IVRCL Infrastructure and Projects

The Directors have pleasure in presenting the 21st Annual Report and
 Audited Accounts for the financial year ended 31st March 2008.
 
 The performance of your Company for the financial year ended 31st
 March, 2008, is summarized below:
 
 1.  FINANCIAL RESULTS
 
                                                    Rs. in million
                                              Year ended     Year ended
                                              31.03.2008     31.03.2007
 
 Gross Turnover                                36,981.14     23,464.57
 
 Profit before Interest, Depreciation,          3,659.70      2,391.71 
 Extraordinary
 items & Taxes
 
 Less : Interest & Finance Charges                478.22        324.87
 
 Less : Depreciation                              328.18        215.88
 
 Profit before tax (PBT)                        2,853.30      1,850.96
 
 Provision for tax                                748.53        436.33
 
 Profit after tax (PAT)                         2,104.77       1414.63
 
 Balance brought forward from previous year       970.76        723.83
 
 Profit available for appropriation             3,075.53      2,138.46
 
 Appropriations : Transfer to
 
 (i) General Reserve                              500.00        250.00
 
 (ii) Special Reserve (Taxation)                  270.00        766.00
 
 Proposed Dividend on existing shares             186.89        129.66
 
 Corporate Dividend Tax                            31.76         22.04
 
 Sum total of Appropriations                      988.65      1,167.70
 
 Balance carried to Balance Sheet               2,086.88        970.76
 
 2.  DIVIDEND
 
 Your Directors have pleasure in recommending a dividend of 70% i.e.
 Rs.1.40/- per share of Rs.2/- each (last year Rs.1/- per share of
 Rs.2/- each) on 133,489,929 equity shares of Rs.2/- each for the
 financial year ended 31st March, 2008, which if approved at the ensuing
 Annual General Meeting, will be paid to all those members whose names
 appear in the Register of Members as on the close of business hours on
 10th September, 2008 and to all those shareholders whose names appear
 on that date as beneficial owners in the list furnished by Nalional
 Securities Depository Limited (NSDL) and Central Depository Services
 (India) Limited (CDSL). The dividend payable will result in an outgo of
 Rs. 186.89 million towards dividend besides the applicable taxes.
 
 The dividend pay out for the year under review is in accordance with
 the Companys policy of suitably rewarding the shareholders besides
 keeping in view the Companys need for capital, its growth plans and
 the intent to finance such plans through internal accruals to the
 maximum.
 
 3.  RESERVES
 
 It is proposed to transfer Rs.500.00 million to the General Reserves of
 the Company, constituting 23.76% of the profits made during the year.
 Further, it is proposed to transfer Rs. 270.00 million to Special
 Reserve Account to meet any unforeseen liabilities that may arise in
 matters connected with taxation.
 
 4.  REVIEW OF PERFORMANCE
 
 Financial
 
 The financial year 2007-08 is yet another year of significant growth.
 Your company achieved a gross turnover of Rs. 36,981.14 million for the
 year ended 31st March, 2008 as against Rs.23,464.57 million for the
 previous financial year registering an incremental turnover of Rs.
 13,516.57 million and recording a growth rate of 57.60% over the
 previous year.
 
 The Earnings before Interest, Depreciation, Taxes and Amortisation
 (EBIDTA) at Rs.  3659.70 million are 9.90% of the Gross Turnover for
 the year under review as against 10.19% for the previous financial year
 and this rate of gross profit compares well with similar other
 companies.
 
 IVRCL continues to be called the Water related technology company with
 maximum turnover from water related projects. The Irrigation Wing of
 Water Division has substantially contributed to the improved turnover
 during the year under review.
 
 TLT Factory at Nagpur
 
 The companys factory for manufacture of Transmission Line Tower parts
 (TLT Parts factory) has commenced production during the year.
 
 5. ORDER BOOK POSITION:
 
 The Order Book has substantially increased during the year to
 Rs.122,415 Million as on 19th May 2008, and is likely to increase
 further considering the tenders in which the companys offers were
 rated lowest, for which orders are in pipeline. Water and Irrigation
 works constitute the bulk of the Order Book Position accounting for
 62%:
 
 SI.  Particulars               Orders on hand
 No.                            (Rs. in Millions)          %
 
 1        Water Division              75,728            61.86
 
 2        Buildings Division          28,015            22.89
 
 3        Transportation Division     11,157             9.11
 
 4        Power Division               7,515             6.14
          TOTAL1                      22,415           100.00
 
 
 6.  FUTURE OUTLOOK
 
 Your directors are confident that the present environment of
 investments in infrastructure by the State and Central Governments
 assures growth of operations of your company, so as not only to
 maintain the growth rates achieved in earlier years but also surpass
 the same.
 
