Notes to Accounts of BGR Energy Systems Ltd.

Mar 31, 2025

a) A Provision Is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably,
and It Is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected
future cash flows (representing the best estimate of the expenditure required to settle the obligation at the balance sheet date) at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as
finance cost

b) Provision for contractual obligation has been provided for in accounts based on management''s assessment of the probable outcome with reference
to the available Information supplemented by experience of similar transactions.

c) The Company makes provision towards warranty obligation arising under the contract, while progressively recognising the revenue, based on
management estimate and past experience of similar contracts. Such provision Is maintained until the warranty period is completed. The unutilised
provision if any, Is reversed on expiry of the warranty period.

xiii) Revenue

The Company has adopted Ind AS 115 ''Revenue from Contracts with Customers'' with the date of initial application being April 1, 2018. Ind AS 115
establishes a comprehensive framework on revenue recognition. Ind AS 115 replaces Ind AS 18 ''Revenue'' and Ind AS 11 ''Construction Contracts''.

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a) Sale of goods and services - Performance obligation at a point In time

Revenue from the sale of goods In the course of ordinary activities is measured at the transaction price of the consideration received or receivable, net
of returns, trade discounts. Revenue Is recognised on the basis of despatches in accordance with the terms of sale when thefsignificant risks and
rewards of ownership have been transferred to the buyer, recovery of the consideration Is probable, the associated costs and possible return of the
goods can be estimated reliably, there Is no continuing effective control over, or managerial Involvement with the goods, and the amount of revenue
can be measured reliably. The timing of transfers of risk and rewards varies depending on the Individual terms of sale.

Revenue from services is recognized In accordance with the specific terms of contract on performance.

Other operating revenue Includes scrap sale, interest Income on margin money deposits etc.arising out of and incidental to the principal operation. The
entire Income under other operating revenue Is recognised on accrual basis except In the case of interest income which is recognised using effective
rate of Interest method.

b) Construction contracts - Performance obligation over time

The Company uses the ''percentage of completion method'' to determine the appropriate amount to recognise revenue In a given period. The stage of
completion Is measured by reference to the contract costs Incurred upto the end of the reporting period as percentage of total estimated costs for each
contract. Expected loss, if any, on the construction / project related activity is recognized as an expense in the period In which It is foreseen,
Irrespective of the stage of completion of the contract. While determining the amount of foreseeable loss, all elements of costs and related incidental
Income not Included Is taken into consideration. In respect of construction contracts, revenue Includes variations In contract work, claims and Incentive
payments are Included in contract revenue to the extent that may have been agreed with the customer and are capable of being reliably measured.

c) Other Income

Other Income is comprised primarily of dividend income and exchange gain/loss on forward and options contracts and on translation of other assets
and liabilities.

Dividend Income: Dividend income Is recognised In profit or loss on the date on which the Company''s right to receive payments Is established.

Others: Any other Income Is recognised only on accrual basis.

xlv) Income tax

Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to other comprehensive Income.

a) Current tax

Current tax comprises the expected tax payable or receivable on the taxable Income or loss for the year and any adjustments to the tax payable or
receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after
considering the uncertainty, if any, related to Income taxes. It is measured using tax rates (and tax taws) enacted or substantially enacted by the
reporting date. Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is
Intended realise the asset and settle the liability on a net basis or simultaneously.

b) Deferred tax

Deferred tax Is recognised In respect of temporary differences between the carrying amounts of assets and liabilities for financial repotting purposes
and the corresponding amounts used for taxation purpose. Deferred tax is recognised In respect of carried forward losses and tax credits. Deferred tax
also not recognised for temporary differences arising on the initial recognition of assets or liabilities in a transaction that affects neither accounting nor
taxable profit or loss at the time of transaction.

Deferred tax assets and liabilities are recognised to the extent that it is probable that future taxable profits will be available against which they can be
used. The existence of unused tax losses Is strong evidence that future taxable profit may not be available. Therefore, In case of a history of recent
losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other
evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets — unrecognised or
recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the
related tax benefit will be realised.

