IVRCL Ltd

Industry Overview

India is a fast-growing economy with a dynamic and robust financial system. Thegovernment has identified infrastructure as a key driver for 9-10 per cent growth duringthe 12^th Plan ending 2017. The Prime Minister’s mid term appraisal of the11th five-year plan suggests that investment in infrastructure during the 12th plan wouldneed to be of the order of about $1025 billion to achieve a share of 9.95 percent as aproportion of GDP. While this is twice the 11th five-year plan’s infrastructureinvestment of $500 billion, 50% of the one trillion dollar investment is expected to befrom the private sector. This huge investment plan clearly points to the fact thatinfrastructure would continue to be the growth engine for the economy in the near future.Therefore, the strategy for infrastructure development will involve a combination ofpublic investment supplemented by private investments wherever feasible. The mix will varyfrom sector to sector and region to region.

India is on the march. While the global slowdown has hurt us too, we have been able tocatch our breath and move forward… We now have the economic pre-conditions, for,sustained high growth brings with it new challenges and new opportunities. We need abetter education system. We need a better health care system. We need investment ineducation and health care. We need modern infrastructure. It is through theapplication of modern science and technology that we hope to march forward.

Prime Minister Dr. Manmohan Singh

Infrastructure sector remains to be the main focus for the government as it hasreceived 46% of total planned allocation in this year’s budget with a provision ofRs.1,73,552 crore for upgrading infrastructure in both rural and urban areas. Majoremphasis has been given to development of high quality physical infrastructure such asroads, ports, airports and railways. Allocation of Rs.40 billion towards the developmentof rural roads is in line with previous budgets with Rs.99.9 billion for planned spendingon national highways. Though allocations for the roads and highways sector have beenprovided, implementation may be slow due to policy ambiguity at the state and centralgovernment levels and delays on account of land acquisition. The refinance facilityprovided by IIFCL to banks will improve the credit availability for infrastructureprojects such as BOT road projects undertaken by the private sector and facilitate inachieving financial closure for projects.

Among the government initiatives, the Jawaharlal Nehru National Urban Renewal Mission(JNNURM) is qualitatively different aiming to scale up planned and integrated developmentof urban infrastructure and services involving a series of reforms over a seven yearprogram (2006-12), covering 63 mission cities with an envisaged investment of overRs.1,000 billion.

JNNURM, as a reform driven agenda, has been instrumental in laying foundation with over70 percent of the projects sanctioned for improving basic urban services like watersupply, sewerage, storm water drainage and solid waste management. So far, 297 projectsworth Rs.347.61 billion have been sanctioned for these sectors. Another governmentinitiative with objectives similar to the JNNURM is the Urban Infrastructure DevelopmentScheme for Small and Medium Towns (UIDSSMT), launched in 2005 to improve civic services in5,098 cities / towns (those not covered under the JNNURM). Since its inception, a total of691 projects worth Rs.123.85 billon in 558 towns have been approved under the UIDSSMT.

Like the JNNURM, water supply projects have been accorded the highest priority underthe UIDSSMT as well. A total of 367 water supply projects comprising about 53 percent ofthe total projects have been approved at a cost of Rs.70.64 billion. While the launch ofsuch novel and progressive schemes as the JNNURM and UIDSSMT provide a platform fordeveloping and sustaining urban infrastructure services, besides opening up opportunitiesfor companies as ours for water and environment based projects.

IVRCL – Forging ahead by unlocking value

On the backdrop of the impetus provided by infrastructure growth thus throwing upimmense opportunities for the construction sector, your Company has continued to exhibitits remarkable acumen and success in bagging projects in a cross section sectors takingits order book to Rs.2,33,558 Million combined while sustaining its strong financialstrack record. While we are consistently making efforts to increase our presence in thecore sectors of the infrastructure space, the company has continued its dominatingpresence in the water and irrigation segments. The execution of projects and translationinto revenues has also kept pace. Moreover, our strong customer focused approach and ourbelief in managing our fundamentals well has kept us ahead.

Aside of being a market leader in Water, IVRCL’ s integrated business inirrigation and its continued presence in transportation, buildings & industrialconstruction and Power Transmission contracts has ensured the bagging of some of the verylarge and prestigious projects, besides continuing to get regular orders in other areas aswell. Of its total order book as of now, 47% comprises water projects, 31% of roads andhighways, 16% of buildings works, and the balance 6% of power and other projects.

The Company’s continued interest and foray into emerging lines of businesses suchas oil & gas, hydropower, railways, mining and power generation hold much promise forthe Company in the coming years.

WATER

Orders are flowing for water and waste water treatment industry and the Indian watertreatment industry is estimated to be about Rs. 20 Billion and growing at 15 to 20 %annually including the Rs 12 Billion industrial water treatment sector and Rs 8 Billionpoint of consumption market which involves localized water treatment. The water industrysize in India is about Rs.60 billion and the industrial water and waste water treatmentmarket size would be around Rs.30 billion and the drinking water purification market wouldtotal around Rs.20 billion.. The growth rates in the last 3 years have hovered in thevicinity of 18-20 percent. The global market would be about $ 50 billion. Good Watermanagement is crucial to overcome the water crisis that threatens our country. We mustcreate an infrastructure that ensures sustainable water supply for the country’sagricultural, industrial and domestic use.

To IVRCL, Water continues to be the dominant business vertical which provides everysolution for all types of water and sanitation needs. With an enviable track record andproven capabilities and credentials in the industry, IVRCL continues to be uniquelypositioned to take harness tremendous opportunities in the water sector. We are capturingthe potential in this vertical by investing in constructing, owning and operating waterprojects across the country. With the ever increasing water demand be it for irrigation,drinking or industrial purposes, several states in India such as, Madhya Pradesh, UttarPradesh Karnataka and Rajasthan to name a few, have launched massive irrigation schemes,reservoirs projects, drinking water schemes comprising treatment plants and vast pipelinesystems to augment their available water resources effectively. Hence irrigation systems,infrastructure for drinking water and industrial water and recycling of waste water shallcontinue to remain the long term demand drivers.

Irrigation – IVRCL continues to be the undisputed leader in irrigationprojects across the country. IVRCL has in the recent times, bagged some significantprojects including the Kosi Canal System in Bihar, besides pursuing potentialopportunities emerging in other states as well.

While we are currently executing major irrigation projects in Andhra Pradesh, namely,Telugu Ganga Stage-3, Sripad Sagar Stage-II; Phase-1, Kalwakurthi Lift IrrigationScheme-Package 28 and Koil Sagar Stages 1 & 2 and the HNSS Phase-1,Pranahitha-Chevella Lift Irrigation Scheme-Package No.20-for drawal / lifting of 25 TMC ofwater from Foreshore of SRSP Reservoir to Balancing Reservoir and Package No.9 - fordrawal and lifting of 6.00 TMC of water in 120 days from Mid Manair to Upper ManairReservoir, work on the Lift Scheme from Thotapally Reservoir to Gouravelly Reservoirincluding tunnel and other allied works near Regonda in Karimnagar District, is alsocurrently under progress.

In Madhya Pradesh, the Company has been progressing on schedule on Punasa LiftIrrigation Scheme with a distribution network of pipelines and Lower Goi Project includinga dam and canal and its distribution network for command area of about 13760 Ha. onturnkey basis including the O&M of completed commissioned scheme for 1 year. This isin addition to the ongoing works undertaken for Narmada Valley Development Departmentcomprising of execution of 51 km of main canal and over 250 km of distribution network fora command area of over 20700 ha.

The Indira Sagar project is the toughest amongst all other Packages under Indirasagar& nearby Omkareswar Packages, under NVDA. The alignment of this portion of the canalruns in the hilly terrain & valleys. Generally the alignment of the gravity canalsfollows a specific contour all along the foot of the hill. But in this particular case,the canal runs on the top of the hills, which is a special feature. Further in this canalthere are 5 nos of ‘D" shaped tunnels of 6.0 M dia for a length of 5 Kms, 12 nosof Aqueducts having a total length of 2.5 Km & about 83 no. of CM & CD works inthe main canal. The Punasa Lift irrigation Project is a comprehensive Project where at thewater from the Indirasagar Dam will be lifted in 3 stages into 3 new balancing reservoirsand from there the distribution of the water to the fields will be done by closed conduitsof different sizes and types. The Project has been progressing extremely well and theCompany has achieved early completion of the Milestone Progress of that approved in theConstruction Program and for this feat, IVRCL has been awarded the Incentive for the twoconsecutive Milestone periods and an appreciation certificate by the client.

