VSF PROJECTS LIMITEDVijaya Lakshmi, who retires by rotation and being eligible offers herself for re-appointment. 3. To appoint Director in the place of Sri C.R. Sen Gupta who retires

VSF PROJECTS LIMITED

19th

ANNUAL REPORT

2010-2011

2

INDEX

Page Nos.

Company Information 3

Notice & Directors Report 4 - 12

Management Discussion and Analysis Report 13 - 14

Report on Corporate Governance 15 - 23

Auditors Report 24 - 27

Balance Sheet 28

Profit & Loss Account 29

Schedules forming part of accounts 30 - 36

Cash Flow Statement 37

Balance Sheet Abstract 38

Proxy Form & Attendance Slip 39

3

COMPANY INFORMATION

BOARD OF DIRECTORS:

Sri C.R. Sen Gupta - ChairmanSri B.Narayana Murthy - Managing DirectorSri G.S. Ramachandra Rao - DirectorSmt. B. Vijaya Lakshmi - DirectorSri J. Srikanth Babu - DirectorSri A. Satya Prasad - DirectorSri L. Raja Rao - Director (Tech)

AUDITORS : M/s Ramana Reddy & Associates(Formerly known as AM Reddy & Co.)Chartered Accountants,10-5-6/B,My Home PlazaMasab Tank, Hyderabad.Andhra Pradesh

REGISTERED OFFICE : Ankulpatur Village, Chillakur Mandal,SPSR Nellore District,Andhra Pradesh - 524 412.

CORPORATE OFFICE : Plot No.89/A, Aishwarya, Sagar Society,Road No. 2, Banjara Hills,

Hyderabad – 500 034. Andhra Pradeshwww.vsfprojects.com

LISTED AT : The Bombay Stock Exchange Limited,Mumbai

BANKERS : UCO Bank

REGISTRARS & : Aarthi Consultants (P) Ltd.,SHARETRANSFER AGENTS 1-2-285, Near Gaganmahal Hospital

Domalaguda, Hyderabad – 500 029Andhra Pradesh

4

NOTICE

Notice is hereby given that the NinteenthAnnual General Meeting of the members ofthe Company will be held as scheduled below:

Day & Date : Friday, 30th September, 2011

Time : 11.00 A.M.

Venue : Ankulapatur Village, ChillakurMandal, SPSR Nellore District,Andhra Pradesh

to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the AuditedBalance Sheet of the Company as at 31st

March, 2011 and the Profit and LossAccount for the financial year ended onthat date along with the Report of Directorsand the Auditors thereon.

2. To appoint Director in the place of Smt. B.Vijaya Lakshmi, who retires by rotation andbeing eligible offers herself for re-appointment.

3. To appoint Director in the place of Sri C.R.Sen Gupta who retires by rotation and beingeligible offers himself for re-appointment.

4. To appoint M/s Ramana Reddy &Associates, Chartered Accountants, asStatutory Auditors of the Company to holdthe office as such from the conclusion ofthis Annual General Meeting till theconclusion of the next Annual GeneralMeeting and to authorize the Board ofDirectors to fix the remuneration.

SPECIAL BUSINESS :

5. To Consider and if thought fit, to passwith or without modification(s) the

following Resolution as an OrdinaryResolution:

“RESOLVED THAT Sri. L. Rajarao, who wasappointed as an Additional Director of theCompany pursuant to the provisions of Section260 of the Companies Act, 1956 and who holdsoffice as such upto the date of this Annual GeneralMeeting and in respect of whom the Companyhas received a Notice in writing under Section257 read with Section 190 of the said Act, alongwith a deposit of Rs.500/- proposing hiscandidature for the office of Director of theCompany be and is hereby appointed as aDirector of the Company whose period of officeshall not be determinable by retirement ofDirectors by rotation.”

6. To Consider and if thought fit, to passwith or without modification(s) thefollowing Resolution as an OrdinaryResolution:

“RESOLVED THAT pursuant to the provisionsof, Section 269,198,309,310 & 311 read with theSchedule XIII and other applicable provisions ifany of the Companies Act 1956 (including anystatutory modification (s) or re-enactment (s)thereof, for the time being in force) approval ofthe members be and is hereby accorded for theappointment of Shri L. Rajarao as Director(Technical) for a period of 5 (Five) Years with effectfrom 14th March, 2011 on a remuneration ofRs.1,00,000/- Per Month as approved by theRemuneration Committee of the Company.”

“FURTHER RESOLVED THAT incase of absenceof profit or inadequate Profit in any financial Year,the above Remuneration shall be the MinimumRemuneration payable in accordance with theSection II & III of part-II of Schedule XIII ofCompanies act 1956.”

7. To Consider and if thought fit, to passwith or without modification(s) the

5

following Resolution as an SpecialResolution:

“RESOLVED THAT pursuant to the provisions ofsection 198, 269, 309, 310 and 311 read withschedule XIII of the Companies Act, 1956 and otherapplicable provisions, if any, of the Companies Act,and pursuant to Articles of Association and uponrecommendation of Remuneration Committeeremuneration of Mr. B. Narayana Murthy, ManagingDirector of the company be and is hereby increasedfrom Rs.1,00,000 per month to Rs.2,00,000 permonth with effect from 1st October, 2011 for aperiod of 3 years.

8. To Consider and if thought fit, to passwith or without modification(s) thefollowing Resolution as an OrdinaryResolution:

“RESOLVED THAT pursuant to the provisions ofsection 198, 269, 309, 310 and 311, read withschedule XIII of the Companies Act, 1956 andother applicable provisions, if any, of theCompanies Act, and pursuant to Articles ofAssociation and upon recommendation ofRemuneration Committee remuneration of Ms.B. Vijaya Lakshmi, Director of the company beand is hereby increased from Rs.35,000 per monthto Rs 50,000 per month with effect from 1stOctober, 2011.

“FURTHER RESOLVED THAT incase of absenceof profit or Inadequate Profit in any financial Year,the above Remuneration shall be the MinimumRemuneration payable in accordance with theSection II & III of part-II of Schedule XIII ofCompanies act 1956.”

BY THE ORDER OF THE BOARDFor VSF PROJECTS LIMITED

Sd/-Place: Hyderabad (B.N. MURTHY)Date : 25.08.2011 Managing Director

NOTES:

1. A MEMBER ENTITLED TO ATTEND ANDTO VOTE AT THE MEETING ISENTITLED TO APPOINT A PROXY TOATTEND AND VOTE ON A POLL INSTEADOF HIMSELF AND SUCH A PROXYNEED NOT BE A MEMBER OF THECOMPANY. Proxies in order to be effectivemust be received at the Company’sRegistered Office not less than 48 hoursbefore the meeting.

2. The Register of Members and the ShareTransfer Books will remain closed from26th September, 2011 to 30th September,2011 (both days inclusive).

3. Members / Proxies are requested to bringtheir copies of Annual Report with themfor the Annual General Meeting and theattendance slip duly filled in for attendingthe Meeting. No copies of the AnnualReport will be distributed at the meeting.

4. Members are requested to quote theirRegistered Folio No or Demat Account Noand Depository Participant IdentificationNumber (DPID No) on all correspondencewith the Company.

5. Members are requested to send allcommunication relating to shares to theCompany’s RTA M/s Aarthi ConsultantsPvt. Ltd, 1-2-285, Near GaganmahalHospital,Domalaguda, Hyderabad – 500029, Andhra Pradesh

6. Shareholders desiring any informationregarding the Accounts are requested towrite to the company atleast 7 days beforethe date of the Meeting so as to enablethe Management to keep the informationready.

66

7. The Ministry of Corporate Affairs has takena “Green Initiative in the CorporateGovernance” by allowing paperlesscompliances by companies and hasissued circular stating that service ofnotice/documents including annual reportcan be sent by e-mail to its members. Wefully support the Ministry’s green initiative.Accordingly, the members are requestedto inform their e-mail addresses to theirrespective Depository Participants / RTA -M/s Aarthi Consultants Pvt. Ltd, 1-2-285,Near Gaganmahal Hospital,Domalaguda,Hyderabad – 500 029, Andhra Pradesh

8. The information pursuant to Clause 49 ofthe Listing Agreement with respect to thedetails of the Directors seekingappointment / re-appointment in this AnnualGeneral Meeting :

9. Explanatory Statement pursuant to theprovisions of section 173(2) of theCompanies Act, 1956, is annexedherewith.

EXPLANATORY STATEMENT

(Pursuant to section 173(2) of the CompaniesAct 1956)

Item No. 5 & 6

The Board of Directors co-opted Sri. L. Rajaraoas Additional Director w.e.f 14.03.2011. As perthe provisions of Section 260 of the CompaniesAct, 1956, he holds office of director upto thedate of the ensuing Annual General Meeting.

The Company has received notice in writing froma Member of the Company along with a depositof Rs.500/- under Section 257 read with Section190 of the Companies Act, 1956 proposing thecandidature of Sri. L. Rajarao for the Office of

Director whose period of office shall bedeterminable by retirement of Directors byrotation. As per the provisions of Section 257 ofthe Act, any such proposal ought to be approvedby the members in their General Meeting.

Further the Board of Directors in their meetingheld on 14.03.2011, considering his threedecades of experience in the field of Erection,Testing & Commissioning, Operation &Maintenance of Thermal Power Engineeringsegment appointed him as Director ( Technical)of the Company.

Pursuant to the provisions of Section 269 readwith Schedule XIII of the Companies, Act, 1956any such appointment needs to be approved bythe members in their General Meeting.

Hence the resolution is commended for yourapproval.