Deferred tax Is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability Is settled, based on the
laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax reflects the tax consequences that
would follow from the manner In which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to Income
taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they Intend to settle current tax liabilities and assets
on a net basis or their tax assets and liabilities will be realised simultaneously.

xv) Segment Reporting

a) Segment policies:

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.

b) Identification of segments:

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of
directors of the Company assesses the financial performance and position of the Company and makes strategic decisions.

c) Segment Revenue and Segment Result:

Segment revenue includes revenue from operations and other income directly Identifiable with / allocable to the segment Expenses that are directly
identifiable with / allocable to segments are considered for determining the segment result. Revenue and expenses which relate to the Company as a
whole and are not allocable to a segment on a reasonable basis have been disclosed as unallocable.

d) Segment Assets and Liabilities:

Segment assets and liabilities Include those directly Identifiable with respective segments. Unallocable corporate assets and liabilities represent the
assets and liabilities that relate to the Company as a whole and not allocable to any segment

xvi) Statement of Cash flows

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial
Institution, other short-term, highly liquid Investments with original maturities of twelve months or less that are readily convertible to known cash and
which are subject to an insignificant risk of changes In value.

Statement of Cash flows are prepared using the indirect method, whereby profit before tax Is adjusted for the effects of transactions of a non-cash
nature and any deferrals or accruals of past or future operating cash receipts or payments and Items of Income or expense associated with investing or
financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

xvii) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial Institution, other short-term, highly liquid investments with
original maturities of twelve months or less that are. readily convertible to known cash and which are subject to an insignificant risk of changes in
value.

xviil) Dividends

Final dividend on shares are recorded as a liability on the date of approval by the shareholders and Interim dividends are recorded as a liability on the
date of declaration by the Company'' Board of Directors.

xix) Earnings per share

a. Basic earning per share

Basic earnings per share is calculated by dividing
I. the profit attributable to owners of the Company

il. by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during
the year and excluding treasury shares

b. Diluted earnings per share

Diluted earning per share adjusts the figures used in the determination of basic earnings per share to take Into account:

I. the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

II. the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity
shares

xx) Contingent liabilities

The company recognizes contingent liability for disclosure In notes to accounts, if any of the following conditions is fulfilled:

n

a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the enterprise; or

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b) a present obligation that arises from past events but is not recognized because:

- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

- the amount of the obligation cannot be measured with sufficient reliability.

xxi) Contingent Assets

Contingent assets has to be recognised in the financial statements in the period In which it Is virtually certain that an inflow of economic benefits will
arise.

xxii) Events after reporting date

Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period , the impact of such
events is adjusted within the standalone financial statements .Otherwise events after the balance sheet date of materials size or nature are only
disclosed. i

a) TTie balance In project specific escrow,current and EEFC accounts have been netted off against respective project''s working capital loan accounts.

b) The Company has availed working capital loan from State Bank of India on sole banking basis for Its Product business and project business which have not been
specifically funded by other banks. The loan Is secured by hypothecation of inventories, trade receivables and movable assets of Product Division viz AFC, ETD, OGED,
EED and EPD excluding Project assets specifically charged to the banks / Consortium of banks. The loan from State Bank of India Is further secured by first charge on
land property at Panjettl Village, Tlruvallur Dlst, Tamilnadu and first charge on the fixed assets of the Product Division.

The Loan Is further secured by corporate guarantee and collateral of land held by Sravanaa Properties Limited (Subsidiary Company), pledge of shares held by BGR
Investment Holdings Company Limited In BGR Energy Systems Limited and the corporate guarantee of BGR Investment Holdings Company Limited.

c) The Company has availed contract specific working capital loans from State Bank of India, IDBI Bank, Punjab National Bank, Canara Bank, Bank of Baroda, Indian
Bank, Bank of India, Central Bank of India, Axis Bank, ICICI Bank, Kotak Mahlndra Bank Ltd and Union Bank of India. These loans are secured by hypothecation of
Inventories, trade receivables and movable current assets of the respective contracts. The participating banks share the securities on parl-passu basis.

d) The Company has availed unsecured Loans from Related Parties at the Interest rate of 9.75% p.a. These loans are repayable on demand subject to approval from
Banks. The details of Loan Is tabulated below

33 Risk Management Strategies
Financial risk management:

The Company''s activities exposed to market risk, credit risk and liquidity risk. The company''s senior management oversees the management of these risks.