 7.  JOINT VENTURES
 
 The increased volume of business was partly due to strategic
 association with various joint ventures partners. The company has
 mainly entered into joint ventures for execution of various works to
 meet the pre-qualification requirements.
 
 The launching of various irrigation projects has given a great
 opportunity to your company to establish itself in a bigger way in the
 development of these projects. Of the irrigation works awarded to the
 company to be executed either by itself or through the Joint Ventures,
 works of the value of 42% thereof have since been completed. The
 company is confident that the balance works would be executed as per
 the timelines set, but for unforeseen circumstances.
 
 8.  SUBSIDIARIES
 
 Your company firmly believes in partnering with the Government in
 implementing and managing various infrastructure projects under the
 concept of Public Private Partnership (PPP) and has decided to have a
 greater role in the infrastructure development of the country in the
 Water, Roads and Power sectors. To meet the challenges in this evolving
 scenario, separate companies (Special Purpose Vehicles) have been
 incorporated into which investments have been made for execution of the
 projects awarded on BOT, BOOT and DBOOT basis, as detailed herein. The
 performance of the subsidiaries is detailed hereunder:
 
 8.1 HINDUSTAN DORR-OLIVER LIMITED (HDO)
 
 The operations of Hindustan Dorr-Oliver Limited (HDO) after acquisition
 by your company have broadened and substantially improved to include
 EPC works.
 
 The company is focusing on high growth sectors of oil business, in
 Manufacturing, Design & Engineering activities of KPO (Knowledge
 Process Outsourcing) and large scale EPC projects in Mineral
 Beneficiation & Environment Sectors. Leveraging on its core competency
 in Design & Engineering, Manufacturing & EPC project execution
 capabilities, the company is positioned to take advantage of
 opportunities in the field of Alumina and Steel industries. In Mineral
 Beneficiation sector, HDO has tied up with global leaders like M/s.
 Bateman Minerals & Metals, South Africa for Uranium Alkali Bleaching
 Technology, M/s. Alfa Laval, Denmark for Evaporation Technology and
 M/s. Bokela, Germany for security filtration Technology.
 
 For the financial year ending 31st March 2008, the company achieved a
 turnover of Rs. 3,050.70 million, an increase of 46% compared to
 previous year. The Profit after tax has increased from Rs. 154 million
 to Rs. 226 million, an incease of 47% resulting an EPS of Rs. 6.29 ps
 on Rs. 2/- share. The Company increased the dividend from 25% to 30 %
 on the equity capital of the Company.
 
 8.2 IVR PRIME URBAN DEVELOPERS LTD., (PUDL)
 
 IVR Prime Urban Developers Limited is the Real Estate arm of your
 company having a land bank of 3393 acres. The company is engaged in
 construction of residential, retail and commercial projects at Chennai,
 Vizag, Bangalore, Pune, Nagpur and New Delhi besides Hyderabad. The
 Company made an initial public offering of its shares during the year
 2007-08. PUDL has undertaken execution of a well planned township in a
 plot of land of about 700 acres, in Sriperambadur, near Chennai, for
 development of Residential complex (300 Acres), Commercial (26.50
 acres), Hardware SEZ (50.00 acres), Convention Centre, Tourism and
 Recreation Facilities (13.20 acres), School and Hospital (10.00 Acres)
 with Open and Green space of 230 acres, jointly with Kotak Realty Group
 through a Special Purpose Vehicle (SPV) viz., IVR Hotels and Resorts
 Limited with a stake of 67% therein.
 
 For the financial year ending 31st March 2008, the company has achieved
 a turnover of Rs.5,958.18 million with a gross profit (PBT) of Rs.2,41
 8.73 million and net profit (PAT) of Rs.1,757.94 million. The Company
 declared a maiden dividend of 40% on its equity capital.
 