The profile of the said director is annexed heretounder the head “Additional Information “

None of the Directors except Shri L. Rajarao isinterested or concerned in the passing of aforesaidresolution.

Item No. 7

Sri B. Narayana Murthy, Managing Director ofthe company is instrumental and one of the keymanagement person in the success and smoothrunning of the Company. The board of directorsproposed to increase the remuneration inrecognition of the services rendered by him tothe company and in tune with Industry standards.The proposed remuneration has been approvedby the Remuneration Committee.

The revision in remuneration payable to Mr. B.Narayana Murthy, Managing Director needs tobe approved by the shareholders in general

77

meeting by way of Special Resolution in termsof provisions of Paragraph 1 (B) (iii) of Section IIof Part II and Part III of Schedule XIII of theCompanies Act, 1956.

A statement containing the information requiredunder Paragraph 1 (B) (iv) of Section II of Part IIand Part III of Schedule XIII of the CompaniesAct, 1956.

None of the Directors except B. Narayana Murthyand B Vijaya Lakshmi is interested or concernedin the passing of aforesaid resolution.

Item No. 8

In recognition of the efforts, hard work andcontribution Ms. B Vijaya Lakshmi towards thegrowth of the Company, the board of directorsproposed to increase the remuneration. Theproposed remuneration has been approved by theRemuneration Committee.

The revision in remuneration payable to Ms. BVijaya Lakshmi, Director needs to be approvedby the shareholders in general meeting by wayof ordinary Resolution in terms of provisions ofPart III of Schedule XIII of the Companies Act,1956.

None of the Directors except B. Vijaya Lakshmiand B N Murthy is interested or concerned in thepassing of aforesaid resolution.

STATEMENT PURSUANT TOPARAGRAPH 1 (B) (IV) OF SECTION II OF

PART II OF SCHEDULE XIII OF THECOMPANIES ACT, 1956.

I. GENERAL INFORMATION

(1) Nature of Industry: Infrastucture & PowerGeneration

The company’s business activities primarilyconsist of infrastructure, civil and engineeringworks. The Company has plans to foray intoPower Generation and is proposing to set up 350MW Super Critical Power Project.

(2) Expected date of commencement ofcommercial production: The Company isalready an operational Company. The PowerProject is expected to be commenced in FY 2012– 2013.

(3) In case of new companies, expected dateof commencement of activities as per projectapproved by financial institutions appearingin the prospectus: Not applicable.

(4) Financial performance during last threeyears: (Rs. in lakhs)

Financial Parameters 2009-10 2008-09 2007-08

Total Income 1121.33 954.46 854.78

Profit After Tax 53.84 76.30 45.32

Book Value in Rs 12.04 11.36 9.54

EPS in Rs 1.01 3.54 0.94

(5) Export performance and net foreignexchange earnings: NIL

(6) Foreign investments or collaborations, ifany: NIL

8

II. INFORMATION ABOUT THE APPOINTEE:

1. Background of the Appointee:

Sri B. Narayana Murthy, a diploma holder inMechanical Engineering has vast experience inthe fields of Logistics, Granite Manufacturing,Mining, Aquaculture and Infrastructure Sectors.

He has 25 years rich experience in the field ofmanagement and execution of construction ofIndustrial structures, Cultivation of shrimps,development of lands and buildings. He is thechief promoter of the company. He hadsuccessfully executed many civil works in thelast 7 years. He has actively participated manybusiness excellence meets in Malaysia, SouthAfrica, Hongkong, etc., He looks after operations,Business development, Purchase, Corporateaffairs & finance for all industrial and contractingbusiness and new project ventures.

2. Past remuneration (including contributionto PF, Superannuation fund and Gratuityfund) for last 3 years:

(Amt in Rs./ pm)

2009-10 2008-09 2007-08

40,000 40,000 40,000

3. Recognition and awards: NIL

4. Job profile and his suitability:

(a) Job Profile

� He will exercise the management controlover the whole of the affairs of theCompany.

� Providing leadership and strategicguidance to the Company

� Profitable operations of the Companythrough efficient and optimum utilization

of Company’s resource viz., man,material and money.

� Entering into strategic tie-ups andalliances for advancement of thebusiness of the Company.

� Development of new businesses.� Employee satisfaction.� Customer satisfaction.

(b) Suitability

Sri B. Narayana Murthy is the chief promoter ofthe Company. He has been at the helm of theaffairs since inception. Under his able leadershipand guidance the Company has reachedunprecedented heights and sailed through thelean phase successfully. He has vast experiencein the fields of Logistics, Granite Manufacturing,Mining, Aquaculture and Infrastructure Sectors.Given the profile of Sri B. Narayana Murthy, it isimperative that he be shouldered withresponsibility of Managing Director and draws theremuneration as proposed.

5. Remuneration proposed: As detailed in theresolution.

6. Comparative remuneration profile withrespect to industry, size of the Company,Profile of the position and person (in case ofexpatriates the relevant details would bew.r.t. the country of his origin

The proposed remuneration to the appointeeis in line with the remuneration comparable tothe size of the Company and also that of theindustry and of the position and person.

7. Pecuniary relationship directly orindirectly with the Company, or relationshipwith the managerial personnel, if any:

Sri B. Narayana Murthy has no pecuniaryrelationship directly or indirectly with the

9

Company except to the extent of his remunerationand shareholding in the Company. Sri Sri B.Narayana Murthy is the Husband of Smt. B VijayaLakshmi, Director of the Company.

III. OTHER INFORMATION:

(1) Inadequate profits:

The Company has achieved profits from itsoperations during the year and it is expected toearn profits in the future years also. The Companyis seeking the permission of the shareholders forpaying remuneration to Sri B. Narayana Murthy,Managing Director, in any of the three years ofhis appointment, in accordance with the provisionsas laid down in Part II in Section II to ScheduleXIII of the Companies Act, 1956, only in the eventthe Company has no profit or inadequate profitsin any such financial year.

(2) Steps taken or proposed to be taken forimprovement: The Company is plans toexpand its scale of operations.

(3) Expected increase in productivity andprofits in measurable terms: The Company isproposing to setup 350 MW super critical powerproject in its WOS, however, the actual revenuesand commencement of generation of power maytake some time.

IV. DISCLOSURES : The details of theremuneration package, benefits and detailsare provided in Corporate GovernanceReport

ADDITIONAL INFORMATION(pursuant to Clause 49 VI (A) of the Listing

Agreement)

1. Shri L. Rajarao, 58 years, has done Masterof Engineering with specialization in Powersystems, have 31 years of vast experience inthe field of Erection, Testing &

Commissioning, Operation & Maintenance ofThermal Power Engineering segment. He hasworked in various positions in APGENCO till31st July, 2010. He had successfullycompleted implementation of KakatiyaThermal Power Project Stage -1 (1x 500 MW)project at Chelpur Village, Ghanpur Mandal,Warangal District in July, 2010.

Shri L. Rajarao, neither holds any directorshipnor membership of any committee, other thanthat of the Company.

Shareholding in the Company : Nil

2. Shri. C R Sen Gupta, 86, Chairman, isBachelor of Commerce and PG Diploma inBanking, having 30 years rich experience inthe field of banking and capital marketsincluding as a former Chairman and ManagingDirector United Bank of India (1982-85), oneof the largest public sector commercial banksin India and also Executive Director of IDBIBank in (1969 - 1982).

Shri. C R Sen Gupta, neither holds anydirectorship nor membership of anycommittee, other than that of the Company.

Shareholding in the Company : Nil

3. Smt. B. Vijaya Lakshmi, 47, Director,Bachelor of Arts, and having 12 years richexperience in the field of cultivation of aquaculture. And also she looks after entireadministrative and human resourcedevelopments.

She is Director in SNEHA AQUA PRIVATELIMITED and VSF ENERGY PROJECTSPRIVATE LIMITED

Shareholding in the Company : 2,87,500 Equityshares (4.90%)

1010

DIRECTORS’ REPORT

Your Directors hereby present the NINETEENTHANNUAL REPORT together with the AuditedAccounts of the company for the financial yearended 31ST March, 2011.

FINANCIAL HIGHLIGHTS:

The performance of the company for thefinancial year ended 31st March, 2011 issummarized below.

(Rupees In Lakhs)

PARTICULARS 2010-11 2009-10

Gross Income 1735.42 1121.33Total expenditure 1603.52 1026.42Profit before Interest & Depreciation 170.48 99.58Interest 16.93 5.46Depreciation 21.65 9.35Profit before tax 131.89 80.08Current Tax 24.45 11.51Deferred tax 15.10 14.72Profit/(Loss) after tax 92.33 53.84Balance Carried forward fromprevious years -19.26 -73.11Balance Carried forward toBalance Sheet 73.07 -19.26

OPERATIONS AND PERFORMANCE:

During the year under review, your company hasseen all round growth in revenues and profitability.The Company has generated income ofRs.1735.42 Lakhs during the current year ascompared to Rs.1121.33 Lakhs during theprevious year an increase of 54.76% and net profitstood at Rs.92.33 as compared to Rs.53.84Lakhs during the previous year an increase of71.47%. The company was able to achieve higherprofits on account effective cost control andeconomies of scale.

The shareholders of the Company have throughpostal ballot accorded approval to the Board ofDirectors for hiving of the proposed 350 MW SuperCritical Thermal Power Project to its Whollyowned Subsidiary M/s VSF Energy ProjectsPrivate Limited as Slump Sale under section 293(1) (a) of the Companies Act, 1956. The resultsof the postal ballot were announced on 08th June,2011.

DIVIDEND:

In view of the inadequate profits, your Directorsdo not recommend any dividend for the financialyear 2010-11.

