DRAFT RED HERRING PROSPECTUS Please read Section 60B of the Companies Act, 1956

100% Book Built Issue The Draft red Herring Prospectus shall be updated upon filing with the RoC

Dated January 8, 2007

1

AFCONS INFRASTRUCTURE LIMITED

(Our Company was originally incorporated as Asia Foundations and Constructions Private Limited on November 22, 1976 under the Companies Act, 1956. The word “private” was deleted on March 18, 1977 pursuant to section 43A of the Companies Act, 1956. The name of our Company was changed to Afcons Infrastructure Limited on August 14, 1996 and it was converted into a public limited company on November 11, 1997. For details of changes in the name and registered office of the Company, please refer to “Our History and Certain Corporate Matters” on page 108 of this Draft Red Herring Prospectus)

Registered Office: Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azad Nagar P.O., Mumbai – 400 053. Tel: (91 22) 6677 3100; Fax: (91 22) 2673 0047

Website: www.afcons.com; Email: ipo@afcons.com Contact Person: P.R. Rajendran

PUBLIC ISSUE OF 16,065,000 EQUITY SHARES OF Rs. 10 EACH OF AFCONS INFRASTRUCTURE LIMITED (“AFCONS” OR THE “COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF Rs. [����] PER EQUITY SHARE (INCLUDING A SHARE PREMIUM OF Rs. [●] PER EQUITY SHARE) AGGREGATING Rs. [����] MILLION (THE “ISSUE”). THE ISSUE COMPRISES A NET ISSUE OF 15,743,700 EQUITY SHARES TO THE PUBLIC AND A RESERVATION OF 321,300 EQUITY SHARES FOR ELIGIBLE EMPLOYEES. THE ISSUE WOULD CONSTITUTE 18.37% OF THE POST ISSUE PAID UP CAPITAL OF THE COMPANY. THE NET ISSUE WOULD CONSTITUTE 18.0 % OF THE POST ISSUE PAID UP CAPITAL OF THE COMPANY.

PRICE BAND: Rs. [����] TO Rs. [����] PER EQUITY SHARE OF FACE VALUE OF RS. 10 EACH THE FACE VALUE OF THE EQUITY SHARES IS RS. 10 EACH. THE ISSUE PRICE IS [●] TIMES THE FACE VALUE AT THE LOWER

END OF THE PRICE BAND AND [●] ATIMES THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND. In case of revision in the Price Band, the Bidding/Issue Period will be extended for three additional working days after revision of the Price Band subject to the Bidding/Issue Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding/Issue Period, if applicable, will be widely disseminated by notification to National Stock Exchange of India Limited (“NSE”) and Bombay Stock Exchange Limited (“BSE”), by issuing a press release, and also by indicating the change on the website of the BRLM, CBRLMs and at the terminals of the Syndicate Members.

In terms of Rule 19(2)(b) of the Securities Contracts Regulations Rules, 1957, this being an issue for less than 25% of the post-Issue capital, the Issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue shall be allocated on a proportionate basis to QIB Bidders. 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIB Bidders, including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 10% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 30% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. We have not opted for IPO grading of this Issue.

RISK IN RELATION TO FIRST ISSUE This being the first issue of equity shares of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the shares is Rs. 10 each and the Floor Price is [•] times of the face value and the Cap Price is [•] times of the face value. The Issue Price (as determined by the Company in consultation with the BRLM and the CBRLMs on the basis of assessment of market demand for the Equity Shares by way of book building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares or regarding the price at which the Equity Shares will be traded after listing.

GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Company and the Issue including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the section titled “Risk Factors” beginning on page xii of this Draft Red Herring Prospectus.

ISSUER’S ABSOLUTE RESPONSIBILITY The Company having made all reasonable inquiries, accepts responsibility for and confirm that this Draft Red Herring Prospectus contains all information with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING ARRANGEMENT The Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on the NSE and BSE. We have received an ‘in-principle’ approval from the NSE and the BSE, for the listing of the Equity Shares pursuant to letters dated [●] and [●], respectively. For the purposes of the Issue, the Designated Stock Exchange shall be [●].

BOOK RUNNING LEAD MANAGER

CO-BOOK RUNNING LEAD MANAGERS REGISTRAR TO THE ISSUE

[●]

ENAM FINANCIAL CONSULTANTS PRIVATE LIMITED

801/ 802, Dalamal Towers Nariman Point Mumbai 400 021, India Tel: (91 22) 6638 1800 Fax: (91 22) 2284 6824 E-mail: afcons.ipo@enam.com Website: www.enam.com Contact Person: Aishwarya Mehra

CLSA INDIA LIMITED 8/F Dalamal House Nariman Point

Mumbai 400 021 Tel: (91 22) 6650 5050 Fax: (91 22) 2284 1657 E-mail: afcons.ipo@clsa.com Website: www.india.clsa.com Contact Person: Varun Kumar

JM MORGAN STANLEY PRIVATE LIMITED 141, Maker Chambers III, Nariman Point

Mumbai 400 021, India Tel.: (91 22) 6630 3030 Fax.: (91 22) 2204 7185 Email: afcons.ipo@jmmorganstanley.com Website: www.jmmorganstanley.com Contact Person: Utkarsh Katoria

SBI CAPITAL MARKETS LIMITED 202, Maker Towers ‘E’, Cuffe Parade,

Mumbai 400 005 Tel: (91 22) 2218 9166 Fax: (91 22) 2218 8332 Email : afcons.ipo@sbicaps.com Website : www.sbicaps.com Contact Person : Swaminathan B

[●]

ISSUE PROGRAMME

BID/ISSUE OPENS ON: [●] BID/ISSUE CLOSES ON: [●]

TABLE OF CONTENTS DEFINITIONS AND ABBREVIATIONS…………………………………………………………..……...iii CERTAIN CONVENTIONS; USE OF MARKET DATA………………………………………..………...ix FORWARD-LOOKING STATEMENTS…………………………………………………………..………..x RISK FACTORS………………………………………………………………………………..…………...xi SUMMARY……………………………………………………………………………………………..…....1 SUMMARY FINANCIAL INFORMATION…………………………………………………..……………7 THE ISSUE……………………………………………………………………………….………………...21 GENERAL INFORMATION……………………………………………………………………..………...22 CAPITAL STRUCTURE………………………………………………………………………….………..29 OBJECTS OF THE ISSUE…………………………………………………………………………………43 BASIS FOR ISSUE PRICE………………………………………………………………………………...46 STATEMENT OF TAX BENEFITS……………………………………………………………………….48 INDUSTRY…………………………………………………………………………………………………56 BUSINESS………………………………………………………………………………………………….81 REGULATIONS AND POLICIES……………………………………………………………………….104 HISTORY AND CERTAIN CORPORATE MATTERS…………………………………………………108 OUR MANAGEMENT……………………………………………………………………………………122 OUR PROMOTERS……………………………………………………………………………………….139 RELATED PARTY TRANSACTIONS…………………………………………………………………..194 DIVIDEND POLICY…………………………………………………………………………………...…203 INDEBTEDNESS………………………………………………………………………………………….204 FINANCIAL STATEMENTS……………………………………………………………………………..207 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS……………………………………………………..………………………………….316 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS……………………………......337 GOVERNMENT APPROVALS……………………………………………………………………….….349 OTHER REGULATORY AND STATUTORY DISCLOSURES……………………………………..….361 TERMS OF THE ISSUE…………………………………………………………………………………..370 ISSUE STRUCTURE…………………………………………………..………………………………….373 ISSUE PROCEDURE…………………………………………………..………………………………....376 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES…………………………... 404 MAIN PROVISIONS OF ARTICLES OF ASSOCIATION…………………………...............................405 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION…………....................................426 DECLARATION…………………………………………………..……………………………………...428

iii

DEFINITIONS AND ABBREVIATIONS

Term Description “AIL”, “our Company”, the “Company”, “We”, “Us”, “Our”, the “Issuer”

Unless the context otherwise requires, refers to Afcons Infrastructure Limited, a company incorporated under the Companies Act, 1956 and having its registered office at Afcons House, 16 Shah Industrial Estate, Azad Nagar P.O., Veera Desai Road, Andheri (W), Mumbai 400 053, India.

Company Related Terms

Term Description Articles/Articles of Association

The Articles of Association of the Company.

Auditors The statutory auditors of our Company; Mr. J. C. Bhatt, Chartered Accountant and M/s. C.C.Chokshi & Co., Chartered Accountants (Joint Auditors)

Board of Directors/Board The board of directors of the Company or a committee constituted thereof.

Directors Directors of the Company, unless otherwise specified.

Memorandum/ Memorandum of Association

The Memorandum of Association of the Company.

Registered Office of the Company

Afcons House, 16 Shah Industrial Estate, Azad Nagar P.O., Veera Desai Road, Andheri (W), Mumbai 400 053

SPCL Shapoorji Pallonji & Co. Limited, a company incorporated under the Companies Act, and having its registered office at 70, Nagindas Master Road, Fort, Mumbai 400 023

CIL Cyrus Investments Limited, a company incorporated under the Companies Act, and having its registered office at Esplanade House, Hazarimal Somani Marg, Fort, Mumbai 400 001

SICL Sterling Investment Corporation Private Limited, a company incorporated under the Companies Act, and having its registered office at 70, Nagindas Master Road, Fort, Mumbai 400 023

FIL Floreat Investments Limited, a company incorporated under the Companies Act, and having its registered office at 70, Nagindas Master Road, Fort, Mumbai 400 023

Issue Related Terms

Term Description Allotment/Allot/Allotted Unless the context otherwise requires, the allotment of Equity Shares

pursuant to this Issue to the successful Bidders.

Allottee The successful Bidder to whom the Equity Shares are being/have been Allotted.

Banker(s) to the Issue [●]

Bid An indication to make an offer during the Bidding/Issue Period by a prospective investor to subscribe to the Company’s Equity Shares at a price within the Price Band, including all revisions and modifications thereto.

Bid Amount The highest value of the optional Bids indicated in the Bid cum Application Form and payable by the Bidder on submission of the Bid in the Issue.

Bid /Issue Closing Date The date after which the Syndicate will not accept any Bids for this Issue, which shall be notified in an English national newspaper, a Hindi

iv

Term Description national newspaper and a Marathi newspaper with wide circulation.

Bid cum Application Form The form in terms of which the Bidder shall make an offer to subscribe to the Equity Shares of our Company and which will be considered as the application for issue of the Equity Shares pursuant to the terms of this Draft Red Herring Prospectus.

Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid cum Application Form.

Bidding/Issue Period The period between the Bid Opening Date /Issue Opening Date and the Bid Closing Date/Issue Closing Date inclusive of both days and during which prospective Bidders can submit their Bids.

Bid/Issue Opening Date The date on which the Syndicate shall start accepting Bids for the Issue, which shall be the date notified in a widely circulated English national newspaper, a Hindi national newspaper and a Marathi newspaper with wide circulation.

Book Building Process The book building process as provided under Chapter XI of the SEBI Guidelines, in terms of which the Issue is being made.

BRLM/Book Running Lead Manager/ Enam

Book Running Lead Manager to the Issue, in this case being Enam Financial Consultants Private Limited,

CBRLMs/ Co Book Running Lead Managers

Co Book Running Lead Managers to the Issue, in this case being CLSA India Limited, JM Morgan Stanley India Private Limited and SBI Capital Markets Limited

CAN/Confirmation of Allocation Note

The note or advice or intimation of allocation of Equity Shares sent to the Bidders who have been allocated Equity Shares after discovery of the Issue Price in accordance with the Book Building Process.

Cap Price The higher end of the Price Band, above which the Issue Price will not be finalised and above which no Bids will be accepted.

CLSA CLSA India Limited, having its registered office at 8th Floor, Dalamal House, Nariman Point, Mumbai 400 021

Cut-off Price Any price within the Price Band finalised by the Company in consultation with the BRLM and the CBRLMs. A Bid submitted at Cut-off Price is a valid Bid at all price levels within the Price Band.

Designated Date The date on which the Escrow Collection Banks transfer funds from the Escrow Account(s) to the Public Issue Account after the Prospectus is filed with the RoC, following which the Board of Directors shall allot Equity Shares to successful Bidders.

Designated Stock Exchange

[●]

Draft Red Herring Prospectus

This Draft Red Herring Prospectus issued in accordance with Section 60B of the Companies Act, which does not contain complete particulars on the price at which the Equity Shares are offered and the size of the Issue.

Eligible Employees Permanent employees of the Company who are Indian Nationals based in India and are present in India on the date of submission of the Bid-cum-Application Form.

Employee Reservation The portion of the Issue being up to 321,300 Equity Shares available for allocation to Eligible Employees.

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

Escrow Account An account opened with an Escrow Collection Bank(s) and in whose favour the Bidder will issue cheques or drafts in respect of the Bid Amount when submitting a bid.

Escrow Agreement Agreement entered into amongst the Company, the Registrar, the Escrow Collection Bank(s), the BRLM, the CBRLMs and the Syndicate Members for collection of the Bid Amounts and for remitting refunds, if

v

Term Description any, of the amounts collected, to the Bidders.

Escrow Collection Bank(s) The banks, which are clearing members and registered with SEBI as Banker(s) to the Issue, at which the Escrow Account will be opened and

in this case being [•].

First Bidder The Bidder whose name appears first in the Bid cum Application Form or Revision Form.

Floor Price The lower end of the Price Band, below which the Issue Price will not be finalised and below which no Bids will be accepted.

IPO Initial Public Offering

Issue Public Issue of 16,065,000 Equity Shares of Rs. 10 each of the Issuer for cash at a price of Rs. [●] per Equity Share (including a share premium of Rs. [●] per Equity Share) aggregating Rs. [●]

Issue Price The final price at which Equity Shares will be Allotted in the Issue, as determined by the Company in consultation with the BRLM and the CBRLMs, on the Pricing Date.

Issue Account An account opened with the Banker(s) to the Issue to receive monies from the Escrow Accounts for the Issue on the Designated Date.

JMMS JM Morgan Stanley Private Limited, having its resgistered office at 141, Maker Chambers III, Nariman Point, Mumbai 400 021, India

Margin Amount The amount paid by the Bidder at the time of submission of their Bid, which may range from 10% to 100% of the Bid Amount.

Mutual Funds A mutual fund registered with SEBI pursuant to the SEBI (Mutual Funds) Regulations, 1996, as amended from time to time.

Mutual Funds Portion 5% of the QIB Portion or 472,311 Equity Shares (assuming the QIB Portion is for 60% of the Net Issue Size) available for allocation to Non-Institutional Bidders

Net Issue The Issue less the Employee Reservation Portion

Non-Institutional Bidders All Bidders that are not QIBs or Retail Individual Bidders and who have Bid for Equity Shares for an amount more than Rs 100,000

Non-Institutional Portion The portion of this Net Issue being not less than 1,574,370 Equity Shares available for allocation to Non Institutional Bidders

Pay- in – Date The Bid/Issue Closing Date or the last date specified in the CAN sent to Bidders, as applicable.

Pay-in-Period With respect to Bidders whose Margin Amount is 100% of the Bid Amount, the period commencing on the Bid Opening Date and extending until the Bid Closing Date; and With respect to Bidders whose Margin Amount is less than 100% of the Bid Amount, the period commencing on the Bid Opening Date and extending until the closure of the Pay – in Date.

Price Band The price band with a minimum price (Floor Price) of Rs. [•] and the

maximum price (Cap Price) of Rs. [•], including any revisions thereof.

Pricing Date

The date on which the Company in consultation with the BRLM and the CBRLMs finalize the Issue Price.

Promoter Our Promoter being Shapoorji Pallonji & Co., Limited, Sterling Investment Corporation Private Limited, Cyrus Investments Limited and Floreat Investments Limited

Promoter Group Companies

Unless the context otherwise requires, refers to those companies mentioned in the section titled “Our Promoter” on page 139 of this Draft Red Herring Prospectus.

Prospectus The Prospectus, to be filed with the RoC containing, inter alia, the Issue Price that is determined at the end of the Book Building Process, the size of the Issue and certain other information.

Public Issue Account An account opened with the Banker(s) to the Issue to receive monies

vi

Term Description from the Escrow Account for this Issue on the Designated Date.

QIB Margin Amount An amount representing at least 10% of the Bid Amount.

QIB Portion The portion of the Net Issue to public being not less than 9,446,220 Equity Shares each at the Issue Price, required to be allocated to QIBs.

Qualified Institutional Buyers or QIBs

Public financial institutions as defined in Section 4A of the Companies Act, FIIs, scheduled commercial banks, mutual funds registered with SEBI, venture capital funds registered with SEBI, foreign venture capital investors registered with SEBI, state industrial development corporations, insurance companies registered with the Insurance Regulatory and Development Authority, provident funds with a minimum corpus of Rs. 250 million, pension funds with a minimum corpus of Rs. 250 million, and multilateral and bilateral development financial institutions.

Refund Account(s) Account(s) opened with an Escrow Collection Bank from which refunds if any, shall be made.

Registrar /Registrar to the Issue

Registrar to the Issue, in this case being [●]

Retail Individual Bidders Individual Bidders (including HUFs) who have Bid for Equity Shares for an amount less than or equal to Rs. 100,000 in any of the bidding options in the Issue.

Retail Portion The portion of the Net Issue to the public being not less than 4,723,110 Equity Shares available for allocation to Retail Individual Bidder(s).

Revision Form The form used by the Bidders to modify the quantity of Equity Shares or the Bid Price in any of their Bid cum Application Forms or any previous Revision Form(s).

RHP or Red Herring Prospectus

The red herring prospectus issued in accordance with Section 60B of the Companies Act, which does not have complete particulars on the price at which the Equity Shares are offered and the size of the Issue. The Red Herring Prospectus which will be filed with the RoC at least three days before the Bid Opening Date and will become a Prospectus after filing with the RoC after the Pricing Date.

SBI CAP SBI Capital Markets Limited 202, having its registered office at Maker Towers ‘E’, Cuffe Parade, Mumbai 400 005

Stock Exchanges NSE and BSE

Syndicate The BRLM, the CBRLM and the Syndicate Members.

Syndicate Agreement The agreement to be entered into among the Company and the Syndicate in relation to the collection of Bids in this Issue.

Syndicate Members Enam Securities Private Limited, JMMS Financial Services and SBICAP Securities Limited

TRS or Transaction Registration Slip

The slip or document issued by the Syndicate Members to the Bidder as proof of registration of the Bid.

Underwriters The BRLM, the CBRLMs and the Syndicate Members.

Underwriting Agreement The agreement among the members of the Syndicate and the Company to be entered into on or after the Pricing Date.

Technical and Industry Terms

Term Description BOT Build, Operate and Transfer

BOOT Build, Own, Operate and Transfer

BOLT Build, Operate, Lease and Transfer

BOQ Bill of Quantities

COD Commercial Operation Date

EPC Engineering, Procurement and Construction

vii

Term Description MCGM Municipal Corporation of Greater Mumbai.

MHADA Mumbai Housing and Area Development Authority

MoP Ministry of Power

MTPA Million tonnes per annum

NABARD National Bank for Agricultural & Rural Development

NHAI National Highways Authority of India

NHDP National Highways Development Project

O&M Operations and Maintenance

PPA Power Purchase Agreement

PPP Public Private Partnership

RCC Roller Compacted Concrete

RFQ Request for Qualification

RFP Request for Proposal

SPV’s Special Purpose Vehicle(s)

TEU Twenty Feet Equivalent Unit

Conventional/General Terms

Term Description AGM Annual General Meeting

AS Accounting Standards issued by the Institute of Chartered Accountants of India

AY Assessment Year

BIFR Board for Industrial and Financial Reconstruction

BSE Bombay Stock Exchange Limited

CAGR Compounded Annual Growth Rate

CDSL Central Depository Services (India) Limited

Companies Act The Companies Act, 1956, as amended from time to time

Depositories Act The Depositaries Act, 1996, as amended from time to time

Depository A body corporate registered under the SEBI (Depositaries and Participant) Regulations, 1996, as amended from time to time

Depository Participant A depository participant as defined under the Depositories Act, 1996

DGFT Director General of Foreign Trade

EBITDA Earnings Before Interest, Tax, Depreciation & Ammortisation

ECS Electronic Clearing System

EGM Extraordinary General Meeting

EPS Earning Per Share

Electronic Transfer of Funds

Refunds through ECS, NEFT, Direct Credit or RTGS as applicable

FDI Foreign Direct Investment

FEMA Foreign Exchange Management Act, 1999, as amended from time to time and the regulations framed thereunder

FII Foreign Institutional Investor (as defined under Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000) registered with SEBI under applicable laws in India

FIPB Foreign Investment Promotion Board, Government of India

Financial Year /fiscal year/FY/ fiscal

Period of twelve months ended March 31 of that particular year, unless otherwise stated

GIR Number General Index Registry Number

Government/ GOI The Government of India

HUF Hindu Undivided Family

I.T. Act The Income Tax Act, 1961, as amended from time to time

viii

Term Description Indian GAAP Generally Accepted Accounting Principles in India

MICR Magnetic Ink Character Recognition

NAV Net Asset Value

NEFT National Electronic Funds Transfer

NOC No Objection Certificate

Non Residents/NR Non-Resident is a Person resident outside India, as defined under FEMA and includes a Non-Resident Indian.

NRE Account Non-Resident External Account

NRI/Non-Resident Indian Non-Resident Indian, is a Person resident outside India, who is a citizen of India or a Person of Indian origin and shall have the same meaning as ascribed to such term in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000.

NRO Account Non-Resident Ordinary Account

NSDL National Securities Depository Limited

OCB/ Overseas Corporate Body

A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least 60% by NRIs, including overseas trusts in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly as defined under Foreign Exchange Management (Deposit) Regulations, 2000. OCBs are not allowed to invest in this Issue.

p.a/P.A Per Annum

PAT Profit after tax

PBT Profit before tax

P/E Ratio Price/Earnings Ratio

PAN Permanent Account Number

Person/Persons Any individual, sole proprietorship, unincorporated association, unincorporated organization, body corporate, corporation, company, partnership, limited liability company, joint venture, or trust or any other entity or organization validly constituted and/or incorporated in the jurisdiction in which it exists and operates, as the context requires

PIO/ Person of Indian Origin

Shall have the same meaning as is ascribed to such term in the Foreign Exchange Management (Investment in Firm or Proprietary Concern in India) Regulations, 2000.

Re. One Indian Rupee

RBI The Reserve Bank Of India

Reserve Bank of India Act/RBI Act

The Reserve Bank of India Act, 1934, as amended from time to time

RoC/Registrar of Companies

The Registrar of Companies, Maharashtra at Mumbai located at Everest House, Marine Lines, Mumbai 400 020

Rs. Indian Rupees

RTGS Real Time Gross Settlement Process

SCRA Securities Contract (Regulation) Act, 1956, as amended from time to time.

SCRR Securities Contract (Regulation) Rules, 1957, as amended from time to time.

SEBI The Securities and Exchange Board of India constituted under the SEBI Act, 1992

SEBI Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on January 27, 2000, as amended, including instructions and clarifications issued by SEBI in relation thereto from time to time.

SEBI Takeover Regulations

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997, as amended from time to time

SICA Sick Industrial Companies (Special Provisions) Act, 1985

ix

Term Description UIN Unique Identification Number

x

CERTAIN CONVENTIONS; USE OF MARKET DATA

Unless stated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our restated consolidated and unconsoliadated financial statements prepared in accordance with Indian GAAP and included in this Draft Red Herring Prospectus. Our current fiscal year commenced on April 1, 2006 and ends on March 31, 2007. In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off. There are significant differences between Indian GAAP and U.S. GAAP. Accordingly, the degree to which the Indian GAAP financial statements included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practices. Any reliance by Persons not familiar with Indian accounting practices on the financial disclosures presented in this Draft Red Herring Prospectus should accordingly be limited. We have not attempted to explain those differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on our financial data. Any percentage amounts, as set forth in “Risk Factors”, “Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Draft Red Herring Prospectus, unless otherwise indicated, have been calculated on the basis of our restated consolidated and unconsoliadated financial statements prepared in accordance with Indian GAAP. All references to “India” contained in this Draft Red Herring Prospectus are to the Republic of India, all references to the “US”, “USA”, or the “United States” are to the United States of America, and all references to “UK” are to the United Kingdom. For definitions, please see the section titled “Definitions and Abbreviations” on page iii of this Draft Red Herring Prospectus. In the section entitled “Main Provisions of Articles of Association”, defined terms have the meaning given to such terms in the Articles. Use of Market data Unless stated otherwise, industry data used throughout this Draft Red Herring Prospectus has been obtained from industry sources such as CRIS INFAC (February 2006), NHAI website accessed on December 9, 2006 and 10th Five Year Plan. Industry sources generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe that industry data used in this Draft Red Herring Prospectus is reliable, it has not been independently verified. Currency of Presentation

In this Draft Red Herring Prospectus, all references to “Rupees” and “Rs.” are to the legal currency of India, all references to “U.S. Dollars”, and “US$” are to the legal currency of the United States of America.

xi

FORWARD-LOOKING STATEMENTS

We have included statements in this Draft Red Herring Prospectus, that contain words or phrases such as “will”, “aim”, “will likely result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of such expressions that are “forward-looking statements”. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from our expectations include, among others:

• Implementation risks involved in our projects;

• Political and regulatory environment;

• Our ability to raise capital for our future projects;

• Our ability to meet our debt service obligations;

• Continuation of tax benefits available to us;

• Our ability to successfully implement our strategy, growth and expansion plans;

• Our exposure to market risks;

• Changes in the value of the Rupee and other currencies;

• The monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates;

• Changes in the foreign exchange control regulations in India;

• Foreign exchange rates, equity prices or other rates or prices; and

• The performance of the financial markets in India. For further discussion of factors that could cause our actual results to differ, see the section titled “Risk Factors” on page xii of this Draft Red Herring Prospectus. By their nature, certain risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. We, the members of the Syndicate and their respective affiliates do not have any obligation to, and do not intend to, update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, we, the BRLM and the CBRLMs will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges.

xii

RISK FACTORS

An investment in Equity Shares involves a high degree of risk. You should carefully consider all the

information in this Draft Red Herring Prospectus, including the risks and uncertainties described

below, before making an investment in our Equity Shares. If any of the following risks actually occur,

our business, results of operations and financial condition could suffer and the price of our Equity

Shares and the value of your investment in our Equity Shares could decline.

Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specify

or quantify the financial or other implications of any of the risks mentioned herein.

Internal Risk Factors

There are criminal cases pending against the Company and our Directors:

There are two criminal cases pending against the Company and our Directors, which are as follows:

• Criminal case pending against the Company under section 29(1)(e) and 29(2)(e) of the Karnataka Sales Tax Act, 1957 before the Judicial Magistrate First Class, Bangalore.

• Complaint pending against Mr. Pallonji Shapoorji Mistry, Mr. Shapoorji Pallonji Mistry and Mr. Cyrus Pallonji Mistry for allegedly committing an offence of dishonouring hundies under sections 406, 417, 422, 423 and 468 read with section 120B of the Indian Penal Code, before the Judicial Magistrate-II, Chennai.

For more details on the above litigations, see the section entitled “Outstanding Litigation and Material Developments” on page 337 of this Draft Red Herring Prospectus.

A significant part of our business transactions are with Indian governmental or government-funded

entities or agencies and any change in the Indian government policies or focus may affect our

business and results of operations.

Our business is dependent on infrastructure projects undertaken by governmental authorities and other entities funded by governments or international and multilateral development finance institutions. Contracts awarded by Indian central, state, local governmental authorities and government bodies accounted for approximately 54.92 % of our order book as of September 30, 2006. For a breakdown of our recent historical revenues, see the section entitled “Business” beginning on page 81 of this Draft Red Herring Prospectus. Government focus on and sustained increase in budgetary allocation for investments in the infrastructure sector, and the development of a structured and comprehensive infrastructure policy that encourages greater private sector participation as well as increased funding by international and multilateral development financial institutions in infrastructure projects in India, have resulted in or are expected to result in the commencement of several large infrastructure projects in India. If there is any change in the government or in governmental policies, practices or focus that results in a slowdown in infrastructure projects, our business and results of operations may be adversely affected. In addition, for projects of value less than Rs.1,000 million, government agencies in India may grant “purchase preference” to public sector construction companies whose bid for the project is within 10% of the lowest bidder, and give such public sector enterprises an option to match the lowest bid. Unfavourable geopolitical, economic or other developments in our intenational markets could

adversely affect our results of operations in those markets

We have undertaken overseas projects in the past and as of September 30. 2006, overseas projects constitute 8.65 % of our Order Book. Our strategy includes sustained focus on key international markets especially the Middle East and Africa. These operations are subject to risks associated with

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uncertain political and economic environments, government instability, and legal systems, laws and regulations, that are different from the legal systems that we are familiar with in India. If any of these risks materialize our results of operations could be adversely affected.

Our profitability and results of operations may be adversely affected in the event of increases in the

price of raw materials, fuel costs, labour or other inputs.

The cost of raw materials, fuel, labour and other inputs constitutes a significant part of our operating expenses. Our construction operations require various construction raw materials including steel and cement. Fuel costs for operating our construction and other equipment also constitute a significant part of our operating expenses, especially in the case of our infrastructure projects. Our ability to pass on increases in the purchase price of raw materials, fuel and other inputs may be limited in the case of fixed-price contracts or contracts with limited price escalation provisions. Under the terms and conditions of fixed-price contracts, we generally agree to provide services for the part of the project contracted to us for a fixed price, subject to contract variations pursuant to changes in the client’s project requirements. Fixed-price contracts contain limited or no price escalation clauses covering increases in the cost of raw materials. We derived approximately 26.65% and 8.19% of our contract revenue in the year ended March 31, 2006 and in the six months ended September 30, 2006, respectively, from such fixed-price contracts. Fixed-price contracts accounted for approximately 19.89% of our Order Book as of September 30, 2006. Our actual expense in executing a fixed-price contract may vary substantially from the assumptions underlying our bid for several reasons, including:

• unanticipated increases in the cost of raw materials, fuel, labour or other inputs;

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

• delays caused by local weather conditions; and

• suppliers’ or subcontractors’ failures to perform. Unanticipated increases in the price of raw materials, fuel costs, labour or other inputs not taken into account in our bid can also have compounding effects by increasing costs of performing other parts of the contract. These variations and other risks generally inherent to the construction industry may result in our profits on a project being less than as originally estimated or may result in our experiencing losses. Depending on the size of a project, these variations from estimated contract performance could have a significant effect on our results of operations.

Our construction contracts are dependent on adequate and timely supply of key raw materials such

as steel and cement at commercially acceptable prices. Timely and cost effective execution of our projects is dependant on the adequate and timely supply of key raw materials. We have not entered into any long-term supply contracts with our suppliers. Additionally, we typically use third-party transportation providers for the supply of most of our raw materials. Transportation strikes by, for example, members of various Indian truckers’ unions and various legal or regulatory restrictions placed on transportation providers have had in the past, and could have in the future, an adverse effect on our receipt of supplies. Further, transportation costs have been steadily increasing, and the prices of raw materials themselves can fluctuate. In addition, the availability of supplies may not be commensurate with the rate of growth being experienced by the infrastructure sector. If we are unable to procure the requisite quantities of raw materials in time and at commercially acceptable prices, the performance of our business and results of operations may be adversely affected.

We have high working capital requirements. If we experience insufficient cash flows to allow us to

make required payments on our debt or fund working capital requirements, there may be an adverse

effect on our results of operations.

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Our business requires a great deal of working capital. In many cases, significant amounts of working capital are required to finance the purchase of materials, the hiring of equipment and the performance of engineering, construction and other work on projects before payments are received from clients. In certain cases, we are contractually obligated to our clients to fund the working capital requirements of our projects. Our working capital requirements may increase if, under certain contracts, payment terms do not include advance payments or such contracts have payment schedules that shift payments toward the end of a project or otherwise increase our working capital burdens. In addition, our working capital requirements have increased in recent years because we have undertaken a growing number of projects within a similar timeframe and due to the growth of the Company’s business generally. All of these factors may result, or have resulted, in increases in our working capital needs. It is customary in the industry in which we operate to provide bank guarantees or performance bonds in favour of clients to secure obligations under contracts. In addition, letters of credit are often required to satisfy payment obligations to suppliers and sub-contractors. If we are unable to provide sufficient collateral to secure the letters of credit, bank guarantees or performance bonds, our ability to enter into new contracts or obtain adequate supplies could be limited. Providing security to obtain letters of credit, bank guarantees and performance bonds increases our working capital needs. We may not be able to continue obtaining new letters of credit, bank guarantees, and performance bonds in sufficient quantities to match our business requirements.

Our expansion plans require significant expenditure and if we are unable to obtain the necessary

funds for expansion, our business may be adversely affected. We will need significant additional working capital and long-term capital to finance our future business plans and, in particular, our plan for expansion and purchase of capital equipment as referred to in “Objects of the Issue” on page 43 of this Draft Red Herring Prospectus. Due to various factors, including certain extraneous factors such as changes in tariff regulations, interest rates, insurance and other costs or borrowing and lending restrictions, if any, we may not be able to finance our expansion plans, or secure other financing when needed, on acceptable commercial terms. Any such situation would adversely affect our business and growth prospects.

Delays associated with the collection of receivables from our clients may adversely affect our

business and results of our operations. There may be delays associated with the collection of receivables from our clients, including government owned, controlled or funded entities and related parties. As of the year ended March 31, 2006 and as of September 30, 2006, Rs. 1,193.99 million, or 60.27% and 1,420.36 million, or 73.92 %, of our accounts receivable were outstanding for a period of more than six months respectively. Our operations involve significant working capital requirements and delayed collection of receivables could adversely affect our liquidity and results of operations. In addition, we may be subject to additional regulatory or other scrutiny associated with commercial transactions with government owned, controlled or funded entities. Our business is subject to a significant number of tax regimes and changes in legislation governing

the rules implementing them or the regulator enforcing them in any one of those jurisdictions could negatively and adversely affect our results of operations. We currently have operations and staff spread across many states of India. Consequently, we are subject to the jurisdiction of a number of tax authorities and regimes. The revenues recorded and income earned in these various jurisdictions are taxed on differing bases, including net income actually

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earned, net income deemed earned and revenue-based tax withholding. The final determination of our tax liabilities involves the interpretation of local tax laws and related authorities in each jurisdiction as well as the significant use of estimates and assumptions regarding the scope of future operations and results achieved and the timing and nature of income earned and expenditures incurred. We are involved in various disputes with the tax authorities. For more details, see “Outstanding Litigation – Taxation related matters” on page 340 of this Draft Red Herring Prospectus. Changes in the operating environment, including changes in tax law, could impact the determination of our tax liabilities for any given tax year. Taxes and other levies imposed by the central or state governments in India that affect our industry include customs duties, excise duties, VAT, income tax, service tax and other taxes, duties or surcharges introduced from time to time. The central and state tax scheme in India is extensive and subject to change from time to time. Any adverse changes in any of the taxes levied by the central or state governments may adversely affect our competitive position and profitability.

Projects included in our Order Book may be delayed, cancelled or not fully paid for by our clients,

which could materially harm our cash flow position, revenues and earnings.

Our Order Book does not necessarily indicate future earnings related to the performance of that work. Order Book projects represent business that is considered firm, but cancellations or scope or schedule adjustments may occur. We may also encounter problems executing the project as ordered, or executing it on a timely basis. Moreover, factors beyond our control like contractual risks which are under the control of our clients may postpone a project or cause its cancellation, including delays or failures to obtain necessary permits, authorizations, permissions, right-of-way, and other types of difficulties or obstructions. Due to the possibility of cancellations or changes in project scope and schedule, as a result of exercises of our clients’ discretion, problems we encounter in project execution, or reasons outside our control or the control of our clients, we cannot predict with certainty when, if or to what extent an Order Book project will be performed. Delays in the completion of a project can lead to clients delaying or refusing to make payment to us of some or all of the amounts we expect to be paid in respect of the project. Even relatively short delays or surmountable difficulties in the execution of a project could result in our failure to receive, on a timely basis or at all, the final payments due to us on a project. These payments often represent a significant portion of the margin we expect to earn on the project. In addition, even where a project proceeds as scheduled, it is possible that the contracting parties may default or otherwise fail to pay amounts owed. Any delay, reduction in scope, cancellation, execution difficulty, payment postponement or payment default in regard to Order Book projects or any other uncompleted projects, or disputes with clients in respect of any of the foregoing, could materially harm our cash flow position, revenues and earnings.

Given the long-term nature of the projects we undertake, we face various kinds of implementation

risks. Most infrastructure construction projects involve agreements that are long-term in nature. Long-term agreements have inherent risks associated with them that may not necessarily be within our control and accordingly our exposure to a variety of implementation and other risks, including construction delays, material shortages, unanticipated cost increases, cost overruns, inability to negotiate satisfactory arrangements with joint venture partners, and disagreements with our joint venture partners is enhanced. For example, business circumstances may materially change over the life of one or more of our agreements and we may not have the ability to modify our agreements to reflect these changes. Further, being committed under these agreements may restrict our ability to implement changes to our business plan. This limits our business flexibility, exposes us to an increased risk of unforeseen business and industry changes and could have a material adverse effect on our business, financial condition and results of operations. As our revenue structure under each such agreement is set over the life of the agreement (and fluctuates subject to the built-in adjustment mechanisms contained in such agreement), our profitability is largely

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a function of how effectively we are able to manage our costs during the terms of our agreements. The nature of the industry is such where quantity variations are an integral part of many contracts. Uncertainty attached to this factor may result in adverse impact in revenues and profitability. If we are unable to effectively manage costs, our business, financial condition and results of operations may be materially and adversely affected.

An inability to manage our growth could disrupt our business and reduce our profitability. We have experienced high growth in recent years and expect our construction and infrastructure business to continue to grow as we gain greater access to financial resources. We expect this growth to place significant demands on us and require us to continuously evolve and improve our operational, financial and internal controls across our organization. In particular, continued expansion increases the challenges involved in:

• preserving a uniform work culture, values and work environment across our projects;

• developing and improving our internal administrative infrastructure, particularly our financial systems,

• operational, communications, internal control and other internal systems;

• recruiting, training and retaining technical and marketing personnel and key managerial personnel;

• maintaining high levels of client satisfaction; and

• adhering to health, safety, and environmental standards. Any inability to manage our growth may have an adverse effect on our business and results of operations.

Any inability to attract, recruit and retain skilled personnel could adversely affect our business and

results of operations.

Our ability to meet future business challenges depends on our ability to attract, recruit and retain talented and skilled personnel. We are highly dependent on our senior management, our Directors and other key personnel, including skilled project management personnel. A significant number of our employees are skilled engineers and we face strong competition to recruit and retain skilled and professionally qualified staff. Due to the limited pool of available skilled personnel, competition for senior management and skilled engineers in our industry is intense. We may experience difficulties in attracting, recruiting and retaining an appropriate number of managers and engineers for our business needs. We may also need to increase our pay structures to attract and retain such personnel. Our future performance will depend upon the continued services of these persons. The loss of any of the members of our senior management, our Directors or other key personnel or an inability to manage the attrition levels in different employee categories may materially and adversely impact our business and results of operations.

Contracts awarded to us by governments or government-backed entities may be unilaterally

terminated for convenience.

One of the standard conditions in contracts typically awarded by governments or government-backed entities is that the government or entity, as the client, has the right to terminate the contract for convenience, without any reason, at any time after providing us with notice that may vary from a period of 30 to 90 days. In the event that a contract is so terminated, our results of operations may be adversely affected.

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We face significant competition in our business from other civil engineering and construction

companies. We operate in a competitive environment. Our competition varies depending on the size, nature and complexity of the project and on the geographical region in which the project is to be executed. We compete against various civil engineering and construction companies. For more information concerning our competitors in specific industry and project segments, please see “Business” beginning on page 81 of this Draft Red Herring Prospectus. While many factors affect the client decisions, price is a key deciding factor in most of the tender awards. We may be unable to compete with larger engineering construction companies for complex, high-value contracts as well as projects that are of comparatively lesser value, many of whom may have greater financial resources, better technology, larger manpower, economics of scale and operating efficiencies. If we are unable to bid for and win engineering construction projects, both large and small, or compete with larger competitors, we could fail to increase, or maintain our volume of order intake and our results of operations may be materially adversely affected. There can be no assurance that we can continue to effectively compete with our competitors in the future, and failure to compete effectively may have an adverse effect on our business, financial condition and results of operations.

Our inability to qualify for and win large contracts and compete with other civil engineering and

construction companies could adversely affect our margins and results of operations.

Substantially all our contracts are obtained through a competitive bidding process. Pre-qualification is key to our winning major projects. In selecting contractors for such projects, clients generally limit the tender to contractors they have pre-qualified based on several criteria, including experience, technical ability, past performance, reputation for quality, safety record, financial strength and the size of previous contracts in similar projects, although the price competitiveness of the bid is usually the most important selection criterion. We are currently qualified to bid for projects up to certain values, depending on the client, and therefore may not be able to compete with other construction companies for larger, higher-value projects. Our ability to bid for and win major projects is dependent on our ability to show experience working on such large engineering, procurement and construction contracts and develop strong engineering capabilities and credentials to execute more technically complex projects.

The auditors report appearing in this Draft Red Herring Prospectus have been qualified by the

auditors

Our Auditors in their report on our consolidated and unconsolidated financial statement for the years ended March 31, 2002, 2003, 2004, 2005, 2006 and six months ended September 30, 2006 have put certain qualifications. For more details please refer to the Financial Statements appearing on page 207 of this Draft Red Herring Prospectus.

We depend on forming successful joint ventures to qualify for the bidding process as well as for

executing certain projects. In order to be able to bid for some large scale projects, we enter into memoranda of understanding or joint venture agreements with various other companies to meet capital adequacy, technical or other requirements that may be required as part of the pre-qualification for bidding or execution of the contract. In cases where we are unable to forge an alliance with appropriate companies to meet such requirements, we may lose out on opportunities to bid. Where we have formed a joint venture, our Company can claim benefits flowing to the joint venture to the extent of its share in the joint venture as agreed among the joint venture partners. However, the liability of joint venture partners is joint and several. Therefore, we would be liable for completion of the entire project if our joint venture partner were to default on its duty to perform. Additionally, our joint venture partners may not have adequate financial resources to meet their indemnity obligations to

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us. In the event that we were to face a situation where our joint venture partner defaulted on their duties to perform and we were unable to recover indemnities payable by them , it could have an adverse effect on our business and results of operations

Our portfolio is relatively concentrated in certain large-scale projects. There are various risks associated with the execution of large-scale integrated projects. Large contracts may take up a large part of our portfolio, increasing the potential volatility of our results through increased exposure to individual contract risks. Managing large-scale integrated projects may also increase the potential relative size of cost overruns and negatively affect our operating margins. Large-scale integrated projects may cause us to assume portions of the project that have potentially lower profit margins. In addition, we often execute large-scale integrated projects as joint ventures with other companies. Should the other members of our joint ventures default on their duties to perform, we would remain liable for the completion of the project. Our 12 largest contracts in terms of outstanding value represented approximately 81.49 % of our Order Book as of September 30, 2006. For a breakdown of our recent historical revenues, see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 316 of this Draft Red Herring Prospectus. We believe that our contract portfolio will continue to be concentrated to a similar degree in the future. If we do not achieve our expected margins or suffer losses on one or more of these large contracts, this could have an adverse effect on our results of operations. We may not be able to participate in certain NHAI road projects Currently, we are undertaking three road projects for NHAI and as of September 30, 2006, the outstanding contract value aggregating to Rs. 881.60 million constituting 2.9% of our Order Book. Owing to non-resolution of certain disputes with NHAI arising from delays in execution of road projects, we propose to participate in such projects only through the BOT/ BOOT route in association with Shapoorji Pallonji group and other established entities, which would function as a concessionaire whilst we would execute the EPC job. Owing to this strategy, our participation in the number of road projects with NHAI may reduce, which may have an adverse impact on our operations.

Our Promoters will continue to retain majority control in the Company after the Issue, which will

enable them to influence the outcome of matters submitted to shareholders for approval. Upon completion of the Issue, the Promoters and Promoter Group Companies will beneficially own 79.12 % of our post-Issue equity share capital. As a result, the Promoters will have the ability to control our business including matters relating to any sale of all or substantially all of our assets, the timing and distribution of dividends and the election or termination of appointment of our officers and Directors. This control could delay, defer or prevent a change in control of the Company, impede a merger, consolidation, takeover or other business combination involving the Company, or discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company even if it is in the Company’s best interest. In addition, for so long as the Promoters continue to exercise significant control over the Company, they may influence the material policies of the Company in a manner that could conflict with the interests of our other shareholders. The Promoters may have interests that are adverse to the interests of our other shareholders and may take positions with which we or our other shareholders do not agree.

Our insurance coverage may not adequately protect us against all material hazards.

Our Company has covered itself against certain risks. Our significant insurance policies consist of among others contractors all risk policy for our projects, special contingency policy for plant, machinery and equipments, marine transit policy, fire policy for buildings, furniture and fixtures, workmen’s compensation group personal accident policy etc. In addition, we have obtained separate insurance coverage for personnel related risks, motor vehicle risks and loss of movable assets risks. Under certain of our contracts and sub-contracts, we are required to obtain insurance for the project

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undertaken by us, which, in some cases, we have not obtained or we permitted such insurance policies to lapse prior to the completion of the project. While we believe that the insurance coverage we maintain would reasonably be adequate to cover all normal risks associated with the operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will be honoured fully, in part or on time, nor that we have taken out sufficient insurance to cover all material losses. Further, we may not have obtained insurance cover for some of our projects that do not require us to maintain insurance. To the extent that we suffer loss or damage for which we did not obtain or maintain insurance, that is not covered by insurance or exceeds our insurance coverage, the loss would have to be borne by us and our results of operations and financial performance could be adversely affected.

Timely and successful completion of our projects is dependent upon our performance and, in case of

many projects, the cooperation of our joint venture partners and sub-contractors.

Typically, construction contracts are subject to specific completion schedule requirements with liquidated damages chargeable in the event that a project falls behind schedule. We often enter into joint ventures to take on a project or sub-contract part of the work in a project to various sub-contractors. In those instances, the completion of the contract for our client depends in part on the performance of us and of our joint venture partners and sub-contractors. Delay or failure on our part or on the part of a joint venture partner or sub-contractor to complete its work on a project on time, for any reason, could result in delayed payment to us or termination of the contract, which in turn may affect our cash flow and results of operations. Furthermore, failure to adhere to contractually agreed timelines for any reason could cause damage to our reputation and client base, result in our being required to pay liquidated damages or lead to forfeiture of security deposits or invocation of performance guarantees. Damage to our reputation could adversely affect our ability to pre-qualify for projects, which in turn may adversely affect our business and results of operations. Additionally, joint venture partners or sub-contractors may not have adequate financial resources to meet their indemnity obligations to us. Losses may derive from risks not addressed in our indemnity agreements or insurance policies, or it may no longer be possible to obtain adequate insurance against some risks on commercially reasonable terms. Failure to effectively cover ourselves against risks for any of these reasons could expose us to substantial costs and potentially lead to material losses. The occurrence of any of these possibilities may also adversely affect industry perception of our operations and the perception of our suppliers, clients and employees, leading to an adverse effect on our business, results of operations and financial condition.

Our indebtedness and the conditions and restrictions imposed on us by our financing agreements

could adversely affect our ability to conduct our business. As of September 30, 2006, we had total secured and unsecured loans of Rs. 4,433.35 million. We may incur additional indebtedness in the future. Our indebtedness could have several important consequences, including but not limited to the following:

• a portion of our cash flow will be used towards repayment of our existing debt, which will reduce the availability of cash to fund working capital needs, capital expenditures, acquisitions and other general corporate requirements;

• our ability to obtain additional financing in the future at reasonable terms may be restricted;

• fluctuations in market interest rates may affect the cost of our borrowings, as some of our loans are at variable interest rates; and

• we may be more vulnerable to economic downturns, may be limited in our ability to withstand competitive pressures and may have reduced flexibility in responding to changing business, regulatory and economic conditions.

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Most of our financing arrangements are secured by our movable and immoveable assets.. Our accounts receivable and inventories are subject to charges created in favour of specific secured lenders. Many of our financing agreements also include various conditions and covenants that require us to obtain lender consents prior to carrying out certain activities and entering into certain transactions. Failure to meet these conditions or obtain these consents could have significant consequences for our business. Specifically, we must seek, and may be unable to obtain, lender consents to incur additional debt, change our capital structure, increase or modify our capital expenditure plans, create additional charges on or further encumber our assets or merge with or acquire other companies, whether or not there is any failure by us to comply with the other terms of such agreements. Compliance with the various terms of our loans is, however, subject to interpretation and we cannot assure you that we have requested or received all consents from our lenders that would be advisable under our financing documents. As a result, it is possible that a lender could assert that we have not complied with all the terms under our financing documents. Any failure to service our indebtedness, comply with a requirement to obtain a consent or perform any condition or covenant could lead to a termination of one or more of our credit facilities, acceleration of amounts due under such facilities and cross-defaults under certain of our other financing agreements, any of which may adversely affect our ability to conduct our business and have a material adverse effect on our financial condition and results of operations.

Our operations are subject to physical hazards and similar risks that could expose us to material

liabilities, loss in revenues and increased expenses.

While construction companies, including us, conduct various scientific and site studies during the course of bidding for projects, there are always anticipated or unforeseen risks that may come up due to adverse weather conditions, geological conditions, specification changes and other reasons. Additionally, our operations are subject to hazards inherent in providing engineering and construction services, such as risk of equipment failure, work accidents, fire or explosion, including hazards that may cause injury and loss of life, severe damage to and destruction of property and equipment, and environmental damage. We may also be subject to claims resulting from defects arising from engineering, procurement and/or construction services provided by us within the warranty periods stipulated in our contracts, which typically range from 12 to 60 months from the date of commissioning. Actual or claimed defects in equipment procured and/or construction quality could give rise to claims, liabilities, costs and expenses, relating to loss of life, personal injury, damage to property, damage to equipment and facilities, pollution, inefficient operating processes, loss of production or suspension of operations. Our policy of covering these risks through contractual limitations of liability, indemnities and insurance may not always be effective. In some of the jurisdictions in which we operate, environmental and workers’ compensation liability may be assigned to us as a matter of law. As per AS 7 of the Indian Accounting Standards, construction companies are required to recognize, in the respective accounting period, potential losses that may be incurred in the foreseeable future. These liabilities and costs could have a material adverse effect on our business, results of operations and financial condition.

We could be adversely affected if we fail to keep pace with technical and technological developments

in the construction industry.

Our recent experience indicates that clients are increasingly developing larger, more technically complex projects in the civil construction and infrastructure sector. To meet our clients’ needs, we must regularly update existing technology and acquire or develop new technology for our engineering construction services. In addition, rapid and frequent technology and market demand changes can often render existing technologies and equipment obsolete, requiring substantial new capital expenditures and/or write-downs of assets. Our failure to anticipate or to respond adequately to changing technical, market demands and/or client requirements could adversely affect our business and financial results.

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Our business is subject to a variety of environmental laws and regulations. Any failure on our part

to comply with applicable environmental laws and regulations could have an adverse effect on our

business. Our operations are subject to numerous environmental protection laws and regulations, which are complex and stringent. We regularly perform work in and around sensitive environmental areas such as rivers, lakes, coastlines and forests. The client may not be able to obtain and handover possession of the site due to problems related to displacement and rehabilitation of the project affected people. Significant fines and penalties may be imposed for non-compliance with environmental laws and regulations and certain environmental laws provide for strict liability for remediation of releases of hazardous substances, rendering a person liable for environmental damage without regard to negligence or fault on the part of such person. Furthermore, we incur significant expenditure relating to operating methodologies and standards in order to comply with applicable environmental laws and regulations. Our clients are generally responsible for obtaining environmental permits required to proceed with the project. Any failure or inability by our clients to retain the requisite permits may have an adverse effect on our business and results of operations. Such laws and regulations may expose us to liability arising out of the conduct of operations or conditions caused by others, or for our own acts including those that were in compliance with all applicable laws at the time such acts were performed. Sanctions for failure to comply with these laws, rules and regulations, many of which may be applied retroactively, may include administrative, civil and criminal penalties, revocation of permits and corrective action orders.

Our inability to obtain, renew or maintain the statutory and regulatory permits and approvals

required to operate our business could have a material adverse effect on our business. We require certain statutory and regulatory permits and approvals for our business. There can be no assurance that the relevant authorities will issue such permits or approvals in the timeframe anticipated by us or at all. Failure by us to renew, maintain or obtain the required permits or approvals may result in the interruption of our operations and may have a material adverse effect on our business, financial condition and results of operations. If we are unable to obtain the requisite licenses in a timely manner, or at all, our operations may be affected.

Claims made by us against our clients for payment have increased over the last few years and failure

by us to recover adequately on future claims could have a material adverse effect on our financial

condition, results of operations and cash flows.

Our project claims have increased in recent years. Project claims are claims brought by us against our clients for additional work and costs incurred in excess of the contract price or amounts not included in the contract price. These claims typically arise from changes in the initial scope of work or from delays caused by the client. These claims are often subject to lengthy arbitration, litigation or other dispute resolution proceedings. The costs associated with these changes or client caused delays include additional direct costs, such as labour and material costs associated with the performance of the additional work, as well as indirect costs that may arise due to delays in the completion of the project, such as increased labour costs resulting from changes in labour markets. We have used significant additional working capital in projects with cost overruns pending the resolution of the relevant project claims. Project claims may continue in the future. For further information, please refer to the section titled “Outstanding Litigation and Material Developments” on page 337 of this Draft Red Herring Prospectus. Failure to recover amounts under these claims could have a material adverse impact on our liquidity, financial condition and results of operations.

We have certain contingent liabilities that may adversely affect our financial condition.

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Clients of construction companies usually demand performance guarantees from construction companies as a safety net against potential defaults by the construction companies. Additionally, construction companies are usually required to have letters of credit issued by their lenders in favour of their suppliers and other vendors. Hence, construction companies often carry substantial contingent liabilities for the projects they undertake. As of September 30, 2006, contingent liabilities appearing in our financial statements are as follows:

Contingent Liabilities

As on September 30, 2006 (Rs. In millions)

Estimated amount of contracts remaining to be executed on capital account and not provided

451.10

Claims against the Company not acknowledged as debt

156.92

Bank guarantees given on behalf of subsidiaries

1.28

In respect of sales tax demands raised by sales tax authorities in matters of disallowance of labour and service charges, consumables for which appeal is pending before various appellate authorities

89.63

In respect of income tax matters in appeals

51.36

In respect of excise duty demands in appeals 11.30

In the event that any of these contingent liabilities materialize, our financial condition may be adversely affected.

Our results of operations could be adversely affected by disputes with our employees.

As of November 30, 2006, we employed around 1,473 full-time employees. In addition, as of such date, we contracted for around 2,695 temporary labourers on our project sites. While we believe that we maintain good relationships with our employees and contract labour, there can be no assurance that we will not experience future disruptions to our operations due to disputes or other problems with our work force, which may adversely affect our business and results of operations. Our employees are organized under three trade unions and significant management time could be lost in dealing with conflicting aspiration of the three trade unions. Further, the settlement with one of these Unions expired on December 31, 2006 and the other expires on March 31, 2007 whilst the charter of demands by one is pending settlement since 2005. The number of contract labourers varies from time to time based on the nature and extent of work contracted to sub-contractors. We enter into contracts with sub-contractors to complete specified assignments. We may however be still liable for any non-compliance or violations by our sub-contractors. Further, any upward revision of wages required by the government to be paid to contract labourers, or offer of permanent employment or the unavailability of the required number of contract labourers, may adversely affect our business and results of our operations.

There are outstanding litigations against the Company, our Directors, our Promoters and our

Promoter Group entities. We are defendants in certain legal proceedings incidental to our business and operations. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. Additionally, there are certain instances of regulatory non-compliance by us. In the event of rulings against us by courts or tribunals in these proceedings or levy of penalties by statutory authorities, we may need to make payments to others or book provisions against probable future payments, which could increase our expenses and our current liabilities.

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There are certain claims pending in various courts and authorities at different levels of adjudication against our Directors and our Promoter Group entities. For further details of outstanding litigations against the Company, our Directors, our Promoters and our Promoter Group, please see the section titled “Outstanding Litigations and Material Developments” on page 337 of this Draft Red Herring Prospectus.

We have entered into transactions with related parties. We have entered into certain transactions with related parties, including our Promoter Group, Directors and our employees. For detailed information on our related party transactions, see the section titled “Related Party Transactions” on page 194 of this Draft Red Herring Prospectus.

We had negative cash flows from operating activities and have incurred losses in the past

We had negative consolidated and unconsolidated cash flows for the each of the previous four financial years and six months ended September 30, 2006. We incurred loses for the financial years ending March 31, 2002, 2003 and 2004 on a consolidated basis. For more details, see the section titled “Financial Statements” on page 207 of this Draft Red Herring Prospectus.

Certain of our Promoter Group entities have incurred losses. Some of our Subsidiaries have in recent years, incurred losses, as set forth in the table below:

Name of Subsidiaries Fiscal 2006 Fiscal 2005 Fiscal 2004 Profits / (Losses) in Rs. Million

AFCONS Arethusa Offshore Services Private Limited (0.525) (0.78) (1.767)

Hazarat & Company Private Ltd. 0.01 (0.01) (0.01)

Afcons Pauling Joint Venture (partnership entity)

(1.83) 2.62 (0.62)

Some of our Promoter Group entities have, in recent years, incurred losses or have negative net worth, as set forth in the table below:

Name of Promoter Group entity Fiscal 2006 Fiscal 2005 Fiscal 2004 Profits / (Losses) in Rs. Million

Abhipreet Trading Private Limited (0.08) 0.02 (0.10)

Afcons Overseas Constrcution & Investments Private Limited

(0.01) (0.006) (0.004)

Afcons BOT Constructions (0.005) (0.006) (0.006)

Afcons Dredging & Marine Services Limited (0.03) (0.05) (0.04)

Bracewall Builders Private Limited (0.01) - -

Calligra Finance Private Limited (0.02) - -

Cama Properties Limited (0.04) (0.01) (0.01)

Chinsha Properties Limited (0.02) (0.01) (0.02)

Cyrus Chemical Private Limited 0.53 (0.36) (0.40)

Cyrus Engineers Private Limited 1.13 1.13 (1.27)

Delna Finance and Investments Private Limited (1.75) (1.63) (0.01)

Eastview Estates Private Limited (0.03) - -

Faery Estates Private Limited (0.46) (0.02) (0.01)

Floral Finance Private Limited (0.10) (0.09) (0.08)

Flooraise Developers Private Limited (0.01) - -

Flotilla Investments Private Limited (0.13) (0.13) (0.13)

Forvol International Services Limited 14 4.5 (4.56)

Grandview Estates Private Limited (0.01) (0.01) (0.01)

High Street Developers Private Limited (0.01) - -

Khajarana Ganesh Properties Limited (0.10) (0.003) (0.003)

Kolland Developers Private Limited (0.03) - -

Magpie Finance Private Limited (0.17) 0.04 (0.07)

Manjri Stud Farm Private Limited (69.16) (70.09) (27.45)

Mazsons Builders and Developers Private Limited (0.04) (0.05) (0.02)

Meriland Estates Private Limited (0.15) (0.15) 0.05

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Name of Promoter Group entity Fiscal 2006 Fiscal 2005 Fiscal 2004 Milvin Investments Private Limited (2.73) (0.55) (0.09)

Palchin Real Estates Private Limited (0.12) (0.09) (0.20)

Ramili Investments Private Limited (0.05) (0.04) (0.04)

Shachin Real Estates Private Limited 0.21 (0.08) 0.19

S.C. Impex Private Limited (0.28) (0.27) (0.25)

Shapoorji & Co., Private Limited 0.03 0.01 (0.05)

Shapoorji & Co. (Rajkot) Private Limited (5.48) (0.25) (0.33)

Shapoorji Data Processing Private Limited (3.54) (1.00) (1.31)

Shapoorji Drilling Enterprises Private Limited (0.02) (0.02) (0.03)

Shapoorji Hotels Private Limited (0.01) (0.01) (0.01)

SP Aluminum Systems Private Limited (0.54) (0.61) (0.61)

SP Infocity Developers Private Limited (0.01) - -

SP Fabricators Private Limited 48.53 16.16 (0.68)

Shapoorji Pallonji Ports Private Limited (0.01) 0.01 (0.01)

Shapoorji Pallonji & Co., (Rajkot) Limited (0.22) (0.07) (0.03)

Skyscape Developers Private Limited (0.01) - -

Sterling Generators Private Limited (29.18) (0.89) (0.53)

Sunny View Estates Private Limited (15.78) (0.15) (0.02)

United Motors (India) Limited 26.78 15.30 (78.18)

Windward Developers Private Limited (0.06) - -

The following Promoter Group Companies had a negative networth as of March 31, 2006:

1. Delna Finance and Investments Private Limited 2. Khajarana Ganesh Properties Limited 3. Magpie Finance Private Limited 4. Manjri Stud Farm Private Limited 5. Shapoorji Data Processing Private Limited 6. Sharus Building Services Private Limited

For a detailed description of our Promoter Group entities, please see the section titled “Our Promoters” on page 139 of this Draft Red Herring Prospectus. We have in the last 12 months issued Equity Shares. We have in the last 12 months made the following issuances of Equity Shares. We have allotted 20 million Equity Shares each to two of our Promoters, FIL and SICL at par by way of conversion of convertible preference shares in terms of the issue of the preference shares. For further details regarding such issuances of Equity Shares, please see the section titled “Capital Structure” beginning on page 29 of this Draft Red Herring Prospectus.

We have not entered into any definitive agreements to use a substantial portion of the net proceeds

of the Issue. Further, the utilization of the Issue proceeds is not subject to monitoring by an

independent agency We intend to use the net proceeds of the Issue for purchase of capital equipment, repayment of debt and general corporate purposes and strategic initiatives. See “Objects of the Issue” on page 43 of this Draft Red Herring Prospectus. We have not entered into any definitive agreements to utilize the net proceeds of the Issue for approximately Rs. 1,250 million of our proposed capital expenditure. The purposes for which the net proceeds of the Issue are to be utilized have not been appraised by an independent entity and are based on our estimates and on third-party quotations. In addition, our capital expenditure plans are subject to a number of variables, including possible cost overruns and changes in management’s views of the desirability of current plans, among others. There can be no assurance that we will be able to conclude definitive agreements for investments in capital equipment or for investments in any special purpose vehicles or joint venture or otherwise on commercially acceptable terms. The objects of the Issue have not been appraised by any bank or financial institution. The deployment of funds is entirely at the discretion of our management and our Board of Directors and is not subject to

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monitoring by any independent agency. We intend to rely on our internal systems and controls to monitor the use of such proceeds. Any further issuance of Equity Shares by the Company or sales of Equity Shares by any significant

shareholders may adversely affect the trading price of the Equity Shares.

Any future issuance of our Equity Shares by the Company including our employee stock option scheme, could dilute your shareholding. Any such future issuance of our Equity Shares or sales of our Equity Shares by any of our significant shareholders may also adversely affect the trading price of our Equity Shares, and could impact our ability to raise capital through an offering of our securities. In addition, any perception by investors that such issuances or sales might occur could also affect the trading price of our Equity Shares. Upon completion of the Issue, the entire post-Issue paid-up capital held by our Promoters will be locked up for a period of one year and 20% of our post-Issue paid-up capital held by certain of our Promoters will be locked up for a period of three years from the date of allotment of Equity Shares in the Issue. For further information relating to such Equity Shares that will be locked up, please see Notes to the Capital Structure in the section “Capital Structure” beginning on page 29 of this Draft Red Herring Prospectus. Our Promoters and certain Promoter Group entities are engaged in business activities similar to

ours.

Our Promoter Directors and certain Promoter Group entities are engaged in business activities similar to those undertaken by our Company such as construction and civil engineering and this could be a potential source of conflict of interest. External Risk Factors

Demand for our construction services depends principally on activity and expenditure levels in the

building and infrastructure sectors.

Demand for our construction services is principally dependent on sustained economic development in the regions in which we operate. In addition, demand for our infrastructure services is largely dependent on government policies relating to infrastructure development and budgetary allocations made by governments for such development, as well as funding provided by international and multilateral development financial institutions for infrastructure projects. Investment by the private sector in infrastructure projects is dependent on the potential returns from such projects and is therefore linked to government policies relating to private sector participation and the sharing of risks and returns from such projects. A reduction of capital investment in the building or infrastructure sectors for any reason could have a material adverse effect on our business, results of operations and financial condition.

Our operations are sensitive to weather conditions.

We have business activities that could be materially and adversely affected by severe weather. Severe weather conditions may require us to evacuate personnel or curtail services and may result in damage to a portion of our fleet of equipment or to our facilities, resulting in the suspension of operations, and may further prevent us from delivering materials to our project sites in accordance with contract schedules or generally reduce our productivity. Our operations are also adversely affected by difficult working conditions and extremely high temperatures during summer months and during monsoon, which restrict our ability to carry on construction activities and fully utilize our resources. We record contract revenues for those stages of a project that we complete, after we receive certification from the client that such stage has been successfully completed. Since revenues are not recognized until we make progress on a contract and receive such certification from our clients, revenues recorded in the first half of our financial year between April and September are traditionally substantially lower compared to revenues recorded during the second half of our financial year. During

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periods of curtailed activity due to adverse weather conditions, we may continue to incur operating expenses, but our revenues from operations may be delayed or reduced. Natural calamities could have a negative impact on the Indian economy and cause our business to

suffer. India has experienced natural calamities such as earthquakes, a tsunami, floods and drought in the past few years. Natural calamities could have a negative impact on the Indian economy and may cause suspension, delays or damage to our current projects and operations, which may adversely affect our business and our results of operations.

We are subject to risks arising from interest rate fluctuations, which could adversely affect our

business, financial condition and results of operations. Changes in interest rates could significantly affect our financial condition and results of operations. As of September 30, 2006, Rs. 3,274.57 million or 74.76% of our total borrowings from banks and financial institutions were at floating rates of interest. If the interest rates for our existing or future borrowings increase significantly, our cost of servicing such debt will increase. This may adversely impact our results of operations, planned capital expenditures and cash flows.

The price of our Equity Shares may be volatile, or an active trading market for our Equity Shares

may not develop.

Prior to this Issue, there has been no public market for our Equity Shares. The trading price of our Equity Shares may fluctuate after this Issue due to a variety of factors, including our results of operations and the performance of our business, competitive conditions, general economic, political and social factors, volatility in the Indian and global securities markets, the performance of the Indian and global economy, significant developments in India’s fiscal regime and other factors. There can be no assurance that an active trading market for our Equity Shares will develop or be sustained after this Issue, or that the price at which our Equity Shares are initially offered will correspond to the prices at which they will trade in the market subsequent to this Issue. NOTES TO RISK FACTORS:

1. Public issue of 16,065,000 Equity Shares for cash at a price of Rs. [•] per Equity Share

(including a share premium of Rs. [●] per Equity Share) aggregating Rs. [•] million comprising. The Issue would constitute 18.37% of the post issue paid-up capital of the Company. The Net Issue would constitute 18.00% of the post issue paid-up capital of the Company.

2. The average cost of acquisition of Equity Shares by our Promoters which has been calculated

by taking the average amount paid by them to acquire our Equity Shares is as follows:

CIL Rs. 16.50 SICL Rs. 11.96 FIL Rs. 10.00

For details, please see section titled “Capital Structure” on page 29 of this Draft Red Herring

Prospectus. 3. Our net worth before the Issue as of March 31, 2006 and September 30, 2006 respectively was

Rs. 2,119 million and Rs. 2,176 million respectively on a consolidated basis and the book value per Equity Share as of as of March 31, 2006 and September 30, 2006 respectively was Rs. 17.88 Equity Share and Rs. 18.96 respectively on a consolidated basis.

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4. For details on relating to related party transactions in the section titled “Related Party Transactions” on page 194 of this Draft Red Herring Prospectus.

5. For details of the interests of our Directors and Key Managerial Personnel, please refer to the

section titled “Our Management” on page 122 of this Draft Red Herring Prospectus. For details of the interests of our Promoters and Promoter Group, please refer to the section titled “Our Promoters” on page 139 of this Draft Red Herring Prospectus.

6. Investors may contact the BRLM and the CBRLMs for any complaints, information or

clarification pertaining to the Issue. The BRLM and the CBRLMs are obliged to provide the same to investors.

7. Our Company was originally incorporated as Asia Foundations and Constructions Private

Limited on November 22, 1976 under the Companies Act, 1956. The word “private” was deleted on March 18, 1977 pursuant to section 43 A of the Companies Act, 1956. The name of our Company was changed to Afcons Infrastructure Limited on August 14, 1996 and it was converted into a public limited company on November 11, 1997.

8. Before making an investment decision in respect of this Issue, Investors are advised to refer to

the section titled “Basis for Issue Price” on page 46 of this Draft Red Herring Prospectus. 9. We, the BRLM and the CBRLMs are obliged to keep this Draft Red Herring Prospectus

updated and inform the public of any material change / development until the listing and trading of the Equity Shares offered under the Issue commences.

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SUMMARY

Overview We are a civil engineering and construction company in India and we are the flagship infrastructure construction company of the Shapoorji Pallonji group, a well-known and reputed name in the construction industry. We have an experience of over four decades in construction industry, which includes a wide variety of infrastructure projects like marine works, bridges, fly-overs, roads, general civil engineering works including industrial structures, nuclear power projects, tunneling, pipelines, LNG storage tanks and special foundation works such as piling, diaphragm wall, pre-stressed anchors, drilling and grouting and other ground improvement works throughout India. We have also successfully completed and are currently engaged in execution of projects in Middle East and Africa. Over the years we have developed an expertise in marine works and we believe that we have an established reputation and expertise in this service line through successful execution of more than 150 structures along the Indian coastline. We have also successfully completed more than 100 bridges, flyovers, viaducts, two LNG storage tanks, underground and elevated train corridors and have executed 2,000 lane kilo meters of road works. We enter into contracts primarily through a competitive bidding process at the domestic and the international level. We have worked on projects for Qatar Petroleum, Shell, Reliance Industries Limited, Mumbai Port Trust, Konkan Railway Corporation Limited, Delhi Metro Rail Corporation (DMRC) and are currently undertaking projects for National Highway Authority of India, Ministry of Transport and Communication, Sultanate of Oman. Of the above clients, we have several repeat orders from Reliance Industries Limited, Konkan Railway Corporation Limited, National Thermal Power Corporation and DMRC. Some of the important projects successfully completed by us in the recent past include:

• Engineering, procurement, installation and commissioning of cofferdams for pump house of Ras Laffan common cooling sea water system for Qatar Petroleum Technical Directorate;

• Construction of jetty for docking LNG carriers and other marine works at Hazira for Shell;

• Construction of underground station including the tunnel at Barakhamba Road and elevated structure (via duct) between Tis Hazari – Tri Nagar rail corridor for Delhi Metro Rail Corporation Limited; and

• Sewage Marine outfalls at Bandra and Worli, Mumbai for Dywidag International GmbH (as a nominated sub-contractor).

The projects being currently executed by us include:

• Construction of marine, civil and pipeline works for Reliance Infrastructure Limited at Jamnagar;

• Design and construction of special bridge across River Chenab in Jammu & Kashmir for Konkan Railway Corporation Limited (in joint venture);

• Construction of single line tunnel on Katra – Laole section of Udhampur – Srinagar – Baramulla rail link project for Konkan Railway Corporation Limited;

• Construction of an Oil Jetty at Port Louis Harbour, Mauritius; and

• Construction of new bridge over River Sone for East Central Railways.

We focus on technology and constantly strive to develop new technologies and innovations in-house to execute large and complex civil engineering and construction works in a cost-efficient and timely manner. For instance, we developed the micro piling technology as early as 1970 and subsequently patented this technology for underpinning works to strengthen existing structures. We have successfully been using the in-house developed Sahayadri Lift Barge for over 15 years now for our shallow as well as deep water projects. The Sahayadri Lift Barge has a hydraulic lift crane capable of lifting 1200 tonnes. . In the years ended March 31, 2005 and 2006, our consolidated income was Rs. 5,541.88 million and Rs. 7,177.67 million, respectively, representing an annual growth rate of 29.52 %. In the six months

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ended September 30, 2006, our consolidated income was Rs. 4,123.85 million. In the years ended March 31, 2005 and 2006, we incurred a consolidated loss of Rs. (14.71) million and earned a consolidated net profit for the year of Rs. 47.85 million respectively, while our consolidated net profit for the six months ended September 30, 2006 was Rs. 48.98 million. Our order book, which includes the projects awarded to us but where we have not yet commenced work and the unfinished and uncertified portions of our commenced projects was Rs. 30,303.4 million as of September 30, 2006, out of which, domestic projects and international projects accounted for Rs. 27,682.50 million and Rs. 2,620.90 million respectively. We have added contracts aggregating Rs. 222.0 million to our order book during the period October 1, 2006 to December 31, 2006 which are all domestic projects. As of September 30, 2006, our work force consisted of approximately 1,473 full time employees and more than 2,695 temporary labour based around India, enabling us to mobilize our skilled employee resources depending on the location and the necessary expertise for projects undertaken by us. Our equipments and skilled employee resources, together with our civil engineering capabilities enable us to successfully implement modern civil engineering construction methodologies. We enjoy the ISO 9001:2000 BVQI accreditation and have received several awards, certifications and appreciation letters from clients for our operations and projects such as the appreciation letter from Shell for the construction of jetty for docking of LNG carriers and other marine works at Hazira, We are committed to adhering to health, safety and environment policies and practices in the execution of our projects. We have received the Safety Award 2005 by the National Safety Council of India in respect for the Sone Bridge, Bihar and ISO 14001:2004 and OHSAS 18001:1999 certifications by BVQI for the construction of elevated viaduct for Delhi Metro Rail Project. We are a part of the Shapoorji Pallonji Group, which is one of the leading conglomerates in India with over 140 years of experience in the construction industry. Its business interests ranges from construction, building materials and real estate to aluminum, finance, biotech, power and fuel oil additives. The Shapoorji Pallonji Group also has a significant presence overseas having been involved in real estate development and construction since 1970. We are the flagship company of the Shapoorji Pallonji Group in the infrastructure construction sector. Corporate History and Structure We began our operations as a civil construction firm in 1959 as a partnership between the Rodio Foundation Engineering Limited, Switzerland and Hazarat & Company, India. Consequent to the exit of Rodio Foundation Engineers and Hazarat & Co, we were reorganized as a company with the name ‘Asia Foundations and Constructions Private Limited’ in 1976 engaged in the business of contractors and engineers. We became a deemed public limited company as per Section 43A(1) of the Companies Act from March 18, 1977. Shipping Credit and Investment Corporation of India (SCICI) became a 20% shareholder of our Company in 1993, which shareholding was transferred to ICICI pursuant to the merger of SCICI with ICICI. We changed the name of our Company from Asia Foundations and Constructions Limited to Afcons Infrastructure Limited with effect from August 14, 1996. We became a full fledged public company on November 11, 1997. In 1998 ICICI subscribed to further shares in our Company which made ICICI the single largest shareholder with 47.37% equity stake in our Company. Shapoorji Pallonji Group acquired 53.96% shareholding in our Company in 2000 where 47.37% was acquired from ICICI Ltd. and 6.59% was acquired from the Hazarat family. We have 3 subsidiaries and 1 joint venture company. We also operate through various unincorporated joint ventures formed for specific projects. Our Strengths Significant experience and strong track record With over four decades of experience as a civil engineering and construction firm, we believe we have become one of the significant players in the Indian construction industry. We believe that we have established a track record for executing large and complex civil engineering and construction and infrastructure contracts in a timely manner with quality work. We have also completed several projects ahead of schedule including the LNG terminal project at Dahej, Moolchand underpass at Delhi and

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Cable stayed bridge for Goa Industrial Infrastructure Corporation. We have received ISO 9001:2000 certification for the quality management system that we apply to the design and construction of civil engineering projects. Our portfolio of completed construction projects includes over 150 marine works, 100 bridges/ fly-overs, 2,000 lane kilometres of roads, general civil engineering works relating to industrial structures including 2 LNG storage tanks and civil work for 2 nuclear power projects. We believe that the breadth and depth of our experience, among other factors, which among other things, enables us to pre-qualify for a greater number of potentially higher-margin projects.

Diversified business and versatile capabilities We have a presence in the different sectors within the Indian construction industry and in different geographical regions in India. We have also been operating in the Middle East for over three decades and have expanded into other parts of Asia such as Sri Lanka and Nepal. This variety of project types in our portfolio enables us to keep our business diversified and reduces our dependence on any one segment or nature of project and allows us to deal with cyclical risks associated with the industry. The diversified business interests also allows us to participate in various projects where we believe we can add value. We believe that through our diversified and long standing experience we have been able to develop the ability to adapt to and operate in different work conditions and find solutions to complex construction projects. For example, while undertaking work in relation to the Calcutta metro rail project, we were able to construct a tunnel in soft soil using a special blade sheld technique. Similarly, we used the jet-grouting technology for making a tunnel at Liliguma for South Eastern Railways. We have successfully executed projects in diverse work conditions, including overseas. We have entered into renewed partnerships for new projects with various existing joint venture partners and have also received repeat orders from clients demonstrating our ability to work efficiently with various partners.

Focus on technology

We are a technology driven company, with a focus on innovation and development of technologies for the execution of complex civil construction and engineering projects. We believe our quick adaptability and solution oriented approach to construction complexities coupled with our technological capabilities enable us to execute projects in an efficient manner. Some of the technological innovations achieved by us include micropiling for underpinning works to strengthen structures, stabilizing of hill slopes by prestressed anchors, river training using underwater geofabric, development of Sahayadri Lift Barge, which has a capacity of lifting 1,200 tonnes, which was developed more than 15 years back and design and construction of jack up platforms as early as 1978. We believe that we are the first Indian company to have indigenously constructed an underground metro station for DMRC at Barakhamba, New Delhi. . We believe that our sustained focus on technology provides us with a key competitive strength.

In- house developed expertise in marine works

We entered into marine construction in 1963 and over the years have developed an expertise in marine works. We have constructed more than 150 structures along the Indian coastline which includes jetties, wharves, slipways, relieving platforms and dry docks. While most of the marine and harbour projects in India have historically relied on the conventional end-on-method whereby construction was undertaken from the shore or along the shoreline, we have successfully commissioned marine projects using a variety of floating devices units and jack up platforms. The development of design and fabrication work for such innovative floating devices and jack up platforms was done in-house. We own a fleet of strategic construction equipments including cranes, marine flotilla including jack up platform, barges and pontoons. We have successfully developed many of our important equipments such as the Sahayadri Lift Barge and jack up platforms in-house that have allowed us to customize the equipment to the specific conditions in which we operate. We believe that the increased focus on development of marine infrastructure by both the Government and private sector will allow us to leverage our expertise to achieve higher growth.

Long term relationship with reputed clients

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We have developed long-term relationships with our clients and have received repeat orders from several of our domestic and international clients. We believe that our client centric approach enables us to develop an established and long term association with many of our clients. We have successfully executed several projects overseas and have received repeat orders showing our ability to work in multicultural environments and with diverse set of clients. For example after our successful association for the Jamnagar Phase - I project, Reliance Infrastructure Limited has placed cost plus basis contracts with us for several structures including modification of jetty job. Other clients from whom we have received repeat orders also include Konkan Railway Corporation Limited, National Thermal Power Corporation, Cochin Port Trust, Nuclear Power Corporation and DMRC. .

Experienced management team and staff

We have an experienced and dedicated management team and a skilled workforce. Our employees include over 707 engineers and 269 skilled operators and technicians. We believe that a large pool of skilled engineering and technical workers is essential to the efficient and effective execution of our projects. In addition, our senior management comprises highly qualified people with extensive experience in our business, with engineering or technical backgrounds, which we believe, enhances our ability to successfully execute large and complex construction projects. Our key managerial personnel on an average have more than 25 years of experience in the construction industry. Our staff force also has diversified experience in various types of construction projects, which allows us to staff our projects with the most appropriate people.

Parentage

We are a part of the Shapoorji Pallonji Group, which is one of the leading conglomerates in India and has been operating for over 140 years in the construction industry. We draw on the expertise and commercial acumen of our parent company in the construction industry for our own business development. Owing to the long-standing history of the Shapoorji Pallonji Group, we believe it enjoys strong brand recognition. Further, we believe that our customers, along with Indian financial institutions, associate the Shapoorji Pallonji Group with quality, reliability and the ability to complete projects on schedule. We believe that the financial strength of the Shapoorji Pallonji Group and its track record and visibility, especially in overseas markets allow us to secure and execute bigger projects.

Our Strategy Continue to focus on the high growth opportunities in the Indian construction and infrastructure

sector. We believe that the increasing levels of investment in infrastructure by governments and private parties will be a major driver for growth in our domestic business in the foreseeable future. Additionally, the GoI has taken steps to encourage additional investments in infrastructure and construction sector, such as formulating plans to create SEZs in various areas of India and providing economic benefits to private sector participants for projects executed on a BOT basis. We intend to take advantage of such growing opportunities in infrastructure development by strengthening our existing expertise and continuing to pursue growth opportunities in India. We shall continue our focus on marine projects, speciality bridges and metro projects and strive to enhance our share in sectors such as Hydro/Tunnels and Oil and Gas pipelines, where we have recently entered. Focus on opportunities in the international market

Apart from pursuing opportunities in India, our objective is to expand and strengthen our overseas operations further by focusing on the regions where we already have a presence, such as the Middle East and Africa, by capitalizing on our local experience, established contacts with local clients and suppliers, and familiarity with local working conditions. Middle East is experiencing a recent increase in construction activities, which makes it an attractive market for us. In addition, we propose to pursue opportunities in newer regions like Algeria and Sudan where large infrastructure initiatives are being made with the aid of multilateral institutions and in Yemen which is experiencing increased construction activities because of the recent discovery of large oil reserves. We currently propose to focus on the medium size contracts where local competition is lesser and we have the capability to

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compete with large multi national players for such projects. We believe that the overseas projects executed by us allow us to earn better margins. Overseas projects also assist us in building our services and technology portfolio through the global exposure and international benchmarking of projects. Further, we also use overseas assignments as a retention measure for our employees. In pursuing our strategies, we seek to identify markets where we believe we can provide cost and operational advantages to our clients and distinguish ourselves from other competitors. In order to expand our operations, we also seek to identify joint venture/ consortium partners whose resources, capabilities and strategies are complementary to ours and who are likely to enhance our business operations in such regions. We shall continue our focus on marine projects, specialty bridges and strive to enhance our share in sectors such as Hydro/Tunnels and Oil and Gas pipelines, where we have recently entered.

Increased focus on EPC contracts and design & build contracts.

As of September 30, 2006, engineering, procurement, construction (EPC) and design & build contracts constituted 37.78 % of our total order book. We intend to use our engineering capabilities to enable us to provide value added engineering services for clients and win more EPC contracts. Owing to complex nature of projects being envisaged, there is an increased demand for engineering capabilities. We believe that EPC projects will enable us to realize greater added value on construction projects through provision of comprehensive integrated solutions. .

Leverage on the strength of the Shapoorji Pallonji Group The Shapoorji Pallonji Group is already an established player in the construction and real estate industry catering to diverse sectors. We are the flagship company of the Shapoorji Pallonji Group in the infrastructure construction sector. We intend to build upon and draw on its established presence and the financial strengths. Accordingly, we also intend to bid for and participate in large BOT infrastructure projects, including road projects in consortium with a Shapoorji Pallonji entity, which would function as the concessionaire with the construction/ EPC job being executed by us. We will participate and expand in those sectors where we derive the necessary strengths from the Shapoorji Pallonji Group in terms of technical expertise, execution skills and an established presence. Enhance profitability and capital efficiency Infrastructure construction is a highly competitive, capital-intensive activity. We believe that the optimal utilisation of financial, human and other resources is a key element for achieving success in this industry, and we shall continue focusing on the strategy of concentrating on a limited number of high-value/ high margin projects in order to maintain execution quality, reliability and timeliness. Going forward, our strategy will be to continue focusing on our capital utilisation and structure to optimise returns, by actively analysing and identifying projects and assigning priority to projects, which are likely to maximise returns. We also intend to improve capital efficiency by striving for accelerated completion of projects and better contract and relationship management with the client. We propose to continue to mitigate our risks by including effective and equitable dispute resolution clauses in our contracts.

Participitate in road projects only in consortium with BOT/ BOOT entities We believe that our ability to effectively manage our cash flows and resultant profitability is adversely affected owing to high level of commodization of the road contracts directly awarded by agencies like NHAI in the competitive bidding route and high level of delays experienced in execution of these projects on account of delays in acquiring land. Typically under the BOT/ BOOT route, 80% of the land is acquired prior to the award of contracts and therefore, the likelihood of delays in execution and consequent adverse impact on cash flow is reduced. Therefore, currently, we propose to participate in road projects only through the BOT/ BOOT route in association with Shapoorji Pallonji group and other established entities, which would function as a concessionaire whilst we would execute the EPC job.

6

Attract, train and retain qualified personnel

We understand that maintaining quality, minimising costs and ensuring timely completion of engineering and construction projects depends largely on the skill and workmanship of our employees. As competition for qualified personnel is increasing among construction companies in India, particularly with the entry of international engineering and construction companies into the Indian market and as we pursue greater growth opportunities, we seek to attract, train and retain qualified personnel by increasing our focus on training our staff in advanced engineering and construction technology and skills. We frequently conduct well-designed training programmes for our staff. A total of 16,984 training man-hours have been spent on employee training between periods April 2005 to November 2006. We also offer our engineering and technical personnel a wide range of work experience and learning opportunities by providing them with an opportunity to work on a variety of large, complex construction projects and forming cross functional teams with the objective of giving them an opportunity to innovate. In addition, we give our employees opportunities to work on wide variety of projects including overseas assignments.

Develop and maintain strong alliances with strategic partners.

We have strategic alliances for the execution of our projects with companies including Dywidag, Germany, Per Aarsleff, Denmark, Kajima, Japan and Walter Mining, Australia. We intend to continue to establish strategic alliances and share risks with companies, whose resources, skills and strategies are complementary to and are likely to enhance our business opportunities, including the formation of joint ventures and consortia to achieve competitive advantage. In the light of our focus on technology, we also seek partners who can assist us in improving our technological capabilities in execution of our projects.

7

SUMMARY FINANCIAL INFORMATION

The following table sets forth summary financial information derived from our restated consolidated and unconsolidated financial statements as of and for the fiscal years ended March 31, 2002, 2003, 2004, 2005 and 2006 and as of the six months ended September 30, 2006, which are included in this Draft Red Herring Prospectus under the section titled "Financial Statements" on page 207 of this Draft Red Herring Prospectus. The restated consolidated and unconsolidated financial statements have been prepared in accordance with the SEBI Guidelines and have been restated as described in the auditors' report attached thereto. The summary financial information presented below should be read in conjunction with the financial statements included in this Draft Red Herring Prospectus, the notes thereto and the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 316 of this Draft Red Herring Prospectus.

SUMMARY STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED

(Rupees in millions)

Particulars As at September

30, 2006

As at March 31, 2006

As at March 31,

2005

As at March 31,

2004

As at March 31,

2003

As at March 31, 2002

FIXED ASSETS

Gross Block

2,854.36

2,648.96

2,195.37

1,987.44

1,721.94

1,540.86

Less: Depreciation

1,565.41

1,481.10

1,152.19

1,013.33

908.69

812.50

Net Block

1,288.95

1,167.86

1,043.18

974.11

813.25

728.36

Less: Revaluation Reserve

59.54

64.08

9.08

9.07

13.95

12.30

Net Block after adjustment for Revaluation Reserve

1,229.41

1,103.78

1,034.10

965.04

799.30

716.06

Capital Work In Progress

330.72

51.06

18.26

6.15

29.39

12.99

TOTAL - (A)

1,560.13

1,154.84

1,052.36

971.19

828.69

729.05

INVESTMENTS - (B)

65.95

65.95

105.11

105.11

121.27

121.27

CURRENT ASSETS, LOANS AND ADVANCES

Inventories

580.05

515.56

387.09

404.59

410.26

344.61

Work-in-Progress -

-

-

1,714.30

1,108.69

638.64

Unbilled Revenue

3,995.15

2,857.30

1,786.95 -

- -

Sundry Debtors

1,808.99

1,887.18

1,732.53

1,705.62

1,199.68

899.46

Cash & Bank Balances

127.00

214.45

169.32

145.87

127.37

228.41

Loans & Advances

1,141.33

1,106.12

1,090.71

1,038.04

1,021.88

930.50

Other Current Assets

0.92

0.91

0.91

0.91

1.48

1.48

TOTAL - (C)

7,653.44

6,581.52

5,167.51

5,009.33

3,869.36

3,043.10

8

(Rupees in millions)

Particulars As at September

30, 2006

As at March 31, 2006

As at March 31,

2005

As at March 31,

2004

As at March 31,

2003

As at March 31, 2002

LIABILITIES AND PROVISIONS

Secured Loans

1,101.45

1,054.35

563.64

829.59

563.82

340.64

Unsecured Loans

3,331.90

2,430.51

2,233.91

1,225.89

927.02

313.11

Current Liabilities

2,443.53

2,005.10

1,625.42

2,670.19

2,202.46

2,235.12

Provisions

121.18

107.21

32.52

34.32

33.53

48.19

Deferred Tax Liability (Net)

119.13

94.93

34.64

23.34

9.43 -

TOTAL - (D)

7,117.19

5,692.10

4,490.13

4,783.33

3,736.26

2,937.06

NET WORTH - (A+B+C-D)

2,162.33

2,110.21

1,834.85

1,302.30

1,083.06

956.36

REPRESENTED BY

1. Share Capital

1,715.25

1,715.25

1,214.00

714.00

514.00

314.00

(Refer note 1

below)

2. Reserves & Surplus

566.76

525.11

707.86

686.21

683.05

670.78

Less: Revaluation Reserve

59.54

64.08

9.08

9.07

13.95

12.30

Reserves & Surplus (Net of Revaluation Reserves)

507.22

461.03

698.78

677.14

669.10

658.48

Total

2,222.47

2,176.28

1,912.78

1,391.14

1,183.10

972.48 Less: Miscellaneous Expenses (to the extent not written off)

60.14

66.07

77.93

88.84

100.04

16.12

NET WORTH

2,162.33

2,110.21

1,834.85

1,302.30

1,083.06

956.36

2) The above statement should be read with the Notes on Adjustments to Restated Financial Statements, Significant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

9

SUMMARY STATEMENT OF PROFIT AND LOSS ACCOUNT, AS RESTATED

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

INCOME :

Income from Operations 3,902.25 6,490.38 5,425.16 4,441.65 4,262.37 4,090.54

Other Income 129.02 372.51 113.89 213.15 178.09 59.19

Total Income 4,031.27 6,862.89 5,539.05 4,654.80 4,440.46 4,149.73

EXPENDITURE :

Cost of Construction 2,916.10 4,514.32 4,008.21 3,316.72 3,149.13 3,342.84

Payments to and Provision for employees 329.35 610.72 483.92 443.00 456.61 449.92

Other Expenses 381.95 1,005.75 496.80 404.31 363.61 354.47

Financial Lease Rentals 9.82 43.09 49.29 52.95 73.17 78.89

Interest and Financial charges 231.76 381.33 334.85 299.82 284.00 209.93

Depreciation 84.32 158.15 140.88 118.97 102.06 81.65

Less : Depreciation on the amount added on Revaluation transferred from Revaluation Reserve 4.53 9.07 9.09 9.09 13.94 12.29

Total Expenditure 3,948.77 6,704.29 5,504.86 4,626.68 4,414.64 4,505.41

Less: Company's Share of Loss in jointly controlled entity (Unaudited) - 9.61 - - - -

Profit\(Loss) before prior period adjustments, extraordinary items and tax 82.50 148.99 34.19 28.12 25.82 (355.68)

Provision for tax:

- Current Tax (9.24) (14.28) (2.63) (1.97) (2.10) -

- Wealth Tax (0.01) (0.02) (0.02) (0.02) (0.02) (0.02)

- Deferred Tax (24.20) (60.29) (11.30) (13.90) (9.43) -

- Fringe Benefit Tax (4.60) (10.40) - - - -

- Foreign Tax - (6.68) - - - -

Total Provision for Tax (38.05) (91.67) (13.95) (15.89) (11.55) (0.02)

Profit\(Loss) after tax 44.45 57.32 20.24 12.23 14.27 (355.70)

- - - - -

Adjustments: - - - - -

10

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Impact of material adjustment for restatement in corresponding years (Refer Annexure IIIA) - (10.49) 10.49 - 13.61 (13.61)

- - - - -

Adjusted Net Profit\(Loss) 44.45 46.83 30.73 12.23 27.88 (369.31)

(Short)/ Excess Provision for taxes in respect of earlier years (Refer note 1 below) 1.73 0.81 (1.66) -

- - - - - -

Balance Brought Forward from Previous Year (347.09) (164.55) (195.28) (207.51) (256.63) 44.96

Transfer From Debenture Redemption Reserve - - - 22.90 67.72

Profit \ (Loss) available for appropriation (300.91) (116.91) (164.55) (195.28) (207.51) (256.63)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Appropriations:

Debit Balance in Profit and Loss account of APIL taken over on Amalgamation - (230.18) - - - -

- - - - -

Balance carried to Summary Statement of Assets and Liabilities, as restated - - - - - -

11

STATEMENT OF CASH FLOW STATEMENT, AS RESTATED

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Cash Flow from Operating Activities

Net Profit\(Loss) before prior period adjustments, extraordinary items and tax, as restated 82.49 138.50 44.68 28.12 39.43 (369.29)

Adjusted for :

Depreciation 79.79 149.08 131.79 109.88 88.11 69.35

(Profit)\Loss on Sale of Fixed Assets - (1.51) 0.22 0.30 0.50 2.80

Interest Expenses 231.76 381.33 334.85 299.82 284.00 209.93

Interest income (34.02) (204.60) (50.20) (91.67) (31.73) (29.63)

Lease Rental Expense 9.98 43.09 49.29 52.95 73.17 78.89

Bad irrecoverable debtor/ Unbilled Revenue/ Advance w/off 1.65 165.31 - - - -

Share of Loss/(Profit) in a firm in which the Company is a partner 1.25 1.83 (2.49) 0.62 0.06 1.34

Share of Loss in Jointly Controlled Entity (Unaudited) - 9.61 - - - -

Deferred revenue expenditure paid during the year - - (0.96) (0.57) (90.25) -

Provision for diminution in the value of long term inv w/back/ provided - - - (13.61) - 13.61

Dividend Income - (0.18) (0.18) (0.14) (0.17) (4.20)

Excess provision no longer required written back (37.95) (19.47) (15.66) (17.47) - -

(Profit) on Sale /Disposal of Short-term investment - (0.88) (0.34) 16.71 - -

(Profit) on Sale /Disposal of Long-term investment - (7.58) - - - (0.26)

Amount received on transfer of tenancy rights - (60.00) - - - -

Deferred revenue expenditure written off 5.93 11.87 11.87 11.77 6.34 5.37

Provision for Projected Losses (11.45) 27.74 1.86 - - -

Operating Profit\(Loss) before prior period items and Working Capital Changes

329.43 634.14 504.73 396.71 369.46 (22.09)

Adjustment for:

(Increase)/Decrease in Trade receivables 98.75 (15.64) (26.91) (505.93) (224.17) (257.97)

(Increase)/Decrease in inventories (64.50) (128.46) 17.50 5.67 (65.66) (45.22)

12

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

(Increase)\Decrease in Work-in-Progress - - 1,714.30 (605.61) (470.05) (140.52)

(Increase) in Unbilled Revenue (1,137.85) (1,187.38) (2,674.81) - - -

(Increase) in Loans and Advances 16.32 (47.67) (23.56) (60.50) (255.05) (67.38)

Increase/(Decrease) in trade, other payables and provisions 485.24 431.76 (144.09) 495.08 (31.83) 905.82

Adjustment on account for amalgamation for net current assets - 73.29 - - - -

Adjustment on account for amalgamation for loans given to Subsidiary Company - (276.81) - - - -

Direct Taxes paid (43.13) (21.97) (78.81) (10.00) 31.26 (55.00)

Prior period expenses - - - - - -

- - - - - -

Net Cash from Operating Activities - (A) (315.74) (538.74) (711.65) (284.58) (646.04) 317.64

Cash Flow from Investing Activities

Purchase of Fixed Assets (485.06) (298.82) (222.57) (259.10) (205.76) (249.39)

Sale of Fixed Asset - 6.83 0.31 2.23 1.91 1.85

Purchase of Investments - (280.61) (1.90) - - -

Sale of Investments - 287.99 2.23 13.07 - 0.01

Sale of Subsidiary - 0.60 - - - 0.86

(Loss)/Profit in a firm in which the Company is partner - (1.83) 2.49 (0.62) (0.06) (1.34)

Share of Loss in Jointly Controlled Entity - (9.61) - - - -

Dividend received - 0.18 0.18 0.14 0.17 4.20

Interest received 13.51 23.64 50.39 92.61 17.57 15.75

Amount received on transfer of tenancy rights - 60.00 - - - -

Net Cash from Investing Activities - (B) (471.55) (211.63) (168.87) (151.67) (186.17) (228.06)

Cash Flow from Financing Activities

Proceeds from Issue of Preference Shares - 500.00 500.00 200.00 200.00 200.00

Proceeds from long term borrowings - 2,215.12 1,414.84 487.33 465.36 177.25

Repayment of long term borrowings - (1,526.08) (1,742.14) (559.77) (205.81) (251.57)

Proceeds from short term borrowings - net 943.93 (5.02) 1,068.84 637.04 578.33 108.51

Interest paid (234.22) (376.30) (336.61) (308.87) (283.33) (218.67)

Lease rentals paid (9.82) (13.23) (0.66) (0.49) (23.11) (43.30)

13

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Dividend paid - - - - (0.01) (6.83)

Corporate dividend tax - - - - - (0.70)

- - - - - -

Net Cash from Financing Activities - (C) 699.89 794.49 904.27 455.24 731.43 (35.31)

Net Increase in Cash and Cash Equivalent (A+B+C) (87.40) 44.12 23.75 18.99 (100.78) 54.27

Cash and Cash Equivalent at the beginning of year 214.39 169.31 145.56 126.57 227.36 173.10

Cash and cash equivalents taken over on amalgamation - 0.96 - - - -

Cash and Cash Equivalent at the end of year 126.99 214.39 169.31 145.56 126.58 227.37

(87.40) 44.12 23.75 18.99 (100.78) 54.27

Reconciliation of Cash and Cash Equivalents

As per Balance Sheet 126.99 214.45 169.31 145.87 127.38 228.42

Less: Interest accrued on Bank Deposits - (0.06) - (0.31) (0.80) (1.05)

As per Cash flow statement 126.99 214.39 169.31 145.56 126.58 227.37

14

SUMMARY STATEMENT OF CONSOLIDATED ASSETS AND LIABILITIES, AS RESTATED

(Rupees in millions)

Particulars As at September

30, 2006

As at March 31,

2006

As at March 31, 2005

As at March 31, 2004

As at March 31, 2003

As at March 31, 2002

FIXED ASSETS

Gross Block

2,887.81

2,667.51

2,482.11

2,276.34

2,013.39

1,829.09

Less: Depreciation

1,578.36

1,494.77

1,412.60

1,270.06

1,158.47

1,049.70

Net Block

1,309.45

1,172.74

1,069.51

1,006.28

854.92

779.39

Less: Revaluation Reserve

59.54

64.08

9.08

9.07

13.95

12.30

Net Block after adjustment for Revaluation Reserve

1,249.91

1,108.66

1,060.43

997.21

840.97

767.09

Capital Work In Progress

330.72

51.06

18.30

6.19

30.97

14.24

TOTAL - (A)

1,580.63

1,159.72

1,078.73

1,003.40

871.94

781.33

INVESTMENTS - (B)

42.65

42.65

43.33

43.33

58.73

58.74

CURRENT ASSETS, LOANS AND ADVANCES

Inventories

611.00

515.61

387.53

405.46

411.77

348.14

Work-in-Progress

14.79

14.99

14.79

1,729.39

1,123.82

780.67

Unbilled Revenue

4,027.62

2,857.30

1,786.95 -

-

-

Sundry Debtors

1,921.59

1,981.02

1,866.71

1,903.46

1,402.03

964.19

Cash & Bank Balances

150.64

237.65

195.73

174.60

156.51

260.20

Loans & Advances

1,111.75

1,030.21

813.89

749.84

789.84

794.17

Other Current Assets

16.23

0.96

0.94

0.94

1.68

1.71

TOTAL - (C)

7,853.62

6,637.74

5,066.54

4,963.69

3,885.65

3,149.08

LIABILITIES AND PROVISIONS

Secured Loans

1,101.45

1,054.35

563.64

829.59

563.82

364.11

Unsecured Loans

3,331.89

2,430.50

2,233.91

1,225.89

927.02

313.11

Current Liabilities

2,615.35

2,022.47

1,688.95

2,749.36

2,289.50

2,338.28 Provisions

127.06

112.46

37.77

39.58

38.84

66.54

Deferred Tax Liability (Net)

119.12

94.92

34.64

23.43

9.50

3.30

Minority Interest

15

(Rupees in millions)

Particulars As at September

30, 2006

As at March 31,

2006

As at March 31, 2005

As at March 31, 2004

As at March 31, 2003

As at March 31, 2002

6.49 6.53 6.98 7.06 8.03 8.81

TOTAL - (D)

7,301.36

5,721.23

4,565.89

4,874.91

3,836.71

3,094.15

NET WORTH - (A+B+C-D)

2,175.54

2,118.88

1,622.71

1,135.51

979.61

895.00

REPRESENTED BY

1. Share Capital

1,715.25

1,715.25

1,214.00

714.00

514.00

314.00

(Refer

note 1

below)

2. Reserves & Surplus

579.97

533.78

495.72

519.42

579.60

609.42

Less: Revaluation Reserve

59.54

64.08

9.08

9.07

13.95

12.30

Reserves & Surplus (Net of Revaluation Reserves)

520.43

469.70

486.64

510.35

565.65

597.12

Total

2,235.68

2,184.95

1,700.64

1,224.35

1,079.65

911.12 Less: Miscellaneous Expenses (to the extent not written off)

60.14

66.07

77.93

88.84

100.04

16.12

NET WORTH

2,175.54

2,118.88

1,622.71

1,135.51

979.61

895.00

16

SUMMARY STATEMENT OF CONSOLIDATED PROFIT AND LOSS ACCOUNT, AS RESTATED

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

INCOME :

Income from Operations 3,990.22 6,804.42 5,433.84 4,453.29 4,299.12 4,130.37 Other Income 133.63 373.25 108.04 193.61 156.56 47.17

Total Income 4,123.85 7,177.67 5,541.88 4,646.90 4,455.68 4,177.54

EXPENDITURE :

Cost of Construction 2,992.20 4,759.03 4,012.65 3,325.05 3,156.03 3,390.27 Payments to and Provisions for employees 335.28 654.25 488.21 447.57 455.30 460.44 Other Expenses 385.66 1,040.68 513.22 421.28 381.83 363.02 Financial Lease Rentals 9.82 43.09 61.19 68.20 92.68 107.07 Interest and Financial charges 234.39 381.48 336.65 300.28 286.85 217.61 Depreciation 85.52 158.64 146.71 129.65 116.72 99.02 Less : Depreciation on the amount added on Revaluation transferred from Revaluation Reserve 4.53 9.07 9.09 9.09 13.94 12.29

Total Expenditure 4,038.34 7,028.10 5,549.54 4,682.94 4,475.47 4,625.14

Profit\ (Loss) before prior period adjustments, extraordinary items and tax 85.51 149.57 (7.66) (36.04) (19.79) (447.60)

Provision for tax:

- Current tax (9.35) (14.66) (2.77) (2.19) (2.24) (0.54)

- Wealth Tax (0.01) (0.02) (0.02) (0.02) (0.02) (0.02)

- Deferred Tax (24.20) (60.28) (11.21) (13.92) (9.27) -

- Fringe Benefit Tax (4.70) (10.40) - - - -

- Foriegn Tax - (6.68) - - - -

Total Provision for Tax (38.26) (92.04) (14.00) (16.13) (11.53) (0.56)

Profit\ (Loss) after tax, before prior period adjustments and extraordinary items

47.25

57.53

(21.66)

(52.17)

(31.32)

(448.16)

Adjustments:

Impact of material adjustment forrestatement in corresponding years (Refer Annexure IIIA)

-

(10.49)

10.49

-

16.92

(16.92)

Adjusted Profit\ (Loss) after tax, before prior period adjustments and extraordinary items

47.25

47.04

(11.17)

(52.17)

(14.40)

(465.08)

(Short)/ Excess Provision for taxes in respect of earlier years (Refer note 1

1.73

0.81

(3.54)

0.09

(1.61)

(0.03)

17

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

below)

Prior Period Expenses -

-

-

-

(0.21)

1.39

Profit\ ( Loss) after taxation and before minority Interest

48.98

47.85

(14.71)

(52.08)

(16.22)

(463.72)

Minority Interest 0.04

(0.08)

11.32

16.25

10.78

23.87

Profit\ ( Loss) after Minority Interest

49.02

47.77

(3.39)

(35.83)

(5.44)

(439.85)

Balance Brought Forward from Previous Year

(282.18)

(329.76)

(326.39)

(290.56)

(308.69)

63.66

Transfer From Debenture Redemption Reserve

-

-

-

-

22.90

67.72

Profit\ ( Loss) available for appropriation

(233.16)

(281.99)

(329.78)

(326.39)

(291.23)

(308.47)

Appropriations:

Proposed Final Dividend -

-

-

-

-

(0.11)

Transfer from/ (to) General Reserve -

(0.19)

-

-

0.67

(0.11)

Less: Deducted from general reserve as per contra

233.16

282.18

329.78

326.39

290.56

308.69

Balance carried to Summary Statement of Assets and Liabilities, as restated

-

-

-

-

-

-

18

STATEMENT OF CONSOLIDATED CASH FLOW STATEMENT, AS RESTATED

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Cash Flow from Operating Activities

Net Profit\(Loss) before prior period adjustments, extraordinary items and tax, as restated

85.51 139.08 2.83 (36.04) (6.18) (461.21)

Adjustment for :

Depreciation 81.01 149.58 137.60 120.55 102.78 86.73

(Profit) / Loss on sale / discard of fixed assets (net)

- (1.51) (0.79) (0.23) - 2.80

Dividend income - (0.18) (0.18) (0.15) - (4.05)

Interest income (34.44) (198.99) (30.89) (73.90) (17.50) (15.40)

Interest expense 234.39 381.48 336.65 300.28 286.85 217.61

Lease rentals expense 9.82 43.09 61.19 68.20 92.69 107.07

Dividend adjustment - - - - - (0.14)

Bad/irrecoverable Debtors /Unbilled Revenue /Advances w/off / TDS W/off

3.80 165.32 3.89 - 4.38 -

Provision for diminution in the value of long-term investments (w/back)/provided

- - - (13.61) - 13.61

Share of Loss in Jointly controlled entity (subject to audit)/ Associate

- - - - 0.01 -

Deferred revenue expenditure paid during the year

- - (0.96) (0.57) (90.25) -

Excess Provision for expenses of earlier years written back

(42.17) (19.47) (19.89) (21.05) (48.07) 1.39

(Profit) / Loss on sale / disposal of short term investments- Others

- (0.88) (0.34) - - -

(Profit) / Loss on sale / disposal of long term investments- Others

- (7.58) - 16.02 - (0.26)

Amount received on transfer of tenancy rights

- (60.00) - - - -

Deferred revenue expenditure written off

5.93 11.87 11.87 11.77 6.34 5.37

Prior Period Expenses (net) - - - - (0.21) -

Provision for Projected Losses Reversed

(11.46) 27.74 1.86 - - -

Operating Profit before working capital changes 332.39 629.55 502.84 371.27 330.84 (46.48)

19

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Adjustment for: (Increase) / Decrease in trade receivables

76.18 (92.32) 47.24 (501.42) (441.26) (96.13)

(Increase)/Decrease in inventories

(95.39) (128.09) 17.94 6.31 (64.60) (37.52)

(Increase)/ Decrease in work-in-progress

0.19 (0.21) 1,714.60 (605.57) (343.15) (103.61)

(Increase) / Decrease in unbilled revenue

(1,170.34) (1,070.35) (1,786.95) - - -

(Increase)/Decrease in loans and advances

(53.45) (294.34) (95.91) (69.51) (48.56) (78.70)

Increase / (Decrease) in trade,other payables and provisions

643.91 385.58 (1,043.35) 490.79 3.34 691.17

Cash (used in) Operations (266.51) (570.18) (643.59) (308.13) (563.39) 328.73

Direct taxes (paid) (42.93) 24.19 (37.29) 39.89 (52.56) 27.05

Net cash from \ (used in) Operating Activities - (A) (309.44) (545.99) (680.88) (268.24) (615.95) 355.78

Cash Flow from Investing Activities

Purchase of fixed assets (499.96) (300.05) (222.84) (259.34) (211.50) (259.18)

Sale of fixed assets - 6.83 1.60 3.37 2.51 1.85

Purchase of Investments - (280.61) (1.90) - - -

Sale of investments 0.01 288.55 2.23 12.99 - 0.01

Sale of Subsidiary - 0.60 - - - -

Amount received on disposal of long term investments

- - - - - 0.86

Dividend received - 0.18 0.18 0.15 - 4.05

Interest received 13.97 18.01 20.58 75.02 17.88 15.84

Amount received on transfer of tenancy rights

- 60.00 - - - -

Share of Loss in Associate - - - - (0.01) -

Net Cash from \ (used in) Investing Activities - (B) (485.98) (206.49) (200.15) (167.81) (191.12) (236.57)

Cash Flow from Financing Activities Proceeds from issue of Preference share

- 500.00 500.00 200.00 200.00 200.00

Proceeds from long-term borrowings

489.62 2,215.12 1,414.84 487.33 465.36 177.25

Repayment of long-term borrowings

(476.89) (1,526.08) (1,742.14) (559.77) (205.81) (251.57)

Proceeds from short term borrowings - net

931.20 (5.02) 1,068.84 637.07 554.07 104.93

Interest paid (235.46) (376.45) (338.41) (309.36) (285.39) (228.30)

Lease rentals paid - (13.23) (0.66) (0.64) (24.49) (55.14)

20

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Dividend paid - - - - (0.11) (6.94)

Corporate Dividend Tax paid - - - - - (0.72)

Net Cash from \ (used in) Financing Activities - (C) 708.47 794.34 902.47 454.63 703.63 (60.49)

Net Increase in Cash and Cash Equivalent (A+B+C) (86.95) 41.86 21.44 18.58 (103.44) 58.72

Cash and cash equivalents at the beginning of the year

237.59 195.73 174.29 155.71 259.15 200.43

Cash and cash equivalents taken over on amalgamation

- - - - - -

Cash and cash equivalents at the end of the year

150.64 237.59 195.73 174.29 155.71 259.15

(86.95) 41.86 21.44 18.58 (103.44) 58.72

Reconciliation of cash and cash equivalents

As per Balance sheet 150.64 237.59 195.73 174.60 156.51 259.15

Less: Interest accrued on Bank Deposits

- - - 0.31 0.80 -

As per Cash flow statement 150.64 237.59 195.73 174.29 155.71 259.15

21

THE ISSUE

Equity Shares offered by the Company 160,65,000Equity Shares

Employee Reservation Portion 321,300 Equity Shares

Therefore

Net Issue to the Public 15,743,700 Equity Shares

Of which

A) Qualified Institutional Buyers (QIB) portion

Of which

At least 9,446,220 Equity Shares*

Available for allocation to Mutual Funds only

472,311 Equity Shares

Balance for all QIBs including Mutual Funds 8,973,909 Equity Shares

B) Non-Institutional Portion At least 1,574,370 Equity Shares*

C) Retail Portion At least 4,723,110 Equity Shares*

Equity Shares outstanding prior to the Issue 71,400,000 Equity Shares

Equity Shares outstanding after the Issue

87,465,000 Equity Shares

Use of Proceeds by the Company See the section titled “Objects of the Issue” on page 43 of this Draft Red Herring Prospectus.

