ANNUAL REPORT 2013 - 14 LANCO INFRATECH LIMITED NATURAL EPC RESOURCES INFRASTRUCTURE

POWER SOLAR PROPERTY CSR DEVELOPMENT

With a core mandate of “Always Inspiring” driving our business mandate, it’s not surprising

that our initiatives come with the imperative of far reaching outcomes. Our customary far-

sightedness has helped us understand the dynamics of challenging environments and

accordingly align ourselves to consolidate and deliver. Across our business interests - EPC,

Power, Solar, Natural Resources, Infrastructure, Property Development - our goal is one of

consolidation and consistencies. An outcome-oriented approach has enabled us to reach this

far. In these challenging times, we have persevered with the conviction that our long-term

strategies will have a positive impact on all those we are associated with and the world at large. EPC

Our reputation for impeccable project management competencies has established us as the frst choice amongst leading enterprises for EPC projects. An ability to straddle a project from “concept to commissioning” bringing together the crucial parameters of cost and quality has earned us a rich portfolio of EPC projects.

With strong engineering competencies across industry verticals such as power, transmission, industrial and transportation segments, our decade-old expertise in EPC is defnitely one of our many strengths. POWER

Our proven prowess in power generation has made us one of the nation’s leading power producers and one of largest private sector players in the Indian power trading market. We have consolidated our strengths and integrated our presence across the value chain. This in turn has facilitated us in capturing an elevated value addition across the businesses.

We currently have an installed capacity of 4722 MW and a capacity under construction of 4636 MW. One of our under construction project has recently signed a Long Term Power Purchase Agreement of 25 years with UPPCL Discoms under Case 1 Bid. SOLAR

Renewable energy is all about being sustainable, innovative and cost-effective, while catering to the ever-increasing energy needs. Our goal of indigenizing alternate technologies with the aim to reduce costs and achieve grid parity is manifested in our fully integrated strategy - ‘Sand to Power’. We are focused on commercializing technologies for green and effcient energy generation systems such as solar thermal and solar photovoltaic (PV).

Currently we have a solar farm development portfolio of 143 MW (Operating - 43 MW and Under Construction - 100 MW). NATURAL RESOURCES

The coal business has always been our key area of focus. Our strategic move towards ‘Project Integration’ has enabled us to extend our natural resources’ operating portfolio and under- development assets in India and across the globe. With more than 2 billion tonnes of coal resources in our business portfolio, we are reckoned as one of the exclusive members among the mine developers & operators in India.

The recent appointment as Mine Developer & Operator (MDO) by Steel Authority of India Ltd., for the Tasra Coal Block including washery and captive power project has reiterated our strengths in Natural Resources. INFRASTRUCTURE

The successful execution and completion of impressive civil & urban projects has earned us our prominent position in the Infrastructure development sector. Today, we are proving our mettle in selective infrastructure projects by leveraging our EPC experience and construction expertise.

The projects currently under our highway portfolio include two major National Highway (NH) projects in the State of Karnataka and one project in the State of Uttar Pradesh. PROPERTY DEVELOPMENT

Foraying into Property Development, we have created one of Hyderabad’s most desired destinations - Lanco Hills. Conceptualized to be ‘a world within’, it is spread over 100 acres and comprises of residential spaces, offce space & IT SEZ, retail and entertainment options. This USD 1.5 billion mega project owes its magnifcence to the meticulous detailing by renowned architects & consultants. With breathtaking vistas, esthetically landscaped gardens and high-rise living, Lanco Hills is reckoned to be one of the world’s largest single-phase development projects. Board of Directors

Mr. L. Madhusudhan Rao Mr. G. Bhaskara Rao Mr. L. Sridhar Executive Chairman Executive Vice - Chairman Vice - Chairman

Mr. G. Venkatesh Babu Mr. S. C. Manocha Dr. Pamidi Kotaiah Managing Director Deputy Managing Director Director

Mr. P. Abraham Dr. Uddesh Kumar Kohli Mr. R. Krishnamoorthy Director Director Director

7 Annual Report 2013-2014 Bankers and Financial Institution of the Company Corporate Information Allahabad Bank Andhra Bank Board of Directors Axis Bank Limited Bank of Baroda Mr. L. Madhusudhan Rao - Executive Chairman Bank of Maharashtra Mr. G. Bhaskara Rao - Executive Vice-Chairman Canara Bank Central Bank of India Mr. L. Sridhar - Vice-Chairman Corporation Bank Dena Bank Mr. G. Venkatesh Babu - Managing Director HDFC Bank Limited Mr. S. C. Manocha - Deputy Managing Director ICICI Bank Limited IDBI Bank Limited Dr. Pamidi Kotaiah - Director Indian Overseas Bank Mr. P. Abraham - Director IDFC Limited ING Vysya Bank Limited Dr. Uddesh Kumar Kohli - Director Kotak Mahindra Bank Limited Mr. R. Krishnamoorthy - Director Life Insurance Corporation of India Oriental Bank of Commerce Punjab & Sind Bank Chief Operating Ofcer Finance Punjab National Bank Mr. T. Adi Babu Srei Equipment Finance Private Limited State Bank of Bikaner & Jaipur Compliance Ofcer State Bank of Hyderabad Mr. A. Veerendra Kumar State Bank of India State Bank of Mysore Auditors State Bank of Patiala Brahmayya & Co., Siemens Financial Services Private Limited (Registration No. - 000511S) TATA Capital Financial Services Limited Chartered Accountants Catholic Syrian Bank Limited 48, Masilamani Road, Balaji Nagar, Royapettah The Jammu & Kashmir Bank Union Bank of India Chennai - 600 014 United Bank of India Tamil Nadu, India Yes Bank Limited

Registered Ofce Plot No.4, Software Units Layout, HITEC City Madhapur, Hyderabad – 500 081, Telangana, India Phone: +91-40-4009 0400, Fax: +91-40-2311 6127 Contents E-mail: [email protected] Year at a Glance 9 Website: www.lancogroup.com Directors’ Report 10 Corporate Identity Number: L45200TG1993PLC015545 Management Discussion and Analysis 16 Report on Corporate Governance 32 Corporate Ofce Abridged Financial Statements Lanco House, Plot No. 397, Udyog Vihar, Phase-3 Gurgaon–122 016, Haryana, India Auditors’ Report 47 Phone: +91-124-474 1000, Fax: +91-124-474 1878 Balance Sheet 54 Statement of Proft and Loss Account 55 Registrar & Share Transfer Agent Cash Flow Statement 56 Aarthi Consultants Private Limited Notes to Abridged Financial Statements 56 1-2-285, Domalguda, Hyderabad – 500 029 Consolidated Financial Statements Telangana, India Auditors’ Report 79 Phone: +91-40-2763 8111, 2763 4445 Balance Sheet 82 Fax: +91-40-2763 2184 Statement of Proft and Loss Account 83 E-mail: [email protected] Cash Flow Statement 84 Website: www.aarthiconsultants.com Notes to Consolidated Financial Statements 85

8 Year at a glance - Consolidated (` Crores) Change PARTICULARS 2013-2014 2012-2013 (%) Proft and Loss Account Gross Revenue 10,875.27 15,295.86 -29 Less: Elimination of Inter Segment Revenue 277.42 1,408.20 -80 Net Revenue 10,597.85 13,887.66 -24 Proft Before Depreciation, Interest and Taxation (PBITDA) 1,671.87 2,653.33 -37 Depreciation and Amortisation 1,171.91 1,125.81 4 Proft Before Interest and Taxation 499.96 1,527.52 -67 Eliminated Proft on transactions with Subsidiaries (15.05) (17.58) -14 Proft Before Interest and Taxation Plus Elimination 484.91 1,509.94 -68 Interest and Finance Charges 2,762.12 2,421.44 14 Proft / (Loss) Before Taxation, Exceptional Item Plus Elimination (2,277.21) (911.50) 150 Exceptional Item (179.26) - 100 Proft / (Loss) Before Taxation Plus Elimination (2,456.47) (911.50) 169 Provision for Taxation (Including Deferred Tax and MAT Credit Entitlement) (129.44) 179.62 -172 Proft / (Loss) After Tax (Before Minority Interest & Share of Profts from Associates) (2,327.03) (1,091.12) 113 Share of Minority Interest (115.64) (11.22) 931 Share of Profts / (Loss) from Associates (33.89) (2.88) 1,077 Proft / (Loss) After Tax (After Minority Interest and Share of Profts from Associates) Plus Elimination (2,245.28) (1,082.78) 107 Prior Period Items 43.50 (12.62) -445 Elimination of Proft on Transactions with Subsidiaries and Associates (14.90) 3.14 -575 Proft / (Loss) After Tax (After Minority Interest and Share of Profts from Associates) (2,273.88) (1,073.30) 112 Cash Proft (743.40) 232.92 -419 Cash Flow Cash from Operating Activities before Elimination 1,345.37 1,869.51 -28 Balance Sheet Share Capital 239.24 239.24 0 Reserves & Surplus 1,218.30 3,433.22 -65 Minority Interest 837.48 934.18 -10 Net Worth Plus Minority 2,295.02 4,606.64 -50 Eliminated Proft on Transactions with Subsidiaries and Associates (Cumulative) 1,501.17 1,516.06 -1 Net Worth Plus Minority & Elimination 3,796.19 6,122.70 -38 Non Current Liabilities 34,354.22 30,971.56 11 Current Liabilities 14,194.93 15,243.06 -7 Total of Net Worth Plus Minority & Liabilities 50,844.17 50,821.26 0.05 Non Current Assets 40,253.03 39,333.96 2 Current Assets 10,591.14 11,487.30 -8 Total of Assets 50,844.17 50,821.26 0

Key indicators Earning Per Share (In `) Basic (9.68) (4.58) 111 Diluted (9.68) (4.58) 111

No. of Employees 4,000 5,710 -30

9 Annual Report 2013-2014 DIRECTORS’ REPORT

Dear Members,

Your Directors are pleased to present the Twenty First Annual Report on the Business and Operations of the Company together with the Audited Accounts for the year ended March 31, 2014.

FINANCIAL RESULTS (` Crores) CONSOLIDATED STANDALONE PARTICULARS Year ended March 31 Year ended March 31 2014 2013 2014 2013 INCOME Revenue from operations and other income 10,597.85 13,887.66 2,339.37 4,822.75 Proft Before Taxation (2,441.42) (893.92) (959.99) 10.23 Provision for Taxation (129.44) 179.62 - (3.11) Net Proft after Taxation (2,311.98) (1,073.54) (959.99) 13.34 Less: Prior period items 43.50 (12.62) - - Add: Share of Proft/(Loss) of Associates (33.89) (2.88) - - Less: Elimination of Unrealized Proft on Transactions with 0.15 20.72 - - Associate Companies Less: Share of Minority Interest (115.64) (11.22) - - Net Proft/ (Loss) after Taxation, Minority Interest and (2,273.88) (1,073.30) (959.99) 13.34 Share of Proft/ (Loss) of Associates (Balance Carried to Balance Sheet) Surplus brought forward 382.23 1,455.54 1,479.10 1,465.76 Balance carried to Balance Sheet (1,891.65) 382.23 519.11 1,479.10

OPERATIONS AND BUSINESS REVIEW CDR PACKAGE: On a Consolidated basis, your Company has reported Gross Revenues Corporate Debt Restructuring Empowered Group (CDR EG) in of ` 10,597.85 Crores as against ` 13,887.66 Crores of Revenues its meeting held on December 11, 2013 has approved the CDR registered in the previous year. Total Expenditure for the Year was package submitted by the Company and issued letter of approval on ` 12,860.01 Crores as against ` 14,781.58 Crores in the previous year. December 20, 2013. As on March 31, 2014 CDR related documents The Earnings Before Interest, Tax, Depreciation and Amortization have been executed and creation of security has been completed (EBITDA) amounted to ` 1,671.87 Crores while the same was partly and the balance is in the process. ` 2,653.33 Crores for the previous year i.e. a decrease of 37%. The The proposal is only for the Company and not for any of its Proft before taxation stood at ` (2,441.42) Crores, a decrease of subsidiaries and associates. 173.11 % as compared to ` (893.92) Crores in the last year. Terms of CDR The Net Proft/(Loss) after Tax after adjustment of Minority Interest l Re-schedule of Term loan and short term loans are having and Share of Profts of Associates was ` (2,273.88) Crores as against moratorium period of 2 years from the cut of date of April 1, ` (1,073.30) Crores for the previous year. 2013 and are repayable in 30 quarterly instalments starting Gross Interest and Finance charges on consolidated basis amounted from June 30, 2015. to ` 2,762.12 Crores in comparison to ` 2,421.44 Crores due to increase l Portion of CDR Working Capital Loans on the cut of date i.e. in loans and Working Capital Requirements for Project Execution. April 1, 2013, has been carved out as Working Capital Term During the year your company sold 10 MW wind based power plant Loan - I (WCTL- I). LC/ BC/ BG devolved from cut of date till situated near Tirunalveli, Tamilnadu and recognised the proft on sale December 31, 2013 has been carved out as Working Capital of assets of ` 8.99 Crores. Term Loan - II (WCTL- II).

A detailed discussion on the results of the operations, fnancial l Funded Interest on Term Loans, WCTL - I and WCTL - II can condition and business review is included in the Management be funded for a period of 2 years from cut of date i.e. April 1, 2013 to March 31, 2015 and on regular Cash Credit limit for an Discussion and Analysis section placed at Annexure-II to this Report. initial period of 6 months from cut of date i.e. April 1, 2013 to 10 Directors’ Report

September 30, 2013 is converted into Funded Interest Term Annual General Meeting. Your Directors place on record their Loan (FITL). Interest on FITL to be paid on monthly basis from appreciations of the valuable contribution by Dr. Pamidi Kotaiah April 30, 2013. during his tenure as Director. l ` 2,500 Crores Priority Loan sanctioned with a moratorium Mr. P. Abraham, Dr. Uddesh Kumar Kohli and Mr. R. Krishnamoorthy period of 2 years at an interest rate of 12.5% and is repayable in were appointed as Independent Directors of the Company in terms 18 quarterly instalments starting from June 30, 2015. of Section 149 of the Companies Act, 2013. l Rate of interest on restructured facilities being 11% p.a. to be The Company had received approvals from the Ministry of Corporate increased in a stepped up manner up to 16% p.a. starting from Afairs, Government of India, New Delhi, in respect of waiver from fnancial year 2016-17. recovery of excess remuneration paid to Mr. L. Madhusudhan Rao, Executive Chairman and Mr. G. Bhaskara Rao, Executive l Waiver of penal charges from the cut-of date to the date of Vice-Chairman, by the Company for the fnancial year 2012-13 and implementation of the package. for payment of managerial remuneration to Mr. L. Madhusudhan l The Company shall raise funds by sale of assets/divestment of Rao, Executive Chairman and Mr. G. Bhaskara Rao, Executive shares in SPV’s/securitisation/QIP/IPO etc. to repay the above Vice-Chairman for the fnancial year 2013-14, by the Company. restructured facilities under CDR scheme. Applications are being submitted to the Ministry of Corporate In relation to the amount outstanding as at March 31, 2014 against Afairs, Government of India, New Delhi, seeking approval for the loans restructured by the CDR lenders, a total amount of payment of managerial remuneration to Mr. L. Madhusudhan Rao, ` 2,224.89 Crores would qualify for the conversion into 354.50 Crores Executive Chairman, Mr. G. Bhaskara Rao, Executive Vice-Chairman, shares at the sole discretion and on demand of the CDR lenders. Mr. G. Venkatesh Babu, Managing Director and Mr. S.C. Manocha, Deputy Managing Director, for the period starting from April 01, In terms of CDR Package, the promoters brought into the company 2014 till the tenure of their current appointment. as unsecured loan a total amount of ` 152.00 Crores and the same would qualify for the conversion into 24.40 Crores shares at the sole Dr. B. Vasanthan resigned as Director of the Company with efect discretion of the promoters. from May 23, 2014. The CDR gives your Company critical support to tide over the present DIVIDEND difcult business environment. The decision of the banks to consider and approve CDR also refects the faith these institutions have in the Your Directors have not recommended dividend for the year ended long term business model of the Company. March 31, 2014.

RESOLUTIONS PASSED THROUGH POSTAL BALLOT SUBSIDIARY COMPANIES During the reporting period, your Company had obtained During the year under review, Tasra Mining & Energy Company shareholders approval by passing of resolutions through Postal Private Limited and Sirajganj Electric (Pvt) Limited had become Ballot. The results of the Postal Ballot were announced on April 17, subsidiaries of the Company. Further, Approve Choice Investments 2014. The details of the resolutions passed through Postal Ballot Limited, Apricus S.R.L, Bar Mount Trading (Pty.) Limited, Barrelake forms part of the Report on Corporate Governance, annexed to this Investments (Pty.) Limited, Belara Trading (Pty.) Limited, Caelamen report. (Pty.) Limited, Dupondius (Pty.) Limited, Gamblegreat Trading (Pty.) Limited, Lexton Trading (Pty.) Limited, Lanco Rocky Face Land AMEMDMENT TO MEMORANDUM AND ARTICLES OF Holdings LLC and Lanco Tracy City Land Holdings LLC, had ceased ASSOCIATION to be Subsidiaries of the Company. Also during the reporting period, Lanco Teesta Hydro Power Limited, Subsidiary of the Company had During the period under review, the Memorandum of Association of changed its status from Private Limited to Public Limited Company. the Company was amended to increase the Authorised Share Capital of the Company from ` 500,00,00,000/- (Rupees Five Hundred Crores The Ministry of Corporate Afairs vide their General Circular No. only) to ` 12,000,00,00,000/- (Rupees Twelve Thousand Crores only). 2/2011, dated February 08, 2011 had granted general exemption This increase was necessitated to provide option to the CDR Lenders to the Companies under Section 212(8) of the Companies Act, 1956 for conversion of loans into equity. The Articles of Association of the from the requirement to attach detailed fnancial statements of each Company was also amended to refect the increase of Authorised subsidiary. The detailed fnancial statements and audit reports of Capital and to provide option for buy-back of securities of the each subsidiary are available for inspection at the Registered Ofce Company. of the Company during ofce hours and upon written request from shareholder(s), your Company will arrange to send the fnancial DIRECTORS statements of subsidiary companies to the said shareholder(s). Mr. G. Bhaskara Rao and Mr. L. Sridhar retire by rotation at the ensuing In terms of the Ministry of Corporate Afairs, General Circular 08/2014 Annual General Meeting and being eligible ofer themselves for No.1/19/2013-CL-V, dated April 04, 2014, the Auditors Report and appointment. Dr. Pamidi Kotaiah retires by rotation at the ensuing Board’s Report in respect of fnancial years that commenced earlier 11 Annual Report 2013-2014 than April 01, 2014 shall be governed by the relevant provisions/ AUDITORS Schedules/rules of the Companies Act, 1956. The fnancial information The Auditors of the Company, Brahmayya & Co., Chartered of the Subsidiaries of the Company was provided accordingly. Accountants, (Firm Registration No. 000511S) retire at the conclusion of the ensuing Annual General Meeting of the Company and have INVESTOR EDUCATION AND PROTECTION FUND confrmed their willingness and eligibility for appointment for During the year under review, pursuant to Section 205C and other the four consecutive years and have also confrmed that their applicable provisions of the Companies Act, 1956, an amount of appointment, if made, will be within the limits prescribed under the ` 1,16,640/- (Rupees One Lakh Sixteen Thousand Six Hundred and Companies Act, 2013. Forty only) was transferred to Investor Education and Protection Fund, with respect to share application money remained unclaimed COST AUDITORS for a period of 7 years by the unsuccessful bidders of the Initial Public DZR & Co., Cost and Management Accountants have been Ofering (IPO) of the Company. reappointed as the Cost Auditors for the year ending March 31, 2014, as recommended by the Audit Committee. The Cost Audit Report for HEALTH, SAFETY AND ENVIRONMENT the year ended March 31, 2013 was due for fling on September 30, Lanco has taken up a very good initiative in implementing a world- 2013 and was fled on September 29, 2013. class Health, Safety & Environment (HSE) Management System by implementing British 5 Star Safety Programs. The entire leadership DISCLOSURE OF PARTICULARS WITH RESPECT TO supported this initiative and sites personnel were instrumental in CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND giving a perfect shape to this new initiative. FOREIGN EXCHANGE EARNINGS AND OUTGO The group has started its process improvement programs in HSE and Your Directors present the abridged accounts under Section is in process to bring out a compliance based tool to enhance the 219 of the Companies Act, 1956. Pursuant to the Companies HSE performance across the group. (Central Government’s) General Rules and Forms, 1956 read with Lanco’s HSE performance is realized with an excellent recognition of Section 219(1)(b)(iv) of the Companies Act, 1956, the Particulars our eforts in HSE and its sustenance. The world renowned “Sword of Conservation of Energy, Technology Absorption and Foreign of Honour” by British Safety Council, UK was conferred to Lanco’s Exchange Earnings and Outgo as required under Section 217(1)(e) Tanjore Site soon after getting awarded with 5-Star rating. Also, of the Companies Act, 1956, read with the Companies (Disclosure Lanco’s HSE culture got further boost as Kondapalli & Anuppur of Particulars in the Report of Board of Directors) Rules, 1988 have sites won the Prestigious “Prashansha Patra” conferred by National not been provided. However, these particulars are available for Safety Council of India (NSCI). Other sites, which have participated in inspection at the Registered Ofce of the Company and upon written various HSE awards and won during the year, make us proud. A brief request from a shareholder, we will arrange to mail these details. description is below: DISCLOSURE ON COMPANY’S EMPLOYEES STOCK OPTION Company Award PLANS Lanco Infratech l NSCI Safety Awards, “Prashansha Patra” Limited- EPC Division to Anuppur Site The Employees Stock Option Plan - 2006 and the Employees Stock Lanco Tanjore Power l “Sword of Honour” by British Safety Option Plan–2010 were approved by shareholders by passing Company Limited Council Special Resolutions in the Extraordinary General Meeting held on June 07, 2006 and Annual General Meeting held on July 31, 2010, l Environment protections and management award from Government respectively. of Tamilnadu The required information pursuant to Clause 12 of the Securities l CII 4 Star ESH Awards, Southern Region and Exchange Board of India (Employee Stock Option Scheme and Lanco Amarkantak l NSCI Safety Awards, “Prashansha Patra” Employee Stock Purchase Scheme) Guidelines, 1999, as amended, is Power Limited enclosed as Annexure-I to this Report. Udupi Power l CII 4 Star ESH Awards, Southern Region Corporation Limited PARTICULARS OF EMPLOYEES l Golden Peacock “Environment Management Award” Your Directors present the abridged accounts under Section 219 Lanco Kondapalli l NSCI Safety Awards, “Prashansha Patra” of the Companies Act, 1956. Pursuant to the Companies (Central Power Limited Government’s) General Rules and Forms, 1956 read with Section 219(1)(b)(iv) of the Act, the Particulars of Employees as required FIXED DEPOSITS by Section 217(2A) of the Companies Act, 1956, read with the Your Company has not accepted fxed deposits falling within the Companies (Particulars of Employees) Rules, 1975 have not been provisions of Section 58A of the Companies Act, 1956 read with the provided. However, these particulars are available for inspection Companies (Acceptance of Deposits) Rules, 1975, during the year at the Registered Ofce of the Company and upon written request under review. from a shareholder, we will arrange to mail these details. 12 Directors’ Report

MANAGEMENT DISCUSSION AND ANALYSIS from lenders and customer in near future and has taken the The Management Discussion and Analysis as required under Clause efect of these transfers while preparing these consolidated 49 of the Listing Agreement is enclosed as Annexure-II to this Report. fnancial results. The delay in getting the balance lenders approval is only CORPORATE GOVERNANCE procedural and the Management is confdent of getting the same. In compliance with the conditions of Corporate Governance, The Company is hopeful of resolving the qualifcation during pursuant to Clause 49 of the Listing Agreements with Stock current fnancial year 2014-15. Exchanges, the Report on Corporate Governance with the Certifcate from a Practicing Company Secretary certifying compliance in this The above Qualifcation is also a qualifcation in Abridged Stand regard forms part of this Report. alone Financial Statements.

DIRECTORS’ RESPONSIBILITY STATEMENT l Qualifcation on Revenue Recognition by a step down subsidiary: As required by Section 217(2AA) of the Companies Act, 1956, your Directors hereby confrm that: The qualifcation by the Auditor is not about deviation from the Accounting Standards but on the interpretation of the (i) in the preparation of the annual accounts, the applicable realisability of the revenue. There is a dispute between a step accounting standards have been followed and that no material down subsidiary company and a customer on the method of departures are made from the same; tarif determination apart from other issues. (ii) we have selected such accounting policies and applied them During the fnancial year, Appellate Tribunal for Electricity, consistently and made judgments and estimates that are India ordered the HERC (state regulatory commission of reasonable and prudent so as to give true and fair view of the the customer) to re-determine the tarif as per HERC Tarif state of afairs of the Company at the end of the fnancial year Regulations, 2008 and CERC Regulations, 2009 where no and of the proft/loss of the Company for the period; specifc operational or fnancial norms have been specifed in (iii) we have taken proper and sufcient care for the maintenance the HERC Tarif Regulations. The power tarif determination of adequate accounting records in accordance with the under HERC Regulations by and large follows the same provisions of the Companies Act, 1956, for safeguarding the principles and methodology of tarif determination as per the assets of the Company and for preventing and detecting fraud CERC Regulations. and other irregularities; and Relied upon the legal opinions obtained and taking into (iv) we have prepared the annual accounts on a going concern basis. consideration the latest APTEL order, the management opines that there is no signifcant uncertainty in recoverability of the INFORMATION ON AUDITORS’ QUALIFICATIONS: recognised revenue for the power supplies made as per the The information and explanations of your Directors on the judicial orders. In addition to that the Management is confdent qualifcations by the Auditors on Abridged and Consolidated of obtaining the tarif approvals in near future and the rate to Statements are as follows: be determined by HERC will be the same rate as adopted by the step down subsidiary company on provisional basis as per l Qualifcation on reorganization of Investments in Power the CERC norms. SPV’s: l Qualifcation on Capitalization of Borrowing cost by step The qualifcation by the Auditor is not about deviation from down subsidiary: the Accounting Standards but on the pending approval of the lenders for the shares transfer to wholly owned subsidiaries. Due to non availability/non allocation of natural gas by To meet the business requirements of augmenting the equity Government of India to the step down subsidiary Company’s funding from private equity investors, strategic investors, the Phase-III Project and considering present economic conditions Power Holding Company structure was created and shares were of Power Sector, the step down subsidiary company has made transferred to the wholly owned subsidiaries. The share transfer an application to the Ministry of Corporate Afairs (MCA) does not alter the fnancial statements at the consolidated requesting to provide relaxation from Accounting Standard - level/standalone level. The Company’s investment as of March 16 and allow the Company to capitalize the borrowing costs 30, 2012 in various subsidiaries and associates was transferred till commencing its commercial operations. The application is to wholly owned step down subsidiaries and to an associate under consideration of MCA. of wholly owned step down subsidiary aggregating to The management is of the opinion that the Government ` 6,815.51 Crores that require lenders and customer approvals. of India is likely to respond positively on the said request by Management has received many such approvals aggregating considering the specifc problems being faced by Gas based to 88% in value, of the lenders consenting to the restructuring, power plants in the country. the management is confdent of receiving balance approvals 13 Annual Report 2013-2014 l Qualifcation on Unaudited fnancials of SPV’s consideration ACKNOWLEDGEMENT AND APPRECIATION in Consolidation: Your Directors take this opportunity to thank all the stakeholders The qualifcation by the Auditor is not about deviation from including Shareholders, Financial Institutions, Banks, Customers, the Accounting Standards but on considering some of the Suppliers, Service Providers and Regulatory and Governmental foreign subsidiary companies non-audited fnancials in the Authorities for their consistent co-operation. Your Directors also consolidation. wish to place on record the sincere appreciation of the hard work, dedication and commitment of Employees at all levels. We look Out of those, some subsidiary companies were acquired by forward to your continued support in the future. the company in February, 2011. These companies were “under administrator” before acquisition. On account of this, audited fnancial statements were not available for 2008-09 and 2009-10. After acquisition, audit was completed for 5 years and audit for the current year is under progress. For and on behalf of the Board

The remaining entities are either non-material/non-operational L. Madhusudhan Rao G. Venkatesh Babu during the year and audit for all these entities is under process. Executive Chairman Managing Director Hence forth the management is expecting the audited DIN - 00074790 DIN - 00075079 fnancials of these companies in time and consolidation can be done with the audited accounts which will avoid the Place: Gurgaon qualifcation in future. Date: August 14, 2014

14 Directors’ Report Annexure I - Disclosure in compliance with Clause 12 of the SEBI (Employee Stock Option Scheme) and (Employee Stock Purchase Scheme) Guidelines, 1999, as amended S. No. Description Employee Stock Options Plan 2006 1 Total Number of Options under the plan 11,11,80,960 2 Options granted during the year NIL 3 Pricing Formula The options issued by the ESOP Trust shall be at Par Value subject to the adjustments for corporate actions such as Bonus, Consolidation and Split. 4 Options vested as of March 31, 2014 6,97,63,125 5 Options Exercised during the year 1,50,24,047 6 The total number of shares arising as a result of exercise of option (As of March 31, 2014) 6,42,16,468 7 Options lapsed during the year 22,14,305 8 Variation of Terms of options upto March 31, 2014 NIL 9 Money realised by exercise of Options during the year (in `) 36,50,843 10 Total Number of options in force as on March 31, 2014 5,43,59,980 11 Employee wise details of options granted to (i) Senior Management during the Year NIL (ii) Employees holding 5% or more of the total number of options granted during the NIL year (iii) Identifed employees who were granted option during any one year, equal to or NIL exceeding 1% of the issued capital (excluding warrants and conversions) of the Company at the time of grant. 12 Diluted Earnings Per Share pursuant to issue of shares on exercise of option calculated (4.08) in accordance with Accounting Standard (AS) 20 13 Where the Company has calculated the employee compensation cost using the intrinsic Since these options were granted at a value of the stock options, the diference between the employee compensation cost nominal exercise price, intrinsic value on so computed and the employee compensation cost that shall have been recognised if the date of grant approximates the fair it had used the fair value of the options. The impact of the diference on profts and on value of options. EPS of the Company. 14 Weighted average exercise prices and weighted average fair values of options seperately Exercise Price ` 0.243 Per Option. for options whose exercise price either equals or exceeds or is less than the market price No new options were granted during the of the stock. year. 15 A description of the method and signifcant assumptions used during the year to estimate NA the fair values of options, including the following weighted average information: (a) risk free interest rate (b) expected life (c) expected volatility (d) Expected dividends, and (e) the price of the underlying share in market at the time of option grant.

15 Annual Report 2013-2014 Annexure II - MANAGEMENT DISCUSSION AND ANALYSIS ECONOMIC REVIEW Installed Power Power Capacities Power Global Capacity under Construction Capacities under Development The world economic activity, led by advanced economies, improved 4,722 MW* 4,636 MW 6,840 MW in the second half of 2013 and is expected to improve further in 2014- *732 MW getting ready for operations 15. World GDP grew at a pace of 3% in 2013 and global growth is expected to increase to 3.6% in 2014 and 3.9% in 2015. In advanced The country witnessed a continued slowdown in economic activity economies, growth is expected to increase to 2.3% vis-à-vis 1.3% in during the year 2012-13 and Lanco being amongst the nation’s 2013. Growth in the developing economies is expected to be at 5% largest players in the infrastructure sector, too got afected by in 2014 as against 4.7% in 2013. the continued slowing economy. During the year 2013-14, Lanco Infratech Ltd initiated the process of Corporate Debt Restructuring GDP Growth Rates (%) (CDR) for the Standalone Company, Lanco Infratech Limited. The Country 2012 2013 2014(E) company opted for CDR as due to a signifcant unforeseen drop in USA 2.8 1.9 2.8 the level of its operations due to the deteriorating external business UK 0.3 1.8 2.9 environment, the company was not able to generate the requisite China 7.7 7.7 7.5 cash fows to meet its obligations to vendors and service providers, Japan 1.4 1.5 1.4 hence it became imperative to restructure the company’s debt. The Euro Area -0.7 -0.5 1.2 CDR proposal does not include restructuring of debt for any of the World 3.2 3.0 3.6 subsidiaries of the company. The primary objective of restructuring (Source: World Economic Outlook, IMF April 2014) is to assist the company to bring back the EPC operations to normal levels of business and make overdue payments. India Lanco Infratech provides EPC services to the infrastructure sector with India’s GDP grew at a modest rate of 4.7% during the year 2013- prime focus on the power sector. The company is heavily involved in 14. Continued struggle with high infation, high interest rates, the construction of power plants and other infrastructure projects. infrastructure constraints and lack of policy reforms pushed the The company’s EPC revenues got afected due to various unresolved nation’s growth rate to sub fve percent for the second straight issues especially in the power sector. The envisaged growth in the year. The growth rate in the previous year was 4.5%. Agriculture power sector has been afected due to factors like unavailability grew at a pace of 4.7% for the year whilst ‘Mining and Quarring’ and of fuel, both coal and gas, unviable power tarifs not refecting the Manufacturing contracted by 1.4% and 0.7% respectively. true cost of generation, delays in obtaining vital clearances, poor India Industry Growth Rates (%) FY13 FY14 fnancial and commercial health of the State Electricity Boards 1. Agriculture, forestry and fshing 1.4 4.7 leading to lower power procurement by SEBs, high interest rates and weakening Indian Rupee. These have all resulted in a continued 2. Mining and quarrying -2.2 -1.4 slowdown in the sector with more projects being shelved than being 3. Manufacturing 1.1 -0.7 announced. The slowing pace of infrastructure development in the 4. Electricity, gas and water supply 2.3 5.9 country afected the business of the company and its cash fows. 5. Construction 1.1 1.6 The company’s plans to raise long term capital for infusion into the business were also afected because of investor apathy towards 6. Trade, hotels, transport and 5.1 3.0 communication investing in the sector both as private equity and primary market 7. Financing, insurance, real estate and 10.9 12.9 investors. Hence the company had to opt for the option of corporate business services debt restructuring. 8. Community, Social and personal 5.3 5.6 During the year 2013-14, Lanco Infratech Ltd initiated the process services of Corporate Debt Restructuring (CDR) for the Standalone Company, Gross Domestic Product 4.5 4.7 Lanco Infratech Limited. The CDR proposal does not include (Source: Central Statistical Organisation, India) restructuring of debt for any of the subsidiaries of the company. The primary objective of restructuring is to assist the company to COMPANY REVIEW bring back the EPC operations to normal levels of business and make Lanco Infratech Limited (Lanco) is amongst the largest private payments to overdue vendors and service providers. independent power producers in the country and one of India’s However given the vital role the power sector plays in the growth of leading business entities. We possess more than 25 years of experience the nation, the government has introduced several measures aimed in the felds of Engineering, Procurement and Construction (EPC), at alleviating the concerns that are hampering the growth of the Power, Solar, Natural Resources and Infrastructure. The company is sector. Some of the initiatives include fnancial restructuring package emerging as one of the top private sector power developers in India. for State Electricity Boards, signing new fuel supply agreements and

16 Management Discussion and Analysis formulating new standard bidding documents etc. Recognising CDR lenders. the need to improve their fnancial health, some states have hiked In terms of CDR scheme the promoters brought into the company electricity tarifs. Given the favourable demand supply dynamics, the as unsecured loan a total amount to ` 152.00 Crores and the same outlook for the power sector is encouraging especially for the private would qualify for the conversion of 24.40 Crores shares at the sole developers as majority of the upcoming capacity will be developed discretion of the promoters. by the private sector. The CDR gives your Company critical support to tide over the present The company is confdent that with the help of the restructuring difcult business environment. The decision of the banks to consider exercise, it will return to optimum level of operations. The Corporate and approve CDR also refects the faith these institutions have in the Debt Restructuring Empowered Group (CDR EG) approved the CDR long term business model of the Company. proposal at its meeting held on December 11, 2013 and the scheme is being implemented. As on March 31, 2014 CDR related documents INDUSTRY REVIEW – DEVELOPMENTS AND OUTLOOK have been executed and creation of security has been completed partly and the balance is in the process. POWER Salient features of the restructuring proposal approved under CDR system- The total installed generation capacity in India as of end FY14 stood at 243.03 GW. Out of the total installed generating capacity, 59.8% l Re-schedule of Term loan and short term loans are having was coal based, 16.7% was hydro and 9.0% was gas based. moratorium period of 2 years from the cut of date of April 1, All India Installed Generation Capacity (As on 31-03-2014) 2013 and are repayable in 30 quarterly instalments starting Thermal Nuclear Hydro RES Grand from June 30, 2015. Coal Gas Diesel Total Renewable (MNRE) Total MW 145273 21782 1200 168255 4780 40531 29463 243029 l Portion of CDR Working Capital Loans on the cut of date Percentage 59.8 9.0 0.5 69.2 2.0 16.7 12.1 100.0 i.e. April 1, 2013, carved out as Working Capital Term Loan - I (Source: CEA) (WCTL- I). LC/ BC/ BG devolved from cut of date till December 31, 2013 has been carved out as Working Capital Term Loan - II The total electricity generation in India during FY14 was at 966.38 (WCTL- II). Billion Units (BUs) versus 912.06 BUs in FY13, an increase of 5.96% YoY. l Funded Interest on Term Loans, WCTL - I and WCTL - II can Electricity Generation during April 2013 to March 2014 (BU) be funded for a period of 2 years from cut of date i.e. April 1, 2013 to March 31, 2015 and on regular Cash Credit limit for an Type FY13 FY14 % Change initial period of 6 months from cut of date i.e. April 1, 2013 to Thermal 761 792 4 September 30, 2013 is converted into Funded Interest Term Hydro 114 135 18 Loan (FITL). Interest on FITL to be paid on monthly basis from Nuclear 33 34 4 April 30, 2013. Bhutan Import 5 6 17 All India 912 966 6 l ` 2,500 Crores Priority Loan sanctioned with a moratorium (Source: CEA) period of 2 years at an interest rate of 12.5% and is repayable in 18 quarterly instalments starting from June 30, 2015. The generating capacity addition during 2013-14 stood at 17,825 MW as against 20,623 MW in 2012-13, a decline of 13.57% YoY. l Rate of interest on restructured facilities being 11% p.a. to be increased in a stepped up manner up to 16% p.a. starting from Generation Capacity Addition during FY14 (MW) fnancial year 2016-17. Type FY13 FY14 % Change l Waiver of penal charges from the cut-of date to the date of Thermal 20122 16767 -17 implementation of the package Hydro 501 1058 111 In relation to the loans restructured by the CDR lenders a total Nuclear 0 0 NA amount to ` 2,224.89 Crores would qualify for the conversion of All India 20623 17825 -14 354.50 Crores shares at the sole discretion and on demand of the (Source: CEA) All India Installed Generation Capacity (MW) – Region Wise (As on 31-03-2014) Region Thermal Nuclear Hydro RES Grand Coal Gas Diesel Total Total Northern 35284 5281 13 40578 1620 16331 5730 64258 Western 58020 10139 17 68176 1840 7448 9925 87389 Southern 26583 4963 939 32485 1320 11398 13127 58330 Eastern 25328 190 17 25535 0 4113 417 30066 North-East 60 1209 143 1411 0 1242 253 2906 Islands 0 0 70 70 0 0 10 80 All India 145273 21782 1200 168255 4780 40531 29463 243029 (Source: CEA) 17 Annual Report 2013-2014 The western region has the highest installed capacity with 35% of the nation’s total installed capacity followed by the northern region at 26% of the total installed capacity. All India Installed Generation Capacity (MW) – Sector Wise (As on 31-03-2014) Sector Thermal Nuclear Hydro RES Grand Coal Gas Diesel Total Total Central 45925 7066 0 52991 4780 10355 0 68126 State 53828 6548 603 60979 27482 3727 92188 Private 45520 8168 597 54286 2694 25736 82715 All India 145273 21782 1200 168255 4780 40531 29463 243029 (Source: CEA) The share of the states in the total installed capacity is the highest at 38% followed by the private sector at 34%.

Capacity Addition Targets in the 12th Plan Type/Sector Central State Private Total Thermal 14878 13922 43540 72340 Hydro 6004 1608 3285 10897 Nuclear 5300 0 0 5300 Total 26182 15530 46825 88537 (Source: CEA) The 12th plan targets a capacity addition of 88,537 MW with 53% of the capacity being added by the private sector.

Achievements up to March 2014 during the 12th Plan Type/Sector Central State Private Total Thermal 6683 7233 22973 36889 Hydro 1288 102 169 1559 Nuclear 0 0 0 0 Total 7971 7335 23142 38448 Achievement % 30 47 49 43 (Source: CEA)

All India yearly Coal Consumption for Power Generation Transmission Lines added during April 2013 to March 2014 (Utilities) (ckms)

Year Coal Consumption Voltage Level FY13 FY14 Million Tonnes +/- 500 KV HVDC 0 0 2008-09 355 2009-10 367 765 KV 1209 4637 2010-11 387 400 KV 11361 7777 2011-12 418 220 KV 4537 4334 2012-13 455 All India 17107 16748 2013-14 488 (Source: CEA) (Source: CEA) All India Annual per Capita consumption of Electricity All India Transformation Capacity Addition during April 2013 to March 2014 (MVA) Year Per Capita Consumption (kwh) Voltage Level FY13 FY14 2007-08 717 +/- 500 KV HVDC 3750 0 2008-09 734 765 KV 24000 34000 2009-10 779 400 KV 16795 9630 2010-11 819 220 KV 19120 13700 2011-12 884 All India 63665 57330 2012-13 917 (Source: CEA) (Source: CEA) 18 Management Discussion and Analysis

OUTLOOK SOLAR The power sector will continue to play a central role in the country’s Amongst the various renewable energy resources, solar energy growth story. As can been seen from the data given above, out of the is considered to have the highest potential in the country. The 12th plan target capacity addition of 88,537 MW, 53% of the capacity Jawaharlal Nehru National Solar Mission (JNNSM) was launched in is estimated to be added by the private sector. Although recently January 2010 to make India a global leader in solar energy. As per the sector has witnesses a slowdown in its envisaged growth the National Tarif Policy of January 2011, solar specifc Renewable path, several measures such as structural reforms in domestic fuel Purchase Obligation (RPO) is envisaged to increase from a minimum availability and power distribution are being planned to alleviate the of 0.25 percent in 2012 to 3 percent in 2022. concerns that are hampering the growth of the sector. The solar power capacity requirement for RPO compliance by 2022 is illustrated below- Some of the initiatives introduced recently to address the issues hampering the sector are- Year Energy Solar Solar Energy Solar Capacity Demand RPO Requirement Requirement for 1. State Electricity Board (SEB) fnancial restructuring (MUs) (%) (MUs) for RPO RPO compliance package: A healthy distribution sector is imperative for the compliance (MW) long term growth of the whole industry. Keeping this in mind, 2013-14 1,095,555 0.50% 5,478 3,291 the government had introduced the SEB debt restructuring 2018-19 1,544,936 2.25% 34,761 20,885 package in 2012 aimed at improving the fnancial health of the 2021-22 1,894,736 3.00% 56,842 34,152 discoms by easing their debt burden. Subsequently, a number (Source: Government of India, Ministry of New and Renewable Energy) of states including Uttar Pradesh, Rajasthan, Haryana and Tamil Nadu have opted in for the restructuring exercise. The The nation would need an installed solar capacity of approximately 34,000 MW in order to achieve the 3% RPO compliance by 2022. restructuring package for discoms will increase cash fow to the SEBs which will in turn help power generators as increased RESOURCES cash fows will enable the discoms to procure more electricity for meeting the growing demand. Coal generated power will continue to be the major source of energy for the nation. With the current per capita commercial primary 2. Compensatory tarif for External/Uncontrollable factors: energy consumption in India at about 350 kgoe/year well below that The regulators have allowed compensatory tarif for some of developed countries, energy usage in India is expected to rise. developers for reasons beyond the developers’ control which The increasing demand for energy will be driven by an expanding led to an unforeseen increase in the price of inputs that was not economy, improvements in infrastructure, rising population and captured in the bid tarifs. This is a positive development for enhanced standard of living. As of April 2014, the geological the whole sector and has allayed both developer and investor resources of coal in the country have been estimated to be a concerns. cumulative total of 301.56 billion tonnes with the state of Jharkhand having the highest resources at 80,716 million tonnes (MTs) followed 3. CCEA approval for coal supply mechanism to power by the state of Orissa at 75,073 MTs. developers: Under the mechanism approved by the Cabinet Committee on Economic Afairs (CCEA), Coal India is to sign Cumulative geological resources of coal- Fuel Supply Agreements (FSA) for a total capacity of 78,000 Proved Indicated Inferred Total MW including cases of tapering linkage, which are likely (MT) (MT) (MT) (MT) to be commissioned by 31.03.2015. Actual coal supplies All India 1,25,909 1,42,506 33,149 3,01,564 would however commence when long term Power Purchase (Source: Government of India, Ministry of Coal) Agreements (PPAs) are tied up. To meet FSA obligations which cannot be met by domestic coal, CIL may import coal and INFRASTRUCTURE supply the same to the willing Thermal Power Plants (TPPs) According to the planning commission, infrastructure investment on cost plus basis. TPPs may also import coal themselves as should be on average almost 10% of GDP during the twelfth plan in well. Higher cost of imported coal is to be considered for pass order to attain a 9% real GDP growth rate. through as per modalities suggested by CERC. As of end FY14, Coal India had signed close to 160 new FSAs. Projected Investment in Infrastructure during the Twelfth Five Year Plan 4. Standard Bidding Documents: During the 2013-14, the Year Base Year FY12 Total 12th Plan Empowered Group of Ministers cleared standard bidding GDP at FY07 Prices (` Crs) 6,314,265 41,190,063 documents for Case II thermal plants. As fuel has been made Infrastructure Investment 8.37% 9.95% a pass through, the new Case II bidding norms will take care of as % of GDP risk associated with fuel price volatility and fuel availability. Infrastructure Investment 528,316 4,099,239 (` Crs in FY07 Prices) Given the favourable demand supply dynamics, the outlook for the power Infrastructure Investment 721,781 6,579,463 sector is encouraging especially for the private developers as a majority of (` Crs in Current Prices) the upcoming capacity will be developed by the private sector. (Source: Planning Commission, Government of India) 19 Annual Report 2013-2014 BUSINESS REVIEW POWER* EPC* Installed Power Capacity Revenues (FY14) EBIDTA (FY14) Order book Revenues (FY14) EBIDTA (FY14) (As of end March 2014) (As of end March 2014) 4,722 MW** ₹ 7,561 Cr ₹ 2,318 Cr ₹ 26,178 Cr ₹ 2,368 Cr ₹ -393 Cr Installed Power Capacity Revenues (FY13) EBIDTA (FY13) Order book (As of end Revenues (FY13) EBIDTA (As of end March 2013) March 2013) (FY13) 4,732 MW** ₹ 8,663 Cr ₹ 1,926 Cr ₹ 26,284 Cr ₹ 5,382 Cr ₹ 785 Cr * Including Solar * Including Solar EPC **732 MW Kondapalli Phase 3 getting ready for operations Lanco with its unique ‘concept to commissioning’ EPC execution model ofers Engineering, Procurement and Construction services in Lanco Infratech is one of the largest independent private producers the infrastructure business segments of power projects, transmission, in the country with an installed capacity 4,722 MW and the capacity transportation, industry and large scale building projects. The total under construction of 4,636 MW. Out of the current installed EPC order book (including Power and Solar Projects) as at end FY14 capacity, 64% is coal based, 34% is gas based and 2% is renewables stood at ` 262 billion. including hydro. During the year, Lanco Babandh (2*660 MW under construction plant) signed a Long Term Power Purchase Agreement For the year 2013-14, revenue for the EPC division was ` 2,368 (25 years) with Uttar Pradesh Power Corporation Limited Discoms crores and EBITDA was ` -393 crores. The revenue for the year and Rajasthan discoms respectively for supply of power under Case was less than the normal level due to the deteriorating external 1 Bid. business environment which led to a slowdown in the execution of infrastructure projects. Lower revenue led to lower recovery of PERFORMANCE OF THE PROJECTS UNDER OPERATION fxed costs afecting the margins. Also due to delays in execution of contracts the cost associated with price escalations, claims of the Kondapalli Phase-I service providers, subcontractors and upward revision of estimated The gas based power station located in Andhra Pradesh with an cost, comprising of provision for expected loses on some ongoing installed capacity of 368 MW has a long term Power Purchase projects and additional costs in recently completed/discontinued Agreement (PPA) with Andhra Pradesh discoms. Fixed charges projects resulted in losses for the year. are recoverable based on alternative fuel based availability under the PPA. The unit has tied up fuel supply arrangements with GAIL. Key Developments in 2013-14 Performance of the plant during the year is as follows- l Completed construction and start of commercial operations of Gross generation (MUs) Plant Load Factor (PLF %) 81 km NH4 road project in Karnataka (Hoskote) FY13 FY14 FY13 FY14 l Successful bidder of the prestigious EPC Contract for 1,768 1,441 55 45 establishing “1 x 660 MW Super Critical Ennore Thermal Power Station Expansion Project” by Tamil Nadu Generation and Generation during the year compared to the previous year was lower Distribution Corporation Limited. by 327 MUs on account of lower availability of gas as well as carrying out major inspection works. The unit was however able to recover MAJOR PROJECTS UNDER EXECUTION full fxed charge based on availability of natural gas and naphtha.

External Kondapalli Phase-II l EPC of 2x600 MW Annupur Thermal Power Project for Moser The gas based power station located in Andhra Pradesh has an Baer installed capacity of 366 MW has tied up fuel supply with RIL (KG-D6). Performance of the plant during the year is as follows- l BOP of 3x660 MW Koradi Thermal Power Project for Mahagenco

l EPC of 2x125 MW Akaz Gas Power Project for Government of Gross generation (MUs) Plant Load Factor (PLF %) Iraq FY13 FY14 FY13 FY14 664 0 21 0 Internal (All EPC Contract Projects) The generation for the year ended March 2014 was nil on account of l 2x660 MW Amarkantak Thermal Power Project non supply of gas from KG-D6. l 2x660 MW Vidarbha Thermal Power Project Kondapalli Phase-III l 2x660 MW Babandh Thermal Power Project The 732 MW gas based unit could not get commissioned during the l 500 MW of Teesta Hydro Power Project year due to non supply of gas.

l 76 MW Mandakini Hydro Power Project

20 Management Discussion and Analysis

Tanjore Anpara Gas based power station located in Tamil Nadu with an installed Located in Uttar Pradesh with an installed capacity of 1200 MW, the capacity of 120 MW. The plant has a long term PPA with Tamil Nadu unit has a long term PPA with Uttar Pradesh discoms for 1100 MW of with fuel supply arrangement with GAIL. Performance of the plant supply. During the year, the unit also started supplying 100 MW of during the year is as follows- power to Tamil Nadu discoms starting June 2013. Performance of the plant during the year is as follows- Gross generation (MUs) Plant Load Factor (PLF %) FY13 FY14 FY13 FY14 Gross generation (MUs) Plant Load Factor (PLF %) 893 733 85 70 FY13 FY14 FY13 FY14 3,979 6,919 38 66 PLF is lower year on year due to short supply of gas by GAIL. The plant maintained an availability factor of 72% during the year. Amarkantak Unit-I There has been a signifcant increase in PLF during the year 2013- Domestic coal based power station located in Chhattisgarh with an 14 due to improvement in coal handling and infrastructure facilities installed capacity of 300 MW. The unit started supplying power under at the plant and better operational performance after the initial a long term PPA to Madhya Pradesh efective December 2012, hence stabilisation period. there has been a signifcant increase in gross generation during the year over the previous year. The plant also maintained an availability Budhil factor of 96% during the year. Performance of the plant during the Hydro based power plant is located in Himachal Pradesh with an year is as follows- installed capacity of 70MW. Plant was commissioned in May 2012 and performance of the plant during the year is as follows- Gross generation (MUs) Plant Load Factor (PLF %) FY13 FY14 FY13 FY14 Gross generation (MUs) Plant Load Factor (PLF %) 1,798 2,259 68 86 FY13 FY14 FY13 FY14 155 221 30 36 Amarkantak Unit-II PLF was low during the year due to maintenance work. The company Domestic coal based power station unit located in Chhattisgarh with has signed an agreement with Tejassarnika Hydro Energies Private an installed capacity of 300MW. Performance of the plant during the Limited, a subsidiary of Hyderabad based Greenko Energies limited year is as follows- to divest 100% stake in the asset. Gross generation (MUs) Plant Load Factor (PLF %) FY13 FY14 FY13 FY14 PROGRESS OF THE PROJECTS UNDER CONSTRUCTION (As at end March 2014) AS % OF BILLING 1,351 0 51 0 Project Name Percentage Expected There was nil generation during the year due to non availability of Completion Commissioning linkage coal as well as regulatory issues. Unit two’s PPA with PTC (%) Date for supply of power to HPGCL (Haryana) was terminated for non- Amarkantak 3&4 (1320 MW) 67 FY16 compliance of certain PPA covenants. The litigation hearings are Vidarbha (1320 MW) 24 FY17 currently being held. Linkage coal supply was suspended by Coal Babandh (1320 MW) 33 FY17 India due to the non existence of a PPA. Supply of power using non Kondapalli III (732 MW) 98 FY15 linkage sources was not considered prudent as the tarif being paid Teestha (500 MW) 48 FY17 by the customer was not workable. Phata Byung (76 MW) 62 FY17 Moser Baer (2&600 MW) 77 FY15 Udupi Mahagenco (3*660 MW BOP) 73 FY16 Coal based power plant located in Karnataka having an installed Akaz (2*125 MW) 96 FY15 capacity of 1200 MW. The plant maintained an availability factor of 75% during the year 2013-14. The availability was less than optimal SOLAR due to non availability of coal. Performance of the plant during the Lanco Solar is one of the largest solar power players in the country year is as follows- today that provides solutions across the entire Solar Power Value Chain. The Company has expertise in managing the entire life cycle Gross generation (MUs) Plant Load Factor (PLF %) of any type of solar project development. As of end March 2014, FY13 FY14 FY13 FY14 the solar EPC order book was ₹ 2,949 Cr with 57% of orders from 6,423 6,806 76* 65 external parties. The major solar plants under construction include *One unit was operational for only a part of the year hence PLF is Lanco’s 100 MW solar thermal power plant at Chinnu in Rajasthan. higher The order book also includes a 100 MW solar thermal power plant being developed by Lanco for KVK energy ventures private limited PLF was lower year on year due to shortage of coal. 21 Annual Report 2013-2014 also at Chinnu in Rajasthan. The company is also setting up a fully- to the expert committee of MoC. A revised mining plan was integrated manufacturing project for high-purity Polysilicon, silicon submitted to MoC in April 2014 after receiving some comments ingots/ wafers and modules in a SEZ facility at Chhattisgarh. The and fnal approval is expected shortly. The application for forest project is the frst of its kind in India with a targeted capacity of clearance has also been submitted. The suitable site for the 300MWp/year. The plant has an operational module line with a 75 power plant has been identifed in Raigarh district. MW capacity. The company is in the process of setting up a 1,800 MT polysilicon facility and 100 MW wafer facility and plans to enter 3. Tasra Open Cast Project into solar cell manufacturing as well. Foray into manufacturing not Tasra Opencast coal project (Tasra OCP) was awarded to Lanco only supports the company’s internal requirements, but also reduces by Steel Authority of India Limited (SAIL) for Mine Development margin volatility through the business cycles. and Operations. The project includes setting up of 4 MTPA mine infrastructure, 3.5 MTPA Washery and a captive power plant Performance of all solar generating capacity of 41 MW during the (CPP) of 300 MW capacity based on the secondary coal from the year is as follows- Washery. Tasra OCP was allocated to SAIL for captive use and Gross generation (MUs) Plant Load Factor (PLF %) detailed exploration of mine has been completed by MECL and FY13 FY14 FY13 FY14 CMPDI (Govt. of India enterprise) and estimated extractable coking coal reserves are around 100 million tons. The project is 56 60 16 17 located in well-established Jharia coal-felds region of District RESOURCES Dhandbad, Jharkhand and has a life span of around 28 years. Captive Power Project of 300 MW capacity will be setup under The Natural Resources business of the Lanco currently consists of the a JV company between Lanco (74%) and SAIL (26%). With this following assets- project, Lanco as MDO will develop and operate 4 MTPA coal 1. Grifn Coal Mine production capacity, 3.5 MTPA washery capacity, and add around 300 MW of coal based power capacity to its existing The Grifn Coal Mining Company Pty Ltd is based in Collie, located business portfolio. For Tasra Coal Block, key project approvals approximately 220 kilometres south east of Perth, Western like Mining Plan, Environmental Clearance etc are already in Australia’s capital city. The Company is the largest individual place. No forest land is involved. For Tasra Washery, approved supplier of coal to Western Australia’s industrial coal market. ToR is available and Environmental Impact Assessment Report With coal resources of approximately 1.1 billion tonnes, coal has been prepared. For Tasra Power Project suitable site has from Grifn caters to the export markets as well. Production at been identifed and development activities shall be initiated. the mine during the year 2013-14 was 2.83 MT with sales of 2.95 MT. Steps are underway to reach the short term production INFRASTRUCTURE target of 5 MT by March 2015. Capacity enhancement program with capacity being raised from current to 15 MTPA ROAD INFRASTRUCTURE PORTFOLIO: is in the planning phase. The company also recently received The road portfolio of the company currently consists of the following environmental clearance for developing a new berth (Berth 14 assets: A) at Bunbury port for export of coal from Grifn. Project Status 2. Mahatamil Project 82 km Neelamangla Junction Operational; Collected ₹ 44 Gare Palma Sector- 2 Coal Block jointly allocated to TNEB (74%) (Bangalore) – Devihalli (NH-48) Cr in toll revenue during the and MSMC (26%) awarded to Lanco Infratech Limited for Mines year FY14 Development and Operations along with the development of 81 Km of Mulbagal – Hoskote – Commissioned in December end use thermal power plant for TNEB share of coal. 23% of Bangalore (NH-4) 2013; Collected ₹ 15 Cr in the coal produced will go to the state of Maharashtra and the toll revenue during the year remaining coal (77%) will be used to generate power. Out of the FY14 total power produced, 37.5% of the power will go to the state of 283 km - Aligarh- Kanpur (NH-91) Achieved fnancial closure, Chattisgarh as home state share and the remaining power will construction to start after obtaining necessary be shared between Tamil Nadu state and Lanco in a 50:50 ratio. clearances Coal mining fees of ` 112/Ton is to be paid by Lanco. Lanco targets the coal mine capacity to be developed to produce REAL ESTATE over 20 MTPA of coal output and approximately ~2000 MW of Located in Hyderabad, Lanco Hills is the group’s lone foray into power plant. According to the geological report prepared by property development. The project comprises of residential space, Mineral Exploration Corporation of India Ltd, the geological ofce space, IT SEZ and non SEZ space, retail and hospitality space reserves of the block are around 1 Billion Ton with extractable and is spread over a land parcel of 100 acres. During the year 2013- reserves as per the mine plan of around 655 MT. The mining 14, revenue from operations increased by 17% to ₹ 196 Cr. and mine closure plan were submitted to the Ministry of Coal (MoC) in October 2013 for approval and presentation made 22 Management Discussion and Analysis

CONSOLIDATED FINANCIAL REVIEW Consolidated segmental proft before interest and taxes and before elimination of inter-segment proft on transactions with subsidiaries SEGMENT REVIEW declined by 78% in FY14 against FY13. The proft from the EPC & Revenues Construction segment decreased by 172% as there has been a slowdown in execution of projects afecting both revenues and (₹ Crores) profts. The segmental proft before tax and interest from the power Segment FY14 Contribution FY13 Contribution YoY vertical increased by 28% during the year. Revenue to Total to Total growth Revenues Revenues (%) (a) EPC & 2,368 22% 5,382 35% -56% FINANCIAL REVIEW Construction* Principles of Consolidation (b) Power* 7,561 69% 8,663 57% -13% The fnancial statements of the Company and its subsidiaries have (c) Property 196 2% 168 1% 17% been consolidated on a line by line basis. This is done by adding Development together the book values of like items of assets, liabilities, income and (d) Infrastructure 0 0% 0 0% expenses and after eliminating intra-group balances, transactions (e) Resources 681 6% 954 6% -29% and the unrealized profts/losses on intra-group transactions. (f) Unallocated 93 1% 93 1% 0% Unrealised losses resulting from intragroup transactions are Total 10,899 100 15,260 100 -29% eliminated to the extent that cost can be recovered. Less: Inter 277 1,408 -80% Segment The consolidated fnancial statements are drawn up by using uniform Revenue accounting policies for like transactions and other events in similar Net Sales/Income 10,622 13,852 -23% circumstances. These are then presented to the extent possible in from Operations the same manner, as the Company’s individual fnancial statements. * Including Solar The fnancial statements of the subsidiaries are consolidated from Lanco Infratech’s total segmental revenue (post elimination of inter- the date on which efective control is transferred to the company, segment revenue) decreased by 23% during 2013-14. This was till the date such control exists. The diference between the cost of primarily due to fall in EPC and Construction revenues and power investments in subsidiaries over the company’s share of book value segment revenues. The share of the power segment in the total of subsidiaries’ net assets on the date of acquisition is recognized as revenue before inter segment revenue in FY14 was 69% vis-à-vis goodwill or capital reserve in the consolidated fnancial statements. 57% in FY13. Power revenues declined by 13% YoY due to fuel supply Equity method of accounting is followed for investments in Associates and regulatory issues. The share of EPC and Construction segment in accordance with Accounting Standard (AS) 23 – Accounting for in the total revenue declined to 22% in FY14 against 35% in FY13. Investments in Associates in Consolidated Financial Statements. In Prior to elimination, the revenue for 2013-14 decreased by 29%. The this case, goodwill/capital reserve arising at the time of acquisition property development segment witnessed a 17% growth in revenue and share of proft or losses after the date of acquisition are included for 2013-14. in carrying amount of investment in associates. SEGMENT PROFITS Unrealized profts and losses resulting from transactions between (₹ Crores) the company and its associates are eliminated to the extent of company’s interest. Unrealised losses resulting from transactions Segment Results (Proft(+)/Loss(-) FY14 FY13 YoY before tax and growth between the company and its associates are also eliminated, unless interest from each segment) (%) the cost cannot be recovered. Investments in associates, made for (a) EPC & Construction* -497 686 -172% temporary purposes, are not considered for consolidation and are accounted for as investments. (b) Power* 1,411 1,099 28% (c) Property Development 16 2 746% Putting it simply, while consolidating the subsidiary company, the (d) Infrastructure 00 elimination takes place at the top line where the entire amount of revenue and expenditure is eliminated. In the case of associate (e) Resources -556 -301 85% consolidation, the entire revenue is recognised. But the proft or (f) Unallocated -44 -12 266% loss earned from the associate is eliminated proportionately to the Total 330 1,474 -78% holding in the associate. This adjustment is for the proft and loss Less: Inter Segment Proft on -15 -18 -17% account. For adjustment to the balance sheet in case of subsidiaries, transactions with Subsidiaries the amount equal to proft or loss eliminated will be net of against Total 345 1,491 -77% fxed assets. In the case of associates, it will be net of against investments. Essentially, it is an adjustment which does not impact * Including Solar the cash fow.