Market risk

Market risk Is the risk of loss of future earnings or fair values or future cash flows that may result from a change In the price of a financial Instrument The value of a
financial Instrument may change as a result of changes In the Interest rates, foreign exchange rates and other market changes that affect market risk sensitive
Instruments. Market risk Is attributable to all market risk sensitive financial Instruments Including foreign currency receivables and payables. The company Is exposed to
market risk primarily related to foreign exchange rate risk (currency risk), Interest rate risk and the market value of Its Investments. Thus the Company''s exposure to
market risk Is a function of Investing and borrowing activities and revenue generating and operating activities In foreign currencies.

Foreign currency risk

The Company has entered Into various contracts In several currencies and consequently the Company Is exposed to foreign exchange risk through Its sales, services
and purchases from suppliers In various foreign currencies. The Company holds derivative financial Instruments such as foreign exchange forward contract to mitigate
the risk of changes In exchange rates on foreign currency exposures. The exchange rate between the rupee and foreign currencies has changed substantially In recent
years. The fluctuations In exchange rate may have an Impact on Company''s operations.

The Company is affected by the price volatility of certain commodities. Us operating activities require the ongoing purchase of Steel, Cement and other materials. Due
to the significantly Increased volatility of the price of the raw material, the Company also entered Into various purchase contracts for supply of Steel, Cement & other
material. The Company has escalation clause In some of their client contracts for variation In the price of commodities.

Equity price risk

The Company''s listed securities are susceptible to market price risk arising from uncertainties about future value of the Investment securities.

At the reporting date, the exposure to listed securities at fair value was Rs.215 lakhs (Rs.20S lakhs). An Increase / decrease of 10% on the BSE Market Index could
have an Impact of approximately Rs.21.50 lakhs (Rs. 20.50 lakhs) on the oa or equity attributable to the Group.

Credit risk •

Credit risk Is the risk that counterparty will not meet Its obligations under a financial Instrument or customer contract, leading to a financial loss. The Company Is
exposed to credit risk from Its operating activities (primarily trade receivables) and from Its financing activities, including deposits with banks, foreign exchange
transactions and other financial Instruments.

Trade receivables

Outstanding customer receivables are regularly monitored and any major export shipments to customers are generally covered by letters of credit The maximum
exposure to the credit risk at reporting date Is primarily from trade receivables amounting to Rs.50357 Lakhs

Financial Instruments and cash deposits .

Credit risk from balances with banks and financial Institutions Is limited as the Company generally Invests In banks and financial Institutions with high credit ratings.
Other financial Instruments Includes primarily Investment In fixed deposits.

Liquidity risk

Liquidity risk Is the risk that the Company will encounter difficulty In meeting the obligations associated with Its financial liabilities that are settled by delivering cash or
another financial asset. The Company''s objective Is to maintain a balance between continuity of funding and flexibility through the use of bank borrowings.

42 During the year, some of the contracts have been terminated by the customers resulting In shortclosure of contract value to the extent of Rs.31991 lakhs.

43 During the year, some of our customers encashed our BG amounting to Rs.152567 lakhs.

44 Going Concern: In the opinion of the management the preparation of the financial statements or a going concern basis Is appropriate, considering the developments
during the current year. These Include the infusion of unsecured loans of Rs.43318 lakhs by the promoters, the Company''s continued execution of ongoing projects
despite instances of bank guarantee encashments, and an order book of approximately Rs.68577 lakhs as on that date. Furthermore, the Company Is actively engaged
In discussions with its bankers for a potential restructuring package.

45 The balance under "Trade Receivables Including retention money" as at 31.03.2025 Is considered good and fully recoverable. A detailed review of sundry debtors was
conducted, including a comprehensive division-wise analysis of collectible and non-collectible receivables pertaining to closed and old projects. We placed emphasis on
this area given the materiality of the balances and the significant Judgment involved In assessing the recoverability of trade receivables and accrued revenue. Several
factors were considered in determining whether an Impairment was necessary. Including defaults or delays In payments, the ageing of outstanding balances, and
challenges encountered In project execution

Based on this review, a provision for old and doubtful debts amounting to Rs.13520 lakhs was recognised during the financial year. We reaffirm that the remaining
balances are considered good and recoverable.

