KNR Constructions

The Directors take pleasure in presenting the 13th Annual Report and
 the audited accounts for the financial year ended 31st March, 2008 and
 this is the first annual report and audited accounts provided after
 public issue.
 
 FINANCIAL RESULTS :
                                                     (Rs. Lakhs)
 PARTICULARS                                  2007-08    2006-07
 
 Gross Income                                55406.25   33395.00
 
 Profit before interest and depreciation      7147.88    4312.38
 
 Less: Interest and financial charges         1003.84     890.67
 
 Profit Before depreciation                   6144.04    3421.71
 
 Less: Depreciation                           1449.40     736.42
 
 Profit before tax                            4694.64    2685.29
 
 Provision for tax 
 (including Wealth Tax, Fringe Benefit 
 Tax and Deferred Tax )                       1614.14     647.94
 
 Profit after tax                             3080.50    2037.35
 
 Less: Prior year taxes and adjustments        125.65      49.65
 
 Net Profit for the year                      2954.85    1987.70
 
 Profit brought forward from previous year    3837.65    2236.85
 
 Profit available for appropriation           6792.50    4224.55
 
 Appropriations:
 
 Transfer to General Reserve                   150.00     150.00
 
 Dividend® 10%                                 281.23     202.49
 
 Dividend tax                                   47.80      34.41
 
 Balance carried forward                      6313.47    3837.65
 
 Pald -up capital                             2812.35    2024.89
 
 Reserves and Surplus                        19812.79    4587.65
 
 REVIEW OF PERFORMANCE:
 
 Your company continues to be in the business of work contracts
 specializing in Roads and Bridges and other infrastructure projects
 like irrigation projects. During the year under consideration, your
 company has achieved a turnover of Rs 54742.71 Lakhs as against Rs
 32120.33 Lakhs in the previous year, thus registering an increase of
 70.43 %. The company has earned a gross profit of Rs 7147.88 Lakhs
 before interest and depreciation as against Rs 4312.38 Lakhs in the
 previous year, thus registering a growth of 65.75%. After deducting an
 interest of Rs 1003.84 Lakhs, providing for Rs.1449.40 Lakhs towards
 depreciation, Rs 1614.14 Lakhs towards provision for income tax, wealth
 tax, fringe benefit tax and deferred tax, Rs 125.65 Lakhs towards prior
 period items and taxes, the operations resulted in a net profit of Rs
 2954.85 Lakhs as against Rs. 1987.70 Lakhs last year, registering a
 growth of 48.66 %.
 
 Following are the major works awarded to our Company from since April
 2007
 
 SI.  Particulars of the Project                            Amount
 No.                                                 (Rs. In Millions)
 
 1 Package No: AP7 - Work order received from Patel
   Engineering Ltd., as back to back construction of 
   Design and                                                 4810.00
   Construction part of the project 
   from Islam Nagar (Km 230.00) to
   Kadtal (Km 278.00) of Nagpur-Hyderabad 
   Section on NH-7 in the
   State of Andhra Pradesh.
 
 2 Package No: NS-32 - Balance works of 
   widening 4/6 laning and                                    1029.98
   strengthening of existing 
   2 lane carriageway of NH-7
  (Madurai — Kanniyakumari section) in the State of Tamil Nadu
  from KM 203.000 (of existing NH, Panagudy) to km 234.690
  (end point of proposed kanniyakumari bypass) construction
  package no. NS-32 / TN (Balance) — Company share 50%
 
 With the above new orders, the order book position as on 30th June 2008
 stands at Rs. 13,618.54 Millions.
 
 Dividend
 
 Your Directors have recommended a divided of Rs. 1 /- per Equity share
 for the financial year ended 31 st March 2008, amounting to Rs. 281.23
 Lakhs. The dividend will be paid to the members whose names appear in
 the Register of Members as on 24.09.2008; in respect of shares held in
 the dematerialized form, it will be paid to members whose names are
 furnished by National Securities Depository Limited and Central
 Depository Services (India) Limited as beneficial owners as on that
 date.
 
 The dividend pay out for the year under review has been formulated in
 accordance with the Companys policy linked with long term performance,
 keeping in view the companys need for capital for its growth plans and
 the intent to finance such plans through internal accruals to the
 maximum.
 
 Listing of Equity Shares
 
 The Companys Equity Shares are listed at Bombay Stock Exchange Limited
 and National Stock Exchange of India Limited through our Initial Public
 Issue (IPO) which was opened on 24th January 2008 and closed on 29th
 January 2008. The listing permission from the both the stock exchanges
 was received on 14th February 2008 and got trading permission with
 effect from 18th February 2008.
 
 The company has utilized the publice issue proceeds in the following
 manner:
 
                                                 Rupees in Lakhs
 Particulars                                  Proposed   Utilised As on
                                                         31-03-2008
 
 Investment in Capital Equipment               2130.47      1359.63
 
 Investment in BOT Projects
 
 a - As equity contribution                    4234.60       600.00
 
 b- As un-secured loan                         3600.00      1800.00
 
 Working Capital                               2520.80      2520.80
 
 Issue Expenses                                 900.90       899.64
 
 Total                                       113386.77      7180.07
 
 The unutilized sum of Rs.6206.70 lakhs was temporarily invested in
 mutual funds and fixed deposits with banks .
 
