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The information in this Preliminary Placement Document is not complete and may be changed. The Issue is meant only for QIBs on a private placement basis and is not an offer to the public or to any other class of investors to purchase the Equity
Shares. This Preliminary Placement Document is not an offer to sell any Equity Shares and is not soliciting an offer to subscribe to or buy the Equity Shares in any jurisdiction where such offer, sale or subscription is not permitted. It is being issued for
the sole purpose of information or discussion relating to the Equity Shares that may be Allotted through the Placement Document.
Preliminary Placement Document
Subject to Completion
Not for Circulation
Serial Number: [●]
Strictly Confidential
SADBHAV ENGINEERING LIMITED
(Incorporated on October 3, 1988 as a limited liability company under the provisions of the Companies Act, 1956 with CIN L45400GJ1988PLC011322)
Sadbhav Engineering Limited (the “Company”) is issuing up to [●] equity shares of face value of ` 1 each (the “Equity Shares”) at a
price of ` [●] per Equity Share (the “Issue Price”), including a premium of ` [●] per Equity Share aggregating up to ` [●] (the “Issue”).
ISSUE IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009, AS AMENDED (THE “SEBI REGULATIONS”) AND SECTION 42 OF THE COMPANIES ACT, 2013, AS
AMENDED AND THE RULES MADE THEREUNDER
THE ISSUE AND THE DISTRIBUTION OF THIS PRELIMINARY PLACEMENT DOCUMENT IS BEING MADE TO QUALIFIED INSTITUTIONAL
BUYERS (“QIBs”) AS DEFINED UNDER THE SEBI REGULATIONS IN RELIANCE UPON CHAPTER VIII OF THE SEBI REGULATIONS AND SECTION
42 OF THE COMPANIES ACT, 2013, AS AMENDED AND THE RULES MADE THEREUNDER. THIS PRELIMINARY PLACEMENT DOCUMENT IS
PERSONAL TO EACH PROSPECTIVE INVESTOR AND DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO
THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTORS WITHIN OR OUTSIDE INDIA.
YOU ARE NOT AUTHORIZED TO AND MAY NOT (1) DELIVER THIS PRELIMINARY PLACEMENT DOCUMENT TO ANY OTHER PERSON; OR (2)
REPRODUCE THIS PRELIMINARY PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER. ANY DISTRIBUTION OR REPRODUCTION OF THIS
PRELIMINARY PLACEMENT DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY
RESULT IN A VIOLATION OF THE SEBI REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS.
INVESTMENTS IN EQUITY SHARES INVOLVE A DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD NOT INVEST IN THIS ISSUE UNLESS
THEY ARE PREPARED TO TAKE THE RISK OF LOSING ALL OR PART OF THEIR INVESTMENT. PROSPECTIVE INVESTORS ARE ADVISED TO
CAREFULLY READ “RISK FACTORS” ON PAGE 38 BEFORE MAKING AN INVESTMENT DECISION RELATING TO THIS ISSUE. EACH
PROSPECTIVE INVESTOR IS ADVISED TO CONSULT ITS OWN ADVISORS ABOUT THE PARTICULAR CONSEQUENCES OF AN INVESTMENT IN
THE EQUITY SHARES BEING ISSUED PURSUANT TO THIS PRELIMINARY PLACEMENT DOCUMENT.
A copy of this Preliminary Placement Document (which includes disclosures prescribed under Form PAS-4 (as defined hereinafter) has been delivered to
the Stock Exchanges. A copy of the Placement Document (which will include disclosures prescribed under Form PAS-4) will also be delivered to the
Stock Exchanges. Our Company shall also make the requisite filings with the Registrar of Companies, Ahmedabad (the “RoC”) and the Securities and
Exchange Board of India (“SEBI”) within the stipulated period as required under the Companies Act, 2013 and the Companies (Prospectus and
Allotment of Securities) Rules, 2014. This Preliminary Placement Document has not been reviewed by SEBI, the Reserve Bank of India (the “RBI”), the
Stock Exchanges, the RoC or any other regulatory or listing authority and is intended only for use by the QIBs. This Preliminary Placement Document
has not been and will not be registered as a prospectus with the RoC, will not be circulated or distributed to the public in India or any other jurisdiction,
and will not constitute a public offer in India or any other jurisdiction. This Preliminary Placement Document has been prepared by our Company solely
for providing information in connection with the Issue.
Invitations, offers and sales of the Equity Shares shall only be made pursuant to this Preliminary Placement Document together with the respective
Application Form (defined hereinafter) and the Placement Document and the Confirmation of Allocation Note (defined hereinafter). For further details,
see the section “Issue Procedure” on page 140. The distribution of this Preliminary Placement Document or the disclosure of its contents without the
prior consent of our Company to any person, other than QIBs and persons retained by QIBs to advise them with respect to their purchase of the Equity
Shares is unauthorized and prohibited. Each prospective investor, by accepting delivery of this Preliminary Placement Document, agrees to observe the
foregoing restrictions and make no copies of this Preliminary Placement Document or any documents referred to in this Preliminary Placement
Document.
The information on the website of our Company or any website directly or indirectly linked to the website of our Company does not form part of this
Preliminary Placement Document and prospective investors should not rely on such information contained in, or available through, any such website.
The Equity Shares are listed on the National Stock Exchange of India Limited (the “NSE”) and the BSE Limited (the “BSE”, and together with NSE, the
“Stock Exchanges”). The closing price of the outstanding Equity Shares on the NSE and the BSE on [●], 2014, was ` [●] and ` [●] per Equity Share,
respectively. In-principle approvals under Clause 24(a) of the Equity Listing Agreements (as defined hereinafter) for listing of the Equity Shares have
been received from both the NSE and the BSE on October 14, 2014. Applications shall be made for obtaining the listing and trading approvals for the
Equity Shares to be issued pursuant to the Issue on the Stock Exchanges. The Stock Exchanges assume no responsibility for the correctness of any
statements made, opinions expressed or reports contained herein. Admission of the Equity Shares for trading on the Stock Exchanges should not be taken
as an indication of the merits of the business of our Company or the Equity Shares.
The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws. The Equity Shares are being offered and sold only outside the United States in offshore transactions in
reliance on the Regulation S under the Securities Act (Regulation S). See “Selling Restrictions” and “Transfer Restrictions” on pages 152 and 156,
respectively.
BOOK RUNNING LEAD MANAGERS
INGA CAPITAL PRIVATE LIMITED
AXIS CAPITAL LIMITED
This Preliminary Placement Document is dated October 14, 2014.
STANDARD CHARTERED SECURITIES (INDIA)
LIMITED
TABLE OF CONTENTS
NOTICE TO INVESTORS ..................................................................................................................................... 2 REPRESENTATIONS BY INVESTORS ............................................................................................................. 4 DISCLAIMER CLAUSE OF THE STOCK EXCHANGES .............................................................................. 9 PRESENTATION OF FINANCIAL AND OTHER INFORMATION ........................................................... 10 INDUSTRY AND MARKET DATA ................................................................................................................... 11 FORWARD-LOOKING STATEMENTS ........................................................................................................... 12 ENFORCEMENT OF CIVIL LIABILITIES ..................................................................................................... 13 EXCHANGE RATES ............................................................................................................................................ 14 DEFINITIONS AND ABBREVIATIONS .......................................................................................................... 15 DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES
ACT, 2013 ............................................................................................................................................................... 21 SUMMARY OF BUSINESS ................................................................................................................................. 24 SUMMARY OF THE ISSUE................................................................................................................................ 29 SELECTED FINANCIAL INFORMATION ..................................................................................................... 32 RISK FACTORS .................................................................................................................................................... 38 MARKET PRICE INFORMATION ................................................................................................................... 68 USE OF PROCEEDS............................................................................................................................................. 71 CAPITALISATION STATEMENT .................................................................................................................... 72 CAPITAL STRUCTURE ...................................................................................................................................... 73 DIVIDENDS ........................................................................................................................................................... 75 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS ....................................................................................................................................................... 76 INDUSTRY OVERVIEW ..................................................................................................................................... 96 BUSINESS............................................................................................................................................................. 103 BOARD OF DIRECTORS AND SENIOR MANAGEMENT........................................................................ 123 PRINCIPAL SHAREHOLDERS ....................................................................................................................... 134 ISSUE PROCEDURE .......................................................................................................................................... 140 PLACEMENT ...................................................................................................................................................... 150 SELLING RESTRICTIONS .............................................................................................................................. 152 TRANSFER RESTRICTIONS........................................................................................................................... 156 THE SECURITIES MARKET OF INDIA ....................................................................................................... 157 DESCRIPTION OF EQUITY SHARES ........................................................................................................... 160 STATEMENT OF TAX BENEFITS ................................................................................................................. 163 LEGAL PROCEEDINGS ................................................................................................................................... 176 INDEPENDENT AUDITORS ............................................................................................................................ 180 GENERAL INFORMATION ............................................................................................................................. 181 FINANCIAL STATEMENTS ............................................................................................................................ 182 DECLARATION .................................................................................................................................................. 183 1
NOTICE TO INVESTORS
Our Company has furnished and accepts full responsibility for all of the information contained in this
Preliminary Placement Document and confirms that to its best knowledge and belief, having made all
reasonable enquiries, this Preliminary Placement Document contains all information with respect to our
Company and the Equity Shares that is material in the context of the Issue. The statements contained in this
Preliminary Placement Document relating to our Company and the Equity Shares are, in every material respect,
true and accurate and not misleading. The opinions and intentions expressed in this Preliminary Placement
Document with regard to our Company and the Equity Shares are honestly held, have been reached after
considering all relevant circumstances, are based on information presently available to our Company and are
based on reasonable assumptions. There are no other facts in relation to our Company and the Equity Shares, the
omission of which would, in the context of the Issue, make any statement in this Preliminary Placement
Document misleading in any material respect. Further, all reasonable enquiries have been made by our
Company to ascertain such facts and to verify the accuracy of all such information and statements.
The Book Running Lead Managers have not separately verified all of the information contained in this
Preliminary Placement Document (financial, legal or otherwise). Accordingly, neither the Book Running Lead
Managers nor any of their shareholders, employees, counsel, officers, directors, representatives, agents or
affiliates make any express or implied representation, warranty or undertaking, and no responsibility or liability
is accepted by the Book Running Lead Managers or any of their shareholders, employees, counsel, officers,
directors, representatives, agents or affiliates in connection with its investigation of the accuracy or
completeness of the information contained in this Preliminary Placement Document or any other information
supplied in connection with the Equity Shares. Each person receiving this Preliminary Placement Document
acknowledges that such person has not relied on the Book Running Lead Managers or on any of their
shareholders, employees, counsel, officers, directors, representatives, agents or affiliates in connection with its
investigation of the accuracy of such information or its investment decision, and each such person must rely on
its own examination of our Company and the merits and risks involved in investing in the Equity Shares.
No person is authorized to give any information or to make any representation not contained in this Preliminary
Placement Document and any information or representation not so contained must not be relied upon as having
been authorized by or on behalf of the Book Running Lead Managers. The delivery of this Preliminary
Placement Document at any time does not imply that the information contained in it is correct as of any time
subsequent to its date.
The Equity Shares to be issued pursuant to the Issue have not been approved, disapproved or
recommended by the U.S. Securities and Exchange Commission, any other federal or state authorities in
the United States or the securities authorities of any non-U.S. jurisdiction or any other U.S. or non-U.S.
regulatory authority. No authority has passed on or endorsed the merits of this Issue or the accuracy or
adequacy of this Preliminary Placement Document. Any representation to the contrary is a criminal
offence in the United States and may be a criminal offence in other jurisdictions. The Equity Shares have
not been and will not be registered under the Securities Act, and may not be offered or sold within the United
States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of
the Securities Act and applicable state securities laws.
The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended
(the “Securities Act”), and may not be offered or sold within the United States except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state
securities laws. The Equity Shares are being offered and sold only outside the United States in offshore
transactions in reliance on the Regulation S under the Securities Act (Regulation S). See “Selling Restrictions”
and “Transfer Restrictions” on pages 152 and 156, respectively.
The distribution of this Preliminary Placement Document or the disclosure of its contents without the prior
consent of our Company to any person, other than QIBs specified by the Book Running Lead Managers or their
representatives, and those retained by QIBs to advise them with respect to their purchase of the Equity Shares is
unauthorized and prohibited. Each prospective investor, by accepting delivery of this Preliminary Placement
Document, agrees to observe the foregoing restrictions and to not make copies of this Preliminary Placement
Document or any documents referred to in this Preliminary Placement Document.
The distribution of this Preliminary Placement Document and the Issue may be restricted by law in certain
countries or jurisdictions. As such, this Preliminary Placement Document does not constitute, and may not be
used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or
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solicitation is not authorized, or to any person to whom it is unlawful to make such offer or solicitation. In
particular, no action has been taken by our Company and the Book Running Lead Managers which would
permit an offering of the Equity Shares or distribution of this Preliminary Placement Document in any country
or jurisdiction, other than India, where action for that purpose is required. Accordingly, the Equity Shares may
not be offered or sold, directly or indirectly, and neither this Preliminary Placement Document nor any offering
materials in connection with the Equity Shares may be distributed or published in or from any country or
jurisdiction, except under circumstances that will result in compliance with any applicable rules and regulations
of any such country or jurisdiction.
In making an investment decision, prospective investors must rely on their own examination of our Company
and the terms of the Issue, including the merits and risks involved. Investors should not construe the contents of
this Preliminary Placement Document as legal, tax, accounting or investment advice. Investors should consult
their own counsel and advisors as to business, legal, tax, accounting and related matters concerning the Issue. In
addition, neither our Company nor the Book Running Lead Managers are making any representation to any
offeree or subscriber of the Equity Shares regarding the legality of an investment in the Equity Shares by such
offeree or subscriber under applicable legal, investment or similar laws or regulations.
Each purchaser of the Equity Shares in the Issue is deemed to have acknowledged, represented and
agreed that it is eligible to invest in India and in our Company under Indian law, including Chapter VIII
of the SEBI Regulations and Section 42 of the Companies Act, 2013, and that it is not prohibited by SEBI
or any other statutory authority from buying, selling or dealing in the securities including the Equity
Shares. Each purchaser of the Equity Shares in the Issue also acknowledges that it has been afforded an
opportunity to request from our Company and review information relating to our Company and the
Equity Shares. This Preliminary Placement Document contains summaries of certain terms of certain
documents, which are qualified in their entirety by the terms and conditions of such documents.
The information on our Company’s website, any website directly or indirectly linked to the website of our
Company or the website of the Book Running Lead Managers or their respective affiliates, does not constitute
nor form part of this Preliminary Placement Document. Prospective investors should not rely on the information
contained in, or available through such websites.
NOTICE TO INVESTORS IN CERTAIN OTHER JURISDICTIONS
For information to investors in certain other jurisdictions, see the sections “Selling Restrictions” and “Transfer
Restrictions” on pages 152 and 156, respectively.
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REPRESENTATIONS BY INVESTORS
References herein to “you” or “your” is to the prospective investors in the Issue.
By bidding for and/or subscribing to any Equity Shares in the Issue, you are deemed to have represented,
warranted, acknowledged and agreed to our Company and the Book Running Lead Managers, as follows:

You are a “QIB” as defined in Regulation 2(1)(zd) of the SEBI Regulations and not excluded pursuant
to Regulation 86 of the SEBI Regulations, having a valid and existing registration under applicable
laws and regulations of India, and undertake to acquire, hold, manage or dispose of any Equity Shares
that are Allocated to you in accordance with Chapter VIII of the SEBI Regulations and undertake to
comply with the SEBI Regulations, the Companies Act and all other applicable laws, including any
reporting obligations;

If you are not a resident of India, but a QIB, you are an Eligible FPI including an FII (including a subaccount other than a sub-account which is a foreign corporate or a foreign individual) having a valid
and existing certificate of registration with or on behalf of SEBI under the applicable laws in India or a
multilateral or bilateral development financial institution or an FVCI, and have a valid and existing
registration with SEBI under the applicable laws in India and are eligible to invest in India under
applicable law, including the FEMA Regulations, and any notifications, circulars or clarifications
issued thereunder, and have not been prohibited by SEBI or any other regulatory authority, from
buying, selling or dealing in securities;

You will make all necessary filings with appropriate regulatory authorities, including RBI, as required
pursuant to applicable laws;

If you are Allotted Equity Shares, you shall not, for a period of one year from the date of Allotment,
sell the Equity Shares so acquired except on the floor of the Stock Exchanges (additional requirements
apply if you are in jurisdictions other than India, see section “Selling Restrictions” and “Transfer
Restrictions” on pages 152 and 156, respectively for further details);

You have made, or been deemed to have made, as applicable, the representations set forth under
sections entitled “Selling Restrictions” and “Transfer Restrictions” on pages 152 and 156, respectively;

You are aware that the Equity Shares have not been and will not be registered through a prospectus
under the Companies Act, the SEBI Regulations or under any other law in force in India. This
Preliminary Placement Document has not been reviewed or affirmed by the RBI, SEBI, the Stock
Exchanges, the RoC or any other regulatory or listing authority and is intended only for use by QIBs;

You are entitled to subscribe for and acquire the Equity Shares under the laws of all relevant
jurisdictions that apply to you and that you have fully observed such laws and you have the necessary
capacity, have obtained all necessary consents, governmental or otherwise, and authorizations and have
complied with all necessary formalities, to enable you to commit to participation in the Issue and to
perform your obligations in relation thereto (including, without limitation, in the case of any person on
whose behalf you are acting, all necessary consents and authorizations to agree to the terms set out or
referred to in this Preliminary Placement Document), and will honour such obligations;

Neither our Company nor the Book Running Lead Managers or any of their shareholders, directors,
officers, employees, counsels, representatives, agents or affiliates is making any recommendations to
you or advising you regarding the suitability of any transactions it may enter into in connection with
the Issue and your participation in the Issue is on the basis that you are not, and will not, up to the
Allotment of the Equity Shares, be a client of the Book Running Lead Managers. Neither the Book
Running Lead Managers nor any of their shareholders, directors, officers, employees, counsels,
representatives, agents or affiliates have any duties or responsibilities to you for providing the
protection afforded to their clients or customers or for providing advice in relation to the Issue and are
not in any way acting in any fiduciary capacity;

You confirm that, either: (i) you have not participated in or attended any investor meetings or
presentations by our Company or its agents (the “Company Presentations”) with regard to our
Company or the Issue; or (ii) if you have participated in or attended any Company Presentations: (a)
you understand and acknowledge that the Book Running Lead Managers may not have knowledge of
4
the statements that our Company, its Directors, its key managerial personnel or its agents may have
made at such Company Presentations and are therefore unable to determine whether the information
provided to you at such Company Presentations may have included any material misstatements or
omissions, and, accordingly you acknowledge that the Book Running Lead Managers have advised you
not to rely in any way on any information that was provided to you at such Company Presentations, and
(b) confirm that, to the best of your knowledge, you have not been provided any material information
relating to our Company and the Issue that was not publicly available;

You are, at the time the Equity Shares are purchased, located outside of the United States (within the
meaning of Regulation S) and you are not an affiliate of our Company or a person acting on behalf of
such an affiliate;

You are purchasing the Equity Shares in an offshore transaction meeting the requirements of Rule 903
or Rule 904 of Regulation S.

All statements other than statements of historical fact included in this Preliminary Placement
Document, including, without limitation, those regarding our Company’s financial position, business
strategy, plans and objectives of management for future operations (including development plans and
objectives relating to our Company’s business), are forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other important factors that could
cause actual results to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Such forward-looking statements are based
on numerous assumptions regarding our Company’s present and future business strategies and
environment in which our Company will operate in the future. You should not place undue reliance on
forward-looking statements, which speak only as at the date of this Preliminary Placement Document.
Our Company assumes no responsibility to update any of the forward-looking statements contained in
this Preliminary Placement Document;

You are aware and understand that the Equity Shares are being offered only to QIBs and are not being
offered to the general public, and the Allotment of the same shall be on a discretionary basis at the
discretion of our Company and the Book Running Lead Managers;

You are aware that if you are Allotted more than 5.00% of the Equity Shares in the Issue, our Company
shall be required to disclose your name and the number of the Equity Shares Allotted to you to the
Stock Exchanges and the Stock Exchanges will make the same available on their websites and you
consent to such disclosures;

You have been provided a serially numbered copy of this Preliminary Placement Document and have
read it in its entirety, including in particular, the section “Risk Factors” on page 38;

In making your investment decision, you have (i) relied on your own examination of our Company and
the terms of the Issue, including the merits and risks involved, (ii) made your own assessment of our
Company, the Equity Shares and the terms of the Issue based solely on the information contained in
this Preliminary Placement Document and no other disclosure or representation by our Company, its
Directors, Promoters and affiliates, or any other party, (iii) consulted your own independent counsel
and advisors or otherwise have satisfied yourself concerning, without limitation, the effects of local
laws, (iv) received all information that you believe is necessary or appropriate in order to make an
investment decision in respect of our Company and the Equity Shares, and (v) relied upon your own
investigation and resources in deciding to invest in the Issue;

Neither our Company and the Book Running Lead Managers, nor any of its shareholders, directors,
officers, employees, counsels, representatives, agents or affiliates, have provided you with any tax
advice or otherwise made any representations regarding the tax consequences of purchase, ownership
and disposal of the Equity Shares (including but not limited to the Issue and the use of proceeds from
the Equity Shares). You will obtain your own independent tax advice from a reputable service provider
and will not rely on the Book Running Lead Managers nor on any of their shareholders, directors,
officers, employees, counsels, representatives, agents or affiliates when evaluating the tax
consequences in relation to the Equity Shares (including but not limited to the Issue and the use of
proceeds from the Equity Shares). You waive, and agree not to assert any claim against our Company
and/or the Book Running Lead Managers or any of their shareholders, directors, officers, employees,
counsels, representatives, agents or affiliates with respect to the tax aspects of the Equity Shares or as a
5
result of any tax audits by tax authorities, wherever situated;

You are a sophisticated investor and have such knowledge and experience in financial, business and
investment matters as to be capable of evaluating the merits and risks of an investment in the Equity
Shares. You are experienced in investing in private placement transactions of securities of companies
in a similar nature of business, similar stage of development and in similar jurisdictions. You and any
accounts for which you are subscribing to the Equity Shares (i) are each able to bear the economic risk
in relation to your investment in the Equity Shares, (ii) will not look to our Company and/or the Book
Running Lead Managers or any of their shareholders, directors, officers, employees, counsels,
representatives, agents or affiliates for all or part of any such loss or losses that may be suffered in
connection with the Issue, including losses arising out of non-performance by our Company of any of
its obligations or any breach of any representations and warranties by our Company, whether to you or
otherwise, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no
need for liquidity with respect to the investment in the Equity Shares, and (v) have no reason to
anticipate any change in your or their circumstances, financial or otherwise, which may cause or
require any sale or distribution by you or them of all or any part of the Equity Shares. You
acknowledge that an investment in the Equity Shares involves a high degree of risk and that the Equity
Shares are, therefore, a speculative investment. You are seeking to subscribe to the Equity Shares in the
Issue for your own investment and not with a view to resell or distribute;

If you are acquiring the Equity Shares to be issued pursuant to the Issue, for one or more managed
accounts, you represent and warrant that you are authorized in writing, by each such managed account
to acquire such Equity Shares for each managed account and to make (and you hereby make) the
representations, warranties, acknowledgements and agreements herein for and on behalf of each such
account, reading the reference to ‘you’ to include such accounts;

You are not a “Promoter” (as defined under the SEBI Regulations) of our Company or any of its
affiliates and are not a person related to the Promoters, either directly or indirectly, and your Bid does
not directly or indirectly represent the “Promoter”, or “Promoter Group”, (as defined under the SEBI
Regulations) of our Company or persons relating to the Promoter;

You have no rights under a shareholders’ agreement or voting agreement with the Promoters or persons
related to the Promoters, no veto rights or right to appoint any nominee director on the Board, other
than the rights acquired, if any, in the capacity of a lender not holding any Equity Shares, which shall
not be deemed to be a person related to the Promoter;

You will have no right to withdraw your Bid after the Bid/Issue Closing Date;

You are eligible to apply and hold the Equity Shares Allotted to you together with any Equity Shares
held by you prior to the Issue. Further, you confirm that your aggregate holding after the Allotment of
the Equity Shares shall not exceed the level permissible as per any applicable regulation;

The Bid made by you would not result in triggering a tender offer under the Takeover Regulations;

The aggregate Allotment made to you and other QIBs in the Issue that belong to the same group or are
under common control as you, shall not exceed 50.00% of the Issue. For the purposes of this
representation:
(a).
The expression ‘belong to the same group’ shall derive meaning from the concept of
‘companies under the same group’ as provided in sub-section (11) of Section 372 of the
Companies Act, 1956; and
(b).
‘Control’ shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the
Takeover Regulations;

You shall not undertake any trade in the Equity Shares credited to your beneficiary account until such
time that the final listing and trading approvals for such Equity Shares are issued by the Stock
Exchanges, as applicable;

You are aware that (i) applications for in-principle approval, in terms of Clause 24(a) of the Equity
Listing Agreements, for listing and admission of the Equity Shares and for trading on the Stock
6
Exchanges, were made and approval has been received from each of the Stock Exchanges, and (ii) the
application for the final listing and trading approvals will be made only after Allotment. There can be
no assurance that the final approvals for listing and trading in the Equity Shares will be obtained in
time or at all. Our Company shall not be responsible for any delay or non-receipt of such final
approvals or any loss arising from such delay or non-receipt;

You are aware and understand that the Book Running Lead Managers have entered into a placement
agreement with our Company, whereby the Book Running Lead Managers have, severally and not
jointly, subject to the satisfaction of certain conditions set out therein, agreed to manage the Issue and
use reasonable best efforts to procure subscriptions for the Equity Shares on the terms and conditions
set forth therein;

You agree that in terms of Section 42(7) of the Companies Act, 2013, our Company shall file the list of
QIBs (to whom this Preliminary Placement Document is circulated), along with other particulars with
the RoC and SEBI within 30 days of circulation of this Preliminary Placement Document and other
filings required under the Companies Act, 2013;

You understand that the contents of this Preliminary Placement Document are exclusively the
responsibility of our Company, and that neither the Book Running Lead Managers nor any person
acting on their behalf has or shall have any liability for any information, representation or statement
contained in this Preliminary Placement Document or any information previously published by or on
behalf of our Company and will not be liable for your decision to participate in the Issue based on any
information, representation or statement contained in this Preliminary Placement Document or
otherwise. By accepting a participation in the Issue, you agree to the same and confirm that the only
information you are entitled to rely on, and on which you have relied in committing yourself to acquire
the Equity Shares is contained in this Preliminary Placement Document, such information being all that
you deem necessary to make an investment decision in respect of the Equity Shares, you have neither
received nor relied on any other information, representation, warranty or statement made by or on
behalf of the Book Running Lead Managers or our Company or any of their respective affiliates or any
other person, and neither the Book Running Lead Managers nor our Company nor any other person
will be liable for your decision to participate in the Issue based on any other information,
representation, warranty or statement that you may have obtained or received;

You understand that the Book Running Lead Managers do not have any obligation to purchase or
acquire all or any part of the Equity Shares purchased by you in the Issue;

You are eligible to invest in India under applicable law, including the FEMA Regulations, and any
notifications, circulars or clarifications issued thereunder, and have not been prohibited by SEBI or any
other regulatory authority, from buying, selling or dealing in securities;

You understand that the Equity Shares have not been and will not be registered under the Securities Act
or with any securities regulatory authority of any state of the United States and accordingly, may not be
offered or sold within the United States, except in reliance on an exemption from the registration
requirements of the Securities Act;

You agree that any dispute arising in connection with the Issue will be governed by and construed in
accordance with the laws of India, and the courts in Mumbai, India shall have exclusive jurisdiction to
settle any disputes which may arise out of or in connection with this Preliminary Placement Document
and the Placement Document;

Each of the representations, warranties, acknowledgements and agreements set out above shall
continue to be true and accurate at all times up to and including the Allotment, listing and trading of the
Equity Shares in the Issue;

You agree to indemnify and hold our Company, its Directors, its key managerial personnel, the Book
Running Lead Managers and their respective employees and affiliates harmless from any and all costs,
claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with
any breach of the foregoing representations, warranties, acknowledgements and undertakings made by
you in this Preliminary Placement Document. You agree that the indemnity set forth in this paragraph
shall survive the resale of the Equity Shares by, or on behalf of, the managed accounts; and
7

Our Company, its Directors, its key managerial personnel, the Book Running Lead Managers, their
respective affiliates and others will rely on the truth and accuracy of the foregoing representations,
warranties, acknowledgements and undertakings, which are given to the Book Running Lead Managers
on their own behalf and on behalf of our Company, and are irrevocable.
OFFSHORE DERIVATIVE INSTRUMENTS
Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of
Regulation 22 of the SEBI FPI Regulations (as defined below), FPIs (other than Category III foreign portfolio
investors and unregulated broad based funds, which are classified as Category II FPI by virtue of their
investment manager being appropriately regulated) may issue or otherwise deal in offshore derivative
instruments (as defined under the SEBI FPI Regulations as any instrument, by whatever name called, which is
issued overseas by a FPI against securities held by it that are listed or proposed to be listed on any recognized
stock exchange in India, as its underlying, and all such offshore derivative instruments are referred to herein as
“P-Notes”), for which they may receive compensation from the purchasers of such instruments. P-Notes may be
issued only in favour of those entities which are regulated by any appropriate foreign regulatory authorities
subject to compliance with ‘know your client’ requirements. An FPI shall also ensure that no further issue or
transfer of any instrument referred to above is made to any person other than such entities regulated by
appropriate foreign regulatory authorities. P-Notes have not been and are not being offered or sold pursuant to
this Preliminary Placement Document. This Preliminary Placement Document does not contain any information
concerning P-Notes or the issuer(s) of any P-notes, including any information regarding any risk factors relating
thereto.
Any P-Notes that may be issued are not securities of our Company and do not constitute any obligation of,
claims on or interests in our Company. Our Company has not participated in any offer of any P-Notes, or in the
establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P-Notes. Any PNotes that may be offered are issued by, and are the sole obligations of, third parties that are unrelated to our
Company. Our Company and the Book Running Lead Managers do not make any recommendation as to any
investment in P-Notes and do not accept any responsibility whatsoever in connection with any P-Notes. Any PNotes that may be issued are not securities of the Book Running Lead Managers and do not constitute any
obligations of or claims on the Book Running Lead Managers. Affiliates of the Book Running Lead Managers
which are Eligible FPIs may purchase, to the extent permissible under law, the Equity Shares in the Issue, and
may issue P-Notes in respect thereof.
Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate
disclosures as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from the
issuer(s) of such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any
P-Notes or any disclosure related thereto. Prospective investors are urged to consult their own financial,
legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including whether
P-Notes are issued in compliance with applicable laws and regulations.
8
DISCLAIMER CLAUSE OF THE STOCK EXCHANGES
As required, a copy of this Preliminary Placement Document has been submitted to each of the Stock
Exchanges. The Stock Exchanges do not in any manner:
(i)
warrant, certify or endorse the correctness or completeness of the contents of this Preliminary
Placement Document;
(ii)
warrant that the Equity Shares will be listed or will continue to be listed on the Stock Exchanges; or
(iii)
take any responsibility for the financial or other soundness of our Company, its Promoters, its
management or any scheme or project of our Company;
and it should not for any reason be deemed or construed to mean that this Preliminary Placement Document has
been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquire
any Equity Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have
any claim against the Stock Exchanges 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.
9
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
In this Preliminary Placement Document, unless otherwise specified or the context otherwise indicates or
implies, references to ‘you’, ‘your’, ‘offeree’, ‘purchaser’, ‘subscriber’, ‘recipient’, ‘investors’, ‘prospective
investors’ and ‘potential investor’ are to the prospective investors in the Issue, references to ‘Company’, or ‘our
Company’ are to Sadbhav Engineering Limited and references to ‘we’, ‘us’, ‘our’, ‘the Group’ or ‘our Group’
are to, where applicable, our Company and its consolidated Subsidiaries, Associates and Joint Ventures
including entities controlled through contractual arrangements, except as the context otherwise requires.
In this Preliminary Placement Document, all references to “Indian Rupees”, “Rs.” and “`” are to the legal
currency of India, all references to “U.S. dollars”, “USD” and “U.S.$” are to the legal currency of the United
States of America. All references herein to the ‘U.S.’ or the ‘United States’ are to the United States of America
and its territories and possessions and all references to “India” are to the Republic of India and its territories and
possessions. References to the singular also refers to the plural and one gender also refers to any other gender,
wherever applicable, and the words “Lakh” or “Lac” mean “100 thousand”, the word “million” means “10
lakh”, the word “crore” means “10 million” or “100 lakhs” and the word “billion” means “1,000 million” or
“100 crores”. All references herein to the ‘Government’ or ‘GoI’ or the ‘Central Government’ or the ‘State
Government’ are to the Government of India, central or state, as applicable.
Our Company publishes its financial statements in Indian Rupees. The consolidated financial statements of our
Company as of and for the year ended March 31, 2012, 2013 and 2014 and the unaudited and reviewed
consolidated financial statements for the three month period ended June 30, 2014, included herein have been
prepared in line with the accounting principles generally accepted in India and have been audited by the
Auditors in accordance with the applicable generally accepted auditing standards in India prescribed by the
ICAI. Our Company does not attempt to quantify the impact of U.S. GAAP or IFRS on the financial data
included in this Preliminary Placement Document, nor does our Company provide a reconciliation of its
financial statements to International Financial Reporting Standards (“IFRS”) or U.S. GAAP. Each of IFRS and
U.S. GAAP differ in certain significant respects from Indian GAAP. Accordingly, the degree to which the
financial statements prepared in accordance with Indian GAAP included in the Preliminary Placement
Document will provide meaningful information is entirely dependent on the reader’s familiarity with the
respective accounting practices. Any reliance by persons not familiar with Indian accounting practices on the
financial disclosures presented in this Preliminary Placement Document should accordingly be limited. See
section “Risk Factors” on page 38.
All numerical and financial information as set out and presented in this Preliminary Placement Document for the
sake of consistency and convenience have been rounded off to two decimal places. Accordingly, figures shown
as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.
The fiscal year of our Company commences on April 1 of each calendar year and ends on March 31 of the
succeeding calendar year, so, unless otherwise specified or if the context requires otherwise, all references to a
particular ‘Financial Year’, ‘fiscal year’ or ‘fiscal’ or ‘FY’ are to the twelve month period ended on March 31 of
that year.
10
INDUSTRY AND MARKET DATA
Information regarding market position, growth rates and other industry data and certain industry forecasts
pertaining to the businesses of our Company (on a consolidated basis as a Group) contained in this Preliminary
Placement Document consists of estimates based on data reports compiled by government bodies, recognized
industry sources, professional organizations and analysts, data from other external sources and knowledge of the
markets in which our Company competes. Unless stated otherwise, the statistical information included in this
Preliminary Placement Document relating to the industry in which our Company operates has been reproduced
from various trade, industry and government publications and websites. We confirm that such information and
data has been accurately reproduced, and that as far as we are aware and are able to ascertain from information
published by third parties, no facts have been omitted that would render the reproduced information inaccurate
or misleading.
This data is subject to change and cannot be verified with certainty due to limits on the availability and
reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. Neither our
Company nor the Book Running Lead Managers have independently verified this data and do not make any
representation regarding the accuracy or completeness of such data. Our Company takes responsibility for
accurately reproducing such information but accepts no further responsibility in respect of such information and
data. In many cases, there is no readily available external information (whether from trade or industry
associations, government bodies or other organizations) to validate market-related analysis and estimates, so our
Company has relied on internally developed estimates. Additionally, some data relating to our business have
been assessed and quantified internally by our Company or our Subsidiaries as no other credible third party
sources are available for such data. The assessment of the data is based on our understanding, experience and
internal estimates of our business. While our Company believes its internal estimates to be reasonable, such
estimates have not been verified by any independent sources and neither our Company nor the Book Running
Lead Managers can assure potential investors as to their accuracy.
11
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Preliminary Placement Document that are not statements of historical facts
constitute ‘forward-looking statements’. Investors can generally identify forward-looking statements by
terminology such as ‘aim’, ‘anticipate’, ‘believe’, ‘continue’, ‘can’, ‘could’, ‘estimate’, ‘expect’, ‘intend’,
‘may’, ‘objective’, ‘plan’, ‘potential’, ‘project’, ‘pursue’, ‘shall’, ‘should’, ‘will’, ‘would’, or other words or
phrases of similar import. Similarly, statements that describe the strategies, objectives, plans or goals of our
Company are also forward-looking statements. However, these are not the exclusive means of identifying
forward-looking statements.
All statements regarding our Company’s expected financial conditions, results of operations; business plans and
prospects are forward-looking statements. These forward-looking statements include statements as to our
Company’s business strategy, planned projects, revenue and profitability (including, without limitation, any
financial or operating projections or forecasts), new business and other matters discussed in this Preliminary
Placement Document that are not historical facts. These forward-looking statements contained in this
Preliminary Placement Document (whether made by our Company or any third party), are predictions and
involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual
results, performance or achievements of our Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements or other projections. All
forward-looking statements are subject to risks, uncertainties and assumptions about our Company that could
cause actual results to differ materially from those contemplated by the relevant forward-looking statement.
Important factors that could cause the actual results, performances and achievements of our Company to be
materially different from any of the forward-looking statements include, among others:

ability to accurately forecast traffic volumes for our projects;

ability to comply with environmental, employee related or health and safety laws and regulations or
any other local laws or regulations;

ability to be able to obtain adequate financing or generate sufficient cash flow to meet our significant
capital expenditures and liquidity requirements;

delay and/or failure in the supply of materials, services and goods from third parties at acceptable
prices and quality; and

Dependence on road projects undertaken or awarded by government entities or other entities funded by
the Government of India.
Additional factors that could cause actual results, performance or achievements of our Company to differ
materially include, but are not limited to, those discussed under the sections entitled “Risk Factors”, “Industry
Overview”, “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” on pages 38, 96, 103 and 76, respectively.
The forward-looking statements contained in this Preliminary Placement Document are based on the beliefs of
the management, as well as the assumptions made by, and information currently available to, the management of
our Company. Although our Company believes that the expectations reflected in such forward-looking
statements are reasonable at this time, it cannot assure the investors that such expectations will prove to be
correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking
statements. In any event, these statements speak only as of the date of this Preliminary Placement Document or
the respective dates indicated in this Preliminary Placement Document and our Company and BRLMs undertake
no obligation to update or revise any of them, whether as a result of new information, future events, changes in
assumptions or changes in factors affecting these forward looking statements or otherwise. If any of these risks
and uncertainties materialise, or if any of our Company’s underlying assumptions prove to be incorrect, the
actual results of operations or financial condition of our Company could differ materially from that described
herein as anticipated, believed, estimated or expected. All subsequent forward-looking statements attributable to
our Company are expressly qualified in their entirety by reference to these cautionary statements.
12
ENFORCEMENT OF CIVIL LIABILITIES
Our Company is a public limited liability company incorporated under the laws of India. All the Directors and
the key managerial personnel of our Company named herein are residents of India and all or a substantial
portion of the assets of our Company and such persons are located in India. As a result, it may be difficult or
may not be possible for investors outside India to effect service of process upon our Company or such persons in
India, or to enforce judgments obtained against such parties outside India.
Recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of the
Code of Civil Procedure, 1908, as amended (the “Civil Procedure Code”), on a statutory basis. Section 13 of
the Civil Procedure Code provides that a foreign judgment shall be conclusive regarding any matter directly
adjudicated upon between the same parties or parties litigating under the same title, except: (i) where the
judgment has not been pronounced by a court of competent jurisdiction; (ii) where the judgment has not been
given on the merits of the case; (iii) where it appears on the face of the proceedings that the judgment is founded
on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is
applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural justice; (v)
where the judgment has been obtained by fraud; and (vi) where the judgment sustains a claim founded on a
breach of any law then in force in India.
India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments.
However, Section 44A of the Civil Procedure Code provides that a foreign judgment rendered by a superior
court (within the meaning of that section) in any jurisdiction outside India which the Government has by
notification declared to be a reciprocating territory, may be enforced in India by proceedings in execution as if
the judgment had been rendered by a District Court in India. However, Section 44A of the Civil Procedure Code
is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or
other charges of a like nature or in respect of a fine or other penalties and does not include arbitration awards.
Each of the United Kingdom, Republic of Singapore and Hong Kong (among others) has been declared by the
Government to be a reciprocating territory for the purposes of Section 44A of the Civil Procedure Code, but the
United States of America has not been so declared. A judgment of a court in a jurisdiction which is not a
reciprocating territory may be enforced only by a fresh suit upon the judgment and not by proceedings in
execution. The suit must be brought in India within three years from the date of the foreign judgment in the
same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would
award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely
that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive
or inconsistent with public policy of India. Further, any judgment or award in a foreign currency would be
converted into Rupees on the date of such judgment or award and not on the date of payment. A party seeking to
enforce a foreign judgment in India is required to obtain approval from the RBI to repatriate outside India any
amount recovered, and any such amount may be subject to income tax in accordance with applicable laws.
13
EXCHANGE RATES
Fluctuations in the exchange rate between the Rupee and foreign currencies will affect the foreign currency
equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect
the conversion into foreign currencies of any cash dividends paid in Rupees on the Equity Shares.
The following table sets forth information with respect to the exchange rates between the Rupee and the U.S.
dollar (in ` per US$1.00), for the periods indicated. The exchange rates are based on the reference rates released
by RBI, which are available on the website of RBI. No representation is made that any Rupee amounts could
have been, or could be, converted into U.S. dollars at any particular rate, the rates stated below, or at all.
On October 13, 2014 the exchange rate (RBI reference rate) was ` 61.25 to US$ 1.00. (Source: www.rbi.org.in)
Average(1)
Period end
High(2)
(` Per US$)
Low(3)
Fiscal Year:
2014
2013
2012
60.10
54.39
51.16
60.50
54.45
47.95
68.35
57.22
54.24
53.74
50.56
43.95
Quarter ended:
September 30, 2014
June 30, 2014
March 31, 2014
61.61
60.09
60.10
60.59
59.77
61.79
60.59
61.12
62.99
59.72
58.43
60.10
61.61
61.56
60.33
60.37
60.23
61.12
60.26
60.43
59.72
59.06
58.43
59.65
Month ended:
September 30, 2014
61.61
60.86
August 31, 2014
60.47
60.90
July 31, 2014
60.25
60.06
June 30, 2014
60.09
59.73
May 31, 2014
59.03
59.31
April 30, 2014
60.34
60.36
(1) Average of the official rate for each working day of the relevant period.
(2) Maximum of the official rate for each working day of the relevant period.
(3) Minimum of the official rate for each working day of the relevant period.
(Source: www.rbi.org.in)
14
DEFINITIONS AND ABBREVIATIONS
This Preliminary Placement Document uses the definitions and abbreviations set forth below, which you should
consider when reading the information contained herein. References to any legislation, act or regulation shall be
to such term as amended from time to time.
Company Related Terms
Term
AJTL
AJTL Project
ARRIL
ARRIL Project
Articles / Articles of Association
Associates
Audit Committee
Auditors
BHTPL
BHTPL Project
Board of Directors / Board
BOT Projects/BOT
BRTPL
BRTPL Project
Chindwara Project
Construction Business
DPTL
DPTL Project
Equity Shares
Group
HYTPL
HYTPL Project
Infrastructure
Business
Development
L&T
Maharashtra Border Checkpost
Project/ MBCPNL Project
MAT
Description
Aurangabad - Jalna Toll Way Limited
Four laning divided into two sections: (i) from Aurangabad airport to
Jalna by-pass; (ii) Zalta by-pass to Beed by-pass on the MSH 6.
Ahmedabad Ring Road Infrastructure Limited
Improving and widening the two lane Sardar Patel Ring Road located
around the Ahmedabad city in Gujarat to a four lane road on BOT basis.
Articles of association of our Company, as amended from time to time
Mumbai Nasik Expressway Limited and Dhule Palesner Tollway
Limited
The audit committee of the Board of Directors described in “Board of
Directors and Senior Management” on page 123
Surana Maloo & Co., statutory auditors of our Company
Bijapur - Hungund Tollway Private Limited
Four laning of Bijapur Hungund section of National Highway 13 under
NHDP Phase III on DBFOT basis
The board of directors of our Company or any duly constituted
committee thereof
Projects awarded to us for development of roads and highways on BOT,
DBFOMT or DBFOT basis and Maharashtra Border Checkpost Project
Bhilwara - Rajsamand Tollway Private Limited
Four laning of Rajsamand Bhilwara section of National Highway 8 on
DBFOT basis
Rehabilitation and upgradation to two lane with paved shoulder and
maintenance of Multai- Chindwara-Seoni section of National Highway
69A and Narsinghpur-Amarwara-Chindwara-Saoner section on National
Highway 26B, in Madhya Pradesh and Maharashtra
Our business under which we undertake engineering, procurement and
construction (“EPC”) activities for transportation, irrigation and mining
sectors. For details, see “Our Business” on page 103.
Dhule Palesner Tollway Limited
Four laning of the Dhule Palesner section of National Highway 3 on
DBFOT basis.
The equity shares of our Company of a face value of ` 1 each
The Company, it Subsidiaries, Associates and Joint Ventures including
entities controlled through contractual arrangements, except as the
context otherwise requires
Hyderabad - Yadgiri Tollway Private Limited
Four laning of Hyderabad Yadgiri section of National Highway 202 on
DBFOT basis
Our business under which we undertake development of roads and
highways on ‘Build, Operate and Transfer’ (“BOT”) basis. For details,
see “Our Business” on page 103
Larsen & Toubro Limited
The concession granted by Government of Maharashtra to Maharashtra
Border Checkpost Network Limited for modernizing, computerizing and
integrating 22 border check posts located at the borders of Maharashtra,
and collection of service fee, parking charges and loading and unloading
charges from different categories of commercial vehicles, for a period of
24 years and 6 months.
Minimum alternative tax
15
Term
MBCPNL
MBHPL
MBHPL Project
Memorandum or Memorandum of
Association
MNEL
MNEL Project
NMC
NSEL
NSEL Project
Order Book
Promoter Group
Promoters
Registered Office
RHTPL
RHTPL Project
RPTPL
RPTPL Project
SBTPL
SIPL
Subsidiaries
SUTPL
SUTPL Project
The Company / our Company
we / us / our / our Group
Description
Maharashtra Border Check Post Network Limited
Mysore - Bellary Highway Private Limited
Upgrading and maintenance of existing State Highway (SH 3 and SH
33) from Malavalli to Pavagada in Karnataka in DBFOMT basis
Memorandum of association of our Company, as amended from time to
time
Mumbai Nasik Expressway Limited
Four laning of Mumbai to Nashik stretch (Vadape – Gonde section) of
National Highway 3
Narmada Main Canal
Nagpur - Seoni Express Way Limited
Construction of four lane road in the Seoni Bypass, Maharashtra
Balance value of work to be executed in respect of our existing contracts
Promoter group of our Company as per the definition provided in
Regulation 2(1)(zb) of the SEBI Regulations
Promoters of our Company, being. Vishnubhai M. Patel and Shantaben
V. Patel.
The registered office of our Company is located at ‘Sadbhav House’,
Opposite Law Garden Police Chowki, Ellisbridge, Ahmedabad 380 006
Rohtak - Hissar Tollway Private Limited
Four laning of Rohtak - Hissaar section of National Highway 10 under
NHDP Phase III on DBFOT basis, including a new connectivity
between National Highway 10 and National Highway 7
Rohtak - Panipat Tollway Private Limited
Four laning of Rohtak Panipat section of National Highway 71A on a
DBFOT basis
Solapur - Bijapur Tollway Private Limited
Sadbhav Infrastructure Project Limited
The subsidiaries of our Company, including step down subsidiaries,
namely, Sadbhav Infrastructure Project Limited, Nagpur – Seoni
Express Way Limited, Ahmedabad Ring Road Infrastructure Limited,
Aurangabad Jalna Toll Way Limited, Bijapur Hungund Tollway Private
Limited, Hyderabad Yadgiri Tollway Private Limited, Maharashtra
Border Check Post Network Limited, Rohtak Panipat Tollway Private
Limited, Solapur Bijapur Tollway Private Limited, Shreenathji Udaipur
Tollway Private Limited, Rohtak - Hissar Tollway Private Limited,
Mysore - Bellary Highway Private Limited and Bhiwara Rajsamand Toll
Way Private Limited
Shreenathji - Udaipur Tollway Private Limited
Four laning of Gomati Chauraha - Udaipur section of National Highway
8 under NHDP Phase IV on DBFOT basis
Sadbhav Engineering Limited, a limited liability company having its
registered office at ‘Sadbhav House’, Opposite Law Garden Police
Chowki, Ellisbridge, Ahmedabad 380 006
Our Company and its Subsidiaries, Associates and Joint Ventures
including entities controlled through contractual arrangements, except as
the context otherwise requires
Issue Related Terms
Term
Allocated / Allocation
Allot / Allotment / Allotted
Description
The allocation of Equity Shares following the determination of the Issue
Price to QIBs on the basis of the Application Form submitted by them,
by our Company in consultation with the Book Running Lead Managers
and in compliance with Chapter VIII of the SEBI Regulations
Unless the context otherwise requires, the issue and allotment of Equity
Shares to be issued pursuant to the Issue
16
Term
Allottees
Application Form
Bid(s)
Bid/Issue Closing Date
Bid/Issue Opening Date
Bid/Issue Period
Bidder
Book Running Lead Managers
CAN or Confirmation of Allocation
Note
Closing Date
Cut-off Price
Designated Date
Equity Listing Agreement(s)
Escrow Agreement
Escrow Banks
Escrow Bank Account
Floor Price
Issue
Issue Price
Issue Size
Mutual Fund
Mutual Fund Portion
Pay-in Date
Placement Agreement
Description
QIBs to whom Equity Shares are issued and Allotted pursuant to the
Issue
The form (including any revisions thereof) pursuant to which a QIB
shall submit a Bid for the Equity Shares in the Issue
Indication of interest of a Bidder, including all revisions and
modifications thereto, as provided in the Application Form, to subscribe
for the Equity Shares in the Issue
[●], 2014, which is the last date up to which the Application Forms shall
be accepted
October 14, 2014
Period between the Bid/Issue Opening Date and the Bid/Issue Closing
Date, inclusive of both days, during which prospective Bidders can
submit their Bids
Any prospective investor, being a QIB, who makes a Bid pursuant to the
terms of this Preliminary Placement Document and the Application
Form
Inga Capital Private Limited, Axis Capital Limited and Standard
Chartered Securities (India) Limited
Note or advice or intimation to QIBs confirming Allocation of Equity
Shares to such QIBs after determination of the Issue Price and
requesting payment for the entire applicable Issue Price for all Equity
Shares Allocated to such QIBs
The date on which Allotment of Equity Shares pursuant to the Issue
shall be made, i.e. on or about [●], 2014
The Issue Price of the Equity Shares to be issued pursuant to the Issue
which shall be finalized by our Company in consultation with the Book
Running Lead Managers
The date of credit of Equity Shares to the QIB’s demat account, as
applicable to the respective QIB
The agreement entered into by our Company with each of the Stock
Exchanges in relation to the Equity Shares listed on each of the Stock
Exchanges
Agreement dated October 14, 2014, entered into amongst our Company,
the Escrow Bank and the Book Running Lead Managers for collection
of the Bid Amounts and for remitting refunds, if any, of the amounts
collected, to the Bidders
Axis Bank Limited, Kotak Mahindra Bank Limited and Standard
Chartered Bank
The account entitled “SEL – QIP Escrow Account” with regard to any
money received towards the subscription of the Equity Shares, opened
with the Escrow Bank, subject to the terms of the Escrow Agreement
The floor price of ` 219.06 which has been calculated in accordance
with Chapter VIII of the SEBI Regulations. In terms of the SEBI
Regulations, the Issue Price cannot be lower than the Floor Price. Our
Company may offer a discount of not more than 5% on the Floor Price
in terms of Regulation 85 of the SEBI Regulations.
The offer, issue and Allotment of [●] Equity Shares to QIBs pursuant to
Chapter VIII of the SEBI Regulations and the provisions of the
Companies Act, 2013
` [●] per Equity Share
The issue of up to [●] Equity Shares aggregating up to ` [●]
A mutual fund registered with SEBI under the Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996
10% of the Equity Shares proposed to be Allotted in the Issue, which is
available for Allocation to Mutual Funds
The last date specified in the CAN for payment of application monies by
the successful Bidders
Placement agreement dated October 14, 2014, entered into by our
17
Term
Placement Document
Preliminary Placement Document
QIBs or Qualified Institutional
Buyers
QIP
Regulation S
Relevant Date
Securities Act
U.S. person
Description
Company and the Book Running Lead Managers
The placement document to be issued by our Company in accordance
with Chapter VIII of the SEBI Regulations and Section 42 of the
Companies Act, 2013
This preliminary placement document dated October 14, 2014 issued in
accordance with Chapter VIII of the SEBI Regulations and Section 42 of
the Companies Act, 2013
Qualified institutional buyers as defined under Regulation 2(1)(zd) of
the SEBI Regulations
Qualified institutions placement under Chapter VIII of the SEBI
Regulations
Regulation S under the Securities Act
October 14, 2014, which is the date of the meeting of the Board, or any
committee duly authorized by the Board, deciding to open the Issue
The U.S. Securities Act of 1933, and the related rules and regulations
“U.S. person” as defined in Regulation S
Conventional and general terms
Term
` / Rs. / INR / Rupees
AIF
AS
AUDA
BOT
BSE
Calendar Year
Category III Foreign
Investor
CCI
CIN
CLB
COD
Companies Act
Companies Act, 1956
Portfolio
Companies Act, 2013
Competition Act
Consolidated FDI Policy
CPI
Cr.P.C
DBFOT
DBFOMT
Depositories
Depositories Act
Depository Participant or DP
DP ID
EBITDA
EGM
Eligible FPIs
Description
Indian Rupees
Alternative Investment Fund
Accounting Standards notified under the Companies Act, 1956, read with
General Circular 8/2014 dated April 4, 2014 issued by the MCA
Ahmedabad Urban Development Authority
Build, operate and transfer
BSE Limited
Year ending on December 31
An FPI registered as a category III foreign portfolio investor under the
SEBI FPI Regulations
Competition Commission of India
Corporate Identity Number
Company Law Board
Commencement of Operation Date
Companies Act, 1956 and/or the Companies Act, 2013, as applicable
Companies Act, 1956, as amended (without reference to the provisions
thereof that have ceased to have effect upon the notification of the Notified
Sections) and the rules made thereunder
Companies Act, 2013, to the extent in force pursuant to the notification of
the Notified Sections, and the rules made thereunder
The Competition Act, 2002
Circular 1 of 2014 issued by the Department of Industrial Policy and
Promotion, Ministry of Commerce and Industry, Government, effective
from April 17, 2014
Consumer Price Index
The Code of Criminal Procedure, 1973
Design, Build, Finance, Operate and Transfer
Design, Build, Finance, Operate, Maintain and Transfer
NSDL and CDSL
The Depositories Act, 1996
A depository participant as defined under the Depositories Act
Depository participant identity
Earnings before interest, tax, depreciation and amortization
Extraordinary general meeting
FPIs that are eligible to participate in this Issue and do not include
qualified foreign investors and Category III Foreign Portfolio Investors
who are not allowed to participate in the Issue
18
Term
FDI
FEMA
FEMA Regulations
FII Regulations
FIIs
Financial year or Fiscal year or
Fiscal
FIPB
Form PAS-4
FPI
FVCI
FY
GAAP
GDP
General Meeting
GoI or Government
I.T. Act
ICAI
IFRS
IND-AS
Indian GAAP
KSHIP
Land Acquisition Act, 2013
MAT
MCA
MOU
MPRDC
NEFT
NHAI
Non-Resident or NR
Notified Sections
NRI
NSDL
NSE
OCB or Overseas Corporate Body
Official Gazette
Description
Foreign direct investment
The Foreign Exchange Management Act, 1999, together with rules and
regulations thereunder
The Foreign Exchange Management (Transfer or Issue of Security by a
Person Resident Outside India) Regulations, 2000
The Securities and Exchange Board of India (Foreign Institutional
Investors) Regulations, 1995
Foreign Institutional Investors as defined under the SEBI FPI Regulations
Period of 12 months ended March 31 of that particular year
Foreign Investment Promotion Board
Form PAS-4 prescribed under the Companies (Prospectus and Allotment
of Securities) Rules, 2014
Foreign portfolio investors as defined under the SEBI FPI Regulations and
includes person who has been registered under the SEBI FPI Regulations.
Any foreign institutional investor or qualified foreign investor who holds a
valid certificate of registration is deemed to be a foreign portfolio investor
till the expiry of the block of three years for which fees have been paid as
per the Securities and Exchange Board of India (Foreign Institutional
Investors) Regulations, 1995
Foreign Venture Capital Investors (as defined under the SEBI (Foreign
Venture Capital Investors) Regulations, 2000) registered with the SEBI
Fiscal Year
Generally Accepted Accounting Principles
Gross Domestic Product
AGM or EGM
Governments in India, central or state, as applicable
The Income Tax Act, 1961
Institute of Chartered Accountants of India
International Financial Reporting Standards
Indian accounting standards converged with IFRS, which has been
proposed for implementation by the ICAI
Generally accepted accounting principles in India
Karnataka State Highways Improvement Project
Land Acquisition, Rehabilitation and Resettlement Act, 2013
Minimum Alternate Tax
Ministry of Corporate Affairs, GoI
Memorandum of Understanding
Madhya Pradesh State Road Development Corporation Limited
National Electronic Fund Transfer
National Highways Authority of India
A person resident outside India, as defined under the FEMA and includes a
Non-Resident Indian
Sections of the Companies Act, 2013 that have been notified by the
Government of India
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 (Deposit) Regulations, 2000
National Securities Depository Limited
National Stock Exchange of India Limited
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 the beneficial interest is irrevocably held by
NRIs directly or indirectly and which was in existence on October 3, 2003
and immediately before such date was eligible to undertake transactions
pursuant to the general permission granted to OCBs under the FEMA.
OCBs are not allowed to invest in the Issue
The official gazette of India or a State
19
Term
O&M
P.A.
PAN
PPP MODEL
PSU
QFI
RBI
Re./ `
SCRA
SCRR
SEBI
SEBI Act
SEBI FPI Regulations
SEBI Insider Trading Regulations
SEBI Regulations
SSNNL
Takeover Regulations
Description
Operation and maintenance
Per annum
Permanent Account Number allotted under the I.T. Act
Private public partnership model
Public sector unit
Qualified financial investor as defined under the SEBI FPI Regulations
Reserve Bank of India
One Indian Rupee
The Securities Contracts (Regulation) Act, 1956
The Securities Contracts (Regulation) Rules, 1957
The Securities and Exchange Board of India established under the SEBI
Act
The Securities and Exchange Board of India Act, 1992
The Securities and Exchange Board of India (Foreign Portfolio Investors)
Regulations, 2014
The Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 1992
The Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009
Sardar Sarovar Narmada Nigam Limited
The Securities and Exchange Board of India (Substantial Acquisition of
Shares and Takeovers) Regulations, 2011
SPCB
State Pollution Control Board
Sq. mts
Square meters
Stock Exchanges
STT
Supreme Court
Treaty
BSE and NSE
Securities Transaction Tax
The Supreme Court of India
Any international convention between India and any foreign country
including Double Tax Avoidance Agreements
Uranium Corporation of India Limited
United States of America
Generally accepted accounting principles in the United States of America
Union territories
A Venture Capital Fund as defined and registered with SEBI under the
Securities and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012 or the erstwhile Securities and Exchange Board of India
(Venture Capital Funds) Regulations, 1996, as the case may be
UCIL
U.S.
U.S. GAAP
UTs
VCF
20
DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES
ACT, 2013
The table below sets out the disclosure requirements as provided in PAS-4 and the relevant pages in this
Preliminary Placement Document where these disclosures, to the extent applicable, have been provided:
Sr.
No.
Disclosure Requirements
1.
GENERAL INFORMATION
a.
Name, address, website and other contact details of the company indicating both
registered office and corporate office
Date of incorporation of the company
b.
c.
Relevant Page
of this
Preliminary
Placement
Document
185
Cover page
103
d.
Business carried on by the company and its subsidiaries with the details of branches
or units, if any
Brief particulars of the management of the company
e.
Names, addresses, DIN and occupations of the directors
123
f.
Management’s perception of risk factors
g.
i)
Details of default, if any, including therein the amount involved, duration of default
and present status, in repayment of –
statutory dues
179
ii)
debentures and interest thereon
179
iii)
deposits and interest thereon
179
iv)
loan from any bank or financial institution and interest thereon
179
h.
185
2.
Names, designation, address and phone number, email ID of the nodal/ compliance
officer of the company, if any, for the private placement offer process
PARTICULARS OF THE OFFER
a.
Date of passing of board resolution
29
b.
Date of passing of resolution in the general meeting, authorizing the offer of
securities
Kinds of securities offered (i.e. whether share or debenture) and class of security
29
c.
d.
123
38 to 67
29
e.
price at which the security is being offered including the premium, if any, along with
justification of the price
name and address of the valuer who performed valuation of the security offered
29
f.
Amount which the company intends to raise by way of securities
g.
Terms of raising of securities:
i)
Duration, if applicable
ii)
Rate of dividend
75
iii)
Rate of interest
Not Applicable
Not Applicable
29, 71
Not Applicable
21
Sr.
No.
Disclosure Requirements
Relevant Page
of this
Preliminary
Placement
Document
iv)
Mode of payment
Not Applicable
v)
Repayment
Not Applicable
h.
Proposed time schedule for which the offer letter is valid
17
i.
Purposes and objects of the offer
71
j.
contribution being made by the promoters or directors either as part of the offer or
separately in furtherance of such objects
Principle terms of assets charged as security, if applicable
71
k.
3.
a.
b.
c.
d.
DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS,
LITIGATION ETC.
Any financial or other material interest of the directors, promoters or key managerial
personnel in the offer and the effect of such interest in so far as it is different from the
interests of other persons
details of any litigation or legal action pending or taken by any Ministry or
Department of the Government or a statutory authority against any promoter of the
offeree company during the last three years immediately preceding the year of the
circulation of the offer letter and any direction issued by such Ministry or Department
or statutory authority upon conclusion of such litigation or legal action shall be
disclosed
remuneration of directors (during the current year and last three fiscal years)
4.
Related party transactions entered during the last three fiscal years immediately
preceding the year of circulation of offer letter including with regard to loans made
or, guarantees given or securities provided
Summary of reservations or qualifications or adverse remarks of auditors in the last
five fiscal years immediately preceding the year of circulation of offer letter and of
their impact on the financial statements and financial position of the company and the
corrective steps taken and proposed to be taken by the company for each of the said
reservations or qualifications or adverse remark
Details of any inquiry, inspections or investigations initiated or conducted under the
Companies Act or any previous company law in the last three years immediately
preceding the year of circulation of offer letter in the case of company and all of its
subsidiaries. Also if there were any prosecutions filed (whether pending or not) fines
imposed, compounding of offences in the last three years immediately preceding the
year of the offer letter and if so, section-wise details thereof for the company and all
of its subsidiaries
Details of acts of material frauds committed against the company in the last three
years, if any, and if so, the action taken by the company
FINANCIAL POSITION OF THE COMPANY
a.
the capital structure of the company in the following manner in a tabular form-
e.
f.
g.
(i)(a)
Not Applicable
127 and 132
179
128-129
133
Nil
179
179
(b)
the authorized, issued, subscribed and paid up capital (number of securities,
description and aggregate nominal value)
size of the present offer
73
(c)
paid up capital
73
(A)
after the offer
73
22
73
Sr.
No.
Disclosure Requirements
(B)
after conversion of convertible instruments (if applicable)
(d)
share premium account (before and after the offer)
(ii)
the details of the existing share capital of the issuer company in a tabular form,
indicating therein with regard to each allotment, the date of allotment, the number of
shares allotted, the face value of the shares allotted, the price and the form of
consideration
Provided that the issuer company shall also disclose the number and price at which
each of the allotments were made in the last one year preceding the date of the offer
letter separately indicating the allotments made for considerations other than cash and
the details of the consideration in each case
Profits of the company, before and after making provision for tax, for the three fiscal
years immediately preceding the date of circulation of offer letter
Dividends declared by the company in respect of the said three fiscal years; interest
coverage ratio for last three years (Cash profit after tax plus interest paid/interest
paid)
A summary of the financial position of the company as in the three audited balance
sheets immediately preceding the date of circulation of offer letter
Audited Cash Flow Statement for the three years immediately preceding the date of
circulation of offer letter
Any change in accounting policies during the last three years and their effect on the
profits and the reserves of the company
A DECLARATION BY THE DIRECTORS THAT the company has complied with the provisions of the Act and the rules made
thereunder
the compliance with the Act and the rules does not imply that payment of dividend or
interest or repayment of debentures, if applicable, is guaranteed by the Central
Government
the monies received under the offer shall be used only for the purposes and objects
indicated in the Offer letter
b.
c.
d.
e.
f.
5.
a.
b.
c.
23
Relevant Page
of this
Preliminary
Placement
Document
Not Applicable
73
73-74
73
F1 to F50
75, 90
32
35-37
93
184
SUMMARY OF BUSINESS
Overview
We are an engineering, construction and infrastructure development company focussing on transportation,
irrigation and mining sectors. We categorise our business into two businesses: (i) Construction Business, under
which we undertake engineering, procurement and construction (“EPC”) activities for transportation, irrigation
and mining sectors; and (ii) Infrastructure Development Business, under which we undertake development of
roads and highways on BOT, DBFOMT or DBFOT basis. Our Company was incorporated in October 1988 by
taking over the business and assets of a partnership firm, Bhavna Construction Co., on a going concern basis.
We have more than 25 years of experience in construction activities and have constructed approximately 4,500
lane kms of roads and highways, excavated approximately 250 million cubic meters of overburden and minerals,
as part of our ongoing and completed projects and constructed approximately 260 kms of irrigation canals since
the incorporation of our Company. We have completed 26 EPC projects in the transportation sector, 20 EPC
projects in the irrigation sector and 9 EPC projects in the mining sectors, since the incorporation of our
Company. For details of some of the major EPC projects completed by us, see “– Business – Construction
Business” on page 108. EPC activities under our Construction Business consist the following:



Transportation sector: Rehabilitation, upgradation, widening and strengthening of roads and highways,
and design and construction of depots, workshops, elevated ramps, elevated viaducts, elevated stations
for metro railways;
Irrigation sector: Construction of earthen dams, canals, remodelling, CC lining structure, control
cabins, hydraulic tunnel and improvement of canals; and
Mining sector: Excavation of overburden and mining of minerals.
Currently, we have 20 ongoing transportation EPC projects, 22 ongoing irrigation EPC projects and 11 ongoing
mining EPC projects. Our Company undertakes EPC activities for the BOT Projects held through our
Subsidiary, Sadbhav Infrastructure Project Limited (“SIPL”) and associates. Our EPC contracts in transportation
sector include in-house contracts as well as contracts from third party clients. Our ongoing and completed EPC
projects for the transportation sector include the EPC activities undertaken by our Company for our BOT
Projects.
Our Order Book for our Construction Business stood at ` 7,93,080 lakhs as of June 30, 2014. As of June 30,
2014, 47.80% of our Order Book was attributable to transportation EPC projects, 28.60% of our Order Book
was attributable to mining EPC projects and 23.60% of our Order Book was attributable to irrigation EPC
projects.
We commenced our Infrastructure Development Business in 2005 which is now being undertaken primarily
through our Subsidiary, SIPL, as an asset holding company for our BOT Projects. Our Company currently holds
84.15% of the equity paid-up capital of SIPL. Our BOT Projects are implemented by special purpose vehicles
(“SPV”s), which include joint ventures and associates. Our Company has been pre-qualified by NHAI for
National Highway projects with a total project cost of up to ` 3,10,545 lakhs until December 31, 2014 and
accordingly, is eligible to apply for project specific RFQs.
Our project portfolio for the Infrastructure Development Business consists of 13 BOT Projects of which eight
are fully operational, one is partially operational and the remaining four projects are in various stages of
development. 11 of the 13 BOT Projects are toll projects, while the remaining two are annuity projects. Our
portfolio of BOT toll projects includes the Maharashtra Border Checkpost Project which involves
modernisation, computerisation and integrating the existing 22 border checkposts in Maharashtra and collection
of service fee, parking charges and loading and unloading charges from different categories of commercial
vehicles in accordance with the service fee notification issued by the Government of Maharashtra.
Our operational projects cover approximately 2,292 lane kms and the projects under construction cover
approximately 1,448 lane kms. In addition, we currently operate 13 check posts and are developing 9 more
check posts in our Maharashtra Border Check Post Project.
We primarily generate revenues from our Infrastructure Development Business primarily through toll collection,
annuity income, service fees and advertising income.
24
Our consolidated total revenue and consolidated net profit were ` 2,76,315.04 lakhs and ` 4,437.48 lakhs,
respectively, for FY2014, ` 2,19,780.18 lakhs and ` 748.16 lakhs, respectively, for FY 2013 and ` 2,89,362.00
lakhs and ` 12,229.09 lakhs, respectively, for FY2012.
Competitive Strengths
Integrated player with established track record and strong execution capabilities
With an experience of over 25 years in construction business, we have an established track record of executing
quality projects within stipulated time period. For example, we completed the construction work for the Bijapur
Hungund Project 11 months ahead of schedule and the construction work for Dhule Palesner Project four
months ahead of schedule. Our Company also received an aggregate net bonus of ` 6,093.98 lakhs during
FY2013 for early completion of the construction work for Bijapur Hungund Project and Dhule Palesner Project.
In FY2005, we received a letter of appreciation from the World Bank for our excellent quality of work in the
Hattigudur Bidar project, which involved upgradation of road from Hattigudur to Bidar.
Our portfolio of completed EPC projects includes 20 irrigation EPC projects, 9 mining EPC projects and 26
transportation EPC projects. We also have a track record in successfully bidding for BOT Projects and have won
bids for, and are developing or have developed, 13 BOT projects. We believe that we have a reputation in the
road infrastructure sector, managing eight operational and one partially operational road projects as of June 30,
2014. Further, our Company has been pre-qualified by NHAI for National Highway projects with a total project
cost of up to ` 3,10,545 lakhs until December 31, 2014 and accordingly, is eligible to apply for project specific
RFQs.
We are an integrated player with experience in both EPC as well and O&M activities. We undertake most of the
activities related to our projects in-house, including tendering for the project, forecasting traffic, preparing
financial bid, achieving financial closure, construction, maintenance and collection of toll. This helps us in
reducing our reliance on sub-contractors and third parties and decreases our costs. We have an in-house design
and engineering team for studying and monitoring EPC costs, an in-house quality assurance team for monitoring
quality of construction, an in-house safety management for monitoring compliance with safety standards and an
in-house traffic survey team for conducting pre-bidding traffic surveys.
We own and maintain a fleet of construction equipments such as bituminous sensor paver, hot mix plant,
crushing plants, excavators, asphalt batch plant, dozer, grader etc. During FY2014 and FY2013, we have
purchased machinery worth ` 20,074.94 lakhs and ` 7,453.73 lakhs. Our range of equipment enables us to meet
the requirements of a broad spectrum of construction activity in transportation, irrigation and mining sectors.
This also reduces our dependence on leased out machinery which plays an important role in timely execution of
projects. Additionally, our skilled employees have the necessary experience in the use and handling of modern
construction equipment and machinery.
We believe that our experience, track record and execution capabilities provide us a competitive advantage in
our business, as we are in a position to meet the prequalification requirements necessary to enter the competitive
bidding process for potential projects. We also believe that our experience enables us in identifying and
mitigating certain development and operational risks, which we believe is a key competitive advantage for us.
Healthy and diversified Order Book of ` 7,93,080 lakhs for our Construction Business as of June, 30, 2014
We have a healthy and diversified Order Book for our Construction Business. As of June 30, 2014, our
construction Order Book was ` 7,93,080 lakhs based on 53 contracts, of which 47.80% was attributable to our
transportation projects, 28.60% was attributable to our mining projects and 23.60% was attributable to our
irrigation projects). Our Order Book provides us clarity regarding future revenue potential and work
requirements, which provides us the opportunity to maximize efficiency in terms of our capital and optimize the
use of our equipment and personnel. We have a diverse Order Book which includes contracts for State
Governments as well as NHAI, in-house as well as third party construction activities and contracts with fixed
price payment as well as price escalation method.
Strong BOT Project portfolio with sizeable operational assets and presence in states with high NSDP
We believe we have a strong BOT Project portfolio with sizeable operational assets. As of June 30, 2014, we
25
have a project portfolio consisting of 13 BOT road projects of which eight are fully operational, one is partially
operational and the remaining four projects are in various stages of development. All of our BOT projects are
implemented through project SPVs. These SPVs enter into concession agreements with government agencies
and generate revenue from toll receipts or annuities. The concession agreements are for periods ranging from 10
to 30 years. The average term for our projects is approximately 22 years, thereby ensuring our sustained future
cash flows and growth.
Our BOT Projects are located in the states of Maharashtra, Gujarat, Rajasthan, Karnataka, Haryana and
Telangana which have higher NSDP and per capita income than that of our country as a whole. For example, the
Maharashtra and Gujarat had NSDP of 7.52% and 8.40%, respectively, and per capita income of 5.89% and
6.70%, respectively, for the period from 1993-94 to 2012-13, as compared to the country’s NSDP of 6.81% and
per capita income of 5.12%. Further, our BOT Projects are also located along the main freight corridors of India
with high industrial traffic growth. We believe that the location of our projects in states with high economic
growth strengthens the stability of our revenue.
We also believe that we have been able to acquire our projects at competitive rates, which results in higher
profit margins. We appoint traffic and EPC consultants to carry out detailed study of traffic growth and road
structure to before making our bids for a project. We focus on bidding for projects rationally to ensure higher
profit margins. For example, bidding for projects in adjoining areas such as the SUTPL Project and the BRTPL
Project and the RPTPL Project and the RHTPL Project has assisted us in achieving better operational efficiency
with lower cost, since we are able to share equipment and manpower across projects as and when required. We
follow certain qualitative and quantitative parameters before selecting a project to bid for, including: (i) minimal
issues relating to land acquisition, environmental and forest clearances; (ii) minimal toll collection risks; (iii)
extend of industrial development planned in the project stretch; (iv) high impact of commercial traffic; (v)
minimal issues for undertaking construction activities. We believe that the parameters that we follow in
selection of projects will aid us in maximize our returns from the projects by improving profit margins.
Strong management team and experienced staff
We have a qualified, experienced, and dedicated management team and a skilled workforce. Our senior
management team includes our Chairman and one of our Promoters, Vishnubhai M. Patel, who has over 40
years of experience in the construction and infrastructure business. Our Promoters are not involved in major
businesses in any other sectors thereby ensuring dedicated focus on our business, which we believe will benefit
us in the growth and expansion of our business.
In recent years, through our selective hiring process, we have recruited and trained employees whom we believe
share our vision and have the potential to contribute to our long term success. As of June 30, 2014, we employ a
workforce of approximately 3,050 employees. We believe that a large pool of engineering and technical workers
is essential for the efficient and effective execution of our projects, and our highly experienced staff with
expertise in various types of construction projects ensures that our projects are staffed with the most capable
people.
We have qualified in-house teams who are responsible for different aspect of our projects from identifying
prospective projects through to the collection of tolls. This enables us to undertake a significant number of
activities related to the project in-house, thereby ensuring timely completion of our projects, reducing our
reliance on subcontractors and decreasing our costs. Our integrated structure also allows us to control our budget
and maximize returns for the project, including EPC margins, developer returns and operation and maintenance
margins.
Healthy financial position and credit profile
We have a healthy balance sheet and have had positive cash flow from operations during the last three financial
years. Cash flow generated from our operations during FY2014, FY2013 and FY2012 was ` 78,637.96 lakhs, `
21,219.83 lakhs and ` 60,526.35 lakhs, respectively. We also believe that we have a sound working capital
management which is evidenced by our current ratio of 1.07, 1.27 and 1.36 as on March 31, 2014, 2013 and
2012, respectively.
We believe we have a strong relationship with financial institutions which enables us to explore options of
refinancing, securitisation, issuing bonds or other infrastructure sector specific debt instrument which helps us to
achieve timely financial closure for our projects. Our ability to obtain adequate financing for our projects
26
provides us with increased availability of funds for our business development and other expansion activities. As
of June 30, 2014, we had an outstanding borrowing of ` 5,87,454 lakhs on a consolidated basis under various
loan facilities availed from banks/financial institutions.
We believe that our financial strength is a key advantage in a capital intensive industry.
Business Strategies
Maintain and strengthen our market position
We intend to maintain and strengthen our market position in the EPC activities as well as road BOT sectors in
India. Over the next few years, we will continue to focus on the operations and maintenance and development of
our existing projects while seeking opportunities to bid for additional projects. In addition to bidding for new
projects, we may also consider acquiring existing projects, developed or under development by other companies
that are available for acquisition at competitive rates. For example, we may consider, on an opportunistic basis,
acquiring stressed projects that are being undertaken by third parties.
We also intend to improve efficiency in operating our operational BOT Projects by reducing dependence on
manpower in our tolling operations, specially through use of technologies at our toll booths such as RFID,
video/image capturing equipment, automatic vehicle identification based on in-road/infrared sensors and weighin-motion technology. NHAI has recently promoted Indian Highways Management Company Limited
(“IHMCL”) which proposes to establish nationwide RFID based ETC system together with central clearing
house services, under which all toll plazas in India that are under NHAI’s jurisdiction would have dedicated
RFID based ETC lanes, under a centralised toll collection system. Our Company has invested ` 55,53,700 as
share application money in IHMCL.
We intend to draw on our experience, market position and our ability to execute and manage multiple projects
across geographies, to grow our portfolio of road projects.
Selectively expand our Infrastructure Development Business into states with higher than average GSDP
Given the track record of our Infrastructure Development Business in Gujarat, Maharashtra, Rajasthan,
Karnataka and Haryana, we intend to expand into states which are economically and politically stable and which
are expected to have higher than average GSDP. We believe that industrialisation would move at a higher pace
in these states and that tolling risks will be comparatively lower in such states. Further, we believe that
expanding our business to other states will improve the geographical diversification of our projects, thereby
reducing our reliance on specific states. We also believe that this will allow us to capitalize on different growth
trends in the different states. We believe our strategy in focusing both on further developing our existing
markets and expanding into new markets with high growth potential will enable us to effectively capture growth
opportunities in different parts of India, broaden our revenue base and reduce risks of volatility of market
conditions and price fluctuations which may result from concentrating our resources in any geographical region
in India.
Expand into new and complementary sub-sectors in the infrastructure industry
We intend to leverage our experience, track record, commercial relationships and brand recognition to expand
our operations into new sub-sectors within the infrastructure industry in India, particularly in the provision of
services relating to toll operations, consultancy services related to border check post and routine and major
maintenance services. We have built a dedicated team to provide O&M services to several of our operational
projects.
We also intend to expand our EPC activities in the mining sector by increasingly focussing on mining of
minerals as well, in addition to excavation of overburden. We plan to bid for tenders floated by public sector
undertakings as well as private parties for the work of mine developer and operator (MDO), which involves both
excavation of overburden as well as mining of minerals, together with washing and transportation of minerals.
We intend to expand our EPC activities in the transportation sector by bidding for EPC contracts issued by the
Dedicated Freight Corridor Corporation of India Limited and similar agencies. We also intend to explore
opportunities to expand our EPC activities into urban infrastructure development as well as to expand further
into EPC activities for metro railways.
27
We further intend to evaluate bidding for large BOT projects in collaboration with reputed BOT Players, where
our role will be to undertake complete EPC activities for such projects with lesser equity share. We believe that
this will help us in enhancing our experience and expertise in constructing large sized projects without having to
bear the entire risk associated with such projects. In line with this strategy, our Company has executed a pre-bid
consortium agreement dated January 30, 2014 with TRIL Roads Private Limited (“TRIL”) and VINCI
Concessions Pte. Ltd (“VINCI”), wherein the parties have agreed to jointly bid for the project floated by NHAI
for the development, operation and maintenance of Delhi-Meerut Expressway. The parties have agreed to
incorporate an SPV to undertake the project if the project is awarded to the consortium. Our Company will have
26% stake in the SPV and will be responsible for the EPC activities under the project.
Monetising our operational BOT Projects and capacity augmentation for the existing BOT Projects
We intend explore opportunities to monetise our operational BOT Projects, including by way of stake sale or
securitisation or transfer of our operational BOT Projects to a platform or entity which holds operational roads
and highways with us having a stake in such platform or entity. Monetising our operational BOT Projects will
improve our financial strength and provide us with resources to pursue planned expansion of our business
without third party support.
We also intend to pursue the option of capacity augmentation for some of our existing BOT Projects in terms of
their respective concession agreements, upon such projects reaching a design capacity level. Under the
concession agreements for some of BOT Projects including BHTPL Project, HYTPL Project and RPTPL
Project, the concessioning authority may at any time (following a detailed traffic study conducted by it and in
order to provide the desired level or services) after a certain specified period, decide to augment or increase the
capacity of the project highway and invite proposals from eligible persons for the proposed capacity
augmentation. We have the right to submit proposal for such capacity augmentation and in case we do not opt to
exercise such right, then the concessioning authority will invite bids for such capacity augmentation. We believe
that such an option for capacity augmentation, will extend the term of the project thereby resulting in additional
revenue as well as in additional revenue from EPC activities.
28
SUMMARY OF THE ISSUE
The following is a general summary of the terms of the Issue. This summary should be read in conjunction with,
and is qualified in its entirety by, the more detailed information appearing elsewhere in this Preliminary
Placement Document, including the sections entitled “Risk Factors”, “Use of Proceeds”, “Placement”, “Issue
Procedure” and “Description of Equity Shares” on pages 38, 71, 150, 140 and 160, respectively.
Issuer
Sadbhav Engineering Limited
Face Value
` 1 per Equity Share
Issue Size
Issue of up to [●] Equity Shares, aggregating upto ` [●]
A minimum of 10% of the Issue Size i.e. up to [●] Equity Shares
shall be available for Allocation to Mutual Funds only, and up to [●]
Equity Shares shall be available for Allocation to all QIBs, including
Mutual Funds. In case of under-subscription in the portion available
for Allocation only to Mutual Funds, such minimum portion or part
thereof may be Allotted to other eligible QIBs.
Date of Board Resolution
September 9, 2014
Date of Shareholders’ Resolution
October 4, 2014
Floor Price
` 219.06 per Equity Share.
Our Company may offer a discount of not more than 5% on the
Floor Price in terms of Regulation 85 of the SEBI Regulations.
Issue Price
` [●] per Equity Share
Eligible Investors
QIBs as defined in regulation 2(1)(zd) of the SEBI Regulations and
not excluded pursuant to Regulation 86 of the SEBI Regulations , to
whom the Preliminary Placement Document and the Application
Form is circulated and who are eligible to bid and participate in the
Issue. See the sections entitled “Issue Procedure – Qualified
Institutional Buyers” and “Transfer Restrictions” on pages 143 and
156, respectively. The list of QIBs to whom the Preliminary
Placement Document and Application Form is delivered shall be
determined by the BRLMs in consultation with our Company, at
their sole discretion.
Equity Shares issued and outstanding
immediately prior to the Issue
15,98,61,800 Equity Shares
Equity Shares issued and outstanding
immediately after the Issue
[●] Equity Shares
Listing
Our Company has obtained in-principle approvals in terms of Clause
24(a) of the Equity Listing Agreements, for listing of the Equity
Shares issued pursuant to the Issue from the Stock Exchanges. Our
Company will make applications to each of the Stock Exchanges to
obtain final listing and trading approvals for the Equity Shares after
Allotment of the Equity Shares in the Issue.
Lock-up
Our Company has agreed that it will not, for a period of 180 days
from the date of the Placement Agreement, without the prior written
consent of the Book Running Lead Managers, directly or indirectly,
(a) offer, issue, contract to issue, issue or offer any option or contract
to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, any
Equity Shares or any securities convertible into or exercisable for
29
Equity Shares (including, without limitation, securities convertible
into or exercisable or exchangeable for Equity Shares), or file any
registration statement under the U.S. Securities Act with respect to
any of the foregoing or (b) enter into any swap or other agreement or
any transaction that transfers, in whole or in part, directly or
indirectly, any of the economic consequences associated with the
ownership of any of the Equity Shares or any securities convertible
into or exercisable or exchangeable for Equity Shares (regardless of
whether any of the transactions described in clause (a) or (b) is to be
settled by the delivery of Equity Shares or such other securities, in
cash or otherwise), or (c) deposit Equity Shares with any other
depositary in connection with a depositary receipt facility or (d)
publicly announce any intention to enter into any transaction falling
within (a) to (c) above or enter into any transaction (including a
transaction involving derivatives) having an economic effect similar
to that of a sale, issue or offer or deposit of Equity Shares in any
depositary receipt facility or publicly announce any intention to enter
into any transaction falling within (a) to (c) above. Provided,
however, that the foregoing restrictions shall not apply to allotment
of Equity Shares by the Company pursuant to ESOP-2008.
Sadbhav Finstock Private Limited and our Promoters, Vishnubhai
M. Patel and Shantaben V. Patel have agreed that they will not, for a
period of 180 days from the date of the Placement Agreement,
without the prior written consent of the Book Running Lead
Managers, (a) directly or indirectly, issue, offer, lend, sell, contract
to sell, pledge, encumber, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase, make any short sale, or otherwise transfer or
dispose of, any promoter shares, including but not limited to any
options or warrants to purchase any promoter shares, or any
securities convertible into or exercisable for, or that represent the
right to receive, any promoter shares or file any registration
statement under the U.S. Securities Act of 1933, as amended, with
respect to any of the foregoing (regardless of whether any of the
transactions described in this clause (a) is to be settled by the
delivery of the promoter shares or such other securities, in cash or
otherwise); or (b) enter into any swap or other agreement or any
transaction that transfers, in whole or in part, directly or indirectly,
any of the economic consequences associated with the ownership of
any of the promoter shares or any securities convertible into or
exercisable or exchangeable for any of the promoter shares
(regardless of whether any of the transactions described in this
clause (b) is to be settled by the delivery of the promoter shares or
such other securities, in cash or otherwise); or (c) deposit any of the
promoter shares, or any securities convertible into or exercisable or
exchangeable for the promoter shares or which carry the rights to
subscribe for or purchase the promoter shares, with any depositary in
connection with a depositary receipt facility; or (d) publicly
announce any intention to enter into any transaction falling within
(a) to (c) above or enter into any transaction (including a transaction
involving derivatives) having an economic effect similar to that of a
sale or deposit of the promoter shares in any depositary receipt
facility or publicly announce any intention to enter into any
transaction falling within (a) to (c) above.
For further details, see section “Placement” on page 150
Transferability Restrictions
The Equity Shares being Allotted pursuant to this Issue shall not be
sold for a period of one year from the date of Allotment, except on
the floor of the Stock Exchanges. See the section “Transfer
30
Restrictions” on page 156.
Use of Proceeds
The gross proceeds from the Issue will be approximately ` [●] lakhs.
The net proceeds from the Issue, after deducting fees, commissions
and expenses of the Issue, will be approximately ` [●] lakhs.
See the section “Use of Proceeds” on page 71 for additional
information.
Risk Factors
See the section “Risk Factors” on page 38 for a discussion of risks
you should consider before deciding whether to subscribe for the
Equity Shares.
Pay-In Date
Last date specified in the CAN sent to the QIBs for payment of
application money.
Closing
The Allotment of the Equity Shares offered pursuant to the Issue is
expected to be made on or about [●], 2014.
Ranking
The Equity Shares being issued pursuant to the Issue shall be subject
to the provisions of the Memorandum of Association and Articles of
Association and shall rank pari passu in all respects with the existing
Equity Shares, including rights in respect of dividends.
The shareholders of our Company will be entitled to participate in
dividends and other corporate benefits, if any, declared by our
Company after the Closing Date, in compliance with the Companies
Act, the Equity Listing Agreements and other applicable laws and
regulations. Shareholders of our Company may attend and vote in
shareholders’ meetings on the basis of one vote for every Equity
Share held. See the section “Description of Equity Shares” on page
160.
Approvals
The Issue was authorized and approved by our Board through the
resolution passed at its meeting on September 9, 2014 and approved
by our Company’s shareholders through the resolution passed at the
EGM held on October 4, 2014.
Security Codes for the Equity Shares
ISIN
INE226H01026
BSE Scrip Code
532710
NSE Symbol
SADBHAV
31
SELECTED FINANCIAL INFORMATION
The following selected financial information is extracted from and should be read in conjunction with, the
audited consolidated financial statements and notes thereto of our Company as at and for the fiscal years ended
March 31, 2014, 2013 and 2012, each included elsewhere in this Preliminary Placement Document. You should
refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations”, on page
76, for further discussion and analysis of the financial statements of our Company.
The financial information included in this Preliminary Placement Document does not reflect our Company’s
results of operations, financial position and cash flows for the future and its past operating results are no
guarantee of its future operating performance.
SUMMARY DATA OF CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2014, MARCH 31,
2013 AND MARCH 31, 2012
(Rs. in lakhs)
Particulars
March 31, 2014 March 31, 2013 March 31, 2012
Amount
Amount
Amount
Equity and liabilities
Shareholders’ funds
Share capital
1,516.62
1,509.46
1,503.68
1,23,479.18
1,19,509.92
1,15,824.99
2,315.00
0.00
0.00
1,27,310.80
1,21,019.38
1,17,328.67
15,321.61
15,567.40
17,455.79
Long-term borrowings
4,98,971.82
405,412.29
3,11,212.84
Deferred tax liabilities
3,566.81
3,169.17
2,344.37
421.07
1,123.67
1,290.06
4,368.75
241.27
195.64
5,07,328.45
4,09,946.40
3,15,042.91
Short-term borrowings
46,779.49
37,318.48
30,356.57
Trade payables
38,395.20
35,377.93
33,275.27
Other current liabilities
46,120.67
23,796.37
25,113.07
Short-term provisions
12,776.63
21,588.14
18,735.51
Sub-total
1,44,071.99
1,18,080.92
1,07,480.42
TOTAL
7,94,032.85
6,64,614.11
5,57,307.79
Reserves and surplus
Money Received against Share Warrants
Sub-total
Minority interest
Non-current liabilities
Other long-term liabilities
Long-term provisions
Sub-total
Current liabilities
Assets
32
Particulars
March 31, 2014
March 31, 2013
March 31, 2012
Amount
Amount
Amount
Non-current assets
Fixed assets :
Tangible assets
52,238.75
35,424.19
31,140.42
4,79,233.71
2,84,953.90
94,098.47
71.74
87.70
15.46
75,219.50
1,63,462.42
2,61,035.04
6,06,763.70
4,83,928.21
3,86,289.39
2,557.39
2,453.93
2,490.28
2.22
1.45
0.00
1,987.52
4,167.79
4,366.43
26,237.11
20,826.02
17,371.06
2,271.34
3,227.13
1,107.16
33,055.58
30,676.32
25,334.93
Current investments
10,286.06
818.54
1,529.03
Inventories
16,382.10
10,219.02
8,839.33
Trade receivables
57,577.57
71,005.47
69,406.33
Cash and cash equivalents
12,800.68
7,347.16
18,013.51
Short-term loans and advances
52,007.23
55,008.67
45,421.77
5,159.93
5,610.71
2,473.50
Sub-total
1,54,213.57
1,50,009.57
1,45,683.47
TOTAL
7,94,032.85
6,64,614.11
5,57,307.79
Intangible assets
Capital work in progress
Intangible assets under development
Sub-total
Non-current investments
Deferred tax asset
Long Term Trade Receivables
Long-term loans and advances and Deposits
Other non-current assets
Sub-total
Current assets
Other current assets
33
SUMMARY DATA OF CONSOLIDATED STATEMENT OF PROFIT & LOSS FOR THE YEAR
ENDED MARCH 31, 2014, MARCH 31, 2013 AND MARCH 31, 2012
(Rs. in lakhs)
Particulars
March 31,
March 31,
March 31,
2014
2013
2012
Amount
Amount
Amount
2,73,252.22
2,15,959.34
2,86,632.91
Other income
3,062.82
3,820.84
2,729.09
Total income
2,76,315.04
2,19,780.18
2,89,362.00
37,788.37
26,838.35
32,966.41
0.00
0.00
0.00
1,68,554.43
1,33,544.37
1,96,211.57
7,657.23
5,319.85
4,617.40
Finance Cost
45,546.41
30,420.39
15,589.68
Depreciation and amortisation expense
13,048.30
17,069.29
8,604.19
Other expenses
14,697.18
10,850.07
11,396.92
Total expenses
2,87,291.92
2,24,042.32
2,69,386.17
Profit/(Loss) before Exceptional items & tax
(10,976.88)
(4,262.14)
19,975.83
12,172.22
6,093.98
0.00
1,195.34
1,831.84
19,975.83
2,722.19
3,543.25
7,353.65
396.87
823.35
737.38
MAT credit entitlement
-2,661.50
0.00
0.00
Short / (excess) provision for earlier years
-1,869.61
-21.50
-11.35
Net tax expense
-1,412.05
4,345.10
8,079.68
Profit/(Loss) after tax
2,607.39
(2,513.26)
11,896.15
Share of Loss Transferred to Minority interest
1,814.79
3,737.57
561.94
15.30
(476.15)
(229.00)
Income
Revenue from operations:
Revenue from operations:
Expenses
Cost of Material Consumed
Change in Inventory of finished goods
Construction, Toll Plaza & Road Maintenance Expenses
Employee benefits expenses
Exceptional Items (Net of Expenses)
Profit/(Loss) before tax
Less: Tax expenses
Current tax
Deferred tax (credit)/charge
Shares of Profit/(loss) of Association
34
Particulars
Profit / (Loss) attributable to group shareholders
March 31,
2014
March 31,
2013
March 31,
2012
Amount
Amount
Amount
4,437.48
748.16
12,229.09
SUMMARY DATA OF CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED
MARCH 31, 2014, MARCH 31, 2013 AND MARCH 31, 2012
(Rs. in lakhs)
Particulars
March 31,
March 31,
March 31,
2014
2013
2012
Amount
Amount
Amount
CASH FLOW FROM OPERATING ACTIVITIES:
Net Profit after Tax as per Profit and Loss account
2,607.39
(2,513.26)
11,896.15
Interest expense
45,546.41
27,161.23
13,063.03
Interest income
(2,520.63)
0.00
0.00
13,048.3
17,069.29
8,604.19
Dividend Income
(7.36)
(247.93)
(34.02)
Profit on sale of Assets
(2.70)
(82.78)
(119.16)
Loss on sale of Assets
498.53
140.87
173.57
Profit on sale of Mutual Funds & Investments
418.17
(335.55)
(115.19)
Employees stock options Premium
433.14
377.68
402.46
2,722.19
3,521.75
7342.3
4.82
4.13
0.00
(12,172.22)
0.00
0.00
Writing off of intangible assets under Construction
257.59
0.00
0.00
Interest Receivable written off
226.51
0.00
0.00
Transfer to Investor Protection & Education Fund
1.25
0.00
0.00
Sundry Balance written back
2.91
(628.02)
0.00
Excess provision written back
(1,869.61)
(2.50)
0.00
Foregin Currency Fluctuation
0.00
164.94
287.61
(2661.50)
0.00
0.00
396.87
823.35
737.38
46,930.06
45,449.07
42,238.32
Adjustments for :
Depreciation and amortisation
Income Tax Provision
Bad Debts
Exceptional item
MAT Credit Entitlement
Deferred Tax Liabilities/(Assets)
Operating profit before working capital changes
35
Particulars
March 31,
2014
March 31,
2013
March 31,
2012
Amount
Amount
Amount
Adjustments for :
(Increase)/Decrease of Long Term Trade Receivables
(265.21)
198.64
(2,056.07)
13,425.99
(1,599.14)
(13,004.04)
97.69
(5,260.86)
4,213.41
955.79
0.00
0.00
(6,163.08)
(1,379.69)
(1,482.51)
(Increase)/Decrease of Long Term Loans and Advances
9,789.91
(79.39)
19,564.13
(Increase)/Decrease of Short Term Loans and Advances
1,420.64
(4173.62)
11,495.68
(Increase)/Decrease of Other Long Term Liabilities
(231.34)
(166.39)
(1,090.41)
(Increase)/Decrease of Long-Term Provisions
4,127.48
45.63
12.14
Increase/(Decrease) of Trade Payables
3,795.60
2,102.66
10,245.40
Increase/(Decrease) of Other Current Liabilities
10,365.7
(7,830.65)
(4,185.40)
(0.71)
(30.98)
16.62
Cash generated from the operations
84,248.52
27,275.28
65,967.27
Tax Paid
(5,610.56)
(6,055.45)
(5,440.92)
Net cash from operating activities (A)
78,637.96
21,219.83
60,526.35
(22,500.55)
(7,630.65)
(17,083.33)
730.75
350.34
1,358.42
0.00
(72.24)
(15.46)
(98,654.25)
(1,01,708.22)
(1,96,338.20)
(Increase)/Decrease in Current Investments
(9,467.52)
0.00
(921.55)
(Increase)/Decrease in Long Term Advances
(17,607.93)
(3,375.57)
8,123.22
(298.17)
(1,375.83)
110.88
(88.16)
1,210.23
459.51
(418.17)
335.55
115.19
0.00
818.54
0.00
2,520.63
3,094.22
2,130.05
7.36
247.93
34.02
(Increase)/Decrease of Trade Receivables
(Increase)/Decrease of Other Current Assets
(Increase)/Decrease of Other Non Current Assets
(Increase) /Decrease in Inventories
Increase/(Decrease) of Short Term Provision
CASH FLOW FROM INVESTMENT ACTIVITIES :
Purchase of Fixed Assets
Sales of Fixed Assets
Payment made for Capital work in progress
Increase in Intengible Assets completed/under development
(Increase)/Decrease in Other Bank Balance & FD
(Increase)/Decrease in Other Non Current Investments
Profit on sale current Investments & Mutual funds
Sales/ Purchase of Investments
Interest Received
Dividend Received
36
Particulars
Option Premium Paid
March 31,
2014
March 31,
2013
March 31,
2012
Amount
Amount
Amount
0.00
0.00
(1,107.16)
(1,45,776.01)
(1,09,742.80)
(2,03,134.41)
Proceeds From Long Term Borrowings (Net)
1,05,080.02
97,889.95
1,38,635.99
Proceeds From Short Term Borrowings (Net)
5,124.24
(6,973.31)
1,251.47
0.00
0.00
0.00
Net Increase in Working Capital Loan
4,336.78
11,503.97
7,834.98
Proceeds/ Payment to Minority Interest
1689.38
0.00
(2,157.54)
358.26
289.00
246.00
Share Issue Expenses
0.00
(12.50)
0.00
Addition in Capital Reserve
0.00
2,570.93
18,277.48
2,315.00
0.00
0.00
0.00
1,339.28
0.00
(45,546.41)
(30,255.45)
(14,782.54)
(1.25)
(0.26)
0.00
Dividend Paid
(908.23)
(899.21)
(899.25)
Dividend Tax Paid
(154.40)
(146.36)
(149.35)
72,293.39
75,306.04
1,48,257.24
Net increase/(decrease) in cash and cash equivalents
(A+B+C)
5,155.35
(13,216.91)
5,649.18
Cash and cash equivalents, beginning of the year
5,811.96
19,028.88
13,379.70
10,967.31
5,811.96
19,028.88
Net Cash From Investing Activities
CASH FLOW FROM FINANCING ACTIVITIES :
Repayment of Long term borrowings
Proceeds From Share Capital
Received against Issue of Share Warrant
Grant Received
Interest Paid
Transfer Investor Protection & Education Fund
Net cash from financing activities (C )
Cash and cash equivalents, end of the year
37
RISK FACTORS
An investment in equity shares involves a high degree of risk. You should carefully consider all the information
in this Preliminary Placement Document, including the risks and uncertainties described below, before making
an investment in our Equity Shares. These risks and uncertainties are not the only issues that we face.
If any of the following risks, or other risks that are not currently known or are now deemed immaterial, actually
occur, our business, results of operations and financial condition could suffer, the price of the Equity Shares
could decline, and all or part of your investment may be lost. Unless otherwise stated, we are not in a position
to specify or quantify the financial or other risks mentioned herein. To obtain a complete understanding of our
business, you should read this section in connection with the sections “Business” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” on pages 103 and 76, respectively.
This Preliminary Placement Document also contains forward looking statements that involve risks and
uncertainties. Our Company’s actual risks could differ materially from those anticipated in these forward
looking statements as a result of certain factors, including considerations described below and in the section
“Forward Looking Statements” on page 12.
Risks Relating to Our Overall Business
1.
We may not be able to successfully manage the growth of our operations which may have a material
adverse effect on our business, financial condition, results of operations and future prospects.
As we continue to grow, we must continue to improve our managerial, technical and operational
knowledge and allocation of resources, and implement an effective management information system. In
order to fund our ongoing operations and future growth, we need to have sufficient internal sources of
liquidity or access to additional financing from external sources. Further, we will be required to manage
relationships with a greater number of clients, suppliers, contractors, service providers, investors,
lenders and other third parties. We will need to further strengthen our internal control and compliance
functions to ensure that we will be able to comply with our legal and contractual obligations and
minimize our operational and compliance risks. There can be no assurance that we will not suffer from
capital constraints, operational difficulties or difficulties in expanding existing business and operations
and training an increasing number of personnel to manage and operate the expanded business. There
can be no assurance that we will be able to successfully manage our growth or that our expansion plans
will not adversely affect our existing operations and thereby have a material adverse effect on our
business, financial condition, results of operations and future prospects.
In addition, the projects we undertake might be increasing in scale and complexity. We must continue
to improve our project management system and supporting infrastructure, such as our information
technology and human resources systems and training programs, in order to ensure that we will be able
to continue to successfully execute large, complex projects on a timely basis. There can be no assurance
that we will be able to improve our project management system and supporting infrastructure at a rate
commensurate with the increase in size and complexity of the projects that we undertake, and any
resulting impairment in our project management and execution capabilities may have a material adverse
effect on our business, financial condition, results of operations and future prospects.
2.
If we fail to comply with environmental, employee related or health and safety laws and regulations
or any other local laws or regulations, our business and results of operations may be materially and
adversely affected.
We, in the normal course of our business operations, are required to comply with various laws and
regulations relating to the environment. Although we believe that we comply in all material respects
with all applicable statutes and with the regulations thereunder, we may incur substantial costs to
comply with requirements of environmental laws and regulations in the future. Environmental laws and
regulations in India have been increasing in stringency and it is possible that they will become
significantly more stringent in the future. If any of our projects are shut down due to non compliance of
such laws, we will continue to incur costs in complying with regulations, appealing any decision to stop
construction, continuing to pay labor and other costs which continue even if construction has ceased.
Moreover, with respect to our Construction Business, most of the construction contracts we enter into
require our clients to obtain the necessary environmental clearances to proceed with a project and we
may not have control over the process. If environmental clearances are not obtained in a timely manner
38
or at all, the project may not be in compliance with environmental laws and regulations and/or may be
delayed and our overall operating expenses may increase, adversely affecting our business and results
of operations. We are also subject to health and safety laws and regulations as well as laws and
regulations governing its relationship with its employees in areas such as minimum wages, maximum
working hours, overtime, working conditions, hiring and terminating employees, contract labor and
work permits. Changes in laws or regulations may result in us incurring significant costs in order to
maintain compliance with such laws and regulations and may delay or prevent project completion.
Our operations are subject to various regulatory requirements. Further, as a listed company in India, we
are required to comply with the provisions of various regulations, guidelines and circulars issued by
SEBI as well as the provisions of the listing agreement entered with the stock exchanges where the
Equity Shares are listed. Whilst, we have been in compliance with the provisions of the listing
agreement and other applicable regulations in the past and have made necessary filings as required
under the listing agreement, copies of certain filings made in the past are not available with us and we
will be unable to submit these records to any regulatory or other authority, in the event we are requested
or required to do so.
There can be no assurance that a failure to comply with any such regulations would not result in
penalties, revocation of permits or licenses for our operations or litigation that may adversely affect our
business, financial condition and results of operations.
3.
Any defect or poor maintenance systems of the machinery may cause strain on our machinery and
lead to delays in implementation of our projects.
We depend on machinery and equipment to implement our projects in the Construction Business. We
order these machinery and equipment generally from India. Any manufacturing defect or poor
maintenance systems of the machinery may cause strain on our machinery and lead to delays in
implementation of our projects.
4.
We may not be able to obtain adequate financing or generate sufficient cash flow to meet our
significant capital expenditures and liquidity requirements, which would have a material and
adverse effect on our business, results of operations, financial position and prospects.
Our Construction Business projects are capital intensive and require us to have significant amounts of
long term loans for capital expenditure and working capital and our Development Business projects are
capital intensive and require us to have adequate amount of long term loans. We have had, and expect
to continue to have, substantial liquidity and capital resource requirements that will require significant
capital expenditure and working capital. As of March 31, 2014, we had consolidated borrowings in the
form of secured and unsecured loans for amounts aggregating ` 5,45,751.31 lakhs and ` 4,42,730.77
lakhs, respectively.
Our project financing is generally a combination of equity contribution, debt financing and grants by
NHAI. While we may approach various lender institutions for financial commitments, these
commitments are subject to a number of conditions precedent, such as completion of documentation
satisfactory to parties thereto, among others. We may not be able to fulfill all or any of the conditions or
agree on commercial terms or non-commercial terms with these banks and financial institutions, in
which case they would have no obligation to provide any loans to us. Our inability to obtain financing
at reasonable or favourable interest rates, or at all, may impair our business, results of operations,
financial condition or prospects, as the case may be. Such inability could result from, among other
causes, our then current or prospective financial condition or results of operations or from our inability
for any reason (including reasons applicable to Indian companies generally) to issue securities in the
capital markets. There can be no assurance that financing from external sources will be available at the
time or in the amounts necessary to meet our requirements.
39
5.
We are subject to restrictions on our financial and operational flexibility and risks associated with
debt financing, including acceleration of our repayment obligations and forced sale of our assets if
we fail to comply with covenants under our credit facilities, many of which have been secured by our
assets.
We are subject to risks normally associated with debt financing. The level of debt and the limitations
imposed on us by our current or future loan arrangements could have significant adverse consequences,
including, but not limited to, the following:

we may be required to dedicate a portion of our cash flow towards repayment of our existing
debt, which will reduce the availability of our cash flow to fund working capital, capital
expenditures, acquisitions and other general corporate requirements;

our ability to obtain additional financing in the future may be impaired;

fluctuations in market interest rates may adversely affect the cost of our borrowings, since the
interest rates on certain of our borrowings may be subject to changes based on the base
rate/prime lending rate of the respective banks/financial institutions, may be renegotiated on a
yearly basis and may not be covered by interest rate hedge agreements;

there could be a material adverse effect on our business, prospects, financial condition and
results of operations if we are unable to service our indebtedness or otherwise comply with
financial covenants of such indebtedness;

we may be subject to adverse revisions to our credit ratings by rating agencies; 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.
We are presently in breach of certain financial covenants under some of our financing agreements. The
breach of such covenants entitles the respective lenders to enforce remedies under the terms of the
respective financing agreements. Further, such breaches and relevant actions by the respective lenders
could also trigger enforcement action by other lenders pursuant to cross-default provisions under certain
of our financing agreements. Any failure to service our indebtedness, maintain the required security
interests, comply with covenants or comply with a requirement to obtain a consent or otherwise perform
our obligations under our financing agreements could lead to a termination of one or more of our credit
facilities, trigger cross default provisions, penalties and acceleration of amounts due under such
facilities and cause lenders to force a sale of our assets, a substantial majority of which secure our
outstanding loans, which would materially and adversely affect our business, financial condition and
results of operations. Further, where our property is secured through a mortgage, in the event of default,
our property may be subject to foreclosure proceedings.
Additionally, certain of our loan agreements contain covenants which in the event of any default restrict
certain activities and require us to obtain lenders' consents before, among other things, issuing new
securities, declaring dividends in the event of non-payment and making certain investments beyond the
approved amount. They also allow those lenders to sell assets of certain value in the event of
non-payment. Certain of the loan agreements also give the lenders the right to nominate directors to the
Board in the event of non-payment. Such provisions are standard in loan agreements with lenders and
are imposed on borrowers, including us, with little or no variation. There can be no assurance that our
lenders will provide us with requisite consents in the future.
Certain equity shares held by our Company in its Subsidiaries and Associates are pledged with the
lenders in terms of our financing agreements. Further, under the terms of certain financing agreements
entered into by our Group, pledge has been created, in favour of the lenders, over all existing and future
assets of the respective entities. Such pledge may be invoked by the lenders in the event of defaults
under the respective financing agreements and this would have material adverse effects on our business
and financial condition.
Our Company has provided corporate guarantees and undertakings to meet shortfall in collection of toll
to the lenders of some of our Subsidiaries to secure the loans availed such Subsidiaries. In the event that
40
our Subsidiaries are not in a position to service its payment obligations under its loan facilities, we may
be called upon by the lenders to fulfill such payment obligations as a guarantor. Any such instance may
have adverse impacts on the financial condition, business and results of operations and prospects of our
Company.
6.
As of September 30, 2014, our Promoters, together with the Promoter Group's shareholders, hold
47.94% of the Equity Shares and, if they take actions that are not in the best interests of the holders
of the Equity Shares, it may harm the value of the investment in the Equity Shares.
As of September 30, 2014, our Promoters, together with the Promoter Group's shareholders, held
47.94% of the Equity Shares. Our Company has on September 30, 2014 allotted 80,00,000 Equity
Shares to the members of the promoter and promoter group. As on September 30, 2014, our Company
was awaiting final listing and trading approval for the said Equity Shares. Our Company has
subsequently received the final listing and trading approvals. As a result, our Promoters exercise
significant control over our Company. This control could delay, defer or prevent a change in control,
impede a merger, consolidation, takeover or other business combination involving us, or discourage a
potential acquirer from making a tender offer or otherwise attempting to obtain control of us even if that
was in our best interests.
Circumstances may arise in which the interests of our Promoters or Promoter Group's shareholders or
the interests of their associated companies may conflict with the interests of our other shareholders. Our
Promoters or Promoter Group's shareholders may from time to time pursue business opportunities and
form other ventures, including in the construction development sector, which may operate within the
Group or outside the Group and which may compete directly or indirectly with existing businesses of
the Group.
7.
Our Promoters have pledged Equity Shares of our Company with certain lenders. If the lenders
exercise their rights and dilute the shareholding of our Promoter, it may adversely affect our
business.
Our Promoters have pledged Equity Shares equivalent to 4.86% of the Equity Share capital of our
Company. If the pledges are enforced, the shareholding of our Promoters in our Company may be
diluted and we may face certain impediments in taking decisions on certain key, strategic matters, will
entitle the lenders to attend general meetings of our Company, and exercise voting rights in respect of
the pledged equity shares which may adversely affect our business, results of operations and financial
condition.
8.
Our success depends largely upon our senior management, skilled professionals and our ability to
attract and retain these professionals.
Our success has been, and will continue to be, heavily dependent upon the collective efforts of our
management team who have built our business and have been instrumental in our development. For
more details, see "Board of Directors and Senior Management". If we lose the services of any of these
key individuals and we are unable to suitably replace them in a timely manner, our business may be
materially and adversely affected.
Our ability to successfully complete projects and to attract new clients also depends largely on our
ability to attract, train, motivate and retain skilled professionals, particularly project managers,
engineers, and skilled workers. If we cannot hire and retain skilled personnel, our ability to bid for, and
execute, new projects and to continue to expand our business, will be impaired and consequently, our
revenues could decline. We may not be able to re-deploy and retrain our professionals to keep pace with
continuing changes in technology, evolving standards and changing needs of our clients. As a result of
the recent growth in the construction industry in India and the expected future growth, the demand for
highly-skilled professionals and workers has significantly increased in recent years. In addition, we may
lose skilled workers to competing employers who pay a significant increase in the wages or be forced to
increase the wage rates that we pay, or both. If we are unable to attract and retain professionals and
skilled workers, our business, results of operations and financial condition may be adversely affected.
Further, increase in compensation for skilled professionals in India could negatively affect our profit
margins. Compensation for skilled professionals in India is increasing at a fast rate, which could result
in increased salary costs of engineers, managers and other professionals. We may need to continue to
41
increase the levels of our employee compensation to remain competitive and manage attrition. Any
such increase could have a material adverse effect on our business and results of operations.
9.
Our insurance coverage may not adequately protect us against all losses.
We are generally required to maintain insurance coverage under our contracts in respect of construction
works, plants and equipment, employees and cash. We have obtained insurance policies like contractors
plant and machinery insurance policy, miscellaneous vehicle package policy and workmen’s
compensation policy
Our projects could suffer physical damage from fire or other causes, resulting in losses, including loss
of rent, which may not be fully compensated by insurance. In addition, we could suffer damage due to
earthquakes, floods, hurricanes, terrorism or acts of war, which may be uninsurable or are not insurable
at a reasonable premium. The proceeds of any insurance claim may be insufficient to cover rebuilding
costs as a result of inflation, changes in regulations, environmental issues as well as other factors. We
would also remain liable for any debt or other financial obligation related to that property.
There can be no assurance that our insurance coverage in respect of our various businesses will cover
actual losses incurred. To the extent that actual losses we incur exceed the amount insured, we may be
required to bear substantial losses which would have a material adverse effect on our financial position.
Further, although we maintain insurance in respect of our engineering and construction projects in
accordance with industry standards in India, there can be no assurance that such insurance will be
sufficient to cover liabilities resulting from claims relating to our engineering and construction projects.
If not otherwise required by the terms of the relevant contracts, we may choose not to insure the
construction works in respect of our projects depending upon our assessment of the risk profile for the
relevant project. If a project is considered safe by us and is subsequently not insured, any unforeseen or
unprecedented act or event resulting in a loss will affect our financial condition and results of
operations. Additionally, we operate with certain business risks uninsured including business
interruptions and loss of profit or revenue. To the extent that uninsured risks materialize, we would be
materially and adversely affected.
10. The failure of a joint venture partner to perform its obligations could impose additional financial
and performance obligations resulting in reduced profits or, in some cases, significant losses from
the joint venture.
We enter into various joint ventures with domestic as well as international construction companies as
part of our business. The success of these joint ventures depends significantly on the satisfactory
performance by our joint venture partners and fulfillment of their obligations. If our joint venture
partners fail to perform these obligations satisfactorily, the joint venture may be unable to perform
adequately or deliver its contracted services. In this case we may be required to make additional
investments and/or provide additional services to ensure the adequate performance and delivery of the
contracted services because we are subject to joint and several liabilities as a member of the joint
venture in most of our projects. These additional obligations could result in reduced profits or, in some
cases, significant losses for us. The inability of a joint venture partner to continue with a project due to
financial or legal difficulties could mean that we would bear increased and possibly sole responsibility
for the completion of the project and bear a correspondingly greater share of the financial risk of the
project.
11. 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, including various
approvals for the purpose of operating our projects. Additionally, we may need to apply for further
approvals in the future including renewal of approvals that may expire from time to time. 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
at the requisite time may result in the interruption of our operations and may have an adverse effect on
our business, financial condition and results of operations. Further, we cannot assure that the approvals,
licenses, registrations and permits issued to us would not be suspended or revoked in the event of non-
42
compliance or alleged non-compliance with any terms or conditions thereof, or pursuant to any
regulatory action.
12. Any material adverse effect on our future earnings, financial condition, cash flows will affect our
ability to pay dividends in future.
Our ability to pay dividends in the future will depend on our earnings, financial condition and capital
requirements that of our Subsidiaries and Associates and the dividends they distribute to us. Our
business is capital intensive and we may plan to make additional capital expenditure to complete
various Construction projects that we are developing. Our ability to pay dividends is also restricted
under certain financing arrangements. We may be unable to pay dividends in the near or medium term,
and our future dividend policy will depend on our capital requirements and financing arrangements in
respect of our projects, financial condition and results of operations.
13. We have entered into, and will continue to enter into, related party transactions.
We may in the course of our business enter into transactions with related parties that include our
Promoters and companies forming part of our promoter group, Subsidiaries and Associates. While we
believe that all such transactions have been conducted on an arm's length basis, there can be no
assurance that we could not have achieved more favorable terms had such transactions not been entered
into with related parties. Furthermore, it is likely that we may enter into related party transactions in the
future. For details, please see “Financial Statements” on page 182. There can be no assurance that such
transactions, individually or in the aggregate, will not have a material adverse effect on our financial
condition and results of operations.
14. Our funding requirements and deployment of the net proceeds may be subject to changes and delays.
Subject to compliance with applicable laws and regulations, we intend to use the Net Proceeds of the
Issue for augmenting long term finance for funding growth and capital expenditure, prepayment/repayment of debt, funding of subsidiaries, associates, joint ventures, working capital
requirements, general corporate purposes. Our funding requirements and the deployment of the net
proceeds of the Issue is based on management estimates and has not been independently appraised by
any institution or organization. We may have to revise our estimates from time to time due to various
factors including market conditions and, consequently, the funding requirements may also change. This
may also result in the rescheduling of the expenditure programs and an increase or decrease in our
proposed expenditure plans. Additionally, the net proceeds of the Issue are to be deployed at the sole
discretion of the Board of Directors.
15. Labour disputes could affect our operations.
Our operations depend upon the productivity of our labour force. While we generally have good
relations with our employees, there can be no assurance that there will not be any major labor related
dispute in the future. In the event of any labor dispute, our operations and results of operations could be
adversely affected. See section titled “Business—Employees” on page 121 of this Preliminary
Placement Document.
As such, in the event of any labour dispute between the subcontractors and the employees or if the
unions order its members to stop construction based on allegations of violations of employee rights or
for other reason, construction work on our projects on which we have engaged such subcontractors may
be stopped. Any such labor disputes or work stoppages as a result of such disputes or actions taken by
labour unions could adversely affect our business operated by us and in turn have a material and
adverse effect on our business, results of operations, financial condition and prospects.
16. Inadequate health and safety precautions may affect us.
Construction and infrastructure development companies in India are subject to various health and safety
laws and regulations as well as laws and regulations governing their relationship with their respective
employees in areas such as minimum wages, maximum working hours, overtime, working conditions,
hiring and terminating employees, contract labor and work permits. Accidents, in particular fatalities,
may have an adverse impact on our reputation and may result in fines and/or investigations by public
authorities as well as litigation from injured workers or their dependents.
43
17. Corrupt practices or improper conduct may delay the development of a project and materially and
adversely affect our results of operations.
The construction industry is not immune to the risks of corrupt practices. Large construction projects in
all parts of the world provide opportunities for corruption. Such corruption may include bribery,
deliberate poor workmanship or the deliberate supply of low quality materials. If we, or any other
person involved in any of the projects is the victim of or involved in any such corruption, our ability to
complete the relevant projects as planned may be disrupted thereby materially and adversely affect our
business, financial condition and results of operations.
18. Our contingent liabilities could adversely affect our results of operations, cash flows and financial
condition.
As of March 31, 2014, we had the following contingent liabilities (that had not been provided for), as
disclosed in our consolidated Financial Statements:
S. No.
(a)
1.
2.
3.
4.
5.
6.
7.
8.
Contingent Liabilities
Claims against the Company not acknowledged as debt:
The Deputy Commissioner of Custom has passed the order for demand of custom duty towards
import of machineries `104.95 lakhs (Year 2011-12 and 2012-13 `104.95 lakhs) & Interest of `
174.05 Lakh (year 2011-12 and 2012-13 `174.05 Lakh ). The Company has filled the Appeal to
Commissioner of Customs against the said order , hence no provision is made in the books of
accounts
Sarda Energy and Minerals Ltd. (Formerly known as Raipur Alloys Limited) has filed a suit for
recovery of `46.42 Lakh (Year 2011-12 and 2012-13 ` 46.42 Lakh) against the company and its
directors and officers holding them jointly and severally liable. The Company purchased steel and
TMT bar from Sarda Energy and Minerals Limited, for which the latter claimed `46.42 Lakh (Year
2011-12 and 2012-13 ` 46.42 Lakh) balance to be paid and filed Civil Suit at Civil Court, Nagpur.
The company has challenged the jurisdiction of the court. The matter is pending before the Civil
Court, Nagpur. Company has not made any provision for the said liability in its Books of Accounts
Demand under Service Tax Act,1994 ` 67.29Lakh (Year 2011-12 and 2012-13 ` 67.29 Lakh)
Company has received order of the Commissioner of service tax on 01st April, 2013 wherein
Commissioner upheld the demand of ` 199.13 Lakh (Year 2011-12 and 2012-13 ` 199.13 Lakh) and
impose penalty of ` 345.92 Lakh (Year 2012-13 ` 345.92 Lakh). Company filed appeal before
CESTAT and received unconditional stay order on order of Commissioner hence no provision has
been made.
The Company has received Show-Cause Notice on 13th April, 2013 for imposing penalty of ` 19.84
Lakh (Year 2011-12 and 2012-13 Nil) under Rule 26 of the Central Excise Rules, 2002. Company
filed appeal before appropriate authority hence no provision has been made.
Service Tax demand of ` 434.80 Lakhs (Year 2012-13 ` 434.80 Lakhs) not acknowledge as debts in
regards to recovery of CENVAT credit on input services availed during the Financial Year 2009-10
and 2010-11 against the subsdiary. Subsidiary has received order from commissioner of Service tax
on May 10, 2013 and the subsidiary has preferred appeal with Tribunal for which subsidiary has
deposited ` 25 Lakhs and received stay order from tribunal for recoveries of demand. Further the
matter is pending with Tribunal as at reporting date.
The Deputy Commercial Tax Commissioner, Audit Divison-1 Ahmedabad has passed order against
“Jililn Sadbhav JV” for VAT demand of ` 702.00 Lakh (Year 2011-12 and 2012-13 ` Nil) inclusive
of interest ` 330.18 lakh and Penalty of ` 74.36 lakh (Year 2011-12 and 2012-13 Rs Nil). In JilinSadbhav JV, Sadbhav Engineering Limited is having 48% share. Against this Order the Joint
Venture has filed an appeal in the Gujarat Value Added Tax Tribunal at Ahmedabad, hence no
provision has been made.
The Company has received a show cause notice from the office of Mining Engineer, Mines and
Geology Department, Udaipur on 05/02/2014 imposing penalty of ` 81.32 Lakh under rule 63, 37A
(IX) of Rajasthan Minor Mineral Concession Rules, 1986. The Company has filed a Civil Writ
Petition No.2635/2014 in The High Court of Rajasthan against the said notice. The Company has
deposited `30.00 Lakh with the Mining Engineer, Mines and Geology Department, Udaipur as per
stay order of the Honourable Court. Further proceeding is pending, hence no provision has been
made.
44
9.
(b)
Income Tax of ` 3,566.92 Lakhs on the claim made of the deduction u/s 80IA (4) of the Income Tax
Act, 1961.The Finance Act (2), 2009 has amended Section 80IA(4) of the Income Tax Act, 1961 by
substituting an explanation to Section 80IA with restrospective effect from 01.04.2000. On the basis
of legal opinion and deided cases, the Company has continued to claim deduction under section 80IA(4) of the Act on eligible projects and consequently the Company considers it appropriate not to
create a liaility for provision of Income Tax. However an amount of income tax of ` 858.40 Lakhs
for the current year and of ` 2,708.51 Lakhs for the earlier years since FY 2007-08 has been
disclosed as contingent liability.
Guarantees
Company has given corporate guarantee to banks for ` 29,825.00 Lakh (Year 2012-13 ` 28,850.00,
Year 2011-12 ` 10,500 Lakh) against the finance facility given by the banks to subsidiary
companies.
(c)
During the year, minority shareholders of Bijapur Hungud Tollway Private Limited (‘BHTPL’) (a
subsidiary of the Company) has filed company petition under section 347 and 398 of the Companies
Act, 1956 with the Company Law Board – Mumbai Bench against Sadbhav Engineering Ltd a
holding Company and its associates/affiliates wherein the company is also defendant. The Company
Law Board (CLB) passed an order in favour of the minority shareholder although company pleaded
that matter should be referred for arbitration as per shareholder agreement (SHA). Against the CLB
order the company filled Special Civil Application (SCA) with Hon’ble High Court of Gujarat that
matter of minority shareholder should be referred as per SHA. Hon’ble High Court accepted SCA of
the company and granted interim relief where by further proceeding of CLB have been stayed.
Currently the matter is pending before Hon’ble High Court of Gujarat. The management believes
that, based on legal advice, the outcome of above contingencies will be favourable and that any loss
is not probable. Accordingly, no amounts have been accrued or paid in regard to dispute.
If any of aforementioned contingent liabilities materialise, it could have a material adverse effect on our
results of operations, cash flows and financial condition. For further details, see the section “Financial
Statements” on page 182.
19. Our Company has provided corporate guarantees to the lenders of some of our Subsidiaries to
secure the loans availed by such Subsidiaries.
Our Company has provided corporate guarantees to the lenders of some of our Subsidiaries to secure
the loans availed by such Subsidiaries. In the event that our Subsidiaries are not in a position to service
its payment obligations under its loan facilities, we may be called upon by the lenders to fulfill such
payment obligations as a guarantor. Any such instance may have adverse impacts on the financial
condition, business and results of operations of our Company.
20. We are involved in legal proceedings in various states in India, both as plaintiff and as defendant, in
which we may not prevail.
We are involved in arbitration and legal proceedings incidental to our business and operations. These
legal proceedings are pending at different levels of adjudication before various courts and tribunals.
Legal proceedings divert management time and attention, and consume financial resources in their
defense or prosecution. In addition, should any new developments arise such as changes in Indian law
or rulings against us by appellate court or tribunals, we may need to make provisions in our financial
statements which could increase our expenses and current liabilities. Furthermore, if any claims are
determined against us and we are required to pay all or a portion of the disputed amounts as determined,
this could have a material adverse effect on our business and financial standing. For details of
outstanding material legal proceedings, see section titled “Legal Proceedings” on page 176.
21. Our Company, our Subsidiaries and our Associates have unsecured loans that may be recalled by the
lenders at any time.
Our Company, our Subsidiaries and our Associates have availed unsecured loans which may be recalled
by their respective lenders at any time. In the event that any lender seeks the accelerated repayment of
any such loan, it may have a material adverse effect on the business, cash flows and financial condition
of the entity against which repayment is sought.
45
22. Our revenues typically tend to fluctuate on a seasonal basis.
Traffic volumes and consequently our revenues, typically register a decrease during monsoon on
account of a decrease in number of persons travelling by road and a reduction in the cargo traffic.
Additionally, heavy or unseasonal rains or other adverse weather conditions could adversely affect
tolling operations at any of our projects, forcing us to temporarily suspend road availability and/or toll
collection. Our maintenance expenses can be higher post monsoons, on account of additional expenses
on road maintenance. Further, our revenue from our EPC activities also decrease during monsoons on
account of lesser business owing to difficulty in carrying out construction work during such season.
Such fluctuations may impact comparison of our reported quarterly financial performance across
quarters upon the listing of our Equity Shares.
23. The audit report in respect of our consolidated financial statements for FY2014 contain emphasis of
matters.
The auditor’s report on the consolidated financial statements of our Company for FY2014 contain
matters of emphasis. The Auditor, in its report, without qualifying its opinion, drawn attention to the
close out agreement dated December 23, 2013 entered into by our Subsidiary, Solapur Bijapur Tollway
Private Limited with the NHAI, pursuant to which the concession agreement with NHAI has been
foreclosed. Accordingly, the financial statements of Solapur Bijapur Tollway Private Limited have been
prepared on the basis that it is no longer a “going concern”. For further details, see “Financial
Statements – Auditors’ Report on Consolidated Financial Statements” on page F1.
24. We cannot guarantee the accuracy of statistical and other information with respect to India, the
Indian economy or our business or the industries in which we operate contained in this Preliminary
Placement Document.
Some data relating to our business have been assessed and quantified internally by our Company or our
Subsidiaries as no other credible third party sources are available for such data. The assessment of the
data is based on our understanding, experience and internal estimates of our business. Although we
believe that the data can be considered to be reliable, their accuracy, completeness and underlying
assumptions are not guaranteed and their dependability cannot be assured.
Statistical and other information in this Placement Document relating to India, the Indian economy or
the industries in which we operate have been derived from various government publications and
obtained in communications with various Indian government agencies that we believe to be reliable.
However, we cannot guarantee the quality or reliability of such source of materials. Further, there is no
assurance that they are stated or compiled on the same basis or with the same degree of accuracy as
may be the case elsewhere. In all cases, investors should give consideration as to how much weight or
importance they should attach to, or place on, such facts or statistics.
Risks Relating to Our Construction Business
25. We are subject to various risks with respect to our Construction Business, including if costs increase
above estimates, changes in scope of work and cost overruns which may cause us to experience
reduced profits or losses and in some cases, cancellation or deferrals of contracts.
The majority of our contracts is and will continue to comprise item rated and/or lump sum turnkey
contracts awarded following competitive bidding. We contract to provide services primarily on the
basis of item rated contracts and/or lump sum turnkey projects per unit of work or a lump sum for the
project as a whole and rarely on a cost-plus-fee basis. Under these types of contracts, increases in the
costs of materials and labor are sometimes covered by suitable escalation clauses. In contracts that lack
such a provision or in which the escalation clause is limited, we bear all or a portion of the risks of any
cost increase, and while we attempt to anticipate and account for any contingencies when determining
our contract price, there is no assurance that we will be able to successfully secure contract prices that
build in adequate amounts to cover any such contingencies. Contract prices are established in part on
cost and scheduling estimates, which are based on a number of assumptions, including assumptions
46
about future economic conditions, the price and availability of labor, equipment and materials and other
relevant factors. If any of these estimates prove inaccurate or circumstances change, cost overruns may
occur and we could experience reduced profits, or in some cases incur loss. In addition to the risk of
cost overruns, under our lump sum contracts, we also bear the risk of any underestimation of the
amount of work or the quantity of material required. Unanticipated costs or delays in performing part of
the contract can have compounding effects by increasing costs of performing other parts of the contract.
These inherent risks of the Construction Business may result in realized gross profits differing from
those we originally estimated and reduced profitability or losses. Depending on the size of a project,
these variations from estimated contract performance could have a material adverse effect on our
operating results for any particular period.
In addition, our scope of work might change during the life of the project or there may be deviations
and delays from the original contract schedule as a result of a client's inability to meet contractual
payments obligations or any other obligations, including handover of land, environmental/forest
clearances, which is not unusual in the construction industry. We cannot assure you that we will be able
to recover the costs arising from change in scope of work caused by a project owner. This may lead to
business disputes, and may materially and adversely affect our business, financial position, results of
operations and prospects.
Regardless of the type of project, our Construction Business is subject to unusual risks, including
unforeseen conditions encountered during construction, the impact of inflation upon costs and financing
requirements of clients, and changes in political and legal circumstances, particularly since contracts for
major projects are performed over an extended period of time. We also provide performance security in
the form of bank guarantees in relation to our projects and other activities. In the event of
non-performance of specified obligations, we may be liable to pay out significant amounts. Although
we seek to minimize and spread our risks over a large number of projects, a combination of
circumstances may result in significant losses on any particular project.
In Construction projects, we are also exposed to project performance risks and may face penalties in the
event that the performance parameters of a project are not met.
We are involved in large projects where design, construction or systems failures can result in substantial
injury or damage to third parties and we could face significant claims for damages if there are defects in
the quality of our or our sub-contractors' design, construction engineering or planning.
26. A delay and/or failure in the supply of materials, services and goods from third parties at acceptable
prices and quality or at all may materially and adversely affect our business, results of operations
and prospects.
We rely on third parties for the timely supply of specified raw materials, equipment and maintenance
services. Although we actively manage these third-party relationships to ensure continuity of supplies
on time and to our required specifications, some events beyond our control could result in the complete
or partial failure of supplies or in supplies not being delivered on time. Furthermore, we are sometimes
required to work with suppliers who are designated by our clients, which may limit our ability to
manage the suppliers. Any such failure could materially and adversely affect our business, results of
operations and prospects.
Our Construction business is also affected by the availability, cost and quality of the raw materials we
need to construct and develop our projects, particularly steel, bitumen, diesel and cement. The prices
and supply of raw materials depend on factors not under our control, including general economic
conditions, competition, production levels, transportation costs and import duties. There is a risk that
our primary suppliers may curtail or discontinue delivery of raw materials in quantities we need and/or
at prices that are competitive. Fluctuations in the prices of the underlying raw materials may also
indirectly impact the prices of equipment and components procured for our operations.
Any failure to obtain the raw materials we need for our projects at acceptable prices and quality or at all
would materially and adversely affect our business, results of operations and prospects.
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27. Our revenues are highly dependent upon Central and State Governments and public sector
undertakings.
We rely heavily upon the Central and State Governments and public sector undertakings (“PSUs”)
wherein Central and/or State Governments hold a majority stake to appoint us on large-scale
infrastructure projects in India. PSUs can be subject to political influence and there have been instances
in India where a party has been awarded a contract by a PSU, which was subsequently rescinded for
reasons not connected to the project or the successful party. Additionally, many of our projects are
Government sponsored projects and these are often subject to delay. Such delays may arise on account
of a change in the central and/or state governments, changes in policies impacting the public at large,
scaling back of government policies or initiatives, changes in governmental or external budgetary
allocation, or insufficiency of funds, any of which can materially and adversely affect our business,
financial condition and results of operations.
Further, infrastructure contracts awarded by the central and/or state governments may provide the client
with the right to terminate the contract, at any time after providing us with notice which typically may
vary from 30 to 90 days. Performance securities and guarantees for advances are also common and are
typically unconditional and payable on demand, and can be invoked by the client. Since the majority of
our projects are contracts with the Central and State Governments or its agencies, we are susceptible to
such termination or invocation. In the event that a contract is so terminated, our revenues will be
adversely affected.
In addition, since a significant proportion of our revenues are derived from a limited number of clients,
we are heavily reliant upon the ability of a relatively small number of clients to pay amounts due to us
for services provided. If such clients experience financial or political difficulties or decrease their
requests for our services for other reasons, we may in turn experience material fluctuations or declines
in our revenues and/or losses. A failure to pay amounts due by a number of our clients at any one time
could significantly and adversely affect our cash flows and operations.
28. Delays in the completion of current and future projects could materially and adversely impact our
results of operations and financial condition.
We provide performance securities to our clients which require us to complete projects within a
specified timeframe. As a result, we are exposed to project performance risks and may face penalties in
the event that the performance parameters of a project are not met. If we fail to complete a project as
scheduled, we may generally be held liable for penalties in the form of agreed liquidated damages or, in
some cases, the customer may be entitled to appoint, at our expense, a third party to complete the work.
To the extent that this happens and is not otherwise covered by the escalations clause in the relevant
contracts, the total cost of a project would exceed our original estimates and we could experience
reduced profits or, in some cases, a loss on that project. In addition, any delays in the completion of
projects could increase our working capital requirements. For example, the projected COD for the
RPTPL Project was delayed because of delay in approval of the projected COD by NHAI. Further, the
projected COD for the HYTPL Project was delayed due to delay in hand over of land by NHAI.
29. Our aggregate order book for the Construction Business may be subject to unexpected adjustments
and cancellations and is, therefore, an uncertain indicator of our future earnings.
As of June 30, 2014, our aggregate order book for the Construction Business was approximately `
7,93,080 Lakhs. Our order book is unaudited and we cannot guarantee that the revenues anticipated in
our order book will be realized or, if realized, will be realized on time or result in profits. If we were to
deviate from the expected margins or suffer losses on one or more of these contracts, our net income
could decrease or we could incur a loss.
Further, our order book may remain outstanding for an extended period of time. In addition, contract
delays or cancellations or adjustment to the scope of work may occur from time to time due to a client's
default, incidents of force majeure, legal impediments or our default and may impact contracts reflected
in our order book. For example, contracts could be removed from our order book as a result of
financing difficulties or payment default by a client. This reduction in our order book could adversely
affect the revenue and profit we actually receive.
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30. We rely on third parties, including principal contractors and sub-contractors, to complete certain
projects and any failure arising from the non-performance, late performance or poor performance
by such third parties, failure by a third-party subcontractor to comply with applicable laws, to obtain
the necessary approvals, or provide services as agreed in the contract or failure on our part to
engage third party consultants and service providers could affect the completion of our contracts
and could negatively impact our business and may result in fines, penalties or even delay and
suspension of work/contract.
We are commonly engaged as a principal contractor and we also sometimes sub-contract work on our
projects. When we are the principal contractor, we rely on third-party subcontractors we hire to
perform a substantial amount of the work under our contracts, particularly EPC contracts. When we are
a sub-contractor, payment on such projects may depend upon the performance of the principal
contractor and when we sub-contract, payments may depend on the sub-contractor's performance. We
also rely on third-party equipment manufacturers or suppliers to provide the equipment and materials
used for Construction projects.
The engagement of subcontractors is subject to certain risks, including difficulties in overseeing the
performance of such subcontractors in a direct and effective manner, failure to complete a project where
we are unable to hire suitable subcontractors, or losses as a result of unexpected subcontracting cost
overrun. As the subcontractors have no direct contractual relationship with our clients, we are subject to
risks associated with non-performance, late performance or poor performance by our subcontractors. As
a result, we may experience deterioration in the quality of our projects, incur additional costs, or be
exposed to liability in relation to the performance of subcontractors under the relevant contracts, which
may have an impact on our profitability, financial performance and reputation, and may result in
litigation or damages claims.
In addition, we may also be subject to claims arising from defective work performed by subcontractors.
While we may attempt to seek compensation from the relevant subcontractors, who may not be able to
perform or perform in a timely manner their obligations, we may be required to compensate our clients
before receiving compensation from the subcontractors. If no corresponding claim can be asserted
against a subcontractor, or the amounts of the claim cannot be recovered in full or at all from the
subcontractor, we may be required to bear some or all the costs of the claims, in which case our
business, financial position, results of operations and prospects could be materially and adversely
affected.
In addition, when we sub-contract, we may be liable to the client due to failure on the part of a
sub-contractor to maintain the required performance standards or insufficiency of a sub-contractor's
performance securities. Any failure arising from the non-performance, late performance or poor
performance by such third parties, failure by a third-party subcontractor to comply with applicable laws,
rules or regulations, to obtain the necessary approvals, or provide services as agreed in the contract or
failure on our part to engage third party consultants and service providers could affect the completion of
our contracts and could negatively impact our business and may result in fines, penalties or even delay
and suspension of work and/or contracts.
In addition, we may not be able to hire qualified subcontractors. If we are unable to hire qualified
subcontractors or find competent equipment manufacturers or suppliers, our ability to successfully
complete a project could be impaired. If the amount we are required to pay for subcontractors or
equipment and supplies exceeds what we have estimated, especially in a fixed-price or lump-sum type
contract, we may suffer losses on these contracts. If a supplier, manufacturer or subcontractor fails to
provide supplies, equipment or services as required under a negotiated contract for any reason or if a
subcontractor engaged by us has misrepresented its qualification or eligibility to undertake a specific
project, we may be required to source these supplies, equipment or services or a replacement for such
sub-contractor (as the case may be) on a delayed basis or at a higher cost than anticipated, which could
impact contract profitability. Any such misrepresentation by a subcontractor as to its qualification or
eligibility may also affect our ability to successfully complete a project and thereby harm our
reputation. The risk of failure by a supplier, manufacturer or subcontractor to provide supplies,
equipment or services may intensified during an economic downturn if our suppliers, manufacturers or
subcontractors experience financial difficulties or find it difficult to obtain sufficient financing to fund
their operations or access to bonding, and are not able to provide the services or supplies necessary for
our business.
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31. Costs associated with warranty and liability due to defects in our projects or related after sales
services and any attendant adverse publicity, could adversely affect our business, projects, results of
operations and financial condition.
Defects, if any, in our projects could require us to undertake repair and rectification actions. We
provide defect liability warranties on our work, typically ranging from two years to four years based on
the contract we enter into with our clients. These warranties require us to cover any defects after the
handover of the property to the client after completion of a project. We are also required to provide
performance bonds which provide that we are responsible for the completion of a project should a
subcontractor fail to do so or become insolvent. A failure to meet quality standards could expose us to
the risk of liability claims during the project execution period when our obligations are typically
secured by performance security, which typically range from 5% to 10% of the contract price, and
during the defects liability period. These actions could require us to spend considerable resources in
correcting the problems and could adversely affect demand for our design and construction operations
services. If the project costs for these projects are higher than the performance bond itself, this may
reduce our profitability or result in a loss on a project that may materially and adversely affect our
business and results of operations. Any defects in our work could also result in client claims for
damages. Moreover, defects in our projects that arise from defective components supplied by external
suppliers may or may not be covered under warranties provided by such suppliers. An unusual number
or amount of warranty claims against a supplier could adversely affect us because we depend on a
limited number of suppliers for the supply of raw materials and components. In defending claims for
damages from clients, we could incur substantial costs and adverse publicity also be generated.
Management resources could be diverted away towards defending such claims. In the event that the
defects are not rectified to the satisfaction of our clients, the clients may decide not to return part or all
of the retention monies under the contract and/or invoke the performance securities. Any of the above
could have a material adverse impact on our business, results of operations, financial condition and
prospects.
32. Changes in technology may render our current technologies obsolete or require us to make
substantial capital investments.
Our business is subject to changes in technology. Although we strive to keep our technology in
accordance with the latest international technological standards, the technologies currently employed
may become obsolete or subject to competition from new technologies in the future. The cost of
implementing new technologies or expanding capacity could be significant and could adversely affect
our results of operations.
33. We face inclement weather and natural disasters and risk that may cause significant interruption of
operations.
Procurement and construction works carried out in respect of our projects involve a number of hazards
including earthquakes, flooding, tsunamis and landslides. While we insure against loss due to the
occurrence of accidents in the conduct of our business, there can be no assurance that all risks are
adequately insured against, that a particular claim will be paid or that we will be able to procure
adequate insurance coverage at commercially reasonable rates in the future. Natural disasters in the
future may cause significant interruption to our operations, disruption to our properties and damage to
the environment that could have a material adverse impact on our business, results of operations,
financial condition and prospects
34. Our Construction Business may be affected by difficult work sites and environments, which could
cause delays and result in additional costs.
We perform work under a variety of conditions, including, but not limited to, difficult and hard to reach
terrain and site conditions. Performing work under such conditions can result in project delays or
cancellations, potentially causing us to incur additional, unanticipated costs, reductions in revenues or
the payment of liquidated damages. Some of our projects involve challenging engineering,
procurement and construction phases that may occur over extended time periods, sometimes over
several years. We may encounter difficulties in engineering, delays in designs or materials provided by
the customer or a third party, equipment and material delivery delays, schedule changes, delays from
customer failure to timely obtain rights of way, weather-related delays and other factors, some of which
are beyond our control, but which impact our ability to complete a project within the original delivery
50
schedule. In some cases, delays and additional costs may be substantial and we may be required to
cancel a project and/or compensate the customer for the delay. We may not be able to recover any of
such costs. Any such delays or cancellations, defects or errors or other failures to meet customer
expectations could result in damages claims substantially in excess of the revenue associated with a
project. Delays or cancellations could also negatively impact our reputation or relationships with our
clients, which could adversely affect our ability to secure new contracts.
35. Our revenue and earnings are dependent on the acceptance of bids and award of new contracts by
the Central and State Governments and governmental agencies.
A high portion of our revenues depend on the acceptance of bids submitted to the Government and
other agencies. We may not be selected for any of the projects for which we have submitted a bid and
we may end up incurring significant costs in preparation and submission of such bid. Once accepted,
our revenues are subsequently dependent on large-scale project awards that we get from time to time.
The timing of when project awards will be made is unpredictable and outside of our control. We operate
in competitive markets where it is difficult to predict whether and when we will receive awards since
these awards and projects often involve complex and lengthy negotiations and bidding processes. These
processes can be impacted by a variety of factors including governmental approvals, financing
contingencies, commodity prices, environmental conditions and overall market and economic
conditions. In addition, many of our competitors may be more inclined to take greater or unusual risks
or terms and conditions in a contract that we might not deem as standard market practice or acceptable.
As a result, we are subject to the risk of losing new awards to competitors. Our results of operations can
fluctuate from quarter to quarter and year to year depending on whether and when project awards occur
and the commencement and progress of work under awarded contracts. Hence, there is a risk that
revenue may not be derived from awarded projects as quickly as anticipated. Also any cancellation or
suspension of an order by a customer may also affect our revenue and financial condition.
36. We maintain a workforce and other organizational set-up based upon current and anticipated
workloads. If we do not receive future contract awards or if these awards are delayed, we could
incur significant costs.
Our estimates of future performance depend on, among other things, whether and when we will receive
certain new contract awards. While our estimates are based upon our best judgment, these estimates
can be unreliable and may frequently change based upon newly available information. In the case of
large-scale projects where timing is often uncertain, it is particularly difficult to predict whether or
when we will receive a contract award. The uncertainty of contract awards and timing can present
difficulties in matching workforce size with contract needs. If an expected contract award is delayed or
not received, we could incur costs due to maintaining under-utilized staff and facilities that would have
a material adverse effect on our results of operations and financial condition.
37. We may experience delays and/or defaults in our receivables, or delay in the release of bidding
guarantees, prepayment guarantees or retention monies which could have a material adverse effect
on our results of operations and financial condition.
Most of our EPC contracts require us to commit a certain amount of cash and other resources to projects
prior to receiving any advances, progress or other payments from the clients in amounts sufficient to
cover expenditures on projects as they are incurred as a result of providing bidding guarantees,
prepayments guarantees, performance guarantees and retention monies arrangements under such
contracts. Delays in client payments may require us to make a working capital investment. If a client
defaults in making its payments on a project on which we have devoted significant resources or if a
project in which we have invested significant resources is delayed, cancelled or does not proceed to
completion, it could have a material adverse effect on our results of operations and financial condition.
38. Our new projects require a long gestation period and substantial capital outlay before any benefits
or returns on investments are realized.
Due to the nature of our business, our projects typically require a long gestation period and substantial
capital outlay before completion and may take months or years before positive cash flows can be
generated, if at all. The time and costs required in completing a project may be subject to substantial
increases due to many factors, including shortages of materials, equipment, technical skills and labor,
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adverse weather conditions, natural disasters, labor disputes, disputes with contractors, accidents,
changes in government priorities and policies, changes in market conditions, delays in obtaining the
requisite licenses, permits and approvals from the relevant authorities and other unforeseeable problems
and circumstances. Further, we provide performance guarantees to our clients. For failure to complete
a project as scheduled, we may be held liable for penalties in the form of liquidated damages and, in
some cases, the customer may be entitled to appoint, at our expense, a third party to complete the work.
Any of these factors may lead to delays in, or prevent the completion of our projects and result in costs
substantially exceeding those originally budgeted for.
39. Our projects are subject to construction, financing and operational risks.
The development of new projects involves various risks, including, among others, regulatory risk,
construction risk, financing risk and the risk that these projects may prove to be unprofitable. We may
need to undergo certain changes to our operations as a result of entering into these new projects.
Entering into any new projects may pose significant challenges to our management, administrative,
financial and operational resources. We cannot provide any assurance that we will succeed in any new
projects we may enter into or that we will recover our investments. If the funding requirements and
project costs for these projects are higher than as estimated, we will need to find sources to fund the
extra costs which may not be readily available. Any failure in the development, financing or operation
of any of our significant new projects will likely materially and adversely affect our business, prospects,
financial condition and results of operations.
We may be adversely affected by investment in the development of our ongoing and other new projects
because:

the contractors hired by us may not be able to complete the construction of projects on time,
within budget or to the specifications and standards set out in our contracts with them;

delays in completion and commercial operation could increase the financing costs, including
due to increase in prices of raw materials, associated with the construction and cause our
forecasted budget to be exceeded;

we may not be able to obtain adequate working capital or other financing to complete
construction of and to commence operations of our projects; and

we may not be able to recover the amounts we may have invested in our projects if the
assumptions contained in the feasibility studies for these projects do not materialize.
For certain projects that have been awarded to us, we are yet to enter into implementation/other
definitive agreements in relation to such projects. We cannot provide any assurance that definitive
agreements will be entered into and/ or successfully implemented.
40. Unanticipated cost escalation of materials, fuel costs, labor and other inputs and purchase price of
equipment may adversely affect our results of operations.
Costs of materials, labor and other inputs constitute a significant part of our operating expenses. Our
construction operations require various bulk construction materials including steel, cement, bitumen
and fly ash, among others. In certain of our contracts, we are required to procure various equipment
including process equipment, mechanical equipment, vessels, machinery, piping materials and electrical
and instrumentation components, and the prescribed cost escalation formula may not be adequate to
cover the entire cost increase. Unanticipated increases in the purchase price of equipment not taken
into account in our bids may adversely affect our results of operations.
Contracts, irrespective of their type, 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). Claims for contract valuation are often subject to lengthy arbitration or litigation
proceedings. Under such circumstances, we may have to use significant additional working capital to
ensure successful execution of such projects. Further, we may also face counterclaims initiated against
us by certain clients in connection with our project claims. If we are held liable for any of these
counterclaims, we will incur write-downs and charges against our earnings to an extent that a reserve
may not be established. Even if we do not lose such counterclaims we may not be successful in our
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claim for contract valuation. Some contracts do not include such price variation or escalation clauses.
In such instances, we face the risk that the price of key raw materials and other inputs will increase
during the project execution period and we may be unable to pass on such cost increases to the client.
Risks Relating to Our Infrastructure Development Businesses
41. We are dependent on the NHAI for most of our concession agreements in respect of BOT and
concession periods of our BOT road projects may be reduced.
Most of our concession agreements in respect of our BOT work have been granted by the NHAI.
Moreover, our concession agreements in respect of BOT road projects are subject to certain conditions
which could result in a reduction of the concession period. Of the 13 road Development projects
currently in our portfolio, 11 projects are toll-based projects (including the Maharashtra Border
Checkpost Project). Additionally, the concession agreement may be terminated by NHAI before the
expiry of the original concession period if the average daily traffic on the project highway exceeds the
designed capacity as defined in the concession agreement and other relevant terms in the concession
agreement. In the event the concession agreements are terminated before the expiry of the original
concession period, we will experience a decrease in our revenues, profitability, cash flows, financial
condition and the results of operations all of which may be materially and adversely affected.
42. We are required to maintain the roads under each of our road project concession agreements and if
we fail to maintain them to the standard required by the concessioning authorities, we may be
subject to sanctions, including penalty deductions and termination of the relevant concession, which
could have a material and adverse effect on our business, financial condition, results of operations
and prospects.
Each of the concession agreements for our road projects requires us to maintain the road under certain
standards prescribed by the concessioning authorities. The concessioning authorities will periodically
carry out tests through one or more engineering firms to assess the quality of roads and their
maintenance. In the case of an annuity road project, if the concessioning authorities determines that we
have failed to maintain the roads to the standards set forth in the relevant concession agreements and
such failure results in one or more of the lanes of such project becoming unavailable for use, the
concessioning authorities may deduct an amount from our annuity payment as penalty. For toll road
projects, if the concessioning authorities determines that we have failed to carry out our road
maintenance obligations to the standards set forth in the relevant concession agreements, the
concessioning authorities may issue notices and provide cure periods. If we fail to meet the
concessioning authorities’ road maintenance requirements during any cure period provided, our
concession agreement for the toll road may be terminated by the concessioning authorities, which could
have a material and adverse effect on our business, financial condition, results of operations and
prospects.
The contracts for our projects typically specify certain operation and maintenance standards and
specifications to be met by us while undertaking our operation and maintenance activities. These
specifications and standards require us to incur operation and maintenance costs on a regular basis. Our
operations and maintenance costs for the year ended March 31, 2014 was ` 4,731.78 lakhs, representing
1.71% of our total revenues for the financial year. The operation and maintenance costs of our projects
may increase due to factors beyond our control, including:

standards of maintenance or road safety applicable to our projects prescribed by the relevant
regulatory authorities;

we may be required to restore our projects in the event of any landslides, floods, road subsidence,
other natural disasters accidents or other events causing structural damage or compromising safety;

unanticipated increases in material and labour costs, higher axle loading, traffic volume or
environmental stress leading to more extensive or more frequent heavy repairs or maintenance
costs. The cost of major repairs may be substantial and repairs may adversely affect traffic flows;
53

increase in electricity tariff rates or other fuel costs resulting in an increase in the cost of energy;

increase in the cost of labour;