Additionally Rs.1300 lakhs provided for debtors based on the arbitration proceedings, Rs.3413 lakhs provided on account of MSME award to various
vendors and provision created for Rs.916 Lakhs for TRN vendors based on TRN award.

46 During the year, the Company recognised a substantial wrlte-back of trade payables amounting to Rs.4780 lakhs, classified as other income In the Statement of Profit
and Loss. The write-back resulted from the expiry of the limitation period, settlement of disputes, and supplier reconciliations, based on management''s assessment,
conducted with the assistance of external professionals, that no further obligations remained In respect of these liabilities. Additionally, the Company reversed other
provisions that were no longer considered necessary.

47 We have received a notice u/s 201 from Income tax TDS office,Vijayawada for non deduction of TDS for Interest provision created on customer advance for Rs.852
lakhs (including interest) for FY 2022-23 and Rs.1975 lakhs for FY 2023-24 (Including Interst). This has been contested by the Company and the same is Included In
Contingent liability.

48 Pursuant to the Rajasthan High Court order dated 21.12.2023, the Company received a VAT demand notice amounting to Rs.50869.50 lakh. The Company filed a
Special Leave Petition (SLP) before the Supreme Court on 29.04.2024, which has been admitted and is currently pending. Meanwhile, the Company applied under the
Rajasthan Amnesty Scheme 2024 seeking relief, while disputing the tax computation by the authorities and requesting Its revision. The application now continues
under the extended Amnesty Scheme 2025. As the proceedings are still ongoing, the amount continues to be disclosed as a Contingent Liability.

0

49 For the NUPPL-Ghatampur project, which commenced with a contract value of Rs.280162 lakhs, revenue has been fully recognized in accordance with Ind AS 115 as of
30th June 2024, corresponding to cumulative costs incurred of Rs.222788 lakhs.

From July 2024 to March 2025, the Company Incurred additional costs of Rs. 19944 lakhs towards project completion. As the contract does not allow for revision of the
agreed contract value, these costs, on which no profit could be recognized, have been fully charged to the Profit and Loss Account

Further, the Company raised a claim of Rs.80462 Lakhs for the increased costs, which was referred to the Conciliation Committee. The Committee recommended
Rs.33969 Lakhs, subject to NtJPPL''s approval. Since the matter remains unresolved, no Income has been recognized against the claim, and all excess costs have been
expensed in the statement of profit and loss account. During the year, Rs.19944 lakh has been written off to the profit and loss account.

50 ''Other expenses'' include Rs.11907 lakhs, represenbng the value of certain contract assets recognised under Ind AS 115 (Revenue from Contracts with Customers),
which were written off as the underlying contracts were either short-closed or cancelled, and in the management''s opinion, their enforceability and collectability are no
longer considered possible.

Similarly, ''other income'' Includes Rs.11597 lakhs, representing the value of certain contract liabilities recognized under Ind AS 115 (Revenue from Contracts with
Customers), which were written back as the underlying contracts were either short-dosed or cancelled, and In the management''s opinion, the obligation for repayment
no longer exists. / ''s''-Y\ .

51 During the year, the Hontjle Andhra Pradesh has granted an interim stay for Insolvency and/or recovery proceedings initiated by the Operational Creditors (ie.,
Vendors/suppllers) and Financial Creditors (le., Bankers) before the NCLT, Amaravatl Bench, which were kept under abeyance for time being.

52 Total BG encashed by various customers is Rs. 188808 lakhs till date and Rs.94001 lakhs is adjusted towards customer advance and balance amount of Rs.94808 lakhs
forms part of current asset. Company is in the process of ascertaining the realisability and Initiating legal proceedings customerwise accordingly.

53 During Mar-2023, Chattisgarh State Power Generabon Co Ltd (CSPGCL) (Marwa Project) demanded encashment of two BGs totalling to Rs.16337 Lakhs from State Bank
of India. The encashment was resorted to without communicating either the termination of the contract or claim of LO. Immediately we approached the Court for stay on
invocation of BG. The stay was Initially granted by the Honourable Chennai High Court and subsequently by the Honourable Chattisgarh High Court The said amount
included In Contingent Liability as on 31.03.2023.

The present status is that Writ Appeal filed before Chattisgarh High Court, against Single Judge''s order In W.P.No.1992/2023 was set aside and the Divisional Bench
allowed our Writ Appeal No. 498/2023 and directed the Adhiniyam to decide the case filed before them within 4 months from the date of receipt of this Judgement/

Order.

