Dear Share holders,
 
 The Companys performance in the previous year has been encouraging. We
 doubled our turn over from Rs. 16,473 million in the previous year to
 Rs. 33,365 million. We registered a 67% growth in our Operating Profits
 which stood at Rs.6,993 million. All our business verticals recorded
 growth with the Construction and EPC business registering the highest
 growth rate on account of the healthy order book. The year also marked
 our successful foray into the Sea Port segment. Going forward,! believe
 that power sector will be our main stay while we gradually grow our
 presence in the infrastructure segment.
 
 The allocation of a coal mine block in Orissa has enhanced our fuel
 security for the expansions in power segment.
 
 Presently, economies across the globe are going through a turbulent
 phase and Indian Economy is no exception. The shockwaves sent by the
 sub prime problems in the United States of America and elsewhere have
 been felt in all the financial markets in the world. That coupled with
 the surge in the commodity prices lead by Crude, Steel and Coal have
 resulted in inflationary pressures in most of the economies.  India, an
 economy at the forefront of developing nations is also bearing the
 brunt of inflation and the Government and the Central Bank of the
 country have initiated policy measures aimed at taming inflation which
 have an impact on growth.
 
 The sectors in which your Company has interests viz.  Infrastructure
 development, Construction and property development - have all been
 affected by these developments.  However,there is an acute awareness
 amongst policy makers that infrastructure development cannot be made to
 suffer because of these pressures and therefore the government is
 trying its best to moderate policy measures in a manner which would
 continue to allow infrastructure development to grow. There is
 therefore no slowdown on the initiatives being taken by the government
 to encourage Public Private Partnership (PPP) models for infrastructure
 development and it is indeed felt that fiscal pressures on government’s
 finances would encourage the government to adopt PPP models more
 aggressively.
 
 On the other hand, the increased commodity and borrowing costs is
 challenging companies such as ours to look at innovative methods to
 reduce costs and maintain margins.  I believe that the synergies
 provided by the integrated business model which we have gives us an
 excellent opportunity to test our skills in improving efficiencies
 across our value chain so that we can still be generating returns
 better than industry benchmarks. I am quite confident that a strong
 focus on value engineering in our EPC business can throw up good
 potential in terms of cost savings and also a large dose of technology
 in the construction activities can improve execution time cycles and
 thereby costs. Innovations in the way we finance our projects can
 enable us to reduce financing costs. Also, the pressure on energy
 prices is making countries across the globe look for alternative energy
 sources such as wind and solar power production in a much more serious
 manner than earlier, thereby providing new areas for future growth.
 
 Besides strengthening our existing business verticals we have
 identified opportunities presented in construction and infrastructure
 development of Transmission, Distribution Lines, Pipelines, Gas
 Distribution, Railway Transportation, Modernization of Railway and Bus
 Terminals to name a few.  Entering into joint ventures and strategic
 alliances to enhance our credibility in terms of financial, technical
 and execution abilities remains a core strategy in new areas. On the
 basis of the technology tie-ups we have also created subsidiaries to
 develop and execute business models for manufacturing and providing
 complete services for wind power generation and also solar photovoltaic
 cell manufacturing.
 
 I strongly believe that the synergetic growth model which we have would
 enable us to continue to grow strongly and rapidly for more years to
 come.
 
 The growth potentialities which we are targeting necessarily require an
 enhancement of human resources capabilities at all levels. We have put
 in place a human resources strategy which would focus on positioning
 managerial skills in each business vertical supported by resources to
 execute the plans. I believe that the ability to attract and retain
 best of the talent is of critical importance for achieving growth.
 
 A profitable growth model with foundations securely linked to a
 sustainable development model is what I believe is required from every
 Corporate and we are committed to discharge our responsibilities and
 duties as a good corporate citizen. We are taking a number of
 initiatives including putting in place a CSR policy document which
 would create a framework and a roadmap for achieving this objective.
 
 I take this opportunity to acknowledge and appreciate the support and
 inspiration that our stakeholders including customers, shareholders,
 associates and employees have provided us through this growth journey
 enabling us to excel.  I thank each one of you for the same and look
 forward to your continued support as we continue to move forward on
 this successful journey.
 
                                                  L.Madhusudhan Rao 
                                                 Executive Chairman