higher interest costs in relation to our borrowings; or

other unforeseen operational and maintenance costs.
Any significant increase in operations and maintenance costs beyond the amounts budgeted for by us,
or any failure to meet quality standards, may reduce our profits and could expose us to penalties
imposed by authorities and could have an adverse effect on our business, results of operations and
financial condition.
43. Delays in the completion of construction of current and future projects could have adverse effects on
our business, results of operation and financial condition
Typically, our projects are subject to specific completion schedules, which require us to complete the
construction of our projects within a specified timeframe. We, typically provide the concession
authorities with performance securities or bank guarantees for a period of one year from the appointed
date (date on which conditions precedent under the financing arrangements for the projects are fulfilled)
or any other milestone as prescribed in the concession agreement, for the performance of its obligations
during the construction period.
Additionally, our typical Infrastructure Development projects are typically required to achieve
commercial operation date no later than the scheduled commercial operation dates specified under the
relevant concession agreements, subject to certain exceptions such as (i) the occurrence and
continuance of force majeure events that are not within the control of our project companies, or (ii)
delays that are caused due to reasons solely attributable to the concessioning authority. Failure to adhere
to contractually agreed timelines or extended timelines for reasons other than those specifically
contemplated in such concession agreement could require us to pay liquidated damages as stipulated in
the concession agreement, or may lead to forfeiture of security deposits, or lead to encashment and
appropriation of the bank guarantee or performance security. The concessioning authority may also be
entitled to terminate the concession agreement in the event of delay in completion of the work if the
delay is not on account of any of the recognised exceptions. In the event of such termination, we may
only receive partial payments under such agreements and such payments may be less than our estimated
earnings from such agreements. Further, we may not be able to obtain extensions for projects on which
we face delays or time overruns.
For our Infrastructure Development projects in the development stage, the concession agreements
require that the project companies achieve financial closure by a date specified in the relevant
concession agreement. There can be no assurance that we will be able to achieve financial closure as
provided in the concession agreement or complete our current and future projects within specified
schedules or at all. Timely completion of construction of our projects is subject to various execution
risks as well as other matters, including securing financing and receipt of relevant approvals for such
projects.
Delays may result in cost overruns, lower returns on capital and reduced revenue for the project
companies thus impacting the project’s performance, as well as failure to meet scheduled debt service
payment dates and increased interest burdens from our financing arrangements for the projects.
44. Delays in the acquisition of land and/or eviction of encroachments from State Government owned
land by the State Governments may adversely affect the timely performance of our contracts leading
to disputes with the State Governments.
Roads projects undertaken as part of our Infrastructure Development Business are dependent on
procurement of contiguous land, free from encumbrance. Failure to acquire such encumbrance free
contiguous land could result in us changing, delaying or abandoning entire projects, which in turn could
cause our business to suffer.
As per most of our concession agreements, the Government entities are required to facilitate the
acquisition or lease of or secure rights of way over, tracts of land and/or to hand over unencumbered
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land free of encroachments. Delays in any of the foregoing may result in delay of project
implementation prescribed by the relevant concession agreement and cause consequent construction
delays or termination of the concession agreement in certain projects. We have faced delays in hand
over of land in the past and in the case of SBTPL, we were required to terminate our concession
agreement due to such delay. This may lead to disputes and cross-claims for liquidated damages
between our project companies and the Government entity. Even if we are not penalised for such
delays, delays or failure to acquire land may lead to change in scope of projects or payment delays or
disputes with the Government entity for claims in connection with a completed project’s eligibility for
an early completion bonus (in case of annuity projects).
Any delays or inability to complete such acquisitions may also result in cost increases in the price of
construction materials from original estimates, which we may not be able to pass on to the motorists.
Moreover, we may be exposed to legal proceedings or claims by landowners objecting to the
acquisition of their lands for our projects. These factors either individually or collectively could have an
adverse effect on our business, results of operations and financial condition.
45. Our Infrastructure Development Business is primarily being undertaken through our Subsidiary
SIPL and project SPVs. SIPL is not a wholly owned subsidiary of our Company and accordingly,
our Company will not be entitled to full benefits arising from any upside to our Infrastructure
Development Business.
We undertake our Infrastructure Development Business primarily through our Subsidiary SIPL and
project SPVs. For details, see the section “Our Business” on page 103. SIPL is the asset holding
company for most of our BOT Projects. However, SIPL is not a wholly owned subsidiary of our
Company and we currently hold only 84.15% of the paid-up capital of SIPL. The BOT Projects that our
Company bids for are usually transferred to SIPL or project SPVs once the project is awarded to us by
the concessioning authority. As such, our Company will not be entitled to full benefits arising from any
upside to our Infrastructure Development Business.
46. Our business depends on our ability to acquire new projects. Any inability to identify, and acquire
new projects or obtain the requisite consent from our lenders could result in uncertainties in our
business, which in turn could have a material adverse effect on our future growth prospects,
business, results of operation and financial condition.
As a part of our business, we bid for projects on an ongoing basis. Projects are awarded following
competitive bidding processes and satisfaction of prescribed pre-qualification criteria. While service
quality, technological capacity and performance, health and safety records and personnel, as well as
reputation and experience and sufficiency of financial resources are important considerations in
authority decisions, there can be no assurance that we would be able to meet such qualification criteria,
particularly for larger projects, whether independently or together with other joint venture partners (if
any).
Further, once the prospective bidders satisfy the pre-qualification requirements of the tender, the project
is usually awarded based on the quote by the prospective bidder. We spend considerable time and
resources in the preparation and submission of bids. We cannot assure you that we would bid where we
have been prequalified to submit a bid or that our bids, when submitted or if already submitted, would
be accepted.
Future acquisitions of projects will depend on various factors such as: (i) our ability to identify projects
on a cost-effective basis, (ii) our ability to integrate acquired operations into the business, and (iii) our
ability to outbid our competitors. Further, such acquisitions may require consents from the lenders
under the existing financing agreements and consents from the concessioning authorities. Any inability
to identify, and acquire new projects or obtain the requisite consent from our lenders/concessioning
authorities could result in uncertainties in our business, which in turn could have a material adverse
effect on our future growth prospects, business, results of operation and financial condition.
Additionally, the Government conducted tender processes may be subject to change in qualification
criteria, unexpected delays and uncertainties. There can be no assurance that the projects for which we
bid will be tendered within a reasonable time, or at all. In the event that new projects which have been
announced and which we plan to bid for are not put up for tender within the announced timeframe, or
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qualification criteria are modified such that we are unable to qualify, our business, prospects, financial
condition, cash flows and results of operations could be materially and adversely affected.
47. Our business is substantially dependent on road projects in India undertaken or awarded by
governmental authorities and other entities funded by the Government of India or State
Governments and we derive almost all of our revenues from contracts with a limited number of
government entities. Any adverse changes in the Central or State Government policies may lead to
our contracts being foreclosed, terminated, restructured or renegotiated.
Our business is substantially dependent on road projects in India undertaken or awarded by
governmental authorities and other entities funded by the Government of India or State Governments.
We currently derive almost all of our revenues from contracts with a limited number of government
entities. These include NHAI, Government of Maharashtra, AUDA and KSHIP. As of June 30, 2014,
the value of ongoing contracts awarded to us by the Central Government and State Governments and
other Government entities (collectively, the “Indian Government”). There can be no assurance that the
Government of India or the State Governments will continue to place emphasis on the road
infrastructure sector. In the event of any adverse change in budgetary allocations for infrastructure
development or a downturn in available work in the road infrastructure sector or de-notification of toll
collection resulting from any change in government policies or priorities, our business prospects and
our financial performance, may be adversely affected.
The contracts with Government entities may be subject to extensive internal processes, policy changes,
Government or external budgetary allocation and insufficiency of funds which may lead to lower
number of contracts available for bidding or increase in the time gap between invitation for bids and
award of the contract. So long as Government entities are responsible for awarding contracts to us and
are a critical party to the development and ongoing operations of our projects, our business is directly
and significantly dependent on projects awarded by them. With reference to projects where our bids
have been successful, there may be delays in award of the projects and/or notification of appointed
dates, which may result in us having to retain resources which remain unallocated, thereby adversely
affecting our financial condition and results of operations.
Any adverse changes in the Government of India or State Government policies may lead to our
contracts being foreclosed or terminated. There is no assurance that the Government will not close
down any more toll plazas in the future. In the event that the Central or any State Government closes
down toll plazas belonging to any of our projects, there can be no assurance that we will recover the
costs incurred in undertaking the project, including payments made to the respective authority, which
may lead to an adverse effect on our business, prospects, cash flows and financial condition. Adverse
changes in Government policies may also lead to our contracts being restructured or renegotiated,
resulting in, amongst others, change in the scope of our work under such contracts. We cannot assure
you that we would be able to recover the cost associated with undertaking any such additional work
which was not contemplated at the time of entering into the contracts. Further, adverse changes in the
Government of India or State Government policies may also materially and adversely affect our
financing, capital expenditure, revenues, development, cash flows or operations relating to our existing
projects as well as our ability to participate in competitive bidding or bilateral negotiations for our
future projects.
Additionally, we may be restricted in our ability to, among other things, increase toll rates, sell our
interests to third parties, contract with certain clients or assign our rights or obligations under our
contracts to any person. These restrictions may limit our flexibility in operating our business, which
could have an adverse effect on our business, prospects, results of operations, cash flows and financial
condition.
48. Revenue from our Infrastructure Development Business is, and will continue to be, primarily
dependent on operating assets which are generating revenue. If the operation of one or more of
these assets is disrupted and we are not able to collect toll or are not paid annuities on time or at all,
it would have a material adverse effect on our financial condition, cash flows and results of
operations.
Revenues from our Infrastructure Development Business are substantially derived from our operating
SPVs. In relation to the Nagpur Seoni tollway project, we receive a fixed annuity and in relation to our
Maharashtra Border Check Post Project which is partially operational, we have commenced revenue
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collection at 9 border check posts. Revenue from toll collection and annuity income and revenue from
service fees, on a consolidated basis, were ` 29,104.03 lakhs and ` 3,022.55 lakhs respectively for
FY2014.
In the event of disruption in receipt of toll, annuity or service fees, our business, results of operations
and financial condition may be adversely affected. For example, in relation to the Aurangabad Jalna toll
way, the Chief Engineer of the Public Works Department issued a letter on November 4, 2013
restraining collection of toll at certain toll booths due to non-compliance with maintenance
requirements and non-completion of the railway over-bridges. Pursuant to orders of the Bombay High
Court, AJTL was permitted to resume toll collection under an interim arrangement subject to certain
conditions including completion of pending work by October 31, 2014 and depositing toll amounts in a
separate escrow account. We cannot assure you that such events will not occur in future in relation to
our SPVs. Any such suspension of toll, annuity or service fees will have an adverse effect on our
financial condition, cash flows and results of operations
49. Any material decrease between the actual traffic volume and our forecast traffic volume for a toll
based project or a contract to collect tolls could have an adverse effect on our business, results of
operations and financial condition.
When preparing our tender for a toll based project, we need to forecast the traffic volume for the road in
order to arrive at our expected revenue over the concession period or the contract period, as applicable,
in order to arrive at our bid based on expected revenues for undertaking such toll based project or
contract. In such instances, if the traffic volume is significantly less than our forecasted traffic volume,
the revenue from the toll based project may be lower than the anticipated revenue. We forecast the
traffic volume for toll based projects based on the data provided by external agencies engaged by us
such as traffic consultants and our team. The forecasting of traffic volumes is based on various
assumptions, and we cannot assure you that our forecasts will be accurate.
We currently operate seven toll-based road concessions, one annuity-based road concession in India and
one partially operational service fee based project. Our revenue is derived from toll receipts, which are
dependent on traffic volumes and traffic mix on the toll roads and the frequency of motorists. Traffic
volumes are directly or indirectly affected by a number of factors, many of which are outside our
control, including:
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toll fees;
fuel prices in India;
the volume or population of automobiles;
the affordability of automobiles;
the quality, convenience and travel time on alternative routes outside of our network;
the convenience and extent of a toll road’s connections with other parts of the local and national
highway networks;
the availability and cost of alternative means of transportation, including rail networks and air
transport;
the level of commercial, industrial and residential development in areas served by our projects;
adverse weather conditions; and
seasonal holidays.
Revenue from toll receipts is affected by traffic volume and tariff rates, both of which are outside our
control. The tariff structure is based upon the fee notification issued by the Government and we do not
have the ability to change it. While most of our concession agreements provide for an extension in
concession period if the actual traffic volumes are significantly lower than the target traffic projected
for the project, in the event that we experience a decrease in traffic volumes short of the number
projected, we would experience a corresponding decrease in our revenues, which in turn would
adversely affect our business, results of operation and financial condition.
Further, some of our contracts do not contain any restrictions on the Government from building or
upgrading competing roads and such roads may not necessarily be subject to payment of toll. While our
BOT contracts with NHAI have non-compete provisions with respect to roads to be constructed by the
NHAI and any other government instrumentality for the term of the contract, these restrictions fall away
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if the traffic on the road exceeds pre-specified limits in any year. Competing road(s) or other alternative
modes of travel may have a significant adverse impact on the toll revenues of the relevant road(s).
50. Traffic saturation may occur on certain of our toll roads and an inability to resolve this problem
could adversely affect the results of our operations.
Toll roads that are part of the projects operated by us may experience high traffic levels and congestion
at certain times of the day or on certain days of the week. Although we may consider possible solutions
and take appropriate steps in order to ease traffic flow and reduce congestion on such roads, there can
be no assurance that the saturation problems will be resolved under conditions that are economically
satisfactory to us. This could also lead to user dissatisfaction and could potentially reduce the traffic
volume which may adversely affect our business, financial condition and results of operations. Our
inability to take appropriate steps to ease traffic flow and reduce congestion in the event of a traffic
saturation problem, may therefore result in a breach of such contract giving a right to the authority to
terminate the contract, which may adversely affect our business, financial condition and results of
operations.
51. Our revenues from our annuity BOT Projects are fixed and our profitability from these projects
could decline with an increase in costs associated with these projects.
The payments received under the contracts for our annuity BOT Projects are fixed. We may be unable
to renegotiate the financial terms of the annuity during its term, and we may be unable to renew such
annuities on commercially acceptable terms. As a result, in the event that our costs increase, we may be
unable to offset such increases with higher revenues, which though not quantifiable monetarily, may
adversely affect our business, financial condition and results of operations. Further, such payments are
contingent on our ensuring that the infrastructure meets the specified quality or efficiency requirements.
52. Our ability to negotiate standard form of contracts may be limited and we may be required to accept
unusual or onerous provisions in such contracts.
Our ability to negotiate the terms of contracts with concessioning authorities is limited and we may be
required to accept unusual or onerous provisions in such contracts in order to be engaged to execute
such projects. For example, in case of the Aurangabad Jalna Tollway Limited (“AJTL”) concession
agreement, AJTL was solely responsible for land acquisition required for the construction of the
project. AJTL was required to bear the risk and costs in connection such land acquisition for the project.
Further, the concession agreements with the NHAI are based on a model concession agreement
prescribed by the NHAI. The model concession agreement imposes certain onerous provisions on the
concessionaire in relation to minimum shareholding requirement, construction of competing roads by
the Government and the concessioning authority, compliance with operation and maintenance
requirements and substitution of the concessionaire by the NHAI and the senior lenders in the event of
default under the project documents and financing documents.
Generally, the concessioning authority that has granted the relevant BOT concession to us unilaterally
determines the terms on which we may collect toll revenues (subject to annual adjustments to account
for inflation as specified in the concession agreements), and we are not permitted to amend such toll
rates. The toll rates set by Government entities depend on the nature of vehicles that use the roads that
makeup our toll projects. Further, in case of annuity-based projects, the annuity payment is generally a
fixed amount and payable at regular intervals as provided in the relevant concession agreement and is
subject to reduction if a minimum number of lanes are not available for use by traffic for a minimum
period, both of which are prescribed in the relevant concession agreement. As a result of this restriction,
in the event of increase in our operation and maintenance expenses, we may not be in a position to
increase our revenues in the same proportion. However, our costs of operating toll roads may increase
due to factors beyond our control. In the event that our costs increase, we may be unable to offset such
increases with higher revenues by increasing toll fees or annuity payments to be received. As such, the
inability to change the terms and conditions, including the toll fees of the concession during the
concession period may adversely impact our operational and financial flexibility.
We cannot assure you that we will always be able to comply with the unusual or onerous provisions. If,
due to unforeseen circumstances, we are required to but are unable to negotiate out of the unusual or
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onerous provisions which we had previously agreed to, our business, results of operations and financial
condition may be adversely affected.
53. Our Company or our SPVs may be required to pay additional stamp duty if the concession
agreements are subject to payment of stamp duty as deeds creating leasehold rights or as
development agreements
The SPVs may be required to pay additional stamp duty if the concession agreements are subject to
payment of stamp duty as deeds creating leasehold rights or as development agreements. News reports
have indicated that the stamp duty authorities, including Gujarat, Andhra Pradesh and Haryana (where
our projects are located) had alleged that since the concession agreement relates to the letting of toll to
the concessionaires in the form of a lease, or as development agreements, such agreements are required
to be stamped as lease agreements, or as development agreements as applicable, and accordingly,
concession agreements that have not been stamped as such should be considered to be inadequately
stamped. The news reports have also indicated that the NHAI had stated that it considered the land
granted for construction and development of roads to concessionaires as being merely for public use
and not in the form of a lease. However, stamp duty authorities may not agree with the NHAI’s view in
this regard and could demand payment of stamp duty for a lease or development agreement. In addition,
the High Court of Allahabad and the High Court of Madhya Pradesh have held that a concession
agreement should be stamped as a lease agreement and have upheld the imposition of a higher stamp
duty on such agreements). Further, although the concession agreements contain provisions for
reimbursement by the concessioning authority in the event of a change in law, the imposition of
additional stamp duty may not be considered to be a change in law requiring the concessioning
authority to compensate the SPVs for the financial burden and/or amend the concession agreements.
54. Failure to provide performance security may result in forfeiture of bid security and termination of
the contract thereby affecting our business, results of operations and financial condition
We are required to deliver a performance security or bank guarantee to the concessioning authority for
each project and are also required to ensure that the performance security is valid and enforceable until
the COD or such other period as is stipulated under the concession agreement. Delay or inability
inproviding performance security may result in termination of the concession agreement or the bid
security
In case of an event of default by us under the relevant concession agreement and failure by us to
remedy such default within the cure period, the concessioning authority is entitled to encash the
relevant performance security. Upon such encashment, the concessioning authority is required to grant
us a stipulated period of time to provide a fresh performance security. If the fresh performance security
is not provided within such period, the concessioning authority may terminate the relevant concession
agreement. Further, upon furnishing of a fresh performance security, we may be granted an additional
cure period to remedy the default, and if the default is not remedied within such period, the
concessioning authority may terminate the relevant concession agreement. In the event that a significant
amount of performance security paid by us had been encashed, our cashflow will be materially and
adversely affected.
55. The road infrastructure sector is intensely competitive and our inability to compete effectively may
adversely affect our business, results of operations and financial condition.
We face significant competition in our business from a large number of infrastructure and road
development companies who also operate in the same regional markets as us. Some of our competitors
are better known in our markets and may commence operations in the vicinity of our current projects
and may charge toll at competitive prices, resulting in a decreasing of use of our projects.
While service quality, technological capacity and performance, health and safety records and personnel,
as well as reputation and experience, are important considerations in concessioning authority’ decision,
price is a major factor in most tender awards. Once prospective bidders clear the technical requirements
of the tender, the contract is usually awarded to the most competitive financial bidder. Our industry has
been frequently subject to intense price competition. This competitive bidding process may have an
adverse affect on the profit margins that we are able to attain.
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Further, for many large construction contracts and Infrastructure Development projects, we may not
always meet the pre-qualification criteria in our own right. Thus, another key factor affecting our
financial results is our ability to partner and collaborate with other companies as joint venture partners
or co-sponsors. We face competition from other bidders in a similar position looking for suitable joint
venture partners for pre-qualification requirements. If we are unable to partner with other companies or
lack the credentials to be the partner-of-choice for other companies, we may lose the opportunity to bid
for, and therefore fail to increase or maintain our volume of new construction contract orders or new
Infrastructure Development projects.
Further, some of our competitors are larger than us or have stronger financial resources or a more
experienced management team. They may also benefit from greater economies of scale and operating
efficiencies. We cannot assure you that we can continue to compete effectively with our competitors in
the future, and failure to compete effectively may have an adverse effect on our business, results of
operations and financial condition.
56. Claims under the Land Acquisition Act, 1894 and the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 may adversely impact
us.
We handle various types of major and minor road infrastructure projects. Typically, our contracts with
the Central and/or State Governments expressly provided that the responsibility for obtaining the right
of way for the roads under a project lies with the Central and/or State Government. While the Central
and/or State Governments may obtain land clearances on which these projects are implemented, we
may not have copies of supporting documentation for the land acquisition. In the event that the affected
landowners seek to bring claims objecting to the acquisition of their land for a particular road, it is
possible that the landowners may also make claims against us or join us as parties to these proceedings.
In case of such claims, while we believe we would not be liable to pay any compensation (as right of
way is to be provided by the client), we face a risk of delay in project implementation or other
intangible losses such as loss of reputation or distraction of management time.
57. We do not have a controlling interest in some of our joint ventures and may encounter problems
relating to the operation of these joint ventures if the interests of our joint venture partners do not
align with our interests.
As of March 31, 2014, our involvement in our joint ventures ranges between 40% and 60%. Our joint
venture partners may:
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be unable or unwilling to fulfill their obligations, whether of a financial nature or otherwise;
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have economic or business interests or goals that are inconsistent with ours;
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take actions contrary to our instructions or requests or contrary to the joint ventures’ policies
and objectives;
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fail to provide timely financial and operating data in order to comply with periodic reporting
obligations to clients, lenders or as required by law;
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take actions that are not acceptable to regulatory authorities;
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have financial difficulties; or
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have disputes with us.
We may also need the cooperation and consent of joint venture partners in connection with project
operations, which may not always be forthcoming and we may not always be successful at managing
our relationships with such partners. Any joint venture partner disputes leading to deadlock could cause
delays and/or impact our supplies while the matter is being resolved. A change of ownership interests
in a joint venture might also cause an event of default under such joint venture’s financing
arrangements with lenders, which may contain restrictions on changes to the capital structure of a joint
venture and restrictions on the divestment of interests by joint venture partners.
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The inability of a joint venture partner to continue with a project due to financial and/or legal
difficulties could mean that, as a result of our joint and several liabilities, we may be required to make
additional investments and/or provide additional services to ensure the performance and delivery of the
contracted services.
58. We plan to monetise our operational BOT Projects and also intend to explore opportunities to raise
further capital for our Infrastructure Development Business. There is no assurance that we will be
successful in doing so or that we would be able to achieve the expected benefits from such efforts.
We intend explore opportunities to monetise our operational BOT Projects, including by way of partial
stake sale or securitisation. We also intend to explore opportunities to raise further capital for our
Infrastructure Development Business. Whilst, we believe that monetising our operational BOT Projects
and raising further capital will improve our financial strength and provide us with resources to pursue
our planned expansions, there is no assurance that we will be successful in doing so or that we would be
able to achieve the expected benefits from such efforts.
59. Our ability to complete our projects in a timely manner and operate, maintain and expand our toll
roads is subject to performance of our contractors.
We engage third-party contractors and sub-contractors to perform parts of our contract or provide
services or manpower. Although our contractors are qualified, we do not have control over their day to
day performance. We cannot ensure that there will be no delay in performance of duties by our
contractors, which may cause a delay in completion of our projects. We may also be exposed to risks
relating to the ability of the contractors to obtain requisite approvals for the operation and maintenance
activities as well as the quality of their services, equipment and supplies. In particular, failure to ensure
the reliability and sustainability of toll collectors who are required to man the toll booths continuously
may adversely affect the overall level of our net revenue. In addition, under certain of the concession
agreements, the consent of the concessioning authority is required for any selection or replacement of
an operation and maintenance contractor.
Further, while we may sub-contract our construction work and may be indemnified by the subcontractor for any loss or damage due to their default, we may still be liable for accidents on the
projects due to defects in design and quality of construction of our projects during their construction
and operation. In addition, we can make no assurance that such contractors or their sub-contractors will
continue to hold or renew valid registrations under the relevant labour laws in India or be able to obtain
the requisite approvals for undertaking such construction and operation.
If our contractors are unable to perform as per their commitments on time or meet the quality standards
required, our ability to complete projects could be impaired. This may have an adverse effect on our
reputation, business, results of operations and financial condition.
60. Leakage of the tolls collected on our BOT toll roads may adversely affect our revenues and earnings.
Our toll receipts are primarily dependent on the integrity of toll collection systems. The level of
revenues derived from collection of tolls may be reduced by leakage through toll evasion, theft, fraud or
technical defaults in our toll systems. If toll collection is not properly monitored, leakage may reduce
our toll revenue. Further, toll collection errors may amount to a loss of revenue as there is an inherent
risk of under-collection of toll fees given that most motorists pay in cash. Any significant failure by us
to control leakage in toll collection systems could have an adverse effect on our business, results of
operations and financial condition.
Risks Relating to India
61. A slow-down in economic growth in India and other political and economic factors may adversely
affect our business and results of operations.
Substantially all of our projects are located in India and a significant part of our revenues is derived
from the domestic market. We and the market price and liquidity of the Equity Shares, may be affected
by foreign exchange rates and controls, interest rates, changes in central government policy, taxation,
social and civil unrest and political, economic or other developments in or affecting India. A slowdown
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in the Indian economy could adversely affect our business, including our ability to implement our
strategy.
The Central Government has traditionally exercised and continues to exercise a significant influence
over many aspects of the economy. Our business, and the market price and liquidity of the Equity
Shares may be affected by interest rates, changes in central government policy, taxation, social and civil
unrest and other political, economic or other developments in or affecting India. Conditions outside
India, such as slowdowns in the economic growth of other countries or increases in the price of oil,
have an impact on the growth of the Indian economy, and government policy may change in response to
such conditions.
62. The Companies Act, 2013 has effected significant changes to the existing Indian company law
framework, which may subject us to higher compliance requirements and increase our compliance
costs.
A majority of the provisions and rules under the Companies Act, 2013 have recently been notified and
have come into effect from the date of their respective notification, resulting in the corresponding
provisions of the Companies Act, 1956 ceasing to have effect. The Companies Act, 2013 has brought
into effect significant changes to the Indian company law framework, such as in the provisions related
to issue of capital (including provisions in relation to issue of securities on a private placement basis),
disclosures in offer document, corporate governance norms, accounting policies and audit matters,
related party transactions, introduction of a provision allowing the initiation of class action suits in India
against companies by shareholders or depositors, a restriction on investment by an Indian company
through more than two layers of subsidiary investment companies (subject to certain permitted
exceptions), prohibitions on loans to directors and insider trading and restrictions on directors and key
managerial personnel from engaging in forward dealing. Further, the Companies Act, 2013 imposes
greater monetary and other liability on our Company and Directors for any non-compliance. To ensure
compliance with the requirements of the Companies Act, 2013, we may need to allocate additional
resources, which may increase our regulatory compliance costs and divert management attention.
The Companies Act, 2013 introduced certain additional requirements which do not have corresponding
equivalents under the Companies Act, 1956. Accordingly, we may face challenges in interpreting and
complying with such provisions due to limited jurisprudence on them. In the event, our interpretation of
such provisions of the Companies Act, 2013 differs from, or contradicts with, any judicial
pronouncements or clarifications issued by the Government in the future, we may face regulatory
actions or we may be required to undertake remedial steps. Additionally, some of the provisions of the
Companies Act, 2013 overlap with other existing laws and regulations (such as the corporate
governance norms and insider trading regulations issued by SEBI). Recently, SEBI issued revised
corporate governance guidelines which are effective from October 1, 2014, with a few provisions to be
applicable from April 1, 2015. Pursuant to the revised guidelines, we will be required to, amongst other
things ensure that there is at least one woman director on our Board at all times, establish a vigilance
mechanism for directors and employees and reconstitute certain committees in accordance with the
revised guidelines. We may face difficulties in complying with any such overlapping requirements.
Further, we cannot currently determine the impact of provisions of the Companies Act, 2013 and the
revised SEBI corporate governance guidelines, which are yet to come in force. Any increase in our
compliance requirements or in our compliance costs may have an adverse effect on our business and
results of operations.
63. We may be affected by competition law in India and any adverse application or interpretation of the
Competition Act could adversely affect our business.
The Competition Act, 2002, as amended (the "Competition Act") was enacted for the purpose of
preventing practices that have or are likely to have an adverse effect on competition in India and has
mandated the Competition Commission of India (the "CCI") to separate such practices. Under the
Competition Act, any arrangement, understanding or action, whether formal or informal, which causes
or is likely to cause an appreciable adverse effect on competition is void and attracts substantial
penalties.
Further, any agreement among competitors which directly or indirectly involves determination of
purchase or sale prices, limits or controls production, shares the market by way of geographical area or
number of subscribers in the relevant market is presumed to have an appreciable adverse effect in the
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relevant market in India and shall be void. The Competition Act also prohibits abuse of a dominant
position by any enterprise. On March 4, 2011, the Government notified and brought into force the
combination regulation (merger control) provisions under the Competition Act with effect from June 1,
2011. These provisions require acquisitions of shares, voting rights, assets or control or mergers or
amalgamations that cross the prescribed asset and turnover based thresholds to be mandatorily notified
to and pre-approved by the CCI. Additionally, on May 11, 2011, the CCI issued the Competition
Commission of India (Procedure for Transaction of Business Relating to Combinations) Regulations,
2011 (as amended) which sets out the mechanism for implementation of the merger control regime in
India.
The Competition Act aims to, among others, prohibit all agreements and transactions which may have
an appreciable adverse effect in India. Consequently, all agreements entered into by us could be within
the purview of the Competition Act. Further, the CCI has extra-territorial powers and can investigate
any agreements, abusive conduct or combination occurring outside India if such agreement, conduct or
combination has an appreciable adverse effect in India. However, the impact of the provisions of the
Competition Act on the agreements entered into by us cannot be predicted with certainty at this stage.
We are not currently party to any outstanding proceedings, nor have we received notice in relation to
non-compliance with the Competition Act or the agreements entered into by us. However, if we are
affected, directly or indirectly, by the application or interpretation of any provision of the Competition
Act, or any enforcement proceedings initiated by the CCI, or any adverse publicity that may be
generated due to scrutiny or prosecution by the CCI or if any prohibition or substantial penalties are
levied under the Competition Act, it would adversely affect our business, results of operations and
prospects.
64. Demand for our services is dependent on industry and general economic conditions.
Demand for our services is substantially dependent on general economic conditions and the financial
markets. Economic downturns, delays in project execution, cost escalation, rise in interest rates and
financing charges and slowdown in construction sector may each have a material adverse impact on our
business, financial condition and/or results of operation. Our business is also directly affected by
changes in Central and/or State Government spending and capital expenditures by our clients. Some of
the industries we serve are cyclical in nature and will continue to be vulnerable to general economic
downturns. Any change or downturn that leads to decreased spending on construction projects could
materially and adversely affect our business and our results of operations may vary depending upon the
demand for future construction projects.
65. The proposed new taxation system in India could adversely affect our business.
Our development and construction business is subject to the IT Act. The IT Act provides certain tax
benefits to companies engaged in infrastructure development and construction operations. We have
claimed and will continue to claim certain tax credits under Section 80 IA of the IT Act, relating to
Infrastructure Development projects which decrease the effective tax rates compared to the statutory tax
rates. There can be no assurance that these tax incentives will continue in the future or that such tax
credits shall be held to be available to us.
66. Political instability and significant changes in the Government's policy on liberalization of the
Indian economy could impact our financial results and prospects.
The Government has traditionally exercised and continues to exercise influence over many aspects of
the Indian economy. The Government has in recent years sought to implement economic reforms and
policies and undertaken initiatives that continue the economic liberalization policies pursued by
previous Governments. However, there can be no assurance that these liberalization policies and the
political stability will continue in the future. The rate of economic liberalization could change, and
laws and policies affecting project construction providers, foreign investment, currency exchange and
other matters affecting investment in our securities could change as well. Any significant change in
liberalization and deregulation policies could adversely affect business and economic conditions in
India generally and our business in particular.
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67. Terrorist attacks, civil disturbances, regional conflicts and other acts of violence in India and abroad
may disrupt or otherwise adversely affect the Indian economy, the health of which our business
depends on.
India has from time to time experienced social and civil unrest and terrorist attacks. These events could
lead to political or economic instability in India. Events of this nature in the future could have a
material adverse effect on our ability to develop our business. As a result, our business, results of
operations and financial condition may be adversely affected.
India has also experienced social unrest, naxalite violence and communal disturbances in some parts of
the country. If such tensions occur in places where we operate or in other parts of the country, leading
to overall political and economic instability, it could adversely affect our business, results of operations,
financial condition and trading price of our Equity Shares.
68. Significant differences exist between Indian GAAP, used throughout our financial information and
other accounting principles with which investors may be more familiar.
As stated in the report of our auditors included in this Preliminary Placement Document, our financial
statements are prepared and presented in conformity with Indian GAAP, consistently applied during the
periods stated, except as provided in such reports, and no attempt has been made to reconcile any of the
information given in this Preliminary Placement Document to any other principles or to base it on any
other standards. Indian GAAP differs from accounting principles and auditing standards with which
prospective investors may be familiar in other countries, including IFRS.
Accordingly the degree to which the financial information included in this Preliminary Placement
Document will provide meaningful information is dependent on your familiarity with Indian GAAP and
the Companies Act. Any reliance by persons not familiar with Indian GAAP on the financial
disclosures presented in this Preliminary Placement Document should accordingly be limited.
69. Any downgrading of our or our Subsidiaries' or India's debt rating by an international rating
agency could have a negative impact on our business.
Any adverse revision to our or our Subsidiaries’ or the rating of India's domestic or international debt
by international rating agencies may adversely impact our ability to raise additional financing and the
interest rates and other commercial terms at which such funding is available. This could have an
adverse effect on our business and future financial performance, our ability to obtain financing for
capital expenditures and the trading price of the Equity Shares.
70. The extent and reliability of Indian infrastructure could adversely affect our results of operations
and financial condition.
India's physical infrastructure is less developed than that of many developed nations. Any congestion
or disruption in its port, rail and road networks, electricity grid, communication systems or any other
public facility could disrupt our normal business activity. Any deterioration of India's physical
infrastructure would harm the national economy, disrupt the transportation of goods and supplies, and
add costs to doing business in India. These problems could interrupt our business operations, which
could have an adverse effect on our results of operations and financial condition.
71. Our ability to raise foreign capital may be constrained by Indian law.
As an Indian company, we are subject to exchange controls that regulate borrowing in foreign
currencies. Such regulatory restrictions limit our financing sources and hence could constrain our
ability to obtain financing on competitive terms and refinance existing indebtedness. In addition, we
cannot assure you that the required approvals will be granted to us without onerous conditions, if at all.
Limitations on raising foreign debt may have an adverse effect on our business growth, financial
condition and results of operations.
72. A third party could be prevented from acquiring control of us because of the anti-takeover provisions
under Indian law.
There are provisions in Indian law that may delay, deter or prevent a future takeover or a change in
control in us. Disclosure and mandatory bid obligations in relation to substantial acquisition of shares
64
and takeovers for listed Indian companies under Indian law are governed by the Takeover Regulations.
These provisions may discourage or prevent certain types of transactions involving actual or threatened
change in control of us. For further details, see “The Securities Market of India” on page 157 of this
Preliminary Placement Document.
Although these provisions have been formulated to ensure that interests of investors/shareholders are
protected, these provisions may also discourage a third party from attempting to take control of us.
Consequently, even if a potential takeover would result in the purchase of the Equity Shares at a
premium to their market price or would otherwise be beneficial to our stakeholders, it is possible that
such a takeover would not be attempted or consummated because of Indian takeover regulations.
Risks Associated with our Equity Shares
73. Instability in financial markets could materially and adversely affect our results of operations and
financial condition.
The Indian economy and financial markets are significantly influenced by worldwide economic,
financial and market conditions. Any financial turmoil, especially in the United States of America or
Europe, may have a negative impact on the Indian economy. Although economic conditions differ in
each country, investors' reactions to any significant developments in one country can have adverse
effects on the financial and market conditions in other countries. A loss in investor confidence in the
financial systems, particularly in other emerging markets, may cause increased volatility in Indian
financial markets.
The global financial turmoil starting in late 2008, an outcome of the sub-prime mortgage crisis which
originated in the United States of America, led to a loss of investor confidence in worldwide financial
markets. Indian financial markets have also experienced the contagion effect of the global financial
turmoil, evident from the sharp decline in SENSEX, BSE's benchmark index. Any prolonged financial
crisis may have an adverse impact on the Indian economy, thereby resulting in a material and adverse
effect on our business, operations, financial condition, profitability and price of our Equity Shares.
74. The trading volume and market price of our Equity Shares may be volatile following the Issue.
The market price of our Equity Shares may fluctuate as a result of, among others, the following factors,
some of which are beyond our control:




quarterly variations in our results of operations;
results of operations that vary from the expectations of securities analysts and investors;
results of operations that vary from those of our competitors;
changes in expectations as to our future financial performance, including financial estimates by
research analysts and investors;
 a change in research analysts' recommendations;
 announcements by us or our competitors of significant acquisitions, strategic alliances, joint
operations or capital commitments;
 announcements by third parties or governmental entities of significant claims or proceedings
against us;
 new laws and governmental regulations applicable to our industry;
 additions or departures of key personnel;
 changes in exchange rates;
 changes in the price of oil or gas;
 fluctuations in stock market prices and volume; and
 general economic and stock market conditions.
A decline in any of the factors listed above could adversely affect the price of our Equity Shares.
75. Investors may have difficulty enforcing foreign judgments against us or our management.
We are a limited liability company incorporated under the laws of India. Substantially all of our
Directors and key management personnel are residents of India and all our assets and such persons are
65
located in India. As a result, it may not be possible for investors to effect service of process upon us or
such persons outside India, or to enforce judgments obtained against such parties outside India.
Furthermore, it is unlikely that an Indian court would enforce foreign judgments if that court were of
the view that the amount of damages awarded was excessive or inconsistent with public policy. For
further details, see “Enforcement of Civil Liabilities” on page 13 of the Preliminary Placement
Document. A party seeking to enforce a foreign judgment in India is required to obtain approval from
RBI to execute such a judgment or to repatriate outside India any amount recovered. It is uncertain as
to whether an Indian court would enforce foreign judgments that would contravene or violate Indian
law.
76. There are restrictions on daily movements in the price of the Equity Shares, which may adversely
affect a shareholder's ability to sell, or the price at which it can sell Equity Shares at a particular
point in time.
The Equity Shares are subject to daily circuit breaker imposed by all stock exchanges in India on all
listed companies which does not allow transactions beyond certain volatility in the price of the Equity
Shares. This circuit breaker operates independently of the index-based market-wide circuit breakers
generally imposed by SEBI on Stock Exchanges. The percentage limits on our circuit breakers are set
by the Stock Exchanges. The Stock Exchanges are not required to inform us of the percentage limit of
such circuit breakers and may change it without our knowledge. This circuit breaker effectively limits
the upward and downward movements in the price of the Equity Shares. As a result of this circuit
breaker, there can be no assurance regarding the ability of our shareholders to sell the Equity Shares or
the price at which shareholders may be able to sell their Equity Shares at a particular point in time.
77. Currency exchange rate fluctuations may have a material adverse effect on the value of Equity
Shares, independent of our operating results.
The exchange rate between the Indian Rupee and the U.S. Dollar has changed substantially in recent
years and may fluctuate substantially in the future. Fluctuations in the exchange rate between the U.S.
Dollar and the Indian Rupee may affect the value of your investment in the Equity Shares. Specifically,
if there is a change in relative value of the Indian Rupee to the U.S. Dollar, each of the following values
will also be affected:

The U.S. Dollar equivalent of the Indian Rupee trading price of our Equity Shares in India;

The U.S. Dollar equivalent of the proceeds that you would receive upon sale in India of any of
our Equity Shares; and

The U.S. Dollar equivalent of cash dividends, if any, on our Equity Shares, which will be paid
only in Indian Rupees.
You may be unable to convert Indian Rupee proceeds into U.S. Dollars or any other currency or the rate
at which any such conversion could occur could fluctuate. In addition, our market valuation could be
seriously harmed by the devaluation of the Indian Rupee, if U.S. investors analyze our value based on
the U.S. Dollar equivalent of our financial condition and results of operations. Additionally, you may be
subject to exchange rate fluctuations if you seek to convert the Rupee proceeds from a sale of shares in
India into foreign currency and repatriate that foreign currency from India.
For historical movements, see "Exchange Rates" on page 14 of this Preliminary Placement Document.
78. Any future issuance of Equity Shares may dilute your shareholdings and sales of the Equity Shares
by our Promoters or other major shareholders may adversely affect the trading price of the Equity
Shares.
There is no restriction on our ability to issue Equity Shares or our principal shareholders' ability to
dispose of their Equity Shares. Any future equity issuances by our Company may lead to the dilution of
investors’ shareholdings in our Company. In addition, any sales of substantial amounts of the Equity
Shares in the secondary market, including by our Promoters or other major shareholders, or the
perception that such sales could occur, could adversely affect the market price of the Equity Shares and
could materially impair future ability of our Company to raise capital through offerings of the Equity
Shares. We cannot predict the effect, if any, that the sale of the Equity Shares held by our Promoters or
66
other major shareholders or the availability of these Equity Shares for future sale will have on the
market price of the Equity Shares.
There can be no assurance that we will not issue further Equity Shares or that the shareholders will not
dispose of, pledge or otherwise encumber their Equity Shares.
79. There is no guarantee that the Equity Shares issued pursuant to the Issue will be listed on the BSE
and the NSE in a timely manner or at all.
In accordance with Indian law and practice, final approval for listing and trading of the Equity Shares
will not be granted by the BSE and the NSE until after those Equity Shares have been issued and
allotted. Approval will require all relevant documents authorizing the issuing of Equity Shares to be
submitted. There could be a failure or delay in listing the Equity Shares on the BSE and the NSE. Any
failure or delay in obtaining the approval would restrict your ability to dispose of your Equity Shares.
Further, historical trading prices, therefore, may not be indicative of the prices at which the Equity
Shares will trade in the future.
80. An investor will not be able to sell any of the Equity Shares subscribed in the Issue other than on a
recognized Indian stock exchange for a period of 12 months from the date of the Issue of Equity
Shares.
Pursuant to the SEBI Regulations, for a period of 12 months from the date of the issue of Equity Shares
in the Issue, QIBs subscribing to the Equity Shares in the Issue may only sell their Equity Shares on the
NSE or BSE and may not enter into any off-market trading in respect of these Equity Shares. We
cannot be certain that these restrictions will not have an impact on the price of the Equity Shares.
81. You may be subject to Indian taxes arising out of capital gains on the sale of the Equity Shares.
Capital gains arising from the sale of equity shares in an Indian company are generally taxable in India.
Any gain realised on the sale of listed equity shares on a stock exchange held for more than 12 months
will not be subject to capital gains tax in India if STT, has been paid on the transaction. STT will be
levied on and collected by an Indian stock exchange on which the equity shares are sold. Any gain
realised on the sale of equity shares held for more than 12 months by an Indian resident, which are sold
other than on a recognised stock exchange and as a result of which no STT has been paid, will be
subject to capital gains tax in India. Further, any gain realised on the sale of equity shares held for a
period of 12 months or less will be subject to capital gains tax in India. Capital gains arising from the
sale of equity shares will be exempt from taxation in India in cases where an exemption is provided
under a treaty between India and the country of which the seller is a resident. Generally, Indian tax
treaties do not limit India's ability to impose tax on capital gains. As a result, residents of other
countries may be liable for tax in India as well as in their own jurisdictions on gains arising from a sale
of equity shares.
82. Foreign investors are subject to foreign investment restrictions under Indian laws which limit our
ability to attract foreign investors, which may adversely impact the market price of the Equity
Shares.
Under the foreign exchange regulations currently in force in India, transfers of shares between
non-residents and residents are freely permitted (subject to certain restrictions) if they comply with the
pricing guidelines and reporting requirements specified by the RBI. If the transfer or shares, which are
sought to be transferred, is not in compliance with such pricing guidelines or reporting requirements or
fall under any of the exceptions referred to above, then the prior approval of the RBI will be required.
Additionally, shareholders who seek to convert the Rupee proceeds from a sale of shares in India into
foreign currency and repatriate that foreign currency from India will require a no objection/ tax
clearance certificate from the income tax authority. We cannot assure investors that any required
approval from the RBI or any other Government agency can be obtained on any particular terms or at
all.
67
MARKET PRICE INFORMATION
As at the date of this Preliminary Placement Document, 15,98,61,800 Equity Shares are issued and outstanding.
The Equity Shares have been listed and traded on the BSE and the NSE since 2006.
On October 13, 2014, the closing price of the Equity Shares on the BSE and the NSE was ` 214.85 and ` 214.90
per Equity Share, respectively. The market price and other information of the Equity Shares traded on each of
the BSE and the NSE has been given separately.
(i)
The following tables set forth the reported high, low and average market prices and the trading volumes
of the Equity Shares on the Stock Exchanges on the dates on which such high and low prices were
recorded for FY2014, FY2013 and FY2012:
BSE
Year
endin
g
Marc
h 31
Date
of high
High (`)
Volum
e on
date of
high
(No. of
Equity
Shares
)
2014
April
1, 2013
120.65
1,981
Total
Volume
of the
Equity
Shares
traded
on date
of high
(` in
lacs)
2.38
2013
April
3, 2012
March
28,
2012
154.20
3,846
5.92
158.10
18,682
29.02
2012
Date of
low
Low
(`)
Volum
e on
date of
low
(No. of
Equity
Shares)
Total
Volume
of the
Equity
Shares
traded
on date
of low (`
in lacs)
Averag
e price
(`)
Total volume of the
equity shares traded in
the financial years
In number
` in lacs
Septemb
er
3,
2013
March 4,
2013
Decembe
r
28,
2011
53.7
0
267
0.14
85.77
80,59,154
6,273.95
105.
55
98.5
0
2,318
2.45
133.50
1,15,32,539
224
0.22
131.56
1,06,87,307
15,391.7
6
14,123.8
6
Date of
low
Low
(`)
Volum
e on
date of
low
(No. of
Equity
Shares
)
Avera
ge
price
(`)
August
30, 2013
March 4,
2013
Decembe
r
26,
2011
53.45
10,532
Total
Volume
of the
Equity
Shares
traded
on date
of low (`
in lacs)
5.73
85.99
3,87,27,235
32,650.14
105.7
5
99.15
5,091
5.40
133.75
2,63,40,351
34,962.04
16,155
16.12
131.71
2,64,43,248
35,073.97
NSE
Year
endin
g
Marc
h 31
Date of
high
High
(`)
Volum
e on
date of
high
(No. of
Equity
Shares
)
2014
April
1, 2013
April
3, 2012
March
28,
2012
121.35
13,875
Total
Volume
of the
Equity
Shares
traded
on date
of high (`
in lacs)
16.74
154.15
15,086
23.21
158.40
36,195
9
558.19
2013
2012
Total volume of the
equity shares traded in
the Financial Years
In number
` in lacs
Source: www.bseindia.com and www.nseindia.com)
Notes:
1)
High, low and average prices are based on the daily closing prices.
2)
In case of two days with the same closing price, the date with the higher volume has been chosen.
(ii)
The following tables set forth the reported high, low and average market prices and the trading volumes
of the Equity Shares on the Stock Exchanges on the dates on which such high and low prices were
recorded during each of the last six months:
BSE
68
Month
Date of
high
High
(`)
Septemb
er 2014
Septemb
er,
15
2014
August
19, 2014
July 18,
2014
June 9,
2014
May 19,
2014
April
28, 2014
244.15
36,185
Total
Volume
of the
Equity
Shares
traded
on date
of high
(` in
lacs)
87.87
223.30
1,13,879
251.65
220.90
1,77,239
391.87
206.95
24,850
51.57
180.40
54,873
96.11
135.70
23,259
31.67
August
2014
July
2014
June
2014
May
2014
April
2014
Volume
on date
of high
(No. of
Equity
Shares)
Date of
low
Low
(`)
Volume
on date
of low
(No. of
Equity
Shares)
Total
Volume
of the
Equity
Shares
traded
on date
of low (`
in lacs)
Averag
e Price
(`)
Septemb
er
08,
2014
August
13, 2014
July 14,
2014
June 2,
2014
May 2,
2014
April 1,
2014
Monthly Total
volume of the equity
shares traded
In
` in lacs
number
208.60
16,294
34.34
227.25
1,178,616
2,718.53
195.75
13,955
27.75
207.94
11,05,436
2,333.67
187.70
14,460
26.88
202.62
11,93,858
2,471.60
186.95
99,276
182.84
197.48
8,26,829
1,628.19
128.75
4,242
5.48
157.10
19,41,458
2,957.50
96.35
6,867
6.64
120.26
8,76,315
1,025.57
Date of
low
Low (`)
Volume
on date of
low (No.
of Equity
Shares)
Aver
age
price
durin
g the
mont
h (`)
Septem
ber 1,
2014
208.75
1,39,488
Total
Volum
e of the
Equity
Shares
traded
on date
of high
(` in
lacs)
288.70
227.2
8
6,414,93
4
14,68
9.40
August
13,
2014
July 11,
2014
196.40
1,47,379
293.33
208.0
2
45,35,06
5
9551.
03
187.90
2,23,760
437.65
202.8
3
59,99,94
9
12340
.75
NSE
Month
Date
of
high
September
2014
Septe
mber
15,
2014
Augus
t 19,
2014
July
18,
2014
June
9,
2014
May
23,
2014
April
25,
2014
August
2014
July 2014
June 2014
May 2014
April 2014
High (`)
Volume
on date
of high
(No. of
Equity
Shares)
243.90
2,56,882
Total
Volume
of the
Equity
Shares
traded
on date
of high
(` in
lacs)
624.04
Monthly Total
volume of the
equity shares
traded
In
` in
number
lacs
221.55
5,21,540
1131.24
220.30
6,45,938
1425.44
208.20
6,95,207
1445.33
June 2,
2014
186.75
3,94,544
726.87
197.7
5
52,86,23
8
10490
.36
179.55
1,99,732
359.71
May 2,
2014
128.60
24,698
31.85
156.8
6
57,15,26
0
9345.
82
135.55
7,81,364
1055.04
April 1,
2014
97.15
20,942
20.29
120.4
5
42,95,38
4
5365.
06
Source: www.bseindia.com and www.nseindia.com)
Notes:
1) High, low and average prices are based on the daily closing prices.
2) In case of two days with the same closing price, the date with the higher volume has been chosen.
(iii)
The following table sets forth the market price on the Stock Exchanges on September 10, 2014, the first
working day following the approval of the Board for the Issue:
Open
227.35
High
234.50
Low
BSE
Close
224.30
230.55
69
Number of Equity
Shares traded
1,65,282
Volume (` lakhs)
378.84
Open
High
Low
NSE
Close
226.85
234.00
221.35
(Source: www.bseindia.com and www.nseindia.com)
230.35
70
Number of Equity
Shares traded
4,75,702
Volume (` lakhs)
1,091.11
USE OF PROCEEDS
The gross proceeds from the Issue will be approximately ` [●] lakhs.
The net proceeds from the Issue, after deducting fees, commissions and expenses of the Issue, will be
approximately ` [●] lakhs (the “Net Proceeds”).
Subject to compliance with applicable laws and regulations, we intend to use the Net Proceeds of the Issue for
augmenting long term finance for funding growth and capital expenditure, pre-payment/repayment of debt,
funding of subsidiaries, associates, joint ventures, working capital requirements and general corporate purposes
or any other purposes as approved by the Board.
In accordance with the policies approved by the Board and as permissible under applicable laws and
government policies, our management will have flexibility in deploying the Net Proceeds. Pending utilization
for the purposes described above, we intend to temporarily invest funds in creditworthy instruments, including
money market Mutual Funds and deposits with banks and any corporate deposits. Such investments would be in
accordance with the investment policies as approved by the Board from time to time and all applicable laws and
regulations.
Neither our Promoters nor our Directors are making any contribution either as part of the Issue or separately in
furtherance of the objects of the Issue.
71
CAPITALISATION STATEMENT
The following table sets forth our consolidated capitalization and total borrowings as per financial statements as
at March 31, 2014 and as adjusted for the Issue. This table should be read in conjunction with section
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 76 and
other financial information contained in section “Financial Statements” on page 182.
As of March 31, 2014
(Audited)
As of June
30, 2014
(Unaudited)
(` lakhs)
As
adjusted
for the
Issue(1)
Short term borrowings:
Secured
Unsecured
34,227.04
12,552.45
34,135.56
19,603.85
[●]
[●]
Long term borrowings:
Secured
Unsecured
484,756.71
14,215.11
496,864.07
14,054.05
[●]
[●]
25,643.20
0.00
22,869.17
0.00
[●]
[●]
1,516.62
29,074.85
94,404.33
1,517.95
29,233.94
92,608.45
[●]
[●]
[●]
2,315.00
127,310.80
2,315.00
1,25,675.34
[●]
Current Maturities of Long Term Borrowings:
Secured
Unsecured
Shareholders’ funds(2):
Share capital
Securities premium
Reserves and surplus (excluding Securities
Premium account)
Money received against issue of warrant
Total Shareholders’ funds
[●]
Total capitalisation
6,98,705.31
7,13,202.04
Will be updated following closure of the Issue
Our Company has issued an aggregate of 1,32,500 Equity Shares on April 22, 2014 and 67,000 Equity
Shares on July 18, 2014 to its eligible employees on exercise of the stock options under the ESOS 2008.
Further, our Company has issued an aggregate of 80,00,000 Equity Shares on September 30, 2014 to
our Promoter, Vishnubhai M. Patel and certain persons forming part of our Promoter Group, upon
conversion of warrants held by them.
(1)
(2)
Employee stock option plans instituted by our Company:
Sadbhav Employee Stock Option Scheme 2008 (“ESOS 2008”)
Our Company instituted ESOS 2008 pursuant to a special resolution dated September 27, 2008 passed by the
shareholders of our Company. The total number of Equity Shares that may be issued under ESOS 2008 is
25,00,000 Equity Shares. The ESOS 2008 came into effect on September 27, 2008 and is valid up to the date on
which all of the options available for issuance under the ESOS Scheme 2008 have been issued and exercised, or
such other date as may be decided by the Board of Directors. Our Company has granted 25,00,000 options to its
employees under ESOS 2008 all of which were vested. Out of the 25,00,000 vested options, 19,86,000 have
been exercised and 3,49,000 options have lapsed. The lapsed options are available for further grant under ESOS
2008.
72
CAPITAL STRUCTURE
The Equity Share capital of our Company as at the date of this Preliminary Placement Document is set forth
below:
(In ` lakhs, except share data)
Aggregate value at face value
A.
B.
C.
D.
E.
AUTHORIZED SHARE CAPITAL
20,00,00,000 Equity Shares
2,000
ISSUED AND SUBSCRIBED AND PAID-UP CAPITAL
BEFORE THE ISSUE
15,98,61,800 Equity Shares
1,598.62
PRESENT ISSUE IN TERMS OF THIS PRELIMINARY
PLACEMENT DOCUMENT
Up to [●] Equity Shares aggregating to ` [●] lakhs
[●]
PAID-UP CAPITAL AFTER THE ISSUE
[●] Equity Shares
[●]
SECURITIES PREMIUM ACCOUNT
Before the Issue
After the Issue
38,494.44
[●]
Share Capital History of our Company
(1)
The history of the Equity Share capital of our Company is provided in the following table:
Date of allotment
November 1, 1988
October 4, 1989
March 31, 1993
March 1, 1994
March 30, 1994
February 28, 2001
January 20, 2005
March 31, 2005
February 22, 2006
July 11, 2007
September 16, 2010
November 17, 2010
January 5, 2011
January 19, 2011
February 24, 2011
November 14, 2011
February 27, 2012
June 25, 2012
October 15, 2012
February 20, 2013
August 07, 2013
January 01, 2014
March 13, 2014
April 22, 2014
No. of Equity
Shares Allotted
Face Value (in `)
2
22,500
27,498
25,000
25,000
50,00,000
20,00,000
29,00,000
16,00,000
6,25,000
12,78,120
25,24,490
1,48,23,190
4,08,500
83,500
30,500
5,30,500
17,000
4,83,750
1,23,250
1,09,500
1,32,500
100
100
100
100
100
10(1)
10
10
10
10
10
1(2)
1
1
1
1
1
1
1
1
1
1
1
1
73
Issue Price
(in `)
100
100
100
100
100
10
60
185
575
725
42.50
42.50
42.50
50
50
50
50
50
50
50
50
50
Consideration
Cash
Other than cash
Cash
Bonus
Cash
Bonus
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Cash
Date of allotment
No. of Equity
Shares Allotted
Face Value (in `)
Issue Price
(in `)
July 18, 2014
67,000
1
50
September 30, 2014
80,00,000
1
115.75
(1)
Split of face value of the equity shares from ` 100 to ` 10 per equity share
(2)
Split of face value of the equity shares from ` 10 to ` 1 per equity share
74
Consideration
Cash
Cash
DIVIDENDS
The declaration and payment of dividends will be recommended by our Board and approved by our shareholders
at their discretion and will depend on a number of factors, including but not limited, to our profits, capital
requirements, cash flows and overall financial condition. The Board may also from time to time pay interim
dividends.
The recommendation, declaration and payment of dividends, if any, will depend on a number of factors,
including but not limited to availability of profits for distribution, overall financial conditions, capital
requirements, results of operations, earnings, contractual restrictions, applicable Indian legal restrictions and
other factors that may be considered relevant by the Board of Directors.
The details of dividend paid by our Company during the last three fiscal years are as below:
Particulars
Rate of Dividend (%)
Dividend Amount
(` lakhs)
Dividend per Equity
Share (`)
FY2014
FY2013
FY2012
70.00
60.00
60.00
1,064.54
905.70
903.77
0.70
0.60
0.60
75
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
We discuss below our historical results of operations and financial condition as of and for the years ended
March 31, 2012, 2013 and 2014 and the three-month period ended June 30, 2014, and our assessment of the
factors that may affect our prospects and performance in future periods. You should read the following
discussion together with our audited consolidated financial statements as of and for the years ended March 31,
2012, 2013 and 2014 and our unaudited but reviewed consolidated financial statements as of and for the threemonth period ended June 30, 2014. We have prepared our financial statements in accordance with Indian
GAAP and in compliance with the Accounting Standards issued by the ICAI, which may differ in certain
significant respects from generally accepted accounting principles in other countries. Accordingly, the degree to
which the financial statements in this Preliminary Placement Document will provide meaningful information to
a prospective investor in countries other than India is entirely dependent on the reader's level of familiarity with
Indian accounting practices.
This discussion and analysis contains forward-looking statements that reflect our current views with respect to
future events and our financial performance. Our actual results may differ materially from those anticipated in
these forward-looking statements as a result of any number of factors, including those set forth in this section
and in the sections “Risk Factors” and “Forward-Looking Statements on pages 38 and 12.”
For purposes of the discussion below, the term “FY2012” refers to the year ended March 31, 2012; the term
“FY2013” refers to the year ended March 31, 2013; the term “FY2014” refers to the year ended March 31,
2014; and the term “1Q2015” refers to the three-month period ended June 30, 2014.
Overview
We are an engineering, construction and infrastructure development company focussing on transportation,
irrigation and mining sectors. We categorise our business into two businesses: (i) Construction Business, under
which we undertake engineering, procurement and construction (“EPC”) activities for transportation, irrigation
and mining sectors; and (ii) Infrastructure Development Business, under which we undertake development of
roads and highways on BOT, DBFOMT or DBFOT basis. Our Company was incorporated in October 1988 by
taking over the business and assets of a partnership firm, Bhavna Construction Co., on a going concern basis.
We have more than 25 years of experience in construction activities and have constructed approximately 4,500
lane kms of roads and highways, excavated approximately 250 million cubic meters of overburden and minerals,
as part of our ongoing and completed projects and constructed approximately 260 kms of irrigation canals since
the incorporation of our Company. We have completed 26 EPC projects in the transportation sector, 20 EPC
projects in the irrigation sector and 9 EPC projects in the mining sectors, since the incorporation of our
Company. For details of some of the major EPC projects completed by us, see “– Business – Construction
Business” on page 108. EPC activities under our Construction Business consist the following:



Transportation sector: Rehabilitation, upgradation, widening and strengthening of roads and highways,
and design and construction of depots, workshops, elevated ramps, elevated viaducts, elevated stations
for metro railways;
Irrigation sector: Construction of earthen dams, canals, remodelling, CC lining structure, control
cabins, hydraulic tunnel and improvement of canals; and
Mining sector: Excavation of overburden and mining of minerals.
Currently, we have 20 ongoing transportation EPC projects, 22 ongoing irrigation EPC projects and 11 ongoing
mining EPC projects. Our Company undertakes EPC activities for the BOT Projects held through our
Subsidiary, Sadbhav Infrastructure Project Limited (“SIPL”) and associates. Our EPC contracts in transportation
sector include in-house contracts as well as contracts from third party clients. Our ongoing and completed EPC
projects for the transportation sector include the EPC activities undertaken by our Company for our BOT
Projects.
Our Order Book for our Construction Business stood at ` 7,93,080 lakhs as of June 30, 2014. As of June 30,
2014, 47.80% of our Order Book was attributable to transportation EPC projects, 28.60% of our Order Book
was attributable to mining EPC projects and 23.60% of our Order Book was attributable to irrigation EPC
projects.
76
We commenced our Infrastructure Development Business in 2005 which is now being undertaken primarily
through our Subsidiary, SIPL, as an asset holding company for our BOT Projects. Our Company currently holds
84.15% of the equity paid-up capital of SIPL. Our BOT Projects are implemented by special purpose vehicles
(“SPV”s), which include joint ventures and associates. Our Company has been pre-qualified by NHAI for
National Highway projects with a total project cost of up to ` 3,10,545 lakhs until December 31, 2014 and
accordingly, is eligible to apply for project specific RFQs.
Our project portfolio for the Infrastructure Development Business consists of 13 BOT Projects of which eight
are fully operational, one is partially operational and the remaining four projects are in various stages of
development. 11 of the 13 BOT Projects are toll projects, while the remaining two are annuity projects. Our
portfolio of BOT toll projects includes the Maharashtra Border Checkpost Project which involves
modernisation, computerisation and integrating the existing 22 border checkposts in Maharashtra and collection
of service fee, parking charges and loading and unloading charges from different categories of commercial
vehicles in accordance with the service fee notification issued by the Government of Maharashtra.
Our operational projects cover approximately 2,292 lane kms and the projects under construction cover
approximately 1,448 lane kms. In addition, we currently operate 13 check posts and are developing 9 more
check posts in our Maharashtra Border Check Post Project.
We primarily generate revenues from our Infrastructure Development Business primarily through toll collection,
annuity income, service fees and advertising income.
Our consolidated total revenue and consolidated net profit were ` 2,76,315.04 lakhs and ` 4,437.48 lakhs,
respectively, for FY2014, ` 2,19,780.18 lakhs and ` 748.16 lakhs, respectively, for FY 2013 and ` 2,89,362.00
lakhs and ` 12,229.09 lakhs, respectively, for FY2012.
Significant Factors Affecting our Business, Financial Condition and Results of Operations
We outline below a number of factors which have had important effects on our results of operations and which
we expect will continue to impact our financial performance in the future.
Macroeconomic factors in India
All of our assets were located in India and we generate our revenues from operations in India. We believe that
macroeconomic factors, including the growth of the Indian economy, inflation, interest rates, as well as the
Indian political and economic environment, will have a material impact on our business, results of operations
and financial condition going forward as we grow our business, which has historically been the case.
Asset mix
We execute our primary Construction Business across three sectors, namely (a) transportation, (b) irrigation and
(c) mining. In addition to our Construction Business we also undertake development of roads and highways on
BOT basis as part of our Infrastructure Development Business which is primarly being undertaken through our
Subsidiary, SIPL. We are as such currently involved in a range of projects, including canals, dams, roads and
highways, metro railways and excavation of minerals. We believe our diversified asset mix will enable us to
benefit from the expected growth in different infrastructure sectors and to diversify our risk exposure. Different
projects have different margins, timelines and payment terms, among other things, depending on the amount of
involvement we have, the technical specialization required, scale and complexity of the project and other
factors. As such, the specific makeup of the projects that we undertake can have substantial impact upon our
revenues and expenses, and therefore profit. As of June 30, 2014, our order book was ` 7,93,080 lakhs. See "—
Order Book".
The following table sets forth a breakdown of our revenue from operations by business segment:
For the three months
ended June 30,
2014
(` lakhs)
Construction and engineering
BOT (Toll & Annuity)
2014
(` lakhs)
68,791.57
11,569.94
77
For the year ended March 31,
2013
2012
(` lakhs)
(` lakhs)
2,37,652.20
32,266.48
1,89,296.10
26,032.34
2,72,541.75
12,235.18
For the three months
ended June 30,
2014
(` lakhs)
Others
Total
2014
(` lakhs)
For the year ended March 31,
2013
2012
(` lakhs)
(` lakhs)
198.74
3,333.54
630.90
1,855.98
80,560.25
2,73,252.22
2,15,959.34
2,86,632.91
Customer mix
In FY2014, we generated 61.04% and 38.96% of our revenues from operations from clients in the public and
private sectors, respectively. For our Construction Business in mining and irrigation sectors, our clients are
majorly government or government agencies or other PSUs, while for our Construction Business in
transportation sector, our client profile also includes our Subsidiaries which are developing our BOT Projects
that are currently under construction, in addition to government agencies and PSUs,. Our customer mix is an
important determinant of the degree to which we are exposed to market factors and the relative impact economic
conditions within India and abroad may have on our business. Our customer mix will also have an impact on the
working capital cycle. We intend to continue our focus on clients with regular payment records in the past.
Availability of cost effective funding sources and changes in interest rates
Infrastructure projects, by their nature, are typically capital intensive and often require high levels of debt
financing, and as such we have substantial indebtedness. See "—Borrowings". Interest expense on our
indebtedness has historically been a material part of our expenses. Almost all of indebtedness bears interest at
floating rates. We expect that we will continue to incur additional indebtedness as we seek to expand our
business. We expect that the levels of interest rates when we incur such additional debt, as well as fluctuations
in interest rates relating to our floating-rate debt, will continue to have a material impact on our expenses. To the
extent interest rates remain low or decrease, it would have a positive impact on our expenses, assuming constant
levels of indebtedness, or would enable us to incur additional indebtedness at relatively lower costs. Higher or
rising interest rates would increase our expenses, unless we reduce the absolute levels of our indebtedness.
Changes in government policies or delays in award of infrastructure projects
Our business is substantially dependent on projects in India undertaken or awarded by governmental authorities
and other entities funded by the Central Government and/or State Governments. A substantial portion of our
revenue from operations is derived from contracts with government entities. In the event of any adverse change
in budgetary allocations for infrastructure development or a downturn in available work in the infrastructure
sector resulting from any change in government policies or priorities, our business prospects, and as a result our
financial performance, may be adversely affected. Any adverse changes in the Central or State Government
policies (including de-notification of our existing projects) may lead to our contracts being restructured,
renegotiated or terminated. These could adversely affect our financing arrangements, capital expenditure,
revenues, development or cash flows relating to our existing projects as well as our ability to participate in
competitive bidding or bilateral negotiations for our future projects.
Cost of construction materials
Costs of construction materials consumed constitute a significant portion of our construction expenses. For
FY2012, FY2013, FY2014 and 1Q2015, our construction materials consumed represented 11.39%, 12.21%,
13.68% and 18.71% of our revenue from operations. Our primary raw materials are steel, cement and bitumen,
and to a lesser extent furnace oil and diesel. Prices for these raw materials can be volatile and depend on
commodity prices in the markets, which, in turn, depend on changes in global economic conditions, industry
cycles, supply-and-demand dynamics, attempts by individual producers to capture market share, and market
speculation, among other factors. We typically enter into memorandums of understanding with our primary
suppliers for supply of products such as diesel, bitumen (on a project specific basis), which provides framework
terms including firm commitment of minimum quantity, discounts to the market price and credit terms. To the
extent that we are unable to pass fluctuations in raw material prices on to our customers, our margins may be
positively or negatively affected by fluctuations in raw material prices. However, as price adjustments occur
periodically, we are not able to immediately pass increases or decreases on to our customers, and to the extent
that price adjustments are based on price indices, the adjusted prices that we realize may not reflect our actual
cost of raw materials. Moreover, even if we are able to pass through raw material costs to our customers, an
78
increase in raw material prices may result in increased prices for infrastructure projects, which may in turn result
in decreased demand for new infrastructure projects and, consequently, our services.
Competitive environment
We operate in a competitive environment. While the level and intensity of competition varies depending on the
size, nature and complexity of the projects, general economic condition and on the geographical region in which
the project is to be executed, the presence of significant competition in any sector in which we operate could
affect our profitability.
Results of Operations
The following table sets forth certain data from our statement of profit and loss, in absolute terms and as a
percentage of our total revenues:
For the three months
ended June 30,
2014
% of
(` lakhs)
total
revenue
For the year ended March 31,
2014
(` lakhs)
2013
(` lakhs)
2012
(` lakhs)
80,560.25
98.81
2,73,252.22
% of
total
revenu
e
98.89
972.29
1.19
3,062.82
1.11
3,820.84
1.74
2,729.09
0.94
81,532.54
100.00
2,76,315.04
100.00
2,19,780.18
100.00
2,89,362.00
100
15,257.95
18.71
37,788.37
13.68
26,838.35
12.21
32,966.41
11.39
0.00
0.00
-
-
-
-
-
-
44,985.49
55.17
2,400.86
14,463.88
2.94
17.74
1,68,554.43
7,657.23
45,546.41
61.00
2.77
16.48
1,33,544.37
5,319.85
30,420.39
60.76
2.42
13.84
1,96,211.57
4,617.40
15,589.68
67.81
1.60
5.39
5,604.16
6.87
13,048.30
4.72
17,069.29
7.77
8,604.19
2.97
Other expenses
2,748.78
3.37
14,697.18
5.32
10,850.07
4.94
11,396.92
3.94
Total expenses
85,461.12
104.82
2,87,291.92
103.97
2,24,042.32
101.94
269,386.17
93.10
Profit/(Loss) before
exceptional items and tax
(3,928.58)
(4.82)
(10,976.88)
(3.97)
(4,262.14)
(1.94)
(19,975.83)
6.90
(683.41)
(0.84)
12,172.22
1195.34
1831.84
2.77
0.83
-
(5.66)
4.41
0.43
6,093.98
(4,611.99)
19975.83
6.90
0.99
3,543.25
1.61
7,353.65
2.54
-
-
Revenue from operations
Other income
Total Revenue
2,15,959.34
% of
total
reven
ue
98.26
2,86,632.91
% of
total
reven
ue
99.06
Expenses:
Cost of Material Consumed
Changes in nventory of
finished goods, work-inprogress and stock-in-trade
Construction, toll plaza and
road maintenance expenses
Employee benefits expense
Finance costs
Depreciation and amortization
expense
Exceptional items
Profit before tax
Tax expense:
Current tax
MAT Credit Entitlement
Deferred tax
Short/(Excess) Provision for
taxation of earlier years
Profit for the period from
continuing operations
Add: Share of loss transferred
to minority interest
Add: Share in Profit/(Loss) of
Associates
Net profit for the period
1,089.29
1.34
2,722.19
0.00
0.00
(2,661.50)
(721.02)
(0.88)
396.87
(0.96)
0.14
823.35
0.37
737.38
0.25
(248.22)
(0.30)
(1,869.61)
(0.68)
(21.50)
(0.01)
(11.35)
-
(4,732.04)
(5.80)
2,607.39
0.94
(2,513.26)
(1.14)
11,896.15
4.11
1,732.42
2.12
1,814.79
0.66
3,737.57
1.70
561.94
0.19
0.00
0.00
(2,999.62)
(3.68)
15.30
4,437.48
0.01
1.61
(476.15)
748.16
(0.22)
0.34
229.00
12,229.09
(0.08)
4.23
Revenues
Revenue from operations
79
We derive substantially all of our total revenue from our revenue from operations, which consists of (i) EPC
contract revenue; (ii) operation, maintenance and supervision income; (iii) revenue from toll collection and
annuity income; (iv) user fees; (v) advisory and project management fees and (vi) other operating income. The
largest component of our revenue from operations is our EPC contract income, which accounted for 94.95%,
87.94%, 87.14% and 85.59% of our revenue from operations in FY2012, FY2013, FY2014 and 1Q2015.
In addition to our revenue from operations, we derive a small amount of other income, which consists of (i)
interest income; (ii) dividend income on current investments; (iii) profit on sale of current investments; (iv)
profit on sales of assets; and (v) other non-operating income which includes foreign exchange gain, sundry
balances written back and miscellaneous income which includes proceeds from sale of scrap.
Expenses
Our expenses consist of the following:
(i) cost of materials consumed, which consists of costs for the raw materials we use in construction,
primarily cement, steel, bitumen and diesel;
(ii) changes in inventory of finished goods, work-in-progress and stock-in-trade which is the difference
between opening and closing stock of work-in-progress;
(iii) Construction, toll plaza and road maintenance expenses, which consist primarily of labour expenses,
power and fuel, stores consumed, repairs and maintenances – construction machineries, transportation
expenses, machinery rent, vehicle hire and maintenance charges, land rent, site establishment expenses,
mess expenses, operation and maintenance expenses, toll plaza and road maintenance expenses and
miscellaneous expenses;
(iv) employee benefit expenses, which consist primarily of salaries and wages and to a lesser extent
contributions to provident and other funds, group gratuity fund expenses, expense on employee stock
option scheme and staff welfare expenses;
(v) finance costs, which consist primarily of interest expenses on our borrowings, interest expenses on
taxes and interest expenses on others which includes processing fee and commission on bank
guarantees, other borrowing costs and expenses on account of foreign currency fluctuation;
(vi) depreciation and amortization expenses relating to our tangible and intangible assets; and
(vii) other expenses, majorly fixed in nature, which consist primarily of rent expenses, rates and taxes,
running and maintenance of vehicles, repairs and maintenance of builidings and other assets, insurance,
electricity charges, postage and telephone, stationary and printing, travelling and conveyance expenses,
Directors’ travelling and conveyance expenses, lega and consultation fees and expenses, donation to
political parties, additional concession fees, other bank charges, auditors’ remuneration, loss on sales of
assets & asset written off as bad debts writing off of intangible asset under construction, interest
receivable written off, miscellaneous expenses, CSR expenses and prior period adjustments.
Exceptional Items
Exceptional items consist of items of income or expense from ordinary activities in our income statement that
are unusual or exceptional and that are of such magnitude, nature or incidence that their disclosure is relevant to
explain the operating performance of the group for the relevant period.
Exceptional items for FY2014 consist of bad debts of ` 2,445.48 lakhs, advance written off of ` 1,389.28 lakhs
(which includes loan to subsidiaries written off of ` 231.94 lakhs) and write back of amortization of toll
collection rights of ` 15,775.04 lakhs due to change in amortization method as detailed under “– Changes in
Accounting Policies” on page 93. Exceptional items for FY2013 consisted of performance bonus received on
early execution of work contracts of ` 6,093.98 lakhs. There were no exceptional items for FY2012.
Taxation
Taxes majorly comprise current, deferred taxes and MAT credit entitlement.
80
We provide for current taxes at the current tax rates after taking into consideration the benefits admissible under
the provisions of applicable income tax laws and regulations.
We recognize deferred tax on timing differences (being the difference between the taxable income and the
accounting income that originate in one year and are capable of reversal in one or more subsequent years). We
compute deferred tax assets and liabilities on the timing differences applying the applicable tax rates.
Three-Month Period Ended June 30, 2014
Our total revenue was ` 81,532.54 lakhs in 1Q2015, which consisted of revenue from operations of ` 80,560.25
lakhs and other income of ` 972.29 lakhs.
Expenses
Our total expenses were ` 85,461.12 lakhs in 1Q2015, which primarily consisted of cost of material consumed
of ` 15,257.95 lakhs, construction, toll plaza and road maintenance expenses of ` 44,985.49 lakhs, finance costs
of ` 14,463.88 lakhs, employee benefits expenses of ` 2,400.86 lakhs and depreciation and amortization
expenses of `5,604.16 lakhs.
Construction, toll plaza and road maintenance expenses
Our construction, toll plaza and road maintenance expenses were ` 44,985.49 lakhs in 1Q2015, which primarily
consisted of labour expenses of ` 33,327.12 lakhs, power and fuel expenses of ` 7,670.90 lakhs, stores
consumed of ` 9.05 lakhs, repairs and maintenances – construction machineries expenses of ` 531.86 lakhs,
transportation expenses of ` 65.05 lakhs, machinery rent expenses of ` 237.63 lakhs, vehicle hire and
maintenance charges of ` 23.89 lakhs, land and godown rent expenses of ` 59.41 lakhs, site establishment
expenses of ` 304.52 lakhs, mess expenses of ` 130.48 lakhs, toll plaza and road maintenance expenses of `
2,026.69 lakhs, periodic major expenses of ` 499.14 lakhs and miscellaneous expenses of ` 99.75 lakhs.
As a percentage of total revenue, construction, toll plaza and road maintenance expenses amounted to 55.17% in
1Q2015, compared to 61% in FY2014 and 60.76% in FY2013, which was on account of greater increase in
revenue as compared to expenses.
Employee benefits expense
Our employee benefits expense was ` 2,400.86 lakhs in 1Q2015, which primarily consisted of salaries and
wages of ` 2,155.17 lakhs. As a percentage of total revenue, employee benefits expenses amounted to 2.94% in
1Q2015, compared to 2.77% in FY2014 and 2.42% in FY2013, which reflects an increase in Expenses mainly
on account of new recruitments and annual increment on salary of Employees.
Finance costs
Our finance costs amounted to ` 14,463.88 lakhs in 1Q2015, which consisted primarily of interest expenses on
borrowings of ` 13,596.32 lakhs.
Depreciation and amortization expense
Our depreciation and amortization expense was ` 5,604.16 lakhs in 1Q2015, which primarily consisted of
depreciation of Plant & Machineries, Amortisation of Intengible Assets.
Other expenses
Our other expenses were ` 2,748.78 lakhs in 1Q2015, which primarily consisted of rates and taxes, legal and
consultancy fees and expense and miscellaneous expenses.
Exceptional items
Our exceptional items was due to Restatement of accounts of stepdown subsidiaries of ` 683.41 lakhs in
1Q2015.
Profit/Loss before tax
81
As a result of the foregoing, our profit/(loss) before tax amounted to ` (4,611.99) lakhs in 1Q2015.
Tax expense
Our tax expense amounted to ` 120.05 lakhs in 1Q2015. Our deferred tax Assetse was ` 721.02 lakhs, primarily
as a result of Change in Depreciation as per books due to change in Companies Act. And Excess Provision of
Taxes written back during the period is ` 248.22 lakhs.
Profit/(Loss) for the period from continuing operations
Our profit/loss for the period from continuing operations was ` (4,732.04) lakhs in 1Q2015.
Share of loss transferred to minority interest
The share of loss transferred to minority interest was ` 1,732.42 lakhs in 1Q2015.
Profit / (Loss) for the period
As a result of the foregoing, our loss for the period was ` 2,999.62 lakhs.
FY2014 Compared to FY2013
Revenue
Our total revenue increased by 25.72% from ` 2,19,780.18 lakhs in FY2013 to ` 2,76,315.04 lakhs in FY2014.
This increase was primarily due to a 26.53% increase in our revenue from operations from ` 2,15,959.34 lakhs
in FY2013 to ` 2,73,252.22 lakhs in FY2014. The increase in our revenue from operations in FY2014 was
primarily the result of increase in EPC contract income, revenue from toll collection and annuity income, user
fees income and income from advisory and project management fees.
Revenue from EPC contracts increased by 25.37% from ` 1,89,915.00 lakhs in FY 2013 to ` 2,38,100.10 lakhs
in FY 2014 primarily as a result of commencement of construction under some of the new projects during FY
2014, namely the SUTPL Project, BHTPL Project and RHTPL Project. Increase in revenue from EPC contracts
was also on account of execution of the Chindwara Project in FY 2014 after receipt of clearances in FY 2013.
Revenue from toll collection and annuity increased by 12.37% from ` 25,899.92 lakhs in FY 2013 to `
29,104.03 lakhs in FY 2014 primarily as a result of commencement of toll collection for the RPTPL Project in
January 2014, commencement of generation of revenue from six checkposts forming part of the MBCPNL
Project during FY2014 and increase in toll rates at operational BOT projects.
Revenue from user fees increased by 3,022.55% from Nil in FY 2013 to ` 3,022.55 lakhs in FY 2014 primarily
as a result of commencement of user fee collection at six checkposts for MBCPNL Project during FY2014.
Revenue from advisory and project management fees increased by 22,916.67% from ` 12.00 lakhs in FY 2013
to ` 2,762.00 lakhs in FY 2014 primarily as a result of advisory and project management fees received on
commencement of construction of new BOT Projects, namely SUTPL Project, BRTPL Project and RHTPL
Project.
Expenses
Total expenses increased by 28.23%, from ` 2,24,042.32 lakhs in FY2013 to ` 2,87,291.92 lakhs in FY2014.
This increase was primarily due to an increase in cost of materials consumed from ` 26,838.35 lakhs in FY2013
to ` 37,788.37 lakhs in FY2014, increase in construction, toll plaza and road maintenance expenses from `
1,33,544.37 lakhs in FY2013 to ` 1,68,554.43 lakhs in FY2014, increase in employee benefits expense from `
5,319.85 lakhs in FY2013 to ` 7,657.23 lakhs in FY2014, and an increase in finance cost from ` 30,420.39
lakhs in FY2013 to ` 45,546.41 lakhs in FY2014.
As a percentage of our total revenue, our total expenses increased to 103.97% in FY2014 as compared to
101.94% in FY2013.
Cost of material consumed
82
Cost of material consumed increased by 40.80% from ` 26,838.35 lakhs in FY2013 to ` 37,788.37 lakhs in
FY2014 primarily as a result of an increase in execution of EPC contracts and increase in prices of raw materials
such as diesel, bitumen, cement etc.
As a percentage of our total revenue, the cost of material consumed increased to 13.68% in FY2014 as
compared to 12.21% in FY2013.
Construction, toll plaza and road maintenance expenses
Construction, toll plaza and road maintenance expenses increased by 26.22% from ` 1,33,544.37 lakhs in
FY2013 to ` 1,68,554.43 lakhs in FY2014 primarily on account of an increase in labour expenses, power and
fuel expenses, site establishment expenses, operation and maintenance expenses and toll plaza and road
maintenance expenses.
Labour expenses increased by 15.46% from ` 1,16,119.95 lakhs in FY2013 to ` 1,34,077.12 lakhs in FY2014
on account of commencement of new projects in FY 2014.
Power and fuel expenses increased by 55.21% from ` 12,871.96 lakhs in FY2013 to ` 19,978.27 lakhs in
FY2014 on account of increase in cost of diesel and electricity.
Site establishment expenses increased by 70.80% from ` 597.72 lakhs in FY2013 to ` 1,020.93 lakhs in FY2014
on account of commencement of construction of the SUTPL Project, the BRTPL Project and the RHTPL
Project.
Operation and maintenance expenses increased by 1,626.99% from ` 273.99 lakhs in FY 2013 to ` 4,731.78
lakhs in FY2014 on account of non-routine major maintenance expenses in some of the BOT Projects.
Toll plaza and road maintenance expenses increased by 1,070.58% from ` 420.36 lakhs in FY 2013 to `
4,920.65 lakhs in FY2014 on account of provision made for major maintenance expenses for the BOT Projects.
As a percentage of our total revenue, the construction, toll plaza and road maintenance expenses increased to
61.00% in FY2014 as compared to 60.76% in FY2013.
Employee benefits expense
Our employee benefits expense increased by 43.94% from ` 5,319.85 lakhs in FY2013 to ` 7,657.23 lakhs in
FY2014, principally driven by a 46.38% increase in salaries and wages. The increase in salaries and wages in
FY2014 was on account of new recruitments during FY2014 and annual increment in salary.
As a percentage of total revenue, employee benefits expense increased to 2.77% in FY2014 as compared to
2.42% in FY2013.
Finance costs
Our finance costs increased by 49.72% from ` 30,420.39 lakhs in FY2013 to ` 45,546.41 lakhs in FY2014. This
increase was primarily due to an increase in interest expenses on borrowings by 46.20% from ` 28,238.45 lakhs
in FY2013 to ` 41,284.14 lakhs in FY2014 on account of new debt for capital expenditure and interest cost for
the newly operational BOT Projects, and an increase in other borrowing costs by 124.02% from ` 1,793.67
lakhs to ` 4,018.13 lakhs on account of advisory and processing fees paid to lenders for the new loans availed
towards capital expenditure and for our BOT Projects.
As a percentage of total revenue, our finance costs increased to 16.48% in FY2014 as compared to 13.84% in
FY2013.
Profit/(loss) before exceptional items and tax
Primarily as a result of the foregoing, our loss before exceptional items and tax increased by 157.54% from `
4,262.14 lakhs in FY2013 to ` 10,976.88 lakhs in FY 2014.
83
Exceptional items
Exceptional items for FY2014 consist of bad debts of ` 2,445.48 lakhs, advance written off of ` 1,389.28 lakhs
(which includes loan to subsidiaries written off of ` 231.94 lakhs) and write back of amortization of toll
collection rights of ` 15,775.04 lakhs due to change in amortization method as detailed under “– Changes in
Accounting Policies” on page 93. Exceptional items for FY2013 consisted of performance bonus received on
early execution of work contracts of ` 6,093.98 lakhs.
Profit before tax
As a result of the foregoing, our profit before tax decreased by 34.75% from ` 1,831.84 lakhs in FY2013 to `
1,195.34 lakhs in FY 2014.
Tax expense
Our tax expense decreased from ` 4,345.10 lakhs in FY 2013 to ` 1,412.05 lakhs in FY 2014 due to MAT credit
entitlement of ` 2,661.50 lakhs in FY2014 on account of claim for deduction made under Section 80IA of the IT
Act for one of the BOT Projects and adjustment for excess provision for taxation for earlier years of ` 1,869.61
lakhs.
Profit/(Loss) for the period from continuing operations
As a result of the foregoing, our profit for the period from continuing operations was ` 2,607.39 lakhs in
FY2014 as compared to a (loss) of ` (2,513.26) lakhs in FY2013.
Share of loss transferred to minority interest
The share of loss transferred to minority interest was ` 1,814.79 lakhs in FY 2014 as compared to ` 3,737.57
lakhs in FY 2013.
Share of profit/(loss) of Associates
The share of Associates was a profit of ` 15.30 lakhs in FY 2014 as compared to a loss of ` 476.15 lakhs in FY
2013.
Profit for the period
As a result of the foregoing, our profit for the period increased by 493.12% from ` 748.16 lakhs in FY 2013 to `
4,437.48 lakhs in FY 2014.
FY2013 Compared to FY2012
Revenue
Our total revenue decreased by 24.05% from ` 2,89,362.00 lakhs in FY2012 to ` 2,19,780.18 lakhs in FY2013.
This decrease was primarily due to a 24.66% decrease in our revenue from operations from ` 2,86,632.91 lakhs
in FY2012 to ` 2,15,959.34 lakhs in FY2013. The decrease in our revenue from operations in FY2013 was
primarily the result of decrease in EPC contract income and income from advisory and project management fees
partially offset by an increase in revenue from toll collection and annuity income.
Revenue from EPC contracts decreased by 30.22% from ` 2,72,155.40 lakhs in FY2012 to ` 1,89,915.00 lakhs
in FY 2013 primarily as a result of early completion of construction of two of our BOT Projects namely Bijapur
Hungund project in March 2012 as against the scheduled completion in March 2013and DPTL Project in
February 2012 as against the scheduled completion date of June 2012. The decrease in revenue from EPC
contracts in FY 2013 was also on account of delay in commencement of construction of the SUTPL Project and
SBTPL project.
Revenue from advisory and project management fees decreased by 99.35% from ` 1,848.18 lakhs in FY2012 to
` 12.00 lakhs in FY 2013 primarily as a result of non commencement of any new BOT Project during FY2013.
84
Revenue from toll collection and annuity increased by 114.62% from ` 12,067.75 lakhs in FY2012 to `
25,899.92 lakhs in FY 2013 primarily as a result of commencement of toll collection for the BHTPL Project and
HYTPL Project in FY2013.
Expenses
Total expenses decreased by 16.83%, from ` 2,69,386.17 lakhs in FY2012 to ` 2,24,042.32 lakhs in FY2013.
This decrease was primarily due to a decrease in cost of materials consumed from ` 32,966.41 lakhs in FY2012
to ` 26,838.35 lakhs in FY2013, decrease in construction, toll plaza and road maintenance expenses from `
1,96,211.57 lakhs in FY2012 to ` 1,33,544.37 lakhs in FY2013 partially offset by an increase in employee
benefits expense from ` 4,617.40 lakhs in FY2012 to ` 5,319.85 lakhs in FY2013, an increase in finance cost
from ` 15,589.68 lakhs in FY2012 to ` 30,420.39 lakhs in FY2013 and an increase in depreciation and
amortization expense from ` 8,604.19 lakhs in FY2012 to ` 17,069.29 lakhs in FY2013.
As a percentage of our total revenue, our total expenses increased to 101.94% in FY2013 as compared to
93.10% in FY2012.
Cost of material consumed
Cost of material consumed decreased by 18.59% from ` 32,966.41 lakhs in FY2012 to ` 26,838.35 lakhs in
FY2013 primarily as a result of slower execution of some of our EPC contracts on account of delay in obtaining
clearances.
As a percentage of our total revenue, the cost of material consumed increased to 12.21% in FY2013 as
compared to 11.39% in FY2012.
Construction, toll plaza and road maintenance expenses
Construction, toll plaza and road maintenance expenses decreased by 31.94%from ` 1,96,211.57 lakhs in
FY2012 to ` 1,33,544.37 lakhs in FY2013 primarily on account of decrease in labour expenses, power and fuel
expenses and operation and maintenance expenses.
Labour expenses decreased by 34.82% from ` 1,78,155.15 lakhs in FY2012 to ` 1,16,119.95 lakhs in FY2013
on account of delay in commencement of execution of some of our EPC contracts during FY2013.
Power and fuel expenses decreased by 8.92% from ` 14,132.00 lakhs in FY2012 to ` 12,871.96 lakhs in
FY2013 on account of delay in commencement of execution of some of our EPC contracts during FY2013
together with slower execution of some of the EPC contracts.
Operation and maintenance expenses decreased by 46.30% from ` 510.20 lakhs in FY2012 to ` 273.99 lakhs in
FY 2013. The operation and maintenance expenses in FY 2013 was less compared to FY 2012 as we incurred
expenses on account of certain non routine maintenance activities for ARRIL Project in FY 2012.
As a percentage of our total revenue, the construction, toll plaza and road maintenance expenses decreased to
60.76% in FY2013 as compared to 67.81% in FY2012.
Employee benefits expense
Our employee benefits expense increased by 15.21% from ` 4,617.40 lakhs in FY2012 to ` 5,319.85 lakhs in
FY2013, principally driven by a 17.35% increase in salaries and wages. The increase in salaries and wages in
FY2014 was on account of annual increment of salaries of employees.
As a percentage of total revenue, employee benefits expense increased to 2.42% in FY2013 as compared
to1.60% in FY2012.
Finance costs
Our finance costs increased by 95.13% from ` 15,589.68 lakhs in FY2012 to ` 30,420.39 lakhs in FY2013. This
increase was primarily due to an increase in interest expenses on borrowings by 103.92% from ` 13,848.13
lakhs in FY2012 to ` 28,238.45 lakhs in FY2013 on account of additional loans obtained for expansion and
85
working capital and interest cost for two newly operationalised BOT Projects, and an increase in other
borrowing costs by 43.69% from ` 1,248.30 lakhs in FY2012 to ` 1,793.67 lakhs on account of advisory and
processing fee paid to the lender in connection with the addition al loans obtained for expansion and working
capital.
As a percentage of total revenue, our finance costs increased to 13.84% in FY2013 as compared to 5.39% in
FY2012.
Profit/(loss) before exceptional items and tax
Primarily as a result of the foregoing, our profit/(loss) before exceptional items and tax decreased by 121.34%
from a profit of ` 19,975.83 lakhs in FY2012 to a loss of ` 4,262.14 lakhs in FY2013.
Exceptional items
Exceptional items for FY2013 consisted of performance bonus received on early execution of EPC contracts of
` 6,093.98 lakhs. There were no exceptional items for FY2012.
Profit before tax
As a result of the foregoing, our profit before tax decreased by 90.83% from ` 19,975.83 lakhs in FY2012 to `
1,831.84 lakhs in FY2013.
Tax expense
Our tax expense decreased from ` 8,079.68 lakhs in FY 2012 to ` 4,345.10 lakhs in FY 2013 due to a decrease
in current tax from ` 7,353.65 lakhs in FY 2012 to ` 3,543.25 lakhs in FY2013 on account of decrease in profit
before tax in FY 2013.
Profit/(Loss) for the period from continuing operations
As a result of the foregoing, our profit for the period from continuing operations decreased by 121.13% from `
11,896.15 lakhs in FY2012 to ` 2,513.26 lakhs in FY2013.
Share of loss transferred to minority interest
The share of loss transferred to minority interest was ` 3,737.57 lakhs in FY 2013 as compared to ` 561.94
lakhs in FY2012.
Share of loss of Associates
The share of Associates was a loss of ` 476.15 lakhs in FY 2013 as compared to a loss of ` 229.00 lakhs in
FY2012.
Profit for the period
As a result of the foregoing, our profit for the period decreased by 93.88% from ` 12,229.09 lakhs in FY 2012 to
` 748.16 lakhs in FY 2013.
Net Cash Flows
The following table sets forth certain data from our cash flow statement:
Cash Flow Data
For the year ended March 31,
2014
2013
(` lakhs)
(` lakhs)
78,637.96
21,219.83
(1,45,776.01)
(1,09,742.78)
72,293.39
75,306.04
5,155.34
(13,216.91)
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Net increase (decrease) in cash and cash equivalents
86
2012
(` lakhs)
60,526.35
(2,03,134.41)
1,48,257.24
5,649.18
Cash Flow Data
For the year ended March 31,
2014
2013
(` lakhs)
(` lakhs)
5,811.96
19,028.88
10,967.31
5,811.96
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at the end of the year
2012
(` lakhs)
13,379.70
19,028.88
Cash Flows (Used in)/Generated from Operating Activities
Our net cash generated from operating activities consists of our after profit, as adjusted for: (i) interest expenses;
(ii) interest income; (iii) depreciation and amortization; (iv) dividend income; (v) profit on sale of assets; (vi)
loss on sale of assets; (vii) profit on sale of mutual funds and investments; (viii) stock option premium; (ix)
provision for taxation; (x) bad debts; (xi) exceptional item; (xii) writing off of intangible assets under
construction; (xiii) interest receivable written off; (xiv) transfer to Investor Protection and Education Fund; (xv)
sundry balances written back; (xvi) excess provision written back; (xvii) foreign currency fluctuation; (xvii)
MAT credit entitlement and (xxi) deffered tax liabilities (assets).
Net cash flow generated from operating activities amounted to ` 78,637.96 lakhs in FY2014. This amount
consisted of a after tax profit of ` 2,607.39 lakhs, adjusted for non-cash and other items in a net amount of `
44,322.67 lakhs, resulting in operating profit before working capital changes of ` 46,930.06 lakhs. Net working
capital increased by ` 37,318.46 lakhs, primarily as a result of trade receivables increasing by ` 13425.99 lakhs,
long term loans and advances increasing by ` 9,789.91 lakhs, other current liabilities increasing by ` 10,365.70
lakhs and inventories decreasing by ` 6,163.08 lakhs. We paid taxes of ` 5,610.56 lakhs.
Net cash flow generated from operating activities amounted to ` 21,219.83 lakhs in FY2013. This amount
consisted of an after tax loss of ` 2,513.26 lakhs, adjusted for non-cash and other items in a net amount of `
47,962.33 lakhs, resulting in operating profit before working capital changes of ` 45,449.07 lakhs. Net working
capital decreased by ` 18,173.79 lakhs, primarily as a result of other current assets decreasing by 5,260.86 lakhs,
short term loans and advances decreasing by 4,173.62 lakhs and other current liabilities decreasing by `
7,830.65 lakhs. We paid taxes of ` 6,055.45 lakhs.
Net cash flow generated from operating activities amounted to ` 60,526.35 lakhs in FY2012. This amount
consisted of an after profit of ` 11,896.15 lakhs, adjusted for non-cash and other items in a net amount of `
30,342.17 lakhs, resulting in operating profit before working capital changes of ` 42,238.32 lakhs. Net working
capital increased by ` 23,728.95 lakhs, primarily as a result of long-term loans and advances increasing by `
19,564.13 lakhs, short-term loans and advances increasing by ` 11,495.68 lakhs, trade payables increasing by `
10,245.40 and trade receivables increasing by ` 13,004.04 lakhs. We paid taxes of ` 5,440.92 lakhs.
Cash (Used in) / Generated from Investing Activities
Net cash used in investing activities amounted to ` 1,45,776.01 lakhs in FY2014. This amount consisted
primarily of ` 22,500.55 lakhs towards purchase of fixed assets, ` 98,654.25 on account of increase in intangible
assets completed/under development, ` 9,467.52 on account of increase in current investments and ` 17,607.93
on account of increase in long term advances.
Net cash flow used in investing activities amounted to ` 1,09,742.78 lakhs in FY2013. This amount consisted
primarily of ` 1,01,708.22 lakhs on account of increase in intangible assets completed/under development, `
7,630.65 lakhs in the purchase of fixed assets and ` 3,375.57 lakhs on account of increase in long term
advances.
Net cash flow used in investing activities amounted to ` 2,03,134.41 lakhs in FY2012. This amount consisted
primarily of ` 1,96,338.20 lakhs on account of increase in intangible assets completed/under development and `
17,083.33 lakhs in the purchase of fixed assets.
Net Cash (Used in) / Generated from Financing Activities
Net cash flow generated from financing activities amounted to ` 72,293.39 lakhs in FY2014. This amount
consisted primarily of ` 1,05,080.02 lakhs as proceeds from long term borrowings, ` 5,124.24 lakhs as proceeds
from short terms borrowings, ` 4,336.78 lakhs on account of increase in working capital loan which was
partially offset by ` 45,546.41 lakhs in interest paid on our borrowings.
87
Net cash flow generated from financing activities amounted to ` 75,306.04 lakhs in FY2013. This amount
consisted primarily of ` 97,889.95 lakhs as proceeds from long term borrowings, ` 1,1503.97 lakhs on account
of increase in working capital loan which was partially offset by ` 30,255.45 lakhs in interest paid on our
borrowings.
Net cash flow generated from financing activities amounted to ` 1,48,257.24 lakhs in FY2012. This amount
consisted primarily ` 1,38,635.99 lakhs as proceeds from long term borrowings, ` 7,834.98 lakhs on account of
increase in working capital loan, ` 18,277.48 lakhs on account of addition in capital reserve which was partially
offset by ` 14,782.54 lakhs in interest paid on our borrowings.
Borrowings
To fund our working capital and capital expenditure requirements, we enter into long-term and short-term credit
facilities. As of March 31, 2014, our outstanding total borrowings amounted to ` 5,45,751.31 lakhs, which
included long-term borrowings of ` 4,98,971.82 lakhs and short-term borrowings of ` 46,779.49 lakhs.
The following table shows certain information about our borrowings as of March 31, 2014:
(` lakhs)
Long-term borrowings:
Secured
Unsecured
Total
4,84,756.71
14215.11
4,98,971.82
Short-term borrowings:
Secured
Unsecured ..........................................................................................................................
Total ..................................................................................................................................
34,227.04
12,552.45
46,779.49
As of June 30, 2014, our total outstanding borrowings amounted to ` 5,64,657.53 lakhs. As of June 30, 2014,
current maturity of long term debt was ` 22,869.17 lakhs as compared to ` 25,643.20 lakhs in FY2014.
Capital Expenditures
Our capital expenditures were ` 2,12,078.57 lakhs, ` 1,09,060.77 lakhs, ` 1,20,424.05 lakhs in FY2012,
FY2013 and FY2014, respectively. Our capital expenditure primarily consists of net expenses towards purchase
of fixed assets, investment in intangible assets (i.e., BOT Projects), and capital work-in-progress.
Contractual Obligations and Commitments
Our capital commitments as at March 31, 2014, 2013 and 2012:
Particulars
Sub-ordinate debt/equity shares in subsidiary
companies
March 31, 2014
(` lakhs)
30,774.37
March 31, 2013
(` lakhs)
83,249.84
March 31, 2012
(` lakhs)
33,240.47
Our Company uses cross currency interest rate swap and currency option to hedge the interest and currency
related risks on its capital account. Outstanding currency option and interest swap to hedge against foreign
currency exchange rates and fluctuations in interest rates are as under:
Particulars
Index swap
March 31, 2014
750.29
Outstanding as at
March 31, 2013
6,048.73
March 31, 2012
1,469.43
81,172.47
1518.58
81,351.59
1,545.47
37,943.00
755.77
Currency option repayment
Equivalent INR (in lakhs)
Equivalent USD (in lakhs)
88
Interest swap
Equivalent INR (in lakhs)
Equivalent USD (in lakhs)
26,363.66
419.55
27,380.19
477.79
15,455.08
361.88
Contingent Liabilities
Our contingent liabilities are as under:
S. No.
(a)
1.
2.
3.
4.
5.
6.
7.
8.
9.
Contingent Liabilities
Claims against the Company not acknowledged as debt:
The Deputy Commissioner of Custom has passed the order for demand of custom duty towards
import of machineries `104.95 lakhs (Year 2011-12 and 2012-13 `104.95 lakhs) & Interest of `
174.05 Lakh (year 2011-12 and 2012-13 `174.05 Lakh ). The Company has filled the Appeal to
Commissioner of Customs against the said order , hence no provision is made in the books of
accounts
Sarda Energy and Minerals Ltd. (Formerly known as Raipur Alloys Limited) has filed a suit for
recovery of `46.42 Lakh (Year 2011-12 and 2012-13 ` 46.42 Lakh) against the company and its
directors and officers holding them jointly and severally liable. The Company purchased steel and
TMT bar from Sarda Energy and Minerals Limited, for which the latter claimed `46.42 Lakh (Year
2011-12 and 2012-13 ` 46.42 Lakh) balance to be paid and filed Civil Suit at Civil Court, Nagpur.
The company has challenged the jurisdiction of the court. The matter is pending before the Civil
Court, Nagpur. Company has not made any provision for the said liability in its Books of Accounts
Demand under Service Tax Act,1994 ` 67.29Lakh (Year 2011-12 and 2012-13 ` 67.29 Lakh)
Company has received order of the Commissioner of service tax on 01st April, 2013 wherein
Commissioner upheld the demand of ` 199.13 Lakh (Year 2011-12 and 2012-13 ` 199.13 Lakh) and
impose penalty of ` 345.92 Lakh (Year 2012-13 ` 345.92 Lakh). Company filed appeal before
CESTAT and received unconditional stay order on order of Commissioner hence no provision has
been made.
The Company has received Show-Cause Notice on 13th April, 2013 for imposing penalty of ` 19.84
Lakh (Year 2011-12 and 2012-13 Nil) under Rule 26 of the Central Excise Rules, 2002. Company
filed appeal before appropriate authority hence no provision has been made.
Service Tax demand of ` 434.80 Lakhs (Year 2012-13 ` 434.80 Lakhs) not acknowledge as debts in
regards to recovery of CENVAT credit on input services availed during the Financial Year 2009-10
and 2010-11 against the subsdiary. Subsidiary has received order from commissioner of Service tax
on May 10, 2013 and the subsidiary has preferred appeal with Tribunal for which subsidiary has
deposited ` 25 Lakhs and received stay order from tribunal for recoveries of demand. Further the
matter is pending with Tribunal as at reporting date.
The Deputy Commercial Tax Commissioner, Audit Divison-1 Ahmedabad has passed order against
“Jililn Sadbhav JV” for VAT demand of ` 702.00 Lakh (Year 2011-12 and 2012-13 ` Nil) inclusive
of interest ` 330.18 lakh and Penalty of ` 74.36 lakh (Year 2011-12 and 2012-13 Rs Nil). In JilinSadbhav JV, Sadbhav Engineering Limited is having 48% share. Against this Order the Joint
Venture has filed an appeal in the Gujarat Value Added Tax Tribunal at Ahmedabad, hence no
provision has been made.
The Company has received a show cause notice from the office of Mining Engineer, Mines and
Geology Department, Udaipur on 05/02/2014 imposing penalty of ` 81.32 Lakh under rule 63, 37A
(IX) of Rajasthan Minor Mineral Concession Rules, 1986. The Company has filed a Civil Writ
Petition No.2635/2014 in The High Court of Rajasthan against the said notice. The Company has
deposited `30.00 Lakh with the Mining Engineer, Mines and Geology Department, Udaipur as per
stay order of the Honourable Court. Further proceeding is pending, hence no provision has been
made.
Income Tax of ` 3,566.92 Lakhs on the claim made of the deduction u/s 80IA (4) of the Income Tax
Act, 1961.The Finance Act (2), 2009 has amended Section 80IA(4) of the Income Tax Act, 1961 by
substituting an explanation to Section 80IA with restrospective effect from 01.04.2000. On the basis
of legal opinion and deided cases, the Company has continued to claim deduction under section 80IA(4) of the Act on eligible projects and consequently the Company considers it appropriate not to
create a liaility for provision of Income Tax. However an amount of income tax of ` 858.40 Lakhs
for the current year and of ` 2,708.51 Lakhs for the earlier years since FY 2007-08 has been
disclosed as contingent liability.
89
(b)
Guarantees
Company has given corporate guarantee to banks for ` 29,825.00 Lakh (Year 2012-13 ` 28,850.00,
Year 2011-12 ` 10500 Lakh)
against the finance facility given by the banks to subsidiary
companies.
(c)
During the year, minority shareholders of Bijapur Hungud Tollway Private Limited (‘BHTPL’) (a
subsidiary of the Company) has filed company petition under section 347 and 398 of the Companies
Act, 1956 with the Company Law Board – Mumbai Bench against Sadbhav Engineering Ltd a
holding Company and its associates/affiliates wherein the company is also defendant. The Company
Law Board (CLB) passed an order in favour of the minority shareholder although company pleaded
that matter should be referred for arbitration as per shareholder agreement (SHA). Against the CLB
order the company filled Special Civil Application (SCA) with Hon’ble High Court of Gujarat that
matter of minority shareholder should be referred as per SHA. Hon’ble High Court accepted SCA of
the company and granted interim relief where by further proceeding of CLB have been stayed.
Currently the matter is pending before Hon’ble High Court of Gujarat. The management believes
that, based on legal advice, the outcome of above contingencies will be favourable and that any loss
is not probable. Accordingly, no amounts have been accrued or paid in regard to dispute.
Interest Coverage Ratio
Our interest coverage ratio, as of March 31, 2014, March 31, 2013 and March 31, 2012 was 2.30, 2.26 and 3.58,
respectively
Off Balance Sheet Arrangements
We do not have any off balance sheet liabilities that are not reflected in our financial statements.
Risk Management
We are, during the normal course of business, exposed to various types of market risks, including interest rate
risk, foreign exchange risk, credit risk and liquidity risk, among others. Our risk management strategy aims to
minimize the adverse effects of financial risk on our financial performance.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Almost all of our indebtedness is on floating interest rate basis, and
hence we are exposed to changes in interest rates.
Credit Risk
Credit risk is the risk that a counter-party will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. We are exposed to credit risk from our operating activities (primarily for
trade receivables) and from its financing activities, including deposits with banks and financial institutions,
foreign exchange transactions and other financial instruments.
Liquidity Risk
Liquidity risk is the risk that we will not be able to meet our financial obligations as they fall due. We manage
liquidity risk by monitoring forecast and actual cash flows continuously and keeping sufficient cash and cash
equivalents.
Foreign Exchange Risk
Foreign exchange risk is the risk that the fair value of a contract or financial instrument or our revenues or
expenses will fluctuate because of changes in foreign exchange rates. Our Company uses cross currency interest
rate swap and currency option to hedge the interest and currency related risks on its capital account. See “–
Contractual Obligations and commitments” on page 88.
Order Book
90
We define our order book as the balance value of work to be executed in respect of our Construction Business.
As of June 30, 2014, our total order book was ` 7,93,080 lakhs.
The following table sets forth our order book according to business sectors as of June 30, 2014:
Engineering and Construction
Transportation
Irrigation
Mining
Total
(` lakhs)
Percentage
3,79,041
1,87,188
2,26,851
7,93,080
47.80% 23.60% 28.60% 100.00
Our order book is not audited and does not necessarily indicate our future revenues or profits in relation to the
performance of such contracts. Although we calculate our order book in respect of signed contracts and
contracts where we have been declared as a successful bidder, the value of our order book may change as a
result of adjustments to the scope of work, escalation clauses and variations in the terms of the contracts. Due to
changes in project scope and schedule, we cannot be certain that the projects in our order book will be
performed or will generate revenue. In addition, even where a project proceeds as scheduled, it is possible that
contracting parties may default and fail to pay the amounts owed. Our clients may dispute the amounts owed to
us and there may be other delays in collecting receivables from clients.
Significant Accounting Policies
The financial statements have been prepared in accordance with Indian GAAP to comply with the Accounting
Standards notified under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the
Companies Act, 1956 read with General Circular 8/2014 dated April 4, 2014 issued by the Ministry of
Corporate Affairs. The financial statements have been prepared on accrual basis under the historical cost
convention. The accounting policies adopted in the preparation of the financial statements are consistent with
those followed in the previous year.
We believe the following principal accounting policies affect the more significant judgments and estimates used
in the preparation of our financial statements.
Revenue Recognition
(a)
(b)
(c)
(d)
In case of item rate contracts, revenue is recognized over the life of the contract using proportionate
completion method, on the basis of physical measurement of work actually completed at the balance
sheet date.
In case of lump sum contracts, revenue is recognized on the completion of milestones as specified in the
contract or as identified by the management.
An expected loss on construction contract is recognized as an expense immediately when it is certain that
the total contract costs will exceed the total contract revenue.
Price escalation and other claims and/or variation in the contract work are included in contract revenue
only when:
(i) negotiation has reached at an advance stage such that it is probable that the customer will accept
the claim; and
(ii) the amount that is probable to be accepted by the customer can be measured reliably.
(e)
Incentive payments, as per customer-specified performance standards, are included in contract revenue
only when:
(iii) the contract is sufficiently advanced that it is probable that the specified performance standards
will be met; and
(iv) the amount of the incentive payment can be measured reliably.
(f)
Site mobilization (camp) expenditure for site installation is written off over the period of contract in
proportion to the value of work done.
Income and expenses of previous years up to ` 5,00,000 are recognized in the current year as such.
However income and expenses over and above ` 5,00,000 of previous year are accounted for as prior
period item.
(g)
91
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
Toll collection from users has been accounted when the amount is received. Income of monthly pass is
recognized as and when it is received in entirely.
Income from sale of services: In respect of arrangements, which provide for an upfront payment followed
by additional payments as certain conditions are met (milestone payments), the amount of revenue
recognized is based on the services delivered in the period as stated in contract. In respect of
arrangements where fees for services rendered are success based, revenue is recognized only when the
factors on which the fee is based, actually occurs.
Project related income: Contract revenue and costs associated with project related activities is recognized
as by reference to the stage of completion of the projects at the date of the balance sheet. The stage of
completion of a project is determined by the proportion that the contract cost incurred for work
performed up to the date of the balance sheet bears to the estimated total contract costs. An expected loss
on construction contract is recognized as expenses immediately when it is certain that total contract costs
will exceeds the total contract revenue.
Income from publicity rights are recorded on accrual basis.
Profit/loss on sale of units of mutual funds and dividend income is recognized on realization basis.
Interest on investment and bank deposits are recognized on a time proportion basis taking into account
the amount invested and the rate applicable.
Income from fixed priced contract revenue from development projects under fixed price contracts, where
there is no uncertainty as to measurement or collectability of consideration is recognized based on
milestones reached under the contracts. Pending completion of milestone, revenue recognition is
restricted to the relevant cost which is carried forward as part of unbilled revenue.
Annuity income for the project is recognized on accrued basis as per concession agreement with NHAI.
Impairment of Assets
The carrying values of assets at each balance sheet date are reviewed for impairment. If any indication of
impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the
carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the
net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their
present value based on an appropriate discount factor. When there is indication that an impairment loss
recognised for an asset in earlier accounting period no longer exists or may have decreased, such reversal of
impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful
life.
Depreciation
(i)
Depreciation is provided for all assets except for vehicles on straight-line method and depreciation on
vehicles is provided on written down value method at the rates specified in schedule XIV to the
Companies Act, 1956.
(ii)
In case of AJTL, ARRIL & RPTPL, Tangible Project Assets, as defined under the concession agreement,
are amortized on straight line basis, from the date on which such project asset is ready for use, till the end
of concession period.
(iii)
Depreciation on Tangible Assets of remaining subsidiaries is provided using the Written down Value
method at rates prescribed under schedule XIV of the Companies Act, 1956.
(iv)
In respect of fixed assets purchased during the period, depreciation is provided on a pro-rata basis from
the date on which such asset is ready to be put to use.
(v)
Depreciation on assets sold, discarded or demolished during the year is being provided at their respective
rates on pro-rata up to the date on which such assets are sold, discarded or demolished.
Provisions, Contingent Liabilities and Contingent Assets
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that
an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be
made. Provisions are not discounted to its present value and are determined based on best estimate required to
92
settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to
reflect the current best estimates.
Contingent liabilities are not provided for and are disclosed by way of notes. Contingent assets are neither
recognized nor disclosed in the financial statement.
Periodic Major Maintenance : Contractual Obligations to periodically maintain Project asset as per the terms of
the concession agreement are provided for in accordance with Accounting Standard(AS) - 29 “Provisions,
Contingent Liabilities and Contingent Assets” i.e; at the best estimate of the expenditure required to settle the
present obligation at the balance sheet date.
Taxes
Tax Expenses comprise Current Tax and Deferred Tax.
Provision for current tax is made after taking into consideration benefits admissible under the provision of the
Income Tax Act, 1961.
Deferred Tax is recognized on timing difference being the differences between the taxable incomes and
accounting income that originate in one period and are capable of reversal in one or more subsequent periods. In
situation where the company has unabsorbed depreciation or carry forward losses, all Deferred Tax. Assets
subject to the consideration of prudence are recognized and carried forward only to the extent that there is a
reasonable certainty that sufficient future taxable income will be available against which such Deferred Tax
Assets can be realized. The tax effect is calculated on the accumulated timing difference at the year end based
on the tax rates and laws enacted or substantially enacted on Balance Sheet date.
Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. We
recognise MAT credit available as an asset only to the extent that there is convincing evidence that we will pay
normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried
forward. In the year in which we recognise MAT credit as an asset in accordance with the Guidance Note on
‘Accounting for Credit Available in respect of Minimum Alternative Tax’ under IT Act, the said asset is created
by way of credit to the statement of profit and loss and shown as “MAT Credit Entitlement.” We will review the
“MAT credit entitlement” asset at each reporting date and write down the asset to the extent we do not have
convincing evidence that it will pay normal tax during the specified period.
Changes in Accounting Policies
Amortisation of Toll Collection Rights: During the year ended March 31, 2014, our Subsidiaries have
retrospectively revised the method of amortization of their Toll Collection Rights from straight line basis to
amortisation based on proportion of actual revenue received during the accounting year to the total projected
revenue till the end of the concession period, in terms of notification dated dated April 17, 2012 of Ministry of
Corporate Affairs. The resultant excess amortisation provided in the books of account till March 31, 2013 as per
the earlier basis to the extent of ` 15,775.04 lakhs has been written back in Statement of Profit and Loss for the
year. This change in accounting policy has resulted in decrease in amortisation expenses and corresponding
decrease in loss for the year by ` 10,148.74 Lakhs.
Use of Accounting Estimates
The preparation of the financial statements in conformity with Indian GAAP requires management to make
estimates and assumptions that affect reported amount of assets and liabilities and disclosures relating to
contingent liabilities as at the reporting date of the financial statements and amount of income and expenses
during the year of account. Example of such estimates includes contract costs expected to be incurred to
complete construction contracts, provision for doubtful debts, income taxes etc. Our management periodically
assesses whether there is an indication that an assets may be impaired and makes provision in the account for
any impairment losses estimated. Contingencies are recorded when it is probable that a liabilities will be
incurred and the amount can be reasonably.
Significant Developments after March 31, 2014 that may affect our future Results of Operations
93
To our knowledge and belief, except as disclosed in this Preliminary Placement Document, no circumstances
have arisen since the date of the last financial statements contained in this Preliminary Placement Document
which materially affect or are likely to affect, the trading and profitability of our Company, or the value of our
assets or our ability to pay material liabilities within the next 12 months.
94
DESCRIPTION OF MATERIAL INDEBTEDNESS
Long-Term Borrowings
We and certain of our subsidiaries (including step-down subsidiaries) have (i) issued secured debentures; (ii)
entered into banking facility agreements, Indian Rupee term loans and foreign currency loans with various
banks/financial institutions. Our borrowings are a mix of Indian Rupees and USD. These debt facilities are
principally used to finance our requirements across the various projects we undertake and for investment in
fixed assets. The financing is typically at the project SPV level. The following table sets forth a summary of our
long term borrowings for the periods indicated:
Long-term borrowings
Debentures
Debentures (secured)
Debentures (unsecured)
Term loans
Indian Rupee term loans
from banks (secured)
Indian Rupee term loans
from financial institutions
(secured)
Foreign currency loans from
banks (secured)
Indian Rupee term loans
from others (unsecured)
The above amount includes
Secured borrowings
Unsecured borrowings
Net amount
Non-current portion
March 31, 2014
March 31, 2013
(` in lakhs)
(` in lakhs)
Current maturities
March 31, 2014 March 31, 2013
(` in lakhs)
(` in lakhs)
18,000.00
-
12,740.00
-
1,600.00
-
3,260.00
-
3,76,294.11
2,99,944.85
14,994.45
4,443.98
3,985.59
442.47
1,473.94
538.77
86,477.01
86,704.21
7,574.81
5,441.85
14,215.11
5,580.76
-
-
4,98,971.82
4,05,412.29
25,643.20
13,684.60
4,84,756.71
14,215.11
4,98,971.82
3,99,831.53
5,580.76
4,05,412.29
25,643.20
25,643.20
13,684.60
13,684.60
As at March 31, 2014
Non-current Portion
The non-current portion of our long term borrowings amounted to ` 4,98,971.82lakhs, which consisted
primarily of (i) debentures; and (ii) Indian Rupee term loans and foreign currency loans.
Current maturities
The current maturities of our long term borrowings amounted to ` 25,643.20 lakhs, which consisted primarily of
(i) debentures; and (ii) Indian Rupee term loans.
Interest
The principal amounts outstanding under the borrowings bear interest either at a fixed rate or at a floating rate.
As at March 31, 2014, the interest rate applicable on the Indian Rupee term loans range from 8.47% to 13.50%
and the interest rate applicable on the foreign currency loans range from LIBOR+ 215 basis point to LIBOR
+250 basis point.
As at March 31, 2014, the interest rate applicable on the debentures is ICICI bank base rate + spread of 1.75%.
Security
As at March 31, 2014, secured borrowings in the amount of ` 4,84,756.71 lakhs, which include Indian Rupee
term loans in the amount of ` 3,80,279.70 lakhs, foreign currency loans in the amount of ` 86,477.01 lakhs and
debentures in the amount of ` 18,000 lakhs, have been secured in the form of a charge or mortgage on the
respective borrower's immovable properties and movable including land, buildings, machinery, tools and
accessories, stocks of raw materials, goods and book debts.
95
INDUSTRY OVERVIEW
The information presented in this section has been obtained from publicly available documents from various
sources, including officially prepared materials from the Government of India and its various ministries,
industry websites and publications. Industry websites and publications generally state that the information
contained therein has been obtained from sources believed to be reliable but their accuracy and completeness
are not guaranteed and their reliability cannot be assured. Although we believe industry, market and
government data used in this Preliminary Placement Document is reliable, it has not been independently
verified by us, the Book Running Lead Managers or any of our or their respective affiliates or advisors. The
information may not be consistent with other information compiled within or outside India.
Overview of the Indian Economy
India, the world’s second largest country in terms of population (an estimated 1,236 million, as of July 2014),
had an estimated GDP on a purchasing power parity basis of approximately U.S.$4,990 billion in 2013, making
it the fourth largest economy by GDP after the United States, European Union and China. (Source:
https://www.cia.gov/library/publications/the-world-factbook/geos/in.html)
The outlook for the Indian economy has improved recently with cautiously positive business sentiments,
improved consumer confidence, expectations of a modest recovery in growth and decline in inflation
expectations. A moderate recovery is likely to set in 2014-15 broadly in line with the Reserve Bank’s indicated
projections in January 2014. India’s GDP grew by 5.7% in the first quarter of 2014-15, the highest in 10
quarters. The recovery is likely to be supported by investment activity picking up due to part resolution of
stalled projects and improved business and consumer confidence. The rural demand base is likely to shore up
demand following record agricultural output. In addition, external demand is expected to improve further during
2014-15 stemming from encouraging prospects for global growth, notwithstanding some recent loss in export
growth momentum.
(Source: Monthly Economic Report, April 2014,
http://indiainbusiness.nic.in/newdesign/upload/Publications/Monthly/2014/Monthly_April.pdf;
Statistics and Programme Implementation, http://www.mospi.nic.in)
Ministry
of
Infrastructure Sector
One of the major requirements for sustainable and inclusive economic growth is an extensive and efficient
infrastructure network. Development of adequate infrastructure has been identified as the most critical
prerequisite for sustaining the current growth momentum of the economy and to ensure inclusiveness of the
growth process. The key to global competitiveness of the Indian economy lies in building a top of the line
infrastructure.
Recent Developments and Initiatives
According to the Economic Survey 2013-14, as presented by the Union Finance Minister, Mr Arun Jaitley on
July 10, 2014:




The fiscal deficit declined from 5.7 % of GDP in 2011-12, to 4.9 % in 2012-13 and further to 4.5 % in
2013-14.
Average WPI inflation declined in 2013-14 to 6.0 % vis-à-vis 8.9 % in 2011-12 and 7.4 % in 2012-13.
In 2013-14 the growth rate of the services sector was 6.8 %, its share in GDP going up to 57%.
The share of exports in GDP increased from 24 % in 2012-13 to 24.8 % in 2013-14, while the share of
imports declined from 30.7 % to 28.4 %, resulting in an improvement in net exports by 3.1 percentage
points of GDP.
As per the provisional estimates released by the Central Statistics Office as part of the Economic Survey 201314, the growth rate of GDP at factor cost (at constant 2004-05 prices) during 2013-14 is estimated at 4.7 % as
compared to the growth rate of 4.5 % in 2012-13 (first revised estimate) and 6.7 % in 2011-12 (second revised
estimate).
(Source: Economic Survey 2013-14, www.indiabudget.nic.in)
96
Economic incentives provided under the Budget 2014 – 15 - Infrastructure
Infrastructure
Implementation of 4P in India, an institutional to provide support to mainstream People Public Private
Partnership called 4Pindia to be set up with a corpus of ` 50,000 lakhs.
Shipping
-
` 11,63,500 lakhs will be allocated for the development of outer harbour project in Tuticorin for Phase I.
SEZs will be developed in Kandla and Jawaharlal Nehru Port Trust.
Comprehensive policy to be announced to promote Indian ship building industry.
Inland Navigation
Project on Ganges called ‘Jal Marg Vikas’ to be developed between Allahabad and Haldi.
New Airports
Scheme for development of new airports in Tier I and Tier II Cities to be launched.
Road sector
-
Sector needs huge amount of investment along with debottlenecking from maze of clearances.
An investment of an amount of ` 37,88,000 lakhs in NHAI and state roads is proposed which includes `
3,00,000 lakhs for the North East.
Target of NH construction of 8500 km will be achieved in current financial year.
Work on select expressways in parallel to the development of the industrial corridors will be initiated. For
project preparation NHAI shall set aside a sum of ` 50,000 lakhs.
Energy
-
` 10,000 lakhs is allocated for a new scheme “Ultra – Modern Super Critical Coal Based Thermal Power
Technology”.
Comprehensive measures for enhancing domestic coal production are being put in place.
Adequate quantity of coal will be provided to power plants which are already commissioned or would be
commissioned by March 2015.
An exercise to rationalize coal linkages to optimize transport of coal and reduce cost of power is underway.
New & Renewable Energy
-
` 50,000 lakhs provided for Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, Andhra
Pradesh and Ladakh.
` 40,000 lakhs provided for a scheme for solar power driven agricultural pump sets and water pumping
stations.
` 10,000 lakhs provided for the development of 1MW Solar Parks in the banks of the canals.
A Green Energy Corridor Project is being implemented to facilitate evacuation of renewable energy across
the country.
Petroleum and Natural Gas
-
Production and exploitation of Coal Bed Methane reserves will be accelerated.
Possibility of using modern technology to revive old or closed wells to be explored.
Usage of PNG to be rapidly scaled up in a Mission mode.
Proposal to develop pipelines using appropriate PPP models.
Mining
Changes, if necessary, in the Mines and Minerals (Development and Regulation) Act, 1957 to be introduced to
97
encourage investment in mining sector and promote sustainable mining practices.
(Source: Key features of the Budget 2014 – 15 at http://indiabudget.nic.in/ub2014-15/bh/bh1.pdf)
ROADS SECTOR IN INDIA
Overview
Road transport has emerged as the dominant mode in India’s transportation sector with a share of 4.8% in
India’s GDP in 2011-12. Easy availability, adaptability to individual needs and cost savings are some of the
factors which go in favour of road transport. Road transport also acts as a feeder service to railway, shipping and
air traffic. The total number of registered motor vehicles has been growing at 10.5 per cent per annum during the
period 2002 to 2012. The share of road traffic in total traffic movement by roads and railways has grown from
13.8 per cent of freight traffic and 15.4 per cent of passenger traffic in 1950-51 to an estimated 65 per cent of
freight and 90 per cent of passenger traffic as per National Transport Development Policy Committee. The rapid
expansion and strengthening of the road network, therefore, is imperative, to provide for both present and future
traffic and for improved accessibility to the hinterland. (Source: Ministry of Road Transport and Highways
Outcome Budget 2014-15 at http://morth.nic.in/showfile.asp?lid=1434)
According to the Planning Commission, a target of 1,835 billion tonne km has been put on road freight volumes
for 2016-17, assuming growth at 8.7% per annum is in line with past trends. (Source: Planning Commission,
Government of India.)
India has one of the largest road networks in the world, consisting of:
F. National highways;
G. State highways;
H. Major district roads; and
I. Rural including other district roads.
(Source: Planning Commission, Government of India.)
The National highways constitute 1.7% of the entire network but carry 40% of the traffic on Indian roads.
(Source: http://www.nhai.org/roadnetwork.htm) The state highways and major district roads together constitute
the secondary system of road transportation which contributes significantly to the development of the rural
economy and industrial growth of the country. The secondary system also carries about 40% of the total road
traffic, although it constitutes about 13% of the total road length. At the tertiary level are the other district roads
and the rural roads (Source: Planning Commission, Government of India.)
Indian road network consists of:
Length(In Km)
Expressways
200
National Highways
79,243
State Highways
1,31,899
Major District Roads
4,67,763
Rural and Other Roads
26,50,000
Total Length
33 Lakh Kms (approx.)
(Source: http://www.nhai.org/roadnetwork.htm)
The Twelfth Plan budgetary support for Central Sector Roads is ` 1,44,769 crore. In addition, the sector is
expected to generate Internal and Extra Budgetary Resources amounting to ` 64,834 crore and private-sector
investment of ` 2,14,186 crore during this period. The Twelfth Plan budgetary support for Rural Roads
(PMGSY) is ` 1,26,491 crore.
Other key targets of the Twelfth Plan are as follows:
98



In respect of the NHDP plan roads, to complete the majority of works by the end of the plan. For NHDP-V
specifically, which involves the conversion of the golden quadrilateral to six-lane roads, specific targets will
be set for it throughout the Twelfth Plan period;
National and state Highways would be upgraded to a minimum two lane standard by the end of the Twelfth
Plan period; and
All villages will be connected by all-weather roads by the end of the Twelfth Plan period.
In addition to the current works, the Twelfth Plan also envisages on a comprehensive master plan for the
development of 15,600 km of expressways in phases. It is expected that 1,000 km of the expressways would be
completed during the Twelfth Plan period, while land for another 6,000km would be acquired to initiate work.
(Source: Twelfth Five Year Plan 2012-2017, Volume II, Planning Commission, Government of India).
Other Initiatives
The Government has approved the special accelerated program for road development in the North- East
(SARDP-NE), which aims to improve 4,099 km length of road by March 2015, 21.8% of which had been
completed as on March 2012.
Framework for highway infrastructure industry
At the Central level, the Ministry of Road Transport and Highways and the Ministry of Rural Development
prepares the overall policy, programme development and resource planning.
National Highway Authority of India (“NHAI”) is the agency for implementation, operation and maintenance of
national highways. NHAI was given the status of an autonomous corporate body under the control of the
Ministry of Road Transport and Highway. However, the Central government, in view of national interests, has
powers to divest NHAI of its responsibilities.
At the state level, the overall policy, programme development and resource planning is done by the state
ministry of roads. State Public Works Department (“PWDs”) and road development corporations are
implementing agencies at the state level implementing, operating and maintaining the state highways, major
district roads and rural roads in few states.
National Highways Authority of India
The NHAI is an autonomous authority of the Government of India constituted by an Act of Parliament – The
National Highways Authority of India Act, 1988 (“NHAI Act”). NHAI was operational from February, 1995,
with the appointment of full time Chairman and other members. NHAI is responsible for the development,
maintenance and management of national highways entrusted to it and for matters connected or incidental
thereto. The functioning of NHAI is governed by NHAI Act and rules, and regulations framed thereunder.
The main objects of NHAI are provided in NHAI Act as per which NHAI is responsible for the development,
maintenance and management of the national highway. Its primary mandate is time and cost-bound
implementation of the NHDP through a host of funding options, including tax revenues, fuel cess, Government
borrowings, private participation and external multilateral agency contributions. It is also seeking active
involvement of the private sector in financing the construction, maintenance and operation of national highways
and wayside amenities.
National Highways Development Project (“NHDP”)
In 2000, the Government initiated the NHDP in an effort to improve road infrastructure. The ongoing NHDP
involves a total of seven road construction phases (Phase I – VII), and at present, all the phases are undergoing
implementation, except phase VI.
The details and the latest status updates of the NHDP are as set out below:
As at June 30 2014
99
NHDP
Total
Length
Already
4/6 Laned
(km)
7,142
380
12,109
14,799
6,500
1,000
700
42,630
NS-EW Ph. I & II
Port Connectivity
NHDP Phase III
NHDP Phase IV
NHDP Phase V
NHDP Phase VI
NHDP Phase VII
NHDP Total
Under
Implementati
on
6,305
379
6,214
610
1,869
22
15,399
Contracts
Under
Implementatio
n
Balance length
for award
(No.)
(km.)
420
1
4,210
5,246
2,212
19
12,108
45
1
86
46
27
2
207
417
0
1,685
8,943
2,419
1,000
659
15,123
(Source: www.NHAI.org/WHATITIS.asp)
State Highways
The Twelfth Plan will encourage the states to develop a core road network. The development of both the fourlanes and two-lanes will be taken up as part of this Plan. Public private partnership would be encouraged
through viability gap funding (“VGF”) window available with the Central Government. Targets for the Twelfth
Plan as mentioned below:
Targets for the Twelfth Plan
State Highways
Major District Roads
% Of Existing /
Total Length
Kilometres
% Of Existing /
Total Length
Kilometres
2-Laning
30,000
30
20,000
8.5
4-Laning
5,000
8
1,000
4
Strengthening
41,500
25
66,500
25
IRQP
50,000
30
80,000
30
(Source: Twelfth Five Year Plan 2012-2017, Volume II, Planning Commission, Government of India)
Implementation of Highway Projects by NHAI
Broadly, the modes adopted for implementation of highway projects by NHAI may be classified into Public
Private Partnership (PPP) and public funded projects. PPP projects are categorised into two types, namely:
(a) BOT (Toll): Concessionaire is procured through steps of Request For Qualification (RFQ) and Request For
Proposal (RFP). Construction, operation, maintenance and tolling responsibility rests with the
concessionaire during entire concession period, which is normally, between 20 to 30 years.
(b) BOT (Annuity): Concessionaire is procured through steps of RFQ and RFP. Construction, operation and
maintenance rest with the concessionaire during the concession period. While toll is collected by the
Authority through a bidding process, the developer receives annuity payments through the concession
period.
The traditional mode of executing public funded projects was Item Rate Contract. This was prone to time and
cost overruns. This mode has been replaced by New Engineering Procurement and Construction (EPC)
contracts. The projects which are not viable under BOT (Toll) mode, such as those in far flung areas would have
to be done under EPC mode. Model EPC Contract Agreement has been finalised and implemented all across
highway projects. Model EPC agreement relies on assigning the responsibility for investigations, design and
construction to the contractor for a lump sum price determined through competitive bidding. Model EPC
agreement incorporates international best practices and provides a sound contractual framework that specifies
the allocation of risks and rewards, equity of obligations between Government and the Contractor, precision and
100
predictability of costs, force majeure, termination and dispute resolution, apart from transparent and fair
procedures.
(Source: NHAI Annual Report 2012-13)
Initiatives to promote private participation
Over the last couple of years, various measures have been taken to revive the interest of private sector
participation towards road projects, such as (i) premium rescheduling, (ii) easier exit norms to enable faster asset
monetization, (iii) relaxing environment clearance norms and de-linking forest clearance from environment
clearance, (iv) contemplating takeover of stalled projects by NHAI, and (v) initiative for setting up finance
corporations to fund projects.
MINING SECTOR IN INDIA
Overview
India is endowed with ample resources of a number of minerals and has the geological environment for many
others. The metals and minerals sector has a direct bearing on the growth, development, depth and sustainability
of the manufacturing and infrastructure sectors. Hence, its extraction and management have to be integrated into
the overall strategy for the country’s development. Raw material security and the ability to provide the range of
metal-based mineral required in terms of quality, standards and prices are keys to the process.
Over the Twelfth Five Year Plan period, the Ministry of Mines has projected an outlay of ` 20,553 crore.
(Source: http://planningcommission.gov.in/plans/planrel/12thplan/pdf/12fyp_vol2.pdf - 12th FYP – Economic
Sectors)
The Government has decided to initiate Public Private Participation (PPP) to augment coal production in the
country. Accordingly, a committee has been set up under the chairmanship of Secretary (Coal) with
representatives from Planning Commission, Ministry of Finance (DEA), Ministry of Labour, Ministry of Law &
Justice (DLA) among others to recommend a framework for the PPP. The committee deliberated on the various
models including engaging Mine Developer cum Operators (MDO) & in consultation with all the stake holders,
the Government is in the process of finalizing a Model Concession Agreement (MCA) for engagement of MDO
in Coal India Limited.
(Source: http://pib.nic.in/newsite/PrintRelease.aspx?relid=102169)
IRRIGATION SECTOR IN INDIA
There has been a massive increase in plan expenditure on irrigation and flood control over the last 60 years.
Major and Medium Irrigation (MMI) outlays rose from ` 376 crore in the First Plan to a projected outlay of
more than ` 1,65,000 crore in the Eleventh Plan, amounting to a total expenditure of around ` 3,51,000 crore
over this period. At the same time, it is clear that these projects have suffered from massive time and cost
overruns. A study carried out by the Twelfth Plan MMI Working Group on cost overruns reveals that the worst
offenders are the major irrigation projects where the average cost overrun is as high as 1,382 per cent. 28 out of
the 151 major projects analysed witnessed cost overruns of over 1,000 per cent. Of these, nine had cost overruns
of over 5,000 per cent. The cost overruns were relatively lower for medium projects but still unacceptably high,
the average being 325 per cent. 23 out of 132 medium projects had cost overruns of over 500 per cent and 10
had cost overruns of over 1,000 per cent.
The Twelfth Plan, therefore, proposes that completion of ongoing projects be given the highest priority and new
projects be taken up only where there is a demonstrated need of an outstanding character. The reversal since
1992 is also indicative of the declining capacities of individual State Governments in this regard. While
financial capacities are being taken care of through programmes such as the Accelerated Irrigation Benefits
Programme (AIBP), lack of capacities in terms of human resources and other ‘soft’ aspects have emerged as
major new challenges, which are proposed to be addressed during the Twelfth Plan. The capability of a State to
take up new projects in the light of the backlog of ongoing projects will be assessed before sanctioning a new
project for the State.
101
According to the Twelfth Five Year Plan, investments of about ` 5,04,371 crore are projected with the Centre
contributing around ` 42,171 crore and the balance ` 4,62,200 crore to be funded by the State.
(Source: http://planningcommission.gov.in/plans/planrel/12thplan/pdf/12fyp_vol1.pdf - 12th FYP – Faster,
More Inclusive and Sustainable Growth)
The Accelerated Irrigation Benefits Programme (AIBP) Experience
The AIBP was launched in 1996 to fast-track the implementation of ongoing major and medium irrigation
projects which were in an advanced stage of completion. Central assistance worth `54,251 crores has been
provided to the States between 1996 and 2012 under AIBP. The AIBP has been successful in accelerating the
rate of creation of additional irrigation potential in the MMI sector, which increased from 2.2 mha per Plan till
the Eighth Plan to 4.10 mha during the Ninth Plan following the introduction of AIBP and further rose to 5.30
mha during the Tenth Plan and 4.28 mha during the Eleventh Plan.
The huge investments over the last 60 years have meant that the irrigation potential created through MMI
projects has increased nearly fivefold from 9.72 mha in the pre-Plan period to around 46 mha by the Eleventh
Plan. However, during the same period, the utilisation of this potential has failed to keep pace. From being
almost equal to the potential created in the pre-Plan period (9.70 mha), it is now well short of it, reaching only
about 35 mha during the Eleventh Plan.
(Source: http://planningcommission.gov.in/plans/planrel/12thplan/pdf/12fyp_vol1.pdf -12th FYP – Faster, More
Inclusive and Sustainable Growth)
Reforms
-
Complete, as far as possible, the huge backlog of ongoing MMI projects by prioritising the allocation of
investible funds to ongoing projects while taking up new only as a matter of exception; completing ongoing
projects will help create new MMI irrigation potential of 7.9 million hactares during the plan period;
Proposal for setting up of a National Irrigation Management Fund (NIMF) to catalyse and support demand
for irrigation management and institutional reform.
Further, a scheme for setting up Micro Irrigation Systems (MIS) through PPP will be launched in pursuance of
the government’s objective to enhance irrigation efficiency, productivity and farm incomes by employing more
efficient means of irrigation in integrated clusters. The absence of organised operations in the farm sector would
be overcome by farmers coming together for the purpose of implementing this scheme through a single entity in
every village. The existing subsidies which are provided by the Central and State Governments for on-farm MIS
equipment and solar systems would be availed of under this scheme. Similarly, budgetary support would
continue to be provided for the development of infrastructure. PPP in MIS would help in doubling the irrigation
efficiency as compared to flow irrigation.
(Source: http://planningcommission.gov.in/plans/planrel/12thplan/pdf/12fyp_vol1.pdf - 12th FYP – Faster, More
Inclusive and Sustainable Growth
102
BUSINESS
Overview
We are an engineering, construction and infrastructure development company focussing on transportation,
irrigation and mining sectors. We categorise our business into two businesses: (i) Construction Business, under
which we undertake engineering, procurement and construction (“EPC”) activities for transportation, irrigation
and mining sectors; and (ii) Infrastructure Development Business, under which we undertake development of
roads and highways on BOT, DBFOMT or DBFOT basis. Our Company was incorporated in October 1988 by
taking over the business and assets of a partnership firm, Bhavna Construction Co., on a going concern basis.
We have more than 25 years of experience in construction activities and have constructed approximately 4,500
lane kms of roads and highways, excavated approximately 250 million cubic meters of overburden and minerals,
as part of our ongoing and completed projects and constructed approximately 260 kms of irrigation canals since
the incorporation of our Company. We have completed 26 EPC projects in the transportation sector, 20 EPC
projects in the irrigation sector and 9 EPC projects in the mining sectors, since the incorporation of our
Company. For details of some of the major EPC projects completed by us, see “– Business – Construction
Business” on page 103. EPC activities under our Construction Business consist the following:



Transportation sector: Rehabilitation, upgradation, widening and strengthening of roads and highways,
and design and construction of depots, workshops, elevated ramps, elevated viaducts, elevated stations
for metro railways;
Irrigation sector: Construction of earthen dams, canals, remodelling, CC lining structure, control
cabins, hydraulic tunnel and improvement of canals; and
Mining sector: Excavation of overburden and mining of minerals.
Currently, we have 20 ongoing transportation EPC projects, 22 ongoing irrigation EPC projects and 11 ongoing
mining EPC projects. Our Company undertakes EPC activities for the BOT Projects held through our
Subsidiary, Sadbhav Infrastructure Project Limited (“SIPL”) and associates. Our EPC contracts in transportation
sector include in-house contracts as well as contracts from third party clients. Our ongoing and completed EPC
projects for the transportation sector include the EPC activities undertaken by our Company for our BOT
Projects.
Our Order Book for our Construction Business stood at ` 7,93,080 lakhs as of June 30, 2014. As of June 30,
2014, 47.80% of our Order Book was attributable to transportation EPC projects, 28.60% of our Order Book
was attributable to mining EPC projects and 23.60% of our Order Book was attributable to irrigation EPC
projects.
We commenced our Infrastructure Development Business in 2005 which is now being undertaken primarily
through our Subsidiary, SIPL, as an asset holding company for our BOT Projects. Our Company currently holds
84.15% of the equity paid-up capital of SIPL. Our BOT Projects are implemented by special purpose vehicles
(“SPV”s), which include joint ventures and associates. Our Company has been pre-qualified by NHAI for
National Highway projects with a total project cost of up to ` 3,10,545 lakhs until December 31, 2014 and
accordingly, is eligible to apply for project specific RFQs.
Our project portfolio for the Infrastructure Development Business consists of 13 BOT Projects of which eight
are fully operational, one is partially operational and the remaining four projects are in various stages of
development. 11 of the 13 BOT Projects are toll projects, while the remaining two are annuity projects. Our
portfolio of BOT toll projects includes the Maharashtra Border Checkpost Project which involves
modernisation, computerisation and integrating the existing 22 border checkposts in Maharashtra and collection
of service fee, parking charges and loading and unloading charges from different categories of commercial
vehicles in accordance with the service fee notification issued by the Government of Maharashtra.
Our operational projects cover approximately 2,292 lane kms and the projects under construction cover
approximately 1,448 lane kms. In addition, we currently operate 13 check posts and are developing 9 more
check posts in our Maharashtra Border Check Post Project.
We generate revenues from our Infrastructure Development Business primarily through toll collection, annuity
income, service fees and advertising income.
103
Our consolidated total revenue and consolidated net profit were ` 2,76,315.04 lakhs and ` 4,437.48 lakhs,
respectively, for FY2014, ` 2,19,780.18 lakhs and ` 748.16 lakhs, respectively, for FY 2013 and ` 2,89,362.00
lakhs and ` 12,229.09 lakhs, respectively, for FY2012.
Competitive Strengths
Integrated player with established track record and strong execution capabilities
With an experience of over 25 years in construction business, we have an established track record of executing
quality projects within stipulated time period. For example, we completed the construction work for the Bijapur
Hungund Project 11 months ahead of schedule and the construction work for Dhule Palesner Project four
months ahead of schedule. Our Company also received an aggregate net bonus of ` 6,093.98 lakhs during
FY2013 for early completion of the construction work for Bijapur Hungund Project and Dhule Palesner Project.
In FY2005, we received a letter of appreciation from the World Bank for our excellent quality of work in the
Hattigudur Bidar project, which involved upgradation of road from Hattigudur to Bidar.
Our portfolio of completed EPC projects includes 20 irrigation EPC projects, 9 mining EPC projects and 26
transportation EPC projects. We also have a track record in successfully bidding for BOT Projects and have won
bids for, and are developing or have developed, 13 BOT projects. We believe that we have a reputation in the
road infrastructure sector, managing eight operational and one partially operational road projects as of June 30,
2014. Further, our Company has been pre-qualified by NHAI for National Highway projects with a total project
cost of up to ` 3,10,545 lakhs until December 31, 2014 and accordingly, is eligible to apply for project specific
RFQs.
We are an integrated player with experience in both EPC as well and O&M activities. We undertake most of the
activities related to our projects in-house, including tendering for the project, forecasting traffic, preparing
financial bid, achieving financial closure, construction, maintenance and collection of toll. This helps us in
reducing our reliance on sub-contractors and third parties and decreases our costs. We have an in-house design
and engineering team for studying and monitoring EPC costs, an in-house quality assurance team for monitoring
quality of construction, an in-house safety management for monitoring compliance with safety standards and an
in-house traffic survey team for conducting pre-bidding traffic surveys.
We own and maintain a fleet of construction equipments such as bituminous sensor paver, hot mix plant,
crushing plants, excavators, asphalt batch plant, dozer, grader etc. During FY2014 and FY2013, we have
purchased machinery worth ` 20,074.94 lakhs and ` 7,453.73 lakhs. Our range of equipment enables us to meet
the requirements of a broad spectrum of construction activity in transportation, irrigation and mining sectors.
This also reduces our dependence on leased out machinery which plays an important role in timely execution of
projects. Additionally, our skilled employees have the necessary experience in the use and handling of modern
construction equipment and machinery.
We believe that our experience, track record and execution capabilities provide us a competitive advantage in
our business, as we are in a position to meet the prequalification requirements necessary to enter the competitive
bidding process for potential projects. We also believe that our experience enables us in identifying and
mitigating certain development and operational risks, which we believe is a key competitive advantage for us.
Healthy and diversified Order Book of ` 7,93,080 lakhs for our Construction Business as of June, 30, 2014
We have a healthy and diversified Order Book for our Construction Business. As of June 30, 2014, our
construction Order Book was ` 7,93,080 lakhs based on 53 contracts, of which 47.80% was attributable to our
transportation projects, 28.60% was attributable to our mining projects and 23.60% was attributable to our
irrigation projects). Our Order Book provides us clarity regarding future revenue potential and work
requirements, which provides us the opportunity to maximize efficiency in terms of our capital and optimize the
use of our equipment and personnel. We have a diverse Order Book which includes contracts for State
Governments as well as NHAI, in-house as well as third party construction activities and contracts with fixed
price payment as well as price escalation method.
Strong BOT Project portfolio with sizeable operational assets and presence in states with high NSDP
104
We believe we have a strong BOT Project portfolio with sizeable operational assets. As of June 30, 2014, we
have a project portfolio consisting of 13 BOT road projects of which eight are fully operational, one is partially
operational and the remaining four projects are in various stages of development. All of our BOT projects are
implemented through project SPVs. These SPVs enter into concession agreements with government agencies
and generate revenue from toll receipts or annuities. The concession agreements are for periods ranging from 10
to 30 years. The average term for our projects is approximately 22 years, thereby ensuring our sustained future
cash flows and growth.
Our BOT Projects are located in the states of Maharashtra, Gujarat, Rajasthan, Karnataka, Haryana and
Telangana which have higher NSDP and per capita income than that of our country as a whole. For example, the
Maharashtra and Gujarat had NSDP of 7.52% and 8.40%, respectively, and per capita income of 5.89% and
6.70%, respectively, for the period from 1993-94 to 2012-13, as compared to the country’s NSDP of 6.81% and
per capita income of 5.12%. Further, our BOT Projects are also located along the main freight corridors of India
with high industrial traffic growth. We believe that the location of our projects in states with high economic
growth strengthens the stability of our revenue.
We also believe that we have been able to acquire our projects at competitive rates, which results in higher
profit margins. We appoint traffic and EPC consultants to carry out detailed study of traffic growth and road
structure and construction cost to before making our bids for a project. We have an in-house enigeering team
who prepares the final EPC cost. We focus on bidding for projects rationally to ensure higher profit margins.
For example, bidding for projects in adjoining areas such as the Shreenathji-Udaipur and the BRTPL Project and
the RPTPL Project and the RHTPL Project has assisted us in achieving better operational efficiency with lower
cost, since we are able to share equipment and manpower across projects as and when required. We follow
certain qualitative and quantitative parameters before selecting a project to bid for, including: (i) minimal issues
relating to land acquisition, environmental and forest clearances; (ii) minimal toll collection risks; (iii) extend of
industrial development planned in the project stretch; (iv) high impact of commercial traffic; (v) minimal issues
for undertaking construction activities. We believe that the parameters that we follow in selection of projects
will aid us in maximize our returns from the projects by improving profit margins.
Strong management team and experienced staff
We have a qualified, experienced, and dedicated management team and a skilled workforce. Our senior
management team includes our Chairman and one of our Promoters, Vishnubhai M. Patel, who has over 40
years of experience in the construction and infrastructure business. Our Promoters are not involved in major
businesses in any other sectors thereby ensuring dedicated focus on our business, which we believe will benefit
us in the growth and expansion of our business.
In recent years, through our selective hiring process, we have recruited and trained employees whom we believe
share our vision and have the potential to contribute to our long term success. As of June 30, 2014, we employ a
workforce of approximately 3,050 employees. We believe that a large pool of engineering and technical workers
is essential for the efficient and effective execution of our projects, and our highly experienced staff with
expertise in various types of construction projects ensures that our projects are staffed with the most capable
people.
We have qualified in-house teams who are responsible for different aspect of our projects from identifying
prospective projects through to the collection of tolls. This enables us to undertake a significant number of
activities related to the project in-house, thereby ensuring timely completion of our projects, reducing our
reliance on subcontractors and decreasing our costs. Our integrated structure also allows us to control our budget
and maximize returns for the project, including EPC margins, developer returns and operation and maintenance
margins.
Healthy financial position and credit profile
We have a healthy balance sheet and have had positive cash flow from operations during the last three financial
years. Cash flow generated from our operations during FY2014, FY2013 and FY2012 was ` 78,637.96 lakhs, `
21,219.83 lakhs and ` 60,526.35 lakhs, respectively. We also believe that we have a sound working capital
management which is evidenced by our current ratio of 1.07, 1.27 and 1.36 as on March 31, 2014, 2013 and
2012, respectively.
105
We believe we have a strong relationship with financial institutions which enables us to explore options of
refinancing, securitisation, issuing bonds or other infrastructure sector specific debt instrument which helps us to
achieve timely financial closure for our projects. Our ability to obtain adequate financing for our projects
provides us with increased availability of funds for our business development and other expansion activities. As
of June 30, 2014, we had an outstanding borrowing of ` 5,87,527 lakhs on a consolidated basis under various
loan facilities availed from banks/financial institutions.
We believe that our financial strength is a key advantage in a capital intensive industry.
Business Strategies
Maintain and strengthen our market position
We intend to maintain and strengthen our market position in the EPC activities as well as road BOT sectors in
India. Over the next few years, we will continue to focus on the operations and maintenance and development of
our existing projects while seeking opportunities to bid for additional projects. In addition to bidding for new
projects, we may also consider acquiring existing projects, developed or under development by other companies
that are available for acquisition at competitive rates. For example, we may consider, on an opportunistic basis,
acquiring stressed projects that are being undertaken by third parties.
We also intend to improve efficiency in operating our operational BOT Projects by reducing dependence on
manpower in our tolling operations, specially through use of technologies at our toll booths such as RFID,
video/image capturing equipment, automatic vehicle identification based on in-road/infrared sensors and weighin-motion technology. NHAI has recently promoted Indian Highways Management Company Limited
(“IHMCL”) which proposes to establish nationwide RFID based ETC system together with central clearing
house services, under which all toll plazas in India that are under NHAI’s jurisdiction would have dedicated
RFID based ETC lanes, under a centralised toll collection system. Our Company has invested ` 55,53,700 as
share application money in IHMCL.
We intend to draw on our experience, market position and our ability to execute and manage multiple projects
across geographies, to grow our portfolio of road projects.
Selectively expand our Infrastructure Development Business into states with higher than average GSDP
Given the track record of our Infrastructure Development Business in Gujarat, Maharashtra, Rajasthan,
Karnataka and Haryana, we intend to expand into states which are economically and politically stable and which
are expected to have higher than average GSDP. We believe that industrialisation would move at a higher pace
in these states and that tolling risks will be comparatively lower in such states. Further, we believe that
expanding our business to other states will improve the geographical diversification of our projects, thereby
reducing our reliance on specific states. We also believe that this will allow us to capitalize on different growth
trends in the different states. We believe our strategy in focusing both on further developing our existing
markets and expanding into new markets with high growth potential will enable us to effectively capture growth
opportunities in different parts of India, broaden our revenue base and reduce risks of volatility of market
conditions and price fluctuations which may result from concentrating our resources in any geographical region
in India.
Expand into new and complementary sub-sectors in the infrastructure industry
We intend to leverage our experience, track record, commercial relationships and brand recognition to expand
our operations into new sub-sectors within the infrastructure industry in India, particularly in the provision of
services relating to toll operations, consultancy services related to border check post and routine and major
maintenance services. We have built a dedicated team to provide O&M services to several of our operational
projects.
We also intend to expand our EPC activities in the mining sector by increasingly focussing on mining of
minerals as well, in addition to excavation of overburden. We plan to bid for tenders floated by public sector
undertakings as well as private parties for the work of mine developer and operator (MDO), which involves both
excavation of overburden as well as mining of minerals, together with washing and transportation of minerals.
We intend to expand our EPC activities in the transportation sector by bidding for EPC contracts issued by the
106
Dedicated Freight Corridor Corporation of India Limited and similar agencies. We also intend to explore
opportunities to expand our EPC activities into urban infrastructure development as well as to expand further
into EPC activities for metro railways.
We further intend to evaluate bidding for large BOT projects in collaboration with reputed BOT Players, where
our role will be to undertake complete EPC activities for such projects with lesser equity share. We believe that
this will help us in enhancing our experience and expertise in constructing large sized projects without having to
bear the entire risk associated with such projects. In line with this strategy, our Company has executed a pre-bid
consortium agreement dated January 30, 2014 with TRIL Roads Private Limited (“TRIL”) and VINCI
Concessions Pte. Ltd (“VINCI”), wherein the parties have agreed to jointly bid for the project floated by NHAI
for the development, operation and maintenance of Delhi-Meerut Expressway. The parties have agreed to
incorporate an SPV to undertake the project if the project is awarded to the consortium. Our Company will have
26% stake in the SPV and will be responsible for the EPC activities under the project.
Monetising our operational BOT Projects and capacity augmentation for the existing BOT Projects
We intend explore opportunities to monetise our operational BOT Projects, including by way of stake sale or
securitisation or transfer of our operational BOT Projects to a platform or entity which holds operational roads
and highways with us having a stake in such platform or entity. Monetising our operational BOT Projects will
improve our financial strength and provide us with resources to pursue planned expansion of our business
without third party support.
We also intend to pursue the option of capacity augmentation for some of our existing BOT Projects in terms of
their respective concession agreements, upon such projects reaching a design capacity level. Under the
concession agreements for some of BOT Projects including BHTPL Project, HYTPL Project and RPTPL
Project, the concessioning authority may at any time (following a detailed traffic study conducted by it and in
order to provide the desired level or services) after a certain specified period, decide to augment or increase the
capacity of the project highway and invite proposals from eligible persons for the proposed capacity
augmentation. We have the right to submit proposal for such capacity augmentation and in case we do not opt to
exercise such right, then the concessioning authority will invite bids for such capacity augmentation. We believe
that such an option for capacity augmentation, will extend the term of the project thereby resulting in additional
revenue as well as in additional revenue from EPC activities.
Group Structure
The following chart sets forth the structure of our Group:
107
Business
We categorise our operations into two businesses: (i) Construction Business; and (ii) Infrastructure
Development Business.
As part of our Construction Business, we undertake EPC projects in the transportation, irrigation and mining
sectors. As part of our Infrastructure Development Business, we undertake BOT Projects for development of
roads and highways. Our Construction Business is undertaken by our Company whereas our Infrastructure
Development Business is primarily undertaken through SIPL and the project SPVs.
Construction Business
Our Construction Business focuses on construction projects for transportation, irrigation and mining sectors. A
significant percentage of our business involves contracts that are secured through competitive bidding.
As of June 30, 2014 the total Order Book of our Construction Business was ` 7,93,080 lakhs, with
transportation projects constituting 47.80%, irrigation projects constituting 23.60% and mining projects
constituting 28.60%.
The following map shows the national footprint of our Order Book for the Construction Business:
108
The table below sets forth the state wise break up of our Order Book as on June 30, 2014:
State
Order Book
(` lakhs)
Madhya Pradesh
Jharkhand
Rajasthan
Haryana
Gujarat
Karnataka
Maharashtra
Andhra Pradesh / Telangana
Delhi
Orissa
Uttar Pradesh
Total
1,73,530
1,43,790
1,20,200
1,07,780
75,860
68,400
22,370
42,430
15,750
20,730
2,240
7,93,080
Transportation
Under our transportation EPC projects, we undertake rehabilitation, upgradation, widening and strengthening of
roads and highways as well as design and construction of depots, workshops, elevated ramps, elevated viaducts,
elevated stations for metro railways. We have been declared as the successful bidder for a project involving
construction of terminal facilities for passenger water transport by MSRDC. As of June 30, 2014 we have
constructed more than 4,500 lane kms of roads and highways. As of June 30, 2014, our transportation Order
Book has 20 contracts aggregating approximately to ` 3,79,041 lakhs comprising a captive Order Book of `
2,85,069 lakhs and a non-captive Order Book of ` 93,972 lakhs. Our transportation Order Book also includes
the EPC activities undertaken by our Company for the BOT Projects held through SIPL.
Some of the major transportation EPC projects completed by us include: (i) widening of the existing two lane
road to a four lane road for a 97.2 km long stretch from Bijapur in Maharashtra to Hungund in Karnataka; (ii)
improvement and performance maintenance of the 195 kms long road project from Lalsot to Kota in Rajasthan;
109
and (iii) improving and widening to four lanes from two lanes of the Sardar Patel Ring Road around the
Ahmedabad city in Gujarat. We have also submitted bid, as part of a consortium, for a tender floated by
MSRDC for construction of terminal facilities for passenger water transport in Mumbai at Marve and Borivali.
Ongoing projects
The following table sets forth details of our top five ongoing transportation EPC projects on the basis of balance
work:
Client
Description of the
project
Scheduled
completion
Date of
contract
Original
contract value
(` lakhs)
Balance
work as on
June 30,
2014 (`
lakhs)
BRTPL Project
BRTPL*
EPC
activities
in
relation to widening of
the existing two lane
carriageway to a four
lane carriageway for
86.40 km long stretch
from Rajsamand (NH
8) - Gangapur Bhilwara (NH 79) in
the section NH 758 in
Rajasthan.
April 2016
February
25, 2013
60,300.00
45,868.09
MBHPL Project
MBHPL*
EPC
activities
in
relation to upgradation
to two lane with
horizontal and vertical
alignment
improvements of the
existing
State
Highway 3 and 33
from Malavalli to
Pavagada
(approximately
193.344 kms.)
911 days from the
appointed date**
July 1, 2014
68,400.00
68,400.00
SUTPL Project
SUTPL*
EPC
activities
in
relation to widening of
the existing two lane
road to a four lane
road a 79.3 km long
stretch from Gomti
Chauraha to Udaipur
Rajasthan of National
Highway 8.
October 2015
July
2012
18,
97,500.00
53,095.35
RHTPL Project
RHTPL*
EPC
activities
in
relation to widening of
the existing two lane
carriageway to a four
lane carriageway for a
98.8 km long stretch
from
Rohtak
to
Hissaar in Rajasthan
of National Highway
10.
June 2016
June
2013
10,
1,08,000.00
94,322.83
Chindwara
Project
NHAI
Rehabilitation
and
upgradation to two
lane
with
paved
October
February 8,
2011
1,41,135.89
16,403.73
110
2014
Client
Description of the
project
Scheduled
completion
Date of
contract
Original
contract value
(` lakhs)
Balance
work as on
June 30,
2014 (`
lakhs)
shoulder
and
maintenance
of
MultaiChindwaraSeoni
section
of
National
Highway
69A and NarsinghpurAmarwaraChindwara-Saoner
section on National
Highway 26B, in
Madhya Pradesh and
Maharashtra
*
**
Our Company has entered into EPC contract with the SPV for undertaking EPC activities for this project. This
project also forms part of our BOT Projects under development. For details, please see “–Infrastructure
Development Business” on page 114.
In terms of the concession agreement, ‘appointed date’ is the date on which the financial closure is achieved or
such other earlier date as agreed between the parties.
Irrigation
Under our irrigation EPC projects, we undertake construction of earthen dams, canals, remodelling and
improvement of canals. As of June 30, 2014 we have constructed approximately 260 kms of canals. As of June
30, 2014 our irrigation Order Book has 22contracts aggregating approximately to ` 1,87,188 lakhs.
Some of the major irrigation EPC projects completed by us include: (i) construction of NMC from 108.326 km
to 127.559 km for Sardar Sarovar Narmada Nigam Limited (“SSNNL”); (ii) construction of canal syphon across
river Watrak in Gujarat for SSNNL; and (iii) construction of canal earthwork, structures, lining and service road
to Kachchh Branch Canal in Gujarat.
Ongoing projects
The following table sets forth details of our top five ongoing irrigation EPC projects on the basis of balance
work:
Project
Client
Description of
the project
Kachch
branch canal
SSNNL
Constructing
Kachch branch
canal reach Ch.
231.022
to
243.839
kms,
Earthwork, C.C.
Lining,
structures,
service
road,
gatework,
control cabins
and
operation
and
maintenance
Bhanpura
canal project,
Madhya
Pradesh
Government
of Madhya
Pradesh
Construction of
twin
intake
barrels
on
Gandhi
Sagar
lake,
control
Scheduled
completion
July 2018
July 2016
111
Date of
contract
July 20,
2013
January
31, 2014
Original
contract value
(` lakhs)
Balance work as
on June 30, 2014
(` lakhs)
10,139.85
11,750.00
10646.84
11,750.00
Project
Client
Description of
the project
Scheduled
completion
Date of
contract
March 2016
March 19,
2013
Original
contract value
(` lakhs)
Balance work as
on June 30, 2014
(` lakhs)
structure,
hydraulic
tunnel,
open
channel
and
barrage
on
Rewa river near
Bhanpura tow
n
SSNNL
SSNNL
Execution
of
Halon Irrigation
Project
complete
on
Turnkey Basis
including
construction of
eastern
dam,
central spillway,
non over flow,
instrumentation
drilling
and
grouting
for
establishing
water
users
association for
about
13040
Hact.
of
commence area
Bhauti level
canal, Madhya
Pradesh
Government
of Madhya
Pradesh
Construction of
Bhauti
high
level canal from
RD km.18 to
RD km. 74 with
full
canal
network
to
irrigate irrigable
command area
of
65,000
hectares with all
in-line
structures on the
canal system on
turnkey basis
Omkareshwar
Government
of Madhya
Pradesh(1)
Execution
of
Omkareshwar
right bank lift
canal including
its distribution
network
on
“Turn-key'
basis, from RD
51.281 km to
RD 125.0 km
(1)
September
2016
36 months
24,561
18,284.23
September
30, 2013
42,800.00
46,961.00
March 26,
2011
6,670.00
12,975.47
The contract has been awarded by the Government of Madhya Pradesh to Sadbhav-GKC Joint Venture, a partnership
firm jointly established by our Company and GKC Projects Limited, pursuant to an agreement dated March 26, 2011.
The work under this contract is being undertaken by our Company pursuant to a joint venture agreement dated March
22, 2011between our Company and GKC Projects Limited.
112
Mining
Under our mining EPC projects, we undertake excavation of overburden and mining of minerals. As of June 30,
2014, we have excavated 250 million cubic meters of overburden and minerals, as part of our ongoing and
completed projects. As of June 30, 2014, our mining Order Book has 11 contracts aggregating to approximately
` 226,851 lakhs.
Some of the major mining EPC projects completed by us include: (i) removal of overburden at Khadia open cast
project; (ii) removal of all types of materials at Junad Open Cast Mine of Wani area for Western Coalfields
Limited; and (iii) excavation of overburden at Mangrol mines in Gujarat pursuant to contracts from Gujarat
Industries Power Company Limited.
Ongoing projects
The following table sets forth details of our top five ongoing mining EPC projects on the basis of balance work:
Project
Client
Description of the
project
Scheduled
completion
Date of
contract
Original
contract
value (`
lakhs)
Balance
work as on
June 30,
2014 (`
lakhs)
Dhanbad,
Katras
BCCL
Hiring of heavy
earthmoving
machines
for
removal
of
overburden
and
extraction
and
transportation
of
coal
with
fire
fighting
from
VIIIC, VIIIA & VII
seams of AKWM
colliery of Katras
Area and Tetulmari
colliery of Sijua
Area named as
‘Mega Project’ of
Katras Area”
May 2017
May 7, 2014
25842.10
24651.80
Dhanbad,
Kusunda
BCCL
Hiring of heavy
earthmoving
machines
for
removal
of
overburden
and
extraction
and
transportation
of
coal from IV (B),
III,II, l(T) & 1(B)
seams of Patch-J of
Dhansar Colliery of
Kusunda Area
March 2019
March
2014
30,299.29
28,208.27
Singruli
NCL
Excavation
of
overburden of first
dig
(Solid)
by
hiring of equipment
such as excavators,
dumpers/tippers,
drills,
dozers,
graders and water
sprinklers
for
composite
work
consisting of blast
September
2018
September
20, 2013
69,736.23
57,478.98
113
28,
Project
Client
Description of the
project
Scheduled
completion
Date of
contract
Original
contract
value (`
lakhs)
Balance
work as on
June 30,
2014 (`
lakhs)
hole
drilling,
excavation, loading,
transportation
of
broken rocks/ soil/
earth,
unloading/dumping,
spreading, dozing,
water
sprinkling
and grading etc. by
mechanical means
at specified places
of Amlohri OCP of
NCL.
Dhanbad,
Basantimata
BCCL1
Hiring of heavy
earthmoving
machines
for
removal
of
overburden,
extraction
and
transportation
of
coal from Khudia,
Palasia, GP(Top),
GP(Bottom),
Brindabanpur (Top
& Bottom) and
Kalimati group of
seams
at
BasantimataDahibari Patch of
Dahibari Colliery
of C.V. Area
May 2017
May
2013
27,
47,178.08
32,814.67
Banduhurang
UCIL
Removal
of
overburden /waste
and extraction of
uranium ore from
Banduhurang
opencast mine and
transportation
of
ore to the ground
hopper at Turamdih
or
any
other
specified area and
transfer
of
overburden to the
specific dump yard
August 2019
August
2013
30,
17,313.75
17,014.48
(1)
The contract has been awarded by BCCL to Sadbhav – Annapurna Joint Venture, a partnership firm jointly
established by our Company and Annapurna Trambakeshwar, pursuant to an agreement dated May 27, 2013. The
work under this contract is being undertaken by our Company pursuant to a memorandum of understanding dated
April 29, 2013 between our Company and Annapurna Trambakeshwar.
Infrastructure Development Business
All of our BOT Projects are implemented and held through SPVs. As of June 30, 2014, we have a project
portfolio consisting of 13 BOT projects of which eight road projects are fully operational, one border check post
project is partially operational and the remaining four road projects are in various stages of development. Our
operational and partly operational projects are located in the states of Maharashtra, Gujarat, Karnataka, Andhra
Pradhesh, Telangana and Haryana. Our projects under development are located in the states of Rajasthan,
114
Haryana and Karnataka. The following map shows the national footprint of our Infrastructure Development
Business:
Most of the operational and partly operational projects are “open” toll systems. In open toll systems, a flat toll
fee is charged to users when they cross the toll plaza/border check post, regardless of the distance travelled. Toll
road concessions are typically awarded under the BOT model of the Government, where a concessionaire, who
is usually a member of the private sector, takes on the role of developing, operating and maintaining a toll road
for a stated contractual period. We enter into concession agreements with the relevant concessioning authorities
with respect to each project to be developed by us.
We earn revenues from the toll road concessions in two ways, depending on whether it is a toll-based service fee
or an annuity-based concession. With respect to the toll-based concession, the concessionaire is entitled to
collect toll fees from users of the toll road. The toll fees are collected in accordance with the provisions of the
relevant concession agreement and/or in accordance with 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 and the National Highways Fee (Determination of Rates and Collection) Rules, 2008, as
amended. Under the relevant concession agreements (other than in relation to AJTL and MBCPNL), the toll fees
are revised periodically based on a formula set out in the concession agreement which is linked to WPI. Under
the annuity-based concession, the concessionaire does not earn the toll fees, but receives a fixed, periodical
payment (annuity payment) from the relevant concessioning authority. The concession agreements for the
project managed by each of AJTL and MBCPNL provides that we are entitled to earn revenue in addition to
toll/service fee collected from sources such as advertising along the project site.
Title to the concession assets (such as toll roads) and related infrastructure (such as toll plazas and monitoring
posts) and the underlying land remains with the concessioning authority. Upon the expiration of the concession
period, the concessionaire is required to transfer these concession assets back to the concessioning authority
without further compensation.
General terms of Concession Agreements
The concession agreements that we enter into with the concessioning authorities have certain common
conditions and obligations that we are required to meet with respect to the project. For example, we are required
to maintain performance security and insurance during the construction and operation period. Typically, the
concession agreement grants leave and license rights for all land forming part of the project highway on an “asis-where-is” basis in our favour for duration of the concession period. Further, it is the obligation of the relevant
concessioning authority to grant a minimum percentage (approximately 80%) of the project highway prior to
commencement of construction of the project. An escrow agreement is generally executed among us, the
concessioning authority, the lenders and an escrow agent in order to ensure that disbursement of funds for the
115
project is in accordance with the terms of the concession agreement. The concessioning authority may require a
change or variation in scope of the project under certain circumstances. During the operation period, we must
operate and maintain the project highway in accordance with the specifications mentioned in each concession
agreement. Further, the concession period may be modified in certain circumstances such as variation in traffic,
suspension of or reduction in fee collection, commissioning of an additional toll road, force majeure events and
unsafe construction works. In the event of any deviations or non-compliance in relation to the maintenance or
repair of the project, the concessioning authority may enforce its rights under the agreement, including the
termination of the agreement, and may undertake remedial measures at our cost. In addition to the recovery of
such costs, a certain percentage of the cost amount must additionally be paid to the relevant concessioning
authority. In case of any material breach of the concession agreement, on account of any default attributable to
us, the concessioning authority may also suspend our rights under the concession agreement and may elect to
exercise the rights we have under the agreement either itself or authorise any other person to exercise or perform
the same on its behalf during such suspension. We continue to be liable for all defects and deficiencies in the
project highway for a certain period after the termination of the concession agreement and are obligated to at our
cost repair or rectify the defects and deficiencies. In addition to the terms mentioned in this paragraph, certain
concession agreement also has provisions on indemnity, termination and consequences of termination clauses in
accordance with best practices.
The tables below sets forth a summary of each of the 13 projects which we operate, and in which we have an
interest:
A.
Fully operational projects
Name of
Project
AJTL
Project
Description of project
Commencement
of operation
AJTL has been granted a July 2009
concession for four
laning divided into two
sections:
(i)
from
Aurangabad airport to
Jalna by-pass; (ii) Zalta
by-pass to Beed by-pass
on the MSH 6. The
project
has
two
operational toll plazas.
Equity
Length (in Type of Approximate
interest of
lane kms) project
Residual
our
concession
Company
life as of
and/or
June 30,
Subsidiaries
2014
Revenue
earned in
FY2014
EBITDA
for
FY2014
SIPL owns
100% of the
shares
of
AJTL.
263.20 Toll
16 years and 2,795.18
one month
856.98
SIPL owns
80% of the
shares
in
ARRIL with
the
remaining
20% being
owned
by
Patel
Infrastructure
Private
Limited
(“Patel
Infra”)(1).
305.60 Toll
13 years and 7,375.99
six months
3,383.68
The concession was
granted
by
the
Government
of
Maharashtra. The term
of the concession is 23
years and 6 months
starting from February 1,
2007 and expiring in
June 30, 2030.
ARRIL
Project
ARRIL has been granted May 2008
a concession to improve
and widen the two lane
Sardar Patel Ring Road
located
around
the
Ahmedabad
city
in
Gujarat to a four lane
road on BOT basis. This
project
has
seven
operational toll plazas.
The concession was
granted by Ahmedabad
Urban
Development
Authority
(“AUDA”).
The
term
of
the
concession is 20 years
starting from January
116
Name of
Project
Description of project
Commencement
of operation
Equity
Length (in Type of Approximate
interest of
lane kms) project
Residual
our
concession
Company
life as of
and/or
June 30,
Subsidiaries
2014
Revenue
earned in
FY2014
EBITDA
for
FY2014
2007 and expiring in
January 2027
MNEL
Project
NSEL
Project
BHTPL
Project
HYTPL
Project
398.00 Toll
owns
MNEL has been granted May 2010, July SEL
a concession for four 2011 and June 20% of the
shares
in
laning of Mumbai to 2012.
MNEL with
Nashik stretch (Vadape –
the
Gonde
section)
of
remaining
National Highway 3.
80% being
This project has two
owned
by
operational toll plazas.
Gammon
Infrastructure
The concession was
Projects
granted by the NHAI.
Limited.
The
term
of
the
concession is 20 years
starting from April 2006
and expiring on April
2026.
112.95
Annuity
Our
NSEL has been granted May 2010
Company,
a
concession
for
along with
construction of four lane
SIPL owns
road in Seoni Bypass,
100% of the
Maharashtra(3)
shares
in
NSEL
The concession was
granted by the NHAI.
The
term
of
the
concession is 20 years
starting from November
2007 and expiring in
November 2027.
Toll
SIPL owns 388.88
BHTPL has been granted March 2012
77% of the
a concession for four
shares
in
laning of Bijapur –
BHTPL with
Hungund section of
the
National Highway 13
remaining
under NHDP Phase III
23% being
on DBFOT basis. This
owned
by
project
has
two
Montecarlo
operational toll plazas.
Limited
The concession was
granted by the NHAI.
The
term
of
the
concession is 20 years
starting from September
2010 and expiring in
September 2030.
HYTPL
has
been December 2012
granted a concession for
four laning of Hyderabad
Yadgiri
section
of
National Highway 202
on DBFOT basis. This
project
has
one
operational toll plaza.
13 years and 3,839.60
five months
3,362.86
16 years and 9,495.82
three months
7,470.34
SIPL owns 142.60
60% of the
shares
in
HYTPL with
the
remaining
40% owned
by
GKC
Projects
Limited
(“GKC”)(4)
Toll
19 years and 3,830.94
one month
1,083.67
DPTL has been granted January
2012, SEL
owns 356.00
a concession for four June 2012 and 26% of the
Toll
13 years and 11,157.66
six months
9,359.23
The concession was
granted by NHAI. The
term of the concession is
23 years starting from
July 2010 and expiring
in July 2033.
DPTL
Project
11 years and 10,483.04(2) 8,123.75(2)
ten months
117
Name of
Project
Description of project
Commencement
of operation
laning Dhule Palesner July 23, 2012
section
of
National
Highway 3 on DBFOT
basis. This project has
two operational toll
plazas.
The concession was
granted by the NHAI.
The
term
of
the
concession is 18 years
starting in December
2009 and expiring in
December 2027.
RPTPL
Project
RPTPL has been granted January 2014
a concession for four
laning of Rohtak Panipat
section
of
National
Highway 71A on a
DBFOT basis. This
project
has
two
operational toll plazas.
Equity
Length (in Type of Approximate
interest of
lane kms) project
Residual
our
concession
Company
life as of
and/or
June 30,
Subsidiaries
2014
Revenue
earned in
FY2014
EBITDA
for
FY2014
shares
and
SIPL holds
1% in DPTL
with
the
remaining
73% being
owned
by
Hindustan
Construction
Company
Limited,
HCC
Concessions
Limited,
John Laing
Investments
Limited and
John Laing
Investments
Muritius
(No.10)
Limited.
SIPL owns 323.43
100% of the
shares
in
RPTPL
Toll
21 years and 1,905.31
10 months
179.68
The concession was
granted by the NHAI.
The
term
of
the
concession is 25 years
starting from April 2011
and expiring in April
2036.
(1)
(2)
(3)
(4)
B.
SIPL has entered into a memorandum of understanding with Patel Infra for transfer of 20% of the equity capital of ARRIL held by
Patel Infra to SIPL. However, this transfer has not yet been completed as on the date of this Preliminary Placement Document.
For the nine months ended from April 2013 to December, 2013
The original scope of work for this project which included design and construction of a four lane road for a total length of 56.48
kms starting from Seoni By-pass to Madhya Pradesh/Maharashtra boarder of National Highway 7 in Madhya Pradesh was
changed by NHAI pursuant to an order dated May 27, 2013.
SIPL has entered into a share purchase agreement dated September 20, 2014, as amended, with GKC for transfer of 40% of the
equity capital of HYTPL held by GKC to SIPL. However, this transfer has not yet been completed as on the date of this Preliminary
Placement Document and will be completed upon receipt of necessary approvals for undertaking the transfer.
Partially operational projects
Name of Project
Description of project
Commissioning
Date
Equity
Type of Residual
interest
of Project
Concession
our
Life as of
Company
June
30,
and/or
2014
Subsidiaries
MBCPNL Project
MBCPNL has been granted
a
concession
for
modernizing
and,
computerizing of integrated
border check posts at 22
locations in Maharashtra.
First check post
was
commissioned in
March 2013 and
the
thirteenth
check post was
commissioned in
Our Company Service
along
with Fee
SIPL
owns
90% of the
shares
in
MBCPNL,
while
the
118
Revenue
earned in
FY2014
The actual 3,023.64
dates
of
expiry
of
the
concession
period will
be
EBITDA
for FY2014
1,268.52
Name of Project
Description of project
Commissioning
Date
The concession was granted August 2014
by the Government of
Maharashtra. The term of
the concession is 24 years
and 6 months.
Equity
Type of Residual
interest
of Project
Concession
our
Life as of
Company
June
30,
and/or
2014
Subsidiaries
remaining
10% is owned
by
SREI
Infrastructure
Finance
Limited
(“SREI
Infra”)and
SREI Sahaj
E-village
Limited
(“SREI
Sahaj”)(1).
Revenue
earned in
FY2014
EBITDA
for FY2014
determined
upon
completion
of
construction
of all check
posts
forming
part of the
project.
(1)
Our Company, SIPL, SREI Infra and SREI Sahaj have entered into agreements pursuant to which a portion of the shareholding of
our Company and SIPL in MBCPNL will be transferred to D. Thakkar Construction Private Limited. The proposed transfer has not
yet taken place as on the date of this Preliminary Placement Document.
C.
Projects under development
Name of
Project
SUTPL
Project (1)
Description of project
Scheduled
Commissioning
Date
SUTPL has been granted a October 2015
concession for four laning of
Gomati Chauraha - Udaipur
section of National Highway
8 under on DBFOT basis.
This project will have two
operational toll plazas.
Equity
interest of our
Company
and/or
Subsidiaries
Length (in
lane kms)
Type of
Project
Residual
Concession
Life as of
June 30,
2014
Project Cost
(` lakhs)
Our Company, 317.24
along
with
SIPL
owns
100% of the
shares
in
SUTPL
Toll
25 years and 1,15,150.00
10 months
Our Company, 349.00
along
with
SIPL
owns
100% of the
shares
in
BRTPL
Toll
29 years and 67,567.00
four months
Our Company, 395.20
along
with
SIPL
owns
100% of the
shares
in
RHTPL
Toll
21 years and 1,27,160.00
six months
The concession was granted
by the NHAI. The term of
the concession is 27 years
starting from April 2013 and
expiring in April 2040.
BRTPL
Project (1)
BRTPL has been granted a April 2016
concession for four laning of
Rajsamand Bhilwara section
of National Highway 758on
DBFOT basis. This project
will have two operational
toll plazas.
The concession was granted
by NHAI. The term of the
concession is 30 years
starting from October 2013
and expiring in October
2043.
RHTPL
Project (1)
RHTPL has been granted a June 2016
concession for four laning of
Rohtak - Hissaar section of
National Highway 10 under
NHDP Phase III on DBFOT
basis, including a new
connectivity
between
National Highway 10 and
National Highway 7. This
project will have two
119
Name of
Project
Description of project
Scheduled
Commissioning
Date
Equity
interest of our
Company
and/or
Subsidiaries
Length (in
lane kms)
Type of
Project
Residual
Concession
Life as of
June 30,
2014
Project Cost
(` lakhs)
operational toll plazas.
The concession was granted
by NHAI. The term of the
concession is 22 years
starting from December
2013 and expiring in
December 2035.
MBHPL
Project (1)
(1)
(2)
owns 386.68
MBHPL has been granted a 911 days from the SEL
50% of the
concession for upgrading appointed date
shares
in
and maintenance of existing
MBHPL and
State Highway (SH 3 and
GKC holds the
SH 33) from Malavalli to
remaining 50%
Pavagada in Karnataka in
(2)
DBFOMT
basis.
two
operational toll plazas.
Annuity
10
years 78,927.00
from
the
appointed
date.
The concession was granted
by the Government of
Karnataka. The term of the
concession is 10 years from
the appointed date
Our Company has entered into EPC contract with the SPV for undertaking engineering, procurement and construction activities for
this project. Accordingly, this project also forms part of our ongoing transportation EPC contracts. For details, please see “–
Construction Business – Transportation projects – Ongoing projects” on page 110.
Our Company, GKC and MBHPL have entered into a share purchase agreement dated October 7, 2014 for transfer of 24% of the
equity capital of in MBHPL held by GKC to SEL.
Awards and Recognition
Our Company has won several awards, including awards for the ‘Most Admired Infrastructure Company in
Transport’ at the 4th KPMG Infrastructure Today Awards 2011, Excellence Award from the Institute of
Economic Studies for excellence in quality, innovation and management, the Rashtriya Udyog Ratan Award
from the Indian Organization for Business Research and Development for achievement in economic and social
development. Further, our Company has obtained ISO 9001:2008 Certification in relation its management
system.
Competition
Since all of our projects are awarded through competitive bidding process, the competition for each contract
depends upon the parties who would pre-qualify to bid for such projects. We are subject to intense competition,
both in relation to BOT as well as EPC contracts.
Our revenues from existing toll roads are subject to competition from other roads that operate in the same area
as well as from other modes of transportation. In addition, we compete with a number of Indian and
international infrastructure operators in acquiring both concessions for new road projects and existing projects.
We currently do not face any material competition with respect to our existing annuity road projects because the
concessioning authorities are required to make fixed annuity payments to us and the commercial risk is
generally taken by the concessioning authority.
Insurance
We maintain a number of insurance policies to cover the different risks related to our projects in accordance
with the terms of the concession agreements and best practices. Such insurance policies include contractor’s
plant and machinery insurance policy, miscellaneous vehicle package policy and workmen compensation policy.
Our insurance policies may not be sufficient to cover our economic losses. For further details, see the section
titled “Risk Factors – Our insurance coverage may not adequately protect us against all losses” on page 42.
For our operations, our insurance cover hazards inherent to the Construction Business and Infrastructure
Development business, such as risks of equipment failure, terrorist attacks, riots, work accidents, fire,
120
earthquake, flood and other force majeure events. This includes hazards that may cause injury and loss of life,
damage and destruction of property, equipment and environmental damage.
We believe that the amount of insurance presently maintained by us represents an appropriate level of coverage
required to insure our business and operations, and is in accordance with the concession agreements and
industry standards in India.
Employees
We believe that a large pool of engineering and technical workers is essential for the efficient and effective
execution of our projects. As of June 30, 2014, we employed a workforce of approximately 3,050 employees.
Set out below are the categories of employees engaged by us and the total number in each category:
Category
Number of employees
Management
28
Finance and Accounts
59
Human Resources and Administration
21
Business Development
17
Project Implementation and Design
610
Operations and Maintenance
2,070
Others
245
Total
3,050
Intellectual Property
” appearing on the cover page of this Preliminary Placement Document has registered in the
The logo “
name of our Company, in Class 37, pursuant to a certificate of registration of trademarks dated May 31, 2012
issued by the Registrar of Trademarks, Trademark Registry, Ahmedabad.
Property
We do not own the assets that we use in our concessions. Generally, pursuant to the terms of our concession
agreements, title to our toll roads and related infrastructure such as toll plazas and monitoring posts remains
with the concessioning authority for the duration of the concession period.
During the concession period, we are entitled to use the toll roads and the related infrastructure which comprise
the concession assets and we are entitled to the income arising from these assets. Upon the expiration of the
concession period, we are required to transfer these concession assets to the concessioning authority without
further compensation.
Our registered and corporate office is on lease.
Environmental Matters
As an engineering and construction and infrastructure development company, we are required to comply with
numerous laws and regulations relating to the environment. India has a number of pollution control statutes that
empower state regulatory authorities to establish and enforce effluent standards relating to the discharging of
pollutants or effluents into water or the air. In addition, we are subject to various applicable regulations relating
to using hazardous processes.
We believe that we comply in all material respects with all applicable environmental laws and regulations. In
particular, we have obtained all of the permits and approvals from the appropriate environmental regulatory
authorities necessary to carry on our business. There are currently no proceedings pending or, to our knowledge,
121
threatened against us or any of our directors, officers or employees in relation to environmental statutes or
regulations
Corporate Social Responsibility
We pursue various corporate social responsibility activities including undertaking green initiatives such as
plantation drives, blood donation camps, road safety week programs and contributing e-waste for environment
friendly recycling.
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BOARD OF DIRECTORS AND SENIOR MANAGEMENT
Directors
The Articles of Association provide that the number of directors shall not be less than three or more than 15. At
present, our Company has 10 Directors including five executive Directors and five non-executive Directors.
Pursuant to the provisions of the Companies Act, 2013, at least two-third of the total number of Directors,
excluding the Independent Directors, are liable to retire by rotation, with one-third of such number retiring at
each annual general meeting. A retiring Director is eligible for re-election. Further, an Independent Director
may be appointed for a maximum of two consecutive terms of up to five consecutive years each. Any reappointment of Independent Directors shall, inter alia, be on the basis of the performance evaluation report and
approved by the shareholders by way of special resolution.
The following table provides information about the Directors as of the date of this Preliminary Placement
Document:
Sr.
No.
1.
Name, Address, DIN, Term and Nationality
Vishnubhai M. Patel
Age
Designation
72
Managing Director and
Chief Executive Officer
33
Joint
Director
41
Whole Time Director
Address:
“Shashin”, 11 Hindu Colony, Opposite Sardar Patel Stadium,
Navrangpura, Ahmedabad – 380 009
DIN: 00048287
Term: For a term of three years with effect from July 1, 2014
Nationality: Indian
Occupation: Business
2.
Shashin V. Patel
Managing
Address:
“Shashin”, 11 Hindu Colony, Opposite Sardar Patel Stadium,
Navrangpura, Ahmedabad – 380 009
DIN: 00048328
Term: For a term of three years with effect from July 1, 2014
Nationality: Indian
Occupation: Business
3.
Vasistha C. Patel
Address:
27, Shashwat Bungalows, S.G.Highway, B/H Rajpath Club,
Bodakdev, Ahmedabad – 380 059
DIN: 00048324
Term: For a term of five years from October 1, 2012
Nationality: Indian
Occupation: Business
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Sr.
No.
4.
Name, Address, DIN, Term and Nationality
Nitin R. Patel
Age
Designation
46
Whole Time Director
and CFO
46
Whole Time Director
39
Independent Director
41
Independent Director
Address:
Keshavlaxmi, opposite Everbela Flats, near Jain Temple, Ankur
Road, Naranpura, Ahmedabad – 380 013
DIN: 00466330
Term: For a term of three years with effect from July 1, 2014
Nationality: Indian
Occupation: Service
5.
Vikram R. Patel
Address:
1, Shipra Society, Opp. Gaurav Bunglows, Nr. Gulab tower,
Nr. K.K. Kanya Vidhalay, Memnagar, Ahmedabad-380 061
DIN: 00048318
Term: For a term of five years from October 1, 2012
Nationality: Indian
Occupation: Business
6.
Sandip A. Sheth
Address:
31, Darshan Bungalows, Nr. Arvachin Soc.
Opp, Bopal Gram Panchayat Office,
Bopal, Ahmedabad- 380058
DIN: 01287413
Term: For five consecutive years for a term upto the
conclusion of the AGM of the Company in the calendar year, 2019
Nationality: Indian
Occupation: Practicing Company Secretary
7.
Mirat N. Bhadlawala
Address:
Flat 202, Dream Heritage, 51, Haribhakti Colony, Racecourse,
Vadodara- 390 007
DIN: 01027984
Term: For five consecutive years for a term upto the conclusion of
the AGM of the Company in the calendar year, , 2019
Nationality: Indian
Occupation: Business
124
Sr.
No.
8.
Name, Address, DIN, Term and Nationality
Atul N. Ruparel
Age
Designation
47
Independent Director
37
Independent Director
69
Independent Director
Address:
1, Aryaman Bunglows, 10, Hira Baug Society,
Opp. Ambawadi Municipal School,
Ahmedabad-380 006
DIN: 00485470
Term: For five consecutive years for a term upto the conclusion of
the AGM of the Company in the calendar year, 2019
Nationality: Indian
Occupation: Practicing Chartered Accountant
9.
Sandip V. Patel
Address:
D-302, Arjun Greens, Nr. Menarav Hall,
Nikanth Mahadev Rd. Navrangpura,
Ahmedabad-380 013
DIN: 00449028
Term: For five consecutive years for a term up to the conclusion
of the AGM of the Company in the calendar year , 2019
Nationality: Indian
Occupation: Practicing Chartered Accountant
10.
Arun S. Patel
Address:
19, Panna Park Society, Nr. Vijay Nagar Society,
Navrangpura, Ahmedabad-380 009
DIN: 06365699
Term: For a term upto September 28, 2017 to complete the first
term of five consecutive years
Nationality: Indian
Occupation: Practicing Chartered Accountant
Biographies of the Directors
Vishnubhai M. Patel is the Managing Director and Chief Executive Officer of our Company. He has completed
his education upto matriculation. He has over 40 years of experience in the construction business. Since 1968,
he has been actively involved in the family construction business as partner of M/s Bhavna Construction Co.
where he was in-charge of canal and road projects. Under his guidance, our Company has successfully
completed various projects displaying high quality standards and has also been awarded the Excellence Award
for excellence in Productivity, Quality, Innovation and Management. He has also been awarded with the Patidar
Ratna award. He has been a Director on our Board since incorporation.
Shashin V. Patel is the Joint Managing Director of our Company. He holds a Masters Degree in Business
Administration from K.S. School of Business Management, Gujarat University. He is associated as a director
with our Company since May 23, 2000. His scope of work includes overview of the day to day affairs of our
Company in consultation with the Managing Director and making strategic management decisions. He is also
in-charge of the Management Information System in our office. He oversees bidding process and execution of
various mining and irrigation projects.
Vasistha C. Patel is a whole time Director of our Company. He holds a diploma in civil engineering from
Gujarat University. He is associated with the Company as a director since September 29, 2012. He has more
125
than 15 years of experience in the construction industry. He oversees the bidding process and execution of
various road projects. He is also in-charge of purchasing of construction materials. He has a track record of
successfully completing various projects in time.
Nitin R. Patel is an Executive Director and Chief Financial Officer of our Company. He is a Chartered
Accountant. He was appointed as a Director on the Board of our Company on August 1, 1999. His current areas
of responsibility include execution of project, cost analysis, claims and arbitration, as well as overall functioning
of the entire corporate affairs of our Company. He also plays an important role in policy implementation and
liaising with banks and financial institutions for obtaining funds. He also participates in the bidding process and
execution of road projects.
Vikram R. Patel is an Executive Director of our Company. He has a Bachelors Degree in Commerce from
Gujarat University. He has been associated with our Company as a director since September 29, 2012. He was
appointed as a Director on the Board of our Company on September 29, 2012. He has more than 22 years of
experience in the construction industry. He oversees execution of various road projects and has successfully
completed various projects in time.
Sandip A. Sheth is an Independent Director of our Company. He is a Company Secretary and was appointed as
a Director on the Board of our Company on July 7, 2014. He has experience in the field of corporate law, which
includes assisting companies in complying with the provisions of corporate law and in the field of finance which
includes assisting the firm/companies in organizing term loan and working capital finance from
Institutions/Banks for proposed projects/going concern. He also undertakes assignments for arranging working
capital requirements, financial structuring and organizing working capital and term loan, management audit etc.
Mirat N. Bhadlawala is an Independent Director of our Company. He holds a Bachelors Degree in Commerce
from Gujarat University. He was appointed as a Director on the Board of our Company on July 7, 2014. His
areas of expertise include procurement, negotiation, contract management, marketing and business strategy
acquired over a period of 23 years. He has experience in working with public sector oil management companies
as well as private sector players. He also has experience in the fields of logistics, construction chemicals,
infrastructure development in manufacturing and marketing. He also has associations with various
multinationals and Indian research and development agencies such as Central Road Research Institute and IITGuwahati along with DuPont for development of sustainable road infrastructure in terms of development of
various new innovative products which sustains and performs extensively in various climatic conditions for
better flexible pavement life.
Atul N. Ruparel is an Independent Director of our Company. He is a Chartered Accountant and has more than
15 years of experience in the field of audit, taxation, finance and consultancy which consists of statutory and
internal audits, management consultancy, tax planning and project financing. He was appointed as a Director on
the Board of our Company on October 23, 2008.
Sandip V. Patel is an Independent Director of our Company. He was appointed as a Director on the Board of
our Company on June 27, 2006. He is a Chartered Accountant and has experience in taxation, audit including
statutory audit of companies and financial institutions, revenue audit of nationalized banks, audit of
stockbroking houses and depository participants. He also has experience in management consultancy,
structuring international transactions, developing internal control systems, cost planning and project financing as
well as raising funds for working capital requirements. He also has experience of consulting and representing
before authorities in respect of direct taxation for domestic and international clients. He has worked as a
committee member of Ahmedabad branch of Western Regional Council of ICAI.
Arun Patel is an Independent Director of our Company. He was appointed as a Director on the Board of our
Company on September 29, 2012. He is a Chartered Accountant and has more than 22 years of experience in
the field of audit, taxation, accounts and finance.
Relationship with other Directors
None of our Directors are related to each other or to the key management personnel, except as follows:
(i)
Shashin V. Patel is the son of Vishnubhai M. Patel;
(ii)
Vasistha Patel is the son-in-law of Vishnubhai M. Patel;
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(iii)
Vikram R. Patel is the son-in-law of Vishnubhai M. Patel;and
(iv)
Shashin V. Patel is the brother-in-law of Vasistha Patel and Vikram R. Patel.
Borrowing powers of our Board
Our Company has resolved, by way of a special resolution dated September 26, 2014 that pursuant to the
provisions of Section 180(1)(c) of the Companies Act, 2013, the Board is authorized to borrow monies from
banks or financial institutions and other persons, firms or bodies corporate, subject to a limit of ` 2,00,000
lakhs.
Interest of the Directors
All Directors may be deemed to be interested to the extent of remuneration or fees payable to them for attending
meetings of the Board or a committee thereof as well as to the extent of reimbursement of expenses payable to
them.
All Directors may also be regarded as interested in our Company to the extent of the Equity Shares or employee
stock options held by them and also to the extent of any dividend payable to them and other distributions in
respect of such Equity Shares held by them. All Directors may also be regarded as interested in the Equity
Shares held by, or subscribed by and allotted to, the companies, firms and trusts, in which they are interested as
directors, members, partners or trustees.
Other than as disclosed in this Preliminary Placement Document, there were no outstanding transactions other
than in the ordinary course of business undertaken by our Company, in which the Directors were interested
parties.
Except as otherwise stated in this Preliminary Placement Document in this regard, our Company has not entered
into any contract, agreement or arrangement during the preceding two years from the date of this Preliminary
Placement Document in which any of the Directors are interested, directly or indirectly, and no payments have
been made to them in respect of any such contracts, agreements, arrangements which are proposed to be made
with them. Furthermore, the Directors have not taken any loans from our Company.
Our Company has taken loans from our Directors. For details, see “Financial Statements” on page 182.
Shareholding of Directors
The following table sets forth details regarding the shareholding of the Directors as of September 30, 2014:
Name
Number of
Equity Shares
1,78,29,220(1)
54,99,720
20,02,150(2)
34,08,750(3)
889
Vishnubhai M. Patel
Shashin V. Patel
Vasistha C. Patel
Vikram R. Patel
Nitin R. Patel
(1)
(2)
(1)
This does not include 56,00,000 Equity Shares allotted to Vishnubhai M. Patel on September 30, 2014 upon conversion
of the warrants held by him.
This does not include 12,00,000 Equity Shares allotted to Vasistha C. Patel on September 30, 2014 upon conversion of
the warrants held by him.
This does not include 12,00,000 Equity Shares allotted to Vikram R. Patel on September 30, 2014 upon conversion of
the warrants held by him
Terms of Appointment and Compensation of the Directors
Executive Directors
a)
Percentage
shareholding in our
Company (%)
11.74
3.62
1.32
2.24
-
Vishnubhai M. Patel
127
Vishnubhai M. Patel was appointed as the Managing Director and Chief Executive Officer of our Company for
a period of three years from July 1, 2014 pursuant to a special resolution passed by our shareholders at the AGM
held on September 26, 2014. Vishnubhai M. Patel is entitled to a salary of up to ` 30,00,000 per month and a
commission as may be decided by the Board. He is also entitled to perquisites, including, medical
reimbursement, leave travel concession, contribution to provident fund and family benefit fund and gratuity.
b)
Shashin V. Patel
Shashin V. Patel was appointed as the Joint Managing Director of our Company for a period of three years from
July 1, 2014 pursuant to a special resolution passed by our shareholders at the AGM held on September 26,
2014. Shashin V. Patel is entitled to a salary of up to ` 15,00,000 per month and a commission as may be
decided by the Board. He is also entitled to perquisites, including, medical reimbursement, leave travel
concession, contribution to provident fund and family benefit fund and gratuity.
c)
Nitin R. Patel
Nitin R. Patel was appointed as a Whole Time Director of our Company for a period of three years from July 1,
2014 pursuant to a special resolution passed by our shareholders at the AGM held on September 26, 2014. Nitin
R. Patel is entitled to a salary of up to ` 8,00,000 per month and a commission as may be decided by the Board.
He is also entitled to perquisites, including, medical reimbursement, leave travel concession, contribution to
provident fund and family benefit fund and gratuity.
d)
Vasistha C. Patel
Vasistha C. Patel was appointed as a Whole Time Director of our Company for a period of five years from
October 1, 2012 pursuant to a resolution passed by our shareholders at the AGM held on September 30, 2013.
Vasistha C Patel is entitled to a salary of up to ` 8,00,000 per month and a commission as may be decided by the
Board. He is also entitled to perquisites, including, medical reimbursement, leave travel concession, contribution
to provident fund and family benefit fund and gratuity.
e)
Vikram R. Patel
Vikram R. Patel was appointed as a Whole Time Director of our Company for a period of five years from
October 1, 2012 pursuant to a resolution passed by our shareholders at the AGM held on September 30, 2013
Vikram R. Patel is entitled to a salary of up to ` 8,00,000 per month and a commission as may be decided by the
Board. He is also entitled to perquisites, including, medical reimbursement, leave travel concession, contribution
to provident fund and family benefit fund and gratuity.
Non-Executive Directors
All other members of the Board are Non-Executive Directors and do not receive any payment other than the
sitting fee for attending the Board or its committee meetings.
The following tables set forth the compensation paid by our Company to the directors during the current fiscal
year, i.e., FY2015 (to the extent applicable) and for FY2014, FY2013 and FY2012:
FY2015 (to the extent applicable)
Name of the Directors
Salary
(` Lakhs)
Vishnubhai M. Patel
Shashin V. Patel
Nitin R. Patel
Vikram R. Patel
Vasistha C. Patel
Amarsinh J. Vaghela (Up to July 5, 2014)
Sandip V. Patel
Atul N. Rupatel
Arun S. Patel
Hemendra C. Shah (Up to July 1, 2014)
Sandip S. Sheth (From July 7, 2014)
75.00
25.00
52.64
12.50
12.50
-
128
Sitting Fees
(`Lakhs)
0.15
0.45
0.45
0.45
0.15
0.30
Total
(`Lakhs)
75.00
25.00
52.64
12.50
12.50
0.15
0.45
0.45
0.45
0.15
0.30
Name of the Directors
Salary
(` Lakhs)
Mirat N. Bhadlawala (From July 7, 2014)
Sitting Fees
(`Lakhs)
-
Total
(`Lakhs)
0.15
0.15
FY2014
Name of the Directors
Salary
(`Lakhs)
Vishnubhai M. Patel
Shashin V. Patel
Nitin R. Patel
Vikram R. Patel
Vasistha C. Patel
Amarsinh J. Vaghela
Sandip V. Patel
Atul N. Rupatel
Arun S. Patel
Hemendra C. Shah
180.00
60.00
54.00
30.00
30.00
-
Sitting Fees
(`Lakhs)
0.30
0.50
0.50
0.50
0.50
Total
(`Lakhs)
180.00
60.00
54.00
30.00
30.00
0.30
0.50
0.50
0.50
0.50
FY2013
Name of the Directors
Salary
(`Lakhs)
Vishnubhai M. Patel
Shashin V. Patel
Girish N. Patel (Up to August 24, 2012)
Nitin R. Patel
Vikram R. Patel (From October 1, 2012)
Vasistha C. Patel (From October 1, 2012)
Pravinkumar M. Ganatra
Amarsinh J. Vaghela
Sandip V. Patel
Atul N. Rupatel
Arun S. Patel
180.00
60.00
12.50
76.95
15.00
15.00
-
Sitting Fees
(`Lakhs)
0.20
0.40
0.40
0.40
0.20
Total
(`Lakhs)
180.00
60.00
12.50
76.95
15.00
15.00
0.20
0.40
0.40
0.40
0.20
FY2012
Name of the Directors
Vishnubhai M. Patel
Shashin V. Patel
Girish N. Patel
Nitin R. Patel
Pravinkumar M. Ganatra
Amarsinh J. Vaghela
Sandip V. Patel
Atul N. Rupatel
Salary
(`Lakhs)
180.00
60.00
30.00
67.74
-
129
Sitting Fees
(`Lakhs)
0.40
0.40
0.40
0.40
Total
(`Lakhs)
180.00
60.00
30.00
67.74
0.40
0.40
0.40
0.40
Management Organisational Structure
Key Managerial Personnel
Our Company’s key managerial personnel are as follows:
Vishnubhai M. Patel, 72, is the Managing Director and Chief Executive Officer of our Company. For details,
see “Board of Directors and Senior Management – Biographies of the Directors” on page 125.
Shashin V. Patel, 33, is the Joint Managing Director of our Company. For details, see “Board of Directors and
Senior Management – Biographies of the Directors” on page 125.
Vasistha C. Patel, 41, is the Executive Director of our Company. For details, see “Board of Directors and
Senior Management – Biographies of the Directors” on page 125.
Nitin R. Patel, 46, is the Executive Director of our Company. For details, see “Board of Directors and Senior
Management – Biographies of the Directors” on page 126.
Vikram R. Patel, 46, is the Executive Director of our Company. For details, see “Board of Directors and
Senior Management – Biographies of the Directors” on page 126.
Vijay Kalyani, 56 years, is the Company Secretary of our Company. He is a qualified Company Secretary and
has more than 20 years of experience in cecretarial, company law matters, accounts, finance, taxation, auditing,
public issue management and capital markets related matters and has also been involved in liaison with statutory
bodies such as SEBI, ROC, RBI and Stock Exchanges. Prior to joining our Company he was associated with
130
Polad Group of Companies. He joined our Company on May 1, 2006. He is the compliance officer of our
Company.
Senior Management Personnel
Our Company’s senior managerial personnel are as follows:
Ashok Menon, 47 years, is the President – Human Resource of our Company. He has a bachelors degree in
commerce from Calicut University and a post graduate diploma in business management in human resource
from Punjab Technical University. He joined our Organisation in November, 2013. Prior to joining our
Company, he was working with Aditya Birla Nuvo Limited, Suzlon Energy Limited and Wellspun Projects
Limited.
P.K. Doshi, 48 years, is the technical director of our Company. He holds Master’s Degree in Civil Engineering
from Jaynarayan Vyas University, Jodhpur and has 24 years of work experience in the field of roads and bridge
construction. Before joining our Company in May 2005, he handled execution of various National Highways
works under Public Works Department, Rajasthan and the project preparation of Kishangarh – Udaipur –
Ahmedabad Section of NH-8 and implementation of projects under National Highways Authority of India.
After joining our Company, he has spearheaded the execution of ADB funded cash contract for four laning
project of Radhanpur – Gagodhar Section of NH – 15 in Gujarat. Subsequently, he had guided timely
implementation of the four laning BOT projects of MP/MH border to Dhule on NH- 3, Rohtak – Panipat
section of NH- 71A, Bijapur – Hungund section of NH- 13 and Hyderabad Yadgiri section of NH- 202.
Currently he is looking after implementation of four laning BOT projects of Gomati Chauraha – Udaipur
Section of NH- 8, Bhilwara – Rajsamand section of NH- 758 and Rohtak Hissar section of NH- 10. His key
responsibilities include but not limited to bidding for road projects, oversee the design and timely
implementation of projects and their contractual matters.
H.C. Shah, 62 years, is the President (Finance) of our Company. He is a qualified cost and management
accountant, a certified associate of the Indian Institute of Bankers as well as a qualified company secretary. He
joined our Company on July 2, 2014. He has experience of 30 years in finance, cost and management
accounting, banking, taxation secretarial, legal, insurance and other related matters.
Sanjay Tiwary: 47 years, is the Chief Operating Officer (Mining) of our Company. He holds a bachelor’s
degree in engineering from Nagpur University. Further, he holds a First Class Mine Manager’s Certificate of
Competency from the Directorate General of Mine Safety, Dhanbad. He joined our Company in August, 2014.
He has total more than 23 years of experience in the field of mining and his key skills are mine planning, mining
operations, and project management.
Parulkumar R Shah, 48 years, is designated as the Deputy General Manager (Business Development) of our
Company. He holds a degree in Civil Engineering from Saurashtra University. He joined us on December 1,
1999. He has around 15 years experience in the engineering industry of which he has been with our Company
for 9 years. Prior to our Company, he was associated with J.D. Corporation.
Shareholding of key managerial personnel
As of September 30, 2014, except as stated below, none of the key managerial personnel hold equity shares in
our Company:
Name
Number of
Equity Shares
17,829,220 (1)
5,499,720
2,002,150(2)
3,408,750(3)
889
5
Vishnubhai M. Patel
Shashin. Patel
Vasistha C. Patel
Vikram R. Patel
Nitin R. Patel
Vijay Kalyani
(3)
Percentage
shareholding in
our Company
(%)
11.74
3.62
1.32
2.24
Negligibe
Negligible
This does not include 56,00,000 Equity Shares allotted to Vishnubhai M. Patel on September 30, 2014 upon conversion
of the warrants held by him.
131
(4)
(5)
This does not include 12,00,000 Equity Shares allotted to Vasistha C. Patel on September 30, 2014 upon conversion of
the warrants held by him.
This does not include 12,00,000 Equity Shares allotted to Vikram R. Patel on September 30, 2014 upon conversion of
the warrants held by him.
Interest of key managerial personnel
The key managerial personnel of our Company do not have any interest in our Company other than to the extent
of (i) the remuneration or benefits to which they are entitled to as per their terms of appointment; and (ii) the
Equity Shares or employee stock options held by them or their dependants in our Company, if any.
Other than as disclosed in this Preliminary Placement Document, there were no outstanding transactions other
than in the ordinary course of business undertaken by our Company in which the key managerial personnel were
interested parties.
Except as stated above, none of the Directors are related to any of the key managerial personnel of our
Company.
Corporate governance
Except as disclosed in the Preliminary Placement Document, our Company has been complying with the
requirements of all applicable corporate governance norms, including the Equity Listing Agreements, the RBI
regulations and the SEBI Regulations, in respect of corporate governance including constitution of the Board
and committees thereof.
Our Board presently consists of 10 Directors comprising of five executive directors and five independent
directors. We are in compliance with the requirements of the Listing Agreement with the Stock Exchanges.
Our Company is in compliance with the corporate governance requirements specified in the revised clause 49 of
the Equity Listing Agreement notified by SEBI by its circular dated April 17, 2014 and the applicable
provisions of the Companies Act, 2013 and the rules made thereunder. Our Company is in the process of laying
down evaluation criteria for performance of independent directors.
Committees of the Board
In terms of Clause 49 of the Equity Listing Agreement and Companies Act, 2013, our Company has constituted
the following committees of Directors namely:
(i)
Audit Committee;
(ii)
Nomination and Remuneration Committee;
(iii)
Stakeholders’ Relationship Committee; and
(iv)
Corporate Social Responsibility Committee.
The following table sets forth the details of the members of the aforesaid committees as of the date of this
Preliminary Placement Document:
Committee
Audit Committee
Nomination and Remuneration
Committee
Stakeholders’
Committee
Relationship
1.
2.
3.
4.
1.
2.
3.
4.
1.
2.
Members
Sandip V. Patel (Chairman);
Arun Patel;
Nitin R. Patel; and
Atul N. Ruparel.
Atul N. Ruparel (Chairman);
Sandip V. Patel;
Arun S. Patel; and
Sandip A. Sheth.
Mirat N. Bhadlawala (Chairman);
Sandip V. Patel;
132
Committee
Corporate Social Responsibility
Committee
3.
4.
1.
2.
3.
4.
Members
Nitin R. Patel; and
Vasistha C. Patel.
Vishnubhai M. Patel (Chairman);
Vasistha C. Patel;
Mirat N. Bhadlawala; and
Sandip A. Sheth.
Policy on disclosures and internal procedure for prevention of insider trading
Regulation 12(1) of the Insider Trading Regulations applies to our Company and its employees and requires our
Company to implement a code of internal procedures and conduct for the prevention of insider trading. Our
Company has implemented a code of conduct for prevention of insider trading in accordance with the Insider
Trading Regulations. As per the code of internal procedures and conduct for the prevention of insider trading
adopted by our Company, the Company Secretary of our Company, shall be the compliance officer of our
Company for the purposes of this code.
Other confirmations
Except as otherwise stated in this Preliminary Placement Document, none of the Directors, Promoters or key
managerial personnel of our Company have any financial or other material interest in the Issue.
Related Party Transactions
For details in relation to the related party transactions entered by our Company during the last three Fiscal
Years, as per the requirements under AS 18 issued by the Institute of Chartered Accountants in India, see the
section “Financial Statements” on page 182.
133
PRINCIPAL SHAREHOLDERS
The following table sets forth the details regarding the shareholding pattern of our Company, as on September
30, 2014:
Sr. Category of Number of
no. Shareholder Shareholders
(A) Shareholding
of Promoter
and Promoter
Group
(1) Indian
(a) Individuals/
Hindu
Undivided
Family
(b) Central
Government/
State
Government(s)
(c) Bodies
Corporate
(d) Financial
Institutions/
Banks
(e) Any Other
(specify)
Trusts
Sub-Total
(A)(1)
(2) Foreign
(a) Individuals
(Non-Resident
Individuals/
Foreign
Individuals)
(b) Bodies
Corporate
(c) Institutions
(d) Qualified
Foreign
Investor
(e) Any
Other
(specify)
Sub-Total
(A)(2)
Total
Shareholding
of Promoter
and Promoter
Group (A)=
(A)(1)+(A)(2)
(B) Public
shareholding
(1) Institutions
(a) Mutual Funds/
Total number of
Equity Shares
14
Total number of
Total Shareholding
Equity Shares
Equity Shares held in
as a % of total
pledged or
Dematerialised Form number of Equity
otherwise
Shares
encumbered
As a % As a % Number As a %
of (A +
of (A + of Equity of total
B)
B+C)
Shares number
of
Equity
Shares
52,256,765
52,256,765
-
-
34.41
34.41 7,768,572
-
-
14.87
-
-
1
16,545,275
1,654,275
10.89
10.89
-
-
-
-
-
1
16
3,993,840
72,795,880
3,993,840
72,795,880
2.63
47.94
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16
72,795,880
72,795,880
47.94
47.94 7,768,572
10.67
-
-
-
-
75
39,388,125
39,388,125
25.94
134
0
0.00
-
-
2.63
0
47.94 7,768,572
0.00
10.67
-25.94
0
0.00
Sr. Category of Number of
no. Shareholder Shareholders
UTI
(b) Financial
Institutions/
Banks
(c) Central
Government/
State
Government(s)
(d) Venture
Capital Funds
(e) Insurance
Companies
(f) Foreign
Institutional
Investors
(g) Foreign
Venture
Capital
Investors
(h) Qualified
Foreign
Investor
(i) Any
Other
(specify)
Sub-Total
(B)(1)
(2) Noninstitutions
(a) Bodies
Corporate
(b) Individuals
(i) Individual
shareholders
holding
nominal share
capital up to
1 lakh.
(ii) Individual
shareholders
holding
nominal share
capital
in
excess of
1
lakh.
(c) Qualified
Foreign
Investor
(d) Any
Other
(specify)
Clearing
Members
Non Resident
Indians
OCB
NRI
(Non
Total number of
Equity Shares
Total number of
Total Shareholding
Equity Shares
Equity Shares held in
as a % of total
pledged or
Dematerialised Form number of Equity
otherwise
Shares
encumbered
As a % As a % Number As a %
of (A +
of (A + of Equity of total
B)
B+C)
Shares number
of
Equity
Shares
3
18,012
18,012
0.01
0.01
15,934
88.46
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44
23,650,370
23,650,370
15.57
15.57
0
0.00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
122
63,056,507
63,056,507
41.52
41.52
15,934
0.03
325
11,084,739
11,084,739
7.30
7.30
717,517
6.47
8,776
4,108,998
41,08,368
2.71
2.71
60,606
1.47
1
500,000
500,000
0.33
0.33
0
0.00
-
-
-
-
-
-
-
135
159,110
159,110
0.10
0.10
6,927
4.35
179
105,690
105,690
0.07
0.07
0
0.00
0
56
0
50,876
0
50,876
0.00
0.03
0.00
0.03
0
0
0.00
0.00
135
Sr. Category of Number of
no. Shareholder Shareholders
Repatriable)
Hindu
Undivided
Family
Trust
Sub-Total
(B)(2)
Total Public
Shareholding
(B)=
(B)(1)+(B)(2)
TOTAL
(A)+(B)
(C) Shares held
by
Custodians
and against
which
Depository
Receipts have
been issued
(1) Promoter and
Promoter
Group
(2) Public
Sub-Total (C)
TOTAL
(A)+(B)+(C)
Total number of
Equity Shares
Total number of
Total Shareholding
Equity Shares
Equity Shares held in
as a % of total
pledged or
Dematerialised Form number of Equity
otherwise
Shares
encumbered
As a % As a % Number As a %
of (A +
of (A + of Equity of total
B)
B+C)
Shares number
of
Equity
Shares
0
0
0
0.00
0.00
0
0.00
0
9,472
0
16,009,413
0
16,008,783
0
10.54
0
10.54
0
785,050
0
4.90
9,594
79,065,920
7,90,65,290
10.54
10.54
8,00,984
1.01
9,610
151,861,800
151,861,170
100.00
100.00 8,569,556
5.64
0
0
0
0.00
0.00
0
0.00
-
-
-
-
-
-
-
9,610
151,861,800
151,861,170
100.00
100.00 8,569,556
5.64
Note: Our Company has on September 30, 2014 allotted 80,00,000 Equity Shares to the members of the
promoter and promoter group. As on September 30, 2014, our Company was awaiting final listing and trading
approval for the said Equity Shares. Our Company has subsequently received the final listing and trading
approvals.
136
The following table sets forth the details regarding the shareholding of the Promoter and Promoter Group as at September 30, 2014:
Name of the
Shareholder
Details of Shares held
No. of
Shares
held
Vishnubhai M
Patel
Shantaben V
Patel
Girish N Patel
Shashin V Patel
Vikram R Patel
Vasistha C Patel
Vishnubhai M
Patel HUF
Santokba Trust
Sadbhav
Finstock Pvt
Ltd
Vipul H Patel
Patel Rekhaben
Vishnubhai
Patel Truptiben
Vishnubhai
Bhavna
Vikramkumar
Patel
Alpa Dharmin
Patel
Patel
Rajeshreeben
Vishnubhai
As a % of
grand total
(A)+(B)+(C)
Encumbered shares (*)
As a
percentage
No.
Details of warrants
As a % of
grand total
(A)+(B)+(C) of
sub-clause (I)(a)
Details of convertible securities
Number of
warrants
held
As a % total
number of
warrants of the
same class
Total shares
(including
underlying
shares assuming
full conversion of
warrants and
convertible
securities) as a %
of diluted share
capital
As a % total
number of
convertible
securities of the
same class
Number of
convertible
securities held
1,78,29,220
11.74
5035714
28.24
3.32
0
0.00
0
0.00
11.15
1,47,15,375
9.69
0
0.00
0.00
0
0.00
0
0.00
9.21
6,75,500
54,99,720
34,08,750
20,02,150
0.44
3.62
2.24
1.32
0
0
1366429
1366429
0.00
0.00
40.09
68.25
0.00
0.00
0.90
0.90
0
0
0
0
0.00
0.00
0.00
0.00
0
0
0
0
0.00
0.00
0.00
0.00
0.42
3.44
2.13
1.25
45,81,700
3.02
0
0.00
0.00
0
0.00
0
0.00
2.87
39,93,840
2.63
0
0.00
0.00
0
0.00
0
0.00
2.50
1,65,45,275
10.89
0
0.00
0.00
0
0.00
0
0.00
10.35
1,66,850
0.11
0
0.00
0.00
0
0.00
0
0.00
0.10
6,75,500
0.44
0
0.00
0.00
0
0.00
0
0.00
0.42
6,75,500
0.44
0
0.00
0.00
0
0.00
0
0.00
0.42
6,75,500
0.44
0
0.00
0.00
0
0.00
0
0.00
0.42
6,75,500
0.44
0
0.00
0.00
0
0.00
0
0.00
0.42
6,75,500
0.44
0
0.00
0.00
0
0.00
0
0.00
0.42
137
Name of the
Shareholder
Details of Shares held
No. of
Shares
held
Total
7,27,95,880
As a % of
grand total
(A)+(B)+(C)
47.94
Encumbered shares (*)
No.
7768572
As a
percentage
10.67
Details of warrants
As a % of
grand total
(A)+(B)+(C) of
sub-clause (I)(a)
Details of convertible securities
Number of
warrants
held
As a % total
number of
warrants of the
same class
0
0.00
5.12
Total shares
(including
underlying
shares assuming
full conversion of
warrants and
convertible
securities) as a %
of diluted share
capital
As a % total
number of
convertible
securities of the
same class
Number of
convertible
securities held
0
0.00
45.54
(*) The term “encumbrance” has the same meaning as assigned to it in regulation 28(3) of the Takeover Regulations
1. Note: Our Company has on September 30, 2014 allotted 80,00,000 Equity Shares to the members of the promoter and promoter group. As on September 30, 2014,
our Company was awaiting final listing and trading approval for the said Equity Shares. Our Company has subsequently received the final listing and trading
approvals.
138
The following table sets forth the details regarding the shareholding of persons belonging to the category
“Public” and holding more than 1% of the total number of Equity Shares as at September 30, 2014:
Details of warrants
Name of the Shareholder
Tata Trustee Co Ltd A/C
Tata Mutual Fund- Tata
Infrastructure Fund
HDFC Trustee Company
Ltd HDFC Tax Saver Fund
Nomura India Investment
Fund Mother Fund
EastSpring Investments
India Infrastructure Equity
Open Ltd
Government Pension Fund
Global
ICICI Prudential Value
Discovery Fund
DSP Blackrock Equity
Fund
Birla Sun Life Trustee
Company Pvt Ltd A/c Birla
Sun Life Midcap Fund
Emerging India Focus
Funds
ICICI Prudential Life
Insurance Company Ltd
Kuwait Investment
Authority Fund 225
Citigroup Global Markets
Mauritius Pvt Ltd
Total
Details of convertible securities
Total shares (including
underlying shares
assuming full
conversion of warrants
and convertible
securities) as a % of
diluted share capital
Shares
as %
of
Total
No. of
Shares
Number
of
warrants
held
As a % total
number
of
warrants of the
same class
Number
of
convertible
securities held
% w.r.t total
number
of
convertible
securities of
the
same
class
5208152
3.43
0
0.00
0
0.00
3.43
6966340
4.59
0
0.00
0
0.00
4.59
3841256
2.53
0
0.00
0
0.00
2.53
3760562
2.48
0
0.00
0
0.00
2.48
3304424
2.18
0
0.00
0
0.00
2.18
13722070
9.04
0
0.00
0
0.00
9.04
5266459
3.47
0
0.00
0
0.00
3.47
2746788
1.81
0
0.00
0
0.00
1.81
2146771
1.41
0
0.00
0
0.00
1.41
5451049
3.59
0
0.00
0
0.00
3.59
2141558
1.41
0
0.00
0
0.00
1.41
No. of
Shares
held
1804980
1.19
0
0.00
0
0.00
1.19
56360409
37.11
0
0.00
0
0.00
37.11
139
ISSUE PROCEDURE
The following is a summary intended to present a general outline of the procedure relating to the application,
payment, Allocation and Allotment of the Equity Shares to be issued pursuant to the Issue. The procedure
followed in the Issue may differ from the one mentioned below, and investors are presumed to have apprised
themselves of the same from our Company or the Book Running Lead Managers. Investors are advised to inform
themselves of any restrictions or limitations that may be applicable to them. See sections entitled “Selling
Restrictions” and “Transfer Restrictions” on pages 152 and 156, respectively.
Qualified Institutions Placement
The Issue is being made to QIBs in reliance upon Chapter VIII of the SEBI Regulations and Section 42 of the
Companies Act, 2013, through the mechanism of a QIP. Under Chapter VIII of the SEBI Regulations and
Section 42 of the Companies Act, 2013, a company may issue equity shares to QIBs provided that certain
conditions are met by the company. Certain of these conditions are set out below:

the shareholders of the issuer have passed a special resolution approving such QIP. Such special
resolution must specify that the allotment of securities is proposed to be made pursuant to the QIP;

equity shares of the same class of such issuer, which are proposed to be allotted through the QIP, are
listed on a recognized stock exchange in India having nation-wide trading terminals for a period of at
least one year prior to the date of issuance of notice to its shareholders for convening the meeting to
pass the above-mentioned special resolution;

the aggregate of the proposed issue and all previous qualified institutions placements made by the
issuer in the same fiscal year does not exceed five times the net worth (as defined in the SEBI
Regulations) of the issuer as per the audited balance sheet of the previous fiscal year;

the issuer shall be in compliance with the minimum public shareholding requirements set out in the
SCRR;

the issuer shall have completed allotments with respect to any offer or invitation made by the issuer or
shall have withdrawn or abandoned that offer or invitation made by the issuer;

the issuer shall offer to each Allottee at least such number of the securities in the issue which would
aggregate to ` 20,000 calculated at the face value of the securities
At least 10% of the equity shares issued to QIBs must be allotted to Mutual Funds, provided that, if this portion
or any part thereof to be allotted to Mutual Funds remains unsubscribed, it may be allotted to other QIBs.
Bidders are not allowed to withdraw their Bids after the Bid/Issue Closing Date.
Additionally, there is a minimum pricing requirement under the SEBI Regulations. The Floor Price shall not be
less than the average of the weekly high and low of the closing prices of the Equity Shares quoted on the stock
exchange during the two weeks preceding the Relevant Date. However, a discount of not more than 5% of the
Floor Price is permitted in accordance with the provisions of the SEBI Regulations.
The “Relevant Date” referred to above, for Allotment, will be the date of the meeting in which the Board or the
committee of Directors duly authorized by the Board decides to open the Issue and “stock exchange” means any
of the recognized stock exchanges in India on which the Equity Shares of the issuer of the same class are listed
and on which the highest trading volume in such Equity Shares has been recorded during the two weeks
immediately preceding the Relevant Date.
Our Company has applied for and received the in-principle approval of the Stock Exchanges under Clause 24 (a)
of the Equity Listing Agreements for the listing of the Equity Shares on the Stock Exchanges. Our Company has
also delivered a copy of this Preliminary Placement Document to the Stock Exchanges.
Our Company shall also make the requisite filings with the RoC and SEBI within the stipulated period as
required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules,
2014.
140
The Issue has been authorized by (i) the Board pursuant to a resolution passed on September 9, 2014, and (ii)
the shareholders, pursuant to a resolution passed under Section 62 of the Companies Act, 2013 on October 4,
2014.
The Equity Shares will be Allotted within 12 months from the date of the shareholders’ resolution approving the
QIP and within 60 days from the date of receipt of subscription money from the successful Bidders. For details
of refund of application money, see the section “Issue Procedure – Pricing and Allocation – Designated Date
and Allotment of Equity Shares” on page 148.
The Equity Shares issued pursuant to the QIP must be issued on the basis of this Preliminary Placement
Document and the Placement Document shall contain all material information including the information
specified in Schedule XVIII of the SEBI Regulations and the requirements prescribed under Form PAS-4. The
Preliminary Placement Document and the Placement Document are private documents provided to only select
investors through serially numbered copies and are required to be placed on the website of the concerned Stock
Exchanges and of our Company with a disclaimer to the effect that it is in connection with an issue to QIBs and
no offer is being made to the public or to any other category of investors.
The minimum number of allottees for each QIP shall not be less than:

two, where the issue size is less than or equal to ` 25,000 lakhs; and

five, where the issue size is greater than ` 25000 lakhs.
No single allottee shall be allotted more than 50.00% of the issue size.
QIBs that belong to the same group or that are under common control shall be deemed to be a single allottee.
For details of what constitutes “same group” or “common control”, see “Issue Procedure — Application
Process — Application Form” on page 145.
Securities allotted to a QIB pursuant to a QIP shall not be sold for a period of one year from the date of
allotment except on the floor of a recognized stock exchange in India. Allotments made to FVCIs, VCFs and
AIFs in the Issue are subject to the rules and regulations that are applicable to them, including in relation to
lock-in requirements.
The Equity Shares offered hereby have not been and will not be registered under the Securities Act and may not
be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act and applicable state securities laws.
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.
Issue Procedure
1.
Our Company and the Book Running Lead Managers shall circulate serially numbered copies of this
Preliminary Placement Document and the serially numbered Application Form, either in electronic or
physical form, to the QIBs and the Application Form will be specifically addressed to such QIBs. In
terms of Section 42(7) of the Companies Act, 2013, our Company shall maintain complete records of
the QIBs to whom the Preliminary Placement Document and the serially numbered Application Form
have been dispatched. Our Company will make the requisite filings with the RoC and SEBI within the
stipulated time period as required under the Companies Act, 2013.
2.
Unless a serially numbered Preliminary Placement Document along with the serially numbered
Application Form is addressed to a particular QIB, no invitation to subscribe shall be deemed to
have been made to such QIB. Even if such documentation were to come into the possession of any
person other than the intended recipient, no offer or invitation to offer shall be deemed to have been
made to such person and any application that does not comply with this requirement shall be treated as
invalid.
3.
All Application Forms duly completed along with payment and a copy of the PAN card or PAN
allotment letter shall be submitted to the Book Running Lead Managers.
141
4.
Bidders shall submit Bids for, and the Company shall issue and Allot to each Allottee, at least
such number of Equity Shares in the Issue which would aggregate to ` 20,000 calculated at the
face value of the Equity Shares.
5.
QIBs may submit an Application Form, including any revisions thereof, during the Bid/Issue Period to
the Book Running Lead Managers.
6.
QIBs will be, inter alia, required to indicate the following in the Application Form:

name of the QIB to whom Equity Shares are to be Allotted;

number of Equity Shares Bid for;

price at which they are agreeable to subscribe for the Equity Shares, provided that QIBs may
also indicate that they are agreeable to submit a Bid at “Cut-off Price”; which shall be any
price as may be determined by our Company in consultation with the Book Running Lead
Managers at or above the Floor Price or the Floor Price net of such discount as approved in
accordance with SEBI Regulations and decided by the Board;

details of the depository account to which the Equity Shares should be credited; and

a representation that it is either (i) outside the United States, and (ii) it has agreed to certain
other representations set forth in the Application Form;.
Note: Each sub-account of an FII other than a sub-account which is a foreign corporate or a foreign
individual will be considered as an individual QIB and separate Application Forms would be required
from each such sub-account for submitting Bids.
7.
Once a duly completed Application Form is submitted by a QIB, such Application Form constitutes an
irrevocable offer and cannot be withdrawn after the Bid/Issue Closing Date. The Bid/Issue Closing
Date shall be notified to the Stock Exchanges and the QIBs shall be deemed to have been given notice
of such date after receipt of the Application Form.
8.
The Bids made by asset management companies or custodians of Mutual Funds shall specifically state
the names of the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate
Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI. Upon receipt of
the Application Form, after the Bid/Issue Closing Date, our Company shall determine the final terms,
including the Issue Price of the Equity Shares to be issued pursuant to the Issue in consultation with the
Book Running Lead Managers. Upon determination of the final terms of the Equity Shares, the Book
Running Lead Managers will send the serially numbered CAN along with the Placement Document to
the QIBs who have been Allocated the Equity Shares. The dispatch of a CAN shall be deemed a valid,
binding and irrevocable contract for the QIB to pay the entire Issue Price for all the Equity Shares
Allocated to such QIB. The CAN shall contain details such as the number of Equity Shares Allocated
to the QIB and payment instructions including the details of the amounts payable by the QIB for
Allotment of the Equity Shares in its name and the Pay-In Date as applicable to the respective QIB.
Please note that the Allocation will be at the absolute discretion of our Company and will be
based on the recommendation of the Book Running Lead Managers.
9.
Pursuant to receiving a CAN, each QIB shall be required to make the payment of the entire application
monies for the Equity Shares indicated in the CAN at the Issue Price, only through electronic transfer
to our Company’s designated escrow account by the Pay-In Date as specified in the CAN sent to the
respective QIBs. No payment shall be made by QIBs in cash. Please note that any payment of
application money for the Equity Shares shall be made from the bank accounts of the relevant QIBs
applying for the Equity Shares. Monies payable on Equity Shares to be held by joint holders shall be
paid from the bank account of the person whose name appears first in the application. Pending
Allotment, all monies received for subscription of the Equity Shares shall be kept by our Company in a
separate bank account with a scheduled bank and shall be utilized only for the purposes permitted
under the Companies Act, 2013 , but not before receipt of final listing and trading approval from the
Stock Exchanges.
10.
Upon receipt of the application monies from the QIBs, our Company shall Allot Equity Shares as per
142
the details in the CANs sent to the QIBs.
11.
After passing the resolution for Allotment and prior to crediting the Equity Shares into the depository
participant accounts of the successful Bidders, our Company shall apply to the Stock Exchanges for
listing approvals. Our Company will intimate to the Stock Exchanges the details of the Allotment and
apply for approvals for listing of the Equity Shares on the Stock Exchanges prior to crediting the
Equity Shares into the beneficiary account maintained with the Depository Participant by the QIBs.
12.
After receipt of the listing approvals of the Stock Exchanges, our Company shall credit the Equity
Shares Allotted pursuant to this Issue into the Depository Participant accounts of the respective
Allottees.
13.
Our Company will then apply for the final trading approvals from the Stock Exchanges.
14.
The Equity Shares that would have been credited to the beneficiary account with the Depository
Participant of the QIBs shall be eligible for trading on the Stock Exchanges only upon the receipt of
final trading and listing approvals from the Stock Exchanges.
15.
Upon receipt of intimation of final trading and listing approval from the Stock Exchanges, our
Company shall inform the Allottees of the receipt of such approval. Our Company and the Book
Running Lead Managers shall not be responsible for any delay or non-receipt of the communication of
the final trading and listing permissions from the Stock Exchanges or any loss arising from such delay
or non-receipt. Final listing and trading approvals granted by the Stock Exchanges are also placed on
their respective websites. QIBs are advised to apprise themselves of the status of the receipt of the
permissions from the Stock Exchanges or our Company.
Qualified Institutional Buyers
Only QIBs as defined in Regulation 2(1)(zd) of the SEBI Regulations and not otherwise excluded pursuant to
Regulation 86(1)(b) of the SEBI Regulations are eligible to invest. Currently, under Regulation 2(1)(zd) of the
SEBI Regulations, a QIB means:

alternate investment funds registered with SEBI;

Eligible FPIs;

foreign venture capital investors registered with SEBI;

insurance companies registered with Insurance Regulatory and Development Authority;

insurance funds set up and managed by army, navy or air force of the Union of India;

insurance funds set up and managed by the Department of Posts, India;

multilateral and bilateral development financial institutions;