The Company has bagged a project of the ERM of the Kosi Canal System including settlingbasin from the Water Resources Department, Bihar. Other significant works bagged this yearare the Construction of the Dhom Balkawadi Project in Satara Irrigation Project Circle inMaharashtra and the SRSP Rehabilitation and Odernisation work of the Sriramsagar projectin Andhra Project. Based on its core experience in the irrigation sector, the company willcontinue to pursue and undertake large irrigation projects across the country. Ouron-going irrigation projects are:

• LIS Link VII - Package No.20 - Investigation, Design and execution of Liftirrigation Scheme for drawl / lifting of 25 TMC of water from Foreshore of SRSP Reservoirto Balancing Reservoir near Masani (V), Nizamabad Mandal & District by water conveyorsystem with all associated components on EPC Turnkey System.

• IFFC from SRSP-LIS Link III - Package No.9 - Investigation, Design and executionof Lift irrigation Scheme for drawl and lifting of 6.00 TMC of water in 120 days from MidManair reservoir at Siricilla Village to Upper Manair Reservoir at NarmalVillage,Karimnagar district . by water conveyor system with all associated components onEPC Turnkey System.

• Execution of Punasa Lift Irrigation Scheme including its distribution network bypipelines down to 40 Ha. Chak of Culturable Command Area (CCA) of about 35008 Ha. OnTurnkey basis and O&M of completed commissioned scheme for 1 year..

• Investigation, Design and Execution of Lift Scheme from Thotapally Reservoir toGouravelly Reservoir including Tunnel and other allied works near Regonda (V), Husnabad(M) of Karimnagar District

• Execution of Lower Goi Project including Dam, Canal and its distribution networkupto 40 Hac. Chak for Irrigation culturable command area of about 13760 Ha. On TurnkeyBasisand maintenance of comlete commissioning for one year.

Investigation, Design, and execution of Kaleswaram LIS with allied works lifting of4.50 TMC of water from Godavari River near Kanepally (V) of Kaleswaram, Mahadevpur(V),Karimnagar Dist to feen an ayacut of 45,000 acres.

Water Supply & Environment Projects - The competency and capability of IVRCL asa major player in the water infrastructure sector is once again proven with the Companycompleting some important water projects this year and bagging several more during thisyear. The Company has successfully completed the Clear Water Sump and Pumping Station forthe UWSEI Project for Indore Municipal Corporation and Some of the significant projectscompleted during the year under review in the Water Sector include the:

• Design, Construction, Commissioning, Operation and Maintanance Clear Water Sumpand Pumping Station.for UWSEI Project, Indore Municipal Corporation, Indore

• Construction, Supply and installation of Water distribution system, clear waterreservoir & water towers, domestic waste water collection system & pump station,Industrial waste water collection system & pump station and related mechanical andelectrical works in Brandix Apparel City Pvt. Ltd., SEZ Vizag.

• Providing CWSS to Tsunami affected coastal habitations in Kanyakumari District -Project No.36. for TWAD Board, Tamil Nadu

• Sujlam Suflam package PM -4A (Godhara City) Regional Water Supply Scheme - forGujarat Water Supply and Sewerage Board, Vadodara

• Execution & O&M of the work of Village Distribution system with PSP& CWT with associated civil works for village distribution of 78 villages ofBhainsroadgarh & Ramganjmandi tehsil of Ramganjmandi Pachpahar water supplyproject-Packages I & IV on single responsibility Turnkey Basis with 5 years O&Mfor PHED,, Kota, Rajasthan IVRCL’ s position as the most versatile player in waterinfrastructure projects is once proved with the bagging of the one of the most prestigiouswater projects of the year, namely the Construction of Tunnel from Gundovali to BhandupComplex in Mumbai for Municipal Corporation of Grater Mumbai, which has not only added afeather in its cap but has taken the company to greater heights in water projects.

• Other major water projects that the Company has bagged during the year are theHogenakkal Water Supply and Fluorosis Mitigation Project-Package I - for Tamil Nadu WaterSupply And Drainage Board, Tamil Nadu which includes Intake Works, Raw Water PumpingStation, Treatment Plant, Treated Water Pumping Station, Booster Pumping Station, PumpingMains, MADAM Master Balancing Reservoir and Allied Works; Replacement of Two Nos. of 1800mm dia riveted Tansa Mains from Tansa to Tarali by one No.2750 mm dia M.S all weldedPipeline in the for Municipal Corporation of Grater Mumbai, and the construction of Intakewell cum Raw water pump house including coffer dam, substations, raw water pumpingequipments, rising mains, WTP at Rukka, clear water pumping equipments at Rukka,Transmission mains to different UGRs and ESRs construction UG reservoirs, distributionnetworks all complete job for Ranchi Water Supply Project under JNNURM on Turnkey Basisfor Drinking Water & Sanitation Department, Jharkhand Major works bagged by thecompany and under execution during the year are:

• Construction of Tunnel from Gundovali to Bhandup Complex in Mumbai for MunicipalCorporation of Grater Mumbai, Mumbai, Maharashtra

• Replacement of Two Nos. of 1800 mm dia riveted Tansa Mains from Tansa to Taraliby one No.2750 mm dia M.S all welded Pipeline in the HE outside city division (Section -II from Jamboli to Chinchavali for Municipal Corporation of Grater Mumbai, Mumbai,Maharashtra

• Detailed Survey, design & drawing including construction of Intake well cumRaw water pump house including coffer dam, approach gangway & substations at pumpingpoints all complete with supplying, installation and commissioning of raw water pumpingequipments, rising mains, WTP at Rukka, clear water pumping equipments at Rukka,Transmission mains to different UGRs and ESRs construction UG reservoirs, distributionnetworks all complete job for Ranchi Water Supply Project under JNNURM on Turnkey Basisfor Drinking Water & Sanitation Department, Jarkhand

• Hogenakkal Water Supply and Fluorosis Mitigation Project-Package I-Intake Works,Raw Water Pumping Station, Treatment Plant, Treated Water Pumping Station, Booster PumpingStation, Pumping Mains, MADAM Master Balancing Reservoir and Allied Works for Tamil NaduWater Supply And Drainage Board, Tamil Nadu

• BWSSB Project II - Contract W1 Raw Water Transmission System under JICA forBangalore Water Supply & Sewerage Board, Bangalore, Karnataka

• Surveying, Collection of Hydrological data, Design, Detailed Engineering,Construction, Supply, Installation, commissioning of Multi Villages 15.60 MLD capacitySurface Water Supply Scheme for Arsenic - affected habitations / villages under Simri& Buxar blocks of Buxar District on Turnkey Basis for Public Health EngineeringDepartment, Bihar

• CW & Water System Civil work package from NTPC - Tamilnadu Energy CompanyLimited Power Project (Vallur Thermal Power Project) (2x500 MW + 1x500MW) for NTPCTamilnadu Energy Company Ltd., Chennai, Tamil Nadu

• CW Pump House CW Ducts (Civil) and Cold Water Channel Package for HarduagunjPower Plant Extension project (2x250 MW) for Uttar Pradesh Rajya Vidyut Utpadan NigamLimited, Lucknow

• Construction Contract for Nano Spurline project (12" and 6" = 33 Kms.)for Gujarat State Petronet Limited, Gandhinagar, Gujarat

• Installation, Operation and Maintenance of Crude and Finished product Tankagesfacility at Paradip Refinery Project, Paradip (Orissa) on BOOT Basis for Indian OilCorporation Limited, New Delhi

Under sewerage treatment projects, the company has won the contract for the Survey,Investigation, Design, Construction, Testing & Commissioning of Sewerage works inSewerage District of Allahabad City for Uttar Pradesh Jal Nigam, Allahabad ProvidingSewerage System to Erstwhile Bommanahalli CMC areas (Zone 4F) under KMRP - Slice No.GBS 4Ffor Bangalore Water Supply & Sewerage Board, Bangalore, Karnataka and Constuction ofthe 70 mld capacity sewage treatment plant at Kharghar, Navi Mumbai.