* Allocation on a proportionate basis

22

GENERAL INFORMATION

Registered Office Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azad Nagar P.O, Mumbai 400 053 Tel No: (91 22) 6677 3100; Fax: (91 22) 2673 0047 Registration No: 11-19335 A We are registered with the RoC situated at Everest House, Marine Lines, Mumbai 400 020

Board of Directors of the Issuer

For further details of our Directors, see section titled “Our Management” on page122 of this Draft Red Herring Prospectus.

Company Secretary and Compliance Officer P.R. Rajendran Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azad Nagar P.O., Mumbai 400 053 Tel No: (91 22) 66773100; Fax: (91 22) 26730047/26731031 Email: ipo@afcons.com Investors can contact the Compliance Officer or the Registrar in case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allocation, credit of allotted Equity Shares in the respective beneficiary account or refund orders, etc. Book Running Lead Manager

Enam Financial Consultants Private Limited 801/ 802, Dalamal Towers Nariman Point Mumbai 400 021, India Tel: (91 22) 6638 1800 Fax: (91 22) 2284 6824 E-mail: afcons.ipo@enam.com Website: www.enam.com Contact Person: Aishwarya Mehra

Co Book Running Lead Managers

Name Designation C. P. Mistry Chairman

K. Subrahmanian Managing Director

P. S. Mistry Non-Executive Director

S. P. Mistry Non-Executive Director

J.J. Parakh Non-Executive Director

A.N.Jangle Executive Director

S. Paramasivan Executive Director

A.H. Divanji Independent Director

N. J. Jhaveri Independent Director

N.D. Khurody Independent Director

P. N. Kapadia Independent Director

23

CLSA India Limited JM Morgan Stanley Private Limited

SBI Capital Markets Limited

8/F Dalamal House Nariman Point Mumbai 400 021 Tel: (91 22) 6650 5050 Fax: (91 22) 2284 1657 E-mail: afcons.ipo@clsa.com Website: www.india.clsa.com Contact Person: Varun Kumar

141, Maker Chambers III, Nariman Point Mumbai 400 021, India Tel.: (91 22) 6630 3030 Fax.: (91 22) 2204 7185 Email: afcons.ipo@jmmorganstanley.com Website: www.jmmorganstanley.com Contact Person: Utkarsh Katoria

202, Maker Towers ‘E’, Cuffe Parade, Mumbai 400 005 Tel: (91 22) 2218 9166 Fax: (91 22) 2218 8332 Email : afcons.ipo@sbicaps.com Website : www.sbicaps.com Contact Person : Swaminathan B

Syndicate Members Enam Securities Private Limited Khatau Building, 2nd Floor 44B Bank Street, Off Shaheed Bhagat Singh Road, Fort, Mumbai – 400023 (India) Tel. No.: (91 22) 2267 7901 Fax No. (91 22) 2266 5613 JM Morgan Stanley Financial Services Private Limited Apeejay House, 3, Dinshaw Waccha Road, Churchgate Mumbai 400 021 India Tel: (91 22) 6504 0404 Fax: (91 22) 6630 1694 SBICAP Securities Limited 191, Maker Tower F Cuffe parade Mumbai 400 005, India Tel (91 22) 22189166 Fax: (91 22) 2218 8332 Contact Person: Prasad Chitnis Legal Advisors to the Issue Amarchand Mangaldas & Suresh A. Shroff & Co. 5th Floor, Peninsula Chambers, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013. Tel: (91 22) 2496 4455 Fax: (91 22) 2496 3666 Registrar to the Issue [●] Tel: [●] Fax: [●] E-mail: [●] Website: [●] Contact Person: [●]

24

Bankers to the Issue and Escrow Collection Banks [●]

Bankers to the Company

Bank of India Andheri Corporate Banking Branch, 28, S.V. Road, Andheri (West), Mumbai 400 058 Tel: (91 22) 2671 8565 Fax:(91 22) 2624 7655

Oriental Bank of Commerce Corporate Group Finance Branch, Maker Tower "E" 18th Floor, Cuffe Parade, Mumbai 400 005 Tel: (91 22) 2215 4656 Fax: (91 22) 2215 3533

BNP Paribas 62, Homji Street, Fort, Mumbai 400 001 Tel : (91 22) 5650 1300 Fax : (91 22) 2265 1275

State Bank of India Commercial Branch, NGN Vaidya Marg, Mumbai 400 023 Tel : (91 22) 2266 2205 Fax : (91 22) 2262 1915

Dena Bank Corporate Business Branch, C-10, G-Block, Bandra-Kurla Complex, Bandra (E), Mumbai 400 051 Tel: (91 22) 2654 5016 Fax: (91 22) 2654 5017

Union Bank of India 66/80, Mumbai Samachar Marg, Fort, Mumbai 400023 Tel: (91 22) 2262 9300 Fax: (91 22) 2267 4919

ICICI Bank Limited ICICI Bank Towers, Bandra-Kurla Complex, Bandra (E) Mumbai 400 051 Tel: (91 22) 5653 8770 Fax: (91 22) 5653 8855

UTI Bank Limited Universal Bhavan Building, Sir P.M. Road,Fort, Mumbai 400 001 Tel: (91 22) 2285 1418 Fax: (91 22) 2283 5785

ING Vysya Bank Limited Trade Finance Unit, Patel Chambers, Mumbai 400 007 Tel: (91 22) 2388 9282 Fax: (91 22) 2382 0958

UCO Bank 1st Floor, Mafatlal Centre, Nariman Point, Mumbai 400021 Tel: (91 22) 2202 6449 Fax: (91 22) 2202 5338

Statement of Inter Se Allocation of Responsibilities for the Issue The following table sets forth the distribution of responsibility and coordination for various activities amongst the BRLMs:

S. No.

Activities Responsibility Co-ordinator

1 Capital structuring with the relative components and formalities

Enam/CLSA/ JMMS/SBI CAP

Enam

2 Due diligence of the Company’s operations / management / business plans/legal documents etc.

Enam/CLSA/ JMMS/SBI CAP

Enam

3 Drafting and design of Issue Document and of statutory advertisement including memorandum containing salient features of the Prospectus. Compliance with stipulated requirements and completion of prescribed formalities

Enam/CLSA/ JMMS/SBI CAP

Enam

25

S. No.

Activities Responsibility Co-ordinator

with Stock Exchange, Registrar of Companies and SEBI

4 Drafting and approval of all publicity material other than statutory advertisement as mentioned above including corporate advertisement, brochure, etc.

Enam/CLSA/ JMMS/SBI CAP Enam

5 Appointment of Registrar, Bankers, Printer and Advertising agency

Enam/CLSA/ JMMS/SBI CAP

Enam

6 Institutional Marketing Strategy Finalisation of the list of investors for one to one meetings in consultation with the Company Preparation of roadshow presentation

Enam/CLSA/ JMMS/SBI CAP

Enam

7 Retail/HNI Marketing Strategy Finalize centres for holding conference for brokers etc Finalise media, marketing and PR strategy Follow up on distribution of publicity and issue materials including form, prospectus and deciding on the quantum of the Issue material Finalise Collection orders

Enam/CLSA/ JMMS/SBI CAP

JM

8 Managing the Book and Co-ordination with Stock Exchanges

Enam/CLSA/ JMMS/SBI CAP

Enam

9 Pricing and allocation Enam/CLSA/ JMMS/SBI CAP

Enam

10 The post bidding activities including management of escrow accounts, co-ordination of non-institutional allocation, intimation of allocation and despatch of refunds to bidders

Enam/CLSA/ JMMS/SBI CAP

SBI

11 The post Issue activities of the Issue will involve essential follow up steps, which must include finalisation of listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as Registrars to the Issue, Bankers to the Issue and the bank handling refund business. BRLMs shall be responsible for ensuring that these agencies fulfil their functions and enable him to discharge this responsibility through suitable agreements with the Issuer Company.

Enam/CLSA/ JMMS/SBI CAP

SBI

Credit Rating As this is an offer of Equity Shares, there is no credit rating for this Issue. Trustees As this is an issue of Equity Shares, the appointment of Trustees is not required. IPO Grading We have not opted for grading of this Issue. Monitoring Agency There is no requirement to appoint a Monitoring Agency for the Issue in terms of clause 8.17.1 of the SEBI DIP Guidelines as the Issue size is less than Rs. 500 crores. Book Building Process Book building, with reference to the Issue, refers to the process of collection of Bids on the basis of the Red Herring Prospectus within the Price Band. The Issue Price is finalized after the Bid/ Issue Closing Date. The principal parties involved in the Book Building Process are: 1. The Company;

26

2. BRLM; 3. CBRLMs; 4. Syndicate Member who is an intermediary registered with SEBI or registered as brokers with

BSE/NSE and eligible to act as Underwriters. The Syndicate Member is appointed by the BRLM and the CBRLMs; and

5. Registrar to the Issue This being an issue for less than 25% of post issue equity capital of the Company, the SEBI Guidelines read with rule 19(2) (b) of the SCRR, have permitted an issue of securities to the public through the 100% Book Building Process, wherein not less than 60% of the Net Issue shall be allocated on a proportionate basis to QIBs, out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allocation on a proportionate basis to QIBs including the Mutual Funds subject to valid bids being received at or above the Issue Price. If at least 60% of the Net Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% of the Net Issue shall be available for allocation on a proportionate basis to Non Institutional Bidders and not less than 30% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. We will comply with the SEBI Guidelines and any other ancillary directions issued by SEBI for this Issue. In this regard, we have appointed the BRLM and the CBRLMs to manage the Issue and to procure subscriptions to the Issue.

Pursuant to amendments to the SEBI Guidelines, QIB Bidders are not allowed to withdraw their Bid(s) after the Bid /Issue Closing Date and for further details see the section titled “Terms of the Issue” on page 370 of this Draft Red Herring Prospectus.

The process of Book Building under SEBI Guidelines is subject to change from time to time and investors are advised to make their own judgment about investment through this process prior to making a Bid or Application in the Issue. Illustration of Book Building Process and Price Discovery Process (Investors should note that this

example is solely for illustrative purposes and is not specific to the Issue) Bidders can bid at any price within the price band. For instance, assume a price band of Rs. 20 to Rs. 24 per share, offer size of 3,000 equity shares and receipt of five bids from bidders out which one bidder has bid for 500 shares at Rs. 24 per share while another has bid for 1,500 shares at Rs. 22 per share. A graphical representation of consolidated demand and price would be made available at the bidding centers during the bidding period. The illustrative book given below shows the demand for the shares of the Company at various prices and is collated from bids from various investors.

The price discovery is a function of demand at various prices. The highest price at which the Company is able to offer the desired number of shares is the price at which the book cuts off i.e. Rs. 22 in the above example. The Company in consultation with BRLM and the CBRLMs, will finalise the Issue Price at or below such cut off price, i.e. at or below Rs. 22. All bids at or above the Issue Price and cut off bids are valid bids and are considered for allocation in the respective categories. Steps to be taken by the Bidders for bidding:

Bid Quantity Bid Price (Rs.) Cumulative Quantity Subscription 500 24 500 16.67%

1,000 23 1,500 50%

1,500 22 3,000 100%

2,000 21 5,000 166.67%

2,500 20 7,500 250%

27

• Check eligibility for bidding (please refer to the section titled “Issue Procedure - Who Can Bid” on page 376 of this Draft Red Herring Prospectus);

• Ensure that the Bidder has an active demat account and the demat account details are correctly mentioned in the Bid cum Application Form;

• If the Bid is for Rs. 50,000/- or more, ensure that you have mentioned your PAN and attached copies of your PAN card to the Bid Cum Application Form (see section titled “Issue Procedure” on page376 of this Draft Red Herring Prospectus; and

• Ensure that the Bid cum Application Form is duly completed as per instructions given in this Draft Red Herring Prospectus and in the Bid Cum Application Form.

Underwriting Agreement After the determination of the Issue Price but prior to filing of the Prospectus with the RoC, we will enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be offered through this Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the BRLM and the CBRLMs shall be responsible for bringing in the amount devolved in the event that their respective Syndicate Members do not fulfill their underwriting obligations. The Underwriters have indicated their intention to underwrite the following number of Equity Shares: (This portion has been intentionally left blank and will be filled in before the filing of the Prospectus

with the RoC)

Name and Address of the Underwriters

Indicative Number of Equity shares to be Underwritten

Amount Underwritten

(Rs. in Million) Enam Financial Consultants Private Limited 801, Dalamal Tower, Nariman Point, Mumbai 400 021 India

[●] [●]

CLSA India Limited 8/F, Dalamal House, Nariman Point Mumbai 400 021 India

[●] [●]

SBI Capital Markets Limited 202, Maker Towers ‘E’, Cuffe Parade, Mumbai 400 005 India

[●] [●]

JM Morgan Stanley Private Limited 141, Maker Chambers III Nariman Point, Mumbai 400 021

[●] [●]

The above mentioned amount is indicative underwriting and this would be finalized after the pricing and actual allocation.

28

In the opinion of our Board of Directors (based on a certificate given by the Underwriters), the resources of the above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. The above-mentioned Underwriters are registered with SEBI under Section 12(1) of the SEBI Act or registered as brokers with the Stock Exchange(s). Our Board of Directors, at its meeting held on [●], has accepted and entered into the Underwriting Agreement mentioned above on behalf of the Company. Notwithstanding the above table, the BRLM, the CBRLMs and the Syndicate Member shall be responsible for ensuring payment with respect to Equity Shares allocated to investors procured by them. In the event of any default in payment, the respective Underwriter, in addition to other obligations defined in the underwriting agreement, will also be required to procure subscriptions for/subscribe to Equity Shares to the extent of the defaulted amount.

29

CAPITAL STRUCTURE

Our Equity Share capital before the Issue and after giving effect to the Issue, as at the date of filing of this Draft Red Herring Prospectus with SEBI, is set forth below:

Aggregate Value at Face Value

(Rs.)

Aggregate Value at Issue Price

(Rs.)

A Authorized Capital* 124,000,000 Equity Shares

101,000,000 Preference Shares

1,240,000,000

1,010,000,000

-

B. Issued, Subscribed And Paid-Up Capital before the Issue

71,400,000 Equity Shares fully paid-up before the Issue

714,000,000

[●]

50,000,000- 7.25% Redeemable Cumulative Preference Shares of Rs. 10 each

500,000,000 [●]

50,000,000- 7.5% Redeemable Cumulative Preference Shares of Rs. 10 each

500,000,000 [●]

125,000 Zero Coupon Redeemable Preference Shares of Rs. 10 each

1,250,000 [●]

C. Present Issue in terms of this Draft Red Herring Prospectus

16,065,000 Equity Shares ** 160,650,000 [●]

D. Employee Reservation Portion Up to 321,300 Equity Shares

3,213,000 [●]

E. Net Issue to the Public 15,743,700 Equity Shares

157,437,000 [●]

F. Equity Capital after the Issue 87,465,000 Equity Shares

874,650,000

[●]

G. Share Premium Account

Before the Issue 161,500,000

After the Issue - [●]

** The Issue in terms of this Draft Red Herring Prospectus has been authorized pursuant to a resolution

passed at the EGM dated December 22, 2006.

* Details in relation to the change in authorized capital clause:

Date Details of change

March 18, 1977

The Authorised Share Capital Rs. 5,000,000 divided into 50,000 Equity Shares of Rs. 100 each.

January 30, 1982

The Authorised Share Capital was increased from Rs. 5,000,000 divided into 50,000 Equity Shares of Rs. 100 each to Rs. 25,000,000 divided into 250,000 Equity Shares of Rs. 100 each.

December 31, 1988

The Authorised Share Capital was increased from Rs. 25,000,000 divided into 250,000 Equity Shares of Rs. 100 each to Rs. 75,000,000 divided into 750,000 Equity Shares of Rs. 100 each.

April 6, 1991 The Authorised Share Capital was increased from Rs. 75,000,000 divided into 750,000 Equity Shares of Rs. 100 each to Rs. 100,000,000 divided into 750,000 Equity Shares of Rs. 100 each and 250,000 unclassified shares of Rs. 100 each.

30

Date Details of change

September 20, 1991

The Authorised Share Capital of Rs. 100,000,000 divided into 750,000 Equity Shares of Rs. 100 each and 250,000 unclassified shares of Rs. 100 each was changed to 750,000 Equity Shares of Rs. 100 each, 100,000 15% Redeemable Cumulative Preference Shares of Rs. 100 each and 150,000 unclassified shares of Rs. 100 each.

July 25, 1996 The Authorised Share Capital of Rs. 100,000,000 divided into 750,000 Equity Shares of Rs. 100 each, 100,000 15% Redeemable Cumulative Preference Shares of Rs. 100 each and 150,000 unclassified shares of Rs. 100 each was changed to 9,000,000 Equity Shares of Rs. 10 each and 1,000,000 Preference Shares of Rs. 10 each.

October 11, 1996

The Authorised Share Capital of Rs. 100,000,000 divided into 9,000,000 Equity Shares of Rs. 10 each and 1,000,000 Preference Shares of Rs. 10 each was increased to Rs. 150,000,000 divided into 13,000,000 Equity Shares of Rs. 10 each and 2,000,000 Preference Shares of Rs. 10 each.

March 7, 2002 The Authorised Share Capital of Rs. 150,000,000 divided into 13,000,000 Equity Shares of Rs. 10 each and 2,000,000 Preference Shares of Rs. 10 each was increased to Rs. 330,000,000 divided into 33,000,000 shares of Rs. 10 each.

March 13, 2003

The Authorised Share Capital of. Rs. 330,000,000 divided into 33,000,000 shares of Rs. 10 each was increased to Rs. 750,000,000 divided into 75,000,000 shares of Rs. 10 each.

March 30, 2005

The Authorised Share Capital of Rs. 750,000,000 divided into 75,000,000 shares of Rs. 10 each was increased to Rs. 1,250,000,000 divided into 125,000,000 shares of Rs. 10 each.

March 31, 2006

The Authorised Share Capital of Rs. 1,250,000,000 divided into 125,000,000 shares of Rs. 10 each was increased to Rs. 1,750,000,000 divided into 175,000,000 shares of Rs. 10 each.

December 22, 2006

The Authorised Share Capital of Rs.1,750,000,000 divided into 175,000,000 shares of Rs.10 each was increased to Rs. 2,250,000,000 divided into 124,000,000 Equity Shares of Rs.10 each and 101,000,000 Preference Shares of Rs.10 each.

Notes to Capital Structure 1. (a) Equity Share Capital History of the Company

Date of Allotment

No. of Shares

Cumulative No. of Equity Shares

Face Value (Rs.)

Issue Price (Rs.)

Nature of Payment of

Consideration

Reasons for Allotment

Cumulative Paid-Up Equity Capital

(Rs.)

Cumulative Equity Share

Premium (Rs.)

November 22, 1976

21

21 100 100 Cash Alloted to Subscribers to Memorandum

2,100 -

March 18, 1977

20,000

20,021 100 100 Consideration other than cash

Alloted pursuant to acquisition of the partnership firm M/s Rodio Foundation Engineering Ltd. and Hazarat & Co.

20,02,100 -

April 22, 1977

29,979

50,000 100 100 Cash Fresh issue of shares at par to employees

5,000,000 -

31

Date of Allotment

No. of Shares

Cumulative No. of Equity Shares

Face Value (Rs.)

Issue Price (Rs.)

Nature of Payment of

Consideration

Reasons for Allotment

Cumulative Paid-Up Equity Capital

(Rs.)

Cumulative Equity Share

Premium (Rs.)

April 10, 1982

50,000

100,000 100 100 Bonus Bonus in the ratio of 1:1 (by capitalizing from general reserves)

10,000,000 -

January 25, 1986

100,000

200,000 100 100 Bonus Bonus in the ratio of 1:1 (by capitalizing from general reserves)

20,000,000 -

April 15, 1989

200,000

400,000 100 100 Bonus Bonus in the ratio of 1:1 (by capitalizing from general reserves)

40,000,000

February 1, 1990

100,000

500,000 100 100 Cash Fresh issue at par to Employee Trusts

50,000,000 -

November 26, 1993

1,25,000

6,25,000 100 100 Cash Fresh issue at par to SCICI Ltd.

62,500,000 -

July 25, 1996

62,50,000 10 10 N.A. Split of Equity Shares from the face value of Rs. 100 each to Rs. 10 each

62,500,000 -

November 7, 1996

12,50,000

7,500,000 10 30 Cash Rights issue in the ratio of 1:5 at a premium of Rs. 20 per share

75,000,000 25,000,000

January 19, 1998

3,900,000

11,400,000 10

45 Cash

Private placement to ICICI Ltd. at a premium of Rs. 35 per share

114,000,000 161,500,000

March 27, 2003

20,000,000

31,400,000 10 10 Cash Alloted to CIL pursuant to conversion of 12% Redeemable Cumulative Convertible Preference Shares into Equity Shares at par.

314,000,000 161,500,000

32

Date of Allotment

No. of Shares

Cumulative No. of Equity Shares

Face Value (Rs.)

Issue Price (Rs.)

Nature of Payment of

Consideration

Reasons for Allotment

Cumulative Paid-Up Equity Capital

(Rs.)

Cumulative Equity Share

Premium (Rs.)

March 31, 2006

20,000,000 51,400,000 10 10 Cash Alloted to FIL pursuant to conversion of 9 .5% Redeemable Cumulative Convertible Preference Shares (initially allotted to SICL, but transferred to FIL) into Equity Shares at par.

514,000,000 161,500,000

December 22, 2006

20,000,000 71,400,000 10 10 Conversion Alloted to SICL pursuant to conversion of 7 .5% Redeemable Cumulative Convertible Preference Shares (initially allotted to CIL, but transferred to SICL) into Equity Shares at par.

714,000,000 161,500,000

(b) Preference Share Capital History of the Company

Date of Allotment

No. of Preference

Shares

Cumulative No. of

Preference Shares

Face Value (Rs.)

Issue Price (Rs.)

Nature of Payment of

Consideration

Reasons for Allotment

Cumulative Paid-Up

Preference Share

Capital (Rs.) March 27, 2002

20,000,000 20,000,000 10 10 Cash 12% Redeemable Cumulative Convertible Preference shares of Rs. 10 each issued to CIL

200,000,000

March 25, 2003

20,000,000 40,000,000 10 10 Cash 9.5% Redeemable Non-Cumulative Convertible Preference

400,000,000

33

Date of Allotment

No. of Preference

Shares

Cumulative No. of

Preference Shares

Face Value (Rs.)

Issue Price (Rs.)

Nature of Payment of

Consideration

Reasons for Allotment

Cumulative Paid-Up

Preference Share

Capital (Rs.) shares of Rs. 10 each issued to SICL

March 27, 2003

- 20,000,000 - - Conversion 12% Redeemable Cumulative Convertible Preference Shares of Rs. 10 each issued to CIL converted into equity shares at par

200,000,000

March 26, 2004

20,000,000

40,000,000* 10 10 Cash 7.5% Redeemable Non-Cumulative Convertible Preference shares of Rs. 10 each issued to CIL

400,000,000

March 30, 2005

50,000,000

90,000,000 10 10 Cash 7.5% Redeemable Non-Cumulative Convertible Preference Shares of Rs. 10 each were issued to SICL.*

900,000,000

March 31, 2006

50,000,000

140,000,000 10 10 Cash 7.5% Redeemable Non-Cumulative Optionally Convertible Preference shares of Rs. 10 each were issued to FIL**

1,400,000,000

March 31, 2006

- 120,000,000 - - Conversion 9.5% Redeemable Non-Cumulative Convertible

1,200,000,000

34

Date of Allotment

No. of Preference

Shares

Cumulative No. of

Preference Shares

Face Value (Rs.)

Issue Price (Rs.)

Nature of Payment of

Consideration

Reasons for Allotment

Cumulative Paid-Up

Preference Share

Capital (Rs.) Preference Shares of Rs.10 each issued to SICL later transferred to FIL converted into Equity Shares at par.

June 30, 2006

1,25,000

12,01,25,000 10 10 Consideration other than cash

Zero Coupon Redeemable Preference Shares allotted to SICL and Pauling PLC, U.K. pursuant to amalgamation of AFCONS Pauling (India) Ltd. with the Company vide High Court Order dated May 6, 2006

120,12,50,000

December 22, 2006

10,01,25,000 - - Conversion 7.5% Redeemable Non-Cumulative Convertible Preference Shares of Rs. 10 each issued to CIL and later trasnferred to SICL converted into Equity Shares at par.

100, 12, 50,000

* On March 31, 2006 SICL transferred 7.5% Redeemable Non-Cumulative Convertible

Preference Shares to FIL. The Company in an EGM held on December 22, 2006 has amended the terms and conditions of these Preference Shares to the following effect: (a) The Preference Shares so issued will be redeemable, non-convertible and cumulative

Preference Shares; (b) The Preference Shares shall be redeemable at any time after 3 years but not later than

20 years from the date of variation of such rights by either the Company or the shareholders by exercising call and put option, respectively by giving 21 days notice;

35

(c) The holders of the Redeemable Preference Shares shall be entitled to a fixed cumulative preferential dividend @ 7.25% per annum on the paid up preference capital in preference to the Equity Shares.

** On March 31, 2006 the Company allotted 7.5% Redeemable Non-Cumulative Optionally

Convertible Preference shares of Rs. 10 each to FIL. The Company in an EGM held on December 22, 2006 has amended the terms and conditions of these Preference Shares to the following effect:

(a) The Preference Shares so issued will be redeemable, non-convertible and cumulative

Preference Shares; (b) The Preference Shares shall be redeemable at any time after 5 years but not later than 20

years from the date of variation of such rights by either the Company or the shareholders by exercising call and put option, respectively by giving 21 days notice;

(c) The holders of the Redeemable Preference Shares shall be entitled to a fixed cumulative preferential dividend @ 7.5% per annum on the paid up preference capital in preference to the Equity Shares.

2. Promoter Contribution and Lock-in

Pursuant to the SEBI Guidelines, an aggregate of 20% of the fully diluted post-Issue capital of the Company held by the Promoters shall be locked in for a period of three years from the date of Allotment in the Issue. All Equity Shares which are being locked in are eligible for computation of Promoter’s contribution and lock in under clause 4.6 of the SEBI Guidelines. The details of such lock-in are given below:

Name Number of Equity Shares

Face Value

Nature of Consideration

Issue Price per

Equity Share (Rs.)

Date of Allotment

Reasons for

Allotment

% of post-Issue paid-

up capital

Lock – in

period

Cyrus Investments Limited

174,93,000 10 Cash 10 March 27, 2003

Alloted to CIL pursuant to conversion of 12% Redeemable Cumulative Convertible Preference Shares into Equity Shares at par.

20% 3 years

36

In terms of Clause 4.14.1 of the SEBI Guidelines, in addition to 20% of the post-Issue shareholding of the Company held by the Promoter and locked in for three years as specified above, the entire pre-Issue share capital of the Company will be locked in for a period of one year from the date of Allotment in this Issue. In terms of Clause 4.16.1(a) of the SEBI Guidelines, the Equity Shares held by persons other than the Promoter prior to the Issue may be transferred to any other person holding the Equity Shares which are locked-in as per Clause 4.14 of the SEBI Guidelines, subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable. Further, in terms of Clause 4.16.1(b) of the SEBI Guidelines, Equity Shares held by the Promoter may be transferred to and among the Promoter Group or to a new promoter or persons in control of the Company subject to continuation of the lock-in in the hands of the transferees for the remaining period and compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable. In addition, the Equity Shares subject to lock-in will be transferable subject to compliance with the SEBI Guidelines, as amended from time to time. Locked-in Equity Shares held by the Promoter can be pledged only with banks or financial institutions as collateral security for loans granted by such banks or financial institutions provided that the pledge of the Equity Shares is one of the terms of the sanction of the loan.

3. Details of transactions in Equity Shares by the Promoters and Promoter Group Companies

The following Equity Shares have been sold or purchased by the Promoter and the Promoter Group Companies, during the period of six months preceding the date on which the Draft Red Herring Prospectus is filed with SEBI.

Transferee Transferor Date on which Shares

purchased or sold

Number of Shares

Face value (Rs.)

Consideration (Rs.)

Purchase/Sale Price (per

Equity Share) (Rs.)

CIL R. Babu October 3, 2006

120 10 1,800 15

CIL A.K. Mohanty

October 3, 2006

240 .10 3,600 15

CIL S. Devi October 3, 2006

4,320 10 64,800 15

CIL R.S. Shikare

December 21, 2006

100 10 1500 15

Rising Mountain Properties Private Limited

FIL December 21, 2006

50,000 10 5,00,000 10

Afcons Dredging and Marine Services Limited

CIL December 28, 2006

1,363,211 10 25,901,009 19

Afcons Dredging and Marine Services Limited

FIL December 28, 2006

26,53,039 10 26,530,390 10

K. Subramanian held jointly with S. Sundari

FIL December 28, 2006

23,168 10 393,856 17

S. Paramasivan FIL December 19,859 10 337,603 17

37

Transferee Transferor Date on which Shares

purchased or sold

Number of Shares

Face value (Rs.)

Consideration (Rs.)

Purchase/Sale Price (per

Equity Share) (Rs.)

28, 2006

A.N. Jangle FIL December 28, 2006

16,549 10 281,333 17

Selvaraj N. jointly held with R. Selvaraj

FIL December 28, 2006

16,549 10 281,333 17

S. Sankar FIL December 28, 2006

16,549 10 281,333 17

S. Kuppuswamy FIL December 28, 2006

9,929 10 168,793 17

P. Sampath FIL December 28, 2006

9,929 10 168,793 17

H. J. Tavaria jointly held with N.H. Tavaria

FIL December 28, 2006

9,929 10 168,793 17

J.J. Parakh jointly held with V.J. Parakh

FIL December 28, 2006

6,619 10 112,523 17

A. R. Mirza jointly held with R. K. Mirza

FIL December 28, 2006

3,310 10 56,278 17

M. J. Parakh jointly held with P M. Parakh

FIL December 28, 2006

3,310 10 56,278 17

N. J. Jhaveri jointly held with C. N. Jhaveri

FIL December 28, 2006

16,549 10 281,333 17

FK. Bhathena jointly held with D. F. Bhathena

FIL December 28, 2006

6,620 10 112,540 17

R.M. Nentin jointly held with G. M. Nentin jointly held with M. M. Nentin

FIL December 28, 2006

3,310 10 56,278 17

M. D. Saini jointly held with Kanta Saini

FIL December 28, 2006

16,549 10 281,333 17

S. C. Dixit jointly held with Lata Dixit

FIL December 28, 2006

13,239 10 225,063 17

M. S. Hingorani jointly held with K. M. Hingorani.

FIL December 28, 2006

9,929 10 168,793 17

A.H. Daruwalla FIL December 28, 2006

6,620 10 112,540 17

B. Prasad jointly held with V. Prasad

FIL December 28, 2006

6,620 10 112,540 17

P.R.Rajendran jointly held with S. Rajendran

FIL December 28, 2006

9,929 10 168,793 17

W. Kabir jointly FIL December 9,929 10 168,793 17

38

Transferee Transferor Date on which Shares

purchased or sold

Number of Shares

Face value (Rs.)

Consideration (Rs.)

Purchase/Sale Price (per

Equity Share) (Rs.)

held with N. Kabir

28, 2006

V.Manivannan jointly held with S. Manivannan

FIL December 28, 2006

6,620 10 112,540 17

N.S.Iyer jointly held with S. S. Iyer

FIL December 28, 2006

13,239 10 225,063 17

P. V. Bhat jointly held with V. K. Bhat

FIL December 28, 2006

9,929 10 168,793 17

Afcons Bot Constructions Pvt.Ltd.

FIL December 28, 2006

4,016,250 10 40,162,500 10

3. Details of transactions in Preference Shares by the Promoters and Promoter Group Companies

Transferee Transferor Date on which Shares

purchased or sold

Number of Shares

Face value (Rs.)

Consideration (Rs.)

Purchase/Sale Price (per

Equity Share)

SIPL CIL December 21, 2006

20,000,000 10 200,000,000 10

4. Equity Shares held by top ten shareholders

The details of the top ten shareholders of the Company and the number of Equity Shares held by them are as under:

a) As on the date of, and ten days prior to filing of this Draft Red Herring Prospectus:

S.No. Shareholder(s) Number of Equity Shares

Percentage (%)

1. Cyrus Investments Limited 24,075,389 33.72

2. Sterling Investment Corporation Private Limited

24,075,389 33.72

3. Floreat Investments Limited 13,015,929 24.23

4. Afcons Dredging and Marine Services Limited 4,016,250 5.63

5. Afcons BOT Constructions Private Limited 4,016,250 5.63

6. A.H. Divanji 81,720 0.26

7. J.A.Divanji 60,000 0.19

8. H. J. Tavaria as trustee of Afcons Shareholders (Holiday Assistance) Trust No. 2*

50,000 0.15

9. H. J. Tavaria as trustee of Afcons Shareholders (Holiday Assistance) Trust No. 3*

50,000 0.15

10. H. J. Tavaria as trustee of Afcons Shareholders (Educational Assistance) Trust No. 1*

50,000 0.15

39

* See “Our Management – Employee Trusts” on page 132 of this Draft Red Herring Prospectus. b) Two years prior to filing of this Draft Red Herring Prospectus:

S.No. Shareholder(s) Number of Equity Shares

Percentage (%)

1. Cyrus Investments Limited 25,412,760 80.93

2. Sterling Investments Corporation Private Limited

4,075,389 12.97

3. A.H. Divanji 81,720 0.26

4. J.A. Divanji 60,000 0.19

5. H. J. Tavaria as trustee of Afcons Shareholders (Holiday Assistance) Trust No. 1*

50,000 0.16

6. H.J. Tavaria as trustee of Afcons Shareholders (Holiday Assistance) Trust No. 2*

50,000 0.16

7. H.J. Tavaria as trustee of Afcons Shareholders (Holiday Assistance) Trust No. 3*

50,000 0.16

8. H.J. Tavaria as trustee of Afcons Shareholders (Medical Benefit) Trust No. 1*

50,000 0.16

9. H.J. Tavaria as trustee of Afcons Shareholders (Educational Assistance) Trust No. 1*

50,000 0.16

10. H.J. Tavaria as trustee of Afcons Shareholders (Educational Assistance) Trust No. 2*

50,000 0.16

* See “Our Management – Employee Trusts” on page 132 of this Draft Red Herring Prospectus. 5. Shareholding Pattern of the Company

The shareholding pattern of the Company before and after the Issue is as under:

Category Pre-Issue Post Issue** No of Equity

Shares Percentage No of Equity

Shares Percentage

Promoters (A)

Shapoorji Pallonji & Co Limited

Nil Nil Nil Nil

Cyrus Investments Limited

24, 075,389 33.72 24,075,389 27.53

Sterling Investment Corporation Private Limited

24, 075,389 33.72 24,075,389 27.53

Floreat Investments Limited

13,015,929 18.22 13,015,929 14.88

Total (A) 61,166,707 85.66 61,166,707 69.94

Promoter Group (B)

Afcons Dredging and Marine Services Limited

4,016,250 5.63 4,016,250 4.59

Afcons BOT Constructions Private Limited

4,016,250 5.63 4,016,250 4.59

Total (B) 8,032,500 11.26 8,032,500 9.18

40

Category Pre-Issue Post Issue** No of Equity

Shares Percentage No of Equity

Shares Percentage

Others (C)

Employee Trusts* 1,191,370 1.67 1,191,370 1.37

Employees and Others 732,759 1.03 732,759 0.83

Executive Directors/Non-Executive Directors

226,664 0.32 226,664 0.26

Rising Mountain Properties Private Limited

50,000 0.06 50,000 0.05

Total (C) 2,200,793 3.08 2,200,793 2.51 Public (D) Nil Nil 1,60,65,000 18.37

Total (A+B+C+D) 71,400,000 100 87,465,000 100

* See “Our Management – Employee Trusts” on page 132of this Draft Red Herring Prospectus.

** On the assumption that the total shareholding of the categories of the shareholders listed out below will not change upon completion of the Issue.

6. Except for options granted under our employee stock option plan (“ESOP”), there are no outstanding warrants, options or rights to convert debentures, loans or other instruments into the Equity Shares.

7. Employee stock option scheme

We have an employee stock option scheme in force, which is applicable to all our Directors, and employees:

ESOP scheme

Outstanding Options Remarks

Afcons Infrastructure Limited Employee Stock Option Scheme, 2006

721,150 The special resolution passed by our Company at its EGM dated December 22, 2006 approved the grant of up to 1,785,000 equity shares of the Company.

(a) ESOP 2006

Particulars Details Options granted 721,150

Exercise price of options Rs. 17 per option

Total options vested Nil

Options exercised Nil

Total number of equity shares that would arise as a result of full exercise of options already granted

721,150

Options forfeited/ lapsed/ cancelled Nil

Variations in terms of options Nil

Money realised by exercise of options N.A.

Options outstanding (in force) 721,150

Person wise details of options granted to i) Directors and key managerial

employees Refer Note 1 below

ii) Any other employee who received a grant in any one year of options

Nil

41

Particulars Details amounting to 5% or more of the options granted during the year

iii) Identified employees who are granted options, during any one year equal to exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant

Nil

Fully diluted EPS on a pre-Issue basis 0.2846 (On a consolidated basis) 0.2681 (On a unconsolidated basis)

Options would vest as follows:

20% Within one year of date of grant*

25% Within two year of date of grant

25% Within three year of date of grant

30% Within four year of date of grant

For employees retiring within four years of grant options would vest from the date of grant as follows:

50% Within one year of date of grant

Vesting schedule

50% Within two year of date of grant

Lock-in No lock-in period for exercised options

Impact on profits of the last three years Nil

* For employees who have not completed minimum two years of service, the vesting shall commence from the expiry of two years from the date of grant and the balance shall vest every year thereafter in the same formula mentioned above.

Note 1: Details regarding options granted to our Directors and our key managerial employees are set forth below:

Name of director/ Key Managerial Personnel

No. of options granted

under ESOP 2006

No. of options exercised

under ESOP 2006

No. of options outstanding under ESOP

2006

No. of Equity Shares held

K. Subrahmanian 35,040 Nil 35,040 23,168

A. N. Jangle 14,460 Nil 14,460 17,549

S. Paramasivan 26,280 Nil 26,280 19,859

N. Selvaraj 21,900 Nil 21,900 20,549

N.S. Iyer 10,510 Nil 10,510 13,239

W. Kabir 10,510 Nil 10,510 9,929

P. R. Rajendran 13,140 Nil 13,140 10,409

M. Jayaram 13,140 Nil 13,140 -

S. Sankar 17,520 Nil 17,520 16,549

K. Ramesh 13,140 Nil 13,140 -

V. K. Bhat 13,140 Nil 13,140 9,929

R. Kalyanakrishnan 8,760 Nil 8,760 -

J. D. Bakshi 8,760 Nil 8,760 -

V. Prasada Rao 13,140 Nil 13,140 -

7. The Company, its Directors, the BRLM and the CBRLMs have not entered into any buy-back

and/or standby arrangements for purchase of the Equity Shares from any person. 8. The Company has not raised any bridge loan against the proceeds of the Issue. For details on

use of proceeds, see the section titled “Objects of the Issue” on page 43 of this Draft Red Herring Prospectus.

42

9. At least 60% of the Net Issue shall be allocated to QIBs on a proportionate basis. 5% of the

QIB Portion shall be available for allocation to Mutual Funds only and the remaining QIB Portion shall be available for allocation to the QIB Bidders including Mutual Funds subject to valid Bids being received at or above the Issue Price. Further, not less than 10% of the Net Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 30% of the Net Issue will be available for allocation to Retail Individual Bidders, subject to valid Bids being received from them at or above the Issue Price. Under-subscription, if any, in the Non-Institutional and Retail Individual categories would be allowed to be met with spill over from any other category at the discretion of the Company, the BRLM and the CBRLMs. The Issue includes the Employee Reservation Portion of up to 321,300 Equity Shares which are available for allocation to Eligible Employees.

10. Only Eligible Employees would be entitled to apply in this Issue under the Employee

Reservation Portion, on competitive basis. Bid/ Application by Eligible Employees can be made also in the “Net Issue” and such Bids shall not be treated as multiple Bids.

11. Under-subscription, if any, in the Employee Reservation Portion will be added back to the

Non Institutional Portion and Retail Portion at the discretion of the BRLM and the CBRLMs. In case of under-subscription in the Net Issue, spill-over to the extent of under-subscription shall be permitted from the Employee Reservation Portion. Under-subscription, if any, in any category, except the QIB Portion, would be met with spill over from other categories at our discretion in consultation with the BRLM and the CBRLMs.

12. A Bidder cannot make a Bid for more than the number of Equity Shares offered in this Issue,

subject to the maximum limit of investment prescribed under relevant laws applicable to each category of investor.

13. There would be no further issue of capital whether by way of issue of bonus shares,

preferential allotment, and rights issue or in any other manner during the period commencing from submission of the Draft Red Herring Prospectus with SEBI until the equity shares offered hereby have been listed.

14. The Company presently does not have any intention or proposal to alter capital structure for a

period of six months commencing from the date of opening of this Issue, by way of split/ consolidation of the denomination of Equity Shares or further issue of Equity Shares or securities convertible into Equity Shares, whether on a preferential basis or otherwise. However, during such period or at a later date, we may issue Equity Shares pursuant to our employee stock option plan or issue equity shares or securities linked to equity shares to finance an acquisition, merger or joint venture by us or as consideration for such acquisition, merger or joint venture, or for regulatory compliance or such other scheme of arrangement if an opportunity of such nature is determined by our Board to be in our interest.

16. We have not issued any Equity Shares out of revaluation reserves or for consideration other

than cash except as stated in the Equity Share Capital History table above. 17. There will be only one denomination of the Equity Shares of the Company unless otherwise

permitted by law and the Company shall comply with such disclosure and accounting norms as may be specified by SEBI from time to time.

18. An oversubscription to the extent of 10% of the Issue can be retained for the purposes of

rounding off. 19. As of December 31, 2006, we had 624 members.

43

OBJECTS OF THE ISSUE

The objects of the Issue are to achieve the benefits of listing on the Stock Exchanges and the raising of capital for our capital expansion plans. We believe that listing will enhance the Company’s brand name, its visibility among investors and would provide liquidity to our existing shareholders. We intend to use the proceeds of the Issue after deducting underwriting and management fees, selling commissions and other expenses associated with the Issue (the “Net Proceeds”) for the following purposes:

• Purchase capital equipment;

• Repayment of debt;

• General corporate purposes and strategic initiatives. Our fund requirements are based on our current business plan and are based on management estimates. In view of the dynamic nature of our industry, we may have to revise our business plans from time to time and consequently our fund requirements may also change. This may include rescheduling of our capital expenditure programmes and /or reducing or increasing the amount of repayment of debt. Proposed use of net proceeds from the Issue The following table summarizes the use and the year wise implementation of Net Proceeds of the Issue:

(in Rs. Million) S.No. Particulars FY 2007 FY 2008 Total

1. Investment in capital equipment - 1,250 1,250 2. Prepayment/repayment of debt 200 550 750 3. General Corporate Purposes and strategic initiatives [●] [●] [●] Total [●] [●] [●]

Whilst we intend to utilize the Net Proceeds of the Issue in the manner provided above, in the event of a surplus, we will use such surplus towards general corporate purposes. In the event of any shortfall in using the Net Proceeds of the Issue, we will reduce the amount of repayment of high cost debt. The main objects clause and the objects incidental or ancillary to the main objects clause of the Memorandum of Association enable us to undertake our existing activities and the activities for which funds are being raised by us in the Issue. Details of Use of Proceeds 1. Investment in Capital Equipment We require to make investments in capital equipment on a recurring basis due to the nature of the industry we operate in. We intend to use Rs. 1,250 million from the Net Proceeds for the purchase of capital equipment to meet the requirements of our various projects based on our order book of projects as of September 30, 2006 and future requirements as estimated by the management.

The following table sets out the equipments that are currently under consideration for placement of

order:

S. No. Equipment Quantity Estimated Price(In Rs. Million)

Equipments being fabricated in-house

1. Jackup Platform -1200 m2 1 120.00

2. Tug -600 bhp -2000 bhp 3 120.00

3. Split Barges – 1000 m3 3 90.00

4. Barge – Dumb – 1000 MT cap 2 40.00

Equipments being purchased

5. Cranes of various capacities ranging from 40 MT to 200 MT

18 308.21

6. Piling Equipments – B180 8 250.56

44

S. No. Equipment Quantity Estimated Price(In Rs. Million) 7. Vibro Hammer – 40 TM cap 2 34.79

8. Desander 4 10.32

9. Batching Plant – 60 m3 3 25.90

10. Transit Mixers, Tippers with rock body

70 97.34

11. Generators of various capacities ranging from 40 KVA to 600 KVA

49 43.29

12. Pipeline Equipment – 1 set – 30” laying capacity

26 109.81

Total 187 1250.22 We purchase the equipments set out above on a regular basis in the course of our business. The prices for the equipments proposed to be purchased as set out above are as per internal management estimates based on the price at which such equipments were purchased in last one year or past quotations. The Company is in the process of seeking fresh quotations for such purchases. The cost for the equipments being fabricated in-house has been certified by M/s AB Marine, Independent Naval Architects by way of their letter dated January 4, 2007. The estimated expenditure plan has not been appraised by an independent organization. In addition, the Company’s capital expenditure plans are subject to a number of variables, including possible cost overruns, construction delays or defects and changes in the management’s views of the desirability of current plans, among others. 2. Repayment of Debt The Company has entered into various financing arrangements with a number of banks/ financial institutions and other lenders. These arrangements include fund based facilities from banks/ financial institutions and other lenders aggregating Rs. 5,940.30 million as on September 30, 2006. As on September 30, 2006, the amount outstanding from the Company under these facilities was Rs. 4,379.88 million. Details of the amounts proposed to be repaid out of Issue proceeds are provided in the table below:

(In Rs. Million) S.No. Bank/Financial

Institution/Lender Total Amount

Sanctioned Under Fund

Based Facilities

Rate of Interest

Repayment date

Amount Outstanding

as on September

30, 2006

Amount proposed to

be repaid out of the

Issue proceeds

A. Unsecured Corporate Loans

1. Bank of India 250.0 9.75% March 28, 2007

250.00 250.0

2. UTI Bank 250.00 9.5% August 8, 2007

251.90 250.00

3. Dena Bank 250.00 9.0% September 15, 2007

250.0 250.0

Total 750.00 In view of the dynamic nature of our industry, the Company may have to revise its business plan from time to time and consequently our fund requirement may also change. Thus, the Company may reduce or increase the amount of prepayment or repayment of debt/advances as stated above. 3. General Corporate Purposes and other strategic initiatives The Company intends to use upto Rs. [●] million from the proceeds of the Issue for general corporate purposes. The Company intends to use the net proceeds of the Issue in accordance with the growth plan and long term strategy. The civil engineering and construction industry is dynamic in nature and the Company’s plan and strategy will depend on future additions in the Order Book, the types of contracts and the schedule of execution of different contracts. Hence, the Company’s management will utilize

45

these funds for various corporate purposes including purchase of capital equipments, working capital, repayment of debts/advances, strategic investments in projects, subsidiaries, acquisitions and joint ventures etc. The Company’s management, in accordance with the policies established by the Board, will have flexibility in deploying the proceeds received from the Issue for the purposes as stated in the Memorandum of Association. Issue Related Expenses The Issue related expenses consist of underwriting fees, selling commission, fees payable to BRLM and the CBRLMs to the Issue, legal counsels, Bankers to the Issue, Escrow Bankers and Registrars to the Issue, printing and stationery expenses, advertising and marketing expenses and all other incidental and miscellaneous expenses for listing the Equity Shares on the Stock Exchanges. We intend to use about Rs. [●] million towards these expenses for the Issue. All expenses with respect to the Issue will be borne out of Issue proceeds. Means of finance The stated objects of the Issue are proposed to be financed entirely out of the proceeds of this Issue. Interim Use of Proceeds The Company’s management, in accordance with the policies established by the Board, will have flexibility in deploying the proceeds received from the Issue. Pending utilization of the proceeds out of the Issue for the purposes described above, we intend to temporarily invest the funds in high quality interest bearing liquid instruments including money market mutual funds, deposits with banks or temporarily deploy the funds in investment grade interest bearing securities as may be approved by the Board. Such investments would be in accordance with the investment policies approved by the Board from time to time. Further, we would not employ proceeds of the Issue in equity capital markets. Monitoring of Utilization of Funds The Board shall monitor the utilization of the proceeds of the Issue. The Company will disclose the utilization of the proceeds of the Issue under a separate head in the Company’s balance sheet for Fiscal 2007 and 2008 clearly specifying the purpose for which such proceeds have been utilized. The Company will also, in the Company’s balance sheet for Fiscal 2007 and 2008, provide details, if any, in relation to all such proceeds of the Issue that have not been utilized and also indicating investments, if any, of such unutilized proceeds of the Issue. No part of the Issue proceeds will be paid by the Company as consideration to the Promoters, the Directors, the Company’s key management personnel or companies promoted by the Promoters except in the usual course of business.

46

BASIS FOR ISSUE PRICE

The Price Band for the Issue shall be decided prior to the filing of the Red Herring Prospectus with the ROC. The Issue Price will be determined by the Company in consultation with the BRLMs on the basis of the assessment of market demand for the offered Equity Shares by the book building process. The face value of the Equity Shares of the Company is Rs. 10 each and the Issue Price is [●] times of the face value. Qualitative Factors

• Significant experience and strong track record

• Diversified business and versatile capabilities

• Focus on technology

• In- house developed expertise in marine works

• Long term relationship with reputed clients

• Experienced management team and staff

• Parentage

For further details please refer to the section titled, ‘Business’ on page 81 of this Draft Red Herring Prospectus.

Quantitative Factors Information presented in this section is derived from our restated unconsolidated financial statements prepared in accordance with Indian GAAP. 1. Earning Per Share (EPS) (as adjusted for changes in capital)

Face value per share (Rs. 10 per share) Particulars

Rupees Weight

Year ended March 31, 2004 0.39 1 Year ended March 31, 2005 0.98 2 Year ended March 31, 2006 1.51 3 Weighted average 1.15

The EPS for the Six months Period ended September, 2006 was Rs. 0.90 (Not Annualised) 2. Price/Earning (P/E) ratio in relation to Issue Price of Rs. [•]. a. Based on the year ended March 31, 2006, EPS is Rs. 1.51. b. P/E based on profits after taxes, as restated, for the year ended March 31, 2006 is Rs. [•]. c. P/E for Industry based on fiscal 2006 data

Particulars Construction Industry Highest 268.6

Lowest 4.2

Industry Composite 51.3

3. Return on Average Net Worth as per restated Indian GAAP financials:

Particulars RONW % Weight

Year ended March 31, 2004 1.36 1 Year ended March 31, 2005 3.29 2 Year ended March 31, 2006 5.23 3 Weighted Average 3.94

The RONW for the Six months Period ended September, 2006 was 9.61 % (Not Annualised)

4. Minimum Return on Increased Net Worth required to maintain pre-issue EPS is [•] %.

47

5. Net Asset Value per Equity Share (i) Net Asset Value per Equity Share for the Year ended March 31, 2006 and for the half year ended September 30, 2006 is Rs. 17.71 and Rs. 18.70. (ii) After the Issue: [•] (iii) Issue Price: Rs. [•] Issue Price per Equity Share will be determined on conclusion of book building process. 6. Comparison of Accounting Ratios

EPS (Rs.)

P/E RONW% NAV (Rs.)

AFCONS Infrastructure 1.51 [●] 5.23 17.71

Peer Group:

Gammon India 9.3 34.7 13.9 98.1

Hindustan Construction Company 3.2 39.7 13.4 34.7

IVRCL Infrastructure 8.3 41.2 25.5 49.2

Simplex Infrastructure 9.7 40.3 24.5 54.4

Jaiprakash Associates 15.7 41.4 20.8 101.3

Patel Engineering 11.9 28.1 44.7 103.8

Note: The EPS, P/E, RONW and NAV figures are based on the latest audited results for the year ended March 31, 2006 Source: Capital Market Volume XXI/22 Jan 01 -14, 2007 7. The Issue Price is [•] times of the face value of the Equity Shares. The BRLM believe that the Issue Price of Rs. [●] is justified in view of the above qualitative and quantitative parameters. See the section titled “Risk Factors” on page xii of this Draft Red Herring Prospectus and the financials of the Company including important profitability and return ratios, as set out in the Auditors Report on page 207 of this Draft Red Herring Prospectus to have a more informed view.

48

STATEMENT OF TAX BENEFITS

22 December, 2006

Afcons Infrastructure Limited Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Andheri (West), Mumbai 400 053.

Dear Sirs,

Statement of Possible Direct Tax Benefits

We hereby report that the enclosed annexure states the possible tax benefits available to Afcons Infrastructure Limited (“Company”) and its shareholders under the current tax laws in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions which, based on business imperatives which the Company may face in the future, the Company may or may not fulfill. The benefits discussed below are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of his or her participation in the issue.

Wedo not express any opinion or provide any assurance whether:

• the Company or its shareholders will continue to obtain these benefits in future; or

• the conditions prescribed for availing the benefits have been or would be met. The contents of the annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company.

Our views expressed herein are based on the facts and assumptions indicated by you. No assurance is

given that the revenue authorities/courts will concur with the views expressed herein. Our views are

based on the existing provisions of law and its interpretation, which are subject to change from time to

time. We do not assume responsibility to update the views consequent to such changes. The views are

exclusively for the use of Afcons Infrastructure Limited. We shall not be liable to Afcons Infrastructure

Limited for any claims, liabilities or expenses relating to this assignment except to the extent of fees

relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or

intentional misconduct. We will not be liable to any other person in respect of this statement.

Thanking you,

Yours faithfully,

CC Chokshi & Co.,

49

ANNEXURE

STATEMENT OF POSSIBLE DIRECT TAX BENEFITS AVAILABLE TO AFCONS INFRASTRUCTURE LIMITED AND TO ITS SHAREHOLDERS

A. Under the Income Tax Act, 1961 (“the Act”)

I. Benefits available to the Company

1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e.

dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) is exempt from tax.

2. As per section 10(35) of the Act, the following income will be exempt from tax in the hands of the

Company: a. Income received in respect of the units of a Mutual Fund specified under section 10(23D); or b. Income received in respect of units from the Administrator of the specified undertaking; or c. Income received in respect of units from the specified company:

However, this exemption does not apply to any income arising from transfer of units of the Administrator of the specified undertaking or of the specified Company or of a mutual fund, as the case may be.

For this purpose (i) “Administrator” means the Administrator as referred to in section 2(a) of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 and (ii) “Specified Company” means a company as referred to in section 2(h) of the said Act.

3. As per section 10(38) of the Act, long term capital gains arising to the Company from the transfer of a long term capital asset being an equity share in a company or a unit of an equity oriented fund, where such transaction is chargeable to securities transaction tax, will be exempt in the hands of the Company.

For this purpose, “equity oriented fund” means a fund – (i) where the investible funds are invested by way of equity shares in domestic

companies to the extent of more than sixty-five percent of the total proceeds of such funds; and

(ii) which has been set up under a scheme of a Mutual Fund specified under section 10(23D) of the Act.

As per section 115JB, while calculating “book profits” for the purpose of “Minimum Alternate Tax”, the Company will not be entitled to reduce the long term capital gains to which the provisions of section 10(38) of the Act apply.

4. Under section 48 of the Act, the long term capital gains arising out of sale of capital assets

excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed after indexing the cost of acquisition/ improvement.

5. As per section 54EC of the Act and subject to the conditions and to the extent specified therein,

long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset will be exempt from tax if the capital gains are invested in a “long term specified asset” within a period of six months after the date of such transfer. However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money.

50

A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1st day of April 2006: (i) by the National Highways Authority of India constituted under section 3 of the National

Highways Authority of India Act, 1988, and notified by the Central Government in the Official Gazette for the purposes of this section; or

(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956, and notified by the Central Government in the Official Gazette for the purposes of this section.

6. As per section 80IA of the Act and subject to the fulfillment of specified conditions, the profits and gains derived from any enterprise carrying on the business of development or operation and maintenance or development, operation and maintenance of any infrastructure facility is exempt for a period of any 10 consecutive years, falling within the first 15/20 years as the case may be, beginning from the year in which eligible undertaking starts development or operation and maintenance or development, operation and maintenance of the infrastructure facility.

7. As per section 111A of the Act, short term capital gains arising to the Company from the sale of

equity shares or units of an equity oriented mutual fund transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable surcharge and education cess).

8. As per section 112 of the Act, long-term capital gains on sale of listed securities or units or zero coupon bonds (in cases not covered under section 10(38) of the Act) will be charged to tax at the rate of 20% (plus applicable surcharge and education cess) after considering indexation benefits in accordance with and subject to the provisions of section 48 of the Act or at 10% (plus applicable surcharge and education cess) without indexation benefits, whichever is less.

II. Benefits available to Resident Shareholders

1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e.

dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received on the shares of the Company is exempt from tax.

2. As per section 10(38) of the Act, long term capital gains arising from the transfer of a long term

capital asset being an equity share of the Company, where such transaction is chargeable to securities transaction tax, will be exempt from tax in the hands of the shareholder.

3. As per section 111A of the Act, short term capital gains arising from the sale of equity shares of

the Company transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable surcharge and education cess).

4. Under section 48 of the Act, the long term capital gains arising out of sale of capital assets

excluding bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed after indexing the cost of acquisition/ improvement.

5. As per section 54EC of the Act and subject to the conditions and to the extent specified therein,

long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset will be exempt from tax if the capital gains are invested in a “long term specified asset” within a period of six months after the date of such transfer. However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money.

A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1st day of April 2006:

51

(i) by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988, and notified by the Central Government in the Official Gazette for the purposes of this section; or

(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956, and notified by the Central Government in the Official Gazette for the purposes of this section.

6. As per section 54F of the Act, long term capital gains (in cases not covered under section 10(38)) arising on the transfer of the shares of the Company held by an individual or Hindu Undivided Family will be exempt from tax if the net consideration is utilised, within a period of one year before, or two years after the date of transfer, in the purchase of a residential house, or for construction of a residential house within three years. Such benefit will not be available:

(a) if the individual or Hindu Undivided Family-

− owns more than one residential house, other than the new residential house, on the date of transfer of the shares; or

− purchases another residential house within a period of one year after the date of transfer of the shares; or

− constructs another residential house within a period of three years after the date of transfer of the shares; and

(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head “Income from house property”.

If only a part of the net consideration is so invested, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new residential house bears to the net consideration will be exempt.

If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be income chargeable under the head “capital gains” of the year in which the residential house is transferred.

7. As per section 112 of the Act, long-term capital gains on sale of listed securities or units or zero

coupon bonds (in cases not covered under section 10(38) of the Act) will be charged to tax at the rate of 20% (plus applicable surcharge and education cess) after considering indexation benefits or at 10% (plus applicable surcharge and education cess) without indexation benefits, whichever is less.

8. As per section 88E of the Act, the securities transaction tax paid by the shareholder in respect of

taxable securities transactions entered into in the course of the business will be eligible for deduction from the amount of income tax on the income chargeable under the head “Profits and Gains of Business or Profession” arising from taxable securities transactions, subject to certain limit specified in the section. As such, no deduction will be allowed in computing the income chargeable to tax as “capital gains” or under the head “Profits and gains of Business or Profession” for such amount paid on account of securities transaction tax.

III. Benefits available to Non-Resident Shareholders (Other than FIIs and Venture Capital Companies / Funds)

1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e.

dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received on the shares of the Company is exempt from tax.

2. As per section 10(38) of the Act, long term capital gains arising from the transfer of a long term

capital asset being an equity share of the Company, where such transaction is chargeable to securities transaction tax, will be exempt from tax.

52

3. As per section 111A of the Act, short term capital gains arising from the sale of equity shares of

the Company transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable surcharge and education cess).

4. As per the first proviso to section 48 of the Act, in case of a non resident shareholder, the capital

gain/loss arising from transfer of shares of the Company, acquired in convertible foreign exchange, will be computed by converting the cost of acquisition, sales consideration and expenditure incurred wholly and exclusively incurred in connection with such transfer, into the same foreign currency which was initially utilized in the purchase of shares. Cost indexation benefit will not be available in such a case. As per section 112 of the Act, long-term capital gains, if any, on sale of shares of the Company (in cases not covered under section 10(38) of the Act) will be charged to tax at the rate of 20% (plus applicable surcharge and education cess).

5. As per section 54EC of the Act and subject to the conditions and to the extent specified therein,

long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset will be exempt from tax if the capital gains are invested in a “long term specified asset” within a period of six months after the date of such transfer. However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money.

A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1st day of April 2006: (i) by the National Highways Authority of India constituted under section 3 of the National

Highways Authority of India Act, 1988, and notified by the Central Government in the Official Gazette for the purposes of this section; or

(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956, and notified by the Central Government in the Official Gazette for the purposes of this section.

6. As per section 54F of the Act, long term capital gains (in cases not covered under section 10(38)) arising on the transfer of the shares of the Company held by an individual or Hindu Undivided Family will be exempt from capital gains tax if the net consideration is utilised, within a period of one year before, or two years after the date of transfer, in the purchase of a residential house, or for construction of a residential house within three years. Such benefit will not be available:

(a) if the individual or Hindu Undivided Family-

− owns more than one residential house, other than the new residential house, on the date of transfer of the shares; or

− purchases another residential house within a period of one year after the date of transfer of the shares; or

− constructs another residential house within a period of three years after the date of transfer of the shares; and

(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head “Income from house property”.

If only a part of the net consideration is so invested, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new residential house bears to the net consideration will be exempt.

If the new residential house is transferred within a period of three years from the date of purchase or construction, the amount of capital gains on which tax was not charged earlier, will be deemed to be income chargeable under the head “capital gains” of the year in which the residential house is transferred

53

7. As per section 88E of the Act, the securities transaction tax paid by the shareholder in respect of taxable securities transactions entered into in the course of the business will be eligible for deduction from the amount of income tax on the income chargeable under the head “Profits and Gains of Business or Profession” arising from taxable securities transactions, subject to certain limit specified in the section. As such, no deduction will be allowed in computing the income chargeable to tax as “capital gains” or under the head “Profits and gains of Business or Profession” for such amount paid on account of securities transaction tax.

8. As per section 115E of the Act, in the case of a shareholder being a non-resident Indian, and

subscribing to the shares of the Company in convertible foreign exchange, in accordance with and subject to the prescribed conditions, long term capital gains arising on transfer of the shares of the Company (in cases not covered under section 10(38) of the Act) will be subject to tax at the rate of 10% (plus applicable surcharge and education cess), without any indexation benefit.

9. As per section 115F of the Act and subject to the conditions specified therein, in the case of a

shareholder being a non-resident Indian, gains arising on transfer of a long term capital asset being shares of the Company will not be chargeable to tax if the entire net consideration received on such transfer is invested within a period of six months in any specified asset or savings certificates referred to in section 10(4B) of the Act. If part of such net consideration is invested within the period of six months in any specified asset or savings certificates referred to in section 10(4B) of the Act, then such gains would not be chargeable to tax on a proportionate basis. Further, if the specified asset or savings certificate in which the investment has been made is transferred within a period of three years from the date of investment, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which such specified asset or savings certificates are transferred.

10. As per section 115G of the Act, non-resident Indians are not obliged to file a return of income

under section 139(1) of the Act, if their only source of income is income from specified investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act.

11. As per section 115H of the Act, where a non-resident Indian becomes assessable as a resident in

India, he may furnish a declaration in writing to the Assessing Officer, along with his return of income for that year under section 139 of the Act to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.

12. As per section 115I of the Act, a non-resident Indian may elect not to be governed by the

provisions of Chapter XII-A for any assessment year by furnishing a declaration along with his return of income for that assessment year under section 139 of the Act, that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Act.

13. The tax rates and consequent taxation mentioned above will be further subject to any benefits

available under the Tax Treaty, if any, between India and the country in which the non-resident has fiscal domicile. As per the provisions of section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the Tax Treaty to the extent they are more beneficial to the non-resident.

IV. Benefits available to Foreign Institutional Investors (‘FIIs’)

1. As per section 10(34) of the Act, any income by way of dividends referred to in section 115-O (i.e.

dividends declared, distributed or paid on or after 1 April 2003 by domestic companies) received on the shares of the Company is exempt from tax.

2. As per section 10(38) of the Act, long term capital gains arising from the transfer of a long term capital asset being an equity share of the Company, where such transaction is chargeable to securities transaction tax, will be exempt in the hands of the FIIs.

54

3. As per section 115AD read with section 111A of the Act, short term capital gains arising from the sale of equity shares of the Company transacted through a recognized stock exchange in India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 10% (plus applicable surcharge and education cess).

4. As per section 115AD of the Act, FIIs will be taxed on the capital gains that are not exempt under

the provisions of section 10(38) of the Act at the following rates:

Nature of income Rate of tax (%)

Long term capital gains 10

Short term capital gains (other than referred to in section 111A)

30

The above tax rates will be increased by the applicable surcharge and education cess.

In case of long term capital gains, (in cases not covered under section 10(38) of the Act), the tax is levied on the capital gains computed without considering the cost indexation and without considering foreign exchange fluctuation.

5. The tax rates and consequent taxation mentioned above will be further subject to any benefits

available under the Tax Treaty, if any between India and the country in which the FII has fiscal domicile. As per the provisions of section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the Tax Treaty to the extent they are more beneficial to the FII.

6. As per section 54EC of the Act and subject to the conditions and to the extent specified therein,

long-term capital gains (in cases not covered under section 10(38) of the Act) arising on the transfer of a long-term capital asset will be exempt from tax if the capital gains are invested in a “long term specified asset” within a period of six months after the date of such transfer. However, if the assessee transfers or converts the long term specified asset into money within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long-term capital gains in the year in which the long term specified asset is transferred or converted into money.

A “long term specified asset” means any bond, redeemable after three years and issued on or after the 1st day of April 2006: (i) by the National Highways Authority of India constituted under section 3 of the National

Highways Authority of India Act, 1988, and notified by the Central Government in the Official Gazette for the purposes of this section; or

(ii) by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956, and notified by the Central Government in the Official Gazette for the purposes of this section.

V. Benefits available to Mutual Funds

As per section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made thereunder, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorised by the Reserve Bank of India will be exempt from income tax, subject to such conditions as the Central Government may by notification in the Official Gazette, specify in this behalf.

VI. Benefits available to Venture Capital Companies / Funds

As per section 10(23FB) of the Act, all Venture Capital Companies / Funds registered with the Securities and Exchange Board of India, subject to the conditions specified, are eligible for exemption from income tax on their entire income, including income from sale of shares of the company. However, under section 115U of the Act, income received by a person out of investment made in a

55

venture capital company or in a venture capital fund will be chargeable to tax in the hands of such person.

B. Benefits available under the Wealth Tax Act, 1957

“Asset” as defined under section 2(ea) of the Wealth tax Act, 1957 does not include shares in companies and hence, shares are not liable to wealth tax.

C. Benefits available under the Gift Tax Act, 1958

Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares will not attract gift tax.

NOTES (i) The above Statement of Possible Direct Tax Benefits sets out the provisions of law in a summary

manner only and is not a complete analysis or listing of all potential tax consequences of the purchase, ownership and disposal of shares.

(ii) All the above benefits are as per the current tax laws.

(iii) In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax advisor with respect to specific tax consequences of his/her investments in the shares of the Company.

Our views expressed herein are based on the facts and assumptions indicated by you. No assurance is

given that the revenue authorities/courts will concur with the views expressed herein. Our views are

based on the existing provisions of law and its interpretation, which are subject to change from time to

time. We do not assume responsibility to update the views consequent to such changes. The views are

exclusively for the use of Afcons Infrastructure Limited. We shall not be liable to Afcons Infrastructure

Limited for any claims, liabilities or expenses relating to this assignment except to the extent of fees

relating to this assignment, as finally judicially determined to have resulted primarily from bad faith or

intentional misconduct. We will not be liable to any other person in respect of this statement.

56

INDUSTRY

INDIA’S CONSTRUCTION INDUSTRY: AN OVERVIEW:

The infrastructure sector covers the services of transportation (railways, roads and road transportation, ports, and civil aviation), communications (telecommunications and postal services), electricity and other services such as water supply and sanitation, solid waste management, and urban transport. Construction activity is an integral part of a country’s infrastructure and industrial development and hence can rightly be termed as the basic input for socio-economic development. Its presence and contribution is immense in terms of providing huge opportunities for direct and indirect employment. In India, construction is the second largest economic activity after agriculture. Construction investment accounts for nearly 11 per cent of the GDP and roughly 50 per cent of the Gross Fixed Capital Formation. Construction investments are expected to grow to the tune of Rs 8,300 billion, at a CAGR of 8 per cent, over the next 3 years (FY06 to FY08) (source: CRIS INFAC Construction Annual Review Report, February 2006 (“CRIS INFAC”).

Over the past ten years, the Indian economy has been one of the fastest growing economies in the world, witnessing an average growth of over 6% per year. The following chart presents a comparison of India’s GDP growth rate with the growth rates of certain other countries from 1993 to 2003.

Country Average GDP Growth India 6.16%

Australia 3.79%

Brazil 2.52%

Chile 4.56%

China 8.92%

Japan 1.32%

Korea 5.50%

Malaysia 5.32%

Russia 0.91%

Thailand 3.54%

United Kingdom 2.92%

United States of America 3.27%

(Source: United Nations Statistical Division) India recently has had a high GDP growth rate. India’s GDP growth rate has increased from 4% in FY 2003 to an estimated 7.5%-8% in FY 2006 (Source: ET Intelligence .com & CSO). This growth in the Indian economy has fuelled demand for quality infrastructure services. Investment requirements Despite recent progress, India has lagged behind many other developing and developed nations in terms of infrastructure development. The following chart illustrates the gap between India and other selected countries for 2003, in terms of certain indicators of infrastructure development:

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(Source: World Development Indicators Online 2005, World Bank)

Investment in infrastructure, given the intent of the Government is expected to rise. The increase in infrastructure development in India is driven by political will and new sources of funding. Independent research studies and estimates from the Plan Documents suggest that there will be an investment of approximately Rs. 8,618 billion into various Indian infrastructure projects (sectors including power, roads, ports, railways, airports, pipelines, irrigation and water supply, urban infrastructure) over the next five years. Construction companies are expected to benefit from this momentum. The Central and State Governments of India are actively engaged in finding the appropriate policy framework for the infrastructure sector which gives the private sector adequate confidence and incentives to make large-scale investments, but which also preserves adequate checks and balances through transparency, competition and regulation. Accordingly, there has been a shift towards financing of infrastructure development to the private sector, primarily through the use of Public Private Partnerships (“PPPs”), which are based on a partnership between the public and the private sectors for the purpose of delivering a project or service traditionally provided by the public sector. PPPs are designed to mobilise financial resources and realise benefits from private sector efficiencies to meet the growing demand for infrastructure services.

Infrastructure projects (underway and proposed) indicates prospective investments of Rs 4,356 billion, growing at a CAGR of 9 per cent over the next 3 years (2005-06 to 2007-08) driven by investments in roads, water supply and sanitation and irrigation, which are supported by regulation/government policies, increasing private sector participation and availability of funds (budgetary supports and multilateral funds). (source: CRIS INFAC)

Expected Infrastructure Investment

Infrastructure Investments (Rs in billion)

Construction component of investment (per cent)

2002-03

2003-04

2004-05 E

2005-06 F

Airports 42 20 15 15 24

Irrigation 80 151 139 208 222

Ports 50 7 5 5 1

Power - 232 312 340 350

Thermal 20 136 204 224 226

Hydel 70 90 96 98 98

Nuclear 30 6 13 18 26

Railways 42 121 135 153 146

Roads 100 206 190 199 358

Telecom 10 133 126 89 116

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Infrastructure Investments (Rs in billion)

Construction component of investment (per cent)

2002-03

2003-04

2004-05 E

2005-06 F

Tourism 55 2 4 5 7

Urban infrastructure 60 162 174 184 220

Total 1,034 1,101 1,197 1,444

Source: CRIS INFAC Construction companies in India are typically civil engineering companies which undertake construction work on a contract basis, in sectors like roads, ports, marine structures, power projects etc. All construction projects have eligibility criteria. Companies who have the requisite financial strength and experience typically meet these eligibility criteria and undertake projects independently. Smaller companies generally have to enter into joint ventures to meet the eligibility criteria and to spread the financial and business risk. Foreign engineering and construction companies typically participate in the infrastructure development in India through joint development ventures with Indian construction companies. The following chart depicts the percentage of construction component within each infrastructure segment: Construction: Sector-wise construction component

Source: NICMAR and CRIS INFAC

Based on the proportion of civil construction-related expenses in each sector, the Infrastructure projects (underway and proposed) have the potential to translate into orders worth Rs 2,229 billion for the construction industry.(source: CRIS INFAC)

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(source: CRIS INFAC) We undertake projects pre-dominantly in the following sectors:

1. Marine 2. Roads 3. Railways 4. Water Supply 5. Industrial 6. Oil & Gas 7. Power

The trends of these sectors are as under: THE PORTS SECTOR IN INDIA Unless otherwise indicated, all financial and statistical data in the following discussion is derived from Indian Ports Association’s website. The data may have been re-classified by us for the purpose of presentation. India has an extensive coastline of 6,000 kilometres, which is serviced by 13 major ports and 184 intermediate and minor ports. Ports are gateways to India’s International trade by sea and handle almost 90% of India’s foreign trade in terms of volume and 75% in terms of value are routed through the ports system. Indian ports handled a total traffic of 518 million tonnes in financial year 2005 with the ports in the western states of Gujarat and Maharashtra having a 42% market share. The volumes handled over the last five years are as follows:

Financial Year (in million tonnes)

2001 2002 2003 2004 2005 2006

Major Ports Traffic

282.6 288.0 313.6 344.8 383.7 423.4

Minor Ports Traffic

87.4 95.5 108.1 118.9 134.7 145.5

Total Indian Port Traffic

370.0 383.5 421.6 463.7 518.3 568.9

Capacity of Major Ports

362.8 362.8 362.8 362.8 389.5 397.5

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Financial Year (in million tonnes)

2001 2002 2003 2004 2005 2006

Capacity Utilisation of Major Ports (%)

78% 79% 86% 95% 106%

(Source: Indian Ports Association)

Regulatory Framework In India, ports are classified as major ports and intermediate and minor (“I&M”) ports. The 13 major ports are governed by the GOI through the Ministry of Surface Transport (“MOST”). Each port is governed by a port trust (responsible for administration, control and management of port operations) reporting to MOST. The tariffs of individual ports were regulated by MOST and by the Tariff Authority for Major Ports (“TAMP”). The I&M ports fall outside the ambit of the GOI, but are still subject to the provisions of The Indian Port Act, 1908. The development and management of intermediate and minor ports is the responsibility of state governments. State governments are free to initiate policy matters (like privatization, pricing of services, etc.) in respect of the minor ports in their respective states. States administer their ports either through state maritime boards, as in Gujarat, Maharashtra and Tamil Nadu, or through government departments. Maritime boards have structures and powers similar to those of the Board of Trustees of a major port. Privatization of Ports The GOI has decided to corporatise the major ports as well as privatize them in a phased manner. Almost all the major ports in India are in the public sector and currently lack commercial orientation because, in part, to a number of restrictions imposed by the central government. This has led to corporatisation of ports as it ensures that the ports achieve a desirable level of autonomy and accountability. The GOI has privatized some of the berths in major ports specifically to handle containers. Some of them are as follows:

Port Company Container Terminal Operator

Major Ports

JNPT

Berth 1 NSICT P&O Ports Australia

Berth 3 GTL AP Moller Terminals, Denmark

Chennai Port Trust CCTL P&O Ports Australia

Tuticorin PortTrust PSCTL PSA International, Singapore

Vizag Port Trust VGTPL Dubai Ports International

Kochi PortTrust IGTPL Dubai Ports International

Minor Ports (both in Gujarat)

Pipavav Port GPPL AP Moller Terminals, Denmark

Mundra Port GAPL P&O Ports Australia

(Source: Indian Ports Association) Port Utilisation The traffic traffic vis-a-vis capacity at major ports during 1999-2000 to 2004-05 is given below:

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(source: National Maritime Development Program)

National Maritime Development Program –capacity expansion of ports

Million tones

Port FY 2004 FY 2014

Estimated percent increase

Kolkata 10 22 120%

Haldia 34 74 116%

Paradip 39 92 137%

Vizag 49 130 164%

Ennore 12 62 415%

Chennai 42 62 47%

Tuticorin 16 46 190%

Cochin 16 59 277%

Mormugao 24 57 143%

New M'lore 30 56 84%

JNPT 33 95 187%

Kandla 45 106 135%

(Source: National Maritime Development Program)

With the above projections in view, all the major ports identified those projects, which would meet the challenges of the growing international traffic demand of the country along with developing the port facilities at par with world standards for giving a concrete shape to the vision and strategy laid down in the Maritime policy document over a period of 10 year’s time horizon relating to projects related to port development like construction of jetties berths etc, procurement, replacement or upgradation of port equipment, deepening of channels for improvements in drafts projects related to port connectivity and other related schemes. The total investment required is about Rs. 603,385 million. The program is proposed to be implemented through public/private partnership. (Source: National Maritime Development Program) Future potential

� A Feasibility study for a World class Container Terminal at Ennore Port has been completed.

Further action in this regard is being taken up by the port authorities. Ennore Port is also set to enter in chemical handling operation through private sector participation.

� Government has approved the proposal for award of contract for Development of International Container Transhipment Terminal at Cochin on BOT basis to Dubai Port International and accordingly the license agreement between Cochin Port Trust and India Gateway Terminal Private Limited, 100% subsidiary of the Dubai Port International was signed in FY2005.

� In the process of reviving the Sethu Samundram Ship Navigation Channel Project, techno- economic viability and environment impact assessment studies on the project completed. Based on the study, the Government has decided to implement the project, through a SPV by the name “Sethusamundram Corporation Limited”. The project envisages cutting of a ship canal to connect Gulf of Mannar & Palk bay, so that most of the ships, depending on draft required, moving between east and west coast of the country could have a continuous navigable sea route around the peninsula, which will save up to 400 nautical miles and up to 36 hours of sailing time for ships between east & west coast.

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� The Jawaharlal Nehru Port has signed a license agreement with Gateway Terminals India Private Limited, a joint venture company formed by Maersk A/S- CONCOR Consortium for operation of the Third Container Terminal on Build Operate Transfer basis.

� The Centre has approved the JNPT plan to extend its existing CFS facilities over a 300-hectare land to facilitate cargo movement after the commencement of the port’s third terminal in the next year.

� JNPT is contemplating development of fourth container terminal in two phases of 1.5 million TEU capacity each. The first phase is estimated to cost Rs. 2,567 crores and will be operational in FY 2010. The second phase is estimated to cost Rs. 2,134 crores and will be operational in FY 2014. JNPT is conducting a feasibility study for the same. (Source: JNPT Website).

� Mumbai port is developing an offshore container terminal on BOT basis in two phases — the first phase envisages construction of two berths with a capacity to handle 0.8 million TEU and the second phase involves construction of a third berth to take up the total capacity to 1.2 million TEU.

(Source: National Maritime Development Program)

THE ROAD SECTOR IN INDIA (source NHAI website accessed on December 9, 2006) The Indian road network of 33.4 lakh kilometer is second largest in the world and consists of :

Length (In Km)

Expressways

200

National Highways 66,590

State Highways 1,28,000

Major District Roads 4,70,000

Rural and Other Roads 26,50,000

Total Length 33.4 Lakhs Kms(Approx)

Modal Shift

• About 65% of freight and 80% passenger traffic is carried by the roads.

• National Highways constitute only about 2% of the road network but carry bout 40% of the total road traffic .

• Number of vehicles has been growing at an average pace of 10.16% per annum over the last five years.

The status of National Highways as on October 31, 2006 is as follows:

Single Lane/Intermediate Lane 35%

Double Lane 55%

Four or more Lanes 10%

Key Growth Drivers for the Road Sector in India

• Scarcity of quality roads:

• Strong Economic Growth: The Indian economy has been growing at the rate of 8.2%, 6.4% and 6.2% in FY 2004, FY 2005 and FY 2006 respectively. As the economy grows, economic activities, such as industrial production and personal consumption will increase which will in turn drive road cargo and passenger traffic growth.

• Growth in vehicles:

• Growth in tourism: The National Highways Authority of India (NHAI)

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The National Highways Authority of India was constituted by an act of Parliament, the National Highways Authority of India Act, 1988. It is responsible for the development, maintenance and management of National Highways entrusted to it and for matters connected or incidental thereto. The National Highways Authority of India was operationalised in Feb, 1995. The NHAI mandate covers the following: 1. The primary mandate of NHDP is through host of funding options including from external

multilateral agencies like World Bank, Asian Development Bank, JBIC etc. Work mainly comprises of strengthening and four laning of high-density corridors around 13,146 Kms. The components are:

• Golden Quadrilateral (GQ)- 5,846 Kms connecting Delhi-Kolkata-Chennai-Mumbai

• North-South-East-West Corridor (NSEW)- 7,300 Kms connecting Kashmir to Kanyakumari and Silchar to Porbandhar

2. Providing road connectivity to major ports. 3. Involving the private sector in financing the construction, maintenance and operation of National

Highways and wayside amenities 4. Improvement, maintenance and augmentation of the existing National Highways network. 5. Implementation of road safety measures and environmental management. 6. Introducing Information Technology in construction, maintenance and all operation of NHAI. In addition to implementation of NHDP, the NHAI is also responsible for implementing other projects on National Highways (mainly road connectivity to major ports in India) at an estimated cost of Rs. 4,000 crore (at 1999 prices) (USD 0.913 billion). NHAI is now responsible for implementing on National Highways of length around 24,000 Km. NHAI proposes to finance its projects by a host of financing mechanisms. Some of them are as follows:- Through budgetary allocations from the Government of India. Cess In a historic decision , the Government of India introduced a Cess on both Petrol and Diesel. This amount at that time (at 1999 prices) came to a total of approximately Rs. 2,000 crores per annum. Further, Parliament decreed that the fund so collected were to be put aside in a Central Road Fund (CRF) for exclusive utilization for the development of a modern road network. The developmental work that it could be tapped to fund, an the agencies to whom it was available were clearly defined as : 1. Construction and maintenance of State Highways by State Governments. 2. Development of Rural Roads by State Governments 3. Construction of Rail over- bridges by Indian Railways 4. Construction and maintenance of National Highways by NHDP and Ministry of Road Transport &

Highways Today, the Cess contributes between Rs 5 to 6 Thousands crores per annum towards NHDP. Loan assistance from international funding agencies Loan assistance is available from multilateral development agencies like Asian Development Bank and World Bank or Other overseas lending agencies like Japanese Bank of International Co - Operation. Market borrowing NHAI proposes to tap the market by securities cess receipts Private sector participation Major policy initiatives have been taken by the Government to attract foreign as well as domestic private investments. To promote involvement of the private sector in construction and maintenance of National Highways, Some Projects are offered on Build Operate and Transfer (BOT) basis to private agencies. After the concession period ,which can range up to 30 years, this road is to be transferred back to NHAI by the Concessionaries.

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NHAI funds are also leveraged by the setting up of Special Purpose Vehicles (SPVs).The SPVs will be borrowing funds and repaying these through toll revenues in the future. This model will also be tried in some other projects. Some more models may emerge in the near future for better leveraging of funds available with NHAI such as Annuity, which is a variant of BOT model Fund Requirement The financial arrangement for the development of GQ and the corridors has been made as:

Rs. in Crore

Cess 20,000

World Bank/Asian Development Bank Loan Assistance 20,000

Market Borrowings 12,000

Private Sector 6,000

Total Rs. 58,000 Crore $(12,608) Million

National Highways Development Project (NHDP) NHAI is mandated to implement National Highways Development Project (NHDP) which is

• India 's Largest ever highways project

• World class roads with uninterrupted traffic flow As National Highways comprise about 2% of the total road length in the country and yet carryover 40% of total traffic, the first and the foremost task mandated to the NHAI is the implementation of NHDP- comprising of the Golden Quadrilateral and North-South & East-West Corridors. In addition to the projects under NHDP, the NHAI is also currently responsible for about 1,000 km of Highways connecting major Ports & also on National Highways 8A, 24, 6, 45 & 27. Highways length with NHAI currently is around 14,162 km. NHDP (Phase I & II) was launched in 1999 covering a length of nearly 14,000 km at an estimated cost of Rs. 54,000 crore (at 1999 prices) (USD 12.317 billion) and NHDP (Phase III) was launched in 2005 for upgradation and 4 laning of 10,000 km of selected high-density corridors of National Highways at an estimated cost of Rs. 55,000 crore (at 2005 prices) (USD 12.544 billion). NHDP's prime focus is on developing International standard roads with facilities for uninterrupted flow of traffic with:

• Enhanced safety features

• Better Riding Surface.

• Better Road Geometry

• Better Traffic Management and Noticeable Signage.

• Divided carriageways and Service roads

• Grade separators

• Over bridges and Underpasses

• Bypasses

• Wayside amenities The main components of NHDP include:

(a) Golden Quadrilateral (GQ) Length :- 5846 km Connecting Delhi, Kolkata, Chennai and Mumbai

b) North-South & East-West Corridors Length :-7 ,300 km Kashmir to Kanyakumari -4000 km (with a spur to Cochin) and Silchar to Porbandar- 3300 km.

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Scheduled for completion by 2007 (earlier it was 2009).

Total length of NS & EW Corridors has been taken around 7,300 km. Alignment finalization is in

progress Status of NHDP & Other NHAI Projects

NHDP Port Connectivity

Others Total by NHAI

Total Length (Km.)

GQ NS - EW Ph. I & II

NHDP Phase IIIA

NHDP Phase V

NHDP Total

Already 4-Laned (Km.)

5,846 7,300+ 6139 6500 25,785 380 945^ 27,110

Under Implementation (Km.)

5,453** 840 30 - 6,323 122 287 6,732

Contracts Under Implementation (No.)

393 5,055 1,090 148 6,686 237 638 7,561

Balance length for award (Km.)

35 139+ 17 2 193 8 16 217

- 1,306^ 5,019^ 6,352 12,677 21 20 12,718

** Out of 5,453 km, 5106 km includes BC layer and 347 km upto DBM. ^ The difference in length is because of change in length after award of works. +Out of 7300 km, 981 km length is in Phase-I and remaining length is in Phase-II. Against 981 km, 840 km length was 4 laned. Actual length at present excluding 442 km common length with GQ is 7,274 km. However, this may again change after preparation of DPRs. The original approved length of Corridors is 7,300 km.

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Future Outlook Roads to contribute nearly 34 per cent share in infrastructure investments

Investments in roads sector are likely to increase from Rs 550 billion in the past 3 years (FY2002-03 to FY2004- 05) to Rs 757 billion in the next 3 years. Activity in the roads sector is centred around NHDP and to some extent PMGSY. The development of state roads has been concentrated in only certain states. NHDP and PMGSY are expected to constitute more than 60 per cent of total planned activities in the sector over the next 3 years. Restructuring and expansion of existing programmes

The government plans a massive facelift of the entire road network in the country over the next 10 years, and NHDP is the flagship project in the sector. To expedite its implementation, the project has been restructured and now involves seven phases (entailing the building, upgrade and maintenance of 51,411 km of roads), at a cost of Rs 1,871 billion. The Centre has till date approved only Phase I (GQ), Phase II (NSEW) and Phase IIIA, totalling 18,279 km. NHAI, the implementing authority for the projects, has done preliminary work on the remaining phases and the Cabinet has given in-principle approval for Phases IIIB to VII. Since the United Progressive Alliance (UPA) government took over at the Centre, the scope and

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estimates of the PMGSY programme have also been revised, after the government unveiled the Bharat Nirman programme, where the development of rural roads is one of the core activities. The government has approved investments to the tune of Rs 1,466 billion in NHDP (up to Phase IIIA) and PMGSY. Of this, Rs 300 billion has already been spent on NHDP and Rs 183 billion on PMGSY. Over the next 5 years, Rs 511 billion will be spent on NHDP Phase I, Phase II and Phase IIIA. Increasing thrust on private sector participation

The government is also inviting greater private sector participation, which is evident from the fact that all the phases from Phase IIIA onwards have been planned predominantly on build-operate-transfer (BOT) basis. In contrast, most of the contracts in the North South East West corridor (NSEW) and all projects in PMGSY have been planned on cash contract basis. CRIS INFAC feels that it is also logical, as private players will participate enthusiastically only when a particular stretch gives them adequate returns. GQ substantially completed; NSEW and Phase IIIA take off well in 2005, but delays galore

After a lull in 2003 and most of 2004, the road sector activity again gathered momentum towards the end of last year. Within NHDP, with the Golden Quadrilateral (GQ) project nearing completion, the implementation focus has shifted to NSEW and Phase IIIA. These two programmes are currently being implemented simultaneously, and the crux of NHAI's awarding activity will be centred on them, at least in the next 2 years. Expected Levels of Roads Activity under NHDP

Phase IIIB to Phase VII: Still on the drawing board Most of these projects (cumulatively over 30,000 km) are still in the conceptualisation stage, though in some cases certain stretches have been identified. NHAI has planned to complete all of them on BOT-toll or BOT- annuity basis.

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The Railway Sector in India The Indian Railways, with a capital base of about Rs. 55,000 crore, is the principal mode of transportation for carrying bulk freight and long distance passenger traffic. Railways are cost effective and also environment friendly. Yet, capacity and efficiency constraints in the freight segment have, over the years, led to a significant shift from railways to road transport. A renewed focus of the Railway Ministry on efficiency, customer care, and commercial principles is aimed at reversing this trend. The recent turn around in railway operations suggests that Indian Railways are poised for rapid growth in capacity expansion. Investments The Railways has a large number of ongoing projects, which require huge funds for completion. The Tenth Five Year Plan provides on capacity augmentation and improvement of the quality of services. The Golden Quadrangle and its diagonals, which comprise 25 per cent of the total broad gauge route km. carry more than 65 per cent of the total freight traffic and more than 55 per cent of the total passenger throughput, would be given priority. The capacity augmentation of the system and improvement in quality of services would be carried out through technological upgradation and modernisation. While augmenting capacity in various sections, route-wise study based on origin and destination survey would be carried out. The Tenth Plan identified certain thrust areas in the railways sector. These are: capacity expansion through modernisation and technological upgradation, improvement in the quality of service, rationalisation of tariff in order to improve the share of rail freight in the total traffic and to improve the safety and reliability of rail services. The Tenth Plan had targeted a relative low growth rate of 5 per cent in freight. The average annual growth rate of freight (originating tonnage) in the first three years of the Tenth Plan is likely to be 6.8 per cent. This is commendable and it is necessary to continue to maintain this growth rate in future and ideally also step it up in view of the need for increasing the share of railways in freight traffic and ensuring a cost-efficient mode of transport, which will benefit the economy in the long run. This will require augmenting capacity, particularly on the main routes which are currently over-stretched. The rate of growth of passenger traffic (in terms of number of passengers) is only around 2.02 per cent, against 4.93 per cent in case of passenger kms, indicating an increase in the average lead of pssenger traffic, is a welcome development on the whole. It is expected that the Railways will be able to achieve its targets for passenger traffic of Tenth Plan.

National Rail Vikas Yojana The Government announced the National Rail Vikas Yojana (NRVY) in August, 2002 in order to remove capacity bottlenecks in the critical sections of the Indian Railway Network. It comprises of three components:

° Strengthening of the Golden Quadrilateral (GQ) and its diagonals.

° Strengthening of rail connectivity to ports and development of multi – modal corridors to the hinterland.

° Construction of four mega bridges:

Bogibeel Rail-cum-Road bridge across river Brahmaputra, Munger Rail cum Road bridge across river Ganga, Patna Ganga bridge and a bridge over river Kosi.

The NRVY projects, except for the mega bridges, are targeted to be completed in five years (2002-07). The Rail Vikas Nigam Limited (RVNL) was set up as a SPV to execute the first two components of NRVY. The RVNL is to undertake project development and mobilisation of resources along with execution of projects on a commercial format, using largely non-budgetary funds. The Ministry of Railways has assigned 53 capacity enhancement projects to RVNL. Of these, 32 projects lie on the GQ and 21 projects relate to connecting ports and strengthening hinterland connectivity. The RVNL projects involve doubling of 1911 km, gauge conversion of 1640 km, new lines of 522 km, railway electrification of 1916 km. and strengthening of about 10,000 km. of GQ and its diagonals for running of freight trains t 100 km. per hour (kmph). The total route kilometres. under various types of developmental works is about 16,019 kms.

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The Union Government has envisaged a budgetary support of Rs.3,000 crore for RVNL, including Rs.1,500 crore as external aid from the Asian Development Bank (ADB), which shall be available to RVNL as Government of India.s equity. The rest of the funding requirements will have to be arranged by RVNL by devising various financing models. The initiative of implementing financially viable projects through RVNL needs to be reinforced. Three such SPVs have already been formed and more are being developed specially in the port connectivity projects. RVNL also intends to execute identified projects through BOT and market borrowings. Project-specific SPVs may raise resources from the market or from external resources against identified incremental revenues from the project. Some of the SPVs could be in the form of joint ventures with stake holders. Others could be based on BOT/ Build-Operate-Lease-Transfer (BOLT) mode.

Public-Private Partnership in Running of Trains Indian Railways have already set up Indian Railways Catering and Tourism Corporation for taking all steps to boost up rail based tourism, including running of tourist trains. In fact village on wheels and hill trains are being run. In addition, railways are tying up with different state governments for running tourist trains on the pattern of palace on wheels and Deccan Odyssey Railway may explore the possibility of Public Private Partnerships in running tourist trains. The operational part relating to traffic management and use of railway tracks may continue to vest in the railways. Railways have taken steps recently for private participation in goods traffic, such as allowing competition in movement of container traffic and wagon investment schemes. However, Railways may explore the possibility of public-private partnership in running goods trains between specified destinations as suggested for tourist trains. This would help in adding modern rolling stock that would add to the traffic and revenues of the railways.

Rail Budget 2006-07

The rail budget has planned an outlay of Rs. 23,475 crore for the year 2006-07. The thrust of the Annual Plan is on early completion of throughput enhancement works, safety, development and expansion of the network. The outlay on safety related plan heads, is Rs.2,922 crore for Track Renewals, Rs.590 crore for Bridges and Rs.1,518 crore for Signalling &Telecommunications, Rs.436 crore for contstruction of ROBs/RUBs and Rs.275 crore for manning of unmanned level crossings. For national projects need based funds to be released by Ministry of Finance of Rs. 2,092 crore. As per the rail budget outlined the investment strategy as giving the highest priority to route-wise throughput enhancement works on high-density network. In addition, all pending throughput enhancement works to be completed in the next three years.

Increased share in freight traffic: Railways have taken a number of steps during Tenth Plan period to improve railways’ share in freight traffic. These include rationalization of freight tariff structure, user benefit measures such as trainload benefit for all block rakes and commodities, flexible rating policy for specific pairs of stations, incentive to premier customers generating high freight earnings for traffic originating from sidings, computerisation of freight movements, provision of in-house facilities etc. Other measures taken by the railways include provision of linkages to ports, introduction of more high speed wagons and refrigerated parcel vans. The Railway Budget for 2006-07 has also announced a number of initiatives aimed at increasing the freight traffic. The Delhi-Mumbai (Western) and Delhi-Howrah (Eastern) dedicated freight corridor projects: The rail budget announced a plan for the Dedicated Multimodal High Axle Load Freight Corridor with computerised control on Western and Eastern routes to be constructed at an estimated cost of Rs. 22,000 crores. The Cabinet has approved the proposal, with railways to go in for EPC & PPP and an SPV has been formed to construct the freight corridors. The project would take at least five years for implementation (after the new organizational structure is established, project report finalized, approval obtained and funding firmed up) and assuming that the current estimates are correct, the average annual requirement would work out to more than Rupees 4500 crore. This requirement would be over and

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above the normal requirements of the Railways for renewal and replacement, acquisition of rolling stock, multiplexing, modernization, projects for new lines and conversion into broad gauge etc. The Task Force noted that the development of a dedicated freight corridor is highly capital intensive. The provision of such a corridor and its operation must be on commercial principles if quality services are to be provided on a sustainable basis. This would require setting up of higher productivity standards, entailing the adoption of norms, benchmarks, policies and practices, which may be significantly different from what are being followed by the Indian Railways.

In an interim draft report by RITES, an Indian Railways undertaking, the construction cost of the east and west corridors has gone up a whopping Rs 13,000 crore to Rs 35,000 crore, from the earlier estimate of Rs 22,000 crore. According to the draft report, the eastern corridor would cover 1,280 km, of which 280 km would be on a new alignment. Similarly, the western corridor will cover 1,483 km, of which 276 km will be diverted. The report awaits ministry comments.

THE WATER SUPPLY SECTOR IN INDIA: (water supply, sanitation and irrigation): After roads, urban infrastructure and irrigation sectors are expected to be the biggest contributor to the total infrastructure investments expected to materialise over the next 3 years. (CRIS INFAC) Water needs to be managed as an economic asset rather than a free commodity. India, which has 16per cent of the world’s population, has only 2.45 per cent of the world’s land resources and 4 per cent of the world’s fresh water resources. Monsoon rain is the main source of fresh water, with 76 per cent of the rainfall occurring between June and September under the influence of the southwest monsoon. The average annual precipitation in volumetric terms is 4,000 billion cubic metres (BCM). The average annual flow out of this is 1,869 BCM, the rest being lost in infiltration and evaporation. Due to topographical and other constraints, only 690 BCM can be utilised. (Source: 10th Five Year Plan) Rainfall in India, as in all tropical countries, is confined mainly to the southwest monsoon months of June to September. The all India annual average rainfall is 1,170 mm. Irrigation constitutes the main use of water and is thus the focal issue in water resources development. As of now, irrigation use is 84 per cent of the total water use. However, due to growing population, the per capita availability of water is steadily going down, declining from 5,000 cubic metres a year at the time of Independence to abut 2,000 cubic metres as of now. This, coupled with urbanisation and industrialisation, has raised concerns about the deteriorating quality of surface and ground water. (Source: 10th Five Year Plan) According to the 54th round of National Sample Survey (NSS) an estimated 70 per cent of urban households reported being served by tap and 21 per cent by tube well or hand pump. Sixty-six per cent of urban households reported having their principal source of drinking water within their premises, while 32 per cent had it within 0.2 km. Forty-one per cent had sole access to their principal source of drinking water, which means that 59 per cent were sharing a public source. Fifteen per cent of households did not get sufficient drinking water from their principal source, between April and June, May being the worst month. The general financial position of the urban water supply and sewerage sector is very poor. Only a few providers in large urban areas generate sufficient revenues to make any contribution to investment. In medium and small towns these entities typically do not collect sufficient revenue to cover operating expenses. There is no matching of revenues against expenditures. Collection efficiency is very low. (Source: 10th Five Year Plan) Investment Needs of the Water Supply Sector: Water supply and sanitation schemes are capital intensive and, consequently, they are financed from the budget, borrowings from financial institutions or the market, and external funding agencies. Most State Governments have a policy relating to the financing pattern of the schemes, with shares for the urban local bodies (ULB), State Government, and institutional finance. The Central Public Health and Environmental Engineering Organisation (CPHEEO) has estimated that by the end of the year 2007, the urban population of the country is likely to be around 363 million. For achieving 100 per cent coverage by the end of the Tenth Five Year Plan and taking into account the

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urban population already covered, the requirement of funds has been assessed. In regard to sewerage and sanitation facilities, it is assessed that 57 per cent of the urban population is likely to be covered by end of Ninth Plan. The estimates are based on the proposed coverage of 75 per cent of urban population. Moreover, 35 per cent of population already covered by the end of the Eighth Plan would need augmentation/rehabilitation and is included in calculation of fund requirements. Based on these assumptions of requirements to be met, the CPHEEO has estimated the following requirements during the Tenth Plan: Water Supply – Rs 282,400 million Sanitation – Rs 231,570 million Solid waste management – Rs 23,226 million Total – Rs 537,198 million (Source: Tenth Five Year Plan) HUDCO has been financing water supply projects for the past 30 years, especially those in small and medium towns, against State Government guarantee. As much as 28 per cent of the cumulative loan sanctions for urban infrastructure of HUDCO is towards water supply. During the Ninth Plan period, HUDCO has sanctioned 101 water supply schemes for financial assistance of Rs 48,280 million. However the main problem in financing of urban water supply and sanitation is the sustainability of the present model which is heavily dependent on the State Governments’ willingness and capacity to provide guarantees for institutional finance, apart from meeting the agreed state share of the project cost. Inability of the states to provide committed shares of project costs, and the tendency to sanction more works than financially feasible, has led to a situation of large numbers of incomplete works, project delays, and cost over-runs. (Source: 10th Five Year Plan) The states such as Andhra Pradesh, Gujarat, Maharashtra, Karnataka and Uttar Pradesh are the few states to have witnessed substantial investments in irrigation sector over the last 3 years. Over the next 5 years, around Rs 400 billion worth of irrigation projects have been envisaged by the State of Andhra Pradesh alone, and therefore, it will be the key focus area of implementation of irrigation projects. Central assistance, though very minimal, is largely routed through the Accelerated Irrigation Benefit Programme, under which the funds are allocated to help the states to fund the uncompleted irrigation projects. (source: CRIS INFAC) WSS projects are state-driven projects, but the implementation focus remains restricted mainly to cities. The key states to have witnessed substantial investments in the last 3 years in the implementation of the WSS projects are Gujarat, Delhi, Maharashtra, Karnataka, Kerala, Tamil Nadu and Uttar Pradesh. Over the next 3 years, besides the above states, Rajasthan and Madhya Pradesh are expected to witness substantial part of the total WSS investments. Key catalysts to investments:

• Increasing levels of urbanisation (water projects)

• Proactive states (as mentioned above)

• Political interests

• Multilateral funding (For details see the tables in the Annexure)

• Improvement in the credit ratings of a few urban local bodies, helping them to issue bonds A number of projects have been mooted in various metros to alleviate the water supply situation. Most projects focus on pumping in water from distant sources. Desalination is another option being looked into. There are only seven large desalination plants in India for the conversion for city sewage into process water. A water augmentation mechanism is a method by which water that would normally run off into rivers or seas, and so would not be accessible for drinking or agriculture, is harvested or stored so that it can be used. Augmentation methods include storing water in underground tanks for use in the dry season; collecting rainwater on the rooftops of homes, schools etc; and watershed scale rainwater harvesting which can directly be tapped or can recharge the surrounding aquifer. Of these methods, watershed scale rainwater harvesting has received the most attention in the literature and on the ground in India, and is part of official water policy in at least five states. The simplest and most common method of watershed-scale rainwater harvesting is the construction of a checkdam across a seasonal drainage. During heavy rains the ground becomes saturated and rainwater flows quickly along the surface instead

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of percolating into the earth, 39 flowing into drainage channels and then into streams, rivers, and ultimately the ocean. A checkdam built across a drainage channel prevents the water from flowing downstream, creating a small reservoir. (Source: Stanford Center for International Development (SCID)’s Fifth Annual Conference on Indian Economic Policy Reform) Rainwater harvesting presents a lot of opportunities for players in the construction sector. This has been taken up as a thrust area in Chennai and Delhi and must be given priority in all towns in the country. The Delhi Jal Board has taken up more than 80 works to harvest rain water and intends to cover about 200 buildings. The Delhi Government has approached the Ministry of Urban Development and Poverty Alleviation to amend building bye-laws to make rain water harvesting mandatory in the Capital. (Source: 10th Five Year Plan) O&M contacts: a potential growth area The basic principle of this approach is to contract out the operation and maintenance of a water supply and network it to a private sector operator. The operator is compensated on the basis of achieving pre agreed operational target levels and would have provision for incentives and penalties for achieving over performance and under performance respectively. A short term contract is a comparatively low risk option as compared to a long term BOT contracts or concession agreements. Sectoral reforms and private participation can further boost investments in the sector The water segment has witnessed some level of public/private participation in the projects. The successful implementation of the desalination project in Chennai and the expected growth in this particular segment along the Coromondel Coast are the few success stories of PPP models, which need to be repeated on a larger and wider scale. (source:CRIS INFAC) The Industrial Sector in India After a slowdown in industrial investments between FY99 and FY03, investments have picked up mildly in FY04. The decline in investments between 1998-99 and 2002-03 was largely due to the absence of major capacity expansions in most manufacturing sectors. In the same period, the operating rates reached high levels, due to demand growth and lack of investments. Therefore, the sustained demand growth and the high operating rates triggered the current upturn in industrial investments. CMIE's quarterly capital expenditure data demonstrates an upward trend in investments as announced, proposed as well as those under implementation. Notably, while proposed investments picked up in January 2004, a surge in projects announced and an increase in projects under implementation began in July 2004. Trends in investments: Proposed, announced and under implementation

(source: CRISIL & CMIE)

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The average annual investment is expected to increase from Rs 220 billion over the past 7 years (1998-99 to 2004-05) to Rs 865 billion over the next 5 years (2005-06 to 2009-10), propelled by investments in oil and gas, and metals. Other industries such as automobiles, petrochemicals, cement, paper and fertilisers, too, are expected to record healthy investments from FY06 to FY10. (Source: CRIS INFAC) This huge investment is likely to result in around Rs 650 billion of construction demand from industrial projects over the next 5 years. (Assuming civil construction to account for nearly 15 per cent of the total capital cost of the projects.) (Source: CRIS INFAC) Sector-wise industrial investments (Rs billion)

High current capacity utilisations and demand growth are expected to result in major capacity additions in 2005-06 and 2006-07. The Oil & Gas Sector in India The strong growth of the Indian economy and infrastructure and the resulting increased demand in the energy industry has resulted in the need to develop an efficient distribution network for oil and natural gas transportation. The use of natural gas in the energy industry is also expected to increase significantly. The current low per capita usage of pipes in India, the recent discovery of large oil and gas reserves in various pasts of India, the Government’s decision to permit oil retailing by the private sector and the proposed national pipeline grid formulated by GAIL and infrastructure development project of other major players in the energy industry in India are expected to increase engineering construction activity in the Indian energy industry. In response to the recent privatization initiatives of the Government, large oil and natural companies in India including IOC, RIL, Essar Oil, BPCL and ONGC have commenced significant oil and natural gas exploration and transportation infrastructure projects. Certain of these companies also propose to establish dedicated distribution networks. There is expected to be a tremendous increase in the volumes of transportation facilities in the oil and gas industry. Investments worth Rs 1,702 billion are expected in the oil and gas sector over the next 5 years as compared with Rs 998 billion of investments made in the last 7 years. A substantial part of the additional investments is expected to come from oil and gas exploration and development (E&D). The oil and gas E&D is going to witness substantial investments, mainly on account of the New Exploration and Licensing Policy announced to increase the reserves and improve the domestic supply of crude oil and natural gas. Accordingly, NELP I, II, III and IV have been announced, which will generate an estimated investment of Rs 147.5 billion. (source:CRIS INFAC)

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Investments in oil and gas (Rs billion)

However, civil construction accounts for only 4 per cent of the total capital costs of oil and gas E&D projects, whereas its proportion is as high as 80 per cent in the case of oil and gas pipeline projects. Therefore, the key investments from the oil and gas sector for the construction industry are expected to come through the oil and gas pipeline projects. (source: CRIS INFAC) The Power Sector in India The power industry in India has been characterized by acute shortages in supply of power in comparison with the level of its demand. In FY 2004 and 2005, demand for electricity exceeded supply by an estimated 11% and 12% respectively in terms of total requirements, on average (Source: CEA Executive Summary). The deficit numbers in the table below illustrates the pressing need for increased investment at a faster pace in India:

(source: CEA) Although power generation capacity in India has increased substantially in recent years, it has not kept pace with the growth in demand or the growth of the economy generally. The concluded Ninth Plan (1996-2001) targeted a capacity addition of 40,245 MW, of which 24.4% was to come from hydro capacity, 73.4% was to come from thermal capacity, and 2.2% was to come from nuclear capacity. Ministry of Power (MoP) estimates indicate that only around 19,251 MW, or 48% of the planned capacity addition, were achieved in aggregate during the Ninth Plan.

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The following table gives the achievement of hydro-power as against the target in each of the Eighth, Ninth and Tenth Plans:

*Implementation of the Tenth Plan not completed. Table shows achievement of the Tenth Plan to the end of March 2005. [Source: Planning Commission]

Historically, most of the power generated in India has been through thermal sources, with approximately 25% coming from the hydro sector as shown in the graph below. Installed Generation Capacities (YE 2001 - YE 2005) by Generation

Source: CEA Executive Summary March 2005 Internationally, the normal ratio of hydro to thermal power generation is 40:60 (Source: NHPC). The Government is therefore increasing its efforts to improve hydro-power generation through its future plans and also due to the inherent benefits of the hydro-power. These include:

° Hydro-power is cost effective as water is abundantly available, at zero cost;

° Hydro-power plants can handle variations in frequencies and in peak and off-peak requirements without

° significant added cost, unlike other modes of generation;

° Hydro-power plants are also more desirable from a social perspective, as they provide integrated solutions

° for power, drinking water and irrigation, without damage to the environment; and

° Hydro-power has lower operating cost than thermal power. The Government has recognized these benefits and therefore plans to increase the use of hydro-power in the future plans as illustrated in the table below :- The Tenth Plan and the Eleventh Plan envisage a capacity addition as set out in the table below. The effort is to close the deficit by the end of the Eleventh Plan to ensure “Power for all by 2012”. Of the total capacity addition, 62% would be in thermal plants, and over 30% in hydro-power plants and the rest would be nuclear power. Envisaged Capacity addition in Power in MW

Source: Plan Documents, * Company estimates

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The Government plans to develop around 50,000 MW of hydro-power projects in the next 20 years (Source: CEA). This is expected to result in an outlay of Rs. 2,000,000 million (at the rate of Rs. 40 million per MW as per our Company’s estimate) for civil construction. MoP has identified 162 projects in 16 states, which will provide approximately 50,000 MW. Feasibility Reports for 132 projects have been received by MoP and of that number, 103 projects have been finalized. Feasibility Reports have been prepared by the following:

Source: Central Electricity Authority Website (cea.nic.in) Overseas Project exports represent another key growth area for Indian companies. Indian project export companies have recently been successful at executing larger and more complex projects worldwide. Trend in Project Exports

(US $ Million) 2000-01 2001-02 2002-03 2003-04 2004-05 Civil construction 271

328 603

818 644

Turnkey project 336 642 645

877 472

Consultancy services 49 57 54 31 5

Note: In 2004-05, civil construction figures are from April to December 2004 only and turnkey project and consultancy services are from April to January 2005 only. Source: CRIS INFAC & PEPC & EXIM Bank Future Outlook The top 15 nations in construction spending are as follows: (in US$ billion)

Country 2003 2004 2005 2006 2007 2008 United States

1039.3 1159.1 1210.1 1218 1244 1288.6

Japan 464.5 506.8 543.8 571.5 587.4 609.5

China 241.9 269.1 299.6 338.1 388.4 440

Germany 220.6 246.8 258.2 267 282.2 292.1

France 173 196.8 208.2 218.3 234 245.2

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Italy 160 182.1 193.4 203.1 218.4 229.3

United Kingdom

151.2 177.5 183.4 190 201.4 210.8

Spain 144 165.9 178.7 189.6 204.4 215.4

Canada 105.9 123.3 132.2 141 151.5 160.1

Netherlands 70 78.5 82.6 86.4 92.5 96.9

India 65 73.9 78.5 84.9 92.2 100

Mexico 62.6 65.5 69.1 71.4 72.8 75.1

Brazil 42.3 54.3 56.7 59.4 61.4 65.3

Australia 48.5 49.3 51.3 53.8 55.9 58.7

Russia 33.9 42.3 47 51.5 56.2 61

Total 3489.5 3913.5 4151.5 4335.6 4577.2 4817.7 (55 Countries)

Source: Global Insight Inc.

