FORMING PART OF THE FINANCIAL STATEMENTS

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES

A. Basis of accounting and brparation of the financial statements:

The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other accounting principles generally accepted in India. The financial statements have been brpared on accrual basis under the historical cost convention. The accounting policies adopted in the brparation of the financial statements are consistent with those followed in the brvious year.

B. Uses of Estimates:

The brparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in brparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

C. Revenue Recognition:

i. Sale of goods is recognised, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sale of services is recognised when services are rendered. Sales exclude sales tax/ value added tax and service tax charged to the customers.

ii. Revenue from turnkey contracts is recognised based on the stage of completion determined with reference to the costs incurred on contracts and their estimated total costs.

When it is probable that the total contract cost will exceed total contract revenue, expected loss is recognised as an expense immediately. Total contract cost is determined based on technical and other assessment of cost to be incurred.

Liquidated damages/ penalties are accounted as per the contract terms wherever there is a delayed delivery attributable to the Company.

iii. Revenue from turnkey contracts awarded to a Jointly Controlled Entity at Saudi Arabia but executed by the Company under the arrangement with the Joint Venture Partner [being in substance in the nature of Jointly Controlled Operations, in terms of Accounting Standard (AS) 27 "Financial Reporting of Interests in Joint Ventures"], is recognised on the same basis as similar turnkey contracts independently executed by the Company.

iv. Share in profit/loss of the projects undertaken by the jointly controlled entities, is accounted on its appropriation to the venturers as per the terms of the respective joint venture contracts.

v. Dividend income is accounted as and when the right to receive the same is established.

vi. Interest income is accounted on time proportion basis.

D. Inventories:

i. Raw materials, work-in-progress, finished goods and stores and erection materials are valued at the lower of cost and net realisable value (NRV). Cost of purchased material is determined on the weighted average basis. Cost of Erection tools and spares is amortised over its estimated useful life. Scrap is valued at net realisable value.

ii. Cost of work-in-progress and finished goods includes material cost, labour cost, and manufacturing overheads absorbed on the basis of normal capacity of production.

E. Fixed Assets:

Fixed assets are stated at cost of acquisition or construction net of impairment loss, if any less accumulated debrciation/ amortisation. Cost comprises of purchase/ acquisition price, non-refundable taxes and any directly attributed cost of bringing the asset to its working condition for its intended use. Financing cost on borrowings for acquisition or construction of qualifying fixed assets, for the period upto the date of acquisition of fixed assets or when the assets are ready to be put in use/ the date of commencement of commercial production, is included in the cost of fixed assets.

Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately.

Assessment of indication of impairment of an asset is made at the year end and impairment loss, if any, is recognised.

F. Debrciation/ Amortisation:

i. Tangible Assets:

a) Leasehold land is amortised over the remaining period of the lease.

b) Debrciation on other tangible fixed assets has been provided on the straight-line method as per the useful life brscribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the certain assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, etc.

Plant and Equipment/ Office Equipment - 7 to 23 years, Buildings-40 years, and Vehicles - 7 years.

ii. Intangible Assets:

a) Brand is amortised over twenty years being the useful life certified by the independent valuer.

In terms of the Scheme of Arrangement sanctioned in the year 2007-08, out of the balance in 'Reserve for Amortisation of Brand Account' an amount equal to annual amortisation of brand is credited to the Statement of Profit and Loss each year so that overall debrciation and amortisation gets reduced to that extent. Accordingly, Rs. Nil (Previous Year Rs. 157 lacs) being the amortisation of brand during the year is credited to the Statement of Profit and Loss by netting it with Debrciation and amortisation expense.

b) Brand transferred pursuant to the Scheme of Amalgamation referred to in 'Note 42' is amortised over ten year being its useful life as estimated by the Company.

c) Computer softwares are amortised on straight line method over the estimated useful life ranging between 4-6 years.

G. Investments:

Long-term investments are stated at cost. Provision is made for diminution, other than temporary, in the value of investments.

H. Trade receivables as at the year end under the contracts are disclosed net of advances received relating to the respective contracts for work to be done and outstanding at the year end.

