The Directors are pleased to present the Twenty Seventh Annual Report
 together with the Audited Accounts of your Company for the financial
 year ended March 31, 2012. The summarised consolidated and standalone
 financial performance of your Company is as follows:
 
 Financial Results                                       (Rs. in Lakh)
 
                           Consolidated                Standalone
                    Year ended     Year ended   Year ended     Year ended
                March 31, 2012  March 31, 2011  March 31, 2012 March 31,
                                                               2011
 
 Total 
 Revenue             2,44,633        1,63,809   1,18,069       74,624
 
 Total 
 Expenses 
 (including 
 depreciation 
 etc.)               2,12,504        1,27,072   1,05,017       52,213
 
 Profit 
 before bad 
 debts, 
 provisions & 
 tax                   32,129          36,737     13,052       22,411
 
 Bad Debts 
 & Provisions 
 etc.                   8,452           7,840      2,173        1,197
 
 Profit 
 Before Tax            23,677          28,897     10,879       21,214
 
 Current 
 Tax                    5,466           8,267      1,760        4,185
 
 Mat Credit 
 entitlement             (189)            (94)       (49)           -
 
 Deferred Tax           3,674            (203)     1,198        3,350
 
 Income Tax 
 in respect of
 earlier years          2,411           1,309      2,174          249
 
 Profit After 
 Tax before 
 Minority 
 Interest              12,315          19,618      5,796       13,430
 
 Minority 
 Interests              1,134           1,694         -            -
 
 Net Profit            11,181          17,924         -            -
 
 Pre 
 Acquisition 
 Profit/(Loss)           -                474         -            -
 
 Minority 
 Interests of
 Pre 
 Acquisition 
 Profit/(Loss)            (39)           (474)        -            -
 
 Profit After 
 Tax after 
 adjustment 
 of Minority 
 Interests             11,142          17,924         -            -
 
 Adjustment 
 on account 
 of 
 Amalgamation            -               (570)        -            -
 
 Surplus 
 brought 
 forward 
 from 
 Previous 
 Year                 30,339           25,618     23,791       19,679
 
 Profit 
 Available 
 For 
 Appropriation        41,481           42,972     29,587       33,109
 
 Paid up 
 Equity 
 Share 
 Capital              50,324           50,324     50,324       50,324
 
 Amount 
 transferred 
 to Reserves           9,965            8,227      4,193        4,918
 
 OPERATIONAL REVIEW
 
 Your Company is one of the leading private sector infrastructure
 financing institutions in India. Some of the key highlights of your
 Company''s performance during the year under review are:
 
 The gross profit (before depreciation/ amortisation, bad debts,
 provision and tax) is Rs.14,592 lakh as against Rs.24,219 lakh in the last
 year.
 
 Profit before taxation is Rs.10,879 lakh as against Rs.21,214 lakh in the
 last year.
 
 Net profit after taxation is Rs.5,796 lakh as against Rs.13,430 lakh in the
 last year.
 
 The total assets under management of the Srei Group is Rs.30,76,435 lakh
 as against Rs.20,50,524 lakh in the last year.
 
 The Consolidated Financial Statements have been prepared by your
 Company in accordance with the requirements of the accounting standards
 notified by the Central Government under the Companies (Accounting
 Standards) Rules, 2006. The audited Consolidated Financial Statements
 together with
 
 Auditors Report thereon forms part of the Annual Report.
 
 The capital adequacy ratio (CAR) of your Company stood at 20.17 per
 cent as on March 31, 2012, well above the regulatory minimum level of
 15 per cent prescribed by the Reserve Bank of India for systemically
 important non- deposit taking NBFCs (NBFCs-ND-SI).  Of this, the Tier I
 CAR was 14.59 per cent.
 
 Your Company has complied with all the norms prescribed by the Reserve
 Bank of India (RBI) including the Fair practices, Anti money laundering
 & Know your customer (KYC) guidelines and also all the mandatory
 accounting standards notified by the Central Government under the
 Companies (Accounting Standards) Rules, 2006. It has adopted a sound
 and forward looking accounting policy of providing for non performing
 assets in terms of the management''s best estimates as well as the
 guidelines laid down by the Foreign Financial Institutions, which are
 more stringent than the guidelines of the RBI.
 