Source: CRIS INFAC World Bank's cumulative lending - Top 20 countries (as on June 30, 2005) ($ million) IBRD loans IDA loans Total Amount Amount Amount India 32664.4 31702.1 64366.5

China 29522.5 9946.7 39469.2

Mexico 36246.7 0.0 36246.7

Brazil 36221.9 0.0 36221.9

Indonesia 28957.6 1905.3 30862.9

Turkey 23803.8 178.5 23982.3

Argentina 22113.2 0.0 22113.2

Republic of Korea 15647.0 110.8 15757.8

Pakistan 7011.6 8170.9 15182.5

Russian Federation 13446.1 0.0 13446.1

Colombia 12961.1 19.5 12980.6

Philippines 11518.2 294.2 11812.4

Bangladesh 46.1 11594.6 11640.7

Morocco 8988.1 50.8 9038.9

Nigeria 6248.2 2466.0 8714.2

Thailand 8063.4 125.1 8188.5

Egypt 5040.4 1984.0 7024.4

Romania 7000.0 0.0 7000.0

Peru 6354.5 0.0 6354.5

Yugoslavia, former Yugoslav Republic

6090.7 0.0 6090.7

Source: Indian Infrastructure

Source: CRIS INFAC CONSTRUCTION BUSINESS MODELS Types of contract There are different models currently being adopted for PPPs in India which vary in the distribution of risks and responsibility between the public and the private sectors for financing, constructing, operating, and maintaining assets. Two important types of contracts - BOT and BOOT - are explained below, as well as certain other contracts generally used in the Indian construction industry.

Build-Operate-Transfer (“BOT”) Under this type of PPP contract, the Government grants to a contractor a concession to finance, build, operate and maintain a facility for a concession period. During the life of the concession, the operator

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collects user fees and applies these to cover the costs of construction, debt-servicing and operations. At the end of the concession period, the facility is transferred back to the public authority. BOT is the most commonly used approach in relation to new highway projects in India, and is also used in the energy and port sectors.

Build-Own-Operate-Transfer (“BOOT”) BOOT contracts are similar to BOT contracts, except that in this case the contractor owns the underlying asset, instead of only owning a concession to operate the asset. For example, in the case of hydroelectric power projects, the contractor would own the asset during the underlying concession period and the asset would be transferred to the Government at the end of that period pursuant to the terms of the concession agreement.

Design-Build-Finance-Operate (“DBFO”) The NHAI is planning to award new highway contracts under the DBFO scheme, wherein the detailed design work is done by the concessionaire. The NHAI would restrict itself to setting out the exact requirements in terms of quality and other structures of the road, and the design of the roads will be at the discretion of the concessionaire. The NHAI expects the DBFO scheme will improve the design efficiency, reduce the cost of construction and reduce time to commence operations, in addition to giving the concessionaire greater flexibility in terms of determining the finer details of the project in the most efficient manner.

Item Rate Contracts These contracts are also known as unit-price contracts or schedule contracts. For item rate contracts, contractors are required to quote rates for individual items of work on the basis of a schedule of quantities furnished by the customer. The design and drawings are provided by the customer. The contractor bears almost no risk in these contracts, except escalation in the rates of items quoted by the contractor, as it is paid according to the actual amount of work on the basis of the per-unit price quoted.

Engineering Procurement Construction/Lump-Sum Turnkey Contracts In this form of contract, contractors are required to quote a fixed sum for the execution of an entire project including design, engineering and execution in accordance with drawings, designs and specifications submitted by the contractor and approved by the customer. The contractor bears the risk of incorrect estimation of the amount of work, materials or time required for the job. Escalation clauses might exist in some cases to cover, at least partially, cost overruns.

Operations and Maintenance (“O&M”) Contracts Typically an operations and maintenance contract is issued for operating and maintaining facilities. This could be in sectors such as water, highways, buildings and power. The contract specifies routine maintenance activities to be undertaken at a predetermined frequency as well as break-down maintenance during the contract period. While the contractor is paid for the routine maintenance based on the quoted rates which are largely a function of manpower, consumables and maintenance equipment to be deployed at the site, any breakdown maintenance is paid for on a cost-plus basis.

Front End Engineering and Design (“FEED”) Contracts Ordinarily, FEED work is carried out as a part of a consultancy assignment where the consultant provides FEED data to the project owner to enable it to take a decision on making a tender for construction. In addition to this, the FEED is also a prerequisite to enable a contractor to bid for EPC/turnkey projects. A FEED project can be an independent consultancy project or a part of an EPC/turnkey contract. Price Preference In tenders for the projects funded by multilateral agencies such as the World Bank and the Asian Development Bank, where there is international competitive bidding, generally there is a clause of

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price preference of 7.5% for domestic bidders. In this case, if the bid by the domestic player is 7.5% higher than the lowest international bid then the employer has to award the project to the domestic bidder. This would be subject to certain conditions specific to the project. In case the domestic bidder is in joint venture with an international bidder, then the domestic bidder should have share of 51% or more in the joint venture.

Purchase Preference In government tenders for projects normally less than Rs. 100 crores, there is a purchase preference clause wherein a tender submitted by a Public Sector Undertaking (PSU) will entail 10% price preference over other bidders. In this case, if the bid by the PSU is 10% higher than the lowest bidder, the employer reserves the right to award the project to the PSU if they can match the price of the lowest bidder. Approaches In the case of large projects, players have adopted two critical approaches, in order to obtain and execute the contract. While contractors have entered into joint ventures (JVs) in order to secure the projects, project execution is undertaken largely through subcontracting. Joint ventures (JVs)

JVs are usually project-specific and are contractual obligations among either domestic or foreign contractors. Besides pre-qualifying for projects, JVs are formed to reduce the risk exposure in large projects and combine specialist skills. JVs are usually project-specific, with revenues/profits shared on a pre-determined basis. For instance, in the case of road projects, all the stretches under Phase III have been planned on BOT basis, and therefore, will need higher level of investments. This has compelled a lot of small contractors to join hands with bigger players, and together on a joint venture basis, bid for the projects. The bigger player benefits from the joint venture as, to some extent, his equity and project completion risk is shared by the other smaller members of the joint venture (consortium). The bigger player is likely to get higher margins as compared to smaller contractors as he assumes greater equity risk in the project. The bigger sized projects will also bring in economies of scale and thereby can reduce the construction cost to some extent. Sub-contracting Subcontract arrangements are widespread in the construction industry, because of the diversified nature of the jobs in a project. Moreover, the use of sub-contract arrangements enable larger construction companies to maintain flexibility in operations and lower their overheads, while enabling the relatively smaller contractors to gain expertise and increase their turnover. In sub-contracting, smaller companies undertake tasks that are not undertaken by the principal contractor, or specialised tasks, through a sub-contract arrangement. Currently, only up to 30 per cent of the project can be sub- contracted. Sub-contracting practices are adopted by both large and small contractors. Large contractors, sub-contract work in India to smaller contractors, while in the international construction market, they undertake sub-contracting activity for larger foreign players. While sub-contracting decreases the capital investment of prime contractors, it enhances the likelihood of timely completion and lowers overhead expenses. It also results in lower profit margins for contractors.

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Process of contract disbursements

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BUSINESS

Overview We are a civil engineering and construction company in India and we are the flagship infrastructure construction company of the Shapoorji Pallonji group, a well-known and reputed name in the construction industry. We have an experience of over four decades in construction industry, which includes a wide variety of infrastructure projects like marine works, bridges, fly-overs, roads, general civil engineering works including industrial structures, nuclear power projects, tunneling, pipelines, LNG storage tanks and special foundation works such as piling, diaphragm wall, pre-stressed anchors, drilling and grouting and other ground improvement works throughout India. We have also successfully completed and are currently engaged in execution of projects in Middle East and Africa. Over the years we have developed an expertise in marine works and we believe that we have an established reputation and expertise in this service line through successful execution of more than 150 structures along the Indian coastline. We have also successfully completed more than 100 bridges, flyovers, viaducts, two LNG storage tanks, underground and elevated train corridors and have executed 2,000 lane kilo meters of road works. We enter into contracts primarily through a competitive bidding process at the domestic and the international level. We have worked on projects for Qatar Petroleum, Shell, Reliance Industries Limited, Mumbai Port Trust, Konkan Railway Corporation Limited, Delhi Metro Rail Corporation (DMRC) and are currently undertaking projects for National Highway Authority of India, Ministry of Transport and Communication, Sultanate of Oman. Of the above clients, we have several repeat orders from Reliance Industries Limited, Konkan Railway Corporation Limited, National Thermal Power Corporation and DMRC. Some of the important projects successfully completed by us in the recent past include:

• Engineering, procurement, installation and commissioning of cofferdams for pump house of Ras Laffan common cooling sea water system for Qatar Petroleum Technical Directorate;

• Construction of jetty for docking LNG carriers and other marine works at Hazira for Shell;

• Construction of underground station including the tunnel at Barakhamba Road and elevated structure (via duct) between Tis Hazari – Tri Nagar rail corridor for Delhi Metro Rail Corporation Limited; and

• Sewage Marine outfalls at Bandra and Worli, Mumbai for Dywidag International GmbH (as a nominated sub-contractor).

The projects being currently executed by us include:

• Construction of marine, civil and pipeline works for Reliance Infrastructure Limited at Jamnagar;

• Design and construction of special bridge across River Chenab in Jammu & Kashmir for Konkan Railway Corporation Limited (in joint venture);

• Construction of single line tunnel on Katra – Laole section of Udhampur – Srinagar – Baramulla rail link project for Konkan Railway Corporation Limited;

• Construction of an Oil Jetty at Port Louis Harbour, Mauritius; and

• Construction of new bridge over River Sone for East Central Railways.

We focus on technology and constantly strive to develop new technologies and innovations in-house to execute large and complex civil engineering and construction works in a cost-efficient and timely manner. For instance, we developed the micro piling technology as early as 1970 and subsequently patented this technology for underpinning works to strengthen existing structures. We have successfully been using the in-house developed Sahayadri Lift Barge for over 15 years now for our shallow as well as deep water projects. The Sahayadri Lift Barge has a hydraulic lift crane capable of lifting 1200 tonnes. . In the years ended March 31, 2005 and 2006, our consolidated income was Rs. 5,541.88 million and Rs. 7,177.67 million, respectively, representing an annual growth rate of 29.52 %. In the six months

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ended September 30, 2006, our consolidated income was Rs. 4,123.85 million. In the years ended March 31, 2005 and 2006, we incurred a consolidated loss of Rs. (14.71) million and earned a consolidated net profit for the year of Rs. 47.85 million respectively, while our consolidated net profit for the six months ended September 30, 2006 was Rs. 48.98 million. Our order book, which includes the projects awarded to us but where we have not yet commenced work and the unfinished and uncertified portions of our commenced projects was Rs. 30,303.4 million as of September 30, 2006, out of which, domestic projects and international projects accounted for Rs. 27,682.50 million and Rs. 2,620.90 million respectively. We have added contracts aggregating Rs. 222.0 million to our order book during the period October 1, 2006 to December 31, 2006 which are all domestic projects. As of September 30, 2006, our work force consisted of approximately 1,473 full time employees and more than 2,695 temporary labour based around India, enabling us to mobilize our skilled employee resources depending on the location and the necessary expertise for projects undertaken by us. Our equipments and skilled employee resources, together with our civil engineering capabilities enable us to successfully implement modern civil engineering construction methodologies. We enjoy the ISO 9001:2000 BVQI accreditation and have received several awards, certifications and appreciation letters from clients for our operations and projects such as the appreciation letter from Shell for the construction of jetty for docking of LNG carriers and other marine works at Hazira, We are committed to adhering to health, safety and environment policies and practices in the execution of our projects. We have received the Safety Award 2005 by the National Safety Council of India in respect for the Sone Bridge, Bihar and ISO 14001:2004 and OHSAS 18001:1999 certifications by BVQI for the construction of elevated viaduct for Delhi Metro Rail Project. We are a part of the Shapoorji Pallonji Group, which is one of the leading conglomerates in India with over 140 years of experience in the construction industry. Its business interests ranges from construction, building materials and real estate to aluminum, finance, biotech, power and fuel oil additives. The Shapoorji Pallonji Group also has a significant presence overseas having been involved in real estate development and construction since 1970. We are the flagship company of the Shapoorji Pallonji Group in the infrastructure construction sector. Corporate History and Structure We began our operations as a civil construction firm in 1959 as a partnership between the Rodio Foundation Engineering Limited, Switzerland and Hazarat & Company, India. Consequent to the exit of Rodio Foundation Engineers and Hazarat & Co, we were reorganized as a company with the name ‘Asia Foundations and Constructions Private Limited’ in 1976 engaged in the business of contractors and engineers. We became a deemed public limited company as per Section 43A(1) of the Companies Act from March 18, 1977. Shipping Credit and Investment Corporation of India (SCICI) became a 20% shareholder of our Company in 1993, which shareholding was transferred to ICICI pursuant to the merger of SCICI with ICICI. We changed the name of our Company from Asia Foundations and Constructions Limited to Afcons Infrastructure Limited with effect from August 14, 1996. We became a full fledged public company on November 11, 1997. In 1998 ICICI subscribed to further shares in our Company which made ICICI the single largest shareholder with 47.37% equity stake in our Company. Shapoorji Pallonji Group acquired 53.96% shareholding in our Company in 2000 where 47.37% was acquired from ICICI Ltd. and 6.59% was acquired from the Hazarat family. We have 3 subsidiaries and 1 joint venture company. We also operate through various unincorporated joint ventures formed for specific projects. Our Strengths Significant experience and strong track record With over four decades of experience as a civil engineering and construction firm, we believe we have become one of the significant players in the Indian construction industry. We believe that we have established a track record for executing large and complex civil engineering and construction and infrastructure contracts in a timely manner with quality work. We have also completed several projects ahead of schedule including the LNG terminal project at Dahej, Moolchand underpass at Delhi and Cable stayed bridge for Goa Industrial Infrastructure Corporation. We have received ISO 9001:2000

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certification for the quality management system that we apply to the design and construction of civil engineering projects. Our portfolio of completed construction projects includes over 150 marine works, 100 bridges/ fly-overs, 2,000 lane kilometres of roads, general civil engineering works relating to industrial structures including 2 LNG storage tanks and civil work for 2 nuclear power projects. We believe that the breadth and depth of our experience, among other factors, which among other things, enables us to pre-qualify for a greater number of potentially higher-margin projects.

Diversified business and versatile capabilities We have a presence in the different sectors within the Indian construction industry and in different geographical regions in India. We have also been operating in the Middle East for over three decades and have expanded into other parts of Asia such as Sri Lanka and Nepal. This variety of project types in our portfolio enables us to keep our business diversified and reduces our dependence on any one segment or nature of project and allows us to deal with cyclical risks associated with the industry. The diversified business interests also allows us to participate in various projects where we believe we can add value. We believe that through our diversified and long standing experience we have been able to develop the ability to adapt to and operate in different work conditions and find solutions to complex construction projects. For example, while undertaking work in relation to the Calcutta metro rail project, we were able to construct a tunnel in soft soil using a special blade sheld technique. Similarly, we used the jet-grouting technology for making a tunnel at Liliguma for South Eastern Railways. We have successfully executed projects in diverse work conditions, including overseas. We have entered into renewed partnerships for new projects with various existing joint venture partners and have also received repeat orders from clients demonstrating our ability to work efficiently with various partners.

Focus on technology

We are a technology driven company, with a focus on innovation and development of technologies for the execution of complex civil construction and engineering projects. We believe our quick adaptability and solution oriented approach to construction complexities coupled with our technological capabilities enable us to execute projects in an efficient manner. Some of the technological innovations achieved by us include micropiling for underpinning works to strengthen structures, stabilizing of hill slopes by prestressed anchors, river training using underwater geofabric, development of Sahayadri Lift Barge, which has a capacity of lifting 1,200 tonnes, which was developed more than 15 years back and design and construction of jack up platforms as early as 1978. We believe that we are the first Indian company to have indigenously constructed an underground metro station for DMRC at Barakhamba, New Delhi. . We believe that our sustained focus on technology provides us with a key competitive strength.

In- house developed expertise in marine works

We entered into marine construction in 1963 and over the years have developed an expertise in marine works. We have constructed more than 150 structures along the Indian coastline which includes jetties, wharves, slipways, relieving platforms and dry docks. While most of the marine and harbour projects in India have historically relied on the conventional end-on-method whereby construction was undertaken from the shore or along the shoreline, we have successfully commissioned marine projects using a variety of floating devices units and jack up platforms. The development of design and fabrication work for such innovative floating devices and jack up platforms was done in-house. We own a fleet of strategic construction equipments including cranes, marine flotilla including jack up platform, barges and pontoons. We have successfully developed many of our important equipments such as the Sahayadri Lift Barge and jack up platforms in-house that have allowed us to customize the equipment to the specific conditions in which we operate. We believe that the increased focus on development of marine infrastructure by both the Government and private sector will allow us to leverage our expertise to achieve higher growth.

Long term relationship with reputed clients

We have developed long-term relationships with our clients and have received repeat orders from several of our domestic and international clients. We believe that our client centric approach enables us

84

to develop an established and long term association with many of our clients. We have successfully executed several projects overseas and have received repeat orders showing our ability to work in multicultural environments and with diverse sets of clients. For example after our successful association for the Jamnagar Phase - I project, Reliance Infrastructure Limited has placed cost plus basis contracts with us for several structures including modification of jetty job. Other clients from whom we have received repeat orders also include Konkan Railway Corporation Limited, National Thermal Power Corporation, Cochin Port Trust, Nuclear Power Corporation and DMRC. .

Experienced management team and staff

We have an experienced and dedicated management team and a skilled workforce. Our employees include over 707 engineers and 269 skilled operators and technicians. We believe that a large pool of skilled engineering and technical workers is essential to the efficient and effective execution of our projects. In addition, our senior management comprises of highly qualified people with extensive experience in our business, with engineering or technical backgrounds, which we believe, enhances our ability to successfully execute large and complex construction projects. Our key managerial personnel on an average have more than 25 years of experience in the construction industry. Our staff force also has diversified experience in various types of construction projects, which allows us to staff our projects with the most appropriate people.

Parentage

We are a part of the Shapoorji Pallonji Group, which is one of the leading conglomerates in India and has been operating for over 140 years in the construction industry. We draw on the expertise and commercial acumen of our parent company in the construction industry for our own business development. Owing to the long-standing history of the Shapoorji Pallonji Group, we believe it enjoys strong brand recognition. Further, we believe that our customers, along with Indian financial institutions, associate the Shapoorji Pallonji Group with quality, reliability and the ability to complete projects on schedule. We believe that the financial strength of the Shapoorji Pallonji Group and its track record and visibility, especially in overseas markets allow us to secure and execute bigger projects.

Our Strategy Continue to focus on the high growth opportunities in the Indian construction and infrastructure

sector. We believe that the increasing levels of investment in infrastructure by governments and private parties will be a major driver for growth in our domestic business in the foreseeable future. Additionally, the GoI has taken steps to encourage additional investments in infrastructure and construction sector, such as formulating plans to create SEZs in various areas of India and providing economic benefits to private sector participants for projects executed on a BOT basis. We intend to take advantage of such growing opportunities in infrastructure development by strengthening our existing expertise and continuing to pursue growth opportunities in India. We shall continue our focus on marine projects, speciality bridges and metro projects and strive to enhance our share in sectors such as Hydro/Tunnels and Oil and Gas pipelines, where we have recently entered. Focus on opportunities in the international market

Apart from pursuing opportunities in India, our objective is to expand and strengthen our overseas operations further by focusing on the regions where we already have a presence, such as the Middle East and Africa, by capitalizing on our local experience, established contacts with local clients and suppliers, and familiarity with local working conditions. Middle East is experiencing a recent increase in construction activities, which makes it an attractive market for us. In addition, we propose to pursue opportunities in newer regions like Algeria and Sudan where large infrastructure initiatives are being made with the aid of multilateral institutions and in Yemen which is experiencing increased construction activities because of the recent discovery of large oil reserves. We currently propose to focus on the medium size contracts where local competition is lesser and we have the capability to compete with large multi national players for such projects.

85

We believe that the overseas projects executed by us allow us to earn better margins. Overseas projects also assist us in building our services and technology portfolio through the global exposure and international benchmarking of projects. Further, we also use overseas assignments as a retention measure for our employees. In pursuing our strategies, we seek to identify markets where we believe we can provide cost and operational advantages to our clients and distinguish ourselves from other competitors. In order to expand our operations, we also seek to identify joint venture/ consortium partners whose resources, capabilities and strategies are complementary to ours and who are likely to enhance our business operations in such regions. We shall continue our focus on marine projects, specialty bridges and strive to enhance our share in sectors such as Hydro/Tunnels and Oil and Gas pipelines, where we have recently entered.

Increased focus on EPC contracts and design & build contracts.

As of September 30, 2006, engineering, procurement, construction (EPC) and design & build contracts constituted 37.78 % of our total order book. We intend to use our engineering capabilities to enable us to provide value added engineering services for clients and win more EPC contracts. Owing to complex nature of projects being envisaged, there is an increased demand for engineering capabilities. We believe that EPC projects will enable us to realize greater added value on construction projects through provision of comprehensive integrated solutions. .

Leverage on the strength of the Shapoorji Pallonji Group The Shapoorji Pallonji Group is already an established player in the construction and real estate industry catering to diverse sectors. We are the flagship company of the Shapoorji Pallonji Group in the infrastructure construction sector. We intend to build upon and draw on its established presence and the financial strengths. Accordingly, we also intend to bid for and participate in large BOT infrastructure projects, including road projects in consortium with a Shapoorji Pallonji entity, which would function as the concessionaire with the construction/ EPC job being executed by us. We will participate and expand in those sectors where we derive the necessary strengths from the Shapoorji Pallonji Group in terms of technical expertise, execution skills and an established presence. Enhance profitability and capital efficiency Infrastructure construction is a highly competitive, capital-intensive activity. We believe that the optimal utilisation of financial, human and other resources is a key element for achieving success in this industry, and we shall continue focusing on the strategy of concentrating on a limited number of high-value/ high margin projects in order to maintain execution quality, reliability and timeliness. Going forward, our strategy will be to continue focusing on our capital utilisation and structure to optimise returns, by actively analysing and identifying projects and assigning priority to projects, which are likely to maximise returns. We also intend to improve capital efficiency by striving for accelerated completion of projects and better contract and relationship management with the client. We propose to continue to mitigate our risks by including effective and equitable dispute resolution clauses in our contracts.

Participate in road projects only in consortium with BOT/ BOOT entities We believe that our ability to effectively manage our cash flows and resultant profitability is adversely affected owing to high level of commodization of the road contracts directly awarded by agencies like NHAI in the competitive bidding route and high level of delays experienced in execution of these projects on account of delays in acquiring land. Typically under the BOT/ BOOT route, 80% of the land is acquired prior to the award of contracts and therefore, the likelihood of delays in execution and consequent adverse impact on cash flow is reduced. Therefore, currently, we propose to participate in road projects only through the BOT/ BOOT route in association with Shapoorji Pallonji group and other established entities, which would function as a concessionaire whilst we would execute the EPC job.

Attract, train and retain qualified personnel

86

We understand that maintaining quality, minimising costs and ensuring timely completion of engineering and construction projects depends largely on the skill and workmanship of our employees. As competition for qualified personnel is increasing among construction companies in India, particularly with the entry of international engineering and construction companies into the Indian market and as we pursue greater growth opportunities, we seek to attract, train and retain qualified personnel by increasing our focus on training our staff in advanced engineering and construction technology and skills. We frequently conduct well-designed training programmes for our staff. A total of 16,984 training man-hours have been spent on employee training between the period April 2005 to November 2006. We also offer our engineering and technical personnel a wide range of work experience and learning opportunities by providing them with an opportunity to work on a variety of large, complex construction projects and forming cross functional teams with the objective of giving them an opportunity to innovate. In addition, we give our employees opportunities to work on wide variety of projects including overseas assignments.

Develop and maintain strong alliances with strategic partners.

We have strategic alliances for the execution of our projects with companies including Dywidag, Germany, Per Aarsleff, Denmark, Kajima, Japan and Walter Mining, Australia. We intend to continue to establish strategic alliances and share risks with companies, whose resources, skills and strategies are complementary to and are likely to enhance our business opportunities, including the formation of joint ventures and consortia to achieve competitive advantage. In the light of our focus on technology, we also seek partners who can assist us in improving our technological capabilities in execution of our projects. Our Services We provide integrated engineering, procurement and construction services for civil construction and infrastructure projects. We have been involved in execution of infrastructure projects right since our inception. Infrastructure development has seen growth in India, especially in recent years with increasing government focus and funding for the sector. Increased investment in infrastructure has led to a surge in the activities of the construction industry. Infrastructure projects have emerged as, and we believe that they will continue to be, a significant business driver for us. We have developed skill sets in providing engineering and construction services for a diverse range of infrastructure projects. Apart from the infrastructure work undertaken by us, we continue to focus on providing mainly engineering and construction services for civil construction projects especially industrial structures. We broadly track our business under the following seven categories of service lines. We separately also track the overseas component our business. Marine Works We entered into the field of marine construction in the year 1963 and have executed more than 150 marine structures all along the Indian coastline. The structures include all types of jetties, wharves, slipways, breakwater, dry docks, intake and outfall structures. Most of the above structures have been executed under very challenging environmental conditions. We have through the years acquired the necessary expertise and skill to execute works under very high tidal variations and high sub surface water currents. Our works span the coastline of India as shown in the map below:

87

Note: The above is not for scale only for reference

The following table provides a brief summary of some of the notable projects that we have undertaken and completed as of November 30, 2006 in this service line:

Name of Project Client Location Contract Value at Completion (in Rs.

millions)

Completion Date

Engineering, procurement, II, installation and commissioning of 2 nos. cofferdams for pump house nos. 1 & 3 of Ras Laffan common cooling seawater system Qatar

Qatar Petroleum

Qatar 1,011.00 2006

Modernisation of Marine Oil Terminal Berth J1 to J3 at Jawahar Dweep Mumbai

Mumbai Port Trust, Mumbai

Mumbai. 1,588.70 2005

Crude Unloading Jetty & Assosiciated facilities onshore cross country pipeline up refinery at Nagapattinum

Chennai Petroleum Corporation. Limited

Nagapattinum Chennai

718.50 2003

Sewage marine Outfalls at Bandra & Worli in Mumbai.(Afcons - Subcontractor) (Main Contractor - Dywidag)

Dywidag International GmbH

Mumbai. 1,347.96 2001

The following table describes some of the notable projects that we are in the process of executing as of November 30, 2006 in this service line:

OUR MAJOR MARINE PROJECT SITES IN INDIA OUR MAJOR MARINE PROJECTS IN INDIA

HALDIA

CALCUTA

(4) (2)

(4)

(2)

(4)

(2)

NELLORE

VISHAKHAPATNAM (30)

(1)

(30)

(1)

(2)

(3)

(2)

(3)CHENNAI

TUTICORIN

PONDICHERRY (1)

(2)

(1)

MUMBAI

DABHOL NHAVA - SHEVA

RATNAGIRI (4)

(2)

(2)

(13)MUMBAI

DABHOL NHAVA - SHEVA

RATNAGIRI (4)

(2)

(2)

(13)

MULDWARKA

JAFARABAD

PIPAVAV DAHEJ

(1)

(2)

(1)

(1)

MULDWARKA

JAFARABAD

PIPAVAV DAHEJ

(1)

(2)

(1)

(1)

HAZIRA

SIKKA

(1)

(3) HAZIRA

SIKKA

(1)

(3) KANDLA

OKHA JAMNAGAR

(4)

(1)

(2)

KANDLA

OKHA JAMNAGAR

(4)

(1)

(2)

GOPALPURRR

PARADIP

(3) (7)

(3)

(7)

(3)

(7)

( FIGURES IN BRACKETS INDICATE NUMBER OF MARINE STRUCTURES .)

COCHIN

MORMUGAO KARWAR MANGALORE

(8)

(2)

(8)

(1)COCHIN

MORMUGAO

KARWAR MANGALORE

(8)

(2)

(8)

MORMUGAO

KARWAR

MANGALORE

KARWAR

MANGALORE

(8)

(2)

(8)

(1)

KALPAKKAM

88

Name of Project Client Location Estimated Contract Value (in Rs.

million)

Scheduled Completion Date

Construction of Container Yard at Pipavav Port

Pipavav Port Limited Gujarat 352.80 April 2007

Construction of Jetty Modification-Zero Point to New Riser Platform, Jamnagar

Reliance Industries Limited Gujarat 1,380.00 January 2008

Construction of New Mooring Facility in Shanna, Al Wusta Region

Sultanate of Oman Oman 1,135.10 January 2008

Construction of Oil Jetty at Port Louis Harbour, Mauritius

Mauritius Port Authority Mauritius 730.10 January 2008

Construction of Breakwater and Associated Works at Pawas Bay, Ratnagiri

Finolex India Maharashtra 1,250.00 August 2008

Bridges/ Flyovers We have executed more than 100 projects involving construction of bridges, fly-overs and viaducts. Our experience includes construction of cast insitu, precast, pre-stressed concrete, cable stayed and structural steel bridges including arch bridges for railways and roads. The following table provides a brief summary of some of the notable projects that we have undertaken and completed as of November 30, 2006 in this service line:

Name of Project Client Location

Contract Value at Completion (in Rs. Millions)

Completion Date

Construction of Bridges and Roads for Vypeen Bride Project under (G3IDA) Kerala

Cochin Port Trust Kerala 541.8 2006

Construction of Bridge across Mapusa river connecting Aldona & Corjuem including approach roads

Goa State Infrastructure Development Corporation Limited

Goa 237.70 2004

Three grade separator at Ring Road and Rohtak Road at Punjabi Bagh, Delhi

Public Works Department, Government of Delhi

Delhi 551.3 2003

Road Bridge across Thane Creek near Airoli, Navi Mumbai

CIDCO, Mumbai Mumbai 928.5 1999

The following table describes some of the notable projects that we were in the process of executing as of November 30, 2006 in this service line:

Name of Project Client Location Estimated Contract Value (in Rs.

million)

Scheduled Completion Date

Const.of grade separation at Mukarba Chowk in Delhi

PWD, Delhi Delhi 1,706.20 August 2008

Design and construction Of special bridge across the River Chenab in Jammu & Kashmir.

KRCL Jammu Kashmir 5,173.80 December 2008

Construction of new bridge over River Sone

East Central Railway Bihar 2,269.70 February 2009

89

Roads We have executed more than 2,000 lane kilometers of road works/expressways projects in India funded by agencies such as World Bank, Asian Development Bank and the National Highways Authority of India. Currently we are executing 676 lane kilometers of National Highway projects which are part of the Golden Quadrilaterial/North South Corridor Project for National Highway Authority of India. The following table provides a brief summary of some of the notable projects that we have undertaken and completed as of November 30, 2006 in this service line:

Name of Project Client Location Contract Value at Completion (in Rs.

millions)

Completion Date

Widening to four lanes of Bhubaneswar - Cuttack - Jagatpur of NH - 5.

Public Works Department, Government of Orissa, Bhubaneswar.

Orissa 1,598.02 2002

Improvement of Panagarh Moregram Road in West Bengal From KM. 00.00 to K.M. 81.00 (S8 & S9) & from K.M.81.00 to K.M. 150 (S10 & S11) (ADB Aided)

Public Works Department, Government of West Bengal

West Bengal 2,417.40 2000

Improvement of East Coast Road extending from Chennai to Cuddalore excluding Pondicherry bypass. (Total length 159 kms)

Public Works Department, Government of Tamil Nadu

Chennai 933.99 1999

The following table describes some of the notable projects that we were in the process of executing as of November 30, 2006 in this service line:

Name of Project Client Location Estimated Contract Value (in Rs.

million)

Scheduled Completion Date

Hyderabad-Bangalore Section Of NH-7 - Six Lanning , Karnataka,NHAI

NHAI Karnataka 866.10 March 2007

Haveri- Hubli Section Of NH-4 Km 340-404- Four Laning Road ,Karnataka,NHAI

NHAI Karnataka 2,037.50 May 2007

Rehabilitation of road from Kallerbavale Cross to Harihara Bellary for KSHIP

Karnataka State Highway Improvement Project

Karnataka 257.90 May 2007

Widening & Rehabilitation of Ponamalle-Kanchipuram Road-NH4,Tamilnadu

NHAI Tamil Nadu 1,744.20 August 2007

Design Engineering, Construction of 4 Laning from Existing 2 Lane Ulundurpet to Padalur

Trichy Tollways Private Limited.

Tamil Nadu 3,145.00 June 2008

General Civil Works The general civil engineering works carried out by us include industrial buildings such as workshop, dry dock complexes, cooling water pump houses, two LNG Tanks, a shopping mall and a major work of turbine buildings, tunnels, trenches, D.M. Plants and associated civil works for a nuclear power plant. We have executed various civil works for a refinery complex which included industrial building, intake channel, culverts, compound wall, effluent treatment and outfall. The following table provides a brief summary of some of the notable projects that we have undertaken and completed as of November 30, 2006 in this service line:

90

Name of Project Client Location Contract Value at Completion (in Rs.

millions)

Completion Date

Construction of Turbine Bldg. C.C.W Tunnels External RCC Trenches, D.M. Plant at Tarapur Atomic Power Project 3 & 4 (Package -3) Tarapur (Maharashtra)

Nuclear Power Corporation of India

Tarapur, Maharashtra

1,948.90 2004

LNG Tank civil works for Dahej LNG Terminal Project

Ishikawajima Harima Heavy Industries Company Limited

Dahej 982.20 2003

The following table describes some of the notable projects that we were in the process of executing as of November 30, 2006 in this service line:

Name of Project Client Location Estimated Contract Value (in Rs.

million)

Scheduled Completion Date

Civil and Structural Construction of Green Field Cement Plant for M/S National Cement Company at Al Awad Yemen

National Cement Company, Yemen

Yemen 812.20 August 2007

Construction of Marine, Civil and Pipeline Works for Reliance - Jamnagar

Reliance Infrastructure Limited

Gujarat 5,000.00 January 2008

Metro Our experience in metro projects include various projects for DMRC like the elevated viaducts at Tis Hazari and Tri Nagar Section and at Dwarka station totalling a total length of 10.32 kilometers, underground construction work for the Barakhamba underground station and two elevated station buildings at Wazirpur and Rithala. We have also carried out sub-contracted work of construction of the diaphragm wall at Chowri Bazar, Central Secretariat and Patel Chowk for the main contractors of DMRC. The following table provides a brief summary of some of the notable projects that we have undertaken and completed as of November 30, 2006 in this service line:

Name of Project Client Location ContractValue at Completion (in Rs.

millions)

Completion Date

Construction of Underground Station including tunnel at Barakhambha Road

DMRC Delhi 1,462.60 2006

Construction of Elevated Viaduct between Connaught Palace & Dwarka

DMRC Delhi 789.80 2006

Construction of Wazirpur & Rithala Stations Contract RC25

DMRC Delhi 450.50 2004

Construction of Elevated STR (Viaduct) on Tis Hazari - Tri Nagar Section

DMRC Delhi 864.40 2003

The following table describes some of the notable projects that we were in the process of executing as of November 30, 2006 in this service line.

91

Name of Project Client Location Estimated Contract Value (in Rs.

million)

Scheduled Completion Date

Construction of viaduct and four stations on Viswavidyalaya - Jahangirpuri corridor for DMRC

DMRC Delhi 1,234.9 July 2008

Part Design and Construction of Elevated Viacuct and Structural Work Of 3 Elevated Stations DMRC

DMRC Delhi 1,409.5 December 2008

Hydro/ Tunnel We entered into the hydro power sector by securing a project for construction of civil work and desilting arrangement for Koldam Hydroelectric Power Project for National Thermal Power Corporation Limited, which we are currently executing. We have been involved in tunnelling projects for over a decade. The following table provides a brief summary of some of the notable projects that we have undertaken and completed as of November 30, 2006 in this service line:

Name of Project Client Location Contract Value (in Rs.

millions)

Completion Date

Construction of Tunnel No.23 of Koraput - Rayagada B.C. Railway Line.

South Eastern Railway Orissa 191.0 1995

Shield Tunnelling underpass below existing Eastern Railway Track Section A-1.

Metro Railway, Kolkata Kolkata, West Bengal

8.5 1991

The following table describes some of the notable projects that we were in the process of executing as of November 30, 2006 in this service line:

Name of Project Client Location Estimated Contract Value (in Rs.

million)

Scheduled Completion Date

Construction of main civil works of desilting arrangement for Kol Dam Hydro-Electric Project

NTPC Himachal Pradesh

1,204.70 April 2008

Construction of BG single line tunnel on Katra - Laole section of Udhampur - Srinagar – Baramulla Rail Link Project

KRCL Jammu Kashmir 3557.80 June 2009

Pipelines Recently, we began actively pursuing opportunities involving laying of land and submarine oil & gas pipelines. Previously, we undertook laying of pipeline in respect of some of our jetty projects. We are currently executing an EPC contract for laying of cross country pipeline for ONGC in Assam. The following table provides a brief summary of some of the notable projects that we have undertaken and completed as of November 30, 2006 in this service line:

Name of Project Client Location Contract Value (in Rs.

millions)

Completion Date

Laying of 8" dia 3.5 km long submarine pipeline in Thane Creek

National Organica Chemical Industries Limited

Thane creek, Maharashtra

37.7

1989

92

Name of Project Client Location Contract Value (in Rs.

millions)

Completion Date

Submarine Pipeline across Thane Creek including Cathodic Protection

Hindustan Petroleum Corporation Limited

Thane creek, Maharashtra

27.6 1988

Submarine Pipeline Hindustan Petroleum Corporation Limited

Vishakapatnam, Andhra Pradesh

38.0 1985

Onshore Pipeline and Trestle Bridge Hindustan Petroleum Corporation Limited

Vishakapatnam, Andhra Pradesh

60.0 1985

The following table describes some of the notable projects that we were in the process of executing as of November 30, 2006 in this service line.

Name of Project Client Location Estimated Contract Value (in Rs.

million)

Scheduled Completion Date

Design, Engineering, Supply & Installation Of 200 MM ND Oil Trunk Pipe Line, Jorhat, Assam

ONGC Assam 391.90 June 2007

Order Book

Our order book comprises the unfinished and uncertified portion of projects that we have undertaken and includes the projects awarded to us but where we have not yet commenced work. In our industry, the order book is considered an indicator of potential future performance since it represents a significant portion of the likely future revenue stream. Our strategy is not focused solely on adding contracts to the order book but instead is focused on capturing quality contracts with potentially high margins. Our Order Book as of September 30, 2006, was Rs. 30,303.40 million. The orders in our order book are subject to cancellation and modification provisions contained in the various contracts and other relevant documentation.

The following table sets forth the value of our order book as of March 31, 2006 and 2005, and as of September 30, 2006 based on the different service lines that we operate in:

(Rs. in millions) As of September 30,

2006 As of March 31, 2006 As of March 31, 2005

Marine Works 3,270.4 474.70 638.20

Bridges/ Flyovers 8,469.4 6,971.50 7,287.50

Roads

4,222.4 1,814.50 3,363.80

General Civil Work

4,636.10 5,374.20 157.20

Metro

2,546.20 1,234.90 395.00

Hydro/ Tunnel

4,287.50 4826.10 1583.60

Pipelines 250.50 391.90 0.00

Overseas 2,620.90 54.00 1,388.00

TOTAL 30,303.40 21,141.80 14,813.30

93

ORDER BOOK BREAK UP BY SECTORS

0

5000

10000

15000

20000

25000

30000

March 31, 2005 March 31, 2006 September 30, 2006

Date

Rs.

in M

illi

on

s

Bridges/ Flyovers General Civil Work Hydro/ Tunnel

Roads Metro Overseas

Pipelines

The following table sets forth the value of our order book as of March 31, 2006 and 2005, and as of September 30, 2006 based on the client composition:

ORDER BOOK BREAKUP BY CLIENT COMPOSITION

Sectors As of September 30, 2006 (Rs. In Millions)

As of March 31s, 2006 (Rs. In Millions)

As of March 31, 2005 (Rs. In Millions)

Government 3,146.40 2,054.10 2,428.90

Government Bodies 13,496.30 13,386.20 10,598.30

Private Bodies 11,039.80 5,647.50 398.10

International 2,620.90 54.00 1,388.00

Total 30,303.4 21,141.80 14,813.30

94

ORDER BOOK BREAKUP BY CLIENT COMPOSITION

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

March 31, 2005 March 31, 2006 September 30, 2006

Date

Rs.

in M

illi

on

Government Bodies Government Private Bodies International

Some Details of our Order Book

The following table sets forth certain information concerning the top 12 contracts in our order book by outstanding value as on September 30, 2006. These orders represented more than 81 % of our order book as on September 30, 2006, based on the outstanding values as on September 30, 2006.

(Rs. in millions) No. Name of Project Service

Line Total

Contract Value

Current Contract

Value

Amount Outstanding as

of September 30,

2006

Scheduled Completion

Date

Client

1. Design and construction of special bridge across the River Chenab in Jammu & Kashmir. (in the name of the joint venture)

Bridge 5,127.4 5,173.8 4,040.00 December, 2008

Konkan Railway Corporation Ltd.

2. Construction of Marine, Civil And Pipeline Works for Reliance – Jamnagar

Civil Works

5,000.0 5,000 4,400.00 January, 2008

Reliance Infrastructure Limited

3. Construction of BG Single Line Tunnel on Katra - Laole section of Udhampur - Srinagar - Baramulla Rail Link Project

Hydro/ Tunnel

3,345.2 3,557.80 3,481.00 June, 2009 Konkan Railway Corporation Ltd.

4. Design Enginering,Construction of 4 Laning from Existing 2 Lane Ulundurpet to Padalur

Road 3,145.00 3,145.00 3,145.00 June, 2008 Trichy Tollways Pvt.Ltd.

5. Construction of new bridge over River Sone

Bridge 2,117.80 2,269.70 1,232.70 February, 2009

East Central Railway, Patna

6. Construction.of Grade Separation at Mukarba Chowk in Delhi

Bridges/ Flyover

1,706.20 1,706.20 1,706.20 August, 2008

Public Works Dept., Delhi

7. Construction of Main Civil Works of Desilting Arrangement for Koldam Hydro-Electric Project. (in the name of JV)

Hydro/ Tunnels

1,583.60 1,204.70 795.00 April, 2008 National Thermal Power Corporation Ltd.

95

No. Name of Project Service Line

Total Contract

Value

Current Contract

Value

Amount Outstanding as

of September 30,

2006

Scheduled Completion

Date

Client

8. Part Design and Construction of Elevated Viaduct and Structural Work Of 3 Elevated Stations DMRC

Metro Rails

1,409.50 1,409.50 1409.50 December, 2008

Delhi Metro Rail Corporation

9. Construction of Jetty Modification-Zero Point to New Riser Platform, Jamnagar

Marine Works

1,380.0 1,380.0 1,380.0 January, 2008

Reliance Industries Ltd.

10. Construction of Breakwater and Associated Works at Pawas Bay, Ratnagiri

Marine Work

1,250.00 1,250.00 1,250.00 August, 2008

Finolex Industries Ltd.

11. Construction of new mooring facility in Shannah, Al Wusta Region

Marine Works

1,135.10 1,135.10 1.135.10 January, 2008

Sultanate of Oman

12. Construction of Oil Jetty At Louis Harbour, Mauritius

Marine Work

822.80 730.1 718.10 January, 2008

Mauritius Ports Authority

Project Lifecycle A typical project cycle can be accounted for in two distinct phases. The first phase relates to identification of the opportunity and leading to receipt of a contract through a series of activities. Once the contract is received, the second phase of project management and execution commences as depicted below. During both these phases, the finance activity interfaces at various stages with corresponding inputs of guarantees, cash flow and fund management.

Project CycleProject Cycle

Pre-Qualification/

Bid - Submission

Tender Preparation

Submission of Bid

Project Identification

Business DevelopmentProject Management

ResultNot

Awarded

Obtaining Experience

Certificate

Signing of Agreement

Execution Plan

Execution

Completion

Defect LiabilityProject Completion

Work AwardedLetter of Intent

Receipt of Retention

Money

Finance

EMD

Return of EMD

Performance Guarantee

Mobilisation Advance/

Guarantee / Funds

Return of Funds

Return of Funds

Return of EMD

Return of MABG

Return of PG

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The various stages involved in the two phases namely: Phase I (business opportunity leading upto the order) and PhaseII (project management and execution) are further detailed below. Phase I:

• Awarding the contract o Expression of interest - called for by the project owner o Request for Qualification (RFQ) or Pre-qualification o Invitation to tender /request for proposal/ (RFP) o Obtain Document- purchase of tender document o Site Visit and Pre-Bid Queries o Post-qualification / Technical Documentation and Financial Bid o Submission of the tender along with Earnest Money Deposit (“EMD”). o Award of the contract to the lowest bidder and issue of Letter of Intent o Signing of the contract along with submission of performance securities and refund

of EMD Phase II:

• Execution of the project o Prepare the Project Cost and Analysis) for execution, detailed execution plan,

detailed resource plan and expenditure plan o Kick-off meetings o Mobilization of resources o Purchase of materials required in the project o Execution of the project as per execution plan o Raising monthly (as per tender condition) Running Account Bills

• Project closure o Implement all project completion activities to the satisfaction of the client. o Receipt of final bill o Taking substantial completion certificate o Taking handing over certificate o Implementing Defect Liability/ O&M period, if there is any o Receive the final retention money after Defect Liability Period

• Defect Liability Period Normally all projects stipulate a defect liability period of 12 months from the date of handing over. Contractor is responsible to make good any defects that may arise as a consequence of inadequate quality of supplies and workmanship during this period. The retention money / bank guarantee of equivalent amount which is held by the client (approximately 5-10%) is returned to the contractor on successful completion of the defect liability period. Business Development and tendering

We enter into contracts primarily through a competitive bidding process. Government and other clients typically advertise potential projects in leading national newspapers or on their websites. Our tendering department regularly scans newspapers and websites to identify projects that could be of interest to us. We have a centralized Business Development Department that is responsible for applying for all pre-qualifications and tenders. We endeavour to qualify on our own for projects in which we propose to bid. In the event that we do not qualify for a project in which we are interested due to eligibility requirements relating to the size of the project or other reasons, we may seek to form strategic alliances or project-specific joint ventures with other relevant experienced and qualified contractors, using the combined credentials of such companies to strengthen our chances of pre-qualifying and winning the bid for the project. Our Business Development department determines the bidding strategy depending upon the type of contract. For example, in the event of bid for a design-build project, we would appoint a competent consultant to design the project and provide us with drawings to enable further analysis of the various aspects of the project. This allows us to make a more informed bid. Similarly, a lump sum tender would entail quantity take-offs from the drawings supplied by the clients.

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We also maintain an extensive computerized data bank and continuously upgrade it to track vendors, prices of various materials in all states of India over the last 20 years. This along with the quotations received help us to determine the price charged by us.

Engineering & Design We provide detailed engineering services, if required by the client, for the projects that we undertake. Typically, for design-build projects, the client supplies conceptual information pertaining to the project and spells out the project requirements and specifications. We are required to prepare detailed architectural and /or structural designs based on the conceptual requirements of the client and also conform to various statutory and code requirements. For those particular segments in which we do not have in-house design capabilities, we outsource design services from experienced consultants who specialise in the particular segment. Prior to bidding for the project, our Business Development department and senior management review the preliminary design prepared by these consultants. Over the years, we have through a combination of experience and technical ability developed expertise in assessing the preliminary pre-tender designs prepared by our consultants, vis-à-vis the requirements of the client. After our initial review of the preliminary designs, we continue to confer with our consultants to arrive at the final solution for the project. Once the project is awarded to us, our consultants prepare detailed designs pursuant to the project requirements. Procurement and Construction Because material procurement plays such a critical part in the success of any project, we maintain experienced staff in our purchase department to carry out material, services and equipment procurement for all project sites. Procurement is a centralized function performed at our headquarters. Only in certain cases is procurement done from project sites. The Company has over the years developed relationships with a number of vendors for key materials, services and equipment. The Company has also developed an extensive vendor database for various materials and services. We maintain material procurement, tracking and control systems, which enable monitoring of our purchases.

Procurement of material, services and equipment from external suppliers typically comprises a significant part of a project’s cost. The ability to cost-effectively procure material, services and equipment, and meeting quality specifications for our projects is essential for the successful execution of such projects. We continually evaluate our existing vendors and also attempt to develop additional sources of supply for most of the materials, services and equipment needed for our projects.

The key construction activities involved in a project depend on the nature and scope of the project. We have a project management system that helps us track the physical and financial progress of work vis-à-vis the project schedule. Daily progress reports are prepared by the major sites and sent to the project monitoring cell in the head office for collation. Project personnel hold periodic review meetings with the client at sites and also with key head office personnel in our headquarters to discuss the progress being made on the project. The project managers also hold periodic review meetings with our vendors and sub-contractors to review progress and assess future needs.

Each project site has a billing department that is responsible for preparing and dispatching periodic invoices to the clients. Joint measurements with the client’s representative are taken on a periodic basis and interim invoices prepared on the basis of such measurements are sent to the client for certification and release of interim payments. The billing department is also responsible for certifying the bills prepared by our vendors and sub-contractors for particular projects and forwarding the same to our head office for further processing.

We are an ISO 9001:2000 certified company with a defined and documented Quality System Manual. The quality assurance cells at our various project sites help to ensure implementation of the procedures set forth in our Quality System Manual in order to help enable us to comply with the quality parameters stipulated in the contract by the client. Two surveillance audits are conducted in a year by external parties to ensure that the policies of the Company are followed. In addition, we also conduct periodic internal audits to ensure the same.

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We consider a project to be “virtually complete” when it is ready to be handed over to the client. We then jointly inspect the project with the client to begin the process of handing over the project to the client. Once satisfied, the client prepares a “virtual completion certificate”, which signifies the commencement of the defects liability period or the maintenance period (i.e., the period during which we are contractually bound to rectify any defects arising out of construction, which can last up to 60 months). On completion of the defects liability period, we request the client to release any performance bonds or retention monies that may be outstanding. Types of Contracts Our contracts types fall into the following categories:

• Lump Sum contracts – Lump Sum contracts provide for a single price for the total amount of work, subject to variations pursuant to changes in the client’s project requirements. In Lump Sum contracts, the client supplies all the information relating to the project, such as designs and drawings. Based on such information, we are required to estimate the quantities of various items, such as raw materials, and the amount of work that would be needed to complete the project, and then prepare our own bill of quantities (“BOQ”) to arrive at the price to be quoted. We are responsible for the execution of the project based on the information provided and technical stipulations laid down by the client at our quoted price.

• Design and Build contracts – Design and Build contracts provide for a single price for the total amount of work, subject to variations pursuant to changes in the client’s project requirements. In Design and Build contracts, the client supplies conceptual information pertaining to the project and spells out the project requirements and specifications. We are required to (i) appoint consultants to design the proposed structure, (ii) estimate the quantities of various items that would be needed to complete the project based on the designs and drawings prepared by our consultants and (iii) prepare our own BOQ to arrive at the price to be quoted. We are responsible for the execution of all aspects of the project based on the above at our quoted price.

• Item rate contracts - Item rate contracts are contracts where we need to quote the price of each item presented in a BOQ furnished by the client. In item rate contracts the client supplies all the information such as design, drawings and BOQ. We are responsible for the execution of the project based on the information provided and technical stipulations laid down by the client at our quoted rates for each respective item.

• Percentage rate contracts - Percentage rate contracts require us to quote a percentage above, below or at par with the estimated cost furnished by the client. In percentage rate contracts, the client supplies all the information such as design, drawings and BOQ with the estimated rates for each item of the BOQ. We are responsible for the execution of the project based on the information provided and technical stipulations laid down by the client at our quoted rates, which are arrived at by adding or subtracting the percentage quoted by us above or below the estimated cost furnished by the client.

• Cost Plus Contracts – We have also been awarded cost plus contracts with certain clients like Reliance Industries Limited with whom we have developed a long term relationship. These contracts typically allow us to recover a fixed margin over the total costs incurred by us for execution of the projects based on periodic invoices submitted by us.

Depending on the nature of the project and the project requirements, contracts may also contain a combination of aspects of any of the contract types discussed above. Contracts, irrespective of their type (i.e., Lump Sum, item rate, percentage rate, design-build), typically contain price variation or escalation clauses that provide for either reimbursement by the client in the event of a variation in the prices of key raw materials (e.g., steel and cement) or a formula that splits the contract into pre-defined components for materials, labour and fuel and links the escalation in amounts payable by the client to pre-defined price indices published periodically by the RBI or the Government. Some contracts do not include such price variation or escalation clauses. Thus, in those instances, we face the risk that the price of key raw materials and other inputs will increase during the project execution period and are unable to pass on the increases in such costs to the client.

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Project-specific Joint Ventures and Strategic Alliances Generally, we bid for projects as the sole contractor of the project with full responsibility for the entire project, including, if required, the overall responsibility and sole discretion to select and supervise sub-contractors. From time to time, on certain larger projects that require resources beyond those we may have available, such as financial strength, equipment, manpower or local content resources, or when we wish to share the risk on a particularly large project, we seek to make alliances through the formation of special purpose vehicles (SPVs) or project-specific joint ventures with other contracting, engineering and construction companies. In a project-specific joint venture, each member of the joint venture shares the risks and revenues of the project according to a predetermined agreement. The agreements specifically assign the work to be performed by each party and the responsibilities of each party with respect to the joint venture, including how the joint venture will be managed and the equipment, personnel or other assets that each party will contribute or make available to the joint venture. The profits and losses of the joint venture are shared among the members according to a predetermined ratio. The fixed assets that are acquired by the joint venture are generally transferred to the respective joint venture members upon completion of the joint venture project. The agreements may also set forth the manner in which any disputes among the members will be resolved. The construction contracts that the joint ventures enter into, or the joint ventures themselves, typically impose joint and several liability on the members. Thus, should the other member(s) of our joint ventures default on its or their duties to perform, we would remain liable for the completion of the project. The SPV or project-specific joint venture typically terminates at the completion of the defect liability period, at which point the SPV or project-specific joint venture liquidates and dissolves. As of November 30, 2006, we had entered into memoranda of understanding, joint venture agreements and consortium agreements in respect of projects being currently executed as described in the table below. For details of these memoranda of understanding, joint venture agreements and consortium agreements, see the section titled “History and Certain Corporate Matters” on page 108.

Joint Venture/ Other Party/Parties/ Type of Arrangement

Project

Memorandum of Understanding with Ace Pipeline Contracts Private Limited

Khoraghat GGS-1 – Borholla GGS in A & AA basin, Jorhat Pipeline construction project

Joint venture agreement with R. N. Shetty and Company Private Limited

Koldam Hydro Electric Power Project (4 X 200 MW) for National Thermal Power Corporation, Delhi

Joint venture agreement with Shapoorji Pallonji and Company Limited

Construction of a flyover at the University Circle and Agriculture College in Pune

Joint venture agreement with Ultra Construction and Engineering Company Limited and VSL India Private Limited

Construction of a special bridge across Chenab river at KM 50/800 on the Katra – Laole Section of Udhamppur-Srinagar-Baramullah Rail Link Project in J&K for Konkan Railway Corporation Limited

Joint venture agreement with Al Saeed Company

Construction of a cement plant for the National Cement Company at Wadi, Faltah, [Yemen]

Joint venture agreement with Oman Shapoorji Construction Company LL.C.

Construction of New Mooring Facility in Shannah (Al-Wusta Region) for the Ministry of Transport and Communications, Directorate General of Ports and Maritime Affairs, Sultanate of Oman

We have also entered into pre-tender tie ups to work as a sub-contractor as per the details provided below:

Counter Party/Parties/ Type of Arrangement Project Subcontract Agreement with PentaOcean Construction Company Limited, Japan

Dredging and jetty works for Kochi LNG Terminal. Project

Subcontract Agreement with Ishikawajima - Harima Heavy Industries Limited, Japan

Design, Engineering, procurement, construction, completion, commissioning and testing work of LNG

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Counter Party/Parties/ Type of Arrangement Project Tanks for the Kochi LNG Terminal Project

Subcontract Agreement with Toyo Engineering India Limited, India

Civil Construction work for the Kochi LNG Terminal. Project

Memorandum of understanding with Terna Cyprus, S.A., Greece

Construction of Qatar Primary Route North Road – Contract 2&3 for Qatar Works Authority

We have also entered into an agreement with Diamond Offshore Drilling (Overseas) Inc., USA to act as a business development agent in relation to the offshore drilling operations in India. Under this agreement, we are paid a fixed commission fee for the services performed in India. Competition We operate in a competitive environment. Our competition depends on whether the project is in the civil construction sector or the infrastructure sector. It also depends on a host of other factors, such as the type of project, contract value and potential margins, the complexity and location of the project, the reputation of the client and the risks relating to revenue generation. While service quality, technical ability, performance record, experience, health and safety records and the availability of skilled personnel are key factors in client decisions among competitors, price is often the deciding factor in most tender awards. We mainly compete with domestic Indian entities in the different segments in which we operate. Some of our key competitors are Larsen and Toubro Limited, Hindustan Construction Company Limited, Gammon India Limited, IVRCL Infrastructures and Projects Limited, Simplex Infrastructures Limited and ITD Cementation Limited. Insurance Our operations are subject to hazards inherent in providing engineering and construction services, such as risk of equipment failure, work accidents, fire, earthquake, flood and other force majeure events, acts of terrorism and explosions including hazards that may cause injury and loss of life, severe damage to and the destruction of property and equipment and environmental damage. We may also be subject to claims resulting from defects arising from engineering, procurement or construction services provided by us within the warranty periods extended by us, which can range from 12 to 60 months from the date of commissioning. We obtain specialized insurance for construction risks and third party liabilities for most projects for the duration of the project and the defect liability period. We generally maintain insurance covering our assets and operations at levels that we believe to be appropriate. Risks of loss or damage to project works and materials are often insured jointly with our clients. Our significant insurance policies consist of coverage for risks relating to physical loss or damage as well as business interruption loss. Loss or damage to our materials and property, including contract works, whether permanent or temporary, and materials or equipment supplied by us or supplied to us, are generally covered by “contractors’ all risks” insurance. Under the all risks insurance policy we are also provided cover for price escalation, debris removal and surrounding properties. Under our general public liability insurance policy, we are indemnified against legal liability to pay damages for third party civil claims arising out of bodily injury or property damage caused by an accident during the project in the course of business. Under certain of our contracts and sub-contracts, we are required to obtain insurance for the project. In some such cases, we have either not obtained insurance or we have obtained insurance but permitted the insurance policy to lapse prior to the completion of the project. For some projects that do not require us to maintain insurance, we have not taken insurance cover. We also maintain automobile policies and workmen’s compensation policies as well as hospitalization and group personnel accident policies for our permanent employees. Guarantees We are often required to provide financial and performance guarantees our performance and financial obligations in relation to a project. The amount of guarantee facilities available to us depends upon our

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financial condition and the availability of adequate security for the banks and financial institutions that provide us with such facilities. There have been zero instances where our performance guarantees have been invoked by our clients. Our Employees We believe that a well-trained, motivated and satisfied employee base is key to our competitive advantage. As of November 30, 2006, we employed 1,473 full-time employees, of which 47.99 % were engineers. Additionally, as of November 30, 2006, we employed 2,695 temporary labourers on our project sites. We are committed to the development of the expertise and know-how of our employees through regular technical seminars and training sessions organised or sponsored by the Company. Our personnel policies are aimed towards recruiting the talent that we need, facilitating the integration of our employees into the Company and encouraging the development of skills in order to support our performance and the growth of our operations. The following table sets forth certain information in respect of our full-time and temporary labour as of November 30, 2006:

Category Number of Full-Time Employees

Number of Temporary labour

Total

Technical Staff 976 1,033 2,009 Commercial Staff 441 645 1,022

Workers 56 1017 1,073 Total 1,473 2,695 4,104

All our non-supervisory employees are members of registered trade unions. There are three trade unions each representing 442, 84 and 22 employees respectively. In relation to two of the unions, we concluded collective bargaining agreements in May 2004 and reached a wage agreement which took effect retrospectively from April 1, 2003 to March 31, 2007 and January 1, 2003 to December 31, 2006 respectively. Besides wage settlement, our management and the unions came to an agreement on several other aspects of employee management. The charter of demand in respect of one of the unions, which represents 22 employees, has been pending since January 21, 2005. As such, we consider our relations with our employees to be good. Health, Safety and Environment We are committed to complying with applicable Health, Safety and Environmental (HSE) regulations and other requirements in our operations and have a documented policy in place. To help ensure effective implementation of our practices, at the beginning of every project we seek to identify all potential material hazards, evaluate all material risks and institute, implement and monitor appropriate controls. We believe that accidents and occupational health hazards can be significantly reduced through the systematic analysis and control of risks and by providing appropriate training to management, employees and sub-contractors. We seek to work proactively towards minimizing or eliminating the impact of hazards to people and the environment. On all project sites, we employ safety personnel dedicated to helping ensure the implementation of our HSE policies at such sites. Additionally, safety managers are sent from the head office to monitor safety standards at project sites. We were awarded ISO 14001:2004 and OHSAS 18001:1999 certifications by BVQI in respect of construction of elevated viaduct for Delhi Metro Rail Project. Our Equipment We believe that our strategic investment in equipment and fixed assets is an advantage that enables us to rapidly mobilize our equipment to project sites as needs arise. We have a fleet of strategic construction equipment assets, including cranes, equipment for piling and diaphragm wall, drilling and grouting, concrete/ earth moving transport, marine flotilla including jack up platform, barges and pontoons. Having such an asset base is in our view an important advantage in serving the technically

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challenging and diverse nature of the construction projects in which we are engaged. We have developed several of equipment in-house. We have equipment storage, maintenance and repair facilities at Ulva (Navi Mumbai), Nagpur, Delhi and Chennai. As of September 30, 2006, our total investment in equipments was Rs. 2,469.93 million (on a consolidated basis). The following table provides a list of some of our more substantial equipment as of September 30, 2006:

No. Equipment Particulars Number of Units 1) Marine Construction a) Jackup platform 4

b) Heavy lifting barge (Shayadri) 1200 T capacity 1

c) Submersible dock barges 3

d) Diving bell 1

e) Toyo pump dredging 11

2) Piling equipment used for dock and harbour as well as bridges, flyovers etc.

a) Intregrated piling rig 6

b) Crane mounted rotary piling rig 6

c) Casing mounted wirth rig 1

3) Diaphragm Wall equipments a) Hydraulic Kelly 4

4) Heavy duty crane a) Tower crane 7

b) Crawler Cranes (20T to 200T capacity) 44

c) Mobile cranes (various capacity) 37

5) Crusher a) Fully integrated mobile crushers 3

b) Crusher of various capacity 6

6) Concreting equipment

a) Batching plant (3ocum/hr to 60 cum/hr) 21

b) Transit mixer (4 cum/hr to 6 cum/hr) 79

c) Concrete pumps 30

7) Asphalt Road construction equipment a) Hot mix plants 5

b) Sensor Pavers/Wet mix Pavers 12

c) Wet mix Plants 7

8) Earthmoving equipment a) Dozers 11

b) Graders 20

c) Loaders 26

d) Excavators/JCB 44

e) Vibro Rollers/ Dead Weight Roller 28

9) Trailers and Tippers 205

Risk Management The risk management framework includes the assessment of risks such as political, economic, contractual and immigration. We have established a Risk Management System to identify all possible risks during selection of project, tender estimation and /submission of tenders. Particularly for foreign projects, we evaluate risks under the category of country risk, political risk, banking risk, currency fluctuation risk, inflation possibility, contract conditions, dispute redressal system, visa restrictions, client profile prior to submitting a bid. During cost estimation at tender stage we also evaluate risk related to labour/ material cost variation, equipment availability in the country, geological conditions, cash flow, consideration of time schedule, liquidated damages, guarantee / warranty requirement and maintenance requirement. Management approval in selection of projects and price to be quoted duly depends on the evaluation and liquidation of the above risks. When the work is awarded the Project Management Team is briefed on the risks on the basis of tender preparation in light of the actual risks. During the execution of the projects, our project managers as well as the project controllers are appraised of the risks expected and to enable them to avoid / mitigate increased time and cost due to such risks. Enterprise Resource Planning

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We are currently implementing an enterprise resource planning (ERP) software to manage our various business functions effectively. Phase I of this implementation which would centralize accounts, purchase, stores, payroll and CPE (covering of implementation of major equipments at various project sites) has already been completed. This assists us in monitoring our projects on a day-to-day basis in an effective manner and improves information availability for our employees. Phase II involving planning, execution, costing, maintenance, which is currently under implementation, would further integrate our various operational arms. Our Properties Our registered office and corporate headquarters are located at Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azad Nagar P.O., Mumbai 400 053 on a plot of land measuring 5,794.55 square metres. We occupy these premises pursuant to a deed of assignment dated March 22, 1977 whereby the partnership firm of Rodio Foundation Engineering and Hazarat & Co. transferred the entire business and undertaking of the partnership along with all properties to us on July 1, 1976. We also own the premises of an area of 2,534.75 square metres at located at Plot No. 254 D(1), “Band Box House”, Dr. Annie Besant Road, Worli, Mumbai 400 018. Presently, the Company is not using this premises. We have signed a lease agreement with the Maharashtra Industrial Development Corporation dated April 15, 1994 for our office and workshop premises of an area of 7,200 square metres in the Nagpur Industrial Area. The lease is valid for a period of 95 years from January 1, 1975. We have paid a sum of Rs. 57,600 as premium at the time of signing the lease agreement. We pay a yearly rent of Re.1 along with service charges. Afcons Paulings Limited (which has now merged into us) had entered into a lease agreement with the Maharashtra Industrial Development Corporation dated April 26, 199 for our workshop and storage premises of an area of 40,000 square metres in the Butibori Industrial Area, Nagpur. The lease is valid for a period of 95 years from June1, 1993. A sum of Rs. 1,600,000 was paid as premium at the time of signing the lease agreement. We pay a yearly rent of Re.1 along with service charges We have signed a lease agreement with Mr. Mukesh Kumar dated March 22, 2006 in respect of the premises located at Raswooltur Road, Near Railway Crossing, Munka, Delhi measuring 24,281.40 square metres used for storage of our equipment in New Delhi. The lease is valid for a period of 24 months from March 22, 2006. We pay a monthly rent of Rs. 5,687 per acre. We have signed a contract with Amma Lines Limited dated October 14, 2006 for premises measuring 2,500 square metres in Ulwa, Mumbai to park our jack-up platforms and marine crafts. The contract is valid for a period of 12 months. We pay a monthly rent of Rs. 82, 500. Our Intellectual Property The “AFCONS” trademark bearing Trade Mark No. 717311 in Class 19 has been approved by the Examiner of Trade Marks, Trade Marks Registry, Government of India, Mumbai and is valid up to September 12, 2013. Apart from this we have no other intellectual property rights.

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REGULATIONS AND POLICIES

The following description is a summary of the relevant regulations and policies as prescribed by the

Government of India. The information detailed in this chapter has been obtained from publications

available in the public domain. The regulations set out below are not exhaustive, and is only intended

to provide general information to the investors and is neither designed nor intended to be a substitute

for professional legal advice.

Introduction

The Company is engaged in the business of civil construction, specialized foundations such as all types of pile foundations, drillings & groutings, construction of diaphragm walls, RCC or otherwise, construction of tunnels, bridges, harbours, dry docks, sea walls, landings and or other types of marine structures.

Set forth below are certain significant legislations and regulations that generally govern this industry in India:

Regulation of Ports

The primary legislation governing ports is the Major Port Trusts Act, 1963 (the Port Trust Act). Each port is administered, controlled and managed by a board of trustees (Port Trust) which is constituted by the central government under the Port Trust Act. The Port Trust usually renders services such as landing and shipping of passengers and goods, transporting and storing goods, receiving, transporting and dispatching goods originating in the vessel in the port and intended for carriage by the railways or vice versa; piloting, hauling, mooring, hooking or measuring of vessels or any other service in respect of vessels. Such services can be sanctioned to be performed by private persons if approval of the central government is obtained. For this, such person cannot charge any sum in excess of the amount specified by the Tariff Authority for Major Ports (Port Tariff Authority) by notification. The Port Tariff Authority is an independent body established for fixing and revising port tariffs. These tariffs determine the upper limit of tariffs that can be charged by private entrepreneurs and the port. Private participation is allowed in the following activities pertaining to ports: (i) leasing out assets of the port; (ii) construction and creation of additional assets (this includes: construction and operation of container terminals; (iii) construction and operation of bulk break bulk, multipurpose and specialized cargo berths; (iv) warehousing, container freight stations, storage facilities and tank farms; (v) crainage/handling equipment; (vi) setting up of captive power plants; (vii) dry docking and ship repair facilities; (viii) leasing of equipment for port handling and leasing of floating crafts from the private sector; (ix) pilotage; (x) captive facilities for port based industries. Further activities may be permitted to be opened to private sector participation after consultation with the central government. The approval of the Port Trust is required for making, erecting or fixing any wharf, dock, quay, stage, jetty, pier, erection or mooring within the port or its approaches and the Port Trust may specify conditions subject to which such consent is granted. Though activities have been opened to participation by the private sector, these persons are obligated to operate in accordance with certain considerations such as protection of national interests including national security and adhering to priority berthing orders of the central government, in this regard. Other considerations include following statutory requirements on environmental protection, anti-pollution measures and safety. However, private sector participants would be permitted to give priority berthing to their own ships and they would service other ships on a first come first served basis with respect to berths constructed or taken on lease by private entrepreneurs.

Regulation of the Road Sector

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The primary central legislations governing the roads sector are the National Highways Act, 1956 and the National Highways Authority of India Act, 1988 (NHAI Act). National Highways Act, 1956

Under this Act, the central government is vested with the power to declare a highway as a National Highway and also to acquire land for this purpose. The central government may by notification, declare its intention to acquire any land when it is satisfied that for a public purpose such land is required for the building, maintenance, management or operation of a national highway. The National Highways Act prescribes the procedure for the same. Such procedure relates to declaration of an intention to acquire, entering and inspecting such land, hearing of objections, declaration required to be made for the acquisition and the mode of taking possession. The central government is responsible for the development and maintenance of national highways. However, it may direct that such functions may also be exercised by state governments. Further, the central government has the power to enter into an agreement with any person for the development and maintenance of a part or whole of the highway. Such person would have the right to collect and retain fees at such rates as may be notified by the central government. The National Highways (Collection of Fees by any Person for the use of Section of National Highways/ Permanent Bridge/ Temporary Bridge on National Highways) Rules, 1997 provide that the central government may enter into agreements with persons for development and maintenance of the whole or part of a national highway/permanent bridge/temporary bridge on national highway. Such person may invest his own funds for development or maintenance and is allowed to collect and retain the fees at agreed rates from different categories of vehicles for an agreed period for the use of the facilities created herein. The rates of fees and the period of collection are decided by the central government and the factors taken into account to decide the same include expenditure involved in building; maintenance, management and operation of the whole or part of such section; interest on the capital invested; reasonable return, the volume of traffic; and the period of such agreement. Once the period of collection of fees by the person is completed, all rights pertaining to the section, permanent bridge or the temporary bridge on the national highway would be deemed to have been taken over by the central government. Hydro Projects Under the Electricity Act 2003, specific provisions have been made for hydro projects. The generating company intending to set up a hydro project station is required to submit any scheme which is estimated to involve a capital expenditure exceeding such sum as may be fixed by the central government before the CEA for approval. The CEA is required to look into whether the proposed river-works will prejudice the best development of the river or its tributaries for power generation. Further factors such as drinking water, irrigation, navigation, flood-control or other public purposes are also required to be considered. The CEA is also required to consider whether the proposed scheme meets the norms regarding dam design and safety. Fiscal Legislation Section 80-IA of the Income Tax Act, 1961 provides that while computing the total income of an undertaking set up for generation of power, 100% deduction of the profit and gains is allowed. This deduction is allowed during any 10 consecutive years in a block of first 15 years from the start of operations of the infrastructure facility. This is applicable when the particular undertaking is not formed by splitting up or reconstruction of a business already in existence and is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Environment Regulation Infrastructure projects must also ensure compliance with environmental legislation such as the Water (Prevention and Control of Pollution) Act 1974 (Water Pollution Act), the Air (Prevention and Control of Pollution) Act, 1981 (Air Pollution Act) and the Environment Protection Act, 1986 (Environment Act).

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The Water Pollution Act aims to prevent and control water pollution. This legislation provides for the constitution of a Central Pollution Control Board and State Pollution Control Boards. The functions of the Central Board include coordination of activities of the State Boards, collecting data relating to water pollution and the measures for the prevention and control of water pollution and prescription of standards for streams or wells. The State Pollution Control Boards are responsible for the planning for programmes for prevention and control of pollution of streams and wells, collecting and disseminating information relating to water pollution and its prevention and control; inspection of sewage or trade effluents, works and plants for their treatment and to review the specifications and data relating to plants set up for treatment and purification of water; laying down or annulling the effluent standards for trade effluents and for the quality of the receiving waters; and laying down standards for treatment of trade effluents to be discharged. This legislation debars any person from establishing any industry, operation or process or any treatment and disposal system, which is likely to discharge trade effluent into a stream, well or sewer without taking prior consent of the State Pollution Control Board. The Central and State Pollution Control Boards constituted under the Water Pollution Act are also to perform functions as per the Air Pollution Act for the prevention and control of air pollution. The Air Pollution Act aims for the prevention, control and abatement of air pollution. It is mandated under this Act that no person can, without the previous consent of the State Board, establish or operate any industrial plant in an air pollution control area. The Environment Act has been enacted for the protection and improvement of the environment. The Act empowers the central government to take measures to protect and improve the environment such as by laying down standards for emission or discharge of pollutants, providing for restrictions regarding areas where industries may operate and so on. The central government may make rules for regulating environmental pollution. With respect to forest conservation, the Forest (Conservation) Act, 1980 prevents state governments from making any order directing that any forest land be used for a non-forest purpose or that any forest land is assigned through lease or otherwise to any private person or corporation not owned or controlled by the Government without the approval of the central government. The Ministry of Environment and Forests mandates that Environment Impact Assessment (EIA) must be conducted for projects. In the process, the Ministry receives proposals for the setting up of projects and assesses their impact on the environment before granting clearances to the projects. Foreign Ownership Under the Industrial Policy and FEMA, FDI up to 100% is permitted in construction and related engineering services. Further, the Industrial Policy now also permits foreign direct investment under the automatic route in projects for construction and maintenance of roads, highways, vehicular bridges, toll roads and ports and harbours. Subject to certain conditions and guidelines, the Industrial Policy and FEMA further permit up to 100% FDI in townships, housing, built-up infrastructure and construction development projects which include, but are not restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities and city and regional level infrastructure. The RBI by its A.P. (DIR Series) circular No. 16 dated October 4, 2004 granted general permission for the transfer of shares of an Indian company by Non-Residents to residents and residents to Non-Residents, subject to the terms and conditions, including pricing guidelines, specified in such circular. No approvals of the FIPB or the RBI are required for such Allotment of Equity Shares under this Issue. Investment by Foreign Institutional Investors Foreign Institutional Investors (FIIs) including institutions such as pension funds, investment trusts, asset management companies, nominee companies and incorporated, institutional portfolio managers can invest in all the securities traded on the primary and secondary markets in India. FIIs are required to obtain an initial registration from the SEBI and a general permission from the RBI to engage in transactions regulated under FEMA. FIIs must also comply with the provisions of the SEBI (Foreign Institutional Investors) Regulations, 1995, as amended from time to time. The initial registration and

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the RBI’s general permission together enable the registered FII to buy (subject to the ownership restrictions discussed below) and sell freely securities issued by Indian companies, to realise capital gains or investments made through the initial amount invested in India, to subscribe or renounce rights issues for shares, to appoint a domestic custodian for custody of investments held and to repatriate the capital, capital gains, dividends, income received by way of interest and any compensation received towards sale or renunciation of rights issues of shares. Ownership Restrictions of FIIs Under the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation basis should not exceed 24% of post-issue paid-up capital of a company. However, the limit of 24% can be raised up to the permitted sectoral cap (which is 100% for the engineering and construction sector) for that company after approval of the Board of Directors and shareholders of the company. As of date, no such approval has been obtained. The total holding of a single FII should not exceed 10% of the post-issue paid-up capital of the Company or 5% of the total paid-up capital in case such sub-account is a foreign corporate or an individual. In respect of an FII investing in equity shares of a company on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of the total issued capital of that company. Other Laws and Regulations Certain other laws and regulations that may be applicable to the Company include the following:

• Contract Labor (Regulation and Abolition) Act, 1970;

• Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996;

• Inter State Migrant Workers Act, 1979;

• Factories Act, 1948;

• Payment of Wages Act, 1936;

• Payment of Bonus Act, 1965;

• Employees’ State Insurance Act, 1948;

• Employees’ Provident Funds and Miscellaneous Provisions Act, 1952;

• Equal Remuneration Act, 1976;

• Payment of Gratuity Act, 1972;

• Shops and Commercial Establishments Acts, where applicable;

• Minimum Wages Act 1948;

• Hazardous Waste (Management and Handling) Rules, 1989;

• Hazardous Chemicals Rules, 1989;

• Industrial Disputes Act, 1947;

• Mines and Quarries Act, 1954;

• The Explosives Act, 1884;

• Workmen’s Compensation Act, 1923;

• The Air ( Prevention and Control of Pollution) Act, 1981; and

• The Water (Prevention and Control of Pollution) Act, 1974

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HISTORY AND CERTAIN CORPORATE MATTERS

Our History We began our operations as a civil construction firm in 1959 as a partnership between the Rodio Foundation Engineering Limited, Switzerland and Hazarat & Company, India. Pursuant to the exit of Rodio Foundation Engineers and Hazarat & Co, we were reorganized as a company called Asia Foundations and Constructions Private Limited in 1976 engaged in the business of contractors and engineers. We became a deemed public limited company as per Section 43A(1) of the Companies Act from March 18, 1977. Shipping Credit and Investment Corporation of India (SCICI) became a 20% shareholder of our Company in 1993, which shareholding was transferred to ICICI pursuant to the merger of SCICI with ICICI. We became a full fledged public company in November 1997. In 1998 ICICI subscribed to further shares in our Company which made ICICI the single largest shareholder with 47.37% equity stake in our Company. Shapoorji Pallonji Group acquired 53.96% per cent shareholding in our Company in 2000 where 47.37% was acquired from ICICI Ltd. and 6.59% was acquired from the Hazarat family.

We changed the name of our Company from Asia Foundations and Constructions Limited to Afcons Infrastructure Limited with effect from August 14, 1996 pursuant to a special resolution of the shareholders passed at an EGM on July 25, 1996. The fresh certificate of incorporation consequent on change of name was granted by the RoC to our Company on August 14, 2000.

Our registered office was shifted from Band Box House, 2nd Floor, 254-D, Dr. Annie Besant Road, Worli, Mumbai 400 018, India to the current address by a resolution of our Board dated November 1, 1992.

Some of our key milestones include:

Year Milestones 1959 Born as Rodio Hazarat Co, a partnership between Rodio Foundation, Switzerland and

Hazarat & Co., India

1963 The firm entered into marine construction

1974 Intake Structure at Kalpakkam was completed. Entry of the firm in the overseas market by construction of intake jetty for desalination plant, Ghubrah, Oman

1976 Renamed as Asia Foundations and Construction Private Limited wherein from a partnership it became a closely held private limited company with equity shares distributed to the employees.

1978 The Company entered Iraq for construction of four berthing dolphins at Muftiah Harbour for State Organisation for Oil Projects.

1979 Design and construction of cofferdam across Narmada where the Company executed the project by using a special technique of touching pile and colgrouting.

1982 Underwater joining of concrete caissons in Oil Berth project at Vizag where caissons were joined together underwater thus eliminating the use of dry docks for caisson foundation.

1986 The Company entered into road construction when large road projects funded by World Bank/ Asian Development Bank were put to tender.

1991 The Company completed the Construction of Thane Creek Railway Bridge for Metropolitan Transport Project (Railways).

1995 Dyckerhoff & Widman (Dywidag) and the Company as nominated sub contractor were awarded the project for construction of sewage marine outfall at Bandra and Worli in Mumbai by Mumbai Municipal Corporation.

1997 The Company was renamed as “Afcons Infrastructure Limited” because of the Company’s major thrust in infrastructure related work.

2000 The Company was acquired by Shapoorji Pallonji Group.

2002 The Company was certified ISO 9001:2000 by BVQI.

2004 Construction and commissioning of 2 LNG Tanks of 40 meter height and 80m diameter

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Year Milestones and ahead of the stipulated time schedule for IHI of Japan. The Company was awarded the contract of Chenab Bridge in Jammu and Kashmir by Konkan Railways (for Indian Railways) as part of a joint venture with Ultra Construction and Engineering Limited and VSL India Private Limited.

2005 Awarded major overseas job which include Engineering, Procurement, Installation and Commissioning two Cofferdams for Ras Laffan Common Cooling Sea Water System for Qatar Petroleum.

Main Objects Our main objects that enable us to carry on our business and proposed business as contained in our Memorandum of Association are as follows: (a) To carry on in India and other parts of the world the business of securing and executing

contracts or works relating to specialised foundations such as all types of pile foundations, exploratory borings, sub-surface investigations, drillings & groutings, tube-well constructions, lowering ground water tables, construction of diaphragm walls, RCC or otherwise, construction of tunnels, bridges, harbours, dry docks, sea walls, landings and or other types of marine structures, construction and execution of anchors prestressed or otherwise, soil and material testing, mining, dredging, underwater works- of all types,, drilling and blasting, micro piles, underpining of structures, guniting, ground consolidation, sand piles, sand drains and civil & soil engineering consultancy services.

(b) To carry on business as building contractors and undertake and carry out building

construction works. (c) To carry on the business of ship owners, ship brokers, shipping agents, ship managers, ship

charterers, barge owners, dock owners, stevedores, warehouse-men, wharfingers, salvors, marine consultants, crew recruitments, ship repairers, loading brokers, freight contractors, haulage and general contractors, marine engineers, surveyors or any other work connected with shipping business.

(d) To carry on the business of manufacturers of and dealers in ropes, tarpaulins, waterproofings,

shipstores and allied products. (e) To manufacture, deal in, hire, store and warehouse, all engines, nautical instruments, rigging

machinery, implements, utensils, appliances used in the shipping industry.

Amendments to our Memorandum of Association

Date Details of change

March 18, 1977

The Authorised Share Capital Rs. 5,000,000 divided into 50,000 Equity Shares of Rs. 100 each.

January 30, 1982

The Authorised Share Capital was increased from Rs. 5,000,000 divided into 50,000 Equity Shares of Rs. 100 each to Rs. 250,00,000 divided into 250,000 Equity Shares of Rs. 100 each.

December 6, 1986

Amendment in object clause of the Memorandum of Association- Addition of words in sub-clause 3 of clause III Insertion of new sub- clauses (4A), (4B), (4C) and (4D) after the existing sub-clause 4 of clause III

December 31, 1988

The Authorised Share Capital was increased from Rs. 25,000,000 divided into 250,000 Equity Shares of Rs. 100 each to Rs. 75,000,000 divided into 750,000 Equity Shares of Rs. 100 each.

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Date Details of change

April 6, 1991 The Authorised Share Capital was increased from Rs. 75,000,000 divided into 750,000 Equity Shares of Rs. 100 each to Rs. 100,000,000 divided into 750,000 Equity shares of Rs. 100 each and 250,000 unclassified shares of Rs. 100 each.

September 20, 1991

The Authorised Share Capital of Rs. 100,000,000 divided into 750,000 Equity Shares of Rs. 100 each and 250,000 unclassified shares of Rs. 100 each was changed to 750,000 Equity Shares of Rs. 100 each, 100,000 15% Redeemable Cumulative Preference Shares of Rs. 100 each and 150,000 unclassified shares of Rs. 100 each.

September 22, 1994

Insertion of Object No. 33A:

“To apply for, promote and obtain any charter, privilege, concession, licence,

authorization, from any Government or authorities Municipal, local or otherwise,

provisional order or licence or any authority for enabling the Company to carry any

of its objects into effect or for extending any of the powers of the Company.”

Insertion of Object No. 33B: “To enter into any arrangement for sharing of profits, union of interests, co-

operation, reciprocal concession, lease, licence or otherwise or to amalgamate with

any person, body corporate or company carrying on or engaged in, any business or

transaction which the company is authorised to carry on or engage in or which can

be carried on in conjunction therewith or which is capable of being conducted so as

directly or indirectly to benefit the company.”

July 25, 1996 The Authorised Share Capital of Rs. 100,000,000 divided into 750,000 Equity Shares of Rs. 100 each, 1,00,000 15% Redeemable Cumulative Preference Shares of Rs. 100 each and 150,000 unclassified shares of Rs. 100 each was changed to 9,000,000 Equity Shares of Rs. 10 each and 1,000,000 Preference Shares of Rs. 10 each.

October 11, 1996

The Authorised Share Capital of Rs. 100,000,000 divided into 9,000,000 Equity Shares of Rs. 10 each and 1,000,000 Preference Shares of Rs. 10 each was increased to Rs. 150,000,000 divided into 13,000,000 Equity Shares of Rs. 10 each and 2,000,000 Preference Shares of Rs. 10 each.

March 7, 2002 The Authorised Share Capital of Rs. 150,000,000 divided into 13,000,000 Equity Shares of Rs. 10 each and 2,000,000 Preference Shares of Rs. 10 each was increased to Rs. 330,000,000 divided into 33,000,000 shares of Rs. 10 each.

March 13, 2003

The Authorised Share Capital of. Rs. 330,000,000 divided into 33,000,000 shares of Rs. 10 each was increased to Rs. 750,000,000 divided into 75,000,000 shares of Rs. 10 each.

March 30, 2005

The Authorised Share Capital of Rs. 750,000,000 divided into 75,000,000 shares of Rs. 10 each was increased to Rs. 1,250,000,000 divided into 125,000,000 shares of Rs. 10 each.

March 31, 2006

The Authorised Share Capital of Rs. 1,250,000,000 divided into 125,000,000 shares of Rs. 10 each was increased to Rs. 1,750,000,000 divided into 175,000,000 shares of Rs. 10 each.

December 22, 2006

The Authorised Share Capital of Rs.1,750,000,000 divided into 175,000,000 shares of Rs.10 each was increased to Rs. 2,250,000, 000 divided into 124,000,000 Equity Shares of Rs.10 each and 101,000,000 Preference Shares of Rs.10 each.

Amalgamation of Afcons Pauling (India) Limited with the Company Afcons Pauling (India) Limited which was a subsidiary of the Company, merged with the Company with effect from April1 1, 2005 pursuant to a resolution passed by the shareholders of the Company in a court convened meeting on March 10, 2006. The High Court of Mumbai vide its order dated May 5, 2006 approved the amalgamation of Afcons Pauling India Limited with the Company. The shareholders of Afcons Pauling India Limited pursuant to the scheme of amalgamation were allotted one zero coupon redeemable preference share of the Company at the par value of Rs.10 each for every ten equity shares of Rs.10 each held by the shareholders in Afcons Pauling India Limited. The zero coupon redeemable preference shares issued by the Company to shareholders Afcons Pauling India Limited will be redeemed on the expiry of 24 months from the date of issue at a premium of 10% of the

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face value. The Board of Directors of the Company issued and allotted 125,000 zero coupon redeemable preference shares of Rs. 10 each to the shareholders of Afcons Pauling India Limited.

Our Joint Ventures The Company has entered into the following joint ventures/ memoranda of understanding where the project is at various stages of pre qualification/ tendering/ execution. Unless extended expressly, joint ventures at the pre qualification/ tendering stage expire if the projects are not awarded to the joint venture. None of these joint ventures are incorporated entities.

Projects under execution

1. Memorandum of understanding with Ace Pipeline Contracts Private Limited

The Company entered into a memorandum of understanding dated September 29, 2005 with Ace Pipeline Contracts Private Limited (ACE) to form a joint venture to participate in the Khoraghat GGS-1 – Borholla GGS in A & AA basin, Jorhat Pipeline construction project for Oil & Natural Gas Corporation Limited (Project). Both parties have agreed to be bound by the terms and conditions of the tender document for the Project. The parties have agreed that the Company shall execute the entire Project, whilst ACE shall act as sub-contractors and undertake the site work under the management of the Company. Subsequently, the Company and ACE have entered into a subcontract agreement dated February 1, 2006. The Project is currently under execution.

2. Joint venture agreement with R. N. Shetty and Company Private Limited

The Company entered into a memorandum of understanding dated October 1, 2004 with R. N. Shetty and Company Private Limited (RNS) and subsequently the parties entered into a joint venture agreement dated April 4, 2005. This agreement has been entered into for the purpose of construction of desilting Koldam Hydro Electric Power Project (4 X 200 MW) for National Thermal Power Corporation, Delhi (Project). By way of a supplemental agreement dated April 12, 2005 the parties have agreed that the Company will execute the entire work at its own risk and cost without making RNS liable for anything in relation to the Project. RNS has agreed to provide only technical support to the Company in relation to the Project. The Company is required to pay technical fees for such services. The Project is currently under execution.

3. Joint venture agreement with Shapoorji Pallonji and Company Limited The Company has entered into a joint venture agreement (JVA) with Shapoorji Pallonji and Company Limited (SPCL) dated April 12, 2004 in relation to the construction of a flyover at the University Circle and Agriculture College in Pune for Maharashtra State Road Development Corporation Limited (Project). Subsequently, by a power of attorney dated May 17, 2005 executed by SPCL, SPCL has authorized the Company to execute the entire Project under the contract. It is agreed that the JVA will remain valid until the Project is completed. The project is currently under execution.

4. Joint venture agreement with Ultra Construction and Engineering Company Limited and VSL

India Private Limited

The Company entered into a detailed joint venture agreement dated November 24, 2004 with Ultra Construction and Engineering Company Limited (Ultra) (a company incorporated in South Korea) and VSL India Private Limited (VSL) pursuant to an initial joint venture agreement between the above parties, dated March 20, 2004. This agreement relates to the design and construction of a special bridge across Chenab river at KM 50/800 on the Katra – Laole Section of Udhamppur-Srinagar-Baramullah Rail Link Project in J&K for Konkan Railway Corporation Limited (Project).

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Pursuant to this agreement, the parties executed a supplemental internal agreement dated February 18, 2005 whereby the parties agreed that the Company will execute the entire work relating to the Project and VSL and Ultra will be paid technical fees as per the terms of this agreement. The Company has agreed to keep VSL and Ultra indemnified against all claims that may be made by any third party in relation to the Project. The joint venture and the aforesaid supplemental agreement will remain valid until the Project is completed. The Project is currently under execution.

5. Joint venture agreement with Per Aarsleff A/S

The Company entered into a joint venture agreement with Per Aarsleff A/S (PAA) (a company incorporated in Denmark) dated June 7, 2004 in relation to the construction of a Flour Mill Jetty in Aden, Yemen for Longulf Trading, London U.K.(Project). The parties have an equal interest this joint venture. The parties have agreed that they shall share the rights and obligations, risks, costs and expenses, net profit or net loss in relation to the Project in equal proportions. It was agreed that the executive body of this joint venture would comprise of a supervisory board; a manager and a site manager. It is provided that this agreement will remain valid until the Project is completed. The Project has already been executed and the finalization of accounts between the parties is pending.

6. Joint venture agreement with Al Saeed Company The Company entered into a joint venture agreement with Al Saeed Company for Manufacturing Concrete and Contracting (SMCC), Yemen on April 27, 2006, for carrying out construction of a cement plant for the National Cement Company at Wadi, Faltah, (Yemen)(Project). It has been agreed that the interests of the parties in this joint venture would be in equal ratios. The parties have agreed that the executive body of this joint venture will comprise of a supervisory board and a project manager. The supervisory board will be responsible for and will decide the general policy of the joint venture in relation to the execution of the Project and related financial matters. It is provided that each member of the said board will have one vote and decisions of the board shall be unanimous. It has been agreed that this agreement would be valid up to the final settlement of accounts on the basis of audited final balance sheet. The Project is currently under execution.

7. Joint venture agreement with Oman Shapoorji Construction Company LL.C.

The Company entered into a joint venture agreement with Oman Shapoorji Construction Company LL.C. (OSCO), Oman dated August 10, 2006 in relation to the construction of New Mooring Facility in Shannah (Al-Wusta Region) for the Ministry of Transport and Communications, Directorate General of Ports and Maritime Affairs, Sultanate of Oman (Project).

This agreement was modified by a supplemental agreement between the parties dated August 11, 2006 which provided that OSCO would only be responsible for construction of roads and pavements, electromechanical work and concrete work. It is provided that the joint venture and the aforesaid supplemental agreement would be valid upto the completion of the Project. The Project is currently under execution.

Projects pending tender/pre-qualification

1. Memorandum of understanding with United Linear Agencies of India Private Limited

The Company entered into a memorandum of understanding (MOU) with United Linear Agencies of India Private Limited (ULA) dated March 1, 2006 for the development of 13th/14th/15th/16th Multipurpose Cargo (other than liquid/container cargo) Berths at Kandla Port for the Kandla Port Trust (Project). The parties have agreed to form a joint venture in the

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event the Project is awarded to them. It has been agreed that the parties would have equal stake in the consortium. Subsequently, by an amendment agreement dated December 11, 2006, the parties have agreed to extend the validity of the MOU from 9 months from the last date of submission of RFQ (June 12, 2007) to June 30, 2007 or till the signing of a detailed memorandum of understanding for submission of the RFP document, whichever is earlier.

2. Memorandum of understanding with United Linear Agencies of India Private Limited

The Company entered into a memorandum of understanding (MOU) with United Linear Agencies of India Private Limited (ULA) dated January 12, 2006 for the development of cruise-cum-container terminal for Mormugoa Port at Goa on BOT basis (Project). The parties have agreed to form a joint venture in the event the Project is awarded. Subsequently, by an amendment agreement dated October 10, 2006 the parties have agreed to extend the validity of the MOU from 9 months of the last date of submission of the RFQ to June 30, 2007 or till the signing of a detailed memorandum of understanding for submission of the RFP document, whichever is earlier.

3. Memorandum of understanding with Shapoorji Pallonji and Company Limited The Company entered into a memorandum of understanding with Shapoorji Pallonji and Company Limited (SPCL) dated September 4, 2004 to form a bidding consortium for City Road development projects on annuity basis for the Pimpri Chinchwad Municipal Corporation (PCMC) (Project). The parties have agreed that SPCL shall be the lead member and shall hold a minimum of 51% (along with promoters, subsidiaries or affiliates) of the consortium. The Company (along with promoters, subsidiaries or affiliates) will be a significant consortium member and will hold 26% of the consortium. The Company shall be responsible for construction of the Project whereas SPCL shall be responsible for the overall execution of the Project. The parties have agreed that this memorandum of understanding will remain valid for a minimum of 9 months from the last date of submission of proposal for prequalification.

4. Memorandum of understanding with Shapoorji Pallonji and Company Limited and

Infrastructure Development Finance Company Limited

The Company entered into a memorandum of understanding with Shapoorji Pallonji and Company Private Limited (SPCL) and Infrastructure Development Finance Company limited (IDFCL) dated September 4, 2006. The parties have agreed to form a special purpose vehicle in relation to the development of Bhopal-Dewas highway section (including existing by-pass of Bhopal-Dewas highway) into 4 lanes in the state of Madhya Pradesh on BOT basis for the Madhya Pradesh Road Development Corporation The parties have agreed that the minimum equity holding in the SPV shall be as follows:

i) SPCL- 39.78% ii) Company- 7.80% iii) IDFCL- 7.80% (Balance will be held by SPCL, the Company, IDFCL and/or their associates).

This memorandum of understanding is valid for a period of nine months from the last date of submission of proposal for prequalification. The Project is yet to commence.

5. Memorandum of understanding with Kajima Corporation The Company has entered into a memorandum of understanding dated April 21, 2005 with Kajima Corporation (Kajima) (a company incorporated in Japan). The parties have agreed to form a joint venture to participate in the application of prequalification and tender for the Bangalore Metro Project Phase - I for Bangalore Mass Rapid Transit Limited (Project) and jointly perform the Project, if awarded. Kajima has been designated as the leader both during the pre-tender stage and execution stage of the Project. The parties have agreed that they will

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have joint and several liability in the joint venture. The parties have agreed that participation of the parties in the joint venture will be as follows: i) Kajima- 55% ii) Company- 45%

6. Joint Venture Agreement with Vijay Tanks and Vessels Limited

The Company entered into a joint venture agreement (JVA) with Vijay Tanks and Vessels Limited (VTV) dated March 30, 2006 to bid for the Construction of 1 no Butane & 1 no Propane Tank for Angola LNG Project, Angola for Overseas Bechtel Inc., Houston, USA (Project) and jointly execute the Project, if awarded.

This agreement provides that each party will bear its respective cost incurred for the tendering process but will share the cost common to the joint venture. It has been agreed that VTV shall be the lead partner and shall provide steel structure/associated works and any other residual works, wheras the Company is responsible for concrete structure construction work. It has been agreed that this agreement may terminate if the Project is not awarded or in the event that it is converted into a detailed joint venture agreement or on December 31, 2006, or such other date as mutually agreed to by the parties. Subsequently, the parties have entered into an Addendum Agreement on December 21, 2006 whereby the parties have agreed to –extend the term of the JVA to June 30, 2007. The Project is pending tender.

7. Memorandum of understanding with Daelim Industrial Company Limited

The Company has entered into a memorandum of understanding dated July 11, 2006 with Daelim Industrial Company Limited (Daelim) (a company incorporated in South Korea) to form a joint venture for the pre-qualification in relation to the construction of dry dock at Al Duqm port in Oman for Daewoo Shipbuilding & Marine Engineering Company Limited/HanmiParsons (Project). It is provided that Daelim shall be the leader in the joint venture and that the interest of the parties in the joint venture shall be as follows: i) Daelim- 51% ii) Company- 49%

The parties have agreed that each party will bear its costs during the preparation of the prequalification application. This agreement shall remain in force until a formal joint venture is executed between the parties. The Project is pending tender.

8 Memorandum of understanding with Walter Mining PTY Limited

The Company entered into a memorandum of understanding (MOU) dated July 6, 2006 with Walter Mining PTY Limited (Walter) (a company incorporated in Australia) to work in collaboration to identify civil projects in India (involving tunneling and mining) and in furtherance, to explore feasibility of forming a joint venture. It is provided that once a particular project is identified, the parties will enter into a pre-bid agreement for that project. Walter has agreed that it will, in order to enable the Company to submit an offer, assume the lead role in preparing the parties’ technical offer for the underground sections of the work and cost estimates based on tender documents. The above parties have undertaken to indemnify each other from and against all losses arising out of or as a consequence of this MOU. The MOU will remain valid for a period of 24 months from the date of its execution.

9. Memorandum of understanding Agreement with Construzioni Cimolai Armando SPA

The Company entered into a memorandum of understanding dated September 22, 2005 with Construzioni Cimolai Armando SPA (Cimolai) (a company incorporated in Italy) to form a joint venture in order to pre-qualify and submit tender in relation to the work of construction of steel superstructure of rail cum road bridge across river Ganga at Munger (Project). It has been agreed that the participating interest of each party in the joint venture shall be as follows:

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(i) Company- 51% (ii) Cimolai- 49% It is provided that this agreement may be terminate if the parties are not pre-qualified for the project; by mutual consent of the parties or until the detailed joint venture is entered into, whichever is earlier. The Project is tending tender.

10. Consortium Agreement with OOO Peter Gaz

The Company entered into a consortium agreement dated July 3, 2006 with OOO Peter Gaz

(“OOO”) (a company incorporated in Russia) to jointly prepare and submit the application of prequalification and tender for development of Bhadbhut-Ganaand Rajkot-Janmagar Pipeline project on an EPC basis for Gujarat State Petronet Limited (Project) and thereafter, to enter into a contract to carry out the Project, if awarded. It has been agreed that the Company shall be the leader of the consortium and has been authorized to incur liabilities and receive instruction for and on behalf of any one or all members of the consortium. The Company has agreed to provide manpower, equipment, consumable etc. for executing the Project and OOO has agreed to lend technology and project management expertise. Subsequently, by way of a supplementary consortium agreement dated July 5, 2006, MJR Engineering Overseas Limited (a company incorporated in Russia) has also been made a party to this arrangement.

11. Joint Venture Agreement with R. N. Shetty and Company Private Limited

The Company entered into a joint venture agreement with R.N Shetty and Company Limited (RNS) dated February 4, 2004 pertaining to the construction of earth dam (main dam across the river, left embankment and right embankment) including concrete spillway, power/irrigation intake structures, instrumentation and powerhouse of Pagladiya Dam Project in the district of Nalbari, Assam for Brahmaputra Board (Ministry of Water Resources), Government of India. (Project). The parties have agreed that Company shall execute the entire Project and RNS shall be paid fees for the technical services provided.

12. Memorandum of Understanding with JSC OGCC KazstroyService

The Company has entered into a memorandum of understanding (MOU) with JSC OGCC KazstroyService (a company incorporated in Kazakhstan) on October 16, 2006 for the purpose of bidding for Assam Renewal Project vide Tender No. MR/OW/MM/APR/)01/2006 (Project). The parties have agreed to form a joint venture named Afcons-KazStroyService Joint Venture (JV) in the event the Project is awarded to them. It is provided that the Company shall be the leader of the JV. Both parties have agreed to participate in the JV in relation to profit or loss and contractual works in the ratio as follows: i) Company- 51% ii) KazStroyService- 49% The above MOU shall terminate if the bid of the parties is not accepted or; the bid process is cancelled or submission is postponed beyond June 30, 2007 (unless extended in wrting) or; the Project is awarded to a bidder other than the JV or, a detailed joint venture agreement is executed between the parties (in the event of the Project being awarded to them).

Our Subsidiaries Unless otherwise stated no subsdaries of ours is a sick company under the meaning of SICA and none of them are under winding up. Further, all our subsdiarires are unlisted companies and they not made any public issue of securities in the preceding three years. AFCONS Arethusa Offshore Services Private Limited. Corporate Information

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This company was incorporated on May 2, 1984. Presently, its registered office is located at Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azadnagar P.O, Mumbai 400 053.

The company had been involved in oil drilling jobs for the Oil and Natural Gas Corporation Limited as a contractor. However, for the last three years this company has not engaged in any business. Shareholding pattern as on December 31, 2006:

Sr No. Name of the Shareholder No. of Equity Shares Percentage 1. Afcons Infrastructure Limited and its nominees. 60,000 60.0

2. Z North Sea Ltd. 40,000 40.0

Board of Directors:

The board of directors as on December 31, 2006 consists of: 1. A. H. Divanji 2. M.F. Baudion (Alternate Director- J.K. Davis) 3. W.C. Long (Alternate Director- S.G. Elwood) 4. P.R.Rajendran Financial Information:

The audited financial results for this company for the last three fiscal are as follows:

(Rs. million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Equity Share Capital

1.00 1.00 1.00

Reserves and Surplus 6.71 7.23

8.02

Income - - -

Profit/ After Tax (PAT) (0.525) (0.78)

(1.767)

Earning Per Share (EPS) (Rs.) (5.25) (7.84) (17.67)

Book Value (Face value of Rs.10 per share) (Rs.) 77.11

82.36 90.20

Hazarat & Company Private Ltd.

Corporate Information: This company was incorporated on November 11, 1982. Presently, its registered office is located at Warden House, Sir P.M.Road, Fort, Mumbai 400 023. The company was formed to acquire the running business of M/s Hazarat & Co. which was a sole proprietary business. The company carries on the business of commission agents, importers & exporters, traders and financiers, including the rendering of secretarial and administrative services to sister & outside concerns. The company also carries on the business of contractors and sub contractors and to award contracts or sub contracts. The company can also undertake work as contractors to execute complete or partial designs, erection and construction of structures, buildings and other works of all description.

The company is not presently engaged in any activities.

Shareholding pattern as on December 31, 2006

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Sr No.

Name of the Shareholder No. of Equity Shares Percentage

1. Afcons Infrastructure Ltd. and its nominees

2,02,610 100

Board of Directors: The board of directors as on December 31, 2006 consists of: 1. A. H. Divanji 2. H. J. Tavaria 3. F. K. Bathena

Financial Performance The audited financial results for this company for the last three fiscal are as follows

(Rs. in million except per share data) Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Equity Share Capital 2.02 2.02 2.02

Reserves and Surplus (0.18) (0.19) (0.18)

Income 0.12 0.08 0.08

Profit/ After Tax (PAT) 0.01 (0.01) (0.01)

Earning Per Share (EPS) (Rs.) 0.07 (0.08) (0.07)

Book Value (Face value of Rs.10/- per share) (Rs.) 9.09 9.01 9.10

SSS Electricals (India) Private Limited Corporate Information

This company was incorporated on July 18, 1985. Presently, its registered office is located at Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azadnagar P.O, Mumbai 400 053.

This company was formed to undertake construction, fabrication and erection of overhead transmission line systems; production and erection of electrical switching plants, distribution boards and control panels; and active corrosion protection systems (anodic and cathodic). The company is currently undertaking jobs relating to cathodic protection

Board of Directors

The board of directors as on December 31, 2006 consists of: 1. A. H. Divanji 2 G. Zimmermann (Alternate Director- R.P.Nagar) 3. S. Paramasivan Shareholding pattern as on December 31, 2006:

Sr No. Name of the Shareholder No. of Equity Shares Percentage

1 Afcons Infrastructure Limited and its nominees. 48,000 60.00

2. Sterlestorm Und Signal Bangesellschaft 32,000 40.00

Financial Performance:

The audited financial results for this company for the last three fiscal are as follows:

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(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Equity Share Capital 0.8 0.8 0.8

Reserves and Surplus 7.50 6.78 6.49

Income 12.49 9.00 11.68

Profit/ After Tax (PAT) 0.71 0.29 0.52

Earning Per Share (EPS) (Rs.) 8.94 3.59 6.51

Book Value (Face value of Rs.10/- per share) (Rs.) 103.72 94.77 91.18

Associate Companies

Afcons Construction Mid East LLC

This company was incorporated on September 3, 2005 under the laws of the United Arab Emirates. Presently its registered office is located at Office No. 203, 2nd Floor, Ali Saeed Abdulla Bel Hub AlAli Amiri Building, Opposite Dubai Residential Oasis, P.O. Box 47516, P.O. Al Guasis, Dubai, United Arab Emirates. The Company has entered into an agreement for incorporation dated September 25, 2005 for Afcons Construction Mid East LLC with Ahmed Hasan Mohamed Ali Alali. Some of the main provisions of this incorporation agreement are as follows: (a) any partner can transfer his/its shares in this company to another partner or to a third party by

virtue of a written instrument. The selling price for the shares in case of such a transfer will have to be certified by the auditor of this company and will be without any discount or premium However, no such transfer of shares will be permitted which would reduce the number of partners to less than two or which would increase the number of partners to more than fifty.

(b) The board of managers for this company are to consist of a minimum of two and a maximum

of 5 members and it has been agreed that the Company shall be entitled to appoint up to 5 individuals to the board of managers.

(c) This company is to have a general meeting composed of all the partners in Dubai atleast once

a year. The Board of Managers must call for a general meeting if requested by any partner holding at least one quarter of the shares. A partner is entitled to the number of votes equal to the number of shares he/it owns or represents.

(d) The net profits shall be distributable among the present partners as follows:

(i) Ahmad Hasan Mohamed Ali AlAli – 20% (ii) Afcons Infrastructure Limited – 80%

(e) This agreement cannot be amended neither can the share capital of this company be increased or reduced without the consent of partners holding three-quarters of the shares.

(f) All disputes which may arise between the partners regarding liquidation of this company or

regarding any provision of this agreement shall be referred to the civil courts in the Emirate of Dubai, if they cannot be amicably resolved.

(g) This agreement shall be governed by and be construed, interpreted and take effect in

accordance with the laws in force in the Emirate of Dubai from time to time. This company has been formed to engage in jobs relating to contracting of piling and foundation works, road works, construction of bridges and dams, ports and marine construction and prestressed concrete works.

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Board of Managers

The board of mangers as on December 31, 2006 consists of:

1. C.P. Mistry 2. J.J. Parakh 3. K. Subrahmanian 4. A.N. Jangle 5. N. Selvaraj

Shareholding Pattern as on December 31, 2006:

(Figures in Arabian Emirates Dirham)

Sr No.

Name of the Shareholder Paid up capital Percentage

1. Afcons Infrastructure Limited 147,000 49%

2. Ahmed Hasan Mohamed Ali AlAli 153000 51%

Financial Performance

The company has no financial performance figures to report since it has not commenced any business activity as yet.

Partnerships

Afcons Pauling Joint Venture

The company entered into a partnership agreement dated August 5, 1988 with Pauling PLC, London. The partnership was formed to execute, perform and complete and maintain jointly the works of a particular tender. This partnership is presently not engaged in any business activity.

The profit/loss sharing ratio of the partnership is as follows:

Profit Loss Afcons Infrastructure Limited 95% 100%

Pauling PLC, U.K. 5% -

Financial Performance

The audited financial results for this partnership for the last three fiscal are as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Share Capital 17.4 17.4 17.4

Reserves and Surplus - - -

Income - 3.93 0.03

Expenditure 1.83 1.32 0.65

Profit/(Loss) After Tax (1.83) 2.62 (0.62)

Subsidiaries under Liquidation

Kier Afcons (India) Limited

This company was incorporated on December 14, 1987. The company was formed to bid for execution of civil construction works. However the company is now under voluntary winding up and the matter is pending with the Official Liquidator for filing with the High Court of Mumbai. The final assets and

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liabilities of the company have been fully realized and proceeds have been paid to the shareholders of the company.

