Nagarjuna Construction Co.

I derive a deep sense of pride in stating that Nagarjuna Construction
 Company Limited serves Indias critical need for quality
 infrastructure,
 
 Today, we are present in 120 project locations across India - one of
 the largest by any company in our space - helping catalyse the national
 growth engine. This strong country- company linkage has reinforced our
 ability to counter the downturn, reflected in the following numbers in
 a challenging year:
 
 Built to survive
 
 We have created a business model relevant for all market cycles through
 the following initiatives:
 
 - Retained our industry pre-eminence through quality services supported
 by robust technical capabilities, rich project management skills and
 large, complex project execution
 
 - Improved the consistency and discipline of our commercial practices
 across our business groups; fostered a sense of healthy competition
 among them to augment return on capital employed
 
 - Increased our capacity to execute contracts through the addition of
 engineers and technical members on the one hand and the expansion of
 low-cost fabrication facilities, engineering and design centre on the
 other
 
 - Strengthened our balance sheet through debt optimisation and net
 worth accretion
 
 - Reduced overhead expenses as a percent of revenues through
 organisational leanness
 
 - Pursued continuous improvement in everything we did Redefining our
 opportunity landscape We serve the following downstream sectors with
 robust prospects that should translate into sustainable growth:
 
 - In a May 2007 report, the U.S. Energy Information Agency (EIA)
 estimated that the worlds net electricity generation is expected to
 grow 85 percent from 2004 (16 billion kilowatt hours) to 2030 (30
 billion kilowatt hours).
 
 - In 2008, the worlds urban population outstripped the rural
 population for the first time ever, According to a recent report by the
 UN Habitat, more than 70 percent of the worlds population would live
 in cities by 2050. In India, half the population is expected to live in
 cities by 2041 (current urban population around 30%), according to the
 World Bank.
 
 - India suffers from a housing deficit of over 25 million units, which
 is growing, A massive investment of Rs 361,318 cr is required to cover
 this deficit.
 
 - The countrys water supply and sanitation market will report
 better-than-ever returns supported by two emerging realities: one, the
 need to provide access to water and sanitation to the rural population;
 two, most of the urban water and sanitation systems are over a century
 old and require replacement with an investment of over Rs 1,38,000 cr
 over the decade.
 
 - Indias realty market will reach a mind-boggling 40 percent
 compounded annual growth rate (CAGR) with a market potential of Rs
 276,000 cr by 2010. A deep hospitality under- penetration is reflected
 in the fact that India has 1.1 lakh hotel rooms, while Shanghai alone
 has 1.5 lakh hotel rooms.
 
 Way to the future
 
 We deliver excellence by enriching a culture where over 4,000 talented
 and committed Nagarjuna Construction Company employees enjoy their work
 and can focus on superior performance for our clients, In pursuit of
 this strategy, we will continue to:
 
 - Grow all our business groups organically through the addition of men
 and machines
 
 - Build capabilities and capacities in our new businesses of mining and
 metals and venture into new synergic verticals
 
 - Leverage our established position in key technologies; form alliances
 with global leaders who can dedicate superior capabilities in the
 execution of large and technically challenging projects, especially at
 our oil and gas, metals and mining divisions
 
 - Enhance cost-competitiveness across all operations
 
 A sense of optimism
 
 I have never been more optimistic about the future of Nagarjuna
 Construction. With reinforced strength in our key markets, defined
 strategies and continuous improvement in our capabilities, your Company
 is poised to post a turnover of Rs 4,800 cr (standalone) in 2009-10 and
 retain its position as one of the top performers in our sector.
 
 In closing, I wish to thank the employees of Nagarjuna Construction for
 their skill and dedication. They have worked hard to deliver value to
 clients, shareholders and other stakeholders.
 
                                                        Sincerely,
                                                  Dr. A.V.S. Raju
                                                Chairman Emeritus