The Directors have pleasure in presenting the Twenty Third Annual
 Report of the Company together with the Audited statement of accounts
 for the 18 months period ended 31st December 2009.
 
 Financial Results Rs in Lakhs
 
 Particulars                    31st Dec, 2009      30th June, 2008
                                 (18 months)         (12 months)
 
 Income from Operations            42944.98           65,651.37
 
 Less: Duties and Taxes              374.20              249.85
 
 Net Income from Operations        42570.78           654,01.51
 
 Other Income                        169.28              222.51
 
 Profit(+)/Loss(-) Before 
 depreciation, Interest and Tax    -5250.05            7,462.84
 
 Interest & Financial Charges      10354.47            2,595.80
 
 Depreciation                        395.05              213.40
 
 Extraordinary items               12807.96                0.00
 
 Profit(+)/Loss(-) Before Tax     -28807.53            4,653.64
 
 Provision for Income Tax            326.72              575.00
 
 Provision for Fringe Benefit Tax     31.47               26.59
 
 Deferred Tax                        390.12               37.72
 
 Prior period adjustments             27.55                0.00
 
 Profit(+)/Loss(-) After Tax      -29583.38             4014.33
 
 Dividend (%)                          0.00                 15%
 
 Equity Capital (Rs.)             207749500           187854520
 
 Earnings per Share (Rs.)           -142.40               21.37
 
 During the year, your Company has achieved Rs.42944.98 lacs revenues
 for the year compared to previous year revenues of Rs. 65651.37 lacs.
 The company has incurred a loss of Rs.29583.38 lacs as against a profit
 of Rs.4014.33 lacs for the previous year. The losses among other
 reasons, are mainly due to Mark-to-Market losses on inventories,
 foreign currency exchange fluctuation losses and due to high interest
 burden for carrying the inventories and new project initiatives.
 
 The decline in revenue is mainly due to the global economic recession
 coupled with the sluggish demand for solar photovoltaic power solar
 farms.
 
 Segment wise revenues of your company are as under:
 
 Rs in Lakhs
 
 Segment wise revenue                2008-2009        2007-08
                                   (18 months)       (12 months)
 
 I.Telecom                            2566.56         29,104.35
 
 II. Energy                          40378.42         36,547.02
 
 Total revenues                     42,944.98         65,651.37
 
 Dividend
 
 Due to non availability of surplus, your Directors do not recommend any
 dividend for the year 2008-09.
 
 Corporate Debt Restructuring
 
 During the year the company has approached CDR Cell for restructuring
 of credit facilities in view of the defaults in debt and interest
 obligations by the company due to global sluggish demand. CDR Cell has
 approved the restructuring package and the details are mentioned at
 point No.B - 1 of Schedule 14 to the notes to accounts.
 
 Foreign Currency Convertible Bonds
 
 Pursuant to the approval accorded by the members on 26th September,
 2007, the Company raised US$ 40 million in October 2007 through an
 issue of Zero Coupon Foreign Currency Convertible Bonds (FCCBs) due in
 2012. The FCCBs have a maturity period of 5 years and 1 day and are
 listed at Singapore Stock Exchange. The said FCCBs are convertible by
 Bondholders into equity shares at any time on or after 29th October,
 2007 upto the close of the business on 22nd October, 2012. During the
 year, conversion price of the FCCBs has been reset to Rs.160/ - per
 equity shares from Rs.260/- per equity share. During the year the
 company issued and allotted 19,89,498 equity shares of Rs.10/- each at
 a premium of Rs.150/- per share on conversion USD 8.00 million FCCBs.
 The outstanding balance of FCCBs as on 31st December 2009 is USD 12.24
 million.
 
 Subsidiary companies
 
 The information as required under Section 212 of the Companies Act,
 1956 is attached to this Annual Report. As required under the Listing
 Agreements with the Stock Exchanges, a Consolidated Financial Statement
 of the Company is attached. The company has submitted the application
 to the Central Government under Section 212(8) of the Companies Act,
 1956 for the exemption from attaching the balance sheet, Profit & Loss
 A/c and Directors Report and other documents as required.
 
