Dear Shareholder, 
 
 In the course of 2010-11, much has been done internally to strengthen 
 your Company''s businesses and delivery capabilities. However, 
 difficult and challenging external factors and business environment 
 have come in the way of translating Punj Lloyd''s various initiatives 
 to higher revenues and profits.
 
 Let me start by sharing my views with you on the challenges for
 2010-11, before outlining the various positive developments. To my
 mind, there have been three major factors that have affected almost any
 Indian infrastructure enterprise. The first has been a slowdown in the
 rate of growth The official estimate of real GDP growth for Q4, 2010-11
 now stands at 7.8% compared to the same quarter in the previous year —
 which is the slowest growth that India has seen in the last five
 quarters. Indeed, we have been seeing a slowdown in growth across each
 quarter: from 9.4% in Q4, 2009-10 to 9.3% in Q1, 2010-11, to 8.9% in
 Q2, to 8.3% in Q3 and now to 7.8% in Q4, 2010-11. This slowing down of
 growth has had a disproportionately direct effect on infrastructure
 spends. Experts in the infrastructure business in India will confirm
 that the second half of 2010-11 has seen a slowdown in both order
 booking and revenues
 
 The second has been the sharp rise in the price of all major
 commodities — crude oil, other hydrocarbons, coal, steel, metals and
 minerals These have had two repercussions. For one, these have
 increased project costs and have made it a challenging task for EPC
 players such as your Company to recover the additional cost from
 clients. Secondly, this inflationary milieu, which shows no sign of
 abating, has put several projects on hold
 
 The third has been the steady rise in interest rates with the Reserve
 Bank of India doing what it believes will combat inflation —
 unfortunately having little impact. The combined effect of consistently
 high inflation and rising interest rates has been very damaging for
 India''s investment environment. Finance is becoming increasingly
 expensive and difficult to obtain; projects are being put on hold; and
 cash flows are being severely pinched for clients and EPC players alike
 
 If one were to add surmounting political problems related to land
 acquisition - which is critical for building infrastructure - to the
 above factors, then it becomes clear why infrastructure growth has
 slowed down in the second half of 2010-11
 
 Your Company has been affected by another additional factor - the
 violent political turmoil in Libya. Punj Lloyd has a significant
 presence in Libya, both in township development and in the oil and gas
 sector. It has had to de-mobilise its operations, bring the Indian
 employees back home, and remove most of the infrastructure projects
 from the unexecuted order book. It is difficult to say when Libya will
 return to normalcy.  While I am confident that your Company will get
 back its projects when peace returns to that nation, it is also a fact
 that the revenue stream from Libyan operations will have to be pushed
 back.
 
 The impact of all these factors has led to a difficult year in terms of
 your Company''s financial parameters. Given below are Punj Lloyd''s key
 financials on a consolidated basis.  
 
 - Total income reduced to Rs.  8,187 crore in 2010-11 versus Rs. 10,875
 crore in 2009-10
 
 - Earnings before interest, depreciation, taxes and amortisation
 (EBIDTA) was Rs.  642 crore in 2010-11, compared to Rs. 554 crore in
 the previous year
 
 - Profit after tax (PAT) was Rs. (50) crore in 2010-11, vis-a-vis Rs.
 (116) crore in 2009-10
 
 There have also been several positive developments within your Company,
 to which now turn. In Q4, 2010-11 alone: 
 
 - Punj Lloyd Infrastructure Limited, a wholly owned subsidiary of your
 Company, bagged a build, operate transfer (BOT) annuity contract to
 upgrade a 140 km section of NH-31 in Bihar
 
 - Won the contract for building a railway siding for the Uttar Pradesh
 Rajya Vidyut Utpadan Nigam Limited - the first-ever railway project for
 your Company
 
 - Won three significant oil and gas contracts in ndia, Oman and
 Indonesia
 
 - Punj Lloyd Delta Renewables, a group company, won an EPC contract for
 a centralised water treatment plant in Bihar
 
 - PL Engineering, another group company, and GECI India entered into a
 joint venture which will initially focus on providing services in the
 indian aerospace sector and for supporting activities in Europe as well
 
 For the year as a whole, your Company secured several key orders. Here
 are some wins 
 
 - A large contract for a processing plant for Indian Oil''s refinery at
 Paradip, India.
 
 - The Dabhol-Bengaluru gas pipeline for Gas Authority of India Limited
 
 - A major EPC contract for a gas project in the UAE
 
 - Contract for setting up offshore pipelines for the Yanbu Export
 Refinery Project in Saudi Arabia
 
 - Significant part of an EPCI contract for new field development in
 Indonesia.
 
 - An LPG pipeline project for Bharat Petroleum Corporation Limited
 
 - A major contract for Sembawang, your Company''s subsidiary in
 Singapore, from Singapore''s landmark integrated resort, Resorts World
 Sentosa, for the construction of the Equarius Hotel, a world class spa,
 beach villas, an oceanarium, and a water theme park.
 
 - Another Sembawang contract from the national water agency of
 Singapore for the Lower Seletar Waterworks
 
 - PL Engineering secured a nuclear power design contract with the
 Nuclear Power Corporation of India Limited for its projects, RAPP 7 and
 8, in Rajasthan
 
 - A prestigious contract to establish solar power in several facilities
 in Punjab including the Golden Temple
 
 In addition, Punj Lloyd has set up a state- of-the-art fabrication and
 assembly facility for defence systems in Malanpur (near Gwalior, Madhya
 Pradesh) on 65 acres of land. These are significant achievements.
 
 Today, seeing the growth in key orders, am convinced that your Company
 has turned the corner. To be sure, the journey may be challenging over
 the next couple of years. As a ''third generation'' entrepreneur who
 created today''s Punj Lloyd from a virtual start up, I have seen several
 ups and downs. While I always look back at the good times, I know that
 the bad patches teach us the most important lessons These are times of
 operating under adversity, with the promise of eventual victory. I have
 full faith in the business model and your Company''s team to deliver the
 promise
 
 While focusing on business, we continue to be socially responsible
 corporate citizens. Your Company is continuously strengthening its
 safety, health and environment initiatives across the project sites, in
 addition to other focused CSR activities. I urge you to read the
 chapter on our CSR initiatives, which forms a part of this Annual
 Report.
 
 Finally, my thanks to all our employees, sub- contractors, customers,
 vendors, Government agencies and other stakeholders for their continued
 support during the year. And, to you for your faith as a shareholder
 
 With kind regards,
 
 Atul Punj
 
 Chairman