I. Foreign Currency Transactions:

i. Foreign branches ( Integral)

a) Fixed assets are translated at the rates on the date of purchase/acquisition of assets and inventories are translated at the rates that existed when costs were incurred.

b) All foreign currency monetary items outstanding at the year end are translated at the year end exchange rates. Income and expenses are translated at average rates of exchange and debrciation/amortisation is translated at the rates referred to in (i) (a) above for fixed assets.

c) The resulting exchange gains and losses are recognised in the Statement of Profit and Loss.

ii. Jointly Controlled Operations (Non Integral)

Assets and liabilities, both monetary and non monetary are translated at the year end exchange rates, income and expense items are translated at the average rate of exchange and all resulting exchange differences are accumulated in a Foreign Currency Translation Reserve.

iii. Other foreign currency transactions:

a) Foreign currency transactions during the year are recorded at the rates of exchange brvailing at the date of transaction. Exchange gains or losses realised and arising due to translation of the foreign currency monetary items outstanding at the year end are accounted in the Statement of Profit and Loss. Non-monetary items of the Company are carried at historical cost.

b) Forward Exchange Contracts:

In case of transactions covered by forward exchange contracts, which are not intended for trading or speculation purposes, brmium or discounts are amortised as expense or income over the life of the contract.

Exchange differences on such contracts are recognised in the Statement of Profit and Loss in the year in which the exchange rate changes.

Profit or loss arising on cancellation or renewal of such forward exchange contracts are recognised as income or as expense for the year.

J. Excise duty payable is accounted on production of finished goods.

K. Employee Benefits:

a) Defined Contribution Plans:

The Company's contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

b) Defined Benefit Plan / Long Term employee benefits:

The Company's liability towards defined benefit plan (viz. gratuity) and long term employee benefits (viz. long term compensated absences) is determined on the basis of year end actuarial valuation done by an independent actuary. The actuarial gains or losses determined by the actuary are recognised in the Statement of Profit and Loss as income or expense.

c) Short term employee benefits:

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service.

L. Leases

a) Assets acquired under lease where the Company has substantially all the risks and rewards incidental to ownership are classified as finance leases. Such assets are capitalised at the inception of the lease at the lower of the fair value and the brsent value of minimum lease payments and a liability is created for an equivalent amount. Each lease rental paid is allocated between the liability and the interest cost, so as to obtain a constant periodic rate of interest on the outstanding liability for each period.

b) Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors, are classified as operating leases. Lease rentals are charged to the Statement of Profit and Loss on a straight line basis over the term of the relevant lease.

M. Taxation:

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the applicable tax rates and the provisions of the Income-tax Act, 1961 and other applicable tax laws.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets are recognised for timing differences of items other than unabsorbed debrciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed debrciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

Minimum Alternative Tax (MAT) credit asset is recognised only when and to the extent there is convincing evidence that the Company will pay normal Income tax during the specified period. The carrying amount of MAT credit asset, if any, is reviewed at each Balance Sheet date.

N. Receivables and loans and advances identified as doubtful of recovery are provided for / written off.

O: Provisions and contingencies :

A provision is recognised when the Company has a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are not recognised in the financial statements.

P. Derivative Contracts and Hedge Accounting

a) Derivative Contracts:

Derivative instrument are used to hedge risk associated with foreign currency fluctuations, interest rates and commodity prices. The Company enters into derivative contracts in the nature of foreign currency swaps, currency options, forward contracts with an intention to hedge its existing assets and liabilities, firm commitments and highly probable transactions in foreign currency. Derivative contracts which are closely linked to the existing assets and liabilities are accounted as per the policy stated for Foreign currency transactions and translations. The Company does not enter into any derivative contracts for speculations or trading purposes.

Derivative contracts designated as a hedging instrument for highly probable forecast transactions are accounted as per the policy stated for Hedge Accounting.

All other derivative contracts are marked-to-market and losses are recognised in the Statement of Profit and Loss. Gains arising on the same are not recognised, until realised, on grounds of prudence.

b) Hedge Accounting:

To designate contract as an effective hedge, the management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk.