 Certifications
 
 During the year, your company accredited with UL certification to enter
 into US Markets.
 
 Conservation of Energy, Technology Absorption etc
 
 As required by the Companies (Disclosure of particulars in the report
 of Directors) Rules, 1988, the relevant data relating to conservation
 of energy, technology absorption and other details are given in the
 prescribed format as annexure to this report.
 
 Directors Responsibility Statement
 
 Pursuant to the requirement under Section 217 (2AA) of the Companies
 Act, 1956 with respect to Directors Responsibilities Statement, it is
 hereby confirmed:
 
 (i) that in the preparation of the annual accounts for the Financial
 Year ended 31st December 2009, the applicable accounting standards have
 been followed and there are no material departures.
 
 (ii) that the Directors had 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 the company at the end of financial year ended on 31st
 December 2009 and of the loss of the Company for that period;
 
 (iii) that the directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 (iv) that the directors had prepared the accounts for the financial
 year ended 31st December 2009 on a going concern basis.
 
 Directors
 
 During the year, Mr.Dhanunjaya Kumar Alia was appointed as alternate
 Director to Mr.Rajiv Garg on 30* April, 2010. During the year,
 Mr.Naresh Chand Singhal has resigned from the Board w.e.f.22nd October
 2009.
 
 In accordance with the provisions of the Companies Act, 1956 and
 Articles of Association of the Company, Mr.Aneesh Mittal, Mrs.Ritulal
 Kumar and Mr.V.Visweswara Rao Directors retire by rotation at the
 ensuing 23rd Annual General Meeting and being eligible have offered
 themselves for re-appointment.
 
 Auditors
 
 M/s. Satyanarayana & Co, Chartered Accountants, the retiring auditors
 of the Company, are eligible for re-appointment. The requisite
 certificate to the effect that the re-appointment, if made, will be
 within the limit specified in Section 224 (1 -B) of the Companies Act,
 1956 has been received from them.
 
 Particulars of Employees
 
 Information in accordance with the provisions of Section 217 (2A) of
 the Companies Act, 1956 read with the Companies (Particulars of
 Employees) Rules, 1975 as amended regarding employees is as follows:
 
 Name             Designation      Remuneration    Qualifications
                Nature of Duties     (Gross)
 
 Mr.Dinesh Kumar   Managing
                   Director       2,25,00,000           MBA
 
 Mr.K.Vasudeva 
 Rao               Executive 
                   Director         54,00,000      B.Sc, CA
 
 Mr.V.Visweswara 
 Rao              Director (Finance)54,00,000         M.Com.
 
 Mr.Aneesh 
 Mittal            Whole Time 
                   Director         36,00,000         B.Com
 
 Mr.Pramod Kumar 
 Jain              Whole Time 
                   Director         46,50,000        M.Tech.
 
 Mr.Ramu M V       General Manager 
                   - Solar           8,70,544     M.Sc (Electronics)
 
 
 
 
 Name                  Date of       Age             Last
                   Commencement   in years       Employment
                   of Employment
 
 Mr.Dinesh Kumar      22.04.1999   46 Years        Business
 
 Mr.K.Vasudeva Rao    23.02.2005   48 years   Goldstone Technologies Ltd
 
 Mr.V.Visweswara Rao  04.09.1999   51 Years   Deccan Granites Ltd
 
 Mr.Aneesh Mittal     01.04.1987   48 Years        Business
 
 Mr.Pramod Kumar Jain 04.03.2002   44 Years   Lucent Technologies Pte Ltd
 
 Mr.Ramu M V          24.08.2009   62 years   TATA BP Solar, Bangalore
 
 Notes: -
 
 i) Cross Remuneration shown above is subject to tax and comprises
 Salary, HRA and other Allowances inclusive of salary due and payable.
 
 ii) They have adequate experience to discharge the responsibility
 assigned to him.
 
 iii) Mr.Dinesh Kumar and Mr.Aneesh Mittal are relatives of Mrs.Ritu Lai
 Kumar, Director of the Company.
 