23 Annual Report 2013-2014 ANALYSIS OF PROFIT AND LOSS ACCOUNT (₹ Crores) FY14 FY13 YoY growth % 1 (a) Income from operations 10,103 12,883 -22% (b) Income from power trading 539 2,188 -75% (c) Other operating income 66 76 -14% Total income from operations (Gross) 10,707 15,147 -29% Less: Elimination of intersegment operating income 277 1,408 -80% Total income from operations (Net) 10,430 13,739 -24% 2 Expenses (a) Cost of materials consumed 6,336 6,469 -2% (b) Purchase of traded goods 530 2,161 -75% (c) Subcontract cost 169 561 -70% (d) Construction, transmission, site and mining expenses 1,061 1,319 -20% (e) Change in inventories of fnished goods and work in progress -151 -454 -67% (f) Employee benefts expense 385 618 -38% (g) Depreciation & amortisation expenses 1,172 1,126 4% (h) Other expenses 225 482 -53% Total expenses 9,727 12,283 -21% 3 Proft/(loss) from operations before other income, foreign exchange fuctuations, 703 1,456 -52% fnance costs, prior period items & exceptional items (1-2) 4 Other income 168 149 13% 5 Add: Eliminated proft on transactions with subsidiaries -15 -18 -14% 6 Proft/(loss) from ordinary activities before foreign exchange fuctuations, 856 1,587 -46% fnance costs, prior period items & exceptional items plus elimination (3+4+5) 7 (Gain)/loss on foreign exchange fuctuations (Net) 371 77 378% 8 Finance costs 2,762 2,421 14% 9 Proft/(loss) from ordinary activities after fnance costs but before prior period -2,277 -912 150% items & exceptional Items plus elimination (6-7-8) 10 Exceptional items -179 100% 11 Proft/(loss) from ordinary activities before tax, prior period items plus -2,456 -912 169% elimination (9+10) 12 Tax expense -129 180 -172% 13 Net proft/(loss) from ordinary activities after tax but before prior period items plus -2,327 -1,091 113% elimination (11-12) 14 Extraordinary Item (net of tax expense) - 15 Net proft/(loss) for the period before prior period items plus elimination (13+14) -2,327 -1,091 113% Less : Prior Period Items 44 -13 -445% 16 Net proft/(loss) for the period plus elimination -2,371 -1,078 120% Less : Minority interest -116 -11 931% Add: Share of proft/(loss) of associates -34 -3 1077% 17 Net proft/(loss) for the period plus elimination after Minority and share proft/(loss) -2,289 -1,070 114% of associates 18 Less: elimination of proft on transactions with -15 3 -575% subsidiaries and associates 19 Net proft/(loss) after taxes, minority interest and share of -2,274 -1,073 112% profts/(loss) of associates (17-18) 20 Cash proft (17 + 2(g) + deferred tax – MAT credit + -743 233 -419% forex loss- forex gain) 21 Proft (+)/Loss (-) from ordinary activities before tax (11 – 5) -2,441 -894 173%

l Gross Revenue before eliminations (including other income) declined by 29% YoY to ₹ 10,875 Crores in FY14 from ₹ 15,296 Crores in FY13 l Reported loss of ₹ 2,274 Crores in FY14 vs. loss of ₹ 1,073 Crores in FY13 l Forex loss of ₹ 371 Crores in FY14 vs. Forex loss of ₹ 78 Crores in FY13. 24 Management Discussion and Analysis

There was a reported loss of ` 2,274 crores due to losses in the EPC (₹ Crore) division, losses at Grifn coal mine and losses in some operating EXPENSES FY14 % of Total FY13 % of YoY power plants that were hampered by fuel supply and regulatory FY14 Total Growth issues. The EPC division sufered due to a slowdown in the economic Expenses FY13 % environment that in turn afected its operations and revenues. Grifn Expenses coal mine is currently in the expansion phase where the capacity Cost of Materials 6,336 71% 6,469 58% -2% enhancement program from the current production of 3 MTPA to Consumed 15 MTPA is underway. The performance of Lanco’s gas based power Purchase of Traded 530 6% 2,161 19% -75% plant at Kondapalli was afected due to non supply of gas. One unit Goods of Lanco Amarkantak (300MW thermal plant) could not operate due Subcontract Cost 169 2% 561 5% -70% to regulatory issues. Construction, 1,061 12% 1,319 12% -20% Transmission, Site and Revenues from Operations Mining Expenses The consolidated net revenue from our operations decreased by (Increase)/Decrease -151 -2% -454 -4% -67% 24% during 2013-14. This was primarily on account of decrease in in Inventories of revenue from contract operations by 48% during the year due to Finished Goods slowdown in EPC activity because of a slowing economy. Income and Construction/ from sale of electrical energy declined by 13% during the year Development Work in Progress as some operating plants sufered due to lack of fuel supply and Employee Benefts 385 4% 618 6% -38% regulatory issues. Income from property development increased by Expenses 16% during the year. Other Expenses 595 7% 560 5% 6% (₹ Crore) Total Expenses 8,926 11,234 -21% FY14 FY13 YoY Growth % Cost of Material Consumed Contract Operations 2,097 4,038 -48% The total cost of material decreased by 15% during 2013-14. This was Property Development 193 166 16% due a fall in EPC related activity during the year. The cost of gas for Management Consultancy 3 3 0% power consumption decreased by 21% in FY14 over FY13 due to fall Operations and Maintenance 5 5 -9% in gas supply for power plants especially at Kondapalli. Electrical Energy 7,405 8,558 -13% Coal 679 947 -28% (₹ Crore) Other Goods 36 8 347% FY14 % of FY13 % of YoY Income from Lease Rentals 2 0 380% Total Total Growth Other Operating Income 11 13 -20% % Net Revenue from Operations 10,430 13,739 -24% Construction 1,903 30% 2,249 35% -15% Material Consumed Other Income Property 208 3% 188 3% 11% Other income for FY14 increased by 13% over FY13 led primarily by Development Cost an increase in interest income. Coal for Power 3,316 52% 2,916 45% 14% Generation (₹ Crore) Gas for Power 629 10% 797 12% -21% FY14 FY13 YoY Generation Growth % Oil (HFO, LDO & 33 1% 67 1% -51% Interest Income 144 95 51% HSD) for Power Dividend Income 1 2 -37% Generation Net Gain on sale of 0 0 -80% Other consumables 22 0% 22 0% -2% investments for Power Other Non Operating Income 22 51 -56% Generations Total 168 149 13% Raw Materials 180 3% 202 3% -11% Consumed - Coal EXPENDITURE Mining There was a 21% decline in total expenditure for the year 2013-14. Raw Materials 45 1% 29 0% 57% There was 75% de-growth in purchase of traded goods primarily Consumed - Solar power purchase. Power trading division (NETS) traded 2089 million Modules units in 2013-14, lower by 66% YoY. Subconctract costs declined by Total 6,336 6,469 -2% 70% during the year and employee beneft expenses declined by 38% YoY. 25 Annual Report 2013-2014 Purchase of Traded Goods (₹ Crore) Purchase of traded goods is mainly on account of power purchased FY14 % of FY13 % of YoY for power trading. Power trading division (NETS) traded 2089 million Total Total Growth % units in 2013-14, lower by 66% YoY. Less: Transferred to 13 12 9% Development cost Sub-Contract Cost Less: Transferred to 0 1 -100% CWIP (Other Direct Sub-contract cost represents the construction work sub-contracted Cost) to other parties. Total 385 618 -38%

Construction, Transmission, Site and Mining Expenses Other Expenses Construction, transmission, site and mining decreased by 20% Other expenses increased by 6% compared with the previous year. over the previous year primarily due to a decrease in coal mining Net loss on foreign exchange fuctuations for the year FY14 was ` and transportation cost by 24% YoY and a decrease in transmission 371 crores compared with ` 77 crores in FY13, an increase of 378%. charges by 74% YoY. Out of the total other expenses, net loss on foreign exchange fuctuations comprise 61% of the total. Consultancy and other (₹ Crore) professional charges declined by 69% year on year. FY14 % of FY13 % of YoY Total Total Growth (₹ Crore) % FY14 % of FY13 % of YoY Equipment/Machinery 200 19% 147 11% 36% Total Total Growth % Hire charges Rent 43 7% 58 10% -25% Transmission Charges 31 3% 116 9% -74% Rates and taxes 15 2% 23 4% -34% Donations 3 1% 8 1% -57% Repairs, Operations and 168 16% 223 17% -25% Repairs and 0% 0% Maintenance Maintenance: Consumption of Stores 54 5% 49 4% 11% Ofce Building 0 0% 0 0% 131% and Spares Others 5 1% 11 2% -59% Insurance 47 4% 54 4% -13% Marketing and selling 2 0% 0 0% 500% Electricity 12 1% 18 1% -32% expenses Ofce maintenance 11 2% 18 3% -40% Security Charges 24 2% 28 2% -14% Insurance 6 1% 13 2% -57% Coal Mining & 473 45% 620 47% -24% Printing and stationery 3 0% 4 1% -36% transportation Cost Consultancy and other 38 6% 119 21% -69% Others 55 5% 65 5% -16% professional charges Total 1061 1319 -20% Directors sitting fee 1 0% 1 0% -10% Electricity charges 5 1% 4 1% 12% Employee Benefts Expenses Net Loss on sale of 0 0% 0 0% During the year 2013-14, employee benefts expenses decreased investments by 38% over the previous year. The decrease was on account of fall Current Investments 0 0% 0 0% in the total number of employees in the group due to a slowdown Long Term Investments 0 0% 0 0% in the development of future projects as a result of a slowdown in Net Loss on Foreign 371 61% 77 13% 378% economic activity in the country. Exchange Fluctuations Remuneration to 0% 0% (₹ Crore) auditors (As Auditor): FY14 % of FY13 % of YoY Audit Fee 3 0% 2 0% 18% Total Total Growth % Tax audit fees 0 0% 0 0% -6% Salaries, allowances and 353 88% 549 87% -36% benefts to employees Remuneration to 0% 0 0% auditors (In other Contribution to 16 4% 22 3% -25% provident fund and capacity): other funds Taxation Matters 0 0% 0 0% Employee Stock Option 6 2% 19 3% -67% Management Services 0 0% 0 0% Charge Company Law matters 0 0% 0 0% Recruitment and training 2 1% 5 1% -53% Other Services 0 0% 0 0% -31% Staf welfare expenses 21 5% 36 6% -42% (Certifcation) 399 632 -37%

26 Management Discussion and Analysis

(₹ Crore) Share of Proft/Loss of Associates FY14 % of FY13 % of YoY The share of loss of associates stood at ` 33.89 crores against a loss of Total Total Growth % ` 2.88 crores in the previous year. Reimbursement of 0 0% 0 0% -43% expenses to Auditors Share of Minority Interest Travelling and 37 6% 78 13% -52% Share of minority interest represents the interest of minority conveyance shareholders in various companies. Share of minority interest in FY14 Communication 8 1% 11 2% -27% was a loss of ` 116 crores against a loss of ` 11 crores in FY13. expenses Net Loss on Sale of fxed 16 3% 19 3% -16% Proft After Tax assets Reported loss for the year 2013-14 was ` 2274 crores against a loss of Provision for Losses of 0 0% 0 0% ` 1073 crores in the previous year. Adjusted loss (Reported loss plus Subsidiary Companies proft eliminated) for the year was ` 2289 crores against an adjusted Share of Loss in a 0 0% 0 0% loss of ` 1070 crores in the previous year. partnership frm/ Limited Liability Cash Proft Partnership Cash proft is the proft the Company has earned after adjusting for Provision for Advances/ 15 2% 68 12% -78% non-cash expenditures like depreciation, forex gain/loss, deferred claims/debts tax, MAT credit entitlement and adding eliminated proft. Cash loss Business Promotion & 5 1% 16 3% -66% for the year FY14 was ` 743 crores versus a cash proft of ` 233 crores Advertisement in the previous year. Miscellaneous expenses 25 4% 48 8% -49% 0% 0% (₹ Crores) 609 100% 579 100% 5% FY14 FY13 YoY Less: Recovery of 10 8 19% growth Common Expenses (%) Less: Transferred to 2 5 -69% Reported PAT -2,274 -1,073 112% Development cost Add: Depreciation 1,172 1,126 4% Less: Transferred to 0 2 -100% Add: Deferred Tax -176 27 -761% CWIP (Other Direct Less: MAT Credit 0 -73 -100% Cost) Add: Forex Loss/(Gain) 371 77 378% Less: Elimination of 3 4 -31% Add: Proft Eliminated -15 3 -575% Cost on Intercompany Less: Exceptional Item -179 Management Cash Proft -743 233 -419% Consultancy Income Total 595 560 6% ANALYSIS OF BALANCE SHEET

Finance Cost & Depreciation/Amortisation Sources of Fund (₹ Crores) Finance costs increased by 14% during the year and depreciation FY14 FY13 YoY and amortisation expenses also increased by 4% for the year. Growth % Provision for Taxation Shareholders’ Funds The current tax/MAT payable declined by 53% during the year. Share Capital 239 239 0% (₹ Crores) Reserves and Surplus 1218 3433 -65% Minority Interest 837 934 -10% FY14 FY13 YoY Growth Non Current Liabilities % Long Term Borrowings 30120 26004 16% Current Tax/Minimum Alternate Tax 38 80 -53% Deferred Tax Liabilities (net) 461 641 -28% (MAT) Payable Other Long Term Liabilities 3071 3605 -15% Long Term Provisions 703 721 -3% Less: MAT Credit Entitlement 0 -73 -100% Current Liabilities Net Current Tax 38 153 -75% Short Term Borrowings 4757 5623 -15% Relating to Previous Years 9 0 -70016% Trade Payables 4112 4515 -9% Deferred Tax -176 27 -762% Other Current Liabilities 5130 4922 4% Total Tax Expense -129 180 -172% Short Term Provisions 197 184 7% Total 50844 50821 0% 27 Annual Report 2013-2014 Shareholder’s Fund Application of Funds The total shareholder’s fund decreased by 60% during FY 2013-14 (₹ Crores) mainly on account of a decrease in reserves and surplus. Reserves FY14 FY13 YoY and Surplus fell by 65% during the year due to a loss for the full year. Growth % The losses mainly come from the EPC segment where there was a Fixed Assets 35789 34755 3% slowdown in activity and Grifn coal mines which is currently under Non Current Investments 3006 2896 4% the expansion phase. Deferred Tax Assets (net) 42 37 14% Long Term Loans and Advances 574 909 -37% Minority Interest Other Non Current Assets 842 737 14% Sub Total 40253 39334 2% The minority interest decreased by 10% during the year. Current Assets Net Worth Current Investment 1 6 -90% Inventories 3121 3098 1% The net worth of the Company, as at March 31, 2014 and as at March Trade Receivables 3959 4658 -15% 31, 2013, is as under Cash and Bank Balances 579 573 1% (₹ Crores) Short Term Loans and Advances 2587 2960 -13% Other Current Assets 344 193 78% FY 14 FY 13 Sub Total 10591 11487 -8% 1 Share Capital 239 239 Total 50844 50821 0% 2 Reserves & Surplus 1218 3433 Fixed Assets 3 Shareholders’ Fund (1+2) 1458 3672 4 Eliminated Proft on Transactions with 1501 1516 The total fxed assets of the company increased by 3% during 2013-14. Subsidiaries and Associates Investments 5 Shareholders’ Fund plus Elimination (3+4) 2959 5189 Total investments (current and non-current) increased by 4% during 6 Minority Interest 837 934 the year. 7 Networth plus Elimination (5+6) 3796 6123 (₹ Crores) Borrowings FY14 FY13 YoY Growth % Total Borrowings include Long Term, Short Term and Current Non-Current Investments 3006 2896 4% Maturities of Long Term Borrowings. Total borrowings increased by Current Investment 1 6 -90% 8% for the year while long term borrowings increased by 16%. There Total 3007 2902 4% was a decrease of 15% in short term borrowings. Investments Break-Up (₹ Crores) (₹ Crores) FY14 FY13 YoY FY14 FY13 YoY Growth % Growth % Long Term Borrowings 30,120 26,004 16% Investment in Equity Instruments 83 100 -17% Current Maturities of Long Term 1,828 2,342 -22% Investment in Preference Shares 2913 2,787 5% Borrowings Non Trade Investments 10 9 13% Short Term Borrowings 4,757 5,623 -15% Investment in Mutual Funds 1 6 -90% Total 36,705 33,969 8% (Unquoted) Total 3006 2902 4% Current Liabilities (Excluding Borrowings) Current Assets (Excluding Investments) (₹ Crores) (₹ Crores) FY14 FY13 YoY FY14 FY13 YoY growth Growth % (%) Inventories 3121 3098 1% Current Liabilities as per Balance Sheet 14,195 15,243 -7% Trade Receivables 3959 4658 -15% Less: Short Term Borrowings 4,757 5,623 -15% Cash and Bank Balances 579 573 1% Less: Current Maturities of Long 1,828 2,342 -22% Short Term Loans and Advances 2587 2960 -13% Term Borrowings Other Current Assets 344 193 78% Total 10591 11482 -8% Total 7,610 7,279 5% Current assets (excluding current investments) decreased by 8% Current liabilities (excluding borrowings) increased by 5% during during the year. Trade receivables decreased by 15% during the the year. year. As at March 31, 2014 the Group has receivables from various 28 Management Discussion and Analysis

State Electricity Utility companies and other customers against sale Analysis of Cash Flow Statement ` ` of power aggregating to 2824 crores ( 2972 crores as at March (₹ Crores) 31, 2013). Based on internal assessment and various discussions had Cash Flow FY14 FY13 with the customers, the management is confdent of recovery of Net Cash Flow from Operating Activities 1,360 1,887 receivables. Cash and bank balance as at end FY14 was ` 579 crores. Net Cash Flow from Financing Activities -1,923 -987 Loans and Advances Net Cash Flow (used in) Investing Activities 717 -1,617 (preliminary fxed assets) (₹ Crores) Net increase in Cash and Cash Equivalents 155 -717 FY14 FY13 YoY Growth % Cash Flow From Operating Activities Long Term 574 909 -37% Short Term 2,587 2,960 -13% Net cash fow from operating activities was ₹ 1,360 crores during Total 3,161 3,870 -18% 2013-14. Loans and advances decreased by 37% during the year. Total Cash Flow From Financing Activities advances declined by 18 during 2013-14. Net cash fow from fnancing activities stood at an outfow of ₹ 1,923 Net Current Assets crores during 2013-14. Interest paid during the year was ₹ 3,703 crores. (₹ Crores) FY14 FY13 YoY Cash Flow (Used In) Investing Activities Growth % Net cash generated in investing activities during FY14 was ₹ 717 Current Assets (excluding 10591 11482 -8% investments) crores. The amount spent on purchase of fxed assets (including Current Liabilities (excluding 7610 7279 5% Capital Advances) during the year was ₹ 147 crores and amount borrowings & current maturities) spent on purchase of non-current investments was ₹ 35 crores. Net Current Assets 2981 4203 -29%

Key Financial Data of Major Operating Companies (₹ Crores) Particulars LITL Amarkantak Anpara Kondapalli Tanjore Udupi Grifn Hills NETS Income Income 2,236 624 2,261 565 245 3,006 679 196 912 Other Income 103 39 2 23 29 54 2 0.6 25 Total 2,339 663 2,263 588 276 3,060 681 196 937 Expenditure Construction/ Development/ Generation Expenses 2,314 376 1,517 534 184 1,772 877 172 906 Administrative and Other Expenses 240 15 10 19 5 33 190 6 20 EBITDA -214 272 736 35 88 1,255 -386 18 11 EBITDA to Total Income (%) -9 41 33 6 34 41 -57 9 1 Interest and Finance Charges 628 299 624 159 12 905 110 68 1 Depreciation 117 146 245 97 19 320 174 3 0.45 Exceptional Items - - - 92 - - - - - Proft before Tax -960 -173 -133 -313 57 30 -670 -52 9 Provision for Taxation - Current Tax - 12 6 -3 - Relating to prior years - - - 0.30 - - 44 0.14 - - Minimum Alternate Tax Credit Entitlement ------Deferred Tax (Net) -47 - -25 -0.6 -100 - - -0.08 - Fringe Beneft Tax ------Net Proft before prior period -960 -126 -133 -288 46 124 -714 -52 7 Prior period items Net proft -960 -126 -133 -288 46 124 -714 -52 7

29 Annual Report 2013-2014

Risks and Mitigation S. Risk Description Mitigation Plan We follow stringent risk management practices to ensure smooth No. functioning of the Company’s business operations. The following are 8. Power plants 1. Following regular maintenance the probable risks and the mitigation plan for each risk: operating at schedule Suboptimal levels 2. Providing necessary technical S. Risk Description Mitigation Plan training to personnel and employing No. expert external assistance if needed 1. Project 1. Regular meetings and close follow up 9. Open Capacities 1. Participation in all upcoming Case 1/ Implementation for the agreed schedule Case 2 bids Delays 2. Ensuring deployment of required 10. Higher Interest Cost 1. Exploring and availing cheaper resources and supply materials as per source of funds the project schedule 2. Regular follow up with debtors and 3. Collection of adequate and accurate monitoring of cash fows market data to ensure timely 11. Loss on account of 1. Review of forex exposure on a regular implementation foreign exchange basis 2. Recovery of 1. Regular follow-up with State fuctuation 2. Hedging as per ‘Lanco Group Forex receivables for Electricity Boards Risk Management policy’ power supplied 3. Adequate and 1. Pursuing with MoPNG/GAIL/Govt. In the normal course of its business operations, the company faces regular Fuel Supply of India for allocation/supply of various macro-economic risks and risks that are inherent in operating (Coal and Gas) contracted quantity of gas a large infrastructure business. The risks that the company faces 2. Bridging defcit quantity of coal from are also dynamic in nature. The major risks that the company faces e-auction/open market/imports related to project implementation delays to a unsupportive macro 3. Synchronizing commissioning of environment, inadequate fuel supply, difculties in land acquisition, plants under construction with the delays in achieving fnancial closure for future projects, efcient availability of fuel operation of operating projects, foreign exchange fuctuation risks 4. Delays in obtaining 1. Regular follow up with concerned etc. At Lanco Infratech, stringent risk management practices are necessary regulatory authorities providing followed to manage and overcome these risks to ensure smooth clearances, land them with project updates functioning of the Company’s business operations. The areas of acquisition etc. 2. Regular interaction with local potential risk are regularly monitored and necessary action is taken population and employing to mitigate their efect. confdence building measures through CSR CORPORATE SOCIAL RESPONSIBILITY (CSR) 5. Delay in Financial 1. Regular follow up with fnancial Closure for institutions Lanco Foundation is the CSR arm of the Lanco Group. The Foundation operates in 14 locations across 12 states in India. Its programmes greenfeld and 2. Follow up with regulatory authorities brownfeld projects to expedite the grant of necessary range across various sections of the society. Some of these are: project approvals Education, Health, Drinking Water, and Disability. 6. Power Evacuation 1. Follow-up with MoEF for necessary Education- Infrastructure clearances. During the year 2013-14, a total of ten location were covered with 2. Follow-up with PGICL for setting up pooling stations within the stipulated 2,925 school kits and 1,70,294 note books distributed. time. Health 3. Making interim arrangements for power evacuation using existing Under the health segment, 179 villages and 2,96,650 benefciaries infrastructure until dedicated lines were covered across the southern, central and northern regions. are set up The Lanco Mobile Health Service (LMHS) has 18 units in operation. 4. Synchronizing commissioning of The number of actual per day benefciaries was 1009 against the per plants under construction with the day plan benefciaries target of 990, an achievement rate of 102%. availability of transmission corridor Under LMHS, 8,756 camps were conducted during the year. In the 7. Slowdown in real 1. Increasing use of customer referrals regions that LMHS operates, the percentage of its outreach vis-à-vis estate market to boost sales the population of the area was 33.5%. (Total registrations as on 31st 2. Using well established channel March 2014 of 106026 vs. population of 316577). partners for marketing Drinking Water 3. Organising site visits The foundation also has 31 functional water plants in 9 locations that beneftted 15,763 households. The number of households registered 30 Management Discussion and Analysis under the drinking water scheme is 15,863. A total number of l Greentech safety Award 2013, in Gold Category in Power Gas 5,95,95,156 litres of water was distributed during the year. based Sector by Greentech Foundation l Received Sword of Honour from British Council, the highest Disablity safety award During the year 2013-14, under the outreach based program, a total of 39 Artifcial Limb Fitting Centre (ALFC) screening camps were held l Company bagged British Sword of Honour Award, from British in the states of Andhra Pradesh, Chattisgarh, Karnataka, Odisha and Council for HSE Tamil Nadu with a total number of 1795 people screened. During l First place in Medium scale, 5 star rating for Excellent EHS the year 2013-14, a total of 27 Artifcial Limb Fitting Centre (ALFC) practices from CII distribution camps were held in the states of Andhra Pradesh, Chattisgarh, Karnataka, Odisha and Tamil Nadu with a total number l 4 Star rating Excellent Commitment in EHS Practices & Policies, of 781 people covered. from CII Under the center based program, a total of 707 people were screened Lanco Hills: during the year with a total number of 533 people covered. l TV 5 Business Leader 2012 award, for outstanding performance Blood donation camps were held at 17 locations during the year in luxury home segment FY14 with the number of donors at 933. Lanco Kondapalli: Budget Allocation and Utilisation (FY14) l Energy Conversation award at Both State Level & National Level, by NREDCAP in December 2013 # Programme Budget For Utilisation % of 2013-14 (`) as on Utilisation l National Level frst prize among Gas based power plants in 31.03.2014 Against December 2013 (`) Annual Plan Udupi Power: 1 Education 1,16,29,364 26,03,900 22.39 l First place in Infrastructure Power category, 4 Star rating for 2 Health 2,18,01,896 1,64,51,497 75.46 excellent commitment in EHS, given by CII 3 Drinking Water 93,56,644 72,59,758 77.59 4 Disability 1,03,18,100 42,64,359 41.33 Lanco Amarkantak: 5 H O Programme 63,00,000 6,15,912 9.78 l Winner of Golden Peacock Award for HSE for the year 2013 Total Programme Cost 5,94,06,004 3,11,95,426 52.51 l Greentech Safety Award 2013 in Gold Category in Thermal 6 Management Cost 1,54,59,720 1,62,30,997 104.99 Power Sector, given by Greentch Foundation Total 7,48,65,724 4,74,26,423 63.35 l 12th Annual Greentech Safety Award in “Gold Category, by Greentech Foundation AWARDS l Golden Peacock Occupational Health & Safety Award’ for the Lanco Tanjore: year 2013 given by MOS for Information & Broadcasting l Good green governance award for the year 2012, as winners in the infrastructure level 2 category for maintaining the Lanco Foundation environmental standards l Outstanding CSR award in Infrastructure Sector by Think Media l Lanco Tanjore Power Company awarded FIVE star Rating by Lanco Anpara British Safety Council l Power Line award for Best Thermal Power project.

31 Annual Report 2013-2014 REPORT ON CORPORATE GOVERNANCE

The Company’s Report on Corporate Governance for the year ended March 31, 2014 is presented by the Directors: I. MANDATORY REQUIREMENTS

1. COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE The Company has set for itself the-

Mission of “Development of Society through Leadership, Entrepreneurship and Ownership” Vision of “Most Admired Integrated Infrastructure Enterprise” The Company frmly believes that Mission and Vision can be realized only by adopting highest standards of Corporate Governance. The Company is committed to conduct business in a manner which would result in enhancing value to all its Stakeholders. The Company believes that this value enhancement process is possible only by adhering to the principles of Corporate Governance. The Company has put in place systems and practices which enable it to conduct its business in line with the best practices elsewhere in the country and the world, but is also continuously striving to improve such systems and practices. The Company believes in the principles of transparency and disclosures to the extent these do not compromise on its competitiveness.

2. BOARD OF DIRECTORS (‘THE BOARD’) (i) Composition of the Board The Board of Directors has been constituted with an optimum mix of Executive, Non-Executive and Independent Directors to clearly demarcate functions of governance and management. As on date, the Board comprises of 10 (ten) Directors out of which 4 (four) are Executive Directors and 6 (six) are Non-Executive Directors. Out of the 6 (six) Non-Executive Directors, 5 (fve) are Independent Directors making the current composition in conformity with the provisions of the Companies Act, 1956 and the Listing Agreements. None of the Non-Executive Directors has any pecuniary relationship or transaction with the Company. All the Directors have made adequate disclosures regarding their Directorships, Chairmanships and Memberships on the Board/ Committees of the Board of other Public Companies. By virtue of the disclosures made, none of the Directors hold Chairmanships of more than 5 (fve) Committees and memberships of more than 10 (ten) Committees across all Public Companies.

(ii) Number of Memberships in Boards of other Public Companies and Chairmanships/ Memberships in Committees of Boards of other Public Companies : Name, Designation and Category of Number of Number of Number of Director Identifcation Directorship Memberships in Chairmanships in Memberships of Number (DIN) Boards of other Committees of Boards of Committees of Boards of Public Companies other Public Companies other Public Companies Mr. L. Madhusudhan Rao Executive 14 2 1 Executive Chairman DIN: 00074790 Mr. G. Bhaskara Rao Executive 14 2 4 Executive Vice-Chairman DIN: 00075034 Mr. L. Sridhar Non-Executive 14 0 3 Vice-Chairman DIN: 00075809 Mr. G. Venkatesh Babu Executive 14 0 8 Managing Director DIN: 00075079 Mr. S.C. Manocha Executive 3 0 0 Deputy Managing Director DIN: 00007645 Dr. Pamidi Kotaiah Non-Executive 10 4 3 Director & Independent DIN: 00038420 32 Report on Corporate Governance

Name, Designation and Category of Number of Number of Number of Director Identifcation Directorship Memberships in Chairmanships in Memberships of Number (DIN) Boards of other Committees of Boards of Committees of Boards of Public Companies other Public Companies other Public Companies Mr. P. Abraham Non-Executive 12 0 1 Director & Independent DIN: 00280426 Dr. Uddesh Kumar Kohli Non-Executive 6 2 5 Director & Independent DIN: 00183409 Dr. B. Vasanthan* Non-Executive 1 0 0 Director & Independent DIN: 01621698 Mr. R. Krishnamoorthy Non-Executive 4 1 2 Director & Independent DIN: 05292993 Note: Mr. L. Madhusudhan Rao, Mr. G. Bhaskara Rao and Mr. L. Sridhar are related inter-se. * Dr. B. Vasanthan resigned from the Board on May 23, 2014. The profle of the Board of Directors forms part of this Report.

(iii) Meetings and attendance during the year The Board meets at least once in a quarter, inter alia, to review quarterly results. The notice and agenda of the Board Meetings are served well in advance to accommodate addition of any other item(s) in the Agenda. During the fnancial year 2013-14, 10 (ten) Board Meetings were held. These meetings were held on May 29, 2013, July 22, 2013, July 26, 2013, August 07, 2013, September 27, 2013, November 11, 2013, December 23, 2013, February 01, 2014, March 07, 2014 and March 08, 2014. The attendance of each Director at the Board Meetings during the fnancial year 2013-14 as well as at last Annual General Meeting is as under: Name of the Director Number of Board Number of Board Attendance at the last Meetings held Meetings attended Annual General Meeting* Mr. L. Madhusudhan Rao 10 9 Yes Mr. G. Bhaskara Rao 10 10 Yes Mr. L. Sridhar 10 9 Yes Mr. G. Venkatesh Babu 10 9 Yes Mr. S.C. Manocha 10 10 Yes Dr. Pamidi Kotaiah 10 9 Yes Mr. P. Abraham 10 2 No Dr. Uddesh Kumar Kohli 10 9 Yes Dr. B. Vasanthan** 10 0 No Mr. R. Krishnamoorthy 10 8 Yes *Last Annual General Meeting was held on September 27, 2013. ** Dr. B. Vasanthan resigned from the Board on May 23, 2014.

3. COMMITTEES OF BOARD In compliance with the Listing Agreements, the Board has set up committees assigning specifc roles and responsibilities by delegating its power to ensure speedy resolution of diverse issues.

(i) Audit Committee a. Brief description of Terms of Reference The Terms of Reference of Audit Committee include the following scope and responsibilities: 1. Oversight of the company’s fnancial reporting process and the disclosure of its fnancial information to ensure that the fnancial statement is correct, sufcient and credible; 33 Annual Report 2013-2014 2. Recommendation for appointment, remuneration and terms of appointment of auditors of the company; 3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors; 4. Reviewing, with the management, the annual fnancial statements and auditor’s report thereon before submission to the board for approval, with particular reference to: a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013 b. Changes, if any, in accounting policies and practices and reasons for the same c. Major accounting entries involving estimates based on the exercise of judgment by management d. Signifcant adjustments made in the fnancial statements arising out of audit fndings e. Compliance with listing and other legal requirements relating to fnancial statements f. Disclosure of any related party transactions g. Qualifcations in the draft audit report 5. Reviewing, with the management, the quarterly fnancial statements before submission to the board for approval; 6. Reviewing, with the management, the statement of uses/application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the ofer document/ prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter; 7. Review and monitor the auditor’s independence and performance, and efectiveness of audit process; 8. Approval or any subsequent modifcation of transactions of the company with related parties; 9. Scrutiny of inter-corporate loans and investments; 10. Valuation of undertakings or assets of the company, wherever it is necessary; 11. Evaluation of internal fnancial controls and risk management systems; 12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; 13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, stafng and seniority of the ofcial heading the department, reporting structure coverage and frequency of internal audit; 14. Discussion with internal auditors of any signifcant fndings and follow up there on; 15. Reviewing the fndings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board; 16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post- audit discussion to ascertain any area of concern; 17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; 18. To review and oversee the functioning of the Whistle Blower mechanism; 19. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the fnance function or discharging that function) after assessing the qualifcations, experience and background, etc. of the candidate; 20. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. 21. To review the following information: i. Management discussion and analysis of fnancial condition and results of operations; ii. Statement of signifcant related party transactions (as defned by the Audit Committee), submitted by management; iii. Management letters/letters of internal control weaknesses issued by the statutory auditors; iv. Internal audit reports relating to internal control weaknesses; and v. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee. 34 Report on Corporate Governance

b. Composition The Audit Committee comprises of 3 (three) Independent Directors and 1 (one) Executive Director, the Chairman being an Independent Director. The members of the Audit Committee are below: Dr. Pamidi Kotaiah Chairman Dr. Uddesh Kumar Kohli Member Mr. R. Krishnamoorthy Member Mr. G. Bhaskara Rao Member

c. Meetings and Attendance during the year During the fnancial year 2013-14, 7 (seven) Meetings were held. These meetings were held on May 23, 2013, May 29, 2013, July 22, 2013, August 07, 2013, November 11, 2013, February 01, 2014 and February 28, 2014. The attendance of the members during the fnancial year 2013-14 is given below:

Name of the Director Number of Meetings held Number of Meetings attended Dr. Pamidi Kotaiah 7 7 Dr. Uddesh Kumar Kohli 7 7 Mr. R. Krishnamoorthy 7 6 Mr. G. Bhaskara Rao 7 7

(ii) Remuneration Committee a. Brief description of Terms of Reference The terms of reference of the Remuneration Committee inter-alia include the determination of remuneration packages for the Executive and Non-Executive Directors of the Company.

b. Composition The Remuneration Committee comprises of 3 (three) Non-Executive Independent Directors as below:

Dr. B. Vasanthan* Chairman Dr. Pamidi Kotaiah Member Mr. R. Krishnamoorthy Member * Dr. B. Vasanthan resigned from the Board on May 23, 2014.

c. Meetings and Attendance during the year During the fnancial year 2013-14, 1 (one) meeting was held on May 29, 2013. The attendance of the Members during the fnancial year 2013-14 is given below:

Name of the Director Number of Meetings held Number of Meetings attended Dr. B. Vasanthan * 1 0 Dr. Pamidi Kotaiah 1 1 Mr. R. Krishnamoorthy 1 1

* Dr. B. Vasanthan resigned from the Board on May 23, 2014.

Remuneration Policy Remuneration Committee recommends the remuneration for the Executive Directors of the Company. Such recommendation is then approved by the Board and Shareholders. Prior approval of shareholders is also obtained in case of remuneration to Non-Executive Directors. The remuneration paid to Executive Directors is determined keeping in view the industry benchmark, the relative performance of the Company to the industry performance, and macro-economic review on remuneration packages of CEOs of other organisations. Perquisites and other allowances are paid according to the policy of the Company as applicable to employees.

35 Annual Report 2013-2014 Independent Non-Executive Directors are appointed for their professional expertise in their individual capacity as Independent Professionals/Business Executives. Independent Non-Executive Directors receive sitting fees for attending the meeting of the Board and Board Committees.

d. Details of Remuneration to all the Directors for the fnancial year 2013-14 (` in Lakhs) Name of the Director Salary Perquisites Commission/ Sitting Number Term of and Performance Fees of Stock appointment Allowances Bonus Options ending on granted Mr. L. Madhusudhan Rao 0.00 78.77 Nil Nil Nil 31.03.2016 Mr. G. Bhaskara Rao 0.00 85.94 Nil Nil Nil 31.03.2016 Mr. G. Venkatesh Babu 250.00 131.26 28.13 Nil Nil 23.06.2016 Mr. S.C. Manocha 172.50 0.42 15.75 Nil Nil 13.08.2015 Mr. L. Sridhar Nil Nil Nil 2.20 Nil N.A. Dr. Pamidi Kotaiah Nil Nil Nil 3.20 Nil N.A. Mr. P. Abraham Nil Nil Nil 0.60 Nil N.A. Dr. Uddesh Kumar Kohli Nil Nil Nil 3.20 Nil N.A. Dr. B. Vasanthan* Nil Nil Nil Nil Nil N.A. Mr. R. Krishnamoorthy Nil Nil Nil 3.00 Nil N.A. * Dr. B. Vasanthan resigned from the Board on May 23, 2014.

e. Shareholding of Non-Executive Directors as on March 31, 2014

S. No. Name of Director Number of shares held 1. Mr. L. Sridhar 4,51,43,587 2. Dr. Pamidi Kotaiah 95,555 3. Mr. P. Abraham 5,170 4. Dr. Uddesh Kumar Kohli 1,69,050 5. Dr. B. Vasanthan* 28,500 6. Mr. R. Krishnamoorthy NIL

* Dr. B. Vasanthan resigned from the Board on May 23, 2014.

(iii) Shareholders/Investors Grievance Committee a. Brief description of Terms of Reference The Committee is responsible, inter alia, for redressal of shareholders’ complaints, approval of share transfers and transmissions, issue of share certifcates and duplicate share certifcates, liasioning with the registrars and share transfer agents etc.,

b. Composition The Committee comprises of 2 (two) Non-Executive Directors and 1 (one) Executive Director, the Chairman being a Non- Executive Director. The members of the Committee are below:

Mr. L. Sridhar Chairman Mr. G. Venkatesh Babu Member Dr. B. Vasanthan * Member

* Dr. B. Vasanthan resigned from the Board on May 23, 2014.

c. Meetings and Attendance during the year During the fnancial year 2013-14, 2 (two) meetings were held. These meetings were held on May 29, 2013 and November 11, 2013. 36 Report on Corporate Governance

The attendance of the Members during the fnancial year 2013-14 is given below:

Name of the Director Number of Meetings held Number of Meetings attended Mr. L. Sridhar 2 2 Mr. G. Venkatesh Babu 2 2 Dr. B. Vasanthan * 2 0 * Dr. B. Vasanthan resigned from the Board on May 23, 2014.

d. Name and Designation of Compliance Ofcer Mr. A. Veerendra Kumar, Company Secretary is the Compliance Ofcer of the Company.

e. Details of Complaints/ Requests received, resolved and pending during the Financial Year 2013-14 During the Quarter Received Resolved Pending 01.04.2013 - 30.06.2013 0 0 0 01.07.2013 - 30.09.2013 1 1 0 01.10.2013 - 31.12.2013 0 0 0 01.01.2014 - 31.03.2014 3 3 0 Total 4 4 0

4. GENERAL BODY MEETINGS (i) Location, Date and Time of Last three Annual General Meetings and Special Resolutions passed thereat: Year Location Date & Time 2012-13 Marigold Hotel by Greenpark, Greenlands, Begumpet, September 27, 2013 Hyderabad - 500016, Telangana, India 3.30 p.m. Special Resolutions passed, if any 1. Subject to the approval of the Central Government, to waive the recovery of the amount paid for the fnancial year 2012-13 to Mr. L. Madhusudhan Rao, Executive Chairman in excess of remunerations limits prescribed in Section 309 read with Schedule XIII of the Companies Act, 1956. 2. Subject to the approval of the Central Government, to waive the recovery of the amount paid for the fnancial year 2012-13 to Mr. G. Bhaskara Rao, Executive Vice-Chairman in excess of remunerations limits prescribed in Section 309 read with Schedule XIII of the Companies Act, 1956. 3. To waive the recovery of the amount paid for the fnancial year 2012-13 to Mr. G. Venkatesh Babu, Managing Director in excess of remunerations limits prescribed in Section 309 read with Schedule XIII of the Companies Act, 1956. 4. To waive the recovery of the amount paid for the fnancial year 2012-13 to Mr. S.C. Manocha, Deputy Managing Director in excess of remunerations limits prescribed in Section 309 read with Schedule XIII of the Companies Act, 1956. 5. Subject to the approval of the Central Government, for payment of remuneration to Mr. L. Madhusudhan Rao, Executive Chairman with efect from April 01, 2013 upto March 31, 2016. 6. Subject to the approval of the Central Government, for payment of remuneration to Mr. G. Bhaskara Rao, Executive Vice- Chairman with efect from April 01, 2013 upto March 31, 2016. 7. Payment of remuneration to Mr. G. Venkatesh Babu, Managing Director for a period of 3 (three) years with efect from April 01, 2013. 8. Payment of remuneration to Mr. S.C. Manocha, Deputy Managing Director with efect from April 01, 2013 upto August 13, 2015. 2011-12 Marigold Hotel by Greenpark, Greenlands, Begumpet, September 27, 2012 Hyderabad – 500016, Telangana, India 3.30 p.m. Special Resolutions passed, if any No Special Resolution passed 2010-11 Green Park Hotel, Greenlands, Begumpet, Hyderabad – 500 September 30, 2011 016, Telangana, India. 3.30 p.m. Special Resolutions passed, if any No Special Resolution passed

37 Annual Report 2013-2014 (ii) Special Resolution(s) passed through Postal Ballot: Yes The following Special Resolutions were passed through Postal Ballot dated April 17, 2014. The details of the Voting Pattern are as follows: Special Resolutions: 1. Restructuring of Debts of the Company under CDR Mechanism. Total No. of Valid Postal Ballot Forms received : 916 Total No. of Valid Votes : 174,09,25,768 Particulars Voted FOR the Resolution Voted AGAINST the Resolution Not Polled No. of Votes (percentage) 174,06,57,463 (99.99%) 2,13,749 (0.01%) 54,556 (0.00%) No. of Members 853 49 14 No. of Invalid Votes: 43,572 Result: Passed as Special Resolution

2. Alteration of Articles of Association of the Company. Total No. of Valid Postal Ballot Forms received : 913 Total No. of Valid Votes : 174,09,25,128 Particulars Voted FOR the Resolution Voted AGAINST the Resolution Not Polled No. of Votes (percentage) 174,05,88,468 (99.98%) 2,41,616 (0.01%) 95,044 (0.01%) No. of Members 805 67 41 No. of Invalid Votes: 43,572 Result: Passed as Special Resolution

3. Creation of Security on the Assets of the Company. Total No. of Valid Postal Ballot Forms received : 913 Total No. of Valid Votes : 174,09,24,828 Particulars Voted FOR the Resolution Voted AGAINST the Resolution Not Polled No. of Votes (percentage) 174,05,21,593 (99.98%) 3,15,864 (0.02%) 87,371 (0.00%) No. of Members 790 83 40 No. of Invalid Votes: 43,572 Result: Passed as Special Resolution

4. Increase in the borrowing powers of the Company. Total No. of Valid Postal Ballot Forms received : 913 Total No. of Valid Votes : 174,09,24,628 Particulars Voted FOR the Resolution Voted AGAINST the Resolution Not Polled No. of Votes (percentage) 174,05,04,376 (99.98%) 3,31,249 (0.02%) 89,003 (0.00%) No. of Members 784 92 37 No. of Invalid Votes: 43,572 Result: Passed as Special Resolution

5. Option to CDR Lenders for conversion of Debt into Equity Shares. Total No. of Valid Postal Ballot Forms received : 914 Total No. of Valid Votes : 174,09,25,288 Particulars Voted FOR the Resolution Voted AGAINST the Resolution Not Polled No. of Votes (percentage) 174,05,87,392 (99.98%) 2,47,830 (0.01%) 90,066 (0.01%) No. of Members 788 85 41 No. of Invalid Votes: 43,572 Result: Passed as Special Resolution

38 Report on Corporate Governance

6. Issue of Equity Shares to CDR Lenders on preferential basis on conversion of 10 (Ten) percent of Working Capital Term Loan 1 (WCTL 1) into Equity Shares of the Company. Total No. of Valid Postal Ballot Forms received : 914 Total No. of Valid Votes : 174,09,25,128 Particulars Voted FOR the Resolution Voted AGAINST the Resolution Not Polled No. of Votes (percentage) 174,05,82,323 (99.98%) 2,47,251 (0.01%) 95,554 (0.01%) No. of Members 786 87 41 No. of Invalid Votes: 43,572 Result: Passed as Special Resolution

7. Issue of Equity Shares to CDR Lenders on preferential basis on conversion of 20 (Twenty) percent of Priority Loan into Equity Shares of the Company.

Total No. of Valid Postal Ballot Forms received : 914 Total No. of Valid Votes : 174,09,25,128 Particulars Voted FOR the Resolution Voted AGAINST the Resolution Not Polled No. of Votes (percentage) 174,05,22,365 (99.98%) 3,09,332 (0.02%) 93,431 (0.00%) No. of Members 780 94 40 No. of Invalid Votes: 43,572 Result: Passed as Special Resolution 8. Issue of Equity Shares to CDR Lenders on preferential basis on conversion of Restructured Term Loan (RTL), Balance Working Capital Term Loan 1 (WCTL 1), Working Capital Term Loan 2 (WCTL 2) and Funded Interest Term Loan (FITL) into Equity Shares of the Company.

Total No. of Valid Postal Ballot Forms received : 911 Total No. of Valid Votes : 174,09,24,378 Particulars Voted FOR the Resolution Voted AGAINST the Resolution Not Polled No. of Votes (percentage) 174,05,23,004 (99.98%) 3,07,340 (0.02%) 94,034 (0.00%) No. of Members 782 88 41 No. of Invalid Votes: 43,572 Result: Passed as Special Resolution 9. Issue of Equity Shares on Preferential Basis to the Promoters of the Company. Total No. of Valid Postal Ballot Forms received : 910 Total No. of Valid Votes : 174,09,23,368 Particulars Voted FOR the Resolution Voted AGAINST the Resolution Not Polled No. of Votes (percentage) 174,04,90,551 (99.98%) 3,45,672 (0.02%) 87,145 (0.00%) No. of Members 761 110 39 No. of Invalid Votes : 43,572 Result: Passed as Special Resolution

(iii) Persons who conducted the Postal Ballot exercise: The Postal Ballot aforesaid was conducted by Mr. Srikrishna S Chintalapati, KBG Associates, Practising Company Secretaries, Hyderabad.

(iv) Whether any Special Resolution is proposed to be conducted through Postal Ballot: No (v) Procedure for Postal Ballot: Postal Ballot procedure as stipulated under Section 192A of the Companies Act, 1956, read with the Companies (Passing of Resolutions by Postal Ballot) Rules, 2011.

39 Annual Report 2013-2014 5. DISCLOSURES (i) Materially Signifcant Related Party Transactions There are no materially signifcant related party transactions having potential conficts with the interests of the Company at large. (ii) Compliances The Company has duly complied with all rules, regulations, terms of the agreements prescribed/entered with Stock Exchange(s), SEBI or any other statutory authority on any matter related to capital markets, during the last three years. (iii) Whistle Blower Mechanism With a view to implement the highest ethical standards in the course of business, the Company has formed and adopted a whistle blower policy which provides a platform for reporting concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct. Directors, employees, vendors or any person having dealings with the Company may report non-compliance to the Chairman of Audit Committee, who reviews the report. Confdentiality is maintained of such reporting and it is ensured that the whistle blowers are not subjected to any discrimination. No person was denied access to the Audit Committee.

(iv) Compliance with mandatory requirements and adoption of the non-mandatory requirements There has been complete compliance with mandatory requirements and in respect of non-mandatory requirements, disclosures have been made to the extent of adoption.

6. MEANS OF COMMUNICATIONS The Company’s quarterly, half-yearly and annual fnancial results are put on the Company’s website www.lancogroup.com. The results are also published in newspapers that include Financial Express and Vaartha. The ofcial news releases and presentations made to investors and analysts are also made available on the website of the Company. Green Initiative in Corporate Governance In order to show its contribution to the “Green initiative in the Corporate Governance” taken by Ministry of Corporate Afairs, the Company has been sending all communications including annual reports through email to those shareholders, who have registered their e-mail id with their depository participant/Company’s Registrar and Share Transfer Agent other than those who have specifcally chosen to receive documents in physical form. Further, the members are requested to register and update their e-mail addresses with their Depository Participant to ensure that the Annual Report and other documents reach them on their preferred e-mail.

7. GENERAL SHAREHOLDERS INFORMATION (i) Annual General Meeting Date and Time September 26, 2014 at 3.30 p.m. Venue Marigold Hotel By Greenpark, Greenlands, Begumpet, Hyderabad – 500 016, Telangana, India.

(ii) Financial Calendar for the Year 2014-15 (Tentative) Particulars Tentative Schedule Financial reporting for the quarter ending June 30, 2014 On or before August 14, 2014 Financial reporting for the half-year ending September 30, 2014 On or before November 14, 2014 Financial reporting for the quarter ending December 31, 2014 On or before February 14, 2015 Financial reporting for the year ending March 31, 2015 On or before May 30, 2015 Annual General Meeting for the year ending March 31, 2015 Before September 30, 2015

(iii) Book Closure Dates : September 13, 2014 to September 26, 2014 (both days inclusive) (iv) Dividend Payment Date : Not Applicable. (v) Listing on Stock Exchanges The Equity Shares of the Company are listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The Company has paid the listing fees for the year 2014-15 to both the stock exchanges. There are no arrears of listing fees with any of the said stock exchanges till date.