Re Issue of Forfeited Shares :

During the year the Board of Directors of theCompany at its meeting held on July 01, 2010,have reissued 5,15,400 equity at Rs. 12.50/- pershare, to Non Promoters, which were earlierforfeited by the Board for nonpayment of callmonies. The Company has applied for listingpermission to BSE and is waiting for the approvalof the same.

SUBSIDIARY COMPANY

In order to execute the proposed 350 MW SuperCritical Thermal Power Project, the companyincorporated Wholly owned Subsidiary M/s VSFEnergy Projects Private Limited on 07th March,2011.

Since the company was incorporated in the lastmonth of the financial year, no accounts havebeen made for the said subsidiary for the FY 2010-11, Statement u/s 212 of the companies Act, 1956.

FIXED DEPOSITS:

The company has neither accepted nor renewedany deposits falling within the provisions of

11

Section 58A of the Companies Act, 1956 readwith the Companies (Acceptance of Deposits)Rules, 1975 from the public during the financialyear.

DIRECTORS:

Smt. B. Vijaya Lakshmi and Sri C.R. Sen Guptaretire at the ensuing Annual General Meeting andbeing eligible, offer themselves for re-appointment.

AUDITORS:

M/s. Ramana Reddy & Associates (Formerlyknown as AM Reddy & Co.), CharteredAccountants, Hyderabad, the Statutory Auditorsof the Company retire at the conclusion of ensuingAnnual General Meeting & being eligible, offerthemselves for re-appointment. They havefurnished a certificate stating that their re-appointment, if made, will be within the limits laiddown under Section 224(1B) of the CompaniesAct, 1956. The Board recommends their re-appointment for the FY 2011-12.

PARTICULARS OF EMPLOYEES: There are no employees whose particulars arerequired to be furnished under Section 217(2A)of the Companies Act, 1956 read with Companies(Particulars of employees) Rules, 1975, and asamended from time to time as remuneration ofnone of the employees is in excess ofRs.5,00,000/- per month, if employed for the partof year or Rs.60,00,000/- per annum during thefinancial year 2010-11.

DIRECTORS’ RESPONSIBILITY STATEMENT:

The Directors of your Company hereby report:

(i) That in the preparation of Annual Accountsfor the financial year ended 31st March,2011, the applicable accounting standards

have been followed along with the properexplanation relating to material departures,if any, there from;

(i) That the directors have selected suchaccounting policies and applied themconsistently and made judgments andestimates that are reasonable and prudentso as to give a true and fair view of thestate of affairs of the company at the endof the financial year and of the profit andloss of the company for that period:

(iii) That the directors have taken proper andsufficient care for the maintenance ofadequate accounting records inaccordance with the provisions of this Actfor safeguarding the assets of the companyand for preventing and detecting fraud andother irregularities

(iv) That the directors have prepared the annualaccounts for the financial year ended 31st

March 2011 on a going concern basis.

CONSERVATION OF ENERGY, TECHNOLOGYABSORPTION, FOREIGN EXCHANGEEARNINGS AND OUTGO:

The details regarding Energy Conservation,Technology Absorption, Foreign ExchangeEarnings and Outgo as required by section217(1)(e) of the Companies Act, 1956 read withthe Companies (Disclosure of the particulars inthe report of the Board of Directors) Rules, 1988are given as Annexure A and forms part of thisreport.

MANAGEMENT DISCUSSION AND ANALYSISREPORT:

Management Discussion and Analysis Report,pursuant to Clause 49 of the Listing Agreementforms part of this Report and is annexed hereto.

12

CORPORATE GOVERNANCE:

The Company has implemented the proceduresand adopted practices in conformity with the Codeof Corporate Governance enunciated in Clause49 of the Listing Agreement with the StockExchanges. A separate report on CorporateGovernance is annexed herewith, as a part of theAnnual Report along with the Auditor’s Certificateon its compliance.

LISTING:

Your Company’s shares are presently listed onThe Bombay Stock Exchange Limited, Mumbai.

ACKNOWLEDGEMENTS:

Your directors acknowledge the continued supportfrom its management and staff. Your Directorsalso wish to thank its customers, vendors, banks,service providers as well as regulatory andgovernment authorities for their support andcooperation.


Sd/- Sd/-(B. VIJAYA LAKSHMI) (B.N. MURTHY)

Director Managing Director

Place: HyderabadDate : 25.08.2011

Annexure – A

INFORMATION UNDER SECTION 217(1)(e) OFTHE COMPANIES ACT, 1956, READ WITHCOMPANIES (DISCLOSURE OFPARTICULARS IN THE REPORT OF THEBOARD OF DIRECTORS) RULES, 1988.

A. CONSERVATION OF ENERGY:

i. The Company is very careful in using thepower to reduce the cost of maintenanceand conserve the resources and constantlyevaluates new technologies and invests tomake its infrastructure more energy-efficient

ii. The Company has not made any additionalinvestments and has not proposed anyamount for reduction of consumption ofenergy.

iii. There is no impact of the measures at (i)and (ii) above for reduction of energyconsumption and consequent impact onthe cost of production of goods.

iv. Disclosure under Form A is not applicableto the Company.

B. TECHNOLOGY ABSORPTION: FORM B(Disclosure of particulars with respect to

technology Absorption)

i) Research and Development (R & D) :

Specific areas in which R & D carried out by theCompany : NILBenefits derived as a result of the above

: NILFuture plan of action : NILExpenditure on R & D : NIL

13

ii) Technology absorption, adaptation andinnovation : NIL

C) FOREIGN EXCHANGE EARNINGS ANDOUTGO:

Activities relating to exports and initiatives takento increase export products, servicesand export plans :

Foreign Exchange earnings and outgo:(on receipts and payments basis)

Particulars 2010-11 2009-10

Foreign Exchange Earnings Nil NilForeign Exchange Outgo Nil Nil


Sd/- Sd/-(B. VIJAYA LAKSHMI) (B.N. MURTHY)

Director Managing Director


MANAGEMENT DISCUSSION & ANALYSIS

OVERVIEW:

The financial statements have been prepared incompliance with the requirements of theCompanies Act, 1956, guidelines issued by theSecurities and Exchange Board of India (SEBI)and other statutory requirements. OurManagement accepts responsibility for theintegrity and objectivity of these financialstatements, as well as for various estimates andjudgments used therein. The estimates andjudgments relating to the financial statementshave been made on a prudent and reasonable

basis, so that the financial statements reflect ina true and fair manner the form and substance oftransactions and reasonably present our state ofaffairs, profits and cash flows for the year.

INDUSTRY STRUCTURE ANDDEVELOPMENT:

ECONOMIC OVERVIEW

According to the latest numbers made availableby Central Statistical Office (CSO), India’s GDPat factor cost at constant prices registered anincrease of 8.5 percent in the year 2010-11.Thisrevised estimate of 8.5 percent growth for GDPin 2010-11 is only a shade below the advanceestimates that had pegged GDP growth for 2010-11at 8.6 percent. The GDP growth range for theyear 2011-12 is expected to be 8 to 8.5 percent.The inputs and projections provided by variousparticipating economists show that while theagriculture and allied activities sector is projected to grow by 3.7 percent this year, industry andservices sector are poised to grow by 8 percentand 9.2 percent respectively. The key risks togrowth in India in the current year are the negativeimpact of continuous tightening of monetary policyby RBI and a slowdown in global growth due tovarious reasons.

INDUSTRY OVERVIEW

The lack of infrastructure has been one of themajor constraints on India’s growth potential andaspirations. Government’s focused initiativestowards infrastructure creation with activeparticipation of the private sector will hold key to growth of Indian Economy. For bridging theinfrastructure deficit and for sustaining a highergrowth rate, the Eleventh Five Year Planenvisages a total investment of Rs.2,056,150crore in infrastructure as against Rs. 887,794 crorerealized during the Tenth Plan. This ambitioustarget cannot be met with public resources

1414

alone.The Eleventh Plan, therefore, projects that30% of the required investment will be madethrough private sector participation; whichtranslates to private sector investment of Rs.619,591crore as compared to Rs.175,203 croreduring the Tenth Plan.

FINANCIAL PERFORMANCE & OUTLOOK:

During the year under review, your company hasseen all round growth in revenues and profitability.The Company has generated income ofRs.1735.42 Lakhs during the current year ascompared to Rs.1121.33 Lakhs during theprevious year an increase of 54.76% and net profitstood at Rs.92.33 as compared to Rs.53.84Lakhs during the previous year an increase of71.47%. The company was able to achieve higherprofits on account effective cost control andeconomies of scale.

The Company is proposing to set up 350 MWSuper Critical Thermal Power Project throughits Wholly owned Subsidiary M/s VSF EnergyProjects Private Limited. The Company has gotall the major clearances and is awaiting finalapproval.

OUTLOOK

VSF Projects Ltd is geared up to participate inthe infrastructure development of the country andit shall reap rich dividends from the forthcominginfrastructure boom and create substantial valuefor all its stakeholders.

OPPORTUNITIES & THREATS

Infrastructure Industry: The continued thruston infrastructure projects including highways /expressways, will bring lot of opportunities forIndia and your Company.

Power Generation: The necessity for addition

of power generation capacity of the country andthe various incentives provided by the Governmentof India for private sector participation indevelopment of power will be key to thedevelopment of Power projects.

General: The Indian Economy is expected togrow at over 8% p.a. in the medium term. Theenvisaged to be driven by investments ininfrastructure including Roads, Ports, PowerSector etc. These factors are expected topositively impact the prospects of demand formCompany’s products.The Company has the mechanism to combat therisks of exposure to Business, Assets andFinancial Risks in the form of competition,accidents, natural calamities, obsolescence, andfluctuations in foreign currency etc. Themanagement of your company is on constant vigilto combat any eventuality that may pose threatto the company’s business.