The Company designates financial instruments as hedging instrument for hedging foreign currency risk. Changes in the fair value of financial instrument that are designated and qualify as cash flow hedges and are determined to be an effective hedge are recognized in the 'Hedging Reserve' under Reserve and Surplus, net of applicable deferred taxes.

The gain or losses on the contracts which do not qualify for hedge accounting or considered as ineffective hedge transactions are charged to Statement of Profit and Loss. Amounts accumulated in the Hedging Reserve are reclassified to the Statement of Profit and Loss in the same periods when the hedged item affects profit and loss.

Q. Operating Cycle

Assets and liabilities other than those relating to long-term contracts (i.e. supply or turnkey contracts) are classified as current if it is expected to realize or settle within 12 months after the balance sheet date.

In case of long-term contracts, the time between acquisition of assets for processing and realisation of the entire proceeds under the contracts in cash or cash equivalent exceeds one year. Accordingly for classification of assets and liabilities related to such contracts as current, duration of each contract is considered as its operating cycle.

R. Cash and cash equivalents (for purposes of Cash Flow Statement)

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

S. Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

T. Basis of Incorporation of integral foreign operations:

Figures in respect of the Company's overseas branches in Afghanistan, Algeria, Bangladesh, Congo, Egypt, Ethiopia, Georgia, Ghana, Indonesia, Ivory Coast, Kazakhstan, Kenya, Laos, Lebanon, Libya, Malaysia, Nepal, Nigeria, Oman, Philippines, South Africa, Sri Lanka, Tanzania, Tunisia, Uganda, United Arab Emirates and Zambia have been incorporated on the basis of financial statements (the Branch Returns) audited by the auditors of the respective branches. Further, in respect of overseas branches in Bhutan, Cameroon, Kuwait and Namibia, the financial statements have been brpared and audited in India.

Note 2 - The Company is primarily engaged in Engineering, Procurement and Construction business (EPC) relating to products, projects and systems for power transmission, distribution and related activities. Further, the Company’s business is managed across multiple geographies on a worldwide basis and the same is monitored on individual project basis. Accordingly, there is no other separate reportable segment as defined by Accounting Standard (AS) 17 “Segment Reporting”. However, in the Consolidated Financial Statements, for the purpose of geographical segments, the consolidated revenue from operations are broadly divided into two segments- India and Outside India and disclosed accordingly.

Note 3 - Basic / diluted earnings per share has been calculated by dividing the profit for the year after tax of Rs. 15,800.96 lacs (Previous Year Rs. 11,073.50 lacs), by 25,70,88,370 (Previous Year 25,70,88,370) being the weighted average number of equity shares (having face value of Rs.2/- each) outstanding during the year.

Note 4 - Based on the details regarding the status of the supplier obtained by the Company, there is no supplier covered under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act).This has been relied upon by the auditors.

Note 5 - Scheme of Amal gamation :

1. A Scheme of Amalgamation (the Scheme) between Jay Railway Projects Private Limited (Jay Railway) (engaged in EPC business relating to railways signaling automation systems and technology) and the Company and their respective shareholders under Section 391 to 394 of the Companies Act, 1956 was sanctioned by the Hon’ble High Court of Judicature at Bombay on December 30, 2015. The Scheme, which has become operative from December 30, 2015 upon filing of the certified copy of the Order of the Hon’ble High Court of Judicature at Bombay with the Registrar of Company in the Maharashtra, is effective from April 01, 2014 (The Appointed date).

2. Pursuant to the Scheme, with effect from the appointed date Jay Railway (Transferor Company) is amalgamated in the Company, as a going concern, with all its assets, liabilities, properties, rights, benefits and interest therein.

3. Upon the Scheme being effective, the shares held by the Company and its nominees in the Transferor Company have been cancelled and extinguished and no share was issued by the Company in consideration for the Scheme of Amalgamation. Further intercompany loans and balances between the Transferor Company and the Company have been cancelled.