40 Report on Corporate Governance

(vi) Stock Code Exchange Code National Stock Exchange of India Limited Stock Code: LITL BSE Limited Stock Code: LITL Scrip Code: 532778 Demat ISIN Number – for NSDL/CDSL INE785C01048

(vii) Stock Market Price Data relating to equity shares listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The monthly high and low stock quotations of equity shares of the Company on NSE and BSE during the year 2013-14 was as under: (In `) Month NSE BSE HIGH LOW HIGH LOW April, 2013 12.40 10.30 12.39 10.30 May, 2013 11.55 9.10 11.58 9.15 June, 2013 10.05 5.95 9.64 6.00 July, 2013 7.50 4.95 7.63 4.96 August, 2013 5.85 4.90 5.84 4.96 September, 2013 6.50 5.00 6.45 5.00 October, 2013 7.25 5.30 7.21 5.34 November, 2013 7.10 5.55 7.10 5.57 December, 2013 8.05 6.00 8.08 5.91 January, 2014 8.80 6.70 8.74 6.73 February, 2014 8.00 6.25 7.96 6.26 March, 2014 7.30 6.25 7.28 6.25

(viii) Stock Performance in comparison to NSE S & P CNX NIFTY Stock Performance in comparison to BSE Sensex

S&P CNX NIFTY LITL SENSEX LITL 8000 50 26000 50 7500 24000 40 40 7000 22000 6500 30 20000 30 6000 18000 5500 20 20 16000 5000 10 10 4500 14000

4000 0 12000 0 Jul-13 Jul-13 Jan-14 Jun-13 Oct-13 Apr-13 Feb-14 Sep-13 Jan-14 Mar-14 Dec-13 Jun-13 Oct-13 Nov-13 Apr-13 Aug-13 Feb-14 May-13 Sep-13 Mar-14 Dec-13 Nov-13 Aug-13 May-13

(ix) Registrar & Share Transfer Agent M/s. Aarthi Consultants Private Limited, 1-2-285, Domalguda, Hyderabad – 500 029, Telangana, India. Ph: +91-40-2763 8111, 27634445, Fax: +91-40-27632184, E-mail: [email protected], Website: www.aarthiconsultants.com (x) Share Transfer System The shareholders are advised to contact the Registrar and Share Transfer Agent at their address for efecting transfer of shares.

41 Annual Report 2013-2014 (xi) Distribution of Shareholding as on March 31, 2014 Nominal Value of Shareholding (in `) No. of Members Percentage No. of Shares Percentage of total Up to 500 1,52,252 59.42 3,32,53,983 1.38 501 – 1,000 45,430 17.73 3,86,12,390 1.60 1,001 – 2,000 27,644 10.79 4,40,74,667 1.83 2,001 – 3,000 9,532 3.72 2,49,69,636 1.04 3,001 – 4,000 4,755 1.86 1,73,44,689 0.72 4,001 – 5,000 4,237 1.65 2,02,65,176 0.84 5,001 – 10,000 6,608 2.58 4,99,66,223 2.08 10,001 and above 5,753 2.25 217,93,18,156 90.51 Total 2,56,211 100.00 240,78,04,920 100.00

Shareholding Pattern of the Company as on March 31, 2014 Category of Shareholder Number of Shares held Percentage of Shareholding Promoter and Promoter Group 168,93,22,783 70.16 Mutual Funds 50,13,769 0.21 Financial Institutions(FIs)/Banks 4,36,18,069 1.81 Bodies Corporate 10,88,10,572 4.52 Foreign Institutional Investors(FIIs) 8,63,78,894 3.59 Non-Resident Indians(NRIs)/Foreign Companies 2,24,25,620 0.93 Others (Public) 45,22,35,213 18.78 Total 240,78,04,920 100.00

Shareholding Pattern Other (Public) 18.78% Promoter and NRIs/Foregin Promoter Group Companies 70.16% 0.93% FIIs 3.59% Bodies Corporate 4.52% FIs/Banks 1.81% Mutual Funds 0.21%

(xii) Dematerialisation of Shares and Liquidity About 99.99% of the outstanding equity has been in dematerialised form as on March 31, 2014. (xiii) Outstanding Convertible Instruments As of March 31, 2014, there are no outstanding convertible instruments. (xiv) Equity Shares in Suspense Account The disclosure as required under Clause 5A of the Listing Agreement is given below: a. Aggregate number of shareholders and the outstanding shares in the suspense account lying at the beginning of the year: 42 shareholders and outstanding Equity Shares are 31,040. b. Number of shareholders who approached issuer for transfer of shares from suspense account during the year: Nil c. Number of shareholders to whom shares were transferred from suspense account during the year: Nil d. Aggregate number of shareholders and the outstanding shares in the suspense account lying at the end of the year: 42 shareholders and outstanding Equity Shares are 31,040. The voting rights on these equity shares shall remain frozen till the rightful owner of such shares claims the shares.

42 Report on Corporate Governance

(xv) Plant Locations of Lanco Infratech Limited l. Khaya Solar Projects Private Limited a. Wind Energy Project at Chikkasidavanahalli Village, Askandra Village, Nachna – II Tehsil Nachana, Chitradurga District, Karnataka; Jaisalmer District, Rajasthan; b. Solar Energy Project at Bhadrada Village, Tehsil Sami, m. Diwakar Solar Projects Limited Patan District, Gujarat; Askandra Village, Nachna – II Tehsil Nachana, Jaisalmer District, Rajasthan; c. Solar Energy Project at Chadiyana Village, Tehsil Sami, Patan District, Gujarat; (xvi) Address for Correspondence d. Solar Energy Project at Charanka Village, Tehsil Registered Ofce: Saltanpur, Patan District, Gujarat; Plot No. 4, Software Units Layout, HITEC City, Madhapur, Plant Locations of Subsidiary Companies Hyderabad – 500 081, Telangana, India a. Lanco Kondapalli Power Limited Phone: +91-40-40090400, Fax: +91-40-23116127, Kondapalli IDA, Kondapalli – 521 228, Email:[email protected], Ibrahimpatnam Mandal, Krishna District, Website: www.lancogroup.com Andhra Pradesh; Profle of Board of Directors b. Lanco Tanjore Power Company Limited Karuppur Village, Thiruvidaimaruthur Taluk, Mr. L Madhusudhan Rao, Executive Chairman has more than 21 Tanjore District, Tamil Nadu; years of varied experience in the industrial feld. He is amongst the most successful and admired young entrepreneurs of corporate c. Lanco Amarkantak Power Limited India. After obtaining his B. Tech from Siddhartha Engineering Pathadi Village, P.O.-Tilkeja, Korba District, College, Vijayawada and M. Tech (Design Engineering) from PSG Chattisgarh - 495 667; College of Technology, Coimbatore, and MS (Industrial Engineering) from Wayne State University in Detroit, United States, he joined the d. Lanco Mandakini Hydro Power Private Limited team involved in building up Lanco Industries Limited near Tirupati, Village & Post-Rampur, Rudraprayag District, Andhra Pradesh. In the year 1992, he became the Managing Director Uttarakhand - 246471; of Lanco Industries Limited. In 2002, he became Chairman of Lanco Infratech Limited. e. Lanco Teesta Hydro Power Limited Teesta VI HEP, Subin Khor, South Sikkim; Mr. G. Bhaskara Rao, Executive Vice-Chairman has more than 36 years of industrial and entrepreneurial experience. He is one of the f. Lanco Budhil Hydro Power Private Limited founder members of the Lanco Group of enterprises. He has executed Village Kharamukh, P.O. Garola, Teh. Bharmour, various construction projects, including dams, bridges and roads. He District Chamba, Himachal Pradesh – 176 309; was instrumental in organizing and implementing the ductile iron pipes manufacturing project by Lanco Kalahasthi Castings Limited. g. Lanco Hydro Power Limited He has a B.E. (Production) Degree from S.V. University, Tirupati and IKU II : Saleg Village, Tehsil Dharamshala, Kangra an M.E (Machine Design) Degree from the Indian Institute of Science, District, Himachal Pradesh; Bangalore. Baner III : Jai Village, Tehsil Palampur, Kangra Mr. L Sridhar, Vice-Chairman has experience of working with ‘Acon District, Himachal Pradesh; Building Constructions’ in San Jose, United States. He worked as h. Lanco Thermal Power Limited Joint Managing Director of Lanco Infratech Limited from 1997 Upper Khauli : Salli Village, Tehsil Shahpur, Kangra to 2003. He has done his B.E. (Civil Engineering) from Siddaganga Institute of Engineering in Tumkur, Karnataka and MS (Construction District, Himachal Pradesh; Management in Civil Engineering) from University of Eastern Drinidhar : Bhiora Village, Tehsil Sihunta, Chamba Michigan, United States. District, Himachal Pradesh; Mr. G. Venkatesh Babu, Managing Director has rich experience in i. Lanco Anpara Power Limited Commercial Banking, Corporate Advisory, Merger and Acquisitions, Phase I : Anpara Village, Sonebhadra District, Project Finance, Equity Capital Markets, HR and Infrastructure Uttar Pradesh; initiatives. He had worked with Indbank & Credit Agricole Indosuez Phase II : Bhognipur, Rambhai Nagar District, (Calyon) and then had two years of entrepreneurial stint before Uttar Pradesh; joining Lanco. He currently looks after Lanco Group’s fnance functions and is a member of Lanco’s Strategy Team. He focuses on j. Udupi Power Corporation Limited Lanco’s strategic partnership and growth initiatives. He is extensively Kolachuru, Yelluru Village, Pilar Post – 574 113, involved in fnancing of Lanco Group’s projects and overseeing the Udupi District, Karnataka; resources function of all the Group companies. He is a Bachelor of Commerce from Madras Christian College, Chartered Accountant k. Lanco Solar Private Limited and Cost and Management Accountant. Solar Manufacturing Plant : Village - Mehrumkhurd, Chawardhal, Dist Rajnandgaon, Chattisgarh; Mr. S.C. Manocha, Deputy Managing Director is a Mechanical Engineer and a Management Graduate. He has several additional Solar PV Project : Village Lathi, Tehsil – Pokaran, qualifcations including project management, fnancial management, District Jaisalmer, Rajasthan; labour laws, welding engineering, construction and planning

43 Annual Report 2013-2014 of thermal power plants, planning management and project his special contribution in the areas of fnance and development. He management from reputed Institutes across India. He has over 36 was also awarded the Special Honour Award in 1996 by the World years of rich experience in key positions with leading corporates. Association of Small and Medium Enterprises in recognition of his His expertise includes pre-project planning, project planning, key special contribution towards the promotion of small and medium negotiations, departmental clearances, fnalising equipment and enterprises. service providers, fnancial modeling, business strategy, marketing intelligence and strategic alliances. Dr. Uddesh Kumar Kohli, Director holds B.E. (Hons.) degree from the Indian Institute of Technology, Roorkee, a Post-Graduate Diploma Mr. P. Abraham, Director is a retired ofcer from the Indian in Industrial Administration from the Manchester University, UK and Administrative Service. He did his M.A. from Andhra University and Ph.D. in Economics from the Delhi School of Economics. Dr. Kohli has Diploma in Systems Management from the Bajaj Institute, Mumbai. been Chairman and Managing Director of Power Finance Corporation He was awarded the United Nations Industrial Development Limited, and has worked with the Planning Commission, Government Organisation Fellowship to study the promotion of Industries with of India, reaching the position of Advisor (Additional Secretary level). special emphasis on export-oriented industries in Europe. During his 35 years of service in the Indian Administrative Service, he held a Dr. Kohli, is presently the Chairman Emeritus of Construction number of executive positions with the Central and State governments Industry Development Council and Chairman of Construction such as Secretary, Ministry of Power, GoI, Special Secretary, Ministry Industry Arbitration Council & Engineering Council of India and of Defence, Additional Secretary, Ministry of Defence, GoI, Chairman Senior Adviser, Global Compact, United Nations. He has carried of Maharashtra State Electricity Board, Commissioner of Industries, out international assignments for Asian Development Bank, United the GoAP, Iron and Steel Controller, Ministry of Steel, GoI, Chairman Nations Industrial Development Organization, United Nations and Managing Director, Maharashtra State Textile Corporation and Development Programme and United Nations Ofce for Project Member, Union Public Service Commission. He was also awarded Services. with Life time achievement award in 2011 in power by council of Dr. Kohli’s areas of expertise include development planning, fnance, power utilities by Ministry of Power. He has authored several books project formulation, appraisal, sustainability and monitoring, on the power sector reforms with focus on distribution. power/energy planning, corporate governance, corporate social responsibility, training and human resource development. Dr. Pamidi Kotaiah, Director is a Gold Medalist in MA (Economics) from Andhra University. He worked in Andhra University, Reserve Mr. R. Krishnamoorthy, Director is a Fellow Member of the Institute Bank of India (RBI), National Bank for Agriculture and Rural of Cost and Management Accountants of India and an S.A.S. Development (NABARD) and served as Executive Chairman of (Commercial) of the Indian Audit & Accounts Department. He is a NABARD between 1992-1998. He also worked as short term Science graduate in Maths, from the University of Madras. He has a Consultant with multilateral institutions including the International total experience of more than 35 years, out of which 30 years has been fund for Agricultural Development (IFAD), Rome, The Food and in Power Sector. He was a Member of Central Electricity Regulatory Agricultural Organization of the United Nations (FAO) and the World Commission and Delhi Electricity Regulatory Commission and had Bank on various Missions to several countries in Asia and Africa. He served Power Finance Corporation Limited for more than 15 years, at has over 50 years of experience in the felds of Banking, Finance, various positions and retired as its Chairman and Managing Director. Management, Project Appraisals/Analysis, Corporate governance etc. He also worked with National Hydroelectric Power Corporation including Board level experience for over 25 years. He was awarded (NHPC) and Mineral Exploration Corporation, Nagpur. the ‘Doctor of Letters’ by Andhra University in 1997 in recognition of

Annual Declaration by CEO Pursuant to Clause 49(I)(D)(ii) of the Listing Agreement As the Managing Director of Lanco Infratech Limited, as required by Clause 49(I)(D)(ii) of the Listing Agreement executed with the National Stock Exchange of India Limited and BSE Limited, I hereby declare that all the Board Members and Senior Management Personnel of the Company have afrmed compliance with the Company’s Code of Conduct and Ethics for the Financial Year 2013-14.

For LANCO INFRATECH LIMITED

Place: Gurgaon G. Venkatesh Babu Date: July 01, 2014 Managing Director II. NON-MANDATORY REQUIREMENTS The Chairman of the Board The Chairman of the Board is an Executive Chairman and hence the provisions for non-executive Chairman are not applicable. All other requirements of the Board during the year have been complied with. Remuneration Committee All the requirements of the Remuneration Committee during the year have been complied with. Whistle Blower Policy The Company has established a Whistle Blower mechanism and has adopted a Whistle Blower Policy, the details of which are given under Disclosures forming part of this Report. Code for prevention of Insider Trading The Company has comprehensive guidelines on prevention of Insider Trading, known as ‘the Lanco Infratech Limited Code of Conduct for Prevention of Insider Trading’, which is in compliance with the SEBI (Prohibition of Insider Trading) Regulations, 1992. 44 Report on Corporate Governance Chief Executive Ofcer (CEO) and Chief Financial Ofcer (CFO) Certifcation

To The Board of Directors of LANCO INFRATECH LIMITED We, the undersigned, in our respective capacities as the Managing Director and Chief Operating Ofcer Finance of Lanco Infratech Limited (“the Company”), to the best of our knowledge and belief certify that: a) We have reviewed Financial Statements and the Cash Flow Statements for the Year ended 31st March, 2014 and based on our knowledge and belief: I. these statements do not contain any materially untrue statements or omit any material fact or contain statements that might be misleading; II. these statements together present a true and fair view of the Company’s afairs and are in compliance with the existing Accounting Standards, applicable Laws and Regulations. b) We further state that to the best of our knowledge and belief, there are no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Company’s Code of Conduct. c) We are responsible for establishing and maintaining internal controls and for evaluating the efectiveness of the same over the Financial Reporting of the Company and have disclosed to the Auditors and the Audit Committee, defciencies in the design or operation of such internal controls, if any, of which they are aware and the steps we have taken and propose to take to rectify these defciencies. d) We have indicated, wherever applicable, to the Auditors and Audit Committee: I. signifcant changes, if any, in internal control over fnancial reporting during the year; II. signifcant changes, if any, in Accounting Policies made during the year and that the same have been disclosed in the notes to the fnancial statements; and III. instances of signifcant fraud of which we have become aware and the involvement therein, if any, of the Management or an Employee having a signifcant role in the Company’s internal control system over fnancial reporting.

For Lanco Infratech Limited

T. Adi Babu G. Venkatesh Babu Chief Operating Ofcer Finance Managing Director Place: Gurgaon Date : May 23, 2014

Corporate Governance Compliance Certifcate

To the Members of M/s Lanco Infratech Limited We have examined the relevant records of M/s. Lanco Infratech Limited for the purpose of certifying compliance of the conditions of the Corporate Governance under Clause 49 of the Listing Agreement with the Stock Exchanges for the fnancial year ended 31st March, 2014. We have obtained all the information and explanations which to the best of my knowledge and belief are necessary for the purposes of Certifcation. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to the procedure and implementation process adopted by the Company for ensuring the compliance of the Conditions of the Corporate Governance. This Certifcate is neither an assurance as to the future viability of the Company nor of the efcacy or efectiveness with which the Management has conducted the afairs of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with all the mandatory conditions of Corporate Governance as stipulated in the said Listing Agreement(s).

For KBG Associates Company Secretaries

Srikrishna S Chintalapati Place: Hyderabad Partner Date: July 01, 2014 C.P. No. 6262 45 Annual Report 2013-2014

Abridged Financial Statements Abridged Financial Statements Independent Auditors’ Report on Abridged Financial Statements To The Board of Directors of Lanco Infratech Limited The accompanying abridged fnancial statements, which comprise the abridged Balance Sheet as at March 31, 2014, abridged Proft & Loss Account and abridged Cash Flow Statement for the year then ended and related notes and other explanatory information are derived from the audited fnancial statements of Lanco Infratech Limited (‘the Company’) as at and for the year ended March 31, 2014. We expressed a qualifed audit opinion on those fnancial statements in our report dated May 23, 2014 (see below). Those fnancial statements and the abridged fnancial statements do not refect the efects of events that occurred subsequent to the date of our report on those fnancial statements. The abridged fnancial statements do not contain all the disclosures required by the accounting principles generally accepted in India, including Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”) applied in the preparation of the audited fnancial statements of the Company. Reading the abridged fnancial statements, therefore, is not a substitute for reading the audited fnancial statements of the Company.

Management’s responsibility for the abridged fnancial Statements Management is responsible for the preparation of a summary of the audited fnancial statements on the basis described in Note 2.

Auditor’s Responsibility Our responsibility is to express an opinion on the abridged fnancial statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810, “Engagements to Report on Summary Financial Statements” issued by the Institute of Chartered Accountants of India.

Opinion In our opinion, the abridged fnancial statements derived from the audited fnancial statements of the Company for the year ended March 31, 2014 are a fair summary of those fnancial statements, on the basis described in Note 2. However, the abridged fnancial statements are unadjusted to the equivalent extent as the audited fnancial statements of the Company as at and for the year ended March 31, 2014. The non-adjustment of the audited fnancial statements is described in our qualifed audit opinion in our report dated May 23, 2014. Our qualifed audit opinion is based on the following facts. a) Reorganization of investments has been undertaken by the Company during the year ended March 31, 2012 as described in Note 23. The Company’s investment as of March 30, 2012 in various subsidiaries and associates was transferred to wholly owned step down subsidiaries and to an associate of wholly owned step down subsidiary aggregating to ` 6,815.51 Crores that require lenders and customer approvals. Management has received many such approvals aggregating to 88% in value, of the lenders consenting to the restructuring, the management is confdent of receiving balance approvals from lenders and customer in near future and has taken the efect of these transfers while preparing these fnancial statements. In case of any of these residual approvals are not granted, the management will have to revisit the structure and the consequential impact would then be recorded in these fnancial statements, pending the fnal outcome of residual lenders and customer approvals, we are unable to comment on the consequential efects of the foregoing should such approvals not be received on these fnancial statements. This had also been qualifed in our audit report for the year ended March 31, 2012 and March 31, 2013. Our qualifed audit opinion states that, except for the efects of the described matters, those fnancial statements give a true and fair view of the state of afairs of the Company as at March 31, 2014, and of its results of operations and its cash fows for the year then ended in accordance with the accounting principles generally accepted in India.

Emphasis of Matters Without qualifying our opinion on the audited fnancial statements in our audit report dated May 23, 2014, Emphasis of matter have been included and those were based on the following facts. a) Note 25 to the fnancial statements, regarding the adequacy of disclosure concerning the Company’s ability to meet its fnancial obligations including loans, overdue loans, unpaid interest and ability to fund obligations pertaining to operations including unpaid creditors and investments in ongoing projects for ensuring normal operations. During the year, the Company incurred a Net Loss of ` 959.99 Crores and has loans aggregating ` 174.57 Crores falling due over next twelve months period which also includes unpaid dues of the Company as at March 31, 2014. These matters require the Company to garner such additional cash fows to fund the operations as well as the investment obligations towards on-going projects comprising various power and other infrastructure projects notwithstanding the current level of low implementation activities. The Company approached Corporate Debt Restructuring (CDR) Cell with a scheme 47 Annual Report 2013-2014 seeking certain reliefs in relation to repayment timelines of loans and accumulated unpaid interest and additional funding for its operations. Further this restructuring envisages certain sacrifces from lenders and commitments from Company in terms of infusion of additional funds through divestment of existing assets. During the year, CDR Empowered Group approved the Debt Restructuring Scheme. The Company is in the process of completing required obligations under the scheme to enable infusion of additional funds from lenders. However, the fnancial statements have been prepared under the assumption, considering the management assessment to recover the dues from various State Electricity Boards and management plan to get requisite funding from various other sources including the CDR scheme in respect of which the CDR lenders have started their partial disbursements. These submissions and assertions by the management as evaluated by lenders envisage that the Company has the ability to garner the required cash fows, which have not been independently assessed by us. Relying on the above, no adjustments have been made in these fnancial statements. b) Note 26 to the fnancial statements, in relation to the carrying value of assets held by Lanco Anpara Power Limited (LAnPL), a step down subsidiary of the Company. Though LAnPL has been incurring losses ever since the commencement of commercial operations and accumulated losses incurred so far eroded the net worth signifcantly, taking into consideration LAnPL management’s assessment of the situation including eforts towards seeking revision in tarif etc pending before the regulators, the management of the Company is of the view that the carrying value of Assets of LAnPL is realizable at the value stated therein. Accordingly no adjustments have been made in the accompanying fnancial statements. Our opinion is not qualifed in the above matters.

For Brahmayya & Co., Chartered Accountants Firm Registration No. 000511S

Lokesh Vasudevan Place: Gurgaon Partner Date: May 23, 2014 Membership No. 222320

48 Abridged Financial Statements Independent Auditor’s Report To The Members of Lanco Infratech Limited

Report on Financial Statements We have audited the accompanying fnancial statements of Lanco Infratech Limited (“the Company”), which comprise the Balance Sheet as at March 31 2014, the Statement of Proft and Loss and Cash Flow Statement for the year then ended, and summary of signifcant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation of these fnancial statements that give a true and fair view of the fnancial position, fnancial performance and cash fows of the Company in accordance with the accounting standards notifed under the Companies Act, 1956 (‘the Act’) read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Afairs in respect of Section 133 of the Companies Act, 2013. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these fnancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fnancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fnancial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fnancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the fnancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the efectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the fnancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our qualifed audit opinion.

Basis for Qualifed Opinion Attention is invited to Note 49 to the fnancial statements, which explain the reorganising undertaken by the management during the year ended March 31, 2012. The Company’s investment as of March 30, 2012 in various subsidiaries and associates was transferred to wholly owned step down subsidiaries and to an associate of wholly owned step down subsidiary aggregating to ` 6,815.51 Crores that require lenders and customer approvals. Management has received many such approvals aggregating to 88% in value, of the lenders consenting to the restructuring, the management is confdent of receiving balance approvals from lenders and customer in near future and has taken the efect of these transfers while preparing these fnancial statements. In case of any of these residual approvals are not granted, the management will have to revisit the structure and the consequential impact would then be recorded in these fnancial statements, pending the fnal outcome of residual lenders and customer approvals, we are unable to comment on the consequential efects of the foregoing should such approvals not be received on these fnancial statements. This had also been qualifed in our audit report for the year ended March 31, 2012 and March 31, 2013.

Opinion In our opinion and to the best of our information and according to the explanations given to us, except for the possible efects of the matter described in the Basis for Qualifed Opinion Paragraph, the fnancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the Balance Sheet, of the state of afairs of the Company as at March 31, 2014; b) in the case of the Statement of Proft and Loss, of the Loss for the year ended on that date; and c) in the case of the Cash Flow Statement, of the cash fows for the year ended on that date.

Emphasis of Matters Attention is invited to a) Note 51 to the fnancial statements, regarding the adequacy of disclosure concerning the Company’s ability to meet its fnancial

49 Annual Report 2013-2014 obligations including loans, overdue loans, unpaid interest and ability to fund obligations pertaining to operations including unpaid creditors and investments in ongoing projects for ensuring normal operations. During the year, the Company incurred a Net Loss of ` 959.99 Crores and has loans aggregating ` 174.57 Crores falling due over next twelve months period which also includes unpaid dues of the Company as at March 31, 2014. These matters require the Company to garner such additional cash fows to fund the operations as well as the investment obligations towards on-going projects comprising various power and other infrastructure projects notwithstanding the current level of low implementation activities. The Company approached Corporate Debt Restructuring (CDR) Cell with a scheme seeking certain reliefs in relation to repayment timelines of loans and accumulated unpaid interest and additional funding for its operations. Further this restructuring envisages certain sacrifces from lenders and commitments from Company in terms of infusion of additional funds through divestment of existing assets. During the year, CDR Empowered Group approved the Debt Restructuring Scheme. The Company is in the process of completing required obligations under the scheme to enable infusion of additional funds from lenders. However, the fnancial statements have been prepared under the assumption, considering the management assessment to recover the dues from various State Electricity Boards and management plan to get requisite funding from various other sources including the CDR scheme in respect of which the CDR lenders have started their partial disbursements. These submissions and assertions by the management as evaluated by lenders envisage that the Company has the ability to garner the required cash fows, which have not been independently assessed by us. Relying on the above, no adjustments have been made in these fnancial statements. b) Note 52 to the fnancial statements, in relation to the carrying value of the assets held by Lanco Anpara Power Limited (LAnPL), a step down subsidiary of the Company. Though LAnPL has been incurring losses ever since the commencement of commercial operation and accumulated losses incurred so far eroded the net worth signifcantly, taking into consideration LAnPL management’s assessment of the situation including eforts towards seeking revision in tarif pending before the regulator, the management of the Company is of the view that the carrying value of the asset of LAnPL is realizable at the value stated therein. Accordingly no adjustments have been made in these fnancial statements. Our opinion is not qualifed in the above matters.

Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”), issued by the Central Government of India in terms of sub- section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specifed in paragraphs 4 and 5 of the Order. 2. As required by section 227(3) of the Act, we report that: a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; b) in our opinion proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; c) the Balance Sheet, Statement of Proft and Loss and Cash Flow Statement dealt with by this Report are in agreement with the books of account; d) except for the matter described in the Basis for Qualifed Opinion Paragraph, in our opinion, the balance sheet, statement of proft and loss and cash fow statement comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Afairs in respect of Section 133 of the Companies Act, 2013; and e) on the basis of written representations received from the directors as on 31 March 2014, and taken on record by the Board of Directors, none of the directors is disqualifed as on 31 March 2014, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

For Brahmayya & Co Chartered Accountants Firm’s Registration Number: 000511S

Lokesh Vasudevan Place : Gurgaon Partner Date : May 23, 2014 Membership Number: 222320

50 Abridged Financial Statements Annexure to the Independent Auditor’s Report

The Annexure referred to in our report to the members of Lanco Infratech Limited (‘the Company’) for the year ended March 31, 2014. We report that: 1. (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fxed assets. (b) Fixed assets have been physically verifed by the management during the year in accordance with a planned programme of verifying them once in three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verifcation. (c) There was no substantial disposal of fxed assets during the year. 2. (a) The management has conducted physical verifcation of inventory at reasonable intervals during the year. In respect of inventory lying with third parties, these have substantially been confrmed by them. (b) The procedure of physical verifcation of stock followed by the management is reasonable and adequate in relation to the size of the Company and the nature of its business. (c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifcation. 3. (a) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured to companies, frms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4 (iii) (a) to (d) of the Order are not applicable to the Company and hence not commented upon. (b) According to the information and explanations given to us, the Company has taken unsecured loan, from the holding Company, covered in the register maintained under section 301 of the Companies Act, 1956. The year-end balance of such loan is ` 152.00 Crores. (c) In our opinion, the rate of interest and terms and conditions of such loans are prima facie not prejudicial to the interest of the Company. (d) In respect of aforesaid loan taken from the holding Company, the Principal is not due for repayment and the interest is not being accrued as the same is pending for approval of CDR Lenders. 4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory, fxed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal control system in respect of these areas. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control system of the Company in respect of these areas. 5. (a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Act that need to be entered into the register maintained under Section 301 of the Act have been so entered. (b) In respect of transactions made in pursuance of contracts and arrangements exceeding the value of Rupees fve lakhs entered into during the fnancial year, because of the unique and specialized nature of the items involved and absence of any comparable prices, we are unable to comment whether the transactions were made at prevailing market prices at the relevant time. 6. The Company has not accepted any deposits from the public. 7. In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. 8. We have broadly reviewed the cost records maintained by the Company pursuant to the Rules made by the Central Government for maintenance of cost records under Section 209(1)(d) of the Act and are of the opinion that prima facie, the prescribed accounts and records have been maintained. 9. (a) The Company is regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it except delays in few cases. (b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Wealth Tax, Service Tax, Sales Tax, Customs Duty, Excise Duty, Cess and Other undisputed statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable except in below stated case. 51 Annual Report 2013-2014

Name of the Statue Nature of the Due Amount Period to which the amount (` Crores) relates The Building and Other Labour Building and Other 0.21 F.Y 2012- 13 Construction Workers Welfare Construction Workers Welfare Cess Act, 1996 (Cess Act) Cess (BOCWWC) 0.01 May’ 2013 – July’2013 (c) According to the information and explanations given to us, there are no material dues of Wealth Tax and Cess which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of Income Tax, Sales Tax and Service Tax, have not been deposited by the Company on account of disputes:

Name of the statute Nature of dues Amount Period to which the Forum where dispute is pending (` in amount relates Crores) Income Tax Act, 1961 Income Tax 3.74 Assessment year 2009-10 Commissioner of Income Tax (Appeals) Hyderabad. Income Tax Act, 1961 Income Tax 0.11 Assessment year 2010-11 Commissioner of Income Tax (Appeals) Hyderabad. Income Tax Act, 1961 TDS 0.02 Assessment Year 2012-13 Commissioner of Income Tax (Appeals) Delhi. Income Tax Act, 1961 Income Tax 1.97 Assessment Year 2002-03 Income Tax Appellate Authority, Hyderabad. Income Tax Act, 1961 Income Tax 2.06 Assessment Year 2003-04 Income Tax Appellate Authority, Hyderabad. Income Tax Act, 1961 Income Tax 2.26 Assessment Year 2003-04 High Court, Hyderabad. Andhra Pradesh Tax on Entry Tax 0.02 Financial Year 2007-08 Commercial Tax Ofcer, Begumpet Entry of Goods Act, 2001 Andhra Pradesh General Sales Tax 0.03 Financial Year 2001-02 The Sales Tax Appellate Tribunal, Sales Tax Act, 1956 Hyderabad Andhra Pradesh Value Sales Tax 0.01 Financial Year 2009-10 The Appellate Deputy Commissioner Added Tax Act, 2005 CT, Panjagutta-Hyderabad Tamil Nadu Value Added Sales Tax 0.38 Financial Year 2007-08 The Appellate Deputy Commissioner Tax, 2006 (including penalty) CT, Chennai Tamil Nadu Value Added Sales Tax 0.89 Financial Year 2010-11 Joint Commissioner (North) Chennai. Tax, 2006 Himachal Pradesh Value Works Contract Tax 3.42 Financial Year 2008-09 Additional Excise and Taxation Added Tax, 2005 & Input Tax Credit Commissioner cum Appellate Authority– Shimla. Bihar Value Added Tax Act, Sales Tax 1.08 Financial Year 2007-08 Joint Commissioner of Commercial 2005 Taxes (Appeals)– Patna. Maharashtra Value Added Sales Tax/ Central 2.34 Financial Year 2009-10 Deputy Commissioner of Sales Tax, Tax Act, 2002/ Central Sales Tax Issue Based Audit- Mumbai. Sales Tax Act, 1956 Central Sales Tax Act, 1956 Central Sales Tax 0.20 Financial Year 2011-12 Assistant Commissioner (CT) Chennai. Central Sales Tax Act, 1956 Central Sales Tax 0.01 Financial Year 2012-13 Assistant Commissioner (CT) Chennai. The Finance Act, 1994 Service Tax 0.14 April 2005-March 2008 Customs, Central Excise and Service Tax Appellate Tribunal, Bangalore. The Finance Act, 1994 Service Tax 0.16 June 2005-August 2008 Customs, Central Excise and Service Tax Appellate Tribunal Bangalore The Finance Act, 1994 Service Tax 12.92 June 2007-March 2008 Customs, Central Excise and Service Tax Appellate Tribunal Hyderabad. The Finance Act, 1994 Service Tax 3.86 June 2007-July 2008 Customs, Central Excise and Service Tax Appellate Tribunal Bangalore. The Finance Act, 1994 Service Tax 15.47 April 2005-March 2008 Customs, Central Excise and Service Tax Appellate Tribunal, Bangalore. The Finance Act, 1994 Service Tax 0.38 July 2008 - September Customs, Central Excise and Service 2009 Tax Appellate Tribunal Hyderabad. The Finance Act, 1994 Service Tax 6.58 April 2008-June 2009 Commissioner of Service Tax Delhi.

52 Abridged Financial Statements

Name of the statute Nature of dues Amount Period to which the Forum where dispute is pending (` in amount relates Crores) The Finance Act, 1994 Service Tax 8.98 July 2009-March 2010 Customs, Central Excise and Service Tax Appellate Tribunal Bangalore. The Finance Act, 1994 Service Tax 0.11 October 2009- February Customs, Central Excise and Service 2011 Tax Appellate Tribunal Hyderabad. The Finance Act, 1994 Service Tax 64.42 April 2010- March 2011 Commissioner of Service Tax, Delhi. The Finance Act, 1994 Service Tax 0.48 March 2011-March 2012 Commissioner of Service Tax Delhi. The Finance Act, 1994 Service Tax 0.00** April 2008- March2009 Commissioner of Custom Central Excise and Service Tax, Hyderabad. ** Amount involved is ` 16,927/- 10. The Company has no accumulated losses as at the end of the fnancial year and has incurred cash losses during the current fnancial year covered by our audit but not in the immediately preceding fnancial year. 11. According to the records of the Company examined by us and the information and explanations given to us, the Company has not paid principal and interest of ` 96.89 Crores and ` 50.99 Crores respectively to banks and fnancial institutions as at the balance sheet date. 12. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. 13. In our opinion, the Company is not a chit fund/ nidhi/ mutual beneft fund/ society. Accordingly the provisions of Clause 4 (xiii) of the Order are not applicable to the Company. 14. In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments. Accordingly the provisions of Clause 4 (xiv) of the Order are not applicable to the Company. 15. According to the information and explanations given to us, the Company has given guarantee for loans taken by others from bank or fnancial institutions, the terms and conditions whereof in our opinion are not prima facie prejudicial to the interest of the Company. 16. Based on the information and explanations given to us by the management, term loans disbursed, including Priority Loan under CDR scheme have been utilized for the purposes of CDR Scheme cash fows envisaged as approved by lenders under the CDR package. 17. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company taking cognizance of the extension of times granted to parties from whom amounts were due in relation to reorganisation mentioned in Note 49 of the fnancial statements and placing reliance on the reasonable assumptions made by the Company for the classifcation of long term and short term usages of funds, we are of the opinion that prima facie, no funds raised on short-term basis have been used for long- term investment. 18. The Company has not made any preferential allotment of shares to parties or companies covered in the register maintained under section 301 of the Act. 19. The Company did not have any outstanding debentures during the year. 20. The Company has not raised any money by public issues and accordingly, provisions of Clause 4(xx) of the Order are not applicable to the Company. 21. Based upon the audit procedures performed for the purpose of reporting the true and fair view of the fnancial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For Brahmayya & Co Chartered Accountants Firm’s Registration Number: 000511S

Lokesh Vasudevan Place : Gurgaon Partner Date : May 23, 2014 Membership Number: 222320

53 Annual Report 2013-2014 Abridged Balance Sheet as at March 31, 2014 (` Crores) March 31, 2014 March 31, 2013 I EQUITY AND LIABILITIES 1 Shareholders' Funds (a) Paid-up Share Capital (i) Equity 239.24 239.24 (b) Reserves and Surplus (i) Capital Reserves (Including Share Options Outstanding Account and FCMITD) 1,914.08 1,912.44 (ii) Revenue Reserves 1.46 1.46 (iii) Surplus 519.11 1,479.10 2,673.89 3,632.24 2 Non-current liabilities (a) Long-term Borrowings 4,011.50 1,087.67 (b) Other Long-term Liabilities 4,760.92 5,890.15 (c) Long-term Provisions 41.09 57.55 8,813.51 7,035.37 3 Current Liabilities (a) Short-term Borrowings 1,646.16 3,060.73 (b) Trade Payables 2,307.94 2,563.12 (c) Other Current Liabilities 3,685.21 3,489.47 (d) Short-term Provisions 54.86 45.49 7,694.17 9,158.81 TOTAL 19,181.57 19,826.42 II ASSETS 4 Non-current assets (a) Fixed assets (i) Tangible Assets(Original cost less depreciation) 1,028.47 1,112.83 (ii) Intangible Assets (Original cost less amortisation) 4.78 7.46 (iii) Capital Work-In-Progress 3.76 55.41 (b) Non-current Investments 8,295.61 7,297.33 (Book Value of Quoted Investments ` 6.47 Crores {Previous year ` 6.47 Crores}) (Market Value of Quoted Investments ` 6.73 Crores{ Previous year `6.42 Crores}) (c) Deferred Tax Assets (Net) 17.75 17.75 (d) Long-term Loans and Advances 1,585.68 1,208.26 (e) Other Non-Current Assets 543.73 428.97 11,479.78 10,128.01 5 Current assets (a) Inventories 1,422.44 1,311.40 (b) Trade Receivables 1,700.87 2,386.61 (c) Cash and Cash Equivalents 122.63 54.65 (d) Short-term Loans and Advances 4,374.61 5,922.78 (e) Other Current Assets 81.24 22.97 7,701.79 9,698.41 TOTAL 19,181.57 19,826.42 Summary of Signifcant Accounting Policies 2.1

The accompanying notes and other explanatory information are an integral part of the Abridged Financial Statements. As per our report on Abridged Financial Statements of even date. For and on behalf of the Board of Directors of Lanco Infratech Limited For Brahmayya & Co L. Madhusudhan Rao G. Venkatesh Babu Firm Registration No. 000511S Executive Chairman Managing Director Chartered Accountants DIN - 00074790 DIN - 00075079 per Lokesh Vasudevan T. Adi Babu A. Veerendra Kumar Partner Chief Operating Ofcer Finance Company Secretary Membership No. 222320 Place: Gurgaon Place: Gurgaon Date: May 23, 2014 Date: May 23, 2014 Note:- Complete Balance Sheet, Statement of Proft and Loss, other statements and notes thereto prepared as per the requirements of Schedule VI to the Companies Act, 1956 are available at the Company’s website at www.lancogroup.com 54 Abridged Financial Statements Abridged Proft and Loss Account for the year ended on March 31,2014

(` Crores) March 31, 2014 March 31, 2013 I. INCOME Revenue from Operations* 2,236.40 4,741.11 Other Income 102.97 81.64 Total Income 2,339.37 4,822.75 II. Expenditure Cost of Materials Consumed 1,798.46 2,597.38 Purchase of Traded Goods - 289.06 Subcontract Cost 363.39 852.03 Construction, Transmission and Site Expenses 117.70 157.39 Change in Construction Work in Progress (151.47) (342.99) Employee Benefts Expense 185.60 365.66 Finance Cost 627.73 600.32 Depreciation and Amortisation Expense 117.24 127.49 Other Expenses 239.81 166.18 Total Expenditure 3,298.46 4,812.52 III. Proft before Tax (I - II) (959.09) 10.23 IV. Exceptional items (0.90) - V. Proft before tax (III+IV) (959.99) 10.23 VI. Tax Expense Defered Tax - (3.11) Total Tax Expense - (3.11) VII. Proft after Tax for the Period (V-VI) (959.99) 13.34 VIII. Earnings Per Equity Share - (Face value of share ` 1 /-) : Basic (`) (4.08) 0.06 Diluted (`) (4.08) 0.06 * Details of Revenue from Operations: Particulars March 31, 2014 March 31, 2013 ` Crores ` Crores I. Contract Operations 2,096.39 4,287.40 II. Sale of Products 78.62 379.60 III. Revenue from services provided 54.89 62.41 IV. Other Operating Revenue 6.50 11.70 Total 2,236.40 4,741.11 Summary of Signifcant Accounting Policies 2.1

The accompanying notes and other explanatory information are an integral part of the Abridged Financial Statements. As per our report on Abridged Financial Statements of even date. For and on behalf of the Board of Directors of Lanco Infratech Limited For Brahmayya & Co L. Madhusudhan Rao G. Venkatesh Babu Firm Registration No. 000511S Executive Chairman Managing Director Chartered Accountants DIN - 00074790 DIN - 00075079 per Lokesh Vasudevan T. Adi Babu A. Veerendra Kumar Partner Chief Operating Ofcer Finance Company Secretary Membership No. 222320 Place: Gurgaon Place: Gurgaon Date: May 23, 2014 Date: May 23, 2014

55 Annual Report 2013-2014 Abridged Cash Flow Statement for the year ended on March 31, 2014 (` Crores) March 31, 2014 March 31, 2013 1. Cash fows from/(used in) Operating Activities (182.68) 209.76 2. Cash fows from Investing Activities 60.80 (245.00) 3. Cash fows from Financing Activities 198.34 (39.08) 4. Net (decrease)/Increase in Cash and Cash Equivalents 76.46 (74.33) 5. Cash and Cash Equivalents at the beginning of the period 36.84 111.17 6. Cash and Cash Equivalents at the end of the period 113.30 36.84

As per our report on Abridged Financial Statements of even date. For and on behalf of the Board of Directors of Lanco Infratech Limited For Brahmayya & Co L. Madhusudhan Rao G. Venkatesh Babu Firm Registration No. 000511S Executive Chairman Managing Director Chartered Accountants DIN - 00074790 DIN - 00075079 per Lokesh Vasudevan T. Adi Babu A. Veerendra Kumar Partner Chief Operating Ofcer Finance Company Secretary Membership No. 222320 Place: Gurgaon Place: Gurgaon Date: May 23, 2014 Date: May 23, 2014

Notes to Abridged fnancial statements for the year ended March 31, 2014

1. Corporate Information management to make estimates and assumptions that Lanco Infratech Limited is an integrated infrastructure afect the reported amounts of assets and liabilities developing company. The company provides engineering, and disclosure of contingent liabilities at the date of the procurement, construction, commissioning and project fnancial statements and the results of operations during management services on a turnkey basis to the power Sector the reporting period. Although these estimates are based for thermal (coal fred and gas fred) and hydro power plants upon management’s best knowledge of current events and as well and also construction of highways, power plants, water actions, actual results could difer from these estimates. supply and irrigation projects including dam, tunnels etc. The ii. Revenue Recognition Company is also into generation of energy from wind and solar power plants. Revenue is recognized based on the nature of activity to the extent it is probable that the economic benefts 2. Basis of preparation will fow to the Company and revenue can be reliably The fnancial statements have been prepared to comply in all measured. material respects with the Accounting Standards notifed by The company collects service tax, sales taxes and value Companies (Accounting Standards) Rules, 2006, (as amended) added taxes (VAT) on behalf of the government and, and the relevant provisions of the Companies Act, 1956. The therefore, these are not economic benefts fowing to the fnancial statements have been prepared under the historical company. Hence, they are excluded from revenue. cost convention on an accrual basis. The following specifc recognition criteria must also be The accounting policies have been consistently applied by the met before revenue is recognised. company are consistent with those used in the previous year. EPC and Construction Services 2.1 Summary of signifcant accounting policies For EPC and construction contracts, contract prices are i. Use of Estimates either fxed or subject to price escalation clauses. The preparation of fnancial statements in conformity Revenues are recognised on a percentage of completion with generally accepted accounting principles requires method measured on the basis of stage of completion 56 Abridged Financial Statements

which is as per joint surveys and work certifed by the Dividends customers. Revenue is recognised when the shareholders’ right to Proft is recognised in proportion to the value of work receive payment is established by the Balance sheet date. done (measured by the stage of completion) when the iii. Tangible Fixed Assets outcome of the contract can be estimated reliably. Tangible assets are stated at cost, less accumulated The estimates of contract cost and the revenue thereon depreciation and impairment losses if any. Cost comprises are reviewed periodically by management and the the purchase price and any attributable cost of bringing cumulative efect of any changes in estimates in the asset to its working condition for its intended use. proportion to the cumulative revenue is recognised in the Borrowing costs relating to acquisition of tangible assets period in which such changes are determined. When the which takes substantial period of time to get ready for its total contract cost is estimated to exceed total revenues intended use are also included to the extent they relate from the contract, the loss is recognised immediately. to the period till such assets are ready to be put to use. Amounts due in respect of price escalation claims and/or Assets under installation or under construction as at the variation in contract work are recognized as revenue only Balance Sheet date are shown as Capital Work in Progress. if the contract allows for such claims or variations and/or there is evidence that the customer has accepted it and The activities necessary to prepare an asset for its are capable of being reliably measured. intended use or sale extend to more than just physical construction of the asset. It may also include technical Liquidated Damages / Penalty as per the contracts / (DPR, environmental, planning, Land acquisition and Additional Contract Claims under the contract entered geological study) and administrative work such as into with Vendors and Contractors are recognised at the obtaining approvals before the commencement of end of the contract or as agreed upon. physical construction.

Sale of Power The company adjusts exchange diferences arising on Revenue from sale of energy is recognized on the accrual translation/settlement of long term foreign currency basis in accordance with the provisions of Power Purchase monetary items pertaining to the acquisition of a Agreement. Claims for delayed payment charges and any depreciable asset to the cost of the asset and depreciates other claims, which the company is entitled to under the the same over the remaining life of the asset. Power Purchase Agreement, are accounted for in the year of acceptance. iv. Intangible Fixed Assets Intangible assets are recognized when it is probable that Sale of Coal the future economic benefts that are attributable to the Revenue from the sale of coal is recognized when the asset will fow to the enterprise and the cost of the asset substantial risks and rewards of ownership are transferred can be measured reliably. to the buyer as per the respective agreements and revenue can be reliably measured. v. Impairment of Assets Carbon Credits The carrying amounts of assets are reviewed at each Revenue from sale of Verifed Emission Reductions (VERs) balance sheet date if there is any indication of impairment and Certifed Emission Reductions (CERs) is recognized on based on internal / external factors. An impairment loss sale of eligible credits. is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount Insurance Claims is the greater of the asset’s net selling price and value in Insurance claims are recognized on actual receipt / use. In assessing value in use, the estimated future cash acceptance of the claim. fows are discounted to their present value using a pre- Management Consultancy tax discount rate that refects current market assessments Income from project management / technical consultancy of the time value of money and risks specifc to the asset. is recognized as per the terms of the agreement on the Net selling price is the amount obtainable from the basis of services rendered. sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal. Interest After impairment, depreciation is provided on the revised Revenue is recognised on a time proportion basis taking into carrying amount of the asset over its remaining useful life. account the amount outstanding and the rate applicable. 57 Annual Report 2013-2014 vi. Depreciation / Amortisation: which such investments are made, are classifed as current investments. All other investments are classifed as long- Tangible Assets:- term investments. Current investments are carried at Depreciation is provided using the Straight Line Method lower of cost and fair value determined on an individual as per the useful lives of the assets estimated by the investment basis. Long-term investments are carried at management, or at the rates prescribed under schedule cost. However, provision for diminution in value is made XIV of the Companies Act, 1956 whichever is higher. to recognise a decline other than temporary in the value Assets costing ` 5000 or less are fully depreciated in the of the investments. year of acquisition. viii. Inventories Leasehold land is amortised over the period of the lease. Construction materials, raw materials, Consumables, Leasehold improvements included in “furniture and Stores and Spares are valued at lower of cost and net fxtures” are amortized over the period of lease or realizable value. Cost is determined on weighted average estimated useful life whichever is shorter. cost method. Certain project related assets including temporary Construction Work-in-progress related to project works is structures are depreciated over the respective estimated valued at lower of cost or net realizable value, where the project periods. Depreciation on ‘Wooden Scafoldings’ is outcome of the related project is estimated reliably. Cost provided at 100%, and ‘Metal Scafoldings’ is written of includes cost of materials, cost of borrowings and other over a period of 3 years, which are grouped under plant related overheads. and machinery. Net realizable value is the estimated selling price in In respect of additions / deletions to the fxed assets / the ordinary course of business, less estimated costs of leasehold improvements, depreciation is charged from completion and estimated costs necessary to make the sale. the date the asset is ready to use / up to the date of deletion. ix. Borrowing Costs Depreciation on adjustments to the historical cost of Borrowing costs directly attributable to the acquisition, the assets on account of reinstatement of long term construction or production of an asset that necessarily borrowings in foreign currency, if any, is provided takes a substantial period of time to get ready for its prospectively over the residual useful life of the asset. intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are The company has used the following rates to provide expensed in the period they occur. Borrowing costs consist depreciation on its fxed assets. of interest, exchange diferences arising from foreign Rates (SLM) currency borrowings to the extent they are regarded as an adjustment to the interest cost and other costs that an Buildings 3.34% entity incurs in connection with the borrowing of funds. Plant and Equipment 4.75% to 11.31% Furniture and Fixtures 6.33% x. Claims Vehicles 9.50% Claims for duty drawback are accounted for on accrual Ofce Equipment 4.75%,16.21% basis: Lease hold land Over the period of lease Lease hold improvements Over the period of lease i. Where there is reasonable assurance that the or estimated useful life, enterprise will comply with the conditions attached whichever is shorter to them; and Temporary Structures ii. Where such benefts have been earned by the - Wooden Scafoldings 100% enterprise and it is reasonably certain that the - Metal Scafoldings 33.33% ultimate collection will be made. - Other Temporary structures Over the respective estimated project period xi. Employee Benefts

Intangible Assets:- i. Retirement benefts in the form of Provident Fund are a defned contribution scheme and the Computer Software is amortized over an estimated useful contributions are charged to the statement of life of 4 years. proft and loss for the year when the contributions vii. Investments to the respective funds are due. There are no other obligations other than the contribution payable to Investments, that are readily realisable and intended the respective funds. to be held for not more than one year from the date on 58 Abridged Financial Statements

ii. Gratuity liability is defned beneft obligation and is company treats a foreign monetary item as “long term provided for on the basis of an actuarial valuation foreign currency monetary item”, if it has a term of 12 on projected unit credit method made at the end of months or more at the date of its origination. each fnancial year. Forward Exchange Contracts not intended for trading iii. Retention bonus liability is provided for on the basis or speculation purposes of an actuarial valuation on projected unit credit In case of forward exchange contracts or any other method at the end of each fnancial year. fnancial instruments that is in substance a forward iv. Compensated absences are provided for on the exchange contract to hedge the foreign currency risks basis of an actuarial valuation on unit credit method the premium or discount arising at the inception of the at the end of each fnancial year. contract is amortised as expenses or income over the life of the contract. Exchange diferences arising on such v. Actuarial gains/losses are immediately taken to contracts are recognized in the period in which they arise. statement of proft and loss and are not deferred. vi. The amount of Non-current and Current portions Derivative Instruments of gratuity, retention bonus and compensated Losses(net of gains) on account of outstanding Forward absences is classifed as per the actuarial valuation exchange contracts which are on account of frm at the end of each fnancial year. commitments and / or in respect of highly probable forecast transaction on balance sheet date are accounted xii. Foreign Currency Transactions on Mark to Market basis keeping in view of the principle Initial Recognition of prudence. The same is as per ICAI announcement on derivatives. Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the As per the ICAI Announcement, accounting for derivative exchange rate between the reporting currency and the contracts, other than those covered under (AS) - 11, foreign currency at the date of the transaction. Accounting for the Efects of Changes in Foreign Exchange Rates are marked to market on a portfolio basis, and the Conversion net loss is charged to the income statement. Net gains are Foreign currency monetary items are reported using the ignored. closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency xiii. Leases are reported using the exchange rate at the date of the Operating Lease transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a As Lessee foreign currency are reported using the exchange rates Assets acquired on leases where a signifcant portion that existed when the values were determined. of the risks and rewards of ownership is retained by the lessor are classifed as operating leases. Lease rentals are Exchange Diferences charged to the Statement of proft and loss on straight Exchange diferences arising on the settlement of line basis over the lease term. monetary items, or on reporting such monetary items of the company at rates diferent from those at which they As Lessor were initially recorded during the year, or reported in Assets given on leases where a signifcant portion of the previous fnancial statements, are recognized as income risks and rewards of ownership is retained by the lessor are or as expenses in the year in which they arise. classifed as operating leases. Lease rentals are recognised in the statement of proft and loss on accrual basis. Exchange diference arising on reporting of long term foreign currency monetary items at rates diferent from Finance Lease those at which they were initially recorded during the Finance leases, which efectively transfer to the Company period, or reported in previous fnancial statements, substantially all the risks and benefts incidental to in so far as they relate to acquisition / construction of a ownership of the leased item, are capitalized at the lower depreciable capital asset, are capitalized and depreciated of the fair value and present value of the minimum lease over the balance life of the asset and in other cases are payments at the inception of the lease term and disclosed accumulated in a “Foreign Currency Monetary Item as leased assets. Lease payments are apportioned Translation Diference Account” in the company’s fnancial between the fnance charges and reduction of the lease statements and amortised over the balance period of liability based on the implicit rate of return. Finance such long term asset or liability, by recognition as income charges are recognised as fnance cost in the statement of or expense in each of such period. For this purpose, the 59 Annual Report 2013-2014 proft and loss. Lease management fees, legal charges and assets can be realised. In situations where the company other initial direct costs are capitalised. has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognised only if there is virtual If there is no reasonable certainty that the Company certainty supported by convincing evidence that they can will obtain the ownership by the end of the lease term, be realised against future taxable profts. capitalized leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. At each balance sheet date the company re-assesses unrecognised deferred tax assets. It recognises xiv. Earnings per Share unrecognised deferred tax assets to the extent that it Basic earnings per share are calculated by dividing the has become reasonably certain or virtually certain, as the net proft or loss for the period attributable to equity case may be, that sufcient future taxable income will be shareholders by the weighted average number of equity available against which such deferred tax assets can be shares outstanding during the period. realised. The weighted average number of equity shares The carrying amount of deferred tax assets are reviewed outstanding during the period is adjusted for events at each balance sheet date. The company writes-down of bonus issue; share split; and reverse share split the carrying amount of a deferred tax asset to the extent (consolidation of shares). that it is no longer reasonably certain or virtually certain, as the case may be, that sufcient future taxable income For the purpose of calculating diluted earnings per share, will be available against which deferred tax asset can be the net proft or loss for the period attributable to equity realised. Any such write-down is reversed to the extent shareholders and the weighted average number of shares that it becomes reasonably certain or virtually certain, as outstanding during the period are adjusted for the efects the case may be, that sufcient future taxable income will of all dilutive potential equity shares. be available. xv. Employee Stock Option Scheme xvii. Minimum Alternative Tax (MAT) The Company has formulated an Employees Stock Option MAT credit is recognised as an asset only when and to the Scheme to be administered through a Trust. The scheme extent there is convincing evidence that the company provides that subject to continued employment with the will pay normal income tax during the specifed period. company, employees of the company and its subsidiaries In the year in which the MAT credit becomes eligible are granted an option to acquire equity shares of the to be recognized as an asset in accordance with the company that may be exercised within a specifed period. recommendations contained in Guidance Note issued The company follows the intrinsic value method for by the Institute of Chartered Accountants of India, the computing the compensation cost for all options granted said asset is created by way of a credit to the statement which will be amortized over the vesting period. ESOP has of proft and loss and shown as MAT Credit Entitlement. been accounted as per the SEBI guidelines and guidance The company reviews the same at each balance sheet note issued by ICAI. date and writes down the carrying amount of MAT Credit xvi. Taxes on Income Entitlement to the extent there is no longer convincing Tax expense comprises of current and deferred tax. evidence to the efect that company will pay normal Income Tax during the specifed period. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the xviii. Provisions, Contingent Liabilities and Contingent applicable tax laws. Deferred income taxes refects the Assets impact of current year timing diferences between taxable Provisions are recognized for liabilities that can be income and accounting income for the year and reversal measured only by using a substantial degree of of timing diferences of earlier years. estimation, if Deferred tax is measured based on the tax rates and the a) The company has a present obligation as a result of tax laws enacted or substantively enacted at the balance past event, sheet date. Deferred tax assets and deferred tax liabilities b) A probable outfow of resources is expected to settle are ofset, if a legally enforceable right exists to set of the obligation; and current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the c) The amount of the obligation can be reliably taxes on income levied by same governing taxation laws. estimated Deferred tax assets are recognised only to the extent that Provisions are not discounted to their present value and there is reasonable certainty that sufcient future taxable are determined based on the best estimate required to income will be available against which such deferred tax settle the obligation at the reporting date. Reimbursement 60 Abridged Financial Statements

expected in respect of expenditure required to settle a Liquidated Damages / Penalty as per the contracts / provision is recognized only when it is virtually certain Additional Contract Claims under the contract entered that the reimbursement will be received. into with Vendors and Contractors are recognised at the end of the contract or as agreed upon. Contingent liability is disclosed in case of a) A present obligation arising from past events, when xix. Cash and Cash equivalents: it is not probable that an outfow of resources will be Cash and cash equivalents comprise cash at bank and required to settle the obligation; in hand and short-term investments with an original b) A present obligation arising from past events, when maturity of three months or less. no reliable estimate is possible; xx. Measurement of EBITDA c) A possible obligation arising from past events whose existence will be confrmed by the occurrence or As permitted by the Guidance Note on the Revised non-occurrence of one or more uncertain future Schedule VI to the Companies Act, 1956, the company events beyond the control of the company where has elected to present earnings before interest, tax, the probability of outfow of resources is not remote. depreciation and amortization (EBITDA) as a separate line item on the face of the statement of proft and loss. The Contingent assets are neither recognized, nor disclosed. company measures EBITDA on the basis of proft/ (loss) Provisions, contingent liabilities and contingent assets are from continuing operations. In its measurement, the reviewed at each Balance Sheet date. company does not include depreciation and amortization expense, fnance costs and tax expense.