Chennai Desalination – The Chennai Sea Water Desalination Project of 100 MLDCapacity, being executed for Chennai Metro and the first of its kind in the country isfast nearing completion and having successfully completed the commercial trials, the plantwill be commissioned shortly. IVRCL recognizes the immense potential of desalination as amajor water source for the country and is focusing on desalination as a major wattersource for the people and industries in the coastal regions of the country.

Industrial Water Projects - As a pure play market leader in the water EPC space inIndia, besides continuing its thrust on irrigation schemes and water distributionprojects, IVRCL, has carved out a niche for itself in the industrial water solutionshaving executed works for NTPC, NLC and TNEL in the past. The Company has completed theturnkey project undertaken in the SEZ of Brandix Apparel City Pvt. Ltd.at Visakhapatnam,comprising supply and installation of water distribution system, clear water reservoir& water towers, domestic waste water collection system & pump station, Industrialwaste water collection system & pump station and related mechanical and electricalworks. With this project, the Company qualifies to execute similar turnkey water projectsof larger magnitude for SEZs, Industrial Parks etc. Currently, under this segment, theCompany is executing the Circulating Water system for NTPC – TNEL 2 x 500 MW & 1X 500 MW Power Project in Tamil Nadu. IVRCL would continue to focus on this segment ofwater projects and very soon emerge a pure play industrial water company in Industrialhigh purity water solutions, Waste Water Treatment & Recirculation Systems andIndustrial Effluent Treatment Solutions.

TRANSPORTATION

The most outstanding achievement of the Company during the year in the Transportationsector has been the completion and commissioning of two of the three National Highway BOTprojects undertaken by the Company. We have completed the Kumarapalyam-Chengapalli Stretchof NH-47 in the state of Tamil Nadu, the first of the BOT highways projects closelyfollowed by the second project, namely Jallandhar –Aamritsar on NH-1 in Punjab. TheCODs have been received and toll collection has commenced for both the projects. The thirdBOT Highway projects, namely Salem-Kumarapalyam on NH-47 is nearing completion and is tobe commissioned very soon. IVRCL has achieved the distinction of having clocked over 21million accident-free man hours and has been rewarded by NHAI for this remarkable feat.

Other key projects completed by the Company during the year include the Madurai toKanyakumari from Km 42.00 to Km 80.00 Contract Packages NS-40 (TN) for NHAI;Rehabilitation and Upgrading of Mungeli to Pondi Section in Chhattisgarh - for PublicWorks Department and Integrated Improvement cum Performance Based Maintenance on Alwar toSikandra Road in Rajasthan (AS) for RIDCOR, Government of Rajasthan.

About new highways projects: With the renewed impetus and determination of thegovernment to speed up the implementation of the NHDP projects on a fast track basis andkey highway projects on the anvil, including the mega highways projects, 6-laning of4-laned roads, expressways and port connectivity projects, IVRCL is strongly focusing onhighways as an opportunity asset creation and bidding for selective highways projects,including some of the mega highways being notified by NHAI. The Company has bagged threemore DBFOT projects. These are 4 - Laning of Indore - Jhabua - Gujarat / MP Border sectionof NH-59 ; 6 -Laning on Chengapalli to start of Coimbatore Bypass and 4 laning on end ofCoimbatore Bypass to TN / Kerala Border Section of NH-47 in the State of Tamil Nadu underNHDP Phase II and 4 - Laning of Baramati-Phaltan Road and Phaltan-Lonand Shirwal Road.

Your Company scores a first once again by being the first company in the country toundertake the construction of a state of the art Automotive Test Track for the NationalAutomotive Testing and R&D Infrastructure Project, New Delhi. The Company has baggedthe contract for the construction of automotive test tracks for NATRAX-Pitampur andGARC-Chennai for involving import of high end track laying technology and specialequipment for Germany specially for this project.

Some of the major works bagged by the company and under execution during the year are:

• Balance work of Rehabilitation, strengthening and 4 Laning of Bhogpur toMukerian section of NH1A from Km.26.00 to Km.70.00 in the State of Punjab (ContractPackage No.NS-38 (PB) for National Highways Authority of India, New Delhi

• Improvement / Upgradation of Darbhanga - Kamtaul - Basaitha - Madhwapur Road forRoad Construction Department, Government of Bihar, Patna

• Reconstruction of Tsunami affected Bridge connecting Keezhamanakudi -Melamanakudi villages in Kanyakumari District for Highways Department, Chennai, TamilNadu.

• Construction of ROB at Bonakal Yard Jaggaihpet - Wyra Road in Khazipet -Vijaywada Section in Khammam District for Roads & Buildings Department, Khammam,Andhra Pradesh

• Construction of pre tippling, empties yard etc. for the Augmentation of Railwayinfrastructure for Rastriya Ispat Nigam Limited (RINL), Visakhapatnam Steel Plant,Visakhaptnam, Andhra Pradesh

• Construction of Bridge across Malaprabha River near Munavalli on Arabhavi -Challikeri Road in Saudatti Taluk in Belgaum District for Karnataka Road DevelopmentCorporation Limited, Bangalore, Karnataka

BOT Highway Projects

• 4 Laning of Indore - Jhabua - Gujarat / MP Border section of NH-59 from Km.9.500to Km.171.000 on BOT (Toll) basis under Phase III in the State of Madhya Pradesh forNational Highways Authority of India, New Delhi

• 6 Laning from Km.102.035 to Km.144.740 on Chengapalli to start of CoimbatoreBypass and 4 laning from Km.170.940 to Km.183.060 on end of Coimbatore Bypass to TN /Kerala Border Section of NH-47 in the State of Tamilnadu under NHDP Phase II on DBFOT(Toll) Basis (Package No.NS-II / BOT / TN-08) for National Highways Authority of India,New Delhi

• Four Laning of Baramati - Phaltan Road SH10 (Ch.42/400 to 64/300) and Phaltan -Lonand Shirwal Road SH70 (Ch.136/00 to 80/00) (total length=77.900 Kms.) on DBFOT Basisfor National Highways Authority of India, New Delhi

• Development of Truck Terminal at Patalganga MIDC Industrial Estate (Maharashtra)on DBFOT Basis for Maharashtra Industrial Development Corporation, Mumbai, Maharashtra

BUILDINGS AND INDUSTRIAL STRUCTURES

The Company has, during the year successfully completed several diverse projects suchas the EPC Contract for TATA Cummins Ltd. Plant at Phaltan, District Satara inMaharashtra, EURO-IV Project of Chennai Petroleum Corporation Limited at Chennai, TamilNadu for Engineers India Ltd and for a Blast Furnace - 2 area for Integrated Steel Plantfor Ramsarup Lohh Udyog Limited, Kolkata, besides undertaking works for Guru Gobind SinghRefinery Project of M/s. HPCL - Mittal Energy Limited at Bathinda in Punjab; civil,structural and associated UG Piping works of MS Quality Up-gradation project at GuwahatiRefinery in Assam And Construction of TELCON Factory at Kharagpur, West Bengal for TelcoConstruction Equipment Company Ltd. consisting of various factory Sheds like ExcavatorAssembly, Dumper assembly, Paint house etc.

Major works completed by the Company during the year are:

• Construction of Seawoods Estate Phase-II, Part-II Housing in Sectors 54, 56& 58 (Part) at Nerul, Navi Mumbai for CIDCO, Mumbai, Maharashtra

• EPC Contract for TATA Cummins Limited (TCL) Plant at Phaltan, District Satara(Maharashtra) for TATA Cummins Ltd., Jamshedpur, Jharkhand.

• Construction of type II & I Quarters, RPF Barrack, Trainning Center, Admin.Bldg. for SEC Rly. Zonal Head Qrtrs., GM’s Bunglow, other service Bldg., along withallied infrastructure for new Zonal Headquarters including HVAC for South East CentralRailway, Bilaspur (Package-II) for South East Central Railway, Bilaspur.