Board of Directors

The erstwhile board of directors of the company consisted of:

1. A.H. Divanji 2. S.A. Graham 3. S.J. Paul 4. R.A. Bhansali 5. N.J. Jhaveri (Alternate Director)

Shareholding Pattern of this company before filing for liquidation was as follows:

Sr No. Name of the Shareholder No. of Equity Shares Percentage 1. Afcons Infrastructure Limited and its nominees 76,500 51.0%

2. K.I. Investments Limited, U.K. 73,500 49.0%

Financial Performance

The company does not have any financial performance figures to report since the company had not undertaken any business activity since incorporation up to winding up.

The company was an unlisted company and it did not make any public issue in the preceding three years before it was resolved to be voluntarily wound up.

Subsidiaries that have been wound up

Rodio Afcons India Limited

The company was incorporated November 21, 1986. The company was formed to bid for specialized pile foundation works in India and abroad. However, the company has been voluntarily wound up as per the order of the High Court of Mumbai with effect from September 8, 2004.

Nakajo Engineering Works (India) Limited

The company was incorporated on December 24, 1998. The company was formed to bid for specialized jobs for fabrication engineering. However, the company has been voluntarily wound up as per the order of the High Court of Mumbai with effect from July 2, 2004.

Subsidiaries of the Company that have been sold

Tensacciai India Private Limited

This company was incorporated on November 24, 1986. The company had been formed to bid for specialized jobs of civil contracts. The Company sold 6000 shares with a par value of Rs.100 per share aggregating to 60% of its equity holding in the company to Prudential Securities and Financial Trust Private Limited for a sum aggregating approximately to Rs.0.78 million. The shares in the company were sold through a share sale and purchase agreement dated March 27, 2006. Afcons Dredging and Marine Services Limited This company was incorporated on January 24, 1986. This company had been formed to carry on in India and other parts of the world, the business of securing and executing contracts of works relating to dredging and other ancillary works. The company sold 10,000 shares with a par value of Rs.100 per share aggregating to 100% of its equity holding in this company to Shapoorji Pallonji Infrastructure Capital Co., Limited on December 7, 2006 for a sum aggregating to Rs. 1 million

Afcons BOT Constructions Private Limited

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This company was incorporated on June 17, 1987. This company had been formed to carry on the business of conducting hydrographic, oceanographic, geophysical, topographic and geodetic surveys, underwater diving and render and supply all forms of connected services. The company sold 40,000 shares with a par value of Rs. 10 per share aggregating to 100% of its equity holding in this company to Shapoorji Pallonji & Co., Limited on December 15, 2006 for a sum aggregating to Rs. 0.4 million.

Afcons (Overseas) Constructions & Investments Private Limited

This company was incorporated on August 28, 1981. This company had been formed to carry on in India and other parts of the world, the business of securing and executing contracts of works relating to specialized foundations such as pile foundations and construction of marine works. This company could also carry on business as building contractors and undertakes and carries out building construction works. The company sold 1000 shares with a par value of Rs. 100 per share aggregating to 100% of its equity holding in this company to Shapoorji Pallonji & Co.; Limited on December 15, 2006 for a sum aggregating to Rs. 0.1 million.

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OUR MANAGEMENT

Board of Directors: We currently have 11 directors. The following table sets forth details regarding our Board as of the date of filing the Draft Red Herring Prospectus with SEBI.

Name, Designation, Father’s Name, Address, Occupation and Term

Age Other Directorships

Cyrus P. Mistry (S/o Pallonji Mistry) Non-Executive Chairman

Sterling Bay, 103, Walkeshwar Road, Walkeshwar, Mumbai 400 006, India Term: Liable to retire by rotation Occupation: Business

38 • Shapoorji Pallonji & Co., Ltd.

• Buildbazaar Technologies (India) Pvt. Ltd.

• Cyrus Investments Ltd.

• Samalpatti Power Co.Pvt. Ltd.

• Shapporji Pallonji Finance Ltd.

• United Motors (India) Ltd.

• Shapoorji Pallonji Power Co. Ltd.

• Shapoorji Pallonji Infrastructure Capital Co.Ltd.

• Sterling Investment Corporation Pvt.Ltd.

• Tata Elxsi Ltd.

• Oman Shapoorji Construction Co. LLC., Muscat

• Shapoorji Pallonji & Co. (Rajkot) Pvt. Ltd.

• Pallonji Shapoorji & Co. Pvt. Ltd.

• Forbes Gokak Limited

• Forvol International Services Ltd.

• Afcons Construction Mideast (LLC)

• Tata Sons Limited

• ANS Textiles (Bangalore Limited)

K. Subrahmanian (S/o S. Krishnamurthy) Managing Director

611 Wing ‘C’, Evening Star, Raheja Vihar, Andheri (East), Mumbai 400 072, India Term: July 1, 2005 – June 30, 2008. Also liable to retire by rotation. Occupation: Service

48 • Afcons Construction Mideast (LLC).

Pallonji S. Mistry (S/o Shapoorji Mistry) Non-Executive Director

Sterling Bay, 103, Walkeshwar Road, Walkeshwar, Mumbai 400 006, India Term: Liable to retire by rotation Occupation: Business

77 • Shapoorji Pallonji & Co.Ltd.

• Forbes Gokak Ltd.

• Cyrus Investments Ltd.

• Shapoorji Pallonji Power Co.Ltd.

• United Motors (India) Ltd.

• Shapoorji Pallonji Finance Ltd.

• Pallonji Shapoorji & Co. Pvt. Ltd.

• Shapoorji Pallonji Infrastructure Capital Co.Ltd.

• Oman Shapoorji Construction

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Name, Designation, Father’s Name, Address, Occupation and Term

Age Other Directorships

Co. LLC., Muscat

• Shapoorji Pallonji Mid East LLC, UAE

• Sterling Trading Co. (LLC) Dubai.

• Euro Forbes International Pte. Ltd.

• Forvol International Services Ltd.

Shapoor P. Mistry (S/o Pallonji Mistry) Non-Executive Director

Sterling Bay, 103, Walkeshwar Road, Walkeshwar, Mumbai 400 006, India Term: Liable to retire by rotation Occupation: Business

42 • Shapoorji Pallonji & Co.Ltd.

• Eureka Forbes Ltd.

• Forbes Gokak Ltd.

• Samalpatti Power Co.Pvt. Ltd.

• Shapoorji Pallonji Infrastructure Capital Co.Ltd.

• Pallonji Shapoorji & Co. Pvt. Ltd.

• The Manji Stud Farm Pvt. Ltd.

• Shapporji Pallonji Finance Ltd.

• Shapoorji Pallonji & Co.Rajkot) Pvt. Ltd.

• Sterling Investment Corporation Pvt.Ltd.

• Forbes Infotainment Pvt. Ltd.

• S.P. Oil Exploration Pvt. Ltd.

• Sovereign Pharma Pvt. Ltd.

• Shapoorji Pallonji Power Co. Ltd.

• The Indian Hotels Company Ltd.

• Cyrus Investments Ltd.

• United Motors (I) Ltd.

• Forvol International Services Ltd.

• ANS Textiles (Bangalore Limited)

Jimmy Jehangir Parakh (S/o Jehangir Parakh) Non –Executive Director

502, Sterling Tower, Horichandra Goregaonkar Marg, Gamdevi, Mumbai 400 007, India Term: Liable to retire by rotation Occupation: Service

56 • Afcons (Mideast) Constructions Investments Pvt. Ltd.

• Adaro Securities Pvt. Ltd.

• Advance Tech Energy Additives Pvt. Ltd.

• Afcons Construction Mideast LLC

• Blue Arrow Finance Co. Pvt. Ltd.

• Cama Properties Pvt. Ltd.

• Chinsha Investments Pvt. Ltd.

• Chinsha Propertyy Pvt. Ltd.

• Cyrus Engineers Pvt. Ltd.

• Cyrus Investments Limited

• Crystal Investment Company Pvt. Ltd.

• Day Star Investments Pvt. Ltd

• Dhan Gaming Solution (India) Pvt. Ltd.

• Faery Estates Pvt. Ltd.

• Finvestco Investments Pvt. Ltd.

• Floreat Investments Ltd

• Floral Finance Pvt. Ltd.

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Name, Designation, Father’s Name, Address, Occupation and Term

Age Other Directorships

• Flooraise Developers Pvt. Ltd.

• Grand View Estates Pvt. Ltd.

• Glittering Gold Finance Pvt. Ltd.

• Heminishi Investments Pvt. Ltd.

• Highstreet Developers Pvt. Ltd.

• Kaisha Manufacturers Pvt. Ltd.

• Mangal Shrusti Gruh Nirmiti Pvt. Ltd.

• Meriland Estates Pvt. Ltd.

• Manjri Developers Pvt. Ltd.

• Next Gen Publishing Limited

• Palchin Real Estate Pvt. Ltd.

• SP Fabricators Pvt. Ltd.

• SP Finance Pvt. Ltd.

• SP Oil Exploration Pvt. Ltd.

• Shapoorji Data Processing Pvt. Ltd.

• Shapoorji Hotels Pvt. Ltd.

• Shapoorji Pallonji & Co. Ltd.

• Shapoorji Pallonji (Cama Estates) Pvt. Ltd.

• Silver Streak Investments Pvt. Ltd.

• Shapoorji Pallonji Finance Ltd.

• S.C. Impex Pvt. Ltd.

• Sterling Investment Corporation Pvt. Ltd

• Sterling Overseas Impex Pvt. Ltd.

• Sterling Generators Private Limited

• S.C. Finance & Investments Pvt. Ltd.

• United Motors (India) Ltd.

• West Star Finance & Investments Pvt. Ltd.

• Winward Builders Pvt. Ltd

Anil N. Jangle (S/o Namdeo Jangle) Executive Director

Flat No.703, Janki Kutir, Vikram Apartments, Juhu, Mumbai: 400 049, India Term: July 1, 2005 – June 30, 2008 Also liable to retire by rotation. Occupation: Service

64 • Afcons Construction Mideast (LLC)

• Trichy Tollway Limited.

S. Paramasivan (S/o R. Srinivasan) Executive Director

Venus – Flat No.85, Versova Venus CHS. .Ltd. Plot No.6, R.D.P. 2, S.V.P. Nagar, Andheri (W),

49 • Afcons (Mideast) Constructions and Investments Pvt. Ltd.

• SSS Electrical (India) Pvt. Ltd.

• Fouress Engineering (India) Ltd.

• Afcons BOT Constructions Pvt. Ltd.

• Afcons Dredging & Marine

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Name, Designation, Father’s Name, Address, Occupation and Term

Age Other Directorships

Near Versova Tel. Exchange, Mumbai 400 053, India Term: June 10, 2005-June 30, 2008 Also liable to retire by rotation. Occupation: Service

Services Limited

Abhimanyu H. Divanji (S/o Hemendra Divanji) Independent Director

Le Repos, Flat No.51 Perry Cross Road, Bandra (West), Mumbai 400 050, India Term: Liable to retire by rotation Occupation: Service

78 • Afcons (Overseas) Constructions And Investments Private Limited

• Afcons (Mideast) Constructions And Investments Private Limited

• Hazarat & Company Private Limited

• Afcons – Arethusa Offshore Services Pvt. Limited

• SSS Electricals (India) Private Limited

• Afcons Dredging & Marine Services Limited

• Afcons BOT Constructions Private Ltd.

Narendra Jamnadas Jhaveri (S/o. Jamnadas Jhaveri) Independent Director

C-42, Samprat Residency, Opp. Parivar Society, Near Maharaja Farm, Premchandnagar Road, Bodakdev, Ahmedabad 380 015, India Term: Liable to retire by rotation Occupation: Consultant

71 • Indian Aluminium Co. Ltd.

• National Securities Depository Ltd.

• Pidilite Industries Limited

• SKF Bearings India Limited

• Siemens Ltd.

• Usha Martin Ltd.

• Voltas Ltd.

• Gujarat State Petronet Limited

• Siemens Information Systems Ltd.

• Star Paper Mills Ltd.

• Hindalco Industries Ltd

• Manipal Health Systems Pvt. Ltd.

• UltraTech Cement Ltd.

• Juniper Hotels Pvt. Ltd.

N.D. Khurody (S/o D. Khurody) Independent Director

12 A, Darbhanga Mansions, M.L. Dhanukar Marg, Mumbai 400 026 Term: Liable to retire by rotation Occupation: Company Director

69 • Voltas Limited

• Eureka Forbes Limited

• Samrat Holdings Limited

• Kurody Technical Services Pvt. Ltd.

• HSBC Asset Management (I) Pvt. Ltd.

• Vantech Investments Limited

• Forbes Gokak Limited

• Forbes Infotainment Limited

• Tata Ceramics Limited

• Next Gen Publishing Limited

Pradip N. Kapadia (S/o Narotam Kapadia) Independent Director

Govind Building, 140, Princess Street,

55 • Fortune Communications Private Limited.

• Hindustan Thompson Associates Private Limited.

• Mafatlal Denim Limited.

• Navin Flourine International

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Name, Designation, Father’s Name, Address, Occupation and Term

Age Other Directorships

Mumbai 400 002 Term: Liable to retire by rotation Occupation: Advocate and Solicitor

Limited.

• Sumangala Investments Private Limited

• The Sanmar Group Corporate Board

Brief Biographies

Mr. Cyrus P. Mistry, 38, an Irish national is the Non-Executive Chairman of the Company. Cyrus Mistry is an alumnus of the Imperial College, London from where he graduated with a degree in B.E. (Civil). He is also an alumnus of the London Business School from where he graduated with a postgraduate degree in Master of Science in Management. Cyrus Mistry is also a Fellow of the Institute of Civil Engineers. Cyrus Mistry’s expertise includes formation of business plans, risk evaluation, business investment strategy and property and infrastructure development. Cyrus Mistry has been actively involved in the business of Shapoorji Pallonji & Co., Limited as the Managing Director since April 1994 and has significantly contributed towards expansion of the company. Mr. K. Subrahmanian, 48, an Indian national is the Managing Director of the Company. K. Subrahmanian is an alumnus of REC, Trichy from where he graduated in mechanical engineering. He is also an alumnus of NITIE, Mumbai from where he graduated with a post graduate degree in industrial engineering. K. Subrahmanian has previously worked with Hindustan Construction Company Ltd. in various areas of project management including project planning, execution, and overall project management apart from contract management and corporate planning. K. Subrahmanian has contributed to various international bodies such as the World Bank, Asian Development Bank for the development and implementation of standard contract forms for the Construction Industry. K. Subrahmanian is a recipient of the “Bharat Shiromani Award, 2004” in recognition for his notable contribution in the construction industry. Mr. Pallonji S. Mistry, 77, an Irish national is a Non-Executive Director of the Company. Pallonji S. Mistry joined the business of Shapoorji Pallonji and Co., Limited at the age of 18 years and has garnered over 55 years of experience in various facets of the Company’s business. Pallonji S. Mistry was instrumental in expanding the business of Shapoorji Pallonji & Co., Limited Shapoorji Pallonji & Co., Limited completed a number of notable contracts, under the Chairmanship of Pallonji S. Mistry, such as the construction of the Sultan’s palace and a number of ministerial buildings in Oman, a hospital as well as the palace guest house in Abu Dhabi and the setting up of a private power project in India. Pallonji S. Mistry’s experience spreads over diverse streams of business such as real estate, trading, power generation and information technology. Pallonji S. Mistry was ranked 199th in the Forbes List of World Billionaires. Mr. Shapoor P. Mistry, 42 an Irish national is a Non Executive Director of the Company. Shapoor P. Mistry is an alumnus of Richmond College, London from where he graduated with a degree in BA (Business and Economics). Shapoor P. Mistry has been actively involved in the business of Shapoorji Pallonji & Co., Limited. Shapoor P. Mistry is currently the Chairman of Forbes Gokak Limited as well as Eureka Forbes Limited. Mr. Jimmy J. Parakh, 56 an Indian national is a Non-Executive Director of the Company. J. Parakh is a Fellow member of the Institute of Chartered Accountants of India and holds a senior management position in the Shapoorji Pallonji Group of companies. J. Parakh has over 30 years of experience in the management of corporate affairs of the companies engaged in diversified business activities. He has been involved in setting up and operation of companies specializing in various businesses such as civil engineering contracts, property development, automobile marketing, finance and infrastructure. Mr. Anil N. Jangle, 64, an Indian national is an executive director of the Company and currently designated as Executive Director (Business Development). A.N. Jangle is an alumnus of the University of Bombay from where he graduated in civil engineering. A.N. Jangle is also an alumnus of the Indian Institute of Technology, Bombay from where he graduated with a masters degree in soil engineering. A.N. Jangle has been involved with the successful completion of a number of important

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projects relating to major ports, highways, nuclear power plants, oil terminal jetties, cargo berths and submarine pipelines. A.N. Jangle has contributed to a number of articles which have been published in technical journals in India and the United Kingdom. A.N. Jangle has been associated with various committees of the Indian Standards Institutes and has been involved with deliberations, formulations and finalization of several codes of practices. Mr. S. Paramasivan, 49, an Indian national is an Executive Director of the Company and currently designated as Senior Executive Director (Finance and Commercial). S. Paramasivan is an alumnus of the University of Madurai from where he graduated with a degree in Commerce. S. Paramasivan is a Certified Associate of the Indian Institute of Bankers. He is a fellow member of Instititue of Cost and Work Accountants of India and Institute of Company Secretaries of India. Mr. S. Paramasivan has previously served the State Bank of Travancore for 15 years. S. Paramasivan was a member of the Banking and Finance Committee of the Bombay Chamber of Commerce and Industry. He has contributed numerous articles on matters of interest on banking and finance. Mr. Abhimanyu. H. Divanji, 78, an Indian national is a Director of the Company. Abhimanyu H. Divanji graduated with a degree in B.E. (Civil) and was instrumental in forming Asia Foundation and Construction Private Limited in 1976. Prior to this, he was instrumental in forming the partnership firm of Rodio Foundation Engineering (Swiss Company) and Hazarat & Company in 1959 of which he was Chief Operating Executive. Abhimanyu H. Divanji had been the managing director of the Company since its inception up to February, 2002. Abhimanyu H. Divanji during his tenure as managing director of the Company was instrumental in diversification of the Company’s activities from pile foundation works to construction of bridges, marine structures and highways. Mr. Narendra J. Jhaveri, 71, an Indian national is a Director of the Company. Narendra J. Jhaveri obtained his master’s degree in economics from the London School of Economics. He has worked with the RBI and the ICICI in all major operational areas including project finance, equity investment, leasing, restructuring, merchant banking, venture capital and technology finance besides economic and market research. Narendra J. Jhaveri has provided advisory services to the World Bank, development banks in Bhutan, Uganda and Tanzania. Narendra J. Jhaveri was also a member of several official committees including SEBI. He has also contributed numerous articles and research papers in Indian journals and has been a frequent speaker at various seminars and conferences held all over India. He also serves as independent director on the board of directors of several reputed companies in India. Mr. N.D. Khurody, 69, an Indian national is a Director of the Company. N.D. Khurody is an alumnus of Trinity College, Cambridge from where he graduated with a masters degree in Economics with honours. N.D. Khurody has previously worked with Tata Administration Service where he worked in various capacities and has handled operations in diverse businesses such as tea and steel. Mr. N.D. Khurody has extensive experience in business and financial planning. Mr. Pradip N. Kapadia, 55, an Indian national is a Director of the Company. Pradip N. Kapadia is an alumnus of the University of Bombay from where he graduated with B.A. and LL.B degrees. Pradip N. Kapadia qualified as an advocate in 1974 and subsequently as an attorney at law of the High Court of Judicature at Bombay in 1976. Pradip N. Kapadia is presently a senior partner in the law firm of Vigil Juris in Mumbai. Pradip N. Kapadia is also a member of the Law review, Reform and Rationalisation Committee of Indian Merchant’s Chamber as well as the Legal Affairs Committee of the Bombay Chamber of Commerce and Industry. Remuneration of Directors The remuneration of our executive Directors is as per the terms of appointment contained below: Agreement with Mr. K. Subrahmanian, our Managing Director

Under the terms of an agreement dated September 1, 2005, Mr. K. Subramanian has been reappointed as our Managing Director with effect from July 1, 2005 for a term of three years till June 30, 2008. The revised remuneration payable to him with effect from July 1, 2006 which has been ratified by the Board of Directors at its meeting held on November 28, 2006 is provided below. The shareholders by way of their resolution dated September 30, 2005 had approved the overall limit within which the Board has fixed the revised remuneration to Mr. Subrahmanian.

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Fixed Compensation:

A monthly fixed compensation of Rs. 86,250 in the grade of Rs. 70,000 – Rs. 1,20,000. Mr. Subrahmanian will be entitled to receive a sum of Rs. 26,00,000 per annum in the scale of Rs. 19,19,000 – Rs. 32, 90,000 for availing perquisites as are applicable to other senior executives of the Company.

Variable Compensation:

Mr. Subrahmanian will be eligible to receive payments of annual incentives as may be applicable to other senior executives of the Company.

Benefits and Payments:

Mr. Subrahmanian is eligible to receive benefits and payments which include mediclaim policy for self and family as per rules of the Company, reimbursement of medical expenses for self and family not exceeding one month’s basic salary per annum, annual executive health check up for self and wife, Company to provide two air conditioners at the residence of Mr. Subrahmanian but the electricity and cost of maintenance to be borne by Mr. Subrahmanian, contribution to provident fund and superannuation fund as per company rules.

Others: Mr. Subrahmanian is eligible to receive certain other benefits which are in addition to the aforesaid remuneration package. These benefits include gratuity as per Company rules, a Company maintained car and in the event the Company does not provide a car, Mr. Subrahmanian will be reimbursed a sum of Rs. 4,500 per month or such sum as per Company rules but expenses towards use of car for personal use to be borne by Mr. Subrahmanian, reimbursement of one telephone bill at Mr. Subrahmanian’s residence excluding personal and long distance calls, leave entitlements and leave encashment accumulated but not availed as per Company rules and reimbursement of entertainment and club expenses incurred for business of the Company.

Agreement with Mr. S. Paramasivan, our Executive Director (Finance and Commercial) Under the terms of an agreement dated September 1, 2005, S. Paramasivan has been reappointed as our whole time director designated as Executive Director (Finance and Commercial) with effect from June 10, 2005 for a term of three years till June 30, 2008. The revised remuneration payable to him with effect from July 1, 2006 which has been ratified by the Board of Directors at its meeting held on November 28, 2006 and is provided below. The shareholders by way of their resolution dated September 30, 2005 had approved the overall limit within which the Board has fixed the revised remuneration to Mr. S. Paramasivan.

Fixed Compensation:

A monthly fixed compensation of Rs. 64,500 in the grade of Rs.42,000 – Rs. 70,000 per annum. Mr. Paramasivan will be entitled to receive a sum of Rs. 19,52,000 per annum in the scale of Rs. 12,98,000 – Rs. 21,63,000 for availing perquisites as are applicable to other senior executives of the Company.

Variable Compensation:

Mr.Paramasivan will be eligible to receive payments of annual incentives as may be applicable to other senior executives of the Company.

Benefits and Payments:

Mr. Paramasivan is eligible to receive benefits and payments which include mediclaim policy for self and family as per rules of the Company, reimbursement of medical expenses for self and family not exceeding one month’s basic salary per annum, contribution to provident fund and superannuation fund as per company rules.

Others Mr. Paramsivan is eligible to receive certain other benefits which are in addition to the aforesaid remuneration package. These benefits include gratuity as per Company rules, a Company maintained car and in the event the Company does not provide a car, Mr. Paramsivan will be reimbursed a sum of Rs. 4,500 per month or such sum as per Company rules but expenses towards use of car for personal use to be borne by Mr. Paramsivan, reimbursement of one telephone bill at Mr. Paramsivan’s residence excluding personal and long distance calls, leave entitlements and leave encashment accumulated but not availed as per Company rules.

Agreement with A.N. Jangle, our Executive Director (Business Development)

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Under the terms of an agreement dated September 1, 2005, A.N. Jangle has been reappointed as our whole time director designated as “Executive Director (Business Development)” with effect from July 1, 2005 for a term of three years till June 30, 2008. The revised remuneration payable to him with effect from July 1, 2006 which has been ratified by the Board of Directors at its meeting held on November 28, 2006 is provided below. The shareholders by way of their resolution dated September 30, 2005 had approved the overall limit within which the Board has fixed the revised remuneration to Mr. Jangle .

Fixed Compensation:

A monthly fixed compensation of Rs. 60,000 in the grade of Rs. 42,000 – Rs. 70,000. Mr. Jangle will be entitled to receive a sum of Rs. 18,01,000 per annum in the scale of Rs. 11,70,000 – Rs. 19,50,000 for availing perquisites as are applicable to other senior executives of the Company.

Variable Compensation:

Mr. Jangle will be eligible to receive payments of annual incentives as may be applicable to other senior executives of the Company.

Benefits and Payments:

Mr. Jangle is eligible to receive benefits and payments which include reimbursement of medical expenses including premium payable for mediclaim policy for self and family not exceeding Rs. 15,000 per annum and contribution to provident fund and superannuation fund as per company rules.

Others: Mr. Jangle is eligible to receive certain benefits which are in addition to the aforesaid remuneration package. These benefits include gratuity capped at 15 days’ basic salary for each completed year of service, payment of Rs. 2,50,000 per annum in lieu of Company providing a car, payment of Rs. 3,40,000 per annum towards maintenance, petrol, insurance and driver’s salary towards use of car but expenses towards use of car for personal use to be borne by Mr. Jangle, reimbursement of one telephone bill at Mr. Jangle’s residence excluding personal and long distance calls and leave entitlements and leave encashment accumulated but not availed as per Company rules .

In relation to other Directors of the Company, apart from sitting fees and reimbursement of expenses, no remuneration is payable by the Company. Interests of Directors All of our Directors may be deemed to be interested to the extent of fees payable to them for attending meetings of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them under our Articles of Association, and to the extent of remuneration paid to them for services rendered as an officer or employee of our Company. Our Directors may also be regarded as interested in the Equity Shares, if any, held by them or by the companies/firms/ventures promoted by them or that may be subscribed by or allotted to the companies, firms, trusts, in which they are interested as Directors, members, partners, trustees and Promoters, pursuant to this Issue. All of our Directors may also be deemed to be interested to the extent of any dividend payable to them and other distributions in respect of the said Equity Shares. Our executive Directors receive remuneration from us. For further details see the above. Except as stated in the section titled “Related Party Transactions” on page 194 of this Draft Red Herring Prospectus, and to the extent of shareholding in our Company, our Directors do not have any other interest in our business. Corporate Governance We have complied with the requirements of the applicable regulations, including the listing agreement with the Stock Exchanges and the SEBI Guidelines, in respect of corporate governance including constitution of the Board and Committees thereof. The corporate governance framework is based on an

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effective independent Board, separation of the Board’s supervisory role from the executive management team and constitution of the Board Committees, as required under law. We have a Board constituted in compliance with the Companies Act and listing agreement with Stock Exchanges and in accordance with best practices in corporate governance. The Board functions either as a full Board or through various committees constituted to oversee specific operational areas. Our executive management provides the Board detailed reports on its performance periodically. The Board has 11 Directors. The Board comprises a Non-executive Chairman, a managing director, two executive directors and seven other non-executive directors out of which four are Independent Directors. Committees of the Board Audit Committee The members of the Audit Committee are;

• N.J. Jhaveri, Independent Director (Chairman)

• N.D. Khurody, Independent Director

• J.J. Parakh, Non- Executive Director

The Audit Committee was reconstituted by a meeting of the Board of Directors held on December 22, 2006. The scope and function of the Audit Committee is in accordance with Section 292A of the Companies Act and Clause 49 of the Listing Agreement and its terms of reference include the following:

• Overseeing the Company’s financial reporting process and the disclosure of financial information.

• Recommending the appointment and removal of external auditors and fixation of audit fees.

• Review with management the annual financial statements before submission to the Board.

• Review with management, external and internal auditors, the adequacy of internal controls. Remuneration Committee The members of the Remuneration Committee are;

• N.J. Jhaveri, Independent Director (Chairman)

• N.D. Khurody, Independent Director

• P.N. Kapadia, Independent Director The Remuneration Committee was reconstituted by a meeting of the Board of Directors held on December 22, 2006. This committee looks in all matters pertaining to remuneration of whole time directors and the managing director. Shareholders/Investors’ Grievance cum Share Transfer Committee The members of the Shareholders/Investors’ Grievance Committee are:

• P.N. Kapadia Independent Director

• J.J. Parakh, Non-Executive Director

• S. Paramasivan, Wholetime Director The Shareholders/Investors’ Grievance Committee was constituted by a meeting of the Board of Directors held on November 28, 2006. This Committee is responsible for redressal of shareholders’ and investors’ complaints relating to transfer of shares, issue of duplicate/consolidated share certificates, allotment and listing of shares, review of cases for refusal of transfer/transmission of shares and debentures, non-receipt of balance sheet, and non-receipt of dividends declared. It is also responsible for reviewing the process and mechanism of redressal of investor complaints and

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suggesting measures of improving the existing system of redressal of investor grievances. This Committee is also responsible for approval of transfer of Equity and preference shares including power to delegate the same to registrar and transfer agents. Other Committees of the Board Committee of Directors The members of the Committee of Directors are;

• N.J. Jhaveri, Independent Director

• J.J. Parakh, Non-Executive Director

• K. Subrahmanian, Managing Director

• S. Paramasivan, Wholetime Director

• A.N. Jangle, Wholetime Director The Committee of Directors was reconstituted by a meeting of the Board of Directors held on December 22, 2006. The scope of the Committee of Directors is as follows:

• To review the various aspects of business including operations, finance, business development etc. from time to time and to assist the Chairman in strategizing the focus of the Company and create better value for the organization from all angles.

• To open a banking account with any scheduled bank and authorise such persons as may be deemed fit by the Committee of Directors to operate the same.

• To approve and execute power of attorney in favour of any employee of the Company in respect of matters as may be deemed necessary from time to time.

• To execute or direct execution of any contract document and power of attorney related to the day-to-day business of the Company under the common seal of the Company, which may be required to be executed between Board meetings.

• To draw, endorse and negotiate promissory notes, hundies, bills of exchange, letters of credit, railway receipts, bills of lading and other negotiable and mercantile documents.

Compensation Committee

The members of the Compensation Committee are:

• N.J. Jhaveri, Independent Director (Chairman)

• P.N. Kapadia, Independent Director

• K. Subrahmanian, Managing Director

The Compensation Committee was constituted by a meeting of the Board of Directors held on November 28, 2006. The scope of the Compensation Committee is to administer the employee stock option Scheme of the Company.

IPO Committee

The members of the IPO Committee are:

• P.N. Kapadia, Independent Director

• J.J. Parakh, Non-Executive Director

• K. Subrahmanian, Managing Director

• S. Paramasivan, Wholetime Director

• A.N. Jangle, Wholetime Director

The IPO Committee was reconstituted by a meeting of the Board of Directors held on December 22, 2006. The scope of the IPO Committee is to administer and exercise all powers and to take all necessary actions to give effect to the initial public offering by the Company including variation of rights of preference shareholders of the Company.

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Shareholding of the Directors

In terms of the Articles of Association, the Directors are not required to hold any qualification shares. The list of Directors holding Equity Shares and stock options as of the date of filing this Draft Red Herring Prospectus is set forth below:

Name of Director No. of options No. of equity shares K. Subrahmanian 35,040 23,168

A. N. Jangle 14,060 17,549

S. Paramasivan 26,280 19,859

A.H. Divanji* NIL 141,720

N.J. Jhaveri NIL 17,749

J.J. Parakh NIL 6,619

* 60,000 Equity Shares held jointly with J.A. Divanji

Employee Stock Options Scheme For details of employee stock option scheme and conversion of options granted to the directors and key managerial personnel see the section titled “Capital Structure” on page 29 of this Draft Red Herring Prospectus.

Employee Trusts As of the date of this Draft Red Herring Prospectus, 11,91370 Equity Shares, constituting 1.67% of the equity share capital of the Company are held by 24 employee trusts, which have been constituted to hold the equity shares for the benefit of the employees of the Company. The trustees of these trusts are: 1. H.J. Tavaria 2. J.J. Parakh 3. F.K. Bhathena The trustees are required to deal with the equity shares in such manner as to assist employees towards meeting expenses for education, hobbies and craft, holidays, payments towards medical benefits, training and development, health promotion and personnel development. Borrowing Powers of our Board

In terms of our Articles, the Board may, from time to time, at its discretion by a resolution passed at its meeting raise or borrow or secure the payment of any sum or sums of money for the purposes of the Company. However, if the moneys sought to be borrowed together with the moneys already borrowed (apart from temporary loans obtained from the Company’s bankers in the ordinary course of business) should exceed the aggregate of the paid-up capital of the Company and its free reserves (not being reserves set apart for any specific purpose), the Board is required to obtain the consent of the Company in general meeting prior to undertaking such borrowing. In this regard, our Company, in the EGM dated December 22, 2006 had resolved that pursuant to the provisions of Section 293(1)(d) of the Companies Act, 1956, the Board is authorised to borrow moneys (apart from temporary loans obtained from the bankers of the Company in ordinary course of business) from banks, financial institutions, NBFCs etc., from time to time, for the purpose of Company’s business in excess of the aggregate of the paid-up capital of the Company and its free reserves (not being reserves set apart for any specific purpose) provided that the total amount of such borrowings together with the amounts already borrowed and outstanding shall not exceed Rs. 15,000 million. Further, our Company in the AGM dated September 28, 2006 has authorised the Board to charge moveable and immoveable properties of the Company for securing loans, facilities from Banks for an increased limit of Rs.2,0000 million

Changes in our Board of Directors in the last three years

The following changes have occurred in Board of Directors of the Company in the last three years:

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Name of

Director

Date of Appointment / Re-

appointment/Cessation

Reason

A.N. Jangle April 7, 2003 Appointed as Additional Director and

Whole time Director

K.C. Mehra November 24, 2003 Appointed as Additional Director

M.S. Hingorani July 1, 2005 Appointed as Additional Director

H.J. Tavaria November 28, 2006 Resigned

J.J. Parakh November 28, 2006 Resigned

S.

Kuppuswammy

November 28, 2006 Resigned

K.C. Mehra November 28, 2006 Resigned

P. Sampath November 28, 2006 Resigned

M.S. Hingorani November 28, 2006 Resigned

P. N. Kapadia November 28, 2006 Appointed as Director

N.D. Khurody December 22, 2006 Appointed as Director

J.J. Parakh December 22, 2006 Appointed as Director

Organisation Structure

CHAIRMAN

BOARD OF

DIRECTORS

MANAGING DIRECTOR

Exec. Vice President

(operations)

Exec. Vice President

(Operations) Road Projects

Vice President (Operations)

Head Planning

Head Design

Director International Operations

Executive Director (Tendering & Business

Development)

Head-Legal & Contracts

Head - CPE

Head - HRD

Executive Director

(Finance & Commercial)

Head-Systems

Dy. Project

controller

Contract Manager

Coordinating Engineer

PM’s

Sub contract

Cell

Geo Technical

cell

Vice President Projects

Dy. Project

controller

Contract Manager

Coordinating Engineer

PM’s

Dy. Project

controller

Contract Manager

Coordinating Engineer

PM’s

Dy. Head Planning

Planning Engineer

Dy. Head Design

Design Engineers

G.M Head-QA/QC

Head-Tendering

Head-BD Special Marine Projects

Head-BD Bridges /Metros Projects

Head-BD Naval / BOT

Projects

Head-HSE

Marine Works

Roads

Flyovers /Bridges

Civil Works

HRD

Training & Development

Head-Procurement

Head-

Secretarial

Head –F & A

Head - Store

Head-Taxation

Head-IR Admin & Personal

Mis. Cost Code &

Budgeting

PM : PROJECT MANAGER @ SITE * EXEC DIRECTOR (TENDERING & BD) IN ADDmON TO NORMAL RESPONSIBILITIES IS APPOINTTED AS MANAGEMENT REPRESENTATIVE WITH THE RESPONSIBILITY FOR ESTABLISHING. IMPLEMENTING & MAINTAINING THE QUALITY MANAGEMENT SYSTEM & REPORTING ITS EFFECTIVENESS ( REFER QM05, 5.5.2 )

Power Projects

Tendering

Key Managerial Personnel of our Company For profile of K. Subrahmanian, the Managing Director, A.N. Jangle and S. Paramasivan, our Wholetime Directors, please refer to page 122 of this Draft Red Herring Prospectus under the section “Our Management”. All the key managerial personnel mentioned below are permanent employees of the Company. N. Selvaraj, aged 50 years graduated with B.E. Civil (Hons.) and is the Executive Vice President (B/D) of our Company. He has about 28 years of varied experience in our Company. Selvaraj Narayanan joined us as an Engineer for Building Docks at Vizag and Mazagaon Dry Dock. He has been involved in successful completion of various projects like Submarine Tunnel and Sand Slurry Pipe Line, Cargo Handling Quay Wall and Const. of 2 cutter suction dredgers, ECR Road Works, Okha Jetty, Honavar Sites. He was responsible for Tendering and Business Development Activities as Project Manager of our company for 6 years. He was also overall in-charge of Planning and Design activities as Vice President for 5 years. Presently, Selvaraj Narayanan is responsible for Business Development in relation to tendering. During Fiscal 2006, he was paid a gross compensation of Rs. 1.87 million. N.S. Iyer, aged 67 years holds a Diploma in Civil Engineering and is the Executive Vice President of our Company. He has 43 years of varied experience in the field of construction. N.S. Iyer has worked as General Manager for HCC Limited and was a Project controller for Ennore Breakwater and Project Manager for Bandra - Worli Sea Link Project. He has been involved in the successful execution of projects of Wet Basin on Bored piles at Hazira and Planning and Execution of Harira jetty and assisted in Business Development Department at Essar Construction for 3 Years. Prior to this he has also worked with us for 24 years as the Project Manager for Vizag Port Trust, Pirpau Jetty, Rihand Lake sites etc. Presently he is the Executive Vice President - Operations of our Company and is the Coordinator for Delhi Sites, Sone Bridge, Koldam and Chenab Bridge Sites. During Fiscal 2006, he was paid a gross compensation of Rs. 1.76 million. W. Kabir, aged 66 years graduated with a B.Sc. Engg. Civil and is the Executive Vice President - Operations of our Company. He has 39 years of varied experience in the field of construction and infrastructure development. Wajahat Kabir has previously worked with Government of India’s PWD Department for 21 years as the Chief Project Manager and has worked as Junior Engineer and Chief Project Manager, in construction of residential buildings, Highways and Industrial Structures. He has also served in the Indian army as chief marshall for 4 years. In his stint with HCC Ltd spanning 4 years, he has been the Project Controller for Mumbai - Pune Expressway among other works. He has also served in DHV Consultants BV, Netherlands as Senior Resident Engineer for 4 years and has done supervision, monitoring and administration of Dhaka Urban Transport Project. Presently Mr. Kabir is the Executive Vice President of our Company and is Project Controller for Hubli, Harihara, Bangalore - Hyd. Road and Poonamalle - Kanchipuram Road Projects. During Fiscal 2006, he was paid a gross compensation of Rs. 1.77 million. P. R. Rajendran, aged 54 years graduated with a Bachelor of Commerce from and later graduated with a L.L.B (Gen). He is an Associate Member of Institute of Company Secretaries of India and is the Vice President - Commercial and Secretarial of our Company. He has 37 years of experience in commercial and secretarial work. P. R. Rajendran has previously worked with Precision Fasteners Ltd. as an Assistant Company Secretary for 22 Years and was responsible for secretarial related work. Presently he is the Vice President - Commercial and Company Secretary of our Company and is responsible for secretarial related works as well as commercial and legal matters. During Fiscal 2006, he was paid a gross compensation of Rs. 1.34 million. M. Jayaram, aged 48 years graduated with a B.E. Civil. He has 25 years of experience inhis field of experience. Jayaram Matta has worked with our Company as Deputy for 20 years and has been involved in the successful execution of 6th Cargo Berth at Kandla, North Dry Dock at Vizag, Gopalpur Port Trust, Coast Guard at Vizag, NMPT at Mangalore, Sheva - Pagota Site, Apollo hospital, ECR Road Works, RPL Jamnagar Site, Dabhol Power Project etc. He has previously worked for NMPT, Mangalore as a Superintendent Engineer for 2 years and was responsible for Planning & Construction of Tanker Jetty No.3 & 4 for NMPT. Presently as Vice President – Projects of our Company, he is Engineer Incharge of

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Poonamalle - Kanchipuram Road, RPL Jetty – Jamnagar Project. During Fiscal 2006, he was paid a gross compensation of Rs. 1.19 million. S. Sankar, aged 57 years graduated with a B.E. (Civil) and is currently the Vice President – Contracts. He has 33 years of experience in the construction industry. Sivaprakasam Sankar has worked with various companies and handled an array of jobs including design of various water supply components, design of water distribution networks intake, structure, pump house etc., quantity surveying and estimation, tendering, and contracts administration. He has previously worked for HCC Limited. as DGM-Contracts, for a span of 9 years involving contracts administration and arbitration for works at various sites. During Fiscal 2006, he was paid a gross compensation of Rs. 1.39 million. K. Ramesh, aged 59 years holds a Diploma in Civil Engineering and is the Vice President – Projects. He has 36 years of experience in his field of expertise. K. Ramesh has worked with our Company as Sr. Project Manager for 31 Years and has been Engineer-In-charge of various projects like Jettyies, Berths, Dry Docks, Cable stayed bridges, Pile Foundation works etc. He has previously worked for Raghava & Veera as Civil Supervisor and Navyuga Engineering Company as General Manager. Currently as Vice President – Projects of our Company, he is also the Engineer In-charge of Poonamalle - Kanchipuram Road. During Fiscal 2006, he was paid a gross compensation of Rs. 1.15 million. V. K. Bhat, aged 50 years graduated with a B.Tech Civil and later with a post graduate degree in M.Tech O.E. He is the Vice President – Operations of our Company. He has 26 years of experience in the construction industry. V. K. Bhat has previously worked as Lecturer for 2 years at KREC, Suratkal. He has also worked for Essar Construction, Mumbai as Junior General Manager for 22 years & was in-charge of Marine & Offshore Divisions. Presently as Vice President – Operations of our Company, he is also the Project Coordinator for Jetties, Berths & Marine Structures. During Fiscal 2006, he was paid a gross compensation of Rs. 1.65 million. R. Kalyanakrishnan, aged 50 years graduated with a degree in Bachelor of Science. He is an Associate Member of Institute of Chartered Accountants of India and also Institute of Cost & Works Accountants of India. He is the Vice President – Finance & Accounts. He has 26 years of experience in his field of expertise. R. Kalyanakrishnan has previously worked with Saif Bin Darwish, UAE as a Financial Controller for 6 years and was responsible for implementation of ERP System. He has also worked for Lovelock & Lewes, Ballarpur Industries Ltd., Nestle India Ltd., Nuware India Ltd., involving varied responsibilities including spearheading accounting and finance functions for Engineering Division and Implementation of Financial & Material Accounting Systems. Presently as Vice President – Finance & Accounts of our Company he is responsible for implementation of ERP System & Accounts Activities. During Fiscal 2006, he was paid a gross compensation of Rs. 1.53 million. R.Kalyanakrishnan joined the Company on April 7, 2005. J. D. Bakshi, aged 58 years holds a Diploma in Civil Engineering and AMIE. He is currently designated as Vice President – Projects of our Company. He has 36 years of experience in his field of expertise. J.D. Bakshi has previously worked with Punj Lloyd Ltd. as a General Manager for 6 years and was in charge of Estimating, Costing & Bidding and Execution of Hazira LNG Terminal. He has also worked for Bridge & Roof Co for 20 years, and Delhi Development Authority for 6 Years and has undertaken Design & Estimation of Development Works and worked as Coordinator for Industrial Civil Projects. Presently as Vice President – Projects of our Company, he is also the Coordinator for Construction of cement plant at Yemen. During Fiscal 2006, he was paid a gross compensation of Rs.1.00 million. J.D. Bakshi joined the Company on May 31, 2005. V. Prasada Rao, aged 56 years graduated with a degree in B.E. (Mechanical Engineer) He is currently the Vice President – Steel Works of our Company. He has 33 years of experience in fabrication & erection of various steel structures and equipments. V. Prasada Rao has previously worked with Navyuga Engineering. Company as Senior General Manager for 10 Years and was involved in execution of Electro Mechanical works, Bridges & Berths. He has also worked for our Company for 9 years as resident engineer and has done Fabrication and Erection of Steel Structures, Tender Estimation, Equipment Planning & Project

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Monitoring. Presently as Vice President – Steel Works of our Company he is also the Engineer In-charge of Chenab Bridge Project. During Fiscal 2006, he was paid a gross compensation of Rs.0.92 million. V.Prasada Rao joined the Company on August 5, 2005. B. Jaggi, aged 65 years is an alumnus of Jadavpur University, Kokata from where he graduated with a degree in BE(Civil) and is Vice President (Projects). He has 38 years of experience in his filed of expertise. He has previously worked with Consulting Engineering Services (I) Limited, New Delhi as chief general manager and has been involved with West Bengal Corridor Development Project as well as construction supervision of Surat Manor Tollway Project. B. Jaggi was not paid any remuneration in Fiscal 2006 since he joined the Company on November 20, 2006. J.R. Sample aged 61 years an English national graduated with a degree in B.Sc. Engineering (Civil) and is a Senior Project Manager with Murray & Roberts Engineering Solutions. He has 30 years of experience in his field of expertise. J.R. Sample has presently been engaged by the Company as Director (International). J.R. Sample has been involved in a variety of construction projects which include civil engineering, general building construction and mining process plants. J.R. Sample has worked on projects in Kenya, South Korea, Malaysia, Dubai, Saudi Arabia, the United Kingdom and the United States of America. During Fiscal 2006, J.R. Sample was not paid any compensation since he started to work along with Company on November 6, 2006.

Shareholding/ Interest of the Key Managerial Personnel of the Company and our Subsidiaries The list of our Key Managerial Personnel holding Equity Shares and the number of Equity Shares held by each of them as of the date of this Draft Red Herring Prospectus is set forth below:

Key Managerial Personnel No. of Equity Shares held No. of stock options K.Subrahmanian 23,168 35,040

S.Paramasivan 19,859 26,280

A.N.Jangle 17,549 14,460

N.Selvaraj 20,549 21,900

N.S.Iyer 13,239 10,510

W.Kabir 9,929 10,510

P.R.Rajendran 10,409 13,140

M.Jayaram Nil 13,140

S.Sankar 16,549 17,520

K.Ramesh Nil 13140

V.K.Bhat 9,929* 13,140

R.Kalyanakrishnan Nil 8,760

J.D.Bakshi Nil 8,760

V.Prasada Rao Nil 13,140

* Shares jointly held with his wife Changes in Key Managerial Personnel The following are the changes in our key managerial personnel over the last three years:

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Name and Designation of the Employee Date of Change Reason

K Ramesh January 23, 2004 Appointment as Vice President (Projects)

V K Bhat February 24, 2004 Appointment as Vice President (Operations)

A.K. Kashalkar February 29, 2004 Resignation (Ex-Vice President [Operations])

K Selvaraj March 19, 2004 Appointment as Head I.T. Services

S.B. Joshi May 31, 2004 Resignation (Ex General Manager Planning)

Col. W. Kabir July 1, 2004 Appointment as Executive Vice President

M M Lalvani September 19, 2004 Appointment as General Manager (Taxation)

Prema Chandrsekhar November 2, 2004 Resignation (Ex-Genral Manager [Finance &

Accounts])

Richard Boehm April 1, 2005 Appointment as Project Manager (contractual)

R. Kalyanakrishnan April 7, 2005 Appointment as Vice President (Finance &

Accounts)

J D Bakshi May 31, 2005 Appointment as Vice President (Projects)

Col. S.G. Diwanji May 31, 2005 Resignation (Ex-General Manager [Projects])

V Prasada Rao August 5, 2005 Appointment as Vice President (Steel Works)

P M Thorat September 10, 2005 Appointment as Assistant Vice President (Pipeline &

Special Projects)

D A Bhide September 28, 2005 Appointment as General Manager (Design)

A. Chakravarty October 14, 2005 Resignation (Ex-Assistant Vice President [Business

Development])

N.K. Batta March 31, 2006 Resignation (Ex-General Manager Procurement)

GovindaRajulu Venkata May 15, 2006 Resignation (Ex-General Manager [CPE])

Alok Gupta October 12, 2006 Resignation (Ex-General Manager [Projects])

Jim Sample November 6, 2006 Appointment as Director (International)

Bharat Jaggi November 20, 2006 Appointment as Vice President (Projects)

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OUR PROMOTERS

Our Promoters are: 1. Shapoorji Pallonji & Co., Limited (“SPCL”) 2. Sterling Investment Corporation Private Limited (“SICL”) 3. Cyrus Investments Limited (“CIL”) 4. Floreat Investments Limited (“FIL”) Unless otherwise stated none of the above is a sick company under the meaning of SICA and none of them are under winding up. Further, all our Promoters are unlisted companies and they not made any public issue of securities in the preceding three years. Shapoorji Pallonji & Co. Limited SPCL was incorporated on January 23, 1943. The company is engaged in the business of construction.

Registered Office The registered office of SPCL is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of SPCL as on December 31, 2006 consists of:

1. Pallonji Shapoorji Mistry 2. Shapoor Pallonji Mistry 3. Cyrus Pallonji Mistry 4. K.B. Captain 5. F.K. Bhathena 6. Jimmy J. Parakh

Shareholding Pattern The shareholding pattern of SPCL as on December 31, 2006is as under:

Names of the shareholders No. of shares held % holding Shapoorji Pallonji & Co., (Rajkot) Limited 246,000 30%

Shapoorji & Co., (Rajkot) Private Limited 246,000 30%

Shapoor Pallonji Mistry 81,100 9.89%

Cyrus Pallonji Mistry 81,100 9.89%

Pallonji Shapoorji & Co., Private Limited 78,000 9.51%

SC Finance and Investments Private Limited 41,900 5.11%

SP Finance Private Limited 41,900 5.11%

Silver Streak Investments Private Limited 4000 0.49%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

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(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004* Equity capital 8.20 8.20 8.20

Reserves 1,287.14 1,064.76 1,010.59

Sales 10,593.58 8,543.91 5,562.52

PAT 222.38 54.23 76.81

EPS (Rs.) 271.19 661.40 936.73

Book value per share (Rs.) 1,579.69 13,084.93 12,423.53

* In Fiscal 2004 and 2005 the face value per share was Rs. 1000 while the face value per share in Fiscal 2006 was Rs. 10 Sterling Investment Corporation Private Limited

SICL was incorporated on June 3, 1943 in Mumbai. SICL became a deemed public company on June 15, 1998; however on December 14, 2000 it was converted into a private company as per the Companies Amendment Act, 2000. SICL is a subsidiary of SPCL and is engaged in the business of investments in stocks and securities.

Registered Office The registered office of SICL is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Sterling Investment Corporation Private Limited as on December 31, 2006 consists of:

1. Shapoor Pallonji Mistry 2. Cyrus Pallonji Mistry 3. P.P. Mistry 4. R.M. Nentin 5. J.J. Parakh 6. F.K. Bhathena

Shareholding Pattern Shareholding Pattern of Sterling Investment Corporation Private Limited as on December 31, 2006 is as under:

Names of the shareholders No. of shares held % holding SPCL 2439600 99.98%

SPCL. and Pallonji Shapoorji Mistry 100 0.004%

SPCL. and K.B. Captain 100 0.004%

SPCL. and Shapoor Pallonji Mistry 100 0.004%

SPCL. and Cyrus Pallonji Mistry 100 0.004%

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Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

* In Fiscal 2004 and 2005 the face value per share was Rs. 1000 while the face value per share in Fiscal 2006 was Rs. 10 Cyrus Investments Limited

CIL was incorporated on March 8, 1923 as F.E. Dinshaw Limited in Mumbai. The name of this company was subsequently changed to F.E. Dinshaw Private Limited on February 1, 1978. On November 11, 1978 the name of the company was changed to Cyrus Investments Private Limited and finally renamed as Cyrus Investment Limited on October 6, 1988. CIL is a subsidiary of Shapoorji and Pallonji Co., Limited and is engaged in the business of investments in stocks and securities.

Registered Office The registered office of CIL is at:

Esplanade House, Hazarimal Somani Marg, Fort, Mumbai 400 001, India

Board of Directors The board of directors of CIL as on December 31, 2006 consists of :

1. Pallonji Shapoorji Mistry 2. Shapoor Pallonji Mistry 3. Cyrus Pallonji Mistry 4. K. B. Captain 5. J.J. Parakh 6. F.K. Bhathena

Shareholding Pattern Shareholding Pattern of Cyrus Investment Limited as on December 31, 2006 is as under

Names of the shareholders No. of shares held % holding SPCL. 14,500,000 96.25%

SICL 562250 3.732%

SICL and Pallonji Shapoorji Mistry 500 0.003%

SICL and K.B. Captain 500 0.003%

SICLand RS Khushrokhan 500 0.003%

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 224.40 24.40 24.40

Reserves 890.52 659.75 461.11

Sales 424.20 481.61 193.79

PAT 230.76 198.04 65.39

EPS (Rs.) 94.57* 8116.37* 2680.01*

Book value per share (Rs.) 456.93 28,039.00 19, 897.94

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Names of the shareholders No. of shares held % holding SICL and PC Sheth 100 0.001%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

* In Fiscal 2004 and 2005 the face value per share was Rs. 1000 while the face value per share in Fiscal 2006 was Rs. 10

Floreat Investments Limited

FIL was incorporated on March 13, 1989. This company is engaged in the business of investment in stocks and securities and trading in securities.

Registered Office The registered office of FIL is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of FIL consists of:

1. A. Daruvala 2. D. Guzdar 3. A. Khambata 4. F.J. Hiloo 5. U.B. Upasani 6. R. Sharma Shareholding Pattern The shareholding pattern of FIL is as under:

Names of the shareholders No. of shares held % holding SPCL 94,998 99.99%

SPCL and K.B. Captain 1 0.001%

SPCL and Jimmy J. Parakh 1 0.001%

Financial Performance Summary audited stand-alone financial statements for the last three fiscal years is as follows:

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004* Equity capital 150.63 150.63 150.63

Reserves 855.60 625.87 460.31

Sales 275.23 214.51 136.76

PAT 228.61 165.57 63.33

EPS (Rs.) 15.25 10.99 416.52

Book value per share (Rs.) 66.80 51274.37 4034.50

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(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 9.50 9.50 9.50

Reserves - 7.41 6.71

Sales 0.60 2.21 7.77

PAT (11.43) 0.70 4.01

EPS (Rs.) (120.32) 7.41 42.24

Book value per share (Rs.) 57.68 178 170.59

We confirm that the Permanent Account Number, Bank Account Numbers, the Company Registration Number and the address of the Registrar of Companies where the Promoters are registered have been submitted to the Stock Exchanges at the time of filing the Draft Red Herring Prospectus. Further, the Promoters have not been declared as a willful defaulter by the Reserve Bank of India or any other Government authority and there are no violations of securities laws committed by the Promoters in the past or are pending against the Promoter.

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Our Promoter Group

Apart from our Promoters, Subsidiaries and Associate company, the following individuals, entities and companies constitute our Promoter Group:

I. Companies

1. Abhipreet Trading Private Limited 2. Afcons BOT Constructions Private Limited 3. Afcons Dredging amd Marine Services Private Limited 4. Afcons (Overseas) ConstructionS & Investments Private Limited 5. Bracewall Builders Private Limited 6. Calligra Finvest Private Limited 7. Cama Properties Private Limited 8. Chinsha Properties Private Limited 9. Cyrus Chemicals Private Limited 10. Cyrus Engineers Private Limited 11. Delna Finance and Investments Private Limited 12. Eastview Estates Private Limited 13. Faery Estates Private Limited 14. Floral Finance Private Limited 15. Flooraise Developers Private Limited 16. Flotilla Finance Private Limited 17. Forbes Gokak Limited 18. Forvol International Services Ltd 19. Grandview Estates Private Limited 20. High Street Developers Private Limited 21. Khajrana Ganesh Properties Private Limited 22. Kolland Developers Private Limited 23. Magpie Finance Private Limited 24. Mangal Shrusti Private Limited 25. Manjri Stud Firm Private Limited 26. Manjri Builders and Developers Private Limited 27. Mazsons Builders and Developers Private Limited 28. Meriland Estates Private Limited 29. Milvin Investments Private Limited 30. Palchin Real Estates Private Limited 31. Ramili Investments Private Limited 32. Sachin Real Estates Private Limited 33. S.C. Impex Private Limited 34. Shapoorji & Co., Private Limited 35. Shapoorji & Co. (Rajkot) Private Limited 36. Shapoorji Data Processing Private Limited 37. Shapoorji Drilling Enterprises Private Limited 38. Shapoorji Hotels Private Limited 39. Sharus Building Services India Private Limited 40. SP Aluminum Systems Private Limited 41. SP Architectural Coatings Private Limited 42. SP Infocity Developers Private Limited 43. SP Fabricators Private Limited 44. Shapoorji Pallonji Biotech Private Limited 45. Shapoorji Pallonji Finance Limited 46. Shapoorji Pallonji Infrastructure Capital Co. Limited 47. Shapoorji Pallonji (Gwalior) Private Limited 48. Shapoorji Pallonji Ports Private Limited 49. Shapoorji Pallonji Power Company Limited

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50. Shapoorji Pallonji & Company (Rajkot) Private Limited 51. Skyscape Developers Private Limited 52. Sterling Generators Private Limited 53. Sunny View Estates Private Limited 54. United Motors (India) Limited 55. Windward Developers Private Limited

Unless otherwise stated none of the above is a sick company under the meaning of SICA and none of them are under winding up. Further unless otherwise stated, all our Promoter Group Companies are unlisted companies and they not made any public issue of securities in the preceding three years. 1. Abhipreet Trading Private Limited Abhipreet Trading Private Limited (previously known as Abhipreet Investments Private Limited) was incorporated on November 15, 1988. This company is engaged in the business of trading.

Registered Office The registered office of Abhipreet Trading Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Abhipreet Trading Private Limited consists of :

1. K.B. Captain 2. R.M. Nentin

Shareholding Pattern The shareholding pattern of Abhipreet Trading Private Limited is as under:

Names of the shareholders No. of shares held % holding Shapoorji Pallonji & Co., Limited 29,998 99.99%

Shapoorji Pallonji & Co., Limited and RM Nentin 1 0.003%

Shapoorji Pallonji & Co., Limited and FK Bhathena 1 0.003%

Financial Performance Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 3.00 3.00 3.00

Reserves 0.04 0.04 0.14

Sales 0.18 0.18 0.21

PAT (0.08) 0.02 (0.10)

EPS (Rs.) (3.51) (2.91) (3.41)

Book value per share (Rs.) 97.66 100.27 103.27

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2. AFCONS BOT Constructions Private Limited Afcons BOT Constructions Private Limited was incorporated on June 17, 1987. This company was formed to carry on the business of conducting hydrographic, oceanographic, geophysical, topographic & geodetic surveys, underwater diving and render & supply all forms of connected services. This company is not presently engaged in any activities.

Registered Office

The registered office of Afcons BOT Constructions Private Limited is at:

Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azadnagar P.O. Post Box No. 11978 Andheri (W), Mumbai 400 053

Board of Directors The board of directors as on consists of: 1. A. H. Divanji 2. H. J. Tavaria 3. S. Paramasivan

Shareholding pattern as on December 26, 2006

Sr No.

Name of the Shareholder No. of Equity Shares Percentage

1 Shapoorji Pallonji Infrastructure Capital Co., Limited and its nominees

40,000 100

Financial Performance The audited financial results for this company for the last three fiscal are as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity Share Capital 0.40 0.40 0.40

Reserves and Surplus (0.37) (0.36) (0.356)

Income - - -

Profit/ After Tax (PAT) (0.005) (0.006) (0.006)

Earning Per Share (EPS) (Rs.) 0.15 (0.15) (0.16)

Book Value (Face value of Rs.10per share) (Rs.) 0.000 0.939 1.095

3. AFCONS Dredging & Marine Services Limited.

Corporate Information:

Afcons Dredging & Marine Services Limited was incorporated on January 24, 1986. Presently, its registered office is located at Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azadnagar P.O, Mumbai 400 053. .

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Afcons Dredging & Marine Services Limited was formed to carry on in India and other parts of the world, the business of securing and executing contracts of works relating to dredging and other ancillary works. This company is not presently engaged in any activities.

Shareholding pattern

Sr No. Name of the Shareholder No. of Equity Shares Percentage 1. Shapoorji Pallonji Infrastructure

Capital Co., Limited 10,000 100

Board of Directors The board of directors as on consists of:

1. A. H. Divanji 2. S. Paramasivan 3. P.R.Rajendran

Financial Performance:

The audited financial results for this company for the last three fiscal are as follows:

(Rs. in million except per share data) Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Equity Share Capital 1.00 1.00 1.00

Reserves and Surplus .009 0.048 0.10

Income 0.048 0.030 0.050

Profit/ After Tax (PAT) (0.03) (0.050 (0.04)

Earning Per Share (EPS) (Rs.) (3.86) (5.997) (4.395)

Book Value (Face value of Rs.100/- per share) (Rs.)

100.99 104.89 110.84

4. AFCONS (Overseas) Construction & Investments Private Limited AFCONS (Overseas) Construction & Investments Limited was incorporated on August 28, 1981. This company was formed to carry on in India and other parts of the world, the business of securing and executing contracts of works relating to specialized foundations such as pile foundations and construction of marine works This company can also carry on business as building contractors and undertakes and carries out building construction works.

This company is not presently engaged in any activities.

Registered Office

The registered office of AFCONS (Overseas) Construction & Investments Private Limited is at: Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azadnagar P.O. Post Box No. 11978 Andheri (W), Mumbai 400 053 Board of Directors

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The board of directors as on December 31, 2006 consists of: 1. A. H. Divanji 2. H. J. Tavaria 3. F. K. Bhathena 4. P. Sampath

Shareholding Pattern

Names of the shareholder No. of shares held % holding Shapoorji Pallonji & Co., Limited 4,000 100%

Financial Performance

The audited financial results for this company for the last three fiscal are as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity Share Capital 0.1 0.1 0.1

Reserves and Surplus 0.014 0.02 0.033

Income 0.009 0.0089 0.01

Profit/ After Tax (PAT) (0.01) (0.006) (0.004)

Earning Per Share (EPS) (Rs.) (12.41) (6.49) (4.192)

Book Value (Face value of Rs.100 per share) (Rs.)

113.80 126.21 132.70

5. Bracewall Builders Private Limited Bracewall Builders Private Limited was incorporated on November 11, 2005. This company is engaged in the business of real estate development.

Registered Office

The registered office of Bracewall Builders Private Limited is at:

59, Haji Mansion, 5th Road, Khar, Mumbai 400 052 India

Board of Directors The board of directors of Bracewall Builders Private Limited consists of:

1. Adil Khambatta 2. Manikant Shah

Shareholding Pattern The shareholding pattern of Bracewell Builders Private Limited is as under:

Names of the shareholders No. of shares held % holding

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Names of the shareholders No. of shares held % holding Meriland Estates Private Limited 4999 49.99%

Grandview Estates Private Limited 4999 49.99%

Adil Khambatta 1 0.01%

Manikant Shah 1 0.01%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004* Equity capital 0.10 - -

Reserves - - -

Sales - - -

PAT (0.01) - -

EPS (Rs.) (1.28) - -

Book value per share(Rs.) 8.09 - -

*Bracewall Builders Private Limited was incorporated in Fiscal 2006.

6. Calligra Finvest Private Limited

Calligra Finvest Private Limited was incorporated on September 10, 1996. This company is engaged in the business of real estate development.

Registered Office

The registered office of Calligra Finance Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Calligra Finance Private Limited consists of:

1. Manikant Shah 2. D.P. Divecha

Shareholding Pattern The shareholding pattern of Calligra Finance Private Limited is as under

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Names of the shareholders No. of shares held % holding SICL 9998 99.98%

SICL and Manikant Shah 1 0.01%

SICL and FK Bhathena 1 0.015%

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Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.10 0.10 0.10

Reserves - - -

Sales - - -

PAT (0.02) - -

EPS (Rs.) (1.53) 0.38 0.37

Book value per share (Rs.) 4.53 7.39 7.77

7. Cama Properties Private Limited

Cama Properties Private Limited (previously known as Shapoorji Pallonji (Cama Estates) Private Limited) was incorporated on February 17, 1998. This company is engaged in the business of real estate development.

Registered Office The registered office of Cama Properties Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Cama Properties Private Limited consists of:

1. K.B. Captain 2. Jimmy J. Parakh

Shareholding Pattern The shareholding of Cama Properties Limited is as under

Names of the shareholders No. of shares held % holding Shapoorji Pallonji Infrastructure Capital Co., Limited

998 99.8%

Shapoorji Pallonji Infrastructure Capital Co., Limited and Jimmy J. Parakh

1 0.1%

Shapoorji Pallonji Infrastructure Capital Co., Limited and RM Nentin

1 0.1%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows :

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.10 0.10 0.10

Reserves - - -

Sales - - -

PAT (0.04) (0.01) (0.01)

EPS (Rs.) (44.71) (9.51) (5.02)

Book value per share (Rs.) 17.21 61.92 70.43

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8. Chinsha Properties Private Limited

Chinsha Properties Private Limited was incorporated on February 28, 1995. The company is engaged in the business of property development.

Registered Office The registered office of Chinsha Properties Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Chinsha Properties Private Limited consists of: 1. F.K. Bhathena 2. Jimmy J. Parakh

Shareholding Pattern The shareholding pattern of Chinsha Properties Private Limited is as under

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 4.00 4.00 4.00

Reserves - - -

Sales - - -

PAT (0.02) (0.01) (0.02)

EPS (Rs.) (0.04) (0.04) (0.04)

Book value per share (Rs.) 9.62 9.66 9.72

9. Cyrus Chemicals Private Limited

Cyrus Chemicals Private Limited was incorporated on October 24, 1978. This company is engaged in the business of investment in property and agricultural land. Registered Office The registered office of Cyrus Chemicals Private Limited is at: 70, Nagindas Master Road, Fort, Mumbai 400 023, India

Names of the shareholders No. of shares held % holding SICL 399,998 99.99%

SICLand Jimmy J. Parakh 1 0.00025%

SICL and F.K. Bhathena 1 0.00025%

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Board of Directors The board of directors of Cyrus Chemicals Private Limited consists of: 1. F.K. Bhathena 2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Cyrus Chemicals Private Limited is as under:

Names of the shareholders No. of shares held % holding SPCL 2397 99.87

SPCL and R.S.Khushrokhan 1 0.04%

SPCL and R.M. Nentin 1 0.04%

SPCL and F.K. Bhathena 1 0.04%

Financial Performance Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 2.40 2.40 2.40

Reserves - - -

Sales 1.06 - -

PAT 0.53 (0.36) (0.40)

EPS (Rs.) 221.54 (150.09) (165.96)

Book value per share (Rs.) 292.73 71.18 222.58

10. Cyrus Engineers Private Limited

Cyrus Engineers Private Limited was incorporated on June 28, 1979. This company is engaged in the business of investment in stocks and securities..

Registered Office

The registered office of Cyrus Engineers Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Shareholding Pattern

The shareholding pattern of Cyrus Engineers Private Limited is as under:

Names of the shareholders No. of shares held % holding SPCL 497 99.4%

SPCL and K.B. Captain 1 0.2%

SPCL and P.C. Sheth 1 0.2%

SPCL and Jimmy J. Parakh 1 0.2%

Financial Performance

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Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.50 0.50

Reserves 8.52 7.40 7.25

Sales 1.25 0.11 0.16

PAT 1.13 1.13 (1.27)

EPS (Rs.) 2253.66 285.27 (2531.49)

Book value per share (Rs.) 18047.56 15793.90 15508.63

11. Delna Finance and Investments Private Limited

Delna Finance and Investments Private Limited was incorporated on October 22, 1991. This company is engaged in the business of investment in stocks.

Registered Office

The registered office of Delna Finance and Investments Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Delna Finance and Investments Private Limited consists of: 1. K.B. Captain 2. R.M. Nentin

The shareholding pattern of Delna Finance and Investments Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 4998 99.96%

SICL and R.M. Nentin 1 0.02%

SICL and Jimmy J. Parakh 1 0.02%

Financial Performance Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.50 0.50

Reserves - - -

Sales 1.33 0.83 -

PAT (1.75) (1.63) (0.01)

EPS (Rs.) (350.38) (325.82) (1.83)

Book value per share (Rs.) (612.37) (241.02) 84.80

12. Eastview Estates Private Limited

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Eastview Estates Private Limited was incorporated on November 25, 2005. This company is engaged in the business of real estate development.

Registered Office

The registered office of Eastview Estates Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India Board of Directors The board of directors of Eastview Estates Private Limited consists of: 1. F.K. Bhathena 2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Eastview Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 9998 99.98%

SICL and R.M. Nentin 1 0.01%

SICL and F.K. Bhathena 1 0.01%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004* Equity capital 0.10 - -

Reserves - - -

Sales - - -

PAT (0.03) - -

EPS (Rs.) (2.71) - -

Book value per share (Rs.) 6.66 - -

* Eastview Estates Private Limited was incorporated in Fiscal 2006.

13. Faery Estates Private Limited

Faery Estates Private Limited was incorporated on May 8, 1998. This company is engaged in the business of real estate development.

Registered Office

The registered office of Faery Estates Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

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Board of Directors The board of directors of Faery Estates Private Limited consists of:

1. Jimmy J. Parakh 2. R.M. Nentin

The shareholding pattern of Faery Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 49980 99.96%

SICL and R.M. Nentin 10 0.02%

SICL and Jimmy J. Parakh 10 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.50 0.10

Reserves - - -

Sales - - -

PAT (0.46) (0.02) (0.01)

EPS (Rs.) (9.22) (0.37) (0.54)

Book value per share (Rs.) 9.89 8.88 6.28

14. Floral Finance Private Limited

Floral Investments Private Limited was incorporated on March 9, 1989. This company is engaged in the business of investment in stocks and securities. Registered Office The registered office of Floral Finance Private Limited is at: 70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Floral Finance Private Limited consists of: 1. F.K. Bhathena 2. Jimmy J. Parakh

Shareholding Pattern The shareholding pattern of Floral Finance Private Limited is as under:

Names of the shareholders No. of shares held % holding SPCL 12016 99.98%

SPCL and R.M. Nentin 1 0.008%

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Names of the shareholders No. of shares held % holding SPCL and F.K. Bhathena 1 0.008%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 1.20 1.20 1.20

Reserves - - -

Sales - - 0.01

PAT (0.10) (0.09) (0.08)

EPS (Rs.) (8.01) (7.09) (6.45)

Book value per share (Rs.) 70.04 80.97 88.08

15. Flooraise Developers Private Limited

Flooraise Developers Private Limited was incorporated on December 27, 2005. This company is engaged in the business of real estate development.

Registered Office

The registered office of Flooraise Developers Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors

The board of directors of Flooraise Developers Private Limited consists of:

1. Jimmy J. Parakh 2. Manikant Shah

The shareholding pattern of Flooraise Developers Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 9998 99.98%

SICL and Manikant Shah 1 0.01%

SICL and Jimmy J. Parakh 1 0.01%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004* Equity capital 0.10 - -

Reserves - - -

Sales - - -

PAT (0.01) - -

EPS (Rs.) (1.20) - -

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Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004* Book value per share (Rs.) 8.17 - -

*Flooraise Developers Private Limited was incorporated in Fiscal 2006

16. Flotilla Finance Private Limited

Flotilla Finance Private Limited was incorporated on March 9, 1989. This company is engaged in the business of investment in stocks and securities and trading in securities.

Registered Office The registered office of Flotilla Investments Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Flotilla Finance Private Limited consists of: 1. K.B. Captain 2. H.J. Tavaria

Shareholding Pattern

The shareholding pattern of Flotilla Finance Private Limited is as under:

Names of the shareholders No. of shares held % holding SPCL 29,998 99.99%

SPCL and R.M. Nentin 1 0.003%

SPCL and F.K. Bhathena 1 0.003%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 3.00 3.00 3.00

Reserves 0.28 0.41 0.54

Sales 0.02 0.02 0.04

PAT (0.13) (0.13) (0.13)

EPS (Rs.) (4.33) (4.32) (4.34)

Book value per share (Rs.) 109.35 113.68 118

17. Forbes Gokak Limited

Forbes Gokak Limited was formed pursuant to an amalgamation of Forbes Campbell & Co., Ltd with Gokak Patel Volkart Limited from January 1, 1992 vide an order dated July 23, 1992 of the High Court, Mumbai. Upon amalgamation, the name of the amalgamated company was changed to Forbes Gokak Limited. The fresh certificate of change of name was issued by the RoC on September 28, 1992. The activities of Forbes Gokak Ltd. at the present include manufacture of yarn, precision engineering products,

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knitted garments, shipping agencies, freight forwarding business, office automation products and investments. The equity shares of the company are currently listed on the BSE.

Registered Office The registered office of Forbes Gokak Limited is at:

Forbes Building, Charanjit Rai Marg, Fort, Mumbai 400 001, India

Board of Directors The board of directors of Forbes Gokak Limited consists of: 1. P.S. Mistry 2. S.P. Mistry 3. K.C. Mehra 4. D.B. Engineer 5. D.S. Soman 6. C.G. Shah 7. R.N. Jha 8. C.P. Mistry 9. N.D. Khurody 10. S.L. Goklaney

Promoter and Promoter Groupof Forbes Gokak Limited 1. SPCL 2. SICL 3. CIL 4. Warrior Investment Limited 5. Forbes Finance Limited

Shareholding Pattern The shareholding pattern of Forbes Gokak Limited as on November 17, 2006 is as under:

Names of the shareholders No. of shares held % holding SICL 8326352 64.55%

Public 1832323 14.21%

Life Insurance Corporation of India 624091 4.84%

SPCL 614505 4.76%

CIL 354436 2.75%

Other Private Companies 239236 1.85%

The National Insurance Co., Limited 193460 1.50%

Forbes Finance Limited 164862 1.28%

Benhill Finance Limited 124000 0.96%

Holborn Finance Limited 124000 0.96%

Central/State Government Institutions 110343 0.86%

Other NRIs/OCBs 81711 0.63

Equity Intelligence India Private Limited

45894 0.36%

Foreign Institutional Investors 41135 0.32%

Banks 20309 0.16%

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Names of the shareholders No. of shares held % holding Warrior (Investment) Limited 1536 0.01%

Mutual Funds 402 0.003%

Unit Trust of India 21 0.0001%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 124.53 124.53 124.53

Reserves 2906.92 1905.31 1727.45

Sales 6144.64 4909.30 4369.48

PAT 216.00 249.46 157.50

EPS (Rs.) 16.75 20.03 12.65

Book value per share (Rs.) 225.37 153 138.71

Stock Market Data The shares of Forbes Gokak Limited are listed on the BSE. The highest and lowest price of the shares of Forbes Gokak Limited on BSE in the last six months is as follows:

Source: BSE Website Closing share price on BSE as on January 4, 2006 was Rs. 478 Market Capitalisation as on January 4, 2006 was Rs. 6,166.2 million. Forbes Gokak Limited has not made any public or rights issue of equity or preference shares or debentures in the past five years.

18. Forvol International Services Limited Forvol International Services Limited was incorporated on May 19, 1977. This company is engaged in the business of a traveling agency and a tour operator.

Registered Office 9-10, Torana Apartments,

Month High (Rs.) Low (Rs.) Volumes (No of Shares

traded )

Volumes ( Rs. in million)

July 2006 506.00 390.00 18,861 8.52

August 2006 487.75 409 28,948 12.56

September 2006 470.00 405.00 65,403 29.22

October 2006 483.65 403.00 40,104 17.45

November 2006 598.90 415.05 235,739 124.7

December 2006 575.00 455.00 107,655 54.22

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Opposite P&T colony, Andheri Sahar Road, Andheri (E), Mumbai 400 099

Board of Directors

The board of directors of Forvol International Services Limited consists of: 1. K.C. Mehra 2. P.S. Mistry 3. D.B. Engineer 4. S.P. Mistry 5. C.P. Mistry

Shareholding Pattern

Forvol International Services Limited is a wholly owned subsidiary of Sterling Investment Corporation Private Limited

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 8.0 8.0 8.0

Reserves 8.24 8.24 8.24

Sales 75.2 55.8 49.5

PAT 14 4.5 (4.56)

EPS (Rs.) 17.55 5.65 (11.25)

Book value per share (Rs.) 10 10 10

19. Grand View Estates Private Limited

Grand View Estates Private Limited was incorporated on May 4, 1998. This company is engaged in the business of investment in property.

Registered Office The registered office of Grand View Estates Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Grand View Estates Private Limited consists of:

1. K.B. Captain 2. Jimmy J. Parakh

Shareholding Pattern The shareholding pattern of Grand View Estates Private Limited is as under:

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Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.10 0.10 0.10

Reserves - - -

Sales - - -

PAT (0.01) (0.01) (0.01)

EPS (Rs.) (0.89) (0.56) (0.55)

Book value per share (Rs.) 40.83 5.71 6.28

20. High Street Developers Private Limited

High Street Developers Private Limited was incorporated on December 16, 2005. This company is engaged in the business of real estate development.

Registered Office The registered office of High Street Developers Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of High Street Developers Private Limited consists of: 1. F.K. Bhathena 2. Jimmy J. Parakh Shareholding Pattern The shareholding pattern of High Street Developers Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 4980 99.6%

SICL and F.K. Bhathena 10 0.2%

SICL and Jimmy J. Parakh 10 0.2%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004*

Names of the shareholders No. of shares held % holding SICL 9980 99.8%

SICL and R.M. Nentin 10 0.1%

SICL and K.B. Captain 10 0.1%

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Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004* Equity capital 0.50 - -

Reserves - - -

Sales - - -

PAT (0.01) - -

EPS (Rs.) (2.86) - -

Book value per share (Rs.) 93.26 -

*High Street Developers Private Limited was incorporated in Fiscal 2006.

21. Khajarana Ganesh Properties Private Limited

Khajarana Ganesh Properties Private Limited was incorporated on September 25, 1995. This company is engaged in the business of real estate development.

Registered Office

The registered office of Khajarana Ganesh Properties Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Khajarana Ganesh Properties Private Limited consists of:

1. Manikant Shah 2. Adil Khambatta

The shareholding pattern of Khajarana Ganesh Properties Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 9998 99.98%

SICL and Manikant Shah 1 0.01%

SICL and Adil Khambatta 1 0.01%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.10 0.10 0.10

Reserves - - -

Sales - - -

PAT (0.10) (0.003) (0.003)

EPS (Rs.) (9.85) (0.38) (0.37)

Book value per share (Rs.) (3.78) 7.39 7.77

22. Kolland Developers Private Limited

Kolland Developers Private Limited was incorporated on December 22, 2005. This company is engaged in the business of real estate development

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Registered Office The registered office of Kolland Developers Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Kolland Developers Private Limited consists of : 1. Adil Khambata 2. Manikant Shah

Shareholding Pattern Shareholding Pattern of Kolland Developers Limited is as under

Names of the shareholders No. of shares held % holding FIL 9998 99.98%

FIL and Adil Khambata 1 0.0001%

FIL and Manikant Shah 1 0.0001%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004* Equity capital 0.10 - -

Reserves - - -

Sales - - -

PAT (0.03) - -

EPS (Rs.) (2.78) - -

Book value per share (Rs.) 6.58 - -

* Kolland Developers Private Limited was incorporated in Fiscal 2005. 23. Magpie Finance Private Limited

Magpie Finance Private Limited was incorporated on March 10, 1989. This company is engaged in the business of investment in stocks and securities.

Registered Office The registered office of Magpie Finance Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors

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The board of directors of Magpie Finance Private Limited consists of: 1. F.K. Bhathena 2. R. Jain 3. B.S. Mistry

Shareholding Pattern The shareholding pattern of Magpie Finance Private Limited is as under:

Names of the shareholders No. of shares held % holding Manjri Stud Farm Private Limited 4998 99.96%

Manjri Stud Farm Private Limited and R. Jain

1 0.02%

Manjri Stud Farm Private Limited and Shapoor Pallonji Mistry

1 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.50 0.50

Reserves - - -

Sales 0.42 1.89 1.15

PAT (0.17) 0.04 (0.07)

EPS (Rs.) (33.0) 9.00 (14.00)

Book value per share (Rs.) (153.90) (120.42) (129.31)

24. Manjri Developers Private Limited Manjri Developers Private Limited was incorporated on March 23, 2006. This company is not presently engaged in any business activity.

Registered Office

The registered office of Manjri Developers Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors

The board of directors of Manjri Developers Private Limited consists of: 1. R.M. Nentin 2. Jimmy J. Parakh

Shareholding Pattern The shareholding pattern of Manjri Developers Private Limited is as under:

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Financial Performance There are no figures to report for financial performance of this company since it does not presently engage in any business activity. 25. Manjri Stud Farm Private Limited Manjri Stud Farm Private Limited was incorporated on October 26, 1939. This company is engaged in the business of stud and agricultural activity, racing of horses and development of information technology infrastructure services. Registered Office

The registered office of Manjri Stud Farm Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Manjri Stud Farm Private Limited consists of:

1. Shapoor Pallonji Mistry 2. F.K. Bhathena 3. R.M. Nentin 4. R. Jain

Shareholding Pattern The shareholding pattern of Manjri Stud Farm Private Limited is as under:

Names of the shareholders No. of shares held % holding SPCL 37,484 99.96%

SPCL and RM Nentin 2 0.01%

SPCL and Shapoor Pallonji Mistry. 2 0.01%

Estate of Sir Jamshedji Jeejibhoy 12 0.03%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 37.50 37.50 37.5

Reserves - - -

Names of the shareholders No. of shares held % holding SICL 4,999 49.9%

Pallonji Shapporji & Co., Private Limited

4,999 49.9%

SICL and R.M. Nentin 1 0.01%

Pallonji Shapoorji & Co., Private Limited and Jimmy J. Parakh

1 0.01%

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Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Sales 191.96 83.55 39.09

PAT (69.16) (70.09) (27.45)

EPS (Rs.) (1844.29) (1869.14) (731.98)

Book value per share (Rs.) (4392.81) (2548.51) (679.37)

26. Mazsons Builders and Developers Private Limited Mazsons Builders and Developers Private Limited was incorporated on March 17, 2004. This company is engaged in the business of property development.

Registered Office The registered office of Mazsons Builders and Developers Private Limited is at: 70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Mazsons Builders and Developers Private Limited consists of: 1. R. Sharma 2. P. Shah 3. A. Kapadia

Shareholder Pattern The shareholding pattern of Mazsons Builders and Developers Private Limited is as under:

Names of the shareholders No. of shares held % holding Delna Finance and Investments Private Limited

4980 99.6%

Delna Finance and Investments Private Limited and K.B. Captain

10 0.2%

Delna Finance and Investments Private Limited and R.M. Nentin

10 0.2%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.48 0.48

Reserves - - -

Sales - - -

PAT (0.04) (0.05) (0.02)

EPS (Rs.) (7.42) (11.47) (5.06)

Book value per share (Rs.) 73.66 79.74 90.79

.

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27. Meriland Estates Private Limited Meriland Estates Private Limited was incorporated on May 4, 1998. This company is engaged in the business of real estate developments and investment.

Registered Office

The registered office of Meriland Estates Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Meriland Estates Private Limited consists of:

1. F.K. Bhathena 2. K.B. Captain 3. J. J. Parakh

Shareholding Pattern The shareholding pattern of Meriland Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 49980 99.96%

SICL and F.K. Bhathena 10 0.02%

SICL and K.B. Captain 10 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.50 0.50

Reserves - - -

Sales - - 0.12

PAT (0.15) (0.15) 0.05

EPS (Rs.) (2.98) (3.24) 1.13

Book value per share (Rs.) 4.48 7.46 9.93

28. Milvin Investments Private Limited

Milvin Investments Private Limited was incorporated on November 15, 1988. This company is engaged in the business of investment in stocks and securities.

Registered Office The registered office of Milvin Investments Private Limited is at:

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70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Milvin Investments Private Limited consists of:

1. R.M. Nentin 2. P.C. Sheth 3. H.J. Tavaria

Shareholding Pattern The shareholding pattern of Milvin Investments Private Limited is as under:

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 3.50 3.50 3.50

Reserves 0.19 0.19 0.19

Sales 0.02 0.02 0.04

PAT (2.73) (0.55) (0.09)

EPS (Rs.) (78.12) (1.57) (2.65)

Book value per share (Rs.) 12.97 91.09 92.66

29. Palchin Real Estates Private Limited

Palchin Real Estates Private Limited was incorporated on January 19, 1995. This company is engaged in the business of real estate development.

Registered Office The registered office of Palchin Real Estates Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Palchin Real Estates Private Limited consists of:

1. F.K. Bhathena

Names of the shareholders No. of shares held % holding Sterling Investments Corporation Limited

34,998 99.99%

Sterling Investments Corporation Limited and F.K. Bhathena

1 0.002%

Sterling Investments Corporation Limited and Jimmy J. Parakh

1 0.002%

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2. Jimmy J. Parakh

Shareholding Pattern The shareholding pattern of Palchin Real Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 49980 99.96%

SICL and R.M. Nentin 10 0.02%

SICL and F.K. Bhathena 10 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.50 0.50

Reserves 0.14 0.26 0.35

Sales - 0.19 -

PAT (0.12) (0.09) (0.20)

EPS (Rs.) (2.48) (1.82) 3.94

Book value per share (Rs.) 9.89 15.20 17.07

30. Ramili Investments Private Limited Ramili Investments Private Limited was incorporated on January 13, 1989. This company is engaged in the business of investment in stocks.

Registered Office The registered office of Ramili Investments Private Limited is at: 70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Ramili Investments Private Limited consists of: 1. Jimmy J. Parakh 2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Ramili Investments Private Limited is as under:

Financial Performance

Names of the shareholders No. of shares held % holding SPCL 21,998 99.99%

SPCL and R.M. Nentin 1 0.004%

SPCL and Jimmy J. Parakh 1 0.004%

170

Summary audited stand-alone financial statements for the last three fiscal years is as under

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 2.20 2.20 2.40

Reserves - - -

Sales - - 0.02

PAT (0.05) (0.04) (0.04)

EPS (Rs.) (2.15) (1.87) (1.87)

Book value per share (Rs.) 53.69 55.84 57.71

31. Shachin Real Estates Private Limited Shachin Real Estates Private Limited was incorporated on January 24, 1995. This company is engaged in the business of real estate development.

Registered Office

The registered office of Shachin Real Estates Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Shachin Real Estates Private Limited consists of: 1. K.B. Captain 2. R.M. Nentin 3. P.C. Sheth Shareholding Pattern The shareholding pattern of Shachin Real Estates Private Limited is as under:

Names of the shareholders No. of shares held % holding Sterling Investments Corporation Limited

129,800 99.84%

Sterling Investments Corporation Limited and K.B. Captain

100 0.08%

Sterling Investments Corporation Limited and R.M. Nentin

100 0.08%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 1.30 1.30 1.30

Reserves 0.34 0.13 0.22

Sales 0.36 0.36 0.33

171

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 PAT 0.21 (0.08) 0.19

EPS (Rs.) 1.58 (0.63) 1.43

Book value per share (Rs.) 10.50 10.69 11.26

32. S.C. Impex Private Limited S.C. Impex Private Limited was incorporated on March 21, 1979. This company is engaged in the business of investing in property.

Registered Office The registered office of S.C. Impex Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of S.C. Impex Private Limited consists of:

1. Jimmy J. Parakh 2. R.M. Nentin

Shareholding Pattern The shareholding pattern of S.C. Impex Private Limited is as under:

Names of the shareholders No. of shares held % holding SPCL 2399 99.95%

SPCL and K.B. Captain 1 0.04%

Financial Performance Summary audited stand-alone financial statements for the last three fiscal years:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 2.40 2.40 2.40

Reserves - - -

Sales - - -

PAT (0.28) (0.27) (0.25)

EPS (Rs.) (117.85) (113.85) (106.1)

Book value per share (Rs.) 109.72 226.90 340.75

33. Shapoorji & Co., Private Limited

Shapoorji & Co., Private Limited was incorporated on December 12, 1943. This company is engaged in the business of investment in stocks and securities and trading in securities.

Registered Office

172

The registered office of Shapoorji & Co., Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors

The board of directors of Shapoorji & Co., Private Limited consists of:

1. K.B. Captain 2. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Shapoorji & Co., Private Limited is as under:

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 4.50 4.50 4,50

Reserves 1.23 1.20 1.19

Sales 0.30 0.32 0.31

PAT 0.03 0.01 (0.05)

EPS (Rs.) 0.57 0.31 (1.08)

Book value per share (Rs.) 127.30 126.73 126.42

34. Shapoorji & Co. (Rajkot) Private Limited

Shapoorji & Co. (Rajkot) Private Limited was incorporated on April 1, 1942. This company is engaged in the business of investment in stocks and securities. Registered Office The registered office of Shapoorji & Co. (Rajkot) Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Shapoorji & Co. (Rajkot) Private Limited consists of:

1. R.M. Nentin 2. SH.J. Tavaria

Names of the shareholders No. of shares held % holding SICL 44998 99.99%

SICL and Pallonji Shapoorji Mistry 1 0.002%

SICL and R.S. Khusrokhan 1 0.002%

173

Financial Performance The shareholding pattern of Shapoorji & Co. (Rajkot) Private Limited is as under:

Names of the shareholders No. of shares held % holding Shapoor Pallonji Mistry 23,199,940 49.99%

Cyrus Pallonji Mistry 23,199,940 49.99%

S P Finance Private Limited 20 0.00004%

SC Finance and Investments Private Limited

20 0.00004%

Shapoor Pallonji Mistry and PMistry 10 0.00002%

Shapoor Pallonji Mistry and K.B. Captain

10 0.00002%

Shapoor Pallonji Mistry and Jimmy J. Parakh

10 0.00002%

Shapoor Pallonji Mistry and F.K. Bhathena

10 0.00002%

Cyrus Pallonji Mistry and K.B. Captain 10 0.00002%

Cyrus Pallonji Mistry and F.K. Bhathena

10 0.00002%

Cyrus Pallonji Mistry and Jimmy J. Parakh

10 0.00002%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 2862.50 0.50 0.50

Reserves 7.26 12.74 12.99

Sales 1.35 0.06 0.08

PAT (5.48) (0.25) (0.33)

EPS (Rs.) (2.28) (49.81) (65.75)

Book value per share (Rs.) 9.96 2648.05 2697.86

35. Shapoorji Data Processing Private Limited

Shapoorji Data Processing Private Limited (previously known as Strata Search Shapoorji Private Limited) was incorporated on October 21, 1985. The company is engaged in the business of investments in property. Registered Office The registered office of Shapoorji Data Processing Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors

174

The board of directors of Shapoorji Data Processing Private Limited consists of:

1. J.J Parakh 2. K.B. Captain 3. R.M. Nentin

Shareholding Pattern The shareholding pattern of Shapoorji Data Processing Private Limited is as under:

Names of the shareholders No. of shares held % holding SPCL 4998 99.96%

SPCL and Jimmy J. Parakh 1 0.02%

SPCL and K.B. Captain 1 0.02%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.50 0.50

Reserves - - -

Sales 1.73 2.64 3.07

PAT (3.54) (1.00) (1.31)

EPS (Rs.) (707.40) (199.27) (261.82)

Book value per share (Rs.) (1845.07) (1239.41) (1038.22)

36. Shapoorji Drilling Enterprises Private Limited

Shapoorji Drilling Enterprises Private Limited was incorporated on September 25, 1984. This company is engaged in the business of investment in stocks and securities and trading in securities.

Registered Office The registered office of Shapoorji Drilling Enterprises Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors

The board of directors of Shapoorji Drilling Enterprises Private Limited consists of:

1. K.B. Captain 2. R.M. Nentin The shareholding pattern of Shapoorji Drilling Enterprises Private Limited is as under:

Names of the shareholders No. of shares held % holding SPCL 20598 99.99%

SPCL and Jimmy J. Parakh 1 0.004%

SPCL and K.B. Captain 1 0.004%

175

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 1.66 1.66 1.66

Reserves - - -

Sales - - -

PAT (0.02) (0.02) (0.03)

EPS (Rs.) (1.02) (0.89) (1.50)

Book value per share (Rs.) 70.46 71.48 72.37

37. Shapoorji Hotels Private Limited

Shapoorji Hotels Private Limited was incorporated on July 14, 1993. This company is engaged in the business of investment in stocks and securities.

Registered Office The registered office of Shapoorji Hotels Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors

The board of directors of Shapoorji Hotels Private Limited consists of:

1. Jimmy J. Parakh 2. K.B. Captain Shareholding Pattern The shareholding pattern of Shapoorji Hotels Private Limited is as under:

Names of the shareholders No. of shares held % holding CIL and K.B. Captain 9980 99.8%

CIL 10 0.1%

CIL and Jimmy J. Parakh 10 0.1%

Financial Performance Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.10 0.10 0.10

Reserves - - -

Sales - - -

PAT (0.01) (0.01) (0.01)

EPS (Rs.) (1.17) (0.55) (0.50)

Book value per share (Rs.) 3.47 4.63 5.18

176

38. Sharus Building Services India Private Limited Sharus Building Services India Private Limited was incorporated on September 27, 1999. The company is engaged in the manufacture of steel door frames.

Registered Office The registered office of Sharus Building Services India Private Limited is at: 70, Nagindas Master Road, Fort, Mumbai 400 023, India Board of Directors

The board of directors of Sharus Building Services India Private Limited consists of: 1. K.B. Captain 2. R. Jain

Shareholding Pattern

The shareholding pattern Sharus Building Services India Private Limited is as under:

Names of the shareholders No. of shares held % holding Sterling Investments Corporation Limited and K.B. Captain

10 50%

R. Jain 10 50%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.50 0.50

Reserves 0.28 0.25 0.28

Sales 77.03 107.20 51.81

PAT 0.04 0.42 0.15

EPS (Rs.) 7.24 84.46 30.58

Book value per share (Rs.) (964.14) 148.43 33.94

39. SP Aluminum Systems Private Limited SP Aluminum Systems Private Limited was incorporated on December 14, 1995. This company is engaged in the business of investment in stocks and securities.

Registered Office The registered office of SP Aluminum Systems Private Limited is at:

70, Nagindas Master Road,

177

Fort, Mumbai 400 023, India Board of Directors The board of directors of SP Aluminum Systems Private Limited consists of:

1. Cyrus Pallonji Mistry 2. R. Jain 3. P.C. Sheth

Shareholding Pattern The shareholding pattern of SP Aluminum Systems Private Limited is as under:

Names of the shareholders No. of shares held % holding Abhipreet Trading Private Limited 16000 20%

Ramili Investments Private Limited 16000 20%

Rosate 16000 20%

Flotilla Investments Private Limited 16000 20%

Floral Investments Private Limited 16000 20%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 8.00 8.00 8.00

Reserves - - -

Sales - - -

PAT (0.54) (0.61) (0.61)

EPS (Rs.)* (679) (768) (769)

Book value per share (Rs.) 68.21 74.98 82.65

* The face value of shares issued is Rs.100 40. SP Architectural Coatings Private Limited SP Architectural Coatings Private Limited was incorporated on June 28, 1999. This company is engaged in the business of carrying out processes for coating of aluminum profiles and sheets.

Registered Office The registered office of SP Architectural Coatings Private Limited is at: 70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of SP Architectural Coatings Private Limited consists of:

178

1. K.B. Captain 2. H.J. Tavaria The shareholding pattern of SP Architectural Coatings Private Limited is as under:

Names of the shareholders No. of shares held % holding Anand Agencies Private Limited 110,000 22

SICL 100,000 20

Shapoorji Drilling Enterprises Private Limited

100,000 20

Cyrus Engineers Private Limited 100,000 20

Shapoorji & Co. (Rajkot) Limited 90,000 18

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 5.00 5.00 5.00

Reserves 1.44 - -

Sales 24.97 25.99 28.55

PAT 3.15 1.51 3.56

EPS (Rs.) 6.31 3.03 7.13

Book value per share (Rs.) 12.86 6.07 3.09

41. SP Infocity Developers Private Limited SP Infocity Developers Private Limited was incorporated on February 8, 2006. This company is not currently engaged in any business.

Registered Office The registered office of SP Infocity Developers Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of SP Infocity Developers Private Limited consists of: 1. F.K. Bhathena 2. R.M. Nentin

Shareholding Pattern The shareholding pattern of SP Infocity Developers Private Limited is as under:

179

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004* Equity capital 0.50 - -

Reserves - - -

Sales - - -

PAT (0.01) - -

EPS (Rs.) (0.22) - -

Book value per share (Rs.) 9.40 - -

* SP Infocity Developers Private Limited was incorporated in Fiscal 2006

42. SP Fabricators Private Limited SP Fabricators Private Limited was incorporated on June 28, 1993. This company is engaged in the business of structural blazing, aluminum composite paneling and manufacture of skylights.

Registered Office The registered office of SP Fabricators Private Limited is at: 70, Nagindas Master Road, Fort, Mumbai 400 023, India Board of Directors The board of directors of SP Fabricators Private Limited consists of: 1. R. Jain 2. M.S. Hingorani 3. Jimmy J. Parakh 4. H.J. Tavaria

Shareholding Pattern The shareholding pattern of SP Fabricators Private Limited is as under:

Names of the shareholders No. of shares held % holding SPCL 29,998 59.97%

Manjri Stud Firm Private Limited 19,992 39.98%

Manjri Stud Firm Private Limited and F.K. Bhathena

10 0.02%

SPCL and Jimmy J. Parakh 10 0.02%

180

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data) Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Equity capital 15.00 15.00 15.00

Reserves 12.14 - -

Sales 792.51 446.59 313.75

PAT 48.53 16.16 (0.68)

EPS (Rs.) 324.00 107.76 (0.5)

Book value per share (Rs.) 131.43 (203.57) (470.35)

43. Shapoorji Pallonji Biotech Park Private Limited Shapoorji Pallonji Biotech Park Private Limited was incorporated on September 7, 2001. This company is engaged in the business of development of biotechnology parks.

Registered Office The registered office of Shapoorji Pallonji Biotech Park Private Limited is at: A-13, Ground Floor, R.K. Nivas, Street No. 3, Indian Airlines Colony, Begumpet, Secunderabad 500 003, Andhra Pradesh, India

Board of Directors The board of directors of Shapoorji Pallonji Biotech Park Private Limited consists of: 1. M.S. Hingorani 2. S.Dhawan 3. S. Kuppuswamy 4. L. Parthasarthy (Nominee of the Government of Andhra Pradesh)

Names of the shareholders Equity Shares

% Holding Preference Shares(9%

Redeemable)

% Holding

CIL - - 415,000 51.87%

SICL - - 225,000 28.12%

Anand Agencies - - 95,000 11.87%

Shapoorji Pallonji (Rajkot) Limited - - 55,000 6.8%

Shapoorji & Co. (Rajkot) Limited - - 10,000 1.25%

SP Aluminum Systems Private Limited 149998 99.99% - -

SP Aluminum Systems Private Limited and R. Jain

1 0.0006% - -

SP Aluminum Systems Private Limited and K.B. Captain

1 0.0006% - -

181

Shareholding Pattern

The shareholding pattern of Shapoorji Pallonji Biotech Park Private Limited is as under:

Names of the shareholders No. of shares held % holding Cyrus Investments Limited 2,000,000 91.04%

Government of Andhra Pradesh 186,800 8.50%

Shapoorji & Co. (Rajkot) Limited 9,997 0.46%

Z. Iqbal 1 0.00005%

M.S. Hingorani 1 0.00005%

S. Kuppuswamy 1 0.00005%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 21.97 21.97 1.97

Reserves 22.83 - -

Sales 120.62 - -

PAT 29.09 - -

EPS (Rs.) 13.24 - -

Book value per share (Rs.) 20.39 1.42 (63.59)

44. Shapoorji Pallonji Finance Limited Shapoorji Pallonji Finance Limited was incorporated on April 4, 1994. This company is engaged in the business of leasing, hire purchase and syndication of loans.

Registered Office The registered office of Shapoorji Pallonji Finance Limited is at: 70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Shapoorji Pallonji Finance Limited consists of:

1. Pallonji Shapoorji Mistry 2. Shapoor Pallonji Mistry 3. Cyrus Pallonji Mistry 4. P.C. Sheth 5. Jimmy J. Parakh 6. N.C. Singal

Shareholding Pattern The shareholding pattern of Shapoorji Pallonji Finance Limited is as under:

182

Names of the shareholders No. of shares held % holding Cyrus Investments Limited 4637695 61.83%

Shapoorji Pallonji & Co., Limited 2025000 27.00%

Flotilla Finance Limited 350000 4.67%

Abhipreet Investments Limited 175000 2.33%

Cyrus Engineers Limited 160601 2.14%

S. Mistry 50000 0.66%

S. Mistry 50000 0.66%

Anand Agencies Private Limited 25000 0.33%

R. Mistry 25000 0.33%

A. Tata 20000 0.26%

H. Amin 3000 0.040%

Pallonji Shapoorji & Co. Private Limited

2000 0.02%

S. Suryanarayan 1000 0.01%

C. Herawatt 500 0.006%

R. Tata 200 0.002%

F.K. Bhathena 1 0%

K. Captain 1 0%

P.C. Sheth 1 0%

Pallonji Shapoorji Mistry 1 0%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 75 75 75

Reserves 3.14 2.92 2.73

Sales 14.32 7.84 8.05

PAT 1.01 0.87 2.00

EPS (Rs.) 0.13 0.12 0.27

Book value per share (Rs.) 6.20 6.07 5.95

45. Shapoorji Pallonji Infrastructure Capital Co. Limited

Shapoorji Pallonji Infrastructure Capital Co. Limited was incorporated on June 9, 1997. This company is engaged in the business in investments and finance of infrastructure projects.

Registered Office The registered office of Shapoorji Pallonji Infrastructure Capital Co. Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Shapoorji Pallonji Infrastructure Capital Co. Limited consists of:

1. Pallonji Shapoorji Mistry 2. Shapoor Pallonji Mistry

183

3. Cyrus Pallonji Mistry 4. F.K. Bhathena 5. H.J. Tavaria 6. R.M. Nentin

Shareholding Pattern

The shareholding pattern of Shapoorji Pallonji Infrastructure Capital Co. Limited is as under:

Financial Performance Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 196.10 196.10 196.10

Reserves 149.87 49.20 18.22

Sales 102.54 31.06 10.22

PAT 100.67 30.99 10.14

EPS (Rs.) 4.11 1.26 0.41

Book value per share (Rs.) 17.64 12.50 10.92

46. Shapoorji Pallonji (Gwalior) Private Limited Shapoorji Pallonji (Gwalior) Private Limited was incorporated on September 29, 1944. This company is engaged in the business of investment in stocks and securities and trading in securities. Registered Office The registered office of Shapoorji Pallonji (Gwalior) Private Limited is at: Next to Burmah Shell Training Centre, Juhu Tara Road, Mumbai – 400 054, India

Board of Directors The board of directors of Shapoorji Pallonji (Gwalior) Private Limited consists of :

1. K.B. Captain 2. R.M. Nentin

Names of the shareholders No. of shares held % holding CIL 1,96,05,160 99.97%

Cyrus Engineers Private Limited 2390 0.012%

Shapoorji & Co., Private Limited 2380 0.012%

P.C. Sheth 10 0.00005%

K.B. Captain 10 0.00005%

P.N. Maloo 10 0.00005%

F.K. Bhathena 10 0.00005%

J.J. Parakh 10 0.00005%

R.M. Nentin 10 0.00005%

CIL and R.M. Nentin 10 0.00005%

184

3. P.P. Mistry

Shareholding Pattern The shareholding pattern of Shapoorji Pallonji (Gwalior) Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 249,970 99.98%

SICL and P.P. Mistry 10 0.004%

SICL and K.B. Captain 10 0.004%

SICL and F.K. Bhathena 10 0.004%

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 2.50 2.50 2.50

Reserves 3.26 3.25 2.63

Sales 0.34 0.35 0.35

PAT 0.01 0.01 -

EPS (Rs.) 0.004 0.031 0.015

Book value per share (Rs.) 23.03 22.99 20.53

47. Shapoorji Pallonji Ports Private Limited

Shapoorji Pallonji Ports Private Limited was incorporated on May 12, 2003. This company is engaged in the business of development of sea ports and undertakes port related services.

Registered Office

The registered office of Shapoorji Pallonji Ports Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors

The board of directors of Shapoorji Pallonji Ports Private Limited consists of: 1. K.B. Captain 2. R.M. Nentin 3. D.S. Salgia

Shareholding Pattern

The shareholding pattern of Shapoorji Pallonji Ports Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 49998 99.99%

SICL and Deepesh Salgia 1 0.002%

SICL and K.B. Captain 1 0.002%

185

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.50 0.50

Reserves - - -

Sales 0.01 0.01 -

PAT (0.01) 0.01 (0.01)

EPS (Rs.) (0.26) 0.18 (0.15)

Book value per share (Rs.) (60.67) 9.71 9.50

48. Shapoorji Pallonji Power Company Limited

Shapoorji Pallonji Power Company Limited was incorporated on January 3, 1995. This company was formed for the purpose of setting up a power plant, however presently this company does not engage in any business activity.

Registered Office The registered office of Shapoorji PallonjiCompany Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Shapoorji Pallonji Power Company Limited consists of:

1. Pallonji Shapoorji Mistry 2. Shapoorji Pallonji Mistry 3. Cyrus Pallonji Mistry 4. P.C. Sheth 5. F.K. Bhathena 6. Hanut Singh 7. M.S. Hingori

Shareholding Pattern The shareholding pattern of Shapoorji Pallonji Power Private Limited is as under:

Names of the shareholders No. of shares held % holding SICL 37498 37.50%

CIL 37498 37.50%

Cyrus Engineers Private Limited 24998 25.00%

R.M. Nentin 2 0.002%

P.C. Sheth 1 0.001%

K.B. Captain 1 0.001%

F.K. Bhathena 1 0.001%

J.J. Parakh 1 0.001%

SICL and R.M. Nentin 1 0.001%

186

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 1.00 1.00 1.00

Reserves - - -

Sales 3.91 0.79 5.83

PAT 2.53 0.18 3.49

EPS (Rs.) 25.28 1.80 36.28

Book value per share (Rs.) (73.36) (98.65) (100.44)

49. Shapoorji Pallonji & Co., (Rajkot) Private Limited

Shapoorji Pallonji & Co., (Rajkot) Private Limited was incorporated on July 3, 1942. This company is engaged in the business of investment in stocks and securities.

Registered Office The registered office of Shapoorji Pallonji & Co., (Rajkot) Private Limited is at: 70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Shapoorji Pallonji & Co., (Rajkot) Private Limited consists of: 1. Shapoor Pallonji Mistry 2. Cyrus Pallonji Mistry 3. P.C. Sheth 4. F.K. Bhathena

Shareholding Pattern The shareholding pattern of Shapoorji Pallonji & Co., (Rajkot) Private Limited is as under:

187

Financial Performance Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 464 0.50 0.50

Reserves 26.62 26.84 26.91

Sales 1.84 0.54 0.67

PAT (0.22) (0.07) (0.03)

EPS (Rs.) (0.51) (13.98) (6.85)

Book value per share (Rs.) 10.50 5468.42 5482.41

50. Skyscape Developers Private Limited

Skyscape Developers Private Limited was incorporated on January 18, 2006. This company is engaged in the business of property development.

Registered Office The registered office of Skyscape Developers Private Limited is at:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

The board of directors of Skyscape Developers Private Limited consists of:

1. F.K. Bhathena 2. R.M. Nentin

Shareholding Pattern The shareholding pattern of Skyscape Developers Private Limited is as under:

Names of the shareholders No. of shares held % holding Shapoor Pallonji Mistry 23,199,940 49.99%

Cyrus Pallonji Mistry 23, 199,940 49.99%

SP Finance Private Limited 20 0.00004%

SC Finance and Investments Private Limited

20 0.00004%

Shapoor Pallonji Mistry and P.P. Mistry 10 0.00002%

Shapoor Pallonji Mistry and K.B. Captain

10 0.00002%

Shapoor Pallonji Mistry and Jimmy J. Parakh

10 0.00002%

Shapoor Pallonji Mistry and F.K. Bhathena

10 0.00002%

Cyrus Pallonji Mistry and K.B. Captain 10 0.00002%

Cyrus Pallonji Mistry and F.K. Bhathena

10 0.00002%

Cyrus Pallonji Mistry and Jimmy J. Parakh

10 0.00002%

188

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004* Equity capital 0.10 - -

Reserves - - -

Sales - - -

PAT (0.01) - -

EPS (Rs.) (1.08) - -

Book value per share (Rs.) 8.29 - -

* Skyscape Developers Private Limited was incorporated in Fiscal 2006.

51. Sterling Generators Private Limited

Sterling Generators Private Limited (previously known as Chinsha Investments Private Limited) was incorporated on February 24, 1995. This company is engaged in the business of manufacturing of diesel generating sets and transformers.

Registered Office The registered office of Sterling Generators Private Limited is at:

Bussa Udyog Bhavan, T.J. Road, Sewree, Mumbai 400 015, India Board of Directors

The board of directors of Sterling Generators Private Limited consists of:

1. Jimmy J. Parakh 2. Z.Y. Darawalla 3. K.Y. Darawalla

Shareholding Pattern The shareholding pattern of Sterling Generators Private Limited is as under:

Financial Performance

Names of the shareholders No. of shares held % holding CIL 4999 49.99%

Anand Agencies 4999 49.99%

F.K. Bhathena 1 0.01%

R.M. Nentin 1 0.01%

Names of the shareholders No. of shares held % holding SICL 9998 99.98%

Aloo N. Tata 1 0.01%

SICL and Jimmy J. Parakh 1 0.01%

189

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data) Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004

Equity capital 10.00 0.10 0.10

Reserves - - -

Sales 0.18 - -

PAT (4.25) (0.01) (0.01)

EPS (Rs.) (29.18) (0.54) (0.54)

Book value per share (Rs.) 5.70 4.89 5.47

52. Sunny View Estates Private Limited Sunny View Estates Private Limited was incorporated on May 18, 1998. This company is engaged in the business of property development.

Registered Office The registered office of Sunny View Estates Private Limited:

70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Sunny View Estates Private Limited consists of: 1. F.K. Bhathena 2. R.M. Nentin The shareholding pattern of Sunny View Estates Private Limited is as under:

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 0.50 0.50 0.10

Reserves - - -

Sales 53.36 - -

PAT (15.78) (0.15) (0.02)

EPS (Rs.) (315.64) (2.97) (0.61)

Book value per share (Rs.) (309.62) 6.02 4.97

53. United Motors (India) Limited

Names of the shareholders No. of shares held % holding SICL 49980 99.96%

SICL and F.K. Bhathena 10 0.02%

SICL and Jimmy J. Parakh 10 0.02%

190

United Motors (India) Limited was incorporated on August 4, 1920. This company is engaged in the business of sale of petrol and diesel and retail.

Registered Office The registered office of United Motors (India) Limited is at: 70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of United Motors (India) Limited cosnists of: 1. P.S. Mistry 2. S.P. Mistry 3. C.P. Mistry 4. P.C. Sheth 5. J. J. Parakh 6.