RISKS & CONCERNS

1. Infrastructure sector is dependent onpolitical stability.

2. Contract Payment Risk3. Un organized Sector4. Shortage of Labor and Employees.

INTERNAL CONTROL SYSTEM AND ITSADEQUACY

The philosophy we have with regard to internalcontrol systems and their adequacy has beenformulation of effective systems and their strictimplementation to ensure that assets andinterests of the Company are safeguarded;checks and balances are in place to determinethe accuracy and reliability of accounting data.The Company has a well defined organizationstructure with clear functional authority, limits forapproval of all transactions. The Company has astrong reporting system, which evaluates and

1515

forewarns the management on issues related tocompliance. Company updates its internal controlsystem from time to time, enabling it to monitoremployee adherence to internal procedures andexternal regulatory guidelines.

PERSONNEL:

Human wealth is the ultimate wealth in for anyindustry. The Company recognizes this fact andunderstands that employees are one of the mostimportant sources for sustained growth of anybusiness. Quality personnel delivering theiroptimum potential for the organization is the keydifferentiator. The Company maintained goodrelations with its employees and there was nounrest in the Company at any point of time.

Industrial relations in the organization continuedto be cordial and progressive.

HEALTH AND SAFETY:

The Company places considerable emphasis onhealth and safety throughout its operation anddisplays commitment to ensure the highstandards being maintained in compliance withapplicable laws and regulations.

FORWARD LOOKING / CAUTIONARYSTATEMENT:

Certain statements in the ManagementDiscussion & Analysis Report detailing theCompany’s objectives, projections, estimates,expectations or predictions may be forwardlooking statements within the meaning ofapplicable securities laws and regulations. Thesestatements being based on certain assumptionsand expectation of future event, actual resultscould differ materially from those expressed orimplied. Important factors that could make adifference to the Company’s operations includeeconomic conditions affecting domestic demand

supply conditions, finish goods prices, changesin Government Regulations and Tax regime etc.The Company assumes no responsibility topublically amend, modify or revise any forwardlooking statements on the basis of subsequentdevelopments, information or events.

REPORT ON CORPORATE GOVERNANCE

1. COMPANY’S PHILOSOPHY ON THE CODEOF GOVERNANCE

The Company believes in transparency,empowerment, accountability and integrity in itsoperations duly delegated authority to variousfunctional heads that are responsible for attainingthe corporate plans with the ultimate purpose ofenhancement of “Stake holder value”.

Moreover, the Company believes that soundCorporate Governance practices that provide animportant platform to assist the management andthe Board in delivering its responsibilities. TheCompany has always been taking the spirit ofvarious legislations as guiding principles and hasdone well beyond simple statutory compliance.The Board of directors of the company has theresponsibility of protecting the long term interestsof all the stakeholders, while adhering to soundprinciples of corporate governance.

The Company has professionals on its Board ofDirectors who are actively involved in thedeliberations of the Board on all important policymatters.

2. BOARD OF DIRECTORS

The Company upholds the policy of having anoptimum combination of Executive, Non-Executive and Independent Directors to ensureindependent, transparent and professionalconduct of Board Procedures in all aspectsrelated thereto. The Chairman is non - executivedirector and the number of Independent Non-

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executive directors is 50% of the Board strengthat any point of time.

During the Financial year ended 31st March, 2011,Board of Directors met 6 times and gap betweentwo Board meetings did not exceed four months.None of the Directors on the Board is a memberin more than 10 committees and none of themact as Chairman of more than five committeesacross all companies in which he is a Director.

❖ 30.04.2010❖ 01.07.2010❖ 31.07.2010❖ 11.11.2010❖ 31.01.2011❖ 14.03.2011

The attendance at the Board Meetings conductedduring the 12 months period ended 31st March,2011 and at the Annual General Meeting as alsothe number of Directorships and committeememberships (other than VSF Projects Limited)are given below:

Name Category No. Attendance No. of Memberships

of the of the of at the in other companies

Director Directorship Board last (excluding private

meetings AGM limited

attended Companies)

Boards Commit

tees

C.R.Sengupta Chairman

Independent

& Non

Executive 3 No Nil Nil

B.N. Murthy Managing

Director -

Executive 6 Yes Nil Nil

GSRamachandra Director -

Rao Non Executive 6 No Nil Nil

B.Vijaya Lakshmi Director -

Executive 6 Yes Nil Nil

J Srikanth Babu Director –

Independent&

Non Executive 6 No Nil Nil

A. Satya Prasad Director -

Independent &

Non Executive 6 Yes Nil Nil

L. Raja Rao Director 0 No Nil Nil

(appointed Executive

w.e.f. 14.03.2011)

3. AUDIT COMMITEE

Terms of Reference:

a. To review the results and announcement,and the report and accounts at the end ofa quarter, half year and the full year beforesubmission to the Board, focusingparticularly on:

(i) Any changes in accounting policiesand practices.

(ii) Compliance with acceptedaccounting standards.

(iii) Compliance with the Listing andother Legal requirements

(iv) Major Judgmental Decisions; etc.

b. To consider appointment of StatutoryAuditors, the Audit Fee, and any matter ofresignation and dismissal.

c. To discuss with the Statutory Auditor,before the audit commences, the natureand scope of the Audit.

d. To discuss problems and reservationsarising from the statutory audit, and anymatters the statutory auditor may wish todiscuss.

17

e. To consider other matters as may bedelegated by the Board from time to time.

Composition of Audit Committee:

The Audit Committee provides assistance to theBoard of Directors in fulfilling its oversightresponsibilities. The Audit committee has beenentrusted with the responsibilities as laid downunder Clause 49 of the Listing Agreement, to theextent applicable and required. The Committeeis constituted by:

Shri A Satya Prasad -ChairmanShri G S Ramachandra Rao -MemberShri J Srikanth Babu -Member

Meetings during the year:

During the Financial year ended 31st March, 2011,the Audit Committee met 5 times as follows, andall the members were present in each of suchmeetings.

❖ 30.04.2010❖ 01.07.2010❖ 31.07.2010❖ 11.11.2010❖ 31.01.2011❖ 14.03.2011

The Company continued to derive immensebenefit from the deliberations of the AuditCommittee. Shri A Satya Prasad, who is headingthe Audit Committee as Chairman has richexperience and professional knowledge inFinance and Accounts. The members alwaysadded value for the Company.

4. REMUNERATION COMMITTEE:

Terms of Reference:

The terms of reference as per Clause 49 of theListing Agreement is to determine and review the

remuneration, performance, and related bonusesof Executive Director(s), if any.

Composition

The remuneration committee consist of thefollowing directors :

Shri J Srikanth Babu - ChairmanShri G S Ramachandra Rao - MemberShri A Satya Prasad - Member

Remuneration paid to Directors during theFinancial year 2010 -2011:

Executive Directors : Sri B N Murthy , ManagingDirector Rs.1,00,000/- p.m.

Sri L Rajarao, Director (Technical) Rs.1,00,000/-pm

Sri B. Vijaya Lakshmi, Director Rs.35,000/- pm

a) Disclosures as required under SectionII of Part II of Schedule XIII

(i) All elements of remuneration package suchas salary, benefits, bonuses, stock options,pension, etc. of all the directors :

Name of the Salary & TotalDirector Perquisites

p.m.

BN Murthy 1,00,000 1,00,000

BVijaya Lakshmi 35,000 35,000

L Rajarao 1,00,000 1,00,000

Non - Executive Directors : NIL

Shareholding of Non-Executive Director:None of the Non-Executive Directors of theCompany holds any share in the Company.

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5. SHAREHOLDERS / INVESTORSGRIEVANCE COMMITTEE

Composition

The committee consist of the following directors:

Shri B.N Murthy ChairmanSmt. B Vijaya Lakshmi MemberShri. J Srikanth Babu Member

The Committee looks into the shareholder’s andinvestor’s complaints. Most of the complaintsreceived from the shareholders have beenresolved.

The number of complaints pending as on 31stMarch, 2011 is Nil.

6. SHARE TRANSFER COMMITTEE

The process of share transfers is entrusted withRegistrars and Share Transfer Agents of theCompany, M/s Aarthi Consultants Pvt. Ltd., , whoattends to the said task as and when therequisitions are received.

The Share transfer committee meets fortnightlyevery month to approve transfer of shares, if anyand also overviews the work of M/s AarthiConsultants Pvt. Ltd., on regular intervals.

Composition

Shri B.N Murthy ChairmanSmt. B Vijaya Lakshmi MemberShri. J Srikanth Babu Member

7. MANAGEMENT DISCUSSION ANDANALYSIS REPORT:

A Report of the Management Discussion andAnalysis is attached as part of the Annual Report.

8. GENERAL BODY MEETINGS:

The last three Annual General Meetings of thecompany were held at the Regd. Office of theCompany at Ankulpatur Village, Chillakur Mandal,Nellore District, Andhra Pradesh.

Year AGM Venue Day & Date Time

2008 16th Ankulpatur Village Thursday, 11:00 A.M.

Chillakur Mandal, 25th September,

Nellore District, 2008

Andhra Pradesh


Chillakur Mandal, 31st December,


Andhra Pradesh


Chillakur Mandal, 30th September,


Andhra Pradesh

Special Resolutions:

No Special Resolutions have been passed in theprevious 3 AGM’s.