 8.3 IVRCL ROAD TOLL HOLDINGS LIMITED
 
 IVRCL Road Toll Holdings Limited (IRTHL) is an investment subsidiary
 through which all the investments into road related BOOT projects viz.,
 Jalandhar-Amritsar road project, Salem- Kumarapalayam road project and
 Kumarapalayam-Chengapalli road project have been routed. IRTHL has made
 investments in Salem Tollways Limited to the extent of Rs.710.67
 million, Kumarapalayam Tollways Limited to the extent of Rs.650.50
 million and Jalandhar Amritsar Tollways Limited to the extent of
 Rs.330.10 million which are the Special Purpose Vehicles conceived for
 implementation of the road projects as further detailed herein.
 
 8.3.1 SALEM TOLLWAYS LTD.
 
 Salem Tollways Limited (a subsidiary of IRTHL) was incorporated to
 design, construct, develop, finance, operate and maintain 53 kilometers
 section of National Highways - 47 from Salem to Kumarapalayam in the
 state of Tamilnadu pursuant to the concession agreement dated
 20.01.2006 between the Company and National Highways Authority of India
 (NHAI) at an estimated cost of Rs.5,011.30 million to be financed by
 way of equity of Rs.801.30 million, grant from NHAI of Rs.1,2.90.00
 million and term loans of Rs. 2,920 million. 27.3% of the project has
 already been completed in financial terms and is expected to be
 completed as per schedule.
 
 8.3.2 KUMARAPALAYAM TOLLWAYS LTD.
 
 Kumarapalayam Tollways Limited (a subsidiary of IRTHL) has been
 incorporated to design, construct, develop, finance, operate and
 maintain 47 kilometers section of National Highway - 47 from
 Kumarapalayam to Chengapalli in the state of Tamilnadu pursuant to the
 concession agreement dated 20.01.2006 between the company and National
 Highways Authority of India (NHAI) at an estimated cost of Rs.4,214.40
 million to be financed by way of equity of Rs.650.50 million, grant
 from NHAI of Rs.175.00 million and term loan of Rs.3,388.90 million.
 33.1% of the project has already been completed in financial terms and
 is expected to be completed as per schedule.
 
 8.3.3 JALANDHAR AMRITSAR TOLLWAYS LTD.
 
 Jalandhar Amritsar Tollways Limited (a subsidiary of IRTHL) has been
 incorporated for execution of widening and strengthening of
 Jalandhar-Amritsar road and the concession agreement signed with
 National Highways Authority of India (NHAI). The estimated cost of the
 project is Rs.2,377.50 million financed by way of debt to the extent of
 Rs. 1,570.00 million and equity of Rs.41 3.00 million and grant from
 NHAI to the extent of Rs.394.50 million. 48.8% of the project has
 already been completed in financial terms and is expected to be
 completed by December, 2008 barring unforeseen delays.
 
 8.3.4 IVRCL BUILDING PRODUCTS LIMITED
 
 IVRCL Building Products Limited (IBPL) (a subsidiary of IRTHL) was
 incorporated with a view to manufacture, produce mine and deal in
 various inputs connected with the construction industry with more
 thrust initially on metal aggregates. The company is in the process of
 acquiring mining leases at various places like Bangalore, Chennai, Pune
 etc. for production of metal aggregates. The operations of this company
 have been conceived to be complementary to those of your Company. The
 IBPL has been made a subsidiary of IVRCL Road Toll Holdings Limited
 with an investment of 60% .
 
 8.4 IVRCL WATER INFRASTRUCTURES LIMITED
 
 IVRCL Water Infrastructures Limited (IVVIL) was incorporated as a
 subsidiary of IVRCL to make investments into various water related BOOT
 projects. IVVIL holds 74.85% of shareholding of Chennai Water
 Desalination Limited, the Special Purpose Vehicle for implementing
 desalination project awarded by the Government of Tamilnadu, besides
 95% of First STP Pvt. Ltd. which has set up the Sewerage Treatment
 Plant for Allandur Municipality, Chennai.
 
 8.4.1 CHENNAI WATER DESALINATION LIMITED
 
 Chennai Water Desalination Limited (CWDL) is a Special Purpose Vehicle
 promoted by your company and M/s. BEFASA CTA of SPAIN who are leaders
 in Water Desalination technology.  Your company holds through IWIL 75%)
 of shareholding while BEFASA holds 25%.  CWDL has received all the
 clearances for implementation of the project at a cost of Rs.4900
 million. The project execution has commenced and 66.9% has been
 completed in financial terms. The project which was scheduled to be
 completed by August 2008, has been rescheduled to be completed by
 January 2009, due to delays in getting certain clearances, abnormal
 climatic conditions at the site and other unforeseen circumstances.  
 