Shareholding Pattern The shareholding pattern of United Motors (India) Limited is as under:

Names of the shareholders No. of equity shares held

% holding No. of preference shares held

% holding

SPCL 403344 50.55% 7500000 50%

FIL 262977 32.96% 7500000 50%

CIL 54924 6.88% - -

Shapoorji Pallonji (Gwalior) Limited

53620 6.72% - -

Others 16715 2.09% - -

Unallotted bonus shares to foreign shareholders

2296 0.29% - -

T.N. Atkinson 1400 0.18% - -

Pallonji Shapoorji & Co., Private Limited

564 0.07% - -

Anand Agencies Private Limited

560 0.07% - -

A.L. Doherty 560 0.07% - -

K.M. Mistry 400 0.05% - -

Bank of India 184 0.02% - -

Lt. Col. R.B. Lloyd 168 0.02% - -

B.G. White 112 0.01% - -

E.C. Allen 56 0.01% - -

H.M. Khajurina 56 0.01% - -

Financial Performance

Summary audited stand-alone financial statements for the last three fiscal years is as follows:

191

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005 Fiscal 2004 Equity capital 7.98 7.98 7.98

Reserves 112.89 112.89 112.89

Sales 50.75 71.93 28.54

PAT 26.78 15.30 (78.18)

EPS (Rs.) 33.57 19.17 (97.97)

Book value per share (Rs.) (134.78) (187.11) (225.28)

54. Windward Developers Private Limited Windward Developers Private Limited was incorporated on December 22, 2005. This company is engaged in the business of property development. The registered office of Windward Developers Private Limited: 70, Nagindas Master Road, Fort, Mumbai 400 023, India

Board of Directors The board of directors of Windward Developers Private Limited consists of: 1. Jimmy J. Parakh 2. R.M. Nentin

Shareholding Pattern The shareholding pattern of Windward Developers Private Limited is as under:

Financial Performance Summary audited stand-alone financial statements for the last three fiscal years is as follows:

(Rs. in million except per share data)

Particulars Fiscal 2006 Fiscal 2005* Fiscal 2004* Equity capital 0.50 - -

Reserves - - -

Sales - - -

PAT (0.01) - -

EPS (Rs.) (2.78) - -

Book value per share (Rs.) 93.34 - -

* Windward Developers Private Limited was incorporated in Fiscal 2006

Names of the shareholders No. of shares held % holding SICL 3237 64.74

SPCL 1494 29.88

Manjri Stud Firm Private Limited 249 4.98

SICL and R.M. Nentin 10 0.20

SICL and Jimmy J. Parakh 10 0.20

192

Promoter Group companies under winding up

SIV Industries Limited This company was incorporated on August 22, 1957. This company was engaged in the manufacture of manmade fibres such as viscose fibre. However, this company is now under liquidation pursuant to a winding up order dated August 25, 2004 passed by the High Court of Madras. The Official Liquidator took charge of all assets of the company in October, 2004. The liquidation process is yet to be completed. The equity shares of this company were listed on the BSE, NSE and the Madras Stock Exchange. The stock exchanges were informed of the winding up process of this company by a letter from this company dated September 15, 2004.

Board of Directors The erstwhile board of directors of this company consisted of: 1. K.K. Shah 2. A.S. Rajagopalan 3. C. Sivaramakrishnan 4. T.S. Chellam 5. V.K. Subburaj (Representative of the Government of Tamil Nadu) 6. Ajay Bhattacharya (Representative of the Government of Tamil Nadu)

Shareholding pattern of this company as of the date of filing for liquidation was as follows:

Sr No. Name of the Shareholder No. of Equity Shares Percentage

1. Promoters and Associates Gherda S.A. 19,838,057 28.701%

Sterling Investment Corporation Private Limited 11,953,092 17.293%

Shapoorji Pallonji & Co., Limited 6,928,520 10.024%

United Motors India Limited 2,894,835 4.188%

Pallonji Shapoorji & Co., Private Limited 265,000 0.383%

Anand Agencies Private Limited 141,820 0.205%

S.P. Mistry 128,200 0.185%

C.P. Mistry 66,200 0.096%

SC Finance & Investments Private Limited 58,200 0.084%

SP Finance Private Limited 54,200 0.078%

A.N. Tata 20,000 0.029%

Crystal Investment Co., Private Limited 8,424 0.012%

Shakai Containers Private Limited 4000 0.006%

Kaisha Manufacturers Private Limited 4000 0.006%

Glittering Gold Finance Private Limited 4,176 0.006%

P.P. Mistry 4,000 0.006%

P.S. Mistry 3,600 0.005%

N.N. Tata 3,539 0.005%

B.S. Mistry 2,000 0.003%

H. Mehta 1,800 0.003%

R.C. Mistry 500 0.001%

N.M. Adenwala 300 0.00%

Promoter and Associates Total 42, 384,463 61.32%

2. Public 11,176,640 16.17%

3. Corporate Bodies 33,38,477 4.83%

4. G.I.C. and Subsidiaries 31,86,413 4.61%

5. Bank of New York 31,31,118 4.53%

193

Sr No. Name of the Shareholder No. of Equity Shares Percentage 6. L.I.C. 24,53,746 3.55%

7. Unit Trust of India 16,31,222 2.36%

8. Government of Tamil Nadu 7,60,316 1.10%

9. Foreign Instiutional Investors 6,56,636 0.95%

10. Non-Domestic Companies 1,31,327 0.19%

11. Non-Resident Indians 1,03,679 0.15%

12. Mutual Funds and Banks 76,031 0.11%

TOTAL 69,119,608 100%

Stock Price Data Since this company is currently under winding up, it is not traded on any stock exchange.

Financial Performance

Summary audited stand alone financial statements for the last three fiscal years is as follows:

Particulars 2004 2003 2002 Equity capital n.a. 69.12 69.12

Reserves n.a. -437.22 -324.72

Sales 6.92 6.40 14.30

PAT -121.74 -112.5 -73.09

EPS (Rs.) n.a. -16.27 -10.5744

Book value per share(Rs.) n.a. -437.22 -324.72

n.a.: not available Source: www.bseindia.com/capital line This company has been under winding up since August 25, 2004 and therefore, no financials are available after fiscal 2005.

Companies disassociated/ struck off The promoters have not disassociated themselves from any company/ firm during preceding three years. No promoter group companies have been struck from the records of the registrar of companies during preceding three years. Common pursuits with the Issuer One of our promoters, SPCL is engaged in the business of civil construction and real estate development, whilst one of our promoter group companies, Shapoorji Pallonji Infrastructure Capital Co. Limited is engaged in the business in investments and finance of infrastructure projects.

194

RELATED PARTY TRANSACTIONS

STATEMENT OF RELATED PARTIES

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

(I) Transactions during the year:

Holding company(s)

Issue of 7.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Cyrus Investments Limited - 200.00 200.00 200.00 - -

Issue of 12% Redeemable Non - Cumulative Convertible Preference Share Capital

Cyrus Investments Limited - - - - - 200.00

Conversion of 12% Redeemable Cumulative Convertible Preference Share Capital to Equity Share Capital

Cyrus Investments Limited - - - - 200.00 -

Guarantees Given by/(Released)

Cyrus Investments Limited - - 150.00 - - -

Subsidiary companies

Sub-Contract Expenses

Afcons Pauling (India) Limited

- - - - - 0.71

Purchase of stores & spares

SSS Electrical (India) Private Limited

- - - - - 0.67

Sale of Stores & spares

Afcons Pauling (India) Limited

- - - - - 0.37

195

Service Charges

Afcons Dredging & Marine Services Limited

0.03 0.06 0.06 0.06 0.06 0.06

SSS Electrical (India) Private Limited

0.03 0.06 0.06 0.06 0.06 0.06

Tensacciai (India) Private Limited

- 0.06 0.06 0.06 0.06 0.06

Dividend Income

SSS Electrical (India) Private Limited

- - - - 0.17 0.14

Current Account (net) outflow / (inflow)

Hazarat & Company Private Limited

- (0.12) - 0.11 - (0.12)

Afcons Arethusa Offshore Services Private Limited

- (0.03) 0.02 - - -

Afcons Pauling (India) Limited

- - 15.07 18.23 36.74 (52.59)

SSS Electrical (India) Private Limited

0.05 (0.51) (0.06) 0.17 (1.23) (1.63)

Afcons Dredging & Marine Services Limited

0.03 (0.15) 0.01 0.01 0.02 0.01

Tensacciai (India) Private Limited

- (0.20) 0.01 - (0.39) 0.02

Afcons BOT Constructions Private Limited

- (0.01) (0.02) - - 0.01

Kier Afcons (India) Private Limited

- - - - (0.01) -

Interest Income - Current Account

Hazarat & Company Private Limited

- 0.01 0.01 - 0.01 0.01

SSS Electrical (India) Private Limited

0.01 0.03 0.05 0.04 0.09 -

Afcons Dredging & Marine Services Limited

- 0.01 0.01 0.01 0.03 0.02

Tensacciai (India) Private Limited

- 0.01 0.01 - 0.01 0.02

Afcons Pauling (India) Limited

- - 19.40 17.93 14.37 14.47

Kier Afcons (India) Private Limited

- - - - - -

Rent Income - - - - - -

Hazarat & Company Private Limited

0.06 0.12 0.09 0.09 - -

Recovery of expenses - - - - - -

Afcons Pauling (India) Limited

- - 6.98 6.80 16.25 33.46

SSS Electrical (India) Private Limited

- - - - - 1.67

Repayment/Conversion of loan

196

Afcons BOT Constructions Private Limited

- - 0.02 - - -

Afcons Pauling (India) Limited

- - 75.07 - - -

Tensacciai (India) Private Limited

- 0.21 - - - -

Afcons Dredging & Marine Services Limited

- - - 1.30 - -

Kier Afcons (India) Private Limited

- - - - 0.01 -

Guarantees Given for/(Released)

SSS Electrical (India) Private Limited

(0.25) 0.84 (0.57) 1.18 - -

Afcons Pauling (India) Limited

- - (100.00) - 100.00 410.00

Fellow Subsidiary(s)

Issue of Zero coupon Redeemable Preference Shares

Sterling Investments Corporation Private Limited

1.24 - - - - -

Issue of Equity Share Capital on conversion of 9.5% Redeemable Non - Cumulative Convertible Preference Share.

Floreat Investment Limited - 200.00 - - - -

Issue of 9.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Issue of 7.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Floreat Investment Limited - 500.00 500.00 - - -

Cyrus Investments Limited - - - - - -

Issue of 7.5% Redeemable Non - Cumulative Optionally Convertible Preference Share Capital

Floreat Investment Limited - 500.00 - - - -

Loan Taken

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Repayment/Conversion of loan

Sterling Investments - - - - 200.00 -

197

Corporation Private Limited

Interest paid loan

Sterling Investments Corporation Private Limited

- - - - 3.53 -

Partnership firm in which Company is a Partner

Current Account (net) outflow / (inflow)

Afcons Pauling Joint Venture 1.21 1.74 (2.71) 0.33 (3.08) 0.04

Profit/(Loss) of share in partnership firm

- - - - - -

Afcons Pauling Joint Venture (1.25) (1.83) 2.49 (0.62) (0.06) 1.34

Associate Company

Finance Lease Charges

Afcons (Mideast) Construction and Investments Private limited

0.04 0.07 0.07 0.07 5.60 5.60

]

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Current Account (net) outflow / (inflow)

Afcons (Mideast) Construction and Investments Private limited

- - - - - 0.82

Loan Taken

Afcons (Mideast) Construction and Investments Private limited

- - - 9.00 - -

Repayment/Conversion of loan

Afcons (Mideast) Construction andInvestments Private limited

- - - - 6.05 -

Interest paid loan

Afcons (Mideast) Construction and Investments Private limited

0.29 0.45 0.46 0.46 - -

Jointly Controller Entity

198

Service Charges

Afcons Aarsleff Joint Venture - 42.96 - - - -

Current Account (net) outflow / (inflow)

- - - - - -

Afcons Aarsleff Joint Venture 18.16 25.78 - - - -

Key Management Personnel

Managerial Remuneration paid

A.H.Divanji - - - - - 1.59

A.M.Nerurkar - - - - - 0.01

Rajul A.Bhansali - - - - 1.63 1.41

K.Subrahmanian 1.20 2.64 2.56 2.37 0.80 -

Sitting Fees paid - - - - - -

P.S.Mistry - - - 0.01 0.03 -

C.P.Mistry 0.01

0.03

0.03

0.04

0.03

-

A.H.Divanji -

-

-

-

-

0.01

Particulars For the period from

April 1, 2006 to

September 30, 2006

For the Financial Year Ended

March 31,

2006 March 31,

2005 March 31,

2004 March 31,

2003 March 31,

2002

(II) Balances as at year end:

Holding company(s)

Outstanding amount of guarantee given/ (taken)

Cyrus Investments Limited (800.00) (800.00) (150.00) - - -

Subsidiary companies

Outstanding amount of guarantee given/ (taken)

Afcons Pauling (India) Limited

- - 18.23 118.23 - -

SSS Electrical (India) Private Limited

1.28 1.53 0.68 1.25 - -

Outstanding Amount Dr/(Cr)

- - - - - -

199

Afcons Pauling (India) Limited

- - 395.80 428.78 385.82 318.45

Afcons (Overseas) Constructions and Investments Private Limited

0.12 0.12 0.12 0.11 0.11 0.11

Hazarat & Company Private Limited

0.21 0.20 0.20 0.19 0.16 0.16

Afcons BOT Constructions Private Limited

- - 0.01 0.04 0.04 0.03

SSS Electrical (India) Private Limited

0.24 0.19 0.61 0.56 0.30 1.37

Tensacciai (India) Private Limited

- - 0.34 0.27 0.21 0.52

Afcons Dredging & Marine Services Limited

0.12 0.09 0.17 0.10 1.33 1.22

Afcons Arethusa Offshore Services Private Limited

0.03 - 0.03 - - -

Afcons Employees Healthcare & Welfare Company Private Limited

0.01 0.01 0.01 - - -

- - - - - -

Partnership firm in which Company is a Partner

Outstanding Amount Dr/(Cr)

Afcons Pauling Joint Venture 146.49 146.53 146.63 146.85 147.14 150.28

Associate Company

Outstanding Amount Dr/(Cr)

Afcons (Mideast) Construction and Investments Private limited

(10.92) (10.59) (10.06) (9.52) - 9.98

Jointly Controller Entity

Outstanding Amount Dr/(Cr)

Afcons Aarsleff Joint Venture 24.40 100.34 - - - -

Al - Saeed Afcons Joint Venture

5.11 - - - - -

200

CONSOLIDATED STATEMENT OF RELATED PARTIES

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

(I) Transactions during the year:

Holding company(s)

Issue of 7.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Cyrus Investments Limited - 200.00 200.00 200.00 - -

Issue of 12% Redeemable Non - Cumulative Convertible Preference Share Capital

Cyrus Investments Limited - - - - - 200.00

Conversion of 12% Redeemable Cumulative Convertible Preference Share Capital to Equity Share Capital

Cyrus Investments Limited - - - - 200.00 -

Guarantees Given by/(Released)

Cyrus Investments Limited - - 150.00 - - -

Fellow Subsidiary(s)

Issue of Zero coupon Reedemable Preference Shares

Sterling Investments Corporation Private Limited

1.24 - - - - -

Issue of Equity Share Capital on conversion of 9.5% Redeemable Non - Cumulative Convertible Preference Share.

Floreat Investment Limited - 200.00 - - - -

Issue of 9.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Issue of 7.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Floreat Investment Limited - 500.00 500.00 - - -

Issue of 7.5% Redeemable Non - Cumulative Optionally Convertible

201

Preference Share Capital

Floreat Investment Limited - 500.00 - - - -

Loan Taken

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Repayment/Conversion of loan

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Interest paid loan

Sterling Investments Corporation Private Limited

- - - - 3.53 -

Associate Company

Finance Lease Charges

Afcons (Mideast) Construction and Investments Private limited

0.04 0.07 0.07 0.07 5.60 5.60

Current Account (net) outflow / (inflow)

Afcons (Mideast) Construction and Investments Private limited

- - - - - 0.82

Loan Taken

Afcons (Mideast) Construction and Investments Private limited

- - - 9.00 - -

Repayment/Conversion of loan

Afcons (Mideast) Construction and Investments Private limited

- - - - 6.05 -

Interest paid loan

Afcons (Mideast) Construction and Investments Private limited

0.29 0.45 0.46 0.46 - -

Key Management Personnel

Managerial Remuneration paid

A.H.Divanji - - - - - 1.59

A.M.Nerurkar - - - - - 0.01

Rajul A.Bhansali - - - - 1.63 1.41

K.Subrahmanian 1.20 2.64 2.56 2.37 0.80 -

Sitting Fees paid

P.S.Mistry - - - 0.01 0.03 -

C.P.Mistry 0.01 0.03 0.03 0.04 0.03 -

A.H.Divanji - - - - - 0.01

(II) Balances as at year end:

Holding company(s)

202

Outstanding amount of guarantee given/ (taken)

Cyrus Investments Limited (800.00) (800.00) (150.00) - - -

Associate Company

Outstanding Amount Dr/(Cr)

Afcons (Mideast) Construction and Investments Private limited

(10.92) (10.59) (10.06) (9.52) - 9.98

203

DIVIDEND POLICY

We have not declared or paid any cash dividend on our Equity Shares in the last five Fiscals. The declaration and payment of dividends if any, will be recommended by our Board of Directors and approved by our shareholders in their discretion, and will depend on a number of factors, including but not limited to our earnings, capital requirements and overall financial position. Our Company has no stated dividend policy. This is not indicative of our dividend policy or dividend amount, if any, in future.

204

INDEBTEDNESS

Details of Secured Borrowings Our secured borrowings as of September 30, 2006 are as follows:

A. Working Capital We have working capital facilities with a consortium of banks consisting of the following:

1. State Bank of India 2. Dena Bank 3. BNP Paribas 4. UTI Bank 5. ING Vysya Bank Limited 6. UCO Bank 7. Bank of India 8. Oriental Bank of Commerce 9. Union Bank of India 10. ICICI Bank Limited

The total cash credit limit granted under the said facility is Rs. 1,000 million. As of September 30, 2006, the outstanding in respect of the same was Rs. 605 million. In addition, a non-fund based limit of Rs. 9,000 million is also available to us under the said facility.

This facility is secured by the following:

1. Pari passu hypothecation charge over Company’s entire present and future stocks of raw material, work in progress, finished product and book debts;

2. Pledge of UTI Bonds (face value Rs. 38 million) ; 3. First Equitable mortgage charge on Company’s properties situated in Nagpur, Andheri

(Afcons House) and Worli (Band Box Hose); and 4. Second charge on plant and machinery of the Company

The loan agreements and sanction letters provide for certain negative and restrictive covenants that must be observed by the Company during the currency of this working capital facility. These include:

(1) It is provided that the Company cannot effect any change in its capital structure without

the prior consent of the lender in writing. (2) It is provided that the company cannot implement of any major scheme or expansion or

acquisition of fixed assets involving major expenditure without the prior consent of the lender in writing.

(3) It is provided that the Company cannot formulate any scheme of amalgamation or

reconstruction without the prior consent of the lender.

205

(4) It is provided that the Company cannot invest by way of share capital in or lend or advance funds to or place deposits with any other concern without the prior consent of the lender in writing.

(5) It is provided that the Company cannot enter into any borrowing arrangements either

secured or unsecured with any other Bank/financial institutions, company or accept of deposits apart from existing arrangements without the prior consent of the lender in writing.

(6) Undertake any guarantee obligations on behalf of the companies without the prior written

consent of the lender in writing. (7) Declaration of dividends for any year except out of profits relating to that year after

making all due and necessary provisions (provided that no default had occurred in any repayment obligations) without the prior consent of the lender in writing.

B. Equipment Loan

As of September 30, 2006, the Company had availed of a total amount of Rs. 1,218.80 from different lenders for the purchase of equipment against such equipment and machinery as collateral security as provided below:

(Rs. In Million)

Sr. No.

Name of the Lender Sanctioned Amount

Outstanding

Interest

1. ICICI Bank 126.46

59.56 6.75% to 11.25%

2. HDFC Bank 70.40

21.13 6.90% to 9.87%

3. Srei International Finance Limited

166.93

14.29 7.75% to 14.00%

4. Bharat Overseas Bank 300.00

165.04 8.75% to 10.00%

5. Oriental Bank of Commerce 500.00

213.64 7.75%

6. UTI Bank Limited 55.00 22.04 9.00%

C. Unsecured Borrowings

As of September 30, 2006, the total unsecured loans of the Company aggregated to Rs. 3,721.5 million. This includes loans taken from the following banks:

(In Rs. million)

Sr. No.

Name of the lender

Amount

Amount Outstanding

Interest

1. UCO Bank

500.00 503.39 8.25%

2. Dena Bank 1,000.00

1,000.00 8.75% and 9.00%

3. UTI Bank 500.00

503.80 9.00% and 9.50%

4. Bank of India

500.00 500.00 8.25% and 9.75%

206

Sr. No.

Name of the lender

Amount

Amount Outstanding

Interest

5. Central Bank of India

250.00 250.00 8.50%

6. State Bank of Hyderabad

250.00 250.00 7.75%

7. Oriental Bank of Commerce

250.00

156.2 7.75%

8. HDFC Limited

312.5 Nil 10.75%

9. Afcons Mideast

9.00 9.00 6.50%

10. IDBI Limited 150.00 115.00 7.80%

D. Other

As of September 30, 2006 the Company has an amount aggregating approximately to Rs. 44.45 million outstanding which was raised by the Company by way of public deposits pursuant to Companies (Acceptance of Deposits) Rules, 1975.

207

FINANCIAL STATEMENTS

AUDITORS’ REPORT

To,

The Board of Directors AFCONS Infrastructure Limited Afcons House, 16, Shah Industrial Estate Veera Desai Road, Azad Nagar P. O. Post Box No. 11976 Andheri (West), Mumbai 400 053

Dear Sirs,

Re: The proposed public offering by Afcons Infrastructure Limited.

1. We have examined the attached financial information of Afcons Infrastructure Limited (“the Company”), as approved by the Board of Directors of the Company, prepared in terms of the requirements of Paragraph B, Part II of Schedule II of the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 as amended up to 18th October, 2006 (“SEBI Guidelines”) and in terms of our engagement agreed upon with you in accordance with our engagement letter dated 4th December, 2006 requesting us to examine financial information referred to above and proposed to be included in the Offer Document being issued by the Company in connection with the proposed issue of Equity shares of the Company.

2. The above information have been extracted by the Management from the financial statements for the

year ended 31st March, 2002, 2003, 2004, 2005 and 2006. 3. We have also examined the financial information of the Company for the period 1st April, 2006 to 30th

September, 2006 prepared and approved by the Board of Directors for the purpose of disclosure in the offer document of the Company mentioned in Paragraph (1) above. The financial information for the above period was examined to the extent practicable, for the purpose of audit of financial information in accordance with the Auditing and Assurance Standards issued by the Institute of Chartered Accountants of India. Those Standards require that we plan and perform our audit to obtain reasonable assurance, whether the financial information under examination is free of material misstatement. Based on the above, we report that in our opinion and according to the information and explanations given to us, we have found the same to be correct and the same have been accordingly used in the financial information appropriately.

4. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI

Guidelines and terms of our engagement as aforesaid, we further report that:

a) The Restated Summary Statement of Assets and Liabilities of the Company as at 31st March, 2002, 2003, 2004, 2005, 2006 and 30th September, 2006, Profits and Losses and Statement of Cash flows of the Company for the year ended 31st March, 2002, 2003, 2004, 2005 and 2006 and for the period 1st April, 2006 to 30th September, 2006 examined by us, as set out in Annexures I, II and V respectively to this report are after making adjustments and regrouping as in our opinion are appropriate as per Annexure IIIA and read with Notes on Adjustments on account of Restatements / Audit Qualifications as appearing in Annexure IIIB and the Significant Accounting Policies and Notes to the Accounts as appearing in Annexure IV.

208

b) Based on above we are of the opinion that the restated financial information have been made after

incorporating:

(i) Adjustments for the changes in accounting Policies retrospectively in respective financial years to reflect the same accounting treatment as per changed accounting policy for all the reporting periods.

(ii) Adjustments for the material amounts in the respective financial years to which they relate.

(iii) And there are no extra-ordinary items that need to be disclosed separately in the accounts.

c) The Summary Statement of Assets and Liabilities, Profits and Losses and Statement of Cash flows

mentioned in (a) above have not been restated to reflect the effect of the Auditors’ qualifications as stated hereunder, since the said qualifications are not capable of precise quantification.

(i) Non-provision for probable non-recovery of dues from a Partnership firm; (Refer note

no. B(6)(i) of Annexure IIIB) (ii) Non-provision for debts and advances; (Refer note no. B(6)(ii) of Annexure IIIB) (iii) Non-provision for diminution in value of certain unquoted investments in subsidiaries

and in value of the capital of a partnership firm; (Refer note no. B(6)(iii) of Annexure IIIB)

(iv) The manner of determination of projected losses in respect of contracts in progress, for which we have relied upon the management’s current estimates of costs to completion owing to their technical nature and due to uncertainties of future; (Refer note no. B(6)(iv) of Annexure IIIB)

(v) Non-provision for unbilled revenue; (Refer note no. B(6)(v) of Annexure IIIB) (vi) The manner of accounting for outstanding arbitration awards and interest accrued

thereon; (Refer note no. B(6)(vi) of Annexure IIIB) (vii) Non-provision for fall in the value of investments in and dues from a subsidiary; (Refer

note no. B(6)(vii) of Annexure IIIB)

In view of the fact that in respect of items mentioned under clauses (i) to (vii) above, the probable loss on account of non-recovery or partial recovery of debts, loans and advances, other receivables, fall in the value of investments, contracts in progress, Arbitration awards in appeal etc. are not capable of being estimated and quantified with reasonable accuracy owing to insufficient evidence and information available which includes, inter alia, a review of events occurring after the Balance Sheet date, management’s experience of similar transactions and in some cases reports from independent experts, the overall effect of the above qualifications could not be determined. Hence, it is not possible to adjust the above non-provisions in the restated summary statements.

d) We have also examined the following other financial information set out in Annexures prepared

by the management and approved by the Board of Directors relating to the Company for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period 1st April, 2006 to 30th September, 2006 for the purpose of inclusion in the Offer Document:-

(i) Statement of Accounting Ratios included in Annexure VI (ii) Statement of Capitalization as at 30th September, 2006 included in Annexure VII (iii) Statement of Tax Shelter included in Annexure VIII (iv) Statement of Secured Loan included in Annexure IX (v) Statement of Other Income included in Annexure X (vi) Statement of Dividend included in Annexure XI (vii) Statement of Unsecured Loan included in Annexure XII

209

(viii) Statement of Sundry Debtors included in Annexure XIII (ix) Statement of Loans and Advances included in Annexure XIV (x) Statement of Investments included in Annexure XV (xi) Statement of Contingent Liabilities included in Annexure XVI (xii) Statement of Related Party transactions included in Annexure XVII

5. In our opinion the financial information contained in Annexures I to XVII of this report read along

with the Significant Accounting Policies and Notes to accounts included in Annexure IV to this report, prepared after making adjustments and regrouping as considered appropriate and read with our observations contained in the paragraph 4 (c) above, have been prepared in accordance with the requirements of Part II of Schedule II of the Act and the SEBI Guidelines.

6. Our report is intended solely for use of the management and for inclusion in the offer document in

connection with the proposed issue of equity shares of the Company and should not be used for any other purpose except with our prior consent in writing.

For C. C. Chokshi & Co., J. C. Bhatt Chartered Accountants Chartered Accountant

R. Laxminarayan Partner Membership No.33023 Membership No.10977

Place: Mumbai Dated: 5th January, 2007

210

ANNEXURE – I : SUMMARY STATEMENT OF ASSETS AND LIABILITIES, AS RESTATED

(Rupees in millions)

Particulars As at September

30, 2006

As at March 31, 2006

As at March 31,

2005

As at March 31,

2004

As at March 31,

2003

As at March 31, 2002

FIXED ASSETS

Gross Block

2,854.36

2,648.96

2,195.37

1,987.44

1,721.94

1,540.86

Less: Depreciation

1,565.41

1,481.10

1,152.19

1,013.33

908.69

812.50

Net Block

1,288.95

1,167.86

1,043.18

974.11

813.25

728.36

Less: Revaluation Reserve

59.54

64.08

9.08

9.07

13.95

12.30

Net Block after adjustment for Revaluation Reserve

1,229.41

1,103.78

1,034.10

965.04

799.30

716.06

Capital Work In Progress

330.72

51.06

18.26

6.15

29.39

12.99

TOTAL - (A)

1,560.13

1,154.84

1,052.36

971.19

828.69

729.05

INVESTMENTS - (B)

65.95

65.95

105.11

105.11

121.27

121.27

CURRENT ASSETS, LOANS AND ADVANCES

Inventories

580.05

515.56

387.09

404.59

410.26

344.61

Work-in-Progress -

-

-

1,714.30

1,108.69

638.64

Unbilled Revenue

3,995.15

2,857.30

1,786.95 -

- -

Sundry Debtors

1,808.99

1,887.18

1,732.53

1,705.62

1,199.68

899.46

Cash & Bank Balances

127.00

214.45

169.32

145.87

127.37

228.41

Loans & Advances

1,141.33

1,106.12

1,090.71

1,038.04

1,021.88

930.50

Other Current Assets

0.92

0.91

0.91

0.91

1.48

1.48

TOTAL - (C)

7,653.44

6,581.52

5,167.51

5,009.33

3,869.36

3,043.10

LIABILITIES AND PROVISIONS

Secured Loans

1,101.45

1,054.35

563.64

829.59

563.82

340.64

Unsecured Loans

3,331.90

2,430.51

2,233.91

1,225.89

927.02

313.11

Current Liabilities

2,443.53

2,005.10

1,625.42

2,670.19

2,202.46

2,235.12

211

(Rupees in millions)

Particulars As at September

30, 2006

As at March 31, 2006

As at March 31,

2005

As at March 31,

2004

As at March 31,

2003

As at March 31, 2002

Provisions

121.18

107.21

32.52

34.32

33.53

48.19

Deferred Tax Liability (Net)

119.13

94.93

34.64

23.34

9.43 -

TOTAL - (D)

7,117.19

5,692.10

4,490.13

4,783.33

3,736.26

2,937.06

NET WORTH - (A+B+C-D)

2,162.33

2,110.21

1,834.85

1,302.30

1,083.06

956.36

REPRESENTED BY

1. Share Capital

1,715.25

1,715.25

1,214.00

714.00

514.00

314.00

(Refer note 1

below)

2. Reserves & Surplus

566.76

525.11

707.86

686.21

683.05

670.78

Less: Revaluation Reserve

59.54

64.08

9.08

9.07

13.95

12.30

Reserves & Surplus (Net of Revaluation Reserves)

507.22

461.03

698.78

677.14

669.10

658.48

Total

2,222.47

2,176.28

1,912.78

1,391.14

1,183.10

972.48 Less: Miscellaneous Expenses (to the extent not written off)

60.14

66.07

77.93

88.84

100.04

16.12

NET WORTH

2,162.33

2,110.21

1,834.85

1,302.30

1,083.06

956.36

Note:

1) Share capital includes share application money of Rs.1.25 million in respect of Zero Coupon Redeemable Preference Shares pending allotment. (Refer note no. III(c) of Annexure IV).

2) The above statement should be read with the Notes on Adjustments to Restated Financial Statements, Significant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

212

ANNEXURE II: SUMMARY STATEMENT OF PROFIT AND LOSS ACCOUNT, AS RESTATED

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

INCOME :

Income from Operations 3,902.25 6,490.38 5,425.16 4,441.65 4,262.37 4,090.54

Other Income 129.02 372.51 113.89 213.15 178.09 59.19

Total Income 4,031.27 6,862.89 5,539.05 4,654.80 4,440.46 4,149.73

EXPENDITURE :

Cost of Construction 2,916.10 4,514.32 4,008.21 3,316.72 3,149.13 3,342.84

Payments to and Provision for employees 329.35 610.72 483.92 443.00 456.61 449.92

Other Expenses 381.95 1,005.75 496.80 404.31 363.61 354.47

Financial Lease Rentals 9.82 43.09 49.29 52.95 73.17 78.89

Interest and Financial charges 231.76 381.33 334.85 299.82 284.00 209.93

Depreciation 84.32 158.15 140.88 118.97 102.06 81.65

Less : Depreciation on the amount added on Revaluation transferred from Revaluation Reserve 4.53 9.07 9.09 9.09 13.94 12.29

Total Expenditure 3,948.77 6,704.29 5,504.86 4,626.68 4,414.64 4,505.41

Less: Company's Share of Loss in jointly controlled entity (Unaudited) - 9.61 - - - -

Profit\(Loss) before prior period adjustments, extraordinary items and tax 82.50 148.99 34.19 28.12 25.82 (355.68)

Provision for tax:

- Current Tax (9.24) (14.28) (2.63) (1.97) (2.10) -

- Wealth Tax (0.01) (0.02) (0.02) (0.02) (0.02) (0.02)

- Deferred Tax (24.20) (60.29) (11.30) (13.90) (9.43) -

- Fringe Benefit Tax (4.60) (10.40) - - - -

- Foreign Tax - (6.68) - - - -

Total Provision for Tax (38.05) (91.67) (13.95) (15.89) (11.55) (0.02)

Profit\(Loss) after tax 44.45 57.32 20.24 12.23 14.27 (355.70)

- - - - -

213

Adjustments: - - - - -

Impact of material adjustment for restatement in corresponding years (Refer Annexure IIIA) - (10.49) 10.49 - 13.61 (13.61)

- - - - -

Adjusted Net Profit\(Loss) 44.45 46.83 30.73 12.23 27.88 (369.31)

(Short)/ Excess Provision for taxes in respect of earlier years (Refer note 1 below) 1.73 0.81 (1.66) -

- - - - - -

Balance Brought Forward from Previous Year (347.09) (164.55) (195.28) (207.51) (256.63) 44.96

Transfer From Debenture Redemption Reserve - - - 22.90 67.72

Profit \ (Loss) available for appropriation (300.91) (116.91) (164.55) (195.28) (207.51) (256.63)

Appropriations:

Debit Balance in Profit and Loss account of APIL taken over on Amalgamation - (230.18) - - - -

Less: Deducted from General Reserve as per contra 300.91 347.09 164.55 195.28 207.51 256.63

Balance carried to Summary Statement of Assets and Liabilities, as restated - - - - - -

Notes:

1) Short \ Excess Provision for tax relates to financial year prior to year ending March 31, 2002 and hence it is not possible to restate in the above annexure.

2) The above statement should be read with the Notes on Adjustments to Restated Financial Statements, Significant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

214

ANNEXURE IIIA: STATEMENT OF IMPACT ON PROFIT AND LOSS DUE TO RESTATEMENTS AND OTHER MATERIAL ADJUSTMENTS MADE TO AUDITED FINANCIAL STATEMENTS.

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Net Profit\(Loss) after tax as per audited Profit and Loss Account 44.45 57.32 20.24 12.23 14.27 (355.70)

Deferred Tax

(Refer note 1

below)

Interest income on arbitration awards now adjusted in respective financial years - (10.49) 10.49 - -

-

Impact of Auditor's qualifications on Profit & Loss Account (Refer note 2 below):

Provision for diminution in the value of quoted investment. - - - - 13.61 (13.61)

Net Profit\(Loss) after tax as per restated profit and loss account 44.45 46.83 30.73 12.23 27.88 (369.31)

Notes:

1) Pursuant to Accounting Standard (AS) 22 on " Accounting for Taxes on Income" issued by The Institute of Chartered Accountants of India (ICAI), the company has computed Deferred Tax Assets and Liabilities in respect of timing differences as at March 31, 2002. The net Deferred Tax Liability for the year ended March 31, 2001 is Rs. NIL. Since the net Deferred Tax Liability for the year is also Rs. NIL, there is no charge on account of Deferred Tax expense in Profit and Loss account for the year. 2) Refer part B of Annexure IIIB for adjustments arising out of audit qualifications \ other restatements, not given effect to.

3) The above statement should be read with the Notes on Adjustments to Restated Financial Statements, Significant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

215

ANNEXURE IIIB - NOTES ON ADJUSTMENT ON ACCOUNT OF RESTATEMENTS / AUDIT QUALIFICATIONS

A The following adjustments have been made to the Summary Statement of Profits and Losses,

Summary Statement of Assets and Liabilities and Statement of Restated Cash Flow (“Summary Statements”):

1. Interest on arbitration awards accounted in the year ended March 31, 2006 in respect of arbitration

awards decided in favour of the company adjusted in respective years to which it relates, except as mentioned below: Afcons Pauling (India) Limited (APIL) a subsidiary of the Company was amalgamated with the Company with effect from 1st April, 2005. During the year ended 31st March, 2006, interest on arbitration awards pertaining to earlier years of APIL aggregating to Rs.98.39 million was accounted as income, which was related to the years prior to amalgamation. For the purpose of this statement the said interest income has not been adjusted in the respective years, as APIL was not part of the Company's operation in those years.

2. Provision for diminution in the value of investment in units of UTI was made in the year ended

March 31, 2003. For the purpose of this statement same has been adjusted in the year ended March 31, 2002 as such provision was related to the financial year 2001-2002.

B The following adjustments have not been made to the Summary Statements for the reasons stated therein:

1. The trustees of Afcons Infrastructure Limited Employees Group Gratuity-cum-Life Assurance

Scheme Trust have taken a Group Gratuity-cum-Life Assurance Policy from the Life Insurance Corporation of India (LIC). Provision for gratuity is made on the basis of premium payable in respect of aforesaid policy and actuarial valuation carried out by the independent actuarial valuer as at the year end.

The Company has made provision for gratuity liability and unavailed leave for the period ended September 30, 2006 as per revised Accounting Standard (AS -15) “Employees Benefit” issued by the Institute of Chartered Accountants of India (ICAI). For the purpose of this statement, Revised AS-15 has not been applied for the years ended March 31, 2002, 2003, 2004 and 2005 as the same was not applicable in those years. Consequently, additional impact, if any, on account of actuarial valuation of gratuity and unavailed leave as per revised (AS 15) has not been recognised in this statement for those years. Based on revised actuarial valuation carried out as per Revised (AS-15) for the year ended March 31, 2006, there was no additional liability on account of gratuity as on 31st March, 2006.

2. Prior to 1st April, 2004, the Company accounted contract revenue and contract cost in accordance

with the Accounting Standard AS7. “Accounting for Construction Contracts” issued in the year 1983 in respect of contracts entered into before 1st April, 2003 and Accounting Standard AS7 “Construction Contracts (Revised)” issued in the year 2002 in respect of contracts entered into on or after 1st April, 2003. During the year ended March 31, 2005, with a view to have uniformity in accounting treatment, the Company has accounted Contract Revenue and costs in accordance with AS7 (revised) in respect of all contracts (including contracts entered into prior to 1st April, 2003). Revenue recognized as a result of this change is Rs. 864.45 millions. Adjustment on this account has not been made in the summary financial statement for the years ended March 31, 2002, 2003 and 2004 in the absence of available information.

3. Prior to 1st April, 2004, the Company has accounted work done remaining to be certified / billed at cost. From the financial year 2004-05 onwards the company has treated work done remaining to be certified / billed as unbilled Revenue in the accounts and valued the same at the contract rates.

216

Adjustment on this account has not been made in the summary financial statement for the years ended March 31, 2002, 2003 and 2004 in the absence of available information.

4. Prior to 1st April, 2002, it was the practice of the Company to defer expenditure on voluntary retirement compensation over a period of five years. During the year 2002-03, the company has changed this practice on the basis of reassessment and has decided to amortize the said expenditure over a period of 10 years with retrospective effect. This change has the effect of (i) write back to the profit and loss account excess amount of amortization, Rs. 5.37 millions (ii) decreasing the amortization charge for the year by Rs 11.71 millions (iii) increasing the profit for the year by Rs. 17.09 millions and (iv) increasing the deferred revenue expenditure carried forward by Rs 17.09 millions. Adjustment on this account have not been made in the summary financial statement for the years ended March 31, 2002 as in the opinion of the Company, the impact of the same in the summary statements for the year ended March 31, 2002 is not material.

5. The Company’s subsidiary AFCONS Pauling (India) Limited was amalgamated with the

Company w.e.f. 1st April, 2005 in accordance with the scheme of amalgamation and approval of Bombay High Court. Hence, Summary Statement of the Company for the year ended March 31, 2006 and for the six month period ended on September 30, 2006 are inclusive of assets, liabilities and reserves taken over from AFCONS Pauling (India) Limited. Summary Statements for the year ended March 31, 2002, 2003, 2004 and 2005 are exclusive of above effects. It is not possible to segregate the data of post amalgamation so as to make Summary Statements of March 31, 2006 and September 30, 2006 comparable with those of earlier years.

6. Auditors’ Qualifications on financial statements:

(i) Audit report for the year ended March 31 2002, 2003, 2004, 2005, 2006 and for the period

ended September 30, 2006 has been qualified for non-provision for dues from the partnership firm “Afcons Pauling Joint Venture” in which the Company is a partner. Refer Note no. II (2) of Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Amount (Rupees in millions) 30th September, 2006 146.49

31st March, 2006 146.53

31st March, 2005 146.63

31st March, 2004 146.85

31st March, 2003 147.14

31st March, 2002 150.28

(ii) Audit report for the year ended March 31, 2002, 2003, 2004, 2005, 2006 and for the period

ended September 30, 2006 has been qualified for non-provision of debts and advances which are subject matter of arbitration\litigation. Refer Note no. II (3) of Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Amount (Rupees in millions) 30th September, 2006 168.40

31st March, 2006 183.83

31st March, 2005 185.54

31st March, 2004 131.46

31st March, 2003 154.19

31st March, 2002 100.25

(iii) Audit report for the year ended March 31, 2002, 2003, 2004, 2005, 2006 and for the period ended September 30, 2006 has been qualified for non-provision for diminution in the value

217

of certain unquoted investments in subsidiaries and in the capital of a partnership firm. Refer Note no. II (4) of Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Value of Capital Amount (Rupees in

millions)

Aggregate value of all unquoted

investments in subsidiaries

(Rupees in millions) 30th September, 2006 17.40 3.11

31st March, 2006 17.40 4.14

31st March, 2005 17.40 44.42

31st March, 2004 17.40 44.42

31st March, 2003 17.40 45.18

31st March, 2002 17.40 45.18

(iv) Audit report for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period ended 30th September, 2006 has been qualified in respect of determination of projected losses in respect of contracts in progress. Auditors have relied upon the management estimate of costs to completion owing to their technical nature and due to uncertainties of future. Refer Note no. II (6) of Annexure IV.

(v) Audit report for the year ended March 31, 2005, 2006 and for the period ended September 30, 2006 has been qualified for non-provision of unbilled revenue outstanding since long period and subject matter of arbitration. Refer Note no. II (8) of Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Arbitration award Amount (Rupees in

millions) 30th September, 2006 51.97

31st March, 2006 51.97

31st March, 2005 69.15

(vi) Audit report for the year ended March 31, 2004, 2005, 2006 and for the period ended September 30, 2006 has been qualified for outstanding arbitration awards unanimously decided in Company’s favour and interest accrued thereon. Refer Note no. II (9) of Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Arbitration award Amount (Rupees in

millions)

Interest on arbitration awards Amount (Rupees in

millions) 30th September, 2006 532.46 127.09

31st March, 2006 457.49 106.53

31st March, 2005 194.99 -

31st March, 2004 186.99 45.43

(vii) Audit report for the year ended March 31, 2002, 2003, 2004 and 2005 has been qualified for non-provision of investment in and dues from subsidiary company. Refer Note no. IV (1) of Annexure IV. A detailed year wise break-up is given below:

218

Year\Period ended

Investment Amount

(Rupees in millions)

Debts Amount

(Rupees in millions)

Loans & advances Amount

(Rupees in millions)

31st March, 2005 39.67 118.99 276.81

31st March, 2004 39.67 118.99 309.79

31st March, 2003 39.67 118.99 266.83

31st March, 2002 39.67 118.99 199.46

In view of the fact that in respect of items mentioned under clauses (i) to (vii) above, the probable loss on account of non-recovery or partial recovery of debts, loans and advances, other receivables, fall in the value of investments, contracts in progress, Arbitration awards in appeal etc. are not capable of being estimated and quantified with reasonable accuracy owing to insufficient evidence and information available which includes, inter alia, a review of events occurring after the Balance Sheet date, management’s experience of similar transactions and in some cases reports from independent experts, the overall effect of the above qualifications could not be determined. Hence, it is not possible to adjust the above non-provisions in the restated summary statements.

(viii) Auditors’ Qualifications in Companies Auditor’s Report Order, 2003 \ Manufacturing and Other Companies (Auditor’s) Report Order, 1988: Audit report for the year ended March 31, 2002, 2003, 2004, 2005 and 2006 has been qualified in respect of statement contained in Companies Auditor’s Report Order, 2003 \ Manufacturing and Other Companies (Auditor’s) Report Order, 1988 regarding;

a) Fixed assets register being under updation to show full particulars including quantitative

details and situation of fixed assets. Audit report for the year ended March 31, 2004, 2005 and 2006 has been qualified in respect of statement contained in Companies Auditor’s Report Order, 2003 \ Manufacturing and Other Companies (Auditor’s) Report Order, 1988 regarding; b) Receipt of interest is not regular in respect of loans granted to the parties covered in the

register maintained under section 301 of the Companies Act, 1956. Audit report for the year ended March 31, 2005 and 2006 has been qualified in respect of statement contained in Companies Auditor’s Report Order, 2003 regarding; c) Payment of interest is not regular in respect of loan taken from the party covered in the

register maintained under section 301 of the Companies Act, 1956.

Audit report for the year ended March 31, 2002 has been issued with disclaimer of opinion in respect of statement contained in Manufacturing and Other Companies (Auditor’s) Report Order, 1988 regarding; d) Terms of interest and other terms and conditions of loans granted to another company

under the same management within the meaning of section 370(1B) of the Companies Act, 1956 are prima facie prejudicial to the interest of the Company or not;

C Figures in the Restated Summary Statements have been appropriately regrouped wherever possible to

conform to the reclassification made in the subsequent years.

219

ANNEXURE IV - SUMMARY OF SIGNIFICANT ACCOUNTING AND POLICIES AND NOTES ON ACCOUNTS FORMING PART OF THE RESTATED SUMMARY STATEMENTS.

I Significant accounting policies:

a) Fixed assets

Fixed assets are stated at cost of acquisition/ construction or book value and include amounts added on revaluation less accumulated depreciation. Leasehold improvements have been capitalized and are written off over the lease term from the date(s) of installation.

b) Impairment loss

Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amounts. Recoverable amount is the higher of an asset’s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

c) Depreciation

Depreciation on fixed assets is provided on the straight-line basis. Cost of the Intangible assets are amortised over a period of five years.

d) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. However, when there is a decline, other than temporary, the carrying amount is reduced to recognize the decline.

e) Inventories

Construction materials, stores and spare parts are valued at lower of cost and net realizable value. Cost is determined on the basis of weighted average method. Cost of shuttering materials (included in construction materials) issued to jobs, is charged off equally over a period of four years.

f) Unbilled Revenue

Work done remaining to be certified/ billed is treated as Unbilled Revenue in the accounts. The same is valued at the contract rates.

g) Retention monies Amounts retained by the clients until satisfactory completion of the contract(s) are recognised in the financial statements as receivables. Where such retention monies have been released by the clients against submission of bank guarantees, the amounts so released are adjusted against receivables from these clients.

h) Foreign currency transactions

Transactions in foreign currency, including in respect of branch operations integral in nature, are recorded at the original rates of exchange in force at the time the transactions are effected. At the year end, monetary items, including those of branch operations integral in nature,

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denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realization/ payment of foreign exchange are accounted for in the relevant year as income or expense except in the case of fixed assets acquired from outside India, in which case, these are adjusted in the carrying amounts of such assets.

i) Revenue recognition on contracts

(i) Contract revenue and expenses are recognized, when outcome can be estimated reliably, on the basis of percentage completion method. Percentage of completion is determined based on the nature of contracts, either in proportion of contract costs incurred up to the reporting date to the estimated total cost or on the basis of physical proportion of the contract work completed.

(ii) Variations (in contracts) and amounts in respect thereof are recognized only when it is

probable that the customer(s) will approve them and amounts can be measured reliably.

(iii) Claims and amounts in respect thereof are recognized only when negotiations have advanced to stage where it is probable that the customer(s) will accept them and amounts can be reliably measured.

j) Retirement benefits

(i) Gratuity

The trustees of Afcons Infrastructure Limited Employees Group Gratuity-cum-Life Assurance Scheme Trust have taken a Group Gratuity-cum-Life Assurance Policy from the Life Insurance Corporation of India (LIC). Provision for gratuity is made on the basis of premium payable in respect of the aforesaid policy and actuarial valuation carried out by the independent actuarial valuer as at the year end.

(ii) Superannuation

The trustees of Afcons Infrastructure Limited Superannuation Scheme Trust have taken a Group Superannuation policy from the LIC. Provision for superannuation is made on the basis of premium payable in respect of the aforesaid policy.

(iii) Provident fund

Contribution as required under the statute/ rules is made to the Company’s Provident Fund/ Government Provident Fund.

(iv) Leave encashment

Provision for leave encashment benefits is made based on the expected cost of unavailed earned leave.

k) Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

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l) Deferred revenue expenditure

The expenditure on voluntary retirement compensation is treated as ‘Deferred Revenue Expenditure’ and amortized over a period of ten years.

m) Finance lease rentals

These are accounted over the life of the asset determined on the basis of technical evaluation made by an independent valuer/ surveyor.

n) Doubtful debts and advances

Provision is made in the accounts for debts and advances which in the opinion of the management are considered doubtful of recovery.

o) Taxes on income

Tax expense comprises both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income-tax payable/ recoverable in respect of the taxable income/ loss for the reporting period. Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. Provision for Fringe Benefits Tax is made in accordance with Chapter XII-H of the Income-tax Act, 1961.

p) Provisions and Contingencies Provisions are recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. Contingent liabilities are disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed.

II Common notes for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period from 1st April, 2006 to 30th September, 2006.

1. Revaluation of fixed assets:

(a) Some of the Fixed assets viz., Plant & Machinery, (including certain items fully written

off in previous years) Laboratory Equipment, Barges (floating equipments), New & Old Workshop and Office Building as on 1st April, 1990 were revalued on the basis of the valuation made by the external valuers resulting in net increase of Rs.455.12 millions being surplus on revaluation.

(b) Revalued amounts substituted for Historical Cost as at 1st April, 1990 are as under:

(i) Plant & Machinery Rs.426.15 millions (Gross)

(ii) Laboratory Equipments Rs. 12.45 millions (Gross) (iii) Workshop & Godown Rs. 46.60 millions (Gross) (iv) Buildings Rs. 126.00 millions(Gross) (v) Barges (Floating Equipments) Rs. 89.98 millions (Gross)

(c) The difference between depreciation provided for the year on revalued cost of assets

and that calculated on original cost of assets for the year as per (a) above has been

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withdrawn from Revaluation reserve and credited to the Profit and Loss account as given below:

Year \ Period ended Amount (Rupees in millions)

30th September, 2006 4.53

31st March, 2006 9.07

31st March, 2005 9.09

31st March, 2004 9.09

31st March, 2003 13.94

31st March, 2002 12.29

2. The Company is a partner in a partnership firm ‘Afcons Pauling Joint Venture’ (APJV).

The balance in capital account is Rs. 17.40 millions. The profit/ loss sharing ratio of the Venturers is as follows:

Profit Loss The Company 95% 100%

Pauling P.L.C.; UK 5% -

Following amounts were due at each year end from the Partnership Firm (APJV):

Year \ Period ended Amount (Rupees in millions)

30th September, 2006 146.49

31st March, 2006 146.53

31st March, 2005 146.63

31st March, 2004 146.85

31st March, 2003 147.14

31st March, 2002 150.28

The Firm has made claims aggregating to Rs. 166.62 millions against its clients which are pending as at period ended 30th September, 2006. These claims are subject matters of arbitration where it expects favorable results. No provision has been made for the amount, if any that may ultimately become irrecoverable, as it cannot be quantified, with reasonable accuracy at this stage.

3. No provision has been made for debts and advances outstanding at each year end, for the

following years:

Year \ Period ended Amount (Rupees in millions)

30th September, 2006 168.40

31st March, 2006 183.83

31st March, 2005 185.54

31st March, 2004 131.46

31st March, 2003 154.19

31st March, 2002 100.25

Out of these, substantial amounts are due from various Government departments \ Agencies and are subject matters of arbitration\ litigation where the Company has obtained awards in favour in some cases and expects favorable results in other cases and hence, the amounts, if

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any, that may ultimately become irrecoverable cannot be quantified, at this stage. However, in view of the uncertainties involved and the procedural delays taking place in the dispute resolution process, the debts and advances have been categorized as ‘Doubtful’ for the purpose of presentation in the financial statements.

4. No provision has been made in the accounts for diminution in the value of certain unquoted

investments and in the capital of a partnership firm, by reason of these investments being in the nature of strategic/ long-term investments and the decline in their value being on account of temporary factors.

5. Confirmation letters have not been obtained from the debtors and creditors. Hence, their

balances are subject to confirmation, reconciliation and consequent adjustments, if any.

6. Projected losses, if any, in respect of contracts in progress are provided for based upon current estimates of cost to completion.

7. Interest on arbitration awards (awards) includes interest in respect of :

(a) unpaid awards decided in favour of the Company as given below, at the rate

mentioned in the awards from the date of awards till the date of payment or year end as the case may be.

Year \ Period ended Amount (Rupees in millions)

30th September, 2006 127.10

31st March, 2006 106.53 (including Rs. 72.18 millions in respect of earlier years)

(b) awards decided in the favour of the Company in the earlier years as given below, which was not accounted then.

Year \ Period ended Amount (Rupees in millions)

30th September, 2006 20.56

31st March, 2006 30.21

(c) awards decided in favour of the Company during the year as given below.

Year \ Period ended Amount (Rupees in millions)

30th September, 2006 -

31st March, 2006 45.94

8. Current Assets, Loans and Advances includes unbilled revenue (net of advances) of Rs. 3,995.15 millions as at 30th September, 2006 (Rs. 2,857.30 millions as at 31st March, 2006). Of this, Rs. 51.97 millions are outstanding for a long period as at 30th September, 2006 and 31st March, 2006. These pertain to variations in contracts, which are subject matter of arbitration, in view of which no provision is considered necessary for the said amount of Rs. 51.97 millions.

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9. Debtors include unpaid arbitration awards (awards) of Rs. 532.46 millions as at 30th September, 2006 (Rs. 457.49 millions as at 31st March, 2006) unanimously decided in the Company’s favour and interest accrued on these awards from the date of awards till the year end/date of payment at the rate mentioned in the award of Rs. 127.10 millions as at 30th September, 2006 (Rs. 106.53 millions as at 31st March, 2006). Though these awards are subject matters of appeal, the Company is hopeful of positive outcome and as such expects them to be fully recovered.

10. Cost of fixed assets taken on operating lease till 31st March, 2001 and future lease rental

obligations there against are as follows:

Year \ Period ended Plant & Machinery (at Cost)

(Rupees in millions)

Future lease rental

(Rupees in millions)

30th September, 2006 94.98 1.07

31st March, 2006 94.98 1.61

31st March, 2005 292.33 3.82

31st March, 2004 302.08 6.31

31st March, 2003 302.08 9.16

31st March, 2002 409.25 39.40

11. For the assets acquired on hire purchase basis after 1st April, 2001, they have been treated

as assets acquired on finance lease as per Accounting Standard on ‘Leases’ (AS-19) issued by the Institute of Chartered Accountants of India. Minimum lease rentals outstanding in respect of these assets are as under:

(Rupees in millions)

As at 30th September,

2006

As at 31st March,

2006

As at 31st March,

2005

As at 31st March,

2004

As at 31st

March, 2003

As at 31st

March, 2002

Total Minimum Lease payment outstanding: Not less than one year

0.24 3.93 18.61 19.83 27.69 13.91

Later than 1 Year and not later than 5 year

_ _ 3.90 22.51 56.70 38.52

Total 0.24 3.93 22.51 42.33 84.39 52.43

Interest not due Not less than one year

0.01 0.14 1.94 4.45 9.12 5.73

Later than 1 Year and not later than 5 year

_ _ 0.14 2.08 8.53 7.65

Total 0.01 0.14 2.08 6.53 17.65 14.38

Present value of minimum lease payments Not less than one year

0.23 3.79 16.67 15.38 18.57 8.18

Later than 1 Year and not later than 5 Year

_ _ 3.75 20.43 48.17 30.88

Total 0.23 3.79 20.43 35.81 66.74 39.05

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12. The Company has entered into a Co-operation Agreement with Dyckerhoff & Widmann Aktingesellschaft, Germany (DYWIDAG) for the execution of the Worli-Bandra Outfalls project of the Municipal Corporation of Greater Mumbai. The relationship of the Company with DYWIDAG is that of a sub-contractor. Nevertheless, in terms of the Agreement that envisages supplementing the resources of each other on mutually agreed basis, both DYWIDAG and the Company have raised debit notes on each other. Accordingly, in earlier years, debit notes for expenses were raised by the Company on DYWIDAG, aggregating to Rs. 17.52 millions and by DYWIDAG on the Company, aggregating to Rs. 16.10 millions. Adjustments, if any, in respect of these debit notes will be made on completion of project.

13. Segment Information

The Company has only one reportable business segment of construction business, hence information for primary business segment is not given.

Segment information for Secondary segment reporting (by geographical segment) The Company has two reportable geographical segments based on location of customers: Revenue from customers within India- Local projects Revenue from customers outside India- Foreign projects

(Rupees in millions)

Year \ Period ended

Local Projects

Foreign Projects

Total

30th September, 2006

3,830.48 71.82 3,902.30 Income from Operations

31st March, 2006 5,452.02 1,038.36 6,490.38

30th September, 2006

8,999.70 140.32 9,140.00 Carrying amount of assets

31st March, 2006 7,214.70 371.28 7,585.98

30th September, 2006

481.61 3.45 485.06 Additions to fixed assets

31st March, 2006 301.70 15.41 317.11

14. Related party disclosures:

Related Party where Control exists

Holding Company(s) Cyrus Investments Limited (Directly)*** Shapoorji Pallonji & Company Limited (Indirectly) Subsidiaries of the Company Afcons Pauling (India) Limited** Afcons (Overseas) Constructions and Investments Private Limited Hazarat & Company Private Limited Afcons BOT Constructions Private Limited SSS Electricals (India) Private Limited Tensacciai (India) Private Limited * Afcons Dredging & Marine Services Limited Afcons Arethusa Offshore Services Private Limited

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Fellow Subsidiary(s) Sterling Investments Corporation Private Limited Floreat Investments Limited

Associate of the Company Afcons (Mideast) Construction and Investments Private Limited Partnership firm in which the Company is a partner Afcons Pauling Joint Venture Jointly Controlled Entity Afcons Aarsleff Joint Venture Al – Saeed Afcons Joint Venture * Ceased to be a subsidiary w.e.f 27.03.06 ** Amalgamated with the Company w.e.f 01.04.05 *** Ceased to be a holding Company w.e.f 31.03.06 and becomes an entity of which the

Company is an Associate

Refer Annexure XVII to the restated financial statement for transactions with related

parties. 15. Expenses capitalized during the year on fabrication/ improvement of equipment that has

resulted in increased future benefits beyond their previously assessed standard of performance are as under:

(Rupees in millions)

For the Financial Year Ended For the period 1st

April, 2006 to 30th

September, 2006

March 31,

2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Construction Material consumed

0.70 7.35 - 3.48 3.56 24.96

Sub Contract charges

2.41 2.48 - 5.15 11.79 6.83

Site installation expenses

- 0.78 - 0.10 5.74 4.32

Stores and spares Consumed

11.71 10.77 16.07 31.27 5.62 6.54

Repairs 4.24 4.04 5.54 8.29 2.46 11.23

Traveling and Conveyance

- - - 0.7 0.57 -

Payroll cost - - - 4.60 4.7 -

Freight forwarding and packing

- - - 2.20 0.59 -

Others 0.04 2.97 - 1.13 1.67 2.23

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16. Derivative Instruments: Payables and Receivables in foreign currency as at the balance sheet date not covered by forward contracts are as given below.

(Rupees in millions) As at 30th September,

2006 As at 31st March,

2006 Payables 89.33 350.37

Receivable 226.35 227.04

17. Details of the Joint Venture, classified as ‘Jointly Controlled Entities’ are as follows:

Sr. No.

Name of the Joint Venture

Name of the joint Venture Partner

Share of ownership interest

1 Afcons Aarsleff Joint Venture

Per Aarsleff A/S 50%

2 Al – Saeed Afcons Joint Venture

Al Saeed Co. for Manufacturing Concrete & Contracting – Al Saeed (SMCC)

50%

3 Afcons Constructions Mideast LLC

Ahmed Hasan Mohamed Ali Alali

49%

(Rupees in millions) Name of the Joint

Venture For the period

ended 30th September,

2006

For the year ended 31st

March, 2006

Afcons Aarsleff Joint Venture

16.38 59.46

Al – Saeed Afcons Joint Venture

160.65 -

Company’s share in Assets

Afcons Constructions Mideast LLC

1.83 1.78

Afcons Aarsleff Joint Venture

0.37 2.35

Al – Saeed Afcons Joint Venture

160.65 -

Company’s share in Liabilities

Afcons Constructions Mideast LLC

- -

Afcons Aarsleff Joint Venture

7.82

325.29

Al – Saeed Afcons Joint Venture

83.83 -

Company’s share of Income

Afcons Constructions Mideast LLC

- -

Afcons Aarsleff Joint Venture

4.92 334.90

Al – Saeed Afcons Joint Venture

83.83 -

Company’s share of Expenses

Afcons Constructions Mideast LLC

- 0.01

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18. Work in Progress is identified project wise and is based on book records maintained by the Company as physical verification of the material, component; etc at the various project sites is not feasible.

III Significant notes for the year ended 31st March, 2006

The High Court of Judicature at Bombay sanctioned the Scheme of Amalgamation (SoA) of Afcons Pauling (India) Limited (APIL), a subsidiary of the Company with the Company. APIL was engaged in the business of Construction. The amalgamation is accounted in the books of the Company as per the High Court Order. The effective date of Amalgamation is 18th May, 2006 and the appointed date is 1st April 2005. Accordingly, the SoA has been given effect to in the accounts. Pursuant to the SoA:

(a) the assets and liabilities of APIL on the appointed date have been taken at book values

(subject to adjustments made as given in the SoA);

(b) debit balances in the Profit and Loss account of APIL has been aggregated with the balances in Profit and Loss account of the Company.

(c) in consideration for the transfer, the minority shareholders of APIL are to be issued 1

(one) Zero Coupon Redeemable Preference Shares of the Company (of Rs. 10/- each) to be redeemed on the expiry of 24 months from the date of issue at a premium of 10% of the face value for every 10 (ten) equity shares held by them in APIL. These have been shown under share capital.

(d) the (deficit) of the value of the assets over the value of the liabilities taken over by the

Company and aggregate face value of the Redeemable preference shares to be issued by the Company as stated above, after adjusting the debit balance in Profit and Loss Account taken over, has been adjusted against General Reserve Account (to the extent of Rs. 48.65 millions);

(e) Cost of investment (Rs. 39.67 millions) of the Company in the shares of APIL is

written off and charged to Revaluation Reserve Account;

(f) As required by the SoA, the debit balance in profit and loss account of APIL has been aggregated with the balance in profit and loss account of the Company. If there was no treatment given in the SoA for the same, than as per the Accounting Standard (AS) 14 “Accounting for Amalgamations”, the debit balance in profit and loss account of APIL would not have been aggregated with the balance in profit and loss account of the Company and there would have been “Goodwill on Amalgamation” aggregating to Rs. 180.72 millions).

IV Significant notes for the year ended 31st March, 2005

1. The Company holds investment of Rs. 39.67 millions in its subsidiary company, Afcons Pauling (India) Limited (APIL), representing 75% of the share capital of that company. APIL owes to the Company Debts, aggregating to Rs.118.99 millions and advances, aggregating to Rs. 276.81 millions as on 31st Mach, 2005. As per the latest audited accounts of APIL, as at 31st March, 2005, its net worth stands eroded. APIL has substantial experience of nearly two decades in the execution of road projects. Therefore, in combination with the company, it has been working on a business plan for generating future revenues in the preferred lines of business of roads and highways construction and is very

229

hopeful of bagging jobs. APIL has also preferred huge claims against its clients that are subject matter of arbitration where it is confident of positive outcome. It is therefore confident of paying back advances of the company out of the above and also out of monies falling due from its debtors in 2005-06. Hence, no provision is deemed necessary for diminution in the value of the Company's investment in APIL and also for amounts due from it, which are considered good and recoverable.

2. Hitherto, the Company accounted contract revenue and contract cost in accordance with the

Accounting Standard AS7. “Accounting for Construction Contracts” issued in the year 1983 in respect of contracts entered into before 01-04-2003 and Accounting Standard AS7 “Construction Contracts (Revised)” issued in the year 2002 in respect of contracts entered into on or after 01-04-2003.During the year, with a view to have uniformity in accounting treatment, the Company has accounted Contract Revenue and costs in accordance with AS7 (revised) in respect of all contracts (including contracts entered into prior to 01-04-2003). Revenue recognized as a result of this change is Rs. 864.45 millions).

V Significant notes for the year ended 31st March, 2004

The Company received subsequent to the year end arbitration awards (unanimously decided) pertaining to earlier years, aggregating to Rs. 186.99 millions(including interest Rs. 45.43 million which are subject of appeals, the ultimate outcome of which is not ascertainable.

VI Significant notes for the year ended 31st March, 2003

Expenditure on Voluntary Retirement Compensation: Hitherto, it was the practice to defer expenditure on voluntary retirement compensation over a period of five years. During the year 2002-03, the company has changed this practice on the basis of reassessment and has decided to amortize the said expenditure over a period of 10 years with retrospective effect. This change has the effect of (i) write back to the profit and loss account excess amount of amortization, Rs. 5.37 million (ii) decreasing the amortization charge for the year by Rs 11.71 million (iii) increasing the profit for the year by Rs 17.09 million and (iv) increasing the deferred revenue expenditure carried forward by Rs 17.09 millions.

VII Significant notes for the year ended 31st March, 2002

1. Provision for bank balances has been made in the year 2001-02 on account of uncertainties in remittances of monies lying in bank accounts abroad.

2. Adjustment in the year 2001-02 represents regrouping of self constructed assets of Rs 6.26

millions from work–in–progress to capital work in progress in respect of previous year.

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ANNEXURE V: STATEMENT OF CASH FLOWS, AS RESTATED

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Cash Flow from Operating Activities

Net Profit\(Loss) before prior period adjustments, extraordinary items and tax, as restated 82.49 138.50 44.68 28.12 39.43 (369.29)

Adjusted for :

Depreciation 79.79 149.08 131.79 109.88 88.11 69.35

(Profit)\Loss on Sale of Fixed Assets - (1.51) 0.22 0.30 0.50 2.80

Interest Expenses 231.76 381.33 334.85 299.82 284.00 209.93

Interest income (34.02) (204.60) (50.20) (91.67) (31.73) (29.63)

Lease Rental Expense 9.98 43.09 49.29 52.95 73.17 78.89

Bad irrecoverable debtor/ Unbilled Revenue/ Advance w/off 1.65 165.31 - - - -

Share of Loss/(Profit) in a firm in which the Company is a partner 1.25 1.83 (2.49) 0.62 0.06 1.34

Share of Loss in Jointly Controlled Entity (Unaudited) - 9.61 - - - -

Deferred revenue expenditure paid during the year - - (0.96) (0.57) (90.25) -

Provision for diminution in the value of long term inv w/back/ provided - - - (13.61) - 13.61

Dividend Income - (0.18) (0.18) (0.14) (0.17) (4.20)

Excess provision no longer required written back (37.95) (19.47) (15.66) (17.47) - -

(Profit) on Sale /Disposal of Short-term investment - (0.88) (0.34) 16.71 - -

(Profit) on Sale /Disposal of Long-term investment - (7.58) - - - (0.26)

Amount received on transfer of tenancy rights - (60.00) - - - -

Deferred revenue expenditure written off 5.93 11.87 11.87 11.77 6.34 5.37

Provision for Projected Losses (11.45) 27.74 1.86 - - -

Operating Profit\(Loss) before prior period items and Working Capital Changes

329.43 634.14 504.73 396.71 369.46 (22.09)

Adjustment for:

231

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

(Increase)/Decrease in Trade receivables 98.75 (15.64) (26.91) (505.93) (224.17) (257.97)

(Increase)/Decrease in inventories (64.50) (128.46) 17.50 5.67 (65.66) (45.22)

(Increase)\Decrease in Work-in-Progress - - 1,714.30 (605.61) (470.05) (140.52)

(Increase) in Unbilled Revenue (1,137.85) (1,187.38) (2,674.81) - - -

(Increase) in Loans and Advances 16.32 (47.67) (23.56) (60.50) (255.05) (67.38)

Increase/(Decrease) in trade, other payables and provisions 485.24 431.76 (144.09) 495.08 (31.83) 905.82

Adjustment on account for amalgamation for net current assets - 73.29 - - - -

Adjustment on account for amalgamation for loans given to Subsidiary Company - (276.81) - - - -

Direct Taxes paid (43.13) (21.97) (78.81) (10.00) 31.26 (55.00)

Prior period expenses - - - - - -

- - - - - -

Net Cash from Operating Activities - (A) (315.74) (538.74) (711.65) (284.58) (646.04) 317.64

Cash Flow from Investing Activities

Purchase of Fixed Assets (485.06) (298.82) (222.57) (259.10) (205.76) (249.39)

Sale of Fixed Asset - 6.83 0.31 2.23 1.91 1.85

Purchase of Investments - (280.61) (1.90) - - -

Sale of Investments - 287.99 2.23 13.07 - 0.01

Sale of Subsidiary - 0.60 - - - 0.86

(Loss)/Profit in a firm in which the Company is partner - (1.83) 2.49 (0.62) (0.06) (1.34)

Share of Loss in Jointly Controlled Entity - (9.61) - - - -

Dividend received - 0.18 0.18 0.14 0.17 4.20

Interest received 13.51 23.64 50.39 92.61 17.57 15.75

Amount received on transfer of tenancy rights - 60.00 - - - -

Net Cash from Investing Activities - (B) (471.55) (211.63) (168.87) (151.67) (186.17) (228.06)

Cash Flow from Financing Activities

Proceeds from Issue of Preference Shares - 500.00 500.00 200.00 200.00 200.00

232

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Proceeds from long term borrowings - 2,215.12 1,414.84 487.33 465.36 177.25

Repayment of long term borrowings - (1,526.08) (1,742.14) (559.77) (205.81) (251.57)

Proceeds from short term borrowings - net 943.93 (5.02) 1,068.84 637.04 578.33 108.51

Interest paid (234.22) (376.30) (336.61) (308.87) (283.33) (218.67)

Lease rentals paid (9.82) (13.23) (0.66) (0.49) (23.11) (43.30)

Dividend paid - - - - (0.01) (6.83)

Corporate dividend tax - - - - - (0.70)

- - - - - -

Net Cash from Financing Activities - (C) 699.89 794.49 904.27 455.24 731.43 (35.31)

Net Increase in Cash and Cash Equivalent (A+B+C) (87.40) 44.12 23.75 18.99 (100.78) 54.27

Cash and Cash Equivalent at the beginning of year 214.39 169.31 145.56 126.57 227.36 173.10

Cash and cash equivalents taken over on amalgamation - 0.96 - - - -

Cash and Cash Equivalent at the end of year 126.99 214.39 169.31 145.56 126.58 227.37

(87.40) 44.12 23.75 18.99 (100.78) 54.27

Reconciliation of Cash and Cash Equivalents

As per Balance Sheet 126.99 214.45 169.31 145.87 127.38 228.42

Less: Interest accrued on Bank Deposits - (0.06) - (0.31) (0.80) (1.05)

As per Cash flow statement 126.99 214.39 169.31 145.56 126.58 227.37

233

ANNEXURE VI: ACCOUNTING RATIOS

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Net Profit\(Loss) after tax, as restated (Rs. in millions)

44.45 46.83 30.73 12.23 27.88 (369.31)

(Short)/ Excess Provision for taxes in respect of earlier years (Rs. in millions)

1.73 0.81 - - (1.66) -

Dividend on Preference shares (including corporate dividend tax at the applicable rate) (Rs. in millions)

- - - - (23.67) (0.33)

Net Profit\(Loss) attributable to equity shareholders, as restated (Rs. in millions)

A 46.18 47.64 30.73 12.23 2.55 (369.64)

Net worth (Rs. in millions)

B 2,162.33 2,110.21 1,834.85 1,302.30 1,083.06 956.36

Net worth excluding Preference Share Capital (Rs. in millions)

C 961.08 910.22 934.85 902.30 883.06 783.59

Total No of equity Shares outstanding during the year - Basic

D 51400000 51400000 31400000 31400000 31400000 11400000

Weighted average no. of equity shares outstanding as on date - Basic

E 51400000 31454795 31400000 31400000 11673973 11400000

Diluted No. of equity shares

F 171501776 121536986 71673973 51728767 32441096 11673973

234

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Earning per Equity Share

Basic (Rs.) A/E 0.90 1.51 0.98 0.39 0.22 (32.42)

Diluted (Rs.) A/F 0.27 0.39 0.43 0.24 0.08 (32.42)

(Refer Note 2

below)

Return on Net worth (%) annualised

A/C 9.61% 5.23% 3.29% 1.36% 0.29% -47.17%

(Refer Note 4 below)

Net Asset Value Per Share (Rs.) C/D

18.70 17.71 29.77 28.74 28.12 68.74

(Refer Note 5 below)

Face Value Per Share 10 10 10 10 10 10

Weighted average no. of shares outstanding during the year -for calculating dilutive EPS

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Opening number of equity shares 51400000 31400000 31400000 31400000 11400000 11400000

Add: Conversion of 12% Redeemable Cumulative Convertible Preference share in to equity shares at par

- - - - 273973 -

Add: Potential equity shares that could arise on conversion of entire 12% Redeemable Cumulative Convertible Preference Shares at par

- - - - 19726027 273973

Add: Diluted effect of Potential equity shares allotted on conversion of 9.5 % redeemable non-cumulative convertible preference shares.

- 54795 - - - -

235

Add: Potential equity shares that could arise on conversion of entire 9.5% Redeemable Non-Cumulative Convertible Preference Shares at par

- 19945205 20273973 20000000 1041096 -

Add: Potential equity shares that could arise on conversion of entire 7.5% Redeemable Non-Cumulative Convertible Preference Shares at par

70000000 70000000 20000000 328767 - -

Add: Potential equity shares that could arise on conversion of entire 7.5% Redeemable Non- Cumulative Optionally Convertible Preference Shares of Rs.10 each at par

50000000 136986 - - - -

Add: Potential equity shares that could arise on conversion of entire Zero Coupon Redeemable Preference Shares of Rs.10 each to be redeemed at the expiry of 24 months at 10 % premium of FV.

101776 - - - - -

Total 171501776 121536986 71673973 51728767 32441096 11673973

Notes: 1) The above ratios have been computed on the basis of the restated Summary Statements as per Annexures I and II 2) Since the potential equity shares have an anti-dilutive effect, diluted EPS is same as basic EPS. 3) The effect of potential dilution pursuant to the proposed issue has not been considered since the quantum of equity shares that will ultimately be subscribed cannot be ascertained at present. 4) Return on Net Worth (%) represents Profit/(Loss) after tax as restated, divided by Net Worth. 5) Net Assets Value is calculated as Net Worth (excluding Preference Share Capital) at the end of each financial year divided by the number of equity shares at the end of each financial year.

236

ANNEXURE VII: CAPITALISATION STATEMENT

(Rupees in millions)

Particulars Pre issue - As at September 30th, 2006

Adjusted for post issue

Secured and Unsecured Debt

Short term 2,799.48 2,799.48

Long term 1,633.87 1,633.87

Total Debt 4,433.35 4,433.35

Shareholders' funds

Share Capital 1,715.25 Refer Note below

Reserves and Surplus (excluding Revaluation Reserve) 507.22 Refer Note below

Less: Miscellaneous Expenditure to the extent not written off. 60.14 Refer Note below

Total Shareholders' funds 2,162.33 Refer Note below

Total Capitalization 6,595.68

Long Term Debt/Equity 0.67

Note:

These figures will be known only after finalisation of the issue price by the Lead Manger to the issue and approval of the same by SEBI and other authorities, if any involved therein.

237

ANNEXURE VIII: STATEMENT OF TAX SHELTER

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Profit before prior period adjustments, extraordinary items and tax as restated

82.50 138.50 44.68 28.12 39.43 (369.29)

Normal Tax Rate 33.66% 33.66% 36.59% 35.88% 36.75% 35.70%

MAT Tax rate 11.22% 8.42% 7.84% 7.69% 7.88% 7.65%

Tax at actual rate on book profits 27.77 46.62 16.35 10.09 14.49 -

Adjustments

Permanent differences

Dividend on shares exempt from tax u/s. 10(34)\10(33)

- (0.18) (0.18) (0.14) - (4.20)

Interest on tax-free bonds of UTI (1.37) (2.74) (2.74) (2.28) - -

Surrender of Tenancy Right - (60.00) - - - -

Donations 1.13 0.28 1.19 0.21 0.26 0.21

Expenses on increase in share capital - 6.00 3.50 0.20 - -

Profit\Loss on sale of Long-term Investments

- - (0.34) 16.71 - -

Share of Loss\(Profit) of Partnership Firm

1.25 1.83 (2.49) 0.62 0.06 1.34

Provision for dimunition in value of Investment written back

- - - (13.61) - 13.61

Profit on Sale of Shares - (7.58) - - - (0.26)

Provision for Projected Loss (11.46) 27.74 1.86 - - -

Interest paid on Income-tax - 15.14 - - - -

Expenditure disallowed u/s. 40A(3) - 0.13 - - 0.05 -

TDS written off - 0.67 - - - -

Capital expenditure debited to Profit & Loss account

- - - - 0.36 -

Prior period expenses - - - - - 9.94

Total (A) (10.45) (18.71) 0.80 1.71 0.73 20.64

Timing Differences

Difference between tax and book depreciation

5.19 21.30 (44.12) (52.27) (43.47) (36.18)

(Profit) / Loss on sale of Assets (Diff treatment of tax)

0.71 (1.51) 0.22 0.30 0.50 2.80

43B Items - 34.59 (2.94) 4.18 4.15 (12.87)

Expenditure disallowed u/s 40a(i) - 0.53 - - - -

238

Interest on arbitration awards (20.56) (219.23) (18.50) (186.19) - -

Deferred Revenue Expenditure - VRS u/s.35DDA

(3.25) (6.99) (11.87) (11.66) (17.09) -

Deferred Amalgamation Expenses u/s. 35DD

(0.01) 0.09 - - - -

Lease Rental 9.78 43.09 49.29 52.46 50.06 35.59

Total (B) (8.14) (128.13) (27.92) (193.18) (5.85) (10.66)

Net Adjustments (A) + (B) (18.59) (146.84) (27.12) (191.47) (5.12) 9.98

Tax (Saving)\Expense thereon (6.26) (49.43) (9.92) (68.69) (1.88) 3.56

Tax payable for the year 21.51 - 6.42 - 12.61 -

Set off of Unabsorbed loss (63.91) - (17.56) - (34.32) -

- - - - - -

Tax effect of unabsorbed loss (21.51) - (6.42) - (12.61) -

- - - - - -

Tax payable as per normal rate -

-

-

-

-

-

Profit as per Income Tax Return 69.02

(9.21)

17.56

(163.35)

34.32

(359.30)

Tax as per Income Tax Returns (MAT)

9.26

9.23

0.86

-

2.04

-

Note:

The statement of tax shelter has been prepared based on income tax return filed by the Company for the year ending 31.03.2002 to 31.03.2006, except for the period ended 30.09.2006, which are provisional and final amount will be ascertained at the time of filing of Return of Income. The effect of assessment / appellate orders have not been considered in above.

239

ANNEXURE IX: DETAILS OF SECURED LOANS

(Rupees in millions)

Principal & Interest outstanding Particulars of Loan

Details of Securities

As at September 30, 2006

As at March

31, 2006

As at March 31,

2005

As at March 31,

2004

As at March

31, 2003

As at March 31,

2002

Debentures Secured by a first charge on certain construction equipments and a second charge on the immovable properties of the Company situated at Andheri, Mumbai and Nagpur mortgaged to the consortium of banks for working capital requirements. Further secured by pledge of 3,740,000 equity shares held by the Company in Afcons Pauling (India) Limited, a subsidiary company and 1,238,352 equity shares of the Company held by Afcons (Mideast) Constructions and Investments Private Limited.

- - - - - 45.80

Term Loan from SICOM Limited

Secured by first and exclusive charge by way on retention money receivable from a client and by a floating charge on all movable assets of the Company

- - - - - 10.17

Term Loan from Export Import Bank of India

Secured by a first charge on certain specified movable fixed assets and pledge of 1,238,352 equity shares of the Company held by Cyrus Investments Limited, the holding company

- - - 200.00 250.00 -

Term Loan from Export Import Bank of India

Secured by first and exclusive charge on current assets (including receivables) pertaining to Qatar Petroleum Project

- 144.98 - - - -

Term Loan from IDBI Limited.

Secured by first charge by way of hypothecation of specific equipment purchased out of this loan

- 60.00 150.00 150.00 - -

Hire Purchase from Associates India Financial Services Pvt. Limited.

Secured by lien on assets purchased under hire purchase agreements

- - - - 17.73 22.30

240

(Rupees in millions)

Principal & Interest outstanding Particulars of Loan

Details of Securities

As at September 30, 2006

As at March

31, 2006

As at March 31,

2005

As at March 31,

2004

As at March

31, 2003

As at March 31,

2002

Equipment Loan \ Car from L & T Finance Limited

Secured by first charge by way of hypothecation of the equipment \ Car financed

- - - - 16.03 20.82

Equipment Loan \ Car from GAMC-TCFC Finance Limited

Secured by first charge by way of hypothecation of the equipment / car(s) financed

- - 0.15 0.24 0.73 0.53

Equipment Loan and Hire Purchase from SREI Infrastructure Finance Limited (Loan & Hire Purchase)

Secured by lien on assets purchased under hire purchase agreements & Secured by lien on assets purchased under hire purchase agreements

14.29 28.64 66.31 91.40 49.00 16.75

Equipment Loan from Centurion Bank

Secured by first charge by way of hypothecation of the equipment \ Cars financed

- - - - 37.53 41.65

Equipment Loan from Kotak Mahindra Bank Limited

Secured by first charge by way of hypothecation of the equipment / car(s) financed

- - 4.33 9.50 6.60 0.69

Equipment Loan from ICICI Bank Limited

Secured by first charge by way of hypothecation of the equipment / car(s) financed

59.56 77.30 81.12 70.12 29.59 -

Equipment Loan from HDFC Bank Limited

Secured by first charge by way of hypothecation of the equipment / car(s) financed

21.13 31.16 49.07 46.08 0.74 -

Equipment Loan from Bharat Overseas Bank Limited

Secured by first charge by way of hypothecation of the equipment / car(s) financed

165.04 130.67 42.34 31.36 - -

Equipment Loan from UTI Bank Limited.

Secured by first charge by way of hypothecation of the equipment / car(s) financed

22.01 28.88 42.64 - - -

Equipment Loan from Oriental Bank of Commerce

Secured by first charge by way of hypothecation of the equipment / car(s) financed

213.63 21.48 - - - -

241

(Rupees in millions)

Principal & Interest outstanding Particulars of Loan

Details of Securities

As at September 30, 2006

As at March

31, 2006

As at March 31,

2005

As at March 31,

2004

As at March

31, 2003

As at March 31,

2002

Cash Credit and Working Capital Demand Loans

Secured by a first charge on the immovable properties of the Company situated in Andheri, Mumbai and Nagpur and mortgage of the Company's premises in Band Box House, Worli, Mumbai on a pari-passu basis. Further secured by hypothecation of the Company's stocks of raw materials, stores and work-in-progress, all other movable properties, plant and machinery and book debts and by pledge of 380,100 Bonds (3,800,000 units as at 31.03.2003) of the Unit Trust of India on a pari-passu basis.

604.40 529.03 126.93 230.67 155.69 177.81

Interest Accrued and Due

1.39 2.21 0.75 0.22 0.18 -

Advances from Clients

Secured by hypothecation of specific plant and machinery at the respective Client sites.

- - - - - 4.12

Total 1,101.45 1,054.35 563.64 829.59 563.82 340.64

242

ANNEXURE X: PARTICULARS OF OTHER INCOME

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Nature of Income

Related or not

Related to Business

Profit before prior period adjustments, extraordinary items tax, as per summarised restated profit & Loss statement, as restated

82.50 148.99 34.19 28.12 25.82 (355.68) - -

Other Incomes

Interest Income:

On Arbitration awards 20.56 191.63 7.05 45.43 - - Non-recurring

Related

On Long-term investments

1.41 2.74 2.74 2.32 1.48 1.48 Non-recurring

Related

On Deposits with Banks 0.22 0.49 1.13 1.62 2.69 2.63 Recurring Related

On Income-tax refund 11.80 13.94 7.83 3.35 12.91 10.19 Non-recurring

Not related

On Interest on Loan to Subsidiaries

- - 19.47 17.98 14.51 14.52 Recurring Not related

Miscellaneous interest 0.03 6.30 1.49 20.96 0.15 0.82 Recurring Related

Total Interest 34.02 215.10 39.71 91.66 31.74 29.64

Dividend (Long Term Investments):

- from Subsidiaries - - - - 0.17 0.14 Recurring Not related

- from Others - 0.18 0.18 0.14 - 4.05 Recurring Not related

Total Dividend - 0.18 0.18 0.14 0.17 4.19

Consultancy fees - - - - 28.00 - Non-recurring

Related

Equipment Hire Charges

0.25 - - 13.70 0.29 10.15 Recurring Related

Service Charges 0.06 0.18 0.18 0.18 0.18 0.18 Recurring Related

Insurance Claim 2.47 0.76 9.90 2.50 0.41 0.15

Provision in respect of diminution in the value of long term investments written back

- - - 13.61 - - Non-recurring

Not related

Excess provision in respect of earlier years

37.95 19.47 15.66 17.47 47.62 - Non-recurring

Not related

243

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Nature of Income

Related or not

Related to Business

written back

Profit on Sale of fixed assets (net)

- 1.51 - - - - Non-recurring

Related

Profit on Sale of current Investments.

- 0.88 0.34 - - - Non-recurring

Not related

Profit on sale of Long term Investments

- 7.58 - - - 0.26 Non-recurring

Not related

Share of Profit in firm in which Company is a Partner

- - 2.49 - - - Non-recurring

Related

Amount received on transfer of tenancy rights

- 60.00 - - - - Non-recurring

Related

Rent Income - 2.25 4.50 4.50 4.50 4.50 Recurring Not related

Agency Commission - - 8.11 - - - Non-recurring

Not related

Sales Tax\Excise Duty Refund

11.67 2.57 2.42 0.04 4.23 - Non-recurring

Not related

Subcontractors Recoveries

- - 9.24 2.09 24.60 - Non-recurring

Related

Liquidated Damages released by clients

- - - - 2.28 - Non-recurring

Related

Rebate/TOD given by Creditors

12.84 - 6.80 10.34 0.36 - Non-recurring

Related

Compensation on Iraqi Bonds

- - - 4.76 - - Non-recurring

Not related

Idling charges - - - 16.69 - - Non-recurring

Not related

Gain/loss in Exchange 8.25 4.89 0.26 0.41 0.49 2.62 Recurring Related

Miscellaneous Income 21.51 57.16 14.11 35.05 33.23 7.50 Recurring Related

Total 129.02 372.52 113.89 213.16 178.12 59.19

244

Other Income from Related Parties included above

0.12 0.36 39.30 36.32 29.72 29.68

ANNEXURE XI: STATEMENT OF DIVIDEND PAID

No dividend on equity share capital or preference share captial has been paid by the Company during any of the period \ years covered by the restated financial statements.

245

ANNEXURE XII: DETAILS OF UNSECURED LOANS

(Rupees in millions)

Principal and Interest outstanding Particulars

As at September 30, 2006

As at March 31,

2006

As at March 31,

2005

As at March 31,

2004

As at March 31,

2003

As at March 31,

2002

Fixed Deposits 44.45 55.93 77.10 104.52 157.06 186.27

Short-term loans

From Banks:

DCB Limited - - - 100.00 100.00 100.00

UTI Bank Limited 250.00 - 250.00 150.00 100.00 -

Oriental Bank of Commerce 125.00 125.00 31.25 250.00 - -

Dena Bank 750.00 500.00 250.00 150.00 - -

ING Vysya Bank Limited - - 150.00 - - -

Bank of India 375.00 250.00 250.00 - - -

Union Bank of India - 250.00 - - -

IDBI Limited 77.50 62.50 - - - -

State Bank of Hyderabad 100.00 50.00 - - - -

Central Bank of India - - - - - -

UCO Bank 500.00 - - - - -

Interest accrued on above loans

-

Interest accrued on the above loans

7.19 1.82 - - - -

From Others:

Afcons (Mideast) Constructions and Investments Private Limited

9.00 9.00 9.00 9.00 - -

Other loans from Banks

From Banks:

UTI Bank Limited 250.00 250.00 - - - -

Oriental Bank of Commerce 31.26 93.76 218.75

Dena Bank 250.00 250.00 500.00

IDBI Limited 37.50 82.50 150.00

Bank of India 125.00 250.00 - - - -

State Bank of Hyderabad 150.00 200.00 - - - -

Central Bank of India 250.00 250.00 - - - -

Line of Credit from HDFC - - - 350.00 500.00 -

246

(Rupees in millions)

Principal and Interest outstanding Particulars

As at September 30, 2006

As at March 31,

2006

As at March 31,

2005

As at March 31,

2004

As at March 31,

2003

As at March 31,

2002

Limited

From Others:

Advances from Clients against Plant and Machinery

- - 97.81 112.37 69.96 26.84

Total 3,331.90 2,430.51 2,233.91 1,225.89 927.02 313.11

Due to Related Party included above 9.00 9.00 9.00 9.00 - -

247

ANNEXURE XIII: STATEMENT OF SUNDRY DEBTORS

(Rupees in millions)

Particulars As at September

30, 2006

As at March 31,

2006

As at March 31,

2005

As at March 31,

2004

As at March 31,

2003

As at March 31, 2002

Unsecured

Debts Outstanding for a period exceeding Six Months

Arbitration Awards

532.46 457.52 205.49 - - -

Others 801.46 794.89 566.22 697.37 446.51 474.61

1,333.92 1,252.41 771.71 697.37 446.51 474.61

Other Debts

Arbitration Awards

127.10 106.50 - 186.99 - -

Others 347.97 528.27 960.82 821.26 753.17 424.85

475.07 634.77 960.82 1,008.25 753.17 424.85

TOTAL 1,808.99 1,887.18 1,732.53 1,705.62 1,199.68 899.46

Good

1,667.77

1,731.69

1,567.50

1,603.13

1,072.22 820.62

Doubtful *

141.22

155.49

165.03

102.49

127.46 78.84

TOTAL 1,808.99

1,887.18

1,732.53

1,705.62

1,199.68 899.46

* does not include debts referred to in notes II(2) and II(9) of Annexure IV

Due from Related parties included above

89.77 151.88 195.26 195.24 195.26 195.22

248

ANNEXURE – XIV: STATEMENT OF LOANS AND ADVANCES

(Rupees in millions)

Particulars As at September 30, 2006

As at March 31,

2006

As at March 31,

2005

As at March 31,

2004

As at March 31, 2003

As at March 31, 2002

Advances and Loans

Subsidiary Companies 0.73 0.64 278.28 311.07 268.97 202.90

Partnership Firm in which Company is a Partner 70.23 70.28 70.37 70.59 70.88 74.03

Advances to jointly controlled entity 16.00 24.72 8.55 - - -

Other advances - - - - - 6.05

Total 86.96 95.64 357.20 381.66 339.85 282.98

Deposit with a company (including interest accrued) 1.06 1.02 1.26 1.14 1.04 1.33

Advances recoverable in cash or in kind or for value to be received 810.87 820.23 546.98 394.55 481.29 391.06

Balance with Central Excise Authorities - - 0.02 0.02 0.02 0.02

Advance Tax (net of provision) 242.44 189.23 185.25 260.67 199.68 255.11

TOTAL 1,141.33 1,106.12 1,090.71 1,038.04 1,021.88 930.50

Good 1,114.15 1,077.78 1,070.19 1,009.06 995.14 909.09

Doubtful * 27.18 28.34 20.52 28.98 26.74 21.41

TOTAL 1,141.33 1,106.12 1,090.71 1,038.04 1,021.88 930.50

249

* does not include advances referred to in notes II(2) Annexure IV

Dues from related Parties included above

86.95

95.63

357.19

381.66

339.85

276.93

250

ANNEXURE XV: STATEMENT OF INVESTMENTS

(Rupees in millions)

Particulars No. of Shares

As at September

30, 2006

As at March 31,

2006

As at March

31, 2005

As at March 31,

2004

As at March 31,

2003

As at March

31, 2002

INVESTMENTS (Long Term)

Government Securities (Unquoted) :

(i) National Savings Certificates *

0.06 0.06 0.06 0.06 0.06 0.06

(ii) 11.40% GOI Compensation (Project Exports to Iraq) Bonds, 2003

- - - - 12.95 12.95

(iii) 5½ Years Kisan Vikas Patra

- - - - 0.02 0.02

(iv) 5½ Years Indira Vikas Patra

- - - - 0.02 0.02

- - - - - -

Total - (A) 0.06 0.06 0.06 0.06 13.05 13.05

Non-Trade Investments

Investment in Equity Shares of Subsidiary Companies of (Unquoted) :

Afcons (Overseas) Constructions And Investments Private Limited of Rs. 100 each fully paid up

1000 0.10 0.10 0.10 0.10 0.10 0.10

Hazarat & Company Private Limited of Rs. 10 each fully paid up

202610 2.03 2.03 2.03 2.03 2.03 2.03

Shares of Afcons Dredging & Marine Services Limited of Rs. 100 each fully paid up

10000 (6000 as

at 31.03.200

3)

0.60 0.60 0.60 0.60 0.60 0.60

Afcons Arethusa Offshore Services Private Limited of Rs.

60000 0.60 0.60 0.60 0.60 0.60 0.60

251

(Rupees in millions)

Particulars No. of Shares

As at September

30, 2006

As at March 31,

2006

As at March

31, 2005

As at March 31,

2004

As at March 31,

2003

As at March

31, 2002

10 each fully paid up

SSS Electricals (India) Private Limited of Rs. 10 each fully paid up

48000 0.48 0.48 0.48 0.48 0.48 0.48

Tensacciai (India) Private Limited of Rs. 100 each fully paid up

NIL (6000 as at

31.03.2005)

- - 0.60 0.60 0.60 0.60

Afcons Pauling (India) Limited of Rs. 10 each fully paid up

NIL (3740000

as at 31.03.200

5)

- - 39.67 39.67 39.67 39.67

Kier Afcons (India) Private Limited of Rs. 10 each fully paid up

NIL (76500 as

at 31.03.200

3)

- - - - 0.76 0.76

Afcons Bot Constructions Private Limited of Rs. 10 each fully paid up

40000 0.34 0.34 0.34 0.34 0.33 0.33

- - - - - -

Other Investments: - - - - - -

Quoted - - - - - -

Equity Shares of Hindustan Oil Exploration Company Limited of Rs.10 each fully paid up

134351 (180000

as at 31.03.200

5)

2.02 2.02 2.70 2.70 2.70 2.70

Equity shares of Hindustan Construction Ltd. of Re 1 each fully paid up.

1000 - - - - - -

Equity shares of Simplex Concrete Piles Ltd. of Rs.10 each fully paid up.

100 - - - - - -

Equity shares of Skanska Cementation India Ltd of Rs.10

50 0.02 0.02 - - - -

252

(Rupees in millions)

Particulars No. of Shares

As at September

30, 2006

As at March 31,

2006

As at March

31, 2005

As at March 31,

2004

As at March 31,

2003

As at March

31, 2002

each fully paid up.

Equity shares of Gammon India Ltd. of Rs. 2 each fully paid up

250 0.01 0.01 - - - -

6.75% Tax Free Bonds of Unit Trust of India of Rs.100 each **

405337 40.52 40.52 40.53 40.53 - -

Units of Units Trust of India - US 64 Scheme of Rs. 10 #

4051374 - - - - 56.56 56.56

Less: Provision - - - - (13.61) (13.61)

- - - - - -

Unquoted - - - - - -

Equity share of Afcons (Mideast) Constructions & Investments Private Limited of Rs.100 each fully paid

1 - - - - - -

Share of Afcons Construction Mideast LLC of AED 1000 each fully paid

147 1.77 1.77 - - - -

- - - - - -

Total - (B) 48.49 48.49 87.65 87.65 90.82 90.82

Capital of Partnership Firm

Afcons Pauling Joint Venture

- 17.40 17.40 17.40 17.40 17.40 17.40

Total - (C) 17.40 17.40 17.40 17.40 17.40 17.40

Total - (A) + (B) + (C)

65.95 65.95 105.11 105.11 121.27 121.27

253

(Rupees in millions)

Particulars No. of Shares

As at September

30, 2006

As at March 31,

2006

As at March

31, 2005

As at March 31,

2004

As at March 31,

2003

As at March

31, 2002

Investments in Related Parties included above

5.92 5.92 44.42 44.42 45.19 45.19

* Out of this Rs.0.05 millions lodged with Government Authorities and Clients ** 380,100 bonds pledged with Banks # 3,800,000 units pledged with Banks

254

ANNEXURE XVI: STATEMENT OF CONTINGENT LIABILITIES

(Rupees in

millions)

Particulars As at September

30, 2006

As at March

31, 2006

As at March

31, 2005

As at March

31, 2004

As at March 31,

2003

As at March 31,

2002

Estimated amount of contracts remaining to be executed on capital account and not provided

451.10 80.74 21.87 62.51 34.48 33.07

Claims Against the Company not acknowledged as debt

156.92 94.01 87.62 50.17 57.13 56.50

Bank Guarantees Given on Behalf of Subsidiaries

1.28 1.37 18.91 19.48 18.30 17.63

Corporate Guarantees Given on Behalf of Subsidiaries for its credit Facilities

- - - 100.00 100.00 410.00

In respect of Service Tax matters in appeals in respect of non-registration and non-payment under Service Tax is in dispute.

- 0.28 0.26 0.24 0.22 -

In respect of Sales Tax demands raised by Sales Tax Authorities in matters of disallowance of labour and service charges, consumables for which appeal is pending before various appellate authorities.

89.63 91.35 34.38 71.72 89.00 7.68

In respect of Income Tax matters in appeals.

51.36 51.36 241.95 157.20 63.70 62.11

In respect of Excise Duty demand in appeals

11.30 - - 8.64 48.99 62.51

Agreement with Trade Union for Enlisted Workers

- - - Not Ascertaina

ble

Not Ascertainabl

e

Arrears of fixed cumulative dividend on 12% Redeemable Cumulative Convertible Preference shares of Rs. 10/- each fully paid-up.

- 24.00 24.00 24.00 24.00 0.33

'A petition to wind up the Company pursuant to the provisions of the Companies Act, 1956 has been filed in the Hon. High Court at Bombay by an erstwhile sub-contractor. The petitioner has alleged that the Company has not paid its dues. Against this, the Company has filed a suit and made a counter claim for the liquidated damages.

- 13.23 - - - -

255

Particulars As at September

30, 2006

As at March

31, 2006

As at March

31, 2005

As at March

31, 2004

As at March 31,

2003

As at March 31,

2002

Bills discounted with banks - 10.83 - - - -

Sundry claims against the Company by employees and others not admitted (amount indeterminate)

- - - - - -

256

ANNEXURE XVII: STATEMENT OF RELATED PARTY TRANSACTIONS

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

(I) Transactions during the year:

Holding company(s)

Issue of 7.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Cyrus Investments Limited - 200.00 200.00 200.00 - -

Issue of 12% Redeemable Non - Cumulative Convertible Preference Share Capital

Cyrus Investments Limited - - - - - 200.00

Conversion of 12% Redeemable Cumulative Convertible Preference Share Capital to Equity Share Capital

Cyrus Investments Limited - - - - 200.00 -

Guarantees Given by/(Released)

Cyrus Investments Limited - - 150.00 - - -

Subsidiary companies

Sub-Contract Expenses

Afcons Pauling (India) Limited

- - - - - 0.71

Purchase of stores & spares

SSS Electrical (India) Private Limited

- - - - - 0.67

Sale of Stores & spares

Afcons Pauling (India) Limited

- - - - - 0.37

257

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Service Charges

Afcons Dredging & Marine Services Limited

0.03 0.06 0.06 0.06 0.06 0.06

SSS Electrical (India) Private Limited

0.03 0.06 0.06 0.06 0.06 0.06

Tensacciai (India) Private Limited

- 0.06 0.06 0.06 0.06 0.06

Dividend Income

SSS Electrical (India) Private Limited

- - - - 0.17 0.14

Current Account (net) outflow / (inflow)

Hazarat & Company Private Limited

- (0.12) - 0.11 - (0.12)

Afcons Arethusa Offshore Services Private Limited

- (0.03) 0.02 - - -

Afcons Pauling (India) Limited

- - 15.07 18.23 36.74 (52.59)

SSS Electrical (India) Private Limited

0.05 (0.51) (0.06) 0.17 (1.23) (1.63)

Afcons Dredging & Marine Services Limited

0.03 (0.15) 0.01 0.01 0.02 0.01

Tensacciai (India) Private Limited

- (0.20) 0.01 - (0.39) 0.02

Afcons BOT Constructions Private Limited

- (0.01) (0.02) - - 0.01

Kier Afcons (India) Private Limited

- - - - (0.01) -

Interest Income - Current Account

Hazarat & Company Private Limited

- 0.01 0.01 - 0.01 0.01

SSS Electrical (India) Private Limited

0.01 0.03 0.05 0.04 0.09 -

Afcons Dredging & Marine Services Limited

- 0.01 0.01 0.01 0.03 0.02

Tensacciai (India) Private Limited

- 0.01 0.01 - 0.01 0.02

Afcons Pauling (India) Limited

- - 19.40 17.93 14.37 14.47

Kier Afcons (India) Private Limited

- - - - - -

Rent Income - - - - - -

Hazarat & Company Private Limited

0.06 0.12 0.09 0.09 - -

Recovery of expenses - - - - - -

258

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Afcons Pauling (India) Limited

- - 6.98 6.80 16.25 33.46

SSS Electrical (India) Private Limited

- - - - - 1.67

Repayment/Conversion of loan

Afcons BOT Constructions Private Limited

- - 0.02 - - -

Afcons Pauling (India) Limited

- - 75.07 - - -

Tensacciai (India) Private Limited

- 0.21 - - - -

Afcons Dredging & Marine Services Limited

- - - 1.30 - -

Kier Afcons (India) Private Limited

- - - - 0.01 -

Guarantees Given for/(Released)

SSS Electrical (India) Private Limited

(0.25) 0.84 (0.57) 1.18 - -

Afcons Pauling (India) Limited

- - (100.00) - 100.00 410.00

Fellow Subsidiary(s)

Issue of Zero coupon Reedemable Preference Shares

Sterling Investments Corporation Private Limited

1.24 - - - - -

Issue of Equity Share Capital on conversion of 9.5% Redeemable Non - Cumulative Convertible Preference Share.

Floreat Investment Limited - 200.00 - - - -

Issue of 9.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Issue of 7.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Floreat Investment Limited - 500.00 500.00 - - -

259

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Cyrus Investments Limited - - - - - -

Issue of 7.5% Redeemable Non - Cumulative Optionally Convertible Preference Share Capital

Floreat Investment Limited - 500.00 - - - -

Loan Taken

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Repayment/Conversion of loan

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Interest paid loan

Sterling Investments Corporation Private Limited

- - - - 3.53 -

Partnership firm in which Company is a Partner

Current Account (net) outflow / (inflow)

Afcons Pauling Joint Venture 1.21 1.74 (2.71) 0.33 (3.08) 0.04

Profit/(Loss) of share in partnership firm

- - - - - -

Afcons Pauling Joint Venture (1.25) (1.83) 2.49 (0.62) (0.06) 1.34

Associate Company

Finance Lease Charges

Afcons (Mideast) Construction and Investments Private limited

0.04 0.07 0.07 0.07 5.60 5.60

Current Account (net) outflow / (inflow)

Afcons (Mideast) Construction and Investments Private limited

- - - - - 0.82

Loan Taken

Afcons (Mideast) Construction and Investments Private limited

- - - 9.00 - -

Repayment/Conversion of loan

260

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Afcons (Mideast) Construction andInvestments Private limited

- - - - 6.05 -

Interest paid loan

Afcons (Mideast) Construction and Investments Private limited

0.29 0.45 0.46 0.46 - -

Jointly Controller Entity

Service Charges

Afcons Aarsleff Joint Venture - 42.96 - - - -

Current Account (net) outflow / (inflow)

- - - - - -

Afcons Aarsleff Joint Venture 18.16 25.78 - - - -

Key Management Personnel

Managerial Remuneration paid

A.H.Divanji - - - - - 1.59

A.M.Nerurkar - - - - - 0.01

Rajul A.Bhansali - - - - 1.63 1.41

K.Subrahmanian 1.20 2.64 2.56 2.37 0.80 -

Sitting Fees paid - - - - - -

P.S.Mistry - - - 0.01 0.03 -

C.P.Mistry 0.01

0.03

0.03

0.04

0.03

-

A.H.Divanji -

-

-

-

-

0.01

(II) Balances as at year end:

Holding company(s)

Outstanding amount of guarantee given/ (taken)

Cyrus Investments Limited (800.00) (800.00) (150.00) - - -

Subsidiary companies

Outstanding amount of guarantee given/ (taken)

261

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Afcons Pauling (India) Limited

- - 18.23 118.23 - -

SSS Electrical (India) Private Limited

1.28 1.53 0.68 1.25 - -

Outstanding Amount Dr/(Cr)

- - - - - -

Afcons Pauling (India) Limited

- - 395.80 428.78 385.82 318.45

Afcons (Overseas) Constructions and Investments Private Limited

0.12 0.12 0.12 0.11 0.11 0.11

Hazarat & Company Private Limited

0.21 0.20 0.20 0.19 0.16 0.16

Afcons BOT Constructions Private Limited

- - 0.01 0.04 0.04 0.03

SSS Electrical (India) Private Limited

0.24 0.19 0.61 0.56 0.30 1.37

Tensacciai (India) Private Limited

- - 0.34 0.27 0.21 0.52

Afcons Dredging & Marine Services Limited

0.12 0.09 0.17 0.10 1.33 1.22

Afcons Arethusa Offshore Services Private Limited

0.03 - 0.03 - - -

Afcons Employees Healthcare & Welfare Company Private Limited

0.01 0.01 0.01 - - -

- - - - - -

Partnership firm in which Company is a Partner

Outstanding Amount Dr/(Cr)

Afcons Pauling Joint Venture 146.49 146.53 146.63 146.85 147.14 150.28

Associate Company

Outstanding Amount Dr/(Cr)

Afcons (Mideast) Construction and Investments Private limited

(10.92) (10.59) (10.06) (9.52) - 9.98

Jointly Controller Entity

262

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Outstanding Amount Dr/(Cr)

Afcons Aarsleff Joint Venture 24.40 100.34 - - - -

Al - Saeed Afcons Joint Venture

5.11 - - - - -

263

AUDITORS’ REPORT

To,

The Board of Directors AFCONS Infrastructure Limited Afcons House, 16, Shah Industrial Estate Veera Desai Road, Azad Nagar P. O. Post Box No. 11976 Andheri (West), Mumbai 400 053 Dear Sirs,

Re: The proposed public offering by Afcons Infrastructure Limited.

1. We have examined the attached consolidated financial information of Afcons Infrastructure Limited and its subsidiaries, associates and joint ventures (“the Group”), as approved by the Board of Directors of the Company, prepared in terms of the requirements of Paragraph B, Part II of Schedule II of the Companies Act, 1956 (“the Act”) and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 as amended up to 18th October, 2006 (“SEBI Guidelines”) and in terms of our engagement agreed upon with you in accordance with our engagement letter dated 4th December, 2006 requesting us to examine financial information referred to above and proposed to be included in the Offer Document being issued by the Company in connection with the proposed issue of Equity shares of the Company.

2. These information have been prepared by the Management from the financial statements for the

year ended 31st March, 2002, 2003, 2004, 2005 and 2006.

3. We did not jointly audit the Financial statements of the subsidiaries, associates and joint ventures for the financial years ended 31st March, 2002, 2003, 2004, 2005 and 2006, whose Financial Statements reflect total assets, total revenue and total cash flows as mentioned below.

31st March, 2006

Rupees in millions

31st March, 2005

Rupees in millions

31st March, 2004

Rupees in millions

31st March, 2003

Rupees in millions

31st March, 2002

Rupees in millions

Total Revenue

337.96

29.55

17.15

46.30

78.48

Total Assets

96.79

466.86

564.36

595.15

631.81

Total Cash flows

2.26

2.31

0.41

2.66

4.46

4. These financial statements have been audited by either of us in our individual capacity or by other

auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to the amount included in respect of subsidiaries and an associate is based solely on reports of the respective auditors except that in the case of Afcons Constructions Mideast LLC and Afcons Aarsleff Joint Venture, our opinion is based on the unaudited separate financial statements prepared by the Joint Venturers and included in the consolidated financial statements. The unaudited Financial Statements of the joint ventures reflect total Assets of Rs.61.24 millions, total revenue of Rs. 325.29 millions and total cash flows of Rs.11.42 millions for the year ended 31st March, 2006.

264

5. We have also examined the consolidated financial information of the Company and its subsidiaries, associates and joint ventures for the period 1st April, 2006 to 30th September, 2006 prepared and approved by the Board of Directors for the purpose of disclosure in the offer document of the Company mentioned in Paragraph (1) above. The consolidated financial information for the above period was examined to the extent practicable, for the purpose of audit of financial information in accordance with the Auditing and Assurance Standards issued by the Institute of Chartered Accountants of India. Those Standards require that we plan and perform our audit to obtain reasonable assurance, whether the financial information under examination is free of material misstatement. Based on the above, we report that in our opinion and according to the information and explanations given to us, we have found the same to be correct and the same have been accordingly used in the financial information appropriately.

6. We did not jointly audit the financial statements of the subsidiaries, associates and joint ventures for the period 1st April, 2006 to 30th September, 2006, whose Financial Statements reflect total assets of Rs. 386.23 millions, total revenues of Rs. 99.05 millions and total cash flows of Rs. 0.50 millions for the period 1st April, 2006 to 30th September, 2006. These financial statements have been audited by either of us in our individual capacity or by other auditors, whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of subsidiaries and an associate, is based solely on reports of the respective auditors except that in the case of Afcons Constructions Mideast LLC, Afcons Aarsleff Joint Venture and Al-Saeed Afcons joint venture, our opinion is based on the unaudited separate financial statements prepared by the Joint Venturers and included in the consolidated financial statements. The unaudited Financial Statements of the joint ventures reflect total Assets of Rs. 180.80 millions as at 30th September, 2006, total revenues of Rs. 91.65 millions and total cash flows of Rs. 0.96 millions for the period 1st April, 2006 to 30th September, 2006.

