Punj Lloyd

The Directors are pleased to present the Twentieth Annual Report for
 the year ended March 31, 2008.
 
 FINANCIAL RESULTS
 
                                                           Rs. Million
 Particulars                                     2007-08        200607
 
 Total Revenue                                 45,417.56     23,054,78
 Profit Before Interest, Depreciation           5,676.18      2,510.36
 &Tax(PBIDT)
 Less: Interest                                 1,132.81        692.42
 Gross Profit                                   4,543.37      1,817.94
 Less: Depreciation                             1,133.87        844.61
 Profit Before Tax (PBT)                        3,409.50        973.33
 Less: Provision for Taxation including         1,195.07        357.49
 Deferred Tax Charge
 Profit After Taxation (PAT)                    2,214.43        615.84
 Add: Profit Brought Forward                    2,366.38      1,894.74
 Transfer from Foreign Project                     26.00         22.50
 Utilised Reserve
 Surplus Available for appropriation            4,606.81      2,533.08
 Appropriation
 Dividend on Equity Shares                        121.38         78.38
 Corporate Tax on Dividend                         20.63         13.32
 Amount transferred to General                    225.00         75.00
 Reserve
 Profit carried to Balance Sheet                 4,239.80     2,366.38
 TOTAL                                           4,606.81     2,533.08
 
 CAPITAL STRUCTURE:
 
 During the year under review, the share capital of the Company was
 changed /altered as follows:
 
 a) 334,476 equity shares of Rs. 2/- each were allotted to employees
 under ESOP 2005 and ESOP 2006 of the Company;
 
 b) 12,251,270 equity shares of Rs. 2/- each were allotted on conversion
 of Foreign Currency Convertible Bonds; and
 
 c) 29,600,000 equity shares of Rs. 2/- each were allotted to Qualified
 Institutional Buyers under Chapter XIIIA of SEBI (DIP) Guidelines, 2000
 as amended from time to time.
 
 Pursuant to the provisions of Chapter XIII of SEBI (DIP) Guidelines,
 2000 as amended from time to time on Preferential Issues and approval
 of shareholders, the Company allotted 10,000,000 warrants to M/s
 Indtech Construction Pvt. Ltd., a promoter Company. Each warrant gives
 a right to the holder to apply for one equity share of the Company at a
 price of Rs. 254/- per share.
 
 EQUITY DIVIDEND
 
 The Directors recommend a dividend of 20% on equity shares, i.e. Re.
 0.40 per share. Pursuant to the provisions of Companies (Transfer of
 Profits to Reserves) Rules, 1975, Rs. 225 million has been transferred
 to General Reserves.
 
 OPERATIONS REVIEW
 
 Total Revenue of the Company rose by 97 percent from Rs. 23054.78
 million in financial year (FY) 2006-07 to Rs. 45417.56 million in FY
 2007-08. The profit before interest, depreciation and tax (PBIDT),
 increased by 126 percent from Rs. 2510.36 million in FY 2006-07 to Rs.
 5676.18 million in FY 2007-08.
 
 The unsecured loans of the Company have declined to Rs. 2528.04 million
 as on March 31, 2008 from Rs. 5754.98 million as on March 31, 2007. The
 secured loans however, have increased from Rs. 9431.42 million as on
 March 31, 2007 to Rs. 11148.44 million as on March 31, 2008 owing to
 the additional working capital required for execution of various new
 projects being undertaken by the Company. Financial charges during the
 year have increased from Rs. 1001.16 million to Rs. 1540.63 million as
 a result of higher interest rates owing to revision in PLR of banks.
 
 The Profit before tax (PBT) has increased by 250 percent from Rs.
 973.33 million in FY 2006-07 to Rs. 3409.50 million in FY 2007-08 and
 the Profit after tax (PAT) has increased by 260 percent from Rs, 615,84
 million in FY 2006-07 to Rs. 2214.43 million in FY 2007-08.
 
 BUSINESS REVIEW
 
 A detailed business review is being given in the Management Discussion
 and Analysis section of the annual report.
 