 8.4.2 FIRST STP PRIVATE LIMITED
 
 FIRST STP Private Limited is a subsidiary of IWIL which holds 95% of
 shareholding. The company is engaged in the business of sewerage
 treatment for Allandur Municipality, a suburb of Chennai. The total
 investment made is Rs.28.50 million. The company achieved a turnover of
 Rs.16.02 million with a Profit Before Tax (PBT) of Rs.0.82 million and
 Profit After Tax (PAT) of Rs.0.73 million, during the period under
 review.
 
 8.5 ALKOR PETROO LIMITED
 
 During the year under review, your company has forayed into oil and gas
 sector by acquiring the majority stake in Alkor Petroo Limited, a
 company which is having 25% participating interest in three oil
 exploration blocks i.e., Blocks 19, 28 and 57 in Yemen and 20%
 participating interest in two blocks viz., Block 6
 {(N-Happy)(Off-shore)! and Block 8 {(South Diyar)(On-shore)} in Egypt
 as a member of consortia which were awarded the exploration rights by
 the respective Governments. The other members of the Consortium are
 Gujarat State Petroleum Corporation Limited (Operator-45%) Jubilant
 (30%) in Blocks 19, 28 and 57 of Yemen; and Gujarat State Petroleum
 Corporation Limited (Operator-50%) Geo Global (30%) in Blocks 6 and 8
 of Egypt.
 
 Production Sharing Agreements have been ratified by the Parliaments of
 respective countries for the relative blocks and the Consortia have
 entered into necessary agreements with the respective governments.
 
 The Company has also fulfilled its obligations in making payment of
 signature bonus and provision of performance guarantees to the
 Government of Yemen to the extent of its share in blocks located in
 Yemen and to the Gujarat State Petroleum Corporation in respect of
 Egyptian Blocks.  The actual exploration is expected to commence from
 August 2008 in all the blocks.
 
 
                                              (Rs. in million)
 
 SI.      Name of the company                        Investment
 No.                                                  made
 
 1        IVR Enviro Projects Private Limited         6.75
 
 2        IVRCL PSC Pipes Private Limited             1.67
 
 3        CEO IVRCL Engineering Limited               0.49
 
 4        IVRCL Steel Construction & Services Ltd.,   0.50
 
 
 Turnover             Profit             Profit
 achieved           before Tax        after Tax
 
 0.81               (2.28)              (1.49)
 
 2.10                0.60                0.40
 
  --                (0.17)              (0.17)
 
  --                (0.02)              (0.02)
 
 The performance of the other subsidiaries, in a nut shell, is detailed
 hereunder :
 
 Statement pursuant to Sec.212 of the Companies Act, is annexed vide
 Annexure-B to this report. The summarized financial performance of the
 subsidiaries is annexed to this report.
 
 9.  CONSOLIDATION OF ACCOUNTS
 
 In accordance with the Accounting Standard AS-21 on Consolidated
 Financial Statements read with Accounting Standard AS-27 on Financial
 Reporting of Interests in Joint Ventures, your Directors have pleasure
 in attaching the Consolidated Financial Statements presented by your
 Company which form part of the Annual Report and Accounts.
 
 Profit after tax and minority interest as per the consolidated accounts
 is Rs. 2,834.40 million considering the combined profits net of losses
 of all the subsidiaries, joint ventures and after eliminating
 unrealized profits from intra-group transactions to the tune of
 Rs.16.09 million.
 
 10.  ISSUE OF FOREIGN CURRENCY CONVERTIBLE BONDS
 
 The Foreign Currency Convertible Bonds (FCCBs) of the value of US $
 65.00 million have been issued by the company and listed on the
 Singapore Stock Exchange and are liable to be converted into companys
 equity shares at an exercise price of Rs.234.03 per share of Rs.2/ -
 each considering an exchange rate of Rs.45.84 per dollar. The bonds of
 the value of US $ 57.40 million have been converted into 11243024
 shares leaving bonds of the value of US $ 7.60 million convertible into
 1488635 shares. As a result of these conversions, the share capital has
 increased by Rs.22.48 million and reserves by Rs.2,609 million.
 
