IVRCL Ltd

To

The Members

The Directors have pleasure in presenting the 23^rd Annual Report and AuditedAccounts for the financial year ended 31^st March 2010.

1. FINANCIAL RESULTS

2. DIVIDEND

Your Directors have pleasure in recommending a dividend of 40% i.e. Rs.0.80 /- ps pershare of Rs.2/ - each (last year Rs.1.40/- per share of Rs.2/- each) on 267,009,858 equityshares of Rs.2/- each for the financial year ended 31^st March, 2010 on theenhanced equity consequent to the bonus issue. The dividend pay out for the year underreview is in accordance with the Company’s policy of suitably rewarding theshareholders besides keeping in view the Company’s need for capital, its growth plansand the intent to finance such plans through internal accruals to the maximum.

3. BONUS SHARES:

The Company issued Bonus Shares in the ratio of 1:1 during March, 2010 as approved bythe Members in the Extra-ordinary General Meeting held on 08.03.2010. Consequently, thepaid-up equity share capital of the Company stands increased from Rs. 26.70 crores to Rs.53.40 crores and the number of equity shares of Rs. 2/- increased from 13,35,04,929 to26,70,09,858.

4. RESERVES

It is proposed to transfer Rs.500.00 million to the General Reserves of the Company,constituting 24% of the profits made during the year. Further, it is proposed to transferRs.315.29 million to Debenture Redemption Reserve.

5. REVIEW OF PERFORMANCE

The financial year 2009-10 is a year of moderate growth. Your company achieved a grossturnover of Rs.54,944.22 million for the year ended 31^st March, 2010 as againstRs.49,830.92 million for the previous financial year, registering an incremental turnoverof Rs.5,113.30 million and recording a growth rate of 10% over the previous year.

The Earnings before Interest, Depreciation, Taxes and Amortisation (EBIDTA) atRs.5,467.77 million are 9.95% of the Gross Turnover for the year under review as against9.06% for the previous financial year and this rate of gross profit compares well withthose of similar other companies.

6. ORDER BOOK POSITION:

The Order Book has increased during the year to Rs.1,68,865.40 million as on 31^stMarch 2010, and has increased further to Rs. 2,33,558 million as on date.

7. FUTURE OUTLOOK

The negative effects of global recessionary conditions are being attenuated by variouscountries through huge investments in infrastructure and India is no exception in thisregard. Hence, your directors are confident that the present environment of investments ininfrastructure by the State and Central Governments assures growth of operations of yourCompany, so as not only to maintain the growth rates achieved in earlier years but alsosurpass the same.

8. SUBSIDIARIES

The statement pursuant to Sec.212 of the Companies Act is at Annexure B. The summarizedfinancial performance of the subsidiaries is at Annexure C.

HINDUSTAN DORR-OLIVER LIMITED

For the financial year ending 31^st March 2010, the company achieved aturnover of Rs.8,711.46 million, an increase of 66.80% compared to previous year. TheProfit after tax has increased from Rs.301.60 million to Rs.555.17million, an increase of84% resulting an EPS of Rs.7.71 ps on Rs.2/-share. The order book of the Company as on31st March 2010 is Rs.13,680 million. The company declared a dividend of 0.80 ps per shareof Rs.2/- each on the increased equity capital on account of 1:1 bonus issue made duringthe year.

IVRCL ASSETS & HOLDINGS LTD., (IVRCL A&H)

IVRCL ASSETS & HOLDINGS LTD., (IVRCL A&H), formerly IVR Prime Urban DevelopersLtd, has amalgamated with itself IVR Strategic Resources & Services Ltd and IVRCLWater Infrastructures Ltd, pursuant to the orders of the Hon’ble High Court ofAndhra Pradesh under sections 391-394 of the Companies Act, 1956, in order to consolidatereal estate and infrastructure development business of the combined entity. The AppointedDate of amalgamation is April 1, 2009 and the Effective Date is 26^th February,2010. Consequent to the amalgamation of IVR Strategic Resources & Services Ltd, andIVRCL Water Infrastructures Ltd, with IVRCL A & H, the Company’s BOOT projects ofSalem Tollways Ltd, Kumarpalyam Tollways Ltd, Jalandhar Amritsar Tollways Ltd, IVRCLBuilding Products Ltd, Chennai Water Desalination Ltd, First STP Ltd, Alkor Petroo Ltdetc., became subsidiaries of IVRCL A & H.

