture with SamsungCorporation (Korea). The project comprises construction ofthe powerhouse and its allied works. All four units in themachine hall is complete.

Purul ia Pumped Storage Project , West BengalThis JBIC funded project is executed by M/s Taisei, Japan asthe main contractor. The portion of underground work hasbeen subcontracted to HCC - L&T JV which includesconstruction of powerhouse and allied tunnels. Around 97per cent of all tunnel excavation work is complete.Powerhouse and transformer cavern excavation work isprogressing on schedule.

Kudankulam Nuclear Power Project , Tamil NaduHCC is executing two packages of this project for NuclearPower Corporation Ltd. This Rs.622 crore project involvestwo units of 1000 MW each. The steel liner work in theinner containment of the reactor has commenced and thisis the first time such type of work is being undertaken inIndia. During the execution of this project, a record 4000cubic metres of slab concrete was put into the reactorbuilding in a single pour. In the second package, work onbreakwater is progressing ahead of schedule, while workon all intake and allied structures is progressing well.

Rajasthan Atomic Power ProjectThis Rs 238 crore contract includes civil works for tworeactors and other ancillary buildings. In both reactors,work on containment walls has commenced and that oninner structures is progressing well. In all other buildings,the slabs and walls are in various stages of completion.Here, HCC executed record concreting of 3665 cubicmetres for the raft of the control building.

03 04 12

Power

K U D A N K U L A M N U C L E A R P O W E R P R O J E C T , T A M I L N A D U

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HCC entered this segment after careful evaluation and itsfirst project in this segment—the Mumbai PuneExpressway—was a grand success. This segment has lowmargins but high growth opportunities. HCC has increasedits efforts in this segment.

Rai l cum road br idge across r iver Ganga atMunger, BiharDuring the year under review, your Company has securedthis Rs.164 crore contract for construction of thefoundation and sub-structure works for a 3190 metre longrail cum road bridge in Bihar. The duration of this projectis expected to be 48 months.

Udhampur-Sr inagar-Baramulla Rai lway l ineProject , Jammu and KashmirHCC has secured this contract in 2003-04. This projectcomprises civil works including tunnels, bridges andearthwork of a 10 kilometre long railway line sectionbetween Laole and Qazigund. The work is to be executedin 36 months.

Delhi Metro Rai l Corr idor HCC in Joint venture with three reputed internationalcompanies namely Kumagaigumi of Japan, Skanska ofSweden and Itochu Corporation of Japan has undertakena 4 km long stretch of the prestigious Delhi Metro RailCorridor. The design & build contract is progressing well

and all tunnel structures are nearly complete, while thestations are substantially complete. In both these areasfinishing works are in progress.

Paradip Port Connect iv ity Road Project , OrissaIn 2003-04, the Company secured this Rs.328 crore project.The scope of work includes four laning of 77 kilometres ofthe section of National Highway number 5A lying betweenChandikhole and Paradip and its intermediate bridges. Theproject is to be completed in 36 months.

West Bengal RoadworksThis project is part of the Golden Quadrilateral andinvolves four laning of National Highway number 6between Kolagahat and Kharagpur. The first twomilestones comprising of 24 kilometres of the road iscomplete and open to traffic.

Grand Trunk Road Improvement Project ,JharkandHCC is in this project in joint venture with L&T. YourCompany is constructing 32 kms out of the total 80 kms offour lane concrete road-works in this project. Around 10kilometres of concrete pavement for one carriageway andconstruction of three bridges is complete.

Gujarat State Highways ProjectDuring 2003-04, HCC completed the package GSHP/2 for

03 04 13

Transportation

D E L H I M E T R O R A I L P R O J E C T

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03 04 14

the 65 kilometre State Highway from Mehsana toPalanpur. The contract was executed in joint venture withPati Sdn Bhd of Malaysia. HCC had also secured the Rs.97crore contract for package GSHP6 in 2002-03. All roadlayers and bridge works are progressing in full swing.

Golden Quadri lateral Project—Satara-Kolhapursect ion, MaharashtraThis project is being executed in joint venture with B GShirke Construction Technology Ltd. The work comprisesfour-laning of a 28 kilometre stretch. 16 kilometres ofconcrete pavement out of the total 28 kilometres iscomplete in the new carriageway.

Karnataka State Highways ImprovementProject The contract for strengthening of a 191 km stretchbetween Hattigudur and Bidar is being executed in jointventure with Sadbhav Engineering Limited. The first 30 kmstretch between Hattigudur and Jewargi has beencompleted and handed over to the client.

Yamuna Br idge—Allahabad/Naini , Uttar PradeshHCC has entered into a joint venture with Hyundai

Engineering Corporation (Korea). The project involvesconstruction of a cable stayed bridge across the riverYamuna. The superstructure works are complete, whilefinishing works and approach road works remain to beexecuted.

Bandra Worl i Sea L ink, MumbaiThis North-South link is vital for Mumbai and HCC isexecuting this project for Maharashtra State RoadDevelopment Corporation. The piling and bridgesubstructure works are in progress. The launching truss forinitiating segmental superstructure works has also beenerected. There are major delays and cost overruns in theBandra-Worli Sea Link project on account of majorchanges in scope of work, adverse geology, changes indesign, delays in issue of designs & the like. Most of thedelays have occurred at the client’s end. At present, theseissues are under discussion with MSRDC and Govt. ofMaharashtra. Work on the project will pick up only aftersatisfactory resolution of these issues.

U D H A M P U R - S R I N A G A R - B A R A M U L L A R A I L W A Y L I N E P R O J E C T , J & K

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03 04 15

This infrastructure segment often does not get thenecessary thrust. While there were not many new projectsin this sector, during 2003-04, HCC bagged a new project.The Company has developed expertise in pipeline worksdone in this segment and believes that there is scope forgrowth in pipelines dealing with oil and gas. HCC isexploring this opportunity by forming strategic jointventures.

Tirupur Water Supply Project , Tamil NaduThe construction industry is increasingly looking tocomplete solutions like contracts based on engineering,procurement and construction (EPC). This project, whichwas secured in 2002-03, is HCC’s first EPC contract on itsown. The intake water treatment plant and the masterbalancing reservoir are at an advanced stage ofcompletion, while 35 kilometre of the 55 kilometrepipeline has already been laid.

Godavari L i ft I r r igat ion SchemePhase 1- Stage 1, Andhra PradeshThis prestigious project was secured in 2003-04. Theproject, located in Warangal and Karimnagar districts ofAndhra Pradesh, involves lifting of 50 cumecs of waterfrom Godavari river through a lift of about 400 metres.While Kirloskar brothers are joint venture partner forsupply and installation of pumps, HCC will be executingaround 135 km of pipeline and civil works for the pumping

station. Your Company has 85 per cent share in this Rs.843crore project.

I I I A Mumbai Water Supply Project ,Maharashtra This project intends to supply water to the suburbs ofMumbai. Out of the total 12.04 km long water supplytunnel, HCC has completed the 5.6 km long tunnelbetween Bhandup and Malad and is expected to behanded over to Brihanmumbai Municipal Corporationsoon. For the remaining stretch between Malad andCharkop, tunnel boring is nearing completion.

Saurashtra Branch Canal Pumping Scheme,GujaratHCC is an associate contractor with Kirloskar BrothersLimited for this water supply canal for Sardar SarovarNarmada Nigam Limited and is undertaking design andconstruction of civil works for five pumping stations.

This is a new area where HCC is venturing into. It isdeveloping the Lake City Hill Station Development Projectin Maharashtra, which is a township in the hills near Pune.The initial infrastructure works has been taken up.

Water Supply and Irrigation

Townships

S A U R A S H T R A B R A N C H C A N A L P U M P I N G S C H E M E , G U J A R A T

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As we approach higher thresholds of growth, explore newavenues and expand operations, it has become imperativeto sustain and enhance our Human Resourcecompetencies. The human asset has grown from 1363officers to 1610 officers during the year.

Given the lack of specialised training institutes in thecountry catering to the needs of the construction industry,in-house training has been a key focus area for yourCompany. More than 5000 man days of formal training hasbeen provided to employees. In the year under review,HCC has further strengthened capabilities at its in-housetraining centre for workmen at Tara. Structuredprogrammes in the area of generic, technical andfunctional skill enhancement are offered, which arespecific,result-oriented and tailor-made to cater to the skillrequirements of the Company.To judge the effectivenessof these programmes, feedback is sought fromparticipants and, based on these, an objective analysis iscarried out to identify tangible benefits arising out ofthese programmes.Training programme for subcontractorsdevelopment were initiated. The inhouse training facilitiesare also extended for participation to employees of subcontractors.

HCC has also been working towards creating a culture oftogetherness and teamwork amongst employees and hasorganised many large culture building activities for thispurpose.

The Company also successfully implemented its intranet-based HR suite for the benefit of its employees. This suiteprovides employees relevant information on the intranetcovering a variety of issues related to their employment,like salary statements, leaves and medical allowance.

.

Devising efficient contracts with clients is critical to yourCompany’s operations. However, given the long durationsof projects, many contingencies are unforeseeable at thetime of writing contracts, which may lead to variationsfrom contract conditions, and eventually raise manycontentious issues. While, missed obligations can seriouslyaffect the long-term reputation of the Company, newobligations due to change in contract can adversely affect

the profitability of the project.

While modern day contracts distinctly allocate risks andfinancial liability between the parties, given the largeamount of money and complexity of the mechanismsinvolved, there is often a possibility of disagreements onwho should actually shoulder the liability. To this end,HCC’s Contract Management System aims to avoid lettingsuch disagreements turn into disputes and to resolve suchissues amicably by engaging clients in conciliatorydialogues. HCC has been successful in resolving manycontentious issues in the past in this fashion. It is onlywhen such negotiations fail, does the system approachalternate dispute resolution authorities like the DisputeResolution Board or resort to formal appeal proceduressuch as arbitration and litigation. This entire procedure iscalled ‘Total Contracts Management’ and forms part of theISO 9000 quality management norms.

Given the criticality of this function and the specialisationrequired, HCC has developed capabilities to impart in-house training for this purpose. These ‘ContractManagement Development Programmes’ not only helpthe existing contracts management team keep abreast ofthe latest developments in this field, but also provide freshengineers the skills and competencies necessary to developinto contract engineers. In addition, a one day, in-house,basic contract awareness has been initiated for allengineers of the organisation.

Your Company has been sharing its experience andexpertise in this field, with the Construction IndustryDevelopment Council (CIDC) and Construction Federationof India (CFI) to develop a standard model contractdocument for all projects.

HCC has established an Integrated Management Systemwhich comprises quality, environment, and occupationalhealth and safety management systems in accordance withglobally recognised international standards — ISO9001:2000, OHSAS 18001:1999 and ISO 14001:1996. Theobjective of this system is not only to enhance customersatisfaction levels by effectively meeting theirrequirements but also, meet the needs of the society andthat of the community at large, and become a ‘SociallyResponsible Corporate Citizen’.

03 04 16

Human Resources

Contract Management

Integrated ManagementSystem

Operations

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The ‘Quality Management System’ serves as an effectivetool for management to ensure consistency in quality ofproducts and services and also to ensure continuousimprovement in customer satisfaction. In this regard, HCChas put in place systems and procedures to track customersatisfaction levels on a regular basis and to take remedialsteps whenever necessary.

Your Company has successfully leveraged its‘Environmental and Safety Management Systems’ tocontrol and mitigate environmental and safety hazardsthat are often associated with large construction projects.The Company, after many years of collaborative and in-house Research and Development (R&D), has developeddesign mix to use fly ash —a waste by-product arising outof thermal generation of electricity and an environmentalhazard— as a partial replacement of cement in highperformance concrete. This technology is being used inmany of the projects currently underway. While on onehand this helps to remove unused and environmentallyharmful fly ash from our proximate environment, on theother, it also reduces the usage of cement in constructionthus saving scarce natural resources.

HCC’s Integrated Management System was certified by athird party certification agency two years ago and sincethen has been subjected to many external ‘surveillanceaudits’ to verify continuous compliance with internationalstandards.

HCC believes in protecting the interests of all itsstakeholders. This is not only restricted to employees,customers and investors but is extended to the communityat large. HCC’s initiatives in corporate social responsibilityare based on the needs of the construction industry. Someof these are highlighted below.

AIDS awareness programmes

HCC is actively involved in promoting HIV/AIDS awarenessprogrammes. Due to periodic movements of theCompany’s labour force from one site to another, theyconstitute a high risk group for HIV/AIDS. To combat thisproblem, HCC, in collaboration with FXB - a French NGOhas taken initiative to establish a conducive environmentat the workplace for disseminating knowledge andawareness. These efforts will be subsequently extended toall project sites and all employees and their families.

Disaster Resource Network ( India)

HCC is one of the founding companies of World EconomicForum’s Disaster Resource Network (DRN) and has activelyparticipated in various initiatives of DRN (India).The objective of DRN is to contribute skilled resources

(technical manpower, equipment and in-kind donations) inresponse to major disasters. To effectively contribute tothis, HCC has been imparting training to its employees onvarious aspects of disaster management and mitigation.

Fly Ash in construct ion

Fly Ash is a by-product of the combustion of pulverizedcoal in thermal power plants. Disposal of fly ash is a bigenvironmental hazard and huge quantity of ash lieaccumulated at thermal power stations. Due to itsexcellent pozzolanic property a substantial quantity ofcement in concrete can be replaced with fly ash.

HCC has been successfully using fly ash in concrete atvarious projects in different types of concrete. This processnot only yields significant environment benefits but alsoimproves the performance of the concrete itself. Anothermajor avenue has been use of fly ash in road workembankment, done by HCC in West Bengal roads, thusconserving ‘natural’ soil.

To further develop capabilities in this field, HCC’s R&DCentre has established technological collaboration withCANMET (Canadian Centre for Mineral and EnergyTechnology), who are the pioneers in development ofHVAC technology worldwide.

HCC has been effectively leveraging its technologicalcapabilities, acquired over the years, to significantlyenhance operational efficiencies and improve clientservices. Our capabilities in the area of InformationTechnology (IT) have significantly aided our endeavour tocomplete many large and complex projects in record time.The Company has used effective IT tools to integrate itsinternal functions and also to connect the central officewith project sites, thus making it possible to closelymonitor on-site operations and improve the speed andquality of decision making and execution. IT is also beingused to reduce costs through better project management.

Your Company has also developed key competencies forconducting in-house Research and Development activities.The Hincon Center for Research & Development—the in-house R&D center of HCC— has been accorded recognitionby the Department of Scientific & Industrial Research,Ministry of Science & Technology, Government of India.The center has been successfully conducting R&D todevelop mix designs for High Performance Concrete byincorporating fly ash as a partial replacement for cement.

03 04 17

Technology andInnovationCorporate Social

Responsibility

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Table 3 summarises the financial performance of yourCompany in 2003-04.

The financial highlights of HCC during 2003-04.� Income from operations increased by 48.4 percent fromRs.789.2 crore in 2002-03 to Rs. 1171.4 crore in 2003-04.This is the highest annual revenue in your Company’shistory surpassing the Rs.1000 crore mark for the first timewith 3 projects billing over Rs.100 crore each� Other income in 2002-03 includes profit on sale ofInvestments. Therefore other income has been excludedwhile calculating and comparing operating ratios.� As we have discussed before, the Company facedpressures on margins, and profit growth is not in line withthe impressive revenue growth. Operating profit beforedepreciation interest and tax (PBDIT) excluding otherincome and JV profit\(loss) increased by 21 percent from

03 04 18

Rs.118.3 crore in 2002-03 to Rs. 143.3 crore in 2003-04� Even though total debt increased by 11.4 per cent fromRs.376.6 crore in 2002-03 to Rs 419.6 crore in 2003-04 dueto increase in business activity, HCC has successfullyleveraged the prevailing low interest environment andrestructured its working capital. As a result interest outgoreduced by 10.6 per cent from Rs.42.1 crore in 2002-03 toRs.37.6 crore in 2003-04� Net profit (PAT) increased by 24.5 per cent from Rs.28.6crore in 2002-03 to Rs 35.7 crore in 2003-04

All profitability ratios are marginally lower in 2003-04when compared to 2002-03. Material costs as a percentageof total revenue has increased from 30.4 in 2002-03 to 31.4in 2003-04. In addition, other construction expenses, whichmainly includes transportation, subcontracting, power andfuel, increased as a percentage of total revenue from 37 in2002-03 to 42.9 in 2003-04. The Company believes that itneeds to constantly improve productivity to maintainmargins. A step in that direction, which thwarted greaterreduction in margins, is the increase in worker productivityseen in the reduction of employee costs as a percentage oftotal revenue from 8.9 in 2002-03 to 7.2 in 2003-04.

ROCE and RONW improved during the year. The Companyis on an accelerated growth path and has had to makeinvestments up front, which will generate returns in thefuture. This has resulted in increase in capital employedfrom Rs.516.1 crore in 2002-03 to Rs.583.5 crore in 2003-04,with net worth increasing from Rs.139.4 crore in 2002-03to Rs. 163.9 crore in 2003-04. HCC’s debt equity ratio hasreduced marginally from 2.7 in 2002-03 to 2.6 in 2003-04and its interest coverage improved from 2.1 in 2002-03 to2.6 in 2003-04.

R E V E N U E

1. Income from operations

2. Less Income from JV

3. Net Income from operations

4. Other income

5. TOTAL (3+4)

1171.4

113.4

1058.0

1.7

1059.7

333.2

454.0

76.8

50.7

37.6

43.8

996.0

143.3

63.7

(3.2)

60.524.8

35.7

3

PARTICULARS 2003-04

789.2

112.0

677.2

5.9

683.1

207.6

252.9

61.0

37.4

42.1

34.1

635.0

118.3

48.1

(2.9)

45.216.6

28.6

2002-03

E X P E N D I T U R E

13. PBDIT(excluding otherincome)

14. PBT(Before profit onintegrated JV)

15. Profit (loss) on integrated JV

16. PBT17. Tax (Current, Deferred &

Provisions for earlier yearwritten back)

18. PAT

6. Materials

7. Construction Expenses

8. Staff costs

9. Other expenditure

10. Interest

11. Depreciation

12. TOTAL

ABRIDGED PROFIT & LOSS ACCOUNT (Rs crore)

KEY FINANCIAL RATIOS

PBDIT*/Net income*

PBT*/Net income*

PBT#/Total income

PAT#/Total income

ROCE*

RONW*

RONW#

EPS

Debt : Equity ratio

13.5%

5.9%

5.7%

3.4%

17.1%

22.5%

21.8%

17.8

2.6

17.5%

6.2%

6.6%

4.2%

16.3%

18.8%

20.6%

14.3

2.7

4

1 2003-2004 2002-2003

Note: *Figures exclude Other income and Profit\ (loss) from integrated JVs.# Figures include other income and Profit\ ( Loss) from integrated JVs.

Financials

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03 04 19

Contingent L iabi l i t ies

A major part of contingent liabilities of HCC is theperformance and advance bank guarantees given by thebankers to the clients under the terms of contract. Theseare issued on the strength of counter-indemnities of HCC.Keeping in view the track record of HCC in meeting itscontractual performance, the chances of contingentliabilities becoming real liabilities are remote. Due toincreased order book , the bank guarantee utilisation withBanks has increased from Rs 725 crore in 2002-03 to Rs. 832. crore in 2003-04.

Risks and Concerns

Construction activity in India has been picking up slowly,and this is expected to continue, if not increase further inthe year ahead. However, the year under review sawsignificant rise in steel prices in domestic as well asinternational markets. Since steel is a major raw materialin the construction industry, this has adversely affected theoperations of your Company. At present, there is also aserious sourcing problem for steel due to its restrictedavailability in both domestic and international markets.Going forward, we expect the steel prices to remain stiff,which could put pressure on the profitability margins.

The precarious fiscal position of several state governmentsremains an area of concern. While this has restricted theability of state governments to invest in new projects, evenwhen new projects are sanctioned, their ability to meetpayment obligations remain suspect. There have beeninstances in the past when projects have come to standstilldue to the inability of state governments to pay. Even asHCC’s exposure to state government sponsored projects islimited, it does constitute a risk for the Company.

Your Company has, over the years, made significantinvestments in highly specialised and capital intensivemachinery and equipment. While these machinery andequipment find use in large and complex infrastructureprojects, their use is often restricted to a single kind ofproject. It is thus important for HCC to secure new projectsacross various areas to ensure that assets are notunderutilised and adequate returns are maintained onthese investments.

A major source of concern for your Company is theshortage of skilled workforce such as carpenters and craneoperators in the country. There exist very limited numberof specialised institutes that impart training in this area,which creates strong restrictions on supply. This problem isfurther aggravated due to demand pull from Middle-Eastcountries for these categories of workers. Even as manyinitiatives are underway to retain and attract skilledworkforce, this is an area of concern especially when HCCexpands its operations further.

As mentioned earlier, there is excess capacity in theindustry, with established capabilities far exceeding theprojects available. This has led to intense competition andput significant pressure on the margins in the industry as a

whole. This trend is particularly visible in the road sector,where HCC has a fair amount of exposure. Going forward,HCC expects further pressure on its profit margins, in linewith the industry trend.

Internal controls and adequacy

HCC has a proper and adequate system of internal controlsto ensure that all assets are safeguarded and protectedagainst loss from unauthorised use or disposition, and thattransactions are authorised, recorded and reportedcorrectly.

The internal control is supplemented by an extensiveprogramme of internal audits, review by management,and documented policies, guidelines and procedures. Theinternal control is designed to ensure that financial andother records are reliable for preparing financialinformation and other data, and for maintainingaccountability of assets.

Opportunit ies and Outlook

The year ahead looks promising for the constructionindustry as a whole, and your Company in particular. As on31 March 2004, the total value of unexecuted work onhand was Rs. 3,975 crore, including company’s share inintegrated joint venture projects. This is almost 18 per centhigher than the value of the work on hand of Rs. 3,346crore as on 31 March 2003. As discussed before, HCCsecured new orders amounting to around Rs. 1381 crore inthe year 2003-04. The Company is awaiting final award onthree projects amounting to Rs. 879 crore, where it hasemerged lowest bidder. Bids for 16 project worth Rs 5600crore are expected to be submitted. This includes projectsworth Rs 1025 crore for which the Company has pre-qualified.HCC is also in the process of submitting pre-qualification bids for 14 projects worth Rs.17,905 crore,and is confident of securing a sizeable share of these newprojects.

There is every reason to feel upbeat about the prospectsof the company in 2004-05 as well as across a longer timehorizon. Our constant endeavour to improve internalefficiencies, reduce costs and enhance productivity, hasgiven us the operational strength to seize possibleopportunities of growth in the future.

Cautionary Statement

Statements in this Management Discussion and Analysisdescribing the company’s objectives, projections, estimatesand expectations may be ‘forward looking statements’within the meaning of applicable laws and regulations.Actual results might differ substantially or materially fromthose expressed or implied. Important developments thatcould affect the company’s operations include adowntrend in the infrastructure sector, significant changesin political and economic environment in India, exchangerate fluctuations, tax laws, litigation, labour relations andinterest costs.

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03 04 888

G U J A R A T S T A T E H I G H W A Y S P R O J E C T

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03 04 21

C O M P O S I T I O N O F T H E B O A R D

The Board of Directors of HCC consists of thirteen members. Of these, three are whole-time Directors, including theChairman and Managing Director, who is a promoter director, and two executive Directors. The remaining tenmembers of the Board are non-executive independent Directors.

N U M B E R O F B O A R D M E E T I N G S

During 2003-04, the Board of HCC met four times — on 15 May 2003, 25 July 2003, 22 October 2003 and 16 January2004. The maximum time gap between any two consecutive meetings did not exceed four months.

Sound corporate governance practices and ethical business conduct are atthe core of HCC’s value system. The company’s philosophy of corporategovernance stems from its belief that timely disclosures, transparentaccounting policies, and a strong and independent board go a long way inmaximising corporate value. Your Company believes that all actions andstrategic plans should deliver value to all stakeholders, includingshareholders, as well as conform with the highest standards of corporatebehaviour. It was this conviction, which led HCC to incorporate goodgovernance practices much before it was legally mandated in the country.

The Securities and Exchange Board of India (SEBI) stipulates the corporategovernance standards for listed companies, through Clause 49 of the listingagreement of stock exchanges. Introduced in the year 2000, this Clausestipulates the norms and disclosure standards that have to be followed inthe area of corporate governance by listed Indian companies.

This chapter, alongwith the chapters on Management Discussion andAnalysis and Additional Shareholders Information, reports HCC’scompliance with Clause 49 of the listing agreement.

BOARD OFDIRECTORS

Corporate Governance

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D I R E C T O R S ’ A T T E N D A N C E R E C O R D A N D D I R E C T O R S H I P S

Details are given in Table 1.

None of the Directors is a member of more than 10 Board-level committees of public companies in which they areDirectors or is a Chairman of more than five such committees.

I N F O R M A T I O N S U P P L I E D T O T H E B O A R D

As a policy, HCC puts up for consideration of the Board all major decisions involving new investments and capitalexpenditure, in addition to matters which statutorily require Board approval. The following information is regularlyplaced before the Board:

� Annual budget � Purchase and disposal of plant, machinery and equipments� Quarterly, half yearly and annual results of the company� Minutes of Audit Committee and other committee meetings� Information on recruitment and remuneration of senior officers just below the Board level� Any material defaults in financial obligations to and by the company for substantial non-payment of goods sold orbought by the company� Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems

03 04 22

Notes: # Independent Director means a director who apart from receiving director’s remuneration does not have any other material pecuniary relationship ortransactions with the company, its promoters, its management or its subsidiaries, which in the judgement of the board may affect independence of judgement ofthe director.* Meetings held during the year ended 31 March 2004.