3 Cash and Cash Equivalents (Note No 19 of Financial Statements) (` Crores) March 31, 2014 March 31, 2013 Cash and cheques on Hand 0.08 0.14 Balances with Banks - On Current Accounts 113.22 36.70 113.30 36.84

4 Exceptional Items (Note No 30 of Financial Statements) During the year an exceptional items of ` (0.90) Crores includes reversal of promoter directors salary and the sacrifce towards reduction in interest for the six months period ended September 30, 2013 as adjusted for the interest payments made during the period to the lenders and expenditure incurred relating to CDR scheme approved by CDR EG on December 20, 2013 by considering cutof date of April 1, 2013. The future sacrifce envisaged under the scheme is not determinable as the Company’s obligation to compensate such sacrifce to the lenders is contingent upon fulflling of various future conditions whose outcome is currently uncertain.

5 Earning Per Share (EPS) (Note No 31 of Financial Statements) (` Crores) March 31, 2014 March 31, 2013 Total Operations for the year Net Proft/(Loss) for calculation of basic EPS (A) (959.99) 13.34 Net Proft/(Loss) as above (959.99) 13.34 Add : Interest on Loan convertible into equity shares (Net of tax) 245.56 - Net Proft/(Loss) for calculation of diluted EPS (B) (714.43) 13.34 Weighted Average Number of Equity Shares for Basic EPS (C) 235.02 234.13 Efect of dilution : Stock options under ESOP* - 0.16 Convertible loan into equity shares* 378.90 - Weighted Average Number of Equity Shares for Diluted EPS (D) 613.92 234.29 Basic EPS on the basis of Total Operations (A)/(C) (4.08) 0.06 Diluted EPS on the basis of Total Operations* (B)/(D) (4.08) 0.06 *Diluted EPS when anti dilutive is restricted to basic EPS. 61 Annual Report 2013-2014 6 Disclosure pursuant to Accounting Standard 7 (Revised) –“Construction Contracts” (Note No 32 of Financial Statements) (` Crores) March 31, 2014 March 31, 2013 Amount of contract revenue recognised as revenue during the period 2,091.98 4,042.22 The aggregate amount of costs incurred and recognised profts (less recognised losses) upto 29,394.63 27,231.13 the reporting date Amount of customer advances outstanding for contracts in progress 6,452.95 7,244.46 Retention amount due from customers for contracts in progress 1,479.63 1,434.42 Gross amount due from customers for contract works as an asset 1,074.08 922.06 Gross amount due to customers for contract works as a liability 638.09 257.68

7 Cost Estimates (Note No 33 of Financial Statements) Due to delays in execution of contracts the cost associated with price escalations, claims of the service providers, subcontractors and upward revision of estimated cost, comprising of provision for expected losses on some ongoing projects and additional costs in recently completed / discontinued projects has resulted in losses for the year. The Company continues to pursue certain entitlements from the clients for suitable compensation.

8 Employee Benefts (Note No 34 of Financial Statements)

Defned Beneft Plans The Company has a defned beneft gratuity plan. Every employee who has completed fve years or more of service gets a gratuity on departure at 15 days salary for each completed year of service subject to a maximum of ` 0.15 Crores. The plan for the same is unfunded. (` Crores) Gratuity March 31, 2014 March 31, 2013 Net Employee beneft expense recognized in the employee cost Current service cost 1.74 2.27 Interest cost on beneft obligation 0.81 0.97 Expected return on plan assets - - Net actuarial (gain)/loss recognized in the year (0.91) (1.35) Net beneft expense 1.64 1.89 Balance Sheet Beneft asset/liability Present value of defned beneft obligation 9.73 9.96 Fair value of plan assets - - Plan asset / (liability) (9.73) (9.96) (Assets) / Liability recognized in the balance sheet Change in the present value of the defned beneft obligation Opening defned beneft obligation 9.96 11.95 Current service cost 1.74 2.27 Interest cost 0.81 0.97 Actuarial (gain) / loss on obligation (0.91) (1.35) Benefts paid (2.15) (1.81) Beneft transferred in 0.82 - Beneft transferred out (0.54) (2.07) Closing defned beneft obligation 9.73 9.96 Assumptions Discount Rate (%) 8.79 8.14 Attrition Rate 19.00 19.00 Expected rate of salary increase (%) 6.00 6.00 Expected Average Remaining Service (years) 4.02 4.06 The estimates of future salary increases, considered in actuarial valuation, take account of infation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. 62 Abridged Financial Statements

Amounts of Defned beneft plan for the current and previous four periods are as follows (` Crores) Present value of Surplus / Experience Experience Defned beneft (defcit) adjustments on adjustments on obligation plan liabilities plan assets March 31, 2014 9.73 (9.73) 0.62 - March 31, 2013 9.96 (9.96) 1.35 - March 31, 2012 11.95 (11.95) 1.11 - March 31, 2011 11.94 (11.94) 0.28 - March 31, 2010 7.39 (7.39) 1.44 - Information is furnished to the extent available out of earlier actuarial certifcates.

Defned Contribution Plans In respect of the defned contribution plan (Provident Fund), an amount of ` 6.02 Crores (Previous year : `10.50 Crores) has been recognized as expenditure in the Statement of Proft and Loss. In respect of the State Plans (Employee State Insurance), an amount of ` 0.0029 Crores (Previous year : `0.01 Crores) has been recognized as expenditure in the Statement of Proft and Loss.

Other Employee Benefts During the year the Company has (reversed)/provided retention bonus of ` (10.73) Crores (Previous Year: ` 8.00 Crores). The provision for compensated absences as per actuarial valuation as at March 31, 2014 is ` 23.70 Crores (March 31, 2013 is ` 27.18 Crores).

9 Employee Stock Option Scheme (Note No 35 of Financial Statements) The Company has till March 31, 2014 allotted 1.11 Crores (March 31, 2013: 1.11 Crores) equity shares of ` 10 each to LCL Foundation (ESOP - Trust) towards the Employee Stock Option Plan 2006 (The plan) which was formulated by the Company. The plan provides for grant of stock options of equity shares of the Company to employees of the Company and its subsidiaries subject to continued employment with the Company or group. Each option comprises of one equity share which will vest on annual basis at 20% each over fve years and shall be capable of being exercised within a period of ten years from the date of frst annual vesting. Each option granted under the above plans entitles the holder to one equity share of the Company at an exercise price, which is approved by the compensation committee. The plan is in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999. Consequent to the splitting of Equity Share of ` 10 each into 10 equity shares of ` 1 each in the year 2009-10, the number of shares allotted to the trust and the options granted, forfeited, exercised are disclosed at ` 1 each. A summary of the status of the Company’s plan is given below: Particulars March 31, 2014 March 31, 2013 No. Crores Weighted No. Crores Weighted Average Exercise Average Exercise Price (`) Price (`) Outstanding at the beginning of the year 2.38 0.24 3.66 0.24 Granted during the year - - - - Forfeited during the year (0.22) - (0.23) - Exercised during the year (1.50) 0.24 (1.06) 0.24 Expired during the year - - - - Outstanding at the end of the year 0.65 0.24 2.38 0.24 Exercisable at the end of the year 0.37 0.24 1.53 0.24 The weighted average share price for the period over which stock options were exercised was ` 6.74 (March 31, 2013 ` 13.33)

63 Annual Report 2013-2014 The details of exercise price for stock options outstanding at the end of the year are: Grant No. (Grant Date) March 31, 2014 Range of Number Weighted Weighted Exercise Price of Options average Average (`) outstanding remaining Exercise Price (Crores) contractual life (`) of options (in years) Grant 1 (24.06.2006) 0.24 0.01 - 0.24 Grant 2 (02.07.2007) 0.24 0.10 - 0.24 Grant 3 (26.09.2007) 0.24 0.01 - 0.24 Grant 4 (24.04.2008) 0.24 0.04 0.07 0.24 Grant 5 (04.07.2008) 0.24 0.09 0.26 0.24 Grant 6 (01.11.2008) 0.24 0.01 0.59 0.24 Grant 7 (19.02.2009) 0.24 0.01 0.89 0.24 Grant 8 (29.07.2009) 0.24 0.11 1.33 0.24 Grant 9 (27.01.2010) 0.24 0.03 1.83 0.24 Grant 10 (30.04.2010) 0.24 0.02 2.08 0.24 Grant 11 (13.08.2010) 0.24 0.21 2.37 0.24 Grant 12 (12.11.2010) 0.24 0.01 2.62 0.24 0.65

Grant No. (Grant Date) March 31, 2013 Range of Exercise Number Weighted Weighted Price (`) of Options average Average Exercise outstanding remaining Price (`) (Crores) contractual life of options (in years) Grant 1 (24.06.2006) 0.24 0.01 - 0.24 Grant 2 (02.07.2007) 0.24 1.06 0.25 0.24 Grant 3 (26.09.2007) 0.24 0.03 0.49 0.24 Grant 4 (24.04.2008) 0.24 0.14 1.07 0.24 Grant 5 (04.07.2008) 0.24 0.28 1.26 0.24 Grant 6 (01.11.2008) 0.24 0.02 1.59 0.24 Grant 7 (19.02.2009) 0.24 0.01 1.89 0.24 Grant 8 (29.07.2009) 0.24 0.24 2.33 0.24 Grant 9 (27.01.2010) 0.24 0.06 2.83 0.24 Grant 10 (30.04.2010) 0.24 0.05 3.08 0.24 Grant 11 (13.08.2010) 0.24 0.44 3.37 0.24 Grant 12 (12.11.2010) 0.24 0.04 3.62 0.24 2.38 The Company has calculated the compensation cost based on the intrinsic value method i.e. the excess of previous closing price of underlying equity shares on the date of the grant of options over the exercise price of the options given to employees under the employee stock option schemes of the Company and is recognised as deferred stock compensation cost and is amortised on a straight line basis over the vesting period of the options. The Company is using Black Sholes Model for calculating fair values of ESOP granted for determining impact of the fair value method of accounting of employee compensation in fnancial statement, the impact on net income and earnings per share is provided below: Particulars March 31, 2014 March 31, 2013 Net Income - As reported ` Crores (959.99) 13.34 Add: ESOP Cost under Intrinsic Value Method ` Crores 4.50 14.25 Less : ESOP Cost under Fair Value Method (Black Sholes) ` Crores 4.41 14.55 Net Income – Proforma ` Crores (959.90) 13.04 Basic Earnings per Share: As reported (4.08) 0.06 Proforma (4.08) 0.06

64 Abridged Financial Statements

Diluted Earnings per Share: As reported (4.08) 0.06 Proforma (4.08) 0.06 The weighted average fair value of stock options granted during the year was N/A (Previous Year N/A) of share of `1 each. Assumptions : March 31, 2014 March 31, 2013 Weighted average share price (in `) NA NA Exercise Price (in `) NA NA Expected Volatility NA NA Historical Volatility NA NA Life of the options granted (Vesting and exercise period) in years NA NA Expected dividends (in `) NA NA Average risk-free interest rate NA NA Expected dividend rate NA NA

10 Leases (Note No 36 of Financial Statements)

Operating Lease : Company as lessee The Company has entered into certain cancellable and non-cancellable operating lease agreements mainly for ofce premises. The lease rentals charged during the year and maximum obligations on long term non-cancellable operating lease payable as per the agreements are as follows : (` Crores) March 31, 2014 March 31, 2013 Lease rentals charged during the year Under Cancellable Leases 15.55 14.39 Under Non-Cancellable Leases - 11.55

Future minimum lease payments under Non Cancellable Leases Not later than one year - 7.95

11 Related Party Transactions (Note No 37 of Financial Statements)

a) Names of Related Parties and description of relationship. i. Names of related parties over which control exists S.No Holding Company 1 Lanco Group Limited (LGL) S.No Subsidiary Companies 1 Amrutha Power Private Limited (APPL) 20 Lanco Budhil Hydro Power Private Limited (LBHPPL) 2 Arneb Power Private Limited(ArPPL) 21 Lanco Enterprise Pte. Ltd, China(LEPL) 3 Bhanu Solar Projects Private Limited (BSPPL) 22 Lanco Hills Technology Park Private Limited (LHTPPL) 4 Bhola Electricity (Pvt) Limited (BEPL) 23 Lanco Holding Netherlands B.V 5 Carpenter Mine Management PTY Ltd 24 Lanco Hydro Power Limited (Formerly known as Lanco Hydro Power Private Limited)(LHPL) 6 Coral Orchids Private Limited (COPL) 25 Lanco Infratech (Mauritius) Limited (LIML) 7 Cordelia Properties Private Limited 26 Lanco Infratech Nepal Private Limited 8 Cressida Properties Private Limited 27 Lanco International Pte Limited(LInPL) 9 Deimos Properties Private Limited 28 Lanco IT P.V. Investments B.V. 10 Dione Properties Private Limited 29 Lanco Kanpur Highways Limited (LKHL) 11 Diwakar Solar Projects Limited (DSPL) 30 Lanco Kondapalli Power Limited (LKPL) 12 Emerald Orchids Private Limited 31 Lanco Mandakini Hydro Energy Private Limited (LMHEPL) 13 Green Solar SRL 32 Lanco Power International Pte. Limited(LPIPL) 14 Helene Power Private Limited 33 Lanco Power Limited (LPL) 15 JH Patel Power Project Private Limited (JhPL) 34 Lanco Rambara Hydro Power Private Limited 16 Jupiter Infratech Private Limited (JIPL) 35 Lanco Resources Australia Pty. Limited (LRAPL) 17 Khaya Solar Projects Private Limited(KSPPL) 36 Lanco Resources International Pte Limited (LRIPL) 18 Lanco Amarkantak Power Limited (LAPL) 37 Lanco Solar Energy Private Limited (LSEPL) 19 Lanco Anpara Power Limited (LAnPL) 38 Lanco Solar Holding Netherlands B.V. 65 Annual Report 2013-2014

39 Lanco Solar Holdings LLC 60 Nix Properties Private Limited. 40 Lanco Solar International GMBH 61 Omega Solar Projects Private Limited 41 Lanco Solar International Limited (LSIL) 62 Orion Solar Projects Private Limited 42 Lanco Solar International Pte Limited(LSIPL) 63 P.T Lanco Indonesia Energy (LInE) 43 Lanco Solar International USA Inc. 64 Pasiphae Power Private Limited 44 Lanco Solar Power Projects Private Limited 65 Pearl Farms Private Limited (PFPL) (LSPPPL) 45 Lanco Solar Private Limited (LSPL) 66 Portia Properties Private Limited (PPPL) 46 Lanco Solar Services Private Limited(LSSPL) 67 Sabitha Solar Projects Private Limited 47 Lanco SP P.V. Investments B.V. 68 Sirajganj Electric (Pvt.) Limited(SEPL) 48 Lanco Tanjore Power Company Limited (LTPCL) 69 Solarf SP06 49 Lanco Teesta Hydro Power Limited (LTHPL) 70 Solarf SP07 50 Lanco Thermal Power Limited (LTPL) 71 Spire Rotor Private Limited (SRPL) 51 Lanco US P.V. Investments B.V. 72 Tasra Mining & Energy Company Private Limited(TMECPL) 52 Lanco Virgin Islands I, LLC 73 Telesto Properties Private Limited (TePPL) 53 Lanco Wind Power Private Limited (LWPPL) 74 The Grifn Coal Mining Company Pty Ltd(GCMCPL) 54 LE New York - LLC 75 Thebe Properties Private Limited (ThPPL) 55 Leda Properties Private Limited (LPPL) 76 Udupi Power Corporation Limited (UPCL) 56 Mahatamil Mining and Thermal Energy Limited 77 Uranus Infratech Private Limited (UIPL) (MMTEL) 57 Mercury Projects Private Limited (MPPL) 78 Uranus Projects Private Limited (UPPL) 58 National Energy Trading and Services Limited 79 Western Australia Coal Terminal Pty Ltd (NETS) 59 Neptune Projects Private Limited (NPPL) ii. Name of other related parties with whom transactions were carried out S.No Fellow Subsidiary 1 Lanco Babandh Power Limited (LBPL) S.No Enterprises where Singnifcant Infuence Exists 1 Ananke Properties Private Limited (AnPPL) 12 Lanco Hoskote Highway Limited(LHHL) 2 Avior Power Private Limited (AvPPL) 13 Lanco Vidarbha Thermal Power Limited (LVTPL) 3 Basava Power Private Limited (BPPL) 14 Mimas Trading Private Limited (MTPL) 4 Bay of Bengal Gateway Terminal Private Limited 15 Mirach Power Limited (MiPL) (BBGTPL) 5 Belinda Properties Private Limited (BePPL) 16 Phoebe Trading Private Limited (PTPL) 6 Bianca Properties Private Limited (BiPPL) 17 Pragdisa Power Private Limited (PrPPL) 7 Charon Trading Private Limited (CTPL) 18 Regulus Power Private Limited (RPPL) 8 Genting Lanco Power (India) Limited 19 Siddheswara Power Private Limited 9 Himavat Power Limited (HPL) 20 Tethys Properties Private Limited (TPPL) 10 KVK Energy Ventures Private Limited(KEVPL) 21 Vainateya Power Private Limited (VPPL) 11 Lanco Devihalli Highways Limited(LDHL) 22 Vasavi Solar Power Private Limited (VSPPL)

S.No Key Management Personnel 1 Sri L.Madhusudhan Rao (Chairman) (LMR) 3 Sri G.Venkatesh Babu (Managing Director) (GVB) 2 Sri G.Bhaskara Rao (Vice Chairman) (GBR) 4 Mr. S.C. Manocha (Whole Time Director) (SCM)

S.No Relatives of Key Management Personnel 1 Sri L.Sridhar (Brother of LMR) (LS)

S.No Enterprises owned or signifcantly infuenced by Key Management Personnel or their relatives 1 Chatari Hydro Power Private Limited (CaPTL) 7 Lanco Horizon Properties Private Limited (LHrPPL) 2 Cygnus Solar Projects Private Limited (Formerly 8 Lanco Kerala Seaports Private Limited (LKSPL) Callisto Trading Private Limited.)(Csppl) 3 Himachal Hydro Power Private Limited (HHPPL) 9 Lanco Transport Network Company Private Limited (LTNCPL) 4 Lanco Bay Technology Park Private Limited (LBTPL) 10 LCL Foundation (LCL) 5 Lanco Enterprise Private Limited(LEnt PL) 11 Nekkar Power Private Limited (NePPL) 6 Lanco Foundation (LF) 12 Ravi Hydro Electric Private Limited (RHEPL) 13 Lanco Rani Joint Venture (LR) 66 b) Summary of transactions with related parties are as follows: (` Crores) Nature of Transaction For the Year Ended March 31, 2014 Holding Subsidiary Fellow Enterprise Key Management Relatives of Key Enterprises owned Company Companies Subsidiaries where Signifcant Personnel Management or signifcantly Infuence Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Name Name Rent Received LTPCL 0.20 Contract Services Rendered UPCL 40.44 LBPL 13.86 LHHL 18.76 LF 2.52 LAnPL 27.33 LMHEPL 17.88 LAPL 12.17 LHTPPL 10.77 OTHERS (5.02) 103.57 13.86 18.76 2.52 Contract Services/ Shared LSEPL 1.69 LBPL 1.04 HPL 0.52 Services Provided/(Availed) LAPL 1.04 LAnPL 1.04 LPL 1.04 MMTEL 0.85 OTHERS 2.64 8.30 1.04 0.52 Interest Paid/ (Received) UPCL 43.02 LDHL (4.04) LEntPL 3.21 LSEPL 14.31 LHHL (19.63) NETS 4.61 LAnPL 0.93 LKHL (0.13) LHPL (0.45) LTPL (0.69) LSPL (0.72) LBHPPL (2.94) LRIPL (10.75) MPPL (10.78) LHTPPL (35.05) 1.36 (23.67) 3.21 Donations Paid LF 0.50 Managerial Remuneration GVB 4.09 SCM 1.89 GBR 0.86 FinancialAbridged Statements LMR 0.79 7.63 Sitting Fee LS 0.02 Purchase/(Sale) of Shares GBR 0.01 LS 0.01 Share Application Money LPL 390.77 LBPL 64.85 LVTPL 13.65 Paid during the year LRIPL 273.66 LDHL 6.82 OTHERS 94.28 OTHERS 1.36 758.71 64.85 21.83 67 68 Annual Report 2013-2014 Report Annual b) Summary of transactions with related parties are as follows: (contd.): (` Crores) Nature of Transaction For the Year Ended March 31, 2014 Holding Subsidiary Fellow Enterprise Key Management Relatives of Key Enterprises owned Company Companies Subsidiaries where Signifcant Personnel Management or signifcantly Infuence Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Name Name Share Application Money PrPPL 304.31 Refunded during the year VPPL 290.59 594.90 Management Consultancy LAnPL 14.40 LHHL 1.53 Fee Charged UPCL 14.40 LDHL 1.28 NETS 8.05 LAPL 7.20 OTHERS 8.03 52.08 2.81 Work Contract Expenses LInPL 830.17 Operation & Maintenance LSSPL 3.14 Expenses Receipts/Payments/ LPL 721.02 LBPL (59.63) PrPPL 304.31 GBR 0.01 LS 0.01 LEntPL 8.47 Adjustments (Net)+(-) LInPL 662.58 VPPL 290.59 GVB (0.00) LF (0.40) LHTPPL 309.36 OTHERS (3.61) LR (0.89) MPPL 111.37 LKHL 108.10 LSEPL (169.50) UPCL (572.28) OTHERS (167.85) 1,002.80 (59.63) 591.29 0.01 0.01 7.18 Purchase/(Sale) of Goods MPPL 25.99 LEntPL 2.84 Loan and Advances given/ LRIPL 142.97 (taken) during the year LWPPL 0.70 143.67 Inter Corporate Deposits LGL (152.00) LHTPPL 301.76 LHHL 135.72 given/(refunded)/(taken)/ LHPL 196.19 LDHL 53.97 repaid during the year LSEPL 85.46 LAPL 59.26 MPPL (238.56) UPCL (329.44) LPL (609.01) OTHERS (10.91) (152.00) (545.25) 189.69 Purchase of Fixed Assets LTHPL 0.17 LDHL 0.26 LBHPPL 0.09 LVTPL 0.04 LKPL 0.07 HPL 0.00 LAPL 0.01 0.34 0.30 b) Summary of transactions with related parties are as follows: (contd.): (` Crores) Nature of Transaction For the Year Ended March 31, 2014 Holding Subsidiary Fellow Enterprise Key Management Relatives of Key Enterprises owned Company Companies Subsidiaries where Signifcant Personnel Management or signifcantly Infuence Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Name Name Sale of Fixed Assets LTHPL 0.56 LDHL 0.63 LAnPL 0.52 LHHL 0.44 MMTEL 0.41 HPL 0.11 LAPL 0.26 LVTPL 0.06 OTHERS 0.41 2.16 1.24 Corporate Guarantee UPCL 4,837.35 LBPL 3,646.08 HPL 450.00 Given to Banks/Financial LRAPL 2,229.28 LHHL 125.00 Institutions on Behalf of OTHERS 2,152.41 LDHL 92.03 Related Parties OTHERS 86.06 9,219.04 3,646.08 753.09 Balance Receivable at the MMTEL 6.20 VPPL 15.21 NePPL 0.08 year end-Share Application PPPL 0.01 OTHERS 0.60 CaPTL 0.03 Money 6.21 15.81 0.11 Balance Receivable at the LHTPPL 627.66 LHHL 164.20 year end-Inter Corporate LHPL 196.19 LDHL 53.97 Deposits LPL 112.08 OTHERS 82.93 1,018.86 218.17 Balance Receivable at the LRIPL 206.52 year end-Loans & Advances LWPPL 2.75 209.27 Balance Receivable at the LTPL 2,541.75 LBPL 202.23 LVTPL 69.07 LR 14.02 year end-OTHERS (Trade LInPL 596.23 LHHL 68.69 OTHERS 1.51 Receivables and Other LAPL 458.54 OTHERS 12.32 Receivables) OTHERS 745.73 4,342.25 202.23 150.08 15.53 Balance Payable at the LGL 152.00 UPCL 309.44 year end-Inter Corporate LSEPL 68.88 Deposits LAnPL 45.00 NETS 24.27

152.00 447.59 FinancialAbridged Statements Balance Payable at the year LAPL 1,493.21 LBPL 1,524.95 LVTPL 933.15 SCM 0.00 LR 0.90 end-OTHERS UPCL 970.46 HPL 756.71 GVB 0.00 LF 0.22 LInPL 865.18 OTHERS 5.16 LCL 0.14 OTHERS 1,689.35 LHrPPL 0.07 5,018.20 1,524.95 1,695.02 0.00 1.33 69 70 Annual Report 2013-2014 Report Annual b) Summary of transactions with related parties are as follows: (` Crores) Nature of Transaction For the Year Ended March 31, 2013 Holding Company Subsidiary Fellow Subsidiaries Enterprise where Key Management Relatives of Key Enterprises owned Companies Signifcant Infuence Personnel Management or signifcantly Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Name Name Rent Received LTPCL 0.20 Contract Services Rendered LAPL 573.51 LBPL 349.88 LVTPL 405.27 LF 1.62 MPPL 198.42 LHHL 8.27 OTHERS 445.14 1,217.07 349.88 413.54 1.62 Contract Services/ Shared LAPL 1.10 LBPL 1.10 HPL 0.55 Services Provided/(Availed) LAnPL 1.10 LPL 1.03 OTHERS 2.48 5.71 1.10 0.55 Interest Paid/ (Received) UPCL 0.31 LHHL (1.14) LSEPL 0.18 NETS 0.05 LSPL (0.01) LRIPL (0.03) LHTPPL (0.05) LPL (0.13) MPPL (0.29) 0.03 (1.14) Donations Paid LF 1.00 Managerial Remuneration GVB 3.99 GBR 3.49 LMR 3.45 SCM 1.97 12.91 Sitting Fee LS 0.02 Purchase / (Sale) of Shares LInPL (4.02) Others 0.01 (4.01) Share Application Money LPL 643.90 LBPL 3.00 LDHL 7.21 Paid during the year OTHERS 56.57 PrPPL 1.15 VPPL 0.50 700.47 3.00 8.86 Share Application Money LPL 3.00 PrPPL 10.79 NePPL 0.02 Refunded during the year OTHERS 0.26 3.00 11.05 0.02 b) Summary of transactions with related parties are as follows: (` Crores) Nature of Transaction For the Year Ended March 31, 2013 Holding Company Subsidiary Fellow Subsidiaries Enterprise where Key Management Relatives of Key Enterprises owned Companies Signifcant Infuence Personnel Management or signifcantly Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Name Name Management Consultancy LAnPL 18.10 LHHL 1.53 Fee Charged UPCL 13.03 LDHL 1.28 NETS 12.51 LAPL 7.20 OTHERS 8.77 59.61 2.81 Work Contract Expenses LInPL 1,286.73 LSIPL 117.72 1,404.45 Operation & Maintenance LSSPL 2.98 Expenses Receipts/Payments/ LInPL 1,306.44 LBPL (478.44) LVTPL (268.07) GVB 0.00 LR 0.14 Adjustments (Net)+(-) LTHPL (87.19) OTHERS (13.20) LF (1.75) LKPL (133.11) LEntPL (2.42) LAPL (547.71) LAnPL (548.10) UPCL (719.52) OTHERS 56.94 (672.25) (478.44) (281.27) 0.00 (4.03) Purchase/(Sale) of Goods/ UPCL (294.84) Power OTHERS (5.62) (300.46) Loan and Advances given/ LWPPL 1.80 (taken) during the year Inter Corporate Deposits UPCL 220.00 LHHL 28.48 given/(taken) /(refunded) LHTPPL 113.40 during the year LSEPL 39.66 MPPL 28.67 LAPL 19.17 NETS (59.86) LPL (633.78) (272.74) 28.48 FinancialAbridged Statements Purchase of Fixed Assets LSEPL 0.68 LBPL 0.00 LVTPL 0.18 LAPL 0.00 0.68 0.00 0.18 Sale of Fixed Assets LAnPL 0.19 LBPL 0.11 LVTPL 0.23 NETS 0.17 HPL 0.05 LPL 0.15 LTHPL 0.12 OTHERS 0.12 0.75 0.11 0.28 71 72 Annual Report 2013-2014 Report Annual b) Summary of transactions with related parties are as follows: (` Crores) Nature of Transaction For the Year Ended March 31, 2013 Holding Company Subsidiary Fellow Subsidiaries Enterprise where Key Management Relatives of Key Enterprises owned Companies Signifcant Infuence Personnel Management or signifcantly Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Name Name Corporate Guarantee UPCL 4,969.33 LBPL 3,232.71 HPL 370.90 Given to Banks/Financial LRAPL 3,671.28 LHHL 358.92 institutions on Behalf of OTHERS 2,512.25 OTHERS 133.78 Related Parties 11,152.86 3,232.71 863.60 Balance Receivable at the LSEPL 284.63 VPPL 305.79 LHrPPL 0.32 year end-Share Application PrPPL 304.31 NePPL 0.08 Money OTHERS 7.79 CaPTL 0.03 284.63 617.89 0.43 Balance Receivable at the LPL 721.09 LHHL 28.48 year end-Inter Corporate LHTPPL 325.90 Deposits MPPL 238.56 UPCL 220.00 OTHERS 25.17 1,530.72 28.48 Balance Receivable at LRIPL 59.83 the year end-Loans and LWPPL 2.05 Advances 61.88 Balance Receivable at the LTPL 2,486.78 LBPL 196.25 LVTPL 82.79 LR 14.01 year end-OTHERS (Trade LInPL 623.72 LHHL 29.76 OTHERS 1.17 Receivables and Other OTHERS 1,784.63 OTHERS 4.23 Receivables) 4,895.13 196.25 116.78 15.18 Balance Payable at the UPCL 200.00 year end-Inter Corporate LSEPL 154.34 Deposits NETS 59.86 414.20 Balance Payable at the year LAPL 1,504.70 LBPL 1,474.24 LVTPL 932.11 GVB 0.00 LEntPL 2.42 end-OTHERS (Trade Payables UPCL 727.16 HPL 739.07 LF 1.49 and Other Payables) LInPL 725.08 PrPPL 308.51 OTHERS 0.21 OTHERS 1,874.28 VPPL 290.59 PTPL 0.95 4,831.22 1,474.24 2,271.23 0.00 4.12 Abridged Financial Statements

12 Segment Reporting (Note No 38 of Financial Statements) Segment information under Accounting Standard- 17 “ Segment Reporting” has not been presented in these fnancial statements as the same has been presented in the Consolidated Financial Statements of the Company.

13 Capital and Other Commitments (Note No 39 of Financial Statements) (` Crores) March 31, 2014 March 31, 2013 a) Investment Commitment in Subsidiaries and Associates 4,919.69 3,395.37 b) Company has a commitment to invest in three of its subsidiaries as promoter support. Since it is need based, amount can't be quantifed.

14 Contingent Liabilities - Not probable and therefore not provided for (Note No 40 of Financial Statements) (` Crores) March 31, 2014 March 31, 2013 Corporate guarantees given to Financial Institutions, Banks on behalf of other group companies 13,618.21 15,249.17 Income Tax Demands disputed by the Company relating to disallowances made in various 10.15 3.84 assessment proceedings, under appeal Claims against the Company not acknowledged as debt 15.61 11.00 Sales Tax/Entry Tax Demands disputed by the Company, under appeal 8.37 0.44 Service Tax demands disputed by the Company relating to applicability of service tax to 116.18 113.02 various services, under appeal

15 Forward Contracts (Note No 41 of Financial Statements) (` Crores) March 31, 2014 March 31, 2013 Details of Forward Cover for amount outstanding as on Balance sheet date For Buy (USD 0.58 Crores) (March 31, 2013 : 1.16 Croers) 34.94 62.89

Details of Unhedged Foreign Currency Exposure March 31, 2014 Currency Exchange Rate Amount in Amount in Foreign Currency INR (Crores) (Crores) Trade Receivables USD 60.10 14.59 876.97 AUD 55.71 0.12 6.76 Trade Payables USD 60.10 23.02 1,383.61 EURO 82.58 0.07 5.43 Advance to Suppliers USD 44.94 13.27 596.15 EURO 68.18 0.00 0.17 GBP 86.45 0.00 0.05 Advance from Customers USD 45.15 34.65 1,564.60 Loans Receivable USD 60.10 3.59 215.52 Foreign Currency Term Loan USD 60.10 9.62 577.97 EURO 82.58 0.17 14.12

73 Annual Report 2013-2014

March 31, 2013 Currency Exchange Rate Amount in Amount in Foreign Currency INR (Crores) (Crores) Trade Receivables USD 54.39 14.08 765.53 Trade Payables USD 54.39 18.51 1,006.56 EURO 69.54 0.09 6.40 Advance to Suppliers USD 44.66 14.01 625.62 EURO 67.36 0.01 0.46 GBP 86.45 0.00 0.05 Advance from Customers USD 44.69 32.97 1,473.43 Loans Receivable USD 54.39 1.10 59.83 Foreign Currency Term Loan USD 54.39 13.95 758.65 EURO 69.54 0.19 13.15

16 Deferral/capitalisation of Exchange Diference (Note No 42 of Financial Statements) In line with the Notifcation dated December 29, 2011 issued by the Ministry of Corporate Afairs, The Company has selected the option given in Paragraph 46A of the Accounting Standard – 11, “The Efects of Changes in Foreign Exchange Rates”, the foreign exchange (gain) / loss arising on revaluation of long term foreign currency monetary items in so far as they relate to the acquisition of depreciable capital assets to be depreciated over the balance life of such assets and in other cases the foreign exchange (gain) / loss to be amortised over the balance period of such long term foreign currency monetary items. On availment of option under this notifcation, foreign exchange diference remains unamortized is ` 75.17 Crores (March 31, 2013 : ` 35.46 Crores).

17 Disclosure of Loans and Advances to Subsidiaries, Associates, Joint Ventures and Others (Pursuant to Clause 32 of the Listing Agreement) (Note No 43 of Financial Statements) (` Crores) Name of the Company Amount outstanding as at Maximum amount outstanding during the year March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 Subsidiaries Lanco Hydro Power Limited # 196.19 - 196.19 - Lanco Amarkantak Power Limited # 78.43 19.17 99.63 500.00 Lanco Solar Private Limited 4.50 6.00 6.00 6.00 Mercury Projects Private Limited - 238.56 255.24 250.58 Lanco Power Limited - 109.90 109.90 119.90 Lanco Power Limited # 112.08 611.19 611.19 1,340.19 Lanco Hydro Power Limited - - 6.77 - Lanco Thermal Power Limited - - 13.07 - Lanco Kanpur Highways Limited - - 104.49 - Lanco Resources International Pte Limited 206.52 59.83 369.75 60.26 Lanco Hills Technology Park Private Limited 421.66 119.90 421.66 119.90 Lanco Hills Technology Park Private Limited # 206.00 206.00 206.00 207.50 Udupi Power Corporation Limited - - - 20.00 Udupi Power Corporation Limited # - 220.00 220.00 308.06 Lanco Wind Power Private Limited # 2.75 2.05 2.75 2.05 Lanco Budhil Hydro Power Private Limited - - 344.45 - Associates Lanco Hoskote Highway Limited 164.20 28.48 265.03 28.48 Lanco Devihalli Highways Limited 53.97 - 87.80 - # Lower than bank rate

74 Abridged Financial Statements

18 Disclosures required under Sec. 22 of MSMED Act 2006 under the Chapter on Delayed Payments to Micro,Small and Medium Enterprises (Note No 44 of Financial Statements) (` Crores) March 31, 2014 March 31, 2013 Principal amount remaining unpaid to any supplier as at the end of the year 2.05 2.33 Interest due on the above amount 0.07 0.16 Amount of interest paid in terms of Section 16 of the MSMED Act, 2006. - - Amount of payments made to the suppliers beyond the appointed day during the year 0.05 0.12 Amount of interest due and payable for the delay in making the payment but without adding 0.00 0.00 the interest specifed under Act Amount of interest accrued and remaining unpaid at the end of the year 0.07 0.16

19 CIF Value of Imports (Note No 45 of Financial Statements) (` Crores) March 31, 2014 March 31, 2013 EPC, Construction goods and Traded goods 846.35 1,536.83 Capital Goods - 5.65 846.35 1,542.48

20 Expenditure In Foreign Currency (Accrual Basis) (Note No 46 of Financial Statements) (` Crores) March 31, 2014 March 31, 2013 Technical Consultation Fee 8.41 8.64 Contract Expenditure 52.31 251.32 Travel 6.17 5.54 Interest on Foreign Currency Term Loan 9.56 15.52 Others 13.43 9.62 89.88 290.64

21 Imported and Indigenous Raw Materials, Components and Spare parts consumed (Note No 47 of Financial Statements) (` Crores) March 31, 2014 March 31, 2014 March 31, 2013 March 31, 2013 % of Total ` Crores % of Total ` Crores Consumption Consumption Raw Materials Imported 48% 850.62 57% 1,443.51 Indigenous 52% 935.88 43% 1,088.90 100% 1,786.50 100% 2,532.41 Components Indigenous 100% 11.96 100% 64.97 100% 11.96 100% 64.97 Spare Parts Imported - - 3% 0.38 Indigenous 100% 6.44 97% 13.49 100% 6.44 100% 13.87

75 Annual Report 2013-2014 22 Earnings In Foreign Exchange (Accrual Basis) (Note No 48 of Financial Statements) (` Crores) March 31, 2014 March 31, 2013 Interest 10.75 3.49 Contract Receipts 85.31 306.64 96.06 310.13

23 (Note No 49 of Financial Statements) (a) On March 30, 2012, the Company has put in place two level power holding company structure wherein Lanco Power Limited (LPL) a wholly owned subsidiary of the Company as the power holding vehicle for the Group. LPL has further two wholly owned subsidiaries namely Lanco Thermal Power Limited(LTPL) and Lanco Hydro Power Limited (LHPL)as thermal power holding company and hydro power holding company respectively. (b) As approved by the members vide their resolution dated March 19, 2010 the Company has sold its shareholding in some of its Subsidiaries and Associate Companies (hereinafter referred as ‘related entities’) to its wholly owned step down subsidiaries i.e. Lanco Thermal Power Limited, Lanco Hydro Power Limited and to an associate, Regulus Power Private Limited (an erstwhile subsidiary) on March 30, 2012 for total cash consideration amounting to ` 6,815.51 Crores. As of March 31, 2014 ` 2,644.22 Crores (March 31, 2013 ` 2,701.35 Crores) representing the balance amount of consideration for sale of shares is receivable from the above entities subject to realisation. (c) As a result of the above change, one of the associate company namely Lanco Babandh Power Limited, consequent to the sale of its equity shares to an associate i.e. Regulus Power Private Limited, has become an associate of an associate. (d) The aforesaid transfer of shares in various subsidiaries and associates requires lenders / customer approvals. Pending the receipt of approvals, the Company has recorded the sale of investments in related entities in the fnancial statements. During the year, the management has obtained approvals from the most of the lenders and the management is confdent of receiving the residual approvals and share transfer is in progress. In case such approvals are not received, the loans given by the lenders to the respective related entities may become due if the Company still wants to pursue transfer of shares, or the sold investments will be purchased back by the company. Based on legal advice, the management is of the opinion that they have complied with relevant laws and regulations.

24 (Note No 50 of Financial Statements) The Company has entered into transactions with related parties, including some of its associates namely Lanco Vidarbha Thermal Power Limited (LVTPL), Himavat Power Limited (HPL), Lanco Hoskote Highway Limited (LHHL), Lanco Devihalli Highways Limited (LDHL), Vainateya Power Private Limited (VPPL) and Lanco Babandh Power Limited (LBPL) (fellow Subsidiary) whose details are shown in summary of the transactions with related parties, under note no. 37. The Company along with Lanco Group Limited (Holding Company) and through various intermediate companies holds the remainder of shares in these associates and LBPL. In case of LVPTL, LBPL and HPL, the Group holds cumulative compulsorily convertible preference shares which when exercised for conversion as per the terms of these shares would result in these companies becoming subsidiaries of the Company or its step down subsidiaries.

25 (Note No 51 of Financial Statements) The Company has commitments to support its various ongoing projects. These commitments require the Company to garner such additional cash fows to fund the operations as well as investment obligations to ongoing projects. The management is actively considering the aspects like dilution of stake in subsidiary companies, disposal of non-core assets for which necessary steps have already been taken which alongwith CDR scheme approved by CDR EG would bring in additional cash fow into the system to meet the obligations.

26 (Note No 52 of Financial Statements) One of the Company’s step down subsidiary Lanco Anpara Power Limited (LAnPL) has been incurring losses ever since the commencement of commercial operations and accumulated losses incurred so far eroded the net worth signifcantly, taking into consideration LAnPL management’s assessment of the situation including eforts towards seeking revision in the tarif etc. pending before the regulators, the management of the Company is of the view that the carrying value of Assets of LAnPL is realizable at the value stated therein.

27 (Note No 53 of Financial Statements) The Company has not paid principal amount of ` 96.89 Crores (March 31, 2013 : ` 572.42 Crores) and interest amount of ` 50.99 Crores (March 31, 2013 : ` 43.50 Crores) as at March 31, 2014. 76 Abridged Financial Statements

28 (Note No 54 of Financial Statements) No Duty Drawback claims recognised during the year (March 31, 2013: ` 0.70 Crores) as deduction from the construction materials consumed.

29 (Note No 55 of Financial Statements) Previous year fgures have been regrouped/reclassifed where ever necessary, to conform to those of the current year.

30 (Note No 56 of Financial Statements) On excersing of the option available under Revised Schedule VI to prepare the fnancials in Crores rounded of to two decimals, the amounts / numbers below ffty thousands in the fnancials are appearing as zero.

As per our report on Abridged Financial Statements of even date. For and on behalf of the Board of Directors of Lanco Infratech Limited

For Brahmayya & Co L. Madhusudhan Rao G. Venkatesh Babu Firm Registration No. 000511S Executive Chairman Managing Director Chartered Accountants DIN - 00074790 DIN - 00075079

per Lokesh Vasudevan T. Adi Babu A. Veerendra Kumar Partner Chief Operating Ofcer Finance Company Secretary Membership No. 222320

Place: Gurgaon Place: Gurgaon Date: May 23, 2014 Date: May 23, 2014

77 Annual Report 2013-2014

Consolidated Financial Statements Consolidated Financial Statements Independent Auditor’s Report To The Board of Directors of Lanco Infratech Limited

Report on Consolidated Financial Statements We have audited the accompanying consolidated fnancial statements of Lanco Infratech Limited (“the Company”) and its subsidiaries (collectively referred as “Group”), which comprise the consolidated Balance Sheet as at March 31, 2014, and the consolidated Statement of Proft and Loss and consolidated Cash Flow Statement for the year then ended, and a summary of signifcant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation of these consolidated fnancial statements that give a true and fair view of the consolidated fnancial position, consolidated fnancial performance and consolidated cash fows of the group in accordance with accounting principles generally accepted in India; this includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated fnancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated fnancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated fnancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accompanying consolidated fnancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated fnancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s preparation and presentation of the consolidated fnancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the efectiveness of the group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the consolidated fnancial statements. We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for our qualifed audit opinion.

Basis for Qualifed Opinion Attention is invited to a. Note 37 to the consolidated fnancial statements, which explain the restructuring undertaken by the management during the year ended March 31, 2012. The Company’s investment as of March 30, 2012 in various subsidiaries and associates was transferred to wholly owned step down subsidiaries and to an associate of wholly owned step down subsidiary aggregating to ` 6,815.51 Crores that require lenders and customer approvals. Management has received many such approvals aggregating to 88% in value, of the lenders consenting to the restructuring, the management is confdent of receiving balance approvals from lenders and customer in near future and has taken the efect of these transfers while preparing these consolidated fnancial statements. In case of any of these residual approvals are not granted, the management will have to revisit the structure and the consequential impact would then be recorded in the consolidated fnancial statements, pending the fnal outcome of lenders and customer approvals, we are unable to comment on the consequential efects of the foregoing should such approvals not be received on these consolidated fnancial statements. This had also been qualifed in our Audit report for the years ended March 31, 2013 and March 31, 2012. b. Note 53 to the consolidated fnancial statements, which explains the management’s assessment with respect to litigation around power purchase agreement of one of the power generating units of Lanco Amarkantak Power Limited (LAPL), a step down subsidiary of the Company and recognition of revenue of ` Nil for the year ended March 31, 2014 (` 195.24 Crores till March 31, 2014) realisability of which is dependent upon settlement of the aforesaid litigation. Due to the uncertainty over the recoverability of these balances, we are unable to comment upon any consequential impact on these consolidated fnancial statements. This had also been qualifed in our Audit report for the years ended March 31, 2013 and March 31, 2012. c. Note 52 to the consolidated fnancial statements where Lanco Kondapalli Power Limited (LKPL), a step down subsidiary of the Company has capitalised borrowing costs amounting to `169.52 Crores for the period July 1, 2013 to March 31, 2014, incurred on a plant which is substantially complete, pending commissioning in respect of which, LKPL has to secure the supply of requisite natural gas and given circumstances, LKPL has approached Ministry of Corporate Afairs (MCA) seeking a relaxation from the applicability of provisions of AS 16 to continue the capitalisation 79 Annual Report 2013-2014 of borrowing costs. However, in our opinion, the capitalisation of such expense is not in accordance with the relevant Accounting Standard. Had the aforesaid expenditure not been capitalised, loss of the Group (Net of Minority Interest) for the year ended March 31, 2014 would have been higher by ` 100.02 Crores. d. Note 38 to the consolidated fnancial statements, include fnancial results of Lanco Resources International Pte Limited (LRIPL) and its subsidiaries and certain subsidiaries of Lanco International Pte Limited (LIPL) whose consolidated accounts refect total assets of ` 7,406.72 Crores as at March 31, 2014, the total revenue of ` 790.01 Crores and total loss of ` 716.75 Crores for the year then ended March 31, 2014. These fnancial statements and other fnancial information have been prepared by the management and which have not been audited and our opinion is based solely on the management accounts. We are unable to comment on adjustments that may have been required to the consolidated fnancial statements, had such consolidated accounts been audited.

Opinion In our opinion and to the best of our information and according to the explanations given to us, except for the possible efects of the matters described in the Basis for Qualifed Opinion Paragraph, the consolidated fnancial statements give a true and fair view in conformity with the accounting principles generally accepted in India: a) in the case of the Consolidated Balance Sheet, of the state of afairs of the Group as at March 31, 2014; b) in the case of the Consolidated Statement of Proft and Loss, of the loss for the year ended on that date; and c) in the case of the Consolidated Cash Flow Statement, of the cash fows for the year ended on that date.

Emphasis of Matter Attention is invited to a. Note 41 to the consolidated fnancial statements, regarding the adequacy of disclosure concerning the Company’s ability to meet its fnancial obligations including loans, overdue loans, unpaid interest and ability to fund obligations pertaining to operations including unpaid creditors and investments in ongoing projects for ensuring normal operations. During the year, the Group incurred a Net Loss of ` 2,273.88 Crores and has loans aggregating ` 2,972.69 Crores falling due over next twelve months period which also includes unpaid dues of the Group as at March 31, 2014. These matters require the Company to garner such additional cash fows to fund the operations as well as the investment obligations towards on-going projects comprising various power and other infrastructure projects notwithstanding the current level of low implementation activities. The Company approached Corporate Debt Restructuring (CDR) Cell with a scheme seeking certain reliefs in relation to repayment timelines of loans and accumulated unpaid interest and additional funding for its operations. Further this restructuring envisages certain sacrifces from lenders and commitments from Company in terms of infusion of additional funds through divestment of existing assets. During the year, CDR Empowered Group approved the Debt Restructuring Scheme. The Company is in the process of completing required obligations under the scheme to enable infusion of additional funds from lenders. However, the consolidated fnancial statements have been prepared under the assumption, considering the management assessment to recover the dues from various State Electricity Boards and management plan to get requisite funding from various other sources including the CDR scheme in respect of which the CDR lenders have started their partial disbursements. These submissions and assertions by the management as evaluated by lenders envisage that the Company has the ability to garner the required cash fows, which have not been independently assessed by us. Relying on the above, no adjustments have been made in these consolidated fnancial statements b. Note 52 to the consolidated fnancial statements, regarding the uncertainty of the availability of natural gas to operate Phase-II and Phase-III power plants of Lanco Kondapalli Power Limited (LKPL), a step down subsidiary of the Company. In view of the said uncertainty, LKPL has approached its lenders of Phase-III for re-scheduling the Commercial Operation Date (COD) and repayment of project loans, which is awaiting sanction. Pending availability of requisite gas required for commencing the operations no impact has been assessed on these consolidated fnancial results on the eventual availability of gas to operate the Phase-II and Phase-III power plants, which is indeterminable at this point of time. c. Note 55 to the consolidated fnancial statements, which explains additional advances of ` 540.67 Crores made by Lanco Amarkantak Power Limited (LAPL), a step down subsidiary of the Company, in accordance with the change in terms of the Engineering, Procurement & Construction (EPC) contract awarded to the Company, which requires approval from the respective lenders. However, this gets eliminated while preparing these consolidated fnancial statements. The management is confdent of obtaining the requisite lenders approval for the changes in the terms of the EPC Contract or adjust the same upon resumption of EPC activities. d. Note 57 to the consolidated fnancial statements, in relation to revenue recognition of Udupi Power Corporation Limited (UPCL), a step down subsidiary of the Company on provisional basis pending determination of fnal tarif by Central Electricity Regulatory Commission (CERC) and consequent non-confrmation of balances representing the trade receivables for which the statutory auditors of UPCL have drawn attention in their audit report as an emphasis of matter

80 Consolidated Financial Statements e. Note 61 to the consolidated fnancial statements, in relation to the carrying value of the assets held by Lanco Anpara Power Limited (LAnPL), a step down subsidiary of the Company. Though LAnPL has been incurring losses ever since the commencement of commercial operation and accumulated losses incurred so far eroded the net worth signifcantly, taking into consideration LAnPL management’s assessment of the situation including eforts towards seeking revision in tarif pending before the regulator, the management of the Company is of the view that the carrying value of the asset of LAnPL is realizable at the value stated therein. Accordingly no adjustments have been made in these consolidated fnancial statements. f. Note 66 to the consolidated fnancial statements, which explains the matter in Lanco Teesta Hydro Power Limited (LTHPL), a step down subsidiary of the Company relating to proceedings pending with Maharashtra Electricity Regulatory Commission (MERC) regarding tarif revision of Long Term Power Purchase Agreement (PPA) with Maharashtra State Electricity Distribution Company Limited (MSEDCL) and the time and consequential cost overrun of the project and the management’s plans to meet the cost overrun of the project. There has been an extension of Commercial Operation Date (COD) due to the circumstances beyond the control of the Company resulting in extended execution of the Hydropower project. In the opinion of the management, the execution of the project with the increased cost and extended timelines for bringing the assets to its intended use is still viable even taking into account the current level of low implementation activities which does not amount to interruption thus continued to capitalise all the costs including interest. Pending resolution of matters concerning the proceedings relating to PPA and achieving the required fnancial closure for funding the cost overrun, no adjustments have been carried out to the carrying value of asset. g. Note 40 to the consolidated fnancial statements, which explains the applicability of notifcation issued by CERC in relation to rates of depreciation to accounting for regulated and non-regulated operations in respect of which the Company has sought clarifcations and guidance from Ministry of Corporate Afairs, Government of India. h. Note 71 to the consolidated fnancial statements, which explains land dispute at Lanco Hills Technology Park Private Limited (LHTPPL), a subsidiary of the Company, the ultimate outcome of these matters cannot presently be determined. Management, based upon its assessment and legal advice obtained, is confdent of the outcome of the matter in its favour. i. Note 68 to the consolidated fnancial statements, which explains the management’s view with respect to the impact of unprecedented fash foods in Uttarakhand that seriously afected Lanco Mandakini Hydro Energy Private Limited (LMHEPL), a step down subsidiary of the Company implementing a Hydel Power Project of 76 MW capacity. The insurance survey has been completed and the claims have been lodged with the insurer. In the assessment of management, the potential damage to the carrying value of asset is unlikely to exceed the expected insurance claim. Relying on the assessment of the management of LMHEPL which have not been independently evaluated by us, no adjustments have been made in these consolidated fnancial statements. Our opinion is not qualifed in respect of the above matters

Other Matter To the extent stated in the paragraphs (a) to (c) below, we did not audit the fnancial statements of certain component entities that comprise the Group and are included in the consolidated fnancial statements. a. We did not audit the fnancial statements of certain subsidiaries, whose audited fnancial statements refect total assets of `12,780.21 Crores as at March 31, 2014 and total revenue of `3,980.10 Crores for the year ended March 31, 2014. The audited fnancial statements and other fnancial information for these subsidiaries have been audited by other auditors whose reports have been furnished to us, and our opinion on these consolidated fnancial statements is based solely on the reports of the other auditors. b. We did not audit the fnancial statements of certain associates, whose audited fnancial statements refect the Group’s share of loss of `18.88 Crores for the year ended March 31, 2014. The audited fnancial statements and other fnancial information for these associates have been audited by the other auditors whose reports have been furnished to us, and our opinion on these consolidated fnancial statements is based solely on the reports of the other auditors. c. We did not audit the fnancial statements of certain associates, whose fnancial statements refect the Group’s share of loss of ` 1.57 Crores for the year ended March 31, 2014. The fnancial statements and other fnancial information of these associates have been prepared by the management and our opinion on these consolidated fnancial statements is based solely on the management accounts. Our opinion is not qualifed in respect of this matter.

