Noida Toll Bridge Company

(a) Scheme of Amalgamation with DND Flyway Ltd.
 
 The Company had filed a scheme of amalgamation with its 100% subsidiary
 DND Flyway Limited in the Honourable High Courts of Allahabad and Delhi
 which has been approved on 22nd March 2007 and 21st May 2007 by the
 respective courts. The company has filed the copy of the scheme with
 the registrar of Companies on 21st June 2007.
 
 As per the terms of the scheme:
 
 i.  DND Flyway Limited (subsidiary Company, hereinafter referred as
 DND) has been amalgamated with the company and all the assets and
 liabilities have been transferred to the company at book value.
 
 ii. The effective date for recording accounting transactions in the
 books of accounts regarding amalgamation has been taken as 1st July, 06
 as per pooling of interest method as specified in AS 14.
 
 iii. Toll Equalisation Receivable of Rs. 1713.30 million has been
 recognised by crediting the General Reserve.
 
 iv. Accumulated losses of Rs. 1125.10 million have been adjusted
 against the general reserve created out of the above.
 
 v. The company has provided for obligations towards ZCB Series B of Rs.
 432.53 million, Prepayment charges Rs. 11.17 million, Bond Issue
 Expenses 6.16 million and contingencies of Rs. 29.56 million out of the
 general reserve created above.
 
 vi. The company has also amortised the unamortized ancillary cost of
 Rs. 108.76 million out of the general reserve created above.
 
 The expenses against the said obligations / amortizations recorded in
 the financial statements of the earlier years after the appointed date
 as defined in the scheme have been reversed during the year and
 consequently Rs. 47.65 million has been credited to the other income
 during the year.
 
 (b) Fixed Assets
 
 i.  Capitalisation of the Mayur Vihar Link Road
 
 The Mayur Vihar project which commenced in July 2006 has been completed
 in two phases. While the first phase was completed and opened to
 traffic on June 15,2007, the second phase has been completed and opened
 to traffic on January 19, 2008. Pending receipt of the final bill from
 the contractors, the Mayur Vihar Link Road has been capitalized for Rs.
 533,431,032 on an estimated basis.
 
 ii.  Depreciation
 
 The Company had obtained approval from the Department of Company
 Affairs vide its letter dated December 14, 2003 for not charging
 depreciation on the Delhi Noida Link Bridge for a three year period
 commencing from Financial Year 2003-04. Accordingly, depreciation on
 the Bridge had not been provided for during the financial years 2003-04
 to 2005-06. The company commenced providing depreciation on the Delhi
 Noida Link Bridge since 1st April 2006.
 
 Consequent to the approval of the Amalgamation Scheme with its wholly
 owned subsidiary M/s DND Flyway Ltd, revalued assets amounting to Rs
 1034.80 million have been added to the Gross Block of Assets.
 
 The Gross Block of Delhi Noida Link Bridge includes Rs. 1345.04 million
 (inclusive of assets transferred pursuant to amalgamation) on account
 of revaluation of the asset carried out in the past. Additional charge
 of Depreciation due to revaluation has been withdrawn from Revaluation
 Reserve and credited to the Profit & Loss Account.
 
 iii.  Revaluation of Fixed Assets:
 
 - Delhi Noida Link Bridge includes value of Land appurtenant to the
 Bridge on both sides of Delhi and Noida. The company had during the
 year 2003-04 carried out revaluation of Land for 34 acres on Noida side
 (original cost Rs 5,719,849 and written down value Rs 5,519,581 as on
 April 1, 2003) for which the value has been increased by Rs
 1,345,044,007.
 
 - New Okhla Industrial Development Authority (NOIDA) has accorded in
 principle approval to grant Development Rights to the Company and
 formal agreement in this regard is pending execution. The terms and
 conditions of the formal agreement may impact land valuation.
 
 (c) Sale/Reacquisition of Revalued Land:
 
 After obtaining approval from the Shareholders and the Lenders, the
 company had sold 30.493 acres of revalued land to DND (wholly owned
 subsidiary) in the year 2003-04 at the revalued price. Consequent to
 such sale, revaluation amount pertaining to land sold had been
 transferred from the Revaluation Reserve to the General Reserve in the
 year 2003-04. The said land has been reacquired by the company on the
 amalgamation of DND with it, and consequently the General Reserve
 created out of Revaluation Reserve has been transferred back to
 Revaluation Reserve.
 
 (d) Creation of Subsidiary:
 
 A new company M/s ITNL Toll Management Services Ltd has been promoted
 jointly by the Company and ITNL Ltd with a shareholding of 51% and 49%
 respectively in the new Company on August 1, 2007 to take over the
 Operation and Maintenance of Delhi Noida Toll Bridge and Mayur Vihar
 Link Road from the erstwhile O&M Operator M/s Intertoll India
 Consultants Private Ltd.
 