 AMALGAMATION OF QUIPPO INFRASTRUCTURE EQUIPMENT LIMITED INTO AND WITH
 YOUR COMPANY
 
 The Scheme of Amalgamation of Quippo Infrastructure Equipment Limited
 (Quippo) into and with your Company was approved by the Hon''ble High
 Court at Calcutta vide its Order made on January 18, 2011. The Scheme
 has become effective w.e.f.  March 04, 2011 after filing of certified
 copy of the Order with the Registrar of Companies, West Bengal at
 Kolkata.  Consequently, all the assets and liabilities and the entire
 business of Quippo stand transferred to and vested in your Company, as
 a going concern, with effect from the Appointed Date i.e.  April 01,
 2010.
 
 During the year under review, an application for dissolution without
 winding up of Quippo was filed before the Hon''ble High Court at
 Calcutta which approved the same vide its Order dated November 22,
 2011. The said dissolution has become effective w.e.f. December 21,
 2011 after filing of certified copy of the Order with the Registrar of
 Companies, West Bengal at Kolkata.
 
 During the year under review, your Company has been notified as a
 Public Financial Institution (PFI) under Section 4A of the Companies
 Act, 1956 by the Ministry of Corporate Affairs (MCA), Government of
 India vide its notification dated September 26, 2011.
 
 PUBLIC DEPOSITS
 
 In April 2010, your Company decided to convert itself into a
 non-deposit taking NBFC in order to qualify for registration as an
 ''Infrastructure Finance Company''. Your Company had decided that it
 would not accept any further public deposits or renew such maturing
 deposits in any manner w.e.f.  April 20, 2010 and the entire amount of
 outstanding public deposits as on April 19, 2010 together with interest
 promised to the depositors, has been kept in an Escrow Account with
 Axis Bank Limited, a scheduled commercial bank for the purpose of
 making payment to the depositors as and when they raise the claim. The
 amount payable to the depositors as on March 31, 2012 is Rs.49,73,000/-.
 
 During the year under review, your Company has not accepted any
 deposits from the public within the meaning of the provisions of the
 Non- Banking Financial Companies Acceptance of Public Deposits (Reserve
 Bank) Directions, 1998.
 
 PUBLIC FINANCIAL INSTITUTION (PFI)
 
 During the year under review, your Company has been notified as a
 Public Financial Institution (PFI) under Section 4A of the Companies
 Act, 1956 by the Ministry of Corporate Affairs (MCA), Government of
 India vide its notification dated September 26, 2011.
 
 MUTUAL FUND ACTIVITY
 
 During the year under review, the
 
 Securities and Exchange Board of India (SEBI) has permitted your
 Company to set up a Mutual Fund for Infrastructure Debt Fund Schemes.
 Accordingly, your Company is in the process of complying with the
 necessary requirements for the grant of Certificate of Registration for
 the Mutual Fund.
 
 PROMOTERS GROUP SHAREHOLDING
 
 The Promoters'' Group of your Company has increased their net
 shareholding in your Company during the year by 0.85 per cent from
 46.22 per cent to 47.07 per cent, through the creeping acquisition
 route allowed as per SEBI (Substantial Acquisition of Shares and
 Takeovers) Regulations, 2011.
 
 The Promoters'' Group has shown increased commitment to the business
 strategy and substantial growth of your Company and your Company
 believes that this will result in enhanced value for all the
 stakeholders.
 
 As on March 31, 2012, 17.23 per cent (out of 47.07 per cent) of
 shareholding held by the Promoters'' Group of your Company is under
 pledge.
 
 PUBLIC ISSUE OF LONG TERM INFRASTRUCTURE BONDS IN THE NATURE OF SECURED
 REDEEMABLE NON- CONVERTIBLE DEBENTURES
 
 Your Company was classified by the
 
 RBI as ''Infrastructure Finance Company'' (IFC) within the overall
 classification of ''Non Banking Finance Company'' in March, 2011.
 Consequently, your Company became eligible to issue Long Term
 Infrastructure Bonds eligible for deduction under Section 80CCF of
 Income Tax Act, 1961.
 