For Brahmayya & Co. Chartered Accountants Firm registration Number: 000511S

Lokesh Vasudevan Place: Gurgaon Partner Date: May 23, 2014 Membership Number: 222320 81 Annual Report 2013-2014 Consolidated Balance Sheet as at March 31, 2014 (` Crores) Notes As at As at March 31, 2014 March 31, 2013 I. EQUITY & LIABILITIES Shareholders' Funds Share Capital 3 239.24 239.24 Reserves and Surplus 4 1,218.30 3,433.22 1,457.54 3,672.46 Minority Interest 837.48 934.18 Non Current Liabilities Long Term Borrowings 5 30,120.19 26,004.34 Deferred Tax Liabilities (net) 6.1 460.63 641.07 Other Long Term Liabilities 7 3,070.79 3,605.28 Long Term Provisions 8 702.61 720.87 34,354.22 30,971.56 Current Liabilities Short Term Borrowings 9 4,756.66 5,622.51 Trade Payables 10 4,111.55 4,514.53 Other Current Liabilities 11 5,130.00 4,921.76 Short Term Provisions 8 196.72 184.26 14,194.93 15,243.06 TOTAL 50,844.17 50,821.26 II. ASSETS Non Current Assets Fixed Assets Tangible Assets 12 21,702.85 22,542.23 Intangible Assets 13 51.58 78.07 Capital Work in Progress 14 13,985.97 12,091.49 Intangible Assets under Development 15 48.91 42.97 35,789.31 34,754.76

Non Current Investments 16 3,005.52 2,896.05 Deferred Tax Assets (net) 6.2 41.91 36.67 Long Term Loans and Advances 18 573.94 909.11 Other Non Current Assets 19 842.35 737.37 40,253.03 39,333.96 Current Assets Current Investment 17 0.57 5.55 Inventories 20 3,121.34 3,097.58 Trade Receivables 19.1 3,959.36 4,657.62 Cash and Bank Balances 21 579.34 572.81 Short Term Loans and Advances 18 2,586.82 2,960.45 Other Current Assets 19.2 343.71 193.29 10,591.14 11,487.30 TOTAL 50,844.17 50,821.26 Summary of Signifcant Accounting Policies 2.1

The accompanying notes and other explanatory information are an integral part of the Financial Statements. As per our report of even date. For and on behalf of the Board of Directors of Lanco Infratech Limited For Brahmayya & Co L. Madhusudhan Rao G. Venkatesh Babu Firm Registration No. 000511S Executive Chairman Managing Director Chartered Accountants DIN - 00074790 DIN - 00075079 per Lokesh Vasudevan T. Adi Babu A. Veerendra Kumar Partner Chief Operating Ofcer Finance Company Secretary Membership No. 222320 Place: Gurgaon Place: Gurgaon Date: May 23, 2014 Date: May 23, 2014 82 Consolidated Financial Statements Consolidated Statement of Proft and Loss for the year ended March 31, 2014 (` Crores) Notes For the year For the year ended ended March 31, 2014 March 31, 2013 I. INCOME Revenue from Operations 22 10,430.03 13,738.80 Other Income 23 167.82 148.86 Total Revenue (I) 10,597.85 13,887.66 II. EXPENSES Cost of Materials Consumed 24 6,335.90 6,469.20 Purchase of Traded Goods 25 529.88 2,161.25 Subcontract Cost 169.16 560.87 Construction, Transmission, Plant/Site and Mining Expenses 26 1,061.47 1,318.64 (Increase)/Decrease in Inventories of Finished Goods and Construction/Development 27 (151.11) (454.05) Work in Progress Employee Benefts Expenses 28 385.33 618.45 Other Expenses 29 595.35 559.97 Total Expenses (II) 8,925.98 11,234.33 III. Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) (I-II) 1,671.87 2,653.33 Finance Cost 30 2,762.12 2,421.44 Depreciation and Amortisation Expense 31 1,171.91 1,125.81 IV. Proft/(Loss) before Exceptional, Prior Period Items, Minority Interest, Share of (2,262.16) (893.92) Proft of Associates and Tax V. Exceptional Items 36 (179.26) - VI. Proft/(Loss) before Prior Period Items, Minority Interest, Share of Proft of (2,441.42) (893.92) Associates and Tax (IV+V) VII. Tax Expense Current Tax/Minimum Alternative Tax (MAT) Payable 37.64 79.85 Less: MAT Credit Entitlement - (73.10) Net Current Tax 37.64 152.95 Relating to Previous Years 9.39 (0.01) Deferred Tax (176.47) 26.68 Total Tax Expense (VII) (129.44) 179.62 VIII. Proft/(Loss) after Taxation but before Prior Period Items, Minority Interest and (2,311.98) (1,073.54) Share of Proft of Associates (VI-VII) IX. Prior Period Items 35 43.50 (12.62) X. Net Proft/(Loss) after Taxation, before Minority Interest and Share of Proft of (2,355.48) (1,060.92) Associates (VIII-IX) Add : Share of Proft/(Loss) of Associates (33.89) (2.88) Less: Elimination of Unrealised Proft on Transactions with Associate Companies 0.15 20.72 XI. Net Proft/(Loss) after Taxation and Share of Proft of Associates before Minority (2,389.52) (1,084.52) Interest Less: Share of Minority Interest (115.64) (11.22) XII. Net Proft/(Loss) after Taxation, Minority Interest and Share of Proft of Associates (2,273.88) (1,073.30) (Balance Carried to Balance Sheet) XIII. Earnings Per Equity Share - (Face value of share ` 1/-) 32 Basic (`) (9.68) (4.58) Diluted (`) (9.68) (4.58) Summary of Signifcant Accounting Policies 2.1

The accompanying notes and other explanatory information are an integral part of the Financial Statements. As per our report of even date. For and on behalf of the Board of Directors of Lanco Infratech Limited For Brahmayya & Co L. Madhusudhan Rao G. Venkatesh Babu Firm Registration No. 000511S Executive Chairman Managing Director Chartered Accountants DIN - 00074790 DIN - 00075079 per Lokesh Vasudevan T. Adi Babu A. Veerendra Kumar Partner Chief Operating Ofcer Finance Company Secretary Membership No. 222320 Place: Gurgaon Place: Gurgaon Date: May 23, 2014 Date: May 23, 2014 83 Annual Report 2013-2014 Consolidated Cash Flow Statement for the year ended March 31, 2014 (` Crores) For the Year For the Year Ended Ended March 31, 2014 March 31, 2013 A. CASH FLOW FROM/(USED IN) OPERATING ACTIVITIES Proft/(Loss) Before Exceptional, Prior Period Items, Minority Interest, Share of Proft of (2,262.16) (893.92) Associates and Tax Adjustments for: Depreciation and Amortisation 1,171.91 1,125.81 (Proft) on Sale of Investments (net) (0.04) (0.05) (Proft)/Loss on Sale of Fixed Assets (net) (15.60) 13.62 Unrealised Loss on Foreign Exchange Fluctuations (Net) 303.56 14.66 Liabilities and Provisions no longer required written back (0.67) (2.88) Provision for Advances/Claims/Debts 15.23 68.33 Employee Stock Option Charge during the year 6.35 19.37 Interest Income (143.98) (95.10) Dividend Income (1.35) (2.15) Interest Expenses 2,762.12 2,421.44 Cash Generated Before Working Capital Changes 1,835.37 2,669.13 Movement In Working Capital (Decrease)/Increase in Trade Payables (694.71) 857.55 (Decrease)/Increase in Provisions (100.22) 86.43 (Decrease) in Other Liabilities (248.74) (637.68) (Increase)/Decrease in Trade Receivables 668.77 (1,024.73) (Increase)/Decrease in Inventories 108.92 (185.78) (Increase)/Decrease in Loan and Advances (excluding Capital Advances) (71.98) 175.83 (Increase)/Decrease in Other Assets (146.70) 52.17 Cash Generated From Operations 1,350.71 1,992.92 Direct Taxes Paid 9.71 (105.83) Net Cash Flow From Operating Activities 1,360.42 1,887.09 B. CASH FLOW FROM/(USED IN) INVESTING ACTIVITIES Purchase of Fixed Assets (including Capital Advances) (124.87) (1,864.53) Proceeds from Sale of Fixed Assets 65.07 50.23 Purchase of Non - Current Investments (158.19) (118.92) Sale/(Purchase) of Current Investments (Net) 4.98 32.06 Inter Corporate Deposits Received Back/(Given) 27.11 (129.88) Redemption of Bank Deposits 121.93 42.83 Advance for Investment Refunded 594.88 283.34 Dividend Income Received 1.35 2.15 Interest Income Received 185.17 85.47 Net Cash Flow From/(Used) in Investing Activities 717.43 (1,617.25) C. CASH FLOW FROM/(USED IN) FINANCING ACTIVITIES Proceeds from Short - Term Borrowings (Net) 44.78 1,183.75 Proceeds from Long Term Loan 3,200.98 3,899.62 Repayment of Long Term Loan (1,484.23) (2,607.94) Proceeds/(Repayment) of Minority Interest 18.95 (6.48) Interest Paid (3,703.66) (3,455.98) Net Cash Flow (Used in) Financing Activities (1,923.18) (987.03) Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) 154.67 (717.19) Cash and Cash Equivalents at the beginning of the year 231.90 949.09 Cash and Cash Equivalents at the end of the year 386.57 231.90 Components of Cash and Cash Equivalents Cash and cheques on Hand 0.45 0.58 Balances with Banks - On Current Accounts 383.21 182.58 - On Deposit Accounts 2.91 48.74 Cash and cash Equivalent as per Note 21 386.57 231.90 Notes: 1 The above cash fow statement has been prepared under the ‘Indirect Method’ as set out in the Accounting Standard-3 on Cash Flow Statements as notifed under Section 211(3C) of the Companies Act, 1956. 2 Previous year’s fgures have been regrouped and reclassifed to confrm to those of the current year.

The accompanying notes and other explanatory information are an integral part of the Financial Statements. As per our report of even date. For and on behalf of the Board of Directors of Lanco Infratech Limited For Brahmayya & Co L. Madhusudhan Rao G. Venkatesh Babu Firm Registration No. 000511S Executive Chairman Managing Director Chartered Accountants DIN - 00074790 DIN - 00075079 per Lokesh Vasudevan T. Adi Babu A. Veerendra Kumar Partner Chief Operating Ofcer Finance Company Secretary Membership No. 222320 Place: Gurgaon Place: Gurgaon Date: May 23, 2014 Date: May 23, 2014 84 Consolidated Financial Statements Notes and other explanatory information to Consolidated Financial Statements for the year ended March 31, 2014 1. Corporate Information The accounting policies have been consistently applied by the Lanco Infratech Limited (‘LITL’ or ‘the Company’) and its group and are consistent with those used in the previous year. subsidiaries (hereinafter collectively referred to as ‘Group’) Principles of Consolidation are engaged in the business of Construction, Engineering, Procurement and Commissioning (EPC), Infrastructure The fnancial statements of the Company and its subsidiaries Development, Power Generation, Power Trading, Property have been consolidated on a line by line basis by adding Development, Development of Expressways and Exploration, together the book values of like items of assets, liabilities, Mining & Marketing of Coal. income and expenses after eliminating intra-group balances, transactions and the unrealized profts/losses on intra-group EPC and Construction Business transactions. Unrealised losses resulting from intragroup The Company and certain entities of the Group are involved in transactions are eliminated to the extent cost can be recovered. development of infrastructure facilities including Engineering, The consolidated fnancial statements are drawn up by using Procurement and Commissioning Services for Power Plants, uniform accounting policies for like transactions and other Industrial Structures, Water supply, Mass housing, Institutional events in similar circumstances and are presented to the extent Buildings and Expressways. possible in the same manner as the Company’s individual fnancial statements. Power Business The fnancial statements of the subsidiaries are consolidated The Company and certain entities of the Group are involved from the date on which efective control is transferred to in the generation of power. The entities are separate special the company till the date such control exists. The diference purpose vehicles formed, which have entered into Power between the cost of investments in subsidiaries over the book Purchase Agreements with electricity distribution companies value of the subsidiaries’ net assets on the date of acquisition is of the respective state governments and power trading entities recognized as goodwill or capital reserve in the consolidated and other customers. National Energy Trading and Services fnancial statements. Limited (NETS), is involved in the power trading activity. Equity method of accounting is followed for investments in Property Development Business Associates in accordance with Accounting Standard (AS) 23 Lanco Hills Technology Park Private Limited (LHTPPL) is involved – Accounting for Investments in Associates in Consolidated in the development of an integrated IT park named Lanco Hills Financial Statements, wherein goodwill/capital reserve arising in approximately 100 acres of land at Manikonda, Hyderabad at the time of acquisition and share of proft or losses after part of an exclusive “Knowledge Corridor” being promoted by the date of acquisition are included in carrying amount of the Government of Andhra Pradesh. The project consists of IT investment in associates. Unrealized profts and losses resulting ofce space, residential buildings, luxury premier hotels, retail from transactions between the company and Associates and commercial complex. are eliminated to the extent of the company’s interest in the associate. Unrealised losses resulting from transactions Resources (Coal) Business between the company and Associates are also eliminated Grifn Coal Mining Company Pty Ltd (GCM) and Carpenter unless cost cannot be recovered. Investments in Associates, Mine Management Pty Ltd (CMM) are incorporated and which are made for temporary purposes, are not considered for operating in Australia. These company’s principal activities are consolidation and accounted for as investments. the exploration, mining and marketing of coal. The fnancial statements of the group companies and associates used for the purpose of consolidation are drawn up to same Solar PV Business reporting date as that of the Company i.e. year ended March One entity in the group is an integrated player across the Solar 31, 2014. Photovoltaic (PV) Value Chain Starting from Manufacturing of Polysilicon to Development of Solar Farms. As per Accounting Standard 21 notifed by Companies (Accounting Standards) Rules, 2006 (as amended) Consolidated 2. Basis of preparation Financial Statements, only the notes involving items which The fnancial statements have been prepared to comply in all are material need to be disclosed. Materiality for this purpose material respects with the Accounting Standards notifed by is assessed in relation to the information contained in the Companies (Accounting Standards) Rules, 2006, (as amended) consolidated fnancial statements. Further, additional statutory and the relevant provisions of the Companies Act, 1956. The information disclosed in separate fnancial statements of the fnancial statements have been prepared under the historical subsidiary and/or a parent having no bearing on the true and cost convention on an accrual basis. fair view of the consolidated fnancial statements need not be disclosed in the consolidated fnancial statements. 85 Annual Report 2013-2014 Entities considered for consolidation The fnancial statements of the following subsidiaries (including the step down subsidiaries) and associates have been considered for consolidation:- March 31, 2014 March 31, 2013 Sr. Country of Percentage Percentage Name of company of of No. Incorporation Relationship Relationship Ownership Ownership Interest Interest 1 Lanco Power Limited (LPL) India Subsidiary of LITL 100.00% Subsidiary of LITL 100.00% 2 Lanco Thermal Power Limited (LTPL) India Subsidiary of LPL 100.00% Subsidiary of LPL 100.00% 3 Lanco Kondapalli Power Limited (LKPL) India Subsidiary of LTPL 59.00% Subsidiary of LTPL 59.00% 4 Lanco Tanjore Power Company Limited (LTPCL) India Subsidiary of LTPL 58.45% Subsidiary of LTPL 58.45% 5 Lanco Amarkantak Power Limited (LAPL) India Subsidiary of LTPL 100.00% Subsidiary of LTPL 100.00% 6 Udupi Power Corporation Limited (UPCL) India Subsidiary of LTPL 100.00% Subsidiary of LTPL 100.00% 7 Lanco Anpara Power Limited (LAnPL) India Subsidiary of LTPL 100.00% Subsidiary of LTPL 100.00% 8 Arneb Power Private Limited (ArPPL) India Subsidiary of LPL 93.75% Subsidiary of LPL 93.75% 9 Portia Properties Private Limited (PPPL) India Subsidiary of LTPL 99.99% Subsidiary of LTPL 99.99% 10 Lanco Hydro Power Limited (LHPL) India Subsidiary of LPL 100.00% Subsidiary of LPL 100.00% 11 Lanco Teesta Hydro Power Limited (LTHPL) (Formerly India Subsidiary of LHPL 100.00% Subsidiary of LHPL 100.00% Lanco Teesta Hydro Power Private Limited (LTHPPL)) 12 Lanco Budhil Hydro Power Private Limited (LBHPPL) India Subsidiary of LHPL 100.00% Subsidiary of LHPL 100.00% 13 Lanco Mandakini Hydro Energy Private Limited (LMHEPL) India Subsidiary of LHPL 100.00% Subsidiary of LHPL 100.00% 14 Lanco Rambara Hydro Private Limited (LRHPL) India Subsidiary of LHPL 100.00% Subsidiary of LHPL 100.00% 15 Diwakar Solar Projects Limited (DSPL) India Subsidiary of LITL 100.00% Subsidiary of LITL 100.00% 16 Lanco Solar Energy Private Limited (LSEPL) India Subsidiary of LITL 100.00% Subsidiary of LITL 100.00% 17 Lanco Solar Services Private Limited (LSSPL) India Subsidiary of LSEPL 100.00% Subsidiary of LSEPL 100.00% 18 Lanco Solar Private Limited (LSPL) India Subsidiary of LSEPL 100.00% Subsidiary of LSEPL 100.00% 19 Khaya Solar Projects Private Limited (KSPPL) India Subsidiary of LSEPL 100.00% Subsidiary of LSEPL 100.00% 20 Bhanu Solar Projects Private Limited (BSPPL) India Subsidiary of LSEPL 100.00% Subsidiary of LSEPL 100.00% 21 Lanco Solar Power Projects Private Limited (LSPPPL) India Subsidiary of LSEPL 100.00% Subsidiary of LSEPL 100.00% 22 Orion Solar Projects Private Limited (OSPPL) India Subsidiary of LSPPPL 100.00% Subsidiary of LSPPPL 100.00% 23 Pasiphae Power Private Limited (PPPL) India Subsidiary of LSPPPL 100.00% Subsidiary of LSPPPL 100.00% 24 Sabitha Solar Projects Private Limited (SSPPL) India Subsidiary of LSPPPL 100.00% Subsidiary of LSPPPL 100.00% 25 Helene Power Private Limited (HPPL) India Subsidiary of LSPPPL 100.00% Subsidiary of LSPPPL 100.00% 26 Omega Solar Projects Private limited (OSPPL) India Subsidiary of LSEPL 51.00% Subsidiary of LSPPPL 100.00% 27 Lanco Wind Power Private Limited (LWPPL) India Subsidiary of LITL 100.00% Subsidiary of LITL 100.00% 28 Amrutha Power Private Limited (APPL) India Subsidiary of LWPPL 100.00% Subsidiary of LWPPL 100.00% 29 Spire Rotor Private Limited (SRPL) India Subsidiary of LWPPL 100.00% Subsidiary of LWPPL 100.00% 30 Emerald Orchids Private Limited (EOPL) India Subsidiary of LWPPL 85.71% Subsidiary of LWPPL 85.71% 31 JH Patel Power Project Private Limited (JhPL) India Subsidiary of LWPPL 99.94% Subsidiary of LWPPL 99.94% 32 National Energy Trading and Services Limited (NETS) India Subsidiary of LITL 99.83% Subsidiary of LITL 99.83% 33 Mahatamil Mining and Thermal Energy Limited (MMTEL) India Subsidiary of LITL 73.90% Subsidiary of LITL 73.90% 34 Mercury Projects Private Limited (MPPL) India Subsidiary of LITL 100.00% Subsidiary of LITL 100.00% 35 Tasra Mining & Energy Company Private Limited India Subsidiary of LITL 100.00% - - 36 Lanco Hills Technology Park Private Limited (LHTPPL) India Subsidiary of LITL 79.14% Subsidiary of LITL 79.14% 37 Uranus Projects Private Limited (UPPL) India Subsidiary of LITL 99.97% Subsidiary of LITL 99.97% 38 Jupiter Infratech Private Limited (JIPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00% 39 Uranus Infratech Private Limited (UIPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00% 40 Leda Properties Private Limited (LPPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00% 41 Coral Orchids Private Limited (COPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00% 42 Thebe Properties Private Limited (ThPPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00% 43 Cressida Properties Private Limited (CrPPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00% 44 Nix Properties Private Limited (NiPPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00% 45 Cordelia Properties Private Limited (CPPL) India Subsidiary of UPPL 99.98% Subsidiary of UPPL 99.98% 46 Deimos Properties Private Limited (DePPL) India Subsidiary of UPPL 99.99% Subsidiary of UPPL 99.99%

86 Consolidated Financial Statements

March 31, 2014 March 31, 2013 Sr. Country of Percentage Percentage Name of company of of No. Incorporation Relationship Relationship Ownership Ownership Interest Interest 47 Dione Properties Private Limited (DPPL) India Subsidiary of UPPL 100.00% Subsidiary of UPPL 100.00% 48 Neptune Projects Private Limited (NPPL) India Subsidiary of UPPL 99.72% Subsidiary of UPPL 99.72% 49 Pearl Farms Private Limited (PFPL) India Subsidiary of UPPL 99.99% Subsidiary of UPPL 99.99% 50 Telesto Properties Private Limited (TePPL) India Subsidiary of UPPL 99.98% Subsidiary of UPPL 99.98% 51 Lanco International Pte Limited (LIPL) Singapore Subsidiary of LITL 100.00% Subsidiary of LITL 100.00% 52 Lanco Enterprise Pte Limited (China) China Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00% 53 Lanco Infratech Nepal Private Limited (LINPL) Nepal Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00% 54 LE New York - LLC (LENY) New York Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00% 55 Lanco Power International Pte Limited (LPIPL) Singapore Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00% 56 Lanco Solar International Pte Limited (LSIPL) Singapore Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00% 57 Lanco Solar Holding Netherland B.V Utrecht (LSHNBV) Netherlands Subsidiary of LSIPL 100.00% Subsidiary of LSIPL 100.00% 58 SolarFi SP 07 (SSP 07) France Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00% 59 SolarFi SP 06 (SSP 06) France Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00% 60 Lexton Trading (Pty.) Limited (LxTPL) South Africa - - Subsidiary of LSHNBV 100.00% 61 Approve Choice Investments (Pty.) Limited (ACIL) South Africa - - Subsidiary of LxTPL 55.00% 62 Bar Mount Trading (Pty.) Limited (BMTPL) South Africa - - Subsidiary of LxTPL 100.00% 63 Barrelake Investments (Pty.) Limited (BIPL) South Africa - - Subsidiary of LxTPL 80.00% 64 Belara Trading (Pty.) Limited (BTPL) South Africa - - Subsidiary of LxTPL 80.00% 65 Caelamen (Pty.) Limited (CPL) South Africa - - Subsidiary of LxTPL 100.00% 66 Dupondius (Pty.) Limited (DPL) South Africa - - Subsidiary of LxTPL 80.00% 67 Gamblegreat Trading (Pty.) Limited (GTPL) South Africa - - Subsidiary of LxTPL 55.00% 68 Lanco Solar International Limited (LSIL UK) United Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00% Kingdom 69 Lanco Solar International GMBH (LSI GMBH) Germany Subsidiary of LSIL UK 100.00% Subsidiary of LSIL UK 100.00% 70 Lanco Solar International US Inc. (LSI USA) USA Subsidiary of LSIL UK 100.00% Subsidiary of LSIL UK 100.00% 71 Lanco Rocky Face Land Holdings LLC (LRFLH) USA - - Subsidiary of LSI USA 100.00% 72 Lanco Tracy City Land Holdings LLC (USA) (LTCLH) USA - - Subsidiary of LSI USA 100.00% 73 Lanco IT PV Investments B.V. (LITPV) Netherlands Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00% 74 Apricus S.R.L (ASRL) Italy - - Subsidiary of LITPV 100.00% 75 Green Solar SRL (GSSRL) Italy Subsidiary of LITPV 100.00% Subsidiary of LITPV 100.00% 76 Lanco US PV Investments B.V.(LUSPV) Netherlands Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00% 77 Lanco Solar Holdings LLC (USA) (LSH USA) USA Subsidiary of LUSPV 100.00% Subsidiary of LUSPV 100.00% 78 Lanco Virgin Islands- 1 LLC (LVI) USA Subsidiary of LSH USA 100.00% Subsidiary of LSH USA 100.00% 79 Lanco SP PV 1 Investments B.V.(LSPPV) Netherlands Subsidiary of LSHNBV 100.00% Subsidiary of LSHNBV 100.00% 80 Lanco Resources International Pte Limited (LRIPL) Singapore Subsidiary of LITL 100.00% Subsidiary of LITL 100.00% 81 Lanco Holding Netherland B.V (LHNBV) Netherlands Subsidiary of LRIPL 100.00% Subsidiary of LRIPL 100.00% 82 P.T Lanco Indonesia Energy (LInE) Indonesia Subsidiary of LHNBV 100.00% Subsidiary of LHNBV 100.00% 83 Lanco Resources Australia Pty. Limited (LRAPL) Australia Subsidiary of LRIPL 100.00% Subsidiary of LRIPL 100.00% 84 The Grifn Coal Mining Company Pty Limited (GCM) Australia Subsidiary of LRAPL 100.00% Subsidiary of LRAPL 100.00% 85 Carpenter Mine Management Pty Limited (CMM) Australia Subsidiary of LRAPL 100.00% Subsidiary of LRAPL 100.00% 86 Western Australia Coal Terminal Pty Ltd(WAC) Australia Subsidiary of LRAPL 100.00% Subsidiary of LRAPL 100.00% 87 Lanco Infratech (Mauritius) Limited (LIML) Mauritius Subsidiary of LIPL 100.00% Subsidiary of LIPL 100.00% 88 Bhola Electricity Pvt Ltd Bangladesh Subsidiary of LITL 100.00% Subsidiary of LITL 100.00% 89 Sirajganj Electric Pvt Limited Bangladesh Subsidiary of LITL 100.00% - - 90 Lanco Kanpur Highways Limited (LKHL) India Subsidiary of LITL 99.99% Subsidiary of LITL 99.99% 91 Lanco Vidarbha Thermal Power Limited (LVTPL) India Associate of LTPL 26.68% Associate of LTPL 26.68% 92 Genting Lanco Power (India) Private Limited (GLPIPL) India Associate of LITL 26.00% Associate of LITL 26.00% 93 Himavat Power Limited (HPL) (Formerly Himavat India Associate of LTPL 26.67% Associate of LTPL 26.67% Power Private Limited (HPPL)) 94 Pragdisa Power Private Limited (PrPPL) India Associate of LITL 26.00% Associate of LITL 26.00% 95 Vainateya Power Private Limited (VPPL) India Associate of LITL 26.00% Associate of LITL 26.00% 87 Annual Report 2013-2014

March 31, 2014 March 31, 2013 Sr. Country of Percentage Percentage Name of company of of No. Incorporation Relationship Relationship Ownership Ownership Interest Interest 96 Avior Power Private Limited (AVPPL) India Associate of LITL 26.00% Associate of LITL 26.00% 97 Mirach Power Private Limited (MiPL) India Associate of LITL 26.00% Associate of LITL 26.00% 98 Lanco Hoskote Highway Limited (LHHL) India Associate of LITL 26.42% Associate of LITL 26.42% 99 Lanco Devihalli Highways Limited (LDHL) India Associate of LITL 26.10% Associate of LITL 26.10% 100 Bay of Bengal Gateway Terminal Private Limited (BBGTPL) India Associate of LITL 26.00% Associate of LITL 26.00% 101 Charon Trading Private Limited (CTPL) India Associate of LTPL 34.00% Associate of LTPL 34.00% 102 Mimas Trading Private Limited (MTPL) India Associate of LTPL 50.00% Associate of LTPL 50.00% 103 Ananke Properties Private Limited (AnPPL) India Associate of LITL 26.03% Associate of LITL 26.03% 104 Tethys Properties Private Limited (TPPL) India Associate of LITL 26.03% Associate of LITL 26.03% 105 Bianca Properties Private Limited (BiPPL) India Associate of LITL 26.03% Associate of LITL 26.03% 106 Belinda Properties Private Limited (BePPL) India Associate of LITL 26.03% Associate of LITL 26.03% 107 Phoebe Trading Private Limited (PTPL) India Associate of LTPL 34.00% Associate of LTPL 34.00% 108 Basava Power Private Limited (BPPL) India Associate of MPPL 26.00% Associate of MPPL 26.00% 109 Siddheswara Power Private Limited (SiPPL) India Associate of MPPL 26.00% Associate of MPPL 26.00% 110 Regulus Power Private Limited (RPPL) India Associate of LTPL 45.10% Associate of LTPL 45.10% 111 DDE Renewable Energy Pvt. Ltd. (DREPL) India Associate of LSEPL 49.00% Associate of LSEPL 49.00% 112 Electromech Maritech Pvt. Ltd. (EMPL) India Associate of LSEPL 49.00% Associate of LSEPL 49.00% 113 Finehope Allied Engg. Pvt. Ltd. (FAPPL) India Associate of LSEPL 38.00% Associate of LSEPL 38.00% 114 KVK Energy Ventures Pvt. Ltd. (KEVPL) India Associate of LSEPL 49.00% Associate of LSEPL 49.00% 115 Newton Solar Private Limited (NSPL) India Associate of LSEPL 26.00% Associate of LSEPL 26.00% 116 Saidham Overseas Pvt. Ltd (SOPL) India Associate of LSEPL 35.00% Associate of LSEPL 35.00% 117 Vasavi Solar Power Pvt Ltd (VSPPL) India Associate of LSEPL 49.00% Associate of LSEPL 49.00%

2.1 Summary of signifcant accounting policies Revenues are recognised on a percentage of completion method measured on the basis of stage of completion i. Use of Estimates which is as per joint surveys and work certifed by the The preparation of fnancial statements in conformity customers. with generally accepted accounting principles in India (Indian GAAP) requires management to make judgments, Proft is recognised in proportion to the value of work estimates and assumptions that afect the reported done (measured by the stage of completion) when the amounts of assets and liabilities and disclosure of outcome of the contract can be estimated reliably. contingent liabilities at the date of the fnancial statements The estimates of contract cost and the revenue thereon and the results of operations during the reporting period. are reviewed periodically by management and the Although these estimates are based upon management’s cumulative efect of any changes in estimates in best knowledge of current events and actions, actual proportion to the cumulative revenue is recognised in the results could difer from these estimates. period in which such changes are determined. When the total contract cost is estimated to exceed total revenues ii. Revenue Recognition from the contract, the loss is recognised immediately. Revenue is recognized based on the nature of activity to the extent it is probable that the economic benefts will Amounts due in respect of price escalation claims and/or fow to the group and revenue can be reliably measured. variation in contract work are recognized as revenue only if the contract allows for such claims or variations and/or The group collects service tax, sales taxes and value there is evidence that the customer has accepted it and added taxes (VAT) on behalf of the government and, are capable of being reliably measured. therefore, these are not economic benefts fowing to the group. Hence, they are excluded from revenue. The Liquidated Damages/Penalty as per the contracts/ following specifc recognition criteria must also be met Additional Contract Claims under the contract entered before revenue is recognized: into with Vendors and Contractors are recognised at the end of the contract or as agreed upon. EPC and Construction Services For EPC and construction contracts, contract prices are either fxed or subject to price escalation clauses. 88 Consolidated Financial Statements

Sale of Power ultimate collection with reasonable certainty is lacking at Revenue from sale of energy is recognized on the accrual the time of all signifcant risks and rewards of ownership basis in accordance with the provisions of Power Purchase are transferred to the buyer, revenue recognition is Agreement. Claims for delayed payment charges and any postponed to the extent of uncertainty involved. other claims, which the entities in the group are entitled Sale of Coal as per the Power Purchase Agreement, are accounted for in the year of acceptance. Revenue from the sale of coal is recognized when the substantial risks and rewards of ownership are transferred Revenue from sale of infrm power is recognized on to the buyer as per the respective agreements and accrual basis as per the Central Electricity Regulatory revenue can be reliably measured. Commission (CERC) norms. Insurance Claims In the case of LBHPPL the sale of energy by the plant is accounted net of 12% free power in the shape of Insurance claims are recognized on acceptance/actual royalty given to Government of Himachal Pradesh as per receipt of the claim. Implementation Agreement dated November 22, 2005. Management Consultancy Sale of Solar Modules Income from project management/technical consultancy Revenue is recognized based on the sale of Module to the is recognized as per the terms of the agreement on the extent it is probable that the economic benefts will fow basis of services rendered. to the Group and revenue can be reliably measured. Interest Carbon Credits Revenue is recognised on a time proportion basis taking into Revenue from sale of Verifed Emission Reductions (VERs) account the amount outstanding and the rate applicable. and Certifed Emission Reductions (CERs) is recognized on Dividends sale of the eligible credits. Revenue is recognised when the shareholders’ right to Property Development receive payment is established by the balance sheet date. Revenue from real estate under development is iii. Tangible Fixed Assets recognised upon transfer of signifcant risks and rewards of ownership of such real estate, as per the terms of the Tangible fxed assets are stated at cost, less accumulated contracts entered into with buyers, which generally depreciation and impairment losses if any. Cost comprises coincides with the frming of the agreement for sale and the purchase price and any attributable cost of bringing when the buyer’s investment is adequate enough to the asset to its working condition for its intended use. demonstrate a commitment to pay. Borrowing costs relating to acquisition of tangible fxed assets which takes substantial period of time to get ready In accordance with the Guidance Note on Recognition of for its intended use are also included to the extent they Revenue by Real Estate Developers issued by the Institute relate to the period till such assets are ready to be put to of Chartered Accountants of India (the “ICAI”) the Revenue use. Assets under installation or under construction as from sale of residential and commercial properties is at the Balance Sheet date are shown as Capital Work in recognized on the “percentage of completion method”. Progress. Percentage of completion is determined on the basis of actual project cost (including cost of Land) incurred The activities necessary to prepare an asset for its thereon to total estimated project cost, where the intended use or sale extend to more than just physical actual cost is 25 percent or more of the total estimated construction of the asset. It may also include technical project cost. Where the total cost of a contract, based (DPR, environmental, planning, Land acquisition and on technical and other estimates is expected to exceed geological study) and administrative work such as the corresponding contract value, such expected loss is obtaining approvals before the commencement of provided for. physical construction. In case it is unreasonable to expect ultimate collection The Ministry of Corporate Afairs, Government of India from sale of residential units, the revenue recognition is vide its Notifcation No. GSR 225(E) dated March 31, postponed to the extent of uncertainty involved. 2009 has announced Companies Accounting Standards (Amendment) Rules 2009 prescribing changes to For determining whether it is unreasonable to expect Accounting Standard 11 on ‘The Efects of Changes ultimate collection, the entities in the group considers in Foreign Exchange Rates’ and further amended by the evidence of the buyer’s commitment to make the notifcation dated 29 December 2011. complete payment. Where the ability to assess the 89 Annual Report 2013-2014 Pursuant to the above mentioned notifcations, the exploration and evaluation asset is tested for impairment group & its associates have selected the option given and the balance is then reclassifed to development. in Paragraph 46A of the Accounting Standard – 11,” The Efects of Changes in Foreign Exchange Rates” with Mine Development efect from April 1, 2011, the foreign exchange (gain)/ Development expenditure is recognised at cost less loss arising on revaluation on long term foreign currency accumulated amortisation and any impairment losses. monetary items in so far as they relate to the acquisition Where commercial production in an area of interest has of depreciable capital assets to be depreciated over the commenced, the associated costs are amortised over the estimated economic life of the mine on a units of balance life of such assets and in other cases the foreign production basis. exchange (gain)/loss to be amortised over the balance period of such long term foreign currency monetary Changes in factors such as estimates of proved and items. LKPL, LAPL, LAnPL, UPCL, LSPL, LHTPPL, LTPCL, probable reserves that afect unit of production LRAPL and the company had already exercised the calculations are dealt with on a prospective basis. option given in para 46 of the Accounting Standard - 11 v. Intangible Fixed Assets in respect of accounting periods commencing on or after 7th December, 2006. Intangible fxed assets are recognized when it is probable that the future economic benefts that are attributable to iv. Mining Assets the asset will fow to the enterprise and the cost of the asset can be measured reliably. Deferred overburden Research costs are expensed as incurred. Development During the commercial production stage of open pit expenditure incurred on an individual project is operations, production stripping costs comprises the recognized as an intangible fxed asset when the entities accumulation of expenses incurred to enable access to in the group can demonstrate: the coal seam, and includes direct removal costs (inclusive of an allocation of overhead expenditure) and machinery - The technical feasibility of completing the intangible and plant running costs. fxed asset so that it will be available for use or sale; - Its intention to complete the asset and use or sell it; Production stripping costs are capitalised as part of an - its ability to use or sell the asset; asset, if it can be demonstrated that it is probable that future economic benefts will be realised, the costs can - how the asset will generate probable future be reliably measured and the entity can identify the economic benefts; component of the ore body for which access has been - the availability of adequate resources to complete approved. The asset is called Capitalised Overburden. the development and to use or sell the asset; and - The ability to measure reliably the expenditure The capitalised overburden asset is amortised on a attributable to the intangible fxed asset during systematic basis, over the expected useful life of the development. identifed component of the ore body that becomes more accessible as a result of the stripping activity. The units of Any expenditure so capitalized is amortised over the production method shall be applied for amortisation. period of expected future sales from the related project.

Production stripping costs that do not satisfy the asset The carrying value of development costs is reviewed for recognition criteria are expensed. impairment annually when the asset is not yet in use, and otherwise when events or changes in circumstances Exploration and evaluation indicate that the carrying value may not be recoverable. Exploration and evaluation assets are initially measured Intangible assets under installation or under construction at cost and include acquisition of rights to explore, as at the Balance Sheet date are shown as Intangible studies, exploratory drilling, trenching and sampling and assets under development. associated activities and an allocation of depreciation vi. Impairment of Assets and amortisation of assets used in exploration and evaluation activities. General and administrative costs The carrying amounts of assets are reviewed at each are only included in the measurement of exploration balance sheet date if there is any indication of impairment based on internal/external factors. An impairment loss is and evaluation costs where they are related directly to recognized wherever the carrying amount of an asset the operational activities in a particular area of interest. exceeds its recoverable amount. An asset’s recoverable Where a decision is made to proceed with development amount is the higher of an asset’s or cash-generating in respect of a particular area of interest, the relevant units (CGU) net selling price and its value in use. The 90 Consolidated Financial Statements

recoverable amount is determined for an individual asset, Intangible Fixed Assets:- unless the asset does not generate cash infows that are Computer Software is amortized over an estimated useful largely independent of those from other assets or groups life of 4 years. Briquetting Technology Asset is amortized of assets. Where the carrying amount of an asset or CGU over an estimated useful life of 20 years. Third party exceeds its recoverable amount, the asset is considered contribution for port is amortized over an estimated impaired and is written down to its recoverable amount. In useful life of 3 - 4 years. assessing value in use, the estimated future cash fows are discounted to their present value using a pre-tax discount viii. Investments rate that refects current market assessments of the time Investments, those are readily realisable and intended value of money and risks specifc to the asset. Net selling to be held for not more than one year from the date on price is the amount obtainable from the sale of an asset which such investments are made, are classifed as current in an arm’s length transaction between knowledgeable, investments. All other investments are classifed as long- willing parties, less the costs of disposal. term investments. Current investments are carried at After impairment, depreciation is provided on the revised lower of cost and fair value. Long-term investments are carried at cost. However, provision for diminution in value carrying amount of the asset over its remaining useful life. is made to recognise a decline other than temporary in vii. Depreciation/Amortisation: the value of the investments.

Tangible Fixed Assets:- ix. Inventories Depreciation is provided using the Straight Line Method Construction materials, raw materials, Consumables, as per the useful lives of the assets estimated by the Stores and Spares and Finished Goods are valued at lower management, or at the rates prescribed under schedule of cost and net realizable value. Cost is determined on XIV of the Companies Act, 1956 whichever is higher. weighted average cost method. Assets costing ` 5,000/- or less are fully depreciated in the Construction Work-in-progress related to project works is year of acquisition. valued at lower of cost or net realizable value, where the outcome of the related project is estimated reliably. Cost Leasehold land is amortised over the period of the lease. includes cost of materials, cost of borrowings and other Leasehold improvements included in “furniture and related overheads. fxtures”` are amortized over the period of lease or Net realizable value is the estimated selling price in estimated useful life whichever is shorter. the ordinary course of business, less estimated costs of Certain project related assets including temporary completion and estimated costs necessary to make the sale. structures are depreciated over the respective estimated In case of LHTPPL, Development Work-in-progress project periods. Depreciation on ‘Wooden Scafoldings’ is related to project works is valued at cost or estimated provided at 100%, and ‘Metal Scafoldings’ is written of net realizable value whichever is lower, till such time the over a period of 3 years, which are grouped under plant outcome of the related project is ascertained reliably and and machinery. at contractual rates thereafter. Cost includes cost of land, cost of materials, cost of borrowings to the extent it relates In case of GCM, depreciation/amortization of the mining to specifc project and other related project overheads. assets is charged in proportion to the depletion of the economically viable mineral reserves i.e. extraction of coal x. Borrowing Costs from the mines. Borrowing costs directly attributable to the acquisition, In case of LTPL and LHPL, Pursuant to order Nos. construction or production of an asset that necessarily 45/3/2011-CL-III & 45/5/2010-CL-III, from the Ministry of takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost Corporate Afairs, Government of India, LTPL and LHPL are of the respective asset. All other borrowing costs are depreciating Hydraulic Works and Plant & Machinery at expensed in the period they occur. Borrowing costs consist 2.57% and 2.71% per annum respectively. of interest, exchange diferences arising from foreign In respect of additions/deletions to the fxed assets/ currency borrowings to the extent they are regarded as leasehold improvements, depreciation is charged from the an adjustment to the interest cost and other costs that an date the asset is ready to use/up to the date of deletion. entity incurs in connection with the borrowing of funds.

Depreciation on adjustments to the historical cost of xi. Duty Drawback Claims the assets on account of reinstatement of long term Claims for duty drawback are accounted for on accrual basis. borrowings in foreign currency, if any, is provided - Where there is reasonable assurance that the prospectively over the residual useful life of the asset. 91 Annual Report 2013-2014 enterprise will comply with the conditions attached foreign currency are reported using the exchange rates to them; and that existed when the values were determined.

- Where such benefts have been earned by the Exchange Diferences enterprise and it is reasonably certain that the Exchange diferences arising on the settlement of ultimate collection will be made. monetary items, or on reporting such monetary items xii. Employee Benefts of group at rates diferent from those at which they were initially recorded during the year, or reported in previous Employee benefts are charged to the statement of fnancial statements, are recognized as income or as Proft and Loss for the year and for the projects under expenses in the year in which they arise. construction stage are capitalised as other direct cost in the Capital Work in Progress/Intangible asset under Exchange diference arising on reporting of long term development foreign currency monetary items at rates diferent from those at which they were initially recorded during the i. Retirement benefts in the form of Provident period, or reported in previous fnancial statements, Fund are a defned contribution scheme and in so far as they relate to acquisition/construction of a the contributions are recognised, when the depreciable capital asset, are capitalized and depreciated contributions to the respective funds are due. There over the balance life of the asset and in other cases are are no other obligations other than the contribution accumulated in a “Foreign Currency Monetary Item payable to the respective funds. Translation Diference Account” in the group’s fnancial ii. Gratuity liability is defned beneft obligations and statements and amortised over the balance period of is provided for on the basis of an actuarial valuation such long term asset or liability, by recognition as income on projected unit credit method made at the end of or expense in each of such period foreign currency each fnancial year. monetary items. For this purpose, the group treats a foreign monetary item as “long term foreign currency iii. Retention bonus is other defned long term monetary item”, if it has a term of 12 months or more at employee beneft obligation and its liability is the date of its origination. provided for on the basis of an actuarial valuation at the end of each fnancial year. Forward Exchange Contracts not intended for trading iv. Compensated absences are provided for on the basis or speculation purposes of an actuarial valuation on projected unit credit Forward exchange contracts or any other fnancial method made at the end of each fnancial year. instruments that is in substance a forward exchange contract to hedge the foreign currency risks the premium v. Actuarial gains/losses are immediately taken to or discount arising at the inception of the contract is statement of proft and loss and are not deferred amortised as expenses or income over the life of the or giving the efect in other direct cost in the contract. Exchange diferences arising on such contracts Capital Work in Progress/Intangible asset under are recognized in the period in which they arise. development. vi. The amount of Non-current and Current portions of Derivative Instruments employee benefts is classifed as per the actuarial As per the ICAI Announcement, accounting for derivative valuation at the end of each fnancial year. contracts, other than those covered under (AS) - 11, Accounting for the Efects of Changes in Foreign Exchange xiii. Foreign Currency Transactions Rates are marked to market on a portfolio basis, and the Initial Recognition loss is charged to the statement of proft and loss. Gains Foreign currency transactions are recorded in the reporting are ignored. currency, by applying to the foreign currency amount the Translation of Non Integral Foreign Operations exchange rate between the reporting currency and the Financial statements of non-integral foreign operations foreign currency at the date of the transaction. are translated as under: Conversion i) Assets and Liabilities both monetary and non- Foreign currency monetary items are reported using the monetary are translated at the rate prevailing at the closing rate. Non-monetary items which are carried in end of the year. terms of historical cost denominated in a foreign currency ii) Income and expense items are translated at are reported using the exchange rate at the date of the exchange rates at the dates of the transactions transaction; and non-monetary items which are carried Exchange diferences arising on translation of non at fair value or other similar valuation denominated in a 92 Consolidated Financial Statements

integral foreign operations are accumulated in the foreign Scheme to be administered through a Trust. The scheme currency translation reserve until the disposal of such provides that subject to continued employment with the operations. company or the group, employees of the company and its subsidiaries are granted an option to acquire equity shares xiv. Leases of the company that may be exercised within a specifed Operating Lease period. The group follows the intrinsic value method for computing the compensation cost for all options granted As Lessee which will be amortized over the vesting period. Assets acquired on leases where a signifcant portion of the risks and rewards of ownership is retained by the xvii. Taxes on Income lessor are classifed as operating leases. Lease rentals are Tax expense comprises of current and deferred tax. arrived on straight line basis and charged to the Statement Current income tax is measured at the amount expected of proft and loss on accrual basis. to be paid to the tax authorities in accordance with the applicable tax laws. Deferred income taxes refects the As Lessor impact of current year timing diferences between taxable Assets given on leases where a signifcant portion of the income and accounting income for the year and reversal risks and rewards of ownership is retained by the lessor are of timing diferences of earlier years. classifed as operating leases. Lease rentals are recognised Deferred tax is measured based on the tax rates and the in the statement of proft and loss on accrual basis. tax laws enacted or substantively enacted at the balance Finance Lease sheet date. Deferred tax assets and deferred tax liabilities Finance leases, which efectively transfer to the group are ofset, if a legally enforceable right exists to set of substantially all the risks and benefts incidental to current tax assets against current tax liabilities and the ownership of the leased item, are capitalized at the lower deferred tax assets and deferred tax liabilities relate to the of the fair value and present value of the minimum lease taxes on income levied by same governing taxation laws. payments at the inception of the lease term and disclosed Deferred tax assets are recognised only to the extent that as leased assets. Lease payments are apportioned there is reasonable certainty that sufcient future taxable between the fnance charges and reduction of the lease income will be available against which such deferred tax liability based on the implicit rate of return. Finance assets can be realised. In situations where the entities charges are recognised as fnance costs in the statement in the group has unabsorbed depreciation or carry of proft and loss. Lease management fees, legal charges forward tax losses, all deferred tax assets are recognised and other initial direct costs are capitalised. only if there is virtual certainty supported by convincing evidence that they can be realised against future taxable If there is no reasonable certainty that the group will profts. obtain the ownership by the end of the lease term, capitalized leased assets are depreciated over the shorter At each balance sheet date the entities in the group re- of the estimated useful life of the asset or the lease term. assesses unrecognised deferred tax assets. It recognises unrecognised deferred tax assets to the extent that it xv. Earnings per Share has become reasonably certain or virtually certain, as the Basic earnings per share are calculated by dividing the case may be, that sufcient future taxable income will be net proft or loss for the period attributable to equity available against which such deferred tax assets can be shareholders by the weighted average number of equity realised. shares outstanding during the period. The carrying amount of deferred tax assets are reviewed at The weighted average number of equity shares each balance sheet date. The entities in the group writes- outstanding during the period is adjusted for events down the carrying amount of a deferred tax asset to the of bonus issue; share split; and reverse share split extent that it is no longer reasonably certain or virtually (consolidation of shares). certain, as the case may be, that sufcient future taxable income will be available against which deferred tax asset For the purpose of calculating diluted earnings per share, can be realised. Any such write-down is reversed to the the net proft or loss for the period attributable to equity extent that it becomes reasonably certain or virtually shareholders and the weighted average number of shares certain, as the case may be, that sufcient future taxable outstanding during the period are adjusted for the efects income will be available. of all dilutive potential equity shares. xviii. Minimum Alternative Tax (MAT) xvi. Employee Stock Option Scheme MAT credit is recognised as an asset only when and to the The group has formulated an Employees Stock Option extent there is convincing evidence that the entities in 93 Annual Report 2013-2014 the group will pay normal income tax during the specifed Contingent assets are neither recognized, nor disclosed. period. In the year in which the MAT credit becomes Provisions, contingent liabilities and contingent assets are eligible to be recognized as an asset in accordance with reviewed at each Balance Sheet date. the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India, the Liquidated Damages/Penalty as per the contracts/ said asset is created by way of a credit to the statement of Additional Contract Claims under the contract entered proft and loss and shown as MAT Credit Entitlement. The into with Vendors and Contractors are recognised at the entities in the group reviews the same at each balance end of the contract or as agreed upon. sheet date and writes down the carrying amount of xx. Warranty provisions MAT Credit Entitlement to the extent there is no longer convincing evidence to the efect that entities in the Provisions for warranty-related costs are recognized when group will pay normal Income Tax during the specifed the product is sold or service provided. Provision is based period. on Industry/historical experience. The estimate of such warranty-related costs is revised annually. xix. Provisions, Contingent Liabilities and Contingent Assets xxi. Operations and Maintenance Provisions are recognized for liabilities that can be measured only by using a substantial degree of Certain power related subsidiaries of the group had estimation, if entered into Long Term Maintenance Agreement (LTMA) for maintenance of the main plant and Long Term Assured a) The entities in group have a present obligation as a Parts Supply Agreement (LTAPSA) for supply of parts for result of past event, planned and unplanned maintenance over the term of b) A probable outfow of resources is expected to settle the agreement. Based on the obligation, amounts payable the obligation; and under the agreements are charged to Statement of proft and loss considering the actual Factored Fired Hours of c) The amount of the obligation can be reliably the Gas Turbines during the year on the basis of average estimated factored hour cost including Customs Duty applicable at Provisions are not discounted to their present value and the current prevailing rate. Periodical minimum payments are determined based on the best estimate required to are accounted as and when due based on contractual settle the obligation at the reporting date. Reimbursement obligations. expected in respect of expenditure required to settle a provision is recognized only when it is virtually certain xxii. Cash and Cash equivalents that the reimbursement will be received. Cash and cash equivalents comprise cash at bank and in hand and short-term investments with an original Contingent liability is disclosed in case of maturity of three months or less. a) A present obligation arising from past events, when it is not probable that an outfow of resources will be xxiii. Measurement of EBITDA required to settle the obligation; As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the group b) A present obligation arising from past events, when has elected to present earnings before interest, tax, no reliable estimate is possible; depreciation and amortization (EBITDA) as a separate line c) A possible obligation arising from past events whose item on the face of the statement of proft and loss. The existence will be confrmed by the occurrence or group measures EBITDA on the basis of proft/(loss) from non-occurrence of one or more uncertain future continuing operations. In its measurement, the company events beyond the control of the company where does not include depreciation and amortization expense, the probability of outfow of resources is not remote. fnance costs and tax expense.

94 Consolidated Financial Statements

3 Share Capital (` Crores) As at As at March 31, 2014 March 31, 2013 Authorised 500 (March 31, 2013: 500) Crores Equity Shares of ` 1/- each 500.00 500.00 Issued, Subscribed and Paid Up 240.78 (March 31, 2013: 240.78) Crores Equity Shares of ` 1/- each, Fully Paid Up 240.78 240.78 Less: Amount recoverable from LCL - Foundation (ESOP Trust) 1.54 1.54 239.24 239.24

3.1 Reconciliation of the shares outstanding at the beginning and at the end of the reporting period As at March 31, 2014 As at March 31, 2013 No. Crores ` Crores No. Crores ` Crores Equity Shares of ` 1/- each, Fully paid up At the beginning of the year 240.78 240.78 240.78 240.78 At the end of the year 240.78 240.78 240.78 240.78

3.2 Terms/Rights attached to Equity Shares The company has only one class of equity shares having a par value of `1/- Per share. Each Holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts in the proportion to the number of equity shares held by the shareholders.

3.3 Shares held by holding company As at March 31, 2014 As at March 31, 2013 No. Crores ` Crores No. Crores ` Crores Equity Shares of ` 1/- each fully paid up held by Lanco Group Limited, the holding company 135.37 135.37 135.37 135.37

3.4 Details of Shareholder holding more than 5% shares of the company As at March 31, 2014 As at March 31, 2013 No. Crores % Holding in No. Crores % Holding in the the Class Class Equity Shares of ` 1/- each held by Lanco Group Limited, the holding company 135.37 56.22 135.37 56.22 The above information represents ownership of shares as per register of share holders/members.

3.5 Details of Shares Reserved for issue under Options For details of shares reserved for issue under Employee Stock Options (ESOP) plan of the company, Refer Note 43. During the year the Company’s proposal to restructure the debt has been approved by the Corporate Debt Restructuring Empowered Group (CDR EG) vide letter of approval dated December 20, 2013. The company executed Master Restructuring Agreement (MRA) on December 27, 2013. As a result of this the lenders of CDR have a right to convert restructured debt into equity shares at the sole discretion and on demand as per the agreed terms in the MRA. In relation to the loans restructured by the CDR lendors a total amount to ` 2,224.89 Crores would qualify for the conversion of 354.50 Crores shares at the sole discretion of the CDR lendors. In relation to the promoters contribution a total amount to ` 152.00 Crores would qualify for the conversion of 24.40 Crores shares at the sole discretion of the promoters.

95 Annual Report 2013-2014 4 Reserves and Surplus # (` Crores) As at As at March 31, 2014 March 31, 2013 Capital Reserve * As at the commencement of the year 754.48 806.44 Add/(less): Additions/Utilisations during the year (23.22) (51.96) 731.26 754.48 Capital Redemption Reserve As at the commencement of the year 16.77 16.77 Add: Additions during the year - - 16.77 16.77 Securities Premium Account As at the commencement of the year 1,852.72 1,821.15 Add : Premium on account of ESOPs exercised 42.79 31.57 1,895.51 1,852.72 Share Option Outstanding Account Employee Stock Options (ESOP) Outstanding (net of ESOP Suspense) at the commencement of 55.43 63.88 the year Add: ESOP Costs recognised during the year 6.70 23.12 Less: Transfer to Security Premium on account of ESOPs exercised 42.79 31.57 19.34 55.43 General Reserve As at the commencement of the year 117.10 117.14 Less: Amount transferred to capital reserve during the year - 0.04 117.10 117.10 Foreign Currency Translation Reserve As at the commencement of the year 254.49 186.19 Add: Addition During the year 75.48 68.30 329.97 254.49 Surplus in the Statement of Proft and Loss As at the commencement of the year 382.23 1,455.54 Add/Less:- Proft/(Loss) for the year (2,273.88) (1,073.30) Less : Appropriations Transfer to General Reserves - (0.00) Preference Dividend and Dividend Distribution Tax - 0.02 Total Appropriations - 0.01 Net Surplus in the Statement of Proft and Loss (1,891.65) 382.23 1,218.30 3,433.22 * On consolidation - after netting of goodwill on consolidation of ` 353.10 (March 2013: 353.09) Crores. Additions/Utilisations includes ` 23.20 (March 2013 : 18.23) Crores on conversion of the opening values with year end forex rates. # Reserves & Surplus before intra group elimination ` 2,719.46 (March 2013 : ` 4,949.28) Crores. Refer Note 33.

96 Consolidated Financial Statements

5 Long Term Borrowings (` Crores) Non Current Current Maturities As at As at As at As at March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 Rupee Term Loans Secured From Banks 13,631.49 10,443.09 962.80 795.80 From Financial Institutions 8,714.60 8,628.63 661.37 493.08

Unsecured From Banks - 422.24 - 254.59 From Financial Institutions 318.87 - - 300.00

Foreign Currency Term Loans Secured From Banks 6,463.49 5,627.20 133.42 375.01 From Financial Institutions 5.80 15.75 11.60 10.50

Deferred Payment Liabilities - Secured # 832.20 850.60 - -

Finance Lease Obligations - Secured 1.74 1.44 32.77 77.60

Hypothecation Loans - Secured From Banks - - 3.82 10.85 From Others - 15.39 22.71 24.55

Loans and Advances from Related Parties (Note 46) Unsecured - Other Loans and Advances 152.00 - - -

30,120.19 26,004.34 1,828.49 2,341.98 Amount disclosed under the head "Other (1,828.49) (2,341.98) Current Liabilities" (Note 11) Net Amount 30,120.19 26,004.34 - - # Represents future consideration payable in respect of acquisition of step down subsidiaries GCM & CMM. The Board of Directors of the company in its meeting held on July 27, 2013 had accorded its approval for restructure of the debts of the Company under Corporate Debt Restructuring (CDR) Mechanism of the Reserve Bank of India. The proposal is only for the company and not for any of its subsidiaries and associates. CDR Empowered Group (CDR EG) in its meeting held on December 11, 2013 has approved the CDR scheme submitted by the Company and issued letter of approval on December 20, 2013. As on March 31, 2014 CDR related documents have been executed and creation of security has been completed partly and the balance is in the process. On restructuring by CDR the following Loans have been recorded in the books under Long Term Borrowings as on March 31, 2014. i. ` 967.90 Crores of Cash Credit has been carved out as Working Capital Term Loan - I (WCTL- I). ii. ` 553.46 Crores amount of LC/BC/BG devolved from cutof date till December 31, 2013 has been carved out as Working Capital Term Loan - II (WCTL- II). iii. ` 293.51 Crores of Funded Interest on Term Loans, WCTL- I and WCTL- II can be funded for a period of 2 years from cutof date i.e. April 1, 2013 to March 31, 2015 and on regular Cash Credit limit for an initial period of 6 months from cutof date i.e. April 1, 2013 to September 30, 2013 is converted into Funded Interest Term Loan (FITL). Interest on FITL to be paid on monthly basis from April 30, 2013. iv. ` 273.03 Crores loan has been availed out of ` 2,500.00 Crores Priority Loan sanctioned with a moratorium period of 2 years. v. ` 299.87 Crores amount of LC/BC/BG devolved from cutof date till December 31, 2013 has been converted to Foreign Currency Non - Resident (Bank) Loan (FCNR(B)).