DETAILS ABOUT THE BOARD OF DIRECTORS1

Position Number ofmeetingsheld*

Numberofmeetingsattended

Whetherattended last AGMon 25 July2003

Number ofoutsidedirectorshipsof public companies

Materially significant pecuniary orbusiness relationshipwith thecompany

Name of Director

Promoter,Chairman andManagingDirector

Non-executive,independent#

Non-executive,independent

Non-executive, independent

Non-executive,independent

ExecutiveDirector

ExecutiveDirector

Non-executive,independent

Non-executive,independent

Non-executive,independent

Non-executive,independent

Non-executive,independent

Non-executive,independent

4

4

4

4

4

4

4

4

4

4

4

4

4

4

3

3

-

2

4

4

3

2

3

4

3

4

10

11

3

4

6

3

1

4

7

1

8

4

1

N.A.

None

None

None

Partner of Mulla & Mulla, Solicitors tothe company

N.A.

N.A.

None

None

Technical Consultant

None

None

Technical Consultant

YES

YES

YES

NO

NO

YES

YES

YES

NO

YES

YES

YES

YES

Ajit Gulabchand

Y. H. Malegam

Rajas R.Doshi

Bhalchandra R Sule

D. M. Popat

K.G.Tendulkar

M D Khattar

Ram P. Gandhi

N.A.Kalyani

Fred Moavenzadeh

Sharad M.Kulkarni

Nirmal P.Bhogilal

R.G.Vartak

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� Transaction that involve substantial payment towards goodwill, brand equity or intellectual property� Materially important show cause, demand, prosecution and penalty notices� Details of foreign exchange exposures and steps taken by management to limit the risks of adverse exchange ratemovement�Materially significant sale of investments, subsidiaries, and such assets which are not in the normal course of business� Details of joint venture agreements� Quarterly statutory compliance report� Disclosures by management on material transactions, if any, including potential conflict of interest

The Board is presented with detailed notes on these matters, as a part of the agenda papers of the meeting or directlytabled at the Board meetings, as and when required.

D I R E C T O R S W I T H M A T E R I A L LY S I G N I F I C A N T P E C U N I A R Y R E L A T I O N S H I P O RB U S I N E S S T R A N S A C T I O N W I T H T H E C O M P A N Y

All executive Directors receive salary, allowances, perquisites and commission, while all non-executive Directors receive sitting fees and commission. In addition, two non-executive Directors, namely Mr. Vartak and Mr. Moavenzadeh, receive technical fees. None of these were materially relevant pecuniary relationships or transactions between the Company and its Directors for the financial year under review.

R E M U N E R A T I O N O F D I R E C T O R S

Table 2 gives details of the remuneration paid/payable to Directors during 2003-2004.The Company did not advance any loans to any of its directors in the year under review.

Relatives of two of the Directors are employees of the Company. Ms. Shalaka Gulabchand, General Manager (Planning& Business Development) is the daughter of Mr. Ajit Gulabchand, Chairman and Managing Director of the Company.The gross remuneration paid to her during 2003-04 was Rs.18,60,238 as was approved by the shareholders and theGovernment of India. Also, Mr. Uday Vartak, an executive in the Tendering Department of the Company is the son ofMr. Mr R.G. Vartak, Director of the Company. Mr. Uday Vartak was paid gross emoluments of Rs.10,54,001 during theyear 2003-04. Mr. Uday Vartak, was an employee of HCC, before his father Mr. R.G. Vartak, joined the Board of theCompany.

03 04 23

Notes: * Sitting fees includes payment made to the Directors for attending meetings of committee. ** Commission proposed, payable after approval of accounts by shareholders in the AGM. + Perquisites does not include company’s contribution to provident fund and super-annuation fund.# Professional fees paid for rendering technical services.

REMUNERATION PAID OR PAYABLE TO DIRECTORS FOR 2003-04 (Amount in Rs.)2

Sitting fees* SalaryAllowances

and Perquisites+

Commission** TechnicalFees#

TotalName of Director

NA

15,000

30,000

NIL

10,000

NA

NA

60,000

10,000

15,000

40,000

20,000

40,000

_

91,20,000

32,50,666

30,18,000

2,88,00,000

2,40,000

2,40,000

2,40,000

2,40,000

32,50,666

30,18,000

2,40,000

2,40,000

2,40,000

2,40,000

2,40,000

2,40,000

3,79,20,000

2,65,000

2,70,000

2,40,000

2,50,000

65,01,332

60,36,000

3,00,000

2,50,000

23,27,350

2,80,000

2,60,000

25,65,000

20,72,350

22,85,000

Ajit Gulabchand

Y.H.Malegam

Rajas R.Doshi

Bhalchandra R.Sule

D.M.Popat

K.G.Tendulkar

M.D.Khattar

Ram P.Gandhi

N.A.Kalyani

Fred Moavenzadeh

Sharad M.Kulkarni

Nirmal P.Bhogilal

R.G. Vartak

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A U D I T C O M M I T T E E

The Audit Committee of HCC comprises four non-executive independent directors. The terms of reference of the AuditCommittee are in conformity with those mentioned in Clause 49 of the listing agreement of the Stock Exchanges aswell as Section 292A of the Companies Act, 1956. Specifically, HCC’s Audit Committee reviews:

� The company’s financial reporting process� Disclosure norms� Internal control systems� Accounting policies and practices� Reports of the company’s internal auditors� Quarterly, half yearly and yearly financial statements and annual accounts including consolidated accounts; and � Financial and risk policies

Apart from the above, the Audit Committee recommends the appointment and removal of statutory auditors, fixesaudit fees and also approves payment of fees for any other services and reviews the adequacy of the internal auditfunction. The minutes of the Audit Committee meetings are circulated to the Board, which discusses and takes note ofthem.

The Audit Committee met four times during the year on — 12 May 2003, 21 July 2003, 20 October 2003, 12 January2004. The composition and attendance of the members of the Committee are given in Table 3. The Company Secretary,Mr. V.P. Kulkarni is the Secretary to the Committee.

R E M U N E R A T I O N C O M M I T T E E

The Remuneration Committee comprises four non-executive independent directors — Dr. N.A. Kalyani (Chairman), Mr.B.R. Sule, Mr. Ram P. Gandhi, and Mr. Nirmal P. Bhogilal. The Committee reviews the remuneration package ofexecutive directors and recommends suitable revisions to the Board. The Committee also recommends compensationto be paid to non-executive directors in accordance with the Companies Act, 1956. The remuneration of the ManagingDirector and other Whole-time Directors is subject to approval of the Board and the shareholders at the AnnualGeneral Meeting, and is within the ceilings laid down by Schedule XIII to the Companies Act, 1956. The terms ofemployment of the Managing Director and Whole-time Directors stipulates a severance notice of six months on eitherside.The minutes of the Remuneration Committee meetings are reviewed and noted by the Board.

The Committee met once during the year. This meeting was held on 12 May 2003 and attended by Mr. Ram P. Gandhiand Mr. Nirmal P. Bhogilal. Each received Rs.5000 as sitting fees.

S H A R E H O L D E R S / I N V E S T O R S G R I E V A N C E C O M M I T T E E

The Company’s Shareholders/Investors Grievance Committee comprises four Directors — Mr. Ram P. Gandhi (Chairman),non-executive independent Director, Mr. Rajas R. Doshi, non-executive, independent Director, Mr. Ajit Gulabchand,Chairman and Managing Director and Mr. K.G. Tendulkar, Executive Director (Operations).

The Company Secretary, Mr. V.P. Kulkarni is the compliance officer. During 2003-04, the Committee met four times on— 12 May 2003, 25 July 2003, 22 October 2003 and 16 January 2004 . The details are given in Table 4.

03 04 24

BOARD LEVEL COMMITTEES

DETAILS OF AUDIT COMMITTEE3

No. ofMeetings held

No. ofMeetingsAttended

Sittingfees (Rs.)

Name of theMember

4

4

4

4

4

-

4

4

20000

-

20000

20000

Mr Sharad M. Kulkarni

Mr Bhalchandra R. Sule

Mr Ram P. Gandhi

Mr R G Vartak

Position

Chairman

Member

Member

Member

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During the year under review, a total of 1142 letters including 28 complaints were received by the Company fromshareholders/ investors. Most of these letters were on account of non-receipt of dividend or interest warrants, sharecertificates after transfer and duplicate share certificates, bank mandates, revalidation of dividend warrants, changeof address, transmission of shares and deletion of names, etc. All the complaints were resolved by the Company tothe satisfaction of the investors and as at 31 March 2004, there were no pending letters or complaints.

M A N A G E M E N T D I S C U S S I O N A N D A N A LY S I S

This annual report has a detailed chapter on management discussion and analysis.

D I S C L O S U R E S B Y M A N A G E M E N T T O T H E B O A R D

All details on the financial and commercial transactions where Directors may have a potential interest are provided tothe Board. The interested Directors neither participate in the discussion nor vote on such matters.

D E T A I L S O F R E L A T E D P A R T Y T R A N S A C T I O N S

As required by the Accounting Standards AS-18, the details of related party transactions are given in Schedule R to theannual accounts.

I N I T I A T I V E S O N P R E V E N T I O N O F I N S I D E R T R A D I N G P R A C T I C E S

In compliance with the SEBI regulation on prevention of insider trading, the company has instituted a comprehensivecode of conduct for its directors and designated employees. The code lays down guidelines, which advises them onprocedures to be followed and disclosures to be made, while dealing with shares of HCC, and cautions them onconsequences of violations.

A P P O I N T M E N T O R R E - A P P O I N T M E N T S O F D I R E C T O R S

Mr. Rajas R.Doshi, Mr. D.M.Popat and Mr. Sharad M.Kulkarni, are retiring by rotation, and being eligible, offerthemselves for reappointment. Their abbreviated resumes are given below.

Mr. Rajas R.Doshi, B.E.(Civil) from Bombay University, is the Chairman and Managing Director of The Indian Hume PipeCo. Ltd and serves on the Board of IHP Finvest Ltd. and The Modern Mills Ltd.

Mr. D. M. Popat, B.Com., B.A., L.L.B. is a Partner of Mulla & Mulla & Craigie Blunt & Caroe. He is on the Board of AshokOrganic Industries Ltd., The Hindoostan Spinning & Weaving Mills Ltd., The Morarjee Goculdas Spinning & WeavingCo. Ltd., Oxford Industries Ltd., The Ruby Mills Ltd. and Tak Machinery & Leasing Ltd.

03 04 25

MANAGEMENT

SHAREHOLDERS

DETAILS OF SHAREHOLDERS / INVESTORS GRIEVANCE COMMITTEE4

No. ofMeetings held

No. ofMeetingsAttended

Sittingfees (Rs.)

Name of theMember

4

4

4

4

4

3

4

4

20000

15000

-

-

Mr. Ram P.Gandhi

Mr. Rajas R.Doshi

Mr. Ajit Gulabchand

Mr. K.G.Tendulkar

Position

Chairman

Member

Member

Member

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Mr. Sharad M. Kulkarni, B.E. from Pune University, is a Fellow Member of the Institution of Engineers FIE (India), Fellowof Institute of Directors (U.K.) and Fellow of Institute of Management (U.K.). He is an eminent Management Consultantand serves on the Board of Bayer ABS Ltd., Bayer Crop Science Ltd., KEC International Ltd., Raychem RPG Ltd., SpencerInternational Hotels Ltd., Global Procurement Consultants Ltd., RPG Enterprises Ltd. and Hilltop Holdings India Ltd.

C O M M U N I C A T I O N T O S H A R E H O L D E R S

Quarterly, half-yearly and annual results are published in prominent daily newspapers such as Business Standard(English) and Sakal (Marathi) in all editions.

W E B S I T E

The Company’s website www.hccindia.com contains information on the Company and its performance. Presentationsto analysts, as and when made, are immediately put on the website for the benefit of the shareholders and public atlarge. The Secretarial Department’s e-mail ID is secretarial@hccindia.co.in

D E T A I L S O F N O N - C O M P L I A N C E

There has been no incident of non-compliance by the company during the year and no penalties or strictures havebeen imposed on the Company by the Stock Exchanges or SEBI or any Statutory Authorities on any matter related tocapital markets during the last three years.

I N F O R M A T I O N O N G E N E R A L B O D Y M E E T I N G S

The date, time and venue of the last three Annual General Meetings are as follows:

P O S T A L B A L L O T

During the year under review, HCC conducted a postal ballot under the provisions of the Companies (Passing of theResolutions by Postal Ballot) Rules, 2001, on an ordinary resolution seeking to authorise the Board of Directors tomortgage and/or charge the immovable and movable assets of the Company.

A total of 1,630 ballots representing 1, 23,52,969 shares were cast in favour while 110 ballots representing 21,871shares were cast against the resolution. Mr. Sujal Shah, partner of N.M. Raiji & Co., Chartered Accountants, wasappointed the Scrutinizer for the postal ballot. Based on the Scrutinizer’s report, the Chairman declared the resolutionpassed with 99.82 per cent votes polled in favour of the resolution at the Annual General Meeting of the Companyheld on 25 July 2003.

03 04 26

INFORMATION ON GENERAL BODY MEETINGS5

LocationYear

Walchand Hirachand Hall Indian Merchants Chambers Indian Merchants Chambers MargChurchgate, Mumbai 400 020.

Walchand Hirachand Hall Indian Merchants Chambers Indian Merchants Chambers MargChurchgate, Mumbai 400 020.

Walchand Hirachand Hall Indian Merchants Chambers Indian Merchants Chambers MargChurchgate, Mumbai 400 020.

2000-2001

2001-2002

2002-2003

Date andTime

25 October200111.00 A.M.

26 July200211.00 A.M..

25 July200311.30 A.M.

Special resolution(s)passed

Increase in commissionpayable to the Non-Executive Directors

Revision in remunerationpayable to Ms. ShakalaGulabchand, daughter of Mr. Ajit Gulabchand

Delisting of equity sharesfrom Ahmedabad, Calcuttaand Delhi Stock exchanges

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A N N U A L G E N E R A L M E E T I N G

78th ANNUAL GENERAL MEETING

Date: 23 July 2004Day: FridayTime: 11.30 a.m.Venue: Walchand Hirachand Hall, Indian Merchants’ Chamber,

Indian Merchants’ Chamber Marg, Churchgate,Mumbai 400 020.

F I N A N C I A L R E S U LT S

The results for the financial year 2003-04 were announced as follows:

25 July 2003: First quarter results.22 October 2003: Second quarter and half yearly results.16 January 2004: Third quarter results.14 May 2004: Fourth quarter and annual results.

B O O K C L O S U R E

The dates of book closure are from 1 July 2004 to 23 July 2004, inclusive of both days.

D I V I D E N D D A T E S

A dividend of Rs. 5/- per share was recommended by the Board on 20,024,000 equity shares. Subject to approval of theshareholders at the AGM, this will be paid on or after 23 July 2004.

L I S T I N G A N D S T O C K C O D E S

The Company’s equity shares are listed on The Stock Exchange, Mumbai (BSE), The Calcutta Stock Association Ltd andthe National Stock Exchange of India Ltd (NSE). The stock codes of the said stock exchanges are given below:

During the year, the Company had applied to The Stock Exchange, Ahmedabad, The Delhi Stock Exchange AssociationLtd and The Calcutta Stock Exchange Association Ltd for delisting of its equity shares from their exchanges. The StockExchange, Ahmedabad and The Delhi Stock Exchange Association Ltd have accordingly delisted the Company’s equityshares from their exchanges with effect from 21 November 2003 and 19 December 2003, respectively. However, TheCalcutta Stock Exchange Association Ltd is yet to delist the shares.

03 04 27

ADDITIONALSHAREHOLDERINFORMATION

Stockcodes

Stockexchanges

500185

10018066

HINDCONS

BSE

Calcutta

NSE

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S T O C K D A T A

Table 1 gives the monthly highs and lows of HCC’s shares on the BSE/NSE.

Chart A and B compare HCC share prices with the BSE Sensex & Nifty

03 04 28

HIGH AND LOW PRICES OF HCC SHARES AT BSE/NSE, 2003-20041

High (Rs.)BSE NSE

Low (Rs.)Month

69.7587.9086.0093.85 92.50 93.90

105.45126.35149.00144.00129.00125.00

56.8062.2577.4074.2078.0076.0082.35

102.00109.50110.0099.0098.25

April 2003May 2003June 2003July 2003August 2003September 2003October 2003November 2003December 2003January 2004February 2004March 2004

High (Rs.)

69.9587.5085.7094.4092.7591.90

107.00126.50149.80157.00128.50129.00

Low (Rs.)

56.0062.0074.0075.1077.5075.5082.05

101.20109.05106.50

98.1599.00

APR

03

MA

Y 0

3

JUN

03

JUL

03

AU

G 0

3

SEP

03

OC

T 03

NO

V 0

3

DEC

03

JAN

04

FEB

04

MA

R 0

4

HCC

BSE SENSEX

Ind

exed

to

100

as

on

1 A

pri

l 200

3

100

50

150

200

250

300

HCC VS BSE SensexA

APR

03

MA

Y 0

3

JUN

03

JUL

03

AU

G 0

3

SEP

03

OC

T 03

NO

V 0

3

DEC

03

JAN

04

FEB

04

MA

R 0

4

HCC

NIFTY

Ind

exed

to

100

as

on

1 A

pri

l 200

3

100

50

150

200

250

300

HCC VS Nifty B

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S H A R E H O L D I N G P A T T E R N

Tables 2 and 3 give details about the distribution of shareholdings of HCC by ownership and size class.

D E M A T E R I A L I S A T I O N O F S H A R E S

As on 31 March 2004, 6,757,352 equity shares representing 33.75 percent of the total equity capital were held indematerialised form. The balance 13,266,648 shares, representing 66.25 per cent of total shares, were held in physicalform.

The ISIN number for HCC’s equity shares is INE 549 A01018 on both the depositories, i.e. NSDL and CDSL.

S H A R E T R A N S F E R S Y S T E M

Trading in the company’s shares in the stock exchanges is compulsorily in the dematerialised mode. Shares in physicalmode which are lodged with the company and MCS Ltd (Registrar & transfer agents) are registered and sent within aperiod of thirty days from the date of receipt, if the documents are in order in all respects. The Board has delegatedthe power for approving transfer of shares to the Committee of Directors, which consists of the ManagingDirector,Executive Director (Operations) and two non-executive and independent Directors. The committee generallymeets every fortnight to approve the transfer of shares.

D E T A I L S O F P U B L I C F U N D I N G O B T A I N E D I N T H E L A S T T H R E E Y E A R S

No capital has been raised from the public in the last three years.

O U T S T A N D I N G W A R R A N T S A N D T H E I R I M P L I C A T I O N S O N E Q U I T Y

There are no outstanding warrants or other instruments.

I N V E S T O R C O R R E S P O N D E N C E

Shareholders can contact the company’s registrar and share transfer agents at the following address:MCS Ltd, Sri Venkatesh Bhavan, Plot No.27, Road No.11, MIDC Area,Marol, Andheri (East),Mumbai 400 093.Telephone: +91-22-28215235; Fax: +91-22-28350456.

03 04 29

2

No. of shares PercentageCategories

1,20,38,775

3,35,697

2,55,226

1,150

1,325

1,04,256

72,87,571

20,024,000

60.12

1.67

1.27

0.005

0.006

0.53

36.40

100.00

Promoters, directors,relatives and associates

Foreign institutionalinvestors/mutual funds

Public financialinstitutions/State FinancialCorporation

Mutual funds (Indian)

Nationalised and otherbanks

NRIs/ OCBs

Public

Total

SHAREHOLDING PATTERN BY OWNERSHIP ASON 31 MARCH 2004

No. of shares %Categories

SHAREHOLDING PATTERN BY SIZE-CLASSAS ON 31 MARCH 2004

3

No. of Shareholders No. of Shares heldCategories

21,548

587

288

75

37

32

47

52

22,666

26,83,763

4,72,736

4,33,731

1,92,102

1,30,246

1,50,846

3,28,566

1,56,32,010

2,00,24,000

1-500

501-1000

1001-2000

2001-3000

3001-4000

4001-5000

5001-10000

10001 and above

Total

%

13.40

2.36

2.17

0.96

0.65

0.75

1.64

78.07

100.0

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H C C ’ S R E G I S T E R E D O F F I C E

Hincon House, L.B.S.Marg, Vikhroli (West),Mumbai 400 083.Telephone: +91-22-25775959; Fax: +91-22-25777568E-Mail : hccindia@vsnl.comWebsite: www.hccindia.comSecretarial Dept E-Mail ID is secretarial@hccindia.co.in

03 04 30

The Members ofHindustan Construction Co.LtdMumbai 400 083.

We have examined the compliance of conditions of Corporate Governance by HindustanConstruction Co.Ltd for the financial year ended March 31, 2004, as stipulated in clause 49 of theListing Agreement of the said Company with the stock exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the management.Our examination was limited to procedures and implementation thereof, adopted by the Companyfor ensuring the compliance of the conditions of the Corporate Governance. It is neither an auditnor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us wecertify that the Company has complied with the conditions of Corporate Governance as stipulatedin the above mentioned Listing Agreement.

As required by the Guidance Note issued by the Institute of Chartered Accountants of India, wehave to state that as per the records maintained by the Company, there were no investor grievancesremaining unattended / pending for more than 30 days.

We further state that such compliance is neither an assurance as to the future viability of theCompany nor the efficiency or effectiveness with which the management has conducted the affairsof the Company.

For K.S.AIYAR & CO.Chartered Accountants

Ramakrishna PrabhuMumbai, 14 May, 2004 Partner

M. No. 38959

A U D I T O R S ’ C E R T I F I C A T E

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03 04 31

P U R U L I A P U M P E D S T O R A G E P R O J E C T, W E S T B E N G A L

Global Reports LLC

03 04 32

HCC’s Integrated Management System internationally certified for Quality,Occupational Health & Safety And Environment

Leader in civil construction for over 77 years, HCC’s corporate philosophy hasspawned a distinct work ethic. To always pursue excellence in quality of workand deliver optimal value to the customer in all its engineering constructionprojects.

In 2002, the company took all the appropriate steps to implement andmaintain an Integrated Management System for Quality, Occupational Health& Safety and Environment and continually improve its effectiveness inaccordance with the requirements of all the three prevalent internationalstandards:ISO 9001:2000 - Quality Management SystemOHSAS 18001:1999 - Occupational Health and Safety Assessment SeriesISO 14001:1996 - Environment Management System

This Integrated Management System has been audited continuously byRWTUV of Germany and found to be conforming to all these requirements ofthese standards. HCC is the first engineering construction company in India tohave all three international certifications.

This Integrated Management System is a testimony of HCC’s commitment toimplementing international business processes for all its operations includingproject sites.

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HCC 78TH ANNUAL REPORT 2003-200433

Notice

NOTICE is hereby given that the Seventy-Eighth AnnualGeneral Meeting of the Shareholders of Hindustan ConstructionCompany Limited will be held on Friday, July 23, 2004 at11.30 A.M. at Walchand Hirachand Hall, Indian Merchants’Chamber, Indian Merchants’ Chamber Marg, Churchgate,Mumbai-400020, to transact the following business: -

ORDINARY BUSINESS

1. To receive, consider and adopt the audited Balance Sheetas at March 31, 2004, the Profit & Loss Account for theyear ended on that date and the Reports of the Directorsand Auditors thereon.

2. To declare dividend on equity shares.

3. To appoint a Director in place of Shri Rajas R.Doshi, whoretires by rotation, and being eligible, offers himself forre-appointment.

4. To appoint a Director in place of Shri D.M.Popat, whoretires by rotation, and being eligible, offers himself forre-appointment.

5. To appoint a Director in place of Shri Sharad M.Kulkarni,who retires by rotation, and being eligible, offers himselffor re-appointment.

6. To consider and if thought fit, to pass with or withoutmodifications, the following resolution as an OrdinaryResolution:

“RESOLVED THAT M/s. K.S.Aiyar & Co., CharteredAccountants, Mumbai, the retiring Auditors of theCompany, be and they are hereby re-appointed as theAuditors of the Company including all its Branch Offices/Sites, to hold office from the conclusion of this AnnualGeneral Meeting until the conclusion of the next AnnualGeneral Meeting on a remuneration as may be fixed bythe Board of Directors of the Company.

RESOLVED FURTHER THAT the Board of Directors beand is hereby authorized in consultation with theCompany’s Auditors to appoint Branch Auditor(s) of theCompany, to audit the accounts of the Company’sworkspots/sites within and outside India, present andfuture on such terms and conditions includingremuneration as the Board of Directors may deem fit.”

By Order of the BoardFor Hindustan Construction Co. Ltd.

VITHAL P. KULKARNICompany Secretary

Registered Office:Hincon House,Lal Bahadur Shastri Marg,Vikhroli (West),Mumbai-400 083.

Place: MumbaiDate: May 14, 2004

NOTES

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THEMEETING IS ENTITLED TO APPOINT ONE OR MOREPROXIES, TO ATTEND AND VOTE INSTEAD OFHIMSELF AND THE PROXY NEED NOT BE A MEMBEROF THE COMPANY. PROXIES IN ORDER TO BEEFFECTIVE MUST BE DEPOSITED AT THEREGISTERED OFFICE OF THE COMPANY NOT LESSTHAN 48 HOURS BEFORE THE COMMENCEMENT OFTHE MEETING.