7. In accordance with the requirements of Paragraph B of Part II of Schedule II of the Act, the SEBI

Guidelines and terms of our engagement as aforesaid, we further report that:

e) The Consolidated Restated Summary Statement of Assets and Liabilities of the Company as at 31st March, 2002, 2003, 2004, 2005, 2006 and 30th September, 2006, Consolidated Profits and Losses and Consolidated Statement of Cash flows of the Company for the year ended 31st March, 2002, 2003, 2004, 2005 and 2006 and for the period 1st April, 2006 to 30th September, 2006 examined by us, as set out in Annexures I, II and V respectively to this report are after making adjustments and regrouping as in our opinion are appropriate as per Annexure IIIA and read with Notes on Adjustments on account of Restatements / Audit Qualifications as appearing in Annexure IIIB and the Significant Accounting Policies and Notes to the Accounts as appearing in Annexure IV.

f) Based on above and also as per the reliance placed on reports submitted by either of us in our

individual capacity or by other auditors for subsidiaries and associates, whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of subsidiaries and an associate is based solely on reports of the respective auditors for the respective years and so far as it relates to the amounts included in respect of joint ventures mentioned in paragraphs 4 and 6 above is based on the unaudited financial statements prepared by the venturers for the year ended 31st March, 2006 and for the period 1st April, 2006 to 30th September, 2006, we are of the opinion that the restated financial information have been made after incorporating:

(i) Adjustments for the changes in accounting Policies retrospectively in respective

financial years to reflect the same accounting treatment as per changed accounting policy for all the reporting periods.

(ii) Adjustments for the material amounts in the respective financial years to which they relate.

265

(iii) And there are no extra-ordinary items that need to be disclosed separately in the accounts.

g) The Summary Consolidated Statement of Assets and Liabilities, Consolidated Profits and

Losses and Consolidated Statement of Cash flows mentioned in (a) above have not been restated to reflect the effect of the Auditors’ qualifications as stated hereunder, since the said qualifications are not capable of precise quantification.

(viii) Non-provision for probable non-recovery of dues from a Partnership firm; (Refer Note

no. B(5)(i) of Annexure IIIB) (ix) Non-provision for debts and advances; (Refer Note no. B(5)(ii) of Annexure IIIB) (x) The manner of determination of projected losses in respect of contracts in progress, for

which we have relied upon the management’s current estimates of costs to completion owing to their technical nature and due to uncertainties of future; (Refer Note no. B(5)(iii) of Annexure IIIB)

(xi) Non-provision for unbilled revenue; (Refer Note no. B(5)(iv) of Annexure IIIB) (xii) The manner of accounting for outstanding arbitration awards and interest accrued

thereon; (Refer Note no. B(5)(v) of Annexure IIIB) (xiii) Accounts of a subsidiary for the year ended 31st March, 2004 and 2005 prepared on

going concern basis; (Refer Note no. B(6)(i) of Annexure IIIB) (xiv) Non-provision for claims lodged by a subsidiary of the company pending final

settlement/acceptances. As the final amount(s) that may be ultimately realised on these claims cannot be ascertained, the overall effect of which on the financial statements for the respective year could not be determined. (Refer Note no. B(6)(ii) of Annexure IIIB)

(xv) Non-updation by a subsidiary of the fixed asset register and no physical verification of assets being conducted during the year. (Refer Note no. B(6)(iii) of Annexure IIIB)

In view of the fact that in respect of items mentioned under clauses (i) to (vii) above, the probable loss on account of non-recovery or partial recovery of debts, loans and advances, other receivables, fall in the value of investments, contracts in progress, Arbitration awards in appeal etc. are not capable of being estimated and quantified with reasonable accuracy owing to insufficient evidence and information available which includes, inter alia, a review of events occurring after the Balance Sheet date, management’s experience of similar transactions and in some cases reports from independent experts, the overall effect of the above qualifications could not be determined. Hence, it is not possible to adjust the above non-provisions in the restated summary statements.

h) We have also examined the following consolidated other financial information set out in

Annexures prepared by the management and approved by the Board of Directors relating to the Company and its subsidiaries, associates and joint ventures for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period 1st April, 2006 to 30th September, 2006 for the purpose of inclusion in the Offer Document:-

(i) Statement of Accounting Ratios included in Annexure VI (ii) Statement of Capitalization as at 30th September, 2006 included in Annexure VII (iii) Statement of Tax Shelter included in Annexure VIII (iv) Statement of Secured Loan included in Annexure IX (v) Statement of Other Income included in Annexure X (vi) Statement of Dividend included in Annexure XI (vii) Statement of Unsecured Loan included in Annexure XII (viii) Statement of Sundry Debtors included in Annexure XIII (ix) Statement of Loans and Advances included in Annexure XIV (x) Statement of Investments included in Annexure XV (xi) Statement of Contingent Liabilities included in Annexure XVI (xii) Statement of Related Party transactions included in Annexure XVII

266

8. In our opinion the financial information contained in Annexures I to XVII of this report read along with the Significant Accounting Policies and Notes to accounts included in Annexure IV to this report, prepared after making adjustments and regrouping as considered appropriate and read with our observations contained in paragraph 7(c) above, have been prepared in accordance with the requirements of Part II of Schedule II of the Act and the SEBI Guidelines.

9. Our report is intended solely for use of the management and for inclusion in the offer document in

connection with the proposed issue of equity shares of the Company and should not be used for any other purpose except with our prior consent in writing.

For C. C. Chokshi & Co., J. C. Bhatt Chartered Accountants Chartered Accountant

R. Laxminarayan Partner Membership No.33023 Membership No.10977

Place: Mumbai Dated: 5th January, 2007

267

ANNEXURE – I : SUMMARY STATEMENT OF CONSOLIDATED ASSETS AND LIABILITIES, AS

RESTATED

(Rupees in millions)

Particulars As at September

30, 2006

As at March 31,

2006

As at March 31, 2005

As at March 31, 2004

As at March 31, 2003

As at March 31, 2002

FIXED ASSETS

Gross Block

2,887.81

2,667.51

2,482.11

2,276.34

2,013.39

1,829.09

Less: Depreciation

1,578.36

1,494.77

1,412.60

1,270.06

1,158.47

1,049.70

Net Block

1,309.45

1,172.74

1,069.51

1,006.28

854.92

779.39

Less: Revaluation Reserve

59.54

64.08

9.08

9.07

13.95

12.30

Net Block after adjustment for Revaluation Reserve

1,249.91

1,108.66

1,060.43

997.21

840.97

767.09

Capital Work In Progress

330.72

51.06

18.30

6.19

30.97

14.24

TOTAL - (A)

1,580.63

1,159.72

1,078.73

1,003.40

871.94

781.33

INVESTMENTS - (B)

42.65

42.65

43.33

43.33

58.73

58.74

CURRENT ASSETS, LOANS AND ADVANCES

Inventories

611.00

515.61

387.53

405.46

411.77

348.14

Work-in-Progress

14.79

14.99

14.79

1,729.39

1,123.82

780.67

Unbilled Revenue

4,027.62

2,857.30

1,786.95 -

-

-

Sundry Debtors

1,921.59

1,981.02

1,866.71

1,903.46

1,402.03

964.19

Cash & Bank Balances

150.64

237.65

195.73

174.60

156.51

260.20

Loans & Advances

1,111.75

1,030.21

813.89

749.84

789.84

794.17

Other Current Assets

16.23

0.96

0.94

0.94

1.68

1.71

TOTAL - (C)

7,853.62

6,637.74

5,066.54

4,963.69

3,885.65

3,149.08

LIABILITIES AND PROVISIONS

Secured Loans

1,101.45

1,054.35

563.64

829.59

563.82

364.11

Unsecured Loans

3,331.89

2,430.50

2,233.91

1,225.89

927.02

313.11

Current Liabilities

2,615.35

2,022.47

1,688.95

2,749.36

2,289.50

2,338.28

268

(Rupees in millions) Particulars As at

September 30, 2006

As at March 31,

2006

As at March 31, 2005

As at March 31, 2004

As at March 31, 2003

As at March 31, 2002

Provisions

127.06

112.46

37.77

39.58

38.84

66.54

Deferred Tax Liability (Net)

119.12

94.92

34.64

23.43

9.50

3.30

Minority Interest

6.49

6.53

6.98

7.06

8.03

8.81

TOTAL - (D)

7,301.36

5,721.23

4,565.89

4,874.91

3,836.71

3,094.15

NET WORTH - (A+B+C-D)

2,175.54

2,118.88

1,622.71

1,135.51

979.61

895.00

REPRESENTED BY

1. Share Capital

1,715.25

1,715.25

1,214.00

714.00

514.00

314.00

(Refer

note 1

below)

2. Reserves & Surplus

579.97

533.78

495.72

519.42

579.60

609.42

Less: Revaluation Reserve

59.54

64.08

9.08

9.07

13.95

12.30

Reserves & Surplus (Net of Revaluation Reserves)

520.43

469.70

486.64

510.35

565.65

597.12

Total

2,235.68

2,184.95

1,700.64

1,224.35

1,079.65

911.12 Less: Miscellaneous Expenses (to the extent not written off)

60.14

66.07

77.93

88.84

100.04

16.12

NET WORTH

2,175.54

2,118.88

1,622.71

1,135.51

979.61

895.00

Notes: 1) Share Capital Includes share application money of Rs.1.25 million in respect of Zero Coupon Redeemable Preference Shares pending allotment.( Refer note no. VIII(c) of Annexure IV)

2) The above statement should be read with the Notes on Adjustments to Restated Financial Statements, Signifcant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

269

ANNEXURE II: SUMMARY STATEMENT OF CONSOLIDATED PROFIT AND LOSS ACCOUNT, AS

RESTATED

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

INCOME :

Income from Operations 3,990.22 6,804.42 5,433.84 4,453.29 4,299.12 4,130.37 Other Income 133.63 373.25 108.04 193.61 156.56 47.17

Total Income 4,123.85 7,177.67 5,541.88 4,646.90 4,455.68 4,177.54

EXPENDITURE :

Cost of Construction 2,992.20 4,759.03 4,012.65 3,325.05 3,156.03 3,390.27 Payments to and Provisions for employees 335.28 654.25 488.21 447.57 455.30 460.44 Other Expenses 385.66 1,040.68 513.22 421.28 381.83 363.02 Financial Lease Rentals 9.82 43.09 61.19 68.20 92.68 107.07 Interest and Financial charges 234.39 381.48 336.65 300.28 286.85 217.61 Depreciation 85.52 158.64 146.71 129.65 116.72 99.02 Less : Depreciation on the amount added on Revaluation transferred from Revaluation Reserve 4.53 9.07 9.09 9.09 13.94 12.29

Total Expenditure 4,038.34 7,028.10 5,549.54 4,682.94 4,475.47 4,625.14

Profit\ (Loss) before prior period adjustments, extraordinary items and tax 85.51 149.57 (7.66) (36.04) (19.79) (447.60)

Provision for tax:

- Current tax (9.35) (14.66) (2.77) (2.19) (2.24) (0.54)

- Wealth Tax (0.01) (0.02) (0.02) (0.02) (0.02) (0.02)

- Deferred Tax (24.20) (60.28) (11.21) (13.92) (9.27) -

- Fringe Benefit Tax (4.70) (10.40) - - - -

- Foriegn Tax - (6.68) - - - -

Total Provision for Tax (38.26) (92.04) (14.00) (16.13) (11.53) (0.56)

Profit\ (Loss) after tax, before prior period adjustments and extraordinary items

47.25

57.53

(21.66)

(52.17)

(31.32)

(448.16)

Adjustments:

Impact of material adjustment forrestatementincorresponding years (Refer Annexure IIIA)

-

(10.49)

10.49

-

16.92

(16.92)

270

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Adjusted Profit\ (Loss) after tax, before prior period adjustments and extraordinary items

47.25

47.04

(11.17)

(52.17)

(14.40)

(465.08)

(Short)/ Excess Provision for taxes in respect of earlier years (Refer note 1 below)

1.73

0.81

(3.54)

0.09

(1.61)

(0.03)

Prior Period Expenses -

-

-

-

(0.21)

1.39

Profit\ ( Loss) after taxation and before minority Interest

48.98

47.85

(14.71)

(52.08)

(16.22)

(463.72)

Minority Interest 0.04

(0.08)

11.32

16.25

10.78

23.87

Profit\ ( Loss) after Minority Interest

49.02

47.77

(3.39)

(35.83)

(5.44)

(439.85)

Balance Brought Forward from Previous Year

(282.18)

(329.76)

(326.39)

(290.56)

(308.69)

63.66

Transfer From Debenture Redemption Reserve

-

-

-

-

22.90

67.72

Profit\ ( Loss) available for appropriation

(233.16)

(281.99)

(329.78)

(326.39)

(291.23)

(308.47)

Appropriations:

Proposed Final Dividend -

-

-

-

-

(0.11)

Transfer from/ (to) General Reserve -

(0.19)

-

-

0.67

(0.11)

Less: Deducted from general reserve as per contra

233.16

282.18

329.78

326.39

290.56

308.69

Balance carried to Summary Statement of Assets and Liabilities, as restated

-

-

-

-

-

-

Notes:

1) Short \ Excess Provision for tax relates to financial year prior to year ending March 31, 2002 and hence it is not possible to restate in the above annexure.

2) The above statement should be read with the Notes on Adjustments to Restated Financial Statements, Significant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

271

ANNEXURE IIIA: CONSOLIDATED STATEMENT OF IMPACT ON PROFIT AND LOSS DUE TO RESTATEMENTS AND OTHER MATERIAL ADJUSTMENTS MADE TO AUDITED FINANCIAL STATEMENTS.

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1, 2006

to September

30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Net Profit after tax, before prior period adjustments and extraordinary items as per audited Profit and Loss Account 47.25 57.53 (21.66) (52.17) (31.32) (448.16)

(Refer note 1 below)

Deferred Tax - - - - 3.31 (3.31)

Interest income on arbitration awards now adjusted in respective financial years - (10.49) 10.49 - - -

Impact of Auditors qualifications on Profit & Loss Account (Refer note 2 below)

Provision for diminution in the value of quoted investment.

- - - - 13.61 (13.61)

Net Profit after tax, before prior period adjustments and extraordinary items as per restated profit and loss account 47.25 47.04 (11.17) (52.17) (14.40) (465.08)

Notes:

1) Afcons Pauling (India) Limited (APIL) a subsidiary of the Company was amalgamated with the Company with effect from 1st April’2005. During the year ended 31st March’2006, interest on arbitration awards pertaining to earlier years of APIL aggregating to Rs. 98.39 million was accounted as income, which was related to the years prior to amalgamation. For the purpose of this statement the said interest income has not been adjusted in the respective years, as APIL was not part of the Company’s operation in those years. 2) Refer Part B of Annexure IIIB for adjustments arising out of audit qualifications \ other restatements, not given effect to.

3) The above statement should be read with the Notes on Adjustments to Restated Financial Statements, Significant Accounting policies and Notes to Accounts as appearing in Annexures IIIB and IV respectively.

272

ANNEXURE IIIB – CONSOLIDATED NOTES ON ADJUSTMENT ON ACCOUNT OF

RESTATEMENTS / AUDIT QUALIFICATIONS A The following adjustments have been made to the Summary Statement of Profits and Losses,

Summary Statement of Assets and Liabilities and Statement of Restated Cash Flow (“Summary Statements”):

3. Interest on arbitration awards accounted in the year ended 31st March, 2006 in respect of

arbitration awards decided in favour of the company; adjusted in respective years to which it relates, except as mentioned below:

Afcons Pauling (India) Limited (APIL) a subsidiary of the Company was amalgamated with the Company with effect from 1st April, 2005. During the year ended 31st March, 2006, interest on arbitration awards pertaining to earlier years of APIL aggregating to Rs.98.39 million was accounted as income, which was related to the years prior to amalgamation. For the purpose of this statement the said interest income has not been adjusted in the respective years, as APIL was not part of the Company's operation in those years.

4. Provision for diminution in the value of investment in units of UTI was made in the year ended

31st March, 2003.For the purpose of this statement same has been adjusted in the year ended 31st March, 2002 as such provision was related to the financial year 2001-2002.

B The following adjustments have not been made to the Summary Statements for the reasons

stated therein:

1. The trustees of Afcons Infrastructure Limited Employees Group Gratuity-cum-Life Assurance Scheme Trust have taken a Group Gratuity-cum-Life Assurance Policy from the Life Insurance Corporation of India (LIC). Provision for gratuity is made on the basis of premium payable in respect of aforesaid policy and actuarial valuation carried out by the independent actuarial valuer as at the year end.

The Company has made provision for gratuity liability and unavailed leave for the period ended 30th September, 2006 as per revised Accounting Standard (AS -15) “Employees Benefit” issued by the Institute of Chartered Accountants of India (ICAI). For the purpose of this statement, Revised AS-15 has not been applied for the years ended March 31, 2002, 2003, 2004 and 2005 as the same was not applicable in those years. Consequently, additional impact, if any, on account of actuarial valuation of gratuity as per revised (AS 15) has not been recognised in this statement for those years. Based on revised actuarial valuation carried out as per Revised (AS-15) for the year ended 31st March, 2006, there was no additional liability on account of gratuity as on 31st March, 2006.

2. Prior to 1st April, 2004, the Company accounted contract revenue and contract cost in accordance with the Accounting Standard AS7. “Accounting for Construction Contracts” issued in the year 1983 in respect of contracts entered into before 1st April, 2003 and Accounting Standard AS7 “Construction Contracts (Revised)” issued in the year 2002 in respect of contracts entered into on or after 1st April, 2003. During the year ended 31st March, 2005, with a view to have uniformity in accounting treatment, the Company has accounted Contract Revenue and costs in accordance with AS7 (revised) in respect of all contracts (including contracts entered into prior to 1st April, 2003). Revenue recognized as a result of this change is Rs.864.45 millions. Adjustment on this account has not been made in the summary financial statement for the years ended March 31, 2002, 2003 and 2004 in the absence of available information.

273

3. Prior to 1st April, 2004, the Company has accounted work done remaining to be certified / billed

at cost. From the financial year 2004-05 onwards the company has treated work done remaining to be certified / billed as unbilled Revenue in the accounts and valued the same at the contract rates. Adjustment on this account has not been made in the summary financial statement for the years ended March 31, 2002, 2003 and 2004 in the absence of available information.

4. Prior to 1st April, 2002, it was the practice of the Company to defer expenditure on voluntary retirement compensation over a period of five years. During the year 2002-03, the company has changed this practice on the basis of reassessment and has decided to amortize the said expenditure over a period of 10 years with retrospective effect. This change has the effect of (i) write back to the profit and loss account excess amount of amortization, Rs.5.37millions (ii) decreasing the amortization charge for the year by Rs11.71millions (iii) increasing the profit for the year by Rs 17.09 millions and (iv) increasing the deferred revenue expenditure carried forward by Rs 17.09 millions. Adjustment on this account have not been made in the summary financial statement for the years ended March 31, 2002 as in the opinion of the Company, the impact of the same in the summary statements for the year ended March, 31, 2002 is not material.

5. Auditors’ Qualifications on financial statements of the Company:

(ix) Audit report for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period

ended 30th September, 2006 has been qualified for non-provision for dues from the partnership firm “Afcons Pauling Joint Venture” in which the Company is a partner. Refer Note no. VII (2) of Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Amount (Rupees in millions)

30th September, 2006 146.49

31st March, 2006 146.53

31st March, 2005 146.63

31st March, 2004 146.85

31st March, 2003 147.14

31st March, 2002 150.28

(x) Audit report for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period ended 30th September, 2006 has been qualified for non-provision of debts and advances which are subject matter of arbitration\litigation. Refer Note no. VII (3) of Annexure IV. A detailed year wise break-up is given below:

Year\Period ended Amount (Rupees in millions)

30th September, 2006 168.40

31st March, 2006 183.83

31st March, 2005 185.54

31st March, 2004 131.46

31st March, 2003 154.19

31st March, 2002 100.25

274

(xi) Audit report for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period ended 30th September, 2006 has been qualified in respect of determination of projected losses in respect of contracts in progress. Auditors have relied upon the management estimate of costs to completion owing to their technical nature and due to uncertainties of future. Refer Note no. VII (5) of Annexure IV.

(xii) Audit report for the year ended 31st March, 2005, 2006 and for the period ended 30th

September, 2006 has been qualified for non-provision of unbilled revenue outstanding since long period and subject matter of arbitration. Refer Note no. VII (7) of Annexure IV. A detailed year wise break-up is given below :

Year\Period ended Arbitration award Amount (Rupees in

millions) 30th September, 2006 51.97

31st March, 2006 51.97

31st March, 2005 69.15

(xiii) Audit report for the year ended 31st March, 2004, 2005, 2006 and for the period ended 30th September, 2006 has been qualified for outstanding arbitration awards unanimously decided in Company’s favour and interest accrued thereon. Refer Note no. VII (8) of Annexure IV. A detailed break-up of year wise non-provision is given below:

Year\Period ended Arbitration award Amount (Rupees in

millions)

Interest on arbitration awards Amount (Rupees in

millions) 30th September, 2006 532.46 127.10

31st March, 2006 457.49 106.53

31st March, 2005 194.99 -

31st March, 2004 186.99 45.43

In view of the fact that in respect of items mentioned under clauses (i) to (v) above, the probable loss on account of non-recovery or partial recovery of debts, loans and advances, other receivables, fall in the value of investments, contracts in progress, Arbitration awards in appeal etc. are not capable of being estimated and quantified with reasonable accuracy owing to insufficient evidence and information available which includes, inter alia, a review of events occurring after the Balance Sheet date, management’s experience of similar transactions and in some cases reports from independent experts, the overall effect of the above qualifications could not be determined. Hence, it is not possible to adjust the above non-provisions in the restated summary statements.

6. Auditors’ Qualifications on financial statements of subsidiary of the Company:

AFCONS PAULING (INDIA) LIMITED

(i) Attention was drawn in Audit report for the year ended 31st March, 2004 and 2005 to Note V

(1) of Annexure IV regarding accounts of the Company prepared on going concern basis;

275

(ii) Attention was drawn in Audit report for the year ended 31st March, 2002, 2003, 2004 and 2005 to Note V (2) of Annexure IV regarding claims lodged by the company pending final settlement/acceptances. As the final amount(s) that may be ultimately realised on these claims cannot be ascertained, the overall effect of which on this financial statements for the respective year could not be determined. A detailed break-up of year wise non-provision is given below:

Year\Period ended

Claim Amount

included in sundry debtors

(Rupees in millions)

Award included in Claim Amount (Rupees

in millions)

Dues of completed project included in Debtors which

will be settled upon completion of arbitration

(Rupees in millions)

31st March, 2005 112.09 63.86 11.67

31st March, 2004 112.09 63.86 11.67

31st March, 2003 112.09 63.86 11.67

31st March, 2002 112.09 63.86 11.67

(iii) Observation was made in Audit report for the year ended 31st March, 2003 for the fixed assets of the Company owned as well taken on lease which were in the possession of the holding Company. The Company has neither updated the fixed asset register nor conducted a physical verification of these assets during the year. In the absence of updated book records and physical verification, auditors were unable to comment on the discrepancies, if any, between the book records and results of physical and impact thereof on the financial statements, if any.

(iv) Observation was made in audit report for the year ended 31st March, 2002 regarding Mr.

Prosser Abaker Peter and Mr. Rowland Roy Veron have not produced written representations for the purpose of section 274 (1)(g) of the Companies Act, 1956. In the absence of this representation the auditors were unable to comment whether Mr. Prosser Abaker Peter and Mr. Rowland Roy Veron are disqualified from being appointed as directors under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

7. Auditors’ Qualifications in Companies Auditor’s Report Order, 2003 \

Manufacturing and Other Companies (Auditor’s) Report Order, 1988:

Audit report of the Company for the year ended 31st March, 2002, 2003, 2004, 2005 and 2006 has been qualified in respect of statement contained in Companies Auditor’s Report Order, 2003 \ Manufacturing and Other Companies (Auditor’s) Report Order, 1988 regarding;

a) Fixed assets register being under updation to show full particulars including quantitative

details and situation of fixed assets. Audit report for the year ended 31st March, 2004, 2005 and 2006 has been qualified in respect of statement contained in Companies Auditor’s Report Order, 2003 \ Manufacturing and Other Companies (Auditor’s) Report Order, 1988 regarding; b) Receipt of interest being not regular in respect of loans granted to the parties covered in

the register maintained under section 301 of the Companies Act, 1956. Audit report for the year ended 31st March, 2005 and 2006 has been qualified in respect of statement contained in Companies Auditor’s Report Order, 2003 regarding;

276

c) Payment of interest being not regular in respect of loan taken from the party covered in the register maintained under section 301 of the Companies Act, 1956.

Audit report for the year ended 31st March, 2002 has been issued with disclaimer of opinion in respect of statement contained in Manufacturing and Other Companies (Auditor’s) Report Order, 1988 regarding; d) Terms of interest and other terms and conditions of loans granted to another company

under the same management within the meaning of section 370(1B) of the Companies Act, 1956 are prima facie prejudicial to the interest of the Company or not;

8. Audit report of the Subsidiary of the Company for the year ended 31st March, 2002, 2003, 2004,

2005 and 2006 has been qualified in respect of statement contained in Companies Auditor’s Report Order, 2003 \ Manufacturing and Other Companies (Auditor’s) Report Order, 1988 regarding;

a) SSS ELECTRICALS (INDIA) PRIVATE LIMITED

(i) Observation was made in audit report for the year ended 31st March, 2002 regarding payment of undisputed statutory dues relating to Fringe Benefit Tax was not regular and it has been paid only once on 31st March’06 for the entire financial year.

(ii) Observation was made in audit report for the year ended 31st March, 2004 that in the

opinion of the auditors, there was no regular internal audit. However, strict and rigid controls were maintained and vigilant procedures were introduced and observed to avoid any misfeasance or fraud on or by the Company.

(iii) Observation was made in audit report for the year ended 31st March, 2003 regarding

Payment of undisputed statutory dues of an amount of Rs.0.03 million in respect of sales-tax being not regular.

(iv) Observation was made in audit report for the year ended 31st March, 2002 that The

Company does not have a system of allocating man-hours utilized to the relative jobs.

b) AFCONS ARETHUSA OFFSHORE SERVICES PRIVATE LIMITED

(i) Observation was made in audit report for the year ended 31st March, 2004, 2005 and 2006 that the Company did not have an internal audit system during the year.

(ii) Observation was made in audit report for the year ended 31st March, 2004 regarding

payment of undisputed statutory dues relating to tax deducted at source was not regular.

(iii) Payment of undisputed statutory dues relating to custom duty of Rs.0.44 millions,

provident fund dues of Rs.0.29 million and income tax dues of Rs.0.03 million was not paid and outstanding for more than six months from the date they become payable.

277

c) AFCONS PAULING (INDIA) LIMITED

For the year ended 31st March, 2005.

(i) Fixed assets were not physically verified during the year by the management and

hence auditors were unable to comment on discrepancies, if any;

(ii) Payments of undisputed statutory dues relating to sales-tax were not regular. There were no arrears of outstanding dues as at the last day of the financial year for a period of more than six months from the date they became payable except in respect of sales-tax of Rs.0.1 million;

(iii) There were cases of non-deposit with appropriate authorities of disputed dues of

sales-tax of Rs.12.61 millions and income-tax of Rs.5.53 millions which disputes are pending before the Appellate Tribunal-Sales tax (Rs.3.77millions), Deputy Commissioner-Commercial Tax (Rs.0.22 million), Additional Commissioner sales tax (Rs.8.62millions) and Commissioner of Income Tax (Appeals) of Rs 5.53 millions.

For the year ended 31st March, 2002, 2003 and 2004.

Fixed assets register was in process of being updated. Fixed assets were not physically verified during the year by the management and hence auditors were unable to comment on discrepancies, if any;

For the year ended 31st March, 2004.

(i) Payment of undisputed statutory dues relating to sales-tax were not regular. There

were no arrears of outstanding dues as at the last day of the financial year for a period of more than six months from the date they became payable except in respect of sales-tax of Rs.0.1 million;

(ii) There were no cases of non-deposit with appropriate authorities of disputed dues of

sales-tax, income-tax, customs duty, wealth-tax, excise duty and cess except for sales tax of Rs.12.40 millions where the disputes are pending before Appellate Tribunal-Sales tax (Rs.3.77 millions), Deputy Commissioner-Commercial Tax (Rs.0.22 million) and Additional Commissioner sales taxes (Rs.8.41 millions) respectively.

For the year ended 31st March, 2002 and 2003.

(i) Physical verification has not been conducted by the management at reasonable

intervals in respect of stores, spare parts and construction materials.

(ii) The procedures of physical verification of inventories followed by the Management need to be strengthened to make them commensurate with the size of the Company and the nature of its business. In the opinion of the auditors, the frequency of such verification needs to be increased.

(iii) The internal control procedures with regard to purchases of stores, construction

materials including components, plant and machinery, equipment and other assets need to be strengthened to make them commensurate with the size of the Company and the nature of its business.

278

For the year ended 31st March, 2002 (i) The Company is in the process of determining unserviceable or damaged stores and

construction materials. Adequate provision, if any, will be made in the accounts for the loss arising on the items once the same is determined.

(ii) The internal audit system of the Company is not commensurate with its size and the

nature of its business.

C Figures in the Restated Summary Statements have been appropriately regrouped wherever possible to

conform with the reclassification made in the subsequent years.

279

ANNEXURE IV - SUMMARY OF SIGNIFICANT ACCOUNTING AND POLICIES AND NOTES ON CONSOLIDATED ACCOUNTS FORMING PART OF THE RESTATED SUMMARY STATEMENTS.

VIII Principles of Consolidation :

a. The consolidated financial statements relate to AFCONS Infrastructure Limited (‘the Company”) and its subsidiaries and associate companies, which together constitute the Group. The consolidated financial statements have been prepared on the following basis :

(iv) The financial statements of the Company and its subsidiary companies are combined

on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses in accordance with Accounting Standard (AS- 21) “Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India.

(v) The difference between the costs of investment in the subsidiaries, over the net assets

at the time of acquisition of shares in the subsidiaries is recognized in the financial statements as Goodwill or Capital Reserve as the case may be.

(vi) Minority Interest’s share of net profit of consolidated subsidiaries for the year is

identified and adjusted against the income of the group in order to arrive at the net income attributable to shareholders of the Company.

(vii) Minority Interest’s share of net assets of consolidated subsidiaries is identified and

presented in the consolidated balance sheet separate from liabilities and the equity of the Company’s shareholders.

(viii) In case of associates, where the Company directly or indirectly through subsidiaries

holds more than 20% of equity or exercises significant influence over the Investee, investments are accounted for using equity method in accordance with Accounting Standard (AS-23) “Accounting for Investments in Associates in Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India.

(ix) The difference between the cost of investment in the associates and the share of net

assets at the time of acquisition of shares in the associates is identified in the financial statements as Goodwill or Capital Reserve as the case may be.

(x) As far as possible, the consolidated financial statements are prepared using uniform

accounting policies for like transactions and other events in similar circumstances and appropriate adjustments are made to the financial statements of subsidiaries when they are used in preparing the consolidated financial statements that are presented in the same manner as the Company’s separate financial statements.

b. As required by Accounting Standard (AS-23) “Accounting for Investments in Associates

on Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India, the carrying amounts of investments in Associates is adjusted for post acquisition change in the Company’s share in the net assets of the associates after eliminating unrealised profits or losses, if any.

c. The list of the subsidiaries of the Company which are included in the consolidation and the Group’s holding therein are as under:

280

Name of Subsidiary Country of Incorporation

Percentage Holding-Share

Afcons (Overseas) Constructions and Investments Private Limited.

India 100%

Hazarat and Company Private Limited. India 100%

SSS Electricals (India) Private Limited. India 60%

Afcons Dredging and Marine Services Limited. India 100%

Afcons BOT Constructions Private Limited.

India 100%

Afcons Arethusa Offshore Services Limited.

India 60%

Afcons Pauling Joint Venture India 95%

Kier Afcons (India) Private Limited*

India 51%

Trensaccai (India) Private Limited**

India 60%

* Not been included in consolidation for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period from 1st April, 2006 to 30th September, 2006 as the company is under liquidation.

**Company ceases to be subsidiary w.e.f. March 27, 2006.

d. The list of the associates of the Group which are included in the consolidation and the Group’s holdings therein are as under:

Name of the Associate Country of

Incorporation Percentage

Holding-Share

Afcons (Mideast) Construction and Investments Private Limited.*

India Less than 1%

* It is accounted based on significant influence by the Company on the composition of Board of Directors of Afcons (Mideast) Construction and Investments Private Limited.

e. The list of the Joint Venture of the Group which are included in the consolidation and the Group’s holdings therein are as under:

Name of the Joint Venture Percentage Holding-Share Afcons Constructions Mideast LLC* 49% AFCONS Aarsleff Joint Venture* 50% Al-Saeed Afcons joint venture* 50%

*For the purpose of consolidation of above joint venture; unaudited management financial statements were considered.

IX Significant accounting policies

q) Fixed assets

Fixed assets are stated at cost of acquisition/ construction or book value and include amounts added on revaluation less accumulated depreciation. Leasehold improvements have been capitalized and are written off over the lease term from the date(s) of installation.

281

r) Impairment loss

Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amounts. Recoverable amount is the higher of an asset’s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

s) Depreciation

Depreciation on fixed assets is provided on the straight-line basis. Cost of the Intangible assets are amortised over a period of five years.

t) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. However, when there is a decline, other than temporary, the carrying amount is reduced to recognize the decline.

u) Inventories

Construction materials, stores and spare parts are valued at lower of cost and net realizable value. Cost is determined on the basis of weighted average method. Cost of shuttering materials (included in construction materials) issued to jobs, is charged off equally over a period of four years.

v) Unbilled Revenue

Work done remaining to be certified/ billed is treated as Unbilled Revenue in the accounts. The same is valued at the contract rates.

w) Retention monies Amounts retained by the clients until satisfactory completion of the contract(s) are recognised in the financial statements as receivables. Where such retention monies have been released by the clients against submission of bank guarantees, the amounts so released are adjusted against receivables from these clients.

x) Foreign currency transactions

Transactions in foreign currency, including in respect of branch operations integral in nature, are recorded at the original rates of exchange in force at the time the transactions are effected. At the year end, monetary items, including those of branch operations integral in nature, denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realization/ payment of foreign exchange are accounted for in the relevant year as income or expense except in the case of fixed assets acquired from outside India, in which case, these are adjusted in the carrying amounts of such assets.

y) Revenue recognition

(i) Contract revenue and expenses are recognized, when outcome can be estimated reliably, on the basis of percentage completion method. Percentage of completion is determined based on the nature of contracts, either in proportion of contract costs incurred up to the

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reporting date to the estimated total cost or on the basis of physical proportion of the contract work completed.

(ii) Variations (in contracts) and amounts in respect thereof are recognized only when it is

probable that the customer(s) will approve them and amounts can be measured reliably.

(iii) Claims and amounts in respect thereof are recognized only when negotiations have advanced to stage where it is probable that the customer(s) will accept them and amounts can be reliably measured.

(iv) Revenue from survey activity is recognized as per the terms of the contract. Revenue

from annual maintenance contracts is recognized in the ratio of the period expired to the total period of the contract. Revenue from repairs work carried out under such contracts is recognized at contractual rates for materials used in such repair works.

(v) Day rate charges for hire of the off-shore drilling rig under the drilling agreement with

ONGC Limited are recognized over the period of the agreement. Claims by the Company are recognized upon realization.

Charter hire costs: Charter hire costs comprise day rate charges for the hire of the off-shore drilling rig under the charter hire agreement with Diamond Off-shore Drilling, Inc. (Diamond). Claims by Diamond against the Company are recognized upon realization of corresponding claims by the Company on ONGC Limited.

(vi) Other revenue is recognised when no significant uncertainty as to determination or

realisation exists

z) Retirement benefits

I) Gratuity The trustees of Afcons Infrastructure Limited Employees Group Gratuity-cum-Life Assurance Scheme Trust have taken a Group Gratuity-cum-Life Assurance Policy from the Life Insurance Corporation of India (LIC). Provision for gratuity is made on the basis of premium payable in respect of the aforesaid policy and actuarial valuation carried out by the independent actuarial valuer as at the year end.

II) Superannuation

The trustees of Afcons Infrastructure Limited Superannuation Scheme Trust have taken a Group Superannuation policy from the LIC. Provision for superannuation is made on the basis of premium payable in respect of the aforesaid policy.

III) Provident fund

Contribution as required under the statute/ rules is made to the Company’s Provident Fund/ Government Provident Fund.

IV) Leave encashment

Provision for leave encashment benefits is made based on the expected cost of unavailed earned leave.

aa) Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

283

bb) Deferred revenue expenditure

The expenditure on voluntary retirement compensation is treated as ‘Deferred Revenue Expenditure’ and amortized over a period of ten years.

cc) Finance lease rentals

These are accounted over the life of the asset determined on the basis of technical evaluation made by an independent valuer/ surveyor.

dd) Doubtful debts and advances

Provision is made in the accounts for debts and advances which in the opinion of the management are considered doubtful of recovery.

ee) Taxes on income

Tax expense comprises both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income-tax payable/ recoverable in respect of the taxable income/ loss for the reporting period. Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. Provision for Fringe Benefits Tax is made in accordance with Chapter XII-H of the Income-tax Act, 1961.

ff) Provisions and Contingencies Provisions are recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. Contingent liabilities are disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed.

X Common notes for subsidiaries for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period from 1st April, 2006 to 30th September, 2006.

The following subsidiaries of the Company have provided depreciation on fixed assets on written down value method, which is in variance to the method adopted by the Company as under:

Gross Value of Fixed Assets (Rupees in millions) Name of Subsidiary

As at September 30, 2006

As at March

31, 2006

As at March 31,

2005

As at March

31, 2004

As at March

31, 2003

As at March 31,

2002

Hazarat and Company Private Limited

0.02 0.02

0.02

0.02

0.02

0.02

SSS Electrical (India) Private Limited

5.48 5.36 4.12 4.09 4.42 4.32

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XI Significant notes for the period ended 30th September, 2006 and year ended 31st March, 2006

Segment Information

The Company has only one reportable business segment of construction business, hence information for primary business segment is not given.

Segment information for Secondary segment reporting (by geographical segment) The Company as two reportable geographical segments based on location of customers: Revenue from customers within India- Local projects Revenue from customers outside India- Foreign projects

XII Significant notes for the year ended 31st March, 2004, 2005

AFCONS Pauling (India) Limited (APIL)

1. The accumulated losses of APIL as at the year end (as well as at 31 March, 2004) have far exceeded its share capital. The Company has also incurred a loss of Rs.44.94 millions during the year (Previous Year Rs.62.98 millions). Together with it's holding Company - Afcons Infrastructure Limited, the Company is working on a Business Plan for increasing future Revenues and Profits in it's preferred line of business of Roads and Highways construction. Further, financial and operational supports will continue to be provided by the Company's major shareholders.

The Company has repaid all it's borrowings from third parties and is confident of repaying advances from it's holding company through receipts of work related claims filed/to be filed and which are at various stages of consideration/settlement.

In view of the foregoing, APIL Company is positive of it's future business and profitability and accordingly, accounts have been prepared on going concern basis.

2. Sundry debtors of APIL outstanding for more than six months include an amount of Rs.112.09

millions as at 31st March,2002, 2003, 2004 and 2005 which represents work yet to be certified by the clients. This includes an award of Rs.63.86 millions as at 31st March,2002, 2003, 2004 and 2005 awarded in favour of the APIL by the arbitrator, which has been disputed and referred to the

Segment For the period 30th September, 2006

For the year ended 31st March, 2006

Rupees In millions Rupees In millions

Segment Assets:

Local Projects 9,251.01 7,638.07

Foreign Projects 345.58 332.18

Total 9,596.59 7970.25 Segment Income from Operations:

Local Projects 3,826.75 5,483.42

Foreign Projects 163.47 1,321.00

Total 3,990.22 6,804.42

Additions to assets:

Local Projects 531.82 302.94

Foreign Projects 19.20 15.41

Total 551.02 318.35

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Civil Court by the client (out of which subsequent to year end the APIL has received an amount of Rs.21.33 millions ) and Rs.48.23 millions on account of other claims lodged by the APIL. Further, it also includes Rs.11.67 millions as at 31st March, 2002, 2003, 2004 and 2005 due in respect of completed projects, which will be settled by client on completion of arbitration.

3. Confirmations letters have not been obtained from debtors, creditors, hence there balances are

subject to confirmation, reconciliation and consequent adjustments, if any.

XIII Significant notes for the year ended 31st March, 2003

AFCONS Pauling (India) Limited (APIL)

Revenue for the year includes arbitration claim awarded in favour of the Company of Rs.22.04 millions. On the basis of prudence, only the principal portion of the claim has been recognized in the books of accounts. The interest will be recognized on collection.

Significant notes of the Company – Afcons Infrastructure Limited

XIV Common notes for the year ended 31st March, 2002, 2003, 2004, 2005, 2006 and for the period

from 1st April, 2006 to 30th September, 2006.

1. Revaluation of fixed assets:

(a) Some of the Fixed assets viz., Plant & Machinery, (including certain items fully written off in previous years) Laboratory Equipment, Barges (floating equipments), New & Old Workshop and Office Building as on 1st April, 1990 were revalued on the basis of the valuation made by the external valuers resulting in net increase of Rs.455.12 million being surplus on revaluation.

(b) Revalued amounts substituted for Historical Cost as at 1st April, 1990 are as under:

(vi) Plant & Machinery Rs.426.15 millions (Gross) (vii) Laboratory Equipments Rs. 12.45 millions (Gross)

(viii) Workshop & Godown Rs. 46.60 millions (Gross) (ix) Buildings Rs. 126.00 millions (Gross) (x) Barges (Floating Equipments) Rs. 89.98 millions (Gross)

(c) The difference between depreciation provided for the year on revalued cost of assets

and that calculated on original cost of assets for the year as per (a) above has been withdrawn from Revaluation reserve and credited to the Profit and Loss account as given below:

Year \ Period ended Amount (Rupees in millions)

30th September, 2006 4.53

31st March, 2006 9.07

31st March, 2005 9.09

31st March, 2004 9.09

31st March, 2003 13.94

31st March, 2002 12.29

286

19. The Company is a partner in a partnership firm ‘Afcons Pauling Joint Venture’ (APJV). The balance in capital account is Rs. 17.40 millions. The profit/ loss sharing ratio of the Venturers is as follows:

Profit Loss The Company 95% 100%

Pauling P.L.C.; UK 5% -

Following amounts were due at each year end from the Partnership Firm (APJV):

Year \ Period ended Amount (Rupees in millions)

30th September, 2006 146.49

31st March, 2006 146.53

31st March, 2005 146.63

31st March, 2004 146.85

31st March, 2003 147.14

31st March, 2002 150.28

The Firm has made claims aggregating to Rs.166.62millions against its clients which are pending as at period ended 30th September, 2006. These claims are subject matters of arbitration where it expects favorable results. No provision has been made for the amount, if any that may ultimately become irrecoverable, as it cannot be quantified, with reasonable accuracy at this stage.

20. No provision has been made for debts and advances outstanding at each year end, for the following years:

Year \ Period ended Amount (Rupees in millions

30th September, 2006 168.40

31st March, 2006 183.83

31st March, 2005 185.54

31st March, 2004 131.46

31st March, 2003 154.19

31st March, 2002 100.25

Out of these, substantial amounts are due from various Government departments \ Agencies and are subject matters of arbitration/ litigation where the Company has obtained awards in favour in some cases and expects favorable results in other cases and hence, the amounts, if any, that may ultimately become irrecoverable cannot be quantified, at this stage. However, in view of the uncertainties involved and the procedural delays taking place in the dispute resolution process, the debts and advances have been categorized as ‘Doubtful’ for the purpose of presentation in the financial statements.

21. Confirmation letters have not been obtained from the debtors and creditors. Hence, their

balances are subject to confirmation, reconciliation and consequent adjustments, if any.

22. Projected losses, if any, in respect of contracts in progress are provided for based upon current estimates of cost to completion.

23. Interest on arbitration awards (awards) includes interest in respect of :

287

(d) unpaid awards decided in favour of the Company as given below, at the rate

mentioned in the awards from the date of awards till the date of payment or year end as the case may be.

Year \ Period ended Amount (Rupees in millions)

30th September, 2006 127.10

31st March, 2006 106.53 (including Rs.72.18 millions in respect of earlier years)

(e) awards decided in the favour of the Company in the earlier years as given below, which was not accounted then.

Year \ Period ended Amount (Rupees in millions)

30th September, 2006 20.56

31st March, 2006 30.21

(f) awards decided in favour of the Company during the year as given below.

Year \ Period ended Amount (Rupees in millions )

30th September, 2006 -

31st March, 2006 45.94

24. Current Assets, Loans and Advances includes unbilled revenue (net of advances) of Rs.

3995.15 millions as at 30th September, 2006 (Rs. 2857.30 millions as at 31st March, 2006). Of this, Rs. 51.97 millions are outstanding for a long period as at 30th September, 2006 and 31st March, 2006. These pertain to variations in contracts, which are subject matter of arbitration, in view of which no provision is considered necessary for the said amount of Rs. 51.97 millions.

25. Debtors include unpaid arbitration awards (awards) of Rs.532.46 millions as at 30th

September, 2006 (Rs.457.49 millions as at 31st March, 2006) unanimously decided in the Company’s favour and interest accrued on these awards from the date of awards till the year end/date of payment at the rate mentioned in the award of Rs. 127.10 millions as at 30th September, 2006 (Rs. 106.53 millions as at 31st March, 2006). Though these awards are subject matters of appeal, the Company is hopeful of positive outcome and as such expects them to be fully recovered.

26. Cost of fixed assets taken on operating lease till 31st March, 2001 and future lease rental

obligations there against are as follows:

Year \ Period ended Plant & Machinery (at Cost) (Rupees in millions

Future lease rental (Rupees in millions

30th September, 2006 94.98 1.01

31st March, 2006 94.98 1.61

31st March, 2005 361.27 3.82

31st March, 2004 439.73 6.32

31st March, 2003 447.47 9.32

31st March, 2002 554.65 40.98

288

27. For the assets acquired on hire purchase basis after 1st April, 2001, they have been treated

as assets acquired on finance lease as per Accounting Standard on ‘Leases’ (AS-19) issued by the Institute of Chartered Accountants of India. Minimum lease rentals outstanding in respect of these assets are as under:

(Rupees in millions)

As at 30th September,

2006

As at 31st March,

2006

As at 31st March,

2005

As at 31st March,

2004

As at 31st

March, 2003

As at 31st

March, 2002

Total Minimum Lease payment outstanding: Not less than one year

1.04 3.93 18.61 19.83 27.69 13.91

Later than 1 Year and not later than 5 year

_ _ 3.90 22.51 56.70 38.52

Total 1.04 3.93 22.51 42.34 84.39 52.43

Interest not due Not less than one year

0.01 0.14 1.94 4.45 9.12 5.73

Later than 1 Year and not later than 5 year

_ _ 0.14 2.08 8.53 7.65

Total 0.01 0.14 2.08 6.53 17.65 14.38

Present value of minimum lease payments Not less than one year

1.03 3.79 16.67 15.38 18.57 8.17

Later than 1 Year and not later than 5 Year

_ _ 3.76 20.43 48.17 30.88

Total 1.03 3.79 20.43 35.81 66.74 39.05

28. The Company has entered into a Co-operation Agreement with Dyckerhoff & Widmann Aktingesellschaft, Germany (DYWIDAG) for the execution of the Worli-Bandra Outfalls project of the Municipal Corporation of Greater Mumbai. The relationship of the Company with DYWIDAG is that of a sub-contractor. Nevertheless, in terms of the Agreement that envisages supplementing the resources of each other on mutually agreed basis, both DYWIDAG and the Company have raised debit notes on each other. Accordingly, in earlier years, debit notes for expenses were raised by the Company on DYWIDAG, aggregating to Rs. 17.52 millions and by DYWIDAG on the Company, aggregating to Rs.16.10 millions Adjustments, if any, in respect of these debit notes will be made on completion of project.

29. Related party disclosures:

Related Party where Control exists

Holding Company(s) Cyrus Investments Limited (Directly)*** Shapoorji Pallonji & Company Limited (Indirectly)

289

Fellow Subsidiary(s) Sterling Investments Corporation Private Limited Floreat Investments Limited

Associate of the Company Afcons (Mideast) Construction and Investments Private Limited *** Ceased to be a holding Company w.e.f 31.03.06 and becomes an entity of which the

Company is an Associate

Refer Annexure XVII to the restated financial statement for transactions with related

parties.

30. Expenses capitalized during the year on fabrication/ improvement of equipment that has resulted in increased future benefits beyond their previously assessed standard of performance are as under:

(Rupees in millions)

For the Financial Year Ended For the period 1st

April, 2006 to 30th

September, 2006

March 31,

2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Construction Material consumed

0.70 7.35 - 3.48 3.56 24.96

Sub Contract charges

2.41 2.48 - 5.15 11.79 6.83

Site installation expenses

- 0.78 - 0.10 5.74 4.32

Stores and spares Consumed

11.71 10.77 16.07 31.27 5.62 6.54

Repairs 4.24 4.04 5.54 8.29 2.46 11.23

Traveling and Conveyance

- - - 0.70 0.57 -

Payroll cost - - - 4.60 4.70 -

Freight forwarding and packing

- - - 2.20 0.59 -

Professional fees 0.28 - - - - 6.63

Others 0.04 2.97 - 1.13 1.67 2.23

31. Derivative Instruments:

Payables and Receivables in foreign currency as at the balance sheet date not covered by forward contracts are as given below.

290

(Rupees in millions)

As at 30th September, 2006

As at 31st March, 2006

Payables 175.62 350.37

Receivable 19.23 227.04

32. Work in Progress is identified project wise and is based on book records maintained by the Company as physical verification of the material, component; etc at the various project sites is not feasible.

XV Significant notes for the year ended 31st March, 2006

The High Court of Judicature at Bombay sanctioned the Scheme of Amalgamation (SoA) of Afcons Pauling (India) Limited (APIL), a subsidiary of the Company with the Company. APIL was engaged in the business of Construction. The amalgamation is accounted in the books of the Company as per the High Court Order. The effective date of Amalgamation is 18th May, 2006 and the appointed date is 1st April 2005. Accordingly, the SoA has been given effect to in the accounts. Pursuant to the SoA:

(g) the assets and liabilities of APIL on the appointed date have been taken at book values

(subject to adjustments made as given in the SoA);

(h) debit balances in the Profit and Loss account of APIL has been aggregated with the balances in Profit and Loss account of the Company.

(i) in consideration for the transfer, the minority shareholders of APIL are to be issued 1

(one) Zero Coupon Redeemable Preference Shares of the Company (of Rs. 10/- each) to be redeemed on the expiry of 24 months from the date of issue at a premium of 10% of the face value for every 10 (ten) equity shares held by them in APIL. These have been shown under share capital.

(j) the (deficit) of the value of the assets over the value of the liabilities taken over by the

Company and aggregate face value of the Redeemable preference shares to be issued by the Company as stated above, after adjusting the debit balance in Profit and Loss Account taken over, has been adjusted against General Reserve Account (to the extent of Rs. 48.65 millions);

(k) Cost of investment (Rs. 39.67 millions) of the Company in the shares of APIL is

written off and charged to Revaluation Reserve Account;

(l) As required by the SoA, the debit balance in profit and loss account of APIL has been aggregated with the balance in profit and loss account of the Company. If there was no treatment given in the SoA for the same, than as per the Accounting Standard (AS) 14 “Accounting for Amalgamations”, the debit balance in profit and loss account of APIL would not have been aggregated with the balance in profit and loss account of the Company and there would have been “Goodwill on Amalgamation” aggregating to Rs. 180.72 millions.

XVI Significant notes for the year ended 31st March, 2005

3. The Company holds investment of Rs. 39.67 millions in its subsidiary company, Afcons Pauling (India) Limited (APIL), representing 75% of the share capital of that company. APIL owes to the Company Debts, aggregating to Rs.118.99 millions and advances,

291

aggregating to Rs. 276.81 millions as on 31st Mach,2005. As per the latest audited accounts of APIL, as at 31st March,2005, its net worth stands eroded. APIL has substantial experience of nearly two decades in the execution of road projects. Therefore, in combination with the company, it has been working on a business plan for generating future revenues in the preferred lines of business of roads and highways construction and is very hopeful of bagging jobs. APIL has also preferred huge claims against its clients that are subject matter of arbitration where it is confident of positive outcome. It is therefore confident of paying back advances of the company out of the above and also out of monies falling due from its debtors in 2005-06. Hence, no provision is deemed necessary for diminution in the value of the Company's investment in APIL and also for amounts due from it, which are considered good and recoverable.

4. Hitherto, the Company accounted contract revenue and contract cost in accordance with the Accounting Standard AS7. “Accounting for Construction Contracts” issued in the year 1983 in respect of contracts entered into before 01-04-2003 and Accounting Standard AS7 “Construction Contracts (Revised)” issued in the year 2002 in respect of contracts entered into on or after 01-04-2003.During the year, with a view to have uniformity in accounting treatment, the Company has accounted Contract Revenue and costs in accordance with AS7 (revised) in respect of all contracts (including contracts entered into prior to 01-04-2003). Revenue recognized as a result of this change is Rs. 864.45 millions.

XVII Significant notes for the year ended 31st March, 2004

The Company received subsequent to the year end arbitration awards (unanimously decided) pertaining to earlier years, aggregating to Rs.186.99 millions (including interest Rs.45.43 millions) which are subject of appeals, the ultimate outcome of which is not ascertainable.

XVIII Significant notes for the year ended 31st March, 2003

Expenditure on Voluntary Retirement Compensation: Hitherto, it was the practice to defer expenditure on voluntary retirement compensation over a period of five years. During the year 2002-03, the company has changed this practice on the basis of reassessment and has decided to amortize the said expenditure over a period of 10 years with retrospective effect. This change has the effect of (i) write back to the profit and loss account excess amount of amortization, Rs. 5.37 millions (ii) decreasing the amortization charge for the year by Rs 11.71 millions (iii) increasing the profit for the year by Rs 17.09 millions and (iv)increasing the deferred revenue expenditure carried forward by Rs 17.09 millions.

XIX Significant notes for the year ended 31st March, 2002

3. Provision for bank balances has been made in the year 2001-02 on account of uncertainties in remittances of monies lying in bank accounts abroad.

4. Adjustment in the year 2001-02 represents regrouping of self constructed assets of Rs 6.26

millions from work–in–progress to capital work in progress in respect of previous year.

292

ANNEXURE V: STATEMENT OF CONSOLIDATED CASH FLOWS, AS RESTATED

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Cash Flow from Operating Activities

Net Profit\(Loss) before prior period adjustments, extraordinary items and tax, as restated

85.51 139.08 2.83 (36.04) (6.18) (461.21)

Adjustment for :

Depreciation 81.01 149.58 137.60 120.55 102.78 86.73

(Profit) / Loss on sale / discard of fixed assets (net)

- (1.51) (0.79) (0.23) - 2.80

Dividend income - (0.18) (0.18) (0.15) - (4.05)

Interest income (34.44) (198.99) (30.89) (73.90) (17.50) (15.40)

Interest expense 234.39 381.48 336.65 300.28 286.85 217.61

Lease rentals expense 9.82 43.09 61.19 68.20 92.69 107.07

Dividend adjustment - - - - - (0.14)

Bad/irrecoverable Debtors /Unbilled Revenue /Advances w/off / TDS W/off

3.80 165.32 3.89 - 4.38 -

Provision for diminution in the value of long-term investments (w/back)/provided

- - - (13.61) - 13.61

Share of Loss in Jointly controlled entity (subject to audit)/ Associate

- - - - 0.01 -

Deferred revenue expenditure paid during the year

- - (0.96) (0.57) (90.25) -

Excess Provision for expenses of earlier years written back

(42.17) (19.47) (19.89) (21.05) (48.07) 1.39

(Profit) / Loss on sale / disposal of short term investments- Others

- (0.88) (0.34) - - -

(Profit) / Loss on sale / disposal of long term investments- Others

- (7.58) - 16.02 - (0.26)

Amount received on transfer of tenancy rights

- (60.00) - - - -

Deferred revenue expenditure written off

5.93 11.87 11.87 11.77 6.34 5.37

293

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Prior Period Expenses (net) - - - - (0.21) -

Provision for Projected Losses Reversed

(11.46) 27.74 1.86 - - -

Operating Profit before working capital changes 332.39 629.55 502.84 371.27 330.84 (46.48)

Adjustment for: (Increase) / Decrease in trade receivables

76.18 (92.32) 47.24 (501.42) (441.26) (96.13)

(Increase)/Decrease in inventories

(95.39) (128.09) 17.94 6.31 (64.60) (37.52)

(Increase)/ Decrease in work-in-progress

0.19 (0.21) 1,714.60 (605.57) (343.15) (103.61)

(Increase) / Decrease in unbilled revenue

(1,170.34) (1,070.35) (1,786.95) - - -

(Increase)/Decrease in loans and advances

(53.45) (294.34) (95.91) (69.51) (48.56) (78.70)

Increase / (Decrease) in trade,other payables and provisions

643.91 385.58 (1,043.35) 490.79 3.34 691.17

Cash (used in) Operations (266.51) (570.18) (643.59) (308.13) (563.39) 328.73

Direct taxes (paid) (42.93) 24.19 (37.29) 39.89 (52.56) 27.05

Net cash from \ (used in) Operating Activities – (A) (309.44) (545.99) (680.88) (268.24) (615.95) 355.78

Cash Flow from Investing Activities

Purchase of fixed assets (499.96) (300.05) (222.84) (259.34) (211.50) (259.18)

Sale of fixed assets - 6.83 1.60 3.37 2.51 1.85

Purchase of Investments - (280.61) (1.90) - - -

Sale of investments 0.01 288.55 2.23 12.99 - 0.01

Sale of Subsidiary - 0.60 - - - -

Amount received on disposal of long term investments

- - - - - 0.86

Dividend received - 0.18 0.18 0.15 - 4.05

Interest received 13.97 18.01 20.58 75.02 17.88 15.84

Amount received on transfer of tenancy rights

- 60.00 - - - -

Share of Loss in Associate - - - - (0.01) -

Net Cash from \ (used in) Investing Activities – (B) (485.98) (206.49) (200.15) (167.81) (191.12) (236.57)

294

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

(Rupees in millions)

Particulars For the Financial Year Ended

For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Cash Flow from Financing Activities Proceeds from issue of Preference share

- 500.00 500.00 200.00 200.00 200.00

Proceeds from long-term borrowings

489.62 2,215.12 1,414.84 487.33 465.36 177.25

Repayment of long-term borrowings

(476.89) (1,526.08) (1,742.14) (559.77) (205.81) (251.57)

Proceeds from short term borrowings – net

931.20 (5.02) 1,068.84 637.07 554.07 104.93

Interest paid (235.46) (376.45) (338.41) (309.36) (285.39) (228.30)

Lease rentals paid - (13.23) (0.66) (0.64) (24.49) (55.14)

Dividend paid - - - - (0.11) (6.94)

Corporate Dividend Tax paid - - - - - (0.72)

Net Cash from \ (used in) Financing Activities – (C) 708.47 794.34 902.47 454.63 703.63 (60.49)

Net Increase in Cash and Cash Equivalent (A+B+C) (86.95) 41.86 21.44 18.58 (103.44) 58.72

Cash and cash equivalents at the beginning of the year

237.59 195.73 174.29 155.71 259.15 200.43

Cash and cash equivalents taken over on amalgamation

- - - - - -

Cash and cash equivalents at the end of the year

150.64 237.59 195.73 174.29 155.71 259.15

(86.95) 41.86 21.44 18.58 (103.44) 58.72

Reconciliation of cash and cash equivalents

As per Balance sheet 150.64 237.59 195.73 174.60 156.51 259.15

Less: Interest accrued on Bank Deposits

- - - 0.31 0.80 -

As per Cash flow statement 150.64 237.59 195.73 174.29 155.71 259.15

295

ANNEXURE VI: CONSOLIDATED ACCOUNTING RATIOS

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Net Profit\ ( Loss) after tax, before prior period adjustments and extraordinary items as restated (Rupees in millions)

47.25 47.04 (11.17) (52.17) (14.40) (465.08)

(Short)/ Excess Provision for taxes in respect of earlier years (Rupees in millions)

1.73 0.81 (3.54) 0.09 (1.61) (0.03)

Prior Period (Expenses) / Income

- - - - (0.21) 1.39

Minority Interest 0.04 (0.08) 11.32 16.25 10.78 23.87

Dividend on Preference shares (including corporate dividend tax at the applicable rate) (Rupees in millions)

- - - - (23.67) (0.33)

Net Profit\ (Loss) attributable to equity shareholders, as restated (Rupees in millions)

A 49.02 47.77 (3.39) (35.83) (29.11) (440.18)

Networth (Rupees in millions)

B 2,176 2,119 1,623 1,136 980 895

Networth excluding Preference Share Capital (Rupees in millions)

C 974.29 918.89 722.71 735.51 779.61 695.00

Total No of equity Shares outstanding during the year - Basic

D 51400000 51400000 31400000 31400000 31400000 11400000

Weighted average no. of equity shares outstanding as on date - Basic

E 51400000 31454795 31400000 31400000 11673973 11400000

Diluted No. of equity shares

F 171501776 121536986 71673973 51728767 32441096 11673973

296

(Rupees in millions)Particulars For the Financial Year Ended

For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Earning per Equity Share

Basic (Rs.) A/E 0.95 1.52 (0.11) (1.14) (2.49) (38.61)

Diluted (Rs.) A/F 0.29 0.39 (0.11) (1.14) (2.49) (38.61)

(Refer note 2

below)

(Refer

note 2

below)

(Refer

note 2

below)

(Refer note 2

below)

Return on Networth (%) annualised

A/C 10.06% 5.20% -0.47% -4.87% -3.73% -63.34%

(Refer note 4 below)

Net Asset Value Per Share (Rs.) C/D

18.96 17.88 23.02 23.42 24.83 60.96

(Refer note 5 below)

Face Value Per Share 10 10 10 10 10 10

Weighted average no. of shares outstanding during the year -for calculating dilutive EPS

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Opening number of equity shares

51400000 31400000 31400000 31400000 11400000 11400000

Add: Conversion of 12% Redeemable Cumulative Convertible Preference share in to equity shares at par

-

-

-

-

273973 -

Add: Potential equity shares that could arise on conversion of entire 12% Redeemable Cumulative Convertible Preference Shares at par

-

-

-

-

19726027 273973

Add: Diluted effect of Potential equity shares allotted on conversion of 9.5 % redeemable non-cumulative convertible preference shares.

-

54795 -

-

-

-

297

For the Financial Year Ended Particulars

For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Add: Potential equity shares that could arise on conversion of entire 9.5% Redeemable Non-Cumulative Convertible Preference Shares at par

-

19945205 20273973 20000000 1041096 -

Add: Potential equity shares that could arise on conversion of entire 7.5% Redeemable Non-Cumulative Convertible Preference Shares at par

70000000 70000000 20000000 328767 -

-

Add: Potential equity shares that could arise on conversion of entire 7.5% Redeemable Non-Cumulative Optionally Convertible Preference Shares of Rs.10 each at par

50000000 136986 -

-

-

-

Add: Potential equity shares that could arise on conversion of entire Zero Coupon Redeemable Preference Shares of Rs.10 each to be redeemed at the expiry of 24 mons at 10 % premium of FV.

101776 -

-

-

-

-

Total 171501776 121536986 71673973 51728767 32441096 11673973

Notes: 1) The above ratios have been computed on the basis of the restated Summary Statements as per Annexures I and II 2) Since the potential equity shares have an anti-dilutive effect, diluted EPS is same as basic EPS. 3) The effect of potential dilution pursuant to the proposed issue has not been considered since the quantum of equity shares that will ultimately be subscribed cannot be ascertained at present. 4) Return on Net Worth (%) represents Profit/(Loss) after tax as restated, divided by Net Worth. 5) Net Assets Value is calculated as Net Worth (excluding Preference Share Capital) at the end of each financial year divided by the number of equity shares at the end of each financial year.

298

ANNEXURE VII: CONSOLIDATED CAPITALISATION STATEMENT

(Rupees in millions)

Particulars Pre issue - As at September 30th, 2006

Adjusted for post issue

Secured and Unsecured Debt Short term 2,799.48 2,799.48 Long term 1,633.86 1,633.86

Total Debt 4,433.34 4,433.34

Shareholders' funds

Share Capital 1,715.25 Refer note below

Reserves and Surplus (excluding Revaluation Reserve) 520.43 Refer note below

Less: Miscellaneous Expenditure to the extent not written off. 60.14 Refer note below

Total Shareholders' funds 2,175.54 Refer note below

Total Capitalization 6,608.88

Long Term Debt/Equity 0.67

Note: These figures will be known only after finalisation of the issue price by the Lead Manger to the issue and approval of the same by SEBI and other authorities, if any involved therein.

299

ANNEXURE VIII: CONSOLIDATED STATEMENT OF TAX SHELTER

(Rupees in millions)

For the Financial Year Ended Particulars For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Profit before prior period adjustments, extraordinary items and tax as Restated 82.61 139.08 2.83 (36.04) (6.18) (461.21)

Normal Tax Rate 33.66% 33.66% 36.59% 35.88% 36.75% 35.70%

MAT Tax rate 11.22% 8.42% 7.84% 7.69% 7.88% 7.65%

Tax at actual rate on book profits 28.29 47.60 16.53 10.55 14.52 0.58

Adjustments

Permanent differences Dividend on shares exempt from tax u/s. 10(34)\10(33) (1.37) (0.18) (0.18) (0.14) - (4.20) Interest on tax-free bonds of UTI - (2.74) (2.74) (2.28) - -

Surrender of Tenancy Right - (60.00) - - - -

Donations 1.13 0.28 1.19 0.21 0.26 0.21 Expenses on increase in share capital - 6.00 3.50 0.20 - - Profit\Loss on sale of Long-term Investments - - (0.34) 16.71 - - Provision for dimunition in value of Investment written back - - - (13.61) - 13.61

Profit on Sale of Shares - (7.58) - - - (0.26)

Provision for Projected Loss (11.46) 27.74 1.86 - - -

Interest paid on Income-tax - 15.14 - - 0.01 - Expenditure disallowed u/s. 40A(3) - 0.13 - - 0.05 -

TDS written off - 0.67 3.09 - - - Capital expenditure debited to Profit & Loss account - - - - 0.36 -

Prior period expenses - - - - (0.20) 9.94 Foreign Exchange Diff (not remited) - - 0.49 - - -

Total (A) (11.70) (20.54) 6.87 1.09 0.48 19.30

Timing Differences Difference between tax and book depreciation 5.25 21.46 (43.47) (48.74) (36.73) (27.36)

300

(Rupees in millions)Particulars For the Financial Year Ended

For the period from April 1,

2006 to September 30,

2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

(Profit) / Loss on sale of Assets (Diff treatment of tax) 0.71 (1.51) (0.80) (0.23) - 2.80

43B Items - 34.59 (2.94) 4.24 4.15 (12.87) Expenditure disallowed u/s 40a(i) - 0.53 - - - - Interest on arbitration awards (20.56) (219.23) (18.50) (186.19) - - Deferred Revenue Expenditure - VRS u/s.35DDA (3.25) (6.99) (11.87) (11.66) (17.09) - Deferred Amalgamation Expenses u/s. 35DD (0.01) 0.09 - - - -

Lease Rental 9.78 43.09 61.19 67.56 68.21 55.93 Provision for doubtful advance - (0.25) (0.25) - 0.51 4.39

Total (B) (8.08) (128.22) (16.64) (175.02) 19.05 22.89

Net Adjustments (A) + (B) (19.78) (148.76) (9.77) (173.93) 19.53 42.19

Tax (Saving)\Expense thereon (6.66) (50.07) (9.08) (68.87) (1.76) 3.11

Tax payable for the year 21.63 0.31 7.45 0.23 12.76 0.53

Set off of Unabsorbed loss (63.92) (0.02) (20.25) - (34.42) -

Tax effect of unabsorbed loss (21.52) (0.01) (7.41) - (12.65) -

Tax payable as per normal rate 0.11 0.30 0.04 0.23 0.11 0.53

Profit as per Income Tax Return 67.94 (10.63) (6.96) (209.94) 13.55 (418.63)

Tax as per Income Tax Returns (MAT) 9.24 9.23 0.86 - 2.04 -

Note: The statement of tax shelter has been prepared based on income tax return filed by the Company and its subsidiaries for the year ending 31.03.2002 to 31.03.2006, except for the period ended 30.09.2006, which are provisional and final amount will be ascertained at the time of filing of Return of Income. The effect of assessment / appellate orders have not been considered in above.

301

ANNEXURE IX: CONSOLIDATED DETAILS OF SECURED LOANS

(Rupees in millions)

Principal & Interest outstanding Particulars of Loan

Details of Securities

As at September

30, 2006

As at March 31,

2006

As at March 31, 2005

As at March 31,

2004

As at March 31,

2003

As at March 31, 2002

Debentures Secured by a first charge on certain

construction equipments and a second charge on the immovable properties of the Company situated at Andheri, Mumbai and Nagpur mortgated to the consortium of banks for working capital requirements. Further secured by pledge of 3,740,000 equity sahres held by the Company in Afcons Pauling (India) Limited, a subsidiary company and 1,238,352 equity shares of the Company held by Afcons (Mideast) Constructions and Investments Private Limited.

- - - - - 45.80

Term Loan from SICOM Limited

Secured by first and exclusive charge by way on retention money receivable from a client and by a floating charge on all movable assets of the Company

- - - - - 10.17

Term Loan from Export Import Bank of India

Secured by a first charge on certain specified movable fixed assets and pledge of 1,238,352 equity shares of the Company held by Cyrus Investments Limited, the holding company

- - - 200.00 250.00 -

Term Loan from Export Import Bank of India

Secured by first and exclusive charge on current assets (including receivables) pertaining to Qatar Petroleum Project

- 144.98 - - - -

Term Loan from IDBI Limited.

Secured by first charge by way of hypothecation of specific equipment purchased out of this loan

- 60.00 150.00 150.00 - -

Hire Purchase from Associates India Financial Services Pvt. Limited.

Secured by lien on asstes purchased under hire purchase agreements

- - - - 17.73 22.30

Equipment Loan \ Car from L & T Finance Limited

Secured by first charge by way of hypothecation of the equipment \ Car financed

- - - - 16.03 20.82

302

(Rupees in millions)

Principal & Interest outstanding Particulars of Loan

Details of Securities

As at September

30, 2006

As at March 31,

2006

As at March 31, 2005

As at March 31,

2004

As at March 31,

2003

As at March 31, 2002

Equipment Loan \ Car from GAMC-TCFC Finance Limited

Secured by first charge by way of hypothecation of the equipment / car(s) financed

- - 0.15 0.24 0.73 0.53

Equipment Loan and Hire Purchase from SREI Infrastructure Finance Limited (Loan & Hire Purchase)

Secured by lien on assets purchased under hire purchase agreements & Secured by lien on asstes purchased under hire purchase agreements

14.29 28.64 66.31 91.40 49.00 16.75

Equipment Loan from Centurion Bank Limited

Secured by first charge by way of hypothecation of the equipment \ Cars financed

- - - - 37.53 41.65

Equipment Loan from Kotak Mahindra Bank Limited

Secured by first charge by way of hypothecation of the equipment / car(s) financed

- - 4.33 9.50 6.60 0.69

Equipment Loan from ICICI Bank Limited

Secured by first charge by way of hypothecation of the equipment / car(s) financed

59.56 77.30 81.12 70.12 29.59 -

Equipment Loan from HDFC Bank Limited

Secured by first charge by way of hypothecation of the equipment / car(s) financed

21.13 31.16 49.07 46.08 0.74 -

Equipment Loan from Bharat Overseas Bank Limited

Secured by first charge by way of hypothecation of the equipment / car(s) financed

165.04 130.67 42.34 31.36 - -

Equipment Loan from UTI Bank Limited.

Secured by first charge by way of hypothecation of the equipment / car(s) financed

22.01 28.88 42.64 - - -

Equipment Loan from Oriental Bank of Commerce

Secured by first charge by way of hypothecation of the equipment / car(s) financed

213.63 21.48 - - - -

303

(Rupees in millions)

Principal & Interest outstanding Particulars of Loan

Details of Securities

As at September

30, 2006

As at March 31,

2006

As at March 31, 2005

As at March 31,

2004

As at March 31,

2003

As at March 31, 2002

Cash Credit and Working Capital Demand Loans

Secured by a first charge on the immovable properties of the Company situated in Andheri, Mumbai and Nagpur and mortgage of the Company's premises in Band Box House, Worli, Mumbai on a pari-passu basis. Further secured by hypothecation of the Company's stocks of raw materials, stores and work-in-progress, all other movable properties, plant and machinery and book debts and by pledge of 380,100 Bonds (3,800,000 units as at 31.03.2003) of the Unit Trust of India on a pari-passu basis.

604.40 529.03 126.93 230.67 155.69 201.27

Interest Accrued and Due

1.39 2.21 0.75 0.22 0.18 -

Advances from Clients

Secured by hypothecation of specific plant and machinery at the respective Client sites.

- - - - - 4.13

Total 1,101.45 1,054.35 563.64 829.59 563.82 364.11

304

ANNEXURE X: CONSOLIDATED PARTICULARS OF OTHER INCOME

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Nature of

Income

Related or not Related to Business

Profit before prior period adjustments, extraordinary items and tax, as per summarised restated profit & Loss statement, as restated

85.51

149.57

(7.66)

(36.04)

(19.79)

(447.60)

Other Incomes

Interest Income:

On Arbitration awards

20.56

191.63

7.05

45.43

-

-

Non-recurrin

g

Related

On Long-term investments

1.39

2.74

2.74

2.32

1.48

1.48

Non-recurrin

g

Related

On Deposits with Banks

0.68

1.17

1.27

1.83

2.89

2.92

Recurring

Related

On Income-tax refund

11.80

13.94

7.84

3.36

12.97

10.19

Non-recurrin

g

Not related

Miscellaneous interest

0.03

6.28

1.49

20.96

0.17

0.82

Recurring

Related

Total Interest

34.46

215.76

20.39

73.90

17.51

15.41

Dividend (Long Term Investments):

- from Others -

0.18

0.18

0.15

-

4.05

Recurring

Not related

Total Dividend 0.00 0.18 0.18 0.15 - 4.05

Consultancy fees -

-

-

-

28.00

-

Non-recurrin

g

Related

Equipment Hire Charges -

-

-

13.70

0.29

10.15

Recurring

Related

Service Charges -

-

-

-

-

0.02

Recurring

Related

Insurance Claim -

-

0.02

-

-

3.23

Provision in respect of diminution in the value of long term investments written back

-

-

-

13.61

-

-

Non-recurrin

g

Not related

305

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Nature of

Income

Related or not Related to Business

Excess provision in respect of earlier years written back

42.17

19.47

19.89

21.05

48.07

-

Non-recurring

Not related

Profit on Sale of fixed assets (net)

-

1.51

1.02

0.53

0.49

-

Non-recurring

Related

Profit on Sale of current Investments.

-

0.88

0.34

-

-

-

Non-recurring

Not related

Profit on sale of Long term Investments

-

7.58

-

-

-

0.26

Non-recurring

Not related

Amount received on transfer of tenancy rights

-

60.00

-

-

-

-

Non-recurring Related

Rent Income -

2.25

4.50

4.50

4.50

4.50

Recurring Not related

Agency Commission -

-

8.11

-

-

-

Non-recurring

Not related

Sales Tax\Excise Duty Refund

11.67

2.57

2.42

0.04

4.23

-

Non-recurring

Not related

Duty Drawback -

-

12.99

-

-

-

Non-recurring

Related

Doubtful debts Recovered -

0.25

0.25

-

-

-

Non-recurring

Related

Subcontractors Recoveries -

-

9.24

2.09

24.60

-

Non-recurring

Related

Liquidated Damages released by clients

-

-

-

-

2.28

-

Non-recurring

Not related

Rebate/TOD given by Creditors

12.84

-

6.80

10.34

0.36

-

Non-recurring

Not related

Compensation on Iraqi Bonds

-

-

-

4.76

-

-

Recurring Related

Idling charges -

-

-

16.69

-

-

Recurring Related

Gain/loss in Exchange

8.25

4.89

0.26

0.41

0.49

2.66 Recurring Related

Miscellaneous Income

24.24

57.91

21.63

31.84

25.74

6.89 Recurring Related

Total 133.63 373.25 108.04 193.61 156.56 47.17

306

ANNEXURE XI: CONSOLIDATED STATEMENT OF DIVIDEND PAID No dividend on equity share capital or preference share captial has been paid by the Company during any of the period \ years covered by the restated financial statement.

307

ANNEXURE XII: CONSOLIDATED DETAILS OF UNSECURED LOANS

(Rupees in millions)

Principal and Interest outstanding Particulars

As at September

30, 2006

As at March 31, 2006

As at March 31, 2005

As at March 31, 2004

As at March 31, 2003

As at March 31, 2002

Fixed Deposits 44.45 55.93 77.10 104.52 157.06 186.27

Short-term loans

From Banks:

DCB Limited - - - 100.00 100.00 100.00

UTI Bank Limited 250.00 - 250.00 150.00 100.00 -

Oriental Bank of Commerce 125.00 125.00 31.25 250.00 - -

Dena Bank 750.00 500.00 250.00 150.00 - -

ING Vysya Bank Limited - - 150.00 - - -

Bank of India 375.00 250.00 250.00 - - -

Union Bank of India - - 250.00 - - -

IDBI Bank 77.50 62.50 - - - -

State Bank of Hyderabad 100.00 50.00 - - - -

UCO Bank 500.00 - - - - -

Interest accrued on the above loans

7.19 1.82 - - - -

From Others:

Afcons (Mideast) Constructions and Investments Private Limited

9.00 9.00 9.00 9.00 - -

Other loans from Banks

From Banks:

UTI Bank Limited 250.00 250.00 - - - -

Oriental Bank of Commerce 31.25 93.75 218.75 - - -

Dena Bank 250.00 250.00 500.00 - - -

IDBI Bank 37.50 82.50 150.00 - - -

Bank of India 125.00 250.00 - - - -

State Bank of Hyderabad 150.00 200.00 - - - -

Central Bank of India 250.00 250.00 - - - -

Line of Credit from HDFC Limited

- - - 350.00 500.00 -

From Others:

Advances from Clients against Plant and Machinery

- - 97.81 112.37 69.96 26.84

Total 3,331.89 2,430.50 2,233.91 1,225.89 927.02 313.11

Due to Related Party included above 9.00 9.00 9.00 9.00 - -

308

ANNEXURE XIII: CONSOLIDATED STATEMENT OF SUNDRY DEBTORS

(Rupees in

millions)Particulars As at

September 30, 2006

As at March 31, 2006

As at March 31, 2005

As at March 31, 2004

As at March 31, 2003

As at March 31, 2002

Unsecured

Debts Outstanding for a period exceeding Six Months

Arbitration Awards

532.46

457.52

205.48

-

-

-

Others

887.90

736.47

549.20

892.00 604.36

314.07

1,420.36

1,193.99

754.68

892.00 604.36

314.07

Other Debts Arbitration Awards

127.10

106.49

-

186.99 -

-

Others

374.13

680.54

1,112.03

824.47 797.67

650.12

501.23

787.03

1,112.03

1,011.46

797.67

650.12

TOTAL

1,921.59

1,981.02

1,866.71

1,903.46

1,402.03

964.19

Good

1,780.36

1,825.53

1,701.69

1,800.97

1,274.57

885.35

Doubtful *

141.23

155.49

165.27 102.99

127.97

78.84 Less: Provision for Doubtful Debts

- - (0.25)

(0.50)

(0.51)

-

TOTAL 1,921.59 1,981.02 1,866.71 1,903.46 1,402.03 964.19

* does not include debts referred to in notes VII(9) of Annexure IV

Due from Related Parties included above. - - - - - -

309

ANNEXURE – XIV: STATEMENT OF LOANS AND ADVANCES

(Rupees in millions)

Particulars As at September

30, 2006

As at March 31, 2006

As at March 31, 2005

As at March 31, 2004

As at March 31,

2003

As at March 31, 2002

Advances and Loans - Other advances - - - - - 6.05

Total - - - - - 6.05 Deposit with a company {including interest accrued} 1.06 1.02 1.26 1.14 1.04 1.33 Advances recoverable in cash or in kind or for value to be received 858.56 830.29 575.38 540.46 538.35 550.89 Balance with Central Excise Authorities - - 0.02 0.02 0.02 0.02 Advance Tax (net of provision) 251.90 198.70 236.86 207.52 249.58 234.17 Other Deposits 0.23 0.20 0.37 0.70 0.85 1.71

TOTAL 1,111.75 1,030.21 813.89 749.84 789.84 794.17

Good 1,084.57 1,001.87 793.36 720.86 763.10 772.76

Doubtful 27.18 28.34 24.92 33.37 31.13 25.80 Less: Provision for Doubtful Loans & Advances - - (4.39) (4.39) (4.39) (4.39)

TOTAL 1,111.75 1,030.21 813.89 749.84 789.84 794.17

Due from Related Parties included above - - - - - -

310

ANNEXURE XV: CONSOLIDATED STATEMENT OF INVESTMENTS

(Rupees in millions)

Particulars No. of Shares

As at September 30,

2006

As at March 31,

2006

As at March

31, 2005

As at March 31,

2004

As at March 31,

2003

As at March 31, 2002

INVESTMENTS (Long Term)

Government Securities (Unquoted) :

(i) National Savings Certificates *

- 0.06 0.06 0.06 0.06 0.06 0.06

(ii) 11.40% GOI Compensation (Project Exports to Iraq) Bonds, 2003

- - - - - 12.95 12.95

(iii) 5½ Years Kisan Vikas Patra

- - - - - 0.02 0.02

(iv) 5½ Years Indira Vikas Patra

- - - - - 0.02 0.02

Total - (A) 0.06 0.06 0.06 0.06 13.05 13.05

Non-Trade Investments

Quoted

Equity Shares of Hindustan Oil Exploration Company Limited of Rs.10 each fully paid up

134351 (180000 as

at 31.03.200

5)

2.02 2.02 2.70 2.70 2.70 2.70

Equity shares of Hindustan Construction Ltd. of Re 1 each fully paid up.

1000 (100 shares of

Rs.10 each as at

31.03.2005)

- - - - - -

Equity shares of Simplex Concrete Piles Ltd. of Rs.10 each fully paid up.

100 - - - - - -

311

Equity shares of Skanska Cementation India Ltd of Rs.10 each fully paid up.

50 0.02 0.02 0.02 0.02 0.02 0.02

(formerly known as Kvaerner Cementation India Ltd.)

Equity shares of Gammon India Ltd. of Rs. 2 each fully paid up

250 0.01 0.01 0.01 0.01 0.01 0.01

6.75% Tax Free Bonds of Unit Trust of India of Rs.100 each **

405337 40.53 40.53 40.53 40.53 - -

Units of Units Trust of India - US 64 Scheme of Rs. 10 #

4051374 - - - - 56.55 56.55

Less: Provision - - - - (13.61) (13.61)

Unquoted

Equity share of Afcons (Mideast) Constructions & Investments Private Limited of Rs.100 each fully paid

1 0.01 0.01 0.01 0.01 0.01 0.02

Total - (B) 42.59 42.59 43.27 43.27 45.68 45.69

Total - (A) + (B) 42.65 42.65 43.33 43.33 58.73 58.74

Investments in Related Parties included above 0.01 0.01 0.01 0.01 0.01 0.02

* Out of this Rs.0.05 millions lodged with Government Authorities and Clients ** 380,100 bonds pledged with Banks # 3,800,000 unitspledged with Banks

312

ANNEXURE XVI: CONSOLIDATED STATEMENT OF CONTINGENT LIABILITIES

(Rupees in millions)Particulars As at

September 30, 2006

As at March 31,

2006

As at March

31, 2005

As at March

31, 2004

As at March 31,

2003

As at March 31,

2002

Estimated amount of contracts remaining to be executed on capital account and not provided

451.10 80.74 21.87 62.51 34.48 33.07

Claims Against the Company not acknowledged as debt

156.92 94.01 111.71 82.83 89.78 89.15

Bank Guarantees Given on Behalf of Subsidiaries

1.28 1.37 18.91 19.48 18.30 17.63

Corporate Guarantees Given on Behalf of Subsidiaries for its credit Facilities

- - - 100.00 100.00 410.00

In respect of Service Tax matters in appeals in respect of non-registration and non-payment under Service Tax is in dispute.

- 0.28 0.26 0.24 0.22 -

In respect of Sales Tax demands raised by Sales Tax Authorities in matters of disallowance of labour and service charges, consumables for which appeal is pending before various appellate authorities.

89.63 91.35 66.80 102.99 115.58 18.43

In respect of Income Tax matters in appeals. 51.36 51.36 244.03 158.58 69.81 68.22

In respect of Excise Duty demand in appeals 11.30 - - 8.64 48.99 62.51

Agreement with Trade Union for Enlisted Workers

- - - Not Ascertai

nable

Not Ascertaina

ble

-

Arrears of fixed cumulative dividend on 12% Redeemable Cumulative Convertible Preference shares of Rs. 10/- each fully paid-up.

- 24.00 24.00 24.00 24.00 0.33

A petition to wind up the Company pursuant to the provisions of the Companies Act, 1956 has been filed in the Hon. High Court at Bombay by an erstwhile sub-contractor. The petitioner has alleged that the Company has not paid its dues. Against this, the Company has filed a suit and made a counter claim for the liquidated damages.

- 13.23 - - - -

Bills discounted with banks - 10.83 - - - -

Sundry claims against the Company by employees and others not admitted (amount indeterminate)

- - - - - -

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ANNEXURE XVII: CONSOLIDATED STATEMENT OF RELATED PARTY TRANSACTIONS

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

(I) Transactions during the year:

Holding company(s)

Issue of 7.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Cyrus Investments Limited - 200.00 200.00 200.00 - -

Issue of 12% Redeemable Non - Cumulative Convertible Preference Share Capital

Cyrus Investments Limited - - - - - 200.00

Conversion of 12% Redeemable Cumulative Convertible Preference Share Capital to Equity Share Capital

Cyrus Investments Limited - - - - 200.00 -

Guarantees Given by/(Released)

Cyrus Investments Limited - - 150.00 - - -

Fellow Subsidiary(s)

Issue of Zero coupon Reedemable Preference Shares

Sterling Investments Corporation Private Limited

1.24 - - - - -

Issue of Equity Share Capital on conversion of 9.5% Redeemable Non - Cumulative Convertible Preference Share.

Floreat Investment Limited - 200.00 - - - -

Issue of 9.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Issue of 7.5% Redeemable Non - Cumulative Convertible Preference Share Capital

Floreat Investment Limited - 500.00 500.00 - - -

Issue of 7.5% Redeemable Non - Cumulative Optionally Convertible

314

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

Preference Share Capital

Floreat Investment Limited - 500.00 - - - -

Loan Taken

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Repayment/Conversion of loan

Sterling Investments Corporation Private Limited

- - - - 200.00 -

Interest paid loan

Sterling Investments Corporation Private Limited

- - - - 3.53 -

Associate Company

Finance Lease Charges

Afcons (Mideast) Construction and Investments Private limited

0.04 0.07 0.07 0.07 5.60 5.60

Current Account (net) outflow / (inflow)

Afcons (Mideast) Construction and Investments Private limited

- - - - - 0.82

Loan Taken

Afcons (Mideast) Construction and Investments Private limited

- - - 9.00 - -

Repayment/Conversion of loan

Afcons (Mideast) Construction and Investments Private limited

- - - - 6.05 -

Interest paid loan

Afcons (Mideast) Construction and Investments Private limited

0.29 0.45 0.46 0.46 - -

Key Management Personnel

Managerial Remuneration paid

A.H.Divanji - - - - - 1.59

A.M.Nerurkar - - - - - 0.01

Rajul A.Bhansali - - - - 1.63 1.41

K.Subrahmanian 1.20 2.64 2.56 2.37 0.80 -

Sitting Fees paid

P.S.Mistry - - - 0.01 0.03 -

C.P.Mistry 0.01 0.03 0.03 0.04 0.03 -

A.H.Divanji - - - - - 0.01

315

(Rupees in millions)

For the Financial Year Ended Particulars For the period from

April 1, 2006 to

September 30, 2006

March 31, 2006

March 31, 2005

March 31, 2004

March 31, 2003

March 31, 2002

(II) Balances as at year end:

Holding company(s)

Outstanding amount of guarantee given/ (taken)

Cyrus Investments Limited (800.00) (800.00) (150.00) - - -

Associate Company

Outstanding Amount Dr/(Cr)

Afcons (Mideast) Construction and Investments Private limited

(10.92) (10.59) (10.06) (9.52) - 9.98

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

You should read the following discussion of our financial condition and results of operations together with

our consolidated financial statements, as restated, under Indian GAAP for the Fiscal years ended March

31, 2003, 2004, 2005 and 2006, and for the six month period ended September 30, 2006, including the

significant accounting policies and notes and annexures thereto which begin on page 207. The following

discussion relates to our Company and is based on our consolidated restated financial statements.

Our restated financial statements have been derived from our consolidated financial statements prepared

in accordance with Indian GAAP, the accounting standards referred to in Section 211(3C) of the

Companies Act and the other applicable provisions of the Companies Act and Indian Securities

regulations. The following discussion is also based on internally prepared statistical information and

publicly available information. You are also advised to read the section titled “Risk Factors” beginning on

page xii, which discusses a number of factors and contingencies that could affect our financial condition,

results of operations and cash flows. For a discussion of our financial condition and results of operation

on the basis of our consolidated financial statements as restated for the same periods, please see page 207.

The following discussion does not relate to our results of operations after the six months ended September

30, 2006. Our Fiscal year ends on March 31, so all references to a particular Fiscal year are to the twelve

month period ended March 31.

Certain industry, technical and financial terms with initial capitals used in this discussion shall have the

meanings ascribed to them in the section titled “Definitions and Abbreviations” beginning on page iii.

Overview

We are a civil engineering and construction company in India and we are the flagship infrastructure construction company of the Shapoorji Pallonji group, a well-known and reputed name in the construction industry. We have an experience of over four decades in construction industry, which includes a wide variety of infrastructure projects like marine works, bridges, fly-overs, roads, general civil engineering works including industrial structures, nuclear power projects, tunneling, pipelines, LNG storage tanks and special foundation works such as piling, diaphragm wall, pre-stressed anchors, drilling and grouting and other ground improvement works throughout India. We have also successfully completed and are currently engaged in execution of projects in Middle East and Africa. Over the years we have developed an expertise in marine works and we believe that we have an established reputation and expertise in this service line through successful execution of more than 150 structures along the Indian coastline. We have also successfully completed more than 100 bridges, flyovers, viaducts, two LNG storage tanks, underground and elevated train corridors and have executed 2,000 lane kilo meters of road works. We enter into contracts primarily through a competitive bidding process at the domestic and the international level. We have worked on projects for Qatar Petroleum, Shell, Reliance Industries Limited, Mumbai Port Trust, Konkan Railway Corporation Limited, Delhi Metro Rail Corporation (DMRC) and are currently undertaking projects for National Highway Authority of India, Ministry of Transport and Communication, Sultanate of Oman. Of the above clients, we have several repeat orders from Reliance Industries Limited, Konkan Railway Corporation Limited, National Thermal Power Corporation and DMRC.

We focus on technology and constantly strive to develop new technologies and innovations in-house to execute large and complex civil engineering and construction works in a cost-efficient and timely manner. For instance, we developed the micro piling technology as early as 1970 and subsequently patented this technology for underpinning works to strengthen existing structures. We have successfully been using the

317

in-house developed Sahayadri Lift Barge for over 15 years now for our shallow as well as deep water projects. The Sahayadri Lift Barge has a hydraulic lift crane capable of lifting 1200 tonnes. . In the years ended March 31, 2005 and 2006, our consolidated income was Rs. 5,541.88 million and Rs. 7,177.67 million, respectively, representing an annual growth rate of 29.52 %. In the six months ended September 30, 2006, our consolidated income was Rs. 4,123.85 million. In the years ended March 31, 2005 and 2006, we incurred a consolidated loss of Rs. 14.71 million and earned a consolidated net profit for the year of Rs. 47.85 million respectively, while our consolidated net profit for the six months ended September 30, 2006 was Rs. 48.98 million. Our order book, which includes the projects awarded to us but where we have not yet commenced work and the unfinished and uncertified portions of our commenced projects was Rs. 30,303.4 million as of September 30, 2006, out of which, domestic projects and international projects accounted for Rs. 27,682.50 million and Rs. 2,620.90 million respectively. We have added contracts aggregating Rs. 222.0 million to our order book during the period October 1, 2006 to December 31, 2006 which are all domestic projects. As of September 30, 2006, our work force consisted of approximately 1,473 full time employees and more than 2,695 temporary labour based around India, enabling us to mobilize our skilled employee resources depending on the location and the necessary expertise for projects undertaken by us. Our equipments and skilled employee resources, together with our civil engineering capabilities enable us to successfully implement modern civil engineering construction methodologies. We enjoy the ISO 9001:2000 BVQI accreditation and have received several awards, certifications and appreciation letters from clients for our operations and projects such as the appreciation letter from Shell for the construction of jetty for docking of LNG carriers and other marine works at Hazira, We are committed to adhering to health, safety and environment policies and practices in the execution of our projects. We have received the Safety Award 2005 by the National Safety Council of India in respect of the Sone Bridge, Bihar and ISO 14001:2004 and OHSAS 18001:1999 certifications by BVQI for the construction of elevated viaduct for Delhi Metro Rail Project. We are a part of the Shapoorji Pallonji Group, which is one of the leading conglomerates in India with over 140 years of experience in the construction industry. Its business interests ranges from construction, building materials and real estate to aluminum, finance, biotech, power and fuel oil additives. The Shapoorji Pallonji Group also has a significant presence overseas having been involved in real estate development and construction since 1970. We are the flagship company of the Shapoorji Pallonji Group in the infrastructure construction sector.

Factors Affecting our Results of Operations and Financial Condition

General economic and business conditions. As a company operating in India, we are affected by the general economic conditions in the country and in particular the factors affecting the infrastructure industry in general and the projects we develop in particular. The Indian economy has grown steadily over the past three years and registered an impressive growth of 8.9% in Q1 FY 2007. This improved performance was propelled by the growth in industrial activity and robust services sector. Quality infrastructure, covering the services of transportation, energy, urban infrastructure and industrial and commercial infrastructure is one of the important necessities for promoting and sustaining this economic growth. Growth in the industrial and manufacturing activity and services sector leads to growth in demand for infrastructure facilities which translates into new proposals for construction, up-gradation and maintenance of infrastructure facilities. Also, improvements in infrastructure facilities in turn have a strong impact upon GDP growth. The overall economic growth will therefore impact the results of our operations. The growth prospects of our business and our ability to implement our strategies will be influenced by macro-economic factors affecting the economy and business conditions.

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Growth in the infrastructure sector.

Over the past few years, the Government of India’s focus on and sustained increase in budgetary allocation for the infrastructure sector and the development of a structured and comprehensive infrastructure policy that encourages greater private sector participation as well as increased funding by international and multilateral development financial institutions for infrastructure projects in India has resulted in several large infrastructure projects in this sector which have been key to our results of operations. Going forward, we believe the Govt policy on the sector and future budgetary allocations for the same would remain a key factor influencing the evolution of infrastructure sector which would directly affect our business.

Competition.

We compete against major construction and engineering companies like Larsen & Toubro, Hindustan Construction Company Limited, Gammon India Limited, IVRCL Infrastructure and Projects Limited, Simplex Infrastructure Limited and ITD Cementation. Our competition for a particular project varies depending on the size, nature and complexity of the project and on the geographical region in which the project is to be executed. In selecting contractors for major projects, clients generally invite the tenders from contractors that have pre-qualified based on several criteria including experience, technological capability, capacity, performance, reputation for quality, safety record, financial strength and bonding capacity and size of previous contracts in similar projects, although price competitiveness of the bid is the most important selection criterion. Pre-qualification is one of the key factors to our winning major projects. The company has adopted quite a selective approach in pursuing new business with adequate focus on risk-return analysis. The company identifies the new business areas or geographical locations for expansion thereby building up its order book.

Ability to attract and retain skilled personnel A significant number of our employees are skilled engineers and we face competitive pressures in recruiting and retaining skilled and professionally qualified staff. Since the project management and technological skills of a company primarily rests with its skilled employees, the loss of key personnel or any inability to manage the attrition levels in different employee categories may materially and adversely impact our results of operations.

Increase in prices of major inputs such as steel, cement and petroleum products. To the extent possible, the company has decided to avoid fixed price contracts and pursue only those projects where either steel / cement is supplied by the client free of charge or at basic rate or price escalation is provided in the contract. This will enable the company to minimize the impact of adverse price fluctuations in the future. The company also ensures the supply of these materials directly from the manufacturer and enters into MOU / Project specific Rate contracts.

Weather conditions.

Our business operations may be adversely affected by severe weather conditions, which may require us to evacuate personnel or curtail services. Further, it may result in damage to a portion of our fleet of equipment or facilities resulting in the suspension of operations and may prevent us from delivering materials or essential equipments to our jobsites in accordance with stipulated contract schedules or generally reduce our productivity. Our operations are also adversely affected by difficult working conditions like extremely high temperatures during summer months and heavy rains during monsoon which restrict our ability to carry on construction activities and fully utilize our resources. Our revenues are accounted on an accrual basis. Revenue from contracts is recognized on the percentage completion method based on billing schedules agreed with the client on a progressive completion basis. As previously mentioned, our operations are adversely affected during monsoons. Accordingly, revenues recorded in the first half of our financial year between April and September are traditionally lower than revenues recorded during the other quarters of our financial year and hence comparison of our financials on a quarter to quarter basis would not be relevant for this specific period of the year.

319

Fluctuations in currency exchange rates.

To the extent that our income and expenditure are not denominated in the same currency, exchange rate fluctuations could cause some of our costs to grow higher than the proportionate revenues on a given contract or on the contrary, could also result in some of our costs falling below budget resulting in higher profitability. Further, being active in foreign markets, a part of our revenues is also exposed to favorable or negative movements in foreign exchange. Our future capital expenditure may include imported equipment and machinery which may be denominated in currencies other than Indian rupees. Therefore, any decline in the value of the rupee against such other currencies could increase the rupee cost of purchasing such equipment thus affecting our results of operations. OUR SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies (for the financial statements as at and for the half year ended September 30, 2006)

a) Fixed assets

Fixed assets are stated at cost of acquisition/ construction or book value and include amounts added on revaluation less accumulated depreciation. Leasehold improvements have been capitalized and are written off over the lease term from the date(s) of installation.

b) Impairment loss

Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amounts. Recoverable amount is the higher of an asset’s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

c) Depreciation

Depreciation on fixed assets is provided on the straight-line basis. Cost of the Intangible assets are amortised over a period of five years.

d) Investments

Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. However, when there is a decline, other than temporary, the carrying amount is reduced to recognize the decline.

e) Inventories

Construction materials, stores and spare parts are valued at lower of cost and net realizable value. Cost is determined on the basis of weighted average method. Cost of shuttering materials (included in construction materials) issued to jobs, is charged off equally over a period of four years.

f) Unbilled Revenue

Work done remaining to be certified/ billed is treated as Unbilled Revenue in the accounts. The same is valued at the contract rates.

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g) Retention monies Amounts retained by the clients until satisfactory completion of the contract(s) are recognised in the financial statements as receivables. Where such retention monies have been released by the clients against submission of bank guarantees, the amounts so released are adjusted against receivables from these clients.

h) Foreign currency transactions Transactions in foreign currency, including in respect of branch operations integral in nature, are recorded at the original rates of exchange in force at the time the transactions are effected. At the year end, monetary items, including those of branch operations integral in nature, denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realization/ payment of foreign exchange are accounted for in the relevant year as income or expense except in the case of fixed assets acquired from outside India, in which case, these are adjusted in the carrying amounts of such assets.

i) Revenue recognition on contracts (i) Contract revenue and expenses are recognized, when outcome can be estimated reliably, on the

basis of percentage completion method. Percentage of completion is determined based on the nature of contracts, either in proportion of contract costs incurred up to the reporting date to the estimated total cost or on the basis of physical proportion of the contract work completed.

(ii) Variations (in contracts) and amounts in respect thereof are recognized only when it is probable that the customer(s) will approve them and amounts can be measured reliably.

(iii) Claims and amounts in respect thereof are recognized only when negotiations have advanced to stage where it is probable that the customer(s) will accept them and amounts can be reliably measured.

j) Retirement benefits 1. Gratuity

The trustees of Afcons Infrastructure Limited Employees Group Gratuity-cum-Life Assurance Scheme Trust have taken a Group Gratuity-cum-Life Assurance Policy from the Life Insurance Corporation of India (LIC). Provision for gratuity is made on the basis of premium payable in respect of the aforesaid policy and actuarial valuation carried out by the independent actuarial valuer as at the year end.

2. Superannuation

The trustees of Afcons Infrastructure Limited Superannuation Scheme Trust have taken a Group Superannuation policy from the LIC. Provision for superannuation is made on the basis of premium payable in respect of the aforesaid policy.

3. Provident fund

Contribution as required under the statute/ rules is made to the Company’s Provident Fund/ Government Provident Fund.

4. Leave encashment

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Provision for leave encashment benefits is made based on the expected cost of unavailed earned leave.

k) Borrowing costs

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalized as a part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.

l) Deferred revenue expenditure

The expenditure on voluntary retirement compensation is treated as ‘Deferred Revenue Expenditure’ and amortized over a period of ten years.

m) Finance lease rentals

These are accounted over the life of the asset determined on the basis of technical evaluation made by an independent valuer/ surveyor.

n) Doubtful debts and advances

Provision is made in the accounts for debts and advances which in the opinion of the management are considered doubtful of recovery.

o) Taxes on income

Tax expense comprises both current and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income-tax payable/ recoverable in respect of the taxable income/ loss for the reporting period. Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. Provision for Fringe Benefits Tax is made in accordance with Chapter XII-H of the Income-tax Act, 1961

p) Provisions and Contingencies Provisions are recognized when the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. Contingent liabilities are disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognized nor disclosed.

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INCOME We derive our income from (i) operations and (ii) other income.

The following table sets forth income from operations from different sectors during the years ended March 31, 2004, 2005 and 2006 and in the six months ended September 30, 2006:

Rs in million

Sectors FY 2004 FY 2005 FY 2006

6 months ended September 30, 2006

Domestic

Civil Works 216.36 421.63 276.61 741.50

Marine Works 858.63 832.48 408.48 115.20

Bridge 1099.82 1020.71 1758.38 1007.54

Hydro 0.00 1.76 131.56 347.97

Tunnel 0.00 0.00 38.61 121.60

Metro 675.09 1297.58 588.64 198.64

Pipeline 0.00 0.00 0.51 128.27

Power 342.05 48.87 3.33 0.00

Road Works 1202.94 1681.47 2193.56 1141.29

Overseas

Marine Works 0 44.37 1339.97 70.60

Civil Works 0.85 0.00 0.00 93.68

Other

Cathodic Protection 11.64 8.68 12.12 7.28

Sale of Scrap 45.91 76.29 52.63 16.63

Total 4453.29 5433.84 6804.42 3990.22

Order Bookings In our industry, the order book is considered an indicator of potential future performance since it represents a significant portion of the likely future revenue stream. Our order book comprises the unfinished and uncertified portion of projects that we have undertaken and includes the projects awarded to us but where we have not yet commenced work. Our strategy is focused on capturing quality contracts with potentially high margins. The following table sets forth the value of our order book as of September 30, 2006 based on the different sectors that we operate in:

Sector Value as on September 30, 2006 Rs. In millions

Marine Works 3270.40

Bridges 8469.40

Roads Works 4222.40

Civil Works 4636.10

Metro Projects 2546.20

Hydro/Tunnel Works 4287.50

Pipeline Project 250.50

Overseas Project 2620.90

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30303.40

Some Details of our Order Book

The following table sets forth certain information concerning the major contracts in our order book by outstanding value as on September 30, 2006. These orders represented more than 81 % of our order book.

(Rs. in millions)

No. Name of Project Service Line

Total Contract

Value

Current Contract

Value

Amount Outstanding

as of September

30, 2006

Scheduled Completion

Date

Client

1. Design and construction of special bridge across the River Chenab in Jammu & Kashmir. (in the name of the joint venture)

Bridge 5,127.4 5,173.8 4,040.00 December, 2008

Konkan Railway Corporation Ltd.

2. Construction of Marine, Civil And Pipeline Works for Reliance – Jamnagar

Civil Works

5,000.0 5,000 4,400.00 January, 2008

Reliance Infrastructure Limited

3. Construction of BG Single Line Tunnel on Katra - Laole section of Udhampur - Srinagar - Baramulla Rail Link Project

Hydro/ Tunnel

3,345.2 3,557.80 3,481.00 June, 2009 Konkan Railway Corporation Ltd.

4. Design Enginering,Construction of 4 Laning from Existing 2 Lane Ulundurpet to Padalur

Road 3,145.00 3,145.00 3,145.00 June, 2008 Trichy Tollways Pvt.Ltd.

5. Construction of new bridge over River Sone

Bridge 2,117.80 2,269.70 1,232.70 February, 2009

East Central Railway, Patna

6. Construction.of Grade Separation at Mukarba Chowk in Delhi

Bridges/ Flyover

1,706.20 1,706.20 1,706.20 August, 2008

Public Works Dept., Delhi

7. Construction of Main Civil Works of Desilting Arrangement for Koldam Hydro-Electric Project. (in the name of JV)

Hydro/ Tunnels

1,583.60 1,204.70 795.00 April, 2008 National Thermal Power Corporation Ltd.

8. Part Design and Construction of Elevated Viaduct and Structural Work Of 3 Elevated Stations DMRC

Metro Rails

1,409.50 1,409.50 1409.50 December, 2008

Delhi Metro Rail Corporation

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No. Name of Project Service Line

Total Contract

Value

Current Contract

Value

Amount Outstanding

as of September

30, 2006

Scheduled Completion

Date

Client

9. Construction of Jetty Modification-Zero Point to New Riser Platform, Jamnagar

Marine Works

1,380.0 1,380.0 1,380.0 January, 2008

Reliance Industries Ltd.

10. Construction of Breakwater and Associated Works at Pawas Bay, Ratnagiri

Marine Work

1,250.00 1,250.00 1,250.00 August, 2008

Finolex Industries Ltd.

11. Construction of new mooring facility in Shannah, Al Wusta Region

Marine Works

1,135.10 1,135.10 1.135.10 January, 2008

Sultanate of Oman

12. Construction of Oil Jetty At Louis Harbour, Mauritius

Marine Work

822.80 730.1 718.10 January, 2008

Mauritius Ports Authority

TOTAL 28022.60 27961.90 24692.60

Other income includes income (i) from our investments, (ii) profits on sale of investments / assets (iii) other miscellaneous income including interest on arbitration awards, excess provision for earlier years written back, sales tax/excise duty refund, insurance claim settled etc and gains from foreign exchange fluctuations are recorded as other income. EXPENDITURE Our expenditure comprises of (i) construction expenses; (ii) employee cost; (iii) other expenses; (iv) interest cost (net); and (iv) depreciation and amortization; Construction expenditure includes: (i) expenditure for construction materials used in our projects such as steel, cement, equipment and materials used for construction, consumable stores, steel plates, spares for the equipments etc.; (ii) contractor charges paid to sub-contractors to whom we have contracted a part of our project responsibilities, piece rate workers’ payments and labour borrow wages; (iii) hire charges paid for hiring of equipment from third parties; (iv) repair and maintenance costs of our equipment and facilities; (v) power, electricity and water charges; and (vi) freight, octroi and transportation cost etc. Construction expenditure is dependent on the type of project being executed and is also influenced by the nature of work being carried out such as labor intensive or mechanized job being carried out. Employee costs include: (i) salaries, wages, gratuity and bonus payments to our employees; (ii) contributions made to provident fund and other fund and iii) expenses relating to workmen and staff. Other expenses include: (i) rent paid for office space and facilities utilized by us; (ii) insurance charges;(iii) traveling and conveyance charges; (iv) fees and taxes paid; (v) consultancy and professional charges paid; and (vi) other miscellaneous administrative and establishment expenses such as office expenses, printing and stationary, communication expenses, postage and advertisement expenses, donation, bank guarantee and bank commission charges etc. We also record any bad debts or advances that are written off, and any loss on sale of fixed assets (net) during a fiscal period under administration expenses. Interest costs include (i) interest payable on term loans, debentures issued, interest payable on hire purchase arrangements for equipment and interest on unsecured loans. The interest received from banks on our fixed

325

and short term deposits, interest on loan given, if any and interest on income tax refund is reduced from the interest cost. The nature of expenditure incurred by us on a given project is significantly dependent on the nature of the project. For example, for our construction activities, we may consider using varying proportions of manual or mechanized labor depending on the project specifications and conditions, or decide to sub-contract parts of such construction activities, resulting in, for example, a varying proportion of labor, fuel and/or sub-contractor costs. In addition, in EPC projects, expenditure relating to procurement of equipment and materials constitute a significantly higher proportion of the total expenditure incurred in comparison with other infrastructure projects, where fuel and labor costs constitute a significantly higher proportion of the expenditure. RESULTS OF OPERATIONS As a result of the various factors discussed above that affect our income and expenditure on specific projects, our consolidated results of operations may vary from period to period depending on the nature of projects undertaken by us, their completion schedules, the nature of expenditure involved in a particular project and the specific terms of the contract, including payment terms. The following table sets forth certain information with respect to our consolidated results of operations for the periods indicated:

Rs. in million 30-Sep-06 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03

INCOME

Income from Operations:

3990.22 6804.42 5433.84 4453.29 4299.12

% to Total Revenue 96.76 94.80 98.05 95.83 96.49

Other Income 133.63 373.25 108.04 193.61 156.56

% to Total Revenue 3.24 5.20 1.95 4.17 3.51

Total Revenue 4123.85 7177.67 5541.88 4646.90 4455.68

EXPENDITURE

Construction Expenditure

2992.20 4759.03 4012.65 3325.05 3156.03

% to Total Revenue 72.56 66.30 72.41 71.55 70.83

Employee Cost 335.28 654.25 488.21 447.57 455.30

% to Total Revenue 8.13 9.12 8.81 9.63 10.22

Other Expenses 385.66 1040.68 513.22 421.28 381.83

% to Total Revenue 9.35 14.50 9.26 9.07 8.57

Operating Expenditure

3713.14 6453.96 5014.08 4193.90 3993.16

% to Total Revenue 90.04 89.92 90.48 90.25 89.62

EBITDA 410.71 723.71 527.80 453.00 462.52

% to Total Revenue 9.96 10.08 9.52 9.75 10.38

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Rs. in million 30-Sep-06 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03

Interest paid 244.21 424.57 397.84 368.48 379.53

Less: Interest Received

34.46 215.76 20.39 73.90 17.51

Interest Cost (Net) 209.75 208.81 377.45 294.58 362.02

% to Total Revenue 5.09 2.91 6.81 6.34 8.13

Depreciation 80.99 149.57 137.62 120.56 102.78

% to Total Revenue 1.96 2.08 2.48 2.59 2.31

Total Expenditure 4038.34 7028.10 5549.54 4682.94 4475.47

% to Total Revenue 97.93 97.92 100.14 100.78 100.44

Profit before Taxation and Extra Ordinary Items

85.51 149.57 (7.66) (36.04) (19.79)

% to Total Revenue 2.07 2.08 (0.14) (0.78) (0.44)

Provision for Taxation - Current

(9.35) (14.66) (2.77) (2.19) (2.24)

Provision for Taxation - Deferred

(24.20) (60.28) (11.21) (13.92) (9.27)

Provision for Taxation - Fringe Benefit Tax

(4.70) (10.40) - - -

Provision for Wealth Tax

(0.01) (0.02) (0.02) (0.02) (0.02)

Foreign Tax - (6.68) - - -

Profit after Taxation before Extra Ordinary items

47.25 57.53 (21.66) (52.17) (31.32)

% to Total Revenue 1.15 0.80 (0.39) (1.12) (0.70)

Profit after Taxation and Extra Ordinary Items (A)

47.25 57.53 (21.66) (52.17) (31.32)

% to Total Revenue 1.15 0.80 (0.39) (1.12) (0.70)

Impact of material adjustments for restatement in corresponding years (B)

- -10.49 10.49 - 16.92

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Rs. in million 30-Sep-06 31-Mar-06 31-Mar-05 31-Mar-04 31-Mar-03

Adjusted Profit before minority interest

47.25 47.04 -11.17 -52.17 -14.4

% to Total Revenue 1.15 0.66 -0.2 -1.12 -0.32

(Short)/Excess provision for taxes in respect of earlier years

1.73 0.81 -3.54 0.09 0.04

Prior Period Expenses - - - - -0.21

Short provision for tax in respect of earlier years

- - - - -1.65

Profit/ (Loss) after taxation and before minority interest

48.98 47.85 -14.71 -52.08 -16.22

% to Total Revenue 1.19 0.67 -0.27 -1.12 -0.36

Minority Interest 0.04 -0.08 11.32 16.25 10.78

Adjusted Profit/(Loss) 49.02 47.77 -3.39 -35.83 -5.44

% to Total Revenue 1.19 0.67 -0.06 -0.77 -0.12

Shapoorji Pallonji Group acquired our Company on March 31, 2000. On acquisition, SP Group decided to continue with the existing management till such time it became necessary to take corrective steps and in FY 2003 several steps were taken by our Promoters including management change, introduction of voluntary retirement scheme bringing in more focused business development activity with a change in the business mix, renewed focus on overseas markets, improving the commercial acumen etc.. The effects of the above has resulted in consistent improvement in efficiencies as reflected in the financials.