The Company recorded all the assets and liabilities of Jay Railway and transferred to and vested in the Company at their respective book values. Further, the debit balance in Statement of Profit and Loss of the Transferor Company as on the appointed date i.e. April 01, 2014 of Rs. 90.63 lacs and for the financial year 2014-15 of Rs. 22.98 lacs has been adjusted against the Surplus in Statement of Profit and Loss of the Company.

4. The amalgamation being “Amalgamation in the nature of merger” has been accounted for under the pooling of interest method as brscribed in the Accounting Standard (AS-14) - “Accounting for Amalgamations”.

Note 6 - The execution of the construction works under contracts of the Company with General Electric Company Libya (a Government of Libya undertaking) is disrupted since February, 2011 due to civil/political unrest in that country. The net assets [including fixed assets, trade receivables etc.] as at March 31, 2016 of the Company relating to these contracts aggregate Rs. 3,134.86 lacs (Previous Year Rs. 5,125.96 lacs) The Company has been receiving time extension from the client, from time to time, for completion of the contracts. The Company is confident of completing these projects.

Note 7 - In terms of the agreement entered into, in an earlier year, by the Company with the joint venture partner, the Company has funded EJP KEC Joint Venture, South Africa (JV) (including for the other venturer’s share) for smooth execution of the transmission line project at South Africa referred to in the said agreement, which was ultimately completed by the JV in April, 2014.

The JV suffered the loss in execution of the aforesaid project, interalia, on account of unexpected weather and terrain conditions, breach of contract by the client (e.g. changes in the specification, withholding payment due to JV).

During the brvious year, the JV lodged various claims (viz. compensation and damages claims) on the client to recover additional costs incurred/ damages suffered by the JV during the execution of the project. During the year, the adjudication proceedings have commenced. Based on the claim expert/ legal advice received, the Company is confident that the JV will ultimately succeed in getting these claims from the client and thereby the Company will realise its dues from the JV. Accordingly, amount recoverable (net of provision) from the JV aggregating Rs. 10,998.22 lacs (Previous Year Rs. 13,022.97 lacs) as appearing under ‘Short-term loans and advances’ - Note 18, has been considered good and recoverable by the management.

Note 8 - The Corporate Social Responsibility (CSR) obligation for the year as computed by the Company and relied upon by the auditors is Rs. Nil (Previous Year Rs. Nil). CSR amount spent during the year is Rs. 93.00 Lacs (Previous Year Rs. 39.50 Lacs).

Note 9 – The transaction for sale of telecom tower assets at 381 sites in the states of Chhattisgarh, Meghalaya and Mizoram to ATC Telecom Tower Corporation Private Limited has been completed at a total consideration of Rs. 8,230 Lacs on July 22, 2015. Profit on sale of these assets (net of related expenses) of Rs. 536.06 lacs is included under “Other Income” Note 21.

Note 10 – During the brvious year, pursuant to the notification of Schedule II to the Companies Act, 2013 (the Act) with effect from April 1, 2014, the Company revised the estimated useful life of its assets as mentioned in Note 1(F)(i). Pursuant to the transition provisions brscribed in Schedule II to the Act, the Company had fully debrciated the carrying value of assets, net of residual value, where the remaining useful life of the asset was determined to be Nil as on April 1, 2014, and adjusted an amount of Rs. 199.01 lacs (net of deferred tax of Rs. 102.48 lacs) against the opening Surplus balance in the Statement of Profit and Loss as at March 31, 2014 under Reserves and Surplus. The debrciation expense in the Statement of Profit and Loss for the brvious year was higher by Rs. 395.51 lacs consequent to the change in the useful life of the assets.

Note 11 - Previous Year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s classification / disclosure.

Signatures to Notes 1 to 48 which form an integral part of the Financial Statements.

For and on behalf of the Board of Directors

H.V.GOENKA Chairman DIN - 00026726

RAJEEV AGGARWAL Chief Financial Officer

VIMAL KEJRIWAL Managing Director & CEO DIN - 00026981

CH.V.JAGANNADHA Company Secretary

RAO A.T.VASWANI Director DIN - 00057953

Place : Mumbai

Date : May 06, 2016