2. The Register of Members and the Share Transfer Booksof the Company will remain closed from Thursday, July 1,2004 to Friday, July 23, 2004 (both days inclusive) for thepurpose of payment of Dividend.

3. Shareholders are requested to intimate the change intheir registered address, if any, to the Company’s Registrarand Share Transfer Agents, M/s. MCS Limited at “SriVenkatesh Bhawan”, Plot No.27, Road No.11, MIDC Area,Andheri (East), Mumbai-400 093.

4. The dividend as recommended by the Board, if declaredat the meeting, will be payable to those members whosenames appear on the Company’s Register of Membersas on July 23, 2004.

5. The unclaimed dividends upto the Company’s financialyear ended 30th June 1994 have been transferred tothe General Revenue Account of the CentralGovernment pursuant to Sub-Section 5 of Sec.205A ofthe Companies Act, 1956. Members who have notencashed their dividend warrants upto the financial yearended 30th June, 1994 are requested to claim the samefrom the Registrar of Companies, Maharashtra atMumbai.

6. In terms of Section 205A and 205C of the CompaniesAct, 1956 any dividend remaining unclaimed for a periodof seven years from the due date of payment is requiredto be transferred to the ‘Investors Education andProtection Fund’(IEPF). Accordingly, the unclaimeddividends upto the financial year ended June 30,1996have been transferred to the said fund. The dividendsfor the financial year ended June 30,1997 andthereafter, which remain unclaimed for a period of 7years will be transferred by the Company to the IEPF.Members who have not encashed their dividendwarrant(s) so far, for the financial year ended June30,1997 and the subsequent financial years, arerequested to make their claims to the Company or M/s.MCS Limited without any delay. It may be noted thatonce the unclaimed dividend is transferred to the IEPFas above, no claim shall lie against the IEPF or theCompany in respect of any amounts which wereunclaimed/unpaid for a period of seven years from thedates that they first become due for payment and nopayment shall be made in respect of any such claims.

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HCC 78TH ANNUAL REPORT 2003-200434

the Chairman & ManagingDirector of The Indian HumePipe Co. Ltd.

He is a Director of the Companysince December 23, 1993.

He is also a Member of theS h a r e h o l d e r s / I n v e s t o r sGrievance Committee of theCompany.

Other Directorships :

Name of the Company Position Committee MembershipHeld Type Status

1. The Indian Hume Pipe Managing Shareholders/ MemberCo. Ltd. Director Investors

Grievance2. IHP Finvest Ltd. Director — —3. The Modern Mills Ltd. Director Audit Member

Shareholders/ ChairmanInvestorsGrievanceRemuneration Member

II. Name: : Shri D.M.Popat

Date of Birth : 18th December, 1933

Qualification : B.Com., B.A., LL.B.

Expertise : Shri Popat is a senior partnerof Mulla & Mulla & Craigie Blunt& Caroe. He has been inpractice for over 40 years andhas vast experience in legalfield. He is also a CommitteeMember in:

(i) The Bombay IncorporatedLaw Society

(ii) Federation of IndianChambers of Commerce& Industry (FICCI)

(iii) The Indian Council ofArbitration (ICA)

(iv) ICC - India

He is a Director of the Companysince 23rd May, 1994

Other Directorships :

Name of the Company Position Committee MembershipHeld Type Status

1. Ashok Organic Industries

Ltd. Director — —

2. The Hindoostan Spg &

Wvg Mills Ltd. Director — —

3. The Morarjee Goculdas

Spg & Wvg Co. Ltd. Director — —

4. Oxford Industries Ltd. Director — —

5. The Ruby Mills Ltd. Director — —

6. Tak Machinery &Leasing Ltd. Director — —

7. In order to provide protection against fraudulentencashment of the warrants, shareholders holding sharesin physical form are requested to intimate the Companyunder the signature of the sole/first joint holder, thefollowing information to be printed on the DividendWarrants:

i) Name of Sole/first joint holder and Folio No.

ii) Particulars of Bank Account, viz:

(a) Name of the Bank

(b) Name of the Branch

(c) Complete address of the Bank with Pin Codenumber

(d) Account type, whether Savings (SB) or CurrentAccount (CA)

(e) Bank Account number allotted by the Bank.

8. Members holding shares in electronic from may kindlynote that their Bank details as furnished by the respectiveDepositories to the Company will be printed on theirdividend warrants as per the applicable regulations of theDepositories, and that the Company will not entertain anydirect request from such members for deletion of/changein such Bank details. Further instructions, if any, alreadygiven by them in respect of shares held in physical formwill not be automatically applicable to dividend paid onshares in electronic form. Members may, therefore, giveinstructions regarding Bank Accounts in which they wishto receive dividend, directly to their DepositoryParticipants.

9. Members are requested to notify immediately any changeof address to their Depository Participants (DPs) in respectof their holdings in electronic form and to MCS Limited,(Unit: Hindustan Construction Company Ltd.) Sri VenkateshBhavan, Plot No.27, Road No.11, M.I.D.C. Area, Andheri(E), Mumbai 400 093 in respect of the shares held bythem in physical form.

10. Re-appointment of Directors

At the ensuing Annual General Meeting, Shri Rajas R.Doshi, Shri D. M. Popat and Shri Sharad M. Kulkarniretire by rotation and being eligible, offer themselves forreappointment. Pursuant to clause 49(VI)(A) of the ListingAgreement relating to the Code of Corporate Governance,the particulars of the aforesaid Directors are given below:

I. Name: : Shri Rajas R.Doshi

Date of Birth : 1st September,1951

Qualification : B. E.(Civil)

Expertise : Shri Doshi is an Industrialist and

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HCC 78TH ANNUAL REPORT 2003-200435

III. Name: : Shri Sharad M. Kulkarni

Date of Birth : 9th December, 1939

Qualification : B. E.

Expertise : Shri Kulkarni is an eminentManagement Consultant. Hehas wide experience inInternational and NationalProjects particularly in Power,Infrastructure and PropertyDevelopment. His area ofexpertise is in the Managementof Joint Ventures, Mergers andAcquisitions, Strategic Planning,Business Development ofEmerging technologies such asIT and applied Bio-technologyand Bio-Informatics.

He is a Director of the Companysince 10th August, 2001

He is also the Chairman of theAudit Committee.

Other Directorships :Name of the Company Position Committee Membership

Held Type Status1. Bayer ABS Ltd. Director Audit Chairman

Remuneration Member

2. Bayer Crop Science Ltd. Director Audit ChairmanInvestor ChairmanGrievance

3. KEC International Ltd. Director Audit MemberInvestor MemberGrievance

4. Raychem RPG Ltd. Director — —5. RPG Enterprises Ltd. Director — —6. Spencer International Ltd. Director — —7. Global Procurement Director — —

Consultancy Ltd.8. Hilltop Holdings India Ltd. Director — —

By Order of the BoardFor Hindustan Construction Co. Ltd.

VITHAL P. KULKARNICompany Secretary

Registered Office:Hincon House,Lal Bahadur Shastri Marg,Vikhroli (West),Mumbai-400 083.

Place: MumbaiDate: May 14, 2004

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HCC 78TH ANNUAL REPORT 2003-200436

Directors’ Report

To,

The Members of

Hindustan Construction Co. Ltd.

1. Report

Your Directors are pleased to present the 78th Annual Report together with the Audited Accounts for the year ended

March 31, 2004.

2. Financial HighlightsYear ended Year ended

March 31,2004 March 31,2003Rs. Lacs Rs. Lacs

Turnover 117135.67 78923.25

Less: Company’s share of Turnover In Integrated JVs 11341.62 11201.86

Turnover excluding Turnover from Integrated JVs 105794.05 67721.39

Profit before Interest, Depreciation and Tax 14496.57 12424.20

Less: i) Interest 3758.81 4206.05

ii) Depreciation 4377.32 8136.13 3408.83 7614.88

Profit after Interest and Depreciation 6360.44 4809.32

Add: Company’s share in Profit/(Loss) in Integrated JVs (315.07) (285.68)

Profit before Tax 6045.37 4523.64

Less: Provision for Current Tax 926.00 724.00

Provision for Deferred Tax 1554.00 2480.00 934.00 1658.00

Profit after Tax 3565.37 2865.64

Add: Tax provision for earlier years written Back 2.61 —

Add: Balance brought forward from last year 7394.68 7397.29 5324.75 5324.75

10962.66 8190.39

Add: Transferred from Debenture Redemption Reserve — 1159.96

Amount available for Appropriation 10,962.66 9350.35

Less: Appropriations

a) Proposed Dividend 1001.20 800.96

b) Corporate Tax on Proposed Dividend 128.28 102.63

c) Debenture Redemption Reserve 552.08 552.08

d) General Reserve 5000.00 6681.56 500.00 1955.67

Balance carried to Balance Sheet 4281.10 7394.68

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HCC 78TH ANNUAL REPORT 2003-200437

3. Dividend

Your Directors are pleased to recommend a dividend ofRs.5/-per Equity Share on the 2,00,24,000 Equity Shares ofRs.10/- each for the financial year ended March 31,2004,as compared to Rs.4/- per Equity Share for the previousyear.

4. Operations

The turnover of the Company at Rs 1171.36 crore hasshown an increase of 48.4% as compared to Rs 789.23crore during the previous year. Due to sustained thruston improvement in the operational efficiency coupled withbetter project mix and management, the profit before taxwas Rs 60.45 crore as compared to Rs 45.24 crore in theprevious year.

Your Directors are pleased to inform you that during theyear under review, the Company has secured the followingContracts:

Rs. in Crore

Sr. Name of the Project Total Value Company’sof Contract Share in

Contract

1. Udhampur-Srinagar-Baramulla New BGRailway Line Project. 169.03 169.03Civil Works including Tunnels,Bridges, Earthwork etc. in Zone-IV (km. 142-152) of Laole –Qazigund Section.

2. Godavari Lift IrrigationScheme Phase-I of Stage-I 843.98 720.04EPC contract for lifting waterfrom River Godavari DistrictWarrangal, Andhra Pradesh,through approximately 135 kmPipeline connecting enrouteexisting tanks viz. Bhimghan-pur, Ramappa, Salivagu,Nagaram, Dharmasagar andGhanpur Railway Station.

3. Paradip Port RoadConnectivity Project. 327.77 327.77Four laning of Chandikhole-Paradip Section of NH-5Ain Orissa.

4. Rail cum Road bridge across 163.99 163.99river Ganga at Munger, Bihar.Construction of Guide Bunds,Foundation and substructure.

Total 1504.77 1380.83

The total value of unexecuted works on hand as on March31, 2004 was Rs 3975 crore, which includes theCompany’s share of work in the Integrated JointVenture projects, as against Rs.3346 crore as on March31, 2003.

Subsequent to the closure of the financial year, yourcompany has secured a work order for execution of thework of Allahabad Bypass Project-Construction ofRoad from Km. 158.00 to Km. 198.00 (Except GangaBridge), Package ABP-2" for a contract price ofRs. 446.99 crore.

Decisions are awaited from various clients for tenderssubmitted by the Company for seventeen projectsamounting to approximately Rs.4743 crore. Tenders forsixteen projects worth Rs.5605 crore are expected to besubmitted in the near future. The Company has alsosubmitted prequalification bids for eighteen projects worthover Rs.15264 crore which are under evaluation.Prequalification bids for projects worth over Rs.17905crore are expected to be submitted in the near future.The Company is confident of securing a sizeable shareof these new projects.

5. Management System

Your company is one of the few Construction companiesin the world which has established, implemented andmaintained an ‘Integrated Management System’comprising Quality, Environment and O.H.& Safetymanagement systems in accordance with internationalstandards ISO 9001:2000, ISO 14001:1996 and OHSAS18001:1999 respectively.

A few of our measurable ‘IMS’ Objectives are:

• Improving Customer Satisfaction

• Continuous enhancement of the Quality of theProduct

• Prevent and control any air, water and soil pollutionarising from construction activities, plants, associatedother utilities.

• Comply with all applicable laws and regulations.

• Committment to provide both safe working conditionsand protection against health risks to all theemployees and other interested parties.

It is evident from the above that your Company is notonly committed to achieve customer satisfaction but isalso committed to take care of the surrounding and thecommunity by ensuring that proper health, safety andenvironmental conditions prevail in and around the workplaces.

These IMS objectives are being verified through planned& systematic ‘Internal Audit’ processes and reviewed for

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HCC 78TH ANNUAL REPORT 2003-200438

its effectiveness at the ‘Management Review’ meetings.Continuous improvement measures are being initiatedfrom time to time to enhance the IMS performance acrossthe Company. Benefits from IMS implementation arerealized in terms of improved customer satisfaction,reduced environmental impacts and a marked decline inoverall accident/incident cases.

6. Subsidiary Companies

During the year under review, the following subsidiariesof the Company have been voluntarily dissolved:

Hincon International Ltd — Mauritius, with effect fromNovember 27, 2003

HCC Infotech Inc. — U.S.A. with effect from March 31,2004

Ucchar Investment Ltd has made an application to theRegistrar of Companies, under Sec. 560 of the CompaniesAct, 1956 to strike off its name from the Register ofCompanies. The Government of India, Ministry of Financeand Company Affairs, Department of Company Affairs,Mumbai, has issued a Notification No. 400/64248/560dated February 24, 2004 that the name of UccharInvestment Ltd. would be struck off from the Registermaintained by the Registrar of Companies and theCompany would be dissolved on the expiry of threemonths from the date of the Notification.

In terms of the approval granted by the CentralGovernment under Section 212(8) of the Companies Act,1956, vide its letter bearing number 47/17/2004-CL-IIIdated May 21, 2004 copies of the balance sheet, profitand loss account, report of the Board of Directors andthe Auditors of the subsidiary companies for the yearended March 31, 2004 need not be attached to thebalance sheet of the Company. The Company will makeavailable the annual accounts of the subsidiaries i.e.Hincon Technoconsult Ltd., Western Securities Ltd.,Ucchar Investment Ltd. and HCC Infotech Ltd. and otherrelated detailed information upon request by any member/investor of the Company/subsidiary Company interestedin obtaining the same. Further, the Annual Accounts ofthe subsidiary companies will also be kept for inspectionby any member/investor at the Company’s RegisteredOffice and that of the subsidiaries concerned. TheCompany has presented the audited consolidated financialstatements and the same have been prepared incompliance with the Accounting Standard AS-21 issuedby the Institute of Chartered Accountants of India, whichincludes the financial and other requisite information ofits subsidiaries.

7. Delisting of Equity Shares

During the year, the Company had applied to the TheStock Exchange, Ahmedabad, The Delhi Stock ExchangeAssociation Ltd. and The Calcutta Stock ExchangeAssociation Ltd. for delisting of its equity shares fromtheir respective exchanges. The Stock Exchange,Ahmedabad and The Delhi Stock Exchange AssociationLtd. have accordingly delisted the Company’s equityshares from their Exchanges with effect from November21, 2003 and December 19, 2003, respectively. However,The Calcutta Stock Exchange Association Ltd., is yet todelist the shares.

8. Conservation of Energy, technology absorption andforeign exchange earnings and Outgo.

As required under section 217(1)(e) of the CompaniesAct, 1956, read with the Companies (Disclosure ofparticulars in the Report of the Board of Directors) Rules1988, the information relating to the foregoing matters isgiven by way of annexure to this Report.

9. Industrial Relations

The industrial relations continue to be generally peacefuland cordial.

10. Directors

As per the provisions of the Companies Act, 1956 readwith Article 152 of the Articles of Association of theCompany Shri Rajas R.Doshi, Shri D.M.Popat and ShriSharad M.Kulkarni, Directors of the Company retire byrotation and being eligible, offer themselves forre-appointment.

11. Directors’ responsibility statement

As required under Section 217(2AA) of the CompaniesAct 1956, the Board of Directors confirm:

a) that in the preparation of the Annual Accounts, theapplicable accounting standards have been followedand there has been no material departure;

b) that the selected accounting policies were appliedconsistently and the Directors made judgements andestimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of theCompany as at March 31, 2004 and the profit or lossof the Company for the year ended on that date.

c) that the proper and sufficient care has been takenfor the maintenance of adequate accounting recordsin accordance with the provisions of the CompaniesAct,1956 for safeguarding the assets of the Company

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HCC 78TH ANNUAL REPORT 2003-200439

and for preventing and detecting fraud and otherirregularities.

d) that the Annual Accounts have been prepared on agoing concern basis.

12. Consolidated Financial Statements

In accordance with the Accounting Standard AS-21 &AS-27 on Consolidated Financial Statements read withAccounting Standard AS-23 on accounting forinvestments in Associates, the Consolidated FinancialStatements attached herewith form part of the AnnualAccounts.

13. Corporate Governance

A separate section titled “Corporate Governance” includinga certificate from the Auditors of the Company regardingcompliance of the conditions of Corporate Governanceas stipulated under Clause 49 of the Listing Agreementhas been annexed in this Annual Report.

14. Fixed Deposits

As at the end of the financial year, a Fixed Depositamounting to Rs.3,000/- remained unclaimed.

15. Particulars of Employees and other additionalinformation.

The information required under section 217(2A) of theCompanies Act, 1956, and the Rules framed thereunderis annexed hereto and forms part of the Report.

16. Auditors

Messrs K.S.Aiyar & Co., Chartered Accountants, Mumbai,Auditors of the Company, retire at the ensuing Annual

General Meeting and are eligible for re-appointment. Theyhave furnished a certificate to the effect that their proposedappointment, if made will be in accordance with the limitsspecified under section 224(1-B) of the Companies Act,1956.

17. Acknowledgements

Your Directors wish to place on record their appreciationto the Financial Institutions, Banks, Central and StateGovernments and the Company’s valued investors fortheir continued co-operation and support.

Your Directors also take this opportunity to acknowledgethe dedicated efforts made by workers, staff, and officersat all levels for their contribution to the success achievedby the Company.

For and on behalf of the Board of Directors

AJIT GULABCHANDChairman & Managing Director

Registered Office:Hincon House,Lal Bahadur Shastri Marg,Vikhroli(West),Mumbai-400 083

Place: Mumbai.Dated: May 25, 2004

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HCC 78TH ANNUAL REPORT 2003-200440

Annexure to the Directors’ Report

(Information as per Section 217(1)(e) of the Companies Act,

1956 read with the Companies (Disclosure of particulars in

the report of the Board of Directors) Rules, 1988.

I. Conservation of Energy:

(a) Energy Conservation Measures Taken:

• Energy efficient motors are included in the

purchase specifications and are put to use.

(b) Additional Investments and Proposals, if any,being implemented for reduction in Consumptionof Energy:

• Energy audit is conducted in one project through

reputed professional energy audit agencies atsome of the major energy intensive sites to

identify the energy conservation measures.

• Some of the Company’s engineers would be

appearing for national level certification examfor Energy Managers/ Auditors being conducted

by the Bureau of Energy Efficiency of the Govt.

of India as per the provisions of EnergyConservation Act – 2001.

(c) Impacts of the Measures of (a) and (b) above forreduction of energy consumption and consequentimpact on the cost of production of goods:

• Decrease in overall energy consumption due toadoption of energy efficient measures.

(d) Total energy consumption and energyconsumption per unit of production as per Form-A of the annexure to the Rules in respect ofindustries specified in the Schedule thereto:

• Not applicable

II. Technology Absorption

Efforts made in technology absorption as per Form-B of

the Annexure to the Rules.

1. Research and Development (R&D)

The Department of Scientific & Industrial Research,

Ministry of Science & Technology, Government of

India has renewed the recognition to the In-houseR&D unit of the Company up to March 2007

The Main objective of the Research & Development

Centre is: “to evaluate the practicality and suitability

of the latest innovations in the construction materials,by carrying out R&D Projects in the centre and

applying the same on site in full scale”.

The R&D Centre has applied for accrediation to NABL

(National Accreditation Board for Testing & Calibrating

Laboratories) and pre-assessment audit by NABL hasalready been conducted. The necessary preparations

for final audit by NABL are under progress.

The various ongoing R&D projects at the centre

include the development of mix design methods for

roller compacted concrete, investigating potential use

of Rice Husk Ash and Metakaolin in concrete.

The R&D Centre with its role of promoting the use of

fly ash in concrete had made an agreement withCANMET (Canadian Centre for Mineral and Energy

Technology) for technology cooperation for

demonstration projects undertaken as part of CII-CIDA-CANMET project on “Implementation of High

Volume Fly Ash Concrete Technology in India for the

reduction of Green House gases from the constructionindustry”. The R&D Centre has successfully

demonstrated the use of High Volume Fly Ash

Concrete at Bandra Worli Sea Link Project by its usein Tremie Seal Concrete. A team from CII-CIDA-

CANMET had visited the site and has appreciated

the work done by the R&D team. Further the R&D

Centre is in the process of investigating the possibilityof using this technology in other projects. The

Company has spent Rs. 127.97 lacs (previous year

Rs. 69.98 lacs) towards Rearch & Developmentexpenses which consist of Rs.71.65 lacs on account

of revenue expenditure (previous year Rs 42.73 lacs)

and Rs. 56.31 lacs towards Capital expenditure(previous year Rs.27.25 lacs.)

2. Technology absorption, adaptation andinnovation.

(a) Efforts made towards technology absorption,adaptation and innovation are:

• technical collaboration with CANMET –

Canada in utilization of ‘High Volume FlyAsh Concrete’ for the Company’s projects.

• Promotion and campaigning the use of High

Volume Fly ash Concrete in IndianConstruction Industry in association with

CANMET and CII-India.

• The Company’s Engineers have received

training in CANMET – Canada in High

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Annexure to the Directors’ Report

Volume Fly Ash Concrete technology and

they in turn conduct similar training programs

in India.

• Construction of steel containment for 1000

MW Nuclear Reactor Unit.

• Other significant efforts made to absorbforeign technology includes methods/

equipment for slip-form paving, tunneling,

bridge construction and other structures.

(b) Benefits derived as a result of the aboveefforts:

• Savings made in monetary terms and alsoreduction in green house gases by

replacement of Cement with eco-friendly Fly

Ash in huge quantity of Concrete.

• Development of Human Resourses in use

of High Volume Fly Ash Concerete

Technology and in advanced ConstructionTechnology.

• Savings in valuable foreign exchange which

would otherwise be spent on hiring of foreignconstruction contractors.

(c) Technology Year of Has technologyimported Import been fully(Product) absorbed

Use of highspeed Conveyors

for concrete

Placement. 1996 Being absorbed

Use of reversecirculation Drill

for piling. 2001 Being absorbed

Use of 55CI5Fressyinet System

for prestressing. 2003 Being absorbed.

III. Foreign Exchange earnings and outgo.

(a) Activities relating to exports, initiatives taken to

increase exports, development of new export marketsfor products and services and export plans:

Visits are being made by technical and marketing

personnel to develop new export markets from time

to time.

(b) Total Foreign Exchange used and earned:

The information on foreign exchange earnings and

outgo is contained in the notes 13 (B) & (D) ofSchedule R forming part of the accounts.

For and on behalf of the Board of Directors

AJIT GULABCHAND

Chairman & Managing Director

Place: Mumbai

Dated: May 25, 2004

Technology Year of Has technologyimported Import been fully(Product) absorbed

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HCC 78TH ANNUAL REPORT 2003-200442

Annexure to the Directors’ Report

Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, a samended and forming part of the Directors’ Report for the financial year ended March 31, 2004.

A. Employed in India through out the financial year under review and were in receipt of remuneration in aggregate of not less than Rs. 2,00,000/- per month.

Sr. Name Designation Total Qualification Exp. Date of Age Last Employment HeldNo. Remuneration in years Commencement

(in Rupees) of employment

1 Ajit Gulabchand Chairman & Managing Director 2,31,06,000.00 B.Com(Hons) 32 01/04/1983 56 Managing DirectorThe Ravalgaon Sugar Farm Ltd.

2 Khattar M D Executive Director –Tech. & BD 62,03,430.00 B.E.(C), Diploma 46 04/09/1996 66 Managing Directorin Management Indian Railway Construction Ltd.

3 Tendulkar K G Executive Director –Operations 65,09,506.00 B.Com., B.G.L, F.C.A 25 08/11/1993 50 Practicing Chartered AccountantPartner of Tendulkar & Mehta

4 Sood Praveen Vice President-Finance& Accounts 30,89,771.00 B.Com.,C.A 22 01/07/97 46 Dy.General Manager-FinanceRaymond Synthetics Ltd.

5 Vaidya Shashank M General Manager –Training 24,07,743.00 B.E.(C), M.Tech.(Struc.) 21 09/05/2001 45 Chief EngineerKonkan Railway Corp Ltd.

Notes:

1. Gross Remuneration includes Salary, Allowances, Commission, Company’s Contribution to Provident and Superannuation Funds, Leave Encashment, Leave Travel Allowances,Reimbursement of Medical Expenses and Monetary value of other perquisites evaluated in accordance with Income Tax Rules.

2. All appointments are contractual and are subject to the rules and regulations of the Company in force from time to time.

3. None of these employees are related to any Director of the company.

B. Employed on contract in India for the financial year under review and were in receipt of remuneration in the aggregate not less than Rs. 2,00,000/- per month.

Sr. Name Designation Total Qualification Exp. Date of Age Last Employment HeldNo. Remuneration in years Commencement

(in Rupees) of employment

1 Ahmed Mohammed Chief Corporate Executive – Quality 48,23,814 B.Sc.(C), 19 12/02/2001 43 Project Chief Engineer, Mohale DamAshraf Management Contractors, a Joint Venture of\

Impregilo, Hochtief & Concor- R.S.A.