Six months ended September 30, 2006 Significant Developments During the six-month ending 30th September’2006 we secured contracts worth Rs. 12,783.50 million. Major contracts secured are as follows:

1) Our first project for a BOT concessionaire involving Design, Engineering, Construction development of four laning the existing two lane from Ulundurrpet to Padalur in the state of Tamil Nadu.

2) Jetty Modifications in Jamnagar for RIL Group. 3) Jetty modification at Jamnagar 4) Oil Jetty at Port Louis Harbor, Mauritius. 5) New Mooring Facility in Shannam, Oman. 6) Civil and Structural construction of Green Field cement plants at Al Anad, Yemen

Our operations in the six months ended September 30, 2006 can be attributed to the following factors: Total Revenue: We recorded total revenue of Rs. 4123.85 million in the six months ended September 30,

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2006, comprising of Rs. 3990.22 million of contract revenue, and other income of Rs. 133.63 million. Income from operations: Our total income from operations in the six months ended September 30, 2006 comprised of Rs.3990.22 million. Overseas operations contributed 4.12 % of the total contract revenue and the balance derived from our Indian operations. Operating Expenditure: We incurred operating expenditure of Rs. 3713.14 millions in the six months ended September 30, 2006. Construction expenditure: In the six months ended September 30, 2006, we incurred construction expenditure of Rs 2992.20 millions which stands at 80.58% of our operating expenditure for the period. Employee costs: In the six months ended September 30, 2006, we incurred personnel expenses of Rs. 335.28 million, including salaries, wages, gratuity and bonus, contribution to provident funds and other statutory employee welfare funds. Other Expenses: Our other administrative expenses for the six months ended September 30, 2006 amounted to Rs. 385.66 million. EBIDTA: Our earnings before providing for depreciation and amortisation charges, interest and taxation was Rs 410.71 million and the EBIDTA margin was 9.96%. Interest (net): We incurred expenditure on account of interest on borrowings of Rs. 209.75 million which is net of interest received of Rs. 34.44 million. Depreciation: We recorded depreciation charges of Rs. 80.99 million in the six months ended September 30, 2006.

Profit before tax: For the reasons discussed above, profit before taxes in the six months ended September 30, 2006 was Rs. 85.51 million.

Provision for taxes: Provision for taxes includes current tax liabilities, fringe benefit tax and deferred tax liabilities. Provision for taxes in the six months ended September 30, 2006 was Rs. 38.26 million. Profit after tax before minority interest: The profit after tax before minority interest for six months ended September 30, 2006 was Rs. 48.98 million. Minority Interest refers to that part of the equity stake not owned by the Company. We hold 60% of the equity in SSS Electricals (India) Pvt. Ltd and Afcons Arethusa Offshore Service Limited. The shareholding details of these subsidiaries are as follows:

Sr. No. Name of the Subsidiary % of AFCONS Holding

% of Minority Holding

Name of Minority

1 SSS Electricals (India) Pvt. Ltd

60% 40% SSS Germany

2 Afcons Arethusa Offshore Service Limited

60% 40% Z North Sea Ltd.

Adjusted Profit: The restated profit was Rs. 49.02 million in the six months ended September 30, 2006.

Year ended March 31, 2006 compared to year ended March 31, 2005

Significant Developments: During the financial year 2005-2006 the significant developments are as under:

1. Major Contracts secured a) Single line tunnel Udampur-Srinagar-Baramulla rail project for Konkan Railway Corpn. Ltd. b) Marine, civil and pipeline works for Reliance Infrastructure Limited– Jamnagar.

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c) Viaduct and four stations on Viswavidyalaya – Jangidpuri Corridor for Delhi Metro Rail Corpn. Ltd.

2. Amalgamation of the subsidiary Afcons Pauling (India) Ltd. with the company w.e.f. 1st April

2005.

Our results of operations in the year ended March 31, 2005 and 2006 can be summarised as follows: Total Revenue: Our total revenue increased by 29.52 % from Rs. 5541.88 million in the year ended March 31, 2005 to Rs. 7177.67 million in the year ended March 31, 2006 on account of more contracts being awarded to us and efficient project management. Income from operations: Our income from operations increased by 25.22 % from Rs. 5433.84 million in the year ended March 31, 2005 to Rs. 6804.42 million in the year ended March 31, 2006. Other Income: Our other income increased by 245.47 % from Rs. 108.04 million in the year ended March 31, 2005 to Rs. 373.25 million in the year-ended March 31, 2006 due to receipt of non recurring income towards transfer of tenancy rights, interest on arbitration award and increase in profit on sale of long term investments. Operating Expenditure: Our expenditure consists of construction expenses, employee cost, operating and administrative expenses, interest cost and depreciation and amortization charges. Our expenditure increased by 28.72 % from Rs. 5014.08 million in FY 2005 to Rs. 6453.96 million in FY 2006 in line with increased business

Construction expenditure: Expenditure relating to stores and spares consumed increased by 18.60 % from Rs. 4012.65 million in FY 2005 to Rs. 4759.03 million in FY 2006. Compared to increase in income from operations the material cost has actually reduced by 8.18 % due to major works given to subcontractors. Employee costs: Employee costs which consists of salaries, gratuity, wages and bonus payments to employees, contributions to providend funds and other funds and expenses incurred in connection with workmen and staff welfare, increased by 34.01 % from Rs. 488.21 million in FY 2005 to Rs 654.25 million in FY 2006 due to salary cost revision and increase in number of new projects resulting in increase in manpower. Other Expenses: Other expenses increased by 102.77 % from Rs. 513.22 million in FY 2005 to Rs. 1040.68 million in FY 2006. This can be attributed mainly to write off of old debts and advances and also due to increase in legal and professional fees relating to our Chenab Bridge Project.

EBIDTA: Our earnings before providing for tax, interest and depreciation and amortisation charges was Rs. 723.71 million and the EBIDTA margin was 10.08% in FY 2006 as compared to Rs. 527.80 million constituting 9.52 % in FY 2005. The increase in EBDITA margin was due to the decrease in the construction cost as a percentage to income from operations.

Interest cost (Net): Our net interest cost decreased by 44.67% from Rs. 377.45 million in FY 2005 to Rs. 208.81 million in FY 2006. This was due to increase in interest received on Arbitration awards. Depreciation: Depreciation expenses increased by 8.68% from Rs. 137.62 million in FY 2005 to Rs. 149.57 million in FY 2006, primarily due to acquisition of additional equipments amounting to Rs.267.29 millions in FY 2006.

Profit before tax: Profit before taxes increased to Rs. 149.57 million in FY 2006 from a loss of Rs. 7.66 million in FY 2005.

Provision for taxes: Provision for taxes includes current tax liabilities and deferred tax liabilities. Provision for taxes increased by 557.43% to Rs. 92.04 million in FY 2006 from Rs. 14.00 million in FY

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2005 primarily because of increase in taxable profits, due to provision for fringe benefit tax which was introduced in FY 2005-2006 and impact of deferred tax. Profit after tax before minority interest: The profit increased from a loss of Rs. 14.71million in FY 2005 to Rs. 47.85 million in FY 2006. Minority Interest refers to that part of the equity stake not owned by the Company. We hold 60% of the equity in SSS Electricals (India) Pvt. Ltd and Afcons Arethusa Offshore Service Limited. The shareholding details of these subsidiaries is as follows:

Sr. No. Name of the Subsidiary % of AFCONS Holding

% of Minority Holding

Name of Minority

1 SSS Electricals (India) Pvt. Ltd

60% 40% SSS Germany

2 Afcons Arethusa Offshore Service Limited

60% 40% Z North Sea Ltd.

Adjusted profit: The restated profit for FY 2006 was Rs. 47.77 million as compared to a loss of Rs. 3.39million in FY 2005 . The restatement is mainly due to interest on arbitration. In FY 2005 the adjusted loss is due to consolidation of accounts with our subsidiary AFCONS Pauling (India) Limited which had incurred a loss of Rs.44.94 millions. Year ended March 31, 2005 compared to year ended March 31, 2004 Significant Developments: During the financial year 2004-2005 major contracts secured are as follows:

1. Construction of special bridge across river Chenab at Km 50/800 on the Karta-Laole Section of the Udampur-Srinagar-Baramulla rail link project for Konkan Railway Corpn. Ltd.

2. Desilting Arrangement Package for Koldam Hydro Electric Power Project (4*200MW) for NTPC. 3. Engineering, Procurement , Installation and Commissioning of 2 nos Cofferdams for Pumphouse

No.1 & 3 of Ras Laffan Common Cooling Seawater systemPhase II for Qatar Petroleum in Qatar. 4. Construction of Elevated Viaduct between Ch.22.13 km to Ch.28.449 km on Extension of

Barakhamba Road for Delhi Metro Rail Corpn Ltd.. Our results of operations in the year ended March 31, 2005 and 2004 can be summarised as follows: Total Revenue: Our total revenue increased by 19.26% from Rs. 4646.90 million in the year ended March 31, 2004 to Rs. 5541.88 million in the year ended March 31, 2005, primarily owing to increase in order book and execution. Income from operations: Our income from operations increased by 22.02% from Rs. 4453.29 million in the year ended March 31, 2004 to Rs. 5433.84 million in the year ended March 31, 2005. Other Income: Our other income decreased by 44.20% from Rs. 193.61 million in the year ended March 31, 2004 to Rs. 108.04 million in the year ended March 31, 2005 primarily because of non recurring income relating to provision write back in FY 2003-04. Operating Expenditure: Our expenditure consists of construction expenses, employee cost, operating and administrative expenses, interest cost, depreciation and amortization charges. Our expenditure increased by 19.56% from Rs. 4193.90 million in FY 2004 to Rs. 5014.08 million in FY 2005 primarily due to corresponding increase in revenue.

Construction expenditure: Expenditure relating to stores and spares consumed increased by 20.68 % from Rs. 3325.05 million on FY 2004 to Rs. 4012.65 million in FY 2005 which was due to increase in revenue.

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Employee costs: Employee costs which consists of salaries, wages, gratuity and bonus payments to employees, contributions to provident funds and other funds and expenses incurred in connection with workmen and staff welfare increased by 9.08% from Rs. 447.57million in FY 2004 to Rs. 488.21million in FY 2005 because of increase in revenue.

Other expenses: increased by 21.82% from Rs. 421.28 million in FY 2004 to Rs. 513.22 million in FY 2005 primarily due to increase in revenue. EBIDTA: Our earnings before providing for tax, interest and depreciation and amortisation charges was Rs. 527.80 million and the EBIDTA margin was 9.52% in FY 2005 as compared to Rs. 453.0 million constituting 9.75% in FY 2004. This can be attributed to non recurring income relating to provision written back in FY 2004 Interest cost (net): Our net interest cost increased by 28.13% from Rs. 294.58 million in FY 2004 to Rs. 377.45 million in FY 2005. This was due to increase in borrowings.

Depreciation: Depreciation expenses increased by 14.15% from Rs. 120.56 million in FY 2004 to Rs. 137.62 million in FY 2005, primarily due to acquisition of additional equipments amounting to Rs.210.74 millions in FY 2005.

Profit before tax: Loss before taxes decreased to Rs 7.66 million in FY 2005 from Rs. 36.04 million in FY 2004. This can be attributed to increase in income from operations.

Provision for taxes: Provision for taxes includes current tax liabilities and deferred tax liabilities. Provision for taxes decreased by 13.21% to Rs. 14.00 million in FY 2005 from Rs. 16.13 million in FY 2004, primarily due to decrease in provision for wealth tax and impact of deferred tax. Profit after tax before minority interest: The loss decreased from Rs. 52.08 million in FY 2004 to Rs. 14.71 million in FY 2005. Minority Interest refers to that part of the equity stake not owned by the Company. The shareholding details of such subsidiaries is as follows:

Sr. No. Name of the Subsidiary % of AFCONS Holding

% of Minority Holding

Name of Minority

1 SSS Electricals (India) Pvt. Ltd

60% 40% SSS Germany

2 Afcons Arethusa Offshore Service Limited

60% 40% Z North Sea Ltd.

3 Tensacciai (India) Pvt. Ltd 60% 40% Tensacciai, Italy

4 Afcons Pauling (India) Ltd 75% 25% Pauling PLC – 0.20% Sterling Invetsment – 24.80%

5 Afcons Pauling Joint Venture

95% 5% Pauling PLC

Adjusted profit: The restated profit/(loss) for FY 2005 was Rs. (3.39) million as compared to Rs. (35.83) million in FY 2004. The restatement is mainly due to interest on arbitration. In FY 2005 and FY 2004 the adjusted loss is due to consolidation of accounts with our subsidiary Afcons Pauling (India) Limited which had incurred a loss of Rs.44.94 millions in FY 2005 and Rs.62.98 millions in FY 2004. Year ended March 31, 2004 compared to year ended March 31, 2003

Significant Developments: During the financial year 2003-2004, major contracts secured are as follows: 1. Sone Bridge in Lieu of existing Bridge No.531 on HWH Delhi Grand Cord section under Eastern

Railway.

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2. Dahej LNG Terminal Jetty Civil works. 3. Dredging in Mandovi river on Panaji Bank & Sand bars at the mouth of river Chapora. Our results of operations in the year ended March 31, 2004 and 2003 can be summarised as follows:

Total Revenue: Our total revenue increased by marginally from Rs. 4455.68 million in the year ended March 31, 2003 to Rs. 4646.90 million in the year ended March 31, 2004.

Income from operations: Our income from operations increased by 3.59% from Rs. 4299.12 million in the year ended March 31, 2003 to Rs. 4453.29 million in the year ended March 31, 2004.

Other Income: Our other income increased by 23.67% from Rs. 156.56 million in the year ended March 31, 2003 to Rs. 193.61 million in the year ended March 31, 2004 due to due to provision write back in the year 2003-04 and equipment hire charges received in 2004. Operating Expenditure: Our expenditure consists of construction expenses, employee cost, operating and administrative expenses, interest cost, depreciation and amortization charges. Our expenditure increased by 5.03% from Rs. 3993.16 million in FY 2003 to Rs. 4193.90 million in FY 2004.

Construction expenditure: Expenditure relating to stores and spares consumed increased by 5.36 % from Rs. 3156.03 million in FY 2003 to Rs. 3325.05 million in FY 2004 on account of additional expenditure on road equipment repairs and spares.

Employee costs: Employee costs which consists of salaries, wages, gratuity and bonus payments to employees, contributions to provident funds and other funds and expenses incurred in connection with workmen and staff welfare, decreased by 1.70% from Rs. 455.30 million in FY 2003 to Rs. 447.57 million in FY 2004. Other expenses: Other administrative and general expenses increased by 10.33% from Rs. 381.83 million in FY 2003 to Rs. 421.28 million in FY 2004. There was a decrease in professional and technical consultancy fees from Rs. 82.10 million in FY 2003 to Rs. 71.88 million in FY 2004 due to completion of projects where consultancy fees were paid. EBIDTA: Our earnings before providing for tax, interest cost and depreciation and amortisation charges was Rs. 453.0 million and the EBIDTA margin was 9.75% in FY 2004 as compared to Rs. 462.52 million constituting 10.38% in FY 2003. The decrease in EBDITA margin is attributed to an increase in the construction cost as a percentage of income from operations. Interest cost (net): Our net interest cost decreased by 18.63% from Rs. 362.04 million in FY 2003 to Rs. 294.58 million in FY 2004 because of increase in interest earnings in the year 2003-2004.

Depreciation: Depreciation expenses increased by 17.30 % from Rs. 102.78 million in FY 2003 to Rs. 120.56 million in FY 2004 due to acquisition of additional equipments amounting to Rs.284.23 millions during the year 2003-2004.

Profit before tax: Loss before taxes was Rs.36.04 million in FY 2004 as compared to Rs. 19.79 million in FY 2003. This can be attributed to increase in construction cost as a percentage of income from operation

Provision for taxes: Provision for taxes includes current tax liabilities and tax provision for earlier years. Provision for taxes increased to Rs 16.13 million in FY 2004 from Rs. 11.53 million in FY 2003.

Profit after taxes: The loss was Rs. 52.17 million in FY 2004 as compared to Rs. 31.32 million in FY 2003. Profit after tax before minority interest: The loss was Rs. 52.08 million in FY 2004 as compared to Rs.

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16.22 million in FY 2003. Minority Interest refers to that part of the equity stake not owned by the Company. The shareholding details of these subsidiaries is as follows:

Sr. No. Name of the Subsidiary % of AFCONS Holding

% of Minority Holding

Name of Minority

1 SSS Electricals (India) Pvt. Ltd

60% 40% SSS Germany

2 Afcons Arethusa Offshore Service Limited

60% 40% Z North Sea Ltd.

3 Tensacciai (India) Pvt. Ltd 60% 40% Tensacciai, Italy

4 Afcons Pauling (India) Ltd 75% 25% Pauling PLC – 0.20% Sterling – 24.80%

Adjusted profit: The restated profit/(loss) for FY 2004 was Rs. (35.83) million as compared to Rs. (5.44) million in FY 2003. The restatement is mainly due to provision write back. In FY 2004 and FY 2003 the adjusted loss is due to consolidation of accounts with our subsidiary Afcons Pauling (India) Limited which had incurred a loss of Rs.62.98 millions in FY 2004 and Rs. 40.76 millions in FY 2003. Liquidity and Capital Resources

Liquidity Historically, our primary liquidity requirements have been to finance our working capital needs and our capital expenditures. We meet this requirement from cash flows from generations as well as from borrowings. In certain cases, we are contractually obligated to our clients to fund for mobilization and machinery on our projects.

Cash Flows The table below summarizes our cash flows in the years ended March 31, 2005 and 2006 and in the six months ended September 30, 2006:

(In Rupees million)

Six Month Ended

September 30 2006

Year ended March 31,

2006 2005 2004 Net cash from (used in) operating activities (309.45) (545.99) (680.88) (268.24)

Net cash from (used in) investing activities (485.98) (206.49) (200.15) (167.82)

Net cash from (used in) financing activities 708.48 794.35 902.47 454.64

Net increase (decrease) in cash and cash equivalents

(86.95) 41.87 21.44 18.58

Sundry Debtors

• Debtors Days Rs. In millions

Description Period Ended 30/09/06

Period Ended 31/03/06

Period Ended 31/03/05

Period Ended 31/03/04

Income from operations 3990.22 6804.42 5433.84 4453.29

Outstanding Debtor at the end of each period

1921.59 1981.02 1866.71 1903.46

Debtors Less than 180 days 501.23 787.03 1112.03 1011.46

Debtors more than 180 days 1420.36 1193.99 754.68 892.00

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Description Period Ended 30/09/06

Period Ended 31/03/06

Period Ended 31/03/05

Period Ended 31/03/04

% Of debtors less than 180 days 26.08% 39.73% 59.57% 53.14%

% Of debtors more than 180 days 73.92% 60.27% 40.43% 46.86%

Provision for Doubtful debts 0 0 0.25 0.50

Debtors – Outstanding no. of days 88 106 125 156

The number of days outstanding has reduced due to improved collections/ realizations.

Sundry Creditors

Rs. In millions

Description Period Ended 30/09/06

Period Ended 31/03/06

Period Ended 31/03/05

Period Ended 31/03/04

Cost of Construction 2992.20 4759.03 4012.65 3325.05

Outstanding creditors at the end of each period

2615.35 2022.47 1688.95 2749.36

Creditors – Outstanding no. of days 100 113 88 118

Generally our creditors days including retention money of sub-contractors varies from 90 days to 120 days..

Foreign currency risk To the extent that our income and expenditure are not denominated in the same currency, exchange rate fluctuations could cause some of our costs to grow higher than the proportionate revenues on a given contract or could also result in some of our costs falling below budget resulting in higher profitability. Our future capital expenditure may include imported equipment and machinery which may be denominated in currencies other than Indian rupees. Therefore, declines in the value of the rupee against such other currencies could increase the rupee cost of purchasing such equipment which may not be completely offset by the corresponding increase in the income as a result of decline in rupee.

Interest rate risk Changes in interest rates could affect our financial condition and results of operations as it is directly linked to our borrowing. If the interest rates for our existing or future borrowings increase significantly, our cost of servicing such debt will increase. This may impact our results of operations, planned capital expenditures and cash flows. However, Changes in interest rate will not have significant impact on our financial position.

Inflation In recent years, although India has experienced fluctuation in inflation rates, inflation has not had material impact on our business and results of operations. According to CMIE, inflation in India was approximately 3.7%, 6.5%, 4.6% and 5.1% in fiscal 2003, 2004, 2005 and 2006 respectively. In most of our project work the risk related to inflation is covered by escalation linked to material indices.

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Unusual or Infrequent Events or Transactions

Rs. In millions

For the Financial Year Ended Particulars For the period from April 1, 2006 to September 30,

2006 31-Mar-06 31-Mar-05 31-Mar-04

Incomes

Provision in respect of diminution in the value of long term investments written back - - - 13.61

Excess provision in respect of earlier years written back 42.17 19.47 19.89 21.05

Amount received on transfer of tenancy rights - 60.00 - -

Expenses Loosers Compensation

- 30.00 - -

Known trends or uncertainties Other than as described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, on page xii and 316 of this Red Herring Prospectus respectively, to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

Future relationship between costs and income Other than as described in the sections entitled “Risk Factors”, “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, to our knowledge there are no known factors which will have a material adverse impact on the operation and finances of our Company. Business Segments Other than as described in section titled “Business” on page 81 of this Red Herring Prospectus, there are no new business segments in which we operate. Seasonality of business Our revenues are also dependent on the stage of the project and the nature and level of activity involved during each stage. In addition, our operations are also adversely affected during a monsoon, which restricts our ability to carry out construction activities and fully utilize our resources. Accordingly, revenues recorded in the first half of the financial year between April to September are traditionally lower than revenues recorded in the second half of the financial year.

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Competitive conditions For details please refer to the discussions of our competition in the sections entitled “Risk Factors” and “Business” beginning on pages xii and 81 in this Red Herring Prospectus.

Significant developments after September 30, 2006 that may affect our future results of operations

1. Conversion of Preference shares into equity shares. For further details please refer to section titled “Capital Structure” on page 29 of the Draft Red Herring Prospectus.

2. Grant of Employee Stock Options. For further details please refer to section titled “Capital Structure” on page 29 of the Draft Red Herring Prospectus.

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OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS

Except as stated below there are no outstanding litigation, suits, criminal or civil prosecutions, proceedings or tax liabilities against our Company, our subsidiaries, our directors, our Promoter and Promoter Group Companies and there are no defaults, non payment of statutory dues, over-dues to banks/financial institutions/small scale undertaking(s), defaults against banks/financial institutions/small scale undertaking(s), defaults in dues payable to holders of any debenture, bonds and fixed deposits and arrears of preference shares issued by the Company, defaults in creation of full security as per terms of issue/other liabilities, proceedings initiated for economic/civil/any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act) other than unclaimed liabilities of the Company and no disciplinary action has been taken by SEBI or any stock exchanges against our Company, our Promoter or Directors. In respect of description of cases involving the Company, apart from criminal cases, a materiality threshold of Rs. 10 million has been adopted for cases filed against the Company and a materiality threshold of Rs. 100 million for cases filed by the Company. The cases involving amounts below these materiality thresholds have been presented on an aggregate basis. Contingent Liability The following table sets forth the principal components of our contingent liabilities as of September 30,

2006

Contingent Liabilities

As on September 30, 2006 (Rs. In millions)

Estimated amount of contracts remaining to be executed on capital account and not provided

451.10

Claims against the Company not acknowledged as debt

156.92

Bank guarantees given on behalf of subsidiaries

1.28

In respect of sales tax demands raised by sales tax authorities in matters of disallowance of labour and service charges, consumables for which appeal is pending before various appellate authorities

89.63

In respect of income tax matters in appeals

51.36

In respect of excise duty demands in appeals 11.30

Cases against the Company There are 66 cases filed against the Company in relation to various matters out of which 32 cases involve an amount of Rs. 80.16 million (out of the 66 cases filed against the Company, 3 civil cases were filed against Afcons Pauling India Limited (“APIL”), which was a subsidiary of the Company and has now merged with the Company and 4 civil cases are filed against APIL AMIL Joint Venture (“APIL-AMIL JV”), a joint venture established between APIL and Alfred McAlpine International Limited (AMIL)). In respect of 34 cases, the amount of claims cannot be quantified. There are 28 civil cases filed against the Company in relation to disputes and amounts payable, pertaining to various contracts and subcontracts for construction and claims arising due to injuries sustained by

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employees at construction sites in which the aggregate amount claimed is Rs. 79.47 million. There are 15 cases pertaining to the same matters in respect of which the amount of claims cannot be quantified. There are 23 suits/writ petitions and labour disputes filed by employees/ex-employees pending against the Company out of which 4 cases involve a total claim amount of Rs. 0.68 million. In respect of 19 cases, the amount of claims cannot be quantified.

There is 1criminal case filed against the Company in relation to alleged sales tax evasion. Criminal case

1. The Joint Commissioner of Commercial Taxes (Intelligence) (Karnataka) has filed a charge sheet

against the Company under section 29 (1) (e) and 29 (2) (e) of the Karnataka Sales Tax Act, 1957 before the Judicial Magistrate First Class (Sales Tax), Bangalore, in June 2005, alleging that the Company has committed an offence by not keeping true and current books of accounts in relation to the Hubli- Haveri National Highway Project and has claimed a tax amount of Rs. 14.08 million. The Hon’ble Magistrate has taken cognizance of the offence and has directed that criminal proceedings be initiated against the Company. The Company has filed a criminal petition before the High Court, Bangalore (Criminal Petition No. 4756 of 2005) under section 482 of the Criminal Procedure Code against the Joint Commissioner of Commercial Taxes (Intelligence) and Assistant Commissioner of Commercial Taxes (Respondents) and has requested that the criminal proceedings initiated against the Company (in CC No. 1081 of 2005) be quashed. The Company has stated that it has duly replied to the show cause notice in spite of which the charge sheet was filed against the Company. The Company has submitted that it has maintained proper books of accounts, not evaded any tax and has regularly submitted annual returns with the Respondent(s) authorities. The Company has submitted that the criminal action cannot be maintained against it if neither an assessment order nor a provisional assessment order was passed against it. The matter is pending as of date. The High Court by its order dated December 1, 2005 has stayed the proceedings initiated against the Company pending the admission of the criminal petition filed by the Company.

Civil cases

1. Associated Engineering Enterprises (Plaintiff) had filed a suit (Original Suit No. 83 of 2000) –before the Court of the Additional Chief Judge, City Civil Court, Secunderabad against APIL for the recovery of retention money and balance amount to the tune of Rs. 12.93 million, allegedly payable to the Plaintiff in relation to a subcontract between the parties (pertaining to the Hyderabad-Karimnagar Road Project). The Company has filed its written statement in the above matter and has denied that any payment or balance is payable to the Plaintiff by the Company. The matter is pending as of date.

2. Cherian Varkey Construction Company Private Limited (Plaintiff) has filed a suit against the Company and others before the Subordinate Judge’s Court, Ernakulam (Original Suit No. 424 of 2004) claiming an amount of Rs. 22.5million in relation to bill of quantities arising under the subcontract between the parties (pertaining to the Vypeen Bridge and Road Project). The Company has filed its written statement in this matter and has denied all claims made by the Plaintiff. Subsequently, the Plaintiff filed an Interim Application in the said matter before the Subordinate Court, requesting that the dispute be referred to arbitration according to section 89 of the Civil Procedure Code. The Subordinate Court by its order dated October 26, 2005, referred the parties to arbitration and appointed a sole arbitrator in this regard. The Company appealed against the said order before the High Court, Ernakulam, stating that the above claims are not arbitrable. The High Court by its order dated October 11, 2006 has confirmed the Subordinate Court’s order referring the parties to arbitration. .The Company intends to challenge the reference to arbitration by way of an appeal in the Supreme Court.

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Additionally, the Plaintiff has filed another suit (O.S. No. 441 of 2006) against the Company before the Subordinate Judge’s Court, Ernakulam, claiming an amount of Rs. 26 million on account of alleged additional works performed by the Plaintiff under the aforesaid subcontract. The Company has filed its written statement in this matter and has denied all claims made by the Plaintiff. The matter is pending as of date.

Cases filed by the Company

There are 35 civil cases filed by the Company (including arbitration claims) in relation to disputes and amounts payable pertaining to various contracts and subcontracts for construction and for refund of municipal taxes paid by the Company in which the aggregate amount claimed by the Company is Rs. 2,399.54 million (out of the 35 cases filed by the Company, 4 cases were filed by APIL and 2 cases are filed by Afcons Puling Joint Venture (“APJV”) (a partnership firm established between the Company and Pauling PLC, London)

Arbitration claims

1. The Company has initiated arbitration proceedings against the Board of Trustees of the Port of Mumbai (Respondent) before a sole arbitrator in Mumbai in February 2005. The Company is claiming damages against the Respondent and recovery of amounts alleged to have wrongfully been held by the Respondent (by way of liquidated damages), aggregating Rs. 645.37 million in relation to a contract between the parties (pertaining to the Modernization of Marine Oil Terminal Berths Project in Mumbai). The claims set forth by the Company are: (a) claim for delay on the part of the Respondent in executing the project under the said contract (b) claim for compensation for extended stay (c) claim for loss of deemed export benefits by the claimant and (d) claim for refund of amounts withheld by way of liquidated damages. In response to the Company’s statement of claims, the Respondent has filed its written statement denying the above claims and has made a counter claim in the amount of Rs. 453 million for losses incurred by the Respondent due to the alleged delay of the Company in performance of the works under the contract. The next date of hearings in this matter is February 5 to February 9, 2007.

2. The Company has initiated arbitration proceedings against Bhaba Atomic Research Centre (Respondent) on April 12, 2006 before a sole arbitrator, claiming a total amount of Rs. 119.60 million plus interest thereon as amount payable due to additional costs incurred by the Company in performing the contract (pertaining to construction of High Block Building Project in Tarapur). The Company has alleged that these costs were incurred due to delays on part of the Respondent. The Respondent has filed a written statement wherein it has denied the above claim and made a counter-claim to the tune of Rs. 202.37 million as amount allegedly due and payable by the Company under the said contract. The matter is pending as of date

3. The Company has initiated arbitration proceedings against Chennai Petroleum Corporation Limited (Respondent) on February 19, 2004 before a sole arbitrator in New Delhi claiming a total amount of approximately Rs. 321.77 million as amount payable in relation to various stages of work performed by the Company under the contract between the parties (pertaining to a project in Nagapattinam). The Company has submitted that it has performed its part of the said contract to the satisfaction of the Respondent and that the Respondent commenced operations of the various facilities with effect from March 1, 2003. The Respondent has made a counter-claim denying the aforesaid claim of the Company and has alleged that the Company has caused delay in completion of work under the contract due to which Respondent suffered a loss. In this regard, the Respondent is seeking damages against the Company to the tune of Rs. 70.35 million. Hearings in this matter have been completed and the arbitral award is pending.

4. The Company has initiated arbitration proceedings against Delhi Metro Rail Corporation Limited (Respondent) in December 2005 before an arbitral panel in New Delhi consisting of 3 arbitrators, claiming an amount of approximately Rs. 210.7 million as additional costs towards various stages of the work performed under the contract between the parties (pertaining to the Wazirpur-Rithiala

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Station Building Project). The Respondent has filed its written statement in the said matter and has denied owing any amount whatsoever to the Company and has made a counter-claim to the tune of Rs. 72.7 million. The matter is pending as of date.5. The Company has initiated four separate arbitration proceedings against the State of West Bengal Public Works Department (Respondent) before a panel of 3 arbitrators in Calcutta in December 2004, each of the four claims arising under the contract executed between the Company and the Respondent (pertaining to Panagarh Moregram Road Project in West Bengal). The Company has claimed a total amount of Rs. 327.2 million towards additional expenses incurred by the Company due to delay in execution of work under the said contract. The panel has granted four arbitral awards (dated June 30, 2004, September 30, 2004, September 19, 2005 and March 21, 2006) in each of the four proceedings in favour of the Company, aggregating Rs. 302.56 million (including interest thereon). The Respondent has filed 4 appeals in the High Court of Calcutta (A.P 23 of 2004, AP 331 of 2004, AP 346 of 2005 and AP 216 of 2006) challenging all the four arbitral awards granted in favour of the Company. The High Court has dismissed two out of the four appeals (AP 23 of 2004 and AP 346 of 2005) filed by the Respondent. Hearings in the remaining 2 appeals have been concluded and judgement(s) is awaited.

6. APJV has initiated arbitration proceedings against the State of Punjab (Respondent) in October, 2005 in relation to three contracts which have been consolidated in the said proceeding (in connection to the widening of 4 lanes and strengthening of a national highway in Punjab). APJV has submitted that it incurred additional expense in relation to the extension and delay in execution of the work under the three contracts, allegedly caused by the Respondent. An amount of Rs. 100.8 million has been claimed. The matter is pending as of date.

7. APIL has initiated arbitration proceedings in December 1999 against the Government of Andhra Pradesh (Respondent) in relation to the contract executed between the parties (pertaining to the Hyderabad- Karimnagar Ramagundam Road Project). APIL has submitted 3 separate claims arising out of 3 different packages (segments) of the contract executed between the parties, aggregating Rs. 75.4 million. By an arbitral award dated October 16, 2000, the arbitral panel has combined the claims arising under all 3 packages and has granted an award to the tune of Rs. 61.83 million in favour of the Company. The Respondent has made 3 applications (IA 607, IA 608 and IA 609 of 2000) in the Court of the Chief Judge, City Civil Court, Hyderabad to set aside the said arbitral award granted by the panel. The Court passed a common judgment in relation to the above three applications on November 12, 2002 and dismissed the Respondent’s application in regard to certain claims and set aside the arbitral award with respect to certain other claims. Subsequently, the Company has submitted additional claims in arbitration against the Respondent pertaining to disputes arising in connection with bitumen, sales tax and cess, claiming a total amount of Rs. 35.5 million. The arbitral panel by its award dated January 28, 3003, has awarded the Company Rs. 22.10 million against the Respondent in respect of the said claims arising under all 3 packages relating to sales tax, bitumen and cess. The Respondent has filed 3 petitions (O.P. 1514 of 2003, O.P. 1515 of 2003 and O.P. 1516 of 2003) before the Chief Judge, City Civil Court, Hyderabad, challenging the said arbitral award dated January 28, 2003. The appeals in this matter are pending as of date.

Tax related matters

Income Tax

There are 9 disputes relating to income tax assessments involving the Company, out of which 8 disputes involve a total amount of Rs. 226.33 million claimed against the Company. In respect of 1 dispute the amount of claim cannot be quantified. There are 10 disputes relating to income tax assessments involving the Company (including 2 disputes involving APIL) in which the total amount claimed by the Company is Rs. 57.91 million.

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1. The Commissioner of Income Tax (CIT) (Appeals) VIII, Mumbai, by way of its order dated October 5, 2006 confirmed/ confirmed in part, the disallowances in respect of the following items in the assessment order for the assessment year 2003-2004:

• Interest on loans to subsidiary companies; and

• Other minor items

The Company has filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai, against the said order. The total disputed disallowance amount in this matter is Rs. 5.73 million.

2. The CIT (Appeals) VIII, Mumbai by way of its order dated April 28, 2006, confirmed/confirmed

in part, the additions in respect of the following items in the assessment order for the assessment year 2002-2003:

• Interest paid on loans to subsidiaries;

• Expenses relating to income exempt under section 14A of the Income Tax Act; and

• Other minor items

The Company has filed an appeal dated June 29, 2006 before ITAT, Mumbai against the said order. The appeal is still pending and the total disallowance disputed amount is Rs. 16.13 million.

The Income Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief amount disputed is Rs.764.62 million.

3. The CIT (Appeals) VIII, Mumbai, by way of its order dated March 17, 2005, confirmed/confirmed in part, the additions in respect of the following items in the assessment order for the assessment year 2001-2002:

• Interest on loans to subsidiary companies;

• Expenses relating to income exempt under section 14A of Income Tax Act; and

• Other minor items The Company has filed an appeal before ITAT, Mumbai against the said order on May 24, 2005. The appeal is still pending and the total disputed disallowance amount is Rs.11.58 million. The Income Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief amount disputed is Rs. 158.18 million.

4. The CIT (Appeals) VIII, Mumbai, by way of its order dated October 17, 2003 confirmed/confirmed in part, the additions in respect of the following items in the assessment order for the assessment year 2000-2001:

• Interest on loans to subsidiary companies and;

• Expenses relating to income exempt under section 14A of Income Tax Act The Company has filed an appeal before ITAT, Mumbai against the said order on June 9, 2006. The appeal is still pending and the total disputed disallowance amount is Rs. 59.16 million. The Income-Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief amount disputed is Rs. 101.11 million.

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5. The CIT (Appeals) VIII, Mumbai by way of its order dated March 27, 2006, confirmed/confirmed in part, the additions in respect of the following items in the assessment order for the assessment year 1999-2000:

• Interest on loans to subsidiary companies;

• Expenses relating to income exempt under section 14A of Income Tax Act;

• Claims under section 80HHB of Income Tax Act; and

• Other minor items The Company has filed an appeal before ITAT, Mumbai against the said order on April 17, 2003. The appeal is still pending and the total disputed disallowance amount is Rs. 47.82 million.

The Income Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief amount disputed is Rs. 118.04 million.

6. The CIT (Appeals) VIII, Mumbai, , by way of its order dated February 20, 2006 confirmed/ confirmed in part, the disallowances in respect of the following items in the assessment order for the assessment year 1998-1999:

• Club membership expenses;

• Advances made to subsidiary and associated companies;

• Interest on loans to subsidiary companies; and

• Other minor items The Company has filed an appeal before ITAT, Mumbai against the said order on April 17, 2003 The appeal is still pending and the total disputed disallowance amount is Rs. 15.19 million.

The Income Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief amount disputed is Rs. 101.69 million.

7. The ITAT, Mumbai, by way of its order dated July 19, 2005 confirmed the order of the CIT (Appeals) dated July 12, 2001 relating to partial disallowances in respect of interest on loans to subsidiary in the assessment order for the assessment year 1997-1998. The Company has filed a writ petition in the High Court of Judicature, Mumbai, challenging the said order of ITAT, Mumbai. The total disputed disallowance amount is Rs.11.52 million.

The Income-Tax Department has also filed appeal(s) before the ITAT, Mumbai disputing the relief allowed to the Company by the CIT (Appeals) in respect of this assessment year. The total relief amount disputed is Rs. 68.82 million.

Sales Tax

There are 37 disputes in relation to sales tax assessments involving the Company (including 7 disputes involving APIL, 3 disputes involving APIL AMIL JV and 8 disputes involving APJV), in which the total amount claimed by the Company is Rs. 106.05 million.

1. The Delhi Sales Tax Department in its assessment order dated March 31, 2006 for the assessment year 2004-2005 has disallowed the following deductions claimed by the Company:

• Labour and service charges; and

• Subcontract claims

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The Company has filed an appeal before the Additional Commissioner of Sales Tax (“ACS”) (Appeals) III, Delhi against the said order on May 22, 2006 and the total disputed tax amount is Rs. 16.61 million. The ACS (Appeals), Delhi by its order dated October 12, 2006 has stayed the tax demand made by the Delhi Sales Tax Department pertaining to the Company’s taxable turnover under dispute. The said appeal is pending as of date.

2. The Delhi Sales Tax Department in its assessment order dated March 21, 2005 for the assessment year 2003-2004 has disallowed deductions claimed by the Company in respect of labour and service charges.

The Company has filed an appeal before the (ACS) (Appeals) III, Delhi against the said order on May 19, 2005. The appeal is still pending and the total disputed tax amount is Rs. 11.23 million.

3. The Orissa Sales Tax Department in its assessment order dated March 16, 2002 for the assessment year 1998-1999 has disallowed deductions claimed by the Company in respect of labour and service charges.

The Company has filed an appeal before the ACS (Appeals) II, Cuttack against the said order on February 22, 2003. The appeal is still pending and the total disputed tax amount is Rs.17.37million.

4. The Orissa State Sales Tax Department in its assessment order dated March 31, 2003 for the

assessment year 1999-2000 had disallowed the following deductions claimed by APIL AMIL JV.

• Escalation payments; and

• Payments made in respect of explosives

The JV Company has filed an appeal before ACS (Appeals) II, Cuttack against the said order in December, 2003 The appeal is still pending and total disputed tax amount is Rs. 135.91 million

5. The Orissa Sales Tax Department in its assessment order dated March 16, 2002 for the assessment year 1998-1999 had disallowed deduction claimed by APIL AMIL JV in respect of labour and service charges

The APIL AMIL JV has filed an appeal before ACS (Appeals) II, Cuttack against the said order on December 31, 2002. The appeal is still pending and total disputed tax amount is Rs. 19.13 million.

Excise Duty

There are 5 disputes in relation to excise duty involving the Company (including 2 disputes involving APJV) in which the total amount claimed against the Company is Rs. 24.57 million. There are 3 disputes in relation to excise duty involving the Company in which the total amount claimed by the Company is Rs. 8.12 million.

Cases against the Directors 1. Mr. Kader Oli has filed a complaint before the Judicial Magistrate-II, Chennai against Mr. Pallonji

Shapoorji Mistry, Mr. Shapoorji Pallonji Mistry and Mr. Cyrus Pallonji Mistry in their capacities as directors of (along with other other directors) of SIV Industries Limited for allegedly committing an offence of dishonouring hundies under sections 406, 417, 422, 423 and 468 read with section 120B of the Indian Penal Code. Mr. Pallonji Shapoorji Mistry, Mr. Shapoorji Pallonji Mistry and Mr. Cyrus Pallonji Mistry have stated that they had resigned as Directors of SIV Industries much prior to the date of the alleged offence. Hearing for disposal of complaint in this matter is pending as of date.

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Cases against the Promoter and Promoter Group

Cyrus Chemicals Private Limited (“CCPL”) There are 3 disputes pending before the High Court, Mumbai involving CCPL in relation to income tax matters (determination of annual value of house property), involving a total claim amount of Rs. 0.40 million. Cyrus Investments Limited (“CIL”) There are 9 tax disputes pending before the High Court, Mumbai involving CIL, out of which 5 disputes pertain to income tax matters and 4 disputes pertain to wealth tax matters (determination of annual value of house property and value of CHS flat whether liable to wealth tax), involving a total claim amount of Rs. 2.08 million. There are 2disputes pending before the Income Tax Appellate Tribunal, Mumbai, involving a total claim amount of Rs0.62 million. Forbes Gokak Limited (“FGL”) Cases against FGL Show cause notice issued against FGL by Bombay Stock Exchange Limited (BSE)-

BSE has issued a show cause notice dated August 8, 2006 against FGL in relation to non-compliance with the provisions of Clause 41 of the Listing Agreement relating to publication of unaudited results for the quarter and the year ended March 31, 2006. FGL had published the audited results for the quarter and the year ended March 31, 2006, on July 26, 2006 and has replied to the said notice issued by BSE vide its letter dated August 14, 2006. There are 307 cases filed against FGL in relation to various matters (including cases filed against Gokak Vadodara Spinning Mills which is a division of FGL and FAL Industries Limited which has merged with FGL) out of which 296 cases involve a total claim amount of Rs. 381.72 million. In respect of 10 cases, the amount of claims cannot be quantified. 1. There are 11 cases filed against FGL in relation to recovery of monies on account of various

services rendered and supplies furnished, involving a total claim amount of Rs. 361.41 million.

2. There are 8 cases filed against FGL by various investors in relation to loss/non receipt of approximately 3300 equity shares of FGL/erstwhile Forbes Campbell and Company Limited and in order to restrain FGL from transferring the said shares. The amount of claims in respect of these 8 cases cannot be quantified.

3. There are 286 suits/writ petitions and labour disputes filed by employees/ex-employees pending

against FGL and the total amount claimed by the plaintiffs in these cases is approximately Rs. 20.31 million.

4. There are 2 cases filed against FGL in relation to eviction of premises and wrongful dismissal of

employees. The amount of claims in respect of these 2 cases cannot be quantified.

Cases filed by FGL

There are 4 cases filed by FAL Industries Limited and Gokak Vadodara Spinning Mills in relation to recovery of monies, involving a total claim amount of Rs. 24.58 million.

Tax related matters

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There are 18 disputes involving FGL in relation to income tax and sales tax assessments and imposition of central and excise duties, involving a total claim amount of Rs. 350.282 million (including disputes involving Gokak Vadodara Spinning Mills and FAL Industries Limited). Floreat Investments Limited (“FIL”) Cases against FIL There are 3 cases filed against FIL in relation to property matters and the amount of claims in all 3 cases cannot be quantified. 1. There are 2 cases filed against FIL in relation to ownership of property wherein FIL as a developer

has been made a necessary party to the respective suits. The amount of claims in respect of these 2 cases cannot be quantified.

2. There is 1 case filed against FIL challenging permission granted to FIL in relation to

redevelopment of property situated in Mumbai. The amount of claim in respect of this case cannot be quantified.

Tax related matters

There are 2 tax disputes involving FIL in relation to income tax matters, each pending before the High Court, Mumbai and the Income Tax Tribunal Appellate, Mumbai, in which aggregate claim amount involved is Rs. 21.87 million. Floral Finance Limited (“FFL”) Cases filed by FFL

There are 2 cases filed by FFL in relation to Section 138 of the Negotiable Instruments Act, 1881, (dishonour of cheque), involving a total claim amount of Rs. 0.40 million. FFL filed a criminal complaint before the Esplanade Court, Mumbai under the above section pursuant to which it also filed a summary suit in the same matter before the High Court, Mumbai for recovery of the above amount of Rs. 0.40 million. Manjri Stud Farm (“MSF”)

Cases filed by MSF MSF has filed 1 criminal complaint before the 33rd Court, Metropolitan Magistrate Court, Mumbai in relation to Section 138 of the Negotiable Instruments Act, 1881 and the amount of claim involved is Rs. 0.50 million. Tax related matters There are 5 disputes involving MSF in relation to income tax assessments in which the aggregate claim amount involved is Rs. 12.07 million. Shapoorji Pallonji and Co., Limited (“SPCL”)

Cases against SPCL There are 8 cases filed against SPCL in relation to various matters out of which 5 cases involve a claim amount of Rs. 1.25 million. In respect of 4 cases, the amount of claims cannot be quantified.

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1. There are 4 cases relating to eviction notices issued against SPCL by various companies in respect of certain premises situated in Mumbai. The amount of claims in respect of these 4 cases cannot be quantified.

2. There is 1 case pending before the Central Excise and Service Tax Appellate Tribunal, Bangalore

in relation to imposition of excise duty and penalty involving a total claim amount against SPCL of Rs. 0.62 million.

3. There are 3 cases filed against SPCL by its workers/employees before the Workmens’

Compensation Court (Raigad) in relation to permenent disability compensation, involving a total claim amount of Rs. 0.63 million

Cases filed by SPCL

1. There are 3 cases filed by SPCL in relation to various matters involving a total claim amount of

Rs. 252.40 million. 2. There are 2 arbitration proceedings initiated by SPCL in relation to recovery of monies payable

under various contracts in which the total amount claimed is Rs. 238.80 million. 3. There is 1 summary suit filed before the High Court, Bombay in relation to the recovery of money

involving a claim amount of Rs. 13.60 million.

Tax related matters

There are 12 tax disputes involving SPCL in relation to income tax matters and wealth tax matters (determination whether value of CHA flat liable to wealth tax, difference in receipts as per TDS certificates and actual receipts and disallowance under section 14 A of Income Tax Section), involving a total claim amount of Rs. 95.99 million. Out of the 12 disputes, 8 disputes are pending before High Court, Bombay and 4 disputes are pending before the Income Tax Tribunal, Mumbai. There are 8 disputes relating to sales tax assessments involving SPCL in which the aggregate claim amount involved is Rs. 49.76 million. Shapoorji Data Processing Private Limited (“SDPP”)

Cases filed by SDPP

There are 5 cases filed by SDPP in relation to various matters out of which 3 cases involve a claim amount of Rs. 0.43 million. In respect of 2 cases, the amount of claims cannot be quantified. 1. There are 3 cases filed by SDPP in relation to recovery of rental lease and arrears of rent involving

an amount of Rs. 0.43 million. 2. There are 2 cases filed by SDPP in relation to wrongful sub-lease and possession of property. The

amount of claims in respect of these 2 cases cannot be quantified. Shapoorji Pallonji Power Company Limited (“SPP’’) There are 2 disputes involving SPP relating to income tax matters, pending before the Income Tax Appellate Tribunal, Mumbai in which the aggregate claim amount involved is Rs. 8.12million. Shapoorji and Co., (Rajkot) Private Limited (“SCRP”)

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There are 6 disputes involving SCRP pending before the High Court, Mumbai and 1 dispute pending before the Income Tax Appellate Tribunal, Mumbai in relation to income tax matters (determination of annual value of house property), involving a total claim amount of Rs. 0.93 million. There is 1 dispute involving SCRP pending before the Supreme Court in relation to income tax (determination of annual value of house property), involving a total claim amount of Rs. 0.23 million. Shapoorji Pallonji and Co., (Rajkot) Private Limited (“SPCR”) There are 6 disputes involving SPCR in relation to income tax matters (determination of annual value of house property) before the High Court, Mumbai and 1 dispute before the Income Tax Appellate Tribunal Mumbai ,involving a total claim amount of Rs. 0.82 million. Shapoorji Pallonji (Gwalior) Private Limited (“SPGP”) There are 6 disputes involving SPGP in relation to income tax matters (determination of annual value of house property), pending before the High Court, Mumbai involving a total claim amount of Rs. 1.15 million. Sterling Investment Corporation Private Limited (“SICL”)

Cases filed by SICL

SICL has filed 1 suit in relation to eviction from premises on account of non-payment of rent. The amount of claim in respect of this case cannot be quantified.

Tax related matters

There are 7 tax disputes involving SICL pending before the High Court, Mumbai , out of which 6 disputes pertain to wealth tax matters (valuation of property and value of CHS flat whether liable to wealth tax), involving a total claim amount of Rs. 0.17million and 1 dispute pertains to income tax (exemption of capital gains), involving a claim amount of Rs. 6.93 million. Shapoorji Pallonji Finance Limited (“SPFL”) Cases against SPFL

There are 2 cases filed against SPFL before the Consumer Forum, Mumbai in relation to deficiency of services and defective vehicles, involving a total claim amount of Rs. 0.39 million. Cases filed by SPFL

There are 41 cases filed by SPFL in relation to various matters out of which 39 cases involve a claim amount of Rs. 20.56 million. In respect of 2 cases, the amount of claims cannot be quantified. 1. There are 2 criminal complaints filed by SPFL against individuals under Section 406 of the Indian

Penal Code for criminal breach of trust, before the 33rd Court, Metropolitan Magistrate Court, Mumbai. The amount of claims in respect of these 2 cases cannot be quantified.

2. There are 25 criminal complaints filed by SPFL against various individuals and entities under

Section 138 of the Negotiable Instrument Act, 1881, (for dishonour of cheques), before the 33rd Court, Metropolitan Magistrate Court, Mumbai, involving a total claim amount of Rs. 4.91 million.

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3. There are 14 summary suits filed by SPFL before the High Court, Bombay against various

individuals and entities pertaining to recovery of monies, involving a total claim amount of Rs. 15.64 million

Tax related matters

There are 8 disputes in relation to income tax assessments involving SPFL, pending before the Income Tax Appellate Tribunal, Mumbai, in which the aggregate amount claimed is Rs. 34.30 million. United Motors (India) Limited (“UMIL”)

Cases against UMIL

There are 20 cases filed against UMIL in relation to various matters out of which 16 cases involve a claim amount of Rs. 10.34 million. In respect of 4 cases, the amount of claims cannot be quantified. 1. There are 8 civil cases filed against UMIL before the High Court, Small Causes Court, and Thane

Court, Mumbai, in relation to recovery of monies and eviction of premises, involving a total claim amount of Rs. 0.83 million.

1. There are 6 consumer cases filed against UMIL in relation to deficiency of services, replacement

of car and recovery of monies, involving a total claim amount of Rs. 2.89 million. 3. There is 1 case filed against UMIL in relation defect in vehicle in respect of which the amount of

claim cannot be quantified. There are 6 labour disputes pending against UMIL, 3 before the Industrial Court, (Mumbai) and 3 before the Industrial Court, (Ratnagiri), out of which 2 disputes involve a total claim amount of Rs. 2.5 million. In respect of 4 disputes, the amount of claims cannot be quantified.

Cases filed by UMIL

There are 2 civil cases filed by UMIL in relation to recovery of monies involving a total claim amount of Rs. 1.45 million..

Tax related matters

There is 1 dispute against UMIL pending before the Income Tax Appellate Tribunal, Mumbai in relation to income tax matters (disallowance of bad debts and VRS expenses) involving a claim amount of Rs. 7.21 million.

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GOVERNMENT APPROVALS

We have received the necessary consents, licenses, permissions and approvals from the government and various governmental agencies required for our present business and except as mentioned below, no further approvals are required for carrying on our present business. Approvals for the Issue 1. In-principle approval from the National Stock Exchange dated [•]; 2. In-principle approval from the Bombay Stock Exchange dated [•].

Approvals to carry on our Business

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

Labour License in relation to construction of road at 6 laning of Bangalore- Hyderabad

28/2002-C1 December 22, 2005

January 21, 2007

Labour Licence under Section 12(1) of the Contract (Regulation and Abolition) Act, 1970

Licensing Officer, Bangalore

Labour License in relation to Koldam Project, Bilaspur, Himachal Pradesh

LO/MK/ /962/05 March 24, 2006

March 31, 2007

Labour License under Section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970

Licensing Officer, Himachal Pradesh

Labour License in relation to Project of four Laning of NH-1, Kancheepuram

LH/144/2005-D3 August 29, 2005

August 29, 2006

August 28, 2007

Labour License under Section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970

Licensing Officer and Assistant Labour Officer, Chennai

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Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

Labour License in relation to Moolchand Underpass Project, New Delhi

CLA/C/196/2205/DLC (S) June 10, 2006

June 9, 2007

Labour License under Section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970

Licensing Officer, New Delhi

Labour License for Harihar site in Karnataka

ALCD:CLA:LCN 01-2005-06

July 12, 2005

July 11, 2007

Labour License under Section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970

Licensing Officer, Karnataka

Labour License in relation to Sone River Project, Patna

L46(38)/2003/ALC-I June 6, 2006

June 9, 2007

Labour License under Section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970 for not more than 300 workmen on any given day

Regional Labour Commissioner, Patna

Labour License in relation to construction of bridge flyover at Khopa, Nagpur

536/D-1/2006 December 31, 2006

December 31, 2007

Labour License under Section 12(1) of the Contract Labour (Regulation

Licensing Officer, Nagpur

351

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

and Abolition) Act, 1970 for not more than 150 workmen on any given day

Labour License in relation to GPPL Pipapavav Project

30/06 May 31, 2006

May 30, 2007

Labour License under Section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970 for not more than 150 workmen on any given day

Licensing Officer, Gujarat

Labour License in relation to construction activities in MTF area, Jamnagar

ALC/ADP/L:24 B/2006 August 11, 2006

August 10, 2007

Labour License under Section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970 for not more than 3,000 employees on any given day

Licensing Officer and Assistant Labour Commissioner, Adipur (Kutch)

Labour License in relation to doing work for four landing of NH- 4, KM 340 to 404 in establishment of National Highway Authority of India, Karnataka

4/2003-A/H August 23, -2006

August 21, -2007

Labour License under section 8(1) of the interstate migrant workman (Regulation of

Assistant Labour Commissioner, Hubli

352

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

Employment and Conditions of Service) Act, 1979 for not more than 13 workmen on any given day

Labour License in relation to Hubli- Haveri rd project- construction of NH-4 Hubli Haveri Road

93/2001-AH July 24, 2006

September -23, 2007

Labour License under section 8(1) of the interstate migrant workman (Regulation of Employment and Conditions of Service) Act, 1979 for not more than 13 workmen on any given day

Assistant Labour Commissioner, Hubli

Labour License for construction of Viaduct and 4 stations on Vishwavidyalay- Jahangirpuri Corridor, New Delhi

ALC-II/46 (07)/2006 February 21, 2006

February 20, 2007

Labour License under section 8(1) of the interstate migrant workman (Regulation of Employment and Conditions of Service) Act, 1979 for not more than 500 workmen on any given day

Regional Labour Commissioner, New Delhi

353

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

Labour License for Chenab River Project

40/L-40/2004-AJK August 31, 2006

September 21, 2007

Labour License under section 8(1) of the interstate migrant workman (Regulation of Employment and Conditions of Service) Act, 1979 for not more than 200 workmen on any given day

Assistant Labour Commissioner, Jammu

Labour license in relation to work in Udhampur, Jammu

46(L-1) 2006/ACH/JK April 27, 2006

April 26, 2007

Section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970

Assistant Labour Commissioner, Udhampur

Labour License for G.H.C.L. Virawal (Gujarat)

119736 May 18, 2006

May 22, 2006

May, 21, 2007

Section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970

Assistant Commissioner, Junaghadh

Labour License in relation to project in Trichur, Chennai

M.46/(264)06-B2 September 18, 2006

September 17, 2007

Section 12(1) of the Contract Labour (Regulation and Abolition) Act, 1970

Licensing Officer, Trichur

Certificate of Registration in relation to the Sone River Project

BCWR/3/2005- ALC-I April 25, 2003

April 24, 2007

Certificate of Registration under sub section 3 of Section 7 of the Building and Other

Regional Labour Commissioner (Central), Patna

354

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

Construction workers (Regulation of Employment and Conditions of Service Act) 1990

Certificate of Registration under Assam Value Added Tax Rules, 2005

18660066712 June 19, 2006

- Value Added tax

Assistant Commissioner of Taxes, Guwahati (Unit D)

Certificate of Registration as dealer under Central Sales Tax (Registration and Turnover) Rules, 1957 (Assam)

GWD/CST/2932 March 31, 2006

Until cancelled

Central Sales Tax

Assistant Commissioner of Taxes, Guwahati (Unit D)

Certificate of Registration under Assam Entry Rules, 2001

GWD/ETX/0026 July 12, 2006

- Entry Tax Assistant Commissioner of Taxes, Guwahati, Unit-D

Certificate of Registration under Maharashtra Value Added Tax Act, 2002

27270000333V April 1, 2006

- Sales Tax/Value Added Tax

Department of Sales Tax, Government of Maharashtra

Certificate of Registration under the Central Sales Tax (Registration and Turnover) Rules, 1957 (Maharashtra)

27270000333C April 1, 2006

- Central sales Tax

Department of Sales Tax, Government of Maharashtra

Certificate of Registration under Andhra Pradesh Value Added Tax, 2005

28350106430 April 1, 2003

- Value Added Tax

Commercial-al Tax Officer, China Waltair Circle, Vishakhapatnam

Certificate of 28350106430 April 1, - Central Commercial-

355

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

Registration under he Central Sales Tax (Registration and Turnover) Rules 1957 (Andhra Pradesh)

2003 Sales Tax al Tax Officer, China Waltair Circle, Vishakhapatnam

Certificate of Registration under Section 19 of Bihar Value Added Tax Ordinance, 2005

10240639007 April 1, 2005

- Value Added Tax

Assistant Commissi-oner of Commercial Taxes, Sasaram Circle, Sasaram

Certificate of Registration under Central Sales Tax (Registration and Turnover Rules), 1957 (Bihar)

10240639104

April 1, 2005

- Central Sales Tax

Assistant Commissi-oner of Commercial Taxes, Sasaram Circle, Sasaram

Certificate of Registration under section 6 of Jammu and Kashmir General Sales Tax Act, 1962 (in the name of M/s. Chenab Bridge Project Undertaking)

119429/GST

January 18, 2005

January 17, 2010

Sales Tax Assessing Officer, Udhampur

Certificate of TIN Registration under Jammu and Kashmir General Sales Tax Act, 1962 (in the name of M/s. Chenab Bridge Project Undertaking)

01911190406 - - Sales Tax Assessing Authority, Udhampur

Certificate of Registration under section 6 of Jammu and Kashmir General Sales Tax Act, 1962

119494/GST

November 30, 2005

November 29, 2010

Sales Tax Assessing Authority, Udhampur

356

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

(in the name of the Company)

Certificate of Registration under Tamil Nadu General Sales Tax Act 1959

1101044/97-98

September 12, 1997

- Sales Tax Commercial Tax Officer, Chennai

Certificate of Registration under Tamil Nadu Value Added Tax Act, 2006

3326110144 January 1, 2007

- Value Added Tax

Department of Commercial Taxes, Tamil Nadu

Certificate of Registration under the Central Sales Tax (Registration and Turnover) Rules 1957 (in the name of M/s. Chenab Bridge Project Undertaking) (Jammu and Kashmir)

5190402/CST (Central) January 18, 2005

Until cancelled

Central Sales Tax

Assessing Officer, Udhampur

Certificate of Registration under Central Sales Tax (Registration and Turnover Rules) 1957 (in the name of the Company)

01231190780 November 30, 2005

Until cancelled

Sales Tax Assessing Officer, Udhampur

Certificate of Registration under Delhi Value Added Tax Act,2004

07670255844 April 1, 2005

- Sales Tax/Value Added Tax

Department of Sales Tax, Government of Delhi

Certificate of Registration under Central Sales Tax Act, 1957 (Delhi)

07670255844 - - Central Sales Tax

Department of Sales Tax, Government of Delhi

Certificate of Registration under Goa Value Added Tax Act, 2005

30780305650 November 29, 2006

- Sales Tax/Value Added Tax

Commercial Tax Officer, Mapusa

Certificate of B/CST/5637 Novemb - Central Commercial

357

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

Registration under Central Sales Tax (Registration and Turnover) Rules, 1957 (Goa)

er 29, 2006

Sales Tax Tax Officer, Mapusa

Certificate of Registration under Gujarat Value Added Tax Act, 2003

24210700104 April 1, 2006

- Value Added Tax

Commercial Tax Officer, Bharuch

Certificate of Registration under Central Sales Tax (Registration and Turnover) Rules, 1957 (Gujarat)

24710700104 July 1, 2002

- Central Sales Tax

Commercial Tax Officer, Bharuch

Certificate of Registration under Himachal Pradesh General Sales Tax Rules, 1970,

BLP-GST-3097

April 11, 2005

Until cancelled

Sales Tax/Value Added Tax

Assessing Officer, Bilaspur

Certificate of Registration under Central Sales Tax (Registration and Turnover) Rules, 1957 (Himachal Pradesh)

CST-3092 (Central) April 11, 2005

Until cancelled

Central Sales Tax

Assessing Officer, Bilaspur

Certificate of Registration under West Bengal Value Added Tax Act, 2003

19670047031 April 1, 2003

- Value Added Tax

Commercial Tax Department, West Bengal

Certificate of Registration under Central Sales Tax Act, 1957 (West Bengal)

19670047225 April 1, 2003

- Central Sales Tax

Commercial Tax Department, West Bengal

Certificate of Registration under Kerala Value Added Tax Act, 2003

32072033204

- - Sales Tax/Value Added Tax

Commercial Tax Officer, Ernakulam

Certificate of 0720C003320 - - Central Commercial

358

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

Registration under Central Sales Tax Act, 1957 (Kerala)

Sales Tax Tax Officer, Ernakulam

Certificate of Registration under of the Karnataka Value Added Tax Act, 2003

29830087001 April 1, 2003

- Sales Tax/Value Added Tax

Registering Authority, Karnataka

Certificate of Registration under Central Sales Tax Act, 1957 (Karnataka)

30773908 February 23, 1996

- Central Sales Tax

Assistant Commissioner of Commercial Taxes, Mangalore

Certificate of Registration under Central Sales Tax (Registration and Turnover) Rules, , 1957 (Tamil Nadu)

718816 September 12, 1997

- Central Sales Tax

Department of Commercial Taxes, Chennai

Certificate of Registration under West Bengal Sales Tax Act, 1994

19670047128

April 1, 2003

- Sales Tax Commercial Tax Department, West Bengal

LICENCES FOR EXPLOSIVES License to Possess Explosives and use subject for use under the provisions of Explosives Act, 1884 and rules made thereunder. (With respect to premises situated at survey 52, village Sangaldan, Tehsil Gool, Udhampur, Jammu and Kashmir)

E/HQ/JK/22/52 (E37592) October 9, 2006

August 14, 2006

March 31, 2008

Chief Controller of Explosives, Nagpur

License to Possess Explosives and use subject for use under the

P/SC/KA/14/1133 (P34362) July 14, 2003

June 21, 2006

December 31, 2007

Joint Chief Controller of Explosives, Chennai

359

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

provisions of Explosives Act, 1884 and rules made thereunder. (Renewal) (Existing petroleum/service station/consumer pump at Solur Vill, Devanholi Tal, s.No. 12/3, Bangalore)

CONSENT/APPROVALS Consent for operation of the plant under section 21 of the Air (Prevention and Control of Pollution) Act, 1981. (Description of chimney: Attached to 160 TPH Hot Mixing Plant Attached to 40 KVA D.G. Set Attached to 125 KVA D.G. Set 200 TPH Crusher Section Attached to 600 KVA D.G. Set-2 Nos.)

106/KSPCB/EO/BNG(N)/INR-120028/DEO/AEO-2/APC/2006-2007/2656 September 2, 2006

September 2, 2006

June 30, 2007

Environmental Officer, Karnataka State Pollution Control Board

CERTIFICATION

Certificate of Recognition, according status of Two Star Export House to the Company

No. B-001059 September 7, 2006

April 1, 2006

March 31, 2009

Company has been accorded the status of Two Star Export House in accordance with the provisions

Government of India, Ministry of Commerce and Industry (Office of the Joint Director General of Foreign Trade)

360

Validity Period Name of License/Registrati

on Authority

Number and Date Of Registration/License

Fron To

Purpose Granting Authority

of the Foreign Trade Policy, 2004-09

361

OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the Issue The Board has, pursuant to resolution passed at its meeting held on November 28, 2006, authorised the Issue subject to the approval by the shareholders of the Company under Section 81(1A) of the Companies Act.

The shareholders have authorised the Issue by a special resolution in accordance with Section 81(1A) of the Companies Act, passed at the Extra-Ordinary General Meeting of the Company held on December 22, 2006 at Mumbai.

Prohibition by SEBI The Company, the Directors, the Promoters, Directors or the person(s) in control of the Promoters, the Company’s subsidiaries and affiliates and companies with which the Directors are associated with as directors have not been prohibited from accessing or operating in capital markets under any order or direction passed by SEBI. Eligibility for the Issue We are eligible for the Issue as per Clause 2.2.2 of the SEBI Guidelines as explained under Clause 2.2.2 of the SEBI Guidelines which states as follows:

“2.2.2 An unlisted company not complying with any of the conditions specified in Clause 2.2.1 may make

an initial public offering (IPO) of equity shares or any other security which may be converted into or

exchanged with equity shares at a later date, only if it meets both the conditions (a) and (b) given below:

(a) (i) The issue is made through the book-building process, with at least 50% of the issue size

being allotted to the Qualified Institutional Buyers (QIBs), failing which the full

subscription monies shall be refunded.

OR

(a)(ii) The “project” has at least 15% participation by Financial Institutions/ Scheduled

Commercial Banks, of which at least 10% comes from the appraiser(s). In addition to

this, at least 10% of the issue size shall be allotted to QIBs, failing which the full

subscription monies shall be refunded

AND

(b) (i) The minimum post-issue face value capital of the company shall be Rs. 10 crores.

OR

(b) (ii) There shall be a compulsory market-making for at least 2 years from the date of listing of

the shares , subject to the following:

(a) Market makers undertake to offer buy and sell quotes for a minimum depth of 300 shares;

(b) Market makers undertake to ensure that the bid-ask spread (difference between

quotations for sale and purchase) for their quotes shall not at any time exceed 10%;

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(c) The inventory of the market makers on each of such stock exchanges, as of the date of

allotment of securities, shall be at least 5% of the proposed issue of the company.)”

We are an unlisted company not complying with the conditions specified in Clause 2.2.1 of the SEBI Guidelines and are therefore required to meet both the conditions detailed in clause 2.2.2(a) and clause 2.2.2(b) of the SEBI Guidelines.

• We are complying with Clause 2.2.2(a)(i) of the SEBI Guidelines and at least 60% of the Net Issue are proposed to be Allotted to QIBs (in order to comply with the requirements of Rule 19(2)(b) of the SCRR) and in the event we fail to do so, the full subscription monies shall be refunded to the Bidders.

• We are complying with the second proviso to Clause 11.3.5(i) of the SEBI Guidelines and Non-Institutional Bidders and Retail Individual Bidders will be allocated up to 10% and 30% of the Net Issue respectively.

• We are also complying with Clause 2.2.2(b)(i) of the SEBI Guidelines and the post-issue face value capital of the Company shall be Rs. 874,650,000 which is more than the minimum requirement of Rs. 10 crore (Rs. 100 million).

Hence, we are eligible for the Issue under Clause 2.2.2 of the SEBI Guidelines.

Further, in accordance with Clause 2.2.2A of the SEBI Guidelines, we shall ensure that the number of prospective allottees to whom the Equity Shares will be Allotted will be not less than 1,000. Further, the Issue is subject to the fulfilment of the following conditions as required by Rule 19(2)(b) SCRR:

• A minimum 2,000,000 Equity Shares (excluding reservations, firm Allotments and promoters contribution) are offered to the public;

• The Net Issue size, which is the Issue Price multiplied by the number of Equity Shares offered to the public, is a minimum of Rs. 1,000 million; and

• The Issue is made through the Book Building method with allocation of 60% of the Net Issue size to QIBs as specified by SEBI.

DISCLAIMER CLAUSE AS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT RED HERRING PROSPECTUS TO SEBI SHOULD NOT, IN ANY WAY, BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT RED HERRING PROSPECTUS. THE BOOK RUNNING LEAD MANAGER, ENAM FINANCIAL CONSULTANTS PRIVATE LIMITED, CLSA INDIA LIMITED, SBI CAPITAL MARKETS LIMITED, JM MORGAN STANLEY PRIVATE LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000 AS FOR THE TIME BEING IN FORCE. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING AN INVESTMENT IN THE PROPOSED ISSUE.

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IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT RED HERRING PROSPECTUS, THE THE BOOK RUNNING LEAD MANAGER AND THE CO BOOK RUNNING LEAD MANAGERS ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE BOOK RUNNING LEAD MANAGER AND CO BOOK RUNNING LEAD MANAGERS, ENAM FINANCIAL CONSULTANTS PRIVATE LIMITED, CLSA INDIA LIMITED, JM MORGAN STANLEY PRIVATE LIMITED AND SBI CAPITAL MARKETS LIMITED, HAVE FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED JANUARY 8, 2007 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992 WHICH READS AS FOLLOWS: “(I) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIALS, MORE PARTICULARLY REFERRED TO IN THE ANNEXURE, IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED HERRING PROSPECTUS PERTAINING TO THE SAID ISSUE. (II) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT: A) THE DRAFT RED HERRING PROSPECTUS FORWARDED TO SEBI IS IN

CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;

B) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO

THE GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

C) THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE

TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE.

(III) BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATIONS ARE VALID. (IV) WHEN UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS. (V) WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR INCLUSION OF ITS SECURITIES AS PART OF PROMOTERS CONTRIBUTION SUBJECT TO LOCK-IN AND THE SECURITIES PROPOSED TO FORM PART OF THE PROMOTERS CONTRIBUTION SUBJECT TO LOCK-IN, WILL NOT BE DISPOSED/SOLD/TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH THE SEBI TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT RED HERRING PROSPECTUS.” All legal requirements pertaining to the Issue will be complied with at the time of filing of the Red Herring

364

Prospectus with the RoC in terms of section 60B of the Companies Act. All legal requirements pertaining to the issue will be complied with at the time of registration of the Prospectus with the RoC in terms of section 56, section 60 and section 60B of the Companies Act. The filing of the Draft Red Herring Prospectus does not, however, absolve the Company from any liabilities under section 63 and section 68 of the Companies Act or from the requirement of obtaining such statutory and other clearances as may be required for the purpose of the proposed Issue. SEBI further reserves the right to take up at any point of time, with the Book Running Lead Manager and Co Book Running Lead Managers, any irregularities or lapses in the Draft Red Herring Prospectus. Disclaimer from the Company, the BRLM and the CBRLMs Investors that bid in the Issue will be required to confirm and will be deemed to have represented to the Company, and the Underwriters and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Equity Shares of the Company and will not Issue, sell, pledge or transfer the Equity Shares of the Company to any person who is not eligible under applicable laws, rules, The Company, the Directors, the BRLM and the CBRLMs accept no responsibility for statements made otherwise than in this Draft Red Herring Prospectus or in the advertisements or any other material issued by or at instance of the above mentioned entities and anyone placing reliance on any other source of information, including our website, www.afcons.com, would be doing so at his or her own risk.

The BRLM and the CBRLMs accept no responsibility, save to the limited extent as provided in the Memorandum of Understanding entered into among the BRLM, the CBRLMs and the Company dated January 8, 2007 and the Underwriting Agreement to be entered into among the Underwriters and the Company. All information shall be made available by the Company, the BRLM and the CBRLMs to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road show presentations, in research or sales reports or at bidding centres etc. Neither the Company nor the Syndicate is liable to the Bidders for any failure in downloading the Bids due to faults in any software/hardware system or otherwise.

Disclaimer in Respect of Jurisdiction This Issue is being made in India to persons resident in India (including Indian nationals resident in India who are majors, HUFs, companies, corporate bodies and societies registered under the applicable laws in India) and authorised to invest in shares, Mutual Funds, Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission), or trusts under the applicable trust law and who are authorised under their constitution to hold and invest in shares, permitted insurance companies and pension funds and to permitted Non-Residents including Eligible NRIs, FIIs and eligible foreign investors. This Draft Red Herring Prospectus does not, however, constitute an invitation to subscribe to Equity Shares Issued hereby in any other jurisdiction to any person to whom it is unlawful to make an Issue or invitation in such jurisdiction. Any person into whose possession this Draft Red Herring Prospectus comes is required to inform himself or herself about and to observe, any such restrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of appropriate court(s) in Mumbai only. No action has been or will be taken to permit a public issuing in any jurisdiction where action would be required for that purpose, except that the Draft Red Herring Prospectus had been filed with SEBI for observations. Accordingly, the Equity Shares, represented thereby may not be Issued or sold, directly or indirectly, and this Draft Red Herring Prospectus may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this Draft

365

Red Herring Prospectus nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as of any time subsequent to this date. The Equity Shares have not been and will not be registered under the U.S. Securities Act 1933, as amended (the “Securities Act”) or any state securities laws in the United States and may not be Issued or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S of the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Disclaimer clause of the BSE BSE has given vide its letter dated [●], permission to us to use BSE’s name in the Red Herring Prospectus as one of the stock exchanges on which our securities are proposed to be listed. BSE has scrutinised the Draft Red Herring Prospectus for its limited internal purpose of deciding on the matter of granting the aforesaid permission to us. BSE does not in any manner:

• Warrant, certify or endorse the correctness or completeness of any of the contents of the Draft Red Herring Prospectus; or

• Warrant that this Company’s securities will be listed or will continue to be listed on BSE; or

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

and it should not for any reason be deemed or construed to mean that the Draft Red Herring Prospectus has been cleared or approved by BSE. Every Person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against BSE whatsoever by reason of any loss which may be suffered by such Person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever. Disclaimer clause of the NSE As required, a copy of the Draft Red Herring Prospectus has been submitted to NSE. NSE has given in its letter no. [●]dated [●], 2006, permission to us to use NSE’s name in the Red Herring Prospectus as one of the stock exchanges on which our securities are proposed to be listed, The NSE has scrutinised the Draft Red Herring Prospectus for its limited internal purpose of deciding on the matter of granting the aforesaid permission to us. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construed to mean that the Draft Red Herring Prospectus has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of the Draft Red Herring Prospectus; nor does it warrant that our securities will be listed or will continue to be listed on the NSE; nor does it take any responsibility for the financial or other soundness of the Company, its promoters, its management or any scheme or project of this Company. Every Person who desires to apply for or otherwise acquires any of our securities may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against NSE whatsoever by reason of any loss which may be suffered by such Person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever. Filing A copy of this Draft Red Herring Prospectus has been filed with SEBI at SEBI Bhavan, G Block, 3rd Floor, Bandra Kurla Complex, Bandra (E),Mumbai 400 051.

366

A copy of the Red Herring Prospectus, along with the documents required to be filed under Section 60B of the Companies Act, will be delivered for registration to the RoC and a copy of the Prospectus required to be filed under Section 60 of the Companies Act will be delivered for registration with RoC situated at Mumbai. Listing Applications have been made to the BSE and the NSE for permission for listing of the Equity Shares being issued through this Draft Red Herring Prospectus. If the permission to deal in and for an official quotation of the Equity Shares is not granted by any of the Stock Exchanges, the Company shall forthwith repay, without interest, all moneys received from the applicants in pursuance of this Draft Red Herring Prospectus. If such money is not repaid within eight days after the Company becomes liable to repay it (i.e. from the date of refusal or within 15 days from the date of Bid/Issue Closing Date, whichever is earlier), then the Company shall, on and from expiry of 8 days, be liable to repay the money, with interest at the rate of 15% per annum on application money, as prescribed under Section 73 of the Companies Act. The Company shall ensure that all steps for the completion of the necessary formalities for listing and commencement of trading at both the Stock Exchanges mentioned above are taken within seven working days of finalisation of the basis of allotment for the Issue. Impersonation Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Companies Act, which is reproduced below: “Any person who: (a) Makes in a fictitious name, an application to a company for acquiring or subscribing for,

any shares therein, or (b) Otherwise induces a company to allot, or register any transfer of shares, therein to him, or

any other person in a fictitious name shall be punishable with imprisonment for a term which may extend to five years.” Consents Consents in writing of: (a) the Directors, the Company Secretary and Compliance Officer, the auditors, the legal advisors, the Bankers to the Issue; and (b) the Book Running Lead Manager, the Co Book Running Lead Managers, the Syndicate Members, the Escrow Collection Banks and the Registrar to the Issue to act in their respective capacities, have been obtained and would be filed along with a copy of the Red Herring Prospectus with the RoC as required under Sections 60 and 60B of the Companies Act and such consents have not been withdrawn up to the time of delivery of the Draft Red Herring Prospectus for registration with the RoC. In accordance with the Companies Act, 1956 and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000, CC Chokshi & Co., and JC Bhatt Chartered Accountants, the Company’s Auditors have given their written consent to the inclusion of their report in the form and context in which it appears in the Draft Red Herring Prospectus and such consent and report has not been withdrawn up to the time of delivery of the Draft Red Herring Prospectus for registration with the RoC.

Expert Opinion We have not obtained any expert opinions.

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Issue Related Expenses The expenses of this Issue include, among others, underwriting and management fees, selling commission, printing and distribution expenses, legal fees, statutory advertisement expenses and listing fees. The estimated expenses of the Issue are as follows:

Activity Expense (in Rs. million)

Expense (% of total expenses)

Expense (% of Issue Size)

Lead management fee and underwriting commissions*

[•] [•] [•]

Advertising and marketing expenses* [•] [•] [•]

Printing and stationery* [•] [•] [•]

Registrar’s fee* [•] [•] [•]

Legal Fees* [•] [•] [•]

Total estimated Issue expenses* [•] [•] [•] * Will be completed after finalisation of the Issue Price.

The listing fee, and all expenses with respect to the Issue will be borne by us. Fees Payable to the Book Running Lead Manager, Co Book Running Lead Managers and Syndicate Members The total fees payable to the Book Running Lead Manager, Co Book Running Lead Managers and the Syndicate Member (including underwriting commission and selling commission) will be as stated in the Engagement Letter with the BRLM and the CBRLMs, a copy of which is available for inspection at the administrative office of the Company located at Afcons House, 16, Shah Industrial Estate, Veera Desai Road, Azad Nagar, P.O. Post Box No. 11978, Andheri (W) Mumbai 400 053. Fees Payable to the Registrar to the Issue The fees payable to the Registrar to the Issue for processing of application, data entry, printing of CAN/refund order, preparation of refund data on magnetic tape, printing of bulk mailing register will be as per the Memorandum of Understanding signed with the Company, a copy of which is available for inspection at the registered office of the Company. The Registrar to the Issue will be reimbursed for all out-of-pocket expenses including cost of stationery, postage, stamp duty and communication expenses. Adequate funds will be provided to the Registrar to the Issue to enable it to send refund orders or allotment advice by registered post/speed post/under certificate of posting. Particulars regarding Public or Rights Issues during the Last Five Years We have not made any public or rights issues during the last five years. Issues otherwise than for Cash

Except as stated in the section entitled “Capital Structure” on page 29 of this Draft Red Herring Prospectus

and “History and Corporate Matters” on page 108 of this Draft Red Herring Prospectus, the Company has

not issued any Equity Shares for consideration otherwise than for cash. Commission and Brokerage paid on Previous Issues of the Equity Shares Since this is the initial public issue of the Company’s Equity Shares, no sum has been paid or has been

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payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for any of the Equity Shares since the Company’s inception.

Companies under the Same Management There is no other company under the same management within the meaning of erstwhile Section 370 (1B) of the Companies Act, other than the subsidiaries, joint ventures, associates, Promoters and Promoter group companies, details of which companies are provided in the sections entitled “History and Certain Corporate Matters” and “Our Promoters” beginning on pages 108 and 139 of this Draft Red Herring Prospectus. Promise vs. Performance – Last Issue of Group/Associate Companies There has been no public issue by any of the Group/Associate Companies in the last five years except as mentioned in the section titled “Our Promoters” beginning on page 139 in this Draft Red Herring Prospectus. Outstanding Debentures or Bonds The Company does not have any outstanding debentures or bonds. Outstanding Preference Shares The Company does not have any outstanding preference shares other than those mentioned in the section titled “Capital Structure” beginning on page 29 in this Draft Red Herring Prospectus.

Stock Market Data of our Equity Shares This being an initial public issue of the Company, the Equity Shares are not listed on any stock exchange. Purchase of Property Except as stated in the “Objects of Issue” in this Draft Red Herring Prospectus, and save in respect of the property purchased or acquired or to be purchased or acquired in connection with the business or activities contemplated by the objects of the Issue, there is no property which has been purchased or acquired or is proposed to be purchased or acquired which is to be paid for wholly or partly from the proceeds of the present Issue or the purchase or acquisition of which has not been completed on the date of this Draft Red Herring Prospectus, other than property, in respect of which:

• The contract for the purchase or acquisition was entered into in the ordinary course of business, nor was the contract entered into in contemplation of the Issue, nor is the issue contemplated in consequence of the contract; or

• The amount of the purchase money is not material. Except as stated in this Draft Red Herring Prospectus, the Company has not purchased any property in which any of its Promoter and/or Directors, have any direct or indirect interest in any payment made thereunder.

Mechanism for Redressal of Investor Grievances The Memorandum of Understanding between the Registrar to the Issue, and the Company will provide for retention of records with the Registrar to the Issue for a period of at least one year from the last date of dispatch of letters of allotment, demat credit, refund orders to enable the investors to approach the Registrar to the Issue for redressal of their grievances. All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such

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as name, address of the applicant, application number, number of shares applied for, amount paid on application, Depository Participant, and the bank branch or collection centre where the application was submitted.

Disposal of Investor Grievances by the Company The Company estimates that the average time required by the Company or the Registrar to the Issue for the redressal of routine investor grievances shall be ten working days from the date of receipt of the complaint. In case of non-routine complaints and complaints where external agencies are involved, the Company will seek to redress these complaints as expeditiously as possible. The Company has appointed Mr. P.R. Rajendran, Company Secretary as the Compliance Officer and he may be contacted in case of any pre-Issue or post-Issue-related problems. He can be contacted at the following address: Afcons Infrastructure Limited Afcons House 16, Shah Industrial Estate, Azad Nagar P.O., Post Box No. 11978, Andheri (W), Mumbai 400 053 Tel: (91 22) 6677 3100

Fax: (91 22) 2673 0047

E-mail: ipo@afcons.com

Changes in Auditors There have been no changes of the auditors in the last three years. Capitalisation of Reserves or Profits Except as disclosed in this Draft Red Herring Prospectus, we have not capitalised our reserves or profits at any time during the last five years. Revaluation of Assets The Company has not revalued its assets in the last five years.

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TERMS OF THE ISSUE

The Equity Shares being issued are subject to the provisions of the Companies Act, our Memorandum and Articles, the terms of this Draft Red Herring Prospectus, the Red Herring Prospectus and the Prospectus, Bid cum Application Form, the Revision Form, the CAN and other terms and conditions as may be incorporated in the allotment advices and other documents/ certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to laws, guidelines, notifications and regulations relating to the issue of capital and listing of securities issued from time to time by SEBI, the Government of India, Stock Exchanges, ROC, RBI and/ or other authorities, as in force on the date of the Issue and to the extent applicable.

Authority for the Issue The Board has, pursuant to resolution passed at its meeting held on November 28, 2006, authorised the Issue subject to the approval by the shareholders of the Company under Section 81(1A) of the Companies Act.

The shareholders have authorised the Issue by a special resolution in accordance with Section 81(1A) of the Companies Act, passed at the Extra-Ordinary General Meeting of the Company held on December 22, 2006 at Mumbai. Ranking of Equity Shares The Equity Shares being issued shall be subject to the provisions of our Memorandum and Articles and shall rank pari-passu with the existing Equity Shares of our Company including rights in respect of dividend. The Allottees in receipt of Allotment of Equity Shares under this Issue will be entitled to dividends and other corporate benefits, if any, declared by the Company after the date of Allotment.

Mode of Payment of Dividend We shall pay dividends to our shareholders as per the provisions of the Companies Act. Face Value and Issue Price The face value of the Equity Shares is Rs. 10 each and the Issue Price is Rs. [●] per Equity Share. At any given point of time there shall be only one denomination for the Equity Shares. Compliance with SEBI Guidelines We shall comply with all disclosure and accounting norms as specified by SEBI from time to time. Rights of the Equity Shareholder Subject to applicable laws, the equity shareholders shall have the following rights:

− Right to receive dividend, if declared;

− Right to attend general meetings and exercise voting powers, unless prohibited by law;

− Right to vote on a poll either in person or by proxy;

− Right to receive offers for rights shares and be allotted bonus shares, if announced;

− Right to receive surplus on liquidation;

− Right of free transferability; and

− Such other rights, as may be available to a shareholder of a listed public company under the Companies Act, the terms of the listing agreement executed with the Stock Exchanges, and our

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Company’s Memorandum and Articles. For a detailed description of the main provisions of our Articles relating to voting rights, dividend, forfeiture and lien and/or consolidation/splitting, please refer to the section titled “Main Provisions of Our Articles of Association” on page 405 of the Red Herring Prospectus.

Market Lot and Trading Lot In terms of Section 68B of the Companies Act, the Equity Shares shall be Allotted only in dematerialised form. As per the SEBI Guidelines, the trading of our Equity Shares shall only be in dematerialised form. Since trading of our Equity Shares is in dematerialised form, the tradable lot is one Equity Share. Allotment in this Issue will be only in electronic form in multiples of [●].

Jurisdiction Exclusive jurisdiction for the purpose of this Issue is with the competent courts/authorities in Mumbai, Maharashtra, India.

Nomination Facility to Investor In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint Bidders, may nominate any one person in whom, in the event of the death of sole Bidder or in case of joint Bidders, death of all the Bidders, as the case may be, the Equity Shares Allotted, if any, shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to Equity Share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale of equity share(s) by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on the prescribed form available on request at the Registered Office of our Company or to the Registrar and Transfer Agents of our Company. In accordance with Section 109B of the Companies Act, any Person who becomes a nominee by virtue of Section 109A of the Companies Act, shall upon the production of such evidence as may be required by the Board, elect either:

• To register himself or herself as the holder of the Equity Shares; or

• To make such transfer of the Equity Shares, as the deceased holder could have made. Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the Equity Shares, until the requirements of the notice have been complied with. Since the Allotment of Equity Shares in the Issue will be made only in dematerialised form, there is no need to make a separate nomination with us. Nominations registered with respective depository participant of the applicant would prevail. If the investors require to change their nomination, they are requested to inform their respective depository participant. Minimum Subscription

If our Company does not receive the minimum subscription of 90% of the Issue, including devolvement of

underwriters within 60 days from the Bid/Issue Closing Date, our Company shall forthwith refund the

entire subscription amount received. If there is a delay beyond 8 days after our Company becomes liable to

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pay the amount, our Company shall pay interest prescribed under Section 73 of the Companies Act.

Further in terms of Clause 2.2.2A of the SEBI Guidelines, we shall ensure that the number of prospective

allottees to whom Equity Shares will be Allotted will not be less than 1,000.

The Equity Shares have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”) or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction.

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ISSUE STRUCTURE

The present Issue of 1,60,65,000 Equity Shares Rs. 10 each, at a price of Rs. [●] for cash aggregating Rs. [●] million is being made through the 100% Book Building Process.

QIBs Non-Institutional

Bidders

Retail Individual

Bidders

Employee Reservation

Portion Number of Equity Shares*

At least 9,446,220 Equity Shares

Minimum of 1,574,370 Equity Shares or Issue Size less allocation to QIB Bidders and Retail Individual Bidders.

Minimum of 4,723,110 Equity Shares or Issue Size less allocation to QIB Bidders and Non-Institutional Bidders.

Up to 321,300 Equity Shares.

Percentage of Issue Size available for allotment/allocation

At least 60% of Net Issue Size being allocated. However, up to 5% of the QIB Portion shall be available for allocation proportionately to Mutual Funds only.

Minimum of 10% of Net Issue or the Net Issue less allocation to QIB Bidders and Retail Individual Bidders.

Minimum of 30% of Net Issue or the Net Issue less allocation to QIB Bidders and Non-Institutional Bidders.

Up to 3,213,000 Equity Shares.

Basis of Allotment/Allocation if respective category is oversubscribed

Proportionate as follows:

(a) [●] Equity Shares shall be allocated on a proportionate basis to Mutual Funds; and

(b) [●] Equity Shares shall be allotted on a proportionate basis to all QIBs including Mutual Funds receiving allocation as per (a) above.

Proportionate Proportionate Proportionate

Minimum Bid Such number of Equity Shares that the Bid Amount exceeds Rs. 100,000.

Such number of Equity Shares that the Bid Amount exceeds Rs. 100,000.

[•] Equity Shares.

[•] Equity Shares.

Maximum Bid Such number of Equity Shares not exceeding the Issue, subject to applicable limits.

Such number of Equity Shares not exceeding the Issue subject to applicable limits.

Such number of Equity Shares whereby the Bid Amount does not exceed Rs. 100,000.

There is no restriction on the maximum Bid Amount.

Mode of Allotment Compulsorily in dematerialised form.

Compulsorily in dematerialised

Compulsorily in dematerialised

Compulsorily in dematerialised

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QIBs Non-Institutional

Bidders

Retail Individual

Bidders

Employee Reservation

Portion form. form. form.

Bid Lot [●] Equity Shares in multiples of [●] Equity Shares

[●] Equity Shares in multiples of [●] Equity Shares

[●] Equity Shares in multiples of [●] Equity Shares

[●] Equity Shares in multiples of [●] Equity Shares

Trading Lot One Equity Share

One Equity Share

One Equity Share

One Equity Share

Who can Apply ** Public financial institutions as specified in Section 4A of the Companies Act, FIIs registered with SEBI, scheduled commercial banks, mutual funds registered with SEBI, multilateral and bilateral development financial institutions, venture capital funds registered with SEBI, foreign venture capital investors registered with SEBI, state industrial development corporations, insurance companies registered with Insurance Regulatory and Development Authority, provident funds (subject to applicable law) with minimum corpus of Rs. 250 million and pension funds with minimum corpus of Rs. 250 million in accordance with applicable law.

NRIs, Resident Indian individuals, HUF (in the name of Karta), companies, corporate bodies, scientific institutions societies and trusts.

Individuals (including HUFs, NRIs) applying for Equity Shares such that the Bid Amount does not exceed Rs. 100,000 in value.

Eligible Employees as on [●]

Terms of Payment QIB Margin Amount shall be payable at the time of submission of Bid cum Application Form to the Syndicate Member.

Margin Amount shall be payable at the time of submission of Bid cum Application Form to the Syndicate Member.

Margin Amount shall be payable at the time of submission of Bid cum Application Form to the Syndicate Member.

Margin Amount shall be payable at the time of submission of Bid cum Application Form to the Syndicate Member.

Margin Amount At least 10% of Bid Amount

Full Bid Amount on bidding

Full Bid Amount on bidding

Full Bid Amount on bidding

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* Subject to valid Bids being received at or above the Issue Price. In terms of Rule 19 (2)(b) of the

SCRR, this is an Issue for less than 25% of the post–Issue capital, therefore, the Issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue shall be allocated to Qualified Institutional Buyers on a proportionate basis out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allottment on a proportionate basis to QIBs and Mutual Funds, subject to valid bids being received from them at or above the Issue Price. If at least 60% of the Net Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% of the Net Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 30% of the Net Issue will be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price. Under-subscription, if any, in any category, except the QIB Portion, would be allowed to be met with spill-over from any other category or combination of categories at the discretion of our Company in consultation with the BRLM, the CBRLMs and the Designated Stock Exchange.

** In case the Bid cum Application Form is submitted in joint names, the investors should ensure that

the demat account is also held in the same joint names and are in the same sequence in which they appear in the Bid cum Application Form.

Bidding/Issue Programme

BID/ISSUE OPENS ON [●]

BID/ISSUE CLOSES ON [●]

Bids and any revision in Bids shall be accepted only between 10 a.m. and 3 p.m. (Indian Standard Time) during the Bidding Period as mentioned above at the bidding centres mentioned on the Bid cum Application Form except that on the Bid /Issue Closing Date, the Bids shall be accepted only between 10 a.m. and 1 p.m. (Indian Standard Time) and uploaded until such time as permitted by the BSE and the NSE on the Bid /Issue Closing Date. The Company reserves the right to revise the Price Band during the Bidding/Issue Period in accordance with SEBI Guidelines. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence, the floor of the Price Band can move up or down to the extent of 20% of the floor of the Price Band advertised at least one day prior to the Bid /Issue Opening Date. In case of revision in the Price Band, the Issue Period will be extended for three additional days after revision of Price Band subject to the Bidding Period/Issue Period not exceeding 10 days. Any revision in the Price Band and the revised Bidding Period/Issue Period, if applicable, will be widely disseminated by notification to the BSE and the NSE, by issuing a press release, and also by indicating the change on the web sites of the BRLM, the CBRLMs and at the terminals of the Syndicate.

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ISSUE PROCEDURE

Book Building Procedure In terms of Rule 19 (2)(b) of the SCRR, this is an Issue for less than 25% of the post–Issue capital of the Company, therefore, the Issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue shall be allocated to Qualified Institutional Buyers on a proportionate basis out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allocation on a proportionate basis to QIBs and Mutual Funds, subject to valid bids being received from them at or above the Issue Price. If at least 60% of the Net Issue cannot be allocated to QIBs, then the entire application money will be refunded forthwith. Further, not less than 10% of the Net Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 30% of the Net Issue will be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price. Bidders are required to submit their Bids through the Syndicate. Further, QIB Bids can be submitted only through Syndicate Members. In case of QIB Bidders, the Company in consultation with the BRLM and the CBRLMs may reject Bids at the time of acceptance of Bid cum Application Form provided that the reasons for rejecting the same shall be provided to such Bidder in writing. In case of Non-Institutional Bidders and Retail Individual Bidders and Employee Reservation Portion, our Company will have a right to reject the Bids only on technical grounds. Investors should note that allotment of Equity Shares to all successful Bidders will only be in the dematerialised form. Bidders will not have the option of getting allotment of the Equity Shares in physical form. The Equity Shares on allotment shall be traded only in the dematerialised segment of the Stock Exchanges.

Bid cum Application Form Bidders shall only use the specified Bid cum Application Form bearing the stamp of a member of the Syndicate for the purpose of making a Bid in terms of this Draft Red Herring Prospectus. The Bidder shall have the option to make a maximum of three Bids in the Bid cum Application Form and such options shall not be considered as multiple Bids. Upon the allocation of Equity Shares, dispatch of the CAN, and filing of the Prospectus with the ROC, the Bid cum Application Form shall be considered as the Application Form. Upon completing and submitting the Bid cum Application Form to a member of the Syndicate, the Bidder is deemed to have authorised our Company to make the necessary changes in the Red Herring Prospectus and the Bid cum Application Form as would be required for filing the Prospectus with the ROC and as would be required by ROC after such filing, without prior or subsequent notice of such changes to the Bidder. The prescribed colour of the Bid cum Application Form for various categories is as follows:

Category Colour of Bid cum Application Form

Indian public, NRIs applying on a non repatriation basis [●]

Non-Residents, Eligible NRIs, FVCIs, FIIs etc applying on a repatriation basis

[●]

Eligible Employees [●]

Who can Bid?

• Indian nationals resident in India who are majors in single or joint names (not more than three);

• Hindu Undivided Families or HUFs, in the individual name of the Karta. The Bidder should

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specify that the Bid is being made in the name of the HUF in the Bid cum Application Form as follows: “Name of Sole or First bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the Karta”. Bids by HUFs would be considered at par with those from individuals;

• Companies, corporate bodies and societies registered under the applicable laws in India and authorised to invest in the equity shares;

• Mutual Funds;

• Indian Financial Institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI regulations and the SEBI Guidelines and regulations, as applicable;

• Venture Capital Funds registered with SEBI;

• Foreign Venture Capital Investors registered with SEBI;

• State Industrial Development Corporations;

• Trusts/societies registered under the Societies Registration Act, 1860, as amended, or under any other law relating to Trusts/societies and who are authorised under their constitution to hold and invest in equity shares;

• Eligible NRIs on a repatriation basis or a non-repatriation basis subject to applicable laws;

• FII registered with SEBI, on a repatriation basis;

• Scientific and/or Industrial Research Organisations authorised to invest in equity shares;

• Insurance Companies registered with Insurance Regulatory and Development Authority, India;

• A permitted by the applicable laws, Provident Funds with minimum corpus of Rs. 250 million and who are authorised under their constitution to hold and invest in equity shares;

• Pension Funds with minimum corpus of Rs. 250 million and who are authorised under their constitution to hold and invest in equity shares; and

• Multilateral and Bilateral Development Financial Institutions.

As per existing RBI regulations, OCBs are prohibited from investing in this Issue.

Note: The BRLM, the CBRLMs and Syndicate Member shall not be entitled to subscribe to this Issue in any manner except towards fulfilling their underwriting obligations. However, associates and affiliates of the BRLM, the CBRLMs and Syndicate Members may subscribe for Equity Shares in the Issue, including in the QIB Portion and Non-Institutional Portion where the allocation is on a proportionate basis.

The information below is given for the benefit of the Bidders. The Company, the BRLM and the CBRLMs are not liable for any amendments or modification or changes in applicable laws or regulations, which may occur after the date of this Draft Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations. Bids by Mutual Funds An eligible Bid by a Mutual Fund shall first be considered for allocation proportionately in the Mutual Fund Portion. In the event that the demand is greater than [●] Equity Shares, allocation shall be made to Mutual Funds proportionately, to the extent of the Mutual Fund Portion. The remaining demand by the

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Mutual Funds shall, as part of the aggregate demand by QIBs, be available for allocation proportionately out of the remainder of the QIB Portion, after excluding the allocation in the Mutual Fund Portion.

As per the current regulations, the following restrictions are applicable for investments by mutual funds:

No mutual fund scheme shall invest more than 10% of its net asset value in the Equity Shares or equity related instruments of any company provided that the limit of 10% shall not be applicable for investments in index funds or sector or industry specific funds. No mutual fund under all its schemes should own more than 10% of any company’s paid-up share capital carrying voting rights. In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple Bids provided that the Bids clearly indicate the scheme concerned for which the Bid has been made. Bids by NRIs 1. Bid cum application forms have been made available for NRIs at our registered /corporate office,

members of the Syndicate of the Registrar to the Issue. 2. NRI applicants may please note that only such applications as are accompanied by payment in free

foreign exchange shall be considered for Allotment. The NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts shall use the form meant for Resident Indians.

Bids by FIIs

As per the current regulations, the following restrictions are applicable for investments by FIIs:

The issue of Equity Shares to a single FII should not exceed 10% of our post-Issue issued capital Equity Shares. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of our total issued capital or 5% of our total issued capital in case such sub-account is a foreign corporate or an individual. Under the current foreign investment policy applicable to us foreign equity participation up to 100% is permissible under the automatic route. As of now, the aggregate FII holding in us cannot exceed 24% of our total issued capital. With the approval of the Board and the shareholders by way of a special resolution, the aggregate FII holding can go up to 100%. However, as on this date, no such resolution has been recommended to the shareholders of the Company for adoption. Subject to compliance with all applicable Indian laws, rules, regulations guidelines and approvals in terms of regulation 15A(1) of the Securities Exchange Board of India (Foreign Institutional Investors) Regulations 1995, as amended, an FII or its sub account may issue, deal or hold, off shore derivative instruments such as Participatory Notes, equity-linked notes or any other similar instruments against underlying securities listed or proposed to be listed in any stock exchange in India only in favour of those entities which are regulated by any relevant regulatory authorities in the countries of their incorporation or establishment subject to compliance of “know your client” requirements. An FII or sub-account shall also ensure that no further downstream issue or transfer of any instrument referred to hereinabove is made to any person other than a regulated entity. Bids by SEBI registered Venture Capital Funds and Foreign Venture Capital Investors

As per the current regulations, the following restrictions are applicable for SEBI registered Venture

Capital Funds and Foreign Venture Capital Investors:

The SEBI (Venture Capital) Regulations, 1996 and the SEBI (Foreign Venture Capital Investor) Regulations, 2000 prescribe investment restrictions on venture capital funds and foreign venture capital investors registered with SEBI. Accordingly, whilst the holding by any individual venture capital fund

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registered with SEBI in one company should not exceed 25% of the corpus of the venture capital fund, a Foreign Venture Capital Investor can invest its entire funds committed for investments into India in one company. Further, Venture Capital Funds and Foreign Venture Capital Investors can invest only upto 33.33% of the investible funds by way of subscription to an initial public offer.

Maximum and Minimum Bid Size (a) For Retail Individual Bidders: The Bid must be for a minimum of [●] Equity Shares and in

multiples of [●] Equity Share thereafter, so as to ensure that the Bid Price payable by the Bidder does not exceed Rs. 100,000. In case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Price does not exceed Rs. 100,000. In case the Bid Price is over Rs. 100,000 due to revision of the Bid or revision of the Price Band or on exercise of Cut-off option, the Bid would be considered for allocation under the Non-Institutional Bidders portion. The Cut-off option is an option given only to the Retail Individual Bidders indicating their agreement to Bid and purchase at the final Issue Price as determined at the end of the Book Building Process.

(b) For Other Bidders (Non-Institutional Bidders and QIBs): The Bid must be for a minimum of

such number of Equity Shares such that the Bid Amount exceeds Rs. 100,000 and in multiples of [●] Equity Shares thereafter. A Bid cannot be submitted for more than the Issue Size. However, the maximum Bid by a QIB investor should not exceed the investment limits prescribed for them by applicable laws. Under existing SEBI guidelines, a QIB Bidder cannot withdraw its Bid after the Bid/ Issue Closing Date and is required to pay QIB Margin upon submission of Bid.

In case of revision in Bids, the Non-Institutional Bidders, who are individuals, have to ensure that the Bid Amount is greater than Rs. 1,00,000 for being considered for allocation in the Non-Institutional Portion. In case the Bid Amount reduces to Rs. 1,00,000 or less due to a revision in Bids or revision of the Price Band, Bids by Non-Institutional Bidders who are eligible for allocation in the Retail Portion would be considered for allocation under the Retail Portion. Non-Institutional Bidders and QIBs are not allowed to Bid at ‘Cut-off’.

(c) For Employee Reservation Portion: The Bid must be for a minimum of [●] Equity Shares and in

multiples of [●] Equity Shares thereafter. The maximum Bid in this category by an Eligible Employee cannot exceed the size of the Issue.

Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or regulation or as specified in this Draft Red Herring Prospectus. Information for the Bidders: (a) The Company will file the Red Herring Prospectus with the RoC at least 3 (three) days before the

Bid/Issue Opening Date. (b) The Company, the BRLM and the CBRLMs shall declare the Bid/ Issue Opening Date, Bid/ Issue

Closing Date and Price Band at the time of filing the Red Herring Prospectus with RoC and also publish the same in three widely circulated newspapers (one each in English, Hindi and Marathi). This advertisement, subject to the provisions of Section 66 of the Companies Act shall be in the format prescribed in Schedule XX–A of the SEBI DIP Guidelines, as amended vide SEBI Circular No. SEBI/CFD/DIL/DIP/14/2005/25/1 dated January 25, 2005.

(c) The members of the Syndicate will circulate copies of the Red Herring Prospectus along with the

Bid cum Application Form to potential investors. (d) Any investor (who is eligible to invest in our Equity Shares) who would like to obtain the Red

Herring Prospectus and/ or the Bid cum Application Form can obtain the same from our registered office or from any of the members of the Syndicate and should approach any of the BRLM, the

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CBRLMs or Syndicate Members or their authorised agent(s) to register their bids. (e) The Members of the Syndicate shall accept Bids from the Bidders during the Issue Period in

accordance with the terms of the Syndicate Agreement. (f) The Bids should be submitted on the prescribed Bid cum Application Form only. Bid cum

Application Forms should bear the stamp of the members of the Syndicate. Bid cum Application Forms, which do not bear the stamp of the members of the Syndicate, will be rejected.

(g) The Bidding/ Issue Period shall be for a minimum of three working days and not exceeding seven

working days. In case the Price Band is revised, the revised Price Band and the Bidding/ Issue Period will be published in three national newspapers (one each in English and Hindi) and one Marathi newspaper and the Bidding/ Issue Period may be extended, if required, by an additional three days, subject to the total Bidding/ Issue Period not exceeding 10 working days.

(h) The Price Band has been fixed at Rs.[●] to Rs. [●] per Equity Share of Rs. 10 each, Rs. [●] being

the lower end of the Price Band and Rs. [●] being the higher end of the Price Band. The Bidders can bid at any price with in the Price Band, in multiples of Re. 1 (One).

(i) The Company in consultation with the BRLM and the CBRLMs, reserve the right to revise the

Price Band, during the Bidding Period, in accordance with SEBI Guidelines. The higher end of the Price Band should not be more than 20% of the lower end of the Price Band. Subject to compliance with the immediately preceding sentence, the lower end of the Price Band can move up or down to the extent of 20% of the lower end of the Price Band disclosed in the Red Herring Prospectus.

(j) In case of revision in the Price Band, the Bidding/ Issue Period will be extended for three

additional days after revision of Price Band subject to a maximum of 10 working days. Any revision in the Price Band and the revised Bidding/ Issue Period, if applicable, will be widely disseminated by notification to BSE and NSE, by issuing a public notice in three widely circulated newspapers (one each in English and Hindi) and one Marathi newspaper, and also by indicating the change on the websites of the BRLM and the CBRLMs and at the terminals of the Syndicate Members.

(k) The Company in consultation with the BRLM and the CBRLMs, can finalise the Issue Price

within the Price Band in accordance with this clause, without the prior approval of, or intimation, to the Bidders.

Method and Process of Bidding

(a) Each Bid cum Application Form will give the Bidder the choice to bid for up to three optional

prices (for details refer to the paragraph titled “Bids at Different Price Levels” on page 381 within the Price Band and specify the demand (i.e., the number of Equity Shares Bid for) in each option. The price and demand options submitted by the Bidder in the Bid cum Application Form will be treated as optional demands from the Bidder and will not be cumulated. After determination of the Issue Price, the maximum number of Equity Shares Bid for by a Bidder at or above the Issue Price will be considered for allocation/Allotment and the rest of the Bid(s), irrespective of the Bid Price, will become automatically invalid.

(b) The Bidder cannot bid on another Bid cum Application Form after Bids on one Bid cum

Application Form have been submitted to any member of the Syndicate. Submission of a second Bid cum Application Form to either the same or to another member of the Syndicate will be treated as multiple Bids and is liable to be rejected either before entering the Bid into the electronic bidding system, or at any point of time prior to the allocation or Allotment of Equity Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, the procedure for which is detailed under the paragraph titled “Bids at Different Price Levels and

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Revision of Bids” on page 381. (c) The Members of the Syndicate will enter each Bid option into the electronic bidding system as a

separate Bid and generate a Transaction Registration Slip, (“TRS”), for each price and demand option and give the same to the Bidder. Therefore, a Bidder can receive up to three TRSs for each Bid cum Application Form.