 SUBSIDIARY COMPANIES AND JOINT VENTURES
 
 During the year under review, three new companies Punj Lloyd Upstream
 Limited, Punj Lloyd Infrastructure Limited and Punj Lloyd Aviation
 Limited were incorporated as wholly owned subsidiaries (WOS) in India
 to carry on the business of drilling for exploration of oil &gas,
 promoting and developing Special Economic Zones & investment in real
 estate and aviation respectively.
 
 Also during the year, a strategic joint venture partner was inducted in
 Punj Lloyd Upstream Limited. The Company, through its WOS, Punj Lloyd
 Infrastructure Limited forayed. into real estate sector by entering
 into a 50:50 Joint Venture with Ramprastha Group.
 
 Punj Lloyd Inc., a WOS in United States of America and Punj Lloyd
 (Malaysia) Sdn. Bhd., a WOS in Malaysia were wound up.
 
 On an application by the Company under Section 212(8), the Central
 Government vide its letter No. 47/1 73/2008-CL-lll dated March 24, 2008
 has exempted the Company from attaching a copy of Balance Sheet, Profit
 and Loss Account, and other documents in respect of its subsidiaries
 for the year ended March 31, 2008.
 
 A statement in respect of each of the subsidiaries, giving the details
 of capital, reserves, total assets and liabilities, details of
 investment, turnover, profit before taxation, provision for taxation,
 profit after taxation and proposed dividend is attached to this report.
 
 Annual accounts of the subsidiary companies and the related detailed
 information will be made available to the holding and subsidiary
 company investors, seeking such information. Copies of the annual
 accounts of the subsidiary companies are available for inspection by
 any investor at the Registered Office as well as the Corporate Office
 of the Company between 11.00 A.M. to 1.00 P.M. on all working days.
 
 HEALTH, SAFETY AND ENVIRONMENT
 
 To mitigate the risks of Health, Safety and Environment (USE), the
 Company is actively involved in the design and engineering of its
 projects. The Company also promotes active participation of its
 employees and contractors to manage HSE risks with a goal to prevent
 accidents, injuries and occupational illnesses.
 
 Det Norske Veritas (DNV), an internationally reputed certification body
 has given OHSAS 18001:2007 and EMS 14001:2004 and ISO 9001:2000 to the
 Company, which evidences the adherence to modern management systems.
 
 The Company is committed to progressively maintaining the best in class
 standards of HSE care for,its people, practices, processes and
 services. International Pipeline and Offshore Contractors Association
 (IPLOCA) have also recognized the Company for its efforts in safety
 management in projects world wide.
 
 Reaffirming its commitment to society and protecting people, place,
 asset and environment, the Company celebrates the World Environment
 Day, World Aids Day and National Safety Day.
 
 DIRECTORS
 
 During the year, Mr. Niten Malhan and Mr. Mehar Karan Singh were
 appointed as Additional Directors and their term of office is expiring
 at the ensuing Annual General Meeting. Necessary resolutions for their
 appointment as directors liable to retire by rotation are being
 included in notice convening Annual General Meeting pursuant to notices
 received under Section 257 of the Companies Act, 1956.
 
 The term of office of Mr. Atul Punj, Executive Chairman is coming to an
 end on June 30, 2008. Subject to the approvals of shareholders and
 Central Government, Mr. Atul Punj has been re-appointed as Executive
 Chairman of the Company for a period of five years w.e.f. July 1, 2008,
 not liable to retire by rotation.
 
 Dr. Naresb Kumar Trehan and Mr. Luv Chhabra are retiring by rotation at
 the ensuing Annual General Meeting and being eligible have offered
 themselves for re-appointment.
 
 Brief resumes of the Directors being appointed/ re-appointed, as
 required by Clause 49 of the Listing Agreement, are furnished in the
 explanatory statement to the notice convening forthcoming Annual
 General Meeting and the Corporate Governance Report.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the requirements of Section 217(2AA) of the Companies Act,
 1956, it is hereby confirmed:
 
 That in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures;
 
 That the Directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that were reasonable
 and prudent so as to give a true and fair view of the state of affairs
 Of the Company at the end of the financial year and of the profit or
 loss of the Company for the period under review. The changes in
 accounting policies during the year have been mentioned at point 2 (c)
 in Schedule N to the Balance Sheet.
 