2 Allen Robert Anthony Vice President – Plant & Equipment 64,02,546 GCSE,ONC(Elect.), 33 20/11/2000 51 Area Plant ManagerHNC(Mechanical) Consolidated Contracting Company,

Athens

3 Broomfield John Albert Technician 47,83,356 GCE(Building) 33 01/04/2000 53 Contracts ManagerAFCONS Pauling Joint Venture India Ltd.

4 Frame Henry Technician 35,12,831 D.M.E. 28 02/09/2002 52 Construction SuperintendentKier International

5 Fotedar S K * Vice – President (Operations) 39,32,494 B.Sc.(C), M.Tech. 35 14/04/2003 60 General ManagerHindustan Construction Co. Ltd.

Notes:

1. All appointments are contractual and are subject to the rules and regulations of the Company in force from time to time.

2. None of the above appointees are related to any Director of the Company.

3. *Retired from the services of the Company with effect from 12th April, 2003 and since employed on contract basis with effect from 14th April, 2003. The total remuneration includesRs.10,14,000 paid towards encashment of leave on retirement.

For and on behalf of the Board of Directors

Place : Mumbai AJIT GULABCHANDDated : May 25, 2004 Chairman & Managing Director

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HCC 78TH ANNUAL REPORT 2003-200443

Auditors’ Report

To The Members of

Hindustan Construction Company Limited

Report on the accounts for the year ended on 31st March,2004 in compliance with Section 227(2) of the CompaniesAct, 1956.

We have audited the attached Balance Sheet of HindustanConstruction Company Ltd., as at 31st March, 2004 and alsothe Profit and Loss Account for the year ended on that dateannexed thereto and the cash flow statement for the yearended on that date. These financial statements are theresponsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements basedon our audit.

We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that weplan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation. We believe that our audit provides areasonable basis for our opinion.

1. As required by the Companies (Auditors’ Report) Order,2003 issued by the Central Government of India in termsof sub-section (4A) of section 227 of the Companies Act,1956, we enclose in the Annexure a statement on thematters specified in paragraphs 4 and 5 of the said Order.

2. Further to our comments in the Annexure referred toabove, we report that :

(a) We have obtained all the information andexplanations, which to the best of our knowledgeand belief, were necessary for the purposes of ouraudit;

(b) In our opinion proper books of account as requiredby law have been kept by the Company so far asappears from our examination of those books;

(c) The Balance Sheet and Profit and Loss Account dealtwith by this report are in agreement with the booksof account;

(d) In our opinion, the Balance Sheet and Profit andLoss Account dealt with by this report comply withthe Accounting Standards referred to in sub-section(3C) of section 211 of the Companies Act, 1956, tothe extent applicable;

(e) On the basis of written representations received fromthe directors/companies, as on 31st March, 2004 andtaken on record by the Board of Directors we reportthat none of the directors is disqualified as on 31stMarch, 2004 from being appointed as a director interms of clause(g) of sub-section(l) of section 274 ofthe Companies Act, 1956;

(f) In our opinion and to the best of our informationand according to the explanations given to us,the said accounts give the information requiredby the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformitywith the accounting principles generally acceptedin India :

(i) In the case of the Balance Sheet, of the state ofaffairs of the Company as at 31st March, 2004;

(ii) In the case of the Profit and Loss Account, ofthe Profit for the year ended on that date; and

(iii) In the case of cash flow statement, of the cashflows for the year ended on that date.

For K. S. Aiyar & Co.Chartered Accountants

Ramakrishna PrabhuPartner

M. No.: 38959

Mumbai:Dated : May 14, 2004

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HCC 78TH ANNUAL REPORT 2003-200444

Annexure to the Auditors’ Report

(Referred to in paragraph 1 of our Report of even date on theAccounts for the year ended on 31st March, 2004 of HindustanConstruction Company Limited)

(i) The Company is maintaining proper records showingfull particulars including quantitative details and situationof Fixed Assets.

(ii) A substantial portion of the fixed assets have beenphysically verified by the management during the yearand in our opinion the frequency of verification isreasonable having regard to the size of the Companyand the nature of its assets. No material discrepancieswere noticed on such physical verification.

(iii) Fixed assets disposed off during the year were notsubstantial. According to the information andexplanations given to us, we are of the opinion that thedisposal of fixed assets has not affected the goingconcern status of the Company.

(iv) The inventories have been physically verified during theyear by the management. In our opinion, the frequencyof verification is reasonable.

(v) The procedures of physical verification of inventoriesfollowed by the management are reasonable andadequate in relation to the size of the Company and thenature of its business.

(vi) In our opinion and according to the information andexplanations given to us, the Company is maintainingproper records of inventory. The discrepancies noticedon verification between physical stocks and the bookrecords were not material and have been properly dealtwith in the books of account.

(vii) The company has taken loans from companies listed inthe Register maintained under Section 301. The numberof parties is 2 and the amount involved in thetransactions is Rs. 405 lacs.

(viii) The rate of interest and other terms and conditions ofthe unsecured loans taken from Companies listed in theRegister maintained under Section 301 are not prejudicialto the interests of the company. The company has beenregular in payment of principal and interest amount.There are no overdues.

(ix) In our opinion and according to the information andexplanations given to us, there are adequate internalcontrol procedures commensurate with the size of thecompany and the nature of its business with regard topurchases of inventory and fixed assets. During thecourse of our audit, we have not observed anycontinuing failure to correct major weaknesses ininternal controls.

(x) Based on the audit procedures applied by us and accordingto the information and explanations provided by themanagement, we are of the opinion that there are notransactions that need to be entered into the registermaintained under Section 301 of the Companies Act, 1956.

(xi) In our opinion and according to the information andexplanations given to us, the Company has compliedwith the provisions of Section 58A and 58AA of theCompanies Act, 1956 and the Companies (Acceptanceof Deposits) Rules, 1975, with regard to depositsaccepted from the public. As informed to us, no orderhas been passed by the Company Law Board.

(xii) In our opinion, the Company has an internal audit systemcommensurate with the size and nature of its business.

(xiii) The Central Government has not prescribed themaintenance of cost records under section 209(1)(d) ofthe Companies Act, 1956.

(xiv) According to the records of the Company, ProvidentFund, Investor Education and Protection Fund,Employees’ State Insurance, Income Tax, Sales Tax,Wealth Tax, Customs Duty, Excise Duty, cess and othermaterial statutory dues applicable to it have beengenerally regularly deposited during the year with theappropriate authorities. According to the information andexplanations given to us, no undisputed amountspayable in respect of above were in arrears, as at March31, 2004 for a period of more than six months from thedate on which they became payable.

(xv) According to the records of the Company, sales tax,income tax, customs duty, wealth tax, excise duty orcess which have not been deposited on account ofdispute are given below:

Name of Nature of Amount Forum where

Statute dues Rs. Lacs dispute is pending

Tamilnadu Sales Tax 463.30 Tamilnadu Sales

General Financial Year Tax AppellateSales Tax Year 1998-99 Tribunal

Tamilnadu Sales Tax 315.99 Tamilnadu SalesGeneral Financial Year Tax Appellate

Sales Tax Year 1999-00 Tribunal

Central Sales Tax 1.67 Tamilnadu Sales

Sales Tax Financial Year Tax AppellateYear 1998-99 Tribunal

(xvi) The Company does not have any accumulated losses

at the end of the financial year and has not incurred

cash losses during the financial year covered by ouraudit and the immediately preceding financial year.

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HCC 78TH ANNUAL REPORT 2003-200445

(xvii) In our opinion and according to the information and

explanations given to us, the Company has not defaulted

in repayment of dues to a financial institution, bank ordebenture holders.

(xviii) Based on our examination of the records and the

information and explanations given to us, the Companyhas not granted any loans and advances on the basis

of security by way of pledge of shares, debentures and

other securities.

(xix) In our opinion the Company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore the provisions of

clause 4(xiii) of the Companies (Auditor’s Report) Order,

2003 are not applicable to the Company.

(xx) In our opinion the Company is not dealing in or trading

in shares, securities, debentures and other investments.

Accordingly, the provisions of clause 4(xiv) of theCompanies (Auditor’s Report) Order, 2003 are not

applicable to the Company.

(xxi) In our opinion, the terms and conditions on which theCompany has given guarantees for loans taken by others

from banks or financial institutions are not prejudicial to

the interest of the Company.

(xxii) In our opinion, the term loans have been applied for thepurpose for which they were raised.

(xxiii) According to the information and explanations given to

us and on an overall examination of the balance sheet

of the Company, we report that no funds raised on

short-term basis have been used for long-term

investment. Long term funds aggregating to Rs. 20611.88lacs have been used to finance short term purpose

including core working capital.

(xxiv) According to the information and explanations given tous, the Company has not made any preferential allotment

of shares to parties and companies covered in the

register maintained under section 301 of the CompaniesAct, 1956.

(xxv) The Company has created securities in-respect of

secured debentures issued and outstanding at the year

end.

(xxvi) The Company has not raised any money through public

issue during the year.

(xxvii)According to the information and explanations given tous, no fraud on or by the Company has been noticed or

reported during the course of our audit.

For K. S. Aiyar & Co.

Chartered Accountants

Ramakrishna Prabhu

PartnerM. No.: 38959

Mumbai:Dated : May 14, 2004

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HCC 78TH ANNUAL REPORT 2003-200446

Balance Sheet as at 31st March, 2004

As at31.03.2003

Schedule Rs. Lacs Rs. Lacs Rs. LacsSOURCES OF FUNDSShare Capital A 2003.06 2003.06Reserves and Surplus B 14387.18 11948.68

Total Shareholders’ Funds 16390.24 13951.74Loans(a) Secured C 19592.53 16505.30(b) Unsecured D 22362.29 21152.57

Total Loans 41954.82 37657.87Deferred Tax Liability (Net, Refer note no.5) 7483.81 5929.81

Total 65828.87 57539.42

APPLICATION OF FUNDSFixed Assets(a) Gross Block E 54821.32 48911.08(b) Less: Depreciation 18736.19 16650.19

(c) Net Block 36085.13 32260.89(d) Items Awaiting Completion or Commissioning 858.00 3560.07

Total Fixed Assets 36943.13 35820.96Investments F 4858.56 3116.77Current Assets, Loans and AdvancesA. Current Assets G

(a) Inventories 52128.82 43665.70(b) Sundry Debtors 127.08 157.81(c) Cash and Bank Balances 4069.90 3662.81(d) Other Current Assets 43.72 43.21

56369.52 47529.53B. Loans and Advances H 6841.05 6415.88

Total Current Assets, Loans and Advances 63210.57 53945.41

Less: Current Liabilities and Provisions ICurrent Liabilities 36957.87 33566.79Provisions 2225.52 1790.05

Total Current Liabilities and Provisions 39183.39 35356.84

Net Current Assets 24027.18 18588.57Miscellaneous Expenditure J — 13.12(To the extent not Written Off or Adjusted)

Total 65828.87 57539.42

The Annexed Notes (Schedule- R ) form an integral part of the Accounts.

As per our report attached

For K.S.AIYAR & CO.Chartered Accountants

RAMAKRISHNA PRABHUPartner

VITHAL P. KULKARNICompany Secretary

Mumbai, Dated: May 14, 2004

AJIT GULABCHAND Chairman & Managing DirectorY.H.MALEGAMD.M.POPATRAM P. GANDHIPROF. FRED MOAVENZADEH

Directors

SHARAD M. KULKARNINIRMAL P. BHOGILALR.G. VARTAKK.G.TENDULKAR Executive Director (Operations)M.D. KHATTAR Executive Director (Technical & B.D.)

Mumbai, Dated: May 14, 2004

}

Global Reports LLC

HCC 78TH ANNUAL REPORT 2003-200447

Profit and Loss Account for the year ended 31st March, 2004

PreviousYear

Schedule Rs. Lacs Rs. Lacs Rs. LacsINCOMEIncome from Operations K 117135.67 78923.25Less: Company’s Share of Turnover in 11341.62 11201.86

Integrated Joint Ventures

105794.05 67721.39Other Income L 167.77 590.72

105961.82 68312.11EXPENDITUREConstruction Expenses M 78714.90 46043.02Employees’ Remuneration and N 7676.45 6101.95Welfare ExpensesOffice and Site Establishment Expenses O 5073.90 3742.94Interest P 3758.81 4206.05Depreciation 4377.32 3408.83

99601.38 63502.79

6360.44 4809.32Add: Company’s Share in Profit/(Loss) in Integrated Joint Ventures (315.07) (285.68)

PROFIT BEFORE TAX 6045.37 4523.64Provision for Current Tax 926.00 724.00Provision for Deferred Tax (Refer Note No. 5) 1554.00 934.00

PROFIT AFTER TAX 3565.37 2865.64Add: Tax provsion for earlier years written back 2.61 —

3567.98 2865.64Add: Balance brought forward from Last Year 7394.68 5324.75

10962.66 8190.39Add: Transferred from :

Debenture Redemption Reserve — 1159.96

AMOUNT AVAILABLE FOR APPROPRIATION 10962.66 9350.35Less: Appropriations :(a) Proposed Dividend 1,001.20 800.96(b) Tax on Proposed Dividend 128.28 102.63(c) Debenture Redemption Reserve 552.08 552.08(d) General Reserve 5,000.00 500.00

6,681.56 1955.67

Balance carried to Balance Sheet 4281.10 7394.68

Earnings per Share (Basic and Diluted ) Annualised—————Rs. 17.82 14.31The Annexed Notes (Schedule -R) form an Integral part of the Accounts.

As per our report attached

For K.S.AIYAR & CO.Chartered Accountants

RAMAKRISHNA PRABHUPartner

VITHAL P. KULKARNICompany Secretary

Mumbai, Dated: May 14, 2004

AJIT GULABCHAND Chairman & Managing DirectorY.H.MALEGAMD.M.POPATRAM P. GANDHIPROF. FRED MOAVENZADEH

Directors

SHARAD M. KULKARNINIRMAL P. BHOGILALR.G. VARTAKK.G.TENDULKAR Executive Director (Operations)M.D. KHATTAR Executive Director (Technical & B.D.)

Mumbai, Dated: May 14, 2004

}

Global Reports LLC

HCC 78TH ANNUAL REPORT 2003-200448

Schedules Forming Part of the Balance Sheet

SCHEDULE A As at31.03.2003

SHARE CAPITAL Rs. Lacs Rs. Lacs Rs. LacsAuthorised Capital

50,000 9.5% Redeemable Cumulative 50.00 50.00Second Preference Sharesof Rs.100/- each

4,95,00,000 Equity Shares of Rs.10/- each 4950.00 4950.00

Total 5000.00 5000.00

Issued, Subscribed & Paid-Up2,00,24,000 Equity Shares of Rs.10/- each 2002.40 2002.40

Add : Forfeited Shares 0.66 0.66

Total 2003.06 2003.06

NOTES:1. Out of 2,00,24,000 Equity Shares of Rs.10/- each

1,26,86,625 Equity Shares were issued as fully paid Bonus Shares bycapitalisation of Reserves and Surplus.

SCHEDULE B As at31.03.2003

RESERVES AND SURPLUS Rs.Lacs Rs.Lacs Rs.Lacs(a) Share Premium Account 1575.00 1575.00(b) General Reserve:

Balance as per last Account 2132.90 1632.90Add: Transferred from

Profit and Loss Account 5,000.00 500.00

7132.90 2132.90(c) Debenture Redemption Reserve:

Balance as per last Account 843.75 1451.63Add: Transferred from

Profit and Loss Account 552.08 552.08

1395.83 2003.71Less: Transferred to Profit and

Loss Account — 1159.96

1395.83 843.75(d) Forfeited Debentures Account 2.35 2.35(e) Profit and Loss Account

Balance carried forward 4281.10 7394.68

Total 14387.18 11948.68

SCHEDULE C As at31.03.2003

SECURED LOANS Rs. Lacs Rs. Lacs Rs. Lacs(a) Debentures:

(i) 13.5% Non-Convertible “A” Series 1000.00 1000.00(ii) 13.6% Non-Convertible “B” Series 500.00 500.00(iii) 13.0% Non-Convertible “C” Series 1000.00 1000.00(iv) 12.5% Non-Convertible “D” Series 1000.00 1000.00(v) 10% Non-Convertible “E” Series 1500.00 1500.00(vi) 9% Non-Convertible “F” Series 2000.00 2000.00

7000.00 7000.00

(b) From Banks:(i) On Cash Credit Account 3361.96 1210.68(ii) Bank of India Term Loan 1900.00 2500.00(iii) Canara Bank Term Loan 4200.00 4200.00(iv) Bank of Baharain & Kuwait F.C.Loan 883.60 —(v) ICICI Bank Car Loan 29.11 —

10374.67 7910.68

(c) From HDFCCorporate Loan 1300.00 —

(d) From Contactees 92.86 469.62

(e) From OthersEquipment Loan 825.00 1125.00

Total 19592.53 16505.30

Notes:

Privately Placed Non Convertible Debentures

i) 13.5% Non Convertible Debentures “A” Series : Secured by first chargeby way of hypothecation of specific movable properties as specified inpart “A” of second Schedule of the trust deed executed on 5th November,2001 in favour of UTI Bank Ltd., the trustees to the debentureholders.These debentures having a face value of Rs. 100/- each aggregatingRs.10 crore are to be redeemed in five equal half yearly installments atthe end of 36th, 42nd, 48th, 54th, and 60th month from the date ofallotment i.e.10th August 2001.

ii) 13.6% Non Convertible Debentures “B” Series : Secured by anexclusive charge by way of hypothecation of specific movable propertiesas specified in part “B” of second Schedule of the trust deed executed on5th November, 2001 in favour of UTI Bank Ltd., the trustees to thedebentureholders. These debentures having a face value of Rs. 100/-each aggregating Rs. 5 crore are to be redeemed in five equal half yearlyinstallments at the end of 36th, 42nd, 48th, 54th and 60th month from thedate of allotment i.e.10th August, 2001.

iii) 13% Non Convertible Debentures “C” Series : Secured by first chargeby way of hypothecation of specific movable properties as specified inpart “C” of second schedule of the trust deed executed on 5th November,2001 in favour of UTI Bank Ltd., the trustees to the debentureholders.These debentures having a face value of Rs. 100/- each aggregatingRs.10 crore are to be redeemed in five equal half yearly installments atthe end of 36th, 42nd, 48th, 54th, and 60th month from the date ofallotment i.e. 25th October, 2001.

iv) 12.5%Non Convertible Debentures “D” Series : Secured by first chargeby way of hypothecation of specific movable properties as specified insecond schedule of the trust deed executed on 28th March, 2002 infavour of UTI Bank Ltd., the trustees to the debentureholders. Thesedebentures having a face value of Rs.100/- each aggregating Rs.10 croreare to be redeemed in five equal half yearly installments at the end of36th, 42nd, 48th, 54th and 60th month from the date of allotment i.e. 25thJanuary, 2002.

v) 10% Non Convertible Debentures “E” Series : Secured by first chargeby way of hypothecation of specific movable properties as specified insecond schedule of the trust deed executed on 20th January, 2003 infavour of UTI Bank Ltd., the trustees to the debentureholders. Thesedebentures having a face value of Rs.100/- each aggregating Rs. 15crore are to be redeemed in seven half yearly installments at the end of48th, 54th, 60th, 66th, 72nd, 78th and 84th month from the date ofallotment i.e. 25th October, 2002.

vi) 9% Non Convertible Debentures “F” Series : Secured by first chargeby way of hypothecation of specific movable properties as specified insecond schedule of the trust deed executed on 20th January, 2003 infavour of UTI Bank Ltd., the trustees to the debentureholders. Thesedebentures having a face value of Rs.100/- each aggregating Rs.20 croreare to be redeemed in 3 annual installments at the end of 36th, 48th, and60th month from the date of allotment i.e. 17th January, 2003.

The above debentures (i) to (vi) are also secured by way of mortgage ona flat situated at Lok Gaurav Complex, Vikhroli.

SCHEDULE C (Contd.) As at31.03.2003

SECURED LOANS Rs. Lacs Rs. Lacs Rs. Lacs

Global Reports LLC

HCC 78TH ANNUAL REPORT 2003-200449

Banks:

1. Cash credit limits are secured against hypothecation of work in progress,stores, book debts, dues and advances and residual charge/mortgage onplant & machinery and certain land situated at Vikhroli and buildings(Flats) at Dadar (Mumbai) and land & buildings at Dhamangaon.

2. Bank of India

Secured by first charge by way of hypothecation of specific fixed assetsdescribed under deed of hypothecation executed on 15th January,2002.

3. Canara Bank

Secured by first charge by way of hypothecation of specific fixed assetsdescribed under deed of hypothecation executed on 21st February, 2002.

4. Bank of Bahrain & Kuwait F.C. Term Loan

Secured by first exclusive charge by way of hypothecation of specific equipmentsdescribed under deed of hypothecation executed on 18th July, 2003.

5. ICICI Bank Car Loan

Secured by first charge by way of hypothecation of Cars purchased underthe scheme in favour of ICICI Bank.

From HDFC

Corporate Loan

Secured by way of oral charge on 6th June, 2003 on non residential premisesbeing all the piece and parcel of land admeasuring 202505 sq. meters atvillage Tara, district Raigad together with Buildings and other structures thereon,land appurtenant thereto both present and future.

Contractees

Secured by hypothecation /pledge of certain plant and machinery.

From Others

Equipment Loan

Secured by first and exclusive charge by way of hypothecation of the equipmentsfinanced by GE Capital Services India.

SCHEDULE D As at31.03.2003

UNSECURED LOANS Rs. Lacs Rs. Lacs

(a) Fixed Deposits 3.10 22.91

(b) From Contractees, Interestbearing (Refer Note no.1) 10659.19 11829.66

(c) Commercial Paper (Maximum balanceoutstanding during the year Rs.5500 lacsprevious year Rs.4000 lacs) 5500.00 4000.00

(d) From Banksi) Short Term Loans 2000.00 2000.00ii) Non Convertible Debentures 3200.00 1,250.00iii) Foreign Currency Loan — 955.00

(e) From Others 1000.00 1095.00

Total 22362.29 21152.57

SCHEDULE E

FIXED ASSETS (Rs. Lacs)

GROSS BLOCK DEPRECIATION NET BLOCK

ASSETS As at Additions Deductions As at As at For the Deductions Upto As at As at01.04.03 31.03.04 01.04.03 year 31.03.04 31.03.04 31.03.03

At Cost:

Freehold Land 255.70 — — 255.70 — — — — 255.70 255.70

At Book Value:

Buildings & Sheds 1895.48 2037.74 — 3933.22 515.79 138.51 — 654.30 3278.92 1379.69

Plant & Machinery 42291.70 5845.54 1846.78 46290.46 13958.67 3639.01 1691.28 15906.40 30384.06 28333.03

Heavy Vehicles 1357.61 124.52 310.30 1171.83 780.09 184.14 275.26 688.97 482.86 577.52

Light Vehicles 1184.33 240.32 162.45 1262.20 357.55 111.91 89.83 379.63 882.57 826.78

Furniture and Office 1221.37 120.69 235.28 1106.78 545.93 163.95 234.95 474.93 631.85 675.44Equipments

Computers 704.89 96.24 — 801.13 492.16 139.80 — 631.96 169.17 212.73

Total of this year 48911.08 8465.05 2554.81 54821.32 16650.19 4377.32 2291.32 18736.19 36085.13 —

Total of previous year 41916.96 8202.71 1208.59 48911.08 14269.53 3408.83 1028.17 16650.19 — 32260.89

Items Awaiting Completion or Commissioning 858.00 3560.07

Total 36943.13 35820.96

Global Reports LLC

HCC 78TH ANNUAL REPORT 2003-200450

SCHEDULE F As at 31.03.2003Cost Cost Cost Cost

Unquoted Quoted Unquoted QuotedINVESTMENTS Rs. Lacs Rs. Lacs Rs. Lacs Rs. LacsLong Term Investments(a) Government Securities :

(i) Rural ElectrificationCorporation Ltd. 5,000Bonds of Rs.10,000/-each fully paid 500.00 — 500.00 —

(ii) National HighwaysAuthority of India 6,000Bonds of Rs.10,000/-each fully paid 600.00 — 600.00 —

(b) Investment in SubsidiaryCompanies in India :(i) Hincon Technoconsult

Ltd. 10,00,000 EquityShares of Rs.10/- eachfully paid 100.30 — 100.30 —

(ii) Ucchar Investment Ltd.1,00,000 Equity Sharesof Rs.10/- each fullypaid — — 10.00 —Less: Provison forDiminution in — — (10.00) —Investment(Company dissolved u/s560 (3) of CompaniesAct, 1956)

(iii) Western Securities Ltd.19,57,500 EquityShares of Rs.10/- eachfully paid 537.66 — 537.66 —

(iv) HCC Infotech Ltd.5,49,500 Equity Sharesof Rs.10/- each fullypaid 54.95 — 54.95 —

Outside Indiai) Hincon International

Ltd. 50,000 EquityShares of US$ 1 eachfully paid (Companydissolved u/s 296(6) ofCompanies Act,1984 ofRepublic of Mauritius) — — 21.71 —

(c) Other Investments:(i) Walchand Co-op.