Mutual Fund;

pension funds with minimum corpus of ` 2,500 lakhs;

provident funds with minimum corpus of ` 2,500 lakhs;

public financial institutions as defined in Section 4A of the Companies Act, 1956 (Section 2(72) of the
Companies Act, 2013);

scheduled commercial banks;

state industrial development corporations;

the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005
of the Government published in the Gazette of India; and
143

venture capital funds registered with SEBI.
In terms of the SEBI FPI Regulations, an FII who holds a valid certificate of registration from SEBI shall be
deemed to be a registered FPI until the expiry of the block of three years for which fees have been paid as per
the SEBI FII Regulations. An FII shall not be eligible to invest as an FII after registering as an FPI under the
SEBI FPI Regulations.
In terms of the SEBI FPI Regulations, the issue of Equity Shares to a single FPI or an investor group (which
means the same set of ultimate beneficial owner(s) investing through multiple entities) shall be less than 10% of
our post-Issue Equity Share capital. Further, in terms of the FEMA Regulations, the total holding by each FPI
shall be below 10% of the total paid-up Equity Share capital of our Company and the total holdings of all FPIs
put together shall not exceed 24% of the paid-up Equity Share capital of our Company. The aggregate limit of
24% may be increased up to the sectoral cap by way of a resolution passed by our Board followed by a special
resolution passed by the Shareholders of our Company and subject to prior intimation to RBI. In terms of the
FEMA Regulations, for calculating the aggregate holding of FPIs in a company, holding of all registered FPIs as
well as holding of FIIs (being deemed FPIs) shall be included. The existing individual and aggregate investment
limits an FII or sub account in our Company is 10% and 24% of the total paid-up Equity Share capital of our
Company, respectively. The existing investment limit for FIIs in our Company is 49% of the paid up capital of
our Company.
FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions which may
be specified by the Government from time to time.
Eligible non-resident QIBs can participate in the Issue under Schedule 1 of the FEMA Regulations and
shall make the payment of application money through the foreign currency non-resident (FCNR) account
and not through the special non-resident rupee (SNRR) account.
FIIs (other than a sub-account which is a foreign corporate or a foreign individual) and Eligible FPIs are
permitted to participate through the portfolio investment scheme under Schedule 2 and Schedule 2A of
FEMA Regulations respectively, in this Issue. FIIs and Eligible FPIs are permitted to participate in the
Issue subject to compliance with all applicable laws and such that the shareholding of the FPIs do not
exceed specified limits as prescribed under applicable laws in this regard.
Eligible FPIs are permitted to participate in the Issue subject to compliance with conditions and restrictions
which may be specified by the Government from time to time.
An FII who holds a valid certificate of registration from SEBI shall be deemed to be an FPI until the expiry of
the block of three years for which fees have been paid as per the SEBI FII Regulations. An FII or sub-account
(other than a sub-account which is a foreign corporate or a foreign individual) may participate in the Issue, until
the expiry of its registration as a FII or sub-account, or until it obtains a certificate of registration as FPI,
whichever is earlier. If the registration of an FII or sub-account has expired or is about to expire, such FII or
sub-account may, subject to payment of conversion fees under the SEBI FPI Regulations, participate in the
Issue. An FII or sub-account shall not be eligible to invest as an FII after registering as an FPI under the SEBI
FPI Regulations.
In terms of the FEMA Regulations, for calculating the aggregate holding of FPIs in a company, holding of all
registered FPIs as well as holding of FIIs (being deemed FPIs) shall be included.
Restriction on Allotment
Under Regulation 86(1)(b) of the SEBI Regulations, no Allotment shall be made pursuant to the Issue, either
directly or indirectly, to any QIB being, or any person related to, the Promoters. QIBs which have all or any of
the following rights shall be deemed to be persons related to the Promoters:

rights under a shareholders’ agreement or voting agreement entered into with the Promoters or persons
related to the Promoters;

veto rights; or

a right to appoint any nominee director on the Board.
Provided, however, that a QIB which does not hold any shares in our Company and which has acquired the
144
aforesaid rights in the capacity of a lender shall not be deemed to be related to the Promoters.
Our Company and the Book Running Lead Managers are not liable for any amendment or modification
or change to applicable laws or regulations, which may occur after the date of this Preliminary Placement
Document. QIBs are advised to make their independent investigations and satisfy themselves that they
are eligible to apply. QIBs are advised to ensure that any single application 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 Preliminary Placement Document. Further, QIBs are required to
satisfy themselves that their Bids would not eventually result in triggering a tender offer under the
Takeover Regulations.
A minimum of 10% of the Equity Shares offered in the Issue shall be Allotted to Mutual Funds. If no
Mutual Fund is agreeable to take up the minimum portion as specified above, such minimum portion or
part thereof may be Allotted to other QIBs.
Note: Affiliates or associates of the Book Running Lead Managers who are QIBs may participate in the Issue in
compliance with applicable laws.
Application Process
Application Form
QIBs shall only use the serially numbered Application Forms (which are addressed to them) supplied by our
Company and/or the Book Running Lead Managers in either electronic form or by physical delivery for the
purpose of making a Bid (including revision of a Bid) in terms of this Preliminary Placement Document.
By making a Bid (including the revision thereof) for Equity Shares through Application Forms and pursuant to
the terms of this Preliminary Placement Document, the QIB will be deemed to have made the following
representations and warranties and the representations, warranties and agreements made under the sections
entitled “Notice to Investors”, “Representations by Investors”, “Selling Restrictions” and “Transfer
Restrictions” on pages 2, 4, 152, and 156, respectively:
1.
The QIB confirms that it is a QIB in terms of Regulation 2(1)(zd) of the SEBI Regulations and is not
excluded under Regulation 86 of the SEBI Regulations, has a valid and existing registration under the
applicable laws in India (as applicable) and is eligible to participate in this Issue;
2.
The QIB confirms that it is not a Promoter and is not a person related to the Promoter, either directly or
indirectly and its Application Form does not directly or indirectly represent the Promoter or Promoter
Group or persons related to the Promoter;
3.
The QIB confirms that it has no rights under a shareholders’ agreement or voting agreement with the
Promoter or persons related to the Promoter, no veto rights or right to appoint any nominee director on
the Board other than those acquired in the capacity of a lender which shall not be deemed to be a
person related to the Promoter;
4.
The QIB acknowledges that it has no right to withdraw its Bid after the Bid/Issue Closing Date;
5.
The QIB confirms that if Equity Shares are Allotted through this Issue, it shall not, for a period of one
year from Allotment, sell such Equity Shares otherwise than on the Stock Exchanges;
6.
The QIB confirms that the QIB is eligible to Bid and hold Equity Shares so Allotted. The QIB further
confirms that the holding of the QIB, does not and shall not, exceed the level permissible as per any
applicable regulations applicable to the QIB;
7.
The QIB confirms that its Bids would not eventually result in triggering a tender offer under the
Takeover Regulations;
8.
The QIB confirms that to the best of its knowledge and belief, the number of Equity Shares Allotted to
it pursuant to the Issue, together with other Allottees that belong to the same group or are under
common control, shall not exceed 50.00% of the Issue. For the purposes of this representation:
a.
The expression “belongs to the same group” shall derive meaning from the concept of
145
“companies under the same group” as provided in sub-section (11) of Section 372 of the
Companies Act, 1956; and
b.
“Control” shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the
Takeover Regulations;
9.
The QIBs shall not undertake any trade in the Equity Shares credited to its beneficiary account
maintained with the Depository Participant until such time that the final listing and trading approvals
for the Equity Shares are issued by the Stock Exchanges.
10.
The QIB represents that it is outside the United States and is acquiring the Equity Shares in an offshore
transaction in reliance on Regulation S and it has agreed to certain other representations set forth in the
Application Form.
QIBS MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, PAN, THEIR DEPOSITORY
PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND
BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. QIBS MUST ENSURE THAT
THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN
WHICH THE DEPOSITORY ACCOUNT IS HELD. FOR THIS PURPOSE, ELIGIBLE SUB
ACCOUNTS OF AN FII WOULD BE CONSIDERED AS AN INDEPENDENT QIB.
Demographic details such as address and bank account will be obtained from the Depositories as per the
Depository Participant account details given above.
The submission of an Application Form by a QIB shall be deemed a valid, binding and irrevocable offer for the
QIB to pay the entire Issue Price for the Equity Shares (as indicated by the CAN) and becomes a binding
contract on the QIB upon issuance of the CAN by our Company in favour of the QIB.
Submission of Application Form
All Application Forms must be duly completed with information including the number of Equity Shares applied
for. All Application Forms duly completed along with payment and a copy of the PAN card or PAN allotment
letter shall be submitted to the Book Running Lead Managers either through electronic form or through physical
delivery at the following address:
Name of the
Book Running
Lead Manager
Axis Capital
Limited
Address
Contact
person
Email
Phone (telephone and
fax)
Axis House, 1st
Floor, C-2
Wadia
International
Center
P. B. Marg,
Worli
Mumbai 400 025
G.
Venkatesh
venkatesh.iyer@axiscap.in
Tel: (9122) 4325 4587
Fax: (9122) 4325 5599
Inga Capital
Private Limited
Naman
Midtown,
‘A’
Wing,
21st
Floor, Senapati
Bapat Marg,
Elphistone
(West)
Mumbai 400 013
S.
Karthikeyan
project.pragati@ingacapital.com
Tel: (91 22) 4031 3489
Fax: (91 22) 2498
2956
Standard
Chartered
Securities
(India) Limited
2nd Floor, 2325, M.G.Road,
Fort, Mumbai
400 001
Ramesh
Ramanathan
Ramesh.ramanathan@sc.com
Tel: (91 22) 4205 6116
Fax: (91 22) 4205
5999
146
The Book Running Lead Managers shall not be required to provide any written acknowledgement of the same.
Permanent Account Number or PAN
Each QIB should mention its PAN allotted under the IT Act in the Application Form. Applications without this
information will be considered incomplete and are liable to be rejected. QIBs should not submit the GIR number
instead of the PAN as the Application Form is liable to be rejected on this ground.
Pricing and Allocation
Build up of the Book
The QIBs shall submit their Bids (including the revision of bids) within the Bid/Issue Period to the Book
Running Lead Managers. Such Bids cannot be withdrawn after the Bid/Issue Closing Date. The book shall be
maintained by the Book Running Lead Managers.
Price Discovery and Allocation
Our Company, in consultation with the Book Running Lead Managers, shall determine the Issue Price, which
shall be at or above the Floor Price. Our Company may offer a discount of not more than 5% on the Floor Price
in terms of Regulation 85 of the SEBI Regulations.
After finalisation of the Issue Price, our Company shall update this Preliminary Placement Document with the
Issue details and file the same with the Stock Exchanges as the Placement Document.
Method of Allocation
Our Company shall determine the Allocation in consultation with the Book Running Lead Managers on a
discretionary basis and in compliance with Chapter VIII of the SEBI Regulations.
Bids received from the QIBs at or above the Issue Price shall be grouped together to determine the total demand.
The Allocation to all such QIBs will be made at the Issue Price. Allocation to Mutual Funds for up to a
minimum of 10.00% of the Issue Size shall be undertaken subject to valid Bids being received at or above the
Issue Price.
THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD
MANAGERS IN RESPECT OF ALLOCATION SHALL BE FINAL AND BINDING ON ALL QIBS.
QIBS MAY NOTE THAT ALLOCATION OF EQUITY SHARES IS AT THE SOLE AND ABSOLUTE
DISCRETION OF OUR COMPANY AND QIBS MAY NOT RECEIVE ANY ALLOCATION EVEN IF
THEY HAVE SUBMITTED VALID APPLICATION FORMS AT OR ABOVE THE ISSUE PRICE.
NEITHER OUR COMPANY NOR THE BOOK RUNNING LEAD MANAGERS ARE OBLIGED TO
ASSIGN ANY REASON FOR ANY NON-ALLOCATION.
CAN
Based on the Application Forms received, our Company, in consultation with the Book Running Lead
Managers, in their sole and absolute discretion, decide the QIBs to whom the serially numbered CAN shall be
sent, pursuant to which the details of the Equity Shares Allocated to them and the details of the amounts payable
for Allotment of such Equity Shares in their respective names shall be notified to such QIBs. Additionally, a
CAN will include details of the relevant Escrow Bank Account into which such payments would need to be
made, address where the application money needs to be sent, Pay-In Date as well as the probable designated
date, being the date of credit of the Equity Shares to the respective QIB’s account.
The eligible QIBs would also be sent a serially numbered Placement Document either in electronic form or by
physical delivery along with the serially numbered CAN.
The dispatch of the serially numbered Placement Document and the serially numbered CAN to the QIBs shall be
deemed a valid, binding and irrevocable contract for the QIB to furnish all details that may be required by the
Book Running Lead Managers and to pay the entire Issue Price for all the Equity Shares Allocated to such QIB.
QIBs are advised to instruct their Depository Participant to accept the Equity Shares that may be
147
Allotted to them pursuant to the Issue.
Bank Account for Payment of Application Money
Our Company has opened the “SEL – QIP Escrow Account” with the Escrow Banks in terms of the
arrangement among our Company and the Book Running Lead Managers and the Escrow Banks. The QIB will
be required to deposit the entire amount payable for the Equity Shares Allocated to it by the Pay-In Date as
mentioned in the respective CAN.
If the payment is not made favouring the “SEL – QIP Escrow Account” within the time stipulated in the CAN,
the Application Form and the CAN of the QIB are liable to be cancelled.
Our Company undertakes to utilize the amount deposited in Escrow Account only for the purposes of (i)
adjustment against Allotment of Equity Shares in the Issue; or (ii) repayment of application money if our
Company has not been able to Allot Equity Shares in the Issue.
In case of cancellations or default by the QIBs, our Company and the Book Running Lead Managers have the
right to reallocate the Equity Shares at the Issue Price among existing or new QIBs at their sole and absolute
discretion.
Payment Instructions
The payment of application money shall be made by the QIBs in the name of “SEL – QIP Escrow Account” as
per the payment instructions provided in the CAN.
Payments are to be made only through electronic fund transfer.
Note: Payments through cheques are liable to be rejected.
Designated Date and Allotment of Equity Shares
The Equity Shares will not be Allotted unless the QIBs pay the Issue Price to the “SEL – QIP Escrow Account”
as stated above.
In accordance with the SEBI Regulations, Equity Shares will be issued and Allotment shall be made only in
dematerialized 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.
Our Company, at its sole discretion, reserve the right to cancel the Issue at any time up to Allotment without
assigning any reason whatsoever.
Following the Allotment and credit of Equity Shares into the QIBs’ Depository Participant accounts, our
Company will apply for final trading and listing approvals from the Stock Exchanges.
QIBs who have been Allotted more than 5.00% of the Equity Shares in the Issue, our Company shall disclose
the name and the number of the Equity Shares Allotted to such QIB to the Stock Exchanges and the Stock
Exchanges will make the same available on their website.
The Escrow Bank shall release the monies lying to the credit of the Escrow Bank Account to our Company post
receipt of final listing and trading approvals from the Stock Exchanges.
In the event that our Company is unable to issue and Allot the Equity Shares offered in the Issue or on
cancellation of the Issue within 60 days from the date of receipt of application money, our Company shall repay
the application money within 15 days from expiry of 60 days, failing which our Company shall repay that
money with interest at the rate of 12 per cent per annum from expiry of the sixtieth day. The application money
to be refunded by our Company shall be refunded to the same bank account from which application money was
remitted by the QIBs.
Other Instructions
Right to Reject Applications
Our Company, in consultation with the Book Running Lead Managers, may reject Bids, in part or in full,
148
without assigning any reason whatsoever. The decision of our Company and the Book Running Lead Managers
in relation to the rejection of Bids shall be final and binding.
Equity Shares in Dematerialised form with NSDL or CDSL
The Allotment of the Equity Shares in this Issue shall be only in dematerialized form (i.e., not in physical
certificates but be fungible and be represented by the statement issued through the electronic mode).
A QIB applying for Equity Shares to be issued pursuant to the Issue must have at least one beneficiary account
with a Depository Participant of either NSDL or CDSL prior to making the Bid. Allotment to a successful QIB
will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the
QIB.
Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with
NSDL and CDSL. The Stock Exchanges have electronic connectivity with NSDL and CDSL.
The trading of the Equity Shares to be issued pursuant to the Issue would be in dematerialized form only for all
QIBs in the demat segment of the respective Stock Exchanges.
Our Company will not be responsible or liable for the delay in the credit of Equity Shares to be issued pursuant
to the Issue due to errors in the Application Form or otherwise on part of the QIBs.
149
PLACEMENT
Placement Agreement
The Book Running Lead Managers have entered into a Placement Agreement with our Company, pursuant to
which the Book Running Lead Managers have agreed to manage the Issue and to act as placement agents in
connection with the proposed Issue and procure subscription for Equity Shares to be placed with the QIBs,
pursuant to Chapter VIII of the SEBI Regulations and Section 42 of the Companies Act, 2013.
The Placement Agreement contains customary representations and warranties, as well as indemnities from our
Company and is subject to termination in accordance with the terms contained therein.
Applications shall be made to list the Equity Shares issued pursuant to the Issue and admit them to trading on
the Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for
such Equity Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which
holders of the Equity Shares will be able to sell their Equity Shares.
This Preliminary Placement Document has not been, and will not be, registered as a prospectus with the RoC
and, no Equity Shares issued pursuant to the Issue will be offered in India or overseas to the public or any
members of the public in India or any other class of investors, other than QIBs.
In connection with the Issue, the Book Running Lead Managers (or their affiliates) may, for their own accounts,
subscribe to the Equity Shares or enter into asset swaps, credit derivatives or other derivative transactions
relating to the Equity Shares to be issued pursuant to the Issue at the same time as the offer and sale of the
Equity Shares, or in secondary market transactions. As a result of such transactions, the Book Running Lead
Managers may hold long or short positions in such Equity Shares. These transactions may comprise a
substantial portion of the Issue and no specific disclosure will be made of such positions.
Affiliates of the Book Running Lead Managers may purchase the Equity Shares and be Allotted Equity Shares
for proprietary purposes and not with a view to distribute or in connection with the issuance of P-Notes. See
section “Representations by Investors – Offshore Derivative Instruments” on page 8.
From time to time, the Book Running Lead Managers and their affiliates may engage in transactions with and
perform services of our Company in the ordinary course of business and have engaged, or may in the future
engage, in commercial banking and investment banking transactions with our Company or its affiliates, for
which they have received compensation and may in the future receive compensation.
Lock-up
Our Company has agreed that it will not, for a period of 180 days from the date of the Placement Agreement,
without the prior written consent of the Book Running Lead Managers, directly or indirectly, (a) offer, issue,
contract to issue, issue or offer any option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of, any Equity Shares or any securities
convertible into or exercisable for Equity Shares (including, without limitation, securities convertible into or
exercisable or exchangeable for Equity Shares), or file any registration statement under the U.S. Securities Act
with respect to any of the foregoing or (b) enter into any swap or other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, any of the economic consequences associated with the
ownership of any of the Equity Shares or any securities convertible into or exercisable or exchangeable for
Equity Shares (regardless of whether any of the transactions described in clause (a) or (b) is to be settled by the
delivery of Equity Shares or such other securities, in cash or otherwise), or (c) deposit Equity Shares with any
other depositary in connection with a depositary receipt facility or (d) publicly announce any intention to enter
into any transaction falling within (a) to (c) above or enter into any transaction (including a transaction
involving derivatives) having an economic effect similar to that of a sale, issue or offer or deposit of Equity
Shares in any depositary receipt facility or publicly announce any intention to enter into any transaction falling
within (a) to (c) above. Provided, however, that the foregoing restrictions shall not apply to allotment of Equity
Shares by the Company pursuant to ESOP-2008.
Sadbhav Finstock Private Limited and our Promoters, Vishnubhai M. Patel and Shantaben V. Patel have agreed
that they will not, for a period of 180 days from the date of the Placement Agreement, without the prior written
consent of the Book Running Lead Managers, (a) directly or indirectly, issue, offer, lend, sell, contract to sell,
pledge, encumber, sell any option or contract to purchase, purchase any option or contract to sell, grant any
150
option, right or warrant to purchase, make any short sale, or otherwise transfer or dispose of, any promoter
shares, including but not limited to any options or warrants to purchase any promoter shares, or any securities
convertible into or exercisable for, or that represent the right to receive, any promoter shares or file any
registration statement under the U.S. Securities Act of 1933, as amended, with respect to any of the foregoing
(regardless of whether any of the transactions described in this clause (a) is to be settled by the delivery of the
promoter shares or such other securities, in cash or otherwise); or (b) enter into any swap or other agreement or
any transaction that transfers, in whole or in part, directly or indirectly, any of the economic consequences
associated with the ownership of any of the promoter shares or any securities convertible into or exercisable or
exchangeable for any of the promoter shares (regardless of whether any of the transactions described in this
clause (b) is to be settled by the delivery of the promoter shares or such other securities, in cash or otherwise); or
(c) deposit any of the promoter shares, or any securities convertible into or exercisable or exchangeable for the
promoter shares or which carry the rights to subscribe for or purchase the promoter shares, with any depositary
in connection with a depositary receipt facility; or (d) publicly announce any intention to enter into any
transaction falling within (a) to (c) above or enter into any transaction (including a transaction involving
derivatives) having an economic effect similar to that of a sale or deposit of the promoter shares in any
depositary receipt facility or publicly announce any intention to enter into any transaction falling within (a) to
(c) above.
151
SELLING RESTRICTIONS
The distribution of this Preliminary Placement Document and the offer, sale or delivery of the Equity Shares is
restricted by law in certain jurisdictions. Persons who come into possession of this Preliminary Placement
Document are advised to take legal advice with regard to any restrictions that may be applicable to them and to
observe such restrictions. This Preliminary Placement Document may not be used for the purpose of an offer or
sale in any circumstances in which such offer or sale is not authorized or permitted.
General
No action has been or will be taken in any jurisdiction by our Company or the Book Running Lead Managers
that would permit a public offering of the Equity Shares or the possession, circulation or distribution of this
Preliminary Placement Document or any other material relating to our Company or the Equity Shares in the
Issue in any jurisdiction where action for such purpose is required. Accordingly, the Equity Shares in the Issue
may not be offered or sold, directly or indirectly and neither this Preliminary Placement Document nor any other
offering material or advertisements in connection with the Equity Shares issued pursuant to the Issue may be
distributed or published, in or from any country or jurisdiction except under circumstances that will result in
compliance with any applicable rules and regulations of any such country or jurisdiction and will not impose
any obligations on our Company or the Book Running Lead Managers. The Issue will be made in compliance
with the SEBI Regulations. Each subscriber of the Equity Shares in the Issue will be required to make, or will be
deemed to have made, as applicable, the acknowledgments and agreements as described under the sections
“Notice to Investors”, “Selling Restrictions” and “Transfer Restrictions”.
Australia. This Preliminary Placement Document is not a disclosure document under Chapter 6D of the
Corporations Act 2001 (the “Australian Corporations Act”), has not been lodged with the Australian
Securities & Investments Commission and does not purport to include the information required of a disclosure
document under the Australian Corporations Act. (i) The offer of Equity Shares under this Preliminary
Placement Document is only made to persons to whom it is lawful to offer Equity Shares without disclosure to
investors under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in Section
708 of the Australian Corporations Act; (ii) this Preliminary Placement Document is made available in Australia
to persons as set forth in clause (i) above; and (iii) by accepting this offer, the offeree represents that the offeree
is such a person as set forth in clause (ii) above and agrees not to sell or offer for sale within Australia any
Equity Share sold to the offeree within 12 months after their transfer to the offeree under this Preliminary
Placement Document.
Cayman Islands. No offer or invitation to purchase Equity Shares may be made to the public in the Cayman
Islands.
Dubai. This Preliminary Placement Document relates to an Exempt Offer in accordance with the Markets Rules
of the Dubai Financial Services Authority (“DFSA”). This Preliminary Placement Document is intended for
distribution only to persons of a type specified in the Markets Rules of the DFSA. It must not be delivered to, or
relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in
connection with Exempt Offers. The DFSA has not approved this Preliminary Placement Document nor taken
steps to verify the information set forth herein and has no responsibility for this Preliminary Placement
Document. The securities to which this Preliminary Placement Document relates may be illiquid and/or subject
to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due
diligence on the securities. If you do not understand the contents of this Preliminary Placement Document you
should consult an authorised financial advisor.
European Economic Area (including Liechtenstein, Iceland and Norway). In relation to each Member State of
the European Economic Area which has implemented the Prospectus Directive (each a “Relevant Member
State”), an offer may not be made to the public in that Relevant Member State prior to the publication of a
prospectus in relation to the Equity Shares which has been approved by the competent authority in that Relevant
Member State or, where appropriate, approved in another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may,
with effect from and including the date on which the Prospectus Directive is implemented in that Relevant
Member State (the “Relevant Implementation Date”), make an offer of Equity Shares to the public in that
Relevant Member State at any time:
152

to legal entities which are authorized or regulated to operate in the financial markets or, if not so
authorized or regulated, whose corporate purpose is solely to invest in securities;

to any legal entity which has two or more of (i) an average of at least 250 employees during the last
financial year, (ii) a total balance sheet of more than €50,000,000, as show in its last annual
consolidated accounts;

to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus
Directive) subject to obtaining the prior consent of the Lead Managers for any such offer; or

in any other circumstances which do not require the publication of a prospectus pursuant to Article 3(2)
of the Prospectus Directive.
provided that no such offer of the Equity Shares shall result in a requirement for the publication by our
Company or the Lead Managers of a prospectus pursuant to Article 3 of the Prospectus Directive. For the
purposes of this provision, the expression an “offer of Equity Shares to the public” in relation to any of the
Equity Shares in any Relevant Member States means the communication in any form and by any means, of
sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to
decide to purchase or subscribe for the Equity Shares, as the same may be varied in that Member State by any
measure implementing the Prospectus Directive in that Member State.
Hong Kong. No Equity Shares have been offered or sold, and no Equity Shares may be offered or sold, in Hong
Kong by means of any document, other than to persons whose ordinary business is to buy or sell shares or
debentures, whether as principal agent; or to “professional investors” as defined in the Securities and Futures
Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or in other circumstances which
do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong
Kong or which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32)
of Hong Kong. No document, invitation or advertisement relating to the Equity Shares has been issued or may
be issued, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong
Kong (except if permitted under the securities laws of Hong Kong) other than with respect to the Equity Shares
which are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as
defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that
Ordinance.
Japan. The offering of the Equity Shares has not been and will not be registered under the Financial Instruments
and Exchange Law of Japan, as amended (the “Financial Instruments and Exchange Law”). No Equity
Shares have been offered or sold, and will not be offered or sold, directly or indirectly, in Japan or to, or for the
benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any
corporation or other entity organized under the laws of Japan) or to others for reoffering or re-sale, directly or
indirectly in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the
registration requirements of the Financial Instruments and Exchange Law and otherwise in compliance with the
Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial ordinances
of Japan.
Korea. The Equity Shares have not been registered under the Korean Securities and Exchange Law, and the
Equity Shares acquired in connection with the distribution contemplated hereby may not be offered or sold,
directly or indirectly, in Korea or to or for the account of any resident thereof, except as otherwise permitted by
applicable Korean laws and regulations, including, without limitation, the Korean Securities and Exchange Law
and the Foreign Exchange Transaction Laws.
Kuwait. The Equity Shares have not been authorized or licensed for offering, marketing or sale in the State of
Kuwait. The distribution of the Preliminary Placement Document and the offering and sale of the Equity Shares
in the State of Kuwait is restricted by law unless a license is obtained from the Kuwaiti Ministry of Commerce
and Industry in accordance with Law 31 of 1990.
Mauritius. The Equity Shares may not be offered or sold, directly or indirectly, to the public in Mauritius.
Neither this Placement Document nor any offering material or information contained herein relating to the offer
of Equity Shares may be released or issued to the public in Mauritius or used in connection with any such offer.
This Placement Document does not constitute an offer to sell Equity Shares to the public in Mauritius and is not
a prospectus as defined under the Companies Act 2001.
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Qatar. The Equity Shares have not been offered, sold or delivered, and will not be offered, sold or delivered at
any time, directly or indirectly, in the state of Qatar in a manner that would constitute a public offering. The
Placement Document has not been reviewed or registered with Qatari Government Authorities, whether under
Law No. 25 (2002) concerning investment funds, Central Bank resolution No. 15 (1997), as amended, or any
associated regulations. Therefore, the Placement Document is strictly private and confidential, and is being
issued to a limited number of sophisticated investors, and may not be reproduced or used for any other purposes,
nor provided to any person other than recipient thereof.
Singapore. Each of the Lead Managers has acknowledged that this Placement Document has not been registered
as a prospectus with the Monetary Authority of Singapore. Accordingly, each of the Lead Managers has
represented and agreed that it has not offered or sold any Equity Shares issued pursuant to the Issue or caused
such Equity Shares to be made the subject of an invitation for subscription or purchase and will not offer or sell
such Equity Shares issued pursuant to the Issue or cause such Equity Shares to be made the subject of an
invitation for subscription or purchase, and have not circulated or distributed, nor will they circulate or
distribute, this Preliminary Placement Document or any other document or material in connection with the offer
or sale, or invitation for subscription or purchase, of such Equity Shares issued pursuant to the Issue, whether
directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the
Securities and Futures Act, Chapter 289 of Singapore (“SFA”), (ii) to a relevant person pursuant to Section
275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section
275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable
provision of the SFA.
Where the Equity Shares are subscribed or purchased under Section 275 by a relevant person which is:

a corporation (which is not an accredited investor) (as defined in Section 4A of the SFA) the sole
business of which is to hold investments and the entire share capital of which is owned by one or more
individuals, each of whom is an accredited investor; or

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and
each beneficiary of the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation to the beneficiaries’ rights and interest
(howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust
has acquired the Equity Shares pursuant to an offer made under Section 275 except:

to an institutional investor under Section 274 of the SFA or to a relevant person defined in Section
275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section
276(4)(i)(B) of the SFA;

where no consideration is or will be given for the transfer;

where the transfer is by operation of law; or

as specified in Section 276(7) of the SFA.
Switzerland. This Preliminary Placement Document does not constitute an issue prospectus pursuant to Art.
652a of the Swiss Code of Obligations. The Equity Shares will not be listed on the SWX Swiss Exchange, and
therefore, this Preliminary Placement Document does not comply with the disclosure standards of the Listing
Rules of the SWX Swiss Exchange. Accordingly, the Equity Shares may not be offered to the public in or from
Switzerland, but only to a selected and limited group of investors, which do not subscribe the Shares with a view
to distribution to the public. The investors will be individually approached by one of the Book Running Lead
Managers. This Preliminary Placement Document is personal to each offeree and does not constitute an offer to
any other person. This Preliminary Placement Document may only be used by those persons to whom it has
been handed out in connection with the offer described herein and may neither directly nor indirectly be
distributed or made available to other persons without the express consent of our Company. It may not be used
in connection with any other offer and shall in particular not be copied and/or distributed to the public in or from
Switzerland.
United Arab Emirates. This Preliminary Placement Document is not intended to constitute an offer, sale or
delivery of shares or other securities under the laws of the United Arab Emirates (the “UAE”). The Equity
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Shares have not been and will not be registered under Federal Law No. 4 of 2000 Concerning the Emirates
Securities and Commodities Authority and the Emirates Security and Commodity Exchange, or with the UAE
Central Bank, the Dubai Financial Market, the Abu Dhabi Securities market or with any other UAE exchange.
The Issue, the Equity Shares and interests therein do not constitute a public offer of securities in the UAE in
accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as amended) or otherwise. This
Preliminary Placement Document is strictly private and confidential and is being distributed to a limited number
of investors and must not be provided to any person other than the original recipient, and may not be reproduced
or used for any other purpose. The interests in the Equity Shares may not be offered or sold directly or indirectly
to the public in the UAE.
United Kingdom. Each of the Book Running Lead Managers has represented and agreed that it:

is a person who is a qualified investor within the meaning of Section 86(7) of the Financial Services
and Markets Act 2000 (the “FSMA”), being an investor whose ordinary activities involve it in
acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its
business;

has not offered or sold and will not offer or sell the Equity Shares other than to persons who are
qualified investors within the meaning of Section 86(7) of the FSMA or who it reasonably expects will
acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their
businesses where the issue of the Equity Shares would otherwise constitute a contravention of Section
19 of the FSMA by us.
United States of America. The Equity Shares have not been and will not be registered under the U.S. Securities
Act, and may not be offered or sold within the United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the U.S. Securities Act. Accordingly, the Equity
Shares are being offered and sold outside the United States in offshore transactions in reliance on Regulation S
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TRANSFER RESTRICTIONS
Investors are advised to consult with their own legal counsel prior to purchasing any Equity Shares or making
any resale, pledge or transfer of such Equity Shares.
Purchasers are not permitted to sell the Equity Shares Allotted pursuant to the Issue for a period of one year
from the date of Allotment, except on the floor of the Stock Exchanges. Additionally, purchasers are deemed to
have represented, agreed and acknowledged as below with respect to purchase and sale of Equity Shares.
United States Transfer Restrictions
The Equity Shares have not been and will not be registered under the U.S. Securities Act and may not be offered
or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the U.S. Securities Act and applicable state securities laws.
Each purchaser of the Equity Shares outside the United States pursuant to Regulation S will be deemed to have
represented and agreed that it has received a copy of this Preliminary Placement Document and such other
information as it deems necessary to make an informed investment decision and that:

the purchaser acknowledges that the Equity Shares have not been and will not be registered under the
U.S. Securities Act, or with any securities regulatory authority of any state of the United States, and are
subject to restrictions on transfer;

the purchaser and the person, if any, for whose account or benefit the purchaser is acquiring the Equity
Shares, was located outside the United States at the time the buy order for the Equity Shares was
originated and continues to be located outside the United States and has not purchased the Equity
Shares for the account or benefit of any person in the United States or entered into any arrangement for
the transfer of the Equity Shares or any economic interest therein to any person in the United States;

the purchaser is not an affiliate (as defined in Rule 405 of the U.S. Securities Act) of our Company or a
person acting on behalf of such affiliate; and it is not in the business of buying and selling securities or,
if it is in such business, it did not acquire the Equity Shares from our Company or an affiliate (as
defined in Rule 405 of the U.S. Securities Act) thereof in the initial distribution of the Equity Shares;

the purchaser is aware of the restrictions on the offer and sale of the Equity Shares pursuant to
Regulation S described in this Preliminary Placement Document;

the Equity Shares have not been offered to it by means of any directed selling efforts as defined in
Regulation S; and

the purchaser acknowledges that our Company, the Book Running Lead Managers and their respective
affiliates (as defined in Rule 405 of the U.S. Securities Act), and others will rely upon the truth and
accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of
such acknowledgements, representations and agreements deemed to have been made by virtue of its
purchase of the Equity Shares are no longer accurate, it will promptly notify our Company, and if it is
acquiring any of the Equity Shares as a fiduciary or agent for one or more accounts, it represents that it
has sole investment discretion with respect to each such account and that it has full power to make the
foregoing acknowledgements, representations and agreements on behalf of such account.
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THE SECURITIES MARKET OF INDIA
The information in this section has been extracted from documents available on the website of SEBI and the
Stock Exchanges and has not been prepared or independently verified by our Company or the Book Running
Lead Managers or any of their affiliates or advisors.
Indian Stock Exchanges
India has a long history of organized securities trading. In 1875, the first stock exchange was established in
Mumbai.
Indian stock exchanges are regulated primarily by SEBI, as well as by the Government acting through the
Ministry of Finance, Capital Markets Division, under the Securities Contracts (Regulation) Act, 1956 (the
“SCRA”) and the Securities Contracts (Regulation) Rules, 1957 (the “SCRR”). On June 20, 2012, SEBI, in
exercise of its powers under the SCRA and the Securities and Exchange Board of India Act, 1992, as amended
from time to time (the “SEBI Act”), notified the Securities Contracts (Regulation) (Stock Exchanges and
Clearing Corporations) Regulations, 2012 (the “SCR (SECC) Rules”), which regulate inter alia the
recognition, ownership and internal governance of stock exchanges and clearing corporations in India together
with providing for minimum capitalisation requirements for stock exchanges. The SCRA, the SCRR and the
SCR (SECC) Rules along with various rules, bye-laws and regulations of the respective stock exchanges,
regulate the recognition of stock exchanges, the qualifications for membership thereof and the manner, in which
contracts are entered into, settled and enforced between members of the stock exchanges.
The SEBI Act empowers SEBI to regulate the Indian securities markets, including stock exchanges and
intermediaries in the capital markets, promote and monitor self-regulatory organizations and prohibit fraudulent
and unfair trade practices. Regulations and guidelines concerning minimum disclosure requirements by public
companies, investor protection, insider trading, substantial acquisitions of shares and takeover of companies,
buy-backs of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, Mutual
Funds, FIIs, FPIs, credit rating agencies and other capital market participants have been notified by the relevant
regulatory authority.
Listing
The listing of securities on a recognized Indian stock exchange is regulated by the applicable Indian laws
including the Companies Act, the SCRA, the SCRR, the SEBI Act and various guidelines and regulations issued
by SEBI and the listing agreements of the respective stock exchanges. The SCRA empowers the governing body
of each recognized stock exchange to suspend trading of or withdraw admission to dealings in a listed security
for breach of or non compliance with any conditions or breach of company’s obligations under such listing
agreement or for any reason, subject to the issuer receiving prior written notice of the intent of the exchange and
upon granting of a hearing in the matter. SEBI also has the power to amend such equity listing agreements and
bye-laws of the stock exchanges in India, to overrule a stock exchange’s governing body and withdraw
recognition of a recognized stock exchange.
Pursuant to an amendment of the SCRR in June 2010, all listed companies (except public sector undertakings)
are required to ensure a minimum public shareholding at 25%. In this regard, SEBI has amended the Equity
Listing Agreements and has provided several mechanisms to comply with this requirement.
Delisting
SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in
relation to the voluntary and compulsory delisting of equity shares from the stock exchanges. In addition, certain
amendments to the SCRR have also been notified in relation to delisting.
Index-Based Market-Wide Circuit Breaker System
In order to restrict abnormal price volatility in any particular stock, SEBI has instructed stock exchanges to
apply daily circuit breakers which do not allow transactions beyond a certain level of price volatility. The indexbased market-wide circuit breaker system (equity and equity derivatives) applies at three stages of the index
movement, at 10%, 15% and 20%. These circuit breakers, when triggered, bring about a co-ordinated trading
halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by
movement of either the SENSEX of the BSE or the S&P CNX NIFTY of the NSE, whichever is breached
earlier.
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In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise
price bands of 20% movements either up or down. However, no price bands are applicable on scrips on which
derivative products are available or scrips included in indices on which derivative products are available.
The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility.
Margin requirements are imposed by stock exchanges that are required to be paid by the stockbrokers.
BSE
Established in 1875, it is the oldest stock exchange in India. In 1956, it became the first stock exchange in India
to obtain permanent recognition from the Government under the SCRA. It has evolved over the years into its
present status as one of the premier stock exchanges of India.
NSE
The NSE was established by financial institutions and banks to provide nationwide online, satellite-linked,
screen-based trading facilities with market-makers and electronic clearing and settlement for securities including
government securities, debentures, public sector bonds and units. It has evolved over the years into its present
status as one of the premier stock exchanges of India. The NSE was recognized as a stock exchange under the
SCRA in April 1993 and commenced operations in the wholesale debt market segment in June 1994. The capital
market (equities) segment commenced operations in November 1994 and operations in the derivatives segment
commenced in June 2000. NSE launched the NSE 50 Index, now known as S&P CNX NIFTY, on April 22,
1996 and the Mid-cap Index on January 1, 1996. The securities in the NSE 50 Index are highly liquid.
Internet-based Securities Trading and Services
Internet trading takes place through order routing systems, which route client orders to exchange trading
systems for execution. Stockbrokers interested in providing this service are required to apply for permission to
the relevant stock exchange and also have to comply with certain minimum conditions stipulated under
applicable law. The NSE became the first exchange to grant approval to its members for providing internetbased trading services. Internet trading is possible on both the “equities” as well as the “derivatives” segments
of the NSE.
Trading Hours
Trading on both the NSE and the BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST
(excluding the 15 minutes pre-open session from 9:00 a.m. to 9:15 a.m.). The BSE and the NSE are closed on
public holidays. The recognized stock exchanges have been permitted to set their own trading hours (in the cash
and derivatives segments) subject to the condition that (i) the trading hours are between 9.00 a.m. and 5.00 p.m.;
and (ii) the stock exchange has in place a risk management system and infrastructure commensurate to the
trading hours.
Trading Procedure
In order to facilitate smooth transactions, the BSE replaced its open outcry system with BSE On-line Trading
facility in 1995. This totally automated screen based trading in securities was put into practice nation-wide. This
has enhanced transparency in dealings and has assisted considerably in smoothening settlement cycles and
improving efficiency in back-office work.
NSE has introduced a fully automated trading system called National Exchange for Automated Trading (or
“NEAT”), which operates on strict time/price priority besides enabling efficient trade. NEAT has provided
depth in the market by enabling large number of members all over India to trade simultaneously, narrowing the
spreads.
Takeover Regulations
Disclosure and mandatory bid obligations for listed Indian companies under Indian law are governed by the
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011,
as amended (the “Takeover Regulations”), which provides specific regulations in relation to substantial
acquisition of shares and takeover. Since our Company is an Indian listed company, the provisions of the
Takeover Regulations apply to our Company.
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Insider Trading Regulations
The Insider Trading Regulations have been notified by SEBI to prohibit and penalize insider trading in India.
An insider is, among other things, prohibited from dealing either on his own behalf or on behalf of any other
person, in the securities of a listed company when in possession of unpublished price sensitive information.
The Insider Trading Regulations also provide disclosure obligations for shareholders holding more than a predefined percentage, and directors and officers, with respect to their shareholding in the company, and the
changes therein. The definition of “insider” includes any person who has received or has had access to
unpublished price sensitive information in relation to securities of a company or any person reasonably expected
to have access to unpublished price sensitive information in relation to securities of a company and who is or
was connected with the company or is deemed to have been connected with the company.
Depositories
The Depositories Act provides a legal framework for the establishment of depositories to record ownership
details and effect transfers in book-entry form. Further, SEBI framed regulations in relation to, among other
things, the formation and registration of such depositories, the registration of participants as well as the rights
and obligations of the depositories, participants, companies and beneficial owners. The depository system has
significantly improved the operation of the Indian securities markets.
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DESCRIPTION OF EQUITY SHARES
The following is information relating to the Equity Shares including a brief summary of the Memorandum and
Articles of Association, the Companies Act, 1956 and the Companies Act, 2013. Prospective investors are urged
to read the Memorandum and Articles of Association carefully, and consult with their advisers, as the
Memorandum and Articles of Association and applicable Indian law, and not this summary, govern the rights
attached to the Equity Shares.
Share Capital
The authorized share capital of our Company is ` 2,000 lakhs divided into 200,000,000 Equity Shares of ` 1
each.
Dividends
Under Indian law, a company pays dividends upon a recommendation by its board of directors and approval by
a majority of the shareholders at the AGM held each fiscal year. Under the Companies Act, 2013 unless the
board of directors of a company recommends the payment of a dividend, the shareholders at a general meeting
have no power to declare any dividend. Subject to certain conditions specified under Section 123 of the
Companies Act, 2013 and the rules made thereunder, no dividend can be declared or paid by a company for any
fiscal year except (a) out of the profits of the company for that year, calculated in accordance with the
provisions of the Companies Act, 2013; or (b) out of the profits of the company for any previous fiscal year(s)
arrived at in accordance with the Companies Act, 2013 and remaining undistributed; or (c) out of both; or (d)
out of money provided by the Central Government or a state Government for payment of dividend by the
Company in pursuance of a guarantee given by that Government.
The Articles of Association provide that our Company, in its general meeting, may declare dividends to be paid
to the members according to their respective rights and interest in the profits. The dividend shall not exceed the
amount recommended by our Board, though a smaller dividend may be declared in a general meeting. Further,
our Board may from time to time pay the members such interim dividends as may appear to them to be justified.
The Equity Shares issued pursuant to this Preliminary Placement Document and the Placement Document shall
rank pari passu with the existing Equity Shares in all respects including entitlements to any dividends that may
be declared by our Company.
Capitalisation of Reserves and Issue of Bonus Shares
In addition to permitting dividends to be paid out of current or retained earnings as described above, the
Companies Act, 2013 permits the board of directors, if so approved by the shareholders in a general meeting, to
capitalize its profits or reserves for the purpose of issuing fully paid-up bonus shares, which are similar to stock
dividend. The Companies Act, 2013 permits the issue of fully paid up bonus shares from its free reserves,
securities premium account or capital redemption reserve account, provided that bonus shares shall not be issued
by capitalising reserves created by revaluation of assets. These bonus Equity Shares must be distributed to
shareholders in proportion to the number of Equity Shares owned by them as recommended by the board of
directors. Any issue of bonus shares by a listed company would be subject to the SEBI Regulations.
The Articles of Association of our Company provide that any general meeting may resolve that any moneys,
investments or other assets forming a part of the undivided profits of our Company standing to the credit of the
reserves or any capital redemption reserve account or in the hands of our Company, and available for dividends
or representing premiums received on the issue of shares and standing to the credit of the share premium
account, be capitalized and distributed amongst such of the members as would be entitled to receive the same if
distributed by way of dividends and in the same proportion on the footing that they become entitled thereto as
capital and that all or any part of such capitalized fund be applied on behalf of such members in paying up in
full any unissued shares, debentures or debenture-stock of our Company which shall be distributed accordingly
or in or towards payment of the uncalled liability on any issued shares, and that such distribution of payment
shall be accepted by such members in full satisfaction of their interest in the said capitalized sum. Any sum
standing to the credit of the share premium account or a capital redemption reserve account may only be applied
in paying up of unissued shares to be issued to members of our Company as fully paid bonus shares.
Increase, Reduction and Alteration of Share Capital
Subject to the provisions of the Companies Act, our Company may increase its share capital by issuing new
shares on such terms and with such rights as it, by action of its shareholders in a General Meeting may
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determine. According to Section 62(1)(a) of the Companies Act, 2013 such new shares shall be offered to
existing shareholders in proportion to the paid up share capital on those shares at that date. The offer shall be
made by notice specifying the number of shares offered and the date (being not less than 15 days and not
exceeding 30 days from the date of the offer) within which the offer, if not accepted, will be deemed to have
been declined. After such date or on receipt of earlier intimation from the persons to whom such notice is given
that they decline to accept the shares offered, the Board may dispose of the shares offered in respect of which no
acceptance has been received in a manner which shall not be disadvantageous to the shareholders of our
Company and our Company. The offer is deemed to include a right exercisable by the person concerned to
renounce the shares offered to him in favour of any other person.
Under the provisions of Section 62(1)(c) of the Companies Act, 2013 and the Companies (Share Capital and
Debentures) Rules, 2014, new shares may be offered to any persons whether or not those persons include
existing shareholders or employees to whom shares are allotted under a scheme of employees stock options,
either for cash or for consideration other than cash, if a special resolution to that effect is passed by our
Company’s shareholders in a general meeting.
The Articles of Association of our Company authorize it to increase its authorized capital by issuing new shares,
which shall be considered as part of the existing capital. The Articles of Association further provide that, subject
to provisions of the Companies Act, our Company, by an ordinary resolution passed at the General Meeting,
from time to time, may consolidate, divide or sub-divide its share capital.
General Meetings of Shareholders
In addition to any other meeting, general meetings of our Company are to be held within such intervals as are
specified in and subject to the provisions of the Companies Act, at such times and places as may be determined
by our Board. Further, our Board, whenever it thinks fit, may call an extraordinary general meeting, and it shall,
on the requisition of such number of members who hold, at the date of the deposit of the requisition, not less
than one-tenth of such of the paid up capital of our Company as at that date carried the right of voting in regard
to the matter considered at the general meeting, proceed to call an extraordinary general meeting. Save as
provided in the Companies Act, 2013, not less than 21 days notice is to be given of every general meeting of our
Company. Further, a general meeting may be called after giving a shorter notice, in the case of an annual
general meeting, by all members entitled to vote, and in the case of any other meeting, by members of our
Company holding not less than 95 percent of such part of the paid up share capital of our Company as gives a
right to vote at the general meeting. Unless, the Articles of Association provide for a larger number, (i) five
shareholders present in person, if the number of shareholders as on the date of meeting is not more than 1,000;
(ii) 15 shareholders present in person, if the number of shareholders as on the date of the meeting is more than
1,000 but up to 5,000; and (iii) 30 shareholders present in person, if the number of shareholders as on the date of
meeting exceeds 5,000, shall constitute a quorum for a general meeting of our Company, whether AGM or
EGM. The quorum requirements applicable to shareholder meetings under the Companies Act, 2013 have to be
physically complied with.
A listed company intending to pass a resolution relating to matters such as, but not limited to, alteration in the
objects clause of the Memorandum, the issuing of shares with different voting or dividend rights, a variation of
the rights attached to a class of shares or debentures or other securities, buy-back of shares under the Companies
Act, giving loans or extending guarantees or providing security in excess of limits prescribed under the
Companies Act, is required to obtain the resolution passed by means of a postal ballot instead of transacting the
business in our Company’s General Meeting. A notice to all the shareholders shall be sent along with a draft
resolution explaining the reasons therefore and requesting them to send their assent or dissent in writing on a
postal ballot within a period of 30 days from the date of dispatch of the notice. Shareholders may exercise their
right to vote at general meetings or through postal ballot by voting through e-voting facilities in accordance with
the circular dated April 17, 2014 issued by SEBI and the Companies Act, 2013.
Voting Rights
At a General Meeting, upon a show of hands, every member holding shares and entitled to vote and present in
person has one vote. Upon a poll, the voting rights of each shareholder entitled to vote and present in person or
by proxy is in the same proportion as the capital paid up on each share held by such holder bears to our
Company’s total paid-up capital. Voting is by a show of hands, unless a poll is ordered by the Chairman of the
meeting or voting is carried out electronically. In addition, the Central Government may prescribe the class or
classes of companies and manner in which a shareholder may exercise his right to vote by the electronic means.
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Ordinary resolutions may be passed by simple majority of those present and voting and those voting
electronically. Special resolutions require that the votes cast in favour of the resolution must be at least three
times the votes cast against the resolution.
As per the Articles of Association of our Company, the instrument appointing a proxy and the power of attorney
(if any) under which it is signed or notarially certified copy of that power of authority shall be deposited at the
registered office of the Company not less than 48 hours before the time for holding the general meeting or
adjourned general meeting, as the case may be, at which the person named in such instrument proposes to vote
and in default the instrument of proxy shall not be treated as valid.
Transfer of Shares
Shares held through depositories are transferred in the form of book entries or in electronic form in accordance
with the regulations laid down by SEBI. These regulations provide the regime for the functioning of the
depositories and the participants and set out the manner in which the records are to be kept and maintained and
the safeguards to be followed in this system. Transfers of beneficial ownership of shares held through a
depository are exempt from stamp duty. Our Company has entered into an agreement for such depository
services with the NSDL and the CDSL. SEBI requires that our Company’s shares for trading and settlement
purposes be in book-entry form for all investors, except for transactions that are not made on a stock exchange
and transactions that are not required to be reported to the stock exchange. Our Company shall keep a book in
which every transfer or transmission of shares will be entered.
Pursuant to the listing agreement with the Stock Exchanges, in the event our Company has not effected the
transfer of shares within 15 days or where our Company has failed to communicate to the transferee any valid
objection to the transfer within the stipulated time period of 15 days, it is required to compensate the aggrieved
party for the opportunity loss caused during the period of the delay. The shares of our Company shall be freely
transferable, subject to the provisions of the Companies Act, 2013. According to the Articles of Association of
our Company, any person, being a nominee, who becomes entitled to shares by reason of death of a member
shall be entitled to the same dividend and other advantages in respect of the share to which he would be entitled
if he was a registered member, except that he shall not before being registered a member in respect of his share,
be entitled in respect of it to exercise any right conferred by membership in relation to the meetings of our
Company.
Liquidation Rights
In the event that our Company is wound up and the assets available for distribution among the members as such
are sufficient to repay the whole of the paid up capital, such assets shall be distributed so that as nearly as may
be the losses are borne by the members in proportion to the capital paid up or which ought to have been paid up
at the commencement of the winding up of the shares held by them respectively. And if in a winding up the
assets available for distribution among the members are more than sufficient to repay the whole of the paid up
capital at the commencement of the winding up, the excess shall be distributed amongst the members. However,
this article shall be without prejudice to the rights of a member registered in respect of shares issued upon
special terms and conditions.
162
STATEMENT OF TAX BENEFITS
To,
The Board of Directors
Sadbhav Engineering Limited
‘Sadbhav House’
Opposite Law Garden Police Chowki, Ellisbridge
Ahmedabad 380 006
(the “Company”)
Re:
Proposed qualified institutions placement of equity shares of face value of Re. 1 each (the “Equity
Shares”) of the Company under Chapter VIII of Securities and Exchange Board of India (Issue of
Capital and Disclosure Requirements) Regulations, 2009, as amended (the “SEBI Regulations”)
and section 42 of the Companies Act, 2013 (the “Issue”).
Ladies and Gentlemen:
1.
We, Surana Maloo & Co., hereby reports the possible tax benefits available to the Company, under the
Income Tax Act, 1961, as amended (the “IT Act”), and to the shareholders of the Company under the
IT Act and Wealth Tax Act, 1957, presently in force in India, in the enclosed statement.
2.
Several of these tax benefits/consequences are dependent on the Company or the qualified institutional
buyers fulfilling the conditions prescribed under the relevant tax laws. Hence the ability of the
Company or its shareholders to derive the tax benefits is dependant upon fulfilling such conditions.
3.
The enclosed annexure is for your information and for inclusion in the Preliminary Placement
Document and the Placement Document, as amended or supplemented thereto or any other written
material in connection with the proposed Issue and is neither designed nor intended to be a substitute
for professional tax advice. In view of the individual nature of the tax consequences, 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 their participation in the issue.
Our confirmation is based on the information, explanations and representations obtained from the
Company and on the basis of our understanding of the business activities and operations of the
Company (including its relevant subsidiaries) and the interpretation of the current tax laws in force in
India.
4.
We do not express any opinion or provide any assurance as to whether:

the Company or its shareholders will continue to obtain these benefits in
future; or

the conditions prescribed for availing the benefits, where applicable have
been/ would be met.

The revenue authorities/courts will concur with the views expressed herein
For Surana Maloo & Co.
Chartered Accountants
Firm Registration Number: 112171W
S.D. Patel
Partner
Membership Number: 37671
Place: Ahmedabad
163
ANNEXURE TO STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE SADBHAV
ENGINERRING LIMITED AND ITS SHAREHOLDERS
(A)
Benefits to the Company under the Income Tax Act, 1961 (“IT Act”)
1.
Special Tax Benefits under Section 80IA
The following specific tax benefits are available to the Company (including its relevant
subsidiaries) after fulfilling conditions as per the respective provisions of the relevant tax laws
In accordance with and subject to the conditions specified in Section 80-IA of the IT Act, the
company and certain subsidiaries of the Company may be entitled for a deduction of an amount
equal to hundred percent of profits or gains derived from any enterprise carrying on business of
(i) developing or (ii) operating and maintaining or (iii) developing, operating and maintaining any
infrastructure facility (iv) generating or (v) generating or distributing of power for any ten
consecutive assessment years out of fifteen years beginning from the year in which the enterprise
has started its operation.
At present, no benefit under this section is allowed with respect to any undertaking which begins
to generate or generation and distribute power at any time after 31st day of March 2017 unless the
same is further extended to any future date
The benefit is available subject to fulfilment of prescribed conditions. For the words “fifteen
years”, the words “twenty years” has been substituted for the following infrastructure facility(a) A road including toll road, a bridge or a rail system:
(b) A highway project including housing or other activities being an integral part of the
highway project:
(c) A water supply project, water treatment system, irrigation project, sanitation and sewerage
system or solid waste management system.
However, the aforesaid deduction is not available while computing Minimum Alternative Tax
(‘MAT’) liability of the relevant subsidiaries of the Company under Section 115JB of the IT Act.
Nonetheless, such MAT paid/ payable on the adjusted book profits of the relevant subsidiaries
of the Company computed in terms of the provisions of IT Act, read with the Companies Act,
1956 would be eligible for credit against tax liability arising under normal provisions of IT Act as
per Section 115JAA of the IT Act to the extent of the difference between the tax as per normal
provisions of the IT Act and MAT in the year of set-off
Further, such credit would not be allowed to be carried forward and set off beyond 10th assessment
year immediately succeeding the assessment year in which such credit becomes allowable.
2.
Depreciation
Subject to compliance with certain conditions laid down in Section 32 of the IT Act, the Company
will be entitled to deduction for depreciation:
a.
In respect of tangible assets (being buildings, machinery, plant or furniture) and intangible
assets (being know-how, patents, copyrights, trademarks, licenses, franchises or any other
business or commercial rights of similar nature acquired on or after 1st day of April,
1998) at the rates prescribed under the Income-tax Rules, 1962;
b.
The Company is further entitled to additional depreciation at the rate of 20 % of the actual cost
of any new plant and machinery (other than ships and aircraft) acquired on or after 31st day of
March 2005 in the year of purchase of such plant or machinery.
164
3.
c.
The IT Act read with Rule 5 of Income Tax Rules, 1962 (‘IT Rules’) for the purpose of plant
and machinery relating to generation of power provides an option of claiming the
depreciation on actual cost(i.e. Straight Line Method) as per rate specified in Appendix IA of IT
Rules.
d.
Business losses, if any, for an assessment year can be carried forward and set off against
business profits for eight subsequent years in terms of the provisions of Section 72 of the IT Act.
e.
As per section 32(2) of the IT Act, unabsorbed depreciation if any, for an Assessment Year
(AY) can be carried forward and set off against any source of income in subsequent AYs,
subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73 of the
IT Act.
f.
In respect of development of road / highways on Build-Operate-Transfer (‘BOT’) basis where
the ownership is not vested with developer but where the developer gets a right to collect
toll, the Central Board of Direct Taxes (CBDT), under powers conferred to it u/s 119 of the
Act, vide circular no. 09/2014 dated April 23, 2014, has clarified that the cost of construction
on development of infrastructure facility of roads/ highways under BOT projects is allowable
as a deduction by amortizing and claiming the same as allowable business expenditure under
the Act. The Amortization allowable may be computed at the rate, which ensures that the whole
of the cost incurred in creation of infrastructural facility of Road/ Highway is amortized
evenly over the period of concessionaire agreement after excluding the time taken for creation
of such facility.
Dividends exempt under sections 10(34) and 10(35) of the IT Act.
Dividend (whether interim or final) received by the Company from its investment in shares of
another domestic company would be exempted in the hands of the Company as per the provisions
of section 10(34) read with section 115-O of the IT Act. The domestic company distributing
dividends will be liable to pay dividend distribution tax at the rate of 15% on net basis on the amount
of dividend payable till September 30, 2014 (plus a surcharge of 10% on the dividend distribution
tax and education cess and secondary and higher education cess of 2% and 1% respectively on
the amount of dividend distribution tax and surcharge thereon).
Further w.e.f October 1, 2014, Finance Act 2014, has amended section 115-O in order to provide
that for the purpose of determining the tax on distributed profits payable in accordance with the
section 115-O, any amount by way of dividends referred to in sub-section (1) of the said section, as
reduced by the amount referred to in sub-section (1A) [referred to as net distributed profits], shall
be increased to such amount as would, after reduction of the tax on such increased amount at the
rate specified in sub- section (1), be equal to the net distributed profits.
Thus, where the amount of dividend paid or distributed by a company is
the amended provision would be calculated as follows:
8.5, then DDT under
Dividend amount distributed = Rs. 8.5
Increase by Rs 1.5 [i.e. (8.5*0.15)/(1-0.15)]
Increased amount = Rs 10
DDT @ 15% of Rs 10 = Rs 1.5
Tax payable u/s 115-O is Rs 1.5
Dividend distributed to shareholders = Rs 8.5
So DDT payable will be Rs 1.5 before surcharge and education cess and higher education
cess
Further it may be noted that the surcharge and education cess and secondary and higher education
cess applicable remains unchanged.
However, as per section 94(7) of the Act, losses arising from sale/transfer of shares, where such
shares are purchased within three months prior to the record date and sold within three months from
165
the record date, will be disallowed to the extent such loss does not exceed the amount of
dividend claimed exempt.
In terms of section 10(35) of the IT Act, any income received from units of a Mutual Fund
specified under section 10(23D) of the IT Act is exempt from tax, subject to such income not
arising from the transfer of units in such Mutual Fund.
Section 14A of the IT Act read with Rule 8D restricts claim for deduction of expenses incurred
in relation to income which does not form part of the total income under the IT Act. Thus,
any expenditure incurred to earn the said tax free income will not be tax deductible expenditure.
Further, the Central Board of Direct Taxes has prescribed methodology for disallowance under Rule
8D of the Income-tax Rules, 1962. The prescribed methodology becomes applicable where the
Indian Revenue authorities are not satisfied with the correctness of the taxpayer`s claim having
regard to its accounts.
Further, if the company being a holding company, has received any dividend from its subsidiary
on which dividend distribution tax has been paid by such subsidiary, then for the same year, the
company will not be required to pay dividend distribution tax to the extent for such dividend has
been paid by such subsidiary company.
For removing the cascading effect of dividend distribution tax, while computing the amount of
dividend distribution tax payable by a domestic company, the dividend received from a
foreign subsidiary on which income-tax has been paid by the domestic company under Section
115BBD of the Act shall be reduced.
4.
Computation of capital gains
Capital assets are to be categorized into short-term capital assets and long-term capital assets based
on the period of holding. All capital assets [except a security (other than a unit) listed in a
recognized stock exchange of India or units of Unit Trust of India (‘UTI’) or a unit of an equity
oriented fund and zero coupon bonds] are considered to be long-term capital assets, if they are
held for a period exceeding thirty-six months. Security (other than a unit) listed in a recognized
stock exchange of India or units of Unit Trust of India (‘UTI’) or a unit of an equity oriented fund
and zero coupon bonds are considered as long-term capital assets, if these are held for a period
exceeding twelve months. The Finance (No.2) Act 2014 has however inserted second proviso to
section 2(42A) w.e.f 1.4.2015 which provides that in the case of capital assets representing shares
held in a company not being shares listed on a recognized stock exchange or units of Mutual Fund
specified under clause (23D) of Section 10 which is transferred between 1st April 2014 and 10th
July 2014 are treated as short term capital assets if they are not held for more than twelve months.
As per the provisions of section 10(38) of the IT Act, long term capital gain arising to the
Company from transfer of a long term capital asset being an equity share in a company listed on
a recognized stock exchange in India or unit of equity oriented mutual fund shall be exempt
from tax, if the transaction is chargeable to Securities Transaction Tax (‘STT’).
However, such long-term capital gains will be included while computing book profits for the
purpose of payment of Minimum Alternate Tax (“MAT”) under the provisions of section 115JB of
the IT Act.
As per provisions of Section 48 of the Act, LTCG arising on transfer of capital assets, other than
bonds and debentures (excluding capital indexed bonds issued by the Government) and depreciable
assets, is computed by deducting the indexed cost of acquisition and indexed cost of improvement
from the net value of consideration (i.e. Full value of consideration minus expenses incurred wholly
and exclusively in connection with such transfer).
As per the provisions of section 112 of the IT Act, long-term capital gains (other than those
covered under section 10(38) of the IT Act) are subject to tax at a rate of 20%. However, proviso
to section 112(1) specifies that if the long-term capital gains (other than those covered under section
10(38) of the IT Act) arising on transfer of listed securities (other than a unit) or zero coupon bond,
calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the
166
rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of
10% without indexation benefit. Second proviso to S 112(1) specifies that in respect of long term
arising on account of transfer of unit of a mutual fund specified under S10(23D) between 1st April
2014 and 10th July 2014 exceeds
the capital gains computed at the rate of 10% without indexation benefit, then such capital gains
are chargeable to tax at the rate of 10% without indexation benefit.
As per provisions of section 111A of the IT Act, short term capital gains arising from transfer of
short term capital asset, being an equity share in a company or a unit of an equity oriented mutual
fund shall be taxable at the rate of 15%, if the transaction is chargeable to STT.
The tax rates mentioned above stands increased by surcharge, payable at the rate of 5% where
the taxable income of a domestic company exceeds Rs 10,000,000. Such surcharge rate would
stand increased to 10% where the taxable income of the domestic company exceeds Rs 100,000,000.
Further, education cess and secondary and higher education cess on the tax on total income and
surcharge at the rate of 2% and 1% respectively is payable by all categories of taxpayers.
As per section 74 of the IT Act short-term capital loss suffered during the year is allowed to be setoff against short-term as well as long-term capital gains of the said year. Balance loss, if any,
could be carried forward for eight succeeding years for claiming set-off against subsequent years’
short-term as well as long-term capital gains. Long-term capital loss suffered during the year is
allowed to be set-off against long-term capital gains. Balance loss, if any, could be carried
forward for eight years for claiming set-off against subsequent eight year’s long-term capital gains.
As per provisions of Section 70 read with Section 74 of the Act, short term capital loss arising
during a year is allowed to be set-off against short term as well as long term capital gains. Balance
loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent
8 assessment years in terms of the provisions of section 74 of the IT Act.
As per provisions of Section 70 read with Section 74 of the Act, long term capital loss arising during
a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be
carried forward and set-off against long term capital gains arising during subsequent 8
assessment years in terms of the provisions of section 74 of the IT Act. Long term capital loss
arising on sale of shares or units of equity oriented fund subject to STT may not be carried forward
for set off.
5.
Exemption of capital gains from income tax
As per the provisions of section 54EC of the IT Act and subject to the conditions specified
therein capital gains arising to the Company on transfer of a long-term capital asset (other than
those covered under section 10(38) of the IT Act) shall not be chargeable to tax to the extent such
capital gains are invested in certain notified bonds within six months from the date of transfer subject
to maximum of Rs 5 Millions. If only part of such capital gain is invested, the exemption shall
be proportionately reduced.
However, if the Company transfers or converts the notified bonds into money (as stipulated
therein) within a period of three years from the date of their acquisition, the amount of capital gains
exempted earlier would become chargeable in such year. The bonds specified for this section are
bonds issued on or after April 1, 2007 by National Highways Authority of India (the “NHAI”) and
the Rural Electrification Corporation Limited (the “REC”). The IT Act has restricted the maximum
investment in such bonds upto Rs 5 million per assessee during any financial year and the
subsequent financial year.
The characterization of the gain/ losses, arising from sale/ transfer of shares/ units as business
income or capital gains would depend on the nature of holding and various other factors.
6.
Deduction of STT paid
STT paid will be allowed as a deduction in the computation of business income. It is laid down that
167
the STT paid during the year shall be allowed as a deduction under Section 36(1)(xv) on the
condition that the income from taxable securities transaction is included under the head, “profits and
gains of business or profession”. When such deduction is claimed, no further deduction in respect
of the said amount is allowed while determining the income chargeable to tax as capital gains.
7.
8.
Other Provisions
a.
As per the provisions of Section 35D of the Act, any specified preliminary expenditure incurred
by an Indian company before commencement of business or after commencement of
business in connection with extension of an undertaking or setting up a new unit shall be
allowed a deduction equivalent to one-fifth of such expenditure for each of the five successive
previous years beginning with the previous year in which the business is commenced/ extended.
However, any deduction in excess of 5% of cost of project/ capital employed would be ignored.
b.
As per the provisions of Section 35DD of the Act, any expenditure incurred by an Indian
Company, wholly and exclusively for the purpose of amalgamation/ demerger of an
undertaking shall be allowed as deduction to the extent of one-fifth of such expenditure for
each of five successive previous years beginning with the previous year in which the
amalgamation/ demerger takes place.
c.
As per the provisions of Section 72A of the Act, pursuant to business re-organisations (such
as amalgamation, demerger, etc), the successor company shall be allowed to carry forward
any accumulated tax losses/ unabsorbed depreciation of the predecessor company subject to
fulfilment of prescribed conditions.
d.
As per section 10(34A) of the IT Act, any income arising to a shareholder, on account of buy
back of shares (not being listed on a recognized stock exchange) by a company, will be
exempt from tax. This exemption is available to shareholders only in case where the company
pays buy back tax under the provisions of section 115QA of the Act. Such income is also
exempt from tax while computing book profit for the purpose of determination of MAT
liability. However, in case of buy back of listed securities, it will be liable to capital gains tax
e.
As per provisions of Section 80G of the Act, the assessee is entitled to claim deduction of
a specified amount in respect of eligible donations, subject to the fulfilment of the
conditions specified in that section
f.
As per provisions of Section 80GGB of the Act, the assesse is entitled to claim
deduction amounting to 100% of any sum contributed to any political party or an electoral trust
MAT credit

In terms of section 115JAA(1A) of the IT Act, the Company is eligible to claim credit for any
tax paid as MAT under section 115JB of the IT Act for any Assessment Year commencing on
or after April 1, 2006 against income tax liabilities incurred in subsequent years as prescribed.

MAT credit eligible in subsequent years is the difference between MAT paid and the tax
computed as per the normal provisions of the IT Act. Such MAT credit will be available for
set-off up to ten years succeeding the year in which the MAT credit initially arose under section
115JAA(IA)