• Construction of NeST Towers at Technopark Campus, Thiruvananthapuram for NetworkSystems & Technologies (P) Ltd

• Building works for implementation of EURO-IV Project of Chennai PetroleumCorporation Limited at Chennai, Tamilnadu for Engineers India Limited, New Delhi

• Construction of Civil work for Blast Furnace - 2 area for Integrated Steel Plantat Karagpur for Ramsarup Lohh Udyog Limited, Kolkata, West Bengal

Continuing its foray in industrial works, the Company has achieved a remarkable feat insuccessfully bagging several contarcts in the industrial sector ranging from Design andConstruction for all Main Civil Works for complete External Coal Handling System andComplete Structural works for Coastal Gujarat Power Limited, in Mundra and Complete Civil& Structural works for Coal Handling Plant package for Rihand Super Thermal PowerProject, Stage-III (2x500 MW) at NTPC-Rihand to Civil and Structural works of ECU Unit forBrahmaputra Petrochemical Complex of M/s. Brahmaputra Cracker and Polymer Limited atLepetkata, Assam (Part-A) for Brahmaputra Cracker and Polymer Limited, Dibrugarh,Assam.and the Makeup Water System Package for 1980 MW Tiroda Thermal Power Project,Tiroda, dist. Gondia, Maharashtra for Adani Power Maharashtra Limited, Gondia,Maharashtra, besides the Construction of Civil & Structural works for the UraniumProcess Plant at Tummalapalle in Kadapa District in Andhra Pradesh.

Among the major residential, institutional and technical building projects awarded tothe copmapny and currently under execution are Construction of 5 Building Towers withParking Plus Twenty One Floors in Kakade City, Karve Nagar, Pune Extension of Bihar VidhanSabha and Secretariat Complex at Patna for Building Construction Department, Patna, BiharRefinery Township Phase-II & III for Paradip Refinery Project near Paradip, Orissa forIndian Oil Corporation Limited, Shatabdi Hospital Building (Phase -2), C.J.S.M. MedicalUniversity Campus Lucknow for Uttar Pradesh Rajkiya Nirman Nigam Limited, LucknowUndergraduate Lecture Theatre Complex at FCI campus University of Allahabad, Allahabad forRITES Limited IMGEOS Project Buildings and development of infrastructure at NSRC Campus,Shadnagar, Mahboobnagar Dist., AP. Computer Centre and Computer Science & EngineeringComplex including Internal PH Works & PVC Conduit System for Electrical works for IITBombay, Powai, Mumbai for Dept. of Atomic Energy Construction of Hepatobilory Disease& Lever Transplant Building at SGPGL, Lucknow for Uttar Pradesh Rajkiya Nirman NigamLimited, Lucknow.

The major buildings and industrisl project works won by the Company during the yearare:

• Design and Construction for all Main Civil Works for complete External CoalHandling System and Complete Structural works including Design, Fabrication, Erection andConstruction for Mundra, Gujarat for Coastal Gujarat Power Limited, Mumbai,

• Extension of Bihar Vidhan Sabha and Secretariat Complex at Patna for BuildingConstruction Department, Patna, Bihar

• Complete Civil & Structural works for Coal Handling Plant package for RihandSuper Thermal Power Project, Stage-III (2x500 MW) at NTPC-Rihand for FLSmidth Pvt. Ltd,Chennai

• Civil works for +/- 500 KV, 2500 MW HVDC Terminal Stations at Mundra andMohinderbagh for Adani Power Limited, Mumbai

• Construction of Quarters, Estate Office & Hospital of Refinery TownshipPhase-II & III for Paradip Refinery Project near Paradip, Orissa for Indian OilCorporation Limited, New Delhi

• Construction of All India Institute of Ayurveda (under Department of Ayush,Ministry of Health & Family Welfare) at Sarita Vihar, New Delhi for HSCC (India)Limited, New Delhi

• Civil and Structural works of ECU Unit for Brahmaputra Petrochemical Complex ofM/s. Brahmaputra Cracker and Polymer Limited at Lepetkata, Assam (Part-A) for BrahmaputraCracker and Polymer Limited, Dibrugarh, Assam.

• Construction of Civil, Miscellaneous Structural & Architectural works ofMake-up Water Pump House and other Associated structures required for Make-up Water SystemPackage for 1980 MW Tiroda Thermal Power Project, Tiroda, dist. Gondia, Maharashtra forAdani Power Maharashtra Limited, Gondia, Maharashtra

• Construction of IMGEOS Project Buildings and development of infrastructure atNSRC Campus, Shadnagar, Mahboobnagar Dist., AP., Package -1: Construction IMGEOS &NDEM Building (Composite Contract inclusive of Civil, PH, Electrical, HVAC and otherallied works) for National Remote Sensing Centre, Hyderabad, Andhra Pradesh

• Construction of Computer Centre and Computer Science & Engineering Complexincluding Internal PH Works & PVC Conduit System for Electrical works for IIT Bombay,Powai, Mumbai for Dept. of Atomic Energy

• Offsite Building (Part-A), for Phase - III Refinery Project of M/s. MangaloreRefinery & Petrochemical Ltd. at Mangalore, Karnataka for Mangalore Refinery &Petrochemicals Limited

• Construction of Civil & Structural works at UCIL Project-Tummalapalle forHindustan DORR-Oliver Limited, Mumbai

• RCC Building and Sheds at proposed LPG Terminal of Visakh terminals ResitmentProject at Visakhapatnam, Andhra Pradesh, Hindustan Petroleum Corporation Limited, Chennai

• Expansion of Factory Building (PEB), Civil, Plumbing, Electrical, HVAC, FireFighting, Telecommunication and Land Scape for Parker Hannifin India Pvt. Ltd.at Mahape,Navi Mumbai for Parker Hannifin India Pvt. Limited, Mumbai

• RCC Buildings, Foundations, Superstructure, Electrical works & Equipmentfoundations at Black Oil Terminal, Visakhapatnam for Hindustan Petroleum CorporationLimited, Chennai

–Under infrastructure development projects the Company is successfullyprogeressing with ONGC Petro Additions Limited (OPAL)- Petrochemical Complex inDahej SEZ in Gujarat comprising infrastructure development of an integrated greenfield petrochemical complex over an area of 508 hectares involving borrowed earth fillingof around 2.0 m and infrastructure development 532 ha of land including water and sewagetreatment facilities, storm water drainage and flood protection system of 37 km; watersupply and sewer network, rain water harvesting system, boundary wall and fencing of 11km, internal road network of 50 km, administrative office building and a world class guesthouse facility etc spread over an area of 10000 sq m. The removal of existing earth is3.72 million cum and filling quantity is 8.65 million cum. IVRCL has achieved thedistinction of having clocked over 5 million accident – free man hours and has beenrewarded by ONGC for this remarkable feat.

Power Transmission

Against this backdrop of a vast opportunity in the field of power transmission anddistribution, IVRCL shall continue to focus and strengthen its presence in the powertransmission sector particularly in cross country transmission lines, substations,distribution systems and railway traction works and IVRCL will continue to pursueopportunities in these segments. The Company has completed Constructing and erecting onTurnkey basis 132 KV. Chikali-Dusarbid Line to proposed 132 KV Sub Station 33 KV SingleCircuit Line for Khadakpurna Project Division.

• While work on the 765 KV Single Circuit Transmission Line; which is part of 765KV Seoni-Wardha Transmission Line associated with Western Region System StrengtheningScheme is briskly progressing, as the highest capacity transmission line work undertakenby the Power Division, the completion of this work will qualify the Division to take upall types of transmission line projects including those of 1200KV capacity and the Tripleand Quadruple conductor configured lines in future.

Some of the major orders bagged by the Company during the year are:

• Detailed Engineering, Manufacturing, Supply, Supervision, Erection, Testing,Commissioning and Putting into Commercial use of Pump - Turbine, Generator - Motor &Associated Equipments for Koyna Left Bank Power Station (2x40 MW) for Water ResourcesDepartment, Mumbai

• Supply & Services Contract for Tower Package-A3 under Transmission SystemAssociated with Pallatana GBPP & Bongaigaon TPS in North Eastern Region for i) 400 KVD/C Silchar-Melhrihat (New) Transmission line & 132 KV D/C Melhrihat (new) - Melhrihat(Mizoram) Interconnecting Transmission Line, including River crossing Towers for PGCIL forPower Grid Corporation of India Limited, Gurgaon, Haryana.