Housing Society Ltd.5 Equity Shares ofRs.50/- each fully paid(Rs. 250 /- Unquoted) — — — —

(ii) Shushrusha CitizensCo-Op. Hospital Ltd. -100 Equity Shares ofRs. 100/- each fullypaid 0.10 — 0.10 —

(iii) Aradhana Co-op Hsg.Socy.Ltd. 35 EquityShares of Rs.50/- eachfully paid 0.02 — 0.02 —

(iv) Housing DevelopmentFinance CorporationLtd. 25,044 EquityShares of Rs.10/- eachfully paid. — 3.34 — 3.34

(v) Hindustan Oil Explora-tion Co.Ltd. 1,04,400Equity Shares of Rs.10/-each fully paid — 10.44 — 10.44

(vi) 6.75 % Tax free US-64Bonds of Govt. of India13,918 Bonds ofRs.100/- each (soldduring the year)(Previous year1,38,183 Units-64 ofRs. 10/- each) — — — 16.88

(vii) HDFC Bank Ltd. 500Equity Shares of Rs.10/- each fully paid — 0.05 — 0.05

(viii) Khandwala SecuritiesLtd. 3,332 EquityShares of Rs.10/- each

fully paid (36068 Eq.Shars sold during theyear) — 2.00 — 23.64Less: Provision fordiminution inInvestment — (1.66) — —

(ix) Saurashtra CementLtd. 1,00,000, 18% NonConvertible Debenturesof Rs.100/- each fullypaid 89.36 — 89.36 —

(x) Hindustan Finvest Ltd.1,20,000 Equity Sharesof Rs.10/- each fullypaid 12.00 — 12.00 —

(xi) The Lake CityCorporation Ltd.18,75,000 EquityShares of Rs.10/- eachfully paid (purchasedduring the year) 2000.00 — — —

(xii) The Lake CityCorporation Ltd.47,50,000 6 %C u m u l a t i v eR e d e e m a b l ePreference Shares ofRs. 10/- each fully paid(purchased during theyear) 950.00 — — —

(xiii) Rentmaker Inc.2,25,225 Equity Sharesof US$ .001 fully paid 69.74 — 69.74 —Less : Provision fordiminution in Investment (69.74) — (69.74) —

(xiv) Endowment FundContribution to HCC-PATI JV (Net) — — 242.06 —

(d) Current Investments :(i) Kotak Mahindra Mutual

Fund-growth option74,43,429.9325 Units@ Rs.12.0912 (soldduring the year) — — — 900.00

(ii) IDBI Liquid Plan-growthoption 9,350.170 Units@ Rs.11.7451 (soldduring the year) — — — 1.09

(iii) Standard CharteredMutual Fund-growthoption 14,292.921 Units@ Rs.11.7451 (soldduring the year) — — — 1.67

(iv) Kotak Mahindra MutualFund-growth option14,288.780 Units @Rs. 10.4757 (soldduring the year) — — — 1.50

Total 4,844.39 14.17 2,158.16 958.61

4858.56 3,116.77

As at 31.03.2003Cost Market Cost Market

Value ValueRs. Lacs Rs.Lacs Rs. Lacs Rs.Lacs

Notes :1. Aggregate of Investments :

(i) Quoted Investments 14.17 204.08 958.61 1,014.48(ii) Unquoted Investments 4,844.39 2,158.16

Total 4,858.56 3,116.77

2. Investments Received/Purchased and sold during the year.Name of the Security No. of Units Amount

in (000) (Rs. Lacs)ICICI Mutual Fund 3800.868 450.00Canbank Mutual Fund 7961.030 800.00Principal Cash Management Fund 9999.450 1,000.00HDFC Liquid Plan 14756.640 1,770.00

Total 4,020.00

SCHEDULE F (Contd.) As at 31.03.2003Cost Cost Cost Cost

Unquoted Quoted Unquoted QuotedINVESTMENTS Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs

Global Reports LLC

HCC 78TH ANNUAL REPORT 2003-200451

SCHEDULE-G As at31.03.2003

CURRENT ASSETS Rs. Lacs Rs. LacsInventories

(As Valued and Certified by the Chairman

& Managing Director)

(a) Stores,Spares and Embedded Goods, at Cost 13369.99 7642.83

(b) Fuel, at Cost 134.49 110.55

(c) Materials in transit, at Cost 27.28 66.57

(d) Work in Progress

Uncompleted Contracts and value of

Work Done 45596.95 37531.42

Less: Advances Received/Other Recoveries 9473.82 4619.56

36123.13 32911.86

Add: Retention Money 2473.37 2933.33

38596.50 35845.19

(e) Stock in Trade 0.56 0.56

Total 52128.82 43665.70

Sundry Debtors

Unsecured, Considered Good :

(a) Outstanding over six months 43.86 119.32

(b) Others 83.22 38.49

Total 127.08 157.81

Cash and Bank Balances

(a) Cash on Hand 54.33 72.95

(b) Cheques on Hand 407.43 807.99

(c) Cash in Transit 50.00 501.70

(d) With Scheduled Banks

(i) Current Accounts in Indian Rupees 3193.44 2089.47

(ii) Current Accounts in Foreign Currency 182.01 116.07

(iii) Deposit Accounts 182.69 74.63

Total 4069.90 3662.81

Other Current Assets

(a) Interest Accrued on Investments 36.72 40.93

(b) Interest Accrued on Others 7.00 2.28

Total 43.72 43.21

Grand Total 56369.52 47529.53

SCHEDULE- H As at31.03.2003

LOANS AND ADVANCES Rs. Lacs Rs. LacsUnsecured, Considered Good(a) Advances Recoverable in Cash

or in Kind or for Value to be received 4167.04 3996.81(b) Advance Payment of Taxes net of provision 1104.71 1742.66

Advance Tax Rs.4426.00 lacs (Previous yearRs.4160.60 lacs), Provision for Tax Rs.3321.29 lacs(Previous year Rs.2417.51 lacs)

(c) Other Receivables — 200.00(d) Earnest Money, Security and Other Deposits 435.37 361.17(e) Integrated Joint Ventures

(i) HCC L & T Purulia Joint Venture 919.13 105.53(ii) KSHI Joint Venture 14.80 9.71

(f) ICD with others 200.00 —

Total 6841.05 6415.88

SCHEDULE- ICURRENT LIABILITIES AND PROVISIONSCurrent Liabilities(a) Sundry Creditors 23881.69 16027.09(b) Advances from Contractees

interest free (Refer Note no. 1) 11646.66 16927.74(c) Interest Accrued but not due on Loans 179.26 64.87(d ) Integrated Joint Ventures

(i) Nathpa Jhakri Joint Venture 786.46 470.32(ii) HCC Pati Joint Venture (Net) 373.95 —

(e) Investor Protection & Education Fund shall beCredited by the following amounts when due:(i) Unclaimed Dividend 52.02 27.07(ii) Unclaimed Fixed Deposits 0.03 0.18(iii) Unclaimed Debentures (including interest) 37.80 49.52

Total 36957.87 33566.79

Provisions:(a) Proposed Dividend 1,001.20 800.96(b) Tax on Proposed Dividend 128.28 102.63(c) Provision for Leave Encashment 453.11 340.10(d) Provision for Gratuity 642.93 546.36

Total 2225.52 1790.05

Grand Total 39183.39 35356.84

SCHEDULE- JMiscellaneous Expenditure(To the extent not written off or adjusted)(a) Deferred Revenue Expenditure — 13.12

Total — 13.12

Global Reports LLC

HCC 78TH ANNUAL REPORT 2003-200452

Schedules Forming Part of the Profit and Loss Account

SCHEDULE-K PreviousYear

INCOME FROM OPERATIONS Rs. Lacs Rs. LacsValue of Work Done(i) Work Bills, Received Gross 97000.86 58482.13

Add: Work in Progress, at Close 45596.95 37531.42

142597.81 96013.55Less: Work in Progress, at Commencement 37531.42 28543.38

105066.39 67470.17(ii) Service Income from Joint Ventures 727.66 251.22

Total 105794.05 67721.39Add: Company’s Share of Turnover inIntegrated Joint Ventures 11341.62 11201.86

Grand Total 117135.67 78923.25

SCHEDULE-LOTHER INCOME(a) Dividend:

On Other Investments 12.01 26.78(b) Miscellaneous Receipts 48.84 66.57(c) Profit on Sale of Investments — 433.07(d) Earlier Years’ Provisions No Longer Required 6.67 61.29(e) Income pertaining to earlier year 100.25 —(f) Conversion / Translation Difference (Net) — 3.01

Total 167.77 590.72

SCHEDULE-MCONSTRUCTION EXPENSES(a) Stores and Embedded Goods consumed :

Stock at Commencement 7642.83 4568.31Add: Purchases 39490.43 24071.45

47133.26 28639.76Less: Scrap and Unserviceables Sold 448.46 239.75

46684.80 28400.01Less: Stock at Close 13369.99 7642.83

33314.81 20757.18(b) Sub-Contract, Transportation, Hire etc. 40017.62 21561.83

(Refer Note no. 3(a) & 3(b))(c) Power and Fuel 4394.68 3109.00(d) Repairs to Machinery 632.62 318.46(e) Other Repairs 67.56 68.33(f) Rent 287.61 228.22

Total 78714.90 46043.02

SCHEDULE-O PreviousOFFICE AND SITE YearESTABLISHMENT EXPENSES Rs. Lacs Rs. Lacs Rs. Lacs(a) Stationery, Postage, Telephone

& Advertisement 554.50 503.37(b) Travelling and Conveyance 1037.08 852.71(c) Rent 10.41 16.13(d) Rates and Taxes 126.34 184.35(e) Insurance 59.52 27.23(f) Professional Charges 551.43 355.82(g) Repairs and Maintenance 523.82 198.08(h) Directors’ Fees 2.40 2.75(i) Auditors’ Remuneration:

(i) Audit Fees 12.00 12.00(ii) Tax Audit Fees 4.00 4.00(iii) For Certification Work 7.04 4.60(iv) Reimbursement of Out

of Pocket Expenses 2.73 0.81(v) Service Tax 2.27 1.00

28.04 22.41(j) Conversion & Translation Difference 38.04 —(k) Guarantee, Commission and Charges 604.12 585.66(l) Share / Debenture Issue Expenses Written Off — 44.95(m) Deferred Revenue Expenses Written Off 13.12 22.27(n) Expenses Relating to Prior Years 0.15 7.89(o) Loss On Sale of Investments (Net) 16.99 —(p) Loss On Sale of Assets ( Net) 60.52 27.09(q) Miscellaneous Expenses

(Including Office Expenses 276.85 254.70General Charges etc.)

(r) Computer Maint. & DevelopmentExpenses 784.11 222.06

(s) Bank Charges 188.34 183.81(t) Donations 196.46 151.92(u) Provision for Diminution in Investments 1.66 79.74

Total 5073.90 3742.94

SCHEDULE-PINTEREST(a) On Fixed Loans 1.63 23.33(b) On Debentures 962.32 1000.51(c) On Other Accounts 3054.31 3296.83

4018.26 4320.67Less: Interest Received (GrossTax Deducted at Source Rs. 10.20 lacs, 259.45 114.62Previous year Rs.20.37 lacs)

Total 3758.81 4206.05

Schedule-Q:STATEMENT OF COMPUTATION OF NETPROFIT UNDER SECTION 349 OF THECOMPANIES ACT, 1956, FOR THECOMMISSION PAYABLE TO THE WHOLE-TIME PreviousAND OTHER DIRECTORS FOR THE YEAR YearENDED 31ST MARCH, 2004 Rs. Lacs Rs. Lacs

Profit Before Tax as per Profit and Loss Account 6,045.37 4,523.64

Add: (a) Depreciation Charged as per Profit andLoss Account 4377.32 3408.83

(b) Managerial Remuneration and Directors Fees 552.40 319.08(c) Loss on Sale of Investment 16.99 —(d) Loss on Sale of Fixed Assets as per 60.52 27.09

Profit & Loss Account

11052.60 8278.64Less: Depreciation as per Section 350 of the

Companies Act, 1956 4377.32 3408.83Less: Loss on Sale of Assets as per Section

349 of the Companies Act,1956 69.56 28.40Less: Profit on Sale of Investments — 433.07

Net Profit as per Section 349 of theCompanies Act, 1956 6,605.72 4,408.34

Maximum amount of Remuneration Permissible 660.57 440.83to Wholetime Directors.(@10% of Net Profit.)Commission Payable 350.69 182.88Maximum amount of Commisstion Permissibleto Non-Executive Directors. (@1% of Net Profit) 66.06 44.08Commission Payable 24.00 24.00

SCHEDULE-NEMPLOYEES’ REMUNERATIONAND WELFARE EXPENSES(a) Salaries,Wages,Bonus,

Gratuity and Compensation 6665.15 5280.13under Voulntary Retirement SchemeRs. Nil lac(Previous year Rs.0.15 lac) (Refer Note no.6 )

(b) Contribution to Provident Fund 392.95 305.98and Other Funds

(c) Labour Recruitment, Termination 23.16 18.38and Repatrition

(d) Welfare Expenses 595.19 497.46

Total 7676.45 6101.95

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HCC 78TH ANNUAL REPORT 2003-200453

SCHEDULE-R:

SIGNIFICANT ACCOUNTING POLICIES AND NOTES

FORMING PART OF THE ACCOUNTS AS AT 31ST MARCH, 2004

I. SIGNIFICANT ACCOUNTING POLICIES

1. Method of Accounting

The Company maintains its accounts on accrual basis.

2. Fixed Assets

Fixed assets are stated at cost of acquisition including interest paidon specific borrowings upto the date of acquisition/installation of theassets and improvement thereon.

3. Depreciation

Depreciation on fixed assets is provided:

i) In respect of buildings and sheds, furniture and officeeuipments on the written down value method (prorata onadditions and deletions of the year) at rates prescribed inSchedule XIV of the Companies Act, 1956.

ii) In respect of plant & machinery, heavy vehicles and lightvehicles on the straight line method at rates prescribed inschedule XIV of the Companies Act, 1956 on a pro-rata basis.

iii) In respect of computers depreciation is provided on straightline basis over a period of three years on a pro-rata basis.

iv) The depreciation on assets used for construction has beentreated as period cost.

4. Investments

Investments are classified as long-term and current investments.Long-term investments are shown at cost or written down value (incase of other than temporary diminution) and current Investmentsare shown at cost or market value whichever is lower.

5. Retirement Benefits

a) Contribution to provident fund and superannuation fund areaccounted on accrual basis.

b) Gratuity is charged to revenue on the basis of actuarialvaluation and in case of daily rated workmen on actual basiscomputed on tenure of service as at the end of the year.

c) Leave encashment is charged to revenue on the basis ofactuarial valuation and in case of daily rated workmen onactual basis calculated on the basis of balance leave.

6. Deferred Revenue Expenses

Deferred Revenue Expenses including compensation on voluntaryretirement scheme are amortized over a period of five years.

7. Inventories

a) The stock of stores, spares and embedded goods and fuel isvalued at cost (weighted average basis), or net realisablevalue whichever is lower.

b) Work-in-Progress is valued at the contract rates and sitemobilisation expenditure of incomplete contracts is stated atcost.

c) Certain loose plant, tools & service equipments costing belowRs. 5 lacs are valued at proportionate written down value @3% p.m. over a period of 32 months.

8. Foreign Exchange Translation of Foreign Projects andAccounting of Foreign Exchange Transactions

a) Current assets and current liabilities are translated at theexchange rate prevailing on the last day of the year.

b) Gains or losses arising out of remittance / translations at theyear-end are credited / debited to the profit and loss accountfor the year.

c) Foreign exchange transactions are converted into Indian

rupees at the prevailing rate on the date of the transaction.

d) Gains & losses in respect of foreign exchange contracts arerecognised as income or expenses over the life of the contract,except in respect of fixed assets where such gains or lossesare adjusted in the carrying amount of the fixed assets.

9. Accounting of construction contracts

The Company follows percentage completion method,stated on thebasis of physical measurement of work actually completed at thebalance sheet date, taking into account the contractual price andrevision there to. The site mobilisation expenditure for site installationis apportioned over the period of contract in proportion to the valueof workdone. Losses on contracts are fully accounted for as andwhen incurred. Foreseeable losses are accounted for when theyare determined except to the extent they are expected to berecovered through claims presented or to be presented to thecustomer or in arbitration.

Expenditure incurred in respect of additional costs/delays areaccounted in the year in which they are incurred. Claims made inrespect thereof are accounted as income in the year of receipt ofarbitration award or acceptance by client or evidence of acceptancereceived from the client.

10. Accounting for Joint Venture Contracts

(a) Contracts executed in Joint Venture under work sharingarrangement (consortium) are accounted in accordance withthe accounting policy followed by the company as that of anindependent contract to the extent work is executed.

(b) In respect of contracts executed in Integrated Joint Venturesunder profit sharing arrangement (assessed as AOP underIncome tax laws), the services rendered to the Joint Venturesare accounted as income on accrual basis. The profit / loss isaccounted for, as and when it is determined by the JointVenture and the net investment in the Joint Venture is reflectedas investments, Loans & Advances or Current Liabilities.

11. Taxation

The tax expense comprises of current tax & deferred tax charged orcredited to the profit and loss account for the year. Current tax iscalculated in accordance with the tax laws applicable to the currentfinancial year. The deferred tax charge or credit is recognised usingthe tax rates and tax laws that have been enacted by the balancesheet date. Where there are unabsorbed depreciation or carryforward losses, deferred tax assets are recognised only if there isvirtual certainty of realisation of such assets. Other deferred taxassets are recognised only to the extent there is reasonable certaintyof realisation in future. At each balance sheet date, recognised andunrecognised deferred tax assets are reviewed.

II. Contingent Liabilities As at As at31.03.2004 31.03.2003

Rs. Lacs Rs. Lacs

(i) Counter Indemnities given to :

Banks, in respect of contracts

(a) For works in India(Secured on all the assets) 64513.81 42268.50

(b) *For works abroad (secured byECGC counter guarantees) 2311.71 2747.24

‘*(Converted in rupees at therate fixed by the Bank)

(ii) Counter indemnities given to CustomAuthorities, Mumbai 192.87 192.87

(iii) Claims not acknowledged as debtsby the Company. — 322.27

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HCC 78TH ANNUAL REPORT 2003-200454

III. Notes :

1. Advances from contractees of Rs.22305.85 lacs (previous yearRs.28757.40 lacs) have been guaranteed by Company’s bankers tothe extent of Rs.16378.27lacs (previous year Rs.27559.47 lacs) .These advances have been reclassified into unsecured loans(Interest bearing) of Rs.10659.19 lacs( previous year of Rs 11829.66lacs) and current liabilities ( Non interest bearing) of Rs.11646.66lacs (previous year Rs 16927.74 lacs).

2. Commitment for capital expenditure is Rs.2384.11 lacs (previousyear Rs.1511.15 lacs)

3. (a) Sub-contract, transportation, hire etc. include insuranceRs.560.58 lacs ( previous year Rs. 614.46 lacs) and rates andtaxes Rs.743.52 lacs (previous year Rs.450.87 lacs) and leaserent of Rs.258.26 lacs (previous year Rs.304.62 lacs).

(b) Light vehicle expenses grouped under construction expensesinclude insurance Rs.10.53 lacs (previous year Rs.5.29 lacs)and taxes Rs.1.49 lacs (previous year Rs.2.37 lacs). Noallocation is made to it for petrol and maintenance at thesites.

4. Managerial Remuneration : 2003-04 2002-03Rs. Lacs Rs. Lacs

(i) Salary 79.34 49.14

(ii) Commission to Chairman &Managing Director & wholetime Directors 350.69 182.88

(iii) Commission to Non-executiveDirectors 24.00 24.00

(iv) Contribution to Provident andother Funds 21.42 13.27

(v) Perquisites 74.55 47.04

Total 550.00 316.33

Note: The above figure does not include provision for gratuity liabilityactuarially valued as separate figures are not available.

5. The Income-tax assessments of the Company have been completedupto the accounting year ended 31st March, 2001.Several appealspreferred by the Company are pending before appellate authorities.Deferred tax liability for the year ended 31st March, 2004 has beenprovided on the estimated tax computatoin for the year.

Major components of deferred tax assets and liabilities arising onaccount of timing differences are:

Assets Liabilities(Rs. Lacs) (Rs. Lacs)

a) Depreciation 4987.37

b) Claims/Arbitration Awards 2756.64

c) Others 260.20

Total 260.20 7744.01

The deferred tax liability of Rs. 1554.00 lacs includes Rs. 155.00lacs towards deferred tax assets reversed during the year on thebasis of completion of income tax assessments for earlier years.

6. The gratuity charged to the profit & loss account for the year includesprovision as per actuarial valuation as well as payment made duringthe year and in case of daily rated workmen on actual basiscomputed on tenure of the service as at the end of the year.

7. The Company has a single segment namely “Engineering andConstruction”. Therefore, the Company’s business does not fall underdifferent business segments as defined by AS 17- “SegmentalReporting” issued by ICAI.

8. Disclosure in accordance with Accounting Standard - 7 ( Revised )ie. amount due from / to customers on construction Contracts.

Rs. Lacs

Contract Revenue 513.25

Contract Costs incurred 2,492.69

Recognised Profits / Losses NIL

Advances received 1,570.79

Retention Money 54.98

Gross amount due from Customer for Contract Work 40.75

Gross amount due to Customer for Contract Work NIL

Note: The above information is given only in respect of contractsentered into on or after 01.04.03.

9. (a) Contracts executed by HCC-Van Oord Joint Venture, Hyundai-HCC Joint Venture, Samsung-HCC Joint Venture, HCC-McnallyJoint Venture, L&T-HCC Joint Venture and HCC-KBL JointVenture are accounted for as per the accounting policyNo.10(a).

Contracts executed by the following Joint Ventures areaccounted for as per accounting policy No. 10(b).

Name of the Name of Venture Method of Share ofVenture Partner/s Accounting Interest

HCC-L&T Larsen & Toubro Percentage 57%Purulia Ltd. completion

HCC-Pati Pati Sendirian, Percentage 50%Berhad completion

Nathpa Jhakri Impregilio Spa, Completed 40%Italy Contract

Kumagai- Skanska, Completed 19.60%Skanska, Kumagai ContractHCC-Itochu ItochuGroup

In-respect of Joint Ventures the company alongwith other JVmembers is jointly & severally responsible for performance ofthe contracts.

9. (b) Financial Interest in Jointly Controlled Entities.

(Rs. Lacs)

Name of theJoint HCC’s Share ofVenture Assets Liabilities Income Expenses

As at 31st March, For the year2004 ended 31-03-04

HCC-L&T PuruliaJoint Venture 2512.21 2344.17 3927.74 3759.69

(1727.71) (1727.71) (1273.02) (1273.02)

HCC-PatiJoint Venture 561.09 266.58 603.17 772.37

(1541.36) (1077.66) (2702.17) (2509.82)

Nathpa JhakriJoint Venture 486.57 495.30 3.53 317.45

(737.18) (980.07) (1322.16) (1846.28)

Kumagai-Skanska 2826.53 2826.53 6810.71 6810.71

HCC-ItochuGroup (3480.55) (3480.55) (5952.68) (5952.68)

Total 6386.40 5932.58 11345.15 11660.22(7486.80) (7265.99) (11250.03) (11581.80)

(Note: Figures in bracket pertain to previous year ).

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HCC 78TH ANNUAL REPORT 2003-200455

10. Value of assets taken on lease Rs.1162.48 lacs (previous yearRs.1208.66 lacs). Future obligation on account of lease rentalsRs.85.75 lacs (previous year Rs.529.75 lacs).

11. The small scale Industrial undertakings to whom amount outstandingfor more than 30 days, are C S Diesel Engg. and Radhika Petrolium.The information has been complied to the extent they could beindentified as small scale and ancilliary undertakings on the basisof information available with the Company.

12. In accordance with Accounting Standard 11 the exchange lossdebited to profit & loss account is Rs.38.04 lacs (previous yearRs.3.01 lacs) and foreign exchange difference (net) on capitalaccount included in the cost of respective fixed assets is Rs.17.28lacs( previous year Rs. 37.53 lacs).

Premium in respect of forward exchange contracts to be debited tosubsequent year’s profit & loss account is Rs.0.43 lac ( previousyear Rs. 1.17 lacs).

13. Additional information pursuant to the provisions of part II of ScheduleVI to the Companies Act, 1956 (wherever applicable).

2003-04 2002-03Rs. Lacs Rs. Lacs

13. A. Value of Imports calculatedon CIF Basis :

(i) Components, embedded goodsand spare-parts 2150.28 885.73

(ii) Capital goods 1793.68 4120.24

13. B. Expenditure in foreign currencies :

(i) Travelling expenses 39.76 36.65

(ii) Other expenses 330.18 558.18

14. C. Transactions with Related Parties,Subsidiaries, Associate Companies, Integrated Joint Ventures & Other Related Parties referred to in item (A)above

(Rs Lacs)

Subsidiary Associate Integrated JV’s Other RelatedNature of Transactions Companies Company Parties

Purchase of Constructionmaterials and Spares - - 435.79 -

(1.08) ( - ) (45.82) (-)

Sale of Constructionmaterials and Spares - 235.00 349.98 -

( - ) ( - ) (239.60) ( - )

Purchase of Fixed Assets 18.71 - 333.78 -(485.85) ( - ) (211.87) ( - )

Rendering of Services 8.02 4.60 443.07 -(16.08) ( - ) (276.77) ( - )

Receiving of Services 543.65 - - 49.96(274.09) ( - ) ( - ) (28.36)

Work Bill Receipts - 935.85 - -( - ) ( - ) ( - ) ( - )

Equity Contribution during the year - 2950.00 - -( - ) ( - ) ( - ) ( - )

Outstanding Balance included in Current Assets 77.83 717.99 933.93 -(127.78) (12.93) (116.73) ( - )

Outstanding Balance included in Current Liabilities 51.04 115.68 1160.41 -(41.96) (20.00) (1026.00) ( - )

Deposit Given - - - -(50.00) ( - ) ( - ) ( - )

Intercorporate Deposit (taken)as at the end of the year - - - -

( - ) ( - ) ( - ) (95.00)

Bank Guarantees outstanding as at the end of the year - 20.00 7717.68 11500.00( - ) ( - ) (6828.09) (9000.00)

Note: Figures in brackets pertain to previous year.