(d) During the Bidding/Issue Period, Bidders may approach the members of the Syndicate to submit

their Bid. Every member of the Syndicate shall accept Bids from all clients / investors who place orders through them and shall have the right to vet the Bids, subject to the terms of the Syndicate Agreement and the Red Herring Prospectus.

(e) Along with the Bid cum Application Form, all Bidders will make payment in the manner

described under the paragraph titled “Terms of Payment and Payment into the Escrow Accounts” on page 388.

Bids at Different Price Levels and Revision of Bids

(a) The Bidder can bid at any price within the Price Band in multiples of Re. 1 (One). The Bidder has

to bid for the desired number of Equity Shares at a specific price. Retail Individual Bidders and Eligible Employees applying for a maximum Bid in any of the bidding options not exceeding Rs. 100,000 may bid at Cut-off Price. However, bidding at Cut-off Price is prohibited for QIB, Non-Institutional Bidders and Eligible Employees bidding in excess of Rs. 100,000 and such Bids shall be rejected.

(b) Retail Individual Bidders and Eligible Employees who bid at the Cut-Off Price agree that they

shall purchase the Equity Shares at any price within the Price Band. Retail Individual Bidders and Eligible Employees bidding at Cut-Off Price shall deposit the Bid Price based on the higher end of the Price Band in the Escrow Account. In the event the Bid Price is higher than the subscription amount payable by the Retail Individual Bidders and Eligible Employees, who Bid at Cut off Price (i.e., the total number of Equity Shares allocated in the Issue multiplied by the Issue Price), the Retail Individual Bidders and Eligible Employees, who Bid at Cut off Price, shall receive the refund of the excess amounts from the Escrow Account.

(c) In case of an upward revision in the Price Band announced as above, Retail Individual Bidders and

Eligible Employees who had bid at Cut-off Price could either (i) revise their Bid or (ii) make additional payment based on the higher end of the Revised Price Band (such that the total amount i.e., original Bid Price plus additional payment does not exceed Rs. 1,00,000, if such Bidder wants to continue to bid at Cut-off Price), with the Syndicate Member to whom the original Bid was submitted. In case the total amount (i.e., original Bid Price plus additional payment) exceeds Rs. 1,00,000 for Retail Individual Bidders the Bid will be considered for allocation under the Non-Institutional Portion in terms of this Draft Red Herring Prospectus. If, however, such Bidder does not either revise the Bid or make additional payment and the Issue Price is higher than the higher end of the Price Band prior to revision, the number of Equity Shares bid for shall be adjusted downwards for the purpose of Allotment, such that the no additional payment would be required from such Bidder and such Bidder is deemed to have approved such revised Bid at Cut-off Price.

(d) In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders

and Eligible Employees who have bid at Cut-off Price could either revise their Bid or the excess amount paid at the time of bidding would be refunded from the Escrow Account.

(e) In the event of any revision in the Price Band, whether upwards or downwards, the minimum

application size shall remain [●] Equity Shares irrespective of whether the Bid Price payable on such minimum application is not in the range of Rs. 5,000 to Rs. 7,000.

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(f) During the Bidding/ Issue Period, any Bidder who has registered his or her interest in the Equity Shares at a particular price level is free to revise his or her Bid within the Price Band using the printed Revision Form, which is a part of the Bid cum Application Form.

(g) Revisions can be made in both the desired number of Equity Shares and the Bid price by using the

Revision Form. Apart from mentioning the revised options in the revision form, the Bidder must also mention the details of all the options in his or her Bid cum Application Form or earlier Revision Form. For example, if a Bidder has Bid for three options in the Bid cum Application Form and he is changing only one of the options in the Revision Form, he must still fill the details of the other two options that are not being revised, in the Revision Form. The members of the Syndicate will not accept incomplete or inaccurate Revision Forms.

(h) The Bidder can make this revision any number of times during the Bidding Period. However, for

any revision(s) in the Bid, the Bidders will have to use the services of the same member of the Syndicate through whom he or she had placed the original Bid.

(i) Bidders are advised to retain copies of the blank Revision Form and the revised Bid must be made

only in such Revision Form or copies thereof. (j) Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft

for the incremental amount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if any, resulting from downward revision of the Bid would be returned to the Bidder at the time of refund in accordance with the terms of the Red Herring Prospectus. In case of QIB Bidders, the members of the Syndicate shall collect the payment in the form of cheque or demand draft for the incremental amount in the QIB Margin Amount, if any, to be paid on account of the upward revision of the Bid at the time of one or more revisions by the QIB Bidders.

(k) When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised

TRS from the members of the Syndicate. It is the responsibility of the Bidder to request for and obtain the revised TRS, which will act as proof of his or her having revised the previous Bid.

Bids and revisions of Bids must be:

(a) Made only in the prescribed Bid cum Application Form or Revision Form, as applicable (White colour for Resident Indians, Blue colour for NRIs and FIIs and applying on repatriation basis, Pink colour for Bidders under Employee Reservation portion).

(b) Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions

contained herein, in the Bid cum Application Form or in the Revision Form. Incomplete Bid cum Application Forms or Revision Forms are liable to be rejected.

(c) For Retail Individual Bidders, the Bid must be for a minimum of [●] Equity Shares and in

multiples of [●] Equity Shares thereafter subject to a maximum Bid Amount of Rs. 100,000. (d) For Non-Institutional Bidders and QIB Bidders, Bids must be for a minimum of such number of

Equity Shares that the Bid Price exceeds or equal to Rs. 100,000 and in multiples of [●] Equity Shares thereafter. Bids cannot be made for more than the Issue Size. Bidders are advised to ensure that a single Bid from them should not exceed the investment limits or maximum number of shares that can be held by them under the applicable laws or regulations.

(e) NRIs for a Bid Price of up to Rs. 100,000 would be considered under the Retail Portion for the

purposes of allocation and Bids for a Bid Price of more than Rs. 100,000 would be considered under Non-Institutional Portion for the purposes of allocation; by other eligible Non Resident Bidders for a minimum of such number of Equity Shares and in multiples of [●] Equity Shares thereafter that the Bid Price exceeds Rs. 100,000.

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(f) Bids by Non Residents, NRIs, FIIs and Foreign Venture Capital Funds registered with SEBI on a

repatriation basis shall be in the names of individuals, or in the names of FIIs but not in the names of minors, OCBs, firms or partnerships, foreign nationals (excluding NRIs) or their nominees.

(g) In single name or in joint names (not more than three, and in the same order as their Depository

Participant details). (h) Thumb impressions and signatures other than in the languages specified in the Eighth Schedule to

the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.

Bids by Eligible Employees

The Bid must be for a minimum of [●] Equity Shares and in multiples of [●] Equity Shares thereafter. Bidders under the Employee Reservation Portion can apply for a maximum of the size of the Issue. The allotment in the Employee Reservation Portion will be on a proportionate basis. Bidders under the Employee Reservation Portion applying for a maximum Bid in any of the bidding options not exceeding Rs. 100,000 may bid-at Cut off Price.

For the purpose of the Employee Reservation Portion, Eligible Employee means permanent employees of the Company incorporated in India who are Indian Nationals, are based in India and are physically present in India on the date of submission of the Bid- cum-Application Form.

Bids under Employee Reservation Portion by Eligible Employees shall be

a) Made only in the prescribed Bid cum Application Form or Revision Form (i.e. Pink colour Form). b) The Bid must be for a minimum of [●] Equity Shares and in multiples of [●] Equity Shares

thereafter. The maximum Bid in this category by an Eligible Employee cannot exceed the size of the Issue.

c) Eligible Employees, as defined above, should mention their Employee Number at the relevant

place in the Bid cum Application Form d) The sole/ first bidder should be Eligible Employees as defined above. e) Only Eligible Employees would be eligible to apply in this Issue under the Employee Reservation

Portion. f) Bids by Eligible Employees will have to bid like any other Bidder. Only those bids, which are

received at or above the Issue Price, would be considered for allocation under this category. g) Eligible Employees who apply or bid for securities of or for a value of not more than Rs. 100,000

in any of the bidding options can apply at Cut-Off. This facility is not available to other Eligible Employees whose minimum Bid Amount exceeds Rs. 100,000.

h) Bid/ Application by Eligible Employees can be made also in the “Net Issue to the Public” and

such bids shall not be treated as multiple bids. i) If the aggregate demand in this category is less than or equal to [●] Equity Shares at or above the

Issue Price, full allocation shall be made to the Eligible Employees to the extent of their demand. j) Under-subscription, if any, in the Employee Reservation Portion will be added back to the Net

Issue to the Public, and the ratio amongst the investor categories will be at the discretion of the

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Company, the BRLM and the CBRLMs. In case of under-subscription in the Net Issue, spill over to the extent of under-subscription shall be permitted from the Employee Reservation Portion.

k) If the aggregate demand in this category is greater than 1,158,790 Equity Shares at or above the

Issue Price, the allocation shall be made on a proportionate basis. For the method of proportionate basis of allocation, refer to para “Basis of Allotment” on page 394 of this Draft Red Herring Prospectus.

l) This is not an issue for sale within the United States of any equity shares or any other security of

the Company. Securities of the Company, including any offering of its equity shares, may not be offered or sold in the United States in the absence of registration under U.S. securities laws or unless exempt from registration under such laws.

Electronic Registration of Bids

(a) The Members of the Syndicate will register the Bids using the on-line facilities of BSE and NSE. There will be at least one on-line connectivity in each city, where a stock exchange is located in India and where Bids are being accepted.

(b) The BSE and NSE will offer a screen-based facility for registering Bids for the Issue. This facility

will be available on the terminals of the Members of the Syndicate and their authorised agents during the Bidding Period. Syndicate Members can also set up facilities for off-line electronic registration of Bids subject to the condition that they will subsequently upload the off-line data file into the on-line facilities for book building on a half hourly basis. On the Bid Closing Date, the Members of the Syndicate shall upload the Bids till such time as may be permitted by the Stock Exchanges. This information will be available with the BRLM and the CBRLMs on a regular basis.

(c) The aggregate demand and price for Bids registered on the electronic facilities of BSE and NSE

will be uploaded on a half hourly basis, consolidated and displayed on-line at all bidding centres and the website of BSE and NSE. A graphical representation of consolidated demand and price would be made available at the bidding centres during the Bidding Period.

(d) At the time of registering each Bid, the members of the Syndicate shall enter the following details

of the investor in the on-line system:

• Name of the investor.

• Investor Category – Individual, Corporate, NRI, FII, or Mutual Fund etc.

• Numbers of Equity Shares bid for.

• Bid price.

• Bid cum Application Form number.

• Whether Margin Amount has been paid upon submission of Bid cum Application Form.

• Depository Participant Identification Number and Client Identification Number of the beneficiary account of the Bidder.

(e) A system generated TRS will be given to the Bidder as a proof of the registration of each of the

bidding options. It is the Bidder’s responsibility to obtain the TRS from the members of the Syndicate. The registration of the Bid by the member of the Syndicate does not guarantee that the Equity Shares shall be allocated/Allotment either by the members of the Syndicate or our Company.

(f) Such TRS will be non-negotiable and by itself will not create any obligation of any kind. (g) In case of QIB Bidders, members of the syndicate also have the right to accept the bid or reject it.

However, such rejection should be made at the time of receiving the bid and only after assigning a

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reason for such rejection in writing. In case on Non-Institutional Bidders and Retail Individual Bidders who Bid, Bids would not be rejected except on the technical grounds listed on page 391.

(h) The permission given by BSE and NSE to use their network and software of the Online IPO

system should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by our Company and/or the BRLM and the CBRLMs are cleared or approved by BSE and NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of the Company, our Promoter, our management or any scheme or project of our Company.

(i) It is also to be distinctly understood that the approval given by BSE and NSE should not in any

way be deemed or construed that this Draft Red Herring Prospectus has been cleared or approved by the BSE and NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Red Herring Prospectus; nor does it warrant that the Equity Shares will be listed or will continue to be listed on the BSE and NSE.

(j) Only bids that are uploaded on the online IPO system of the NSE and BSE shall be considered for

allocation/ Allotment. In case of discrepancy of data between the BSE or the NSE and the members of the Syndicate, the decision of the BRLM and the CBRLMs based on the physical records of Bid Application Forms shall be final and binding on all concerned.

GENERAL INSTRUCTIONS

Do’s:

(a) Check if you are eligible to apply; (b) Read all the instructions carefully and complete the applicable Bid cum Application Form; (c) Ensure that the details about Depository Participant and Beneficiary Account are correct as

Allotment of Equity Shares will be in the dematerialised form only; (d) Ensure that the Bids are submitted at the bidding centres only on forms bearing the stamp of a

member of the Syndicate; (e) Ensure that you have been given a TRS for all your Bid options; (f) Submit revised Bids to the same member of the Syndicate through whom the original Bid was

placed and obtain a revised TRS; (g) Where Bid(s) is/ are for Rs. 50,000/- or more, each of the Bidders, should mention their

Permanent Account Number (PAN) allotted under the IT Act. The copies of the PAN Card or PAN allotment letter should be submitted with the Bid cum Application form. If you have mentioned “Applied for” or “Not Applicable”, in the Bid cum Application Form in the section dealing with PAN number, ensure that you submit Form 60 or 61, as the case may be, together with permissible documents as address proof;

(h) Ensure that the Demographic Details (as defined hereinbelow) are updated, true and correct in all

respects; (i) Ensure that the name(s) given in the Bid cum Application Form is exactly the same as the name(s)

in which the beneficiary account is held with the Depository Participant. In case the Bid cum Application Form is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the Bid cum Application Form.

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Don’ts:

(a) Do not bid for lower than the minimum Bid size; (b) Do not bid/ revise Bid price to less than the lower end of the Price Band or higher than the higher

end of the Price Band; (c) Do not bid on another Bid cum Application Form after you have submitted a Bid to the members

of the Syndicate; (d) Do not pay the Bid Price in cash, by money order or by postal order or by stockinvest; (e) Do not send Bid cum Application Forms by post; instead submit the same to a member of the

Syndicate only; (f) Do not bid at Cut Off Price (for QIB Bidders and Non-Institutional Bidders); (g) Do not fill up the Bid cum Application Form such that the Equity Shares bid for exceeds the Issue

Size and/ or investment limit or maximum number of Equity Shares that can be held under the applicable laws or regulations or maximum amount permissible under the applicable regulations;

(h) Do not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground.

Instructions for Completing the Bid cum Application Form Bidders can obtain Bid cum Application Forms and / or Revision Forms from the members of the Syndicate. Bidder’s Depository Account and Bank Details Bidders should note that on the basis of name of the Bidders, Depository Participant’s name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository the demographic details including address, Bidders bank account details, MICR code and occupation (hereinafter referred to as ‘Demographic Details’). These Bank Account details would be used for giving refunds to the Bidders. Hence, Bidders are advised to immediately update their Bank Account details as appearing on the records of the depository participant. Please note that failure to do so could result in delays in despatch/ credit of refunds to Bidders at the Bidders sole risk and neither the BRLM and the CBRLMs or the Registrar or the Escrow Collection Banks nor the Company shall have any responsibility and undertake any liability for the same. Hence, Bidders should carefully fill in their Depository Account details in the Bid cum Application Form.

IT IS MANDATORY FOR ALL THE BIDDERS TO GET THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION FORM. INVESTORS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE BID CUM APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE BID CUM APPLICATION FORM. These Demographic Details would be used for all correspondence with the Bidders including mailing of the

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CANs/Allocation Advice and printing of Bank particulars on the refund orders or for refunds through electronic transfer of funds, as applicable. The Demographic Details given by Bidders in the Bid cum Application Form would not be used for any other purpose by the Registrar to the Issue. By signing the Bid cum Application Form, the Bidder would be deemed to have authorised the depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. In case of Bidders receiving refunds through electronic transfer of funds, delivery of refund orders/allocation advice/CANs may get delayed if the same once sent to the address obtained from the depositories are returned undelivered. In such an event, the address and other details given by the Bidder in the Bid cum Application Form would be used only to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidders sole risk and neither the Company, the Registrar, Escrow Collection Bank(s) nor the BRLM nor the CBRLMs shall be liable to compensate the Bidder for any losses caused to the Bidder due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories, which matches three parametres, namely, names of the Bidders (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and the beneficiary’s identity, then such Bids are liable to be rejected. The Company in its absolute discretion, reserves the right to permit the holder of the power of attorney to request the Registrar that for the purpose of printing particulars on the refund order and mailing of the refund order/CANs/allocation advice/ refunds through electronic transfer of funds, the Demographic Details given on the Bid cum Application Form should be used (and not those obtained from the Depository of the Bidder). In such cases, the Registrar shall use Demographic Details as given in the Bid cum Application Form instead of those obtained from the depositories. Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and net of bank charges and / or commission. In case of Bidders who remit money through Indian Rupee drafts purchased abroad, such payments in Indian Rupees will be converted into US Dollars or any other freely convertible currency as may be permitted by the RBI at the rate of exchange prevailing at the time of remittance and will be dispatched by registered post or if the Bidders so desire, will be credited to their NRE accounts, details of which should be furnished in the space provided for this purpose in the Bid cum Application Form. The Company will not be responsible for loss, if any, incurred by the Bidder on account of conversion of foreign currency. As per the RBI regulations, OCBs are not permitted to participate in the Issue. There is no reservation for Non Residents, NRIs, FIIs and foreign venture capital funds and all Non Residents, NRI, FII and foreign venture capital funds applicants will be treated on the same basis with other categories for the purpose of allocation. Bids under Power of Attorney In case of Bids made pursuant to a power of attorney or by limited companies, corporate bodies, registered societies, a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the Memorandum of Association and Articles of Association and/or bye laws must be lodged along with the Bid cum Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefor. In case of Bids made pursuant to a power of attorney by FIIs, a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of their SEBI registration certificate must be lodged along with the Bid cum Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any

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reason therefor. In case of Bids made by insurance companies registered with the Insurance Regulatory and Development Authority, a certified copy of certificate of registration issued by Insurance Regulatory and Development Authority must be lodged along with the Bid cum Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefor. In case of Bids made by provident funds with minimum corpus of Rs. 250 million (subject to applicable law) and pension funds with minimum corpus of Rs. 250 million, a certified copy of certificate from a chartered accountant certifying the corpus of the provident fund/ pension fund must be lodged along with the Bid cum Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason thereof. The Company in its absolute discretion, reserve the right to relax the above condition of simultaneous lodging of the power of attorney along with the Bid cum Application form, subject to such terms and conditions that the Company, the BRLM and the CBRLMs may deem fit.

PAYMENT INSTRUCTIONS Escrow Mechanism The Company, and the members of the Syndicate shall open Escrow Accounts with one or more Escrow Collection Bank(s) for the collection of the Bid Amount payable upon submission of the Bid cum Application Form and for amounts payable pursuant to allocation in the Issue. The Escrow Collection Banks will act in terms of the Red Herring Prospectus and the Escrow Agreement. The Escrow Collection Bank (s) for and on behalf of the Bidders shall maintain the monies in the Escrow Account. The Escrow Collection Bank(s) shall not exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Bank(s) shall transfer the funds equivalent to the size of the Issue from the Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue Account with the Banker(s) to the Issue. The balance amount after transfer to the Public Issue Account shall be held for the benefit of the Bidders who are entitled to refunds. Payments of refund to the Bidders shall also be made from the Refund Account are per the terms of the Escrow Agreement and the Draft Red Herring Prospectus. The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been established as an arrangement between the Company, and the members of the Syndicate, the Escrow Collection Bank(s) and the Registrar to the Issue to facilitate collections from the Bidders. Terms of Payment and Payment into the Escrow Accounts Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on allocation/Allotment as per the following terms. 1. Each category of Bidders i.e., QIB Bidders, Non-Institutional Bidders, Retail Individual Bidders

and Eligible Employees, shall provide the applicable Margin Amount, with the submission of the Bid cum Application Form draw a cheque or demand draft for the maximum amount of his/ her Bid in favour of the Escrow Account of the Escrow Collection Bank(s) (for details refer to the paragraph titled “Payment into Escrow Account” on page 389 below) and submit the same to the member of the Syndicate to whom the Bid is being submitted. Bid cum Application Forms accompanied by cash shall not be accepted. The Margin Amount payable by each category of Bidders is mentioned under the section titled “Issue Structure” on page 373. The maximum Bid price has to be paid at the time of submission of the Bid cum Application Form based on the highest bidding option of the Bidder.

2. Where the Margin Amount applicable to the Bidder is less than 100% of the Bid Price, any

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difference between the amount payable by the Bidder for Equity Shares allocated/allotted at the Issue Price and the Margin Amount paid at the time of Bidding, shall be payable by the Bidder no later than the Pay-in-Date, which shall be a minimum period of 2 (two) days from the date of communication of the allocation list to the members of the Syndicate by the BRLM and the CBRLMs. If the payment is not made favouring the Escrow Account within the time stipulated above, the Bid of the Bidder is liable to be cancelled.

3. The payment instruments for payment into the Escrow Account should be drawn in favour of:

• In case of Resident QIB Bidders: “[●]”

• In case of non-resident QIB Bidders: “[●]”

• In case of Resident Bidders: “[●]”

• In case of Non Resident Bidders: “[●]”

• In case of Eligible Employees: “[●]” 4. In case of Bids by NRIs applying on repatriation basis, the payments must be made through Indian

Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on application remitted through normal banking channels or out of funds held in Non-Resident External (NRE) Accounts or Foreign Currency Non-Resident (FCNR) Accounts, maintained with banks authorised to deal in foreign exchange in India, along with documentary evidence in support of the remittance. Payment will not be accepted out of Non-Resident Ordinary (NRO) Account of Non-Resident Bidder bidding on a repatriation basis. Payment by drafts should be accompanied by bank certificate confirming that the draft has been issued by debiting to NRE Account or FCNR Account.

5. In case of Bids by FIIs, the payment should be made out of funds held in Special Rupee Account

along with documentary evidence in support of the remittance. Payment by drafts should be accompanied by bank certificate confirming that the draft has been issued by debiting to Special Rupee Account.

6. Where a Bidder has been allocated a lesser number of Equity Shares than the Bidder has Bid for, the excess amount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Shares allocated\ will be refunded to the Bidder from the Refund Account.

7. On the Designated Date and no later than 15 days from the Bid/ Issue Closing Date, the Escrow Collection Bank shall also refund all amounts payable to unsuccessful Bidders and also the excess amount paid on Bidding, if any, after adjusting for allocation/Allotment to the Bidders.

8. Payments should be made by cheque, or demand draft drawn on any Bank (including a Co-operative Bank), which is situated at, and is a member of or sub-member of the bankers’ clearing house located at the centre where the Bid cum Application Form is submitted. Outstation cheques/bank drafts drawn on banks not participating in the clearing process will not be accepted and applications accompanied by such cheques or bank drafts are liable to be rejected. Cash/ Stockinvest/Money Orders/ Postal orders will not be accepted.

Payment by Stockinvest

In terms of the Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the option to use the stockinvest instrument in lieu of cheques or bank drafts for payment of Bid money has been withdrawn. Hence, payment through stockinvest would not be accepted in this Issue. OTHER INSTRUCTIONS

Joint Bids in the case of Individuals

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Bids may be made in single or joint names (not more than three). In the case of joint Bids, all payments will be made out in favour of the Bidder whose name appears first in the Bid cum Application Form or Revision Form. All communications will be addressed to the First Bidder and will be dispatched to his or her address as per the Demographic Details received from the Depository.

Multiple Bids

A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares required. Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the same. Bid/ Application by Eligible Employees can be made also in the “Net Issue to the Public” and such bids shall not be treated as multiple bids. In this regard, the procedures which would be followed by the Registrar to the Issue to detect multiple applications are given below: 1. All applications with the same name and age will be accumulated and taken to a separate process

file which would serve as a multiple master. 2. In this master, a check will be carried out for the same PAN. In cases where the PAN is different,

the same will be deleted from this master. 3. The Registrar will obtain, from the depositories, details of the applicant’s address based on the DP

ID and Beneficiary Account Number provided in the Bid-cum-Application Form and create an address master.

4. The addresses of all the applications in the multiple master will be strung from the address master.

This involves putting the addresses in a single line after deleting non-alpha and non-numeric characters i.e. commas, full stops, hash etc. Sometimes, the name, the first line of address and pin code will be converted into a string for each application received and a photo match will be carried out amongst all the applications processed. A print-out of the addresses will be taken to check for common names. The applications with same name and same address will be treated as multiple applications.

5. The applications will be scrutinised for DP ID and Beneficiary Account Numbers. In case

applications bear the same DP ID and Beneficiary Account Numbers, these will be treated as multiple applications.

6. Subsequent to the aforesaid procedures, a print out of the multiple master will be taken and the

applications physically verified to tally signatures as also father’s/ husband’s names. On completion of this, the applications will be identified as multiple applications.

In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple Bids provided that the Bids clearly indicate the scheme concerned for which the Bid has been made.

The Company reserves the right to reject, in our absolute discretion, all or any multiple Bids in any or all categories. Permanent Account Number or PAN

Where Bid(s) is/ are for Rs. 50,000 or more, the Bidder or in the case of a Bid in joint names, each of the Bidders, should mention his/ her Permanent Account Number (PAN) allotted under the I.T. Act. The copy of the PAN card or PAN allotment letter is required to be submitted with the Bid-cum-Application Form. Applications without this information and documents will be considered incomplete and are liable to

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be rejected. It is to be specifically noted that Bidders should not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground. In case the Sole/First Bidder and Joint Bidder(s) is/are not required to obtain PAN, each of the Bidder(s) shall mention “Not Applicable” and in the event that the sole Bidder and/or the joint Bidder(s) have applied for PAN which has not yet been allotted each of the Bidder(s) should Mention “Applied for” in the Bid cum Application Form. Further, where the Bidder(s) has mentioned “Applied for” or “Not Applicable”, the Sole/First Bidder and each of the Joint Bidder(s), as the case may be, would be required to submit Form 60 (Form of declaration to be filed by a person who does not have a permanent account number and who enters into any transaction specified in rule 114B), or, Form 61 (form of declaration to be filed by a person who has agricultural income and is not in receipt of any other income chargeable to income tax in respect of transactions specified in rule 114B), as may be applicable, duly filled along with a copy of any one of the following documents in support of the address: (a) Ration Card (b) Passport (c) Driving License (d) Identity Card issued by any institution (e) Copy of the electricity bill or telephone bill showing residential address (f) Any document or communication issued by any authority of the Central Government, State Government or local bodies showing residential address (g) Any other documentary evidence in support of address given in the declaration. It may be noted that Form 60 and Form 61 have been amended vide a notification issued on December 1, 2004 by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. All Bidders are requested to furnish, where applicable, the revised Form 60 or 61, as the case may be.

UNIQUE IDENTIFICATION NUMBER - MAPIN

Unique Identification Number (“UIN”)

With effect from July 1, 2005, SEBI had decided to suspend all fresh registrations for obtaining UIN and the requirement to contain/ quote UIN under the SEBI MAPIN Regulations/Circulars vide its circular MAPIN/Cir-13/2005. However, in a recent press release dated December 30, 2005, SEBI has approved certain policy decisions and has now decided to resume registrations for obtaining UINs in a phased manner. The press release states that the cut off limit for obtaining UIN has been raised from the existing limit of trade order value of Rs. 100,000 to Rs. 500,000 or more. The limit will be reduced progressively. For trade order value of less than Rs. 500,000 an option will be available to investors to obtain either the PAN or UIN. These changes are, however, not effective as of the date of this Draft Red Herring Prospectus and SEBI has stated in the press release that the changes will be implemented only after necessary amendments are made to the SEBI MAPIN Regulations.

GROUNDS FOR REJECTIONS

In case of QIB Bidders, the Company in consultation with the BRLM and the CBRLMs may reject Bids provided that the reasons for rejecting the same shall be provided to such Bidder in writing. In case of Non-Institutional Bidders and Retail Individual Bidders who Bid, the Company have a right to reject Bids based on technical grounds. Bidders are advised to note that Bids are liable to be rejected inter alia on the following technical grounds:

• Amount paid does not tally with the amount payable for the highest value of Equity Shares bid for;

• Age of First Bidder not given;

• In case of partnership firms, Equity Shares may be registered in the names of the individual partners and no firm as such shall be entitled to apply;

• Bid by persons not competent to contract under the Indian Contract Act, 1872 including minors, insane persons;

• PAN photocopy/PAN communication/ Form 60 or Form 61 declaration along with documentary evidence in support of address given in the declaration, not given if Bid is for Rs. 50,000 or more;

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• GIR number furnished instead of PAN;

• Bids for lower number of Equity Shares than specified for that category of investors;

• Bids at a price less than lower end of the Price Band;

• Bids at a price more than the higher end of the Price Band;

• Bids at Cut Off Price by Non-Institutional and QIB Bidders and Bidders in Employee Reservation Portion bidding in excess of Rs. 100,000

• Bids for number of Equity Shares which are not in multiples of [●];

• Category not ticked;

• Multiple Bids as defined in this Draft Red Herring Prospectus;

• In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant documents are not submitted;

• Bids accompanied by Stockinvest/money order/postal order/cash;

• Signature of sole and / or joint Bidders missing;

• Bid cum Application Forms does not have the stamp of the BRLM, the CBRLMs, or Syndicate Members;

• Bid cum Application Forms does not have Bidder’s depository account details;

• Bid cum Application Forms are not delivered by the Bidders within the time prescribed as per the Bid cum Application Forms, Bid/Issue Opening Date advertisement and the Red Herring Prospectus and as per the instructions in the Red Herring Prospectus and the Bid cum Application Forms;

• In case no corresponding record is available with the Depositories that matches three parametres namely, names of the Bidders (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s account number;

• Bids for amounts greater than the maximum permissible amounts prescribed by the regulations;

• Bids by QIBs not submitted through members of the Syndicate;

• Bids by OCBs;

• Bids by US persons other than “qualified institutional buyers” as defined in Rule 144A of the Securities Act or other than in reliance on Regulation S under the Securities Act; and

• Bids by any persons outside India if not in compliance with applicable foreign and Indian laws. Price Discovery and Allocation (a) After the Bid/Issue Closing Date, the BRLM and the CBRLMs will analyse the demand generated

at various price levels.

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(b) The Company in consultation with the BRLM and the CBRLMs shall finalise the “Issue Price”. (c) The allocation to QIBs will be atleast 60% of the Net Issue and allocation to Non-Institutional and

Retail Individual Bidders will be 10% and 30% of the Net Issue, respectively, on a proportionate basis, in a manner specified in the SEBI Guidelines and this Draft Red Herring Prospectus, in consultation with the Designated Stock Exchange, subject to valid bids being received at or above the Issue Price.

(d) Under-subscription, if any, in the Non-Institutional category and the Retail Individual category

would be met with spill over from any other category at the sole discretion of the Company and the in consultation with the BRLM and the CBRLMs. However, if the aggregate demand by Mutual Funds is less than [●] Equity Shares, the balance Equity Shares available for allocation in the Mutual Fund Portion will first be added to the QIB Portion and be Allotted proportionately to the QIB Bidders. In the event that the aggregate demand in the QIB Portion has been met, undersubscription, if any, would be allowed to be met with spill-over from any other category or combination of categories at the discretion of the Company, in consultation with the BRLM, the CBRLMs and the Designated Stock Exchange.

(e) Under-subscription, if any, in the Employee Reservation Portion will be added back to the Retail

Portion. (f) Allocation to Eligible NRIs, FIIs, foreign venture capital funds registered with SEBI applying on

repatriation basis will be subject applicable law and the terms and conditions stipulated by the RBI.

Signing of Underwriting Agreement and RoC Filing (a) The Company, the BRLM, the CBRLMs and the Syndicate Member shall enter into an

Underwriting Agreement on finalisation of the Issue Price and allocation(s) /Allotment to the Bidders.

(b) After signing the Underwriting Agreement, the Company would update and file the updated Red

Herring Prospectus with RoC, which then would be termed ‘Prospectus’. The Prospectus would have details of the Issue Price, Issue size, underwriting arrangements and would be complete in all material respects.

(c) The Company will file a copy of the Prospectus with the RoC in terms of Section 56, Section 60

and Section 60B of the Companies Act. (d) The Company will issue a statutory advertisement after the filing of the Prospectus with the RoC.

This advertisement, in addition to the information that has to be set out in the statutory advertisement, shall indicate the Issue Price. Any material updates between the date of Red Herring Prospectus and the date of Prospectus will be included in such statutory advertisement.

Issuance of CAN (a) Upon approval of the basis of Allotment by the Designated Stock Exchange, the BRLM, the

CBRLMs or Registrar to the Issue shall send to the members of the Syndicate a list of their Bidders who have been allocated/ Allotted Equity Shares in the Issue. The approval of the basis of Allotment by the Designated Stock Exchange for QIB Bidders may be done simultaneously with or prior to the approval of the basis of allocation for the Retail and Non-Institutional Bidders. However, investors should note that the Company shall ensure that the date of Allotment of the Equity Shares to all investors in this Issue shall be done on the same date.

(b) The BRLM, the CBRLMs or members of the Syndicate would dispatch a CAN to their Bidders

who have been allocated Equity Shares in the Issue. The dispatch of a CAN shall be deemed a

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valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares allocated to such Bidder. Those Bidders who have not paid the entire Bid Amount into the Escrow Account at the time of bidding shall pay in full the amount payable into the Escrow Account by the Pay-in Date specified in the CAN.

(c) Bidders who have been allocated/Allotted Equity Shares and who have already paid the Bid

Amount into the Escrow Account at the time of bidding shall directly receive the CAN from the Registrar to the Issue subject, however, to realisation of his or her cheque or demand draft paid into the Escrow Account. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for the Allotment to such Bidder.

(d) The Issuance of CAN is ‘Subject to “Allotment Reconciliation and Revised CANs” as set forth

herein. Notice to QIBs: Allotment Reconciliation and Revised CANs After the Bid/Issue Closing Date, an electronic book will be prepared by the Registrar on the basis of Bid applications received. Based on the electronic book, QIBs will be sent a CAN on or prior to [●], 2007, indicating the number of Equity Shares that may be Allotted to them. This CAN is subject to the basis of final Allotment, which will be approved by the Designated Stock Exchange and reflected in the physical book prepared by the Registrar. Subject to SEBI Guidelines, certain Bid applications may be rejected due to technical reasons, non-receipt of funds, cancellation of cheques, cheque bouncing, incorrect details, etc., and these rejected applications will be reflected in the reconciliation and basis of Allotment as approved by the Designated Stock Exchange and specified in the physical book. As a result, a revised CAN may be sent to QIBs and the allocation of Equity Shares in such revised CAN may be different from that specified in the earlier CAN. It is not necessary that a revised CAN will be sent. QIBs should note that they may be required to pay additional amounts, if any, by the Pay-in Date specified in the revised CAN, for any increased Allotment of Equity Shares. The CAN will constitute the valid, binding and irrevocable contract (subject only to the issue of a revised CAN) for the QIB to pay the entire Issue Price for all the Equity Shares allocated to such QIB. The revised CAN, if issued, will supersede in entirety the earlier CAN.

Designated Date and Allotment of Equity Shares (a) The Company will ensure that the Allotment of Equity Shares is done within 15 days of the

Bid/Issue Closing Date. After the funds are transferred from the Escrow Account to the Public Issue Account on the Designated Date, the Company would ensure the credit to the successful Bidders depository account. Allotment of the Equity Shares to the allottees shall be within two working days of the date of Allotment.

(b) In accordance with the SEBI Guidelines, Equity Shares will be issued, and Allotment shall be

made only in the dematerialised form to the allottees. Allottees will have the option to re-materialise the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act.

Investors are advised to instruct their Depository Participant to accept the Equity Shares that may be allocated/Allotted to them pursuant to this Issue.

BASIS OF ALLOTMENT

A. For Retail Individual Bidders

• Bids received from the Retail Individual Bidders at or above the Issue Price shall be grouped together to determine the total demand under this category. The Allotment to all the successful Retail Individual Bidders will be made at the Issue Price.

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• The Net Issue size less Allotment to Non-Institutional and QIB Bidders shall be available for Allotment to Retail Individual Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.

• If the aggregate demand in this category is less than or equal to [●] Equity Shares at or above the Issue Price, full Allotment shall be made to the Retail Individual Bidders to the extent of their valid Bids.

• If the aggregate demand in this category is greater than [●] Equity Shares at or above the Issue Price, the Allotment shall be made on a proportionate basis up to a minimum [●]. For the method of proportionate basis of Allotment, refer below.

B. For Non-Institutional Bidders

• Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to determine the total demand under this category. The Allotment to all successful Non-Institutional Bidders will be made at the Issue Price.

• The Net Issue size less Allotment to QIBs and Retail Portion shall be available for Allotment to Non-Institutional Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.

• If the aggregate demand in this category is less than or equal to [●] Equity Shares at or above the Issue Price, full Allotment shall be made to Non-Institutional Bidders to the extent of their demand.

• In case the aggregate demand in this category is greater than [●]Equity Shares at or above the Issue Price, Allotment shall be made on a proportionate basis up to a minimum of 16 Equity Shares. For the method of proportionate Basis of Allotment refer below.

C. For Employee Reservation Portion

The Bid must be for a minimum of [●]Equity Shares and in multiples of [●]Equity Shares thereafter. The allotment in the Employee Reservation Portion will be on a proportionate basis. Bidders under the Employee Reservation Portion applying for a maximum Bid in any of the bidding options not exceeding Rs. 100,000 may bid-at Cut off Price.

• Bids received from the Eligible Employees at or above the Issue Price shall be grouped together to determine the total demand under this category. The allocation to all the successful Eligible Employees will be made at the Issue Price.

• If the aggregate demand in this category is less than or equal to [●] Equity Shares at or above the Issue Price, full allocation shall be made to the Employees to the extent of their demand.

• If the aggregate demand in this category is greater than [●] Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis up to a minimum of [●] Equity Shares and in multiple of [●] Equity Shares thereafter. For the method of proportionate basis of allocation, refer below.

• Only Eligible Employees eligible to apply under Employee Reservation Portion. D. For QIBs

• Bids received from the QIB Bidders at or above the Issue Price shall be grouped together

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to determine the total demand under this portion. The Allotment to all the QIB Bidders will be made at the Issue Price.

• The QIB Portion shall be available for Allotment to QIB Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.

• Allotment shall be undertaken in the following manner:

(a) In the first instance allocation to Mutual Funds for up to 5% of the QIB Portion

shall be determined as follows: (i) In the event that Mutual Fund Bids exceeds 5% of the QIB Portion,

allocation to Mutual Funds shall be done on a proportionate basis for up to 5% of the QIB Portion.

(ii) In the event that the aggregate demand from Mutual Funds is less than

5% of the QIB Portion then all Mutual Funds shall get full Allotment to the extent of valid bids received above the Issue Price.

(iii) Equity Shares remaining unsubscribed, if any, not allocated to Mutual

Funds shall be available for Allotment to all QIB Bidders as set out in (b) below;

(b) In the second instance Allotment to all QIBs shall be determined as follows:

(i) In the event that the oversubscription in the QIB Portion, all QIB

Bidders who have submitted Bids above the Issue Price shall be Allotted Equity Shares on a proportionate basis for up to 95% of the QIB Portion.

(ii) Mutual Funds, who have received allocation as per (a) above, for less

than the number of Equity Shares Bid for by them, are eligible to receive Equity Shares on a proportionate basis along with other QIB Bidders.

(iii) Under-subscription below 5% of the QIB Portion, if any, from Mutual

Funds, would be included for allocation to the remaining QIB Bidders on a proportionate basis.

• The aggregate Allotment to QIB Bidders shall not be less than [●] Equity Shares. Illustration of Allotment to QIBs and Mutual Funds (“MF”) A. Issue Details

Sr. No. Particulars Issue details

1 Issue size 200 million equity shares

2 Allocation to QIB (60%) 120 million equity shares

Of which:

a. Allocation to MF (5%) 6 million equity shares

b. Balance for all QIBs including MFs 114 million equity shares

3 No. of QIB applicants 10

4 No. of shares applied for 500 million equity shares

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B. Details Of QIB Bids

S.No Type of QIB bidders# No. of shares bid for (in million) 1 A1 50

2 A2 20

3 A3 130

4 A4 50

5 A5 50

6 MF1 40

7 MF2 40

8 MF3 80

9 MF4 20

10 MF5 20

Total 500

# A1-A5: ( QIB bidders other than MFs), MF1-MF5 ( QIB bidders which are Mutual Funds) C. Details of Allotment to QIB Bidders/ Applicants

(Number of equity shares in million)

Type of QIB

bidders

Shares bid for

Allocation of 6 million Equity Shares to MF

proportionately (please see note 2 below)

Allocation of balance 114 million Equity Shares to

QIBs proportionately (please see note 4 below)

Aggregate allocation to

MFs

(I) (II) (III) (IV) (V)

A1 50 0 11.40 0

A2 20 0 4.56 0

A3 130 0 29.64 0

A4 50 0 11.40 0

A5 50 0 11,40 0

MF1 40 1.2 9.12 10.32

MF2 40 1.2 9.12 10.32

MF3 80 2.4 18.24 20.64

MF4 20 0.6 4.56 5.16

MF5 20 0.6 4.56 5.16

500 6 114 51.64

Please note: 1. The illustration presumes compliance with the requirements specified in this Draft Red

Herring Prospectus in the section titled “Issue Structure” beginning on page 373. 2. Out of 120 million Equity Shares allocated to QIBs, 6 million (i.e. 5%) will be allocated

on proportionate basis among 5 Mutual Fund applicants who applied for 200 shares in QIB category.

3. The balance 114 million Equity Shares (i.e. 120 - 6 (available for MFs)) will be allocated

on proportionate basis among 10 QIB applicants who applied for 500 Equity Shares (including 5 MF applicants who applied for 200 Equity Shares).

4. The figures in the fourth column titled “Allocation of balance 114 million Equity Shares

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to QIBs proportionately” in the above illustration are arrived as under:

• For QIBs other than Mutual Funds (A1 to A5)= No. of shares bid for (i.e. in column II) X 114 / 494

• For Mutual Funds (MF1 to MF5)= [(No. of shares bid for (i.e. in column II of the table above) less Equity Shares allotted ( i.e., column III of the table above)] X 114/494

• The numerator and denominator for arriving at allocation of 114 million shares to the 10 QIBs are reduced by 6 million shares, which have already been Allotted to Mutual Funds in the manner specified in column III of the table above.

Method of Proportionate Basis of Allotment in the Issue

In the event of the Issue being over-subscribed, the Company shall finalise the basis of Allotment in

consultation with the Designated Stock Exchange. The Executive Director (or any other senior official

nominated by them) of the Designated Stock Exchange along with the BRLM, the CBRLMs and the

Registrar to the Issue shall be responsible for ensuring that the basis of Allotment is finalised in a fair and

proper manner.

The Allotment shall be made in marketable lots, on a proportionate basis as explained below: a) Bidders will be categorised according to the number of Equity Shares applied for. b) The total number of Equity Shares to be Allotted to each category as a whole shall be arrived at on

a proportionate basis, which is the total number of Equity Shares applied for in that category (number of Bidders in the category multiplied by the number of Equity Shares applied for) multiplied by the inverse of the over-subscription ratio.

c) Number of Equity Shares to be Allotted to the successful Bidders will be arrived at on a

proportionate basis, which is total number of Equity Shares applied for by each Bidder in that category multiplied by the inverse of the over-subscription ratio.

d) In all Bids where the proportionate Allotment is less than [●] Equity Shares per Bidder, the

Allotment shall be made as follows:

• The successful Bidders out of the total Bidders for a category shall be determined by draw of lots in a manner such that the total number of Equity Shares Allotted in that category is equal to the number of Equity Shares calculated in accordance with (b) above; and

• Each successful Bidder shall be Allotted a minimum of [●] Equity Shares. e) If the proportionate Allotment to a Bidder is a number that is more than [●]but is not a multiple of

one (which is the market lot), the decimal would be rounded off to the higher whole number if that decimal is 0.5 or higher. If that number is lower than 0.5, it would be rounded off to the lower whole number. Allotment to all Bidders in such categories would be arrived at after such rounding off.

f) If the Equity Shares allocated on a proportionate basis to any category are more than the Equity

Shares Allotted to the Bidders in that category, the remaining Equity Shares available for Allotment shall be first adjusted against any other category, where the Allotted shares are not sufficient for proportionate Allotment to the successful Bidders in that category. The balance

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Equity Shares, if any, remaining after such adjustment will be added to the category comprising Bidders applying for minimum number of Equity Shares.

PAYMENT OF REFUND Bidders must note that on the basis of name of the Bidders, Depository Participant’s name, DP ID, Beneficiary Account number provided by them in the Bid-cum-Application Form, the Registrar will obtain, from the Depositories, the Bidders’ bank account details, including the nine digit Magnetic Ink Character Recognition (“MICR”) code as appearing on a cheque leaf. Hence Bidders are advised to immediately update their bank account details as appearing on the records of the Depository Participant. Please note that failure to do so could result in delays in despatch of refund order or refunds through electronic transfer of funds, as applicable, and any such delay shall be at the Bidders’ sole risk and neither the Company, the Registrar, Escrow Collection Bank(s), Bankers to the Issue nor the BRLM nor the CBRLMs shall be liable to compensate the Bidders for any losses caused to the Bidder due to any such delay or liable to pay any interest for such delay. Mode of making refunds The payment of refund, if any, would be done through various modes as given hereunder: 1. ECS – Payment of refund would be done through ECS for applicants having an account at any of

the following fifteen centres: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvananthapuram. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories. The payment of refunds is mandatory for applicants having a bank account at any of the abovementioned fifteen centres, except where the applicant, being eligible, opts to receive refund through NEFT, direct credit or RTGS.

2. Direct Credit – Applicants having bank accounts with the Refund Banker(s), as mentioned in the

Bid cum Application Form, shall be eligible to receive refunds through direct credit. Charges, if any, levied by the Refund Bank(s) for the same would be borne by the Company.

3. RTGS – Applicants having a bank account at any of the abovementioned fifteen centres and

whose refund amount exceeds Rs. 1 million, have the option to receive refund through RTGS. Such eligible applicants who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the Bid-cum-application Form. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the Refund Bank(s) for the same would be borne by the Company. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant.

4. NEFT (National Electronic Fund Transfer) – Payment of refund shall be undertaken through

NEFT wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR), if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method. The process flow in respect of refunds by way of NEFT is at an evolving stage and hence use of NEFT is subject to operational feasibility, cost and process efficiency.

5. For all other applicants, including those who have not updated their bank particulars with the

MICR code, the refund orders will be despatched under certificate of posting for value up to Rs. 1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection

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Banks and payable at par at places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders.

Letters of Allotment or Refund Orders We shall give credit to the beneficiary account with depository participants within two working days from the date of the finalisation of basis of allocation. Applicants residing at 15 centres where clearing houses are managed by the RBI, will get refunds through ECS only except where applicant is otherwise disclosed as eligible to get refunds through direct credit & RTGS. We shall ensure despatch of refund orders, if any, of value up to Rs.1,500 by “Under Certificate of Posting”, and shall dispatch refund orders above Rs.1,500, if any, by registered post or speed post at the sole or First Bidder’s sole risk within 15 days of the Bid/Issue Closing Date. Applicants to whom refunds are made through electronic transfer of funds will be send a letter through ordinary post intimating them about the mode of credit of refund within 15 days of closure of Bid/ Issue.

In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI DIP

Guidelines, the Company further undertakes that:

• Allotment of Equity Shares will be made only in dematerialised form within 15 days from the Bid/Issue Closing Date;

• The Company shall pay interest at 15% per annum (for any delay beyond the 15 day time period as mentioned above), if Allotment is not made, refund orders are not dispatched and/or demat credits are not made to investors within the 15 day time prescribed above.

The Company will provide adequate funds required for dispatch of refund orders or allotment advice to the

Registrar to the Issue. Refunds will be made by cheques, pay-orders or demand drafts drawn on a bank appointed by us, as an Escrow Collection Bank and payable at par at places where Bids are received. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. DISPOSAL OF APPLICATIONS AND APPLICATION MONEYS AND INTEREST IN CASE OF DELAY The Company ensures dispatch of Allotment advice, refund orders (except for Bidders who receive refunds through electronic transfer of funds and give benefit to the beneficiary account with Depository Participants and submit the documents pertaining to the Allotment to the Stock Exchanges within two working days of date of Allotment of Equity Shares. In case of applicants who receive refunds through ECS, direct credit or RTGS, the refund instructions will be given to the clearing system within 15 days from the Bid/ Issue Closing Date. A suitable communication shall be sent to the bidders receiving refunds through this mode within 15 days of Bid/ Closing Date, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund. The Company shall use best efforts to ensure that all steps for completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed, are taken within seven working days of Allotment. In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI Guidelines, the Company further undertakes that:

• Allotment of Equity Shares shall be made only in dematerialised form within 15 (fifteen) days of the Bid/Issue Closing Date;

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• Dispatch of refund orders or in a case where the refund or portion thereof is made in electronic manner, the refund instructions are given to the clearing system within 15 (fifteen) days of the Bid/Issue Closing Date would be ensured; and

• The Company shall pay interest at 15% (fifteen) per annum for any delay beyond the 15 (fifteen)-day time period as mentioned above, if Allotment is not made and refund orders are not dispatched or if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions have not been given to the clearing system in the disclosed manner and/or demat credits are not made to investors within the 15 (fifteen)-day time prescribed above as per the guidelines issued by the Government of India, Ministry of Finance pursuant to their letter No. F/8/S/79 dated July 31, 1983, as amended by their letter No. F/14/SE/85 dated September 27, 1985, addressed to the stock exchanges, and as further modified by SEBI’s Clarification XXI dated October 27, 1997, with respect to the SEBI Guidelines.

UNDERTAKINGS BY OUR COMPANY We undertake the following:

• That the complaints received in respect of this Issue shall be attended to by us expeditiously;

• That all steps will be taken for the completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed within seven working days of finalisation of the basis of Allotment;

• That funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by the Issuer.

• That where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 15 days of the Bid/ Issue Closing Date, as the case may be, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund.

• That the certificates of the securities/ refund orders to the non-resident Indians shall be despatched within specified time; and

• That no further issue of Equity Shares shall be made till the Equity Shares offered through this Draft Red Herring Prospectus are listed or until the Bid monies are refunded on account of non-listing, under-subscription etc.

The Company shall not have recourse to the Issue proceeds until the approval for trading of the Equity Shares from all the Stock Exchanges where listing is sought has been received. Utilisation of Issue proceeds Our Board certifies that:

• All monies received out of the Issue shall be credited/transferred to a separate bank account other than the bank account referred to in sub-section (3) of Section 73 of the Companies Act;

• Details of all monies utilised out of Issue shall be disclosed under an appropriate head in our balance sheet indicating the purpose for which such monies have been utilised;

• Details of all monies utilised out of the funds received from Employee Reservation Portion shall be disclosed under an appropriate head in the balance sheet of the Company, indicating the

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purpose for which such monies have been utilised;

• Details of all unutilised monies out of the Issue, if any shall be disclosed under the appropriate head in the balance sheet indicating the form in which such unutilised monies have been invested;

• Details of all unutilized monies out of the funds received from the Employee Reservation Portion shall be disclosed under a separate head in the balance sheet of the Company, indicating the form in which such unutlilised monies have been kept.

Withdrawal of the Issue The Company in consultation with the BRLM and the CBRLMs reserve the right not to proceed with the Issue at anytime including after the Bid/ Issue Opening Date, without assigning any reason thereof. In terms of the SEBI Guidelines, QIB Bidders shall not be allowed to withdraw their Bid after the Bid/Issue Closing Date.

EQUITY SHARES IN DEMATERIALISED FORM WITH NSDL OR CDSL As per the provisions of Section 68B of the Companies Act, the Allotment of Equity Shares in this Issue shall be only in a de-materialised form, (i.e., not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode). In this context, two agreements have been signed among the Company, the respective Depositories and the Registrar to the Issue: a) Agreement dated [●]with NSDL, the Company and the Registrar to the Issue; b) Agreement dated [●] with CDSL, the Company and the Registrar to the Issue. All Bidders can seek allotment only in dematerialised mode. Bids from any Bidder without relevant details of his or her depository account are liable to be rejected. a) A Bidder applying for Equity Shares must have at least one beneficiary account with either of the

Depository Participants of either NSDL or CDSL prior to making the Bid. b) The Bidder must necessarily fill in the details (including the Beneficiary Account Number and

Depository Participant’s identification number) appearing in the Bid cum Application Form or Revision Form.

c) Allotment to a successful Bidder will be credited in electronic form directly to the beneficiary

account (with the Depository Participant) of the Bidder d) Names in the Bid cum Application Form or Revision Form should be identical to those appearing

in the account details in the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the Depository.

e) If incomplete or incorrect details are given under the heading ‘Bidders Depository Account

Details’ in the Bid cum Application Form or Revision Form, it is liable to be rejected. f) The Bidder is responsible for the correctness of his or her Demographic Details given in the Bid

cum Application Form vis-à-vis those with his or her Depository Participant. g) Equity Shares in electronic form can be traded only on the stock exchanges having electronic

connectivity with NSDL and CDSL. All the Stock Exchanges where our Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL.

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h) The trading of the Equity Shares of the Company would be in dematerialised form only for all investors in the demat segment of the respective Stock Exchanges.

Communications All future communications in connection with Bids made in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or First Bidder, Bid cum Application Form number, Bidders Depository Account Details, number of Equity Shares applied for, date of bid form, name and address of the member of the Syndicate where the Bid was submitted and cheque or draft number and issuing bank thereof. Investors can contact the Compliance Officer or the Registrar to the Issue in case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allotment, credit of allotted shares in the respective beneficiary accounts, refund orders etc.

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RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES

Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of GoI and FEMA. While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in all sectors of Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. As per current foreign investment policies, foreign investment in the construction and engineering sector is permitted under the automatic route. By way of Circular No. 53 dated December 17, 2003, the RBI has permitted FIIs to subscribe to shares of an Indian company in a public offer without the prior approval of the RBI, so long as the price of the equity shares to be issued is not less than the price at which the equity shares are issued to residents. Transfers of equity shares previously required the prior approval of the FIPB. However, vide a RBI circular dated October 4, 2004 issued by the RBI, the transfer of shares between an Indian resident and a non-resident does not require the prior approval of the FIPB or the RBI, provided that (i) the activities of the investee company are under the automatic route under the foreign direct investment (FDI) Policy and transfer does not attract the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (ii) the non-resident shareholding is within the sectoral limits under the FDI policy, and (iii) the pricing is in accordance with the guidelines prescribed by the SEBI/RBI. Subscription by foreign investors (NRIs/FIIs) There is no reservation for Non Residents, NRIs, FIIs, foreign venture capital funds, multi-lateral and bilateral development financial institutions and any other foreign investor. All Non Residents, NRIs, FIIs and foreign venture capital funds, multi-lateral and bilateral development financial institutions and any other foreign investor applicants will be treated on the same basis with other categories for the purpose of allocation. As per existing regulations, OCBs cannot participate in the Issue. The Equity Shares have not been and will not be registered under the US Securities Act of 1933 (the Securities Act) or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Equity Shares have not been and will not be registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold, and Bids may not be made by persons in any such jurisdiction, except in compliance with the applicable laws of such jurisdiction. The above information is given for the benefit of the Bidders. The Company, the BRLM and the CBRLMs are not liable for any amendments or modification or changes in applicable laws or regulations, which may occur after the date of this Draft Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under laws or regulations.

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MAIN PROVISIONS OF ARTICLES OF ASSOCIATION

Capitalised terms used in this section have meaning that has been given to such terms in the Articles of Association of Afcons Infrastructure Limited. Pursuant to Schedule II of the Companies Act and SEBI Guidelines, the main provisions of the Articles of Association of Afcons Infrastructure Limited are set forth below:

APPLICABILITY OF TABLE A Article 1 provides that “all regulations of Table A in the First Schedule to the Companies Act, 1956 shall be deemed to be incorporated with these Articles and to apply to the Company in so far as they are not inconsistent with the provisions of the following Articles.”

SHARE CAPITAL Increase and Reduction of Capital Article 4 provides that “the Company is authorised to increase or reduce the capital of the Company and to divide the shares in the capital for the time being into one or more classes, and to attach thereto respectively such preferential priority, qualified or special rights, privileges or conditions as may be determined by or in accordance with the Articles of Association of the Company for the time being in force, and to vary, modify or abrogate any such rights, privileges or conditions in such manner as may, for the time being be permitted by the Act, or provided by the Articles of Association of the Company.” Article 6 provides that “the Company may from time to time, by Ordinary Resolution increase the share capital by such sums to be divided into shares of such amount as may be specified in the Resolution.” Power to issue Preference Shares Article 5(A)(i) provides that “the Company shall have the power to issue preference shares which shall not be redeemable beyond the period of redemption specified under the Act and the resolution authorising such issue shall prescribe the manner, terms and conditions of redemption.” Article 5(A)(ii) provides that “the Company shall have the power to issue preference shares which are or at the option of the Company or of the preference shareholders, would be convertible into equity shares on such terms and conditions as may be provided in the terms of issue and at the premium or at a discount as may be laid down thereunder.” Article 5(B) provides that “on the issue of Redeemable Preference Shares under the provisions of Articles 5(A) hereof the following provisions shall take effect: (a) no such shares shall be redeemed except out of the profits of the Company which would otherwise

be available for dividend or out of the proceeds of a fresh issue of shares made for the purpose of the redemption;

(b) no such shares shall be redeemed unless they are fully paid; (c) the premium, if any, payable on redemption must have been provided for out of the profits of the

Company or the Company’s Share Premium Account before the shares are redeemed; (d) where any such shares are redeemed otherwise than out of the proceeds of a fresh issue, there

shall, out of profits which would otherwise have been available for dividend, be transferred to a reserve fund, to be called the “Capital Redemption Reserve Account”, a sum equal to the nominal amount of the shares redeemed and the provisions of the Act, relating to the reduction of the share capital of the Company, shall, except as provided in Section 88 of the Act, apply as if the Capital Redemption Reserve were paid-up share capital of the Company.”

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Article 5(C) provides that,

“(a) subject to the provisions of the Act and all other applicable provisions of law, the Company may

issue shares, either equity or any other kind with non-voting rights and the resolutions authorising such issue shall prescribe the terms and conditions applicable to the issue of such shares;

(b) if the shares to be so issued are redeemable, the resolution authorising such issue shall prescribe

the manner, terms and conditions of redemption. The Company shall subject to and in accordance with all applicable provisions of the Act, have power to make payment out of Capital of the Company f9r the purpose of such redemption.”

CONSOLIDATION, SUB-DIVISION AND CANCELLATION OF SHARES Consolidation, sub-division and cancellation of shares Article 7 provides that “the Company may by Ordinary Resolution (a) consolidate and divide all or any of its share capital into shares of large amount than its existing

shares;

(b) sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the Memorandum, subject nevertheless to the provisions of clause (4) of sub-section (1) Section 94 of the Act;

(c) cancel any share which at the date of the passing of the resolution have not been taken or agreed to

be taken by any person; New shares created are part of original capital Article 8 provides that, “except so far as otherwise provided by the conditions of issue or by these presents, any capital raised by the creation of new shares shall be considered part of the original capital and shall be subject to the provisions herein contained with reference to the payment of calls and instalments, transfer and transmission, forfeiture, lien, surrender, voting and otherwise.” Application amount payable on shares Article 9 provides that, “the amount payable on application on each share of the Company shall be such sum as the Board may determine at the time of issue of such shares.” Powers of the Company when reducing share capital Article 10 provides that, “the Company may from time to time by Special Resolution, subject to confirmation by the Court, and subject to the provisions of Sections 100 to 104 of the Act, reduce its share capital in any way, and in particular, without prejudice to the generality of the foregoing power, by (a) extinguishing or reducing the liability on any of its shares in respect of share capital not paid up,

or (b) cancelling either with or without extinguishing or reducing liability on any of its shares, any paid-

up capital which is lost or is unrepresented by available assets, or (c) paying off, either with or without extinguishing or reducing liability on any of its shares, any paid-

up share capital which is in excess of the wants of the Company;

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and Capital may be paid off upon the footing that it may be called up again or otherwise, and paid-up capital may be cancelled as aforesaid, without reducing the nominal amount of the .shares by the like amount, to the intent that the unpaid and callable Capital shall be increased by the like amount.” Variation of rights Article 11 provides that, “If at any time the share capital of the Company is divided into different classes of shares, then the rights attached to any class of, shares, may, subject to the provisions of Section 106 of the Act, be varied with (a) the consent of the holders of at least three-fourths of the issued shares of that class; or (b) the sanction of a special resolution passed at a separate meeting of the holders of those shares. and all the provisions hereinafter contained as to general meetings (including the provisions relating to quorum at such meetings) shall mutatis mutandis apply to every such meeting.”

SHARES Register of Members Article 12 provides that, “the Company shall cause to be kept a Register and index of Members in accordance with Section 150 and 151 of the Act. The Company shall be entitled to keep is any State or Country outside India a Branch Register of Members resident in that State or Country.” Rights issue of shares Article 13 provides that “(a) subject to the provisions of the Act where at any time after the expiry of two years from the

formation of the Company or the expiry of one year from the allotment of shares made for the first time after its formation whichever is earlier, it is proposed to increase the subscribed capital of the Company by allotment of further shares whether out of unissued share capital or out of increased share capital, then such further shares shall be offered to the persons who at the date of the offer, are holders of the equity shares of the Company, in proportion, as nearly as circumstances admit, to the capital paid up on these shares at the date. Such offer shall be made by a notice specifying the number of shares offered and limiting a time not being less than fifteen days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined. Such offer shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him or any of them in favour of any other person and the notice referred to in this clause shall contain a statement of this right. However, this shall not be deemed; (a) to extend the time within which the offer should be accepted; or (b) to authorize any person to exercise the right of renunciation for a second time, on the ground that the person whose favour the renunciation was first made declined to take the shares comprised in the renunciation. After the expiry of the time specified in the notice aforesaid or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board may dispose of them in such manner as they think most beneficial to the Company;

(b) Notwithstanding anything contained in the preceding sub-clause the Company may

(i) by a special resolution; or (ii) where no such special resolution is passed, if the votes cast whether on show of hands, or

on a poll as the case may be, in favour of the proposal contained in the resolution moved in that general meeting (including the casting vote, if any, of the Chairman) by members who, being entitled so to do, vote in person, or where proxies are allowed, by proxy

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exceed the votes, if any, cast against the proposal by members so entitled and voting and the Central Government is satisfied, on an application made by the Board in this behalf, that the proposal is most beneficial to the Company.

offer further shares to any person whether or not such person, at the date of the offer, are the holders of the equity shares of the Company.”

Increase of subscribed capital on exercise of option attached to debentures issued or loans raised by the Company Notwithstanding anything contained in sub-clause (a) above, but subject, however, to Section 81(3) of the Act, the company may increase its subscribed capital on exercise of an option attached to the debentures issued or loans raised by the Company to convert such debenture or loans into shares, or to subscribe for shares in the Company. Provided that the terms of the issue of debentures or the terms of such loans include a term for such option and such term: (a) Either has been approved by the Central Government before the issue of debentures or the raising

of the loans in conformity with Rules, if any, made by that Government in this behalf; (b) In the case of debentures or loans or other than debentures issued to, or loans obtained from the

Government or any institution specified by the Central Government in this behalf, has also been approved by the special resolution passed by the Company in General Meeting before the issue of loans.”

Shares to be numbered progressively Article 14 provides that, “the Shares in the Capital of the Company shall be numbered progressively according to their several denominations, and except in the manner hereinbefore provided, no share shall be sub-divided. Every forfeited or surrendered share shall continue to bear the number by which the same was originally distinguished.” Shares to be under the control of Board of Directors Article 15 provides that, “Subject to the provisions of the Act and these Articles, the shares shall be under the control of the Board and they may allot or otherwise dispose of the same to such persons, on such terms and conditions, and either at a premium or at par, or (subject to the provisions of Section 79 of the Act) at a discount and at such times, as the Board may think fit. The Board with the sanction of the Company in the General Meeting can give to any persons the option or right to call for any shares either at par or premium during such time and for such consideration as the directors think fit, and may issue and allot shares in the capital of the Company on payment in full or part of any property sold and transferred or for any services rendered to the Company in the conduct of its business and any shares which may be so allotted may be issued as fully paid up shares and if so issued, shall be deemed to be fully paid shares. Provided that option or right to call shares shall not be given to any person or persons without the sanction of the Company in the General Meeting.” Allotment of shares other than for cash Article 16 provides that, “Subject to the provisions of the Act and these Articles, the Board may allot and issue shares in the capital of the Company as payment for any property sold, or transferred, or for services rendered to the Company in the conduct of its business, and any, shares which may be so issued shall be deemed to be fully paid up shares.” Application for and allotment of shares to constitute membership in the Company

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Article 17 provides that “an application signed by or on behalf of an applicant for shares in the Company, followed by an allotment of any shares, shall be acceptance of shares within the meaning of these Articles, and every person who thus or otherwise accepts any shares and whose name is on the Register of Members, shall, for the purpose of these Articles, be a member.” Outstanding money to be paid on shares to constitute debt due to the Company Article 18 provides that “the money (if any) which the Board shall, on allotment of any shares being made by them require or direct to be paid by way of deposit, call or otherwise in respect of any shares, shall immediately on the insertion of the name of the allottee in the Register of Members as the name of the holder of such shares, become a debt due to and recoverable by the Company from the allottee thereof and shall be paid by him accordingly.” Article 19 provides that, “if by the conditions of allotment of any share the whole or any part of the amount or issue price thereof shall be payable by ‘instalments, every such instalment shall when due, be paid to the Company by the person, who for the time being and from time to time, shall be the registered holder of the share or his legal representatives.” Article 20 provides that, “every member or his heirs, legal representatives, executors and administrators shall pay to the Company the proportion of the Capital represented by his share or shares, which may for the time being remain unpaid thereon, in such amounts at such time or times and in such manner, as the Board shall from time to time in accordance with the Company’s regulations require or fix for the payment thereof.” Article 21 provides that, “the joint holders of a share shall be severally as well as jointly liable for the payment of all installment and calls due in respect of such shares.” No person to be recognized by the Company as holding any share upon any trust Article 22 provides that “Except as required by law, no person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any share or except only as by these regulations or by law otherwise provided any other rights in respects of any share, except an absolute right to the entirety thereof as the registered holder.” CERTIFICATES Member entitled to share certificate Article 24 provides that, “(a) every Member or allottee of shares shall be entitled without payment to receive one certificate

specifying the name of the person in whose favour it is issued, the shares to which it relates and the amount paid-up thereon. Such certificate shall be issued only in pursuance of a resolution passed by the Board and on surrender to the Company of its letter of allotment or its fractional coupons of requisite value, save in case of issues against letters of acceptance or of renunciation or in case of issue of bonus shares. The Company shall complete and have ready for delivery such certificates within three months from the date of allotment, unless conditions of issue thereof provide otherwise, or within two months of the receipt of allocation of registration of transfer, transmission, subdivision, consolidation or renewal of any of its shares as the case may be. Every such certificate shall be issued under the seal of the Company, which shall be affixed in the presence of two Directors or persons acting on behalf of the Board under a duly registered power of attorney and the Secretary or some other persons appointed by the Board for the purpose, and two Directors or their attorneys and the Secretary or other person shall sign the share certificate.

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Particulars of every share certificate issued shall be entered in the Register of Members against the name of the person to whom it has been issued, indicating the date of issue.”

(b) any two or more joint allottees or owners of a share shall, for the purpose of this Article, be treated

as a single member, and the certificate of any share, which may be the subject of joint ownership, may be delivered to any one of such joint allottees or owners on behalf of all of them. For any further certificate the Board shall be entitled,’ but shall not be bound to prescribe a charge not exceeding such sum as may be prescribed by law.

(c) a Director may sign a share certificate by affixing. his signature thereon by means of any machine,

equipment or other mechanical means, such as engraving in metal or lithography, but not by means of a rubber stamp, provided that the Director shall be responsible for the safe custody of such machine, equipment or other material used for the purpose.

(d) the Company shall be entitled to charge such sum as the Board may decide for issuing certificates

for shares in numbers other than the marketable lot.” Replacement of certificates Article 25 provides that

“(a) no certificate of any share or shares shall be issued either in exchange for those which are sub-

divided or consolidated or in replacement of those which are defaced, torn or old, decrepit, worn out, or where the cages on the reverse for recording transfers have been duly utilised unless the certificate in lieu of which it is issued is surrendered to the Company.

(b) when a new share certificate has been issued in pursuance of clause (a) of this Article, it shall state

on the face of it and against the stub or counterfoil to the effect that it is “Duplicate issued in lieu of share certificate No …………….” Sub-divided / replaced1on consolidation of shares.

(c) If a share certificate is Lost or destroyed, a new certificate in lieu thereof shall be issued only with

the prior consent of the Board and on such terms, if any, as to evidence and indemnity as also to the payment of out-of-pocket expenses incurred by the Company in investigating evidence, as the Board thinks fit.

(d) when a new share certificate has been issued in pursuance of clause (c) of this Article, it shall state

on the face of it and against the stub or counterfoil to the effect that it is “Duplicate issued in lieu of share certificate No ………….”. The word “Duplicate” shall be stamped or punched in bold letters across the face of the share certificate. Every certificate issued pursuant to clause (a) or (c) of this Article shall be issued without payment of fees, if the Directors so decide, or on payment of fees (not exceeding Rs.2 for each certificate). Provided that no fee shall be charged for issue of new certificates in replacement of those which are defaced, torn or old, decrepit, worn out, or where the the cages on reverse for recording transfers have been duly utilized.

(e) where a new share certificate has been issued in pursuance of clause (a) or clause (c) of this

Article, particulars of every such Share certificate shall be entered in a Register of Renewal and Duplicate Certificates indicating against the name of the persons to whom the certificate is issued, the number and date of issue of the share certificate in lieu of which the new certificate is issued and the necessary changes indicated in the Register of Members by suitable cross reference in the “Remarks” Column.

(f) Notwithstanding anything contained in Article 25(c) of the Articles of Association of the

Company, the Board may at their discretion charge and recover the stamp duty ,that may be payable on share certificates issued in replacement of those that are torn, defaced, lost or destroyed or issued on splitting or consolidation of share certificates into denominations other than

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marketable lots and such payment shall be made by the shareholders receiving the certificates prior to the issue of share certificates.”

The provisions of this Article shall mutatis mutandis apply to debentures of the Company. JOINT HOLDERS OF SHARES Article 26 provides that, “if any shares stand in the names of two or more persons, the person first named in the Register of Members shall, ,as regards receipt of dividends or service of notices and all or any other matters connected with the Company, except voting at meetings and the transfer of the shares, be deemed the sole holder thereof.” Article 27 provides that, “in the case of death of any one or more of the persons named in the Register of Members as jointholders of any share, the survivors or survivor shall be the only persons or person recognised by the Company as having any title to or interest in such share but nothing herein contained shall be taken to release the estate of a jointholder from any liability on shares held by him jointly with any other person.” UNDERWRITING AND BROKERAGE Article 30 provides that, “subject to the provisions of Section 76 of the Act, the Company may at any time pay a commission to any person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) for any shares or debentures in the Company, or procuring, or agreeing to procure subscription (whether absolute or conditional) for any shares in or debentures of the Company, but so that the commission shall not exceed in the case of shares five per cent of the price at which the shares are issued and in the case of debentures two and a half per cent of the price at which the debentures are issued, or such higher rates as may be permissible under any statutory provision for the time being in force. Such commission may be satisfied by payment of cash or by allotment of fully or partly paid shares or partly in one way and partly in the other.” TRANSFER AND TRANSMISSION OF SHARES Register of transfer Article 33 provides that, “the Company shall keep a “Register of Transfer” and therein shall be fairly and distinctly entered particulars of every transfer or, transmission of any share.” Instrument of transfer Article 34 provides that, “the instrument of transfer shall be in writing and all the provisions of Section 108 of the Act, and or any statutory modification thereof for the time being shall be duly complied with in respect of all transfer of shares.” Procedure for transfer Article 35 provides that, “the instrument of transfer duly stamped and executed by the Transferor and the Transferee shall be delivered to the Company in accordance with the provisions of the Act. The instrument of Transfer shall be accompanied by .such evidence as the Board may required to prove the title of Transferor and his right to transfer the shares and every registered instrument of transfer shall remain in the custody of the Company until destroyed by order of the Board. The Transferor shall be deemed to be the holder of such shares until the name of the Transferee shall have been entered in the Register of Members in respect thereof. Before the registration of a transfer the certificate or certificates of the shares must be delivered to the Company.”

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Board’s power to refuse transfer Article 37 provides that, “subject to the provisions of Section 111A of the Act, and save and except in respect of any shares or debentures held by any Financial Institution in the Company, the Board may at its own absolute and uncontrolled discretion or in exceptional circumstance when it is felt that the transferee is not a desirable person from the larger point of view of the interest of the Company as a whole, decline to register or acknowledge any transfer of shares or debentures or any other scrip or security whether fully paid or not, (notwithstanding that the proposed transferee be already a member) and assigning reasons for such refusal, but in such cases it shall, within one month from the date on which the instrument of transfer was lodged with the Company, send to the transferee and the transferor notice of refusal provided that the registration of a transfer shall not be refused on the ground that the transferor being either alone or jointly with any other person or persons, indebted to the Company on any account whatsoever except where the Company has exercised its right of lien on the shares.” Transfer of partly paid shares Article 38 provides that, “where, in the case of partly paid share, an application for registration is made by the transferor, the transfer shall not be registered unless the Company gives notice of the application to the Transferee in accordance with the provisions of Section 110 of the Act.” Title to shares of deceased member Article 39 provides that “the executors or administrators or holders of a Succession Certificate or the legal representatives of a deceased member (not being one of two or more joint-holders) shall be the only persons recognised by the Company as having any title to the Shares but shall not be bound to recognise such executors or administrators or holders of a Succession Certificate or the legal representatives unless they shall have first obtained Probate or Letters of Administration or Succession Certificate, as the case may be, from a duly constituted Court in the Union of India; provided that in any case where the Board in its absolute, discretion thinks fit, the Board may dispense with production of Probate or Letters of Administration or Succession Certificate, upon such terms as to indemnity or otherwise as the Board in its absolute discretion may think necessary and register the name of any person who claims to be absolutely entitled to the shares standing in the name of a deceased member, as a member.” Transmission of shares Article 40 provides that, “subject to the provisions of the Act and Articles 27 and 39 any person becoming entitled to a share in consequence of the death, lunacy, bankruptcy, insolvency of any member or by any lawful means other than by a transfer in accordance with these Articles, may, with the consent of the Board (which it shall not be under any obligation to give) and upon producing such evidence that he sustains the character in respect of which he proposes to act under this Article or of such title as the Board thinks sufficient, either be registered himself as the holder of the share or elect to hive some person nominated by him and approved by the Board registered as such holder; provided nevertheless, that if such person shall elect to have his nominee registered, he shall testify his election by executing in favour of his nominee an Instrument of Transfer in accordance with the provisions herein contained, and until he does so, he shall be freed from any liability in respect of such shares. This clause is hereinafter referred to as the “Transmission Clause.” Board’s right to refuse transmission of shares Article 41 provides that, “the Board shall subject to the provisions of Article 37 hereof have the same right to refuse to register a person entitled by transmission to any shares or his nominee, as if he were the transferee named in the case of transfer presented for registration.” Company’s limitation of liability

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Article 43 provides that, “The Company shall incur no liability or responsibility whatever in consequence of its registering or giving effect to any transfer of shares made or purporting to be made by any apparent legal owner thereof (as shown or appearing in the Register of Members) to the prejudice of persons having or claiming any equitable right, title or interest to or in the said shares, notwithstanding that the Company may have had notice of such equitable right, title or interest or notice prohibiting registration of such transfer and may have entered such notice or referred thereto,. in any book of the Company, and the Company shall not be bound or required to regard or attend or give effect to any notice which may he given to it of any equitable right, title or interest or be under any liability whatsoever for refusing or neglecting so to do, though it may have been entered or referred to in some book of the Company, but the Company shall nevertheless be at liberty to regard and attend to any such notice and give effect thereto if the Board shall so think fit.” No fee payable on transfer or transmission of shares Article 44 provides that, “The Company shall not charge any fee in respect of the transfer or transmission of any number of shares.” Applicability to debentures Article 45 provides that, “the provisions of these Articles, as far as applicable, shall mutatis mutandis apply to the transfer of or transmission by operations of law of the right to debentures, if any, of the Company.” CALLS Board’s power to make calls Article 46 provides that, “the Board may, from time to time by resolution passed at a meeting of the Board and not by a circular resolution, make such calls as they think fit upon the members in respect of all moneys unpaid on the shares held by them respectively (whether on account of nominal value of the shares or by way of premium) and not by the conditions of allotment thereof made payable at fixed times, and each member shall pay the amount of every call so made on him to the persons and at the times and places specified by the Board. A call may be made payable by instalments.” Registered holders of shares to pay installments Article 47 provides that, “if by the conditions of allotment of any shares the whole or part of the amount or issue price thereof shall be payable by instalments; every such instalment shall, when due, be paid to the Company by the person who for the time being shall be the registered holder of the share or his legal representatives.” Limitation on making calls Article 48 provides that, “No call shall be made payable within two months after the last preceding call was payable. All calls shall be made on a uniform basis on all shares falling under the same class. For the purpose of this Article shares of the same nominal value on which different amounts have been paid up shall not be deemed to fall under the same class.” Notice for calls Article 50 provides that, “notice of not less than fourteen days in respect of any call shall be given specifying the date, time and place of payment and to whom such call shall be paid, provided that, before the time for payment of such call shall elapse, the Board may in its discretion by notice in writing to the members, revoke the same.”

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Calls made at fixed times Article 51 provides that, “if by the terms of issue of any share or otherwise. any amount is payable at any fixed time or by instalments at fixed times, whether on account of the nominal amount of the share or by way of premium, every such amount or instalment shall be payable, as if it were a call duly made by the Board and payable on the date on which by the terms of issue, such sum becomes payable, and of which, due notice has been given. In case of non-payment of such sum, all the relevant provisions herein contained as to payment of interest and expenses, forfeiture or otherwise shall apply, as if such sum had become payable by virtue of a call duly made, and notified.” Calls when not paid on time Article 52 provides that “if the sum payable in respect of any call or installment be not paid on or before the day appointed for payment thereof, the holder for the time being or the allottee of the share in respect of which the call shall have been made or the instalment shall be due, shall pay interest on such sum from the day appointed for payment thereof, to the time of actual payment, at such rate as may from time to time be fixed by the Board; but nothing in this Article shall render it obligatory upon Board to demand or recover any interest from any such member.” Liability of joint holders Article 54 provides that “the Joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof.” Payment of calls in advance Article 56 provides that, “the Board may, if they think fit, agree to and receive from any members willing to pay in advance. the same the whole or any part of the amounts payable on their respective shares beyond the sums actually called up; and upon the amount being so paid in advance or upon so much thereof as, from time to time, and at any time, exceeds the amount of the calls then made upon and due in respect of the shares on account of which such advance payment has been made, the Board may pay or allow interest at such rate, as the member paying such sum in advance and the Board agree upon. The Board may further agree to repay at any time the amount so paid in advance or may at any time repay the same upon giving to the member three months notice in writing. The member making such advance payment shall not, however, be entitled to any voting rights in respect of the money so paid by him or to participate in profits until the same would, but for such payment, become presently payable.” Applicability to debentures The provisions of this Article shall mutatis mutandis apply to the calls on debentures of the Company. FORFEITURE Failure to pay calls Article 57 provides that, “if any member fails to pay any call or instalment of a call, on or before the day appointed for the payment of the same, the Board may at any time thereafter, during such time as the call or instalment remains unpaid, serve a notice on such member requiring him to pay the same, together with any interest that may have accrued, and all expenses that may have been incurred by the Company by reason of such nonpayment.” Article 58 provides that, “the notice shall name a day (not being earlier than the expiry of fourteen days from the date of service of the notice) and a place or places, on and at which, such call or instalment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of non-payment at or before the time and at the place appointed, the shares in respect of which the call was made or instalment is payable, will be liable to be forfeited.”

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Forfeiture of shares Article 59 provides that, “If the requirement of any such notice as aforesaid is not complied with any share in respect of which such notice has been given may, at any time thereafter before payment by the member to the Company of such calls or instalments, interest and expenses or other moneys due in respect thereof, forfeit such shares by a resolution of the Board to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture.” Notice of forfeiture Article 60, provides that “when any share shall have been so forfeited, notice of the forfeiture shall be given to the member in whose name it stood immediately prior to the date thereof and an entry to that effect shall forthwith be made in the Register of Members, provided however, that the failure to give the notice or to make such entry as aforesaid will not in any way invalidate the forfeiture.” Forfeited shares are property of the Company Article 61 provides that “Any share so forfeited shall be deemed to be the property of the Company and the Board may sell, re-allot or otherwise dispose of the same in such manner as they think fit.” Article 62 provides that, “the Board may at any time before any shares so forfeited shall have been sold, reallotted or otherwise disposed of, annul the forfeiture thereof as a matter of grace and favour and not as of right, upon such terms and conditions as they may think fit.” Liability of member whose shares have been forfeited Article 63 provides that, “any member whose shares have been forfeited shall, notwithstanding such forfeiture, be liable to pay, and shall forthwith pay to the Company all calls, installments, interest, expenses and other moneys owing upon or in respect of such shares at the time of forfeiture together with interest thereon from the time of forfeiture until payment, at such rate as the Board may determine and the Board may enforce the payment of whole or any part thereof if they think fit, but shall not be under any obligation to do so.” Consequence of forfeiture Article 64 provides that, “The forfeiture of a share shall result in the extinction of all interest in, and also all claims and demands made against the Company in respect of the share and all other rights incident to the share, except only such of those rights as are by these articles expressly saved.”

LIEN Company to have no lien on fully paid shares and debentures Article 70 provides that, “the Company shall have no lien on its fully paid shares/debentures. In the case partly paid up shares/debentures, the Company shall have a first and paramount lien thereon, in respect of all moneys (whether presently payable or not) or called, or payable at a fixed time, in respect of such shares/debentures, and no equitable interests in any share shall be created except upon footing that and condition that this Article will have full effect. sSuch lien shall extend to all dividends and bonuses from time to time declared and payable in respect of the shares/debentures. Unless otherwise agreed, the registration of a transfer of shares/debentures shall operate as a waiver of the Company’s lien, if any, on such shares/debentures. The directors may at any time declare any share/debenture wholly or in part to be exempt from this provision.”

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Enforcement of lien by the Board Article 71 provides that, “for the purpose of enforcing such lien, the Board may sell the shares subject thereto, in such manner as they may think fit, but no sale shall be made unless the sum in respect of which the lien exists, is presently payable and until notice in writing of the intention to sell shall have been served on such member or the person or persons entitled by transmission to the shares, and default have been made by him or them in payment of the sum payable as aforesaid, for seven days after despatch of such notice.”

SHARE WARRANTS Issue of Share Warrants Article 74 provides that, “the Company may issue share warrants subject to, and in accordance with, the provisions of Section 114 and 115 of the Act and accordingly the Board may in its discretion, with respect to any share which is fully paid up, on application in writing signed by the person registered as holder of the share, and authenticated by such evidence (if any) as the Board may from time to time, require as to the identity of the person signing the application and on receiving the certificate (if any) of the share, and the amount of the stamp duty on the warrant and such fee as the Board may from time to time prescribe, issue a share warrant.”

DEMATERIALISATION OF SECURITIES Article 79 A provides that, “notwithstanding contained in these Articles; (a) the shareholders/debenture holders of the Company shall be entitled to dematerialize its existing

shares, debentures and other securities, rematerialize its securities held in the Depository and the Company shall offer fresh shares, debentures and other securities for subscription in a dematerialized form pursuant to the Depositories Act and the rules framed there under, if any

(b) every Person subscribing to or holding securities of the Company shall have the option to receive

security certificates or to hold the securities with a Depository. (c) the share in the capital shall be numbered progressively according to their several denominations.

Provided that the provisions relating to progressive numbering shall not apply to the shares of the Company which are dematerialized or may be dematerialized in future or issued in future in dematerialized form. Every forfeited or surrendered share shall continue to bear the number by which the same was originally distinguished.

(d) every person subscribing to shares, debentures or other securities offered by the Company shall

have the option to receive such shares, debentures or securities in physical form or to hold the same with a Depository in dematerialized form. Such a person who is the Beneficial owner of the securities can at any time opt out of a depository, if permitted and in the manner provided by law and the Company shall, in the manner and within the time prescribed, issue to the Beneficial owner the required Certificates.

(e) in case of transfer of shares, debentures and other marketable securities, where the Company has

not issued any certificate and where such shares, debentures or securities are being held in an electronic and fungible form by a Depository, the provisions of the Depositories Act shall apply.

(f) If the shares of the Beneficial owner are held with a Depository, the Company shall intimate such

Depository, the details of allotment of the security, and on receipt of the information, the Depository shall enter in its records, the names of the allottees as the Beneficial owner of the security.

(i) a Depository shall be deemed to be the registered owner of the securities for the purposes

of effecting transfer of ownership of security on behalf of the Beneficial Owner.

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(ii) save as otherwise provided in (i) above, the Depository as the registered owner of the

securities shall not have any voting rights or any other rights in respect of the securities held by it. Such voting rights shall be vested with the Beneficial owner of the shares of the Company.

(g) Beneficial owner deemed as absolute owner. Save as herein otherwise provided, the Company

shall be entitled to treat the persons whose name appears as the Beneficial owner of the shares, debentures and other securities in the records of the Depository as the absolute owner thereof as regard receipt of dividends or bonus on shares, interest/premium on debentures and other securities and repayment thereof or for service of notices and all or any other matters connected with the Company and accordingly the Company shall not (except as ordered by the Court of competent jurisdiction or as by law required) be bound to recognize any benami trust or equity or equitable, contingent or other claim to or interest in such shares, debentures or other securities as the case may be, on the part of any other person whether or not it shall have express or implied notice thereof but the Board shall be entitled at their sole discretion to register any share in the joint names of any two or more persons or the survivors or the survivors of them.

(i) the Company shall cause to keep a Register and Index of Members and Register and Index of

Debenture holders in accordance with Section 151 and 152 of the Act respectively, and the Depositories Act, with details of shares and debentures held material and dematerialized forms in any media as may be permitted by law including in any form of electronic media. Notwithstanding anything in these Articles to the contrary, the Register and Index of Beneficial owners maintained by a Depository under Section 11 of the Depositories Act shall be deemed to be the Register and Index of Members for the purposes of the Act. The Company shall have the power to keep in any state or country outside India a branch of Register of Members resident in that state or country.

(j) notwithstanding anything in these Articles to the contrary, the Register and Index of Beneficial

owners maintained by a Depository under Section 11 of the Depositories Act shall be deemed to be the Register and Index of Debenture holders for the purposes of the Act.

(k) nothing contained in Section 108 of the Act or these Articles shall apply to the transfer of shares,

debentures or other securities effected by the transferor or transferee, both of whom are entered as Beneficial owners in the records of the Depository, provided that in respect of the shares, debentures and other securities held by the Depository on behalf of a Beneficial owner, Sections 153, 153A, 153B, 187B, 187C and 372A of the Act, shall not apply.

(l) Issue of Certificates, if required, in the case of dematerialised shares/debentures/other

securities and rights of Beneficial owner of such shares/debentures/other securities. Notwithstanding anything contained in these Articles, certificate, if required, for dematerialised share, debenture and any other security shall be issued in the name of the Depository and all the provisions contained in these Articles in respect of the rights of a member/debenture holder of the Company shall mutatis mutandis apply to the Depository as if it were a Member/debenture holder/security holder excepting that and notwithstanding that the Depository shall have been registered as the holder of a dematerialised share, debenture and any other security, the person who is the Beneficial owner of such shares, debentures and other securities shall be entitled to all the rights (other than those set out in these Articles) available to the registered shares, debentures and other securities, in the Company as set out in the other provisions of these Articles.

GENERAL MEETINGS Annual General Meeting Article 80 provides that, “Subject to the provisions contained in Section 166 and 210 of the Act, as far as applicable, the Company shall, in each year hold, in addition to any other meetings, and General Meeting as its Annual General Meeting and shall specify the meeting as such in the notice calling it, and not more than

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fifteen months shall elapse between the date of one Annual General Meeting of the Company and that of the next; provided further, that if the Registrar of Companies may for any special reason extend the time, within which any Annual General meeting (not being the first Annual General Meeting) shall be held by a period not exceeding three months, then such Annual General Meeting may be held, within such extended period; Article 81 provides that, “Every Annual General Meeting shall be called for a time during business hours, on a day that is not a public holiday and shall be held either at the registered office of the Company or at some other place within the city, town or village in which the registered office of the Company is situated, as the Boart may determine.” Extraordinary General Meeting Article 82 provides that, “All meetings of the Company other than the Annual General Meetings shall be called “Extraordinary General Meeting.” Article 83 provides that, “The Board may whenever they think fit, convene an “Extraordinary General Meeting.” Procedures for Extraordinary General Meetings. Article 84 provides that, “the Board shall on the requisition of such number of members of the Company as is specified in Section 169 of the Act forthwith proceed duly to call an Extraordinary General Meeting of the Company and in the case of such requisition, the provisions of the said Section shall have effect.” Article 85 provides that, “any valid requisition so made by members shall state the object or objects of the meeting proposed to be called, and shall be signed by the requisitionists and be deposited at the registered office of the Company provided that such requisition may consist of several documents in like form each signed by one or more requisitionists.” Article 86 provides that, “upon the receipt of any such requisition, the Board shall forthwith call an Extraordinary General Meeting and if they do not proceed within twenty-one days from the date of the requisition being deposited at the office to cause a meeting to be called on a day not later than forty-five days from the date of deposit of the requisition, the requisitionists, or such of their number as represent either a majority in value of the paid-up share capital held by all of them or not less than one-tenth of such of the paid-up share capital of the Company as is referred to in Section 169(4)(a) of the Act; whichever is less, may themselves call the meeting, but in either case any meeting so called shall be held within three months from the date of the delivery of the requisition as aforesaid.” Article 88 provides that, “the accidental omission to give notice to, or non-receipt of notice by, any member or other person to whom it should be given shall not invalidate the proceedings at the meeting.” Notice required for special resolutions Article 89 provides that, “no General Meeting, Annual or Extraordinary, shall be competent to enter upon, discuss or transact any item of business deemed to be special, unless notice thereof is given in the notice convening the meeting.” QUORUM Article 90 provides that, “five members entitled to vote and present in person shall be a quorum for a General Meeting. When more than one of the joint holders of a share are present, not more than one of them shall be counted for ascertaining the quorum. Several executors or administrators of a deceased person, in whose sole name the share stands, shall, for the purposes of this clause, be deemed joint holders thereof.”

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Article 92 provides that, “No business shall be transacted at any General Meeting, unless the quorum requisite shall be present at the commencement of the business.” CHAIRMAN Article 93 provides that, “the Chairman of the Board shall be entitled to take the chair at every General meeting. If there be no such Chairman, or if at any meeting, be shall not be present within fifteen minutes after the time appointed for holding such meeting, or being present declines to take the chair, the Board present may choose one of their number to be the Chairman, and in default of their doing so, the members present shall choose one of the Board to be the Chairman, and if no Director present be willing to take the chair, the members present shall on a show of hands, elect one of them to be the Chairman of the meeting. If a poll is demanded on the election of the Chairman, it shall be taken forthwith in accordance with the provisions of the powers of the Chairman under the said provisions. If some other person is elected Chairman as a result of the poll, he shall be the Chairman for the rest of the meeting.” Article 94 provides that, “no business shall be discussed at any General Meeting except election of the Chairman, white the Chair is vacant.” VOTING Article 95 provides that, “no resolution submitted to a meeting, unless proposed by the Chairman of the meeting, shall be discussed nor put to vote, until the same has been proposed by a member present and entitled to vote at such meeting and seconded by another member present and entitled to vote at such meeting.” Article 96 provides that “at any General Meeting a resolution put to the vote of the meeting, shall, unless a poll is demanded, be decided on a show of hands.” Article 97 provides that, “a declaration by the Chairman that on a show of hands, a resolution has or has not been carried either unanimously or by a particular majority, and an entry to that effect in the books containing the minutes of the meetings of the Company, shall be conclusive evidence of the fact, without proof of the number, or proportion of the votes cast in favour or against such resolution.” Poll Article 98 provides that (1) Before or on the declaration of the result of the voting on any resolution on a show of hands, a poll

may be ordered to be taken by the Chairman of the meeting at his own motion, and shall be ordered to be taken by him on a demand made in that behalf by any member or members present in person or by proxy and holding shares in the Company

(a) which confer a power to vote on the resolution not being less than one tenth of the total

voting power in respect of the resolution, or (b) on which an aggregate sum of not less than fifty thousand rupees has been paid up

(2) the demand for a poll may be withdrawn at any time by the person or persons who has made the

demand Voting by representative Article 112 provides that, “No member, not personally present, shall be entitled to vote on a show of hands, unless such member is a company or corporation, present by a representative duly authorised under Section 187 of the Act, in which case, such representative may vote on a show of hands, as if, he were an individual member of the Company.”

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Voting by proxy Article 113 provides that, “Any member of the Company entitled to attend and vote at a meeting of the Company shall be entitled to appoint more than one proxy to attend on the same occasion. Votes may be given either personally or by proxy, or in the case of a Company, or other corporation, by a representative duty authorised as aforesaid.” Deemed Registered Holder Article 119 provides that, “Any person entitled under the transmission clause to transfer any shares, may vote at the General Meeting in respect thereof, in the same manner as if he were the registered holder of such shares, provided that, forty-eight hours at least, before the time of holding the meeting. or adjourned meeting, as the case may be, at which he proposes to vote, he shall satisfy the Board of his right to transfer such shares, unless the Board shall have previously admitted his right to vote at such meeting.” Votes of joint members Article 120 provides that, “Where there are joint registered holders of any share, any one of such persons may vote at any meeting either personally or by proxy or by agent duly authorised under power of attorney in respect of such share, as if he were solely entitled thereto; and if more than one of such joint holders be present at any meeting, personally or by proxy or by an agent duly authorised under a power of attorney, that one of the said persons so present, whose name stands first or higher as the case may be, on the Register of Members in respect of such share shall alone be entitled to vote in respect thereof, but the other or others of the joint holders shall be entitled to be present at the meeting, Provided always, that a person present at any meeting personally, shall be entitled to vote in preference to a person present by an agent duty authorised under a power of attorney or by proxy, although the name of such person present by an agent or proxy, stands first or higher in the Register of Members in respect of such shares. Several executor or administrators of a deceased member, in whose (deceased member’s) sole name any share stands, shall, for the purpose of this clause, be deemed as joint holders thereof.” DIRECTORS Number of directors Article 125 provides that, “the number of Directors of the Company shall not be less than three or more than sixteen, excluding Alternate Directors.” Appointment of alternate director Article 126 provides that, “subject to the provisions contained in Article 125 hereof the Board shall have power at any time and from time to time to appoint any other persons as and addition to the Board. The Director so appointed as an additional director shall bold office only upto the date of the next Annual General Meeting of the Company but he shall be eligible for re-election at such meeting.” Article 127 provides that, “the Board of the Company may appoint an alternate Director to act for a Director (hereinafter called “the Original Director”) during his absence for a period of not less than three months from the State in which the registered office of the Company is situated. An alternate Director appointed under this Article shall vacate office if and when the Original Director returns to the State in which the registered office of the Company is situated. If the term of office of the original Director is determined before he so returns to the State in which the registered office of the Company is situated, any provision in the said Act or in these Articles for the automatic reappointment of retiring Directors in default of another appointment shall apply to the Original Director but not to the alternate Director.”

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Power to fill casual vacancies Article 128 provides that, “subject to the provisions of Sections 262, 264 and 284 (5) of the Act, the Board shall have power at any time and from time to time to appoint any other qualified person t9 be a Director to fill a casual vacancy. Any person So appointed shall hold office until the date upto which the Director in whose place he is appointed would have held office if it had not been vacated by him.” Nominee directors Article 129 provides that, “whenever the Board enter into a contract with any Central Government and/or State Government, any bank or financial institution or any person or persons (hereinafter referred to as the appointor) for borrowing any money or for providing any guarantee or security or for technical collaboration or assistance or for underwriting or enter into any other arrangement whatsoever, the Board shall have, subject to the provisions of Section 255 of the Act, the power to agree that such appointor shall have the right to appoint or nominate by a notice in writing addressed to the Company, one or more Directors on the Board for such period and upon such conditions as may be mentioned in the agreement and that such Director or Directors may not be liable to retire by rotation nor be required to hold any qualification shares. The Board may also agree that any such Director or Directors may be removed from time to time by the appointor entitled to appoint or nominate them and the appointor may appoint another or others in his or their place and also fill in any vacancy, which may occur as a result of any such Director or Directors ceasing to hold that office for any reason whatsoever. The Directors appointed or nominated under this Article shall be entitled to exercise and enjoy all or any of the rights and privileges exercised and enjoyed by the Board of the Company including payment of remuneration and travelling expenses to such Director or Directors as may be agreed by the Company with the appointor.” Article 130 provides that, “notwithstanding anything to the contrary contained in these Articles, so long as any moneys remain owing by the Company to any Financial Institution or Fund (hereinafter in this Article referred to as “the Investors”) out of any loan/debenture assistance granted by them to the company or so long as the Investors continue to hold debentures/shares in the Company as a result of underwriting or private placement, or so long as any liability of the Company arising out of any Guarantee furnished by the Investors on behalf of the Company remains outstanding, the Investors shall if so stipulated by them at the time of granting the loan or acquiring shares or debentures or issuing a guarantee have a right to appoint from time to time, any person or persons as a Director or Directors, whole-time or non-wholetime, (which Director or Directors, is/are hereinafter referred to as “Nominee Director/s”) on the Board of the Company and to remove from such office any person or persons so appointed and to appoint any person or persons in his or their places.” The Board of the Company shall have no power to remove from office the Nominee Directors. At the option of the Investors such Nominee Directors shall not be required to hold any qualification share in the Company. Also at the option of the Investors such Nominee Directors shall not be liable for retirement by rotation. Subject as aforesaid, the Nominee Directors shall be entitled to the same rights and privileges and be subject to the same obligations as any other Director of the Company. The Nominee Directors so appointed shall hold the said office only so long as any moneys remain owing by the Company to the Investors out of any loans/ debenture assistance or so long as the investors hold or continue to hold Debentures/shares in the Company as a result of underwriting or private placement or the liability of the Company arising out of the guarantee given as aforesaid is outstanding and the Nominee Directors so appointed in exercise of the said power shall ipso facto vacate such office immediately the moneys owing by the Company to the investors are paid off or on the Investors ceasing to hold Debentures/ shares in the Company or on the satisfaction of the liability of the Company arising out of the guarantee furnished by the Investors.

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Remuneration of directors Article 133 provides that, (1) “subject to the provisions of the Act, a Managing Director or Director, who is in the whole-time

employment of the Company may be paid remuneration either by way of monthly payment or at a specified percentage of the net profits of the Company or partly by one way and partly by the other;

(2) subject to the provisions of the Act, a Director who is neither in the whole time employment nor a

Managing Director may be paid remuneration either

(i) by way of monthly, quarterly or annual payment with the approval of the Central Government if required;

(ii) by way of Commission if the Company by a special resolution authorises such payment; (3) the fee payable to a Director for attending meetings of the Board or Committee thereof shall be the

maximum sum applicable to the Company as may be prescribed by law or by the Central Government from time to time

Powers to add to board of directors Article 137 provides that, “subject to Section 258 of the Act, the Company may by Ordinary Resolution from time to time, increase or reduce the number of Directors within the limits fixed in that behalf by these Articles, and may alter their qualifications and the Company may (subject to the provisions of Section 284 of the Act) remove any Director before the expiration of his period of office and appoint another qualified person in his stead. The person so appointed shall hold office during such time as the Director in whose place he is appointed would have held such office if he had not been removed.” MANAGING DIRECTORS Appointment of managing director Article 139 provides that,

“(1) subject to provisions of the Articles hereof, the Board may from time to time appoint one or more

of their body to be the Managing Director or Managing Directors of the Company on such terms as they may deem proper;

(2) the Managing Director or Managing Directors while he or they continue to hold the office, shall

not be subject to retirement by rotation and shall not be taken into account in determining the retirement by rotation of Directors or the number of Directors to retire, but he or they shall be subject to the same provisions as to resignation or removal as the other Directors of the Company and he or they shall ipso facto immediately cease to be a Managing Director or Managing Directors if he or they cease to hold the office of a Director or Directors for any cause;

(3) the remuneration of a Managing. Director or Managing Directors shall, subject to the provisions of

the Act and any contract between the Company and him or them, be from time to time fixed by the Board, and may be by way of a fixed salary and/or commission on the profits of the Company and/or in any other mode and may be in addition to the remuneration for attendance at Board meetings as may be provided under any other clause;

(4) the Board may, from time to time, subject to the provisions of the Act entrust to and confer upon

the Managing Director for the time being, such of the powers exercisable by the Board under these presents or by law, as they may think fit, and may confer such powers for such time and to be exercised for such objects and purposes and upon such terms and conditions and with such

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restrictions, as they may think expedient, and they may confer such powers, either collaterally with or to the exclusion of or in substitution for all or any of the powers of the Board, in that behalf, and may from time to time revoke, withdraw, alter or vary all or any of such powers.”

WHOLETIME DIRECTORS Article 140 provides that, “subject to the applicable provisions of the Act and these Articles, the Board may from time to time, appoint one or more of their body to be a Whole-time Director or Wholetime Directors of the Company for such term and subject to such terms and conditions they may think fit.” PROCEEDINGS OF DIRECTORS Meetings of directors Article 141 provides that, “ “(1) the Directors may meet together for the despatch of business, adjourn and otherwise regulate their

meetings and proceedings, as they think fit; (2) a meeting of the Board shall be held at least once in every three months and at least four such

meetings shall be held in every year; (3) a Director may, and the Manager, or Secretary if any, shall, on the requisition of a Director,

summon a meeting of the Board Committee of Directors Article 148 provides that, “all acts done by any meeting of the Board or of a Committee of Directors, or by any person acting as a director, shall notwithstanding that it may be afterwards discovered that there was some defect in the appointment of one or more of such Directors, or of any person acting as aforesaid, or that they or any of them were or was disqualified, be as valid as if, every such Director or such person has been duly appointed and was qualified to be a Director. Provided that nothing herein contained shall be deemed to give validity to acts done by a Director after his appointment has been shown to be invalid or to have terminated.” Powers of the board Article 150 provides that, “subject to the provisions of the Act and these Articles, the Board of the Company shall be entitled to exercise all such powers and to do all such acts and things as the Company is authorised to exercise and do, provided that, the Board shall not exercise any power or do any act or thing which is directed or required, whether by the Act or any other Act, or by the Memorandum of Association of the Company or these presents or otherwise, to be exercised or done by the Company in General Meeting, provided further, that in exercising any such power or doing any such act or thing, the Board shall be subject to the provisions contained in this behalf in the Act or in any other Act or in the Memorandum of Association of the Company or these presents or in any regulations not inconsistent therewith and duly made thereunder including regulations made by the Company in General Meeting.” Article 152 provides that, “subject to the provisions contained in Section 292 of the Act, the Board of the Company shall exercise the following powers on behalf of the Company and they shall do so only by means of resolutions passed At meetings of the Board viz (a) the power to make calls on shareholders in respect of moneys unpaid on their shares; (b) the power to issue debentures; (c) the power to borrow moneys otherwise than on debentures;

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(d) the power to invest the funds of the Company; (e) and the power to make loans. Provided that the Board may by a resolution passed at a meeting, delegate to any Committee of Directors the Managing Director, or the Manager or any other principal officer of the Company, the powers (1) to borrow moneys otherwise than on debentures, (2) to invest the funds of the Company and (3) to make loans, to the extent hereinafter specified namely (1) every resolution delegating the power to borrow moneys otherwise than on debentures, shall

specify the total amount outstanding at any one time upto which moneys may be borrowed by the delegate;

(2) every resolution delegating the power to invest the funds of the Company, shall specify the total

amount to which the funds may be invested, and the nature of the investments which may be made by the delegate;

(3) every resolution delegating the power to make loans shall specify the total amount upto which

loans may be made by the delegate, the purposes for which the loans may be made and the maximum amount of loans which may be made for each such purpose in individual cases;

Nothing contained in this article shall be deemed to affect the right of the company in General Meeting to impose restrictions and conditions on the exercise by the Board of any of the powers herein specified. BORROWING POWERS Article 153 provides that, “subject to the provisions of Section 58A, 292 and 293 of the Act the Board may, from time to time at its discretion by resolution passed at a meeting of the Board, accept deposits from members either in advance of calls or otherwise and generally raise or borrow or secure the payment of any sum or sums of money for the purposes of the Company.” Article 154 provides that, “the Board may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions in all respects as they think fit, and in particular, by the issue of bonds, perpetual or redeemable debentures or debenture stock or any mortgage, charge or other security on the undertaking of the whole or any part of the property of the Company (both present and future) including its uncalled capital for the time being. The Board shall exercise such power only by means of resolutions passed at their meetings and not by circular resolutions.” Article 155 provides that, “debentures, debenture stock, bonds and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued” Article 156 provides that, “any debentures, debenture stock, bonds or other securities may be issued at discount, premium or otherwise, and may be issued on condition that they shall be convertible into shares of any denomination, and with any special privileges as to redemption, surrender, drawings, allotment of shares, attending (but not voting) at General Meetings of the Company, appointment of directors and otherwise provided however, that no debentures with the right to conversion into or allotment of shares shall be issued, except with the consent of the Company in General Meeting by a special resolution.” AUDITORS Article 164 provides that, “auditors of the Company shall be appointed at every Annual General meeting or otherwise as the occasion may require and their appointment and re-appointment and the remuneration payable to them shall be in accordance with the provisions of Section 224, 224A and 225 of the Act. The qualifications and disqualifications of Auditors shall be as set out in Section 224 and 226 of the Act and

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their powers and duties shall be as set out in Section 227 and 228 of the Act, in regard to audit of accounts of any branch office of the Company, the provisions of Section 228 of the Act shall apply.”

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MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

Copies of the following contracts which have been entered or are to be entered into by the Company (not

being contracts entered into in the ordinary course of business carried on by the Company or contracts

entered into more than two years before the date of this Draft Red Herring Prospectus) which are or may

be deemed material have been attached to the copy of this Draft Red Herring Prospectus delivered to the

Registrar of Companies, Maharashtra at Mumbai for registration. Copies of the abovementioned contracts

and also the documents for inspection referred to hereunder, may be inspected at the Registered and

Corporate Office of the Company located at Afcons House, 16, Shah Industrial Estate, Veera Desai Road,

Azad Nagar Andheri (W), Mumbai 400 053 from 10.00 a.m. to 4.00 p.m. on working days from the date of

this Draft Red Herring Prospectus until the date of closure of the Issue.

Material Contracts 1. Letter of Engagement dated January 6, 2007 for the appointment of Enam Financial Consultants

Private. Limited, CLSA India Limited, SBI Capital Markets Limited and JM Morgan Stanley Private Limited from the Company appointing them as BRLM and CBRLMs.

2. Memorandum of Understanding dated January 8, 2007 between the Company, the BRLM and the

CBRLMs. 3. Memorandum of Understanding dated [●] 2007 between the Company and the Registrar to the

Issue.

4. Escrow Agreement dated [•] between the Company, BRLM, CBRLMs Escrow Collection Bank and the Registrar to the Issue.

5. Underwriting Agreement dated [•] between the Company, BRLM, CBRLMs and the Syndicate Members.

6. Syndicate Agreement dated [•] between the Company, BRLM, the CBRLMs and the Syndicate Members.

B. Documents for Inspection

1. Certified copies of the updated Memorandum and Articles of Association of the Company as

amended from time to time. 2. Certificate of Incorporation of the Company dated November 22, 1976. 3. IPO resolutions. 4. The report of M/s C.C. Chokshi & Co., Chartered Accountants and Mr. J.C. Bhatt, Chartered

Accountant, the statutory auditors, dated Janaury 5, 2007 prepared as per Indian GAAP and mentioned in this Draft Red Herring Prospectus together with copies of balance sheet and profit and loss account of the Company referred to therein.

5. Consent from the Auditors for inclusion of their names as the statutory auditors and of their

reports on accounts in the form and context in which they appear in this Draft Red Herring Prospectus.

6. The Tax Benefit Report dated Deecember 22, 2006 from the Company’s statutory auditors.

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7. Consent of Directors, Legal Advisors to the Issue, the Syndicate Members, Registrars to the Issue, Escrow Collection Banker, Banker to the Issue, Bankers to the Company, Company Secretary and Compliance Officer as referred to in their specific capacities.

8. Resolution of the Members of Afcons passed at the Annual General Meeting held on September

28, 2006 appointing M/s C.C. Chokshi & Co., Chartered Accountants and Mr. J.C. Bhatt, Chartered Accountant as statutory auditors for the year 2006-2007.

9. Agreement dated September 1, 2005, Board resolution dated November 28, 2006 and Shareholder

Resolution dated September 30, 2005 in relation to the appointment and remuneration of Mr. K. Subrahmanian, Managing Director.

10. Agreement dated September 1, 2005, Board resolution dated November 28, 2006 and Shareholder

Resolution dated September 30, 2005 in relation to the appointment and remuneration of Mr. S. Paramasivan, whole-time Director.

11. Agreement dated September 1, 2005, Board resolution dated November 28, 2006 and Shareholder

Resolution dated September 30, 2005 in relation to the appointment and remuneration of Mr. A.N. Jangle, whole-time Director.

12. Due Diligence Certificate dated January 8, 2007 addressed to SEBI from the BRLM. 13. SEBI observation Letter Nos. [●] dated [●]. 14. Initial listing application dated [●], 2007 and [●], 2007, for listing the Equity Shares of the

Company on NSE and BSE respectively. 15. In principle listing approvals dated [●] and [●] issued by NSE and BSE respectively. 16. Tripartite Agreement dated [●], 2007 the Company, NSDL and the Registrar to the Issue. 17. Tripartite Agreement dated [●] 2007 between the Company, CDSL and the Registrar to the Issue. Any of the contracts or documents mentioned in this Draft Red Herring Prospectus may be amended or modified at any time if so required in the interest of the Company or if required by the other parties, without reference to the shareholders subject to compliance of the provisions contained in the Companies Act and other relevant statutes.

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DECLARATION

We, hereby declare that all relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government or the guidelines issued by the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Draft Red Herring Prospectus is contrary to the provisions of the Companies Act, 1956 or the Securities and Exchange Board of India Act, 1992 or Rules made there under or guidelines issued, as the case may be. We further certify that all statements in this Draft Red Herring Prospectus are true and correct. SIGNED BY THE DIRECTORS OF THE COMPANY _________________ C. P. Mistry (Chairman) _________________ K. Subrahmanian (Managing Director) _________________ P. S. Mistry _________________ S. P. Mistry __________________ J.J Parakh _________________ A.N.Jangle _________________ S. Paramasivan _________________ A.H. Divanji _________________ N. J. Jhaveri _________________ N. D. Khurody* _________________ P. N. Kapadia * Signed through duly constituted power of attroney

Date: January 8, 2007 Place: Mumbai