 During the year under review, your Company raised Rs.24,88,56,000 (Rupees
 Twenty four crore eighty eight lakh fifty six thousand only) through
 the public issue of Long Term Infrastructure Bonds of face value of
 Rs.1000 each, in the nature of Secured Redeemable Non-convertible
 Debentures (the Bonds), eligible for deduction under Section 80CCF of
 the Income Tax Act, 1961. The issue opened on December 31, 2011 and
 closed on March 06, 2012. The Bonds were thereafter allotted on March
 22, 2012. These Bonds are listed on the Wholesale Debt Market (WDM)
 Segment of the Bombay Stock Exchange Limited (BSE). The entire proceeds
 have been utilised for the purpose of ''Infrastructure Lending'' in terms
 of Central Board of Direct Taxes (CBDT) Notification dated September
 09, 2011.
 
 The public issue of Long Term Infrastructure Bonds has not only
 facilitated diversification of your Company''s sources for mobilising
 long term resources but has also provided the retail investors an
 opportunity to participate in India''s infrastructure development and
 progress. The various communication efforts of your
 
 Company surrounding the Bonds played a meaningful role in enhancing
 your Company''s brand image amongst relevant constituencies.
 
 UNSECURED SUBORDINATED BONDS
 
 In the year 2000, your Company had issued on rights basis 52,66,075
 Unsecured Subordinated Bonds of Rs.100/- each aggregating to
 Rs.52,66,07,500/- vide Letter of Offer dated June 16, 2000. Each Bond has
 an overall tenure of 12 years, reckoned from the date of allotment viz.
 August 25, 2000 and the face value of the Bonds along with an overall
 premium of 20 per cent of the original face value is to be redeemed in
 seven installments, commencing from the completion of sixth year from
 the date of allotment.
 
 Your Company has accordingly redeemed on August 25, 2011, being sixth
 redemption date, Rs.15/- towards principal amount and Rs.3/- towards
 premium amount total aggregating to Rs.18/- per Unsecured Subordinated
 Bond and the face value of the aforesaid Bonds accordingly stands
 reduced to Rs.10/- per Bond. The aggregate principal amount outstanding
 as on March 31, 2012 is Rs.5.27 crore.
 
 DIVIDEND
 
 Your Company has had a consistent dividend policy that balances the
 dual objectives of appropriately rewarding shareholders through
 dividends and retaining capital, in order to maintain a
 
 healthy capital adequacy ratio to support long term growth of your
 Company. Consistent with this policy, your Board has recommended a
 Dividend of Rs.0.50 per Equity Share (5 per cent) for the Financial year
 2011-12 to the Equity shareholders of your Company. The Dividend shall
 be subject to tax on dividend to be paid by your Company but will be
 tax-free in the hands of the shareholders.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 Recognising its social responsibility, your Company had established a
 public charitable trust in the name of ''Srei Foundation'' with the
 objective of granting scholarships and other financial assistance to
 deserving and talented candidates. The Fund also supports setting up of
 schools, colleges, medical and scientific research institutions.
 Donations to Srei Foundation qualify for deduction under Section 80G of
 the Income Tax Act, 1961. Your Company has granted donation of Rupees
 Fifty lakh to Srei Foundation during the financial year 2011-12.
 
 Your Company also promotes all-round development of a clean environment
 and help in propagating and imparting education for the betterment of
 agriculture / horticulture and other similar activities.
 
 Your Company is fully aware of the fact that as a corporate citizen, it
 is also entrusted with the responsibility to contribute for the
 betterment of the community at large. During the year under review,
 your Company supported a variety of charitable projects and social
 welfare activities and has contributed a sum of Rs.82,13,082/- (Rupees
 Eighty two lakh thirteen thousand and eighty two only) to several
 welfare and charitable organisations.
 
 CORPORATE GOVERNANCE
 
 Your Company has always practised sound corporate governance and takes
 necessary actions at appropriate times for enhancing and meeting
 stakeholders'' expectations while continuing to comply with mandatory
 provisions of corporate governance.
 
 A separate section on Corporate Governance and a Certificate from the
 Auditors of your Company regarding compliance with the requirements of
 corporate governance as stipulated under Clause 49 of the Listing
 Agreement with the Stock Exchanges, form part of the Annual Report.
 
 TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
 
 During the year under review, your
 
 Company has transferred a sum of Rs.3,54,549/- to the Investor Education
 & Protection Fund, the dividend amount which was due & payable and
 remained unclaimed and unpaid for a period of seven years, as provided
 in Section 205A(5) of the Companies Act, 1956. Cumulatively, the
 dividend amount transferred to the said Fund upto March 31, 2012 was
 Rs.28,33,842.69.
 
 SUBSIDIARY COMPANIES
 
 During the year under review, the Share Capital of Srei Mutual Fund
 Asset Management Private Limited, a wholly owned subsidiary of your
 Company was enhanced to Rs.13 crore (Rupees Thirteen crore only)
 consequent upon infusion of fresh capital by your Company.
 
 Your Company enhanced its aggregate stake from 99.80 per cent to 99.90
 per cent in Quippo Oil & Gas Infrastructure Limited, a subsidiary of
 your Company by acquisition of 30,000 equity shares.  IIS International
 Infrastructure Services GmbH (IIS), Germany, a subsidiary of your
 Company has enhanced its stake in Zao Srei Leasing, Russia, a sub-
 subsidiary of your Company, from 57.14 per cent to 64.20 per cent by
 acquisition of 25,950 equity shares.  Further, IIS has infused further
 capital of SGD 50,000 (Singapore Dollars Fifty Thousand only) in Srei
 Advisors Pte.  Limited, Singapore, a wholly owned subsidiary of IIS.
 Quippo Infocomm Limited (QIL) has ceased to be a sub- subsidiary of
 your Company w.e.f. July 16, 2011 consequent upon sale of 43,000 equity
 shares of QIL by Srei Infrastructure Advisors Limited, a subsidiary of
 your Company, at par value.
 
 Further, Quippo Construction Equipment Limited (QCEL), a subsidiary of
 your Company reduced its stake from 68 per cent to 40.28 per cent in
 Kasco Steel Limited (KSL) pursuant to which KSL ceased to be a
 sub-subsidiary of your Company w.e.f.  September 22, 2011.
 Subsequently, QCEL disposed off its entire shareholding in KSL on
 December 03, 2011.
 
 Further, Quippo Holding Cooperatief U.A., Netherlands, a subsidiary of
 Quippo Oil and Gas Infrastructure Limited and Quippo International
 B.V., Netherlands, a subsidiary of Quippo Holding Cooperatief U.A.,
 Netherlands were liquidated w.e.f. February 13, 2012. Quippo Mara
 Infrastructure Limited, British Virgin Islands, a subsidiary of Quippo
 International B.V., Netherlands ceased to be a sub- subsidiary of your
 Company w.e.f.  February 13, 2012 on account of liquidation of its
 holding company.
 
 During the year under review, Quippo Mauritius Private Limited,
 Mauritius was incorporated on March 05, 2012 as a wholly owned
 subsidiary of Quippo Energy Private Limited, a wholly owned subsidiary
 of your Company. Thereafter, Quippo Energy Nigeria Private Limited,
 Nigeria was incorporated on March 22, 2012 as a wholly owned subsidiary
 of Quippo Mauritius Private Limited,
 
 Mauritius.
 
 Further, consequent upon receipt of requisite approvals of the
 regulatory authorities, your Company has acquired 51 per cent
 shareholding in Srei Insurance Broking Private Limited (SIBPL) and
 hence, SIBPL has become a subsidiary of your Company w.e.f.  March 31,
 2012.
 
 The Statement pursuant to Section 212 of the Companies Act, 1956,
 containing details of your Company''s subsidiaries in India and
 Overseas, forms part of the Annual Report.
 
 In compliance with General Circular No: 2/2011 dated February 08, 2011
 of Government of India, Ministry of Corporate Affairs, the audited
 statement of accounts along with the reports of the Board of Directors
 and Auditors relating to your Company''s subsidiaries in India and
 Overseas are not annexed as required under Section 212 of the Companies
 Act, 1956.  Shareholders who wish to have a copy of the full report and
 accounts of the aforesaid subsidiary companies will be provided the
 same by the Company Secretary on receipt of a written request from
 them. These documents will also be available for inspection by any
 shareholder at the Registered Office of your Company and the concerned
 subsidiary companies during business hours on all working days.
 Further, the documents shall be available on the website of your
 Company. However, as directed by the Ministry of Corporate Affairs,
 Government of India, the financial data of the subsidiaries have been
 separately furnished and form part of the Annual Report. Further, in
 line with the Listing Agreement with the Stock Exchanges and in
 accordance with the Accounting Standard 21 (AS- 21), Consolidated
 Financial Statements prepared by your Company include financial
 information of its subsidiary companies.
 