97 Annual Report 2013-2014 A. Rupee Term Loan from Banks & Financial Institutions #

(` Crores) Amount of Loan S. Subsidiary/Company Name From Financial No. From Banks* Institutions* 1 Lanco Infratech Limited (LITL) - the Company 2,852.46 64.29 (103.51) (75.00) Security & Terms and Conditions a) from banks 1. Term Loan of ` 666.68 Crores (March 31, 2013 : ` 676.83 Crores, out of which ` 254.59 Crores is Current), WCTL- I of ` 967.90 Crores (March 31, 2013 : Nil) , WCTL- II of ` 553.46 Crores (March 31,2013 : Nil), FITL of ` 293.51 Crores (March 31, 2013 : Nil) classifed as long term borrowings as per the CDR package approved by CDR EG and Master Restructuring Agreement (MRA) dated December 27, 2013. These loans are having charge on the TRA of the Company and frst pari passu charge on fxed assets and current assets (present and future) of the Company except assets with exclusive charge. Further, this loan is secured by pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fxed asset of 13 SPVs/Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. These loans are having moratorium period of 2 years from the cutof date of April 1, 2013 and are repayable in 30 quarterly installments staring from June 30, 2015. Further Land admeasuring 924 acres (approx.) held by one of the step down subsidiary is ofered as collateral security for ` 400.00 Crores of the Term Loan and/or shares of subsidiary held by another subsidiary are ofered as collateral security for ` 216.68 Crores of Term Loan. 2. Priority Loan of ` 273.03 Crores (March 31, 2013 : Nil) classifed as long term borrowings as per the CDR package approved by CDR EG and MRA dated December 27, 2013. These loans are having priority charge on the Trust and Retention Account (TRA) of the company and frst pari passu charge on fxed assets and current assets (present and future) of the Company except assets with exclusive charge. Further, this loan is secured by pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fxed asset of 13 SPVs/Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. These loans are having moratorium period of 2 years from the cutof date of April 1, 2013 and are repayable in 18 quarterly installments staring from June 30, 2015. 3. ` Nil (March 31, 2013: `13.15 Crores, out of which ` 3.30 Crores is Current) was secured by way of mortgage on the immovable assets pertaining to the wind turbine generator project and hypothecation of movable assets both present and future of the project on frst charge basis. 4. ` 46.62 Crores, Term Loan availed from Non-CDR lender, out of which ` 4.89 Crores is Current (March 31, 2013: `18.98 Crores, out of which ` 4.89 Crores is Current) is secured by way of mortgage on immovable assets pertaining to solar projects and hypothecation of movable assets both present and future of the project on frst charge basis, which is being repaid in 48 quarterly installments ending on September 30, 2023. 5. ` 51.26 Crores, Term Loan availed from Non-CDR lender, out of which ` 6.41 Crores is Current (March 31, 2013: ` 71.38 Crores, out of which ` 16.05 Crores is current) are secured by way of mortgage on the immovable assets pertaining to the solar power projects and hypothecation of movable assets of those projects on frst charge basis. Out of which ` 48.71 Crores is currently being repaid in 55 structured quarterly installments ending on March 20, 2025 and ` 2.54 Crores is being repaid in 57 structured quarterly installments ending on December 31, 2025. b) from fnancial institutions 1. ` 64.29 Crores, all Non-Current (March 31, 2013: `75.00 Crores, out of which ` 32.14 Crores is Current) is having charge on the TRA of the Company and frst pari passu charge on fxed assets and current assets (present and future) of the Company except assets with exclusive charge. Further, this loan is secured by pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fxed asset of 13 SPVs/Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. This loan is having moratorium period of 2 years from the cutof date i.e. April 1, 2013 and is repayable in 30 structured quarterly installments staring from June 30, 2015. The Company has not paid Principal amount of `10.32 Crores and Interest amount of ` 29.65 Crores as at March 31, 2014.

98 Consolidated Financial Statements

(` Crores) Amount of Loan S. Subsidiary/Company Name From Financial No. From Banks* Institutions* 2 Lanco Amarkantak Power Limited (LAPL) 2,629.77 3,350.59 (2,553.30) (3,122.14) Security & Terms and Conditions Indian Rupee Term Loans from Banks and Financial Institutions represent the loans taken for all units which are secured by way of frst charge ranking pari-passu on all immovable properties, both present and future and by way of hypothecation of all movable properties and assets, present and future and also by pledge of equity shares held by promoters. The equity shares to the extent of 77% in case of Unit I & II and 51% in case of Unit III & IV of the Promoter Company have been pledged for loans borrowed. Further certain loans are also covered by personal guarantee of certain directors and promoters of LAPL. The term loans are repayable over 12 years in quarterly installments. Pursuant to Common Loan Agreement(s) dated August 4, 2005, June 19, 2006, March 21, 2012 and May 23, 2012 between LAPL and its Senior Debt "B " Lenders, the Lenders shall at any time after the Commercial Operation Date have the right to convert their respective portion of outstanding Senior Rupee Debt B Facility into fully paid up equity share value of `10 each. The outstanding amount of Senior Rupee Debt B facility as on March 31, 2014 is ` 195.24 Crores. IIDFC’s term loan to the extent of ` 285 Crores is secured by way of charge on all movable and immovable properties of LAPL ranking paripassu with all other term lenders. The balance amount of ` 565 Crores is secured by second charge on the movable properties of Unit I & II of LAPL and pledge of 20% paid up shares of the LAPL held by Promoters. The loan is repayable in 12 years in quarterly installments from 6 months post the Scheduled Commercial Operation Date (SCOD) or actual COD which-ever is earlier. The loan is secured by frst pari-pasu charge on the immovable properties both present and future and by way of hypothecation of all movable properties and assets, present and future and also by pledge of equity shares held by promoters. The equity shares to the extent of 77% in case of Unit I & II and 51% in case of Unit III & IV of LAPL have been pledged for loans borrowed. Further certain loans are also covered by personal guarantee of certain directors and promoters of LAPL. The term loans are repayable over 12 years in quarterly installments. Pending approval of request made for extension of COD of Unit 3&4 from Lenders, LAPL classifed the current maturities of Term Loans as non current Liabilities. The LAPL has not paid the Principal amount of ` 95.55 Crores and Interest of ` 329.35 Crores as at March 31, 2014. 3 Lanco Kondapalli Power Limited (LKPL) 1695.74 908.48 (1,654.06) (818.16) Security & Terms and Conditions Indian Rupee Term Loans from Banks and Financial institutions for phase II & III, are repayable in 48 equal quarterly instalments commencing after 6 months from project completion date. LKPL is in the process of rescheduling term loan pertaining to Life Insurance Corporation of India (LIC), pending the same the principal repayment for the next 12 months has been classifed as Current maturities with regard to LIC Phase - III Term Loan. Term loans availed from Banks and Financial Institutions for phases II and Phase III are secured by a pari passu frst charge on all immovable properties of LKPL both present and future, all the tangible moveable properties, including movable plant and machinery, machinery spares, equipments, tools and accessories both present and future relating to Phase - I, Phase - II and Phase - III projects, assignment by way of pari passu frst charge on all the rights, title and interests to all the receivables, commissions, revenues of whatsoever nature and whatever arising, intangibles, goodwill, uncalled capital, the accounts and book debts, both present and future, the rights, title and interest under the Project Documents duly acknowledged and consented to by the relevant counter parties to such Project Documents all as amended, varied or supplemented from time to time, all the rights, title, interest, benefts, claims and demands whatsoever in the Government approvals and clearances, all the rights, title interest, benefts, claims and demands of the borrower in any letter of credit, guarantee, performance bonds indemnities and securities that may be furnished by the various counter parties under such Project documents, all insurance contracts and insurance proceeds, the rights, title and interest on the Letter of Credit, if any/Escrow account, Retention Accounts including Debt Service accounts (2 quarters), other reserves and any other bank accounts of the Borrower wherever maintained subject to working capital loan, if any, foating charge on all other assets, present and future, of the Borrower including but not limited to goodwill and general undertaking of the Borrower in favour of the Lenders; Pledge of the shares held by Sponsors and Shareholder(s) representing 51% of the issued and paid up share capital of the Borrower. All the aforesaid mortgages, charges, assignments and pledges shall in all respects of Phase II and Phase III lenders along with Working Capital lenders. The LKPL has not paid principal amount of ` 43.16 Crores and interest amount of `17.39 Crores as at March 31, 2014.

99 Annual Report 2013-2014

(` Crores) Amount of Loan S. Subsidiary/Company Name From Financial No. From Banks* Institutions* 4 Lanco Tanjore Power Company Limited (LTPCL) 29.22 - (48.87) Security & Terms and Conditions Indian Rupee Loan from Banks is repayable in 40 quarterly instalments of ` 49 Crores each along with interest, from the date of loan, viz July 2005. The loan is secured by way of First Charge on pari passu basis on all the immovable properties of the company, both present and future situated at Karuppur village, near Kuttalam in Thiruvidaimaruthur Taluk, Tanjore district, Tamil Nadu and by way of hypothecation of all the movable properties of the LTPCL including its movable plant and machinery ,spares, tools, accessories and other movables, both present and future including book debts and future secured by personal guarantees of certain Promoters of the LTPCL. 5 Lanco Anpara Power Limited (LAnPL) 1,538.20 2,279.57 (1,544.25) (2,302.98) Security & Terms and Conditions The repayment of Indian Rupee term loan has been restructured by the consortium of lenders from 64 (Sixty four) equal quarterly instalments to 60 (Sixty) quarterly structured unequal instalments along with interest from June 30, 2012. The same has been done to match the cash fows according to LAnPL. The above loan is secured as follows : 1. A frst mortgage/hypothecation and charge on all the immovable and movable properties (including all receivables, tangible and intangible properties) of the project both present and future. 2. A frst charge/assignment/ security interest on rights, titles and interests of LAnPL in respect of all assets of the project. 3. A frst charge/assignment/security interest on rights, titles and interests of LAnPL in all project documents/contracts/ licenses including insurance contracts pertaining to the project. 4. A frst charge/assignment/security interest of contractor guarantee, performance bonds and any letter of credit that may be provided by any party under the project. 5. A frst charge/assignment/security interest on the irrevocable, no lien Trust and Retention Accounts (TRA) into which all cash infows from the project. 6. Pledge of 61% of the fully paid up equity share capital of the project as collateral security. 7. LAnPL has not paid principal amount of `12.68 Crores and interest amount of `129.13 Crores as at March 31, 2014. 6 Udupi Power Corporation Limited (UPCL) 2,316.22 1,841.13 (2,489.92) (1,969.40) Security & Terms and Conditions In case of UPCL, Pursuant to Common Loan Agreement dated October 17, 2006 in respect of Senior Rupee Debt B between UPCL and its Lenders, each of the Senior rupee Debt B Lenders shall at any time after the COD, have the right to convert at their sole option the whole of the outstanding amount or any part of their respective portion of the Senior Rupee Debt B Facility into fully paid-up equity shares of the Borrower at par. The Sr. Rupee Debt A & Sr. Rupee Debt B loans from the Financial Institutions and Banks are secured by frst/second ranking pari-passu Security interest created by UPCL as below: (i) mortgage and charge on the UPCL immovable properties present and future; (ii) hypothecation of UPCL movable properties and assets present and future including movable plant and machinery, machinery spares, tools and accessories, furniture, fxtures and vehicles; (iii) charge on UPCL operating cash fows, book debts and all the receivables and revenues from the project, all current assets, commissions and any other revenues of what so ever nature and wherever arising, present and future; (iv) charge of all intangible assets including but not limited to goodwill and uncalled capital, present and future; (v) assignment of/charge on (a) all right, title, interest, benefts, claims and demands what so ever in the project documents, all as amended, varied or supplemented from time to time; (b) all the rights, title, interest, benefts, claims and demands what so ever in the clearances and uncalled capital; (c) all the right, title interest benefts, claims and demands what so ever of UPCL in any letter of credit, guarantee, performance bond provided by any party to the project documents;(d) all insurance contracts/insurance proceeds; (vi) charge on the letter of credit, escrow accounts, trust accounts and other reserves and any other bank account wherever maintained. The above Loans are also secured by a Corporate Guarantee from the company. The Loans under Sr Debt B are also guaranteed by three of the persons of Promoter Group Company. The UPCL has not paid Interest amount of `133.99 Crores as at March 31, 2014. 7 Lanco Thermal Power Limited (LTPL) 85.00 - (9.04) Security & Terms and Conditions Indian rupee bank term loan is repayable in 60 quarterly instalments beginning from June 30, 2015 and is secured by frst charge on all the fxed assets of the LTPL and pledge of 0.73 Crores Equity Shares of LTPL held by Lanco Power Limited (LPL). The LTPL has not paid Interest amount of `2.57 Crores as at March 31, 2014. 100 Consolidated Financial Statements

(` Crores) Amount of Loan S. Subsidiary/Company Name From Financial No. From Banks* Institutions* 8 Lanco Hydro Power Limited (LHPL) 38.00 - (19.29) Security & Terms and Conditions Indian rupee bank term loan is repayable in 60 quarterly instalments beginning from June 30, 2014and is secured by frst charge on all the fxed assets of the LHPL and pledge of 0.71 Crores Equity Shares of LHPL held by LPL. The LHPL has not paid interest amount of `1.09 Crores as at March 31, 2014. 9 Lanco Mandakini Hydro Energies Private Limited (LMHEPL) 456.18 - (398.36) Security & Terms and Conditions Indian Rupee Term Loan from consortium of Lenders (Six Banks) - sanctioned loan of ` 581.48 Crores is repayable in 48 quarterly instalments along with interest, from December 2015 (including moratorium of one year). The loan is secured by Pledge/First pair passu Charge etc. of all movable & immovable assets of LMHEPL. The Loan is secured by pledge of the 76% of paid up Equity Share Capital of LMHEPL, the total shares pledged as on March 31, 2014, equivalent to 68.29%. The LMHEPL has not paid the Interest of ` 4.31 Crores as at March 31,2014. 10 Lanco Budhil Hydro Power Private Limited (LBHPPL) 282.39 102.73 (105.22) (110.22) Security & Terms and Conditions Indian Rupee term loan from Banks and fnancial institutions - Drawn loan of `275.51 Crores is repayable in quarterly instalments of ` 4.80 Crores, from December 01, 2009 for PNB (including moratorium of Six Months) and from March 01, 2010 for other Lenders (including moratorium of Nine Months). Indian rupee term loans from Banks are secured by pledge/ frst pair passu charge etc. of all movable and immovable assets of LBHPPL. The loan is secured by pledge of the 30% of Paid up Equity Share Capital of LBHPPL held by the company (under process to be Transferred to LHPL). Additional Loan drawn from ICICI Bank Ltd. ` 185.00 Crores during FY 2013-14 and is repayable in 48 quarterly unstructured instalments from June 2015. The LBHPPL has not paid principal amount of ` 6.02 Crores and interest amount of `17.55 Crores as at March 31, 2014. 11 Lanco Teesta Hydro Power Limited (LTHPL) 1,091.64 829.18 (896.09) (723.81) Security & Terms and Conditions Indian Rupee Term Loan from Consortium of Lenders (Six Banks & Three Financial Institutions) - sanctioned loan of ` 2,400 Crores is repayable in 56 quarterly instalments, from August 2013. As per Rupee Facility Agreement, the instalments are due after 15 months of Scheduled Commercial Operation Date (COD), May 2012 i.e. from August 2013, repayable @ 1.50% of the disbursed amount in frst eight quarterly instalments, at 1.625% of the disbursed amount in next eight quarterly instalments and the balance at 1.875% of disbursed amount in next forty quarterly instalments. Approval from all the lenders except REC and IIFCL towards the extension of COD, from May 2012 to May 2016 and cost overrun of ` 1,800 Crores, has been received as on March 31, 2014, so their repayment instalments have not been included in Current Maturities. Repayment due to REC and IIFCL, from whom the cost and time overrun approval is pending, has been considered as Current maturities of long term borrowings. The loan is secured by First Charge on all movable/immovable assets of LTHPL. The loan is secured by pledge of 30% of Paid up Equity Share capital of LTHPL. The LTHPL has not paid principal amount of `11.17 Crores and interest amount of ` 33.24 Crores as at March 31, 2014. 12 Lanco Hills Technology Park Private Limited (LHTPPL) 764.70 - (747.55) Security & Terms and Conditions (a) Indian Rupee Loan from Banks (Phase - I) are repayable in 4 yearly instalments of ` 93.75 Crores each, of which Punjab National Bank is on quarterly instalments of ` 3.75 Crores per quarter, from 31 December 2010. The loan is secured as frst charge, ranking paripassu, by way of hypothecation of all receivables and movable assets, including plant, machinery equipment, machinery spares, tools, stores, furniture, fxtures, vehicles and other moveable assets, both present and future, and mortgage of 22.45 acres of Phase - I and together with building superstructures, amenities, infrastructure and other immovable assets present and future to be constructed/ developed thereon by LHTPPL. Further part of the loan has been guaranteed by corporate guarantee of the company.

101 Annual Report 2013-2014

(` Crores) Amount of Loan S. Subsidiary/Company Name From Financial No. From Banks* Institutions* (b) Indian Rupee Loan from Banks (Phase II) are repayable in 10 half-yearly instalments of ` 75 Crores each, from June 30, 2015. The loan is Secured as frst charge, ranking paripassu, by way of hypothecation of all receivables and movable assets including movable, plant, machinery, spares, tools, stores and accessories, furniture and fxtures, vehicles and building and other immovable assets both present and future of the Phase II of the project in 60.84 acres of land by way of equitable mortgage in Manikonda village with the development rights of the company pertaining to LHTPPL. Further part of the loan is secured by way of a third party guarantee by way of an equitable mortgage of land admeasuring 26.39 acres at Siruseri village, Tamilnadu State as collateral security pertaining to Lanco Horizon Pvt Ltd. Further part of the loan is secured by pledge of LHPL shares held by LPL. Further part of the loan has been guaranteed by corporate guarantee of the company. The LHTPPL has not paid principal amount of ` 25.20 Crores and Interest amount of ` 62.48 Crores as at March 31, 2014. 13 Diwakar Solar Projects Limited (DSPL) 301.17 - (200.00) Security & Terms and Conditions (a) Indian Rupee Loan from bank - 80% of the loan is repayable in 48 quarterly unequal installments and balance 20% shall be paid in single instalment with a moratorium period of 12 months from the date of COD. The loan is secured by a way of pledge of 51% of total equity shares of the DSPL held by the Company, Corporate Guarantee of the company and by way of rank pari passu charge of project on all mortgages, charges, assignments and pledges as per the standard security package and is identifed by and between consortium members and Letter of Credit /Escrow accounts, including inter- alia and by way of rank pari passu charge of project on all mortgages, charges, assignments and pledges as per the standard security package and is identifed by and between consortium members and LC/Escrow accounts, inter- alia First charge by way of mortgage on immovable properties, present & future, of the DSPL. First charge by way of hypothecation on all movables including movable plant and machinery, machinery spaces, tools and accessories, furniture, fxtures, vehicles, present & future, of the DSPL. First charge on all book debts, operating cash fows, receivables, commissions, revenues of whatsoever nature and wherever arising, of the of the DSPL. A frst charge on all intangible assets, if any, of the DSPL including but not limited to good will, uncalled capital, present & future. (b) The DSPL has not paid interest amount of ` 3.58 Crores as at March 31, 2014. 14 Khaya Solar Projects Private Limited (KSPPL) 50.69 - (52.82) Security & Terms and Conditions Indian Rupee Loan from bank is repayable in 56 quarterly structured instalments with a moratorium period of 6 months from the date of Commercial Operation Date (COD). The repayment started from September 30,2012. The loan is secured by way of pledge of shares of the KSPPL held by the LSEPL, Corporate Guarantee of the Company and are secured by way of frst charge by way of hypothecation of KSPPL's movable assets, book debts, Intangible Assets, Letter of Credit/Escrow Account. The KSPPL has not paid principal and interest amount of ` 0.50 Crore and ` 0.48 Crore respectively as at March 31, 2014. 15 Lanco Solar Private Limited (LSPL) 262.91 - (216.61) Security & Terms and Conditions (a) Indian Rupee Loan from Banks are repayable in 36 unequal quarterly instalments of 2.5% per Quarter for frst 16 Quarters and 3% per Quarter for the Last 20 Quarters along with interest, after the date of expiry of 39 months from July 15, 2010. The loan is secured by way of pledge of shares of the LSPL held by the LSEPL, Corporate Guarantee of the Company and are secured by way of Hypothecation/Pledge/Mortgage/First Charge etc. of immovable properties both present and future, tangible movable properties including movable plant and machinery, machinery spares, tools and accessories, furniture, fxtures, vehicles, equipment, and all other movable fxed assets, both present and future, all the rights, title and interests of the Borrower in and to all the receivables, accounts, other bank accounts, retention accounts, book debts, operating cash fows, commissions, other revenues of whatsoever nature and wherever arising, and all intangible assets including but not limited to goodwill, uncalled capital, both present and future of the company pertaining to poly-silicon and wafer manufacturing plant with capacity of 1800 T and 100 MW respectively at Villages Mehrumkhurd and Chhawardal, Tehsil Rajnandgaon, District Rajnandgaon in the state of Chhattisgarh. As per the 2nd Amendatory Loan Agreement dated February 06, 2014, the revised Commercial Operation Date is October 12, 2014 and the loan is repayable in 36 structured quarterly instalments commencing 12 months from Commercial Operational Date. The LSPL has not paid interest of `3.45 Crores as at March 31, 2014. 102 Consolidated Financial Statements

(` Crores) Amount of Loan S. Subsidiary/Company Name From Financial No. From Banks* Institutions* 16 Udupi Power Corporation Limited (UPCL) 200.00 - (200.00) Security & Terms and Conditions In case of UPCL, a loan of ` 200 Crores has been availed from banks as Mezzanine Debt for which the collateral security is given by LITL by way of corporate guarantee and pledge of 0.13 Crore (` 10 each) shares of the company held by the promoters. None of the assets of UPCL is given as security for the said loan. Total 14,594.29 9,375.97 (11,238.89) (9,121.71) # In the Company and at each SPV there are many loans and many lenders. The Carrying interest rate is as per the respective loan agreements entered at Company/SPV level which is linked to each of the Lender's Bank Rate +/- Spread as applicable. * Previous Year fgures are mentioned within the brackets.

B. Foreign Currency Loan from Banks and Financial Institutions # (` Crores) Amount of Loan S. Subsidiary / Company Name From Financial No. From Banks* Institutions* 1 Lanco Infratech Limited (LITL) - the Company 525.74 - (327.91) Security & Terms and Conditions 1) Foreign Currency Term Loans (Buyers Credit) from banks out of which ` 223.40 Crores is secured by way of mortgage on immovable assets pertaining to solar projects and hypothecation of movable assets both present and future of the solar project and ` 2.47 Crores is having frst pari passu charge on fxed assets and current assets (present and future) of the Company except assets with exclusive charge along with pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fxed asset of 13 SPVs / Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, company and its step down subsidiaries and associates. For the previous year (March 31, 2013 : ` 327.91 Crores) these loans were secured by way of frst charge over the asset as additional security and / or secured as part of working capital limits from banks by way of frst charge of hypothecation of stock / work in progress and entire current assets of the Company both present and future on pari passu basis or secured by way of mortgage on immovable assets pertaining to solar projects and hypothecation of movable assets both present and future of the project. 2) FCNR Loan from banks of ` 299.87 Crores (March 31, 2013 : Nil) is having frst pari passu charge on fxed assets and current assets (present and future) of the Company except assets with exclusive charge. Further, this loan is secured by pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fxed asset of 13 SPVs / Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. These loans are having moratorium period of 2 years from the cutof date i.e. April 1, 2013 and are repayable in 30 quarterly installments staring from December 31, 2015. 2 Lanco Amarkantak Power Limited (LAPL) 1,347.46 - (1,225.20) Security & Terms and Conditions Foreign Currency Buyer’s Credit is secured by letter of under taking issued by LC Issuing Banks.

103 Annual Report 2013-2014

(` Crores) Amount of Loan S. Subsidiary / Company Name From Financial No. From Banks* Institutions* 3 Lanco Kondapalli Power Limited (LKPL) 202.78 - (218.68) Security & Terms and Conditions Buyers credit from Banks for Phase - III are secured by a pari passu frst charge on all immovable properties of LKPL both present and future, all the tangible moveable properties, including moveable plant and machinery, machinery spares, equipments, tools and accessories both present and future relating to Phase - I, Phase - II and Phase - III projects, assignment by way of pari passu frst charge on all the rights, title and interests to all the receivables, commissions, revenues of whatsoever nature and whatever arising, intangibles, goodwill, uncalled capital, the accounts and book debts, both present and future, the rights, title and interest under the Project Documents duly acknowledged and consented to by the relevant counter parties to such Project Documents all as amended, varied or supplemented from time to time, all the rights, title, interest, benefts, claims and demands whatsoever in the Government approvals and clearances, all the rights, title interest, benefts, claims and demands of the borrower in any letter of credit, guarantee, performance bonds indemnities and securities that may be furnished by the various counter parties under such Project documents, all insurance contracts and insurance proceeds, the rights, title and interest on the Letter of Credit, if any / Escrow account, Retention Accounts including Debt Service accounts (2 quarters), other reserves and any other bank accounts of the Borrower wherever maintained subject to working capital loan, if any, foating charge on all other assets, present and future, of the Borrower including but not limited to goodwill and general undertaking of the Borrower in favour of the Lenders; Pledge of the shares held by Sponsors and Shareholder(s) representing 51% of the issued and paid up share capital of the Borrower. All the aforesaid mortgages, charges, assignments and pledges shall in all respects of Phase - II and Phase - III lenders along with Working Capital lenders. 4 Lanco Tanjore Power Company Limited (LTPCL) 1.80 17.40 (2.72) (26.25) Security & Terms and Conditions Foreign currency Loan from Bank is repayable in 40 quarterly instalments of approximately ` 0.27 Crores (equivalent to $ 0.05 Crores) each along with interest, from the date of loan, viz July 2005. The loan is secured by way of First Charge on pari passu basis on all the immovable properties of the LTPCL, both present and future situated at Karuppur village, near Kuttalam in Thiruvidaimaruthur Taluk, Tanjore district, Tamil Nadu and by way of hypothecation of all the movable properties of the LTPCL including its movable plant and machinery ,spares, tools, accessories and other movables, both present and future including book debts and future secured by personal guarantees of certain Promoters of LTPCL. Foreign currency Loan from Financial Institution is repayable in 40 quarterly instalments of approximately ` 2.65 Crores (equivalent to $ 0.48 Crores) each along with interest, from the date of loan, viz July 2005. The loan is secured by way of First Charge on pari passu basis on all the immovable properties of LTPCL, both present and future situated at Karuppur village, near Kuttalam in Thiruvidaimaruthur Taluk, Tanjore district, Tamil Nadu and by way of hypothecation of all the movable properties of LTPCL including its movable plant and machinery ,spares, tools, accessories and other movables, both present and future including book debts and future secured by personal guarantees of certain Promoters of LTPCL. 5 Lanco Hills Technology Park Private Limited (LHTPPL) 132.22 - (373.93) Security & Terms and Conditions Foreign Currency Loan from Banks are repayable in 5 Half- yearly instalments of diferent amounts of USD 2.20,1.925,1.925, 2.750 and 2.20 crores, from March 29, 2012. The loan is secured by pledge of shares of the company held by M/s. Lanco Group Limited. Further, the balance outstanding as on balance sheet date has been guaranteed by corporate guarantee of LHPL. The LHTPPL has not paid principal amount of ` 132.22 Crores as at March 31, 2014. 6 Lanco Solar Private Limited (LSPL) 318.71 - (288.43) Security & Terms and Conditions Foreign Currency Loan (Buyers Credit) from Banks availed by the LSPL is Part of total Rupee Term loan Sanctioned by the Banks and the loan is secured by way of pledge of shares of the LSPL held by the LSEPL, Corporate Guarantee of the company and are secured by way of hypothecation / Pledge / Mortgage / First Charge etc. of immovable properties both present and future, tangible moveable properties including moveable plant and machinery, machinery spares, tools and accessories, furniture, fxtures, vehicles, equipment, and all other movable fxed assets, both present and future, all the rights, title and interests of the Borrower in and to all the Receivables, Accounts, Other Bank Accounts, Retention Accounts, book debts, operating cash-fows, commissions, other revenues of whatsoever nature and wherever arising, and (ii) all intangible assets including but not limited to goodwill, uncalled capital, both present and future of the LSPL pertaining to poly-silicon and wafer manufacturing plant with capacity of 1800 T and 100 MW respectively at Villages Mehrumkhurd and Chhawardal, Tehsil Rajnandgaon, District Rajnandgaon in the state of Chhatisgarh.

104 Consolidated Financial Statements

(` Crores) Amount of Loan S. Subsidiary / Company Name From Financial No. From Banks* Institutions* 7 Lanco Resource International Pte Limited (LRIPL) 2,807.45 - (679.45) Security & Terms and Conditions Loan is secured by pledge of equity shares and charge over all present and future assets of LRIPL and its subsidiaries. The obligations are further supported by an irrevocable and unconditional, joint and several guarantee from the LRIPL and its subsidiaries as the case may be and Corporate Guarantee directly or indirectly from the company. The security shall be shared on Pari -passu basis with the lenders of existing acquisition facility and other SBLC issuers. 8 Lanco Resource Australia Pty Limited (LRAPL) 1,260.75 - (2,867.76) Security & Terms and Conditions Refer S. No. 7 of Long - Term Foreign Currency Loans from Banks and Financial Institutions above. 9 Apricus SRL - - (18.14) Security & Terms and Conditions During the year this entity has been sold. Total 6,596.91 17.40 (6,002.22) (26.25) C. Deferred Payment Liability 832.20 - (850.64) Security & Terms and Conditions Refer S. No. 7 of Long - Term Foreign Currency Loans from Banks and Financial Institutions above. D. Finance Lease Obligation - 34.51 (79.04) Security & Terms and Conditions Secured by the Plant and Machinery taken under Finance Lease Agreement. E. Hypothecation Loans 3.82 22.71 (10.85) (39.94) Security & Terms and Conditions Secured by hypothecation of specifc construction equipment/ vehicles acquired out of such loans. These loans are repayable on agreed monthly installments. F. Unsecured Loans Nil 318.87 (676.83) (300.00) Security & Terms and Conditions a) During the year unsecured loan converted as secured loan as per the CDR Terms. b) Term Loan availed from Non-CDR lender (Financial Institutions) , all Non-Current (March 31, 2013: ` 300.00 Crores, all Current) is unsecured. However, collateral securities have been provided by way of pledge of shares of a subsidiary held by another subsidiary and also by pledge of shares of the Company held by one of the Promoters. Repayable in 8 quarterly installments starting from September 30, 2015. G Other Loans & Advances 152.00 - (Nil) Security & Terms and Conditions Other Loans and Advances is the Unsecured loan of `152.00 Crores. (March 31, 2013 : Nil) payable only after approval of CDR lenders received from promoter company as promoter's contribution as per term and conditions of CDR package with conversion option into equity repayable at the end of 10 years after approval of the CDR lenders. # In the Company and at each SPV there are many loans and many lenders. The Carrying interest rate is as per the respective loan agreements entered at Company / SPV level which is linked to each of the Lender's Bank Rate / LIBOR +/- Spread as applicable. * Previous Year fgures are mentioned within the brackets

105 Annual Report 2013-2014 6.1 Deferred Tax Liability (net) (` Crores) As at As at March 31, 2014 March 31, 2013 Deferred Tax Liability Diferences in Written Down Value in Block of Fixed Assets as per Tax & Financial Books 1,012.49 739.30 Recoverable from benefciaries * (354.78) - Gross Deferred Tax Liability 657.71 739.30 Deferred Tax Asset Provision for Gratuity and Compensated Absences 4.26 3.75 Provision for Incentives and Exgratia - 0.09 Unabsorbed Depreciation-Carry forward losses as per Income Tax Act 1961 191.03 94.39 Provision for Other Disallowances 1.79 - Gross Deferred Tax Asset 197.08 98.23 Deferred Tax Liability (net) 460.63 641.07 * In case of UPCL, Deferred Tax Liability originated at the year end and reversing after the tax holiday period, falling within the tenure of Power Purchase Agreement and to the extent expected to be recovered through future tarif from power buyers, has been disclosed as recoverable from benefciaries.

6.2 Deferred Tax Asset (net) (` Crores) As at As at March 31, 2014 March 31, 2013 Deferred Tax Liability Diferences in Written Down Value in Block of Fixed Assets as per Tax & Financial Books 74.91 74.89 Gross Deferred Tax Liability 74.91 74.89 Deferred Tax Asset Provision for Gratuity and Compensated Absences 12.51 12.13 Provision for Doubtful Debts 4.90 4.90 Provision for Lease Equalisation Reserve 1.80 1.80 Provision for Incentives and Exgratia 11.17 10.66 Carry Forward Losses as per the Income Tax Act 1961 64.76 64.71 Provision for Other Disallowances 21.68 17.36 Gross Deferred Tax Asset 116.82 111.56 Deferred Tax Asset (net) 41.91 36.67

7 Other Long Term Liabilities (` Crores) As at As at March 31, 2014 March 31, 2013 Trade Payables (including acceptances) 222.30 302.33 Others Amount payable in respect of Purchase of Fixed Assets/EPC contracts - 11.20 Advances from Customers 2,719.77 3,270.42 Other Liabilities 128.72 21.33 3,070.79 3,605.28

106 Consolidated Financial Statements

8 Provisions (` Crores) Long Term Short Term As at As at As at As at March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 Provision for Leave Encashment 28.40 31.66 13.08 9.40 Provision for Gratuity 13.56 13.94 4.09 4.58 Provision for Bonus 0.41 0.38 6.37 3.34 Provision for Retention Bonus 17.54 32.31 7.46 14.69 Provision for Other Employee Benefts - - 0.11 7.84 Provision for Taxation (Net of Advance taxes) 0.23 0.27 59.26 66.68 Provision for Operations and Maintenance - - 11.26 23.83 Provision for Lease Equalisation 5.40 5.49 0.87 - Proposed Preference Dividend - - - 0.02 Provision for Mine restoration 192.02 285.22 5.34 5.46 Provision for warranty 445.05 351.60 - - Other Provisions * - - 88.88 48.42 702.61 720.87 196.72 184.26 * Includes Provision for Diminution in Value of Investments of ` 86.65 Crores for the year ended March 31, 2014 and Provision for the claim to be paid by GCM of ` 42.53 Crores for the year ended March 31, 2013. 9 Short Term Borrowings (` Crores) As at As at March 31, 2014 March 31, 2013 Cash Credits and Working Capital Demand Loan from Banks (Secured) 2,855.54 3,519.37 Rupee Loans and Advances Secured From Banks 932.27 660.00 From Financial Institutions 105.96 - Unsecured From Banks 1.36 - From Others 19.00 - Foreign Currency Loans and Advances Secured- From Banks 837.31 1,441.19 Loans and Advances from Related Parties - Unsecured (Note 46) Rupee Loans and Advances 5.22 1.95 4,756.66 5,622.51 A. Cash Credits and Working Capital Demand Loan # (` Crores) S. Amount of Loan Subsidiary / Company Name No. From Banks* 1 Lanco Infratech Limited (LITL) - the Company 1,206.72 (2,339.75) Security & Terms and Conditions ` 1,206.72 Crores is having frst pari passu charge on fxed assets and current assets (present and future) of the Company except assets with exclusive charge as per the CDR scheme approved by CDR EG. Further, this loan is secured by pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fxed asset of 13 SPVs/Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. For the previous year (March 31, 2013 : ` 2,339.75 Crores) these loans were secured by a frst charge by way of hypothecation of stock / work-in-progress and entire current assets of the Company both present and future, on pari passu basis with other working capital lenders under multiple banking arrangement. The Company has not paid principal amount of ` 86.57 Crores and Interest amount of ` 21.33 Crores as at March 31,2014.

107 Annual Report 2013-2014

(` Crores) S. Amount of Loan Subsidiary / Company Name No. From Banks* 2 Lanco Kondapalli Power Limited (LKPL) 123.99 (68.53) Security & Terms and Conditions Cash Credits and Working Capital demand loan from Banks secured by way of charge on LKPL inventories, consumable stores, book debts and all the movable properties of LKPL including its movable plant and machinery, spares, tools, accessories and other movables both present and future and further secured by way of a equitable charge by deposit of title deeds of all the immovable properties of LKPL situated at Krishna District in the State of Andhra Pradesh, both present and future ranking pari passu with charges created for securing term loans of the LKPL and secured on a pari passu basis by way of registered mortgage of LKPL freehold properties in the State of Maharashtra and assignment of project contracts. Further secured by pledge of a portion of shares held by promoters. The Cash Credit is repayable on demand. 3 Lanco Tanjore Power Company Limited (LTPCL) 13.54 (54.94) Security & Terms and Conditions Cash Credits and Working Capital demand loan from Banks is secured by hypothecation of stocks/ Work in Progress and other current assets both present and future on parri passu basis on movable and immovable properties and also guaranteed by certain directors / others in their personal capacity and by issue of Letter of Comfort by LTPCL. The Cash Credit is repayable on demand. 4 Lanco Amarkantak Power Limited (LAPL) 237.21 (262.63) Security & Terms and Conditions Cash Credit facilities from IDBI Bank Ltd to the extent of ` 145 Crores towards Fund Based limits and ` 70 Crores towards Non Fund Based Limits which are secured by way of a frst charge on movables and immovable assets of Unit - I and Unit - II ranking pari passu with Other Lenders of Unit - I. Cash credit facilities from Canara Bank and Allahabad Bank to the extent of ` 135 Crores towards Fund Based limits and ` 71 Crores towards Non Fund based Limits which are secured by way of a frst charge on movables assets of Unit - I and immovable assets of Unit - I ranking pari passu with Term Loan Lenders. The balance Non Fund based facilities of ` 78 Crores are secured by way of a second charge on movables assets of Unit - I and immovable assets of Unit - I. 5 Udupi Power Corporation Limited (UPCL) 486.53 (219.36) Security & Terms and Conditions Cash Credits and Working Capital demand loan from Bank is Security given to Senior Rupee Debt A and Senior Rupee Debt B Lenders shall rank pari passu among the participating Senior Rupee Debt A and Senior Rupee Debt B Lenders and the Working Capital Lenders. The Security Interest in the context of Working Capital Lenders shall secure the working capital facility to a maximum extent of ` 690 Crores. 6 Lanco Anpara Power Limited (LAnPL) 505.44 (428.73) Security & Terms and Conditions Cash Credits and Working Capital demand loan Secured as follows: 1. First pari-passu charge by way of hypothecation of entire Current Assets, namely, raw-materials, stock-in-process, semi-fnished goods, and fnished goods, stores and spares including relating to plant and machinery (Consumable Stores & Spares), Bills Receivable and Book Debts and operating cash fows, revenues and receivables of the Project and all other movables of the Borrower, both present and future; 2. First ranking pari-passu charge on project assets both present and future ranking pari-passu with other working capital lenders; 3. First pari-passu charge by hypothecation on all the movable fxed assets of the Company, both present & future; 4. First pari-passu charge by way of equitable charge on all the immovable fxed assets of the Company, both present & future; 5. First pari-passu charge/assignment/security interest of contractor guarantees, performance bonds and any letter of credit that may be provided by any party under the project; 6. First pari-passu charge/assignment/security interest of rights, titles and interest of the company in all project documents/ contracts/licenses including insurance contracts pertaining to the project. 7 Lanco Solar Energy Private Limited (LSEPL) 282.11 (145.43) Security & Terms and Conditions (i) Cash Credits from Andhra Bank sanctioned to the extent of `75.00 Crores towards the Fund Based and `150.00 Crores towards the Non Fund Based limit are secured by frst charge on current assets of the LSEPL ranking pari passu charge with other member banks under multiple banking arrangements. (ii) Cash Credits from Central Bank of India sanctioned to the extent of `75.00 Crores towards the Fund Based and `275.00 Crores towards the Non Fund Based limit are secured by frst Pari Passu charge on all Current Assets. 108 Consolidated Financial Statements

(` Crores) S. Amount of Loan Subsidiary / Company Name No. From Banks* Total 2,855.54 (3,519.37) # In the Company and at each SPV there are many loans and many lenders. The Carrying interest rate is as per the respective loan agreements entered at Company / SPV level which is linked to each of the Lender's Bank Rate +/- Spread as applicable. * Previous Year fgures are mentioned within the brackets. B. Rupee Term Loan from Banks / Financial Institutions # (` Crores) Amount of Loan S. Subsidiary / Company Name From Financial No. From Banks* Institutions* 1 Udupi Power Corporation Limited (UPCL) 670.00 100.00 (310.00) (Nil) Security & Terms and Conditions IDBI Bank : 1. First charge on all assets (movable & immovable) of UPCL, pari-passu with Sr. Debt A and Sr. Debt B lenders and fund based working capital lenders. Collateral : Exclusive charge on pledge of shares to the extent of `160 Crores (16 Crores share of `10 each) and Third party Guarantee : Corporate Guarantee of the company. Bank of India : 1. First paripassu charge on all the project assets. The security ranks pari passu amongst Sr. Debt A and fund based WC Lenders. 2. UPCL should give an undertaking to the efect that Lenders (Sanctioning RTL for meeting Revenue GAP) would have a pari passu charge on Diferential arrears to be received from the ESCOM's for the revised bills from November 2010 onwards the same would be utilised towards repayment of Lenders (Sanctioning RTL for meeting the revenue Gap). 3. Corporate Guarantee of the company. 4.Collateral : Exclusive charge on pledge of shares of UPCL to the extent of `150 Crores. (15 Crores shares of `10/- each) held by promoter / group companies. ICICI Bank Limited : 1. First paripassu charge on all the project assets. The security ranks pari passu amongst Sr. Debt A and fund based WC Lenders. 2. UPCL should give an undertaking to the efect that Lenders (Sanctioning RTL for meeting Revenue GAP) would have a pari passu charge on Diferential arrears to be received from the ESCOM's for the revised bills from November 2010 onwards and the same would be utilised towards repayment of Lenders (Sanctioning RTL for meeting the revenue Gap). Exclusive charge on pledge of shares of UPCL to the extent of `31.90Cr. (3.19 Crores shares of `10/- each) held by promoter / group companies Axis Bank : 1.Subservient charge to Sr Debt A, Sr Debt B, Revenue gap Funding & Working Capital Lenders on project assets (Movable & Immovable) including but not limited to current assets, receivables, cash fows etc. 2.Corporate Guarantee of the company. PFC: First charges on pari passu basis on current assets and fxed assets of UPCL to be provided within 2 months from the date of frst disbursement. The closing balance includes ` 24.55 Crores (March 31, 2013: Nil) being the installments due and not paid. 2 Lanco Amarkantak Power Limited (LAPL) 250.00 - (250.00) Security & Terms and Conditions Andhra Bank Short Term Rupee term loan of ` 250 Crores availed for Unit V & VI is secured by Mortgage of 100.55 acres of lease hold land and also pledge of 2.77 crores Equity shares of `10/- each of LTPCL held by LTPL. Further this loan is also covered by personal guarantees of certain directors and promoters of the LAPL. 3 National Energy Trading Services (NETS) 12.27 - (Nil) Security & Terms and Conditions Loans against fxed deposits is repayable on or before the maturity date of the fxed deposit . 4 Lanco Kanpur Highways Limited (LKHL) Nil - (100.00) Security & Terms and Conditions The loan is secured by Unconditional and irrevocable corporate guarantee of the company. The loan is repayable in bullet repayment at the end of six months. 5 Mercury Projects Private Limited (MPPL) - 5.96 (Nil) Security & Terms and Conditions Loan from Financial Institution is repayable on demand. The loan is secured by collateral security of Equipment's given by the Company against the Agreements. Total 932.27 105.96 (660.00) (Nil)

109 Annual Report 2013-2014 C. Foreign Currency Loan from Banks # (` Crores) S. Amount of Loan Subsidiary / Company Name No. From Banks* 1 Lanco Infratech Limited (LITL) - the Company 101.29 (506.78) Security & Terms and Conditions Foreign Currency Loans (Buyers Credit) from banks of ` 101.29 Crores having frst pari passu charge on fxed assets and current assets (present and future) of the Company except assets with exclusive charge along with pledge of equity shares of the Company held by its Promoters, Corporate Guarantee given by Promoter Company, Personal Guarantee of Promoter Guarantors, subservient charge on the fxed asset of 13 SPVs / Subsidiaries and unencumbered shares of 9 SPVs held by Promoters, Company and its step down subsidiaries and associates. For the previous year (March 31, 2013: ` 506.78 Crores), these loans were secured as part of working capital limits from banks by way of frst charge of hypothecation of stock/work in progress and entire current assets of the company both present and future on pari passu basis under multiple banking arrangement. 2 Udupi Power Corporation Limited (UPCL) 697.41 (677.64) Security & Terms and Conditions The Security shall rank pari-passu amongst the lenders providing non-fund based facilities for the project upto a limit of `750 Crores, but shall, however, be second and subsequent to the frst / second ranking pari-passu charges created thereon in favour of Sr. Debt A and Sr. Debt B lenders. 3 Lanco Solar Private Limited (LSPL) 25.50 (155.12) Security & Terms and Conditions Foreign Currency Loan (Buyers Credit) from Banks is taken out from Company's credit limits. 4 Lanco Solar Energies Private Limited (LSEPL) 13.11 (101.65) Security & Terms and Conditions Buyers Credit from Banks are secured as part of working capital limits from banks by way of frst charge of hypothecation of stock/work in progress and entire current assets of the LSEPL both present and future, on pari passu basis and second charge on movable and immovable properties and also guaranteed (Corporate Guarantee) by Company as collateral security is held by Andhra Bank. Total 837.31 (1,441.19) # In the Company and at each SPV there are many loans and many lenders. The Carrying interest rate is as per the respective loan agreements entered at Company / SPV level which is linked to each of the Lender's Bank Rate / LIBOR +/- Spread as applicable. * Previous Year fgures are mentioned within the brackets. 10 Trade Payables (` Crores) As at As at March 31, 2014 March 31, 2013 Trade Payables (including acceptances) 4,111.55 4,514.53 4,111.55 4,514.53

11 Other Current Liabilities (` Crores) As at As at March 31, 2014 March 31, 2013 Current maturities of long term borrowings (Note 5) 1,828.49 2,341.98 Interest accrued but not due on borrowings 206.99 194.29 Interest accrued and due on borrowings 831.64 389.98 Unpaid Dividend - 0.02 Advances from Customers 1,552.14 1,438.40 Taxes Payable 81.54 80.83 Amount payable in respect of Purchase of Fixed Assets/EPC contracts 88.56 73.61 Salaries and Other Employee benefts Payable 163.03 148.46 Other Payables 377.61 254.19 5,130.00 4,921.76

110 12 Tangible Assets

(` Crores) Assets Taken On Owned Assets Finance Lease Particulars Leasehold Freehold Buildings Plant and Furniture Vehicles Mine Ofce Total (A) Plant and Total TOTAL Land $ Land Equipment and Properties## Equipment Equipment (B) ASSETS Fixtures ** (A + B) Gross Block As at April 01, 2012 164.98 342.66 1,060.32 13,732.10 123.56 50.48 5,159.13 80.51 20,713.74 681.37 681.37 21,395.11 Additions 33.15 1.50 261.96 4,080.85 5.51 2.38 478.55 5.37 4,869.27 - - 4,869.27 Additions on inclusion of - 6.26 ------6.26 - - 6.26 new subsidiaries Disposals - 13.07 20.18 5.39 8.19 7.13 - 2.15 56.11 15.31 15.31 71.42 Adjustments - Exchange Diference - 3.11 8.56 168.11 (0.63) (0.22) 396.38 (0.62) 574.69 52.35 52.35 627.04 - Other * - - (0.10) (18.53) 0.01 0.00 (138.69) 0.02 (157.29) (123.73) (123.73) (281.02) As at March 31, 2013 198.13 340.46 1,310.56 17,957.14 120.26 45.51 5,895.37 83.13 25,950.56 594.68 594.68 26,545.24 Additions 10.09 57.47 122.03 185.22 1.24 1.43 10.09 2.15 389.72 - - 389.72 Disposals ^ 0.18 1.20 12.46 122.31 8.39 13.30 - 4.67 162.51 - - 162.51 Adjustments - Exchange Diference - (1.05) (2.24) 59.37 0.93 0.01 (110.73) 0.26 (53.45) (12.86) (12.86) (66.31) - Other * - - - (0.00) 0.01 - - (0.08) (0.07) - - (0.07) As at March 31, 2014 208.04 395.68 1,417.89 18,079.42 114.05 33.65 5,794.73 80.79 26,124.25 581.82 581.82 26,706.07 Depreciation As at April 01, 2012 2.62 - 203.33 2,113.04 26.75 13.62 145.89 19.38 2,524.63 326.22 326.22 2,850.85 Charged For the Period 1.39 - 50.59 883.71 13.28 4.42 85.00 9.82 1,048.21 48.36 48.36 1,096.57 On Disposals 0.00 - 0.72 0.92 2.75 2.05 - 0.99 7.43 - - 7.43 Adjustments - Exchange Diference - - 7.31 70.46 0.04 (0.07) 4.98 (0.14) 82.58 26.28 26.28 108.86 - Other * - - (0.10) (7.78) 0.00 0.00 (3.36) 0.00 (11.24) (34.60) (34.60) (45.84) As at March 31, 2013 4.01 - 260.41 3,058.51 37.32 15.92 232.51 28.07 3,636.75 366.26 366.26 4,003.01 For the Period 2.05 - 49.49 958.82 11.50 3.68 80.67 8.32 1,114.53 26.16 26.16 1,140.69 On Disposals 0.01 - 12.35 37.82 3.33 4.01 - 2.53 60.05 - - 60.05 Adjustments - Exchange Diference - - (0.74) (5.73) 0.26 (0.01) (5.03) 0.15 (11.10) (7.92) (7.92) (19.02) - Other * - - - (61.35) 0.00 - - (0.06) (61.41) - - (61.41) As at March 31, 2014 6.05 - 296.81 3,912.43 45.75 15.58 308.15 33.95 4,618.72 384.50 384.50 5,003.22 Net Block

As at March 31, 2013 194.12 340.46 1,050.15 14,898.63 82.94 29.59 5,662.86 55.06 22,313.81 228.42 228.42 22,542.23 Consolidated Financial Statements As at March 31, 2014 ^^ 201.99 395.68 1,121.08 14,166.99 68.30 18.07 5,486.58 46.84 21,505.53 197.32 197.32 21,702.85 * On reclassifcation of asset class. ** Includes Leasehold Improvements of Gross Block as on April 1, 2012 - ` 56.14 Crores, as on March 31, 2013 - ` 57.17 Crores, as on March 31, 2014 - ` 54.84 Crores and Accumulated Depreciation as on April 1, 2012 - ` 7.82 Crores, as on March 31, 2013 - ` 15.11 Crores, as on March 31, 2014 - ` 21.09 Crores. $ In case of UPCL, Land obtained on Lease from Karnataka Industrial Areas Development Board which will remain leasehold for frst 11 years and after which the lease shall be converted into a sale subject to fulfllment of all the terms and conditions of allotment and payment of additional price, if any as may be fnally fxed by Lessor. All the requirements have been satisfed with respect to the terms and conditions of allotment. ## Includes Mine Lease, Noise Bund, Exploration & Development, Overburden Removal & Rehabilitation asset.

111 ^ Includes Capital Subsidy of ` 2.59 Crores. ^^ Out of the net block an amount of ` 27.92 Crores (March 31, 2013 : ` NIL) worth of assets are held for sale. Annual Report 2013-2014 13 Intangible Assets (` Crores) Particulars Computer Other Total Software Intangible Assets ** Gross Block As at April 01, 2012 28.06 99.31 127.37 Additions 5.91 0.02 5.93 Adjustments - Exchange Diference 0.00 6.59 6.59 As at March 31, 2013 33.97 105.92 139.89 Additions 2.91 - 2.91 Disposals 0.67 - 0.67 Adjustments - Exchange Diference 0.00 (3.69) (3.69) - Others (Reclassifcation) 0.07 - 0.07 As at March 31, 2014 36.28 102.23 138.51 Depreciation As at April 01, 2012 15.01 16.19 31.20 Charged For the Period 8.95 21.47 30.42 Adjustments - Exchange Diference 0.00 0.20 0.20 As at March 31, 2013 23.96 37.86 61.82 For the Period 6.93 21.01 27.94 On Disposals 0.66 - 0.66 Adjustments - Exchange Diference 0.00 (2.22) (2.22) - Others (Reclassifcation) 0.06 - 0.06 As at March 31, 2014 30.28 56.65 86.94 Net Block As at March 31, 2013 10.01 68.06 78.07 As at March 31, 2014 6.00 45.58 51.58 ** includes Briquetting technology asset & third party capital contribution for the port.