 Directors
 
 In accordance with the requirements of the Companies Act, 1956 Sri L B
 Reddy, Sri D. Ramaiah, Sri J S R Chandra Mouli, and Shri K Jalandhar
 Reddy, Directors of the Company are liable to retire by rotation at the
 Annual General Meeting and, being eligible, offer themselves for
 reappointment at the ensuring Annual General Meeting. Brief resume of
 the Directors proposed to be reappointed, nature of their expertise in
 specific functional areas, names of the companies in which they hold
 directorships and relationships between directors inter-se, as
 stipulated under Clause 49 of the Listing Agreement with the Stock
 Exchanges in India, are provided in the Report on Corporate Governance.
 
 Auditor and Auditors Report:
 
 M/s. Sukumar Babu & Co., Chartered Accountants, Statutory Auditors of
 the company hold office until the conclusion of the ensuring Annual
 General Meeting and are eligible for reappointment.
 
 The Company has received letter from the Statutory Auditors to this
 effect that their reappointment, if made, would be within the
 prescribed limits under the Section 224(IB) of the Companies Act, 1956
 and they are not disqualified for such reappointment within the meaning
 of Section 226 of the said Act.
 
 The Notes on Accounts referred to in the Auditors Report are
 self-explanatory and therefore do not call for any further comments.
 
 Expiation to Auditors Observations
 
 1.  With reference to clause VII of Annexure for the Auditors Report,
 the management has taken note of the same and appropriate actions will
 be taken in the regard
 
 2.  With reference to clause 9(b) of Annexure of die Auditors Report,
 amount represents the provisions made for entry tax payable on the
 purchase of lubricants, HSD, tyres and bitumen. The company is entitled
 to the refund of special entry tax already paid by it and is awaiting
 the necessary assessment and refund orders.  After receipt of the same
 the refund amount will be adjusted against this liability. Any excess
 or shortfall in the above provision will be accounted for the books of
 accounts.
 
 Consolidated Financial Statements:
 
 In accordance with the Accounting Standards AS-21 and AS-27 on
 Consolidated Financial Statements read with the Accounting Standard
 AS-23 on Accounting for Investments in Associates, the audited
 Consolidated Financial Statements are provided in the Annual Report.
 
 Managements Discussion and Analysis Report
 
 Managements Discussion and Analysis Report for the year under review,
 as stipulated under Clause 49 of Listing agreement with the Stock
 Exchanges in India, is presented in a separate section forming part of
 the Annual Report.
 
 Fixed Deposits:
 
 The Company has not accepted any deposits from the public in terms of
 Section 58A of the Companies Act, 1956
 
 Particulars of Employees:
 
 The particulars of employees whose details need to be provided under
 section 217(2A) of the Companies Act, 1956 read with the Companies
 (Particulars of Employees) Rules, 1975 is presented as an Annexure to
 this report.
 
 Directors Responsibility Statement:
 
 Pursuant to the requirements 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 read with requirements set out under Schedule VI to the
 Companies Act, 1956, have been followed and there are no material
 departure from the same;
 
 ii) the Directors have selected such accounting policies and applied
 them consistendy and made judgments 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 March 31, 2008 and profit for the 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.  Conservation of Energy, Technology Absorption
 and Foreign Exchange Earnings and Out Go:
 
 The particulars relating Conservation of Energy, Technology absorption,
 Foreign Exchange earnings and outgo as required under section 217 (1)
 (e) of the Companies Act, 1956 read with Companies (Disclosure of
 particulars in the Report of Board of Directors) Rules, 1988 are as
 follows
 
 a) Conservation of Energy
 The Company has taken suitable measures for conservation of energy. The
 Companys main business is Civil Contract Works and mainly depends on
 heavy vehicles which run on diesel.
 
 b) Technology absorption, Adoption and Innovation
 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 need 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 that cannot be quantified.
 
 c) Foreign Exchange earnings and outgo
 
 Foreign Exchange Earnings - Nil
 Foreign Exchange outgo towards
 
 a) Travel - Rs. 1,11,760 (P.Y Rs. 20,038)
 
 b) Import of capital goods - Rs.7,10,23,975 (P.Y. Rs. 3,40,35,650)
 
 Corporate Governance:
 
 In pursuance of Clause 49 of the Listing Agreement entered into with
 the stock exchanges, a separate section on Corporate Governance has
 been incorporated in the annual report for the information of
 shareholders. A certificate from the auditors / Practicing Company
 Secretary of die Company regarding compliance with the conditions of
 Corporate Governance as stipulated under Clause 49 also forms part of
 die annual report.
 
 Acknowledgements:
 
 Your Directors wish to place on record dieir gratitude to the Companys
 shareholders, customers, vendors and bankers for their continued
 support to KNRCLs growdi initiatives Your Directors also wish to place
 on record, their appreciation of the contribution made by employees at
 all levels, who through dieir competence, sincerity, hard work,
 solidarity and dedicated support, have enabled your Company to make
 rapid strides in its business initiatives Your Directors also thank the
 Central and State Government and dieir various agencies, particularly,
 National Highway Authority of India and other Governmental agencies for
 extending their support during the year, and look forward to their
 continued support.
 
                           On behalf of the Board of Directors
                           of KNR Constructions Limited
 
 
                                   Sd/-           Sd/-
 
                         K Narasimha Reddy    M Rajesh Reddy
                         Managing Director    Executive Director
 
 Place : Hyderabad
 Date  : 30.08.2008