 11.  EMPLOYEE STOCK OPTION SCHEMES:
 
 Your Company is the first company to introduce stock options in the
 construction sector, as detailed hereunder:
 
 a) IVRCL ESOP 2000
 
 All the 3,00,000 options granted to permanent employees as approved by
 the shareholders on 17th March, 2000 have been duly exercised and
 converted into shares except 3000 options entitling allotment of 15000
 shares of Rs.2/- each which are liable to be exercised in June 2008.
 
 b) IVRCL ESOP 2004
 
 All the 4,00,000 options approved by the shareholders at the
 Extraordinary General Meeting held on 5th January, 2004 have been
 granted to the employees, exercised by the employees on the respective
 due dates and have been converted into 1999205 shares of Rs.2/- each
 except 795 options which have lapsed party due to efflux of time within
 which these options were scheduled to be converted into shares and
 non-exercising by the employees who have been granted the same, due to
 resignations etc.
 
 c) IVRCL ESOP 2007
 
 The members approved granting of 4,200,000 options at the Annual
 General Meeting held on 7th September 2007, underlying 4,200,000 shares
 of Rs.2/- each. The company is yet to grant these options to the
 employees.
 
 The options against which allotment have been made are accounted for in
 the books in accordance with the SEBI guidelines and the required
 particulars are provided in Annexure-C.
 
 12.  PUBLIC DEPOSITS
 
 There are no outstanding public deposits as on 31st March, 2008.
 
 13.  DIRECTORS
 
 Mr. S.K.Gupta, Mr. P.R.Tripathi and Mr.  T.N.Chaturvedi retire at the
 forthcoming Annual General Meeting and being eligible offer themselves
 for reappointment.
 
 14.  CORPORATE GOVERNANCE
 
 Your Directors report that your Company is compliant with the Corporate
 Governance requirements as per Clause 49 of the Listing Agreement with
 the Stock Exchanges. M/s.  Chaturvedi & Partners, Chartered
 Accountants Certificate along with the report on Corporate Governance
 is included in the Annual Report. The Management Discussion and
 Analysis of the previous years performance is also provided in the
 Annual Report.
 
 15.  DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement under section 217 (2AA) of the Companies
 Act, 1956, with respect to Directors Responsibility Statement, it is
 hereby confirmed that:
 
 i) in the preparation of the annual accounts the applicable accounting
 standards have been followed along with proper explanations relating to
 material departures ;
 
 ii) the Directors have selected such accounting policies and applied
 them consistently and made judgment and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company as at 31st March, 2008 and of the profit of the Company
 for the financial year ended on that date.
 
 iii) the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956, for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities; and
 
 iv) the Directors have prepared the annual accounts of the Company on a
 going concern basis.
 
 16.  AUDITORS
 
 M/s. Chaturvedi & Partners and M/s. Deloitte Haskins & Sells, the
 Statutory Auditors, retire at the ensuing annual general meeting and
 are eligible for reappointment. The Company received confirmation that
 their appointment, if made, would be within the limits prescribed under
 Sec. 224(1 B) of the Companies Act, 1956.
 
 17.  PARTICULARS OF EMPLOYEES
 
 Particulars of employees as comtemplated under Section 21 7 (2A) of the
 Companies Act, 1956 is attached as Annexure -D to the report.
 
 18.  CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO:
 
 Conservation of Energy, which is an on going process in the Companys
 activities. The core activity of the company is civil construction
 which is not an energy intensive activity.
 
 There is no information to be furnished regarding Technology Absorption
 as your Company has not undertaken any research and development
 activity in any manufacturing activity nor any specific technology is
 obtained from any external sources which needs to be absorbed or
 adapted.
 
 Innovation is a culture in the Company to achieve cost efficiency in
 the construction activity to be more and more competitive in the
 prevailing environment and the effect of the same cannot be quantified.
 
 The particulars of expenditure and earnings in Foreign currency is
 furnished in item No.BIO Notes to Accounts in Schedule 19.
 
 19.  INDUSTRIAL RELATIONS
 
 The Company enjoyed cordial relations with the employees during the
 year under review and the Management appreciates the employees of all
 cadres for their dedicated services to the Company, and expects
 continued support, higher level of productivity for achieving the
 targets set for the future.
 
 20.  ACKNOWLEDGMENTS
 
 The Directors wish to express their appreciation of the support and
 co-operation of the Central and the State Governments, bankers,
 financial institutions, suppliers, associates and subcontractors, and
 expects the same in future as well for sustaining the growth rates
 achieved in the past.
 
 
                                      For and on behalf of the Board
 
                                      E. Sudhir Reddy
 Place: Hyderabad                     Chairman &
 Date : May 28, 2008                  Managing Director