13. C. Value of imported and 2003-04 2002-03indigenous components, Rs.lacs % Rs.lacs %embedded goods andspare parts consumed:(i) Imported into India 1857.91 5.58 658.05 3.17(ii) Indigenous, to the site 31456.90 94.42 20099.13 96.83

33314.81 100.00 20757.18 100.00

13. D. Earnings in foreign currencies 2003-04 2002-03(on accrual basis) Rs.lacs Rs.lacsExport of goods or serviceson F.O.B. basis and workbills realised on contracts 1501.92 1577.20

14. Disclosure inaccordance with Accounting Standard -18 Related PartyTransactions

14. A. Names of Related Parties & Nature of RelationshipNames of Related Parties Nature of Relationship

Hincon Technoconsult Ltd. Subsidiary CompanyWestern Securities Ltd. Subsidiary CompanyHCC Infotech Ltd. Subsidiary CompanyNathpa Jhakri Joint Venture Integrated Joint VentureHCC-Pati Joint Venture Integrated Joint VentureKumagai-Skanska-HCC-Itochu Group Integrated Joint VentureHCC-L & T Purulia Joint Venture Integrated Joint VentureHincon Holdings Ltd. Other Related PartiesThe Lake City Corporation Ltd. Associate Company

14. B. Key Management PersonnelShri Ajit Gulabchand Chairman & Managing

DirectorShri K.G. Tendulkar Executive Director

(Operations)Shri M.D. Khattar Executive Director

(Technical & BusinessDevelopment)

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HCC 78TH ANNUAL REPORT 2003-200456

D) Details of Transactions relating to persons referred to in item (B) above

For the year For the yearNature of Transactions 31.03.2004 31.03.2003

Rs. Lacs Rs.Lacs

Managerial Remuneration 526.00 292.43

Emoluments 18.60 14.33

Fixed Deposits outstanding as at the end of the year - 2.00

Interest on Fixed Deposit paid during the year 0.29 0.63

15. Earnings per share:

A. Profit computation for both basic and diluted earnings per share of Rs.10/-each Net Profit as per Profit & Loss Account available for equity shareholders (Rs. lacs) 3567.98 2865.64

B. Weighted average number of equity shares for EPS computation(for basic and diluted EPS) (Nos.) 20024000 20024000

C. EPS (weighted average)

(basic & diluted) (Rs.) 17.82 14.31

16. Figures for the previous year have been regrouped/recast, wherever necessary.

As per our report attached Signatures to Schedules A to R

AJIT GULABCHAND Chairman & Managing DirectorFor K.S.AIYAR & CO. Y.H. MALEGAMChartered Accountants D.M.POPAT

RAM P. GANDHIRAMAKRISHNA PRABHU PROF. FRED MOAVENZADEH DirectorsPartner SHARAD M. KULKARNI

NIRMAL P. BHOGILALR.G. VARTAKK.G.TENDULKAR Executive Director (Operations)

VITHAL P.KULKARNI M.D. KHATTAR Executive Director (Technical & B.D.)Company Secretary

Mumbai, Dated: May 14, 2004 Mumbai, Dated: May 14, 2004

}

Global Reports LLC

HCC 78TH ANNUAL REPORT 2003-200457

2003-04 2002-03Rs. Lacs Rs. Lacs

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax and extraordinary items 6045.37 4523.64

Adjustments for :

Depreciation 4377.32 3408.83

Interest expense 4018.26 4320.67

Interest/Dividend received (271.46) (141.40)

Lease Rentals 258.26 304.62

Foreign Exchange (Gain)/Loss 38.04 (3.01)

Debenture Issue exp. written off — 44.95

(Profit)/Loss on sale of Assets 60.52 27.09

(Profit)/Loss on sale of Investments 16.99 (433.07)

Provision for Diminution in Investments 1.66 79.74

(Increase)/Decrease in Deferred Revenue Expenses 13.12 22.41

8512.71 7630.83

14558.08 12154.47Operating profit before working capital changesAdjustments for :

Trade & Other receivables (1070.43) (78.97)

Inventories (8463.12) (11280.57)

Trade payables 8767.35 4120.38

Client Advances (Interest Free) (5281.08) 5709.49

(6047.28) (1529.67)

Cash generated from operations 8510.80 10624.80

Interest paid (3903.87) (4344.41)

Direct Taxes paid (388.07) 243.90

(4291.94) (4100.51)

NET CASH FLOW FROM OPERATING ACTIVITIES 4218.86 6524.29

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (5762.98) (10559.01)

Sale of Fixed Assets 202.97 153.33

Purchase of Investments (2950.00) (904.26)

Sale of Investments 1189.56 510.02

Interest received 258.94 106.15

Dividend received 12.01 26.78

NET CASH USED IN INVESTING ACTIVITIES (7049.50) (10666.99)

Cash Flow Statement for the year ended 31st March, 2004

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HCC 78TH ANNUAL REPORT 2003-200458

C. CASH FLOW FROM FINANCING ACTIVITIES

Repayment of Lease Finance Liabilities (258.26) (304.62)

Proceeds from Long Term and other Borrowings 4296.95 5458.49

Dividend paid (800.96) (600.72)

NET CASH USED IN FINANCING ACTIVITIES 3237.73 4553.15

NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) 407.09 410.45

CASH AND CASH EQUIVALENTS AS AT 1/4/2003 (OPENING BALANCE) 3662.81 3252.36

CASH AND CASH EQUIVALENTS AS AT 31/3/2004 (CLOSING BALANCE) 4069.90 3662.81

407.09 410.45NOTES: 1. Proceeds from Long Term and Other Borrowings are shown net of repayments.

2. Figures for the previous year figures have been regrouped wherever necessary.

2003-04 2002-03Rs. Lacs Rs. Lacs

As per our report attached

AJIT GULABCHAND Chairman & Managing DirectorFor K.S.AIYAR & CO. Y.H. MALEGAMChartered Accountants D.M.POPAT

RAM P. GANDHIRAMAKRISHNA PRABHU PROF. FRED MOAVENZADEH DirectorsPartner SHARAD M. KULKARNI

NIRMAL P. BHOGILALR.G. VARTAKK.G.TENDULKAR Executive Director (Operations)

VITHAL P.KULKARNI M.D. KHATTAR Executive Director (Technical & B.D.)Secretary

Mumbai, Dated: May 14, 2004 Mumbai, Dated: May 14, 2004

}

Global Reports LLC

HCC 78TH ANNUAL REPORT 2003-200459

I. Registration Details

Registration No. 1228

State Code No. 11

Balance Sheet Date 31.03.2004

II. Capital Raised During the Year (Rs. in 000s)

Public Issue (Issue through the prospectus) Nil

Rights Issue Nil

Bonus Issue Nil

Private Placement (Firm allotment to the

Promoters and their Associates) Nil

III. Position of Mobilisation and Deployment of Funds

Total Liabilities 10501226

Total Assets 10501226

Sources of Funds

Paid-up Capital (Including Share Application Money) 200306

Reserves & Surplus 1438718

Secured Loan 1959253

Unsecured Loan 2236229

Deferred Tax Liability 748381

Application of Funds

Net Fixed Assets 3694313

Investments 485856

Net Current Assets 2402718

Misc. Expenditure —

Accumulated Losses —

IV. Performance of Company

Turnover/Total Income 10596182

(Excluding Company’s Share of Turnover in Integrated Joint Ventures)

Total Expenditure 9960138

Profit/Loss Before Tax (Incl. HCC’s share of Profit/(Loss) 604537in Integrated Joint Ventures)

Profit/Loss After Tax 356798

Earning Per Share (Non-Annualised) Rs. 17.82

Dividend Rate 50%

V. Generic Name of Principal

Product of Company

(As per Monetary Terms)

Item Code No. N.A

Product Description Engineering & Construction

Additional Information Pursuant to Part IV of Schedule VI to the Companies Act, 1956

Global Reports LLC

HCC 78TH ANNUAL REPORT 2003-200460

Name of the Subsidiary Hincon Ucchar Western HCCTechnoconsult Investment Securities InfotechLtd. Ltd. Ltd. Ltd.

1. The financial year of thesubsidiary Company ended on 31-3-2004 31-3-2004 31-3-2004 31-3-2004

2. (a) Number of Shares held 10,00,000 1,00,000 1957500 5,49,500by holding Company as Equity Shares Equity Shares Equity Shares Equity Shareson the above date. of Rs. 10/- each of Rs. 10/- each of Rs. 10/- each of Rs. 10/- each

(b) Extent of interest of theholding Company at theend of the financial yearof the subsidiary 100% 100% 97.88% 54.95%

3. Date from which it becamea subsidiary 30-3-1976 3-3-1994 28-2-1997 27-4-2000

4. The net aggregate amountof Profits/(Losses) of thesubsidiary so far as theyconcern the members ofthe holding Company:(a) not dealt with in the

holding Company’s accounts;(i) for the financial year

of the subsidiary Rs. 9,38,388 (Rs. 22,212) (Rs. 2,02,115) (Rs. 1,13,628)(ii) for the previous financial

years of the subsidiarysince it became the holdingCompany’s subsidiary; Rs. 39,17,359 (Rs.9,69,502) (Rs. 61,46,291) Rs. 23,11,131

(b) dealt with in the holdingCompany’s accounts;(i) for the financial

year of the subsidiary Nil Nil Nil Nil(ii) for the previous

financial years of thesubsidiary since itbecame the holdingCompany’s subsidiary. Rs. 7,20,000 Nil Nil Nil

5. Changes in the interest of holdingCompany between the end of thesubsidiary’s financialyear and 31st March, 2004 N.A. N.A. N.A. N.A.

6. Material changes between theend of the subsidiary’s financialyear and 31st March, 2004 in:(i) Fixed Assets N.A. N.A. N.A. N.A.(ii) Investments N.A. N.A. N.A. N.A.(iii) Moneys lent by the subsidiary N.A. N.A. N.A. N.A.(iv) Moneys borrowed by the

subsidiary other than formeeting current liabilities N.A. N.A. N.A. N.A.

Statement Pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies

VITHAL P. KULKARNICompany Secretary

Mumbai, Dated: May 14, 2004

AJIT GULABCHAND Chairman & Managing DirectorY.H.MALEGAMD.M.POPATRAM P. GANDHIPROF. FRED MOAVENZADEH

Directors

SHARAD M. KULKARNINIRMAL P. BHOGILALR.G. VARTAKK.G.TENDULKAR Executive Director (Operations)M.D. KHATTAR Executive Director (Technical & B.D.)

Mumbai, Dated: May 14, 2004

}

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200461

AUDITOR’S REPORT TO THE BOARD OF DIRECTORS OFHINDUSTAN CONSTRUCTION COMPANY LIMITED ON THECONSOLIDATED FINANCIAL STATEMENTS OF HINDUSTANCONSTRUCTION COMPANY LIMITED, ITS SUBSIDIARIES,ASSOCIATES AND JOINT VENTURES.

We have examined the attached consolidated Balance Sheetof Hindustan Construction Company Ltd., its subsidiaries andjoint ventures as at 31st March, 2004 the Consolidated Profitand Loss Account and the Consolidated Cash Flow Statementfor the year then ended.

These financial statements are the responsibility of theHindustan Construction Company Limited’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit. We conducted our audit inaccordance with generally accepted auditing standards in India.These Standards require that we plan and perform the auditto obtain reasonable assurance whether the financialstatements are prepared, in all material respects, in accordancewith an identified financial reporting framework and are free ofmaterial misstatements. An audit includes, examining on atest basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessingthe accounting principles used and significant estimates madeby management, as well as evaluating the overall financialstatements presentation. We believe that our audit provides areasonable basis for our opinion.

We did not audit the financial statements of certain subsidiaries,associates and joint ventures, whose financial statementsreflect total assets of Rs. 16094.55 lacs as at 31st March,2004 and total revenue of Rs. 36702.46 lacs for the year thenended. These Financial Statements have been audited byother auditors whose report(s) have been furnished to us andour opinion, insofar as it relates to the amounts included inrespect of the subsidiaries and joint ventures, is based solelyon the report of the other auditors.

We report that the consolidated financial statements havebeen prepared by the Company in accordance with the

requirements of Accounting Standard (AS) 21, ConsolidatedFinancial Statements, Accounting Standard (AS) 23 Accountingfor Investments in Associates in Consolidated FinancialStatements and Accounting Standard (AS) 27, FinancialReporting of Interest in Joint Ventures, issued by the Instituteof Chartered Accountants of India and on the basis of theseparate audited financial statements of HindustanConstruction Company Ltd., its subsidiaries, associates andjoint ventures included in the consolidate financial statements.

On the basis of the information and explanations given to usand on the consideration of the separate audit reports onindividual audited financial statements of HindustanConstruction Company Ltd., its aforesaid subsidiaries,associates and joint ventures, we are of the opinion that:

a) The Consolidated Balance Sheet gives a true and fairview of the consolidated state of affairs of HindustanConstruction Company Ltd., its subsidiaries, associatesand joint ventures as at 31st March, 2004;

b) The Consolidated Profit and Loss account gives a trueand fair view of the consolidated results of operations ofHindustan Construction Company Ltd., its subsidiariesand joint ventures for the year then ended; and

c) The Consolidated Cash Flow Statement gives a true andfair view of the consolidated cash flows of the HindustanConstruction Company Ltd., its subsidiaries and jointventures for the year then ended.

For K. S. Aiyar & Co.Chartered Accountants

Ramakrishna PrabhuPartner

M.No. 38959MumbaiDated: May 14, 2004

CONSOLIDATED FINANCIAL STATEMENTS

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200462

As at31.03.2003

Schedule Rs. Lacs Rs. Lacs Rs. LacsSOURCES OF FUNDSShare Capital A 2002.80 2002.80Reserves and Surplus B 14388.87 11917.03

Total Shareholders’ Funds 16391.67 13919.83Minority InterestHCC Infotech Ltd. 47.54 48.13Western Securities Ltd. 2.49 2.64

50.03 50.77Loans(a) Secured C 19592.53 16794.18(b) Unsecured D 23760.29 21843.39

Total Loans 43352.82 38637.57Deferred Tax Liability (Net) 7478.85 5928.23

TOTAL 67273.37 58536.40

APPLICATION OF FUNDSFixed Assets(a) Gross Block E 56945.47 52675.26(b) Less: Depreciation 19414.07 18476.58

(c) Net Block 37531.40 34198.68(d) Items Awaiting Completion orCommissioning 979.49 3670.85

Total Fixed Assets 38510.89 37869.53Investments F 4179.30 2168.97Current Assets, Loans and AdvancesA. Current Assets G

(a) Inventories 55899.68 47840.30(b) Sundry Debtors 204.45 747.74(c) Cash and Bank Balances 4917.16 4466.80(d) Other Current Assets 43.72 43.22

61065.01 53098.06B. Loans and Advances H 7033.11 6600.42

Total Current Assets, Loans and Advances 68098.12 59698.48Less: Current Liabilities and Provisions I

Current Liabilities 41254.06 39377.91Provisions 2261.61 1842.59

Total Current Liabilities and Provisions 43515.67 41220.50Net Current Assets 24582.45 18477.98Miscellaneous Expenditure J 0.73 19.92(To the extent not Written Off or Adjusted)

TOTAL 67273.37 58536.40

The annexed notes (Schedule-S) form an integral part of the Accounts

Consolidated Balance Sheet as at 31st March, 2004

AJIT GULABCHAND Chairman & Managing Director

Y. H. MALEGAM

D. M. POPAT

RAM P. GANDHI

PROF. FRED MOAVENZADEH Directors

SHARAD M. KULKARNI

NIRMAL P. BHOGILAL

R. G. VARTAK

K. G.TENDULKAR Executive Director (Operations)

M. D. KHATTAR Executive Director (Technical & B.D.)

Mumbai, Dated: May 14, 2004

�As per our report attached

For K. S. AIYAR & CO.Chartered accountants

RAMAKRISHNA PRABHUPartner

VITHAL P. KULKARNICompany Secretary

Mumbai, Dated: May 14, 2004

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200463

Consolidated Profit and Loss Account for the year ended 31st March, 2004

Previous YearSchedule Rs. Lacs Rs. Lacs Rs. Lacs

INCOMEIncome From Operations K 117178.22 79289.81

117178.22 79289.81Other Income L 178.75 661.99

117356.97 79951.80EXPENDITUREConstruction Expenses M 87964.09 54163.90Cost of Goods Sold N 7.70 65.87Employees’ Remuneration and O 9154.36 7591.13Welfare ExpensesOffice and Site Establishment P 5484.92 4861.63ExpensesInterest Q 3920.16 4451.53Depreciation 4626.84 4213.26

111158.07 75347.32

PROFIT BEFORE TAX 6198.90 4604.48Provision for Current Tax R 1027.11 777.07Provision for Deferred Tax 1550.62 931.87

PROFIT AFTER TAX 3621.17 2895.54Add/(Less): Tax provision for earlier years 4.98 (1.34)

3626.15 2894.20Add : Minority Interest 0.74 4.03Add:Balance brought forward from Last Year 7301.20 5198.68

10928.09 8096.91Add:Transferred from:Debenture Redemption Reserve — 1159.96

AMOUNT AVAILABLE FOR APPROPRIATION 10928.09 9256.87Less:Appropriations:(a) Proposed Dividend 1,001.20 800.96(b) Tax on Proposed Dividend 128.28 102.63(c) Debenture Redemption Reserve 552.08 552.08(d) General Reserve 5,000.00 500.00

6681.56 1955.67

Balance carried to Balance Sheet 4246.53 7301.20

Earnings Per Share (Basic and Diluted) Annualised Rs. 18.11 14.47The annexed notes (Schedule-S) form an Integral part of the Accounts

AJIT GULABCHAND Chairman & Managing Director

Y. H. MALEGAM

D. M. POPAT

RAM P. GANDHI

PROF. FRED MOAVENZADEH Directors

SHARAD M. KULKARNI

NIRMAL P. BHOGILAL

R. G. VARTAK

K. G.TENDULKAR Executive Director (Operations)

M. D. KHATTAR Executive Director (Technical & B.D.)

Mumbai, Dated: May 14, 2004

�As per our report attached

For K. S. AIYAR & CO.Chartered accountants

RAMAKRISHNA PRABHUPartner

VITHAL P. KULKARNICompany Secretary

Mumbai, Dated: May 14, 2004

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200464

As at31.03.2003

SCHEDULE - C Rs. Lacs Rs. Lacs Rs. LacsSECURED LOANS(a) Debentures:

(i) 13.5% Non-Convertible “A” Series 1000.00 1000.00(ii) 13.6% Non-Convertible “B” Series 500.00 500.00(iii) 13.0% Non-Convertible “C” Series 1000.00 1000.00(iv) 12.5% Non-Convertible “D” Series 1000.00 1000.00(v) 10.0% Non-Convertible “E” Series 1500.00 1500.00(vi) 9.0% Non-Convertible “F” Series 2000.00 2000.00

7000.00 7000.00(b) From Banks:

(i) On Cash Credit Account 3361.96 1210.68(ii) Bank Of India Term Loan 1900.00 2500.00(iii) Exim Bank Short Term Loan

Joint Ventures — 250.00(iv) Canara Bank Term Loan 4200.00 4200.00(v) Bank of Bahrain & Kuwait F.C. Loan 883.60 —(vi) ICICI Bank Car Loan 29.11 —

10374.67 8160.68(c) From HDFC

Corporate Loan 1300.00 —(d) From Contractees 92.86 469.62(e) From Others:

(i) MIDC — 38.88(ii) Equipment Loan 825.00 1125.00

TOTAL 19592.53 16794.18

Notes:Privately Placed Non Convertible Debenturesi) 13.5% Non Convertible Debentures “A” Series : Secured by first charge

by way of hypothecation of specific movable properties as specified inpart “A” of second Schedule of the trust deed executed on 5th November,2001 in favour of UTI Bank Ltd., the trustees to the debentureholders.Thesedebentures having a face value of Rs. 100/- each aggregating Rs.10crore are to be redeemed in five equal half yearly installments at the endof 36th, 42nd, 48th, 54th and 60th month from the date of allotmenti.e.10th August, 2001.

ii) 13.6% Non Convertible Debentures “B” Series : Secured by anexclusive charge by way of hypothecation of specific movable propertiesas specified in part “B”of second Schedule of the trust deed executed on5th November,2001 in favour of UTI Bank Ltd., the trustees to thedebentureholders. These debentures having a face value of Rs. 100/-each aggregating Rs. 5 crore are to be redeemed in five equal half yearlyinstallments at the end of 36th, 42nd, 48th, 54th and 60th month from thedate of allotment i.e.10th August, 2001.

iii) 13% Non Convertible Debentures “C” Series : Secured by first chargeby way of hypothecation of specific movable properties as specified inpart “C” of second schedule of the trust deed executed on 5th November,2001 in favour of UTI Bank Ltd., the trustees to the debentureholders.These debentures having a face value of Rs. 100/- each aggregatingRs.10 crore are to be redeemed in five equal half yearly installments atthe end of 36th, 42nd, 48th, 54th and 60th month from the date ofallotment i.e. 25th October, 2001.

iv) 12.5%Non Convertible Debentures “D” Series : Secured by first chargeby way of hypothecation of specific movable properties as specified insecond schedule of the trust deed executed on 28th March, 2002 infavour of UTI Bank Ltd., the trustees to the debentureholders. Thesedebentures having a face value of Rs.100/- each aggregating Rs.10 croreare to be redeemed in five equal half yearly installments at the end of36th, 42nd, 48th, 54th and 60th month from the date of allotment i.e. 25thJanuary, 2002.

v) 10% Non Convertible Debentures “E” Series : Secured by first chargeby way of hypothecation of specific movable properties as specified insecond schedule of the trust deed executed on 20th January, 2003 infavour of UTI Bank Ltd., the trustees to the debentureholders. Thesedebentures having a face value of Rs.100/- each aggregating Rs. 15crore are to be redeemed in seven half yearly installments at the end of48th, 54th, 60th, 66th, 72nd, 78th and 84th month from the date ofallotment i.e. 25th October, 2002.

vi) 9% Non Convertible Debentures “F” Series : Secured by first chargeby way of hypothecation of specific movable properties as specified insecond schedule of the trust deed executed on 20th January, 2003 infavour of UTI Bank Ltd., the trustees to the debentureholders. Thesedebentures having a face value of Rs.100/- each aggregating Rs.20 crore

Schedules Forming Part of the Balance Sheet

As at31.03.2003

SCHEDULE - A Rs. Lacs Rs. LacsSHARE CAPITALAuthorised Capital

50,000 9.5% Redeemable CumulativeSecond Preference Sharesof Rs.100/- each 50.00 50.00

4,95,00,000 Equity Shares of Rs.10/- each 4950.00 4950.00

TOTAL 5000.00 5000.00

Issued, Subscribed and Paid-up:2,00,24,000 Equity Shares of Rs.10/- each 2002.40 2002.40

Less: 2,600 Equity Shares held byWestern Securities Ltd.- a Subsidiary 0.26 0.26

2002.14 2002.14Add: Forfeited Shares 0.66 0.66

TOTAL 2002.80 2002.80

NOTES:1. Out of 2,00,24,000 Equity Shares of Rs.10/- each

1,26,86,625 Equity Shares were issued as fully paid Bonus Shares bycapitalisation of Reserves and Surplus

SCHEDULE - BRs. Lacs Rs. Lacs Rs. Lacs

Reserves and Surplus(a) Share Premium Account 1575.00 1575.00(b) General Reserve:

Balance as per last Account 2169.57 1669.57Add: Transferred from Profit

and Loss Account 5000.00 500.00Less: Transferred to Profit

and Loss Account 0.41 —

7169.16 2169.57

(c) Capital ReserveBalance as per last Account 24.78 24.78Less: Transferred to Profit

and Loss Account 24.78 —

— 24.78

(d) Debenture Redemption Reserve:Balance as per last Account 843.75 1451.63Add: Transferred from Profit

and Loss Account 552.08 552.08

1395.83 2003.71

Less: Transferred to Profitand Loss Account — 1159.96

1395.83 843.75

(e) Forfeited Debentures Account 2.35 2.35

(f) Special ReserveBalance as per last Account 0.38 0.38Less: Transferred to Profit

and Loss Account 0.38 —

— 0.38

(g) Profit and Loss AccountBalance Carried ForwardHCC 3792.69 6740.99Joint Ventures 453.84 560.21

4246.53 7301.20

TOTAL 14388.87 11917.03

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200465

are to be redeemed in 3 annual installments at the end of 36th, 48th, and60th month from the date of allotment i.e. 17th January, 2003.

The above debentures (i) to (vi) are also secured by way of mortgage ona flat situated at Lok Gaurav Complex, Vikhroli.

Banks:

1. Cash credit limits are secured against hypothecation of work in progress,stores, book debts, dues and advances and residual charge/mortgage onplant & machinery and certain land situated at Vikhroli and buildings(Flats) at Dadar (Mumbai) and land & buildings at Dhamangaon.