Postal ballot:

Postal Ballot Notice Dated 30.04.2010

The Board of Directors sought the approval ofmembers of the Company by way of specialresolution through Postal Ballot to amend theMain Objects Clause of the Memorandum ofAssociation of the Company by inserting subclause 6 after the existing Clause III (A) (5), soas to include Objects relating to Power and forRe Issue of Forfeited shares on Preferential basis,subject to obtaining of necessary approvals fromconcerned authorities.

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The Postal Ballot Notice issued on 30th April,2010 along with Postal Ballot Forms and the self-addressed envelopes, pursuant to Section192A(2) of the Companies Act, 1956, for passingthe above Resolutions by postal ballot, wasdispatched to the members of the Company on12th May, 2010.

The Board of Directors at its meeting held on30th April, 2010 had appointed Shri P.S. Rao, ofM/s P.S. Rao & Associates, CompanySecretaries, Hyderabad as Scrutinizer to receiveand scrutinize the ballot forms received from theMembers and for conducting the Postal Ballotprocess in a fair and transparent manner.

The Postal Ballot Forms and the self-addressedbusiness reply envelopes were also sent for useof Members. The shareholders were requestedto return the postal ballot forms duly completedalong with the assent (for) or dissent (against),so as to reach the scrutinizer on or before 11thJune, 2010.

Mr. P.S.Rao, Company Secretary in Practice,Hyderabad submitted his report dated 12th June,2010 with the Company and based on the saidreport, results of Postal Ballot were declared on12th June, 2010 as under:

Item No. of No. of Votes Votes

No. valid invalid cast in cast

ballots ballots favour against

received received

1 37 Nil 33,99,597 Nil

(100 .00%)

2 37 Nil 33,99,597 Nil

(100 .00%)

The Resolutions were approved unanimously bythe shareholders. The results were also informedto the Bombay Stock Exchange and necessary

Forms filed with the Registrar of Companies, A.P.

� No special resolution is proposed to beconducted through postal ballot in the AGM.

9. DISCLOSURES:

a) Related Party Transaction (Shown inNotes to Accounts)

There are no materially significant relatedparty transactions i.e., transactionsmaterial in nature, with its promoters, theDirectors or the Management, theirsubsidiaries or relatives, etc., havingpotential Conflict with the interests ofCompany at large.

b) Details on non-compliance by thecompany, penalties and strictures imposedon the company by stock Exchange orSEBI or any statutory authority, on anymatter related to capital markets, duringthe last three years: None

c) Details of compliance with mandatoryrequirements and adoption of non-mandatory requirements of the clause.

Pursuant to sub-clause VII of clause 49 ofthe listing agreement, the Companyconfirms that it has complied with allmandatory requirements prescribed.

As regards non-mandatory requirements,a Remuneration Committee has beenformed to evaluate remuneration packagesfor directors and senior staff members.

d) C.E.O. Certification

Sri B N Murthy (Managing Director) andSmt B Vijaya Lakshmi Director certified

20

to the Board on the prescribed matters asrequired under Clause 49 of the ListingAgreement and the said Certificate wasconsidered by the Board at its meeting heldon 25.08.2011.

10. MEANS OF COMMUNICATION:

a. Quarterly Financial Results are furnishedwithin the time frame to all the concernedStock Exchanges as per clause 41 of theListing Agreement and the same aredisplayed on the company’s website.

b. No presentations were made to theanalysts or institutional investors during theyear under review except the results aremailed electronically to those who haverequested for regular information.

c. All material information about the Companyis promptly sent through facsimile to theStock Exchanges where the Company’sshares are listed and the same aredisplayed on the company’s website.

11. GENERAL SHAREHOLDERINFORMATION:

Annual General Meeting :

Day, Date and time : Friday, 30th September,2011 at 11:00 A.M.

Venue : Ankulapatur Village, Chillakur Mandal,Nellore District, Andhra Pradesh

Book Closure Date : 26th September, 2011 to30th September, 2011 (both days inclusive)

Dividend : No dividend is recommended for theyear.

Listing on Stock Exchanges : The BombayStock Exchange Limited, Mumbai

The Company has paid the annual listing fees forthe year 2011-12 to the stock exchange.

Scrip Code Number : 519331

ISIN Number for NSDL & CDSL :INE923K01014

Distribution of Shareholdings as on31.03.2011:

Equity shares No.of % Amount %holding of share ( in Rs)Nominal Value holders(Rs)

Upto 5000 8426 97.43 832574 14.195001 to 10000 74 0.86 51784 0.8810001 to 20000 44 0.51 55180 0.9420001 to 30000 35 0.40 87500 1.4930001 to 40,000 6 0.07 21168 0.3640001 to 50000 11 0.13 54300 0.9350001 to 100000 6 0.07 47500 0.81100001 & above 46 0.53 4718944 80.41

Total 8648 100.00 5868950 100.00

Market Price Data : The closing market priceof the equity shares as on 31ST March, 2011 wasRs. 60.90 /- on BSE

The monthly movement of the equity share priceduring the year on BSE are summarised here inbelow:

Month High Low No. of SharesTraded

Jun-10 11.94 9.90 500Jul-10 31.72 12.01 3100Aug-10 44.4 33.25 4100Dec-10 34.5 34.5 100Jan-11 52.05 29.65 14000Feb-11 70.1 49.2 21791Mar-11 71.4 57.85 7962

21

Registrars and Transfer Agents : ShareTransfers & Communication regarding ShareCertificates, Dividends & Change of Address maybe sent to

M/s Aarthi Consultants Pvt. Ltd,1-2-285, Near Gaganmahal Hospital,Domalaguda, Hyderabad – 500 029,Andhra Pradesh

Share Transfer System :

The R & T Agent process the Physical ShareTransfers and the Share Certificates are returnedto the shareholder within a maximum period of30 days from the date of receipt, subject to thedocuments being valid and complete in allrespects. All share transfers are approved by theShare Transfer Committee, which meets everyfortnight.

The company obtains half yearly Certificate ofCompliance with the Share Transfer formalitiesas required under clause 47 ( C ) of the ListingAgreement with Stock exchanges from aCompany Secretary in practice and the same issubmitted to the Stock Exchanges within theperiod prescribed.

All requests for Dematerialization of shares areprocessed and the confirmation is given to therespective Depositories, i.e, National SecuritiesDepository Limited (NSDL) and CentralDepository Services (India) Limited (CDSL), within15 days of receipt.

Outstanding GDR’s / ADR’s / Warrant or anyconvertible instruments, conversion date andlikely impact on Equity:

The Company has not issued any of theseinstruments till date.

Plant Location:

Ankulpatur Village, Chillakur Mandal, SPSRNellore District

Secretarial Audit:

A qualified practicing Company Secretary carriesout Secretarial Audit every quarter to reconcilethe total admitted capital with National SecuritiesDepository Limited (NSDL) and CentralDepository Services (India) Limited (CDSL) andthe total issued and listed capital. The auditconfirms that the total issued/paid up capital isin agreement with the aggregate total number ofshares in physical form and the total number ofdematerialized shares held with NSDL and CDSL.

Address for correspondence:

Corporate Office : Plot No.89/A,Aishwarya, Sagar Society,Road No. 2, Banjara Hills,,Hyderabad – 500 034Andhra Pradesh

Email : [email protected]

Nomination Facility:

Shareholders holding shares in physical form anddesirous of making a nomination in respect oftheir shareholding in the Company as permittedunder Section 109A of the Companies Act, 1956are requested to submit to the Company theprescribed Form 2B for this purpose.

22

Code of Conduct for the Board & SeniorManagement Personnel:

The Company has laid down a Code of Conductwhich has been effectively adopted by the BoardMembers and Senior Management Personnel ofthe Company.

DECLARATION OF COMPLIANCE OF CODE OFCONDUCT

VSF Projects Limited has adopted a Code ofBusiness Conduct and Ethics (the Code) whichapplies to all the employees and Directors of the

Company. Under the Code, it is the responsibilityof all the employees and directors to familiarizethemselves with the code and comply with itsstandards.

I hereby certify that the Board of Members andSenior Management Personnel of the Companyhave affirmed compliance with the Code of Conductof the Company for the year 2010-11.

Sd/-Date : 25.08.2011 (BN Murthy)Place : Hyderabad. Managing Director

Statement pursuant to Section 212 of the Companies Act, 1956.1 Name of the Subsidary & Registered Office: VSF Energy Projects Private Ltd

Plot No. 89/A, Aiswarya, 3rd Floor,Street No. 8, Sagar Society, Road No.2,Banjara Hills, Hyderabad - 500034

2 The Financial Year of the subsidiary companyentered on : 31.03.2011

3 Number of shares in the subsidiary company heldby Holding Company at the above date : - Equity shares 10000 shares of Rs. 10/- each - Equity holding (%) 100%

4 The net aggregate of profits(losses) of the subsidiary companyfor its financial year so far as they concern the members of Holding company - Dealt with the accounts of Holding Company - - Not dealt with the accounts of Holding Company -

5 The net aggregate of profits(losses) of the subsidiary companyfor its previous financial years so far as they concern themembers of Holding company - Dealt with the accounts of Holding Company - - Not dealt with the accounts of Holding Company -

6 Changes in the interest of Holding Company between the endof the last financial year and 31.03.2011 NA

7 Material Changes between the end of the last fiancial year and NIL31.03.2011

BY THE ORDER OF THE BOARD For VSF PROJECTS LIMITEDB N MURTHY B. VIJAYA LAKSHMI

Managing Director DirectorPlace: HyderabadDate: 25.08.2011

23

CERTIFICATE FROM AUDITORS REGARDING COMPLIANCE OF CONDITIONS OFCORPORATE GOVERNANCE

ToThe Members,VSF Projects LimitedHyderabad

We have examined the compliance of conditionsof corporate governance by VSF ProjectsLimited for the year ended 31st March, 2011, asstipulated in clause 49 of the Listing Agreementof the Company with Stock Exchanges.