MAT credit can be set off in a year when tax is payable under the normal provisions of the IT
Act.
MAT credit to be allowed shall be the difference between MAT payable and the tax computed
as per the normal provisions of the IT Act for that assessment year.
(B)
Benefits to the Resident shareholders of the Company under the IT Act
1.
Dividends exempt under section 10(34) of the IT Act
Dividend (whether interim or final) received by a resident shareholder from its investment in shares
168
of a domestic company would be exempt in the hands of the resident shareholder as per the
provisions of section 10(34) read with section 115-O of the IT Act.
Section 14A read with Rule 8D of the IT Act restricts claim for deduction of expenses incurred
in relation to income which does not form part of the total income under the IT Act. Thus, any
expenditure incurred to earn the said tax free income will not be a tax deductible expenditure.
2.
Computation of capital gains
Capital assets are to be categorized into short-term capital assets and long-term capital assets based
on the period of holding. All capital assets [except a security (other than a unit) listed in a
recognized stock exchange of India or units of Unit Trust of India (‘UTI’) or a unit of an equity
oriented fund and zero coupon bonds] are considered to be long-term capital assets, if they are
held for a period exceeding thirty-six months. Security (other than a unit) listed in a recognized
stock exchange of India or units of Unit Trust of India (‘UTI’) or a unit of an equity oriented fund
and zero coupon bonds are considered as long-term capital assets, if these are held for a period
exceeding twelve months. The Finance (No.2) Act 2014 has however inserted second proviso to
section 2(42A) w.e.f 1.4.2015 which provides that in the case of capital assets representing shares
held in a company not being shares listed on a recognized stock exchange or units of Mutual Fund
specified under clause (23D) of Section 10 which is transferred between 1st April 2014 and 10th
July 2014 are treated as short term capital assets if they are not held for more than twelve months.
As per the provisions of section 48 of the IT Act, the amount of capital gain shall be computed
by deducting from the sale consideration, the cost of acquisition and expenses incurred in connection
with the transfer of a capital asset. However, in respect of long-term capital gains arising to a
resident shareholder, a benefit is permitted to substitute the cost of acquisition/ improvement with
the indexed cost of acquisition/ improvement. The indexed cost of acquisition/ improvement,
adjusts the cost of acquisition/ improvement by a cost inflation index, as prescribed from time to
time.
As per the provisions of section 10(38) of the IT Act, long term capital gain arising to a
resident shareholder from transfer of a long term capital asset or units of equity oriented mutual
fund being an equity share in a company listed on a recognized stock exchange in India, shall be
exempt from tax, if the transaction is chargeable to STT.
As per provisions of Section 48 of the Act, LTCG arising on transfer of capital assets, other than
bonds and debentures (excluding capital indexed bonds issued by the Government) and depreciable
assets, is computed by deducting the indexed cost of acquisition and indexed cost of improvement
from the full value of consideration.
As per the provisions of section 112 of the IT Act, long-term capital gains (other than those
covered under section 10(38) of the IT Act) are subject to tax at a rate of 20%. However, proviso
to section 112(1) specifies that if the long-term capital gains [other than those covered under section
10(38) of the IT Act] arising on transfer of listed securities (other than a unit) or zero coupon bond,
calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the
rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of
10% without indexation benefit. Second proviso to S112(1) specifies that in respect of long term
arising on account of transfer of unit of a mutual fund specified under S10(23D) between 1st April
2014 and 10th July 2014 exceeds the capital gains computed at the rate of 10% without indexation
benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit.
As per provisions of section 111A of the IT Act, short term capital gains arising from transfer of
short term capital asset, being an equity share in a company or a unit of an equity oriented mutual
fund shall be taxable at the rate of 15%, if the transaction is chargeable to STT.
The tax rates mentioned above stands increased by surcharge, payable at the rate of 5% where
the taxable income of a domestic company exceeds Rs 10,000,000. Such surcharge rate would
stand increased to 10% where the taxable income of the domestic company exceeds Rs 100,000,000.
Further, education cess and secondary and higher education cess on the tax on total income and
169
surcharge at the rate of 2% and 1% respectively is payable by all categories of taxpayers.
As per provisions of Section 70 read with Section 74 of the Act, short term capital loss arising
during a year is allowed to be set-off against short term as well as long term capital gains. Balance
loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent
8 assessment years in terms of the provisions of section 74 of the IT Act
As per provisions of Section 70 read with Section 74 of the Act, long term capital loss arising during
a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be
carried forward and set-off against long term capital gains arising during subsequent 8
assessment years in terms of the provisions of section 74 of the IT Act
3.
Exemption of capital gains arising from income tax
As per the provisions of section 54EC of the IT Act and subject to the conditions specified
therein capital gains arising to a resident shareholder on transfer of a long-term capital asset (other
than those covered under section 10(38) of the IT Act) shall not be chargeable to tax to the extent
such capital gains are invested in certain notified bonds within six months from the date of transfer.
If only part of such capital gain is invested, the exemption shall be proportionately reduced.
However, if the resident shareholder transfers or converts the notified bonds into money (as
stipulated therein) within a period of three years from the date of their acquisition, the amount of
capital gains exempted earlier would become chargeable in such year. The bonds specified for
this section are bonds issued on or after April 1, 2007 by National Highways Authority of India
(the “NHAI”) and the Rural Electrification Corporation Limited (the “REC”). The IT Act has
restricted the maximum investment in such bonds upto Rs 5 million per assessee during any
financial year or in the subsequent financial year.
Further, as per the provisions of section 54F of the IT Act and subject to conditions specified
therein, long-term capital gains (other than capital gains arising on sale of resident house and
those covered under section 10(38) of the IT Act) arising to an individual or Hindu Undivided
Family (‘HUF’) on transfer of shares of the Company will be exempted from capital gains tax, if
the net consideration from such shares are used for either purchase of one residential house property
in India within a period of one year before or two years after the date on which the transfer took
place, or for construction of one residential house property in India within a period of three years
after the date of transfer.
4.
Deduction of STT paid
STT paid will be allowed as a deduction in the computation of business income. It is laid down that
the STT paid during the year shall be allowed as a deduction under Section 36 on the condition
that the income from taxable securities transaction is included under the head, “profits and gains of
business or profession”. When such deduction is claimed, no further deduction in respect of the
said amount is allowed while determining the income chargeable to tax as capital gains.
5.
In case of an individual or HUF, where the total taxable income as reduced by capital gains is
below the basic exemption limit, the capital gains will be reduced to the extent of the shortfall and
only the balance long-term capital gains or short term capital gains will be subjected to such tax in
accordance with the proviso to sub-section (1) of Sections 111A and 112 of the IT Act.
6.
As per provisions of Section 56(2)(vii) of the Act and subject to exception provided in second
proviso therein, where an individual or HUF receives shares and securities without
consideration or for a consideration which is less than the aggregate fair market value of the
shares and securities by an amount exceeding fifty thousand rupees, the excess of fair market
value of such shares and securities over the said consideration is chargeable to tax under the head
'income from other sources'. However, the said section is not applicable in case the shares and
securities are received under instances specified under the proviso thereon.
170
(C)
Benefits to the Non-resident shareholders of the Company other than Foreign Institutional
Investors and Foreign Venture Capital Investors
1.
Dividends exempt under section 10(34) of the IT Act
Dividend (whether interim or final) received by a non-resident shareholder from its investment
in shares of a domestic company would be exempt in the hands of the non-resident shareholder as
per the provisions of section 10(34) read with section 115-O of the IT Act.
Section 14A read with Rule 8D of the IT Act restricts claim for deduction of expenses incurred
in relation to income which does not form part of the total income under the IT Act. Thus, any
expenditure incurred to earn the said tax free income will not be a tax deductible expenditure.
2.
Computation of capital gains
Capital assets are to be categorized into short-term capital assets and long-term capital assets based
on the period of holding. All capital assets [except a security (other than a unit) listed in a
recognized stock exchange of India or units of Unit Trust of India (‘UTI’) or a unit of an equity
oriented fund and zero coupon bonds] are considered to be long-term capital assets, if they are
held for a period exceeding thirty-six months. Security (other than a unit) listed in a recognized
stock exchange of India or units of Unit Trust of India (‘UTI’) or a unit of an equity oriented fund
and zero coupon bonds are considered as long-term capital assets, if these are held for a period
exceeding twelve months. The Finance (No.2) Act 2014 has however inserted second proviso to
section 2(42A) w.e.f 1.4.2015 which provides that in the case of capital assets representing shares
held in a company not being shares listed on a recognized stock exchange or units of Mutual Fund
specified under clause (23D) of Section 10 which is transferred between 1st April 2014 and 10th
July 2014 are treated as short term capital assets if they are not held for more than twelve months.
As per the provisions of section 48 of the IT Act, the amount of capital gain shall be computed
by deducting from the sale the consideration, the cost of acquisition and expenses incurred in
connection with the transfer of a capital asset. Under first proviso to section 48 of the IT Act, the
taxable capital gains arising on the transfer of capital assets being shares or debentures of an Indian
company need to be computed by converting the cost of acquisition, expenditure in connection
with such transfer and full value of the consideration received or accruing as a result of the
transfer into the same foreign currency in which the shares were originally purchased. The
resultant gains thereafter need to be reconverted into Indian currency. The conversion needs to be
done at the prescribed rates prevailing on dates stipulated. Hence, in computing such gains, the
benefit of indexation is not available to non- resident shareholders.
As per the provisions of section 10(38) of the IT Act, long term capital gain arising to a nonresident shareholder from transfer of a long term capital asset being an equity share in a company
listed on a recognized stock exchange in India or units of equity oriented mutual fund, shall be
exempt from tax, if the transaction is chargeable to STT.
In case of an individual or HUF, where the total taxable income as reduced by capital gains is
below the basic exemption limit, the capital gains will be reduced to the extent of the shortfall and
only the balance long-term capital gains or short term capital gains will be subjected to such tax in
accordance with the proviso to sub-section (1) of sections 111A and 112 of the IT Act.
As per provisions of section 111A of the IT Act, short term capital gains arising from transfer of
short term capital asset, being an equity share in a company or a unit of an equity oriented mutual
fund shall be taxable @ 15%, if the transaction is chargeable to STT.
The tax rates mentioned above stands increased by surcharge, payable at the rate of 5% where
the taxable income of a domestic company exceeds Rs 10,000,000. Such surcharge rate would
stand increased to 10% where the taxable income of the domestic company exceeds Rs 100,000,000.
Further, education cess and secondary and higher education cess on the tax on total income and
surcharge at the rate of 2% and 1% respectively is payable by all categories of taxpayers.
171
As per provisions of Section 70 read with Section 74 of the Act, short term capital loss arising
during a year is allowed to be set-off against short term as well as long term capital gains. Balance
loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent
8 assessment years in terms of the provisions of section 74 of the IT Act
As per provisions of Section 70 read with Section 74 of the Act, long term capital loss arising during
a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be
carried forward and set-off against long term capital gains arising during subsequent 8
assessment years in terms of the provisions of section 74 of the IT Act
3.
Exemption of capital gain from income-tax
As per the provisions of section 54EC of the IT Act and subject to the conditions specified
therein capital gains arising to a non-resident shareholder on transfer of a long-term capital asset
(other than those covered under section 10(38) of the IT Act) shall not be chargeable to tax to
the extent such capital gains are invested in certain notified bonds within six months from the date
of transfer. If only part of such capital gain is invested, the exemption shall be proportionately
reduced.
However, if the non-resident shareholder transfers or converts the notified bonds into money
(as stipulated therein) within a period of three years from the date of their acquisition, the
amount of capital gains exempted earlier would become chargeable in such year. The bonds
specified for this section are bonds issued on or after April 1, 2007 by NHAI and REC. The IT
Act has restricted the maximum investment in such bonds upto Rs 5 million per assessee during
any financial year and subsequent financial year.
As per provisions of Section 56(2)(vii) of the Act and subject to exception provided in second
proviso therein, where an individual or HUF receives shares and securities without
consideration or for a consideration which is less than the aggregate fair market value of the
shares and securities by an amount exceeding fifty thousand rupees, the excess of fair market
value of such shares and securities over the said consideration is chargeable to tax under the head
'income from other sources'. However, the said section is not applicable in case the shares and
securities are received under instances specified under the proviso thereon.
4.
Tax Treaty Benefits
Under the provisions of section 90(2) of the IT Act, a non-resident will be governed by the
provisions for the Agreement for Avoidance of Double Taxation (DTAA) between India and
the country of residence of the non-residence and the provisions of IT Act apply only to the
extent they are more beneficial to the assesse. It needs to be noted that a non-resident is
required to hold a valid tax residency certificate containing the particulars prescribed under
Notification No. 57 of 2013 dated 1 August 2013 issued by the Central Board of Direct Taxes
in order to claim benefits under the applicable tax treaty.
5.
Non-Resident Indian taxation
Under section 115-I of the IT Act, the non-resident Indian shareholder has an option not to be
governed by the provisions of Chapter XIIA of the IT Act viz. “Special Provisions Relating to
Certain Incomes of Non-Residents” which are as follows:
a.
Under section 115E of the IT Act, where shares in an Indian company are acquired or
subscribed to in convertible foreign exchange by a non-resident Indian, capital gains
arising to the non- resident on transfer of shares held for a period exceeding 12 months, will
[in cases not covered under section 10(38) of the IT Act], be concessionally taxed at the
flat rate of 10% (plus applicable surcharge and cess) (without indexation benefit but with
protection against foreign exchange fluctuation).
b.
Under provisions of section 115F of the IT Act, long-term capital gains [in cases not
covered under section 10(38) of the IT Act] arising to a non-resident Indian from the transfer
of shares of the company subscribed to in convertible foreign exchange will be exempt from
172
income tax, if the net consideration is reinvested in specified assets within six months of the
date of transfer. If only part of the net consideration is so reinvested, the exemption will be
proportionately reduced. However the amount so exempted will be chargeable to tax
subsequently, if the specified assets are transferred or converted into money within three years
from the date of their acquisition.
c.
Under provisions of section 115G of the IT Act, non-resident Indians are not required to file
a return of income under section 139(1) of the IT Act, if their only income is income from
forex asset investments or long-term capital gains in respect of those assets or both, provided
tax has been deducted at source from such income as per the provisions of Chapter XVII-B of
the IT Act.
d.
Under section 115H of the IT Act, where the non-resident Indian becomes assessable as a
resident in India, such person may furnish a declaration in writing to the Assessing Officer,
along with the return of income for that year under section 139 of the IT Act to the effect that
the provisions of the Chapter XIIA will continue to apply to such person in relation to the
investment income derived from the specified assets for that year and subsequent assessment
years until such assets are converted into money and if he does so, the provisions of chapter
XIIA shall continue to apply to him in relation to such income.As per provisions of Section 115I of the Act, a NRI can opt not to be governed by the provisions of Chapter XII-A for any
assessment year by furnishing return of income for that assessment year under Section 139 of
the Act, declaring therein that the provisions of the chapter shall not apply 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.
e.
As per provisions of Section 115-I of the Act, a NRI can opt not to be governed by the
provisions of Chapter XII-A for any assessment year by furnishing return of income for that
assessment year under Section 139 of the Act, declaring therein that the provisions of the
chapter shall not apply 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
(D)
Benefits to Foreign Institutional Investors (‘FII’)
1.
Dividends exempt under section 10(34) of the IT Act
Dividend (whether interim or final) received by a FII from its investment in shares of a
domestic company would be exempt in the hands of the FII as per the provisions of section
10(34) read with section 115-O of the IT Act.
Section 14A read with Rule 8D of the IT Act restricts claim for deduction of expenses incurred
in relation to income which does not form part of the total income under the IT Act. Thus, any
expenditure incurred to earn the said tax free income will not be a tax deductible expenditure.
2.
Long term capital gains exempt under section 10(38) of the IT Act.
As per the provisions of section 10(38) of the IT Act, long term capital gain arising to the FII
from transfer of a long term capital asset being an equity share in a company listed on a
recognized stock exchange in India or units of equity oriented mutual fund, shall be exempt from
tax, if the transaction is chargeable to STT.
3.
Capital gains
As per the provisions of section 115AD of the IT Act, FIIs are taxed on the capital gains income at
the following rates:
Rate of tax
Nature
of
Income
(%)
Long-term capital gains
10
Short-term capital gains covered u/s 111A
15
Short-term capital gains
30
173
For corporate FIIs, the tax rates mentioned above stands increased by a surcharge, payable at the rate
of 2% where the taxable income exceeds Rs 10,000,000. Such surcharge would stand increased
to 5% where the taxable income exceeds Rs 100,000,000. Further, education cess and secondary
and higher education cess on the tax on total income and surcharge at the rate of 2% and 1%
respectively is payable.
The benefits of foreign currency fluctuation protection and indexation as provided by Section 48 of
the IT Act are not available to a FII.
No income tax is deductible on income by way of Capital Gains, in case the same is arising in
the hands of residents. As per Section 195 of the IT Act, any income payable to non-resident,
may fall within the ambit of with-holding provisions, subject to the provisions of the relevant
tax treaty. Accordingly, income tax may have to be deducted at source in the case of a nonresident at the rate prescribed under the domestic tax laws or under the tax treaty, whichever is
beneficial to the assessee unless a lower withholding certificate is obtained from the tax authorities.
As per provisions of 196D of the Act, taxes shall not be withheld from any income in the nature
of capital gains arising to FIIs from transfer of securities specified in Section 115AD of the Act.
Further, capital gains arising on transfer of other securities would be subject to withholding tax at
the rate of 20%.
Any interest income arising to FIIs in respect of investment in rupee denominated bonds of an
Indian company or a Government security between 1 June 2013 and 1 June 2015 would be
subject to tax deduction at source at 5% u/s 194LD.
As per the provisions of section 10(38) of the IT Act, long term capital gain arising to FII from
transfer of a long term capital asset being an equity share in a company listed on a recognized stock
exchange in India or units of equity oriented mutual fund, shall be exempt from tax, if the
transaction is chargeable to STT.
As per provisions of section 111A of the IT Act, short term capital gains arising from transfer of
short term capital asset, being an equity share in a company or a unit of an equity oriented mutual
fund shall be taxable at the rate of 15%, if the transaction is chargeable to STT.
The benefit of exemption under Section 54EC of the Act mentioned above in case of the Company
is also available to FIIs.
As per the provisions of Section 10(34A) of the Act, any income arising to shareholders on account
of buy-back of unlisted shares shall be exempt in the hands of the shareholders. This
exemption is available to shareholders only in case where the company pays buy back tax under
the provisions of section 115QA of the Act.
4.
Tax Treaty Benefits
As per section 90(2) of the IT Act, the provisions of the IT Act would prevail over the provisions of
the tax treaty to the extent they are more beneficial to the FII. Thus, an FII can opt to be
governed by provisions of the IT Act or the applicable tax treaty whichever is more beneficial. It
needs to be noted that a non-resident is required to hold a valid tax residency certificate
containing the particulars prescribed under Notification No. 57 of 2013 dated 1 August 2013
issued by the Central Board of Direct Taxes in order to claim benefits under the applicable tax
treaty.
(E)
Benefits to Venture Capital Companies / Funds under the Act
In terms of section 10(23FB) of the Act, all Venture capital companies/funds registered with
Securities and Exchange of India, subject to the conditions specified, are eligible for exemption
from income tax on all their income, including profit on sale of shares of the Company. However, the
income distributed by the Venture Capital Companies/Funds to its investors would be taxable in the
hands of the recipient.
174
(F)
Benefits to the Mutual Funds
As per the provisions of section 10(23D) of the IT Act, any income of the
Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 (“SEBI”)
or regulations made thereunder, Mutual Funds set up by public sector banks or public financial
institutions or Mutual Funds authorised by the Reserve Bank of India, would be exempt from income
tax, subject to the prescribed conditions.
(G)
Under the Wealth-tax Act, 1957 (Common to all)
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.
(H)
Under the Gift Tax Act.
Gift Tax is not leviable in respect of any gifts made on or after 1st October, 1998. Therefore any gifts
of Shares will not attract gift-tax. However any transfer of shares made on or after 1, October
2009 without consideration or for inadequate consideration to an Individual or HUF will be
taxable in the hands of receiver under clause (vii) of Section 56(2) of the Income Tax Act,
1961 subject to the prescribed condition and valuation rules.
Notes:
We have not commented on the taxation aspect under any law for the time being in force, as applicable, of any
country other than India. Each investor is advised to consult its own tax consultant for taxation in any
country other than India.
1.
All the above benefits are as per the current tax law.
2.
The stated benefits will be available only to the sole/first named holder in case the share are held
by joint holders
3.
The stated benefits will be available only to the sole/first named holder in case the share are held
by joint holders
4.
In respect of non-residents, the tax rates and the consequent taxation mentioned above will be
further subject to any benefits available under the relevant DTAA, if any, between India and the
country in which the non-resident has fiscal domicile.
5.
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 participation in the scheme.
6.
The above statement of possible direct tax benefits set 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 equity shares.
175
LEGAL PROCEEDINGS
Our Company and our Subsidiaries are, from time to time, involved in various legal proceedings in the ordinary
course of business, which involve matters pertaining to, amongst others, tax, regulatory and other disputes. The
section below describes the legal proceedings, which singly or in aggregate, could have a material adverse
effect on our Company or the relevant Subsidiary.
Litigation filed against our Company
1.
Montecarlo Limited (“MCL”), Kanubhai Patel and Mrunal Patel (the “Petitioners”) filed a company
petition before the Company Law Board, Regional Bench, Bombay (the “Company Law Board”) against
our Company, SIPL, BHTPL, Vishnubhai M. Patel and others (the “Respondents”) under Sections 397 and
398 read with 399, 402 and 403 of the Companies Act, 1956 alleging certain irregularities in relation to
corporate and other matters pertaining to BHTPL including, inter alia, acts of oppression and
mismanagement of affairs of BHTPL by the respondents, non-involvement of the nominee director of
MCL in the day to day affairs of BHTPL, awarding of EPC contract to our Company and siphoning of an
amount to the tune of
2,000 million through EPC contract, and payment of project fee to SIPL through
service, rent and O&M agreements. The Petitioners have sought certain reliefs in relation to the aforesaid
allegations including, inter alia, declaration that memorandum of understanding dated July 9, 2010 entered
between MCL, BHTPL, SIPL and our Company is non-binding, certain amount paid by BHTPL to our
Company in accordance with the terms of the EPC contract to be refunded, services agreement dated
March 1, 2010 entered into by BHTPL with SIPL to be quashed and amount paid under the services
agreement to be refunded and permitting the petitioners along with chartered accountants / consultants /
advocates as representative of the Petitioners to inspect the books of accounts and other books and papers
of BHTPL. The Company Law Board passed an interim order (the “Interim Order”) allowing the
Petitioners to send a representative (Deloitte) to take inspection of the books of accounts and other books
and papers of BHTPL and directed BHTPL to give sufficient notice to the Petitioners of its board
meetings.
Prior to passing of the aforesaid order, SIPL had also issued a notice to MCL invoking arbitration clause
under paragraph 36 of the shareholders agreement dated July 9, 2010 (“SHA”) which was disputed by
MCL. In this regard, SIPL had filed a civil application before the Company Law Board under Section 8 of
the Arbitration and Conciliation Act, 1996 (the “Arbitration Act”) (the “Arbitration Application”).
Being aggrieved by the Interim Order, SIPL and our Company preferred an appeal before the Gujarat High
Court against the order of the Company Law Board. The Gujarat High Court was of the opinion that
neither any reasons had been assigned by the Company Law Board while granting Interim Order nor had
the Arbitration Application been examined by the Company Law Board and accordingly, the Gujarat High
Court set aside the order passed by the Company Law Board and remanded the matter back to the
Company Law Board with a direction to decide the Arbitration Application and pass an order after
deciding the Arbitration Application.
The Company Law Board dismissed the Arbitration Application on certain grounds including inter alia
issues alleged by the Petitioners did not fall in the domain of the arbitral tribunal, subject matter of the
arbitration agreement under paragraph 36 of the SHA were distinct and the aforesaid petition and the fact
that BHTPL was not a party to the arbitration agreement under paragraph 36 of the SHA.
The Company Law Board also granted certain ad-interim reliefs sought by the Petitioners including that (i)
the nominee director of MCL was required to be served with 7 days advance notice in respect of the board
meetings of BHTPL and notices of other meetings was required to be served under applicable law; (ii) the
nominee director of MCL was required to be allowed to participate in the meetings and any comments /
objections was required to be recorded and circulated with minutes within 3 days; (iii) BHTPL was
restrained from entering into any arrangement with any person including other respondents without prior
approval of the Company Law Board; (iv) MCL, through its nominee directors along with chartered
accountant and a company secretary, were permitted to inspect books of accounts and statutory records of
BHTPL subject to certain conditions; and (v) Petitioners with the help of experts were allowed to install
necessary system to monitor toll plazas/project site online.
The Respondents filed a special civil application (the “SCA”) before the Gujarat High Court challenging
the aforesaid order of the Company Law Board. The Gujarat High Court passed an order granting interim
176
reliefs to the Respondents including inter alia restraining the Company Law Board from proceeding
further with the company petition till final disposal of the SCA filed by the Respondents.
Subsequently, the Petitioners filed a civil application in relation to the SCA seeking modification of the
aforesaid order of the Gujarat High Court. The Gujarat High Court clarified that the Petitioners were at
liberty to approach the Company Law Board for enforcing the interim order passed by the Company Law
Board granted certain ad-interim reliefs sought by the Petitioners.
In relation to the SCA, the Gujarat High Court upheld the order of the Company Law Board, vacated the
interim order and dismissed the SCA. The Gujarat High Court, however, directed the Company Law Board
not to proceed with the petition for four weeks from the date of the order. SIPL and another have filed a
letters patent appeal before the Gujarat High Court against the Company Law Board and others for
quashing and setting aside of the order passed by the Gujarat High Court dismissing the SCA. This matter
is currently pending.
2.
Osho Venture FZE (“Osho Venture”) has initiated an arbitration proceeding against our Company,
Vishnubhai M. Patel, Ocean Bright Corporation Limited (“OBCL”) and Sadbhav Natural Resources
Private Limited (“SNRPL”) in relation to non-payment of dues pertaining to the purchase of certain
prospecting licenses and its contribution towards the acquisition of the shares of Osho Minerals Limited
and Osho Cimentos Limited. OBCL is a joint venture entity incorporated by our Company and Vishnubhai
M. Patel along with Osho Ventures pursuant to a memorandum of understanding for acquisition of the
business of four subsidiaries of Osho Venture (“Osho Subsidiaries”), together with the prospecting licenses
held by the Osho Subsidiaries. SNRPL held 74% of equity capital of OBCL and Osho Venture held 26%
of the equity capital of OBCL. Pursuant to the aforementioned memorandum of understanding, Osho
Venture transferred the shares held by it in the Osho Subsidiaries to OBCL.
Further, Osho Venture has also filed a civil miscellaneous application before the City Civil Court,
Ahmedabad against our Company, Vishnubhai M. Patel, OBCL and SNRPL (collectively, the
“Respondents”) seeking an order directing our Company and Vishnubhai M. Patel to pay an amount of
USD 6,685.080 being the amount due to Osho Venture on account of purchase of the business of the Osho
Subsidiaries and the prospecting licenses held by them. Osho Venture has also sought, inter alia,: (i) an
order restraining the Respondents from selling any assets or properties of OBCL; (ii) an order restraining
our Company and SNRPL from allotting additional shares of OBCL in favour of our Company or SNRPL;
(iii) an order directing our Company, Vishnubhai M. Patel and SNRPL to submit list of properties of
OBCL. The City Civil Court passed an order dated May 4, 2009 restraining the Respondants from allotting
additional shares of OBCL in favour of our Company or SNRPL. Our Company, Vishnubhai M. Patel and
OBCL have filed an appeal before the High Court of Gujarat challenging the order dated May 4, 2009
passed by the City Civil Court. In the appeal, our Company, Vishnubhai M. Patel and OBCL have sought
that the order be quashed on the grounds that the City Civil Court erred in its decision restraining the
allotment of shares. The arbitration proceedings initiated by Osho Venture and the appeal filed by our
Company, Vishnubhai M. Patel and OBCL before the High Court of Gujarat are currently pending.
3.
Sidharth Infraprojects Private Limited (the “Claimant”) has initiated an arbitration proceeding against our
Company in relation to a sub-contract agreement dated October 31, 2007 between the Claimant and our
Company. Pursuant to the aforesaid sub-contract agreement, our Company sub contracted the work under
the main contract between our Company and MPRDC for rehabilitation and upgradation of package 11 of
Seoni Chiraidongri Road. The Claimant has alleged that our Company had committed breaches of the
terms of the sub-contract agreement and had unilaterally reduced its scope of work covered under the subcontract agreement The Claimant has claimed an aggregate amount of ` 8,160 lakhs on account of, inter
alia,: (i) amount not paid for the work done; (ii) overhead losses suffered by the Claimant; (iii) losses
suffered on account of profit not earned at appropriate time; (iv) loss of productivity; (v) opportunity
losses; (vi) compensation for interest charges paid to the bank; (vii) loss due to under utilised tools, plants
and machineries. Our Company has been submitted its statement of defence before the Arbitral Tribunal.
The matter is currently pending.
4.
Our Company understands that the Assistant Commissioner of Income Tax (“ACIT”) has filed an appeal
before the Gujarat High Court against an order dated December 19, 2013 passed by the Income Tax
Appellate Tribunal, Ahmedabad (“ITAT”). The ACIT served an assessment order allowing deductions
under section 80-IA of the Income Tax Act, 1961 amounting to ` 4,08,53,900 for assessment years 20052006, 2006-2007 and 2007-2008, for adjusting the losses incurred by the other undertaking of our
177
Company against the eligible income of the undertakings while computing the deductions. The matter is
currently pending.
5.
Our Company understands that the Assistant Commissioner of Income Tax (“ACIT”) has filed an appeal
before the Income Tax Appellate Authority (“ITAT”) challenging the order dated July 29, 2013 passed by
the Commissioner of Income Tax, Appeal (“CIT-A”) allowing certain expenses and deductions allowed by
CIT-A, which was disallowed by the assessing officer for assessment years 2007-2008, 2008-2009, 20092010, 2010-2011 and 2011-2012 under the Income Tax Act, 1961. The matter is currently pending
6.
Our Company understand that the Assistant Commissioner of Income Tax, Appeal Central Circle – 8,
Ahmedabad has filed an appeal before the Income Tax Appellate Tribunal, Ahmedabad challenging the
order dated January 25, 2011 passed by Commissioner of Income Tax (Appeal) (“CIT(A)”). In the
aforesaid order, CIT(A) had allowed deductions of ` 8,22,39,101 in favour of our Company and under
section 80-IA(4) of the Income Tax Act, 1961 for the assessment year 2008-2009. Our Company has filed
a cross objection stating the CIT(A) has, inter alia, erred in rejecting our Company’s plea for allowance of
expenditure of ` 2,39,82,891 as business expenditure. The matter is currently pending.
7.
Our Company has filed an appeal before the Income Tax Appellate Tribunal, Ahmedabad against an order
dated July 29, 2013 passed by the Commissioner of Income Tax (Appeal)-I, Central Circle – 1(1),
Ahmedabad (“CIT-A”). In its order CIT-A has disallowed deduction amounting to ` 12,76,95,200 for
assessment years 2007-2008, 2008-2009, 2009-2010, 2010-2011 and 2011-2012 with respect to certain
payments made by our Company to a sub-contractor on the grounds that such payments were not genuine
the work for which such payments were made was bogus in nature. The matter is currently pending.
8.
Our Company has filed an appeal before the Commissioner of Income Tax, Central Circle- 1(1) (“CIT”)
against the order dated June 20, 2014 passed by the Deputy Commissioner of Income Tax, Central Circle1(1) (“DCIT”). In its order, DCIT disallowed our Company’s claim for deduction for a sum of `
3,79,46,675 under section 80IA(4) of the Income Tax Act, 1961, in relation to agreements entered with
Central and State Government for construction of highways and roads. DCIT also held that our Company
is a contractor who executed the work and was not eligible for such deductions. The matter is currently
pending.
9.
Our Company has filed an appeal before Customs, Excise and Service Tax Appellate Tribunal,
Ahmedabad (“CESTAT”) challenging the order dated July 30, 2013, passed by the Commissioner of
Service Tax, Ahmedabad. In its order, the Commissioner of Service Tax has demanded recovery of
CENVAT credit of input services and capital goods of ` 199.13 lakhs as being wrongly availed by our
Company and imposed a penalty of ` 345. 92 lakhs for suppressing material facts which resulted in wrong
availment of CENVAT credit of input services and capital goods. The matter is currently pending.
Litigation filed by our Company
1.
Our Company has initiated arbitration proceedings against SSNNL before the Gujarat Public Works
Contracts Disputes Arbitration Tribunal, Ahmedabad in relation to the non payment of the costs incurred
by our Company during construction of Narmada Main Canal from Km. 155 to 163 Km. (Package-II),
Phase-II aggregating to `31,11,09,510. The matter is currently pending.
2.
Our Company has initiated arbitration proceedings against SSNNL before the Gujarat Public Works
Contracts Disputes Arbitration Tribunal, Ahmedabad in relation to the non payment for the work executed
by our Company for the construction, extension and improvement of Shedhi Branch Canal from Ch. 0.00
km to 46.03 km aggregating to `10,57,47,251 which our Company claims to have completed prior to the
scheduled date. The matter is currently pending.
3.
Our Company has initiated arbitration proceedings against SSNNL before the Gujarat Public Works
Contracts Disputes Arbitration Tribunal, Ahmedabad in relation to the non payment of the costs incurred
by our Company during construction of Narmada Main Canal in reach Km. 290.605 to 300.326 Km.
(Package-4) aggregating to ` 4,41,19,293. The matter is currently pending.
4.
Our Company has initiated arbitration proceedings against SSNNL before the Gujarat Public Works
Contracts Disputes Arbitration Tribunal, Ahmedabad in relation to the non payment of the costs incurred
178
by our Company during construction of Narmada Main Canal in reach Km. 314.356 to 328.846 Km.
aggregating to ` 4,92,33,206. The matter is currently pending.
5.
Our Company has initiated arbitration proceedings against SSNNL before the Gujarat Public Works
Contracts Disputes Arbitration Tribunal, Ahmedabad in relation to the suffered losses due to the excess
work done by our Company as the estimates of quantities in respect of several items of work were
inaccurate and the damages aggregating to ` 32,81,47,469 was not paid to our Company in time by
SSNNL during construction of Canal across the river Watrak on Narmada Main Canal in the Reach
between Km 144.500 to Km. 264.00 at Chainage 196.18 Km. aggregating to ` 32,81,47,469.The matter is
currently pending.
Inquiries, inspections or investigations under Companies Act
Nil
Material fraud committed against our Company
Nil
Litigation or legal action pending or taken by any ministry or government department or statutory authority
against our Promoters during the last three years
Nil
Defaults in respect of dues payable:
Our Company has no outstanding defaults in relation to statutory dues payable, dues payable to holders of any
debentures (including interest thereon) or dues in respect of deposits (including interest thereon) or any defaults
in repayment of loans from any bank or financial institution (including interest thereon).
179
INDEPENDENT AUDITORS
Our Company’s current statutory auditors are Surana Maloo & Co., Chartered Accountants, who audited the
consolidated financial statements for FY2013 and FY2014, and Shashikant D. Patel, proprietor of M/s
Shashikant Patel Associates, Chartered Accountants audited the consolidated financial statements for FY2012,
included in this Preliminary Placement Document, are independent auditors with respect to our Company as
required by the Companies Act and in accordance with the guidelines issued by the ICAI. Further, Surana
Maloo & Co., Chartered Accounts have conducted limited review of the consolidated financial statements as per
requirement of clause 41 of listing requirement for the quarter ended June 30, 2014, included in this Preliminary
Placement Document.
180
GENERAL INFORMATION
1.
Our Company was incorporated on October 3, 1988 as Sadbhav Engineering Private Limited. Our
Company became a Deemed Public Company by virtue of section 43A (1A) of the Companies
Act,1956, with effect from September 18, 1992. Subsequently, our Company was converted into a
Public Limited Company "Sadbhav Engineering Limited" with a fresh Certificate of Incorporation
dated May 17, 2001. The registered office of our Company which was initially situated at 707, 7th
Floor, Shilp Building, Near Municipal Market, C G Road, Navrangpura, Ahmedabad 380009 was
subsequently shifted to “Sadbhav House”, Opposite Law Garden Police Chowki, Ellisbridge,
Ahmedabad 380 006 with effect from January 3, 2004.
2.
The Issue was authorized and approved by our Board through the resolution passed at its meeting on
September 9, 2014 and approved by our Company’s shareholders through the resolution passed at the
EGM held on October 4, 2014.
3.
Our Company has received in-principle approvals in terms of Clause 24(a) of the Equity Listing
Agreements from both the BSE and the NSE on October 14, 2014, respectively, to list the Equity
Shares on the Stock Exchanges.
4.
Copies of the Memorandum and Articles of Association will be available for inspection during usual
business hours on any weekday between 10:00 a.m. to 5:00 p.m. (except public holidays), at the
Registered Office.
5.
Except as disclosed in this Preliminary Placement Document, our Company has obtained necessary
consents, approvals and authorizations required in connection with the Issue.
6.
Except as disclosed in this Preliminary Placement Document, there has been no material change in our
Company’s financial and trading condition since March 31, 2014, the date of the latest audited
financial statements, prepared in accordance with Indian GAAP, included herein.
7.
Except as disclosed in this Preliminary Placement Document, there are no legal or arbitration
proceedings against or affecting our Company or its assets or revenues, nor is our Company aware of
any pending or threatened legal or arbitration proceedings, which are, or might be, material in the
context of the Issue.
8.
Our Company’s statutory auditors, Surana Maloo & Co., Chartered Accountants have (i) audited the
consolidated financial statements for FY2012, FY2013 and FY2014; and (ii) conducted limited review
on the financial statements for the quarter ended June 30, 2014 included in this Preliminary Placement
Document, have consented to the inclusion of their reports in relation thereto in this Preliminary
Placement Document.
9.
Our Company confirms that it is in compliance with the minimum public shareholding requirements as
required under the terms of the Equity Listing Agreements with the Stock Exchanges.
10.
The Floor Price for the Equity Shares under the Issue is ` 219.06 which has been calculated in
accordance with Chapter VIII of the SEBI Regulations, as certified by Surana Maloo & Co., Chartered
Accountants, vide their certificate dated October 14, 2014.
11.
We may offer a discount of not more than 5% of the Floor Price in terms of Regulation 85 of the SEBI
Regulations.
181
FINANCIAL STATEMENTS
Financial Statements
Financial statements as at and for the years ended March 31, 2012, 2013 and 2014
Financial statements for the three months period ended June 30, 2014
182
Page No.
F1 to F47
F48 to F 49
FINANCIAL STATEMENTS
AUDITOR’S REPORT FOR CONSOLIDATED FINANCIAL STATEMENTS
To,
The Board of Directors of
Sadbhav Engineering Limited
Dear Sirs,
1.
We have examined the accompanying Financial Information of Sadbhav
Engineering Ltd (the “Company”). and its Subsidiaries as set out in
paragraph 2 below, stamped and initialed by us for identification, which
has been prepared for inclusion in the Preliminary Placement Document
and the Placement Document to be submitted to the stock exchanges,
the Registrar of Companies and the Securities and Exchange Board of
India by the Company in connection with its proposed offering of
Equity Shares of Re.1 each of the Company to Qualified Institutional
Buyers pursuant to Chapt er VIII of the of the Securities and
Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009 (hereinafter referred to as ‘the SEBI Regulations’) and
Section 42 of the Companies Act, 2013.
2.
The Financial Information represents the a u d i t e d Consolidated
Balance Sheet of the Company as at March 31, 2014, March 31, 2013
and March 31, 2012, and the related audited statement of Profit and
Loss and Cash Flow Statements for the years ended on those dates,
together with Notes to the Accounts thereon including Significant
Accounting Policies.
3.
The aforesaid Financial Information has been extracted from the
Financial Statements of the Company for each of the years ended March
31, 2014 and March 31, 2013 which have been audited by us and
Financial Statements for the year ended March 31, 2012 has been
audited by M/S Shashikant Patel Associates. The Financial Statements
for the years ended March 31, 2014, March 31, 2013 and March 31,
2012, have been adopted by the members of the Company. We further
report that there are no qualifications in the Auditors’ Reports in respect
of the above financial years which requires adjustments to the said
Financial Information.
4.
We did not audit the financial statements / consolidated financial
statements of subsidiaries whose financial statements / consolidated
financial statements reflect total assets, total revenue and cash flow as
follows:
F-1
S. No.
1
2
3
Financial
Year
2013-14
2012-13
2011-12
Total Assets
6,43,658.55
5,15,841.84
4,23,814.97
Total
Revenue
39,674.40
37,772.07
21,976.64
(Rs. In Lakh)
Cash
Inflow/(used)
16.81
(7,564.35)
7755.18
These financial statements / consolidated financial statements and other
financial information have been audited by other auditors whose reports have
been furnished to us and our opinion is based solely on the reports of the other
auditors.
5.
In our opinion and according to the information and explanations given
to us, the Financial Information as stated in the above paragraph are in
accordance with the requirement of Regulation 84(1) read with applicable
disclosures mentioned in Schedule XVIII of the SEBI Regulations.
6.
This report is intended solely for your information and inclusion in the
Preliminary Placement Document and the Placement Document for
submission to the stock exchanges, the Registrar of Companies and the
Securities and Exchange Board of India in connection with the proposed
offering referred to in paragraph 1 above and is not to be used, referred to
or distributed to any other parties for any other purpose without our prior
consent.
For SURANA MALOO & COMPANY
Chartered Accountants
Firm Reg. No. 112171W
Place: Ahmedabad
Date: October 8, 2014
S.D.PATEL
PARTNER
Membership No. 37671
F-2
Sadbhav Engineering Limited
CONSOLIDATED BALANCE SHEET
(Rs. in Lakh)
Note
No.
PARTICULARS
I EQUITY AND LIABILITIES
(1) Shareholders' funds
(a) Share Capital
(b) Reserve and Surplus
(c) Money Received against Share Warrants
As at
March 31, 2014
As at
March 31, 2013
As at
March 31, 2012
1516.62
123479.18
2315.00
127310.80
1509.46
119509.92
0.00
121019.38
1503.68
115824.99
0.00
117328.67
15321.61
15567.40
17455.79
2.3
2.4
2.5
2.6
498971.82
3566.81
421.07
4368.75
507328.45
405412.29
3169.17
1123.67
241.27
409946.40
311212.84
2344.37
1290.06
195.64
315042.91
2.7
2.8
2.9
2.10
46779.49
38395.20
46120.67
12776.63
144071.99
794032.85
37318.48
35377.93
23796.37
21588.14
118080.92
664614.11
30356.57
33275.27
25113.07
18735.51
107480.42
557307.79
2.11
2.12
2.11
2.12
52238.75
479233.71
71.74
75219.50
606763.70
35424.19
284953.90
87.70
163462.42
483928.21
31140.42
94098.47
15.46
261035.04
386289.39
2.1
2.2
(2) Minority Interest
(3) Non-current Liabilities
(a) Long Term Borrowings
(b) Deferred Tax Liabilities
(c) Other Long Term Liabilities
(d) Long Term Provisions
(4) Current Liabilities
(a) Short Term Borrowings
(b) Trade Payables
(c) Other Current Liabilities
(d) Short Term Provisions
II
TOTAL
ASSETS
(1) Non-current Assets
(a) Fixed Assets
(i) Tangible Assets
(ii) Intangible Assets
(iii) Capital Work-in-Progress
(iv) Intangible Assets under Development
(b) Non-current Investments
2.13
2557.39
2453.93
2490.28
(c) Deferred Tax Assets
2.14
(d) Long Term Trade Receivables
(e) Long Term Loan, Advances and Deposits
(f) Other Non Current Assets
2.15
2.16
2.17
2.22
1987.52
26237.11
2271.34
33055.58
1.45
4167.79
20826.02
3227.13
30676.32
0.00
4366.43
17371.06
1107.16
25334.93
10286.06
16382.10
57577.57
12800.68
52007.23
5159.93
154213.57
794032.85
818.54
10219.02
71005.47
7347.16
55008.67
5610.71
150009.57
664614.11
1529.03
8839.33
69406.33
18013.51
45421.77
2473.50
145683.47
557307.79
(2) Current Assets
(a) Current Investments
(b) Inventories
(c) Trade Receivables
(d) Cash and Cash Equivalents
(e) Short-Term Loans and Advances
(f) Other Current Assets
2.18
2.19
2.20
2.21
2.22
2.23
TOTAL
Significant accounting policies & Notes on Accounts
1&2
forming part of Financial Statements
F-3
Sadbhav Engineering Limited
CONSOLIDATED PROFIT AND LOSS STATEMENT FOR THE YEAR
(Rs. in Lakh)
PARTICULARS
I
Revenue from Operations
II Other Income
Note
No.
2013-14
2012-13
2011-12
2.24
273252.22
215959.34
286632.91
2.25
3062.82
3820.84
2729.09
276315.04
219780.18
289362.00
III Total Revenue (I+II)
IV Expenses :
Cost of Material Consumed
Changes in Inventory of finished goods,
Work-in-Progress and Stock-in-trade
Construction, Toll Plaza and Road Maintenance
Expenses
2.26
37788.37
26838.35
32966.41
2.27
0.00
0.00
0.00
2.28
168554.43
133544.37
196211.57
Employee Benefits Expense
2.29
7657.23
5319.85
4617.40
Finance Cost
2.30
45546.41
30420.39
15589.68
13048.30
17069.29
8604.19
2.31
14697.18
10850.07
11396.92
287291.92
224042.32
269386.17
(10976.88)
(4262.14)
VI Exceptional Items (Net of Expenses) (Refer Note No. 2.40)
12172.22
6093.98
VII Profit Before Tax (V-VI)
1195.34
Depreciation and amortization Expense
Other Expenses
Total Expenses
V Profit/(Loss) Before Exceptional Items and Tax (III-IV)
1831.84
19975.83
0.00
19975.83
VIII Tax Expense
(1) Current Tax
(2) MAT Credit Entitlement
(3) Deferred Tax
Short/(Excess) Provision for taxation for
(4)
earlier years
Profit for the period from continuing
IX
Operations (VII-VIII)
Add: Share of Loss Transferred to Minority interest
Add: Share of Profit/(Loss) of Associates
Net Profit for the year
2722.19
(2661.50)
396.87
3543.25
823.35
7353.65
0.00
737.38
(1869.61)
(21.50)
(11.35)
2607.39
(2513.26)
11896.15
1814.79
15.30
4437.48
3737.57
(476.15)
748.16
561.94
(229.00)
12229.09
2.93
2.93
0.50
0.49
X Earning per Equity Share: (in Rupees)
(1) Basic
(2) Diluted
Significant accounting policies & Notes on Accounts
forming part of Financial Statements
2.32
2.32
8.14
8.08
1&2
F-4
Sadbhav Engineering Limited
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED
2013-14
Particulars
A. CASH FLOW FROM OPERATING ACTIVITIES :
Net Profit after Tax as per Profit and loss account
Adjustments For :
Interest Expenses
Interest Income
Depreciation & Amortisation
Dividend Income
Profit on sale of Assets
Loss on sale of Assets
Profit on sale Mututal funds & Investments
Stock Option Premium
Provision for Taxatiion
Bad Debts
Exceptional Item
Writing off of Intangible asset under Construction
Interest receivable Written off
Transfer to Investor Protection & Education Fund
Sundry balances written back
Excess Provision written back
Foreign currency Fluctuation
MAT Credit Entitlement
Deferred Tax Liabilities/(Assets)
OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES
Adjustment For :
(Increase)/Decrease
(Increase)/Decrease
(Increase)/Decrease
(Increase)/Decrease
of
of
of
of
Long Term Trade Receivables
Trade Receivables
Other Current Assets
Other Non Current Assets
(Increase) /Decrease in Inventories
(Increase)/Decrease
(Increase)/Decrease
(Increase)/Decrease
(Increase)/Decrease
Increase/(Decrease)
Increase/(Decrease)
Increase/(Decrease)
of
of
of
of
of
of
of
Long Term Loans and Advances
Short Term Loans and Advances
Other Long Term Liabilities
Long-Term Provisions
Trade Payables
Other Current Liabilities
Short Term Provision
Cash generated from Operations
Tax Paid
Net Cash From Operating Activities
B. CASH FLOW FROM INVESTMENT ACTIVITIES :
Purchase of Fixed Assets
Sales of Fixed Assets
Payment made for Capital work in progress
Increase in Intengible Assets completed/under development
(Increase)/Decrease in Current Investments
(Increase)/Decrease in Long Term Advances
(Increase)/Decrease in Other Bank Balance & FD
(Increase)/Decrease in Other Non Current Investments
Profit on sale current Investments & Mutual funds
Sales / Purchase of Investments
Interest Received
Option Premium Paid
Dividend Received
Net Cash From Investing Activities
2012-13
2607.39
45546.41
(2520.63)
13048.30
(7.36)
(2.70)
498.53
418.17
433.14
2722.19
4.82
(12172.22)
257.59
226.51
1.25
2.91
(1869.61)
0.00
(2661.50)
396.87
44322.67
46930.06
(265.21)
13425.99
97.69
955.79
(6163.08)
9789.91
1420.64
(231.34)
4127.48
3795.60
10365.70
(0.71)
(5610.56)
(2513.26)
27161.23
0.00
17069.29
(247.93)
(82.78)
140.87
(335.55)
377.68
3521.75
4.13
0.00
0.00
0.00
0.00
(628.02)
(2.50)
164.94
0.00
823.35
(6055.45)
11896.15
13063.03
8604.19
(34.02)
(119.16)
173.57
(115.19)
402.46
7342.30
287.61
47962.33
45449.07
198.64
(1599.14)
(5260.86)
0.00
(1379.69)
(79.39)
(4173.62)
(166.39)
45.63
2102.66
(7830.65)
(30.98)
37318.46
84248.52
(5610.56)
78637.96
Rs. in Lakh
2011-12
737.38
(2056.07)
(13004.04)
4213.41
0.00
(1482.51)
19564.13
11495.68
(1090.41)
12.14
10245.40
(4185.40)
16.62
(18173.79)
27275.28
(6055.45)
21219.83
(5440.92)
(22500.55)
730.75
0.00
(7630.65)
350.34
(72.24)
(17083.33)
1358.42
(15.46)
(98654.25)
(9467.52)
(17607.93)
(298.17)
(88.16)
(418.17)
0.00
2520.63
(101708.22)
0.00
(3375.57)
(1375.83)
1210.23
335.55
(818.54)
3094.22
(196338.20)
(921.55)
8123.22
110.88
459.51
115.19
7.36
(145776.01)
(145776.01)
247.93
30342.17
42238.32
(109742.78)
(109742.78)
2130.05
(1107.16)
34.02
F-5
23728.95
65967.27
(5440.92)
60526.35
(203134.41)
(203134.41)
Particulars
2013-14
2012-13
2011-12
C. CASH FLOW FROM FINANCING ACTIVITIES :
Proceeds From Long Term Borrowings (Net)
Proceeds From Short Term Borrowings (Net)
Repayment of Long Term Borrowings
Net Increase in Working Capital Loan
Proceeds/ Payment to Minority Interest
Proceeds From Share Capital
Share Issue Expenses
Addition in Capital Reserve
Received against Issue of Share Warrant
Grant Received
Interest Paid
Transfer Investor Protection & Education Fund
Dividend Paid
Dividend Tax Paid
Net Cash From Financing Activities
NET INCREASE IN CASH & CASH EQUIVALENTS ( A+B+C )
OPENING BALANCE OF CASH & CASH EQUIVALENTS
CLOSING BALANCE OF CASH & CASH EQUIVALENTS
COMPONENTS OF CASH & CASH EQUIVALENTS
CASH ON HAND
BALANCE IN CURRENT ACCOUNT WITH BANKS
BALANCE IN FIXED DEPOSITS NOT KEPT AS MARGIN
INVESTMENT IN MUTUAL FUNDS
105080.02
5124.24
0.00
4336.78
1689.38
358.26
0.00
0.00
2315.00
0.00
(45546.41)
(1.25)
(908.23)
(154.40)
72293.39
72293.39
5155.34
5811.96
10967.31
305.48
6085.50
4576.33
97889.95
(6973.31)
0.00
11503.97
0.00
289.00
(12.50)
2570.93
0.00
1339.28
(30255.45)
(0.26)
(899.21)
(146.36)
138635.99
1251.47
7834.98
(2157.54)
246.00
18277.48
(14782.54)
75306.04
75306.04
(13216.91)
19028.88
5811.96
(899.25)
(149.35)
172.63
1964.23
3675.10
148257.24
148257.24
5649.18
13379.70
19028.88
73.26
2655.06
15125.82
1174.74
Notes:
1. The cash flow statement has been prepared under Indirect Method as per Accounding Stadanrd - 3 "Cash Flow Statement".
2. All fitures in bracket are outflow.
3. Direct taxes paid are treated as arising from operating activities and are not bifurecated between investing and financing
activities
4. Previous year figures have been recast / restated wherever necessary
F-6
1.1
Corporate Information:
The Company, Sadbhav Engineering Limited is engaged in the business of
development of infrastructure facilities in areas of canals, irrigations projects,
roads, bridge, dams which includes civil, electrical and mechanical contractor,
designer and engineers, structural contractor, earthwork contractor for repairing,
reconstruction, renovation, demolitions and construction of canals, irrigations
projects, roads, bridge, dams. Company also establish, maintain, operate, lease or
transfer the above infrastructure facilities on BOT, BOLT and BOOT basis.
Company is also engaged in mining activities on contract basis and business of
energy generation thorough Wind Power Project.
Sadbhav Infrastructure Project Limited (SIPL), subsidiary company, is engaged in
development, construction as well as operation & maintenance of infrastructure
projects and related consulting and advisory activities. SIPL undertakes
infrastructure projects directly or indirectly through Special Purpose Vehicles
(SPVs) in the form of subsidiaries, joint ventures or associates.
All other subsidiaries are the Special Purpose Vehicles (SPVs) incorporated to
undertake the specific project.
1.2 Principles of Consolidation:
The consolidated financial statements relate to the Company and its subsidiary
companies and its associates hereinafter referred to as the ‘Group Companies’.
The consolidated financial statements have been prepared on the following basis:
a) The financial statements of the Company, its subsidiary companies and
step-down subsidiaries have been consolidated 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. The results of subsidiaries acquired during the year are
included in the Statement of Profit and Loss from the effective date of
acquisition. The amount shown in respect of reserves comprises the
amount of relevant reserves as per the balance sheet of the parent company
and its share in the post-acquisition change in the relevant results of the
subsidiaries.
b) The Build, Operate & Transfer (BOT)/ Design, Build, Operate & Transfer
(DBFOT) contracts are governed by service concession agreements with
government authorities (Grantor). Under these agreements, the operator
(Group Companies) which are Special Purpose Vehicles, does not own the
infrastructure assets, but gets toll collection/user fee rights against the
construction services rendered. Since the construction revenue earned by
the company is considered as exchanged with grantor against toll
collection/user fee rights, profit from such contracts is considered as
realized.
F-7
Accordingly BOT/DBFOT contracts awarded to subsidiary and step-down
subsidiaries (operator), where the work is sub-contracted to parent
company, the intra group transactions on BOT/DBFOT contracts and the
profits arising thereon are taken as realized and not eliminated for
consolidation under Accounting Standard - 21.
c) The financial statements are based on historical cost convention and are
prepared on accrual basis.
d) The
difference
between
the
cost
of
investment
in
the
subsidiaries/associates companies over the net assets at the time of
acquisition of shares in subsidiaries/associates is recognized in the
financial statements as Goodwill or Capital Reserve as the case may be.
e) 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.
f)
Investment in Associate companies has been accounted under the equity
method as per AS 23 – “Accounting for Investments in Associates in
Consolidated Financial Statements”.
g) The Company accounts for its share in change in net assets of the
associate companies, post-acquisition, after eliminating unrealized profits
and losses resulting from transactions between the Company and associate
companies to the extent of its share, through its Statement of Profit and
Loss to the extent such change is attributable to the associate company’s
Profit or Loss and through its reserves for the balance, based on available
information.
h) As far as possible, the consolidated financial statements are prepared using
uniform accounting policies for the transactions and other events in similar
circumstances and are presented in the same manner as the Company’s
separate financial statements.
i)
The list of subsidiaries, step-down subsidiaries and associates included in
consolidation and the company’s holding therein are as under:
F-8
Information pertaining to Subsidiaries
Sr
No
1
Name
Sadbhav
Infrastructure
Projects
Ltd
(SIPL)
Country of
Incorporation
Proportion of
Ownership
Interest as at
31-03-2014
Proportion
of
Ownership
Interest as
at 31-032013
India
84.15%
84.15 %
Proportion of
Ownership
Interest as at
31-03-2012
82.95%
Information pertaining to Step-down Subsidiaries (Subsidiaries of SIPL)
Sr
N
o
1
2
3
4
5
6
7
8
9
10
11
12
Name
Ahmedabad Ring Road
Infrastructure
Ltd
(ARRIL)
Aurangabad Jalna Toll
Way
Ltd
(AJTWL)
Bijapur
Hungund
Tollway Private Ltd
(BHTPL)
Hyderabad
Yadgiri
Tollway Private Ltd
(HYTPL)
Maharashtra
Border
Check Post Network
Ltd (MBCPNL)
Rohtak
Panipat
Tollway Private Ltd
(RPTPL)
Solapur Bijapur Toll
Way
Private
Ltd
(SBTPL)
Shreenathji
Udaipur
Tollway
Private
Limited (SUTPL)
Bhiwara
Rajsamand
Toll Way Private Ltd
(BRTPL)
Rohtak Hissar Tollway
Private Ltd. (RHTPL)
Nagpur-Seoni
Expressway
Ltd
(NSEWL)
Mysore
Bellary
Highway Private Ltd.
(MBHPL)
Country of
Incorporati
on
Proportion of
Ownership
Interest as at
31-03-2014
Proportion of
Ownership
Interest as at 3103-2013
Proportion of
Ownership
Interest as at 3103-2012
India
80.00%
80.00 %
80.00%
India
100.00%
100.00 %
51.00%
India
77.00%
77.00 %
77.00%
India
60.00%
60.00 %
60.00%
India
90.00%*
India
100.00%
100.00 %
100.00%
India
100.00%**
100.00%
--
India
100.00%**
100.00%
--
India
100.00%**
100.00%
--
India
100.00%**
--
India
100.00%
90.00 %
90.00%
India
50.00% ****
--
--
90.00 %
90.00%
--
F-9
Information pertaining to Associates
Sr
N
o
1
2
Name
Country of
Incorporatio
n
Proportion
of Ownership
Interest as
at 31-032014
Proportion of
Ownership
Interest as at 3103-2013
Proportion of
Ownership
Interest as at
31-03-2012
India
20.0%
20.00 %
--
India
27.00***
27.00 %
--
Mumbai Nasik
Expressway Ltd
(MNEL)
Dhule Palesner
Tollway Ltd
(DPTL)
*
63% SEL and 27% SIPL
** 26% SEL and 74% SIPL
*** 26% SEL and 1% SIPL
**** 50% by SEL
Note: AJTL, NSEWL & RPTPL converted to 100% subsidiary of SIPL.
F-10
Note -1.3 Significant Accounting Policies
a) Basis of Preparation of Consolidated Financial Statements:
The Financial statements of the Company have been prepared in accordance
with the Generally Accepted Accounting Principles in India (Indian GAAP) to
comply with the Accounting Standards notified under the Companies
(Accounting Standards) Rules, 2006 (as amended) and the relevant provisions
of the Companies Act, 1956 read with General Circular 8/2014 dated 4 April
2014 issued by the Ministry of Corporate Affairs. The financial statements have
been prepared on accrual basis under the historical cost convention. The
accounting policies adopted in the preparation of the financial statements are
consistent with those followed in the previous year.
b) Change in Accounting Policies :
Amortisation of Toll Collection Rights: During the year ended March 31, 2014,
the SPVs/Subsidiaries has retrospectively revised the method of amortisation
of its Toll Collection Rights from Straight Line Basis to amortisation based on
proportion of actual revenue received during the accounting year to the total
projected revenue till the end of the concession period, in terms of notification
dated dated April 17, 2012 of Ministry of Corporate Affairs (MCA).
The resultant excess amortisation provided in the books of account till March
31, 2013 as per the earlier basis to the extent of `15,775.04 Lakhs has been
written back in Statement of Profit and Loss for the year. This change in
accounting policy has resulted in decrease in amortisation expenses and
corresponding decrease in loss for the year by ` 10,148.74 Lakhs.
c) Use of accounting Estimates:
The preparation of the financial statements in conformity with Indian GAAP
requires management to make estimates and assumptions that affect
reported amount of assets and liabilities and disclosures relating to
contingent liabilities as at the reporting date of the financial statements and
amount of income and expenses during the year of account. Example of such
estimates includes contract costs expected to be incurred to complete
construction contracts, provision for doubtful debts, income taxes etc.
Management periodically assesses whether there is an indication that an
assets may be impaired and makes provision in the account for any
impairment losses estimated. Contingencies are recorded when it is probable
that a liabilities will be incurred and the amount can be reasonably
F-11
estimated. The management believes that the estimates used in preparation
of the financial statements are prudent and reasonable. Future result could
differ from those estimates and the difference between actual results and the
estimates are recognised in the periods in which the results are known /
materialise.
d) Inventories:
Stock of material, Spare-parts, Diesel oil is valued at the lower of cost or net
realizable value after providing any other losses, where considered necessary.
Cost is determined on first-in-first-out basis. Cost includes all the charges in
bringing the goods to the point of use, including octroi and other levies, transit
insurance and receiving charges.
Work in progress is valued at contract rates.
e) Cash and Cash Equivalent:
Cash and cash equivalents for the purpose of cash flow statement comprise
cash at bank and in hand and short term investments with an original
maturity of three months or less from the date of acquisition.
f) Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit/(loss)
before extra-ordinary items and tax is adjusted for the effects of transactions
of non-cash nature. The cash flow from operating, investing and financing
activities of the Company are segregated based on the available information.
g) Recognition of contract revenue and expenses:
(i)
In case of Item rate contracts Revenue is recognized over the life of the
contract using proportionate completion method, on the basis of physical
measurement of work actually completed at the balance sheet date.
(ii)
In the case of lump sum contracts, revenue is recognized on the
completion of milestones as specified in the contract or as identified by the
management.
(iii) An expected loss on construction contract is recognized as an expense
immediately when it is certain that the total contract costs will exceed the
total contract revenue.
(iv) Price escalation and other claims and/or variation in the contract work
are included in contract revenue only when:
F-12
-Negotiation have reached at an advance stage such that it is
probable that customer will accept the claim; and
-The amount that is probable will be accepted by the customer can
be measured reliably.
(v)
Incentive payments, as per customer-specified performance standards, are
included in contract revenue only when:
(a) The contract is sufficiently advanced that it is probable that the
specified performance standards will be met; and
(b) The amount of the incentive payment can be measured reliably.
(vi) Site mobilization (Camp) Expenditure for site installation is written off over
the period of contract in proportion to the value of work done.
(vii) Income and expenses of previous years up to Rs. 500000/- are recognized
in the current year as such. However income and expenses over and above
Rs. 500000/- of previous year are accounted for as Prior Period item
(viii) Toll collection from users has been accounted when the amount is
received. Income of monthly pass is recognized as and when it is received
in entirely.
(ix) Income from sale of services: In respect of arrangements, which provide for
an upfront payment followed by additional payments as certain conditions
are met (milestone payments), the amount of revenue recognized is based
on the services delivered in the period as stated in contract. In respect of
arrangements where fees for services rendered are success based, revenue
is recognized only when the factors on which the fee is based, actually
occurs.
(x)
Project Related Income: Contract revenue and costs associated with
project related activities is recognized as by reference to the stage of
completion of the projects at the Balance Sheet date. The stage of
completion of a project is determined by the proportion that the contract
cost incurred for work performed up to the Balance Sheet date bears to
the estimated total contract costs.
An expected loss on construction contract is recognized as expenses
immediately when is certain that total contract costs will exceeds the total
contract revenue.
(xi) Income from publicity rights are recorded on accrual basis.
(xii) Profit/loss on sale of units of mutual funds and dividend income is
recognized on realization basis.
(xiii) Interest on investment and bank deposits are recognized on a time
proportion basis taking into account the amount invested and the rate
applicable.
(xiv) Income from fixed priced contract Revenue from development projects
under fixed price contracts, where there is no uncertainty as to
measurement or collectability of consideration is recognized based on
F-13
milestones reached under the contracts. Pending completion of milestone,
revenue recognition is restricted to the relevant cost which is carried
forward as part of Unbilled Revenue.
(xv) Annuity income for the project is recognized on accrued basis as per
Concession agreement with NHAI.
h) Other Income
Interest Income is accounted on accrual basis. Dividend income is accounted
for when the right to receive it is established
i) Tangible Assets:
Tangible Fixed Assets are valued at cost less accumulated depreciation. Direct
cost is inclusive of all expenditure of capital in nature attributable to bring the
fixed assets to working conditions, duties and taxes, incidental expenses
including interest relating to acquisition and cost of improvements thereon are
capitalized until fixed assets are ready for use. Subsequent expenditure on
fixed assets after its purchase/completion is capitalised only if such
expenditure results in an increase in the future benefits from such asset
beyond its previously assessed standard of performance.
j) Depreciation:
(i) Depreciation is provided for all assets except for vehicles on straight-line
method and depreciation on vehicles is provided on written down value
method at the rates specified in schedule XIV to the Companies Act, 1956.
(ii) In case of AJTL, ARRIL & RPTPL, Tangible Project Assets, as defined under
Concession Agreement, are amortized on straight line basis, from the date
on which such project asset is ready for use, till the end of concession
period.
(iii) Depreciation on Tangible Assets of remaining subsidiaries is provided
using the Written down Value method at rates prescribed under schedule
XIV of the Companies Act, 1956.
(iv) In respect of fixed assets purchased during the period, depreciation is
provided on a pro-rata basis from the date on which such asset is ready to
be put to use.
(v) Depreciation on assets sold, discarded or demolished during the year is
being provided at their respective rates on pro-rata up to the date on
which such assets are sold, discarded or demolished.
k) Intangible Assets and Amortisation:
F-14
(i) An intangible asset is recognized, only where it is probable that future
economic benefits attributable to the asset will accrue to the enterprise
and the cost can be measured reliably. Intangibles are stated at cost, less
accumulated amortisation and impairment losses, if any.
(ii) Toll collection rights received from the authority against construction
services rendered by the subsidiary companies on BOT basis include
direct and indirect expenses on construction of roads, bridges etc.
(iii) Goodwill arising on consolidation is amortised on straight line basis,
beginning from the date of acquisition of subsidiaries or commencement of
commercial operations by subsidiaries, whichever is later, till the end of
concession period.
(iv) Intangible Asset (Right to operate the Project Road) is amortised based on
proportion of actual revenue received during the accounting year to the
total projected revenue till the end of the concession period in terms of
Ministry of Corporate Affairs (MCA) notification dated April 17, 2012. The
total projected revenue for the entire useful life is reviewed at the end of
each financial year for expected changes in traffic and adjusted to reflect
any changes in the estimate which will lead to actual collection at the end
of useful life.
(v) Software used at Head office and work-shop are amortised over a period
of three years and software used at Project sites are amortised during the
project completion period.
l) Intangible Asset under Development:
(i) Intangible asset under development comprises of cost of road development
including other capital assets till they are ready for their intended use as
at the reporting date of the financial statements as well as “Expenditure
during construction period, pending allocation.” These shall be capitalised
as an intangible asset after its Commercial Operation Date (COD).
(ii) Expenditure directly relating to construction activity is capitalised.
Indirect expenditure incurred during the construction period is capitalised
as part of the indirect construction cost to the extent to which the
expenditure is indirectly related to construction or is incidental thereto.
Income earned during construction period is deducted from the total of
the indirect expenditure. Other indirect expenditure (including borrowing
costs) incurred during the construction period which is not related to the
construction activity nor is incidental thereto, is charged to Statement of
Profit and Loss.
m) Impairment of Assets:
F-15
The carrying values of assets at each balance sheet date are reviewed for
impairment. If any indication of impairment exists, the recoverable amount
of such assets is estimated and impairment is recognised, if the carrying
amount of these assets exceeds their recoverable amount. The recoverable
amount is the greater of the net selling price and their value in use. Value
in use is arrived at by discounting the future cash flows to their present
value based on an appropriate discount factor. When there is indication
that an impairment loss recognised for an asset in earlier accounting period
no longer exists or may have decreased, such reversal of impairment loss is
recognised in the Statement of Profit and Loss, except in case of revalued
assets.
After impairment, depreciation is provided on the revised carrying amount
of the asset over its remaining useful life.
n) Foreign Currency Transactions:
(i)
Transactions denominated in foreign currencies are recorded at the
exchange rate prevailing on the date of transactions or rates that closely
approximate the rate at the date of the transaction.
(ii) Monetary items denominated in foreign currencies at the year-end are
restated at year end rates. As the Company has adopted para 46A of AS11, the exchange differences arising on settlement / restatement of longterm foreign currency monetary items are Capitalised as part of the
depreciable fixed assets. If such monetary items do not relate to
acquisition of depreciable fixed assets, the exchange difference is
amortised over the maturity period/up to the date of settlement of such
monetary items, whichever is earlier, and charged to the Statement of
Profit and Loss. The unamortised exchange difference is carried in the
Balance Sheet as “ Foreign Currency Monetary Item Translation Difference
Account” net of the tax effect thereon, where applicable.
(iii) Non-monetary foreign currency items are carried at cost
(iv) Exchange differences arising on long-term foreign currency monetary items
related to acquisition of a fixed asset are capitalized and depreciated over the
remaining useful life of the asset.
(v) Exchange differences arising on other long-term foreign currency monetary items
are accumulated in the “Foreign Currency Monetary Item Translation Difference
Account” and amortized over the remaining life of the concerned monetary
item.
(vi) Foreign currency transactions are recorded in the reporting currency
either on settlement or on year end by applying to the foreign currency
amount the exchange rate between the reporting currency and the foreign
currency at the date of the settlement or year end.
F-16
o) Derivative Contracts:
The Company uses derivative contracts to hedge its risks. In respect of
derivative contracts, premiums paid, gains / losses on settlement and
provision for losses for cash flow hedges are recognized in the statement of
profit and loss.
p) Investments:
Trade Investments are the investments made to enhance the Company’s
business interest. Investments are either classified as current or long-term
based on the management’s intention at the time of purchase or Investment.
Current investments are carried at the lower of cost or quoted / fair value,
computed category wise. Long Term Investments are stated at cost. Provision
for diminution in the value of long-term investments is made only if such a
decline is other than temporary.
On disposal of an investment, the difference between its carrying amount and
net disposal proceeds is charged or credited to the statement of profit and loss.
q) Grant:
Grant received or receivable from government or other authorities is in the
nature of promoters’ contribution hence treated as capital receipt and is
accounted as Capital Reserve.
r) Employee Benefits:
(i) Contribution to “Defined Contribution Schemes” such as Provident Fund
is charged to the profit and loss account as incurred. Provident Fund
contribution is made to the Government Administered Provident Fund.
Company has no further obligation beyond this contribution charged in
financial statement.
(ii) Company also provides for Retirement Benefits in the form of Gratuity.
Such Benefits are provided for, based on valuation, as at the Balance
Sheet date, made by independent actuaries. Company has taken Group
Gratuity Policy of L.I.C. of India and Premium paid is recognized as
expenses when it is incurred. Actuarial gains and loss in respect of
Gratuity are charged to Profit & Loss Account.
(iii) Short term employee benefits including leave are recognized as an expense
in the profit and loss account of the year in which the related services are
rendered
(iv) In respect of employee stock options, the excess of fair price on the date of
grant over the exercise price is recognized as deferred compensation cost
amortised over the vesting period
F-17
s) Employee Share Based payment
The Company has constituted Employee Stock Option Plan – 2008.
Employee Stock Option granted on 4th October, 2010 is accounted under
‘Fair Value Method’ stated in the Guidance Note on Employee Share Based
Payments issued by the Institute of Chartered Accountants of India.
t) Borrowing Costs:
Borrowing costs include interest, amortisation of ancillary costs incurred and
exchange differences arising from foreign currency borrowings to the extent
they are regarded as an adjustment to the interest cost.
Cost in connection with the borrowing of the funds to the extent not directly
related to the acquisition of qualifying assets are charged to the Statement of
Profit and Loss over the tenure of the loan
Borrowing Costs directly attributable and identifiable to the acquisition or
construction of qualifying assets are capitalized till the date such qualifying
assets are ready to be put to use. A qualifying asset is one that required
substantial period of time to get ready for its intended use. All other borrowing
costs are charged to the Profit & Loss Account as period costs.
u) Segment Reporting Policies:
Identification of segments:
The Company’s operating businesses are organized and managed separately
according to the nature of services provided, with each segment representing a
strategic unit that offers different services and serves different markets. The
analysis of geographical segments is based on the areas in which major
operating divisions of Company operate i.e. India
Allocation of common costs:
Common allocable costs are allocated to each segment according to the relative
contribution of each segment to the total common costs.
Unallocated Items:
Includes general corporate income and expense items which are not allocated
to any business segment. Assets and liabilities (including investments made in
infrastructure projects through special purpose vehicle) that cannot be
allocated between the segments are shown as a part of unallocated corporate
assets and liabilities respectively.
Segment Policies:
F-18
The company prepares its segment information in conformity with the accounting
policies adopted for preparing and presenting the financial statements of the
company as a whole.
v) Leases:
Where the Company is the lessee,
Leases where the lessor effectively retains substantially all the risks and
benefits of ownership of the leased item, are classified as operating leases.
Operating lease payments are recognized as an expense in the Statement of
Profit and Loss on a straight-line basis over the lease term. In case of SPVs
where the commercial operations have not commenced, the lease payments are
capitalised as “Expenditure during Construction Period, pending allocation”.
w) Income Taxes:
Tax Expenses comprise Current Tax and Deferred Tax.
Provision for current tax is made after taking into consideration benefits
admissible under the provision of the Income Tax Act, 1961.
Deferred Tax is recognized on timing difference being the differences between
the taxable incomes and accounting income that originate in one period and are
capable of reversal in one or more subsequent periods. In situation where the
company has unabsorbed depreciation or carry forward losses, all Deferred Tax
Assets subject to the consideration of prudence are recognized and carried
forward only to the extent that there is a reasonable certainty that sufficient
future taxable income will be available against which such Deferred Tax Assets
can be realized. The tax effect is calculated on the accumulated timing
difference at the year end based on the tax rates and laws enacted or
substantially enacted on Balance Sheet date.
Minimum alternate tax (MAT) paid in a year is charged to the statement of
profit and
loss
as current tax. The Company recognises MAT credit
available as an asset only to the extent that there is convincing evidence that
the Company will pay normal income tax during the specified period, i.e., the
period for which MAT credit is allowed to be carried forward. In the year in
which the Company recognises MAT credit as an asset in accordance with the
Guidance Note on ‘Accounting for Credit Available in respect of Minimum
Alternative Tax’ under IT Act, the said asset is created by way of credit to the
statement of profit and loss and shown as “MAT Credit Entitlement.” The
Company will review the “MAT credit entitlement” asset at each reporting date
and write down the asset to the extent the Company does not have convincing
evidence that it will pay normal tax during the specified period.
F-19
x) Provisions:
A provision is recognized when an enterprise has a present obligation as a