14 Capital Work In Progress (` Crores) As at and Upto As at and Upto March 31, 2014 March 31, 2013 Asset Under Construction (Refer Note 56,76 and 80) 9,250.14 8,841.46 Other Direct Cost Salaries, Allowances and Benefts to Employees 205.42 235.47 Contribution to Provident Fund and Other Funds 9.68 9.16 Grid Connection Charges 2.00 3.38 Staf Welfare Expenses 4.11 5.54 Rent 11.37 16.08 Rates and Taxes 14.15 19.15 Socio Economic Development Expenses 42.57 68.32 Repairs and Maintenance - Others 3.22 6.43 Ofce Maintenance 5.33 6.28 Insurance 56.28 84.50 Printing and Stationery 1.53 2.23 Consultancy and Other Professional Charges 132.81 161.33 Electricity, Water and Fuel Charges 1.31 1.64 Travelling and Conveyance 28.05 40.66 Communication Expenses 3.37 4.57 112 Consolidated Financial Statements

(` Crores) As at and Upto As at and Upto March 31, 2014 March 31, 2013 Project Allotment Expenses 29.63 30.32 Interest 3,767.23 3,965.55 Loss/(Gain) on Foreign Exchange Fluctuation (net) 465.33 225.40 Bank and Other Finance Charges 110.41 158.13 Depreciation 14.46 15.53 Trail Run Cost - Fuel Consumed - 99.51 Trail Run Cost - Finance Charges 0.99 - Miscellaneous Expenses 25.82 68.49 14,185.21 14,069.13 Less: Other Income Sale of Infrm Power - 90.27 Miscellaneous Income 41.44 45.39 Insurance Claim Received 58.52 2.73 Interest Received (Gross) on Deposits and Others 93.48 48.53 13,991.77 13,882.21 Less: Expenditure Apportioned over Cost of Fixed Assets 3.67 1,778.45 Less: Charged to Proft and Loss Account 2.13 12.27 13,985.97 12,091.49

15 Intangible Asset Under Development (` Crores) As at and Upto As at and Upto March 31, 2014 March 31, 2013 Other Direct Cost Salaries, Allowances and Benefts to Employees 8.68 7.49 Contribution to Provident Fund and Other Funds 0.10 0.10 Staf Welfare Expenses 0.07 0.05 Rent 0.92 0.58 Rates and Taxes 1.01 1.01 Repairs and Maintenance - Others 0.04 0.01 Ofce Maintenance 0.99 0.69 Insurance 0.25 0.25 Printing and Stationery 0.07 0.05 Consultancy and Other Professional Charges 2.93 2.93 Travelling and Conveyance 1.07 0.96 Communication Expenses 0.14 0.12 Project Allotment Expenses 0.06 0.06 Interest 24.58 20.97 Bank and Other Finance Charges 8.34 8.11 Depreciation 0.11 0.06 Miscellaneous Expenses 0.16 0.14 49.52 43.58 Less: Other Income Miscellaneous Income 0.48 0.48 Interest Received (Gross) on Deposits and Others 0.13 0.13 48.91 42.97

113 Annual Report 2013-2014 16 Non Current Investments (At Cost unless otherwise stated) No. Crores (` Crores) As at As at As at As at March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 I Trade Investments (a) Investment in Equity Instruments (i) Investment in Associate Company (Unquoted) (At cost plus share of profts/losses based on equity accounting) Equity Shares @ `10/- each fully paid up Lanco Vidarbha Thermal Power Limited # 0.29 0.29 - - (After elimination of proft/(loss) of ` 2.91 (March 31, 2013: ` 2.91) Crores) Genting Lanco Power (India) Private Limited 0.05 0.05 11.47 10.63 (Including Share of proft/(loss) of ` 9.36 (March 31, 2013: ` 8.52) Crores) Regulus Power private Limited 0.23 0.23 0.23 0.23 (Including Share of proft/(loss) of ` (0.0042) (March 31, 2013: ` (0.0042) Crore) Himavat Power Limited 0.00 0.00 - - (Including Share of proft/(loss) of ` (0.0027) (March 31, 2013: (0.0027)) Crores & after elimination of proft/(loss) of ` 0.0073 (March 31, 2013: 0.0073) Crore) Pragdisa Power Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` 0.0026 (March 31, 2013: ` 0.0026) Crore) Vainateya Power Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` 0.0026 (March 31, 2013: ` 0.0026) Crore) Avior Power Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` 0.0026 (March 31, 2013: ` 0.0026) Crore) Mirach Power Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` 0.0026 (March 31, 2013: ` 0.0026) Crore) Lanco Hoskote Highway Limited 5.03 5.03 32.48 41.31 (Including Share of proft/(loss) of ` (7.19) (March 31, 2013: ` (0.26)) Crore & after elimination of proft/ (loss) of ` 10.61 (March 31, 2013: ` 8.71) Crores) Lanco Devihalli Highways Limited 4.59 4.59 26.27 35.92 (Including Share of proft/(loss) of ` (17.41) (March 31, 2013: ` (7.74)) Crores & after elimination of proft/(loss) of ` 2.23 (March 31, 2013: ` 2.25) Crores) Bay of Bengal Gateway Terminal Private Limited 0.00 0.00 - - (Including Share of proft/(loss) of ` (0.01) (March 31, 2013: ` (0.01)) Crore) Charon Trading Private Limited 0.03 0.03 0.30 0.30 (Including Share of proft/(loss) of ` (0.04) (March 31, 2013: ` (0.04)) Crore) Mimas Trading Private Limited 0.05 0.05 0.47 0.47 (Including Share of proft/(loss) of ` (0.03) (March 31, 2013: ` (0.03)) Crore)

114 Consolidated Financial Statements

No. Crores (` Crores) As at As at As at As at March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 Ananke Properties Private Limited 0.10 0.10 0.92 0.92 (Including Share of proft/(loss) of ` (0.12) (March 31, 2013: ` (0.12)) Crore) Tethys Properties Private Limited 0.10 0.10 0.92 0.92 (Including Share of proft/(loss) of ` (0.12) (March 31, 2013: ` (0.12)) Crore) Bianca Properties Private Limited 0.10 0.10 0.92 0.92 (Including Share of proft/(loss) of ` (0.12) (March 31, 2013: ` (0.12)) Crore) Belinda Properties Private Limited 0.10 0.10 0.92 0.92 (Including Share of proft/(loss) of ` (0.12) (March 31, 2013: ` (0.12)) Crore) Phoebe Trading Private Limited 0.03 0.03 0.31 0.31 (Including Share of proft/(loss) of ` (0.03) (March 31, 2013: ` (0.03)) Crore) Basava Power Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` (0.0026) (March 31, 2013: ` (0.0026)) Crore) Siddheswara Power Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` (0.0026) (March 31, 2013: ` (0.0026)) Crore) DDE Renewable Energy Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` 0.31 (March 31, 2013: ` 0.31) Crore) Electromech Maritech Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` 0.64 (March 31, 2013: ` 0.64) Crore) Finehope Allied Engg. Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` 0.0038 (March 31, 2013: ` 0.0038) Crore) KVK Energy Ventures Private Limited 0.49 0.49 4.88 4.50 (Including Share of proft/(loss) of ` Nil (March 31, 2013: ` (0.03)) Crore & after elimination of proft/(loss) of ` Nil (March 31, 2013: ` 0.35) Crore) Newton Solar Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` 0.0026 (March 31, 2013:` 0.0026) Crore) Saidham Overseas Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` 0.0035 (March 31, 2013: ` 0.0035) Crore) Vasavi Solar Power Private Limited 0.00 0.00 - - (After elimination of proft/(loss) of ` 0.05 (March 31, 2013: ` 0.05) Crore) (ii) Investment in Other Company (Unquoted) Unique Corporate Consultants Pvt Ltd. 0.15 0.15 1.50 1.50 Indian Energy Exchange 0.13 0.13 1.25 1.25 Sub Total (a) 82.84 100.10

115 Annual Report 2013-2014

No. Crores (` Crores) As at As at As at As at March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 (b) Investment in Preference Shares (i) Investment in Associate Company (Unquoted) 0.001% Cumulative Compulsory Convertible Preference Shares @ ` 10/- each fully paid up Himavat Power Limited 55.09 53.83 550.88 538.32 (Including Share of proft/(loss) of ` (0.08) (March 31, 2013: ` (0.06)) Crore) Mirach Power Private Limited 0.03 0.03 0.29 0.29 (Including Share of proft/(loss) of ` (0.01) (March 31, 2013: ` (0.01)) Crore) 0.001% Optionally Convertible Cumulative Redeemable Preference shares @ ` 10/- each fully paid up Avior Power Pvt Ltd 0.25 0.25 2.50 2.50 (Including share of proft/(loss) of ` (0.0015) (March 31, 2013: ` (0.0015) Crore) Ananke Properties Private Limited 3.30 3.28 66.12 65.72 Belinda Properties Private Limited 3.30 3.28 65.92 65.92 Bianca Properties Private Limited 3.30 3.28 65.92 65.72 Tethys Properties Private Limited 3.30 3.28 65.92 65.72 Charon Trading Private Limited 1.09 1.09 10.85 10.85 Mimas Trading Private Limited 0.27 0.27 2.66 2.65 Phoebe Trading Private Limited 0.27 0.27 3.15 2.65 Regulus Power Private Limited 0.02 0.02 2.21 1.35 Lanco Devihalli Highways Limited 1.40 - 14.03 - DDE Renewable Energy Private Limited 0.74 0.74 5.21 6.18 (Including Share of proft/(loss) of ` (1.43) (March 31, 2013: ` (0.53)) Crore & after elimination of proft/(loss) of ` (0.07) (March 31, 2013: ` 1.70) Crores) Electromech Maritech Private Limited 0.74 0.74 6.09 6.84 (Including Share of proft/(loss) of ` (1.33) (March 31, 2013: ` (0.57)) Crore & after elimination of proft/ (loss) of ` 0.01 (March 31, 2013: 2.04) Crores) Finehope Allied Engineering Private Limited 0.75 0.75 4.66 5.57 (Including Share of proft/(loss) of ` (1.16) (March 31, 2013: ` (0.59)) Crore & after elimination of proft/ (loss) of ` (0.33) (March 31, 2013: ` 0.86) Crore) KVK Energy Ventures Private Limited 10.86 10.86 111.35 111.35 Newton Solar Private Limited 0.75 0.75 5.93 6.49 (Including Share of proft/(loss) of ` (1.38) (March 31, 2013: ` (0.48)) Crore & after elimination of proft/ (loss) of ` 0.35 (March 31, 2013: 0.90) Crore) Saidham Overseas Private Limited 0.75 0.75 4.24 4.60 (Including Share of proft/(loss) of ` (0.68) (March 31, 2013: ` (0.29)) Crore & after elimination of proft/(loss) of ` 0.03 (March 31, 2013: ` 0.64) Crore) Vasavi Solar Power Private Limited 0.75 0.75 4.39 5.25 (Including Share of proft/(loss) of ` (2.13) ((March 31, 2013: ` (1.20)) Crores & after elimination of proft/(loss) of ` (March 31, 2013: ` 0.07) Crores)

116 Consolidated Financial Statements

No. Crores (` Crores) As at As at As at As at March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 0.01% Redeemable Cumulative Convertible Preference Shares @ ` 10/- each fully paid up Lanco Vidarbha Thermal Power Limited # 70.47 70.47 612.43 624.78 (Including Share of proft/(loss) of ` (1.69) (March 31, 2013: ` (1.69) Crores & after elimination of proft/ (loss) of ` 79.81 (March 31, 2013: ` 78.24) Crores) 0.01% Cumulative Compulsory Convertible Preference Shares @ ` 10/- each, fully paid up Lanco Vidarbha Thermal Power Limited # 1.36 - 13.64 - (ii) Investment in Other Company (Unquoted) 6% Optionally Convertible Redeemable Cumulative Preference shares @ ` 1/- each fully paid up Clarion Power Corporation Limited 0.25 0.25 0.25 0.25 Rithwik Energy Systems Limited 0.14 0.14 0.14 0.14 0.001% Cumulative Compulsory Convertible Preference Shares @ ` 10/- each fully paid up Lanco Babandh Power Limited 122.17 112.20 1,221.70 1,122.04 0.01% Redeemable Cumulative Convertible Preference Shares @ ` 10/- each fully paid up Lanco Horizon Properties Private Limited 7.25 7.21 72.51 72.19 Sub Total (b) 2,912.98 2,787.37 Total Trade Investments (I) (a+b) 2,995.82 2,887.47 II Non Trade Investments (c) Investment in Equity Instruments Investment in Other Company (Quoted) Equity Shares @ ` 10/- each fully paid up Power Finance Corporation Limited 0.02 0.02 5.02 5.02 Rural Electrifcation Corporation Limited 0.00 0.00 0.99 0.99 Indian Bank 0.00 0.00 0.06 0.06 Andhra Bank 0.00 0.00 0.21 0.21 Bank of Baroda 0.00 0.00 0.17 0.17 Central Bank of India 0.00 0.00 0.02 0.02 Sub Total (c) 6.47 6.47 (d) Investment in Debentures or Bonds (Unquoted) of ` 0.10 Crores each, fully paid up Central Bank of India 0.00 0.00 1.00 1.00 Sub Total (d) 1.00 1.00 (e) Investment in Mutual Funds/ULIPs/Insurances (Unquoted) Birla Sunlife Insurance Platinum Premier Plan 0.06 0.06 0.67 0.67 MetLife-Met Smart One 0.00 0.00 0.05 0.05 Star Union Dai-Ichi Life Insurance 1.03 - Canara HSBC OBC Insurance ISP 0.18 0.09 MetLife-Met Suvidha Non Par Single 0.30 0.30 Sub Total (e) 2.23 1.11 Total Non Trade investment (II) (c+d+e) 9.70 8.58 Total Non Current Investments (I + II) 3,005.52 2,896.05 Aggregate amount of Quoted Investments 6.47 6.47 Market Value of Quoted Investments 6.73 6.42 Aggregate amount of Non - Quoted Investments 2,999.05 2,889.58

117 Annual Report 2013-2014 Details of Shares pledged with Banks and Financial Institutions No. Crores As at As at March 31, 2014 March 31, 2013 Non Current Investment * Lanco Vidarbha Thermal Power Limited - Equity Shares 0.10 0.10 Lanco Hoskote Highways Private Limited– Equity Shares 5.03 5.03 Lanco Devihalli Highways Private Limited– Equity Shares 4.59 4.59 DDE Renewable Energy Private Limited - Equity Shares 0.00 - Electromech Maritech Private Limited - Equity Shares 0.00 0.00 Newton Solar Private Limited - Equity Shares 0.00 0.00 Saidham Overseas Private Limited - Equity Shares 0.00 - Vasavi Solar Power Private Limited - Equity Shares 0.00 0.00 Himavat Power Limited – Preference Shares 26.90 26.90 DDE Renewable Energy Private Limited - Preference Shares 0.74 - Electromech Maritech Private Limited - Preference Shares 0.14 0.14 Finehope Allied Engineering Private Limited - Preference Shares 0.14 0.14 Newton Solar Private Limited - Preference Shares 0.14 0.14 Vasavi Solar Power Private Limited - Preference Shares 0.14 0.14 Saidham Overseas Private Limited - Preference Shares 0.74 - Lanco Vidarbha Thermal Power Limited - Preference Shares 33.33 28.49 Lanco Babandh Power Limited - Preference Shares 70.62 70.62 * The above shares were pledged with Banks and Financial Institutions who have extended Loan & Credit Facilities to the respective investee companies. # The Unencumbered shares in the investee company are being ofered as collateral security to the CDR lenders of the company.

17 Current Investments (At lower of cost and fair value) No. Crores (` Crores) As at As at As at As at March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 Investment in Mutual Funds (Unquoted) Baroda Pioneer Liquid Fund - Daily Dividend - 0.01 - 5.00 Birla Sunlife Cash Manager-Institutional Plan-Daily Dividend 0.00 0.00 0.01 0.01 Canara Robeco-Treasury Advantage Retail Dividend Find 0.00 0.00 0.20 0.41 Canara Robeco Income Fund -regular growth 0.01 0.00 0.13 0.01 Canara Robeco Gold Saving Fund 0.00 0.00 0.20 0.09 HDFC Liquid Fund - Premium Plan Growth 0.00 0.00 0.01 0.01 HDFC Liquid Fund - Premium Plan Daily Dividend 0.00 0.00 0.02 0.02 Total Current Investments 0.57 5.55

118 Consolidated Financial Statements

18 Loans and Advances (` Crores) Non Current Current As at As at As at As at March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 Capital Advances Secured, Considered Good 0.50 0.57 - - Unsecured, Considered Good 75.59 161.95 - - 76.09 162.52 - - Security Deposit Secured, Considered Good - 0.10 - - Unsecured, Considered Good 134.09 107.37 20.10 21.88 Doubtful 0.60 0.60 0.38 0.38 134.69 108.07 20.48 22.26 Less: Provision for doubtful Security Deposit 0.60 0.60 0.38 0.38 134.09 107.47 20.10 21.88 Loans & Advances to Related Party (Note 46) Advances for Investment 16.16 19.69 10.65 614.14 Prepaid Expense - 0.24 - - Loans Receivable 68.88 309.68 280.92 67.23 Advances Recoverable in Cash or in kind - - 65.80 68.29 85.04 329.61 357.37 749.66 Other Loans & Advances (Unsecured, Considered good otherwise stated) Advance Tax (Net of Provision for Tax) 29.28 21.39 123.81 195.91 Minimum Alternative Tax Credit Entitlement 19.17 19.17 23.13 23.13 Loans and Advances to Employees - 3.51 8.46 5.78 Advances for Investment 3.64 - - - Prepaid Expense 0.18 0.11 99.67 57.20 Cenvat/Vat/Service Tax Credit Receivable 44.49 41.39 174.58 166.36 Taxes Paid Under protest 0.20 0.20 4.53 7.52 Loans Receivable- Unsecured, Considered Good - - 2.38 2.38 Advances Recoverable in Cash or in kind Secured, Considered Good - - - 0.51 Unsecured, Considered Good 181.76 223.74 1,772.79 1,730.12 Doubtful - - 7.46 5.62 278.72 309.51 2,216.81 2,194.53 Less: Provision for doubtful Other Loans and Advances - - 7.46 5.62 278.72 309.51 2,209.35 2,188.91 573.94 909.11 2,586.82 2,960.45

119 Annual Report 2013-2014 19 Trade Receivables and Other Assets (` Crores) Non Current Current As at As at As at As at March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 19.1 Trade Receivables Outstanding for a period exceeding six months from the date they are due for payment Secured, Considered Good 111.74 116.04 Unsecured, Considered Good 1,039.58 938.43 Doubtful 12.07 5.17 - - 1,163.39 1,059.64 Less : Allowance for bad & doubtful debts 12.07 5.17 - - 1,151.32 1,054.47 Other Receivable Unsecured, Considered Good 604.25 525.51 2,808.04 3,603.15 Doubtful 2.42 2.41 - - 606.67 527.92 2,808.04 3,603.15 Less : Allowance for doubtful debts 2.42 2.41 - 604.25 525.51 2,808.04 3,603.15 Sub Total (A) 604.25 525.51 3,959.36 4,657.62 19.2 Other Assets Non Current Bank Deposits (Note 21) 238.06 211.86 - - Unamortised Expenses 0.00 0.00 0.00 9.13 Unamortised Premium on Forward Contract - - 11.19 5.13 Unbilled Revenue - - 245.82 96.13 Interest Accrued on Deposits 0.04 0.00 85.70 81.98 Others - - 1.00 0.92 Sub Total (B) 238.10 211.86 343.71 193.29 Total (A + B) 842.35 737.37 4,303.07 4,850.91

20 Inventories (At lower of cost and net realisable value unless otherwise stated) (` Crores) As at As at March 31, 2014 March 31, 2013 Raw Materials (including Stock in transit ` 0.05 (March 31,2013 : ` 15.68)) Crores 258.14 290.71 Construction/Development Work In Progress 2,638.88 2,575.96 Finished Goods 12.05 45.60 Consumables, Stores and Spares (including Stock in transit ` 0.15 (March 31,2013 : ` 0.09)) Crores 212.27 185.31 3,121.34 3,097.58 Details of Closing Inventory Raw Materials Naptha 40.98 43.07 Coal 105.97 95.12 Oil - (HFO, LDO & HSD) 13.29 10.86 Material in Transit & Under Inspection 32.62 42.37 Semi Finished Goods 0.33 6.61 Solar Cells & other Solar Equipments 4.85 1.17 Steel 45.51 57.58 Inventory Others 14.59 33.93 258.14 290.71 Finished Goods Solar Modules 1.38 1.03 Coal 10.67 44.57 12.05 45.60 120 Consolidated Financial Statements

21 Cash And Bank Balance (` Crores) Non Current Current As at As at As at As at March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013 Cash and Cash Equivalents Balances with Banks -On Current Accounts 383.21 182.58 -On Deposit Accounts (Having Maturity less than 3 2.91 48.74 Months from date of deposit) Cash on Hand 0.45 0.58 386.57 231.90 Other Bank Balances On Deposit Accounts** Having Maturity more than 3 Months but less than - - 24.96 80.64 or equal to 12 months from date of deposit Having Maturity more than 12 Months from date of 236.16 187.68 62.59 72.32 deposit On Margin Money Deposit Accounts * 1.90 24.18 105.22 187.95 238.06 211.86 192.77 340.91 Amount disclosed under other non Current assets (Note 19.2) (238.06) (211.86) - - 579.34 572.81 * The Margin Money Deposits are towards Letters of Credit and Bank Guarantees. ** Includes ` 365.93 (March 31, 2013 : 231.05) Crores deposits are under lien.

22 Revenue From Operations (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Contract Operations (A) 2,096.58 4,037.83 Property Development (B) 193.23 166.38 Sale of Services Management Consultancy 2.81 2.81 Operations and Maintenance 4.80 5.30 (C) 7.61 8.11 Sale of Products Electrical Energy 7,404.52 8,557.91 Coal 678.86 946.51 Other Goods 36.22 8.10 (D) 8,119.60 9,512.52 Other Operating Revenue Income from Lease Rentals 2.27 0.47 Other Operating Income 10.74 13.49 (E) 13.01 13.96 Revenue from Operations (A+B+C+D+E) 10,430.03 13,738.80

121 Annual Report 2013-2014 23 Other Income (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Interest Income on Deposits and Margin money 22.64 35.11 Loans Receivable and Inter Corporate Deposits 55.72 40.55 Long Term Investments - 0.13 Others 65.63 19.31 Dividend Income on Current Investments 0.51 1.64 Long Term Investments 0.84 0.51 Net Gain on sale of Current Investments - 0.20 Long Term Investments 0.04 - Other Non-Operating Income (Net of expenses directly attributable to such Income) Insurance Claims Received/Receivable 3.32 9.97 Liabilities and Provisions no longer required written back 0.67 2.88 Net Proft/(Loss) on Sale of Assets 0.01 5.07 Miscellaneous Income 18.44 33.49 167.82 148.86 24 Cost of Materials Consumed (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Construction Material Consumed 1,919.11 2,248.54 Property Development Cost 207.99 187.62 Coal for Power Generation 3,315.67 2,915.69 Gas and Naphta for Power Generation 629.23 797.27 Oil (HFO, LDO and HSD) for Power Generation 32.93 67.18 Other Consumables for Power Generations 21.93 22.46 Consumables for Coal Mining 179.93 201.68 Materials Consumed for Solar Modules & Solar Equipments 29.11 28.76 6,335.90 6,469.20 25 Purchase of Traded Goods (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Power Purchase 529.88 2,161.25 529.88 2,161.25 26 Construction, Transmission, Plant/Site and Mining Expenses (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Equipment/Machinery Hire charges 199.67 147.31 Transmission Charges 30.58 116.14 Repairs, Operations and Maintenance 167.83 222.61 Consumption of Stores and Spares 53.91 48.62 Insurance 46.58 53.73 Electricity 11.89 17.57 Security Charges 23.93 27.91 Coal Mining and transportation Cost 472.53 619.79 Others 54.55 64.96 1,061.47 1,318.64 122 Consolidated Financial Statements

27 (Increase)/Decrease in Inventories of Finished Goods and Construction/Development Work in Progress (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Finished Goods Inventories at the beginning of the year 45.60 31.85 Less : Inventories at the end of the year * 12.05 45.60 (A) 33.55 (13.75) Construction/Development Work in Progress Inventories at the beginning of the year 2,575.96 2,135.66 Add : Other Adjustments (Note 74) (1.67) - Less: Transfer to Fixed Assets 120.07 - 2,454.22 2,135.66 Less : Inventories at the end of the year * 2,638.88 2,575.96 (B) (184.66) (440.30) (Increase)/Decrease in inventories (A+B) (151.11) (454.05) * For Details Note 20

28 Employee Benefts Expenses (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Salaries, allowances and benefts to employees 352.52 549.17 Contribution to provident fund and other funds 16.42 22.03 Employee Stock Option Charge 6.35 19.37 Recruitment and training 2.47 5.26 Staf welfare expenses 20.97 36.18 398.73 632.01 Less: Transferred to Development cost 13.40 12.32 Less: Transferred to Capital work in progress - Other Direct Cost - 1.24 385.33 618.45 29 Other Expenses (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Rent 42.84 57.50 Rates and taxes 14.83 22.64 Donations 3.23 7.56 Repairs and Maintenance - others 4.58 11.10 Marketing and selling expenses 2.12 0.35 Ofce maintenance 10.56 17.74 Insurance 5.78 13.43 Printing and stationery 2.62 4.09 Consultancy and other professional charges 37.53 119.45 Directors sitting fee 0.66 0.74 Electricity charges 4.79 4.29 Net Loss on sale of - Long Term Investments - 0.15 Net Loss on Foreign Exchange Fluctuations 370.67 77.49 Remuneration to auditors (As Auditor): Audit Fee 2.66 2.25 Tax audit fees 0.27 0.29 Remuneration to auditors in other capacity - Certifcation 0.03 0.05

123 Annual Report 2013-2014

(` Crores) For the Year Ended Reimbursement of expenses to Auditors 0.23 0.40 Travelling and conveyance 37.19 77.92 Communication expenses 7.78 10.73 Net Loss on Sale of fxed assets and Assets write of 15.61 18.69 Provision for Advances/claims/debts 15.23 68.33 Business Promotion and Advertisement 5.32 15.64 Miscellaneous expenses 24.82 48.44

609.36 579.27 Less: Recovery of Common Expenses 9.87 8.29 Less: Transferred to Development cost 1.59 5.21 Less: Transferred to Capital Work in Progress - Other Direct Cost - 2.08 Less: Elimination of Cost on Intercompany Management Consultancy Income 2.55 3.72 595.35 559.97 30 Finance Cost (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Interest 3,401.26 2,972.20 Other Borrowing Cost (Upfront Fees, Commitment Charges, LC commission etc.) 124.89 156.72 Exchange Diference to the extent considered as an adjustment to borrowing costs (11.97) 10.30 3,514.18 3,139.22 Less: Transferred to development cost 132.68 122.92 Less: Transferred to Capital Work in Progress - Other Direct Cost 619.38 594.86 2,762.12 2,421.44 31 Depreciation and Amortisation Expense (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Depreciation on Tangible Assets 1,144.07 1,095.51 Amortisation on Intangible Assets 27.84 30.30 1,171.91 1,125.81 32 Earning Per Share (EPS) (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Net Proft/(Loss) after Taxation, Minority Interest and Share of proft of Associates (2,273.88) (1,073.30) Net Proft/(Loss) for calculation of basic EPS (A) (2,273.88) (1,073.30)

Net Proft as above (2,273.88) (1,073.30) Add : Interest on Loan convertible into equity shares (Net of tax) 245.56 - Net Proft/(Loss) for calculation of diluted EPS (B) (2,028.32) (1,073.30)

Weighted average number of Equity Shares for Basic EPS (C) 235.02 234.13 Efect of dilution : Stock options under ESOP * - 0.16 Convertible loan into equity shares* 378.90 - Weighted Average number of Equity shares for Diluted EPS (D) 613.92 234.29

Basic EPS (in `) (A)/(C) (9.68) (4.58) Diluted EPS (in `) * (B)/(D) (9.68) (4.58) *Diluted EPS is anti dilutive hence restricted to basic EPS. 124 Consolidated Financial Statements

33 Intra Group Turnover and Profts The Group ‘Revenue from Operations’, ‘Net Proft after taxation, minority interest and share of profts of associates’, ‘Net Cash fow from Operating Activities’ and ‘Reserves and Surplus’ is after eliminating inter-company transactions as per Accounting Standard (AS) 21 “Consolidated Financial Statements” and Accounting Standard (AS) 23 “Accounting for Investments in Associates in Consolidated Financial Statements”. The impact of these eliminations on the said items is as under: (` Crores) For the Year Ended March 31, 2014 March 31, 2013 Revenue from Operations Before Elimination 10,707.45 15,147.00 Less : Elimination of Intersegment Operating Income 277.42 1,408.20 After Elimination (As per Note 22) 10,430.03 13,738.80 Net Proft/(Loss) after taxation, minority interest and share of profts of associates Before Elimination (2,288.78) (1,070.16) Less : Elimination for current year (14.90) 3.14 After Elimination (2,273.88) (1,073.30) Net Cash fow from Operating Activities Before Elimination 1,345.37 1,869.51 Less : Elimination for current year (15.05) (17.58) After Elimination 1,360.42 1,887.09 (` Crores) As at As at March 31, 2014 March 31, 2013 Reserves and Surplus Before Elimination 2,719.46 4,949.28 Less : Elimination for current year (14.90) 3.14 Less : Elimination for previous years 1,516.06 1,512.92 After Elimination (As per Note 4) 1,218.30 3,433.22 34 Efect of new subsidiaries acquired/disposed of subsidiaries on the Consolidated fnancial statements The efect of acquisition (including newly formed) of stake in subsidiaries on the consolidated fnancial statements is as under:- (` Crores) Name of Subsidiary company Efect on Group Efect on Net Efect on Group Efect on Net Proft/(Loss) Assets as at Proft/(Loss) after Assets as at after Minority March 31, 2014 Minority Interest March 31, 2013 Interest for the for the year year ended ended March 31, March 31, 2014 2013 Indian Subsidiaries Lanco Rambara Hydro Private Limited - - - 0.01 Tasra Mining & Energy Company Private Limited - 0.35 - - Foreign Subsidiaries Bhola Electricity Pvt Ltd - - - 0.02 Sirajgunj Electric Private Limited - 0.01 - -

- 0.36 - 0.03

125 Annual Report 2013-2014 The efect of disposal of stake in subsidiaries on the consolidated fnancial statements is as under:- (` Crores) Name of Subsidiary company Efect on Group Efect on Net Efect on Group Efect on Net Proft/(Loss) Assets as at Proft/(Loss) after Assets as at after Minority March 31, 2014 Minority Interest March 31, 2013 Interest for the for the year year ended ended March 31, March 31, 2014 2013 Foreign Subsidiaries Lanco Solar Canada Limited - - (0.89) (0.95) Lexton Trading (Pty.) Ltd. (0.01) - - - Approve Choice Investments Ltd. - - - - Bar Mount Trading (Pty.) Ltd. - - - - Barrelake Investments (Pty.) Ltd. - - - - Belara Trading (Pty.) Ltd. - - - - Caelamen (Pty.) Ltd. - - - - Dupondius (Pty.) Ltd. - - - - Gamblegreat Trading (Pty.) Ltd. - - - - Lanco Rocky Face Land Holdings LLC (3.28) 3.29 - - Lanco Tracy City Land Holdings LLC (3.26) 3.27 - - Apricus S.R.L (0.27) (1.60) - - (6.82) 4.97 (0.89) (0.95) 35 Prior period item for the year ended March 31, 2014 is due to positive diference of ` 17.65 Crores between the management fnancials and audited fnancials of GCM, CMM and LRAPL fnancials under Australian GAAP for the year ended March 31,2013. Further on review of property,plant and equipment opening balances during the year there was a prior period expenditure of ` 61.15 Crores. Net prior period item is ` 43.50 Crores. Prior period item for the year ended March 31, 2013 is on account of foreign currency loans restatement. 36 Exceptional Item for the year ended March 31, 2014 includes :- (` Crores) Particulars Borrowing cost reduction due to sacrifce by Bankers, Reversal of promoter directors salary and net of CDR 0.90 expenses on implementation of CDR Provision for diminution in Investments value of LBHPPL, LHPL and LSIPL 86.65 Additional Transmission charges as per CERC order relating to one of the Subsidiary (LKPL) 91.71 Total 179.26 37 (a) On March 30, 2012, the Company has put in place two level power holding company structure wherein Lanco Power Limited (LPL) a wholly owned subsidiary of the Company as the power holding vehicle for the Group. LPL has further two wholly owned subsidiaries namely Lanco Thermal Power Limited (LTPL) and Lanco Hydro Power Limited (LHPL) as thermal power holding company and hydro power holding company respectively. (b) As approved by the members vide their resolution dated March 19, 2010 the Company has sold its shareholding in some of its Subsidiaries and Associate Companies (hereinafter referred as ‘related entities’) to its wholly owned step down subsidiaries i.e. Lanco Thermal Power Limited, Lanco Hydro Power Limited and to an associate, Regulus Power Private Limited (an erstwhile subsidiary) on March 30, 2012 for total cash consideration amounting to ` 6,815.51 Crores. As of March 31, 2014 ` 2,644.22 Crores (March 31, 2013 ` 2,701.35 Crores) representing the balance amount of consideration for sale of shares is receivable from the above entities and the same has been eliminated while preparing the consolidated fnancial statements. (c) As a result of the above change, one of the associate company namely Lanco Babandh Power Limited, consequent to the sale of its equity shares to an associate i.e. Regulus Power Private Limited, has become an associate of an associate. (d) The aforesaid transfer of shares in various subsidiaries and associates requires lenders/customer approvals. Pending the receipt of approvals, the Company has recorded the sale of investments in related entities in the fnancial statements. During the year, the management has obtained approvals from the most of the lenders and the management is confdent of receiving the residual approvals and share transfer is in progress. In case such approvals are not received, the loans given by the lenders to the respective 126 Consolidated Financial Statements

related entities may become due if the Company still wants to pursue transfer of shares, or the sold investments will be purchased back by the company. Based on legal advice, the management is of the opinion that they have complied with relevant laws and regulations. 38 The audit for the current fnancial year ended March 31, 2014 pertaining to LRIPL & its subsidiaries, LSIPL and its subsidiaries and LENY is under progress. Accordingly total assets of ` 7,406.72 Crores as at March 31, 2014, the total revenue of ` 790.01 Crores and net loss of ` 716.75 Crores for the year ended March 31, 2014, have been taken from the fnancials prepared by the management under Indian GAAP. 39 During the year 2011-12 in line with the Notifcation dated December 29, 2011 issued by the Ministry of Corporate Afairs, the group had selected the option given in Paragraph 46A of the Accounting Standard – 11,” The Efects of Changes in Foreign Exchange Rates”, the foreign exchange (gain)/loss arising on revaluation of long term foreign currency monetary items in so far as they relate to the acquisition of depreciable capital assets to be depreciated over the balance life of such assets and in other cases the foreign exchange (gain)/loss to be amortised over the balance period of such long term foreign currency monetary items. On availment of option under this notifcation, foreign exchange diference remains unamortized is ` 1,036.84 (March 31, 2013 : 472.10) Crores. 40 The Group currently provides depreciation on assets at the rates specifed in the Schedule XIV of the Companies Act, 1956. The Ministry of Corporate Afairs (MCA) vide its notifcation dated May 31, 2011, has clarifed that companies engaged in the generation and supply of electricity can distribute dividend after providing for depreciation at rates/methodology notifed by Central Electricity Regulatory Commission (CERC). As the Group has both regulated and non-regulated generating assets, the management has sought clarifcations and guidance from the MCA on the applicability of the CERC rates for its regulated and non-regulated generating assets. Pending the clarifcation, existing depreciation rates continued for the year ended March 31, 2014. 41 As at March 31, 2014 the Group has receivables from various State Electricity Utility companies and other customers for sale of power aggregating to ` 2,823.45 Crores, net current liabilities of ` 1,775.30 Crores and current maturities of long term borrowings ` 1,828.49 Crores. Based on internal assessment and various discussions had with the customers, the management is confdent of recovery of receivables. At present the Group’s operating assets are not generating envisaged revenues on account of various factors beyond the control of the company, such as short supply of coal, non availability of gas, pending tarif clarity and delayed payments from the customers is posing challenges for meeting the cash fow needs. However the Group has actively engaged in resolving in each of the aspects associated with the respective revenue generating units by efectively addressing the core issues which would enable a quick turnaround in the situation and the management is confdent that the eforts would result in the operating units generating positive cash fows. The approved CDR scheme of the company and the aspects like inviting strategic investors, disposal of assets would also bring in the additional cash fows into the system. Cumulatively, the Group is confdent that the initiatives narrated above would address the bottlenecks and make the operating units viable, augmenting the construction and EPC activity to normal level and thus does not foresee any eventual cash fow mismatch in terms of meeting its fnancial obligations including that of to the lenders, vendor and others and also will have adequate cash fows to support the implementation of ongoing projects which are capitalising interest and expenses during the period of construction including the current low level period of construction.

42 Employee Benefts Defned Beneft Plans The Group has a defned beneft gratuity plan. Every employee who has completed fve years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. In certain subsidiaries the scheme is funded with an insurance company in the form of a qualifying insurance policy. The following table summarizes the components of net beneft expense recognised in the Statement of Proft and Loss/Capital Work in Progress/Intangible Assets Under Development and amounts recognised in the Balance Sheet for the respective plans. (` Crores) Gratuity March 31, 2014 March 31, 2013 Net Employee beneft expense recognized in the employee cost Current service cost 3.51 4.24 Interest cost on beneft obligation 1.55 1.65 Expected return on plan assets (0.24) (0.21) Net actuarial (gain)/loss recognized in the year (1.43) (3.50) Net beneft expense 3.39 2.18

127 Annual Report 2013-2014

(` Crores) Gratuity March 31, 2014 March 31, 2013 Balance Sheet Beneft asset/liability Present value of defned beneft obligation 19.43 19.17 Fair value of plan assets 2.84 2.57 Plan asset/(liability) (16.59) (16.60) Change in the present value of the defned beneft obligation Opening defned beneft obligation 19.17 20.43 Current service cost 3.51 4.25 Interest cost 1.55 1.65 Actuarial (gain)/loss on obligation (1.61) (3.50) Benefts paid (3.48) (1.87) Beneft transferred in 0.96 - Beneft transferred Out (0.67) (1.79) Closing defned beneft obligation 19.43 19.17 Change in the fair value of plan assets Opening fair value of plan assets 2.57 2.30 Expected return 0.24 0.21 Contributions by employer 0.25 0.10 Benefts paid (0.04) (0.06) Actuarial gain/(loss) (0.18) 0.02 Closing fair value of plan assets 2.84 2.57 Investment details of the plan assets Investment with Insurer 100% 100% Assumptions Discount Rate (%) 8.79 8 to 8.40 Estimated Rate of Return on Plan Assets 9.00 9.00 Attrition Rate 19.00 19.00 Expected rate of salary increase (%) 6.00 6.00 Expected Average Remaining Service (years) 4.02 4.06 The estimates of future salary increases, considered in actuarial valuation, take account of infation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. Amount of defned beneft plan for the current and previous four periods are as follows * (` Crores) Present value of Surplus/(defcit) Experience Experience Defned beneft adjustments on adjustments on obligation plan liabilities plan assets March 31, 2014 19.43 16.59 1.43 - March 31, 2013 19.17 16.60 3.52 - March 31, 2012 20.43 17.98 1.41 - March 31, 2011 16.51 15.60 0.77 - March 31, 2010 9.55 8.76 0.90 - * Information is furnished to the extent available within the group. Defned Contribution Plans In respect of the defned contribution plan (Provident fund), an amount of ` 12.29 (March 31, 2013 : ` 17.43) Crores has been recognized as expenditure in the Statement of Proft and Loss/Capital Work in Progress. Other Employee Benefts During the year the group has provided Retention Bonus of ` (6.47) (March 31, 2013 : ` 10.87) Crores. The provision for compensated absences as per actuarial valuation as at March 31, 2014 is ` 41.48 (March 31, 2013 : ` 41.06) Crores. 128 Consolidated Financial Statements

43 Employee Stock Option Scheme The Group has till March 31, 2014 allotted 1.11 (March 31, 2013: 1.11) Crores equity shares of ` 10/- each to LCL Foundation (ESOP - Trust) towards the Employee Stock option plan 2006 (The Plan) which was formulated by the Group. The plan provides for grant of stock options of equity shares of the Company to employees of the Company and its subsidiaries subject to continued employment with the Company or Group. Each option comprises of one equity share which will vest on annual basis at 20% each over fve years and shall be capable of being exercised within a period of six years from the date of frst annual vesting. Each option granted under the above plans entitles the holder to one equity share of the company at an exercise price, which is approved by the compensation committee. The Plan is in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999. Consequent to the splitting of Equity Share of ` 10 each into 10 equity shares of ` 1 each in the year 2009-10, the number of shares allotted to the trust and the options granted, forfeited, exercised are disclosed at ` 1 each.” A summary of the status of the Company’s plan is given below: Particulars March 31, 2014 March 31, 2013 No. Crores Weighted No. Crores Weighted Average Average Exercise Exercise Price Price (`) (`) Outstanding at the beginning of the year 2.38 0.24 3.66 0.24 Granted during the year - - - 0.00 Forfeited during the year (0.22) - (0.22) - Exercised during the year (1.50) 0.24 (1.06) 0.24 Expired during the year - - - - Outstanding at the end of the year 0.65 0.24 2.38 0.24 Exercisable at the end of the year 0.37 0.24 1.53 0.24 The weighted average share price for the period over which stock options were exercised was ` 7.28 (March 31, 2013 ` 13.33). The details of exercise price for stock options outstanding at the end of the year are: March 31, 2014 Grant No. (Grant Date) Range of Number Weighted Weighted Exercise Price of Options average average outstanding remaining exercise price (Crores) contractual life of options (in years) Grant 1 (24.06.2006) 0.24 0.01 0 0.24 Grant 2 (02.07.2007) 0.24 0.10 0 0.24 Grant 3 (26.09.2007) 0.24 0.01 0 0.24 Grant 4 (24.04.2008) 0.24 0.04 0.07 0.24 Grant 5 (04.07.2008) 0.24 0.09 0.26 0.24 Grant 6 (01.11.2008) 0.24 0.01 0.59 0.24 Grant 7 (19.02.2009) 0.24 0.01 0.89 0.24 Grant 8 (29.07.2009) 0.24 0.11 1.33 0.24 Grant 9 (27.01.2010) 0.24 0.03 1.83 0.24 Grant 10 (30.04.2010) 0.24 0.02 2.08 0.24 Grant 11 (13.08.2010) 0.24 0.21 2.37 0.24 Grant 12 (12.11.2010) 0.24 0.01 2.62 0.24 0.65

129 Annual Report 2013-2014

March 31, 2013 Grant No. (Grant Date) Range of Exercise Number Weighted Weighted Price of Options average average exercise outstanding remaining price (Crores) contractual life of options (in years) Grant 1 (24.06.2006) 0.24 0.01 - 0.24 Grant 2 (02.07.2007) 0.24 1.06 0.25 0.24 Grant 3 (26.09.2007) 0.24 0.03 0.49 0.24 Grant 4 (24.04.2008) 0.24 0.14 1.07 0.24 Grant 5 (04.07.2008) 0.24 0.28 1.26 0.24 Grant 6 (01.11.2008) 0.24 0.02 1.59 0.24 Grant 7 (19.02.2009) 0.24 0.01 1.89 0.24 Grant 8 (29.07.2009) 0.24 0.24 2.33 0.24 Grant 9 (27.01.2010) 0.24 0.06 2.83 0.24 Grant 10 (30.04.2010) 0.24 0.05 3.08 0.24 Grant 11 (13.08.2010) 0.24 0.44 3.37 0.24 Grant 12 (12.11.2010) 0.24 0.04 3.62 0.24 2.38 The Group has calculated the compensation cost based on the intrinsic value method i.e. the excess of previous closing price of underlying equity shares on the date of the grant of options over the exercise price of the options given to employees under the employee stock option schemes of the Group and is recognised as deferred stock compensation cost and is amortised on a straight line basis over the vesting period of the options. The group is using Black Sholes Model for calculating fair values of ESOP granted for determining impact of the fair value method of accounting of employee compensation in fnancial statement, the impact on net income and earnings per share is provided below:

March 31, 2014 March 31, 2013 Particulars Net Income - As reported ` Crores (2,273.88) (1,073.30) Add: ESOP Cost under Intrinsic Value Method ` Crores 6.35 19.37 Less : ESOP Cost under Fair Value Method (Black Sholes) ` Crores 2.62 19.60 Net Income – Proforma ` Crores (2,270.15) (1,073.53) Basic Earnings per Share: As reported (9.68) (4.58) Proforma (9.66) (4.59) Diluted Earnings per Share: As reported (9.68) (4.58) Proforma (9.66) (4.58) The weighted average fair value of stock options granted during the year was N/A (Previous Year N/A) of share of ` 1 each.

Assumptions:- March 31, 2014 March 31, 2013 Weighted average share price (in `) NA NA Exercise Price (in `) NA NA Expected Volatility NA NA Historical Volatility NA NA Life of the options granted (Vesting and exercise period) in years NA NA Expected dividends (in `) NA NA Average risk-free interest rate NA NA Expected dividend rate NA NA

130 Consolidated Financial Statements

44 Leases Finance Lease : As lessee Assets acquired on fnance lease mainly comprise Plant & Machinery which are used specifcally for mining activities. The leases are non cancellable and non renewable. There is no escalation clause and majority of the lease expires in next 12 months. The minimum lease rentals payable for the assets acquired under Finance Lease agreement and the present value of these rentals are as under:- (` Crores) March 31, 2014 March 31, 2013 Minimum Lease Present Value Minimum Lease Present Value of Payments of MLP Payments MLP Future minimum lease payments and their present values Not later than one year 32.73 30.29 77.60 71.82 Later than one year and not later than fve years 1.74 1.66 1.44 1.38 Later than fve years - - - - 34.47 31.95 79.04 73.20 Less : Future fnance charges 2.52 - 5.84 - Present value of Minimum Lease Payments 31.95 31.95 73.20 73.20

Operating Lease : As lessee The group has entered into certain cancellable and non-cancellable operating lease agreements mainly for ofce premises. The lease rentals charged during the year and maximum obligations on long-term non-cancellable operating leases payable as per the agreements are as follows:- (` Crores) March 31, 2014 March 31, 2013 Lease rentals charged during the year Under Cancellable Leases 22.53 28.55 Under Non-Cancellable Leases 9.07 20.33

Future minimum lease payments under Non Cancellable Leases Not later than one year 3.97 16.55 Later than one year and not later than fve years 2.01 3.10 Later than fve years 0.28 - There are no contingent rents in the lease agreement. The lease term is for 1 – 5 years and is renewable at the mutual agreement of both the parties. There is no escalation clause in the lease agreements (other than those disclosed above). There are no restrictions imposed by lease arrangements.

Operating Lease : As lessor One of the entity in the group has given buildings on operating lease. The lease rentals receivables during the year and maximum outstandings on long term non- cancellable operating leases recievables as per the agreements are as follows :- (` Crores) March 31, 2014 March 31, 2013 Future minimum lease rentals receivable under Non Cancellable Leases Not later than one year 0.22 - Later than one year and not later than fve years 5.35 -

131 Annual Report 2013-2014 45 Segment Reporting The details of primary segment information for the year ended March 31, 2014 and March 31, 2013 are given below: a) The segment report of LITL and its subsidiaries (the Group) has been prepared in accordance with Accounting Standard 17 “Segment Reporting” as notifed under section 211(3C) of the Companies Act.” b) The Group is currently focused on fve business segments: EPC and Construction, Power, Property Development, Infrastructure and Resources. c) In respect of secondary segment information, the Group has identifed its geographical segments as (i) India, (ii) Singapore, (iii) Australia & (iv) Others. The secondary segment information has been disclosed accordingly.”

d) The business segments of the Group comprises of the following: Segment Details of Business EPC and Construction Construction of Industrial, Residential & Commercial Buildings and Roads etc., Engineering, Procurement and Commissioning (EPC) Power Generation of power and trading in power Property Development Development of integrated properties comprising of commercial and residential buildings Infrastructure Development of roads on Build, Operate and Transfer basis and other infrastructure Resources Exploration, mining and marketing of coal Others Residual activities

e) For the purpose of reporting, business segments are primary segments and the geographic segment is a secondary segment.

f) Segment wise Name of Companies

1 EPC and Construction 1 Lanco Infratech Limited 4 Lanco Enterprise Pte Limited (China) 2 Lanco Solar Energy Private Limited 5 Lanco Solar International Pte Limited 3 Lanco International Pte Limited

2 Power 1 Lanco Infratech Limited 26 Lanco Wind Power Private Limited 2 Lanco Power Limited 27 Amrutha Power Private Limited 3 Lanco Thermal Power Limited 28 Spire Rotor Private Limited 4 Lanco Kondapalli Power Limited 29 Emerald Orchids Private Limited 5 Lanco Tanjore Power Company Limited 30 JH Patel Power Project Private Limited 6 Lanco Amarkantak Power Limited 31 National Energy Trading and Services Limited 7 Arneb Power Private Limited 32 Portia Properties Private Limited 8 Udupi Power Corporation Limited 33 Lanco Infratech Nepal Private Limited 9 Lanco Anpara Power Limited 34 Lanco Power International Pte Limited 10 Lanco Hydro Power Limited 35 Lanco Solar Holding Netherland B.V Utrecht 11 Lanco Teesta Hydro Power Limited 36 SolarFi SP 07 12 Lanco Budhil Hydro Power Private Limited 37 SolarFi SP 06 13 Lanco Mandakini Hydro Energy Private Limited 38 Lexton Trading (Pty.) Limited * 14 Lanco Rambara Hydro Power Private Limited 39 Approve Choice Investments (Pty.) Limited * 15 Diwakar Solar Projects Limited 40 Bar Mount Trading (Pty.) Limited * 16 Lanco Solar Services Private Limited 41 Barrelake Investments (Pty.) Limited * 17 Lanco Solar Private Limited 42 Belara Trading (Pty.) Limited * 18 Khaya Solar Projects Private Limited 43 Caelamen (Pty.) Limited * 19 Bhanu Solar Projects Private Limited 44 Dupondius (Pty.) Limited * 20 Lanco Solar Power Projects Private Limited 45 Gamblegreat Trading (Pty.) Limited * 21 Orion Solar Projects Private Limited 46 Lanco Solar International Limited 22 Pasiphae Power Private Limited 47 Lanco Solar International GMBH 23 Sabitha Solar Projects Private Limited 48 Lanco Solar International US Inc. 24 Helene Power Private Limited 49 Lanco Rocky Face Land Holdings LLC * 25 Omega Solar Projects Private limited 50 Lanco Tracy City Land Holdings LLC (USA) *

132 Consolidated Financial Statements

51 Lanco IT PV Investments B.V. 56 Lanco Virgin Islands- 1 LLC 52 Apricus S.R.L * 57 Lanco SP PV 1 Investments B.V. 53 Green Solar SRL 58 Bhola Electricity Private Limited 54 Lanco US PV Investments B.V. 59 Sirajganj Electric Private Limited 55 Lanco Solar Holdings, LLC (USA)

3 Property Development 1 Lanco Hills Technology Park Private Limited 9 Nix Properties Private Limited 2 Uranus Projects Private Limited 10 Cordelia Properties Private Limited 3 Jupiter Infratech Private Limited 11 Deimos Properties Private Limited 4 Uranus Infratech Private Limited 12 Dione Properties Private Limited 5 Leda Properties Private Limited 13 Neptune Projects Private Limited 6 Coral Orchids Private Limited 14 Pearl Farms Private Limited 7 Thebe Properties Private Limited 15 Telesto Properties Private Limited 8 Cressida Properties Private Limited

4 Resources 1 Lanco Resources International Pte Limited 5 Western Australia Coal Terminal Pty Ltd 2 Lanco Resources Australia Pty Limited 6 Mahatamil Mining and Thermal Energy Limited 3 The Grifn Coal Mining Company Pty Limited 7 Tasra Mining & Energy Company Private Limited 4 Carpenter Mine management Pty Limited

5 Infrastructure 1 Lanco Infratech Limited 3 Lanco Kanpur Highways Limited 2 Mercury Projects Private Limited

6 Others 1 LE New York - LLC 3 P.T Lanco Indonesia Energy 2 Lanco Holding Netherland B.V 4 Lanco Infratech (Mauritius) Limited * During the year these companies had been sold/closed

133 134 Annual Report 2013-2014 Report Annual Segment Reporting for the Year Ended March 31, 2014 (g) The details of Primary Segments information for Year Ended March 31, 2014 and March 31, 2013 are given below: (` Crores) Business Segments EPC and Power Property Infrastructure Resources Unallocable Eliminations Total Construction Development March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 Revenue External Customers 2,142.39 4,074.24 7,561.23 8,621.91 196.21 167.73 - - 681.10 954.05 40.85 33.57 - - 10,621.78 13,851.50 Inter Segment 225.35 1,307.93 - 40.67 ------52.07 59.60 (277.42) (1,408.20) - - Revenue Total Revenues 2,367.74 5,382.17 7,561.23 8,662.58 196.21 167.73 - - 681.10 954.05 92.92 93.17 (277.42) (1,408.20) 10,621.78 13,851.50 Segment Result (496.97) 686.05 1,411.04 1,098.62 15.73 1.86 - - (555.81) (300.80) (44.40) (11.95) - - 329.59 1,473.78 before Eliminations Inter Segment Proft (15.50) (19.73) (0.00) 1.48 ------0.45 0.67 - - (15.05) (17.58) Segment Result (481.47) 705.78 1,411.04 1,097.14 15.73 1.86 - - (555.81) (300.80) (44.85) (12.62) - - 344.64 1,491.36 Interest 2,762.12 2,421.44 - - 2,762.12 2,421.44 Unallocated Other (23.94) 36.16 (23.94) 36.16 Income Proft/(Loss) before (2,441.42) (893.92) tax Provision for Current 47.03 152.94 tax Provision for Deferred (176.47) 26.68 tax Net Proft/(Loss) (2,311.98) (1,073.54) after taxation Other Information Segment Assets 5,942.96 6,410.80 34,237.67 33,878.21 2,319.14 2,214.95 723.90 788.84 7,448.83 7,211.39 171.66 317.07 - - 50,844.17 50,821.26 Segment Liabilities 7,670.78 8,569.03 2,253.30 1,379.88 506.11 462.43 3.87 5.75 806.17 822.27 37,308.91 34,975.26 - - 48,549.15 46,214.63 Capital Expenditure 108.84 83.15 1,692.86 2,525.01 176.63 82.99 5.94 17.02 242.48 420.78 - - - - 2,226.74 3,128.95 Depreciation/ 88.73 98.76 907.14 827.52 2.51 1.06 - - 173.53 197.82 - 0.65 - - 1,171.91 1,125.81 Amortisation Other Non Cash 206.66 72.33 33.86 40.24 0.62 0.91 - - 172.03 0.74 - - - - 413.17 114.22 Expenses h) The group’s secondary segments are the geographic distribution of the activities. Revenues and receivables are specifed by location of customers while the other geographical information is specifed by location of assets. The following table summarizes the geographical information for the year ended March 31, 2014 and March 31, 2013: Geographical Segments India Singapore Australia Other Total Particulars March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, March 31, 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 External Revenue by Location of 9,854.73 12,574.12 - - 613.69 738.39 153.37 538.98 10,621.78 13,851.50 Customers Carrying Amount of Segment 42,315.39 42,590.42 1,218.66 1,060.00 7,287.86 7,070.13 22.25 100.71 50,844.17 50,821.26 Assets by Location of Assets

Capital expenditure 1,996.81 2,752.72 0.53 0.67 229.41 375.56 - - 2,226.74 3,128.95 Consolidated Financial Statements

46 Related Party Transactions a) Name of the related parties and description of relationship: Relation S. No. Related Party Name Holding Company 1 Lanco Group Limited (LGL) Fellow Subsidiary 1 Lanco Babandh Power Limited (LBPL) Enterprises where Signifcant 1 Ananke Properties Private Limited(AnPPL) Infuence Exists 2 Avior Power Private Limited (AvPPL) 3 Basava Power Private Limited (BPPL) 4 Bay of Bengal Gateway Terminal Private Limited (BBGTPL) 5 Belinda Properties Private Limited (BePPL) 6 Bianca Properties Private Limited (BiPPL) 7 Charon Trading Private Limited (CTPL) 8 DDE Renewable Energy Private Limited (DREPL) 9 Electromech Maritech Private Limited (EMPL) 10 Finehope Allied Engg Private Limited (FAEPL) 11 Genting Lanco Power (India) Private Limited (GLPIPL) 12 Himavat Power Limited (HPL) 13 KVK Energy Ventures Private Limited (KEVPL) 14 Lanco Devihalli Highways Limited (LDHL) 15 Lanco Hoskote Highway Limited (LHHL) 16 Lanco Vidarbha Thermal Power Limited (LVTPL) 17 Mimas Trading Private Limited (MTPL) 18 Mirach Power Limited (MiPL) 19 Newton Solar Private Limited (NSPL) 20 Phoebe Trading Private Limited (PTPL) 21 Pragdisa Power Private Limited (PrPPL) 22 Regulus Power Private Limited (RPPL) 23 Saidham Overseas Private Limited (SOPL) 24 Siddheswara Power Private Limited (SiPPL) 25 Tethys Properties Private Limited (TPPL) 26 Vainateya Power Private Limited (VPPL) 27 Vasavi Solar Power Private Limited (VSPPL) Key Management Personnel 1 Sri L. Madhusudhan Rao (Chairman) (LMR) 2 Sri G. Bhaskara Rao (Vice Chairman) (GBR) 3 Sri G. Venkatesh Babu (Managing Director) (GVB) 4 Sri S. C. Manocha (Whole Time Director) (SCM) Relatives of Key Management 1 Sri L. Sridhar (Brother of LMR) (LS) Personnel Enterprises owned or 1 Chatari Hydro Power Private Limited (CaPTL) signifcantly infuenced by key 2 Cygnus Solar Projects Private Limited (Formerly Callisto Trading Private Limited.) (Csppl) management personnel or 3 Himachal Hydro Power Private Limited (HHPPL) their relatives 4 Lanco Bay Technology Park Private Limited (LBTPL) 5 Lanco Enterprise Private Limited (LEntPL) 6 Lanco Foundation (LF) 7 Lanco Horizon Properties Private Limited (LHrPPL) 8 Lanco Kerala Seaports Private Limited (LKSPL) 9 Lanco Transport Network Company Private Limited (LTNCPL) 10 LCL Foundation (LCL) 11 Nekkar Power Private Limited (NePPL) 12 Ravi Hydro Electric Private Limited (RHEPL) 13 Lanco Property Management Private Limited (LPMPL) 14 Hastinapur Property Private Limited (HSPPL) 15 Lanco Rani Joint Venture (LR)

135 Annual Report 2013-2014 b) Summary of transactions with related parties are as follows: (` Crores) Nature of March 31,2014 Transaction Holding Company Fellow Subsidiary Enterprises Key Management Relatives of Key Enterprises owned where Signifcant Personnel Management or signifcantly Infuence Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Name Contract Services LBPL 13.86 LHHL 18.76 LF 2.52 Rendered KEVPL 14.74 13.86 33.50 2.52 Shared Services LBPL 1.04 HPL 0.52 Provided/(Availed) Interest Paid/ KEVPL (0.94) LEntPL (3.60) (Received) NSPL (2.16) DREPL (2.33) FAEPL (2.60) EMPL (2.63) SOPL (2.86) VSPPL (3.26) LDHL (7.11) LHHL (26.41) (50.30) (3.60) Donations Paid LF 2.44 Managerial GVB 4.09 Remuneration SCM 1.89 GBR 0.86 LMR 0.79 7.63 Sitting Fee LMR 0.01 LS 0.03 Receipts/Payments/ LBPL (59.63) PrPPL 304.31 GBR 0.01 LEntPL 8.47 Adjustments VPPL 290.59 LR (0.89) (Net)+(-) OTHERS (3.61) LF (0.40) (59.63) 591.29 0.01 7.18 Purchase/(Sale) of HPL 12.04 GBR 0.01 LS 0.01 Shares RPPL 0.86 LVTPL 0.02 - 12.92 0.01 0.01 Share Application LBPL 99.66 LVTPL 13.64 Money Paid/ LDHL 6.82 (Received) during OTHERS 1.37 the year SOPL (3.66) DREPL (10.40) 99.66 7.77 Share Application PrPPL 304.31 Money Refunded by VPPL 290.59 during the year 594.90 Management LHHL 1.53 Consultancy LDHL 1.28 Services Rendered 2.81

136 Consolidated Financial Statements

(` Crores) Nature of March 31,2014 Transaction Holding Company Fellow Subsidiary Enterprises Key Management Relatives of Key Enterprises owned where Signifcant Personnel Management or signifcantly Infuence Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Name Operation & DREPL 0.35 Maintenance EMPL 0.35 Services Rendered/ FAEPL 0.35 (Availed) NSPL 0.35 SOPL 0.35 VSPPL 0.35 GLPIPL (18.90) (16.80) Other Expenses/ LBPL 0.09 LVTPL 0.11 (Incomes)/ (Recoveries) Purchase/(Sale) of LEntPL 2.84 Goods/Power Inter Corporate LGL (152.00) LHHL 135.72 LEntPL 62.75 Deposits given/ LDHL 53.97 novated from (152.00) 189.69 62.75 (taken/refunded) during the year Purchase of Fixed LBPL 0.01 LDHL 0.26 Assets LVTPL 0.04 HPL 0.00 0.01 0.30 Sale of Fixed Assets LBPL 0.01 LDHL 0.63 LHHL 0.44 HPL 0.11 LVTPL 0.06 0.01 - 1.24 Corporate LBPL 3,646.08 HPL 450.00 Guarantee given LHHL 125.00 to Banks/Financial LDHL 92.03 Institutions on behalf of Related OTHERS 86.06 Parties (balance as 3,646.08 753.09 at the year end) Balance Receivable VPPL 15.21 PHPPL 0.15 at the year end- PrPPL 10.65 CHPPL 0.13 Share Application OTHERS 0.60 NePPL 0.08 Money CaPTL 0.03 26.46 0.39 Balance Receivable LHHL 164.20 LEntPL 62.75 at the year end - LDHL 53.97 Loans VSPPL 23.70 EMPL 18.66 FAPPL 11.17 NSPL 9.87 DREPL 5.48 287.05 62.75