The compliance of the conditions of the corporategovernance is the responsibility of theManagement. Our examination was limited toprocedures and implementation thereof, adoptedby the company for ensuring the compliance ofthe conditions of the Corporate Governance. It isneither an audit nor expression of the opinion onthe financial statements of the Company. In ouropinion and to the best of our information andaccording to the explanations given to us, wecertify that the Company has complied with theconditions of Corporate Governance as stipulatedin the above mentioned listing agreement.

We state that no investor grievances were pendingfor a period exceeding one month against theCompany as per the records maintained by theCompany.

We further state that such compliance is neitheran assurance as to the future viability of thecompany nor the efficiency or effectiveness withwhich the management has conducted the affairsof the company.

FOR P.S. RAO & ASSOCIATES,COMPANY SECRETARIES

Sd/-(P. S. RAO)

PartnerCP No. 3829

Place: HyderabadDate: 25.08.2011

24

AUDITORS’ REPORT

The Members ofVSF PROJECTS LIMITED,HYDERABAD.

1. We have audited the attached BalanceSheet of M/s.VSF PROJECTS LIMITED asat 31st March, 2011, Profit and Loss Accountand also the Cash Flow Statement for theyear ended on that date annexed thereto.These financial statements are theresponsibility of the Company’smanagement. Our responsibility is toexpress an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance withauditing standards generally accepted inIndia. Those Standards require that we planand perform the audit to obtain reasonableassurance about whether the financialstatements are free of materialmisstatement. An audit includes examining,on a test basis, evidence supporting theamounts and disclosures in the financialstatements. An audit also includesassessing the accounting principles usedand significant estimates made bymanagement, as well as evaluating theoverall financial statement presentation. Webelieve that our audit provides a reasonablebasis for our opinion.

3. As required by the Companies (Auditor’sReport) Order, 2003 issued by the CentralGovernment of India in terms of sub-section(4A) of section 227 of the Companies Act,1956 of India (the Act) and on the basis ofsuch checks as we considered appropriateand according to the information andexplanations given to us, we set out in theannexure a statement on the matters

specified in paragraphs 4 and 5 of the saidorder.

4. Further to our comments in the Annexurereferred to in paragraph 3 above, we reportthat:

(i) We have obtained all the informationand explanations, which to the best ofour knowledge and belief werenecessary for the purposes of our audit;

(ii) In our opinion, proper books of accountas required by law have been kept bythe company so far as appears from ourexamination of those books;

(iii) The Balance Sheet, Profit and LossAccount and Cash Flow Statementdealt with by this report are in agreementwith the books of account;

(iv) In our opinion, the Balance sheet, Profitand Loss Account and Cash FlowStatement dealt with by this reportcomply with the accounting standardsreferred to in sub-section (3C) of section211 of the Companies Act, 1956;

(v) On the basis of written representationsreceived from the directors, as on 31st

March, 2011, and taken on record bythe Board of Directors, we report thatnone of the directors is disqualified ason 31st March, 2011 from beingappointed as a director in terms ofclause (g) of sub-section (1) of section274 of the Companies Act, 1956;

(vi) In our opinion to the best of ourinformation and according to theexplanations given to us, the saidaccounts together with the notesthereon and attached thereto give in the

25

prescribed manner the informationrequired by the Companies Act, 1956and give a true and fair view in conformitywith the accounting principles generallyaccepted in India:

(a) In the case of the Balance Sheet,of the state of affairs of theCompany as at 31st March 2011;

(b) In the case of the Profit and Lossaccount, of the Profit for the yearended on that date; and

(c) In the case of Cash FlowStatement, of the cash flows for theyear ended on that date.

for RAMANA REDDY & ASSOCIATESCHARTERED ACCOUNTANTS

FIRM REG. NO. 003246S

PLACE: HYDERABAD.DATE: 25.08.2011

(CA. Ramana Reddy A.V.)PARTNER

Membership No. 024329

ANNEXURE TO THE AUDITORS’ REPORT( Referred to in paragraph (3) of our report of

even date )

1. (a) The company has maintained properrecords showing full particulars includingquantitative details and situation of fixedassets.

(b) The fixed assets of the company havebeen physically verified by themanagement during the year as per aprogramme of verification, which in ouropinion is reasonable having regard tothe size of the company and the natureof its fixed assets. No materialdiscrepancies were noticed on suchverification.

(c) In our opinion and according to theinformation and explanations given to us,during the year, the company has notdisposed off any substantial part of itsfixed assets so as to affect its goingconcern.

2. (a) The stocks of construction materials,stores and consumables have beenphysically verified by the managementduring the year, in our opinion, thefrequency of verification is reasonable.

(b) In our opinion and according to theinformation and explanations given to us,the procedures of physical verification ofstocks followed by the management arereasonable and adequate in relation tothe size of the company and the natureof its business.

(c) On the basis of our examination ofrecords of stocks, in our opinion, thecompany has maintained proper recordsof stocks. The discrepancies noticed on

26

physical verification between the physicalstocks and the book records were notmaterial.

3. (a) The company has not granted any loanssecured or unsecured to companies,firms or other parties listed in the registermaintained u/s.301 of the Act.

(b) The company has not taken any loanssecured or unsecured from companies,firms or other parties listed in the registermaintained u/s.301 of the Act.

4. In our opinion and according to the informationand explanations given to us, there isadequate internal control systemcommensurate with the size of the companyand the nature of its business. Further, onthe basis of our examination and informationand according to the explanations given tous, we have neither come across nor havewe been informed of any instance of majorweaknesses in the aforesaid internal controlsystem.

5. (a) In our opinion and according to theinformation and explanations given to us,the particulars of contracts orarrangements that need to be enteredinto the Register maintained undersection 301 of Act, have been so entered.

(b) In our opinion, and according to theinformation and explanations given to us,the company has not made any contractsor arrangements that need to be enteredin the register maintained under section301 of the Act, and exceeding the valueof five lakh rupees in respect of any partyduring the year.

6. In our opinion and according to the informationand explanations given to us, the company

has not accepted any deposits from thepublic to which the provisions of sections58A, 58AA or any other relevant provisionsof the Companies Act, 1956 and the rulesframed thereunder are applicable.

7. The company has no internal audit system.

8. The maintenance of cost records has not beenprescribed by the Central Government underclause (d) of sub-section (1) of section 209of the Companies Act, 1956.

9. (a) We were informed that the provisions ofProvident Fund Act and Employees StateInsurance Act are not applicable to thiscompany during the year under report.However, the company is regular indepositing with appropriate authoritiesundisputed statutory dues includingincome tax, sales tax, wealth tax,service tax, custom duty, excise duty,cess and other material statutory duesas applicable to it.

(b) According to the information andexplanations given to us, no undisputedamounts payable in respect of incometax, wealth tax, service tax, sales tax,customs duty, excise duty and cesswere in arrears, as at 31st March, 2011for a period of more than six months fromthe date they became payable.

10. The company has neither accumulatedlosses as on 31.03.2011 nor it has notincurred any cash losses during the financialyear ended on that date or in the immediatelypreceding financial year.

11. The company has not defaulted in repaymentof dues to banks, financial institutions etc.,during the year.

27

12. The company has not granted any loans andadvances on the basis of security by way ofpledge of shares, debentures and othersecurities.

13. In our opinion, the company is not a chit fundor a nidhi mutual benefit fund/ society.Therefore, the provisions of clause 4(xiii) ofthe Companies (Auditor’s Report) Order, 2003are not applicable to this company.

14. The company has maintained proper recordsof transactions and contracts in respect ofinvestments and timely entries have beenmade therein. All the investments have beenhold by the company in its own name.

15. The company has not given any guaranteesfor loans taken by others, from banks orfinancial institutions, the terms andconditions, whereof, in our opinion, are primafacie prejudicial to the interest of thecompany. .

16. During the year under report, the companyhas not availed any term loan from banks orfinancial institutions.

17. According to the information andexplanations given to us and on an overallexamination of the balance sheet of thecompany, we report that the no funds raisedon short-term basis have been used for long-term investment.

18. According to the information andexplanations given to us, the company hasnot made any preferential allotment of sharesto parties and companies covered in theregister maintained under section 301 of theAct, 1956.

19. According to the information andexplanations given to us, during the periodcovered by our audit report, the company hasnot issued any debentures.

20. The company has not raised any money bypublic issue, during the year.

21. According to the information andexplanations given to us, no fraud on or bythe company has been noticed or reportedduring the course of our audit.