Based on SLP judgement BG encashed for Rs, 16337 Lakhs in Dec''24. Arbitration proceedings is under progress.

54 The company reviewed Its Investment In subsidaries l.e BGR Boilers Private Limited and BGR Turbines company Private Limited and confident of recovering Its investment
In lieu of settlement and seperation aggrement with Hitachi Group.Accordlngly no provision for dimunitlon in value of Investment is made.

55 VAT/GST/Income tax receivable is written off in Rates & taxes for Rs.1147 lakhs

56 Inventories are valued at the lower of cost or net realizable value. The Company follows the weighted average cost method for the relevant categories of inventory.
Physical verification of stocks was carried out during the year, and no material discrepancies were noted. We also confirm that all stocks, including non-moving Items, are
In usable condition. During the year, certain Inventories were written off due to deterioration In value, amounting to Rs.148 lakhs relating to the Environment Engineering
Division (EED) and Rs.36 Lakhs relating to the Oil and Gas Engineering Division, aggregating to Rs.184 Lakhs.

Further, during the year, inventory pertaining to the AFC Division, where no commercial operations are being carried on, was disposed of for a lump sum amount of
Rs.306 Lakhs. The remaining inventory, with a book value of Rs.465 Lakhs, was written off and disclosed under ''Exceptional Items'' in the financial statements.

57 Previous year figures

Figures of previous year have been regrouped / rearranged, wherever required to conform to the current year presentation.

For and on behalf of Board of Directors As per our report of even date

t For Anand & Ponnappan

/I Chartered Accountants

i/. H I Firm Registration No.: OOOll IS ,

OHl PATHY ^ • R PONNAPPAN

\ / /) 7T fanner

^v ..----- P () IL-J Membership No.021695

1(1 (*( e tlto W

K.MEYYKNATHAN \]EYAKRISMNA GANESAN [71 • , r, Ji I *

Independent Director f4on-Independent Director

DIN: 07845698 / D1N:0320803S

S.PATTABIRAMAN SUNDAR 5R1NIVASAN Chennai

Vice President & Chief Financial Officer Company secretary & Compliance officer May 28,2025

---

Mar 31, 2024

xii) Provisions (other than for employee benefits)

a) A Provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows (representing the best estimate of the expenditure required to settle the obligation at the balance sheet date) at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

b) Provision for contractual obligation has been provided for in accounts based on management''s assessment of the probable outcome with reference to the available information supplemented by experience of similar transactions.

c) The Company makes provision towards warranty obligation arising under the contract, while progressively recognising the revenue, based on management estimate and past experience of similar contracts. Such provision is maintained until the warranty period is completed. The unutilised provision if any, is reversed on expiry of the warranty period.

xiii) Revenue

The Company has adopted Ind AS 115 ''Revenue from Contracts with Customers'' with the date of initial application being April 1, 2018. Ind AS 115 establishes a comprehensive framework on revenue recognition. Ind AS 115 replaces Ind AS 18 ''Revenue'' and Ind AS 11 ''Construction Contracts''.

a) Sale of goods and services - Performance obligation at a point in time

Revenue from the sale of goods in the course of ordinary activities is measured at the transaction price of the consideration received or receivable, net of returns, trade discounts. Revenue is recognised on the basis of despatches in accordance with the terms of sale when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of the goods can be estimated reliably, there is no continuing effective control over, or managerial involvement with the goods, and the amount of revenue can be measured reliably. The timing of transfers of risk and rewards varies depending on the individual terms of sale.

Other operating revenue includes scrap sale, interest income on margin money deposits etc.arising out of and incidental to the principal operation. The entire income under other operating revenue is recognised on accrual basis except in the case of interest income which is recognised using effective rate of interest method.

b) Construction contracts - Performance obligation over time

The Company uses the ''percentage of completion method'' to determine the appropriate amount to recognise revenue in a given period. The stage of completion is measured by reference to the contract costs incurred upto the end of the reporting period as percentage of total estimated costs for each contract. Expected loss, if any, on the construction / project related activity is recognized as an expense in the period in which it is foreseen, irrespective of the stage of completion of the contract. While determining the amount of foreseeable loss, all elements of costs and related incidental income not included is taken into consideration. In respect of construction contracts, revenue includes variations in contract work, claims and incentive payments are included in contract revenue to the extent that may have been agreed with the customer and are capable of being reliably measured.

c) Other Income

Other income is comprised primarily of dividend income and exchange gain/loss on forward and options contracts and on translation of other assets and liabilities.