As per the swap ratio stipulated in the approved Scheme, IVRCL A & H issued59,463,572 equity shares to the Company. As a result, the shareholding of the Company inIVRCL A & H increased from 62.35% to 80.46%. Subsequent to this, IVRCL A & Hissued Bonus Shares in the ratio of 1:2.

The name of IVR Prime Urban Developers Ltd has been changed to IVRCL ASSETS &HOLDINGS LIMITED in order to reflect the restructured activities of the Company.

For the financial year ending 31^st March 2010, the company has achieved aturnover of Rs.1431.10 million.

IVRCL Chengapalli Tollways Ltd and IVRCL Holdings & Services Pte.Ltd, Singaporehave been incorporated as subsidiaries of the Company on 3^rd February, 2010 and30^th December, 2009 respectively. The financial information for the purpose ofconsolidation have been prepared by the management which are un-audited, in view of shortaccounting period and no significant volume of operations and turnover and hence thedocuments under section 212 (1) of the Companies Act, 1956 have not been attached.

9. CONSOLIDATION OF ACCOUNTS

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statementsread with Accounting Standard AS-27 on Financial Reporting of Interests in Joint Ventures,your Directors have pleasure in attaching the Consolidated Financial Statements presentedby your Company which forms part of the Annual Report and Accounts.

Profit after tax and minority interest as per the consolidated accounts is Rs. 2,156.02million considering the combined profits net of losses of all the subsidiaries, jointventures and after eliminating unrealized profits from intra-group transactions to thetune of Rs. 2,155.55 million.

10. ISSUE OF FOREIGN CURRENCY CONVERTIBLE BONDS

The Foreign Currency Convertible Bonds (FCCBs) of the value of US $ 65.00 million havebeen issued by the company and listed on the Singapore Stock Exchange and are liable to beconverted into company’s equity shares at an exercise price of Rs.117.02 per share ofRs.2/- each considering an exchange rate of Rs.45.84 per dollar. The bonds of the value ofUS $ 57.40 million were converted into 11,243,024 shares. There was no conversion of bondsas equity shares during the financial year 2009-10. Bonds of the value of US $ 7.60million convertible into 2,977,270 shares are outstanding as on 31.03.2010. In terms ofthe FCCB Issue, the Company shall redeem the Bonds at 142.80% of the principal amount on 9^thDecember, 2010, unless previously converted, redeemed or purchased.

11. ISSUE OF SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES

On 30.09.2009 the company allotted 150 unsecured debentures of face value ofRs.10,00,000/- each for a period of 15 months, to the following, aggregating to Rs.15.00Crores with a coupon rate of 8.75% p.a. payable on maturity and the same were listed onNSE under the Wholesale Debt Segment.

On 27.11.2009 the company allotted 1050 secured redeemable non-convertible debenturesof face value of Rs.10,00,000/- each for a period of 17 months, aggregating to Rs.105.00Crores to the following banks with a coupon rate of 8.85% p.a. payable yearly and balance5 months on maturity and the same were listed on NSE under the Wholesale Debt Segment. Thecompany executed the Debenture Trust Deed.

12. EMPLOYEE STOCK OPTION SCHEMES

Your Company is the first company to introduce stock options in the constructionsector.

The earlier two ESOP Plans viz., IVRCL ESOP 2000 and IVRCL ESOP 2004 have been fullyutilized.

IVRCL ESOP 2007 Scheme:

The members approved granting of 4,200,000 options at the Annual General Meeting heldon 7^th September 2007, underlying 4,200,000 shares of Rs.2/- each. The companyis yet to grant these options to the employees.

The members approved the amendment to the scheme at the Annual General Meeting held on9^th September 2009, modifying the terms relating to Price and TimeLimit. The Scheme as modified is valid upto 6^th September, 2013.

13. PUBLIC DEPOSITS

There are no outstanding public deposits as on 31^st March, 2010.