FIRM REG. NO. 003246S

(CA. Ramana Reddy A.V.)PARTNER


PLACE: HYDERABAD.DATE: 25.08.2011

28

Balancesheet as at 31.03.2011Particulars Schedule As at As at

No 31.03.11 31.03.10

Rs Rs Rs RsSOURCES OF FUNDS:SHAREHOLDERS FUNDS: - Share Capital A 58689500 56468500- Reserves & Surplus B 40372724 28843875LOAN FUNDS - Secured loans C 23953791 15550843- Unsecured loans D 183924 183924TOTAL 123199939 101047142APPLICATION OF FUNDSFixed Assets E - Gross Block 59317459 58365638- Less Depreciation 7777598 5612491Net Block 51539861 52753147Investments F 99990 0Curent Assets, Loans & Advances G - Sundry Debtors 135130196 19445909- Cash & Bank Balances 460776 1813527- Inventories 1237736 8449736- Loans & Advances 36499374 24882964

173328082 54592136Less Curent Liabilities & Provisions H - Current Liabilities 103453999 12629422 - Provisions 2445424 1237363

105899423 13866785Net current Assets 67428659 40725351Deferred Tax asset 4131429 5642134Profit & Loss A/c 0 1926510TOTAL 123199939 101047142Notes on Accounts L

Notes, Schedules, Cash Flow Statement & Significant Accounting Policies form an integral part of Balancesheet.Vide our report of even date For and on behalf of the Boardfor Ramana Reddy & Associates Sd/-Chartered Accountants (B. VIJAYA LAKSHMI)Firm Regn. No. 003246S Director

Sd/- Sd/-(CA. Ramana Reddy A.V.) (BN MURTHY)

Partner Managing DirectorMembership No. 024329Place: HyderabadDate : 25.08.2011

28

29

Profit and Loss Account for the year ended 31st March, 2011Particulars Schedule As at As at

No 31.03.11 31.03.10

Rs Rs Rs RsINCOME:Gross Receipts 173542903 112133824(Sub contract & Farm receipts) TOTAL 173542903 112133824

EXPENDITURE:Operating & Contract Expenses I 146892089 96170237Administrative expenses J 7543563 6005223Financial charges K 3752156 1014132Depreciation 2165107 935415

160352915 104125007

Net Profit for the year before Tax 13189988 8008817

Less: Provision for Taxation - Current Tax 2445424 1237363 - Deferred Tax 1510705 1386581

3956129 2623944Net profit after tax 9233859 5384873Add: Balances brought forwad from previous years -1926510 -7311383 TOTAL 7307349 -1926510Notes on Accounts L

Notes, Schedules, Cash Flow Statement & Significant Accounting Policies form an integral part of Balancesheet.Vide our report of even date For and on behalf of the Boardfor Ramana Reddy & Associates Sd/-Chartered Accountants (B. VIJAYA LAKSHMI)Firm Regn. No. 003246S Director

Sd/- Sd/-(CA. Ramana Reddy A.V.) (BN MURTHY)

Partner Managing DirectorMembership No. 024329


29

30

SCHEDULES TO ACCOUNTS As at As at

31.03.11 31.03.10

Rs. Rs.

SCHEDULE-A:SHARE CAPITAL:Authorised - 80,00,000 Equity shares Rs.10/- each 80000000 60000000 (in the previous year 60,00,000 equity shares of Rs.10/- each.)

Issued, Subscribed and Paidup - 58,68,950 equity shares Rs.10/- each 58689500 53535500 fully paidup (previous year 53,53,550equity shares of Rs.10/- each)

Add : Shares Forfeited 0 2933000TOTAL 58689500 56468500

SCHEDULE - BRESERVES & SURPLUS- Forfeited shares reserve 2933000 0- Revaluation reserve 20843875 20843875- Secuirities Premium 9288500 8000000- Profit & Loss Account 7307349 0TOTAL 40372724 28843875

SCHEDULE - CSECURED LOANS- Hire Purchase Finance from: Reliance Finance Ltd 545561 1154859 SREI Equipment Finance Pvt. Ltd 6219781 14395984- Overdraft with Uco Bank 17188449 0TOTAL 23953791 15550843

SCHEDULE - DUNSECURED LOANS- From Shareholders & Others 183924 183924TOTAL 183924 183924

31

SCHEDULE - E:FIXED ASSETS:

Description of the Asset Gross Block Depriciation Block Net block

As at Add/Del As at Upto for the Total As at As at01.04.10 during the 31.03.11 01.04.10 year as at 31.03.11 31.03.10

year 31.03.11

Rs Rs Rs Rs Rs Rs Rs Rs

Land & Site Development 28092000 0 28092000 0 0 0 28092000 28092000

Buildings 7697050 0 7697050 3933171 257081 4190252 3506798 3763879

Plant & Machinery 9051029 0 9051029 97062 429925 526987 8524042 8953967

Office Equipments 408909 227984 636893 248530 19424 267954 368939 160379

Furniture & Fixtures 240891 657437 898328 160483 46117 206600 691728 80408

Computers 102630 66400 169030 51519 22889 74408 94622 51111

Vehicles - Tippers 9736002 0 9736002 365036 1101142 1466178 8269824 9370966

Vehicles - Others 3037127 0 3037127 756690 288529 1045219 1991908 2280437

Total 58365638 951821 59317459 5612491 2165107 7777598 51539861 52753147

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As at As at31.03.11 31.03.10

SCHEDULE-F: Rs. Rs. Rs. Rs.INVESTMENTS :In Equity Shares of Subsidiary CompanyVSF Energy Projects Pvt.Ltd 99990 0(9999 equity shares of Rs.10/-each) TOTAL 99990 0SCHEDULE - GCURRENT ASSETS, LOANS & ADVANCESInventories 1237736 8449736(Fire wood & Timber)Sundry Debtors(Unsecured, Considered Good)- Debts outstanding for a period 7191896 964772 exceeding six months- Other Debts 127938300 18481137

135130196 19445909Cash & Bank Balances- Cash in hand 224989 790636- Balance with Scheduled Banks in Current Accounts 235787 1022891

460776 1813527Loans & Advances- Deposits 9323006 8352545- Advance for Materials 9270294 9370000- Investments in power division 8507974 0- IT Refund Receivable 5810108 4342690- Prepaid expenses 121866 112948- TDS receivable 3466126 2477424- TCS Receivable 0 227357

36499374 24882964 TOTAL 173328082 54592136SCHEDULE - HCURRENT LIABILITIES & PROVISIONSCURRENT LIABILITIES- Creditors for Suppliers 4261623 6226623- Creditors for Expenses 99192376 1834013- Advance from Customers 0 3702119- Advance for Lease 0 866667

103453999 12629422PROVISIONS - For Taxation 2445424 1237363 TOTAL 105899423 13866785

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SCHEDULE - I: Current PreviousYear YearRs Rs

OPERATING &

CONTRACT EXPENDITUE:

- Materials & Consumables 17579500 26507096

- Machinery & Vehicles Hire charges 2514110 2735941

- Earthwork expenses 126798479 66927200

TOTAL 146892089 96170237

SCHEDULE - J: Current PreviousYear YearRs Rs

ADMINISTRATIVE EXPENSES

- Rent 486000 640400- Rates & Taxes 120712 7725- Salaries & Wages 3153870 2490000- Staff Welfare 8295 11951- Electricity charges 101105 53410- Office Maintenance 39796 86461- Postage & Telegrams 176730 58023- Printing & Stationary 32590 71360- Telephone charges 138777 108347- Travelling expenses Directors 398139 804706 Others 71530 86826- Computer Maintenance 6570 6340- Internet charges 14233 8836- Insurance charges 259049 157258- Directors’ Remuneration 1620000 480000- Audit fee 100000 75000- Professional charges 158038 258804- Registration & Licence fee 279314 241564- AGM Expenses 152200 74000- Board Meeting Expenses 17300 52252- Tender exp. 200000 206000- Advertisement 9315 25960TOTAL 7543563 6005223

SCHEDULE - KFINANCIAL CHARGES- Interest on Cash Credit 1693870 0- HP Financial Charges 1363487 546935- Bank charges 585199 467197- Loan Processing Charges 109600 0TOTAL 3752156 1014132

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SCHEDULE – L

NOTES ON ACCOUNTS

1. Disclosure of Significant AccountingPolicies:

a) Basis of Preparation:The financial statements are prepared underthe historical cost convention and complyin all material respects with the mandatoryAccounting Standards issued by theInstitute of Chartered Accountants of Indiaand the relevant provisions of the CompaniesAct, 1956 and the same is prepared on agoing concern basis.

b) Fixed Assets:All fixed assets are stated at cost ofacquisition inclusive of freight, duties, taxesand other incidental charges related toacquisition.

c) Revenue Recognition:All revenue income and expenditure arerecognized on accrual concept ofaccounting.

d) Depreciation:Depreciation on fixed assets has beenprovided on straight line method at the ratesspecified in Schedule XIV of the CompaniesAct, 1956 on pro-rata basis.

e) Inventories:Inventories are stated at the lower of costand net realizable value.

f) Earning per Share:The Company reports its Earnings per Share

(EPS) in accordance with AccountingStandard 20 issued by the Institute ofChartered Accountants of India.

g) Taxes on Income:The current charge for income tax iscalculated in accordance with the relevanttax regulations applicable to the company.Deferred tax asset and liability is recognizedfor future tax consequences attributable tothe timing differences that result betweenthe profit offered for income tax and the profitas per the financial statements. Deferredtax asset & liability are measured as perthe tax rates / laws that have been enactedor substantively enacted by the BalanceSheet date.

h) Provision, Contingent Liabilities andContingent Assets:Provisions involving substantial degree ofestimation in measurement are recognisedwhen there is a present obligation as a resultof past events and it is probable that therewill be an outflow of resources. ContingentLiabilities are not recognised but aredisclosed in Notes. Contingent Assets areneither recognised nor disclosed in thefinancial statements.

2. Contingent Liabilities : NIL

3. Subsidiary Company:The company has got approval for settingup of thermal power project at NelloreDistrict. In this regard, the company hasincorporated the subsidiary company “VSFEnergy Projects Private Limited” on 7th

March, 2011.

34

35

4. Auditors Remuneration:Particulars Current Previous

Year YearRs. Rs.

As Auditors 60000 40000

Tax Audit fee 25000 20000

Other services 15000 15000

Total 100000 75000

5. Managerial Remuneration:Current Previous

Year YearRs. Rs.