 Explanations to qualifications in Auditors Report
 
 a.  The company has not provided for the amount of the gratuity
 liability as per Accounting Standard-15.
 
 Companys response: As per the companys present accounting policy,
 Gratuity liability is accounted for on cash basis. However the board
 has decided to change the policy to conform to AS-15 which will be
 reflected in the accounts of ensuing period.
 
 b.  The balances appearing under secured loans are arrived at after
 providing for interest at a lower rate than the original rates. The
 interest for the period is calculated based on the concessional rates
 of Interest that are to be charged as per the Corporate Debt
 Restructuring (CDR) Scheme approved by the lenders to the company on
 30th December2009. However the said CDR package is yet to be
 implemented and the secured lenders have not restated the interest
 rates as per the CDR package as on date. The provision of interest as
 per the rates approved under CDR as against original contacted rates
 has an impact of reduction in secured loan by Rs.2197.11 lakhs and
 understate- ment of loss to the same extent.
 
 Companys response: The company has accounted for the interest based on
 the CDR Scheme approved on 23rd January 2010 and the Master
 Restructuring Agreement (MRA) executed with the lenders.
 
 c.  We are unable to comment on the carrying value of the investment in
 one of the subsidiary companies viz. Khandoba Distilleries Limited
 pending implementation of the project.
 
 Companys response: The realizable value of the investment would be
 determined as per the CDR Scheme referred to above Deposits.
 
 d.  The Balances appearing under unsecured loans, sundry creditors,
 capital WIP, sundry debtors and loans and advances are subject to
 confirmation and reconciliation. We find no provision has been made in
 books for doubtful debts.
 
 Companys response: Company has circulated letters for the balances
 appearing in unsecured loans, sundry creditors, capital WIP, sundry
 debtors and loans and advances for confirmation of balances. Company
 has received confirmations from some of the parties and the same are in
 agreement with the balances as per the companys books.
 
 e.  The Company is not regular in depositing with appropriate
 authorities the undisputed statutory dues including provident fund,
 investor education protection fund, employees state insurance, income
 tax, sales tax, wealth tax, customs duty, excise duty, cess and other
 material statutory dues applicable to it excepting income tax dues for
 the Asst Year 2007-08, 2008-09 amounting to Rsi1486 lacs, provident
 fund dues to the tune of Rs.15.31 lacs and the TDS of Rs.119.53 lacs.
 
 Companys response: Unpaid statutory dues pending as on 31st December
 2009 will be discharged on a priority basis through the CDR mechanism.
 
 Deposits
 
 During the year under review your Company has not accepted any deposits
 within the meaning of Section 58A of the Companies Act, 1956 and the
 rules made there under.
 
 Corporate Governance
 
 As per Clause 49 of the Listing Agreement with the Stock exchanges, a
 separate section on Corporate Governance is enclosed herewith which
 forms part of the Annual Report.
 
 A certificate from the Practicing Company Secretary confirming
 compliance with the conditions of Corporate Governance as stipulated
 under the Clause 49 of the Listing Agreement is annexed to this Report.
 
 Management Discussion & Analysis
 
 Management Discussion & Analysis of the financial condition and results
 of operations of the Company for the period under review as required
 under Clause 49 of the Listing Agreement, is given as a separate
 statement forming part of the Annual Report.
 
 Acknowledgements
 
 Your Directors would like to express their appreciation for the sincere
 efforts put in by the dedicated team of employees of the Company
 resulting in successful performance during the period under review.
 
 Your Director would like to place on the record their sincere
 appreciation for continuous support extended by the Companys Bankers
 and Financial Institutions.
 
 Last but not the least, Your Directors also wish to place on record
 their thanks to stake holders of the Company for the confidence reposed
 on the management of the Company.
 
                         For and on behalf of the Board of Directors
                                      of XL TELECOM & ENERGY LIMITED
 
 Place: Secunderabad               DINESH KUMAR    V. VISWESWARA RAO
 
 Date: 21st April, 2010       MANAGING DIRECTOR   DIRECTOR (FINANCE)