2. Bank of India

Secured by first charge by way of hypothecation of specific fixed assetsdescribed under deed of hypothecation executed on 15th January,2002.

3. Canara Bank

Secured by first charge by way of hypothecation of specific fixed assetsdescribed under deed of hypothecation executed on 21st February, 2002.

4. Bank of Bahrain & Kuwait F.C. Term Loan

Secured by first exclusive charge by way of hypothecation of specific equipmentsdescribed under deed of hypothecation executed on 18th July, 2003.

5. ICICI Bank Car Loan

Secured by first charge by way of hypothecation of Cars purchased underthe scheme in favour of ICICI Bank.

From HDFC

Corporate Loan

Secured by way of oral charge on 6th June, 2003 on non residentialpremises being all the piece and parcel of land admeasuring 202505 sq.

meters at village Tara, district Raigad together with Buildings and otherstructures thereon, land appurtenant thereto both present and future.

Contractees

Secured by hypothecation /pledge of certain plant and machinery.

From Others

Equipment Loan

Secured by first and exclusive charge by way of hypothecation of theequipments financed by GE Capital Services India.

As atSCHEDULE - D 31.03.2003UNSECURED LOANS Rs. Lacs Rs. Lacs

(a) Fixed Deposits 3.10 22.91(b) From Contractees (Interest bearing) 10659.19 11829.66(c) Commercial Paper (maximum balance

outstanding during the year Rs.5500 lacs(Previous Year Rs. 4000 lacs) 5500.00 4000.00

(d) From Banks(i) Short Term Loans

HCC 2000.00 2000.00Joint Ventures 984.00 668.82

2984.00 2668.82ii) Non Convertible Debentures 3200.00 1250.00iii) Foreign Currency Loan — 955.00

(e) From Others 1414.00 1117.00

TOTAL 23760.29 21843.39

SCHEDULE - EFIXED ASSETS (Rs. Lacs)

ASSETS GROSS BLOCK DEPRECIATION NET BLOCKParticulars AS AT ADDI- DEDUC- AS AT UP TO FOR THE DEDUC- UP TO AS AT AS AT

01.04.03 TIONS TIONS 31.03.04 01.04.03 YEAR TIONS 31.03.04 31.03.04 31.03.03At Cost:GoodwillHCC 366.97 — 0.41 366.56 — — — — 366.56 366.97

366.97 — 0.41 366.56 — — — — 366.56 366.97Freehold Land (Book Value)HCC 255.70 — — 255.70 — — — — 255.70 255.70

255.70 — — 255.70 — — — — 255.70 255.70Buildings & ShedsHCC 2,321.31 2,043.50 78.50 4,286.31 598.64 152.31 4.30 746.65 3,539.66 1,722.67

2,321.31 2,043.50 78.50 4,286.31 598.64 152.31 4.30 746.65 3,539.66 1,722.67Plant & MachineryHCC 42,300.41 5,860.99 1,846.78 46,314.62 13,959.50 3,632.19 1,691.28 15,900.41 30,414.21 28,340.91Joint Ventures 2,505.36 106.54 1,611.20 1,000.70 1,549.62 170.67 1,301.21 419.08 581.62 955.74

44,805.77 5,967.53 3,457.98 47,315.32 15,509.12 3,802.86 2,992.49 16,319.49 30,995.83 29,296.65Heavy VehiclesHCC 1,357.61 124.52 77.17 1,404.96 780.09 184.14 275.27 688.96 716.00 577.52Joint Ventures 12.30 — 12.30 — 7.45 0.42 7.87 — — 4.85

1,369.91 124.52 89.47 1,404.96 787.54 184.56 283.14 688.96 716.00 582.37Light VehiclesHCC 1,187.59 251.80 405.86 1,033.53 358.07 112.29 89.99 380.37 653.16 829.52Joint Ventures 50.76 5.92 19.87 36.81 23.47 5.22 16.11 12.58 24.23 27.29

1,238.35 257.72 425.73 1,070.34 381.54 117.51 106.10 392.95 677.39 856.81Furniture and Office EquipmentsHCC 1,292.06 124.99 235.43 1,181.62 563.28 171.75 234.98 500.05 681.57 728.78Joint Ventures 61.38 3.87 24.22 41.03 17.11 6.15 11.76 11.50 29.53 44.27

1,353.44 128.86 259.65 1,222.65 580.39 177.90 246.74 511.55 711.10 773.05ComputersHCC 812.77 107.98 15.21 905.54 533.08 161.96 6.67 688.37 217.17 280.38Joint Ventures 98.89 3.66 53.70 48.85 74.22 11.78 49.91 36.09 12.76 24.67

911.66 111.64 68.91 954.39 607.30 173.74 56.58 724.46 229.93 305.05Computer SoftwareHCC 52.15 17.09 — 69.24 12.05 17.96 — 30.01 39.23 40.10

52.15 17.09 — 69.24 12.05 17.96 — 30.01 39.23 40.10Total of this yearHCC 49,946.57 8,530.87 2,659.36 55,818.08 16,804.71 4,432.60 2,302.48 18,934.83 36,883.25 —Joint Ventures 2,728.69 119.99 1,721.29 1,127.39 1,671.87 194.24 1,386.87 479.24 648.15 —

52,675.26 8,650.86 4,380.65 56,945.47 18,476.58 4,626.84 3,689.35 19,414.07 37,531.40 —Previous Year -HCC 42,917.72 8,237.97 1,209.12 49,946.57 14,369.73 3,463.74 1,028.76 16,804.71 — 33,141.86Joint Ventures 5,152.97 636.23 3,060.51 2,728.69 3,181.43 749.52 2,259.08 1,671.87 — 1,056.82

48,070.69 8,874.20 4,269.63 52,675.26 17,551.16 4,213.26 3,287.84 18,476.58 — 34,198.68

Items Awaiting Completion or Commissioning HCC 979.49 3,670.31

Joint Ventures — 0.54

TOTAL 38,510.89 37,869.53

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200466

SCHEDULE - F As at 31.03.2003Cost Cost Cost Cost

Unquoted Quoted Unquoted QuotedINVESTMENTS Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs

Long Term Investments(A) Government Securities:

(i) Rural ElectrificationCorporation Ltd. 5,000Bonds of Rs.10000/-each fully paid 500.00 500.00

(ii) National HighwaysAuthority of India 6,000Bonds of Rs.10000/-each fully paid 600.00 600.00

(B) Other Investments:(i) Walchand Co-Op.

Housing Society Ltd. 5Equity Shares of Rs.50/- each fully paid (Rs.250 /- Unquoted) 0.00 0.00

(ii) Shushrusha CitizensCo-Op. Hospital Ltd. -100 Equity Shares ofRs.100/- each fully paid 0.10 0.10

(iii) Aradhana Co-OpHsg.Socy.Ltd. 35 EquityShares of Rs.50/- eachfully paid 0.02 0.02

(iv) Housing DevelopmentFinance CorporationLtd. 25,044 EquityShares of Rs.10/- eachfully paid. 3.34 3.34

(v) Hindustan Oil ExplorationCo.Ltd. 1,04,400 EquityShares of Rs.10/- eachfully paid 10.44 10.44

(vi) 6.75% Tax free US -64Bonds of Govt. of India13,918 Bonds of Rs.100/- each (sold duringthe year) (Previousyear 1,38,183 Units-64of Rs.10/- each) — 16.88

(vii) HDFC Bank Ltd. 500Equity Shares of Rs.10/- each fully paid 0.05 0.05

(viii) Khandwala SecuritiesLtd. 3,332 Equity Sharesof Rs.10/- each fully paid(36068 Eq. Shs. Soldduring the year) 2.00 23.64Less: Provision fordiminution in investment (1.66) —

(ix) Saurashtra CementLtd. 1,00,000, 18%N o n - C o n v e r t i b l eDebentures of Rs. 100/- each fully paid 89.36 89.36

(x) Hindustan Finvest Ltd.1,20,000 Equity Sharesof Rs.10/- each fullypaid 12.00 12.00

(xi) The Lake CityCorporation Ltd.18,75,000 EquityShares of Rs.10/- eachfully paid (Purchasedduring the year)(including Rs. 75.83lacs Goodwill arising onacquisition of Associate) 2000.00 —

(xii) The Lake City Corpora-tion Ltd. 47,50,000 6%Cumulative Redeem-able Preference Sharesof Rs. 10/-each fullypaid (Purchased duringthe year) 950.00 —

(xiii) Rentmaker Inc. 225225Equity Shares ofUS$ .001 fully paid 69.74 69.74Less: Provison fordiminution in Investment (69.74) (69.74)

(C) Current Investments(i) ICICI Prudential liquid

plan 79822.860 Nos.(Nav -Rs. 14.51 lacs) 13.65 8.88

(ii) Kotak Mahindra MutualFund-growth option7 4 , 4 3 , 4 2 9 . 9 3 2 5Units@12.0912 (Soldduring the year) — 900.00

(iii) IDBI Liquid Plan-growthoption 9,350.170Units@11.7451 (Soldduring the year) — 1.09

(iv) Standard CharteredMutual Fund growthoption 14,292.921Units@11.7451 (Soldduring the year) — 1.67

(v) Kotak Mahindra MutualFund-growth option14,288.780 Units@Rs.10.4757 (Soldduring the year) — 1.50

TOTAL 4165.13 14.17 1201.48 967.49

4179.30 2168.97

As at 31.03.2003Cost Market Cost

ValueRs.Lacs Rs.Lacs Rs. Lacs

Notes:1. Aggregate of Investments:

(i) Quoted Investments 14.17 204.08 967.49 1023.45

(ii) Unquoted Investments 4165.13 1201.48

TOTAL 4179.30 2168.97

2. Investments Received / Purchased and Sold During the year.

Name of the Security No. ofUnits Amount

In (‘000) (Rs.Lacs)

(i) ICICI Mutual Fund 3800.868 450

(ii) Canbank Mutual Fund 7961.03 800

(iii) Principal Cash Management Fund 9999.45 1000

(iv) HDFC Liquid Plan 14756.64 1770

TOTAL 4020.00

SCHEDULE - F As at 31.03.2003Cost Cost Cost Cost

Unquoted Quoted Unquoted QuotedINVESTMENTS Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs

SCHEDULE - G As at 31.03.2003CURRENT ASSETS Rs. Lacs Rs. Lacs Rs. LacsINVENTORIES(a) Stores, Spares and Embedded

Goods, at CostHCC 13369.99 7642.83Joint Ventures 513.28 1141.99

13883.27 8784.82(b) Fuel, at Cost

HCC 134.49 110.55Joint Ventures 6.06 7.34

140.55 117.89(c) Materials In transit, at Cost 27.28 66.57(d) Work In Progress:

Uncompleted Contracts andvalue of Work DoneHCC 45666.98 37564.08Joint Ventures 3135.25 2925.30

48802.23 40489.38

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200467

Cost of Incomplete Contracts of Software 3.51 4.38BusinessFinished Units (at Cost) 6.80 6.80Finished Goods 0.01 1.21Less: Advances Received/Other Recoveries 9473.82 4619.56

39338.73 35882.21Add: Retention MoneyHCC 2473.37 2933.33Joint Ventures 35.92 45.54

2509.29 2978.87

41848.02 38861.08(e) Stock In Trade 0.56 9.94

TOTAL 55899.68 47840.30

SUNDRY DEBTORSUnsecured, Considered Good:(a) Outstanding over six months

HCC 46.69 74.11Joint Ventures 9.92 —

56.61 74.11(b) Others

HCC 122.07 167.37Joint Ventures 25.77 506.26

147.84 673.63

TOTAL 204.45 747.74

CASH AND BANK BALANCES(a) Cash on Hand

HCC 54.49 73.73Joint Ventures 3.24 6.13

57.73 79.86(b) Cash in Transit 50.00 501.70(c) Cheques on Hand 407.43 807.99(d) With Scheduled Banks:

(i) Current Accounts inIndian RupeesHCC 3231.96 2151.53Joint Ventures 378.47 110.23

3610.43 2261.76(ii) Current Accounts in

Foreign CurrencyHCC 187.55 118.91Joint Ventures 202.16 93.87

389.71 212.78(iii) Deposit Accounts

HCC 183.16 74.84Joint Ventures 218.63 389.40

401.79 464.24(iv) Other Banks

HCC 0.07 12.95Joint Ventures — 125.52

0.07 138.47

TOTAL 4917.16 4466.80

OTHER CURRENT ASSETS(a) Interest Accrued on Investments 36.72 40.93(b) Interest Accrued on Others 7.00 2.29

TOTAL 43.72 43.22

GRAND TOTAL 61065.01 53098.06

SCHEDULE - G (Contd.) As at 31.03.2003CURRENT ASSETS Rs. Lacs Rs. Lacs Rs. Lacs

SCHEDULE - H As at 31.03.2003LOANS AND ADVANCES Rs. Lacs Rs. Lacs Rs. LacsUnsecured, Considered Good(a) Advances Recoverable in Cash

or in Kind or for Value to be receivedHCC 4444.08 3377.59Joint Ventures 474.42 567.17

4918.50 3944.76(b) Advance Payment of Taxes

Net of provisionAdvance Tax Rs.6025.45 lacs(Previous year Rs.5645.39 lacs),Provision for Tax Rs.4561.74 lacs(Previous year Rs.3564.85 lacs)HCC 1125.48 1755.07Joint Ventures 338.23 325.47

1463.71 2080.54(c) Other Receivables — 200.00(d) Earnest Money, Security

and Other DepositsHCC 391.27 313.33Joint Ventures 59.63 61.79

450.90 375.12(e) ICD with Others 200.00 —

TOTAL 7033.11 6600.42

SCHEDULE - ICURRENT LIABILITIES AND PROVISIONSCurrent Liabilities(a) Sundry Creditors

HCC 25253.45 16297.32Joint Ventures 1833.17 3091.11

27086.62 19388.43(b) Advances from Contractees (Interest free)

HCC 11646.66 16927.74Joint Ventures 2251.67 2920.10

13898.33 19847.84(c) Interest Accrued but not due on Loans 179.26 64.87(d) Investor Protection & Education Fund

shall be Credited by the followingamounts when due:(i) Unclaimed Dividend 52.02 27.07(ii) Unclaimed Fixed Deposits 0.03 0.18(iii) Unclaimed Debentures

(including interest) 37.80 49.52

89.85 76.77

TOTAL 41254.06 39377.91

Provisions:Proposed Dividend 1,001.20 800.96Tax on Proposed Dividend 128.28 102.63Provision for Leave Encashment

HCC 453.11 340.10Joint Ventures 30.08 41.20

483.19 381.30Provision for Gratuity

HCC 642.93 546.36Joint Ventures 6.01 11.34

648.94 557.70

TOTAL 2261.61 1842.59

GRAND TOTAL 43515.67 41220.50

SCHEDULE - JMiscellaneous Expenditure(To the extent not written off or adjusted)(a) Debenture Issue Expenses — 0.84(b) Deferred Revenue Expenditure 0.73 19.08

TOTAL 0.73 19.92

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200468

SCHEDULE - K Previous YearRs. Lacs Rs. Lacs Rs. Lacs

INCOME FROM OPERATIONSValue of Work Done(i) Work Bills Received, Gross

HCC 97238.15 58961.18Joint Ventures 11131.67 9309.87

108369.82 68271.05Add: Work In Progress, at CloseHCC 45670.49 37568.46Joint Ventures 3135.25 2925.30

48805.74 40493.76Add: Finished Units (at Cost) 6.80 6.80

157182.36108771.61Less: Work In Progress, at CommencementHCC 37568.46 28592.29Joint Ventures 2925.30 1090.34

40493.76 29682.63Less: Finished Units (at Cost) 6.80 6.80

116681.80 79082.18(ii) Service Income from Joint Ventures 492.53 107.50(iii) Sale of Securities — 0.13(iv) Income from Trading Activity 3.89 100.00

TOTAL 117178.22 79289.81

SCHEDULE - LOTHER INCOME(a) Dividend on Other Investments 12.23 26.86(b) Miscellaneous Receipts

HCC 151.39 65.95Joint Ventures 0.62 52.04

152.01 117.99(c) Earlier Years Provisions No Longer Required

HCC 11.60 61.31Joint Ventures 2.91 1.24

14.51 62.55(d) Profit on Sale of Investments — 433.42(e) Exchange Gain/(Loss) Difference

HCC — 2.09Joint Ventures — 19.08

— 21.17

TOTAL 178.75 661.99

SCHEDULE - MCONSTRUCTION EXPENSES(a) Stores and Embedded Goods Consumed:

Stock at CommencementHCC 7642.83 4568.31Joint Ventures 1141.99 1005.98

8784.82 5574.29Add: PurchasesHCC 39446.62 24043.82Joint Ventures 4717.81 4184.02

44164.43 28227.84

52949.25 33802.13Less: Scrap and Unserviceables SoldHCC 448.46 239.75Joint Ventures 117.49 185.52

565.95 425.27

52383.30 33376.86Less: Stock at CloseHCC 13369.99 7642.83Joint Ventures 513.28 1141.99

13883.27 8784.82

38500.03 24592.04

(b) Sub-Contract, Transportation,Hire etc.HCC 39968.45 21571.29Joint Ventures 3299.94 3821.46

43268.39 25392.75

(c) Power and FuelHCC 4394.68 3109.00Joint Ventures 733.03 421.43

5127.71 3530.43

(d) Repairs to MachineryHCC 632.62 318.46Joint Ventures 51.62 26.93

684.24 345.39

(e) Other RepairsHCC 67.56 68.33Joint Ventures 1.28 4.75

68.84 73.08

(f) RentHCC 287.61 228.22Joint Ventures 27.27 1.99

314.88 230.21

TOTAL 87964.09 54163.90

SCHEDULE - NCost Of Goods SoldOpening Stock 1.21 5.84Add: Purchases 6.50 61.24

7.71 67.08Less: Stock at Close 0.01 1.21

TOTAL 7.70 65.87

SCHEDULE - OEMPLOYEES’ REMUNERATION AND WELFARE EXPENSES(a) Salaries, Wages, Bonus,

Gratuity and Compensationunder VoluntaryRetirement SchemeHCC 7037.93 5650.59Joint Ventures 995.33 997.34

8033.26 6647.93

(b) Contribution to Provident Fundand Other FundsHCC 402.74 329.98Joint Ventures 29.23 28.63

431.97 358.61

(c) Labour Recruitment, Terminationand RepatriationHCC 27.79 19.75Joint Ventures 4.77 2.34

32.56 22.09

(d) Welfare ExpensesHCC 614.22 515.24Joint Ventures 42.35 47.26

656.57 562.50

TOTAL 9154.36 7591.13

Schedules Forming Part of the Profit and Loss Account

SCHEDULE - M (Contd.) Previous YearRs. Lacs Rs. Lacs Rs. Lacs

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HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200469

SCHEDULE - P Previous YearRs. Lacs Rs. Lacs Rs. Lacs

OFFICE AND SITE ESTABLISHMENT EXPENSES(a) Stationery, Postage,

Telephone & AdvertisementHCC 581.80 538.95Joint Ventures 46.31 43.61

628.11 582.56

(b) Travelling and ConveyanceHCC 1057.60 900.32Joint Ventures 95.50 109.26

1153.10 1009.58

(c) RentHCC 11.40 27.75Joint Ventures 60.09 62.89

71.49 90.64

(d) Rates and TaxesHCC 137.19 206.26Joint Ventures 3.71 26.65

140.90 232.91

(e) InsuranceHCC 63.56 35.47Joint Ventures 18.42 35.63

81.98 71.10

(f) Professional ChargesHCC 587.92 331.80Joint Ventures 77.53 31.45

665.45 363.25

(g) Repairs and MaintenanceHCC 564.96 239.68Joint Ventures 2.40 11.87

567.36 251.55

(h) Directors’ Fees 2.46 3.58

(i) Auditors’ Remuneration:(i) Audit Fees

HCC 12.72 13.07Joint Ventures 4.23 12.72

16.95 25.79

(ii) Tax Audit FeesHCC 4.20 4.21Joint Ventures 1.60 8.97

5.80 13.18

(iii) For Certification WorkHCC 7.16 4.75Joint Ventures 0.81 4.39

7.97 9.14

(iv) Reimbursement of Outof Pocket Expenses(Including Service Tax)HCC 5.13 1.91Joint Ventures 0.38 0.65

5.51 2.56

36.23 50.67

(j) Conversion & Translation Difference (Net)HCC 38.36 —Joint Ventures 24.07 —

62.43 —

(k) Guarantee, Commission and ChargesHCC 604.12 585.66Joint Ventures 123.86 139.35

727.98 725.01

(l) Share / Debenture Issue Expenses Written Off — 44.95

(m) Deferred Revenue Expenses Written Off 13.43 24.05

(n) Expenses Related to Prior Years 0.27 7.89

(o) Loss on Sale of Investments (Net) 16.72 —

(p) Loss on Sale of Assets ( Net)HCC 60.51 27.08Joint Ventures 9.94 519.81

70.45 546.89(q) Miscellaneous Expenses

HCC 299.98 297.84Joint Ventures 111.97 76.85

411.95 374.69(r) Computer Maint. & Development Expenses

HCC 426.22 19.65Joint Ventures 4.93 1.09

431.15 20.74(s) Bank Charges

HCC 188.64 184.70Joint Ventures 3.67 13.71

192.31 198.41(t) Donations

HCC 196.46 151.92Joint Ventures 0.02 1.57

196.48 153.49(u) Provision for Diminution

in Investments 1.66 94.52

(v) Provision for Doubtful DebtsJoint Ventures 7.67 4.91

(w) Bad Debts Written Off — 10.24

(x) Loss on Dissolution of Subsidiary 5.34 —

TOTAL 5484.92 4861.63

SCHEDULE - QINTEREST(a) On Fixed Loans

HCC 6.61 31.53Joint Ventures 146.22 118.66

152.83 150.19(b) On Debentures 962.32 1000.51

(c) On Other AccountsHCC 3054.31 3296.83Joint Ventures 17.80 187.17

3072.11 3484.00

4187.26 4634.70Less: Interest ReceivedHCC 260.27 117.92Joint Ventures 6.83 65.25

267.10 183.17

TOTAL 3920.16 4451.53

SCHEDULE - R(a) Provision For Current Tax

HCC 939.87 732.30Joint Ventures 87.24 44.77

1027.11 777.07(b) Provision For Deferred Tax

HCC 1548.73 931.87Joint Ventures 1.89 —

TOTAL 1550.62 931.87

SCHEDULE - P (Contd.) Previous YearRs. Lacs Rs. Lacs Rs. Lacs

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HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200470

SCHEDULE S

A. CRITERIA FOR PREPARATION OF CONSOLIDATEDFINANCIAL STATEMENTS

1. Hindustan Construction Company Ltd. (HCC Ltd.) hasprepared the consolidated financial statements to provide

the financial information of its activities along with its

Subsidiaries & Joint Ventures as a single entity. They arecollectively referred as “Group” herein.

The consolidated financial statements are prepared by

i) Consolidating its accounts with financial statements

of its Subsidiaries & Integrated Joint Ventures.

ii) Applying the equity method of accounting for its

investee companies in which it holds between 20and 50 percent of the equity share capital.

iii) Financial statements of Integrated ( i.e. Profit / Losssharing ) Joint Ventures are consolidated to the extent

of HCC’s share in Joint Venture.

2. Method of Consolidation

The financial statements of these companies are

prepared according to uniform accounting policies, in

accordance with the generally accepted accounting

principles in India to the extent possible. Theconsolidated financial statements comprise of financial

statements of its Subsidiaries namely HCC Infotech

Ltd., Western Securities Ltd., & Hincon TechnoconsultLtd., & financial statements of its Integrated Joint

Ventures namely Nathpa Jhakri (NJJV), HCC-L&T

Purulia Joint Venture, HCC-Pati Joint Venture &Kumagai-Skanska-HCC–Itochu Group (KSHI JV).

The consolidated financial statements have been preparedby the Company in accordance with the requirements of

Accounting Standard (AS) 21, Consolidated Financial

Statements and Accounting Standard (AS) 27, FinancialReporting of Interest in Joint Ventures, issued by the

Institute of Chartered Accountants of India.

In case of Integrated Joint Ventures i.e. NJJV and KSHI

JV the Joint Ventures follow the completion contract

method for accounting of its revenue, as per the policiesformulated by the respective Joint Ventures.

For the purpose of consolidation, NJJV financialstatements are restated as per the percentage

completion method followed by HCC. Depreciation is

also reworked as per the rates considered by HCC.

KSHI JV is a lumpsum contract. Therefore it is notpracticable to restate its accounts as per the method

of accounting followed by HCC and hence the accounts

have been consolidated as prepared by the JointVenture.

KSHI JV follows Completed Contract method, the ‘Valueof the Work Done’ is considered to the extent of expenses

incurred by them.

The year-end balances and the common transactions with

the Subsidiaries are eliminated in full. Whereas in case

of Integrated Joint Ventures these transactions areeliminated to the extent of HCC’s share in Integrated

Joint Ventures.

3. Equity Method :- Investment in Associate company is

accounted for in accordance with AS –23, “ Accounting

for Investment in Associates in Consolidated FinancialStatements”. The details of Associate, ownership interest

etc. is given below:

Sr. Name of Associate Ownership Original Amount of Carrying

No. and country of interest cost of Goodwill in cost of

incorporation Investment original cost InvestmentRs. Lacs Rs. Lacs Rs. Lacs

1 The Lake City

Corporation Ltd. 31.25% 1,924.17 75.83 2,000.00India

4. Cross Holding : Investments held by a subsidiary viz.

Western Securities Ltd. in HCC is eliminated and resultant

goodwill is recognized in the consolidated financialstatements.