 (e) GDR Issue
 
 March 2006 to raise new equity capital. Accordingly the company issued
 56,818,180 Equity Shares represented by 11,363,636 GDRs (each GDR
 representing 5 Ordinary Shares of Rs 10 each) @ .96/GDR through M/S
 Collins Stewart Limited and Edelweiss Capital Limited to the
 Institutional Investors and raised $ 44,999,998.56 (equivalent to INR
 199,70,99,936) . The company also granted Collins Stewart Limited an
 over allotment option of up to 10% of the total number of new ordinary
 shares issued to the Depository.  The company has received $
 4,499,997.48 (equivalent to INR 20,13,29,887) in April 2006 towards
 over allotment.
 
 As the construction of the Mayur Vihar link to the Delhi Noida Toll
 Bridge could not be commenced by 21 April 2006, pending receipt of all
 approvals, the company used the funds for the prepayment of loans as
 mentioned in the GDR issue Admission documents.
 
 (f) Debt Restructuring:
 
 Pursuant to the approved Debt Restructuring package, the Company has
 issued Zero Coupon Bonds (Series B) of face value of Rs 100 each
 aggregating to Rs. 55.54 crores to Banks, Financial Institutions and
 others repayable no later than March 31,2014 towards the Net Present
 Value of the sacrifice made by them by way of reduction of interest
 rates from the contracted terms. The company had redeemed ZCB (Series
 B) aggregating to Rs. 27,771,100 and Rs 55,542,200 during the year
 2003-04 and the current year respectively and the same has been
 adjusted against the face value of the Zero Coupon Bonds (Series B).
 The Company was creating provision on a year to year basis on the
 principle of Sinking Fund by applying the weighted average interest
 rate on outstanding borrowings prior to restructuring as the discount
 rate and thereby arrive at the amount of the yearly charge. However
 during the current accounting period, the Company has fully provided
 the remaining liability of ZCB (series B) as mentioned in Note No.3 a
 (v).
 
 (g) Secured Loans:
 
 (i) Deep Discount Bonds are secured by a pari passu first charge in
 favour of the trustees along with the other senior lenders of the
 Company on all the project assets which include the Delhi Noida Link
 Bridge and all tangible and intangible assets including but not limited
 to rights over the project site, project documents, financial assets
 such as receivables, cash, investments, insurance proceeds etc.
 
 (ii) The Company has issued Series B Zero Coupon Bonds ( ZCB-B) of Rs
 100 each for an aggregate amount of Rs 555,422,000 to Banks and
 Financial Institutions against the sacrifice made by them by way of
 reduction of interest rates from the contracted terms pursuant to the
 approval of the Companies debt restructuring package by the Corporate
 Debt Restructuring Empowered Group of the Banks and Financial
 Institutions. These Zero Coupon Bonds are secured by pari passu first
 charge on the Companys assets both present and future. The company has
 made a redemption of 5% and 10% of the face value of such ZCBs on
 September 24,2003 and February 01, 2008 respectively.
 
 (iii) The \oan of Rs. 350,000,000 taken from M/s Infrastructure Leasing
 & Financial Services Ltd (IL&FS ) during the year 2004-05 is secured by
 pari passu first charge on the Companys assets both present and future
 along with the other Senior Lenders of the Company.
 
 (iv) The Company has during the year 2005-06 taken a Loan of Rs
 124,313,383 from M/s IL&FS Ltd which is secured by pari passu first
 charge on the Companys assets both present and future.
 
 (v) The Company has taken loans in 2004-05 from M/s IL&FS Ltd and M/s
 Infrastructure Development Finance Company Ltd (IDFC) of Rs 944,321,313
 carrying interest @8.5% p.a for carrying out the Scheme of Arrangement
 with the Deep Discount Bond holders approved by the Honourable
 Allahabad High Court. The Loan is secured by pari passu first charge on
 the companys assets both present and future along with the other
 Senior Lenders of the company.
 
 (vi) Term loans from banks, financial institutions and others are
 secured by a charge on:
 
 - Immovable properties of the Company situated in the states of Delhi
 and Uttar Pradesh.
 
 - The whole of the movable properties of the Company, both present and
 future.
 
 - All the Companys book debts, receivables, revenues of whatsoever
 nature and wheresoever arising, both present and future.
 
 - All the rights, titles, interest, benefits, claims and demands
 whatsoever of the Company under any agreements entered into by the
 Company in relation to the project including consents, agreements or
 any other documents entered into or to be entered into by the Company
 pertaining to the project, as amended, varied or supplemented from time
 to time.
 