• Supply & Services Contract for Tower Package - A1 for i) 400 KV D/C QuadLine from Gurgaon (PG Sec 71) - Manesar (18 Kms.) ii) Delinking of Agra - Samaypur andSamaypur - Gurgaon 400 KV Line from Samaypur (1.5 Kms) and making a direct link from Agrato Gurgaon associated with Northern Region Strengthening Sscheme (NRSS) - XIII, iii) 400KV D/C Maneswar - Neemrana- Bhiwadi (150 Kms.) Transmission Line associated with NRSS-XVand iv) LILO of 400 KV S/C Bhiwadi - Bassi at Kotputli (15 Kms) associated with NRSS– XV for Power Grid Corporation of India Limited, Gurgaon, Haryana.

• Shifting / Modification of 400 KV D/C Agra - Agra (UPPTCL), 220 KV D/C Agra -Auraiya and 400 KV S/C Kanpur - Ballabhgarh Transmission Lines Package (Deposit work) forPower Grid Corporation of India Limited, New Delhi The state-of-the-art Transmission LineTower manufacturing facility at Nagpur in Maharashtra, set up as strategic backwardintegration measure, is under production and has commenced exports as well besidesexpanding its portfolio with diversification into related products.

Overseas Operations

Having firmly established in the core sectors with a healthy order book in the Indianmarket, your Company, IVRCL has ventured into overseas to explore and tap theinfrastructure construction potential with prime focus on the Middle East and Africanmarkets. The Company has commenced its operations in the Middle East with an initial focuson Water and Power Transmission projects and has also set up an office in Dubai to overseethe operations and to identify new sectors and projects. Presently IVRCL, Dubai Region isexecuting several district cooling projects for EMPOWER which is a government entity andone of the biggest district cooling system providers in UAE. The Company is in talks withStellar, one of the biggest cooling system solution technology providers in the world tobid for more complex and high value works including Abu Dhabi New Airport Cooling Systemand similar works of TRANSCO, FEWA, AL RAYAN, B K GULF etc. The company is currentlytargeting business in Abu Dhabi, Dubai and other emirates of UAE, besides exploringopportunities in Oman, Syria and Saudi Arabia. While the Company has been receivingseveral enquiries from local agencies and international construction companies toassociate in large construction projects, the Company is evaluating the projects onselective basis.

The Company is also looking at the emerging opportunities in the African countries aswell and initially targeting to take up some Water and Power Transmission projects incountries like Kenya, Botswana, Uganda and Nigeria.

RESTRUCTURING OF OPERATIONS:

The challenges thrown out by the complex environment ridden with near-recessionaryeconomic conditions and downturn in the real-estate sector, coupled with greatopportunities in new infrastructure projects, have made the management to stop, look aheadand proceed with reorganization of its operations at the group level. The policies of theGovernment are encouraging Public Private Participation for construction of variousinfrastructure projects which presumes mopping up of huge resources by private sector foractively participating in the Nation building activities. While IVRCL has all along beenimproving its net worth through internal accruals and fresh infusion of equity to qualifyitself for bidding for new and bigger projects and has invested about Rs 850 crores ofsuch resources raised during the previous five years, either by way of debt or equity inthese new projects, it is considered all the more necessary that these long-gestationprojects should not impact the financials of the flagship Company and hamper the growthprocess recorded over the last decade. The options available were evaluated and it wasconsidered necessary that the group should slowly and steadily come out of the real estatesector without having any adverse impact on the ongoing projects; utilize the latentvaluations of the land holdings to improve liquidity either by sale or otherwise to raisefurther monies for investment into infrastructure projects being declared open by theGovernment in various sectors including railways, oil & gas, mining, ports etc., andto ensure that the core competence of the flag-ship IVRCL is further strengthened toeffectively manage the construction of these new projects. All said and done, thefinancial viability of the long-gestation BOT infrastructure projects is a challengingtask before the Government as well as the individual participating Companies requiringhuge capital and innovative financial models. From this point of view, IVRCL’smanagement has evaluated the various risks and with the approval of all stake holders,identified that investments in these projects should be managed independent of the projectexecution capabilities of the Company so that while executing these investment orientedprojects, the group can attract talent from outside either by way of joint-ventures orotherwise.

As a first step, IVRCL’s investments in various BOT and BOOT projects through twoof its wholly owned subsidiaries viz., IVRCL Strategic Resoursces Ltd., and IVRCL WaterInfrastructures LTd., have been amalgamated with IVR Prime Urban Developers Ltd. (whosename has been subsequently changed to IVRCL Assets & Holdings Ltd so as to reflect thenew orientation given to its operations) in consideration of the shareholdings in the saidCompany. The details of the amalgamations have else-where been detailed in the analysis ofaccounts in this report. In this process, IVRCL shall continue to be a project-executingentity while IVRCLA&H shall concentrate on raising monies for the new projects andeffective investment thereof evaluating the long term risks and addressing the same fromtime to time effectively to the best advantage of all stakeholders. As a result of thereorganization, the networth of IVRCL Assets & Holdings Ltd., has gone up to aboutRs.2300 crores in which IVRCL holds more than 80% equity-an increase from 62% beforereorganization. It is expected that the positive results of the reorganization will bemore visible during the course of next few years.

New Sectors - Leveraging Core Competencies in Emerging Sectors

Infrastructure development across specific sectors such as sea water desalination,power generation, hydropower, oil and gas, ports, mining, railways freight corridors andindustrial infrastructure construction are some of the key sectors poised for a big leapforward and contribute over 60 per cent of the revenues of the construction business inthe coming years. Having firmly established in the major infrastructure sectors, namelywater, roads, buildings and power, your Company is briskly foraying into these emergingsectors by leveraging its core competencies as a value addition to its existing businessareas.

A brief overview of IVRCL’ s entry into these sectors is given below:

Railways

The Indian Railways is one of the largest railway systems in the world under a singlemanagement and manages more than 63,000 km of railway tracks. The Government of India hasdecided to invest about $5 billion to enhance the rail routes in India and has formulateda well-planned strategy to reduce bottlenecks and boost the railways capacity to match tothe requirements. With major capacity expansion plans have been lined up andinfrastructure is being improved through priority projects such as the dedicated freightcorridor, construction of new lines, gauge conversion works, high speed passengercorridors, rail-port connectivity projects, corridor hinterland projects, construction ofprivate sidings and inland container terminals, besides the modernization of major railwaystations.

The massive investments for the proposed Railway works including the proposed DedicatedFreight Corridor comprising 2762 km of new railway lines along the western and easterncorridors being envisaged by the Indian Railways and RVNL projects in the pipeline providea tremendous opportunity for your Company to participate in these works either on its ownor by a joint venture route and thereby enhance its credentials in the railways sector.Having bagged and executing some orders for the prestigious Bangalore Metro work, theCompany is also focusing on the other upcoming metro rail projects comprising elevatedviaducts and stations and underground tunnels as well in major cities apart from focusingon the port connectivity and high speed railway projects being proposed across the countryas highly potential projects in the railways in the coming years.

Hydro Power

The hydel - thermal power mix in India currently stands in favour of thermal power at25:75 as against the global mix of 40:60. However, the government’s thrust on hydelpower can be gauged from the fact that 36 percent of the planned capacity addition duringthe Eleventh five year plan is in hydel power. Under the 50,000 MW Hydro Initiative by2012, which aims at developing 162 schemes, the preliminary feasibility reports have beencompleted. Having successfully completed the Bhilangana Hydel Project in Uttaranchal,IVRCL has bagged EPC Contract for 2 X 40 MW Koyna Left Bank Power Station includingerection testing and commissioning of Pump Turbine, Generator – Motor and associatedequipment. Having bagged this project, the Company is targeting to undertake hydroprojects involving civil, hydro – mechanical and electro – mechanical projectsof larger capacities and simultaneously exploring on taking up BOT projects on a selectivebasis.