 That the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the Company and
 for preventing and detecting fraud and other irregularities;
 
 That the Directors have prepared the annual accounts for the year ended
 March 31, 2008 on a going concern basis.
 
 LISTING OF THE SHARES
 
 Companys shares are listed at Bombay Stock Exchange Ltd. and the
 National Stock Exchange of India Ltd. and the listing fee for the year
 2008-09 has been paid to these stock exchanges.
 
 ESOPs
 
 The details as required to be provided in terms of the Securities and
 Exchange Board of India (Employee Stock Option Scheme and Employee
 Stock Purchase Scheme) Guidelines, 1999 as regards the Punj Lloyd
 Employee Stock Option Plan, 2005 and 2006 as on March 31, 2008 are
 given below:- 
 
 During the year, an aggregate of 334,476 equity shares were issued
 pursuant to exercise of options under Punj Lloyd Employee Stock Option
 Plan, 2005 and Employee Stock Option Plan, 2006, resulting in dilution
 of EPS by 0.00281.
 
 SI.                     Particulars     ESOP 2005
 No.                                     Nov. 17, 2005
 
 1 Total No. of options granted          3217445
 2 Pricing Formula                       Exercise price being at 10%
                                         discount to IPO price i.e. Rs
                                         630/- per share of Rs. 10/-
                                         each. After split in face value
                                         of share from Rs. 10/- to
                                         Rs. 2/- per share, the exercise
                                         price adjusted to Rs. 126/-
                                         per share.
 3 Number of options vested              965241
 4 Number of options exercised           419774
 5 Total no. of shares arising as a      419774
   result of exercise of options
 6 Number of options lapsed              1099065
 7 Number of options forfeited             Nil
 8 Variation in terms of options         None
 9 Money realized by exercise of         52892
   options (Rs.OOO)
 10 Total No. of options in force as     2118380
    on March 31,2008
 11 Grant to Senior Management
 Number of options                       1850545
 - Vesting period (Yrs)                  4
 12 Any other employee who               Mr. V. K. Kaushik,
                                         receives a grant in any one 
                                         year Options granted - 200000
                                         of options amounting to 5% or
                                         more of option granted during
                                         the year
 13 Identified employees who were        Nil
                                         granted option, during any one
                                         year equal to or exceeding 1%
                                         of the issued capital (excluding
                                         outstanding warrants and
                                         conversions) of the Company at
                                         the time of grant.
 
 ESOP 2006
 May 10, 2006           Oct. 30, 2006           Sept. 27, 2007
 
 771040                   1491050              30000
 Rs. 235.99 (being       Rs.  154.46 (being    Rs. 299.90 (being
 the market price        the market price      the market price
 as defined in SEBI      as defined in SEBI    as defined in SEBI
 guidelines)             guidelines)           guidelines)
 77056                   149105                Nil
 10132                   65725                 Nil
 10132                   65725                 Nil
 402145                  274620                Nil
 Nil                     Nil                   Nil
 None                    None                  None
 2391                    10153                 Nil
 368895                  1216430               30000
 352935                  1002800               30000
 4                       4                     4
 Nil                     Mr. V. K. Kaushik     Mr. Paul Birch,
 Options granted         Options Granted
 - 75000                 - 30000
 Nil                     Nil                   Nil
 
 CORPORATE GOVERNANCE
 
 Report on Corporate Governance as stipulated under Clause 49 of the
 Listing Agreements with the Stock Exchanges forms part of this Annual
 Report. Certificate of the auditors of the Company regarding compliance
 of the conditions of corporate governance as stipulated in Clause 49 of
 the Listing Agreement with the stock exchanges is attached to the
 report as Annexure.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 A detailed section of the Management Discussion and Analysis forms part
 of the Annual Report.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 In accordance with the accounting standard (AS-21) on consolidated
 financial statements, the Directors are pleased to attach the
 consolidated financial statements, .which form p|rt of the Annual
 Report and Accounts.
 