Managing Director 1200000 480000

Directors 420000 —

Total 1620000 480000

6. Particulars of Employees required inpursuant to the Provisions of Sec. 217(2A)of the Companies Act, 1956 read with theCompanies (Particulars of Employees)Rules, 1975 - Nil.

7. There are no separate reportable segments(business and/or geographical) inaccordance with the requirements of

Accounting Standard 17 – ‘SegmentReporting’, notified in the companies(Accounting Standards) Rules 2006.

8. Consolidated Financial Statements: Thesubsidiary “VSF Energy Projects PrivateLimited” has incorporated on 7th March,2011. The first year accounts of thesubsidiary company will be closed by 31st

March, 2012, therefore the consolidation offinancial statements for the year ended 31st

March, 2011 is not applicable.

9. Disclosure under Micro, Small and MediumEnterprises Development Act, 2006

There are no Micro and Small ScaleBusiness Enterprises, to whom theCompany owes dues, which are outstandingfor more than 45 days as at March 31, 2011.This information as required to be disclosedunder the Micro, Small and MediumEnterprises Development Act, 2006 hasbeen determined to the extent such partieshave been identified on the basis ofinformation available with the Company.

10. Balances of Sundry Debtors, Advances andSundry Creditors are subject to confirmationwith the respective parties.

35

11. Earnings Per Share:

The numerators and denominators used for calculation of EPS

Particulars Year ended Year ended31-03-11 31-03-10

Rs Rs

a) Profit available to the Equity shareholders 8655077 5384873b) No. of Equity shares 5868950 5353550c) Weighted Average No. of Shares 5740453 3091632c) Nominal value of share 10 10d) Basic Earning per Share 1.47 1.74

36

12. Transactions with the Related Parties pursuant to Accounting Standard 18:

i. List of Related Parties

Key Management Personnel : Sri. B.N.Murthy,Managing Director

Whole-Time DirectorB. Vijaya Lakshmi

ii. Transactions with Related PartiesRemuneration to Managing Director Rs. 12,00,000/-Remuneration to Whole-Time Director Rs. 4,20,000/-

iii. Balance as on 31st March, 2011 Rs. 1,79,109/-

13. Taxes on Income:

(a) Provision has been made for tax as per sec. 115JB.

(b) In compliance with the Accounting Standard AS 22 Accounting for Taxes on Income issued bythe Institute of Chartered Accountants of India, the company has provided Rs.13,83,500/- to-wards deferred tax liability in the year 2010-11. The major components of deferred tax asset /liability are on account of timing differences in depreciation, carried forward of losses and Mini-mum alternate tax.

14. Paise have been rounded off to the nearest rupee.

15. Previous year figures have been regrouped wherever necessary.

16. Additional information pursuant to Provisions of Part II of Schedule – VI of the Companies Act,1956 is not applicable to this company since the company is involved in contract work activitiesand farm is on lease.

Notes, Schedules, Cash Flow Statement and statement on accounting policies form an integralpart of the balance sheet and profit and loss account.

SIGNATURES TO SCHEDULE A TO K

VIDE OUR REPORT OF EVEN DATE FOR AND ON BEHALF OF THE BOARDFor RAMANA REDDY & ASSOCIATESCHARTERED ACCOUNTANTSFirm Regn. No.003246S (B. VIJAYA LAKSHMI)

DIRECTOR

(CA. RAMANA REDDY A.V.)PARTNER (BN MURTHY)

Membership No. 024329 MANAGING DIRECTOR

PLACE : HYDERABADDATE : 25.08.2011

37

CASH FLOW STATEMENT FOR THE YEAR ENDED 31.03.2011(As required under Clause 32 of the Listing Agreement with Stock Exchange)

Particulars As at As at31.03.11 31.03.10

Rs Rs

A. CASH FLOW FROM OPERATING ACTIVITIES:Net Profit / Loss 13189988 8008817Adjusted for:Depreciation 2165107 935415Operating Profit before Working Capital Charges 15355095 8944232Adjustment for:Decrease / (Increase) in Sundry Debtors -115684287 34179228Decrease / (Increase) in Loans & Advances -11616410 -9560086Decrease / (Increase) in Inventories 7212000 -8449736Increase / (Decrease) in Current Liabilities & Provisions 90824577 -17992359Income Tax Paid -1237363 -658930Net Cash Flow from operating Activities -15146388 6462349B. CASH FLOW FROM INVESTMENT ACTIVITIES:Fixed Assets additions -951821 -20209132Investments -99990 0Net Cash Flow from Investment Activities -1051811 -20209132C. CASH FLOW FROM FINANCIAL ACTIVITIESIncrease / (Decrease) in Share Capital 2221000 32000000Increase / (Decrease) in Securities Premium 4221500 8000000Proceeds from Secured Loans 8402948 15121368Proceeds / (Repayment) from Unsecured Loans 0 -40000000Net Cash Flow from Financing Activities 14845448 15121368Net increase in Cash & Cash Equivalents -1352751 1374585Cash and Cash Equipvalents at the benginning of the year 1813527 438942Cash and Cash Equipvalents at the end of the year 460776 1813527VIDE OUR REPORT OF EVEN DATE FOR AND ON BEHALF OF THE BOARD

Sd/- Sd/-Place: Hyderabad (B.N. MURTHY) (B. VIJAYA LAKSHMI)Date: 04.09.2010 Managing Director Director

AUDITORS’ CERTIFICATEWe have examined the attached Cash Flow Statement of M/s.VSF Projects Limited for the year ended 31st March, 2011. Thestatement has been prepared by the company in accordance with requirements of Clause 32 of Listing Agreement with the StockExchange and is based on and in agreement with the corresponding Profit & Loss A/c and Balance Sheet of the Companycovered by our report of 25th August, 2011 to the Members of the Company.

Place: HyderabadDate: 25.08.2011


Firm Regn. No. 003246S Sd/-

(CA. RAMANA REDDY A.V.) PARTNER


38

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE(As per Part IV of Schedule VI of the Companies Act, 1956)

I. Registration Details:

Date of incorporation : Registration No: State Code Balance sheet Date

04.06.1992 014326 01 31.03.2011

I I . Capital raised during the year (Amount in Rs.thousands)

Public Issue Right Issue Bonus Issue Pvt. Placement

Nil Nil Nil 2221

I I I . Position of Mobilisation and Deployment of funds (Amount in Rs.thousands)

Total Liabilities 123200 Total Assets 123200

Sources of Funds:

Paidup Capital Reserves & Surplus Secured Loans Unsecured loans

58690 Nil 23954 184

Application of Funds:

Net Fixed Assets Net Current Assets Investments Misc. Expenditure Accumulated Losses

51540 67429 Nil Nil Nil

IV. Performance of the Company (Amt.Rs. in thousands)

Turnover & Other Income Total expenditure Profit/Loss before tax Profit/loss after tax

173543 160353 13190 9234

Earning per share Dividend Rate

1.47 Nil Nil

V. Generic Names of three principle products / services company (as per monetary norms)

Item code No. (ITC Code) Product Description

Infra Projects and Power Generation

Vide our report of even date For and on behalf of the Board of Directors

Sd/-(B. VIJAYA LAKSHMI)

Director

Sd/-Place: Hyderabad (BN MURTHY)Date :25.08.2011 Managing Director

39

VSF PROJECTS LIMITEDRegd.Off: Ankupatur Village, Chillakur Mandal, SPSR Nellore District, Andhra Pradesh

PROXY FORMRegd. Folio No. : No. of Shares Held:

Client ID No. :

I/We …………………………………………….................……………………................……………………

of ………………………….....………………………………………...................……………………… in the

District of ………………………………….................………………..........……………………….. being a

member/members of the above named company hereby appoint ….............................……………. of

………………………………....…………………………………........………………………. in the District of

…………………………………………………………………………… as my/our Proxy to attend and to votefor me/us on my/our behalf at the 19h Annual General Meeting of the Company to be held on Friday,30th September, 2011 at 11.00 A.M. at Ankulpatur Village, Chillakur Mandal, SPSR Nellore District,Andhra Pradesh and at any adjournment thereof.

Signed this ………………............….. day of ………….............………………. Two Thousand Ten.

Note: This Proxy Form duly completed should be deposited at the Registered Office of the Company notless the 48 (Forty Eight) hours before the time fixed for holding the meeting.

VSF PROJECTS LIMITEDRegd.Off: Ankupatur Village, Chillakur Mandal, SPSR Nellore District, Andhra Pradesh

ATTENDENCE SLIP(Please present this slip at the Meeting Venue)

19th ANNUAL GENERAL MEETING – 30th September, 2011

Regd. Folio No. : No. of Shares Held:

Client ID No. :

I hereby record my presence at the 19th ANNUAL GENERAL MEETING of the members of the Companyheld on Friday, 30th September, 2011 at 11.00 A.M. at Ankulpatur Village, Chillakur Mandal, SPSRNellore District, Andhra Pradesh.

Name of the Shareholder: …………………………………………………………………

Name of the Proxy: ………………………………………………………………………...

Signature of Member / Proxy: …………………………………………………………….

AffixRs.1/-Stamp

40

If undelivered please return to:VSF PROJECTS LIMITED,Corp.Off: Plot No.89/A, Aiswarya,Street No. 8, Sagar Society, Road No. 2, Banjara Hills,Hyderabad - 500 034. Phone : 040-40102929

BOOK POST(Printed Matter)

To

Documents

VSF PROJECTS LIMITEDVijaya Lakshmi, who retires by rotation and being eligible offers herself for re-appointment. 3. To appoint Director in the place of Sri C.R. Sen Gupta who retires