 PARTICULARS OF EMPLOYEES
 
 The names and other particulars of the employees as required under
 Section 217(2A) of the Companies Act, 1956 read with the Companies
 (Particulars of Employees) Rules, 1975, are set out in the annexure to
 the Directors'' Report and form part of this report.
 
 PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN
 EXCHANGE EARNINGS AND OUTFLOW
 
 Your Company has no activity relating to Conservation of Energy and
 Technology Absorption as stipulated in the Companies (Disclosure of
 Particulars in the Report of Board of Directors) Rules, 1988. However,
 your Company uses information technology extensively in its operations.
 
 During the year under review, the total foreign exchange earnings and
 expenditure of your Company was Rs.117 lakh and Rs.18,972 lakh respectively
 (previous year Rs.238 lakh and Rs.10,953 lakh respectively).
 
 SREI WEBSITE
 
 The website of your Company, www.srei.com, has been redesigned to
 present the Company''s businesses up- front on the home page. The
 redesigned site carries a comprehensive database of information of
 interest to the investors including the financial results of your
 Company, dividend declared, shareholding pattern, any price sensitive
 information disclosed to the regulatory authorities from time to time,
 analyst reports, investor presentations, media coverage, corporate
 profile and business activities of your Company and the services
 rendered by your Company to its investors.
 
 DIRECTORS
 
 During the year under review, Mr.  Kishore Kumar Mohanty resigned as
 Director of your Company w.e.f. June 07, 2011 due to his personal
 preoccupations. The Board wishes to place on record its sincere
 appreciation of the sterling contribution made by Mr.  Mohanty towards
 the growth and development of your Company through his wealth of
 knowledge and experience during his long tenure of over ten years as a
 Director of your Company.
 
 Further, Mr. Avinder Singh Bindra resigned as Director of your Company
 w.e.f. February 07, 2012 due to his personal preoccupations. The Board
 wishes to place on record deep appreciation of the contribution, advice
 and guidance extended by him during his tenure as a Director of your
 Company.
 
 Mr. Saud Ibne Siddique was re- appointed as the Joint Managing Director
 of your Company for a further period of 3 (three) years w.e.f. April
 01, 2012 based on the recommendation of the Compensation Committee of
 your Company. In accordance with the provisions of Section 302 of the
 Companies Act, 1956, the Members were furnished an abstract of the
 terms of re-appointment and payment of remuneration to Mr. Saud Ibne
 Siddique as Joint Managing Director of your Company.
 
 Further, the status of directorship of Mr.  Shyamalendu Chatterjee was
 changed from being a Non-Executive Director to an Independent Director
 w.e.f. April 01, 2012 in accordance with Clause 49I(A) of the Listing
 Agreement.
 
 In accordance with the provisions of the Companies Act, 1956 and your
 Company''s Articles of Association, Mr.  Salil K. Gupta, Mr. Shyamalendu
 Chatterjee and Dr. Satish C. Jha retire by rotation at the ensuing
 Annual General Meeting (AGM) and being eligible, offer themselves for
 re- appointment. All these Directors have filed Form DDA with your
 Company as required under the Companies (Disqualification of Directors
 under Section 274(1)(g) of the Companies Act, 1956) Rules, 2003. The
 brief resume / details relating to Directors who are to be appointed /
 re-appointed are furnished in the Notice of the ensuing AGM. The Board
 of Directors of your Company recommends the re- appointment of all the
 above Directors at the ensuing AGM.
 
 In accordance with the approval of Central Government read with General
 Circular No: 4/2011 dated March 04, 2011 of Government of India,
 Ministry of Corporate Affairs, your Company has approved payment of
 remuneration of Rs.50 lakh by way of commission on net profits calculated
 under Section 198 of the Companies Act, 1956 to Non- executive
 Directors of your Company for the financial year 2011-12.
 