Dividend income: Dividend income is recognised in profit or loss on the date on which the Company''s right to receive payments is established. Others: Any other income is recognised only on accrual basis.

xiv) Income tax

Income tax comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to other comprehensive income.

a) Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustments to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantially enacted by the reporting date. Current tax assets and liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended realise the asset and settle the liability on a net basis or simultaneously.

b) Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purpose. Deferred tax is recognised in respect of carried forward losses and tax credits. Deferred tax also not recognised for temporary differences arising on the initial recognition of assets or liabilities in a transaction that affects neither accounting nor taxable profit or loss at the time of transaction.

Deferred tax assets and liabilities are recognised to the extent that it is probable that future taxable profits will be available against which they can be used. The existence of unused tax losses is strong evidence that future taxable profit may not be available. Therefore, in case of a history of recent losses, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realised. Deferred tax assets — unrecognised or recognised, are reviewed at each reporting date and are recognised/ reduced to the extent that it is probable/ no longer probable respectively that the related tax benefit will be realised.

Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

xv) Segment Reporting

a) Segment policies:

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

b) Identification of segments:

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company assesses the financial performance and position of the Company and makes strategic decisions.

c) Segment Revenue and Segment Result:

Segment revenue includes revenue from operations and other income directly identifiable with / allocable to the segment. Expenses that are directly identifiable with / allocable to segments are considered for determining the segment result. Revenue and expenses which relate to the Company as a whole and are not allocable to a segment on a reasonable basis have been disclosed as unallocable.

d) Segment Assets and Labilities:

Segment assets and liabilities include those directly identifiable with respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

xvi) Statement of Cash flows

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institution, other short-term, highly liquid investments with original maturities of twelve months or less that are readily convertible to known cash and which are subject to an insignificant risk of changes in value.

Statement of Cash flows are prepared using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a noncash nature and any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.

xvii) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institution, other short-term, highly liquid investments with original maturities of twelve months or less that are readily convertible to known cash and which are subject to an insignificant risk of changes in value.

xviii) Dividends

Final dividend on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company'' Board of Directors.

xix) Earnings per share

a. Basic earning per share

Basic earnings per share is calculated by dividing

i. the profit attributable to owners of the Company

ii. by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares

b. Diluted earnings per share

Diluted earning per share adjusts the figures used in the determination of basic earnings per share to take into account:

i. the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

ii. the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares

xx) Contingent liabilities

The company recognizes contingent liability for disclosure in notes to accounts, if any of the following conditions is fulfilled:

a) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation that arises from past events but is not recognized because:

- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

- the amount of the obligation cannot be measured with sufficient reliability.

xxi) Contingent Assets

Contingent assets has to be recognised in the financial statements in the period in which it is virtually certain that an inflow of economic benefits will arise.

xxii) Events after reporting date

Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period , the impact of such events is adjusted within the standalone financial statements .Otherwise events after the balance sheet date of materials size or nature are only disclosed.

a) The balance in project specific escrow,current and EEFC accounts have been netted off against respective project''s working capital loan accounts.

b) The Company has availed working capital loan from State Bank of India on sole banking basis for its Product business and project business which have not been specifically funded by other banks. The loan is secured by hypothecation of inventories, trade receivables and movable assets of Product Division viz AFC, ETD, OGED, EED and EPD excluding Project assets specifically charged to the banks / Consortium of banks. The loan from State Bank of India is further secured by first charge on land property at Panjetti Village, Tiruvallur Dist, Tamilnadu and first charge on the fixed assets of the Product Division.