137 Annual Report 2013-2014

(` Crores) Nature of March 31,2014 Transaction Holding Company Fellow Subsidiary Enterprises Key Management Relatives of Key Enterprises owned where Signifcant Personnel Management or signifcantly Infuence Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Name Balance Receivable LBPL 202.78 LVTPL 69.26 LR 14.02 at the year end- LHHL 68.69 LEntPL 4.15 Others (Trade KEVPL 53.88 OTHERS 1.51 Receivables,Interest receivable and VSPPL 3.48 Other Receivables) EMPL 1.35 DREPL 0.94 FAPPL 0.94 NSPL 0.68 SOPL 0.36 CTPL 0.02 OTHERS 12.32 202.78 211.92 19.68 Balance Payable at LGL 152.00 SOPL 5.22 the year end-ICD Balance Payable at LBPL 1,525.06 LVTPL 933.15 SCM 0.00 LR 0.90 the year end-Others HPL 756.71 GVB 0.00 LF 0.22 (Trade Payables and KEVPL 248.34 LCL 0.14 Other Payables) GLPIPL 14.79 LHrPPL 0.07 VSPPL 1.14 FAPPL 0.07 NSPL 0.07 EMPL 0.07 LDHL 0.05 LHHL 0.01 OTHERS 5.16 1,525.06 1,959.56 0.01 1.33

(` Crores) March 31,2013 Nature of Transaction Fellow Subsidiary Enterprises Key Management Relatives of Key Enterprises owned where Signifcant Personnel Management or signifcantly Infuence Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Contract Services Rendered LBPL 349.88 LVTPL 405.27 LF 1.62 KEVPL 33.46 LHHL 8.27 Others 2.71 349.88 449.71 1.62 Shared Services Provided/(Availed) LBPL 1.10 HPL 0.55 Interest Paid/(Received) KEVPL 2.13 EMPL (1.67) NSPL (1.67) VSPPL (1.85)

138 Consolidated Financial Statements

(` Crores) March 31,2013 Nature of Transaction Fellow Subsidiary Enterprises Key Management Relatives of Key Enterprises owned where Signifcant Personnel Management or signifcantly Infuence Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name FAEPL (2.54) DREPL (3.34) SOPL (4.39) LDHL (10.33) LHHL (21.50) (45.16) Donations Paid LF 3.96 Managerial Remuneration GBR 4.21 GVB 3.99 LMR 3.45 - SCM 1.97 13.62 Sitting Fee LMR 0.01 LS 0.04 Receipts/Payments/Adjustments(Net)+(-) LBPL (478.44) LVTPL (268.07) GVB 0.00 LR 0.14 OTHERS (13.20) LF (1.75) LEntPL (2.42) (478.44) (281.27) 0.00 (4.03) Purchase/(Sale) of Shares LBPL 44.55 HPL 12.05 Share Application Money Paid during the LBPL 3.00 LDHL 7.21 year PrPPL 1.15 VPPL 0.50 3.00 8.86 Share Application Money Refunded PrPPL 10.79 NePPL 0.02 during the year Others 0.26 11.05 0.02 Management Consultancy Services LDHL 1.28 Rendered LHHL 1.53 2.81 Operation & Maintenance Services Availed GLPIPL (24.42) Other Expenses/(Incomes)/(Recoveries) HPL 0.06 Inter Corporate Deposits given/(taken)/ LHHL 28.48 (refunded) during the year Purchase of Fixed Assets LBPL 0.00 LVTPL 0.18 Sale of Fixed Assets LBPL 0.11 LVTPL 0.23 HPL 0.05 0.11 0.28 Corporate Guarantee given to Banks/ LBPL 3,232.71 HPL 370.90 Financial Institutions on behalf of Related LHHL 358.92 Parties (balance as at the year end) OTHERS 133.78 3,232.71 863.60 Balance Receivable at the year end-Share PrPPL 304.30 LHrPPL 0.32 Application Money VPPL 305.78 NePPL 0.08 RPPL 0.86 CaPTL 0.03 PTPL 0.50 HSPPL 2.96 PrPPL 10.65 LPMPL 0.58 OTHERS 7.77 629.86 3.97

139 Annual Report 2013-2014

(` Crores) March 31,2013 Nature of Transaction Fellow Subsidiary Enterprises Key Management Relatives of Key Enterprises owned where Signifcant Personnel Management or signifcantly Infuence Exists Personnel infuenced by key management personnel or their relatives Party Amount Party Amount Party Amount Party Amount Party Amount Name Name Name Name Name Balance Receivable at the year end-Loans LHHL 193.37 LDHL 72.90 FAEPL 25.66 VSPPL 23.70 NSPL 20.99 EMPL 20.37 DREPL 19.79 Others 0.13 376.91 Balance Receivable at the year end- LBPL 196.25 LVTPL 82.79 LR 14.01 Others (Trade Receivables and Other SOPL 59.71 OTHERS 1.17 Receivables) KEVPL 37.31 DREPL 32.76 LHHL 29.76 FAEPL 2.07 VSPPL 1.66 NSPL 1.45 EMPL 1.42 HPL 0.27 HPL 0.21 CTPL 5.05 OTHERS 4.23 196.25 258.69 15.18 Balance Payable at the year end-Others LBPL 1,474.24 LVTPL 932.12 GVB 0.00 LS 0.00 LEntPL 4.37 (Trade Payables and Other Payables) HPL 739.07 LF 1.86 PrPPL 308.51 OTHERS 0.21 VPPL 290.59 KEVPL 255.15 GLPIPL 12.66 VSSPL 2.64 PTPL 0.95 1,474.24 2,541.69 0.00 0.00 6.44 47 Forward Contracts (` Crores) Particulars March 31, 2014 March 31, 2013 Details of Forward Cover for amount outstanding as on Balance sheet date For Buy (Hedge for foreign currency loan repayment) USD 571.03 501.91 Details of Forward Cover for Firm Commitments and highly probable forecast transaction For Sale (Against AUD) USD 856.61 244.80 Currency Swaps (Against CNY) USD 55.83 236.70

140 Consolidated Financial Statements

Details of Unhedged Foreign Currency Exposure Currency March 31, 2014 Exchange Rate Amount in Amount in INR Foreign Currency (Crores) (Crores) Trade Payables EURO 82.58 0.08 6.71 Trade Payables USD 60.10 9.39 570.09 Secured foreign currency loans (Buyers Credit) EURO 82.58 0.19 15.73 Secured foreign currency loans (Buyers Credit) USD 60.10 44.33 2,664.43 Secured foreign currency term loans including interest USD 60.10 69.89 4,200.42 Advance from Customers USD 45.15 23.08 1,042.17 Trade receivables USD 60.10 10.57 635.50 Advances Recoverable in Cash or in kind (Advance to Supplier) USD 44.94 0.01 0.46 Advances Recoverable in Cash or in kind (Advance to Supplier) EURO 68.18 0.002 0.17 Advances Recoverable in Cash or in kind (Advance to Supplier) GBP 86.45 0.001 0.05 Net Exposure 7,863.37

Details of Unhedged Foreign Currency Exposure Currency March 31, 2013 Exchange Rate Amount in Amount in INR Foreign Currency (Crores) (Crores) Trade Payables EURO 69.54 0.14 10.08 Trade Payables USD 54.39 11.92 648.10 Secured foreign currency loans (Buyers Credit) EURO 69.54 0.28 19.72 Secured foreign currency loans (Buyers Credit) USD 54.39 55.32 3,008.74 Secured foreign currency term loans including interest USD 54.39 72.43 3,939.28 Advance from Customers USD 44.90 25.01 1,123.06 Trade receivables USD 54.39 10.18 553.44 Advances Recoverable in Cash or in kind (Advance to Supplier) USD 44.68 0.16 7.21 Advances Recoverable in Cash or in kind (Advance to Supplier) EURO 69.54 0.01 0.48 Advances Recoverable in Cash or in kind (Advance to Supplier) GBP 81.80 0.00 0.05 Net Exposure 8,187.80

48 Movement in Provisions (` Crores) Particulars March 31, 2014 Mine Operations & Warranties Restoration Maintenance (a) Balance as on 01.04.2013 290.67 23.83 351.60 (b) Additional Provision made during the year - - 56.54 (c) Provision reversed/used during the year 90.20 12.57 - (d) Foreign exchange rate variation (3.11) - 36.91 (e) Balance as on 31.03.2014 (a+b-c+d) 197.36 11.26 445.05

(` Crores) Particulars March 31, 2013 Mine Restoration Operations & Warranties Maintenance (a) Balance as on 01.04.2012 230.14 25.50 259.99 (b) Additional Provision made during the year 52.49 10.61 75.19 (c) Provision reversed/used during the year - 12.28 - (d) Foreign exchange rate variation 8.05 - 16.42 (e) Balance as on 31.03.2013 (a+b-c+d) 290.68 23.83 351.60

141 Annual Report 2013-2014 49 Capital and Other Commitments (` Crores) March 31, 2014 March 31, 2013 Estimated amount of contracts remaining to be executed on capital account and not provided for 21,015.46 19,667.54 Investment Commitment in Associates 2,327.34 2,453.22 Contractual obligations for purchase of coal under fuel supply agreement 41.74 10.45 Contractual obligation for Long Term Access for transmission of power 42.90 56.58

50 Contingent Liabilities - Not probable and therefore not provided for (A) Claims disputed by Group * (` Crores) March 31, 2014 March 31, 2013 Duty Draw Back 7.28 7.28 Custom Duty 323.71 191.08 Sales tax Liability 8.37 5.69 Service tax Liability 121.45 113.04 Income tax Liability 11.50 5.01 Construction Cess under Building and Other Construction Workers Act, 1996 3.45 3.45 Others 34.90 30.29 * Tax demands disputed by the group, based on the internal assessment and/or legal opinion, management is confdent that these matters will be decided in its favour. (B) Company’s share of contingent liabilities of associate companies is ` 3.14 (March 31, 2013: ` 2.19) Crores. (C) Bond for SEZ - In case of LSPL, Bond Cum Legal Undertaking for Special Economic Zone (SEZ) has been entered between LSPL and President of India acting through the Development Commissioner of Visakhapatnam SEZ and the Special Ofcer for ` 171.24 Crores. As per the terms and conditions of the Bond cum Legal Undertaking, LSPL shall be obligated to pay all duties chargeable on the goods imported if LSPL carries any operations other than authorized operations as per SEZ Act 2005. The amount of utilisation till March 31, 2014 is ` 116.95 (March 31, 2013: 115.49) Crores. (D) Outstanding corporate guarantees - ` 4,407.45 (March 31, 2013: ` 4,101.61) Crores. (E) During the year the company’s proposal to restructure the debt has been approved by the Corporate Debt Restructuring Empowered Group (CDREG) vide letter of approval dated December 20, 2013 (taking in to consideration April 01, 2013 as cutof date). The company executed Master Restructuring Agreement (MRA) on December 27, 2013. The future sacrifce envisaged under the scheme is not determinable as the company’s obligation to compensate such sacrifce to the lenders is contingent upon fulflling various future conditions whose outcome is currently uncertain. (F) Claims not acknowledged as debts (i) LKPL Phase - I is selling electric energy under a power purchase agreement (PPA) with Andhra Pradesh Power Co-ordination committee (APPCC), APPCC has raised certain disputes regarding the installed capacity and the reduction in tarif as per the PPA which are subjudice at present. As these matters are technical and interpretational in nature, the Management contends that it is not practicable to estimate the overall fnancial impact, if any, at this stage. Pending such disputes, LKPL has recognized revenue to the extent accepted by the APPCC as in earlier years. Further, the Management, based on its internal assessment and legal opinion, is confdent that the above matters will be decided in its favour. (ii) In case of LKPL, on December 15, 2005 APPCC raised a claim of liquidated damages amounting to ` 95.16 Crores towards alleged delay in commissioning of the Phase - I project as stipulated in PPA by LKPL and has unilaterally adjusted dues to extent of ` 46.25 Crores from the monthly tarif bill dated December 12, 2005 against this claim. On June 13, 2011, Andhra Pradesh Electricity Regulatory Commission (APERC) passed an order stating that there was a delay in the commissioning of the Phase - I project and thus, the liquidated damages amounted to ` 74.87 Crores. However, it is held that such claim by APPCC is barred by limitation. Whilst the matter stood thus, APPCC adjusted another ` 62.69 Crores against the tarif bill dated June 13, 2011 and informed LKPL that an interest of ` 62.14 Crores accrued on their claim and demanded the balance amount of ` 28.07 Crores. LKPL fled appeal with Appellate Tribunal for Electricity (APTEL) against the order dated June 13, 2011 and APTEL by its order dated April 07, 2014 reserved the judgment. The Management on the basis of a legal advice, is confdent that the amounts so deducted are recoverable and no adjustments are required in respect of such dues recognized as receivable as at March 31, 2014. 142 Consolidated Financial Statements

(iii) In case of LKPL, On March 13, 2012, APERC passed an order that the LKPL is entitled for reimbursements of Minimum Alternate Tax (MAT) for the periods April 2006 and onwards with consequential reliefs i.e. with interest at the rate prescribed in the PPA till the realization of the said amount. Pending acceptance by the Board, the revenue in respect of MAT reimbursements from April 2001 have been postponed. In respect of the claims prior to April 2006, LKPL has fled an appeal before APTEL and the same was allowed in favour of the LKPL. APPCC has fled an appeal before the Supreme Court and the Supreme Court has an interim arrangement as directed APPCC to pay 50% of the MAT computed by APERC for the period 2006 to 2009 directly to LKPL and remaining 50% to secure by way of Bank Guarantee. APERC also allowed the claim of LKPL from 2009 onwards. Upon appeal by APPCC, Supreme Court directed APPCC to pay 50% of MAT directly to LKPL and balance to secure by way of BG for the period 2009-12. However, the main case is pending. (iv) In case of LTPCL Gail India Limited raised a claim of ` 2.44 Crores towards recovery of market rate for APM gas supplied beyond APM allocation for the period July 01, 2005 to March 31, 2010. Based on legal advice obtained, the Management is of the view that the above claims are not tenable and the same can be successfully contested and hence no provision has been made in the accounts. As per the direction of Delhi High Court, cases has been referred for the Arbitration. GAIL made an application to Supreme Court to merge all the cases with similar issue and be heard in Delhi High Court or by Supreme Court itself. (v) In case of UPCL, a claim raised by one of the contractor amounting ` 143.17 Crores. The Management, based on its internal assessment, is confdent that the claim is not tenable. (vi) In case of LSEPL, with respect to two of its EPC Contracts for setting up of solar power plants, the customer of contractee has disputed the Commercial Operation Date (COD) which may result in to liquidated damages of ` 9.56 Crores (` 4.70 Crores towards contract with Newton Solar Private Limited and ` 4.86 Crores towards contract with DDE Renewable Energy Private Limited). As per EPC Contract terms the liquidated damages shall be borne by contractor, i.e. LSEPL. As the dispute is referred to and pending before arbitration, the same is not provided for in the books of the LSEPL. (vii) The Grifn Coal Mining Company Pty Ltd (GCM) is currently mining through some leases that overlay land owned by a company Grifn Windfarm Holdings Pty Ltd (Grifn Windfarm). Grifn Windfarm used to be a related entity until Lanco Resources Australia acquired GCM. GCM maintains that any activity that may have occurred in the relevant area was done with the consent and agreement of Grifn Windfarm. GCM and the liquidators for Grifn Windfarm (Pricewaterhouse Coopers) have engaged in discussions with a view to resolving the matter but at this stage, no resolution has been reached. The matter is next listed for a directions hearing in the Warden’s Court on July 11, 2014. 51 In respect of the amounts billed by LKPL, for sale of electrical energy and for other claims up to June 15, 2003, APTRANSCO has retained certain amounts. Recognition of this revenue has been postponed till acceptance by APTRANSCO. LKPL has initiated proceedings in APERC for resolution of all such pending issues regarding outstanding amounts with APTRANSCO. 52 In case of LKPL, a) The Phase - III expansion is getting ready for operation and operations of Phase - II plant is stalled due to shortage of gas. LKPL has approached its phase - III lenders for reschedule of commercial operation date (COD) and repayment of project term loans. During the year majority of the lenders approved the proposal and the remaining lenders approvals are under process. LKPL is actively pursuing/making representations with various government authorities to secure the gas, which is in short supply now. LKPL is closely monitoring the macro situation and is evaluating various approaches/alternatives to augment the gas supply. The Management is confdent that the Government of India (GOI) would take necessary steps/initiatives in this regard. b) During the period July 1, 2013 to March 31, 2014 LKPL has capitalised ` 169.52 crores borrowing costs incurred on loans pertaining to Phase - III plant which is yet to complete commissioning activities in respect of which, LKPL has to secure the supply of requisite natural gas. As the supply of natural gas is under the control of GOI and the present situation is beyond the control of LKPL, LKPL has approached Ministry of Corporate Afairs (MCA) seeking relaxation from the applicability of provisions of Accounting Standard - 16 to continue the capitalisation of borrowing costs. 53 a) In case of LAPL Unit - I, All the pending cases between LAPL, PTC, Madhya Pradesh Power Management Company (MPPMC) and Govt. of Madhya Pradesh were withdrawn jointly by all the parties by August 2013. b) LAPL entered into a Power Purchase Agreement (“PPA”) with PTC India Ltd. (PTC) for sale of power generated from its Unit - II. PTC further signed a Power Sale Agreement (“PSA”) with Haryana Power Generation Corporation Limited (“HPGCL”) for sale of power purchased from LAPL. LAPL had terminated the aforesaid PPA, as PTC failed in its obligation under the PPA to obtain long term open access within the specifed time which is a condition precedent to be fulflled by PTC under the PPA. PTC has also initiated arbitration proceedings on the aforesaid termination to declare the PPA termination to be illegal, baseless, void and unsustainable. PTC has claimed compensation of ` 162.55 Crores and to reimburse for any charge/claim which HPGCL may claim from PTC and also to direct LAPL to pay PTC damages for the loss of business due to illegal termination of the PPA by LAPL. The Management is

143 Annual Report 2013-2014 confdent that the Arbitral Tribunal will award a suitable order in favour of LAPL reiterating the validity of termination of the PPA. The Arbitration proceedings are in process. c) LAPL, thereafter, signed another PPA with Chhattisgarh State Power Trading Company Limited (“CSPTCL”) for sale of 35% of the capacity in accordance with the Implementation Agreement signed by LAPL with the Government of Chhattisgarh. LAPL fled an appeal and stay application with the Appellate Tribunal of Electricity (“APTEL”) against the order of the HERC dated February 02, 2011. The APTEL in its interim order dated March 23, 2011 granted a limited and conditional stay of the order and directed that 35% of the power generated from LAPL Unit - II should be sold to the state of Chhattisgarh and the balance power is to be sold to PTC. d) As per interim order dated March 23, 2011 of APTEL, the LAPL started supplying power to PTC and CSPTCL w.e.f. May 7, 2011. APTEL passed the fnal order, dismissing the appeal of LAPL and remanding the matter to HERC and also directed HERC to grant an opportunity of being heard to CSPTCL while confrming the said interim order. Against the order of APTEL, LAPL fled a civil appeal along with an application for stay before the Hon’ble Supreme Court of India (SC). SC vide its order dated December 16, 2011 directed LAPL to continue supply of electricity in terms of the APTEL interim order and also directed HERC to fx/approve the tarif of sale and purchase of power for the period in dispute uninfuenced with any earlier orders. Further, SC also stayed further proceedings pending before HERC related to the petition fled by HPGCL challenging the termination of PPA. Pursuant to SC order, LAPL had fled an application to fx/approve the tarif for the dispute period before HERC. HERC by order dated October 17, 2012 determined the tarif and held that the cap tarif of ` 2.32/kWh would prevail for the power supplied to Haryana. On November 27, 2012, LAPL had fled an Interim Application (I.A) before SC praying to direct Haryana (HPGCL) to pay the outstanding amount and as well as to direct to pay for future based on the rate computed in accordance with the CERC Tarif Regulations, 2009 or alternatively direct CERC to re-determine the tarif as per CERC Tarif Regulations, 2009. On February 19, 2013, the SC passed an order directing LAPL to fle an appeal in APTEL. On March 04, 2013, an appeal was fled in APTEL against HERC order dated October 17, 2012. APTEL has passed a judgement order on January 03, 2014 setting aside the HERC order dated October 17, 2012 and has directed HERC to re-determine the tarif as per HERC Tarif Regulations 2008. HERC has commenced the process of re-determination of tarif. HPGCL has fled an appeal before SC requesting to set aside APTEL order dated January 03, 2014. The SC has directed to list this case along with the appeal of LAPL. LAPL had recognized revenue on the basis of CERC Tarif Regulations, 2009, whereas the payments were released by PTC (Haryana) on the basis of erstwhile PPA capped tarif rate resulting in closing receivables being higher by ` 195.24 Crores. Pursuant to the APTEL judgement order dated January 03, 2014, LAPL has fled before HERC the necessary details of project cost and tarif computation based on HERC Tarif Regulations 2008. The Management based upon its assessment and legal advice obtained, is confdent of the outcome of the matter in its favour and recovery of the above said receivables. e) Pursuant to APTEL’s interim order dated March 23, 2011 directing LAPL to supply 35% power to Chhattisgarh, LAPL in terms of PPA dated January 12, 2011 with CSPTCL commenced power supply w.e.f. June 22, 2011. The said PPA with CSPTCL provides for 5% of the net power to be supplied at Energy Charges and 30% of the net power at Total Tarif (Fixed Charges + Energy Charges) computed as per CERC Tarif Regulations, 2009. LAPL had recognized revenue on the basis of CERC Tarif Regulations, 2009, whereas the payments were released by CSPTCL initially at a fat rate of ` 2.85/kWh and later at an arbitrary rate of ` 2.52/kWh and ` 2.46/ kWh for FY 2011-12 and FY 2012-13 respectively resulting in closing receivables being higher by ` 32.25 Crores. Since the power supplied by LAPL to CSPTCL was in turn supplied by CSPTCL to CSPDCL (Discom of Chhattisgarh), LAPL requested the Chhattisgarh State Electricity Regulatory Commission(CSERC) to adjudicate on the petition fled by it under Section 86 (1) (f) of the Electricity Act, 2003. CSERC has completed the hearings in the matter and order has been reserved. The Management based upon its assessment and legal advice obtained, is confdent of the outcome of the matter in its favour and recovery of the above said receivables. 54 In case of LAPL, South Eastern Coalfelds Limited (SECL), in line with the policy guidelines of Ministry of Coal (MoC) that were revised from time to time, reduced the quantity of linkage coal due to which the operations of Unit - II were signifcantly afected. LAPL and SECL have signed FSA as per the presidential directive in Aug 2013, and thereafter linkage coal supply has been totally stopped stating that the PPA is sub-judice as above. LAPL has already requested the Buyers to allow the power supply with alternative coal for which LAPL is yet to receive the response. Further, Unit - II was unable to source coal through e-auction/open market sources in view of non-receipt of outstanding receivables from the Buyers due to the above disputes. APTEL by its order dated January 03, 2014 has directed HERC to re-determine the tarif as per HERC Tarif Regulations, 2008, which is in advanced stage. Upon fxation of tarif by HERC, Unit - II would be in a position to receive the outstanding receivables for the past supplies and tarif determined for the future supplies would enable Unit - II to resume its operations efectively. As the process of tarif determination is in advanced stage, the Management is confdent of resuming Unit - II operations very soon. 55 In case of LAPL, there are additional advances to the tune of ` 540.67 Crores made by LAPL to the Company (EPC Contractor) which are to be recovered from dues to EPC Contractor. As per the understanding with Company, LAPL has agreed to adjust the retention money of ` 367.95 Crores against Bank Guarantee towards the above said additional advances after obtaining the Lender’s approval. The process of Lenders approval is in progress and the management is confdent of obtaining the same. In addition to this, an amount of ` 100.54 Crores is payable to the EPC Contractor of Unit 1 & Unit 2. The said balances eliminated while preparing these consolidated fnancials. 144 Consolidated Financial Statements

56 In case of LAPL, The Government of India (Ministry of Power) issued a notifcation No.A-4/2011-IPC dated August 17, 2011, requiring all the existing eligible power projects, inter alia, to obtain Provisional Mega Project Status on satisfying certain conditions as stated in the said revised policy guideline for setting up of Mega Power Projects. After obtaining the Provisional Mega Power Status, LAPL shall has to furnish security in the form of Fixed Deposit Receipt (FDR) for an amount equal to the Customs Duty Payable on imports. As Unit 3&4’s original Project Cost was estimated on Mega Status basis, LAPL had to approach Lenders for sanction of additional loan to meet this unexpected interim fund requirement which took quite some time and after receipt of loan sanction, LAPL started clearing the import materials lying at port. Subsequently, the Government permitted Bank Guarantees (BG) also as a form of security and LAPL, keeping in view the diferential savings, desired to minimize the cost of Interest During Construction (IDC) by opting for furnishing of BG in the place of FDR. Accordingly, LAPL had again approached its Lenders for sanction of BG limits and awaits their sanction for this mid-way requirement. Meanwhile, the imported materials reached the port and got accumulated for clearance to the tune of ` 627.93 Crores which are included in Asset Under Construction. Further to the above, certain midway regulatory changes in the form of Environment Compliance and stipulation of certain additional facilities by the authorities have resulted in re-orientation of layout leading to delay in project implementation and change of scope in the EPC Contract causing time and cost overrun of the project. LAPL approached its lead lender for appraising and sanction of the cost overrun funding and is confdent of tying up the same with its lenders and completing the project as per the revised timelines. Even after considering the cost and time overrun as stated above, the project is viable keeping in view the increasing power tarifs with the ever increasing power demand. “ 57 In case of UPCL, in line with the CERC Regulations, 2009 UPCL has fled petition for determination of tarif for both the units during the year. The fnal order for determination of Tarif of UPCL is issued by CERC on February 20, 2014. Appeals were fled by the Principal Buyers and UPCL independently after the Balance sheet date against the tarif order which is yet to be heard by the APTEL. Balances representing Sundry Debtors and the amount of Sales revenue recognized are based on fnal tarif order issued by CERC on February 20, 2014. 58 In the current year LAnPL has received ` 50.21 Crores towards Advance Loss of Profts (ALOP) & ` 7.66 Crores towards material damages after adjusting the interim payments by the insurance company in the previous years, as full and fnal settlement of the claim. Amount received against ALOP has been adjusted in Project Capital cost and amount received against Material damage & increased cost of working has been credited to Contractor. 59 In LAnPL UI charges has been accounted on the estimates of the management which is amounting to ` 35.65 Crores, pending invoicing of these charges from State Load Despatch Center (SLDC). The management does not expect any material diference afecting the current year’s fnancial statement due to the same. 60 LAnPL is in the process of setting up a new project (Anpara phase-II) of 2x660 MW at Bhognipur, U.P. The land for setting up of the Plant has been acquired and most of the approvals have been received. Advance of ` 286.91 Crores has also been given to EPC contractor for procurement of BTG equipment and the same has been funded from equity. The approval for linkage Coal is yet to be obtained pending which the Financial Closure is yet to be completed. 61 In case of LAnPL, The plant is operating at sub optimal levels since inception onwards due to initial stabilizing phase and on account of coal and infrastructure constraints. LAnPL is taking necessary steps and confdent of improving the operating levels of the plant in future and would meet fnancial obligations as and when they arise. Due to non fulfllment of certain obligations by Uttar Pradesh State Power Distribution Companies (Buyers) under the PPA with LAnPL for sale of 1,100 MW power, LAnPL has terminated the PPA. LAnPL exercised the option available under PPA and fled petition before Uttar Pradesh Electricity Regulatory Commission (UPERC) for resolution of options. The management is confdent of realising the carrying value of assets in the books. 62 In case of LAnPL, The Deputy Labour Commissioner, Sonebhadra (U.P.) has sent notices during year 2011 asking it to get registered under “Building & Other Construction Workers Act 1996” as well as submission of various documents. In response there of LAnPL has fled a writ petition with the Allahabad High Court restraining the Government to do any assessment/raise any demand on the LAnPL in respect thereof. The Hon’ble High Court vide its order dated May 31, 2011 has allowed LAPL application and has stayed issuance of any demand in the case concerned. Further any liability if any, accruing on this account shall be recovered from the EPC Contractor. 63 LAnPL fled a SLP before Hon’ble Supreme Court of India challenging the Order of High Court dated November 11, 2011 directing LAnPL to deposit transit fee with State of Uttar Pradesh (State). The Hon’ble Supreme Court Order vide dated January 31, 2012 has stayed any demand and recovery of transit fee. Further, the Hon’ble Supreme Court Order vide dated October 29, 2013 has modifed the stay order that the State shall be free to recover transit fee for forest produce and any such recovery shall remain subject to the ultimate outcome of present petitions pending in the Court. Any liability, if any accruing on this account is recoverable from our Procurer “Uttar Pradesh Power Corporation Limited”.

145 Annual Report 2013-2014 64 In case of LVTPL (an associate of the company), a Public Interest Litigation (PIL. No 78/2010) was initiated in Hon’ble Supreme Court in April 7, 2012 against Mumbai High Court Order, dated October 18, 2011, regarding a petition fled in public interest, challenging public hearing conducted for granting environment clearance, wherein it was ordered to continue the activity undertaken by LVTPL at its own risk and the PIL was dismissed by the Hon’ble Supreme Court on May 4, 2013. But LVTPL took a view to slowdown the execution of the project till all the required approvals are obtained. Second public hearing was held on June 20, 2012, consequent to which MPCB had submitted the proceedings to the MoEF on September 11, 2012. In the meeting the Expert Appraisal Committee (EAC) of Environmental Impact Assessment for Thermal Plants held on November 18, 2013, the company had presented the action plan for implementation and budgets regarding issues raised by public. The EAC, in its meeting held on December 16, 2013, recommended for revalidation of Environmental Clearance. Factors stated above and various other factors beyond the control of LVTPL, have lead to substantial time and cost overrun. The management is establishing various measures to obtain the requisite clearance and satisfy conditions required as per the contractual obligations. LVTPL is also confdent of obtaining timely operational and fnancial support from promoters and lenders for commissioning the project within targeted timelines. “ 65 LTHPL has provided ` 4.72 Crores (March 31, 2013: ` 4.72 Crores) towards Environmental Cess in the books of accounts on import of goods from outside Sikkim as on Balance sheet date under the Sikkim Ecology Fund and Environmental Cess Act but the same has not been remitted to the Government of Sikkim as LTHPL has represented to the Government of Sikkim to waive the Cess on the project and LTHPL is awaiting the Government’s direction/order in this respect. 66 In case of LTHPL, due to delay in diversion of forest land, poor geology and earthquake, leading to substantial time and cost overrun, the LTHPL has requested the customer to revise the PPA Tarif for viability of the project. As there was no positive response from the customer, on June 20, 2012, the LTHPL terminated the PPA and fled a petition before regulatory commission for determining of revised tarif. To facilitate the revised tarif determination process, termination notice for PPA was withdrawn on October 18, 2013. In the petition, Hon’ble Commission is prayed to determine the provisional revised levelised tarif of ` 4.49 per unit as per the tarif calculations in accordance with CERC (Terms and Conditions of Tarif) Regulations, 2009 based on the revised estimated project cost of ` 5,453.91 Crores computed by the independent consultant (Tractable Engineering). LTHPL also prayed to approach the Hon’ble Commission for determination of fnal tarif following COD of the Project. LTHPL approached lenders for funding the cost overrun which is under consideration. The management is confdent of getting the revised funding from the lenders, complete the project as per the revised timelines and resolution of PPA issues. The management is confdent that even after considering the cost overruns and delays in execution there is viability in the project and hence does not foresee any requirement for adjustment for carrying value in the fnancial statements. 67 LBHPPL terminated the Power Purchase Agreement (PPA) entered with PTC India Limited (PTC). Haryana Power Generation Corporation Limited (HPGCL), the ultimate benefciary (as PTC entered into a PSA with HPGCL), disputed the termination. HPGCL approached the Honorable HERC seeking inter alia that (i) the termination of the PPA be declared illegal and invalid and (ii) that both LBHPPL and PTC be directed to comply with their obligations qua HPGCL (“HPGCL Petition”). LBHPPL contended HERC jurisdiction. On August 25, 2011 the Hon’ble HERC passed its order holding that it has jurisdiction to hear the HPGCL Petition. LBHPPL fled an appeal in Appellate Tribunal for Electricity (APTEL). On August 09, 2012 Hon’ble APTEL held that HERC does not have jurisdiction. HPGCL & PTC both have challenged the decision of APTEL separately with Hon’ble Supreme Court of India. Petitions have been admitted by Hon’ble Supreme Court. The matter is pending with Hon’ble Supreme Court for hearing. Based on the Legal opinion obtained by LBHPPL, the management is confdent that outcome of the matter in its favour. 68 In the case of LMHEPL, Considerable damage has been witnessed across the project site due to devastating fash foods occurred in the Rudraprayag district of Uttarakhand in the month of June, 2013. The LMHEPL Project is insured under CAR & ALOP policies to cover the damages including Act of God. Insurance Claims has been lodged with the insurer during the year. Management is confdent that the potential damage to the carrying value of asset is unlikely to exceed the expected insurance claim. 69 In case of LTPL & LHPL has received a notice from Assistant Provident Fund Commissioner, Shimla regarding project work as a principal employer. The EPC contractor (company) is appearing before the PF authorities. Further any liability regarding the case will be borne by the contractor in align of EPC contract. 70 In case of NETS, During the year 2010-11 NETS had contracted with Madhya Pradesh Power Trading Company Ltd (MPPTCL), a supplier for purchase of power from May 2010 to March 2011 at pre determined prices. Due to the drastic fall in power demand arising out of widespread monsoons and change in law due to new UI Regulations (falling under the force majeure clause of the tender document) and consequential signifcant reduction in prices, the NETS could not schedule the sale of power onwards at the contracted price, after June, 2010. The NETS had accordingly suspended the contract in November 2010 and also proposed the customer to of-take power at the average prevailing market price and to extend the contract period beyond March 31, 2011 if the contracted power could not be sold by then. The supplier had not responded to the proposal, but has raised bills for compensation charges amounting to ` 86.55 Crores which has not been accepted by the NETS. 146 Consolidated Financial Statements

During the year 2011-12, the supplier encashed the Letter of Credit of ` 5.00 Crores given by the NETS and has not refunded earnest money deposit of ` 0.25 Crore. The supplier also fled a petition before the Madhya Pradesh Electricity Regulatory Commission (MPERC) under section 86(1)(f) of the Electricity Act, 2003, for adjudication of dispute with NETS. By order dated October 1, 2011, MPERC held that it has jurisdiction to adjudicate the dispute between licensees. The NETS fled an Appeal against the aforesaid order before the Appellate Tribunal of Electricity (APTEL). The Appeal was admitted on February 13, 2012 and further proceeding before the MPERC was stayed pending the appeal in APTEL. Further, NETS fled I.A. 359 of 2012 on October 26, 2012 for dispose of the present Appeal. The Hon’ble APTEL on November 8, 2012, dismissed the appeal and vacated the interim stay order granted by it with a liberty to approach the Commission (MPERC) seeking appropriate relief according to law. The Hon’ble Commission (MPERC) heard both the parties and obtained written submissions from both the parties. The Hon’ble Commission (MPERC) passed an order on December 31, 2013, stating that Madhya Pradesh Power Management Company Ltd (MPPMCL) (erstwhile Madhya Pradesh Power Trading Company Ltd) is entitled to receive reasonable compensation (` 14.06 Crores as calculated by the MPERC). MPPMCL has raised an invoice dated March 12, 2014 for an amount of ` 9.06 Crores (i.e. after adjusting an amount of ` 5.00 Crores LC encashed by it, earlier), NETS has paid the invoice amount of ` 9.06 Crores. Accordingly the matter has been settled. 71 LHTPPL has obtained possession of land parcel of 100 acres at Manikonda, Hyderabad, as per the development agreement (‘the agreement’) dated November 6, 2006, entered with Andhra Pradesh Industrial Infrastructure Corporation (APIIC). The land has been obtained for developing residential and commercial space and amenities. The transfer of ownership to the LHTPPL of such land is subject to the fulfllment of the commitment to develop the land as stipulated in the agreement. Accordingly to the extent of development commitment already executed by the LHTPPL, proportionate land admeasuring 26.97 Acres has been transferred in favour of the LHTPPL on June 22, 2010. The management is hopeful to get the balance land transferred in the favour of LHTPPL in due course. The ownership of the land obtained as above is disputed by various parties stating that the land belongs to Dargah and consequently being administered by the Wakf Board. The disputes are presently pending before at various levels of judiciary bodies. During the year 2010-11, The Andhra Pradesh Wakf Tribunal (‘the tribunal’) passed a temporary injunction against the LHTPPL and restrained the LHTPPL from alienating the land. The LHTPPL, in response to the temporary injunction, had fled review petitions in the High Court of Andhra Pradesh for setting aside the said injunction of the tribunal and the same was dismissed. Further the LHTPPL had appealed against the order of the High Court before the Hon’ble Supreme Court, which granted an interim stay against the orders of Honourable High Court of Andhra Pradesh and the WAKF Tribunal. Pending the fnal outcome of Appeal before the Supreme Court, the Management of the LHTPPL, on the basis of an expert legal opinion, is of the view that no adjustments are required in the fnancial statements in respect of such disputes. 72 In case of LHTPPL, Cash Flows from the operations have got afected due to ongoing legal matter regarding the title of the land which was sold by Government of Andhra Pradesh under Competitive bidding for cash consideration. Currently the short fall in cash fows are supported by the Company. Consequent to the interim order of the Hon’ble Supreme Court, the management is estimating that the cashfows required for the project implementation and business requirements would be met from the customer collections and if any short fall in the cash fows arises, will be supported by the Company. Based on the support from the company the management is confdent of executing the on going project in the revised timeline. 73 In case of LHTPPL, As per the business plan, of the total 100 acres allotted, land admeasuring 13.56 acres had been earmarked for the development of residential properties, land admeasuring 6.00 acres had been emarked towards construction of Hanging Gardens, land admeasuring 29.08 acres has been earmarked for Special Economic Zone (SEZ) and land admeasuring 4.10 acres has been earmarked for Club house and shopping street. Out of the balance land admeasuring 47.26 acres, 1.6 acres has been converted into SEZ during the fnancial year and transferred the cost from Development Work in progress to Land under fxed Asset. The Balance 45.66 acres approximately will be classifed under fxed assets, investment properties and inventories, as the case may be, based on ultimate end use pattern as per fnal business plan of the LHTPPL. Pending such reclassifcation the cost incurred on development of projects is included under the head “Development works in progress.” 74 Other adjustment in note 27 is pertaining to LHTPPL, which includes IT-6 Tower CENVAT Input Credit ` 3.19 Crores Charged to Development Work In Progress (DWIP), Expenses Transfer from SEZ proft centre to DWIP of ` 0.23 Crore and Transfer to Capital work in Progress of ` (5.09) Crores. 75 In case of LSPL, had fled an application for seeking an approval of the Central Government U/s 309 (5B) of the Companies Act, 1956 for waiver of recovery of excess remuneration paid to the Whole Time Director of the LSPL, during the period from 14.04.2010 to 31.03.2011. The application has been examined by the Ministry of Corporate Afairs (MCA) and approval for waiver of recovery of excess remuneration has not been granted. Consequently, the LSPL had recovered the excess remuneration paid to the Whole Time Director and complied with the directives of the Central Government of India. 147 Annual Report 2013-2014 76 In view of the growing solar power generation market in India and the favorable policy initiatives for the growth of the sector, LSPL proposed to alter the scope and size of its project by increasing Polysilicon capacity from 1250 TPA to 1800 TPA and wafer manufacturing capacity from 80 MW to 100 MW and also add 75 MW of module line in addition to the existing facility, which is leading to delay in project implementation and change of scope in the EPC Contract causing time and increase in cost of the project. The Lead Lender to the Project, in consultation with the LSPL has assessed the project viability based on the revised project parameters. Based on the revised envisaged Project cost, along with independent assessment done by ITCOT Consultancy and Service Ltd (ITCOT stands for Industrial and Technical Consultancy Organization of Tamilnadu) ; the Project has been assessed to be technically feasible and fnancially viable. The management is confdent of getting the revised funding from the lenders and complete the project. Hence the LSPL does not foresee any requirement for adjustment in carrying value of assets under construction as at March 31, 2014. 77 In case of LSEPL, some of the balances in Trade Receivables, Retention Money, Sundry Creditors and Advances are subject to confrmations and adjustments, if any. Such adjustments, in the opinion of the management, are not likely to be material and will be carried out as and when ascertained. 78 In case of LSPL, Capital advance includes an amount of ` 16.38 Crores paid to Chhattisgarh State Industrial Development Corporation Ltd (CSIDCL) for acquisition of Land for future expansion of poly-wafer-module project. 79 In case of DSPL, on account of various factors beyond the control of the DSPL (like non-availability of additional land, non-availability of Heat Transfer Fluid (HTF), re-designing of the Project, fuctuations in forex), the project has undergone substantial time and also cost overrun. The DSPL has fled petition with Central Electricity Regulatory Commission (CERC) for extension of Commercial Operation Date (COD) and to revise the Power Purchase Agreement (PPA) Tarif for viability of the project. As per the petition fled with the CERC, the DSPL requested CERC for revised COD of 18 clear months from the date of increased tarif approval received by the DSPL. The Management is confdent of obtaining permissions/approval for the requests made in the petition fled before CERC and also raising fund for executing the project, hence the DSPL does not foresee any requirement for adjustment in carrying value of assets under construction as at March 31, 2014. 80 Incase of DSPL, Assets Under Construction includes Steam Turbine Generator amounting to ` 100.11 Crores, held as trust by the Original Equipment Manufacturer at warehouse outside India. 81 In case of GCM, Genbow Pty. Ltd- Forfeiture of Coal Mining Leases: On May 10, 2013, Warden Wilson handed down his judgment in respect of two preliminary questions before him, the principal one being whether, on a proper construction of the State Agreement and associated legislation, Grifn’s coal mining leases (CMLs) were exempt from the need to comply with the expenditure conditions under the 1978 Mining Act. The Warden confrmed Grifn’s view that Grifn’s CMLs are exempt from the requirement to comply with expenditure conditions under the 1978 Mining Act. The Warden accepted all of Grifn’s arguments in support of the contention. In essence, he accepted that the CMLs continue to be governed by the 1904 Mining Act by virtue of the State Agreement and associated legislation and nothing in Schedule 2 of the 1978 Mining Act afected this position. Grifn is now in the process of recovering a portion of its legal costs from Genbow Pty Ltd.” 82 In case of GCM, WR Carpenter Agriculture Pty Ltd - Land Access : This matter relates to a claim by WR Carpenter Agriculture Pty Ltd (WRC Ag) against Grifn Coal for compensation for mining claimed to be occurring on some coal mining leases that overlay land owned by WRC Ag. WRC Ag used to be a related entity until Lanco Resources Australia acquired GCM. Until that point WRC Ag knowingly allowed GCM to continue to mine through its land, which commenced in early 2009. On April 11, 2013, Warden Wilson ordered that Plaint 372079 be stayed until further order (on the basis of WR Carpenter having failed to comply with order 2 of the warden dated February 13, 2013) and that WRC Ag pay to the Director-General of Mines the amount of $192,463 to be held in trust as security for costs in plaint 372079. GCM has subsequently entered into an agreement with WRC Ag which will result in this claim being dismissed permanently. 83 In case of CMM, Department of Mines and Petroleum Vs CMM – Char Plant Magistrate’s Court proceedings : On October 23, 2008, an explosion occurred at the Ewington Trial Char Plant, located within a fenced compound on the GCM Ewington Mine, which resulted in a ftter working at the plant site that day, being badly burned. On November 24, 2011, the State Solicitor’s Ofce (SSO) (on behalf of the Department of Mines and Petroleum) served GCM and CMM with prosecution notices alleging two charges against each of GCM and CMM for breach of the Mines Safety and Inspection Act 1994 (WA). The SSO discontinued one of the charges against CMM on 28 February 2012. After receiving prosecution disclosure in early 2012, GCM successfully negotiated that both charges be dropped against GCM in exchange for CMM pleading guilty to the remaining charge against it. CMM was originally meant to be sentenced in December 2012 but the Magistrate raised some factual issues (mostly concerning plant operation and design) which the parties negotiated an agreed response to. This matter has now been settled with the Magistrate handing down a fne of $100,000 to CMM on August 20, 2013.

148 Consolidated Financial Statements

84 The Company has entered into transactions with related parties, including some of its associates namely LVTPL, HPL, LHHL, LDHL, VPPL and LBPL (fellow Subsidiary) whose details are shown in summary of the transactions with related parties, under note 46. The Company along with Lanco Group Limited (Holding Company) and through various intermediate companies holds the remainder of shares in these associates and LBPL. In case of LVPTL, LBPL and HPL, the Group holds cumulative compulsorily convertible preference shares which when exercised for conversion as per the terms of these shares would result in these companies becoming subsidiaries of the Company or its step down subsidiaries. Regulus Power Private Limited (RPPL) and Ananke Properties Private Limited (APPL), associate of the step down subsidiary and associate of the company respectively, which have the associates/subsidiaries, do not prepare consolidated fnancial statements. LBPL is an associate of RPPL and Banas Thermal Power Private Limited (BTPPL) is a subsidiary of APPL. Under Indian GAAP, the Company is not required to consolidate these associates and LBPL. 85 On excersing of the option available under Revised Schedule VI to prepare the fnancials in Crores rounded of to two decimals, the amounts/numbers below ffty thousand in the fnancials are appearing as zero. Previous year fgures have been regrouped/reclassifed wherever necessary.

As per our report of even date. For and on behalf of the Board of Directors of Lanco Infratech Limited For Brahmayya & Co L. Madhusudhan Rao G. Venkatesh Babu Firm Registration No. 000511S Executive Chairman Managing Director Chartered Accountants DIN - 00074790 DIN - 00075079 per Lokesh Vasudevan T. Adi Babu A. Veerendra Kumar Partner Chief Operating Ofcer Finance Company Secretary Membership No. 222320 Place: Gurgaon Place: Gurgaon Date: May 23, 2014 Date: May 23, 2014

149 150 Annual Report 2013-2014 Report Annual Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies (` Crores)^ Sl. Subsidiary Name Reporting Capital Reserves Total Total Investment Turnover Proft Provision Proft Proposed No. Currency Liabilities Assets (Except Before For After Dividend Investment in Taxation Taxation Taxation Subsidiaries) 1 Lanco Power Limited INR 5,574.72 (13.32) 132.21 5,693.62 14.00 21.38 (15.76) 1.42 (17.18) - 2 Lanco Thermal Power Limited INR 4,769.45 2.57 2,860.02 7,632.05 2,417.44 13.15 3.76 0.76 3.01 - 3 Lanco Kondapalli Power Limited INR 340.00 915.41 3,517.47 4,772.88 0.01 564.99 (312.79) (25.00) (287.79) - 4 Lanco Tanjore Power Company Limited INR 115.05 385.00 102.25 602.29 - 247.93 56.93 11.34 45.59 - 5 Lanco Amarkantak Power Limited INR 1,271.22 354.13 9,186.92 10,812.27 - 624.15 (173.22) (47.45) (125.77) - 6 Udupi Power Corporation Limited INR 1,934.20 54.76 6,896.52 8,885.48 0.53 3,005.51 30.04 (94.03) 124.07 - 7 Lanco Anpara Power Limited INR 1,364.60 (909.40) 4,698.58 5,153.78 - 2,260.91 (132.47) - (132.47) - 8 Arneb Power Private Limited INR 2.07 - 0.00 2.07 ------9 Portia Properties Private Limited INR 69.60 (0.48) 0.08 69.20 - - (0.00) - (0.00) - 10 Lanco Hydro Power Private Limited INR 562.22 (197.25) 572.34 937.32 - 9.56 (191.42) - (191.42) - 11 Lanco Teesta Hydro Power Limited INR 608.71 - 2,095.05 2,703.76 ------12 Lanco Budhil Hydro Power Private Limited INR 307.18 (129.04) 456.35 634.49 - 50.53 (75.51) - (75.51) - 13 Lanco Mandakini Hydro Energy Private Limited INR 133.06 - 464.22 597.28 ------14 Lanco Rambara Hydro Private Limited INR 0.01 (0.01) 0.00 0.01 - - (0.01) - (0.01) - 15 Diwakar Solar Projects Limited INR 238.33 - 399.74 638.07 ------16 Lanco Solar Energy Private Limited INR 477.33 (64.59) 1,383.42 1,796.16 164.05 259.49 (95.86) 0.29 (96.15) - 17 Lanco Solar Services Private Limited INR 0.60 1.44 7.41 9.45 - 9.83 0.33 0.19 0.13 - 18 Lanco Solar Private Limited INR 324.62 (19.08) 758.69 1,064.23 - 19.68 (22.52) - (22.52) - 19 Khaya Solar Projects Private Limited INR 28.63 (6.80) 51.55 73.38 - 11.25 (0.87) - (0.87) - 20 Bhanu Solar Projects Private Limited INR 0.01 (0.03) 0.04 0.02 - - (0.00) - (0.00) - 21 Lanco Solar Power Projects Private Limited INR 1.26 (0.05) 0.19 1.40 - - (0.02) - (0.02) - 22 Orion Solar Projects Private Limited INR 0.51 (0.03) 0.03 0.51 - - (0.00) - (0.00) - 23 Pasiphae Power Private Limited INR 0.01 (0.01) 0.00 0.00 - - (0.00) - (0.00) - 24 Sabitha Solar Projects Private Limited INR 0.29 (0.03) 0.15 0.41 - - (0.00) - (0.00) - 25 Helene Power Private Limited INR 0.49 - 0.06 0.55 ------26 Omega Solar Projects Private limited INR 10.06 0.00 0.55 10.61 - - 0.07 0.01 0.06 - 27 Lanco Wind Power Private Limited INR 40.62 - 4.79 45.41 ------28 Amrutha Power Private Limited INR 0.31 - 1.02 1.32 ------29 Spire Rotor Private Limited INR 0.01 - 0.01 0.02 ------30 Emerald Orchids Private Limited INR 0.07 - 0.01 0.08 ------31 JH Patel Power Project Private Limited INR 0.16 - 0.01 0.17 ------32 National Energy Trading and Services Limited INR 36.53 42.91 110.96 190.40 - 912.17 9.41 2.89 6.52 - 33 Mahatamil Mining and Thermal Energy Limited INR 78.65 75.76 154.41 ------34 Mercury Projects Private Limited INR 208.43 2.47 95.59 306.50 173.97 25.99 0.00 0.01 (0.01) - 35 Tasra Mining & Energy Company Private Limited INR 0.35 - 0.35 0.70 ------36 Lanco Hills Technology Park Private Limited INR 480.50 (89.74) 2,088.80 2,479.56 - 195.66 (52.30) 0.14 (52.44) - 37 Uranus Projects Private Limited INR 17.97 (0.24) 0.00 17.73 - - (0.00) - (0.00) - 38 Jupiter Infratech Private Limited INR 1.51 (0.04) 0.01 1.47 - - (0.00) - (0.00) - 39 Uranus Infratech Private Limited INR 1.34 (0.05) 0.00 1.29 - - (0.00) - (0.00) - 40 Leda Properties Private Limited INR 6.76 (0.08) 0.00 6.69 - - (0.00) - (0.00) - 41 Coral Orchids Private Limited INR 4.82 (0.12) 0.02 4.71 - - (0.02) - (0.02) - 42 Thebe Properties Private Limited INR 13.14 (0.13) 0.31 13.31 - - (0.00) - (0.00) - 43 Cressida Properties Private Limited INR 3.29 (0.06) 0.00 3.24 - - (0.00) - (0.00) - 44 Nix Properties Private Limited INR 6.11 (0.11) 0.01 6.00 - - (0.00) - (0.00) - 45 Cordelia Properties Private Limited INR 1.94 (0.14) 0.08 1.88 - - (0.00) - (0.00) - Statement pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies (Contd.) (` Crores)^ Sl. Subsidiary Name Reporting Capital Reserves Total Total Investment Turnover Proft Provision Proft Proposed No. Currency Liabilities Assets (Except Before For After Dividend Investment in Taxation Taxation Taxation Subsidiaries) 46 Deimos Properties Private Limited INR 3.52 (0.10) 0.01 3.42 - - (0.01) - (0.01) - 47 Dione Properties Private Limited INR 4.27 (0.16) 0.00 4.12 - - (0.00) - (0.00) - 48 Neptune Projects Private Limited INR 1.89 (0.05) 0.00 1.84 - - (0.00) - (0.00) - 49 Pearl Farms Private Limited INR 9.54 (2.72) 0.00 6.83 - - (0.00) - (0.00) - 50 Telesto Properties Private Limited INR 5.68 (0.21) 0.00 5.48 - - (0.01) - (0.01) - 51 Lanco International Pte Limited USD 60.10 751.74 2,231.10 3,042.94 - 829.47 28.65 18.95 9.70 - 52 Lanco Enterprise Pte Limited CNY 0.90 0.18 0.74 1.82 - 15.96 0.36 0.10 0.26 - 53 Lanco Infratech Nepal Private Limited NPR 0.30 (0.01) 0.07 0.36 ------54 LE New York - LLC * USD 1.08 0.35 0.69 2.12 - - (0.98) - (0.98) - 55 Lanco Power International Pte Limited USD 0.60 (0.18) 11.36 11.79 - - (0.05) - (0.05) - 56 Lanco Solar International Pte Limited * USD 60.10 (72.45) 182.82 170.47 - 104.82 (133.29) 0.82 (134.11) - 57 Lanco Solar Holding Netherland B.V * EURO 61.14 (67.26) 105.51 99.39 - - (21.60) - (21.60) - 58 SolarFi SP 07 * EURO 0.01 (0.45) 9.00 8.56 - 1.11 0.50 0.05 0.44 - 59 SolarFi SP 06 * EURO 0.01 (0.57) 9.32 8.76 - 1.01 0.44 0.06 0.38 - 60 Lanco Solar International Limited, UK * GBP 22.47 (6.81) 28.30 43.95 - - (0.16) - (0.16) - 61 Lanco Solar International GMBH * EURO 1.36 (1.25) 0.34 0.46 - - (0.02) - (0.02) - 62 Lanco Solar International USA Inc. * USD 0.03 (0.94) 0.97 0.06 - - (0.13) - (0.13) - 63 Lanco IT PV Investments B.V. * EURO 0.15 (2.62) 7.72 5.25 - - (0.44) - (0.44) - 64 Green Solar SRL * EURO 0.08 (1.76) 2.34 0.67 - - 0.12 - 0.12 - 65 Lanco US PV Investments B.V. * EURO 0.15 1.10 13.96 15.20 - - 0.00 - 0.00 - 66 Lanco Solar Holdings LLC (USA) * USD - (4.63) 4.63 0.00 - - (0.01) - (0.01) - 67 Lanco Virgin Islands- 1 LLC (LVI) * USD ------68 Lanco SP PV 1 Investments B.V.* EURO 0.15 (0.91) 0.77 0.01 - - (0.05) - (0.05) - 69 Lanco Resources International Pte Limited * USD 601.00 (134.79) 3,853.97 4,320.17 - - (46.83) - (46.83) - 70 Lanco Holding Netherland B.V * EURO 0.17 (12.64) 13.11 0.64 - - (0.58) - (0.58) - 71 P.T Lanco Indonesia Energy IDR 7.51 (10.82) 3.45 0.14 - - (2.20) - (2.20) - 72 Lanco Resources Australia Pty. Limited * AUD 1,261.38 (452.49) 4,694.41 5,503.31 - 1.58 (679.09) (338.63) (340.46) - 73 The Grifn Coal Mining Company Pty Limited * AUD 31.93 3,950.33 4,937.29 8,919.55 - 667.93 (437.20) (276.15) (161.05) - 74 Carpenter Mine Management Pty Limited * AUD - 88.56 1,781.76 1,870.33 - 888.03 4.90 (55.18) 60.08 - 75 Western Australia Coal Terminal Pty Ltd * AUD ------76 Lanco Infratech (Mauritius) Limited USD 0.60 0.67 0.04 1.31 - - (0.06) - (0.06) - 77 Bhola Electricity Pvt Ltd BDT 0.01 (0.00) 2.53 2.54 ------78 Sirajganj Electric Pvt Limited BDT 0.01 - 0.01 0.02 - -- --

79 Lanco Kanpur Highways Limited INR 196.50 - 3.75 200.25 ------Consolidated Financial Statements 1 The annual accounts of the subsidiary companies and the related detailed information are available for inspection to shareholders of the holding and subsidiary companies in the corporate ofce of the holding company and of the subsidiary companies concerned. 2 The Indian rupee equivalents of the fgures given in the foreign currencies in the accounts of the subsidiary companies, have been given based on the exchange rate on 31.03.2014. INR vs. USD GBP EURO CNY ZAR AUD BDT NPR IDR (Rand) (per Re) Exchange rate 60.10 99.85 82.58 10.38 5.67 55.41 0.77 0.63 189.80 * Based on the unaudited fnancial statements ^ Amounts below INR ffty thousand are appearing as zero. 151 Annual Report 2013-2014 Notes CSR

Lanco Foundation The fervent commitment to fulfl our responsibility as a conscious corporate citizen, has proactively involved us with communities and those deprived of development. We have always regarded them as equal stakeholders in growth & development in the locations that we work and live. With an aim to make a defnitive difference, Lanco Foundation has been initiating various welfare & development programs across 13 locations in 11 Indian states. Lanco Infratech Limited Registered Offce: Plot No. 4, Software Units Layout, HITEC City Madhapur, Hyderabad 500 081, Telangana, India Corporate Offce: Lanco House, Plot No. 397, Udyog Vihar, Phase-3 Gurgaon 122 016, New Delhi Region, India www.lancogroup.com CIN No.: L45200TG1993PLC015545