B. SIGNIFICANT ACCOUNTING POLICIES FORMINGPART OF ACCOUNTS AS AT 31ST MARCH, 2004

1. Method of accounting

The Group maintains its accounts on accrual basis.

2. Fixed Assets

Fixed assets are stated at cost of acquisition including

interest paid on specific borrowings upto the date ofacquisition/installation of the assets and improvement

thereon.

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HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200471

3. Depreciation

Depreciation on fixed assets is provided:

i) In respect of buildings and sheds, furniture and office

equipments on the written down value method(prorata on additions and deletions of the year) at

rates prescribed in Schedule XIV of the Companies

Act, 1956.

ii) In respect of plant & machinery, heavy vehicles and

light vehicles on the straight line method at rates

prescribed in Schedule XIV of the Companies Act,1956 on a pro-rata basis.

iii) In respect of computers depreciation is provided on

straight line basis over a period of three years on a

pro-rata basis.

iv) Depreciation on assets of HCC Infotech Ltd. is

provided on straightl ine basis at the rates

prescribed under the Companies Act, 1956.

v) The Depreciation on assets used for constructionhas been treated as period cost.

4. Investments

Investments are classified as long-term and current

investments. Long-term investments are shown at cost orwritten down value (in case of other than temporary

diminution) and current investments are shown at cost or

market value whichever is lower.

5. Retirement Benefits:

i) Contribution to provident fund and superannuation

fund are accounted for on accrual basis.

ii) Gratuity is charged to revenue on the basis ofactuarial valuation and in case of daily rated

workmen on actual basis computed on tenure of

the services as at the end of the year. In respect of

KSHI JV on actual basis computed on tenure ofservice as at the end of the year and in respect of

NJJV on accrual basis.

iii) Leave encashment is charged to revenue on thebasis of actuarial valuation and in case of daily rated

workmen on actual basis calculated on the basis of

balance leave.

6. Deferred Revenue Expenses

Deferred revenue expenses including compensation onvoluntary retirement scheme are amortized over a period

of five years.

7. Inventories

i) The stock of stores, spares and embedded goods

and fuel is valued at cost (weighted average basis)

or net realisable value whichever is lower.

ii) Work-in-Progress is valued at the Contract rates and

site mobilisation expenditure of incomplete contractsis stated at cost except NJJV and KSHI JV where

work in progress is determined at cost in view of

policy followed by JV and in case of HCC InfotechLtd. and Hincon Technoconsult Ltd. the work in

progress is valued at cost.

iii) Certain loose plant, tools & service equipments costing

below Rs. 5 lacs are valued at proportionate written

down value @ 3% p.m. over a period of 32 months.

8. Foreign Exchange Translation of Foreign Projects andAccounting of Foreign Exchange Transactions

i) Current assets and current liabilities are translated

at the exchange rate prevailing on the last day of theyear.

ii) Gains or losses arising out of remittance / translationsat the year-end are credited / debited to the profit

and loss account for the year.

iii) Foreign exchange transactions are converted into

Indian rupees at the prevailing rate on the date of

the transaction.

iv) Gains & losses in respect of foreign exchange

contracts are recognised as income or expenses overthe life of the contract, except in respect of fixed

assets where such gains or losses are adjusted in

the carrying amount of the fixed assets.

9. Revenue Recognition

i) Accounting of construction contracts:

In respect of Construction business the Companyfollows percentage completion method, stated on

the basis of physical measurement of work actually

completed at the balance sheet date, taking intoaccount the contractual price and revision thereto.

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200472

The site mobilization expenditure for site installation

is apportioned over the period of contract in

proportion to the value of work done . Losses oncontracts are fully accounted for as and when

incurred. Foreseeable losses are accounted for

when they are determined except to the extentthey are expected to be recovered through claims

presented or to be presented to the customer or in

arbitration and inrespect of KSHI JV completioncontract method is followed.

Expenditure incurred in respect of additional costs /delays are accounted in the year in which they are

incurred. Claims made in respect thereof are

accounted as income in the year of receipt ofarbitration award or acceptance by client or evidence

of acceptance received from the client.

Revenue from Software Solutions :

a) In case of contract for development of softwareundertaken on time basis, their billing is based

on specified terms of the contract.

b) In case of fixed price contracts, on achievement

of the milestones set out in the contracts.

ii) Revenue from Designing Services & Projects:

Revenue from designing services & projectscomprises income from time and fixed price contracts.

Revenue from time contracts is recognized on man

hour basis as per the terms of the contracts. Revenuefrom fixed price contracts is recognized on the

completion of milestones specified in the contracts

under percentage completion method. Revenue fromsale of designs is accounted on the despatch of

designs to customers.

10. Taxation

The tax expense comprises of current tax & deferredtax charged or credited to the profit and loss account for

the year. Current tax is calculated in accordance with

the tax laws applicable to the current financial year. TheDeferred tax charge or credit is recognized using the

tax rates and tax laws that have been enacted by the

balance sheet date. Where there are unabsorbeddepreciation or carry forward losses, deferred tax assets

are recognized only if there is virtual certainty of

realization of such assets. Other deferred tax assets

are recognized only to the extent there is reasonable

certainty of realisation in future. At each balance sheet

date, recognized and unrecognized deferred tax assetsare reviewed.

C. CONTINGENT LIABILITIES:2003-04 2002-03

Rs. Lacs Rs. Lacs

(i) Counter Indemnities given to :Banks in respect of Contracts

a) For works in India

(Secured on all the assets) 64513.81 42268.50

b) For Works Abroad

(Secured by ECGC counter 2311.71 2747.24

guarantees)

(Converted in Rupees at the rate

fixed by the Bank)

(ii) Claims not acknowledged as debts

by the Company 359.15 322.84

(iii) Custom Authority, Mumbai 192.87 192.87

D. OTHER NOTES TO ACCOUNTS :

1. Notes to these Consolidated Financial Statements

are intended to serve as a means of informativedisclosure and a guide to better understanding.

Recognizing this purpose, the Company has disclosed

only such Notes from the individual financialstatements, which fairly present the needed

disclosures.

2. Major components of deferred tax assets and

liabilities arising on account of timing differences are:

Assets Liabilities

Rs. Lacs Rs. Lacs

i) Depreciation 4992.27

ii) Claims / Arbitration Awards 2756.64

iii) Others 270.06

TOTAL 270.06 7748.91

3. Contracts executed by HCC-Van Oord Joint Venture,

Hyundai-HCC Joint Venture, Samsung-HCC Joint

Venture, HCC-Mcnally Joint Venture, L&T – HCCJoint Venture, HCC- KBL Joint Venture are accounted

for in accordance with the accounting policy followed

by the company.

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200473

The details of Integrated Joint Ventures alongwith Share of

Interest is given hereunder :

Name of the Name of the Venture Method of accounting Share of

Venture Partners Interest

Natpha Jhakri Impregilio Spa, Italy Completed Contract 40%

HCC-Pati Pati Sendirian Berhad Percentage Completion 50%

Kumagai- Skanska- Skanska, Kumagai, Completed Contract 19.60%

HCC-Itochu group Itochu

HCC-L&T Purulia Larsen & Toubro Ltd. Percentage Completion 57%

Each of the above Joint Ventures are incorporated in India. In

respect of Joint Ventures, the company alongwith other JV

partners is jointly & severally responsible for performance of

the contracts.

List of Subsidiary Companies included in consolidation and

the Parent Company’s holdings are as under :

Name of the Subsidiary Country of Percentage Holding

Incorporation

Hincon Technoconsult Ltd. India 100 %

Western Securities Ltd. India 97.88 %

HCC Infotech Ltd. India 54.95 %

4. Related Party Disclosure:

A. Names of Related Parties & Nature of Relationship

Names of Related Parties Nature of Relationship

The Lake City Corporation Ltd Associate Company

Nathpa Jhakri Joint Venture Integrated Joint Venture

HCC- L& T Purulia Joint Integrated Joint Venture

Venture

HCC-Pati Joint Venture Integrated Joint Venture

Kumagai-Skanska-HCC- Integrated Joint Venture

Itochu Group

Hincon Holdings Ltd. Other Related Party

B. Key Management Personnel

Shri Ajit Gulabchand Chairman & Managing Director

Shri K.G. Tendulkar Executive Director (Operations)

Shri M.D. Khattar Executive Director (Technical &

Business Development)

C. Transactions with related parties with AssociateCompanies & Other Related parties referred to initem (A) above:

Rs. LacsNature of Transactions 2003-2004

Associate Integrated OtherJoint Ventures related party

Purchase of Construction - 319.37 -Materials and Spares (- ) (- ) (- )Sale of ConstructionMaterials and Spares 235.00 150.71 -

(- ) (- ) (- )Sale of Fixed Assets - 333.78 -

(- ) (- ) (- )Receiving of Services - - 49.96

(-) (- ) (28.36)Rendering of Services 4.60 207.34 -

(- ) (- ) (5.15)Work Bill Receipts 935.85 - -

(-) (-) (-)Equity Contributions during 2950.00 - -the year (- ) (- ) (- )Outstanding Debit balances 717.99 407.12 -as at year end (- ) (- ) (- )Outstanding Credit 115.68 658.85 -balances as at year end (- ) (- ) (95.00)Bank Guarantees outstanding 20.00 7717.68 11500.00as at the end of the year (- ) (- ) (9000.00)

Note :- Figures in bracket indicate previous year figures.

D. Details of Transactions relating to persons referredto in item (B) above :

2003-04 2002-03Rs. Lacs Rs. Lacs

Nature of TransactionsManagerial Remuneration 526.00 292.43

Emoluments 18.60 14.33Fixed Deposit outstanding as at theend of the year — 2.00

Interest on Fixed Deposit accruedduring the year 0.29 0.63

5. Segment Reporting:

The Group has disclosed Business Segment as theprimary segment. Segments have been identified takinginto account the nature of activities of the parent company,its subsidiaries and joint ventures, the differing risks andreturns, the organization structure and internal reportingsystem. There are no reportable geographical segments.

The Group’s operations predominantly relate to“Engineering & Construction”. Other business segmentscontribute less than 10 % of the total revenue and havebeen grouped as others.

The Segment Revenue, Segment Results, SegmentAssets and Segment Liabilities include respective amountsidentifiable to each of the segments as also amountsallocated on a reasonable basis.

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200474

SEGMENT INFORMATION FOR THE YEAR ENDED 31ST MARCH, 2004

INFORMATION ABOUT PRIMARY BUSINESS SEGMENTS

Rs. Lacs

PARTICULARS ENGINEERING & OTHERS TOTALCONSTRUCTION

REVENUE :External Sales 117166.67 11.55 117178.22

(78996.56) (293.25) (79289.81)

Add: Inter Segment Sales Nil 364.51 364.51(Nil) (393.50) (393.50)

Total Segment Revenue 117166.67 376.06 117542.73(78996.56) (686.75) (79683.31)

Less: Eliminations 364.51(393.50)

Total 116132.72(79289.81)

Result (Profit before Interest) 10133.58 10.84 10144.42(8500.25) (162.52) (8662.77)

Less: Eliminations 8.64(40.18)

Result (Profit before Interest) 10135.78(8622.59)

Interest Expenses 3920.16(4451.53)

Loss on Sale of Investments 16.72(-433.42)

Current Tax 1022.13(778.41)

Deferred Tax 1550.62(931.87)

NET PROFIT 3626.15(2894.20)

Segment Assets 104761.02 340.56 105101.58(94749.04) (495.21) (95244.25)

Segment Liabilities 43314.12 22.29 43336.41(40015.26) (72.47) (40087.73)

Capital Expenditure 5929.64 29.86 5959.50(11301.61) (16.40) (11318.01)

Depreciation 4626.84(4213.26)

Non-Cash Expenses other 13.43than depreciation (69.00)

Total Assets Exclude: 4179.30Investments (2168.97)

Advance Tax (Net) 1463.71(2080.54)

Other Current Assets 43.72(243.22)

Miscellaneous Expenditure 0.73(to the extent not written off) (19.92)

Total Liabilities Exclude:Secured Loans 19592.53

(16794.18)

Unsecured Loans 23760.29(21843.39)

Proposed Dividend 1129.28(including taxes thereon) (903.59)

Accrued Interest 179.26(64.87)

Note: Figures in brackets pertain to previous year

Rs. Lacs

PARTICULARS ENGINEERING & OTHERS TOTALCONSTRUCTION

OTHER INFORMATION

AJIT GULABCHAND Chairman & Managing Director

Y. H. MALEGAM

D. M. POPAT

RAM P. GANDHI

PROF. FRED MOAVENZADEH Directors

SHARAD M. KULKARNI

NIRMAL P. BHOGILAL

R. G. VARTAK

K. G.TENDULKAR Executive Director (Operations)

M. D. KHATTAR Executive Director (Technical & B.D.)

Mumbai, Dated: May 14, 2004

�As per our report attached

For K. S. AIYAR & CO.Chartered accountants

RAMAKRISHNA PRABHUPartner

VITHAL P. KULKARNICompany Secretary

Mumbai, Dated: May 14, 2004

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200475

2003-04 2002-03Rs. Lacs Rs. Lacs

A. CASH FLOW FROM OPERATING ACTIVITIES

Net Profit before tax and extraordinary item 6198.90 4604.48Adjustments for :

Depreciation 4626.84 4213.26Interest expense 4187.26 4634.70Interest/Dividend received (279.33) (210.03)Lease Rentals 261.30 304.62Foreign Exchange (Gain)/Loss 62.43 (21.17)Debenture Issue exp. written off — 44.95(Profit)/Loss on sale of Assets 70.45 546.89(Profit)/Loss on sale of Investments 16.72 (433.42)Provision for Diminution in Invts. 1.66 94.52(Increase)/Decrease in Deferred Revenue Expenses 18.35 17.84Reserves of dissolved subsidiaries written back (25.57) —

8940.11 9192.16

Operating profit before working capital changes 15139.01 13796.64Adjustments for:

Trade & Other receivables (568.66) (684.79)Inventories (8059.38) (13051.86)Trade payables 7904.40 4990.41Client Advances (Interest Free) (5949.51) 4727.18

(6673.15) (4019.06)

Cash generated from operations 8465.86 9777.58

Interest paid (4072.87) (4658.44)Direct Taxes paid (507.93) (437.24)

(4580.80) (5095.68)

NET CASH FLOW FROM OPERATING ACTIVITIES 3885.06 4681.90

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (5959.50) (11318.01)Sale of Fixed Assets 620.85 434.90Purchase of Investments (2954.77) (913.14)Sale of Investments 926.06 452.46Interest received 266.60 207.79Dividend received 12.23 26.86

NET CASH USED IN INVESTING ACTIVITIES (7088.53) (11109.14)

Consolidated Cash Flow Statement for the year ended 31st March, 2004

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200476

C. CASH FLOW FROM FINANCING ACTIVITIES

Repayment of Lease Finance Liabilities (261.30) (304.62)Proceeds from Long Term and Other Borrowings 4715.25 5738.66Debenture Issue Expenses 0.84 (0.84)Dividend paid (800.96) (600.72)

NET CASH USED IN FINANCING ACTIVITIES 3653.83 4832.48

NET INCREASE IN CASH AND CASHEQUIVALENTS (A+B+C) 450.36 (1594.76)

CASH AND CASH EQUIVALENTS AS AT01/04/2003 (OPENING BALANCE) 4466.80 6061.56

CASH AND CASH EQUIVALENTS AS AT31/03/2004 (CLOSING BALANCE) 4917.16 4466.80

450.36 (1594.76)NOTES : 1. Proceeds from Long Term and Other Borrowings are shown net of repayments.

2. Previous years figures have been regrouped wherever necessary.

2003-04 2002-03Rs. Lacs Rs. Lacs

AJIT GULABCHAND Chairman & Managing Director

Y. H. MALEGAM

D. M. POPAT

RAM P. GANDHI

PROF. FRED MOAVENZADEH Directors

SHARAD M. KULKARNI

NIRMAL P. BHOGILAL

R. G. VARTAK

K. G.TENDULKAR Executive Director (Operations)

M. D. KHATTAR Executive Director (Technical & B.D.)

Mumbai, Dated: May 14, 2004

�As per our report attached

For K. S. AIYAR & CO.Chartered accountants

RAMAKRISHNA PRABHUPartner

VITHAL P. KULKARNICompany Secretary

Mumbai, Dated: May 14, 2004

Global Reports LLC

HCC CONSOLIDATED FINANCIAL STATEMENTS 2003-200477

Rs. Lacs

Hincon Ucchar Western HCCParticulars Technoconsult Investment Securities Infotech

Ltd. Ltd. Ltd. Ltd.

Share Capital 100.00 10.00 200.00 100.00

Reserves & Surplus 49.00 (10.00) (78.12) 20.47

Total Assets 398.36 — 171.98 152.16

Total Liabilities 398.36 — 171.98 152.16

Details of Investments

Shares — — 2.16 —

Mutual Funds 4.27 — 9.37 —

Total of Investments 4.27 — 11.53 —

Turnover (incl. Other income) 376.58 Nil 9.87 370.99

Profit Before Tax 11.37 (0.17) (1.15) 2,23

Provision for Current & Deferred Tax 1.99 0.05 0.87 3.37

Profit after Tax 9.38 (0.22) (2.02) (1.14)

Proposed Dividend Nil Nil Nil Nil

The above details have been provided in terms of the letter number 47/17/2004-CL-III dated May 21, 2004 issued by theGovernment of India, Ministry of Finance, Department of Company Affairs under section 212(8) of the Companies Act, 1956.

Financial Details of Subsidiary Companies

Global Reports LLC

HCC 78TH ANNUAL REPORT 2003-200461

HINDUSTAN CONSTRUCTION COMPANY LIMITEDRegistered Office : Hincon House, Lal Bahadur Shastri Marg, Vikhroli (West), Mumbai 400 083

Attendance SlipPlease complete this Attendance Slip and hand it over at the entrance of the Meeting Hall.

Shares held ______________

Regd. Folio No. ____________ DP ID No. _________________________ Client ID No. ________________

(Name in BLOCK letters) ________________________________________________________________________________

I hereby record my presence at the 78th ANNUAL GENERAL MEETING of the Company held at Walchand Hirachand Hall,Indian Merchants’ Chamber, Indian Merchants’ Chamber Marg, Churchgate, Mumbai - 400 020 on Friday, the 23rdJuly, 2004.

_____________________________

Member’s/Proxy’s Signature

NOTES :1. Members/Proxy holders are requested to bring their copy of the Annual Report with them at the Meeting.

CUT HERE

HINDUSTAN CONSTRUCTION COMPANY LIMITEDRegistered Office : Hincon House, Lal Bahadur Shastri Marg, Vikhroli (West), Mumbai 400 083

Proxy FormShares held ______________

Regd. Folio No. ____________ DP ID No. _________________________ Client ID No. ________________

(Name in BLOCK letters) ________________________________________________________________________________

I/We ___________________________________________ of _______________________________________ in the district of

______________________ being a Member/Members of the above-named Company, hereby appoint _________________

______________________________________________ of _______________________________________ in the district of

___________________________ or failing him _________________________ of _____________________ in the district of

............................................... as my/our proxy to vote for me/us and on my/our behalf at the 78th Annual General Meeting of

the Company to be held on Friday, the 23rd July, 2004.

Signed this ____________day of _________________ 2004.

Note : The Proxy to be effective should be deposited at the Registered Office of the Company not less than 48 hours before thecommencement of the meeting.

Signature _______________ ____________

AffixOne Rupee

RevenueStamp

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1966-671967-681968-691969-701970-711971-721972-731973-741974-751975-76

1976-771977-781978-791979-801980-811981-821982-831983-841984-851985-86

1986-871987-881988-89 (14 months)1989-91 (18 months)1991-92 (15 months)1992-931993-941994-951995-961996-971997-981998-9999-20002000-012001-02 (9 months)2002-032003-04

4.004.004.004.004.004.008.008.00

12.0012.00

12.0012.0012.0012.0012.0012.0012.0012.0012.0012.00

12.0036.0036.0036.0036.0036.0036.0036.0036.0036.00

36.0036.0036.0036.0036.0072.0072.0072.0072.00

180.00

252.00252.00252.00252.00252.00252.00252.00252.00252.00252.00

252.00252.00252.00252.00252.00252.00252.00628.54629.96629.98

630.00630.00630.00630.00775.13775.90775.98776.79

2002.552003.042003.042003.042003.042003.052003.062003.062003.06

----------

-----

25.0025.0025.0025.0025.00

25.0025.0025.0025.0025.0025.0025.0025.0025.0025.00

25.0025.0025.0025.0025.0025.0025.0025.0025.0025.00

25.0025.0025.0025.0025.0025.0025.0025.0025.0025.00

25.0025.0025.0025.0025.0025.0025.0025.0025.0025.00

25.0025.0025.00

--------------

.30

.30

.25

.25

.25

.25

.25

.19

.24

.48

.56

.70

.70

.701.701.701.701.702.709.70

17.701.705.70

12.7015.7018.7019.0021.5024.0025.35

23.3451.1166.7097.62

129.34144.75218.32280.29389.13389.81

391.81427.26472.14492.31468.44355.07260.62216.33301.11320.23

435.82384.81387.43409.90608.98755.81

1861.512046.452253.892057.21

1710.571672.721772.711820.251824.842006.602624.813955.225499.235559.825771.456348.458043.55

10145.179986.63

11948.6814387.18

----------

----------

----------

----------

------

120.00120.00120.00120.00

120.0096.0080.4264.8549.2845.7142.1438.57

1035.001035.00

1035.00990.83

1032.151421.601031.78800.65547.16451.73

7120.587206.417133.237059.896962.166142.135819.927000.007000.00

.58

.53

.53

.50

.84

.941.783.163.424.71

7.308.086.856.025.364.704.664.893.873.99

10.4612.4014.4618.5221.3821.8924.3024.0924.0627.93

29.4237.1638.48

563.22575.97635.20673.22744.67889.87977.45

1154.511250.051420.941473.641541.991580.801677.911776.091825.941890.47

1994.992111.142170.422255.963122.813991.444744.495022.305627.176329.50

6578.916445.076282.706685.516318.247033.207949.798442.899890.04

16083.4117112.4527251.8729566.6434454.4341916.9648911.0854821.32

.58

.58

.53

.50

.84

.641.282.662.823.96

6.407.185.955.124.463.803.011.74

-.04

6.318.25

10.3114.3716.2315.9417.3516.6414.1116.01

17.0125.0624.10

210.51202.46225.06259.40281.65364.65401.22

503.28524.60614.79577.23527.99471.42491.34481.58462.49471.69

508.35594.75595.93582.63

1152.641598.372745.662748.323052.753311.65

3102.102653.762308.822477.792015.472488.913101.732899.084770.48

10493.3810743.3118942.2819839.2123602.2228851.2035820.9636943.13

N.A.N.A.N.A.N.A.N.A.N.A.N.A.N.A.N.A.9.40

62.9669.0445.5090.39

184.58510.53574.57466.69

-175.47

165.70249.76263.14202.49239.24299.04231.57

-345.62415.54

769.15928.37

1080.85913.84

1037.661280.331476.121837.792169.892021.32

1994.931689.722249.822574.572256.932294.292478.092962.993006.502529.62

3485.712903.633146.534181.766916.96

10989.8611021.2310989.899178.048426.38

9885.4912334.3712223.1912794.3311232.5711072.2714292.8522037.4024695.2431170.1337563.5762540.2553077.2256585.9346394.1678923.25

117135.67

.98

.981.38.81.12.44

2.192.672.191.86

1.81(1.90)

.313.584.287.45

10.5910.3310.1412.89

10.928.26

11.209.759.106.228.16

10.6515.3417.73

12.4615.2224.3731.8831.0859.6830.8684.51

120.79114.64

72.7655.3536.6128.86

(37.01)(140.47)(136.27)(55.70)

61.6515.98

(46.25)145.7121.3845.31

233.58184.07422.90513.13231.06

(195.12)

(346.64)21.98

202.61161.0564.95

275.01812.48

1562.961050.63324.51431.97924.66

2139.832653.544274.912865.643567.98

.80

.801.40

.70-

.402.002.802.001.75

---

2.404.206.188.768.561.564.56

4.564.564.565.165.165.165.165.165.166.06

6.066.068.768.768.76

11.4515.9637.5644.7646.43

46.9231.8031.8031.80

1.561.561.56

--

19.81

51.9616.6824.2424.2439.3639.3639.3681.4696.06

1.56

-59.83

102.62113.46

60.3693.25

194.27232.96304.84200.03200.03300.46400.66500.83600.72800.96

1001.20

202035

171/2-

102535

161/3141/2

---

2035456060

-25

2581/381/3101010101010

121/2

121/2121/2

2020202020506025

18121212

-----6

20699

1515151515

-

-9

1618

8122530

171/21010152025304050

Paid up capital Fixed assetsYear Equity

Rs. lacs

Preference

Rs. lacs

Reserves

Rs. lacs

Debentures

Rs. lacs

Gross block

Rs. lacs

Netblock

Rs. lacs

Turnover

Rs. lacs

Netprofit

Rs. lacs

Equitydividend

%

Dividendpaid on

preferenceand equity

shares

Rs. lacs

importantfinancial statistics

Global Reports LLC

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ANNUAL REPORT2003 - 04

H I N D U S T A N C O N S T R U C T I O N C O L T D

H I N D U S T A N C O N S T R U C T I O N C O L T D

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