 - All the rights, titles, interest of the Company in relation to the
 Trust & Retention account proceeds, being the bank account established
 by the Company for crediting all the revenues from the project
 including but not limited to toll collections from the project.
 
 - All the rights, titles, interest benefits, claims and demands
 whatsoever of the Company in the Government permits, authorizations,
 approvals, no objections, licenses pertaining to the project and to any
 claims or proceeds arising in relation to or under the insurance
 policies taken out by the Company pertaining to the assets of the
 projects of the Company.
 
 (h) Contingent Liabilities:
 
 Contingent Liabilities in respect of:
 
                                           As at               As at
                                    March 31, 2008      March 31, 2007
                                       Rs./Million         Rs./Million
 
 (i) Estimated amount of contracts             NIL             144.21
 remaining to be executed on
 capital account and not provided
 for (Net of advances paid against
 such contracts Rs. Nil (Previous
 year Rs. 276.12 million)
 
 (ii) Claims not acknowledged as
 debt by the Company.                          NIL                NIL
 
 (iii) Based on an environment and social assessment, compensation for
 rehabilitation and resettlement of project-affected persons has been
 estimated and considered as part of the project cost and provided for
 based on estimates made by the Company.
 
 (iv) Claims made by the contractor M/s AFCONS Ltd pertaining to the
 Construction of the Ashram Flyover aggregating to Rs. 19.82 million
 (Previous year Rs. 19.82 million) have not been accepted by the
 Company. The matter was referred for adjudication by both parties. The
 adjudication proceeding has been concluded and adjudicator has ruled
 that the claims are time barred. However the matter has been referred
 to arbitration by M/s AFCONS Ltd.
 
 (v) The company has acquired the land on Delhi side for the
 construction of Bridge from the Government of Delhi and DDA and the
 amount paid has been considered as a part of the project cost. However
 pending final settlement of the dues, the company had estimated the
 cost at Rs. 29.32 million and provided the same as a part of the
 project cost. The actual settlement may result in probable obligation
 to the extent of Rs. 30 million based on management estimates.
 
 (j) There are no amounts outstanding as payable to any enterprise
 covered under the Micro, Small and Medium Enterprises Development Act,
 2006.
 
 (k) Employees Post Retirement Benefits:
 
 The Company has three post employment funded benefit plans, namely
 gratuity, superannuation and provident fund.
 
 Gratuity is computed as 30 days salary, for every completed year of
 service or part there of in excess of 6 months and is payable on
 retirement/termination/resignation. The benefit vests on the employee
 completing 3 years of service. The Gratuity plan for the Company is a
 defined benefit scheme where annual contributions as demanded by the
 insurer are deposited to a Gratuity Trust Fund established to provide
 gratuity benefits. The Trust Fund has taken a Scheme of Insurance,
 whereby these contributions are transferred to the insurer. The Company
 makes provision of such gratuity asset/ liability in the books of
 accounts on the basis of actuarial valuation.
 
 The Superannuation (pension) plan for the Company is a defined
 contribution scheme where annual contribution as determined by the
 management (Maximum limit being 15% of salary) is paid to a
 Superannuation Trust Fund established to provide pension benefits. The
 benefits vests on employee completing 5 years of service. The
 management has the authority to waive or reduce this vesting condition.
 The Trust Fund has taken a Scheme of Insurance, whereby these
 contributions are transferred to the insurer. These contributions will
 accumulate at the rate to be determined by the insurer as at the close
 of each financial year. At the time of exit of employee, accumulated
 contribution will be utilised to buy pension annuity from an insurance
 company.
 
 The Provident Fund (being administered by a trust) is a defined
 contribution scheme whereby the Company deposits an amount determined
 as a fixed percentage of basic pay to the fund every month. The benefit
 vests upon commencement of employment.
 
 (l) Capitalisation of Borrowing Cost
 
 The company has borrowed Rs. 15 crore for the construction of Mayur
 Vihar Link. The interest cost of the same of Rs. 36,98,630 (Previous
 Year Rs. 91,23,288) has been capitalized with the Mayur Vihar Link.
 
 (m) The Income Tax Department has served a notice of demand of Rs.
 44,00,000 on account of penalty in lieu of upholding of one of the
 grounds by the CIT(A) for the Financial Year 2002-03.  The Company has
 filed the appeal against the same before the CIT appeal. In view of the
 Company till the discharge of appeal the said amount is not payable and
 the Company further believes that the order has been passed
 mechanically on the basis of partial rejection of the appeal by the
 CIT(A) and it is confident that its view shall be upheld by the higher
 appellate authorities. Thus, no provision for such demand is warranted.
 
 (n) Previous Years Comparatives:
 
 Figures for the previous year have been regrouped / reclassified to
 conform to current years presentation. Figures in brackets represent
 negative balance except otherwise stated.