14. DIRECTORS

Mr. R.Balarami Reddy, Mr. K.Ashok Reddy and Mr. T.N.Chaturvedi retire at theforthcoming Annual General Meeting and being eligible offer themselves for reappointment.The Notice convening the Annual General Meeting includes the proposals for re-appointmentof Directors.

15. CORPORATE GOVERNANCE

Your Directors report that your Company is compliant with the Corporate Governancerequirements as per Clause 49 of the Listing Agreement with the Stock Exchanges. Thecertificate issued by M/s. Chaturvedi & Partners, Chartered Accountants is included inthe Annual Report along with the report on Corporate Governance. The Management Discussionand Analysis of the previous year’s performance is also provided in the AnnualReport.

The Ministry of Corporate Affairs announced the Corporate Governance VoluntaryGuidelines 2009 as well as Corporate Social Responsibility Voluntary Guidelines 2009 whichset out tone for good practices which may be voluntarily adopted by the Corporates. TheCompany is looking into adoption of the same voluntarily.

16. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217 (2AA) of the Companies Act, 1956, withrespect to Directors’ Responsibility Statement, it is hereby confirmed that:

i) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanations relating to material departures;

ii) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31^st March, 2010 and ofthe profit of the Company for the financial year ended on that date.

iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956,for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; and

iv) the Directors have prepared the annual accounts of the Company on a ‘goingconcern’ basis.

17. AUDITORS

M/s. Chaturvedi & Partners and M/s. Deloitte Haskins & Sells, the JointStatutory Auditors, retire at the ensuing annual general meeting and are eligible forreappointment. The Company received confirmation that their appointment, if made, would bewithin the limits prescribed under Sec.224(1B) of the Companies Act, 1956.

Audit of Accounts of Dubai Branch Office:

The Company has availed exemption from audit of financial statements of Dubai Branch asrequired under section 228 of the Companies Act, 1956 for the year ended March 31, 2010 byvirtue of Rule 3 of Companies (Branch Audit Exemption) Rules, 1961.

18. PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956 and the Rulesmade thereunder is provided in Annexure forming part of the Report. In terms of Section219(1)(b)(iv) of the Act, the Report and Accounts are being sent to the shareholdersexcluding the aforesaid Annexure. Any shareholder interested in obtaining copy of the samemay write to the Company Secretary. None of the employees listed in the said Annexure,except Mr. E.Sudhir Reddy, Chairman & Managing Director, is related to any Director ofthe Company.

19. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO

Conservation of Energy, which is an on going process in the Company’s activities.The core activity of the company is civil construction which is not an energy intensiveactivity.

There is no information to be furnished regarding Technology Absorption as your Companyhas not undertaken any research and development activity in any manufacturing activity norany specific technology is obtained from any external sources which needs to be absorbedor adapted.

Innovation is a culture in the Company to achieve cost efficiency in the constructionactivity to be more and more competitive in the prevailing environment and the effect ofthe same cannot be quantified.

The particulars of expenditure and earnings in Foreign currency is furnished in itemNo.B-12 Notes to Accounts in Schedule 19.

20. INDUSTRIAL RELATIONS

The Company enjoyed cordial relations with the employees during the year under reviewand the Management appreciates the employees of all cadres for their dedicated services tothe Company, and expects continued support, higher level of productivity for achieving thetargets set for the future.

21. ACKNOWLEDGMENTS

The Directors wish to express their appreciation of the support and co-operation of theCentral and the State Governments, bankers, financial institutions, suppliers, associatesand subcontractors, and expects the same in future as well for sustaining the growth ratesachieved in the past.

Note :

The company applied for exemption from annexing the Audited statement of accounts, thereports of the Board of Directors and Auditors of the subsidiary companies as requiredunder Section 212(8) of the Companies Act, 1956. The company has since received theexemption from Central Government vide letter No.47/201/2010-CL-III dated June 4, 2010.Accordingly, the documents as per Section 212(1) are not annexed. As required by the saidletter, the information on subsidiary companies is furnished in Annexure B to this Report.Shareholders who wish to have a copy of the full report and accounts of the subsidiarieswill be provided the same on receipt of a written request from them. These documents willbe put up on the company’s web site www.ivrcl.com and will also be available forinspection at the Registered Office of the company on any working day during the businesshours.

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARYCOMPANIES

Financial Information regarding Subsidiary Companies