 AUDIT COMMITTEE
 
 The Audit Committee comprises of Mr.  Salil K. Gupta, Mr. V. H. Pandya,
 Mr. S.  Rajagopal, Mr. Sujitendra Krishna Deb, Mr. Shyamalendu
 Chatterjee, Independent & Non Executive Directors and Mr. Sunil
 Kanoria, Non Executive Director. Mr. Salil K. Gupta, Chief Mentor &
 Director of your Company is the Chairman of the Audit Committee.
 
 DIRECTORS
 
 RESPONSIBILITY
 
 STATEMENT
 
 In terms of provisions of Section 217(2AA) of the Companies Act, 1956
 (Act), your Directors confirm that:
 
 (i) In the preparation of the annual accounts for the financial year
 ended March 31, 2012, the applicable accounting standards have been
 followed along with proper explanation relating to material departures;
 
 (ii) the Directors have selected such accounting policies and applied
 them consistently and made judgements and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of your Company at the end of the financial year and of the profit of
 your Company for the year;
 
 (iii) 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 your Company and
 for preventing and detecting fraud and other irregularities; and
 
 (iv) the Directors have prepared the annual accounts for the financial
 year ended March 31, 2012 on a going concern basis.
 
 AUDITORS
 
 Messrs Haribhakti & Co., Chartered Accountants having registration No.
 103523W allotted by The Institute of Chartered Accountants of India
 (ICAI), retire as Auditors of your Company at the conclusion of the
 ensuing Annual General Meeting (AGM) and have confirmed their
 eligibility and willingness to accept the office of Auditors, if
 re-appointed. Your Company has received a confirmation from Messrs
 Haribhakti & Co., Chartered Accountants to the effect that their
 re-appointment, if made, would be within the limits prescribed under
 Section 224(1B) of the Companies Act, 1956. They have also confirmed
 that they hold a valid peer review certificate as prescribed under
 Clause 41(1)(h) of the Listing Agreement.
 
 The Audit Committee and the Board of Directors of your Company
 recommend the re-appointment of Messrs Haribhakti & Co., Chartered
 Accountants, as the Auditors of your Company. Members are requested to
 consider their re-appointment as Auditors of your Company to hold
 office from conclusion of ensuing AGM to the conclusion of next AGM on
 remuneration to be decided by the Board of Directors based on
 recommendation of the Audit Committee of your Company.
 
 SECRETARIAL AUDIT REPORT
 
 As a measure of good corporate governance practice, your Company
 appointed Dr. K. R. Chandratre, Practising Company Secretary, to
 conduct the Secretarial Audit. The Secretarial Audit Report for the
 financial year ended March 31, 2012 is provided in the Annual Report.
 
 The Secretarial Audit Report confirms that your Company has complied
 inter alia with all the applicable provisions of the Companies Act,
 1956, Depositories Act, 1996, Listing Agreements with the Stock
 Exchanges, Securities Contracts (Regulation) Act, 1956 and all the
 Regulations and Guidelines of SEBI as applicable to your Company,
 including the SEBI (Substantial Acquisition of Shares and Takeovers)
 Regulations, 2011 and the SEBI (Prohibition of Insider Trading)
 Regulations, 1992.
 
 ACKNOWLEDGEMENT
 
 Your Directors would like to express their grateful appreciation for
 the excellent support and co-operation received from the Financial
 Institutions, Banks, Central & State Government Authorities, RBI, SEBI,
 Ministry of Corporate Affairs (MCA), Registrar of Companies, Indian and
 Overseas Stock Exchanges, Depositories, Credit Rating Agencies,
 Customers, Manufacturers, Vendors, Suppliers, Business Associates,
 Shareholders and other Stakeholders during the year under review. Your
 Directors also place on record their deep appreciation for the valuable
 contribution of the employees at all levels for the progress of your
 Company during the year and look forward to their continued co-
 operation in realisation of the corporate goals in the years ahead.
 
                                      On behalf of the Board of Directors
 
 Kolkata                                                   Hemant Kanoria
 
 May 14, 2012                                Chairman & Managing Director