Ports

With 12 major ports and 187 minor ports, 7,517 km long Indian coastline plays a pivotalrole in the maritime transport helping in the international trade. Traffic handled atmajor ports during April 2008 to January 2009 is recorded to be 436686 units. The ports inIndia offer tremendous scope for international maritime transport both for passenger andcargo handling. The Government of India targets to increasing the cargo handling capacityof major ports by two folds to reach 1.5 billion metric tons by the year 2012. Further,111 shipping and inland water transport projects entailing an investment of Rs 400 billionare expected to be completed by 2025. With such tremendous potential in this sector, IVRCLis venturing into on-shore and off-shore port works on EPCM basis and is also looking atviable BOT projects in this sector. The Company has been pre-qualified to bid forconstructing and operating two berths in Visakhapatnem Port. If successful, while IVRCLwould take up the construction of the berths, IVRCL A & H would operate them. Plansare being drawn up to take up similar projects including the construction and operation ofa full fledged port on long term concession basis.

Power Generation

India is today at the cusp of a vast opportunity in power generation, transmission, anddistribution. The target of over 150,000 MW of hydel power germination is yet to beachieved. By the year 2012, India requires an additional 100,000 MW of generationcapacity. A huge capital investment is required to meet this target. This has welcomednumerous power generation, transmission, and distribution companies across the globe toestablish their operations in the country under the PPP program. There are strongopportunities in transmission network ventures - additional 60,000 circuit kilometers oftransmission network is expected by 2012 with a total investment opportunity of about US$200 billion. IVRCL, backed by its experience and proven credentials in the transmissionsector would focus on projects of enhanced capacities of 1200 MW in transmission. Havingcompleted water projects and currently executing coal handling plants, the Company wouldinitially bid for BOP works and very soon move on executing turnkey power plant projects.The Company is also looking at entering into thermal and gas-based power generation andevaluating selective projects.

Mining

India is endowed with significant mineral resources and in view of the immensepotential offered by the mining sector, the Company is actively venturing into this sectorleveraging on its existing experience and resources. The Company has executed a miningproject in the over burden of over 2 million tons in one year for Singareni CollereiesCompany Limited. It possesses heavy earth moving equipment and trained manpower. Besides,IVRCL has within its fold Hindustan Dorr Oliver with proven abilities in mineralbeneficiation including design & fabrication of coal washeries / beneficiation plants.The Company has eminent mining experts, as Consultants to advice on mining projects. Thecompany has submitted expression of interest in joint venture with reputed overseascompanies for some large coal and mineral mining projects in the country.

Oil and Gas

The deregulation of the oil and gas sector has opened up new investments across theupstream and downstream segments. While exploration and production activity is on therise, transport infrastructure and storage facilities for oil and gas are a must to meetenergy needs of our economy. India has natural gas resources and the country’s gasproduction is expected at around 44 billion cubic meter (BCM) per annum by 2011-12 and 54BCM by 2014-15 from current level of 8 BCM per annum. The construction of pipelines forgas is also proceeding at a fast clip. The government is planning to set up a national gashighway authority to develop pipeline infrastructure in the country. The ministry istargeting a natural gas pipeline networks to 40-50 km per thousand sq km from the current3.29 km per thousand square km.

IVRCL through its subsidiary, IVRCL A&H has taken a 37.5 per cent stake in theconcession project for development of crude/product tankages facilities at ParadipRefinery Project, Paradip, Orissa of Indian Oil Corporation Limited (IOC) on Build, Own,Operate and Transfer (BOOT) basis and will be the joint venture partner in the specialpurpose vehicle, IOT Utkal Energy Services Ltd., which has been set up for theimplementation of this project. The remaining 62.5 per cent share holding is held byIndian Oil Tanking Limited. The project involves Installation, Operation & Maintenanceof approx. 1.4 million kilolitres of tankages for crude oil, petroleum products. LPG andsulphur and associated facilities at Paradip Refinery Project in Orissa which is expectedto go on stream during 2012. The concession period will be 15 years after commissioning.The total project cost is estimated at around Rs. 3000 crores. EPC services will beprovided by IOT and IVRCL, while Operations and Maintenance will be undertaken by IOT. TheCompany would be targeting similar ventures as well as EPC contracts in undergroundstorage projects, utilities and off-sites, terminals and large pipeline works.

Strategic Alliances to Strengthen Pre Qualifications

IVRCL has entered into Joint Venture Agreements and project specific consortiumagreements and MOUs for strategic alliances with several reputed Indian and foreignpartners with proven track record and credentials of technical expertise to enable it topre-qualify and to keep it in a vantage point as a Lump Sum Turn Key (LSTK) InfrastructureDevelopment Company and to add value to our Front End Engineering and Design (FEED)capabilities in the new and emerging infrastructure sectors.

Risk Management

The Company is committed to high standards of business conduct and risk management. Allengineering projects and construction undertakings involve risks; while some risks areinsurable and avoidable, certain risks can only be managed by latest project managementtechniques.

At IVRCL, risk avoidance and risk management for projects is handled by the ProjectMonitoring Cell (PMC), which monitors the on going projects at all sites across thecountry on a regular basis combined with frequent visits to work sites. The PMC reports onthe progress or about any perceived risk of each project to the Chief Operating Committee(COC) comprising senior management member of the company. The COC in turn accessesprojects associated with such risk perception and initiates prompt action to avoid ormitigate any such risks.

Also, members of the senior management comprising Business Heads, Regional Heads andProject Managers are provided with frequent training programs on Risk Managementassociated with construction risks,contractual risks, design risks, and potential risktreatment measures and strategies to ensure that potential risks are recognized andforecast beforehand and mitigated so that project progress remains un-impacted. Thecompany has engaged professional services and documented various risks involved anddeveloped a structure for systematic management of various risks in construction. In theprocess, the company has in place risk mitigation and de risking strategies coveringenvironmental, regulatory, economic, operational, financial,, technical, legal andstrategy risks.

IVRCL is committed to risk management with the objective to:

• Protect the Company’s assets.

• Achieve the targeted and sustainable business growth.

• Avoid sudden and major surprises with respect to the overall business andcontrol environment.

• Ensure the compliance with applicable, legal regulatory and strategyrequirements.

Internal Control Systems

Our Company has laid enormous significance to developing internal control systemsrelating to all aspects of the business such as procurement, project execution, financeand management information systems as we realize that the current levels of growth andvolume can only be sustained efficiently with appropriate systems and procedures in place.At the time of going to the press, our Company is on the threshold of developing a sitecost control software that would be integrated with corporate functions to provide aseamless and real time data of all variables relating to a project site thus enablingtimely decision making for optimized operations. Our Project Monitoring Cell (PMC) hasalready proved its worth by systematic analysis and MIS generated for management decisionswhich are operations related.

Our Best Asset - Our People

While we do believe that our best asset has been our people and have always realizedthe importance of human capital and valued it highly as an infrastructure company, We areaware of the challenge in attracting the best of talent to join us and in retaining thepeople endowed with the critical mass accumulated over the years in IVRCL and despite thecurrent scenario, our attrition rate amongst our top management is negligible. We have inplace a well drawn out HR Policy and a working environment encouraging innovation, costreduction and a time bound completion of projects, measures targeted to emerge as a meritdriven organization in these challenging times.

We are the foremost among companies in the Indian construction industry with EmployeeStock Options (ESOPs) facility to its employees, whereby a record 3.5 million shares havebeen allotted till date. Going forward, we want to enable a team culture at all levels,while encouraging employees to change orbits to ramp up their career path

We are truly blessed to be in a business that has such a positive impact on human life.IVRCL is a corporate entity that has been growing at a phenomenal pace on the foundationof work that improves the quality of life and the standard of living of people.

Our water projects, be it drinking water supply schemes, industrial water schemes,irrigation projects or desalination projects are fulfilling a basic need of the populace.Environment projects in the areas of water treatment, sewage treatment and solid wastemanagement are critical to the sustenance of our environment and the survival of humanlife on Earth. So far, we have executed close to 20000 km of pipelines for drinking waterand made canals for irrigation. A lot more will be done in the near future. Our powerprojects especially rural electrification works have brought about a sea-change in thequality of life of people in pertinent locations. We have more than 250 work sites allover India which have generated employment, indirectly contributing to social upliftmentand greatly benefiting the local economy.

Apart from the above, we have also undertaken several initiatives in our constantendeavor to enhance human living. We offer primary education facilities at several of ourconstruction sites. We also operate a school in the Srikakulam district of Andhra Pradesh.