 ACCOUNT AND AUDIT
 
 The Auditors, M/s S. R. Batliboi & Co. will retire at the conclusion of
 the Twentieth Annual General Meeting and being eligible, have offered
 themselves for re-appointment vide their letter dated April 28, 2008.
 The observations of the Auditors regarding deductions made/ amounts
 withheld by some customers on various accounts have been fully
 explained in Note 11 in Schedule N to the financial statements. There
 have been slight delays in deposit of statutory dues at the project
 sites. No penalty has been imposed on the Company by the authorities,
 however, the management is taking adequate steps to ensure the timely
 deposit of statutory dues.
 
 INTERNAL CONTROL SYSTEM
 
 The internal control systems in the Company commensurate to the size
 and nature of its business. The internal control system ensures: timely
 and accurate recording of financial transactions and adherence to
 applicable accounting standards.
 
 Optimum utilization and safety of assets.  compliance with applicable
 laws, regulations, listing 1 agreements and management policies.  
 
 An effective management information system and reviews of other
 systems.
 
 There are well defined and documented procedures, policies and
 (authority guidelines for each business unit. The Company has an Oracle
 based ERP across all business units to ensure robust internal controls.
 This ensures uniformity and adequacy of controls in various processes
 like Purchasing, Inventory Management, Vendor Payments, Fixed Assets
 and Financial accounting process.
 
 During the year, the Company has upgraded its Oracle E-Business suite
 from version 11.5.5 to version 11.5.10.2 and implemented new modules
 viz. Enterprise Asset Module (EAM) and Human Resource Management System
 (HRMS) for complete data integration. EAM has been implemented so as to
 ensure monitoring, tracking and optimum utilization of its assets and
 HRMS provides a world class framework to manage Human Resources. The
 Company has also implemented an IT based Statutory Compliance tracking
 tool to monitor compliance with applicable laws and regulations at
 various projects sites and at the Head Office.
 
 The Internal Audit Division conducts audits across the Company
 throughout the year to test check the internal control system, reports
 observations to the Audit committee and tracks the Compliance status of
 the Audit observations. Project reviews are also carried out by the
 Internal Audit team as a part of internal control process.
 
 FIXED DEPOSITS
 
 The Company has not accepted any fixed deposits from public,
 shareholders or. employees during the year.
 
 PERSONNEL
 
 As required by the. provisions of Section 217(2 A) of the Companies
 Act, 1956 read with Companies (Particulars of Employees), Rules, 1975,
 as amended, the names and other particulars of employees are set out in
 the Annexure 2 to the Directors Report. However, as per the provisions
 of Section 219 (1) (b) (iv) of the Companies Act, 1956, the Directors
 Report is being sent to all members of the Company excluding the
 aforesaid information. Any member interested in obtaining such
 particulars may write to the Company Secretary at the Registered Office
 of the Company.
 
 CONSUMPTION OF ENERGY AND FOREIGN EXCHANGE AND OUTGO
 
 The details as required under the Companies (Disclosure of Particulars
 in Report of Board of Directors) Rules, 1988 are given as Annexure 3 to
 the Directors Report. However; as per the provisions of Section 219
 (1) (b) (iv) of the Companies Act, 1956, the Directors Report is being
 sent to all members of the Company excluding the aforesaid information.
 Any member interested in obtaining such particulars may write to the
 Company Secretary at the Registered Office of the Company.
 
 ACKNOWLEDGEMENT
 
 The Companys growth has come in partnership with others. The Companys
 partners - different stakeholder groups of customers, suppliers,
 employees, investors, community members, have been instrumental in
 Companys success. The Directors wish to place on record their sincere
 thanks to these partners. The Directors would also like to express
 their appreciation to financial institutions, banks and various
 agencies of Central & State Government for their continued support.
 
                                         For and Behalf of the Board
 
                                         Sd/- 
 Place : Gurgaon                          Atul Punj
 Date  : May 30,2008                      Chairman