result of past event; it is probable that an outflow of resources will be required
to settle the obligation, in respect of which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined based on
best estimate required to settle the obligation at the balance sheet date. These
are reviewed at each balance sheet date and adjusted to reflect the current best
estimates.
y)
Earning per share (EPS):
Basic earnings per share are calculated by dividing the net profit for the year
attributable to equity shareholders by the weighted average number of Equity
Shares outstanding during the year.
For the purpose of calculating diluted earning per share, the net profit for the
year attributable to equity shareholders and the weighted average number of
Equity Shares outstanding during the year are adjusted for the effects of all
dilutive potential equity shares.
z) Contingent Liabilities & contingent assets:
Contingent liabilities are not provided for and are disclosed by way of notes.
Contingent assets are neither recognized nor disclosed in the financial
statement
Periodic Major Maintenance : Contractual Obligations to periodically maintain
Project asset as per the terms of the concession agreement are provided for in
accordance with Accounting Standard(AS) -29 "Provisions, Contingent
Liabilities and Contingent Assets" i.e; at the best estimate of the expenditure
required to settle the present obligation at the balance sheet date.
aa) Insurance Claims
Insurance claims are accounted for on the basis of claims admitted/expected
to be admitted and to the extent that there is no uncertainty in receiving the
claims
bb) Service Tax Input Credit
Service tax input credit is accounted for in the books in the period in which
the underlying service received is accounted and when there is no
uncertainty in availing/utilizing the credits.
cc) Operating Cycle
Operating cycle for the business activities of the company covers the
duration of the specific projects/contract/product line/service including
F-20
the defect liability period wherever applicable and extends up to the
realization of receivables (including retention monies) within the agreed
credit period normally applicable to the respective lines of business.
dd) General:
Accounting policies not specifically referred to are consistent with generally
accepted accounting policies.
F-21
(Rs. in Lakh)
PARTICULARS
Note 2. Notes on Accounts
2.1 Share Capital
(a) Authorised Share Capital: 20,00,00,000 Equity Shares of
Re.1/- each
(b) Issued, Subscribed and fully paid
As at
March 31, 2014
As at
March 31, 2013
As at
March 31, 2012
2000.00
2000.00
2000.00
1516.62
1509.46
1503.68
150945800
716500
151,662,300
150,367,800
578,000
150,945,800
149875800
492000
150,367,800
151662300 [(150945800) (150367800)] Equity shares of
Re.1/- each with voting rights
(c) Reconciliation of No.of Shares:
Outstanding at the beginning of the year
Addition during the year
Outstanding at the end of the year
(Nos.)
(Nos.)
(Nos.)
(d) Rights of Shareholders and Repayment of Capital:
(i) The Company has only one class of shares referred to as equity shares having a par value of Re. 1/-.
(ii) Each holder of equity shares is entitled to one vote per share.
(iii) In the event of liquidation of the Company, the holders of equity shares shall be entitled to receive any of the remaining
assets of the Company, after distribution of all preferential amounts. The amount distributed will be in proportion to the
number of equity shares held by the shareholders.
(e) Shares held by each share holder holding more than 5% Equity shares of the company
(f)
Name
No.of shares & (%)
No.of shares & (%)
No.of shares & (%)
Vishnubhai M. Patel
Shantaben V. Patel
Sadbhav Finstock Private Limited
17829220 (11.76%)
14715375 (9.70%)
16545275 (10.91%)
10763570 ( 7.13%)
14715375 ( 9.75%)
16545275 (10.96%)
10763570 (7.16%)
14715375 (9.79%)
16545275 (11.00%)
Shares reserved for Issue under ESOP @Rs.50/-per share
(Nos.)
(Face Value Re.1/-)
382500
1167500
1820000
The activity in the ESOP-2008 during the year ended March 31, 2014, March 31, 2013 and March 31, 2012 respectively, is set out
below:
Particulars
Option outstanding in the beginning of the year
Option granted during the year
Less: Exercised
Less: Forfeited/Lapsed
Option outstanding at year end
Option exercisable at year end
As at
March 31, 2014
(Figure in Nos)
1167500
0
716500
68500
382500
382500
As at
March 31, 2013
(Figure in Nos)
1820000
0
578000
74500
1167500
75500
As at
March 31, 2012
(Figure in Nos)
2442000
0
492000
130000
1820000
90500
As at March 31, 2014 3,82,500 equity shares have been kept reserved for issue against the outstanding options. All shares are
vested and are exercisable at any point of time within three years from the date of vesting.
The exercise price of option is Rs. 50/- per option granted
2.2
Reserve and Surplus
(a) Capital reserve
As per Last Balance Sheet
Add/(Less) during the year
(b) Security Premium Account
As per Last Balance Sheet
Addition during the year
(c) Debenture Redemption Reserve
As per Last Balance Sheet
Addition during the year
(d) Shares Options Outstanding Account
As per Last Balance Sheet
Addition during the year
Less Shares issued during the year
52291.97
0.00
52291.97
49721.04
2570.93
52291.97
31443.56
18277.48
49721.04
28214.33
860.52
29074.85
27520.14
694.18
28214.32
26929.25
590.89
27520.14
1814.80
200.00
2014.80
1814.80
0.00
1814.80
1214.80
600.00
1814.80
229.86
433.14
509.43
153.57
263.14
377.68
410.96
229.86
210.49
402.46
349.81
263.14
F-22
(Rs. in Lakh)
As at
March 31, 2014
As at
March 31, 2013
As at
March 31, 2012
8160.18
1000.00
9160.18
7410.18
750.00
8160.18
6010.18
1400.00
7410.18
28798.78
4,437.48
0.00
29095.69
748.16
755.94
19916.98
12,229.09
0.00
1,000.00
200.00
0.00
1064.54
187.91
30783.81
750.00
0.00
(1.81)
905.70
147.11
28798.79
1,400.00
600.00
0.00
903.77
146.61
29095.69
123479.18
119509.92
115824.99
18000.00
12740.00
0.00
Repayable During The Year
No of Instalments
Maturity Amount
2014-15
2015-16
2016-17
2017-18
4
4
4
4
1600
2000
4000
12000
0
0
PARTICULARS
(e) General Reserves
As per Last Balance Sheet
Addition during the year
(f)
2.3
Profit and Loss account
As per Last Balance Sheet
Net Profit for the year
Addition due to Increase in stake
Appropriations:Transfer to general reserves
Transfer to Debenture Redemption reserves
Dividend on Preference Shares waivered by Shareholders
Proposed Dividend
Tax on Proposed Dividend
Long Term Borrowings
(a) Bonds/Debentures
(Secured)
Secured redeemable non-convertible debentures
ICICI Bank [200 (130) debentures of Rs. 1 Crore each]
The debentures are secured by (a) a residual charge over all
the movable assets of the company (b) exclusive charge
over the secured Immovable Property i.e. piece of non
agricultaral freehold land situated at Maharajpura of Kadi
Taluka, in favour of the Debenture Trustee (for the benefits
of the secured parties (c) pledge in favour of ICICI Bank Ltd
2600717 number of equity shares of Sadbhav
Infrastructure Project Ltd.
Rate of interest of above NCD is ICICI Bank base rate plus
spread of 1.75%
Repayment Schedule of Debentures is as under:
Life Insurance Corporation of India (300 debentures of Rs.10
Lakhs each)
3000
The debentures are secured by the first legal Registered
Mortgage and charge on the specific movable fixed assets of
the Company and specific immovable properties i.e.
Bungalow (Manorama Retreat) and Flat (Abhimanyu)
belonging to the Company. The security has been created
on the said assets on 29th May, 2009 and same has been
registered with Registrar of Company on 2nd June, 2009.
Above debentures are Repayable on 23/03/2014
(b) Term Loans
(i) (Secured)
From Banks:(a) Foreign Currency Term Loan (ECB)
(b) Rupee Term Loan
From Financial Institutions
Secured by way of hypothecation
machineries and equipments purchased
of
86477.01
376294.11
86704.21
299944.85
56574.54
247952.85
3985.59
442.47
412.92
specific
F-23
(Rs. in Lakh)
PARTICULARS
(ii) Unsecured
Loans and Advances from related parties
(Subordinate Debt from Promoters, in terms of
common Rupee Term Loan Agreement)
As at
March 31, 2014
As at
March 31, 2013
As at
March 31, 2012
14215.11
5580.76
3272.53
498971.82
405412.29
311212.84
The details of security in respect of Indian Rupee Term Loans and Foreign Currency Loans (ECB) are as under:
A Term Loan from Bank availed by the Company (SEL) is secured by way of hypothecation of specific
machineries and equipments purchased, Sadbhav Vision House, Guest House & office in Mumbai, Non
Agricultural land at Sheikhpur (Ahmedabad), Guest House in Delhi.
B The term loan from Bank availed by SIPL is secured by:
i
ii
iii
A first charge on all movable assets including intangible assets, book debts and other receivables of
the company.
First charge on all bank accounts of the company.
Corporate guarantee of Sadbhav Engineering Limited. The guarantee shall fall off in case the credit
rating of the company remains AA- for two consecutive years.
C Rupee Term Loans and Foreign Currency Loans from banks availed by Step-down Subsidiaries are secured by:
i
ii
iii
A first mortgage and charge on all the Company's immovable properties, both present and future,
save and except the Project Assets;
A First charge on all the Company's tangible moveable assets, including moveable plant and
machinery, machinery spares, tools and accessories, furniture, fixtures, vehicles and all other
movable assets, both present and future, save and except the Project Assets;
A first charge over all accounts of the Company including the Escrow Account and the SubAccounts (or any account in substitution thereof) that may be opened in accordance with Common
Rupee Loan Agreement and the Supplementary Escrow Agreement, or any other Project Documents
and all funds from time to time deposited therein, including those arising out of realisation of
Receivables and all permitted Investments or other securities representing all amounts credited
thereto.
iv
A first charge on all intangible assets of the Company including but not limited to goodwill, rights,
undertakings and uncalled capital present and future excluding the Project Assets.
v
A first charge on assignment by way of security in:
All the right, title, interest, benefits, claims and demands whatsoever of the Company in the
Project Documents;
- The right, title and interest of the Company in, to and under all Clearances;
Charge/assignment on all the intangible assets of the Company (other than project assets)
including by not limited to goodwill, rights, undertakings, all the right, title, interest, benefits,
- claims and demands whatsoever of the Company in any letter of credit, guarantee including
contractor guarantees and liquidated damages and performance bond provided by any party to
the Project Documents;
All the right, title, interest, benefits, claims and demands whatsoever of the Company under all
Insurance Contracts;
Pledge of equity shares held by SEL, SIPL and other promoters of the respective Subsidiaries as
stipulated in Loan Agreements. Details of shares pledge are as under:
-
vi
Particulars
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
Pledged
by
by
by
by
by
by
by
by
by
by
by
by
by
by
by
by
by
SIPL
SIPL
SIPL
SIPL
SIPL
SEL
SIPL
SIPL
SEL
SIPL
SIPL
SIPL
SIPL
SEL
SEL
SEL
SEL
Name of SPV
ARRIL
AJTWL
BHTPL
HYTPL
MBCPNL
MBCPNL
RPTPL
SBTPL
SIPL
NSEWL
BRTPL
RHTPL
SUTPL
BRTPL
RHTPL
SUTPL
SBTPL
% of shares
pledged
30.00 %
51.18 %
13.84 %
51.01 %
0.02 %
47.70 %
51.00 %
51.00 %
11.88 %
30.00%
39.24%
51.00 %
51.00 %
39.24%
51.00 %
51.00 %
51.00 %
F-24
(Rs. in Lakh)
As at
March 31, 2014
PARTICULARS
As at
March 31, 2013
As at
March 31, 2012
Notes:
(a)
The aforesaid mortgages, charges, assignments and guarantees and the pledge of equity shares
as stipulated in paragraph 6 above shall in all respects rank pari-passu inter-se amongst the
Lenders and the Working Capital Lenders, in accordance with the Concession Agreement,
without any preference or priority to one over the other or others;
(b) The security interest shall exclude the Project Assets (as defined in and in accordance with the
Concession Agreement) unless such security is consented to by the authority pursuant to the
Concession Agreement.
D
Terms of Repayment:
i
The Long Term Loans taken by SEL carry a floating interest rate ranging from 8.47% to 12.00%.
Interest payable on ECB is linked to LIBOR which is 215 basis points and 250 basis points over
libor.
Terms of repayment of term loan taken by Sadbhav Engineering Limited is as under:
Repayable during the year
No of Installments
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
692
675
632
151
4
2
2020-21
2021-22
2
2
Maturity Profile of Term Loans
From Financial
From Banks
Institutions
13166.40
1473.94
7519.34
1623.32
5856.50
1765.06
3637.83
597.21
1363.07
0.00
596.79
0.00
596.79
0.00
596.79
0.00
The term loan taken by SIPL carries a floating interest rate ranging from 13.25% to 13.50% during the
reporting period. This loan is repayable in 4 annual installments commencing after 48 months from the date
of 1st disbursement i.e. 06 March 2012.
With regards to loan repayment terms of other subsidiaries, the same are as under:
ARRIL
The First Ranking Rupee Loan is repayable to each lennder in 50 structured quarterly installments
commencing from August 31, 2009. As per repayment schedule of the loan agreement, the principal amount
outstanding under the said agreement shall be repaid by November 30, 2021. The Loans carry an average
interest rate of 10.50% to 11.50% per annum.
The Second Ranking Rupee term loan is repayable to the lenders in 52 structured quarterly installments
commencing from August 31, 2011. As per the repayment schedule of the loan agreement, all the principal
amount outstanding under the said agreement shall be repaid by May 31, 2024. Term Loans carry an average
interest rate of 12.50% to 12.75 % per annum.
AJTL
The principal amount of the loan to each of the lender is payable in 48 equal quarterly installments
commencing from October 1, 2011. Term loans carry average interest rate of 11.00 % to 11.50 % per annum.
NSEWL
The foreign currency loan is repayable in 15 semi annual installments commencing from December 30, 2010.
Term loans carry interest @ LIBOR + 135 basis points.
MBCPNL
The loan is repayable in 50 quarterly installments commencing after 15th quarter from first disbursement i.e.
March 20, 2010. The term loans carry interest rates ranging from 13.00% to 13.25 % per annum.
BHTPL
Principal of Rupee Term loan is repayable in 37 equal quarterly installments commencing from the expiry of
moratorium period (i.e. 14 quarters from first drawdown date, December 12, 2010). The loans carry interest of
11.00 % to 12.00 % per annum.
Foreign currency loan shall be repayable in unequal semi annual installments. First repayment shall be made
from the half year anniversary falling immediately after the date on which any scheduled repayment is made
to the Rupee lenders in accordance with the common Rupee Loan agreement. The company is paying interest
of LIBOR + 4.70 basis points per annum.
F-25
(Rs. in Lakh)
PARTICULARS
As at
March 31, 2014
As at
March 31, 2013
As at
March 31, 2012
HYTPL
Principal amount of each term loan shall be repayable in 47 equal quarterly installments commencing from
the expiry of moratorium period (i.e. 33 months from initial drawdown date). Term loans carry interest of
11.75 % per annum.
Foreign Currency Loan from Bank shall be repayable in unequal semi-annual installments. First repayment
shall be made from the half year anniversary falling immediately after the date on which any scheduled
repayment is made to the Rupee lenders in accordance with common Rupee loan agreement. Interest at
LIBOR + 470 basis points per annum.
RPTPL
The principal amount of the loan shall be repayable in 43 quarterly installments commencing from 22
quarters from initial drawdown date (i.e. March 30, 2011). The term loans carry interest rate of 12.25 % to
12.75% per annum.
Foreign Currency Loan from Bank shall be repayable in accordance with the Repayment schedule which shall
be in line with the repayment schedule of the Rupee Lenders under the amended common Rupee Loan
Agreement. Interest at LIBOR + 470 basis points per annum is paid on the loan.
SUTPL
The Principal amounts of the Loan under Tranche I is repayable to the Lenders in 138 structured monthly
installments ,commencing from the expiry of thirteenth (13th) calendar month starting from the calendar
month in which the Schedule Commercial Operations Date (SCOD) occurs. Term loans carry interest of 12 to
12.75 per cent per annum.
The Principal amounts of the Loan under Tranche II is repayable to the Lenders in 174 structured monthly
installments , commencing from the expiry of thirteenth (13th) calendar month starting from the calendar
month in which the SCOD occurs.
Term loans carry interest of 12 to 12.75 per cent per annum.
BRTPL
The Principal amounts of the Loan is repayable to the Lenders in 174 structured monthly installments,
commencing from the expiry of thirteenth (13th) calendar month starting from the calendar month in which
the Schedule Commercial Operations Date (SCOD) occurs. Term loans carry interest of 12.25 per cent per
annum.
RHTPL
The Principal amounts of the Loan is repayable to the Lenders in 174 structured monthly installments,
commencing from the expiry of thirteenth (13th) calendar month starting from the calendar month in which
the Schedule Commercial Operations Date (SCOD) occurs. Term loans carry interest of 12.50% per annum.
Sub-ordinate debt from Holding Company/Promoters is repayable after the Term Loans from Banks and
Financial Institutions availed under the Common Rupee Loan agreement and other financing documents are
irrevocably and unconditionally paid and discharged. Sub-ordinate debt from promoters is interest free.
Sub-ordinate debt from Holding Company/Promoters is repayable on fulfillment of performance based terms
and conditions of the Term Loans from Banks and Financial Institutions availed under the Common Rupee
Loan agreement.
The sub-ordinate debts including interest is recoverable on fulfillment on financial performance based terms
and conditions of Loan Agreement with Lenders of respective SPV.
F-26
(Rs. in Lakh)
PARTICULARS
2.4
Less : Carry forward business losses and unabsorbed
depreciation as per Income Tax Act, 1961
Closing Balance of Deferred Tax Liability
2.6
2.7
As at
March 31, 2013
As at
March 31, 2012
3169.17
392.07
5.57
2344.37
834.57
9.77
1606.99
3828.28
7.64
0.00
0.00
3,098.54
3566.81
3169.17
2344.37
60.78
360.29
0.00
0.00
421.07
571.01
305.93
0.00
246.73
1123.67
703.57
329.85
9.55
247.09
1290.06
271.09
4097.66
4368.75
241.27
0.00
241.27
195.64
0.00
195.64
29191.18
5035.86
28613.37
1276.89
15320.38
2931.19
10748.00
147.46
0.00
1656.99
46779.49
2500.00
3775.92
52.30
1100.00
37318.48
2500.00
8505.00
0.00
1100.00
30356.57
0.00
38395.20
38395.20
0.00
35377.93
35377.93
0.00
33275.27
33275.27
Deferred Tax Liabilities (Net)
As per accounting standard-22 on “Accounting for taxes on Income”
issued by the Institute of Chartered Accountants of India, Deferred
Tax Assets/Liabilities arising are as follows:Opening Balance of deferred Tax Liability
Add : Deferred Tax Liability on depreciation
Add : Provision/(Excess provision) of Gratuity
2.5
As at
March 31, 2014
Other Long Term Liabilities
(a) Advance Received From Clients
(b) Security & Other Deposits from Sub-contractors/Vendors
(c) Other Liability-Miscellaneous Liability
(d) Interest Accrued but not Due
Long-Term Provisions
Provision for Employee Benefits
Provision for Gratuity
Periodic Major Maintanance
Short-Term Borrowings
Secured
Loans repayable on demand
From Banks
Overdraft due to Issuance of Cheques
Secured by
(a)
Hypothecation of stock of construction materials lying at
sites, books debts and other receivables
(b) First charge by way of mortgage of immovable property
(Sadbhav House) and immovable property situated at
Village Ognaj along with furnitures, fixtures etc. owned by
company and second charge on machineries owned by the
company.
(c) Personal Guarantee of Shri Vishnubhai M Patel, Smt.
Shantaben V Patel, Shri Vasisthakumar & Shri
Vikramkumar
Unsecured
From Banks
From Related parties
From company in which Directors are Directors
From Others
2.8
Trade Payables
(a) To Micro, Small and Medium Enterprises *
(b) Others
* As per Intimation available with the company, there are no Micro, Small and Medium Enterprises, as
defined in the Micro, Small and Medium Enterprises Development Act, 2006 to whom the company owes
dues outstanding more than 45 days on account of principal amount together with interest and accordingly
no additional disclosures have been made.
F-27
(Rs. in Lakh)
PARTICULARS
2.9
Other Current Liabilities
(a) Current Maturities of Long term debts
Non Convertible Debentures
Loan from Banks
Loan from Financial Institutions
(b) Sundry Creditors for Capital Goods
(c) Other Payable for Investments
(d) Interest Accrued but not due on Loans
(e) Interest Accrued and due on Loans
(f) Unclaimed Dividend *
(g) Statutory Dues
As at
March 31, 2014
As at
March 31, 2013
As at
March 31, 2012
1600.00
22569.26
1473.94
5001.75
0.00
1572.91
259.81
4.59
3260.00
9885.83
538.77
178.99
0.00
1586.39
23.33
5.50
0.00
6441.83
742.96
2129.62
150.62
1387.13
0.00
2.50
3762.20
4456.61
3185.92
(h) Advertisement income received in advance
2.08
0.00
0.00
(i) Advance received against sales of Assets
1.95
0.00
0.00
7024.59
5102.05
10425.82
0.01
0.01
0.27
2008.74
0.00
0.00
(j) Advances Received from Clients
(k) Unpaid IPO & Right Issue Money
(l) Contract Work in Progress
(m) Miscellaneous Liabilities
144.43
29.58
70.12
46120.67
23796.37
25113.07
* Note :-There was no amount outstanding as on 31.03.2014, which is required to be transferred to Investor Education and
Protection Fund (IEPF)
2.10 Short-Term Provisions
(a) Provision for Employee Benefits
(b) Proposed Dividend
(c)
(d)
(d)
(e)
Tax on Proposed Dividend
Provision for FBT
Provision for Wealth Tax
Provision for Income Tax
7.25
8.54
15.24
1061.64
905.67
902.21
180.43
0.00
2.51
11524.80
12776.63
146.92
0.00
1.93
20525.08
21588.14
146.36
24.83
1.38
17645.49
18735.51
F-28
(` in lakhs)
Fixed Assets
Financial Year 2013-14
Gross Block
Particulars
2.11 Tangible Assets
Land Free Hold
Building
Machineries
Furniture
Vehicles
Computer
Office Equipments
Wind Mills
Assets Not put to use
**Advertisement hoarding under Disposal
Total (i)
2.12 Intangible Assets:
Goodwill
Computer Software
Toll Rights
Service Fees Collection Rights
Toll Plaza Booth Work
Total (ii)
2.11 Capital Work in Progress
Advertisement Hoardings
Toll Plaza Building
Total (iii)
2.12 Intangible assets under development
Toll Plaza Booth Work
Road Development Expenditure
Expenditure during construction period (Pending Allocation)
Railway Authorities
Road and Check Post Development Work
As at
April 1,2013
Additions
during
the year
Adjustment/
deductions
during the year
578.19
2,528.05
41,918.51
638.15
1,071.66
97.03
515.18
5,085.19
1,410.77
96.00
53,938.73
7,177.54
715.09
283,554.74
24,820.01
685.60
316,952.98
7.07
80.63
87.70
26.37
88,089.47
26,784.33
55.31
198.84
20,074.94
72.60
275.66
12.32
60.68
1,892.91
22,587.95
26.49
15.94
120,615.35
65,865.35
118.45
186,641.58
0.77
56.88
57.65
118.45
47,357.22
20,358.21
-
54.77
1,409.16
95.70
145.05
1,704.68
2.10
2.10
4.34
69.27
73.61
118.45
96,472.96
36,323.36
55.31
Depreciation and Amortisation
Adjustment/
on Account of
Foreign
Exchange
As at
March 31, 2014
As at
April 1,2013
Net Block
Adjustment/
deductions
during the year
For the
year
As at
March 31, 2014
As at
March 31,2014
As at
March 31,2013
434.07
4.03
438.10
-
578.19
2,672.12
61,018.36
710.75
1,251.62
109.35
575.86
5,089.22
3,158.63
96.00
75,260.10
7,204.03
731.03
404,170.09
90,685.36
801.95
503,592.46
3.50
68.24
71.74
26.37
38,973.73
10,819.18
-
292.21
16,823.54
147.46
623.99
63.09
289.86
274.38
18,514.53
721.41
631.70
30,645.83
0.14
31,999.08
-
68.62
4,292.93
51.20
155.10
16.47
61.19
267.98
4,913.49
379.20
37.43
7,467.12
229.33
21.73
8,134.81
-
33.76
303.34
69.56
406.66
15,539.01
0.10
15,539.11
-
327.07
20,813.13
198.66
709.53
79.56
351.05
542.36
23,021.36
1,100.61
669.13
22,573.94
(6.70)
21.77
24,358.75
-
578.19
2,345.05
40,205.23
512.09
542.09
29.79
224.81
4,546.86
3,158.63
96.00
52,238.74
6,103.42
61.90
381,596.15
90,692.06
780.18
479,233.71
3.50
68.24
71.74
26.37
38,973.73
10,819.18
-
578.19
2,235.84
25,094.96
490.69
447.67
33.94
225.32
4,810.81
1,410.77
96.00
35,424.19
6,456.13
83.39
253,144.94
24,583.98
685.46
284,953.90
7.07
80.63
87.70
26.37
88,089.47
26,784.34
55.31
26,058.25
14,566.17
28,054.00
-
12,570.42
-
-
-
-
12,570.42
26,058.25
Building Development Work
6,951.58
5,040.82
8,856.12
-
3,136.28
-
-
-
-
3,136.28
6,951.58
Computerisation and Check Post Integration Work
9,353.64
8,020.75
10,971.01
-
6,403.38
-
-
-
-
6,403.38
9,353.64
359.83
471.03
680.20
-
150.66
-
-
-
-
150.66
359.83
5,783.63
163,462.41
534,441.82
419,999.87
95,932.65
305,219.83
318,417.65
2,644.15
184,175.56
185,955.95
204,398.72
438.10
423.00
3,139.48
75,219.50
654,143.80
534,441.83
50,513.61
33,710.58
13,048.30
17,117.43
15,945.77
314.41
47,380.11
50,513.61
3,139.48
75,219.50
606,763.69
483,928.21
5,783.63
163,462.42
483,928.21
-
Other Direct Capital Expenses
Project Upfront Fees
Total (iv)
Total (i)+(ii)+(iii)+(iv)
Previous Year
1 Out of total depreciation charged for the year, NIL (48.13 lakhs) has been capitalised under the head "Expendinture during constructuion period (pending allocation)" .
** Advertisement Hoardings under disposal are stated at the lower of their book value or net realisable value.
F-29
Financial Year 2012-13
Gross Block
Particulars
2.11 Tangible Assets
Land Free Hold
Building
Machineries
Furniture
Vehicles
Computer
Office Equipments
Wind Mills
Assets Not put to use
**Advertisement hoarding under Disposal
Total (i)
2.12 Intangible Assets:
Goodwill
Computer Software
Toll Rights
Toll Plaza Booth Work
Total (ii)
2.11 Capital Work in Progress
Advertisement Hoardings
Toll Plaza Building
Total (iii)
Intangible assets under
2.12 development
Toll Plaza Booth Work
Road Development Expenditure
Expenditure during construction period (Pending Allocation)
Railway Authorities
Road and Check Post Development Work
Building Development Work
Computerisation and Check Post Integration Work
Other Direct Capital Expenses
Project Upfront Fees
Total (iv)
Previous Year
Total (i)+(ii)+(iii)+(iv)
Previous Year
Additions
during
the year
As at
April 1,2012
467.71
2,498.76
34,725.94
347.76
913.41
67.06
462.66
5,085.19
2,039.42
46,607.91
7,177.54
635.66
104,528.38
112,341.57
10.79
10.79
Depreciation and Amortisation
Adjustment/
on Account of
Foreign
Exchange
Adjustment/
deductions
during the year
110.48
29.29
7,453.73
290.39
196.93
29.97
52.52
1,393.04
96.00
9,652.34
79.43
203,846.37
685.60
204,611.40
42.12
80.63
122.75
684.15
38.69
2,021.69
2,744.53
45.84
45.84
As at
March 31, 2013
423.00
423.00
-
As at
April 1,2012
578.19
2,528.05
41,918.51
638.15
1,071.66
97.03
515.18
96.00
47,442.77
7,177.54
715.09
308,374.75
685.60
316,952.98
7.07
80.63
87.70
-
-
-
-
-
4.67
183,863.64
36,230.96
55.31
21,819.13
4,618.28
7,376.57
71.04
7,000.00
261,039.60
419,999.87
209,298.61
707.30
55,824.41
20,965.24
14,417.85
5,877.56
5,708.42
530.38
104,031.16
318,417.65
210,978.15
685.60
151,598.58
30,411.87
10,178.72
3,544.25
3,731.35
241.59
1,216.37
201,608.35
204,398.72
5,303.63
423.00
-
26.37
88,089.47
26,784.33
55.31
26,058.25
6,951.58
9,353.64
359.83
5,783.63
163,462.41
527,945.86
419,999.99
For the
year
224.31
14,323.91
106.33
529.70
44.78
232.58
5.88
15,467.48
376.65
612.91
17,253.53
18,243.10
-
67.91
2,795.63
41.13
112.69
18.32
57.28
268.50
3,361.45
344.76
18.79
13,392.29
0.14
13,755.98
-
33,710.58
26,429.18
Net Block
Adjustment/
deductions
during the year
17,117.43
8,658.78
296.00
18.41
314.41
314.41
1,377.37
As at
March 31, 2013
292.21
16,823.54
147.46
623.99
63.09
289.86
274.38
18,514.53
721.41
631.70
30,645.83
0.14
31,999.08
-
As at
March 31,2013
As at
March 31,2012
578.19
2,235.84
25,094.96
490.69
447.67
33.94
225.32
4,810.81
1,410.77
96.00
35,424.19
6,456.13
83.39
277,728.92
685.46
284,953.90
7.07
80.63
87.70
467.71
2,274.46
20,393.97
241.42
383.70
260.43
5,079.31
2,039.42
31,140.42
6,800.89
22.74
87,274.84
94,098.47
10.79
4.67
15.46
-
-
-
-
26.37
88,089.47
26,784.34
55.31
26,058.25
6,951.58
9,353.64
359.83
5,783.63
163,462.42
483,928.20
386,289.40
183,863.72
36,230.99
55.31
21,819.13
4,618.28
7,376.57
71.04
7,000.00
261,035.04
386,289.39
-
50,513.61
33,710.59
Note
1 Out of total depreciation charged for the year, ` 48.13 lakhs (54.59 lakhs) has been capitalised under the head "Expendinture during constructuion period (pending allocation)" .
2 The company has adopted an option under para 46A of AS 11 - "The Effect of Changes in Foreign Exchange Rates", inserted by notification no G.S.R. 914(E) dated December 29, 2011 issued by Ministry of Corporate Affairs, and accordingly the
exchange difference arising on reporting of long term foreign currency monetory items, in so far as they relate to the acquisition of depreciable asset, is added or deducted from the cost of the asset and shall be amortised over the balance life of
asset. During the year company has added Rs. 2916.80 lakh (previous year 2859.71 Lakh) to the capital asset towards such exchange differences. The unamortised amount of such exchange difference included into the carrying amount of asset is Rs.
6825.43 lakh (previous year 4201.89 Lakh) .
F-30
Financial Year 2011-12
Gross Block
Particulars
2.11 Tangible Assets
Land Free Hold
Building
Furniture
Office Equipments
Machineries
Vehicles
Wind Mills *
Assets Not put to use
Total (i)
2.12 Intangible Assets:
Goodwill
Computer Software
Toll Rights
Toll Plaza Booth Work
Total (ii)
2.11 Capital Work in Progress
Toll Plaza
Advertisement Hoardings
Total (iii)
Additions
during
the year
As at
April 1,2011
Depreciation and Amortisation
Adjustment/
on Account of
Foreign
Exchange
Adjustment/
deductions
during the year
235.77
1,271.85
275.91
497.43
35,786.25
844.51
-
231.94
1,226.90
71.85
44.85
1,655.52
130.73
5,085.19
2,039.42
38,911.72
10,486.39
3,051.71
617.97
102,074.96
4,125.83
17.69
2,453.42
105,744.64
6,596.93
-
4.67
10.79
15.46
-
34,147.61
9,140.37
873.66
1,389.00
55.31
7,000.00
12,036.30
-
149,716.11
12,678.76
3,744.62
5,987.57
21,681.26
71.04
2,513.43
-
64,642.25
193,879.36
2,513.43
As at
March 31, 2012
-
For the
year
467.71
2,498.75
347.76
542.27
34,713.41
913.40
5,085.19
2,039.42
170.69
80.87
216.25
13,059.84
464.33
-
53.60
25.46
65.60
2,579.90
122.44
5.88
-
46,607.91
13,991.98
2,852.88
530.52
11,906.68
376.65
82.39
5,346.86
-
7,177.54
635.66
104,528.38
112,341.57
12,437.20
5,805.90
-
4.67
10.79
15.46
-
183,863.72
21,819.13
4,618.28
7,376.57
55.31
7,000.00
36,230.99
71.04
261,035.04
2,728.36
61.84
2,790.20
As at
April 1,2011
-
Net Block
Adjustment/
deductions
during the year
-
As at
March 31, 2012
As at
March 31,2012
As at
March 31,2011
224.29
106.33
281.85
14,319.44
529.70
5.88
-
467.71
2,274.46
241.42
260.43
20,393.97
383.70
5,079.31
2,039.42
235.77
1,101.16
195.04
281.18
22,726.41
380.18
-
1,377.37
15,467.49
31,140.42
24,919.74
6,800.89
22.74
87,274.84
94,098.47
3,051.71
87.45
90,168.28
-
376.65
612.91
17,253.53
18,243.10
93,307.44
-
-
4.67
10.79
15.46
-
183,863.72
21,819.13
4,618.28
7,376.57
55.31
7,000.00
36,230.99
71.04
261,035.04
34,147.61
9,140.37
873.66
1,389.00
55.31
7,000.00
12,036.30
-
-
-
1,320.30
57.07
Intangible assets under
2.12 development
Road Development Expenditure
Road and Check Post Development Work
Building Development Work
Computerisation and Check Post Integration Work
Railway Authorities
Project Upfront Fees
Expenditure during construction period (Pending Allocation)
Electrical Fittings
Total (iv)
Previous Year
Total (i)+(ii)+(iii)+(iv)
Previous Year
209,298.61
149,214.82
210,978.15
132,270.81
5,303.63
72,187.02
-
419,999.99
209,298.61
26,429.18
19,209.11
8,658.78
7,945.06
1,377.37
724.99
33,710.59
26,429.18
386,289.40
182,869.43
64,642.25
182,869.43
1 Out of total depreciation for the year Rs. 54.59 Lakhs (Rs. 59.34 Lakhs )in respect of MBCPNL and BHTPL is included in " Expenditure during construction period (Pending allocation)"
2 Additions in assets during the year includes allocation of pre operative expenses to related assets
3 The Company has adopted an option under para 46A of AS 11, inserted
Intangible Assets under Development' includes foreign exchange loss of Rs. 465.67 Lakhs from BHTPL and Rs. 2453.42 Lakhs (Previous Year Rs .1500.65 Lakhs) from NSEL and gain of Rs. 59.38 Lakh ( Previous Year Nil) from
4 HYTPL.
F-31
(Rs. in Lakh)
As at
March 31, 2014
As at
March 31, 2013
As at
March 31, 2012
2043.50
2028.20
1208.51
0.00
0.00
821.54
0.00
0.00
13.50
2043.50
2028.20
2043.55
(a) 25000 Fully Paid up Equity Shares of Saket Projects Ltd. of Rs.
10/- each
2.50
2.50
2.50
900 Fully Paid up Equity Shares of Ocean Bright Corp.,
(b)
Hongkong of HK$ 1/- each
0.06
0.06
0.06
Share application Money with Indian Highways Management
(c)
Co.Ltd.
1.00
0.00
0.00
200.00
200.00
200.00
PARTICULARS
2.13 Non-current Investments
(A) Trade Investment
Investment in Equity Instruments (Unquoted) :In Associate companies:(a)
Equity Participation in Mumbai Nasik Expressway Ltd.
(SPV) 10400000 Fully Paid up Equity Shares of Rs. 10/each
Entire 1,04,00,000 shares held in Mumbai Nasik
Expressway Ltd., are pledged with the lenders of Mumbai
Nasik Expressway Ltd
(b)
Dhule Palesner Tollway Ltd.
16380000 [(11739000) (11739000)] Fully Paid up Equity
Shares of Rs. 10/- each
68,850 Shares have been pledged out of shares held in
Dhule Palesner Tollway Ltd with lenders
(c)
Share application Money with Dhule Palesner Tollway Ltd.
Others
(d) 9.5% 20 Bonds of Yes Bank of Rs.10,00,000/- each
(e) Bond of Sardar Sarovar Narmada Nigam Limited
(f)
12.5% 10 Nos Debentures of Srei Equipment Finance Ltd of Rs.
10,00,000/- each.
(g) Investment in NSC
(h) Land at cost
(B). Non Trade Investments (Unquoted)
Fixed Deposit (VAT)
27.57
58.18
89.92
100.00
100.00
100.00
12.15
170.61
513.89
10.99
53.95
425.68
0.30
53.95
446.73
0.00
0.05
0.00
2557.39
2453.93
2490.28
Aggregate Value of Un-Quoted Investment Rs. 2557.39
Lakh [(Rs 2453.93 Lakh) (Rs. 2490.28)]
2.14 Deferred Tax Asset (net)
(a)
Deferred tax assets in case of SIPL- Standalone:
In accordance with Accounting Standard 22 “Accounting for Taxes on Income”. The components of Deferred Tax Assets and
Liability are as under:-
Deferred Tax Assets
Gratuity
3.06
3.06
1.56
1.56
0.00
0.00
Difference in Book and Tax Depreciation
0.84
0.11
0.00
Deferred Tax Assets (net)
2.22
1.45
0.00
Deferred Tax Liability
F-32
(Rs. in Lakh)
As at
March 31, 2014
PARTICULARS
(b)
As at
March 31, 2013
As at
March 31, 2012
Deferred tax assets and liabilities in case of Step Down Subsidiaries:
In accordance with Accounting Standard 22 “Accounting for Taxes on Income” notified under the Companies (Accounting
Standards) Rules, 2006, the Subsidiary Companies have a net deferred tax assets. Having regard to the consideration of the fact
that Subsidiaries are entitled to deduction under section 80IA of the Income Tax, 1961 , the deferred tax assets on timing
differences, on account of unabsorbed depreciation and business losses have not been accounted for in the books since it is not
virtually certain that they will be realised against forceable future.
2.15 Long Term Trade Receivables
Trade Receivables (Unsecured considered good)
Due from Others
1987.52
4167.79
4366.43
1987.52
4167.79
4366.43
1346.88
2111.18
0.00
608.12
290.66
0.00
18202.65
3290.47
384.90
2.25
26237.11
1371.55
4387.23
0.00
1613.87
208.00
146.88
9844.00
2116.44
1138.05
0.00
20826.02
1371.55
2389.77
1035.15
698.16
133.65
146.88
8604.00
1037.58
1954.32
2.16 Long Term Loans ,Advances and Deposits
Unsecured, considered good
(a) Loan to Related Party
(b) Advances for Goods and Services
(c) Advances to Sub Contractors
(d) Advances to Suppliers for Fixed Assets
(e) Group Gratuity Fund
(f) Advance against Purchase of Shares - others
(g) Sub-ordinate Debts - to related parties
(h) Interest Receivable - from related parties
(i) Security & Other Deposits
(j) Tax Credits & Receivables
17371.06
The Company has recognised interest on sub-ordinate debt of Rs.11,240 Lakh (March 31, 2013: Rs. 9,844 Lakh) given to
Dhule Palesnar Tollway Limited. The interest accrued as at March 31,2014 is Rs. 3,036.18 Lakh ( March 31, 2013: Rs.
1,989.30
Lakh).
The
sub-ordinate
debt
including
accrued
interest
is
recoverable
on
fulfillment
of
financial
performance/obligation as per terms and conditions of Loan Agreement with lenders of DPTL.
2.17 Other Non Current Assets
Unamortised Option Premium
Ancilliary cost of arranging the Borrowings
1107.16
721.93
1549.41
2271.34
3227.13
0.00
1107.16
10285.96
0.00
0.10
818.44
0.00
0.10
1174.74
354.29
0.00
10286.06
818.54
1529.03
14193.45
929.59
1259.06
8840.76
929.59
448.67
7477.39
929.59
432.35
16382.10
10219.02
8839.33
914.54
2312.59
2.18 Current Investments
Trade : Un-quoted
Investment in units of Mutual Fund
Bonds of Sardar Sarovar Narmada Nigam Limited
Investment in NSC
Aggregate Value of Un-Quoted Investment Rs. 10286.06 Lakh
[(Rs. 818.54 Lakh) (Rs. 1529.03 Lakh)]
2.19 Inventories
(a) Construction Materials
(b) Work in Progress
(c) Stores & Spares
(All Valued at Cost or Net Realizable Value, whichever is less, as
certified by the Management)
F-33
(Rs. in Lakh)
PARTICULARS
As at
March 31, 2014
As at
March 31, 2013
As at
March 31, 2012
5848.89
15135.17
4210.13
2.20 Trade Receivables
Trade Receivables (Unsecured considered good)
(a) Debts outstanding for more than six months
Due from Others
(b) Other Debts
(i) Due from Companies in which directors of the
company are director
(ii) Due from Others
13620.63
0.00
10985.46
38108.05
57577.57
55870.30
71005.47
54210.74
69406.33
305.48
172.63
73.26
6085.50
1964.23
2655.06
4576.33 *
3675.10
15125.82
1825.27 *
1526.19
153.10
3.50
5.50
0.01
0.00
7347.16
3.50
2.50
0.01
0.26
18013.51
2.21 Cash and Bank Balance
(A) Cash and Cash Equivalents
(a)
(b)
Cash On Hand
Balance with Banks
(i) In Current Accounts
In Fixed Deposit original maturities of 3 months
(ii)
or less
(B) Other Bank Balances
(a) In Fixed Deposit of more than 3 Months Maturity
(b) In earmarked accounts
(i) For Margin Money
(ii) Unclaimed Dividend
(iii) Unclaimed Right Issue Money
(iv) Unclaimed IPO Money
3.50
4.59
0.01
0.00
12800.68
* Balance with bank includes deposits of Rs.1531.72 Lakh [(1037.12 Lakh) (33.92 Lakh)] with remaining maturity of more than
12 months.
* Fixed Deposit includes Rs.2878.55 Lakh [(1150.40 Lakh ) (153.10)] Pledged with Central and various State Governments/
Undertakings & Local Bodies
2.22 Short-term Loans and Advances
Unsecured, considered good
(a) Advances
(i) Advances for goods and Services
(ii) Advances to Officers
(iii) Advances to Others
(b) Advance Fringe Benefit Tax
(c) MAT Credit Entitlement
(d) Advance Income Tax
(e) Advance Sales Tax & Service Tax
(f) Prepaid Expenses
(g) Security & Other Deposits
(h) Interest receivable from related parties
(i) Interest receivable from others
(j) Intere Corporate Loans
10090.04
0.00
108.37
0.00
2661.50
16975.49
4719.14
791.39
14801.56
70.35
89.39
1700.00
13957.69
1.53
724.46
0.00
0.00
21217.79
2519.71
3147.82
13439.67
0.00
0.00
0.00
11680.98
3.33
129.20
24.35
0.00
15804.50
2048.69
1502.69
14228.03
0.00
0.00
0.00
52007.23
55008.67
45421.77
15.09
7.74
1473.63
642.40
192.62
1966.89
288.09
0.00
5.21
123.64
25.76
7.75
1233.20
642.40
192.62
156.77
3013.79
21.15
0.00
0.00
237.83
0.00
1178.20
642.40
192.64
0.00
0.00
0.00
0.00
0.00
444.62
5159.93
317.27
5610.71
222.43
2473.50
2.23 Other Current Assets
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
Interest Accrued But Not Due on Investment
Receivable from Authority
Receivable Against Sale of Assets
Grant Receivable
Unamortised Option Premium
Deferred Revenue Expenditure
Income Tax Refund Recievable
Asset held for sale
Gratuity Plan Assets
Unbilled Revenue
Recoverable in Cash or Kind
Due from others
F-34
(Rs. in Lakh)
PARTICULARS
2.24 Revenue from Operations
Contracts Receipt
EPC Contract Income
Operation, Maintenance & Supervision Income
Revenue from Toll Collection & Annuity Income
User Fees
Sale of Services
Advisory and Project Management Fees
Other Operating Income- Advertisement Income
2.25 Other Income
(a) Interest Income
(i) From Related Parties
(ii) From Current Investments
(iii) From Non -Current Investments
(iv) From Others
(b) Dividend Income on current Investments
(c) Profit on sale of Current Investment
(d) Profit on Sale of Assets
(e) Other Non-operating Income
(i) Foreign Exchange Gain
(ii) Sundry Balances Written Back
(ii) Miscellaneous Income
2.26 Cost of Material Consumed
Opening Stock
Add Purchase
Less Closing Sock of Material
2.27
Changes in Inventory of finished goods, Work-in-Progress and
Stock-in-trade
Opening Work-in-Progress
Less :Closing Work-in-Progress
2.28 Construction, Toll Plaza and Road Maintenance Expenses
Labour Expenses
Power & Fuel
Stores Consumed
Repairs & Maintenances-Construction Machineries
Transportation Expenses
Machinery Rent
Vehicle hire & Maintenance charges
Land Rent
Site Establishment Expenses
Mess Expenses
Operation & Maintenance Expenses
Toll Plaza & Road Maintenance Expenses
Miscellaneous Expenses
2013-14
2012-13
2011-12
238100.10
123.64
29104.03
3022.55
189915.00
0.00
25899.92
0.00
272155.40
2762.00
139.90
273252.22
12.00
132.42
215959.34
1848.18
561.58
286632.91
1163.20
312.20
139.51
905.72
7.36
418.17
2.70
1057.56
450.11
110.08
1476.47
247.93
335.55
82.78
43.06
470.27
1483.45
241.71
34.02
115.19
119.16
0.00
2.91
111.05
3062.82
0.00
0.00
60.36
3820.84
0.55
0.00
221.68
2729.09
8837.06
43144.76
51981.82
14193.45
37788.37
7477.39
28198.02
35675.41
8837.06
26838.35
5532.31
34911.49
40443.80
7477.39
32966.41
929.59
929.59
0.00
929.59
929.59
0.00
929.59
929.59
0.00
134077.12
19978.27
27.51
2221.76
207.76
503.50
76.49
236.36
1020.93
463.97
4731.78
4920.65
88.33
116119.95
12871.96
273.09
1673.63
195.91
605.81
59.11
141.28
597.72
291.34
273.99
420.36
20.22
178155.15
14132.00
344.11
1307.15
138.37
251.33
0.00
170.66
506.94
332.62
510.20
363.04
0.00
168554.43
133544.37
196211.57
12067.75
F-35
(Rs. in Lakh)
PARTICULARS
2.29 Employee Benefits Expense
Salary & Wages
Contribution to PF and Other Funds
Group Gratuity Fund Expenses
Expense on Employee Stock Option Scheme
Staff Welfare expenses
2.30 Finance Cost
Interest Expenses
On Borrowings
On Taxes
Others
Other Borrowing Costs
Foreign Currency Fluctuation
2.31 Other Expenses
Rent Expenses
Rates & Taxes
Vehicle Rent
Running & Maintenance of Vehicles
Repairs & Maintenances
Building
Others Assets
Insurance
Electricity Charges
Postage & Telephone
Stationary & Printing
Traveling & Conveyance Expenses
Directors' Traveling & Conveyance Expenses
Legal & Consultation Fees & Expenses
Donation to Bhartiya Janta Party
Additional Concession Fees
Donation Expenses
Other Bank Charges
Auditors Remuneration
Loss on Sales of Assets & Asset Written Off
Bad debts
Writing off of Intangible asset under Construction
Interest receivable Written off
Miscellaneous Expenses
Corporate Social Responsibility Expenses
Prior Period Adjustment
2013-14
2012-13
2011-12
6728.79
208.15
22.28
433.14
264.87
7657.23
4596.81
155.18
36.32
377.68
153.86
5319.85
3917.12
130.68
39.78
402.46
127.36
4617.40
41284.14
38.60
0.00
4018.13
205.54
45546.41
28238.45
127.85
95.48
1793.67
164.94
30420.39
13848.13
202.48
2.61
1248.30
288.16
15589.68
34.75
6302.90
171.33
64.62
127.97
6487.10
135.27
64.19
129.03
6549.76
112.29
75.06
17.02
106.59
419.51
31.59
121.69
73.26
251.53
33.64
2602.05
0.00
2246.98
93.98
77.02
75.82
498.53
4.82
257.59
226.51
984.58
9.22
(8.35)
47.62
33.44
301.41
22.02
95.53
87.53
170.15
28.87
2123.79
21.00
390.00
62.36
24.15
44.37
140.87
4.13
0.00
0.00
417.46
0.00
20.84
36.33
20.46
271.75
78.92
83.76
66.58
137.34
16.49
2301.77
0.00
0.00
73.20
57.10
34.20
173.57
0.00
0.00
0.00
730.65
0.00
448.66
14697.18
10850.07
11396.92
F-36
Notes forming Part of the Consolidated financial statements
(Rs. in Lakh)
2.32
2.33
2013-14
2012-13
2011-12
Basic EPS
Net Profit after Tax
Weighted Average number of Equity Shares
Basic EPS (Rs.)
4437.48
151,384,261
2.93
748.16
150,824,388
0.50
12229.09
150,235,175
8.14
Diluted EPS
Net Profit after Tax
Weighted Average number of Diluted Equity Shares
Basic EPS (Rs.)
4,437.48
151,544,171
2.93
748.16
151,555,961
0.49
12,229.09
151,420,153
8.08
Assets taken under Operating Leases
MBCPNL has incurred during the Financial year 2013-14 Rs. 9.90 Lakh (Financial year 2012-13 Rs. 10.46 Lakh) towards lease rentals
of land. Such rentals have been recognized as Expenditure during Construction Period, pending allocation. The lease terms are
generally for the period of one to three years and are renewable by mutual agreement. There are no sub-leases and the leases are
cancellable in nature. There are no restrictions imposed by the lease arrangements. There is neither any contingent rent, nor any
escalation clause in the lease agreements.
2.34
Contingent Liabilities and commitments
A
Contingent Liabilities
Contingent liabilities of the Company is as under:
(a) Claims against the Company not acknowledged as debt:
1 The Dy. Commissioner of Custom has passed the order for Demand of Custom duty towards import of Machineries
Rs.104.95 Lakh (Year 2011-12 and 2012-13 Rs.104.95 Lakh ) & Interest of Rs. 174.05 Lakh (year 2011-12 and 2012-13
Rs.174.05 Lakh ). The Company has filled the Appeal to Commissioner of Customs against the said order , hence no
2
provision is made in the books of accounts
Sarda Energy and Minerals Ltd. (Formerly known as Raipur Alloys Limited) has filed a suit for recovery of Rs.46.42 Lakh
(Year 2011-12 and 2012-13 Rs. 46.42 Lakh) against the company and its directors and officers holding them jointly and
severally liable. The Company purchased steel and TMT bar from Sarda Energy and Minerals Limited, for which the
latter claimed Rs.46.42 Lakh (Year 2011-12 and 2012-13 Rs. 46.42 Lakh) balance to be paid and filed Civil Suit at Civil
Court, Nagpur. The company has challenged the jurisdiction of the court. The matter is pending before the Civil Court,
3
Nagpur. Company has not made any provision for the said liability in its Books of Accounts
Demand under Service Tax Act,1994 Rs. 67.29Lakh (Year 2011-12 and 2012-13 Rs. 67.29 Lakh)
4
Company has received order of the Commissioner of service tax on 01st April, 2013 wherein Commissioner upheld the
demand of Rs. 199.13 Lakh (Year 2011-12 and 2012-13 Rs. 199.13 Lakh) and impose penalty of Rs. 345.92 Lakh (Year
2012-13 Rs. 345.92 Lakh). Company filed appeal before CESTAT and received unconditional stay order on order of
5
Commissioner hence no provision has been made.
The Company has received Show-Cause Notice on 13th April, 2013 for imposing penalty of Rs. 19.84 Lakh (Year 201112 and 2012-13 Nil) under Rule 26 of the Central Excise Rules, 2002. Company filed appeal before appropriate authority
6
hence no provision has been made.
Service Tax demand of Rs. 434.80 Lakhs (Year 2012-13 Rs. 434.80 Lakhs) not acknowledge as debts in regards to
recovery of CENVAT credit on input services availed during the Financial Year 2009-10 and 2010-11 against the
subsdiary. Subsidiary has received order from commissioner of Service tax on May 10, 2013 and the subsidiary has
preferred appeal with Tribunal for which subsidiary has deposited Rs. 25 Lakhs and received stay order from tribunal
7
for recoveries of demand. Further the matter is pending with Tribunal as at reporting date.
The Deputy Commercial Tax Commissioner, Audit Divison-1 Ahmedabad has passed order against “Jililn Sadbhav JV”
for VAT demand of Rs. 702.00 Lakh (Year 2011-12 and 2012-13 Rs. Nil) inclusive of interest Rs. 330.18 lakh and
Penalty of Rs. 74.36 lakh (Year 2011-12 and 2012-13 Rs Nil). In Jilin-Sadbhav JV, Sadbhav Engineering Limited is
having 48% share. Against this Order the Joint Venture has filed an appeal in the Gujarat Value Added Tax Tribunal at
8
Ahmedabad, hence no provision has been made.
The Company has received a show cause notice from the office of Mining Engineer, Mines and Geology Department,
Udaipur on 05/02/2014 imposing penalty of Rs. 81.32 Lakh under rule 63, 37A (IX) of Rajasthan Minor Mineral
Concession Rules, 1986. The Company has filed a Civil Writ Petition No.2635/2014 in The High Court of Rajasthan
against the said notice. The Company has deposited Rs.30.00 Lakh with the Mining Engineer, Mines and Geology
Department, Udaipur as per stay order of the Honourable Court. Further proceeding is pending, hence no provision has
9
been made.
Income Tax of Rs.3566.92 Lakhs on the claim made of the deduction u/s 80IA (4) of the Income Tax Act, 1961.The
Finance Act (2), 2009 has amended Section 80IA(4) of the Income Tax Act, 1961 by substituting an explanation to
Section 80IA with restrospective effect from 01.04.2000. On the basis of legal opinion and deided cases, the Company
has continued to claim deduction under section 80-IA(4) of the Act on eligible projects and consequently the Company
considers it appropriate not to create a liaility for provision of Income Tax. However an amount of income tax of Rs.
858.40 Lakhs for the current year and of Rs. 2708.51 Lakhs for the earlier years since FY 2007-08 has been disclosed
as contingent liability.
F-37
Notes forming Part of the Consolidated financial statements
(b)
Guarantees
Company has given corporate guarantee to banks for Rs. 29825.00 Lakh (Year 2012-13 Rs.28850.00, Year 2011-12 Rs.
10500 Lakh) against the finance facility given by the banks to subsidiary companies.
(c)
During the year, minority shareholders of Bijapur Hungud Tollway Private Limited (‘BHTPL’) (a subsidiary of the Company)
has filed company petition under section 347 and 398 of the Companies Act, 1956 with the Company Law Board – Mumbai
Bench against Sadbhav Engineering Ltd a holding Company and its associates/affiliates wherein the company is also
defendant. The Company Law Board (CLB) passed an order in favour of the minority shareholder although company pleaded
that matter should be referred for arbitration as per shareholder agreement (SHA). Against the CLB order the company filled
Special Civil Application (SCA) with Hon’ble High Court of Gujarat that matter of minority shareholder should be referred as
per SHA. Hon’ble High Court accepted SCA of the company and granted interim relief where by further proceeding of CLB
have been stayed. Currently the matter is pending before Hon’ble High Court of Gujarat. The management believes that, based
on legal advice, the outcome of above contingencies will be favourable and that any loss is not probable. Accordingly, no
amounts have been accrued or paid in regard to dispute.
B
Capital & other Commitments
The followings are the estimated amount of contractual commitments of the company:
(Rs. in Lakh)
2013-14
2012-13
2011-12
83249.84
33240.47
(a) The followings are the estimated amount of contractual commitments of the company:
Sub Ordinate Debt/Equity Shares in Subsidiary Companies
(b)
30774.37
Commitment-Derivative contract
The company uses Cross Currency Interest Rate Swap and Currency Option to hedge the interest and currency related risks
on its capital account. Such transactions are governed by the strategy approved by the board of directors which provide
principles on the use of these instruments, consistent with the Company’s Risk Management Policy. The company does not
use these contracts for speculative purposes. Out standing Currency Option and Interest Swap to hedge against foreign
currency exchange rates and fluctuations in interest rate are as under:
Particulars
Index Swap
Currency Option-Repayment (Amount in Lakhs)
Equivalent INR
Equivalent USD
Interest Swap (Amount in Lakhs)
Equivalent INR
Equivalent USD
Outstanding as
at March 31,
2014
Outstanding as
at March 31,
2013
Outstanding as
at March 31,
2012
750.29
6048.73
1469.43
81172.47
1518.58
81351.59
1545.47
37943.00
755.77
26363.66
419.55
27380.19
477.79
15455.08
361.88
Un-hedged Foreign Currency Exposure
Particulars
Loan Payable
Interest Payable on Loan
As at March 31, 2014
As at March 31, 2013
As at March 31, 2012
USD
INR
USD
INR
337.05
20256.56
368.35
20034.49
Nil
Nil
Nil
Nil
USD
INR
394.44
20178.17
9.78
500.51
Additional Concession Fees as per Concession Agreement
As per Concession Agreement with NHAI, some of the subsidiaries shall pay to NHAI for each year of the Concession Period, additional
concession fees, out of the gross revenues of the respective projects as share of the authority commencing on COD for the period
remaining in that year and for each subsequent year of the concession.
2.35
Employee Benefits
(a)
Defined Benefit Plan:
The company made annual contributions to the employee's Group Gratuity cash accumulation Scheme of the
Life Insurance Corporation of India, a funded benefit plan for qualifying employees.
The present value of the defined benefit obligation and the related current service cost were measured using the
projected unit credit method as per actuarial valuation carried out at balance sheet date.
F-38
Notes forming Part of the Consolidated financial statements
The following tables sets out the funded status of the gratuity plan and the amount recognised by the
company's financial statements as at March 31, 2013.
(i)
Net Assets /Liability recognized in the Balance Sheet are as follows:
(Rs. in Lakh)
2013-14
2012-13
2011-12
(a)
Present Value Funded Obligations
293.34
228.55
159.72
(b)
Fair Value of Plan Assets
317.80
228.55
144.03
(c)
Liability Recognized in the Balance Sheet
0.00
34.82
64.85
(ii) Expenses recognized in the statement of Profit & Loss Account(Under the head “Expenses on Employees
- Contribution to Provident & Other Funds”-Refer Schedule-20)
(Rs. in Lakh)
(a)
(b)
(c)
(d)
(e)
(f)
Current Service Cost
Interest on obligation
Expected Return on plan assets
Net Actuarial Losses / (Gains) recognized in the year
Past Service Cost
Adjustment
Net Gratuity Cost
2013-14
2012-13
2011-12
68.02
20.86
(21.03)
(44.03)
0.00
(2.04)
49.62
17.58
(19.89)
(8.52)
(3.59)
(1.32)
53.33
11.61
(10.29)
(28.59)
0.27
(0.20)
21.78
33.88
26.13
2013-14
2012-13
2011-12
263.35
68.02
0.00
20.87
(47.16)
(11.75)
0.00
208.89
49.62
(3.59)
17.58
(13.64)
(1.80)
6.29
176.65
53.32
0.27
14.99
(26.49)
(9.84)
293.33
263.35
208.90
2013-14
2012-13
2011-12
228.55
0.00
23.07
(3.20)
80.37
(10.99)
144.04
(0.01)
16.05
0.03
70.24
(1.80)
96.77
0.20
13.67
2.08
41.15
(9.83)
317.80
228.55
144.04
(iii) Reconciliation of Opening & Closing balance of Gratuity is as follows
(Rs. in Lakh)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Opening Defined Benefit Obligation
Service Cost for the year
Past Service cost
Interest Cost for the year
Actuarial Losses/ (Gain)
Benefits Paid
Opening Provision for Gratuity
Closing Defined Benefit obligation
(iv) Reconciliation of Opening & Closing Balance of Fair Value of Plan Assets:
(Rs. in Lakh)
(a)
(b)
(c)
(d)
(e)
(f)
Opening fair value of plan assets
Adjustment to the opening fund
Expected Return
Actuarial Gains
Contribution by the employer
Benefits paid
Closing fair value of the plan assets
(v) Major Category of plan assets as a percentage of total plan assets as on 31-03-2014 are as under
(Rs. in Lakh)
(a)
(b)
(c)
(d)
(e)
(f)
Government of India Securities
High Quality Corporate Bonds
Equity Shares of Listed Companies
Property
Policy administered by L.I.C.of India
Bank Balance
2013-14
2012-13
2011-12
100%
100%
100%
(vi) Principal Actuarial assumptions at the Balance Sheet Date:
(Rs. in Lakh)
(a)
(b)
(c)
(d)
Discount Rate as at year end
For SEL
For Subsidiaries
Expected return on plan assets at year end
Proportion of employees opting for early retirement
· At Younger Ages
· At Older Ages
Annual increase in salary cost
2013-14
2012-13
2011-12
9.10%
9.10%
8.75%
8.10%
8.1% to 8.20%
9.00%
8.50%
8.50%
9.00%
5.00%
1.00%
6.00%
5.00%
1.00%
6% to 7%
5.00%
1.00%
6.00%
The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
F-39
Notes forming Part of the Consolidated financial statements
2.36
List of Related Parties
Associate Companies
Mumbai Nasik Expressway Ltd., Dhule Palesner Tollway Ltd.,
Joint Ventures:
SEL-GKC JV, SEL-Annapurna JV, SEL-Vishnushiva JV & SEL-Vaishnovi JV
Key Management Personnel (KMP) :
Shri Vishnubhai M. Patel, Shri Girish N. Patel, Shri Nitin R. Patel, Shri Shashinbhai V. Patel, Smt. Rajeshriben Patel,
Shri Vasistha C. Patel, Shri Vikram R. Patel.
Relatives of KMP
Smt. Shantaben V. Patel, V. M. Patel (HUF), Alpa Dharmin Patel, Bhavna V. Patel, Tosha Patel, Rekhaben V Patel,
Truptiben V. Patel, Vipulbhai H. Patel
Enterprises owned or significantly influenced by KMP or their relatives
Sarjan Infracon Pvt. Ltd., Veer Procon Ltd.,Sadbhav Finstock Pvt.Ltd., Sadbhav Quarry Works Pvt.Ltd., Sadbhav
Public Charitable Trust, Bhavna Engineering Co., Saakar Infra Nirman Pvt. Ltd.
Details of Related Party Transactions
Transactions
Sub
contracting
Income
Interest
Received
Sale of Service
Sub
contracting
Expenditure
Associates
Key
Managerial
Persons
Relatives of
KMP &
Enterprises
over which
KMP/Relativ
es of KMP
having
significant
influence
Joint Venture
Total
2013-14
0.00
0.00
0.00
18621.30
18621.30
2012-13
2971.46
0.00
0.00
23522.55
26494.01
2011-12
26232.79
0.00
0.00
15658.45
41891.24
2013-14
0.00
0.00
1304.47
0.00
1304.47
2012-13
0.00
0.00
1198.33
0.00
1198.33
2011-12
0.00
0.00
643.63
0.00
643.63
2013-14
0.00
0.00
12.00
0.00
12.00
2012-13
0.00
0.00
12.00
0.00
12.00
2011-12
0.00
0.00
16.00
0.00
16.00
2013-14
0.00
0.00
14644.05
0.00
14644.05
2012-13
0.00
0.00
12095.77
0.00
12095.77
2011-12
0.00
0.00
4265.82
0.00
4265.82
F-40
Notes forming Part of the Consolidated financial statements
Remuneration
Paid
Interest Paid
Rent & Service
charges
Loan Received
during the
year
Loan given
during the
year
Security
Deposit Retention
Deducted
during the
yearReceivable
Security
Deposit Retention
Deducted from
Sub Conct Payable
Deposit repaid
during the
year
Dividend Paid
during the
year
Donation given
during the
year
Mobilization
Given during
the year
2013-14
0.00
333.56
0.00
0.00
333.56
2012-13
0.00
362.29
0.00
0.00
362.29
2011-12
0.00
347.50
0.00
0.00
347.50
2013-14
0.00
34.73
5.22
0.00
39.95
2012-13
0.00
296.35
2.56
0.00
298.91
2011-12
0.00
194.64
15.20
0.00
209.84
2013-14
0.00
0.00
1.69
0.00
1.69
2012-13
0.00
0.00
6.75
0.00
6.75
2011-12
0.00
0.00
6.75
0.00
6.75
2013-14
0.00
2067.73
0.00
0.00
2067.73
2012-13
0.00
2289.00
51.00
0.00
2340.00
2011-12
0.00
5790.44
2313.00
0.00
8103.44
2013-14
0.00
0.00
141.27
0.00
141.27
2012-13
0.00
0.00
127.41
0.00
127.41
2011-12
0.00
0.00
1331.69
0.00
1331.69
2013-14
0.00
0.00
0.00
2377.16
2377.16
2012-13
319.46
0.00
0.00
1191.72
1511.18
2011-12
976.80
0.00
0.00
743.95
1720.75
2013-14
0.00
0.00
528.11
0.00
528.11
2012-13
0.00
0.00
978.94
0.00
978.94
2011-12
0.00
0.00
577.50
0.00
577.50
2013-14
0.00
0.00
0.00
0.00
0.00
2012-13
319.46
5204.25
376.28
839.33
6739.32
2011-12
4616.06
793.73
2626.03
739.65
8775.47
2013-14
0.00
177.49
265.52
2012-13
0.00
165.49
262.47
0.00
427.96
2011-12
0.00
152.30
274.72
0.00
427.02
2013-14
0.00
0.00
8.10
0.00
8.10
2012-13
0.00
0.00
12.50
0.00
12.50
2011-12
0.00
0.00
0.00
0.00
0.00
2013-14
0.00
0.00
340.99
0.00
340.99
2012-13
0.00
0.00
703.49
0.00
703.49
2011-12
0.00
0.00
105.23
587.60
692.83
443.01
F-41
Notes forming Part of the Consolidated financial statements
Mobilization
Advance
Received
during the
year
Investment
Advance
Received
during the
Year for issue
of Convertible
Warrants
Sub-ordinate
Given
Trade
Receivable
Reversed
Share
Application
Money Given
Share
Application
Money
Refunded
Balance
Receivable at
the year end
Balance
Payable at the
year end
Closing
Balance:Loan
Received
during year
2013-14
0.00
0.00
0.00
2336.55
2336.55
2012-13
0.00
0.00
0.00
395.93
395.93
2011-12
0.00
0.00
0.00
0.00
0.00
2013-14
0.00
0.00
0.00
0.00
0.00
2012-13
0.00
0.00
17.85
0.00
17.85
2011-12
0.00
0.00
20.30
0.00
20.30
2013-14
0.00
2315.00
0.00
0.00
2315.00
2012-13
0.00
0.00
0.00
0.00
0.00
2011-12
0.00
0.00
0.00
0.00
0.00
2013-14
0.00
1396.00
0.00
1396.00
2012-13
0.00
0.00
1240.00
0.00
1240.00
2011-12
0.00
0.00
3548.00
0.00
3548.00
2013-14
0.00
0.00
37.65
0.00
37.65
2012-13
0.00
0.00
3.97
0.00
3.97
2011-12
0.00
0.00
0.00
0.00
0.00
2013-14
0.00
0.00
0.00
0.00
0.00
2012-13
0.00
0.00
0.00
0.00
0.00
2011-12
0.00
0.00
342.05
0.00
342.05
2013-14
0.00
0.00
0.00
0.00
0.00
2012-13
0.00
0.00
0.00
0.00
0.00
2011-12
0.00
0.00
391.95
0.00
391.95
2013-14
1068.14
34.67
2452.55
3555.36
2012-13
4920.36
0.00
24.05
3223.74
8168.15
2011-12
10943.32
0.00
15.88
3531.26
14490.46
2013-14
0.00
0.00
295.17
0.00
295.17
2012-13
0.00
4.34
494.49
0.00
498.83
2011-12
0.00
4.13
136.85
0.00
140.98
2013-14
0.00
147.47
56.99
0.00
204.46
2012-13
0.00
3765.30
52.30
0.00
3817.60
2011-12
0.00
0.00
0.00
0.00
0.00
F-42
Notes forming Part of the Consolidated financial statements
2013-14
0.00
0.00
1371.55
0.00
1371.55
2012-13
0.00
0.00
1371.55
0.00
1371.55
2011-12
0.00
0.00
0.00
0.00
0.00
2013-14
0.00
0.00
0.00
3396.51
3396.51
2012-13
0.00
0.00
0.00
1339.70
1339.70
2011-12
0.00
0.00
0.00
0.00
0.00
2013-14
0.00
0.00
174.10
0.00
174.10
2012-13
0.00
0.00
446.84
0.00
446.84
2011-12
0.00
0.00
44.77
1783.10
1827.87
Closing
Balance:
Security
Deposit Receivable
2013-14
908.20
0.00
0.00
3289.69
4197.89
2012-13
901.15
0.00
0.00
1626.98
2528.13
2011-12
1333.99
0.00
0.00
543.44
1877.43
Closing
Balance:
Security
Deposit Payable
2013-14
0.00
0.00
1139.41
0.00
1139.41
2012-13
0.00
0.00
997.33
0.00
997.33
2011-12
0.00
0.00
292.53
0.00
292.53
2013-14
0.00
0.00
11240.00
0.00
11240.00
2012-13
0.00
0.00
9844.00
0.00
9844.00
2011-12
0.00
0.00
8604.00
0.00
8604.00
2013-14
0.00
2315.00
0.00
0.00
2315.00
2012-13
0.00
0.00
0.00
0.00
0.00
2011-12
0.00
0.00
0.00
0.00
0.00
2013-14
0.00
0.00
0.00
0.00
0.00
2012-13
0.00
0.00
0.00
0.00
0.00
2011-12
0.00
0.00
0.50
0.00
0.50
2013-14
0.00
3.85
0.00
0.00
3.85
2012-13
0.00
0.00
0.00
0.00
0.00
2011-12
0.00
0.00
0.00
0.00
0.00
2013-14
0.00
0.00
3290.47
0.00
3290.47
2012-13
0.00
0.00
2116.44
0.00
2116.44
2011-12
0.00
0.00
1037.58
0.00
1037.58
Closing
Balance:Loan
Given during
year
Closing
Balance:
Mobilization
Advance
Received
Closing
Balance:
Mobilization
Advance Given
Sub Ordinate
Loan
Receivable
Outstanding at
the year end
Closing
Balance:
Advance
Received
during the
Year for issue
of Convertible
Warrants
Closing
Balance: Share
application
Pending
allotment
Remuneration
Payable at year
end
Interest
Receivable at
Year end
F-43
2.37 Segment Information:
(a)
The Company has disclosed Business Segment as the primary segment. Segments have been identified taking into account the nature of the products, the differing risks and returns, the organisation
structure and internal reporting system.
(b)
The Company's operations predominantly relate to EPC Contracts, Toll Collection and energy generation through Wind Power Project.
(c)
The Company's activities are restricted within India and hence no separate geographical segment disclosure is considered necessary.
(d)
For the purpose of reporting, business segment is primary segment and geographical segment is a secondary segment.
(e)
Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segment as also amounts allocable on a reasonable basis.
(f)
The expenses and income, which are not directly allocated between the segments are shown as unallocated corporate expense or income as the case may be.
(g)
As per requirement of Accounting Standard - 17 "Segment Reporting", Management has identified two segments as reportable segments i.e. EPC Contracts and BOT (Toll & Annuity).
(h)
Assets that cannot be allocated between the segments are shown as a part of unallocated corporate assets.
(i)
Details of Business Segment information is presented below:
Statement Showing details of Segment Reporting
Construction & Engineering
2013-14
2012-13
BOT (Toll & Annuity)
2011-12
Others
2013-14
2012-13
2011-12
2013-14
Total
2012-13
2011-12
2013-14
2012-13
2011-12
Revenue
External Revenue
Inter-Segment Revenue
Total
237652.20
0.00
237652.20
189296.10
0.00
189296.10
272541.75
0.00
272541.75
32266.48
0.00
32266.48
26032.34
0.00
26032.34
12235.18
0.00
12235.18
3333.54
0.00
3333.54
630.90
0.00
630.90
1855.98
0.00
1855.98
273252.22
273252.22
215959.34
215959.34
286632.91
0.00
286632.91
212780.53
170694.97
239595.04
11627.79
2823.07
1228.12
16.97
29.85
1774.83
224425.29
173547.89
242597.99
Operating Profit
24871.67
18601.13
32946.71
20638.69
23209.27
11007.06
3316.57
601.05
81.15
48826.93
42411.45
44034.92
Less: Interest & other finance expense
11344.61
8436.97
6511.19
28731.51
21983.42
8289.89
466.88
0.00
788.60
40543.00
30420.39
15589.68
963.24
840.22
763.87
0.00
0.00
(654.02)
0.00
0.00
2128.64
963.24
840.22
2238.49
96.98
68.12
230.10
0.00
589.06
0.00
0.00
0.00
260.50
96.98
657.18
490.60
Unallocated Corporate Expense
-
-
-
-
-
-
-
-
-
9665.92
3004.75
2594.31
Unallocated Corporate Income
-
-
-
-
-
-
-
-
-
2002.60
2323.44
14587.28
11072.50
27429.49
1814.91
2063.15
2849.69
601.05
1681.69
1680.83
12807.15
Segment Expense
Segment Result
Interest Income
Other Income
Profit before Depreciation and Tax
(8092.82)
28580.02
F-44
Depreciation and Amortisation
4353.66
2807.96
2659.44
7917.74
13887.04
5854.80
267.98
268.50
11.37
Unallocated Depreciation
Profit Before Tax and Exceptional Items
10233.62
8264.54
24770.05
6093.98
0.00
(16010.56)
12539.38
16963.50
8525.61
118.33
105.79
78.58
(10976.88)
(4262.14)
19975.83
(12072.13)
(3791.65)
2581.71
332.55
1670.32
0.00
0.00
0.00
0.00
0.00
12172.22
6093.98
(12072.13)
(3791.65)
2581.71
332.55
1670.32
1195.34
1831.84
19975.83
3543.25
7353.65
Exceptional Items
(3602.82)
Profit Before Tax
6630.80
14358.52
24770.05
Current Tax
-
-
-
-
-
-
-
-
-
2722.19
MAT Credit Entitlement
-
-
-
-
-
-
-
-
-
(2661.50)
0.00
Deferred Tax
-
-
-
-
-
-
-
-
-
396.87
823.35
Short/(Excess) provision of Taxtion of Earlier
Years
-
-
-
-
-
-
-
-
-
6,630.80
14,358.52
24770.05
2,581.71
332.55
1670.32
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15.30
6630.80
14358.52
24770.05
2581.71
332.55
1670.32
4437.48
748.16
12229.09
Segment Assets
Unallocated Segment Assets
277746.82
-
224804.89
-
192516.68
-
642094.04
-
500967.85
-
412893.99
-
4546.86
-
4822.72
-
5103.11
-
924387.72
2473.42
730595.46
2372.86
610513.78
2028.49
Segment Liabilities
194485.35
142284.02
118732.72
589914.84
446888.67
323783.78
4546.86
4810.81
0.00
788947.05
593983.50
442516.50
Capital Work In Progress
0.00
0.00
0.00
71.74
87.70
15.46
0.00
0.00
0.00
71.74
87.70
15.46
Intangible Assets Under Development
0.00
0.00
0.00
75219.50
64759.58
966.98
0.00
0.00
0.00
75219.50
64759.58
966.98
4353.66
0.00
2807.96
0.00
2659.44
0.00
7917.74
0.00
13887.04
0.00
5854.80
0.00
267.98
118.33
268.50
0.00
11.37
0.00
12539.38
118.33
16963.50
0.00
8525.61
0.00
402.46
381.81
511.96
5511.24
320.15
0.00
0.00
0.00
0.00
5,913.70
701.96
511.96
Profit after Tax
Add: Share of Loss Trabsfered to Minority
Interest
Add: Share of Profit/(Loss) of Associates
Net Profit for the Year
15775.04
(235.52)
(235.52)
(235.52)
(12072.13)
(12072.13)
(3791.65)
(3791.65)
(1869.61)
(21.50)
2607.39
(2513.26)
1814.79
3737.57
(476.15)
737.38
(11.35)
11896.15
561.94
(229.00)
ASSETS
Depreciation and Amortisation
Unallocated Depreciation
Non Cash Expenses other than depreciation
and amortisation
Footnotes:
1. Segment Assets Exclude the following:a. Advance payment of Income Tax of Rs. 19691.10 Lacs, Rs. 21294.79 Lacs, Rs. 15804.50 in Financial Year 2014-13, 2012-13 and 2011-12 respectively
1. Segment Liability Exclude the following:a. Priovision of Income Tax of Rs. 11351.58 Lacs, Rs. 20525.08 Lacs and Rs. 17654.49 in Financial Year 2014-13, 2012-13 and 2011-12 respectively
b. Deferred Tax Liabilities of Rs. 3564.59 Lacs, Rs. 3167.72 Lacs and Rs. 2344.37 in Financial Year 2014-13, 2012-13 and 2011-12 respectively
c. Priovision of FBT of Rs. 24.83 Lacs in Financial Year 2011-12
F-45
Notes forming Part of the Consolidated financial statements
2.38
Intra-group Turnover and Profits on BOT Construction Contracts
The BOT contracts are governed by Service concession agreements with government authorities (grantor). Under these agreements, the
operator does not own the road, but gets "toll collection rights" or User Fee Income in the case of MBCPNL (Maharashtra Border Check
Post Ltd) against the construction services rendered. Since the construction revenue earned by the operator is considered as exchanged
with the grantor against toll collection rights, profit from such contracts is considered as realised.
Accordingly, BOT contracts awarded to subsidiary and step-down subsidiaries (operator), where work is sub-contracted to parent
company, the intra-group transactions on BOT contracts and the profits arising thereon are taken as realised and not eliminated for
consolidation under Accounting Standard - 21.
The revenue and profit in respect of these transactions are as follows:
Particulars
Revenue
Profit
2.39
2012-13
77377.5
10195.96
(Rs. In Lakh)
2011-12
180929.23
23289.47
In terms of disclosure required to be made under the accounting standard (AS) 7 (revised 2002 for 'Construction Contracts', the
amounts considered in the financial statements upto the reporting date are as follows:
Particulars
2.40
2013-14
64919.94
12018.12
1
Amount of Contract Revenue Recognised as revenue during the period
2
Disclosure in respect of Contract in Progress at the reporting date
3
4
(a) Contract cost incurred and recognised profit less recognised losses
upto the reporting date
(b) Profits (less recognized losses) upto reporting
(c) Advances Received
(d) Retention Amount
Amount due from Customers for Contract in Progress
Amount due to Customers for Contract in Progress
As at 2013-14
As at 2012-13
237032.82
186901.21
635970.87
518900.63
5174.35
43130.35
12489.71
69333.94
0.00
4280.64
24350.03
13900.18
73429.85
0.00
As at 2011-12
272155.40
457477.94
15199.08
8650.60
35669.61
0.00
Exceptional Items
(i) Exceptional Items for the current year ended March 2014 pertains to the Bad debts of Rs. 2445.48 Lakhs, Advance Written off
Rs.1389.28 Lakhs (Including Loan to Subsidiaries written off Rs.231.94 Lakhs) and for the previous year ended March 2013 it pertains
to Performance Bonus (net of expenditure) received on early execution of work contracts.
(ii) Exceptional Items for the year ended March, 2014 includes over and above shown under note no.2.40(i), the write back of amortisation
of toll collection rights of Rs.15775.04 Lakhs due to change in amortisation method as mention in Note No. 1.3 (b)
2.41
Movement in Periodic Major Maintenance Provision:
Particulars
Carrying amount as at Beginning of the Year
Add: Additional provision made in the year
Less: Amounts used
(i.e. incurred and charged against the provision) during the year
Unused amounts reversed during the year
Carrying amount as at End of the Year
2013-14
0.00
4,097.66
0.00
2012-13
0.00
0.00
0.00
2011-12
0.00
0.00
0.00
0.00
4,097.66
0.00
0.00
0.00
0.00
2.42
As per intimation available with the Company, there are no micro, small and medium enterprises as defined in the Micro, Small and
Medium Enterprise Development Act, 2006 to whom the Company owes dues on account of principal amount together with interest and
accordingly no related additional disclosure have been made.
2.43
During the financial year 2013-14, one of the step down subsidiary company i.e. Solapur Bijapur Tolllway Private Limited has entered
the settlement and close out agreement with National Highway Authority of India ('NHAI') dated 23rd December, 2013 for foreclose the
concession agreement due to delay in handing over the land for the road project as per Concession agreement with NHAI. Since, the
subsidiary was promoted for purpose of execution of above road project under the concession agreement which is foreclosed and hence
sub-ordinate debt given to the SPVs has been waived off.
2.44
According to the management, the intangible assets to be amortized is in the form of right to operate the project road, and hence proper
amortization method should be based on use of such contractual right rather than use of underlying tangible asset. This right is
consumed through passage of time and hence SLM method of amortization is more appropriate. The accumulated amount of
amortization under straight line method is higher than the amortization computed in terms of Notification no. GSR 298(E) dated April
17, 2012 issued by Ministry of Corporate Affairs.
F-46
Notes forming Part of the Consolidated financial statements
2.45
Pending Litigation :
(a)
During the year, minority shareholders of Bijapur Hungud Tollway Private Limited (‘BHTPL’) (a step down subsidiary of the
Company) has filed company petition under section 347 and 398 of the Companies Act, 1956 with the Company Law Board –
Mumbai Bench against the Company and its associates/affiliates wherein the subsidiary is also defendant. The Company Law
Board (CLB) passed an order in favour of the minority shareholder although company pleaded that matter should be referred for
arbitration as per shareholder agreement (SHA). Against the CLB order the company filled Special Civil Application (SCA) with
Hon’ble High Court of Gujarat that matter of minority shareholder should be referred as per SHA. Hon’ble High Court accepted
SCA of the company and granted interim relief where by further proceeding of CLB have been stayed. Currently the matter is
pending before Hon’ble High Court of Gujarat. The management believes that, based on legal advice, the outcome of above
contingencies will be favourable and that any loss is not probable. Accordingly, no amounts have been accrued or paid in regard to
(b)
dispute.
Officer of Public Works Department ,Govt of Maharashtra (PWD) passed the order on November 4, 2013 to stop Toll Collection.The
subsidiary had filed a writ petition in the Hon. High Court, Aurangabad Bench challenging the said order.The Hon. High Court
passed an interim order on December 9, 2013 allowing restoration of Toll Collection from December 14, 2013 on the undertaking
to complete balance works and road maintenance works under supervision of Maharashtra Engineering Research Institute (MERI),
Nashik and PWD authorities and also directed to deposit the amount of toll collection into separate ESCROW account to be opened
and operated jointly by subsidiary Company and PWD officer. The subsidiary has accordingly deposited the amount of toll
collection into separate escrow account with Bank.The amount and account would be released once the entire work is completed
and certified by PWD officers. The deadline for completion of above works is presently extended up to 31st July 2014.
2.46
As per the Accounting Standard-27 ‘Financial Reporting of Interest in Joint Venture’, Joint Ventures entered
into by the Company are as follows:
Sr
Name of Joint Venture
No
% of
Involvement
1
SEL-GKC (Radhanpur-manpura)
Jointly Controlled Operation
52%
2
SEL-GKC (Vishakhapatnam Project)
Jointly Controlled Operation
50%
3
SEL-GKC (Omkareshwar Project)
Jointly Controlled Operation
60%
4
SEL-GKC (Karimnagar Project)
Jointly Controlled Operation
52%
5
SEL-GKC-Omkareshwar Project
Jointly Controlled Operation
40%
6
SEL-GKC-Managuru Project
Jointly Controlled Operation
51%
7
SELL-GKC-BSHIP-II
Jointly Controlled Operation
50%
8
SELL-GKC-Govindpur Project
Jointly Controlled Operation
50%
9
SEL-Annapurna (Basantimata Project)
Jointly Controlled Operation
80%
10 SEL-Vishnushiva (Maheshpur Project)
Jointly Controlled Operation
75%
11 SEL-Vaishnovi
Jointly Controlled Operation
72%
Jointly Controlled Operation
40%
Jointly Controlled Operation
40%
Corsan Corviam Const S.A.-SEL (DMRC12
CC43
Corsan Corviam Const S.A.-SEL (DMRC13
CC47
2.47
Description of Interest
Note on NBFC:
Based on the legal opinion obtained by the subsidiary in terms of Reserve Bank of India directive with regards to systematically
important Core Investment Companies (Reserve Bank) Directions 2011, the subsidiary is not required to be registered with Reserve Bank
of India in terms of said directives.
2.48
2.49
During the Financial year 2013-14 Share of Profit in Mumbai Nasik Express Way Limited, an associates of the company, has been taken
for the period from April 1, 2013 to December 31, 2013 as the company has received the audited financial statement for that period only
till the preparation for Consolidated financial statements.
All amounts in the financial statements are presented in Rupees Lakhs except per share data and as otherwise stated. Figures in
brackets represent corresponding previous year figures in respect of Profit & Loss items and in respect of Balance Sheet items as on the
Balance Sheet date of the previous year. Figures for the previous year have been regrouped/rearranged wherever considered necessary
to confirm to the figures presented in the current year.
F-47
Limited Review Report
Review Report to
The Board of Directors
Sadbhav Engineering Limited
I . We have reviewed the accompanying statement of unaudited consolidated financial results of S a d b h a v
Group comprising Sadbhav Engineering Limited ('the Company') and its subsidiaries, (together, 'the
Group'), for the quarter ended June 3 0, 2014 (the "Statement"), being submitted by the Company
pursuant to the requirement of Clause 41 of the Listing Agreement, except for the disclosures regarding
'Public Shareholding' and 'Promoter and Promoter Group Shareholding which have been traced from
disclosures made by the management and have not been reviewed by us. This Statement is the
responsibility of the Company's management and has been approved by the Board of Directors. Our
responsibility is to issue a report on the Statement based on our review.
2. We conducted our review in accordance with the Standard on Review Engagements (SRE) 2410, Review of
Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Institute of
Chartered Accountants of India. This standard requires that we plan and perform the review to obtain
moderate assurance as to whether the Statement is free of material misstatement. A review is limited
primarily to inquiries of company personnel and analytical procedures applied to financial data and thus
provides less assurance than an audit. We have not performed an audit and accordingly, we do not express
an audit opinion.
3. We did not review revenues of Rs. 12846.30 lakh, included in the accompanying unaudited consolidated
financial results relating to subsidiaries, whose financial information have been reviewed by the other auditors
and whose reports have been furnished to us. Our conclusion on the unaudited quarterly financial results, in so
far as it relates to such subsidiaries is based solely on the reports of the other auditors.
4. Based on our review conducted as above and on consideration of reports of other auditors on the unaudited
separate quarterly financial results and on the other financial information of the components, nothing has
come to our attention that causes us to believe that the accompanying Statement of unaudited consolidated
financial results prepared in accordance with recognition and measurement principles laid down in
Accounting Standard 25 Interim Financial Reporting notified under the Companies Act, 1956 read with
General Circular 15/2013 dated 13 September 20 13, issued by the Ministry of Corporate Affairs, in respect
of Section 133 of the Companies Act. 2013 and other recognised accounting practices and policies has not
disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including
the manner in which it is to be disclosed, or that it contains any material misstatement.
For SURANA MALOO & COMPANY
Chartered Accountants
Firm Reg. No. 112171W
Place: Ahmedabad
Date: October 13, 2014
S.D.PATEL
PARTNER
Membership No. 37671
F-48
Sr.
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
A
1
2
B
SADBHAV ENGINEERING LIMITED
Regd Office: Sadbhav House, Opposite Law Garden Police Chowki, Ellisbridge, Ahmedabad-380 006
UNAUDITED FINANCIAL RESULTS (CONSOLIDATED) FOR THE QUARTER ENDED 30TH JUNE, 2014
(Rs. in Lakhs, Except for Share Data)
Year ended 31/03/2014
Particulars
Quarter ended 30/06/2014
(Audited)
Income from operations (Net of excise duty)
80560.25
273252.22
80560.25
273252.22
Total Income from operations (net)
60243.44
206342.80
Construction Expenses
0.00
0.00
Changes in inventories of Finished Goods, Work in Progress & Stock in trade
2400.86
7657.23
Employee benefits expense
5604.16
13048.30
Depreciation and amortization expense
Other expenses
2748.78
14697.18
Total Expenditure
70997.24
241745.51
Profit from Operation before other Income, finance costs and exceptional Items(1-2)
9563.01
31506.71
972.29
Other income
3062.82
Profit from ordinary activities before finance costs and Exceptional Items ( 3+4)
10535.30
34569.53
Finance costs
14463.88
45546.41
Profit from ordinary activities after finance costs but before exceptional Items (5-6)
(3,928.58)
(10,976.88)
Exceptional Items - Net (refer Note No. 7)
683.41
12172.22
Profit from Ordinary Activities before tax (7+8)
(4,611.99)
1195.34
Tax Expense
368.27
457.56
Short/(Excess) provision for taxation of earlier year
(248.22)
(1,869.61)
(4,732.04)
2607.39
Net Profit from Ordinary Activities after tax(9-10-11)
0.00
0.00
Extraordinary Item ( Net of tax expenses Rs. )
(4,732.04)
2607.39
Net Profit for the period ( 12-13)
Share of Profit/(Loss) of Associates
15.30
Share of Loss Transferred to Minority interest
1,732.42
1814.79
Net Profit for the period after Taxes, Minority Interest
(2,999.62)
4437.48
1517.95
1516.62
Paid up Equity share Capital (face value of Re. 1 each)
124157.39
125794.18
Reserve excluding revaluation reserve
151782482
151384261
Weighted average Number of Equity Shares
154176007
151544171
Weighted average Number of Dilutive Equity Shares
-1.98*
2.93
Basic EPS (Rs.) before and after extra ordinary items (* not annualized)
-1.95*
2.93
Diluted EPS (Rs.) before and after extra ordinary items (* not annualized)
Particulars of Shareholding
Public Shareholding
Number of Shares
Percentage of shareholding
Promoters and promoter group shareholding
a) Pledged/ Encumbered
- Number of Shares
- Percentage of shares ( as a % of the total share holding of promoter and promoter group)
- Percentage of shares ( as a % of the total share capital of company)
b) Non -encumbered
- Number of Shares
- Percentage of shares ( as a % of the total share holding of promoter and promoter group)
- Percentage of shares ( as a % of the total share capital of company)
Investors Complaints
Investors Complaints for the quarter
Notes :
1
2
3
4
5
6
7
Pending at the
beginning of the
quarter
0
78998920
Received during
the quarter
0
52.04
77826420
51.32
Nil
Nil
Nil
Nil
Nil
Nil
72795880
100.00
73835880
100.00
47.96
48.68
Disposed during Remaining unsolved at the
the quarter
end of the quarter
0
0
The above results were reviewed by the Audit Committee and were approved & taken on record by the Board of Directors at their meeting held on October 13, 2014
Limited review as required under Clause 41 of the Listing Agreement has been carried out by the Statutory Auditors of the Company.
The figures have been regrouped and/or rearranged wherever considered necessary.
Provision for Tax has been made as per Normal Provision Income Tax Act 1961. Tax Expense includes provision for current tax and deferred tax.
During the quarter company has issued and allotted 1,32,500 equity shares of Re.1 each to its employees at price of Rs. 50/- per equity share under ESOS Scheme 2008 on 22nd April,
2014.
Share of the company in Profit or Loss of Mumbai-Nashik Expressway Limited, a associate company has not been considred.
Exceptional item includes effect of changes in accounting policies in case of subsidiaries are as follows:A. Premium payable to NHAI
B. Major maintenance expenses
Net
(1,533.20)
2216.61
683.41
F-49
DECLARATION
Our Company certifies that all relevant provisions of Chapter VIII read with Schedule XVIII of the SEBI
Regulations have been complied with and no statement made in this Preliminary Placement Document is
contrary to the same. Our Company further certifies that all the statements in this Preliminary Placement
Document are true and correct.
Signed by:
Sd/Vishnubhai M. Patel
Managing Director and Chief Executive Officer
Sd/Shashin V. Patel
Joint Managing Director
Date: October 14, 2014
Place: Ahmedabad
183
DECLARATION
We, the Directors of our Company certify that:
(i)
our Company has complied with the provisions of the Companies Act, 2013 and the rules made
thereunder;
(ii)
the compliance with the Companies Act, 2013 and the rules does not imply that payment of dividend
or interest or repayment of debentures, if applicable, is guaranteed by the Central Government;
(iii)
the monies received under the offer shall be used only for the purposes and objects indicated in the
Preliminary Placement Document;
Signed by:
Sd/Vishnubhai M. Patel
Managing Director and Chief Executive Officer
Sd/Shashin V. Patel
Joint Managing Director
I am authorized by the Board of Directors of our Company vide resolution number 7 dated September 9, 2014 to
sign this form and declare that all the requirements of Companies Act, 2013 and the rules made thereunder in
respect of the subject matter of this form and matters incidental thereto have been complied with. Whatever is
stated in this form and in the attachments thereto is true, correct and complete and no information material to the
subject matter of this form has been suppressed or concealed and is as per the original records maintained by the
promoters subscribing to the Memorandum of Association and the Articles of Association.
It is further declared and verified that all the required attachments have been completely, correctly and legibly
attached to this form.
_________________________
Sd/Vijay Kalyani
Company Secretary
Date: October 14, 2014
Place: Ahmedabad
184
SADBHAV ENGINEERING LIMITED
Registered Office and Corporate Office
‘Sadbhav House’, Opposite Law Garden Police Chowki, Ellisbridge, Ahmedabad 380 006
Website: www.sadbhaveng.com; CIN: L45400GJ1988PLC011322
Contact Person: Vijay Kalyani, Company Secretary - Compliance Officer
Address of Compliance Officer:
‘Sadbhav House’, Opposite Law Garden Police Chowki, Ellisbridge, Ahmedabad 380 006
Tel: (91 79) 2646 3384; Fax: (91 79) 2640 0210; Email: sel@sadbhav.co.in
BOOK RUNNING LEAD MANAGERS
Inga Capital Private Limited
Naman Midtown, ‘A’ Wing, 21st Floor, Senapati
Bapat Marg,
Elphistone (West)
Mumbai 400 013
Axis Capital Limited
Axis House, 1st Floor, C-2
Wadia International Centre
P. B. Marg, Worli
Mumbai 400 025
Standard Chartered Securities (India) Limited
2nd Floor, 23-25
M.G.Road, Fort
Mumbai 400 001
AUDITORS TO OUR COMPANY
Surana Maloo & Co.
2nd Floor, Aakashganga Complex,
Parimal under bridge, Near. Suvidha Shopping Centre,
Paldi, Ahmedabad -380007
LEGAL ADVISOR TO THE ISSUE AS TO INDIAN LAW
Amarchand & Mangaldas & Suresh A. Shroff & Co.
Peninsula Chambers, Peninsula Corporate Park
Ganpatrao Kadam Marg, Lower Parel
Mumbai 400 013
185