In conclusion, while IVRCL will continue expanding its presence geographically andgrowing at a consistent pace, we are focusing creating and developing innovative modelsfor infrastructure development. By virtue of our pan-India presence, we are transferringthe best practices from one part to the other. We believe that our abiding vision, thestrength of our human capital and our commitment to build a better world of enduringvalues will continue to inspire us as we strive to make it happen.

There is so much we do. There is so much more we want to do. Expect much more from us.

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Over View:

The financial statements have been prepared in compliance with the requirements of theCompanies Act, 1956, guidelines issued by the Securities and Exchange Board of India andGenerally Accepted Accounting Principles (GAAP) in India. The management of IVRCL acceptsresponsibility for the integrity and objectivity of these financial statements, as well asfor various estimates and judgments used therein. The estimates and judgments relating tothe financial statements have been made on a prudent and reasonable basis, in order thatthe financial statements reflect in a true and fair manner the form and substance oftransactions, and reasonably present the state of affairs on the Balance Sheet date andprofits of the Company for the year ended on that date.

The Company achieved a marginal growth in terms of revenue in Fiscal 2010. The CAGR ofrevenue for last five years is 30%. The Company’s total revenue increased toRs.55,078 million i.e. increased by 9.9% over fiscal 2009 and Net Profit (PAT) decreasedto Rs.2,113 million, by 6.5% over fiscal 2009.

Financial Performance:

A summary of the Company’s financial position as at March 31, 2010 and 2009 isgiven below:

1. SHARE CAPITAL

The authorized share capital of the Company consists of 275,000,000 equity shares ofRs.2/- each amounting to Rs.550,000,000 and 25,000,000 preference shares of Rs.2/- eachamounting to Rs.50,000,000.

During the year, the Company increased the equity share capital by Rs.267.01 million onaccount of issue of bonus shares is the ratio of 1:1. The total paid up share capital asat March 31, 2010 stood at Rs.534.02 million.

A statement showing movement of share capital is given below:

Security Premium Account:

A statement of movement in the security premium account is given below:

Revaluation Reserve:

The revaluation reserve amount of Rs.28.41 million as on March 31, 2010 represents thereserve arising due to revaluation of some land and building done during the year 2001-02as reduced by the depreciation on revalued portion of the assets till March 31,2010.

General Reserve:

Out of the profits for the year Rs.500 million has been transferred to general reserve,Rs 315.29 million to Debenture Redemption Reserve and balance of Rs.1,047.93 million(after providing for dividend and tax thereon) has been retained in the profit and lossaccount.

The total Shareholder funds of the Company increased to Rs.18,533 million as of March31, 2010 from Rs.18,106 million as of the previous year end. The book value per sharehaving face value Rs.2/- increased to Rs.69.41 as of the year end compared to Rs.67.81 asof the previous year end(post bonus issue) registering an increase of 2.36%.

3. SECURED LOAN

The details of Secured Loans are discussed below:

During the year, the Company raised Secured, Non-Convertible Debentures of Rs 1,050million for repayment of some high cost debts and to meet the working capitalrequirements.

The Company has taken term loans to finance purchase of plant, machinery, equipment andvehicles specific to certain projects and for the Company as a whole.

The Company has availed Project-specific working capital loans for certain majorprojects to meet the working capital requirements of those specific projects.

The Company has also availed working capital loans from a ten-member consortium banksto finance infrastructure projects where no project-specific funding have been done. Thelimits are optimally operated with all the member banks in the consortium duly meeting therequirements of these banks in compliance with the terms of the loan agreements with them.

4. UNSECURED LOAN

The details of Unsecured Loans are discussed below:

The Company has availed short term unsecured loan of Rs.2,953.97 million (Rs.3,409.94million during last year) from some banks, financial institutions during the year tobridge temporary needs in the ordinary course of business. All these loans are due forrepayment with in the current financial year ending March 2011.

During the year none of the holders of Foreign Currency Convertible Bonds (FCCB) haveexercised their option for conversion into equity shares. The amount of FCCBs outstandingas on March 31, 2010 remained unchanged at US$ 7.60 million, the increase in the value ofINR is only because of the exchange difference accounted as on the Balance Sheet date.

The Company has also issued short-term unsecured, Non-Convertible Debentures of Rs150.00 million to banks to manage some urgent working capital need.

The overall Long-term and Short-term borrowings of the Company (other than FCCB)increased from Rs 13,594.76 million as on March 31, 2009 to Rs 15,792.02 million in thecurrent year representing an increase of 16.16%.

5. FIXED ASSETS

During the year, the Company has invested Rs.878.27 million (net) towards the additionto fixed assets as compared to addition of Rs.2,447.54 million during the previous year.

6. DEFERRED TAX ASSETS & LIABILITIES

The Company accounts for deferred tax in compliance with the Accounting Standard 22issued by the Institute of Chartered Accountants of India. The Company has recogniseddeferred tax expenses of Rs.7.36 million during the year. Net deferred tax liabilityrepresents timing differences in the financial and tax books arising mainly fromdeprecation on assets, provision for debtors and advances etc.. The net deferred taxliability has increased from Rs.117.41 million as on March 31, 2009 to Rs 124.77 millionas on March 31, 2010.

7. INVESTMENTS

The major investments of the Company are in the subsidiaries IVRCL Assets &Holdings Limited and Hindustan Dorr-Oliver Limited. During the year, the investment indomain companies in specific sectors like Water and, Transportation i.e. in IVRCL WaterInfrastructures Limited and IVRCL Strategic Resources Limited were transferred to IVRCLAssets & Holding Limited through a process of amalgamation. The Company got allotmentof equity shares in IVRCL Assets & Holdings Limited as consideration. Totalinvestments in subsidiaries as at March 31, 2010 stood at Rs.6,113.20 million as againstinvestments as at March 31, 2009 Rs.3,867.46 million.

The details of investments in subsidiary Companies as on March 31,2010 and themovements in the investment account during the year is given below:

Additions in case of IVRCL Assets & Holdings Ltd and deletions in case of IVRCLWater Infrastructures Ltd and IVRCL Strategic Resources Ltd mainly comprises sharesallotted as a consideration on amalgamation of the above Companies as per the Scheme ofMerger approved by the Hon’ble High Court of Andhra Pradesh.

The revenues, Profit after tax and net worth of subsidiaries are as given below:

IVRCL Assets & Holdings Ltd.

The subsidiary is an infrastructure company focussing on development which includeroad, water, oil tankage facility, truck parking terminals and real estate projects.Originally, the Company was formed as a SPV to develop premier deluxe apartments andvillas in a prime location in Hyderabad. Subsequently, the Company ventured intodevelopment of megamalls, hotels etc in cities like Chennai, Bangalore, Pune, Hyderabadand NCR. Recently on merger of the domain companies of IVRCL in Water and Roadinfrastructures with the subsidiary, it has become more of an asset holding company.

Hindustan Dorr-Oliver Limited

The subsidiary is engaged in the business of providing Engineering & Turnkeysolutions, Technology and EPC installations in liquid solid separation applications invarious industry segments like mineral processing and benefication, Pulp and paperprocessing, fertiliser & chemical and environmental management.

During the last financial year, the Company has acquired 100% equity of Sheffield, UKbased 180 years old Engineering Company, Davymarkham Ltd. involved in the design,manufacture and assembly of large equipment for mining, power generation, oil, gas andnuclear sectors through its wholly owned subsidiary in UK, IMCO(22010) Ltd.

8. SUNDRY DEBTORS

Sundry debtors amount to Rs.19,445.24 million (as reduced by provision for doubtfuldebts) as at March 31, 2010 as compared with amount of Rs.13,430.21 million as at March31, 2009. These debtors are considered good and realisable.

Debtors including unbilled revenue amounts to Rs. 27,293.94 million as at March 31,2010 as compared to Rs.20,229.19 million as at March 31, 2009. Debtors and unbilledrevenue are at 49.7% of revenues for the year ended March 31, 2010, as compared to 40.6%for the previous year, representing an outstanding of 181 days and 148 days of revenuesfor the respective years.

9. CASH & CASH EQUIVALENTS

Cash/Cheques on hand comprises cash balances in project sites, regional offices andhead office required to meet day to day needs of the growing business. Balances in currentaccounts Rs.1,427.09 million are spread over project sites at various locations to meetday to day requirements of the project management and major portion includes client billproceeds received and deposited at the year end but realised subsequent to the balancesheet date.

10. OTHER CURRENT ASSETS

The amount under this heading mainly consist of:

Unbilled Revenue – Rs.7,848.70 million (Rs.6,798.98 million)

This represents amounts to be billed to some of the contractee clients in respect ofrevenue earned under the percentage completion method, followed by the Company, as reducedby that portion of such revenue already billed and receivable from those clients.

This unbilled revenue recoverable is a dynamic figure every quarter in as much as therevenue earned is arrived at every quarter under the same method duly adjusting in thosequarters the billed revenue as well as the unbilled revenue carried over from thecorresponding previous quarter.

Retention Money – Rs.5,476.34 million (Rs.4,292.00 million)

The account represents the amounts retained by the clients towards performance securityas a guarantee for satisfactory performance of the infrastructure projects developed bythe Company. The Company has not received any demand for claim from any of the clients andhence all these amounts are treated as good for recovery except an amount of Rs20.21million considered doubtful of recovery.

Other deposits – Rs. 2,827.67 (Rs.2,661.25 million)

This mainly consists of deposit lying with Government departments like Sales tax,Electricity Board, Telephones etc and EMD with the clients.

11. LOANS AND ADVANCES

Tax deducted at source and advance tax net of provisions – Rs. 416.93 million(Rs.1,702.88 million) This mainly consists of tax deducted at source from contract revenueby the clients as per the provisions of the Income Tax Act, 1961 and advance tax paid asreduced by the income tax provisions made and assessed (undisputed). All undisputedliabilities have been fully adjusted against this account. During the year, tax deductionsclaimed under Section 80 IA of the Income Tax Act, 1961 in earlier years Rs 1,409.03million have been charged off as tax expense and the special reserve created for thepurpose, Rs 1,411.00 million has been credited back to the Profit & Loss Account.

Loans to Subsidiaries – Rs. 2,810.47 million (Rs.4,499.02 million)

These amounts as loans have been provided to the subsidiaries and their fellowsubsidiaries for strategic business ventures. These loans are interest bearing andsubsidiary wise details of loans are as follows:

Advances recoverable in cash or in kind or for value to be received (Secured &Unsecured) – Rs. 2,963.74 (Rs.2,544.90 million) The account represents advances paidto various suppliers, sub-contractors, labour contractors etc., which are partly adjustedin the subsequent periods and the balance would also be recovered from their bill ofservices or otherwise. Hence all these amounts outstanding are consideredrealisable/adjustable.

Advances received from Contractee-clients are the advances provided to the Company inthe nature of short-term liabilities, which are recovered from client bills. Some of theadvances bear an interest cost and others are interest free. The Company has also providedbank guarantees for some of these advances.

Sundry Creditors represent amount due to suppliers, sub-contractors, labourcontractors, back-to-back contractors and other service providers. Other liabilitiesmainly represent all statutory dues such as PF, ESI, TDS, Sales Tax etc payable by theCompany relating to the month of March 2010.

13. PROVISIONS

Proposed dividend of Rs.213.61 million (Rs.186.91 million) represents the dividendrecommended to the shareholders by the Board of Directors. This will be paid after theAnnual General Meeting, upon approval by the shareholders. Provision for tax on dividendRs.36.30 million (Rs.31.76 million) denotes taxes payable on dividends declared for theyear ended March 31, 2010.

Gratuity provision and Provision for Leave Encashment has been made as per theactuarial estimation and certification by an independent Actuary as per the requirementunder Accounting Standard 15 (revised).

14. Results of Operations:

The following table sets forth the income statement for the financial year ended March31, 2010 and 2009. The components of expenses have been expressed as a percentage of totalincome for the years indicated.

A. Income Recognised

Gross work bills represent revenue earned till end March 2010, on long termconstruction contracts, where revenue is recognizable over time as the work progressesrather than at the completion of such contracts. It is an established principle that thecontractee client has the legal right to require specific performance from the contractorto the effect the client acquire ownership claim to the contractors work-in-progress. Inturn the contractor acquires legally enforceable rights to require the client to makepayments progressively against the work executed/cost incurred in due performance of thosecontracts. Hence, the substance of the construction business activity is that revenue isearned continuously as the project progress. This principle is well established in theaccounting standard, AS 7 (revised 2002) issued by the Institute of Chartered Accountantsof India. The income from operation also includes sale of galvanized structuresmanufactured in the TLT factory and other products Rs.1,423.22 million.

The Company continues to earn its major contract revenue from water and water relatedprojects, which account for 57.05% of the total revenue. The other projects such asbuilding and industrial structures accounted for 24.55%, transport infrastructures likeroads, rail tracks and bridges 13.27% and power infrastructures like transmission lines,substations etc. 5.13%.

B. Construction Expenses

The increase in prime cost i.e. construction materials, sub-contractors work bills andmasonry & other works are in line with the increase in gross work bills. The majoritems of construction materials are steel, cement, pipes, oil and fuel etc. Increase inother construction expenses like Repairs & Maintenance, Machinery Hire Charges,Royalty and Lab Testing Charges are considered normal and are in line with the increase inrevenue.

C. Administration and other Expenses

Insurance expense is net of claims received. Insurance claim of Rs 74 million wasaccounted during the year ended March 2009, hence the variance in the insurance account.

Other expenses/provisions in the current financial year includes bad debt andprovisions accounted Rs 382.75 million as compared to Rs 61.44 million in the previousfinancial year.

Increase/decrease in other heads of expenses are normal and in line with the increasein operation.

D. Interest and Finance charges

The increase in the Total Interest & finance cost by 7.1% is due to marginalincrease in credit availment because of increased operations.

Interest income represents interest earned on ICD given to subsidiaries and thedeposits kept with banks for EMD etc.

E. Depreciation and Amortisation – Rs 542.84 million (Rs.473.05 million)

Depreciation on all assets have been provided at the rates and method as adopted in theprevious year. There is no change in the accounting policy as regards charge ofdepreciation and the same is in compliance with the provisions of the Companies Act, 1956and the relevant accounting standards. The increase in depreciation is in line with theadditions to the gross block of fixed assets.

15. OPERATING PROFIT

The Company earned an operating profit (EBITDA) of Rs.5,467.77 million, representing9.92% of the total income as compared to Rs.4,516.95 million, representing 9.01% of totalincome during the previous year. Overall savings in the prime cost i.e. material andlabour cost has contributed to the improvement in EBITDA in the current financial year.

Profit before tax(PBT) as a percentage to Total Income works out to 5.97% for the yearwhen compared to 5.46% for the previous year. The increase in the PBT inspite of increasein administrative and finance cost is primary due to saving in construction expensesi.e.prime cost

The Company has made provision for income tax for the year Rs.1,177.21 million asagainst Rs.478.07 million during the previous year. During the year, the Company hasdiscontinued claim of deduction under Section 80 IA of the Income Tax Act, 1961 in view ofthe clarificatory amendment in the last Finance Act. Amount already claimed upto FY 2009Rs 1,409.03 million has been charged off to the Profit & Loss Account during the yearand an amount of Rs 1,411.00 million created as special reserve for the purpose has beencredited back.

Profit for the year after tax (PAT) as a percentage to Total Income works out to 3.83%when compared to 4.51% for the previous year. The disproportionate reduction in PAT is onaccount of increase in tax expense due to discontinuance of claim under section 80 IA.

16 . LIQUIDITY

Cash Flow Statement:

The construction infrastructure industry is by its nature working capital intensive,and net investments in inventory and current assets amount to, on average, approximatelysix months of total income. The company had a compound annual growth rate in excess of 30%over the last five fiscal years. The increase in the current assets are mainly in thecategories of sundry debtors and advances. There were also corresponding increase in thepayables also hence the Company could achieve positive net cash generated from operationsfor last two consecutive years.

Net cash used in investing activities mainly comprises of purchase of fixed assets andinvestment in subsidiaries.Net cash generated from financing activities comprises ofinflow from long term and short term borrowings