The Loan is further secured by corporate guarantee and collateral of land held by Sravanaa Properties Limited (Subsidiary Company), pledge of shares held by BGR Investment Holdings Company Limited in BGR Energy Systems Limited and the corporate guarantee of BGR Investment Holdings Company Limited.

c) The Company has availed contract specific working capital loans from State Bank of India, IDBI Bank, Punjab National Bank, Canara Bank, Bank of Baroda, Indian Bank, Bank of India, Central Bank of India, Axis Bank, ICICI Bank, Kotak Mahindra Bank Ltd and Union Bank of India. These loans are secured by hypothecation of inventories, trade receivables and movable current assets of the respective contracts. The participating banks share the securities on pari-passu basis.

d) The Company has availed unsecured Loans from Related Parties at the interest rate of 9.75% p.a. These loans are repayable on demand subject to approval from Banks. The details of Loan is tabulated below

Market risk is the risk of loss of future earnings or fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial

instruments including foreign currency receivables and payables. The company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate r

of its investments. Thus the Company''s exposure to market risk is a function of

investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Foreign currency risk

The Company has entered into various contracts in several currencies and consequently the Company is exposed to foreign exchange risk through its sales, services and purchases from suppliers in various foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward contract to mitigate the risk of changes in exchange rates on foreign currency exposures.

The exchange rate between the rupee and foreign currencies has changed substantially in recent years. The fluctuations in exchange rate may have an impact on Company''s operations.

The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of Steel, Cement and other materials. Due to the significantly increased volatility of the price of the raw material, the Company also entered into various purchase contracts for supply of Steel, Cement & other material. The Company has escalation clause in some of their client contracts for variation in the price of commodities.

Equity price risk

The Company''s listed securities are susceptible to market price risk arising from uncertainties about future value of the investment securities.

At the reporting date, the exposure to listed securities at fair value was Rs.205 lakhs (Rs.126 lakhs). An increase / decrease of 10% on the BSE Market Index could have an impact of approximately Rs.20.50 lakhs (Rs. 12.60 lakhs) on the OCI or equity attributable to the Group.

Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade receivables

Outstanding customer receivables are regularly monitored and any major export shipments to customers are generally covered by letters of credit. The maximum exposure to the credit risk at reporting date is primarily from trade receivables amounting to Rs.70596 Lakhs

44 During the year, certain clients have terminated/short closed contracts amounting to Rs.479758 lakhs representing the value of unexecuted contracts. The unbilled revenue due to termination or short closure amounting to Rs.25769 lakhs has been reversed.

45 Bank guarantees encashed by clients amounting to Rs.36241 lakhs which form part of other current asset and the Company has initiated arbitration proceedings. Subsequently, till 29.05.2024 further 4 clients encashed BG valuing Rs.129336 lakhs.

46 Going Concern: The Promoters have infused unsecured loan, which is in excess of accumulated losses for the year ended as on 31st March 2024. Though there has been encashment of Bank Guarantees, the Company is continuing to execute the contracts and are hopeful of amicable solutions. Balance orders on hand as on 31.03.2024 is about Rs.167254 lakhs. The Company is in discussions with the Bankers for restructuring package. Based on the above, the Company is of the opinion that the accounts will be stated on Going Concern basis.

47 Pursuant to the orders of the The Honourable Rajasthan High court on 21.12.2023, the Company received demand notice from the Rajasthan VAT authorities amounting to Rs.50869.50 lakhs(Tax Rs.14552.35 lakhs and Interest Rs.36317.15 lakhs) on 12.01.2024. SLP has been filed In Supreme

court on 29.04.2024.

48 Due to non-visibility of profit in the near future, considering the balance orders in hand and expected order booking in future, the net deferred tax asset has been reversed to the extent of Rs.13269 lakhs in the third quarter.

49 Review of Sundry debtors has been made particularly for the Product segments and analysis of division wise collectible and non-collectible of debtors has been studied thoroughly relating to old projects which was already closed, but final closure and reconciliation of the contract are still under progress in most of the cases and the realization is not certain in some cases. As the outcome of the same the provision has been created for old and doubtful debtors to the tune of Rs.16076 lakhs of product segments and Rs.6611 lakhs related to construction segments totaling to Rs.22687 lakhs during the financial year.

50 Provision has been created for Rs.166.55 lakhs in Rates and taxes related to VAT/CST tax refunds pertaining to pre GST regime.

In case of Sundry creditors, ageing analysis has been carried out for the old contracts which was already completed and the balance amount in vendor ledger is not payable due to various factors considering the LD applicability, Risk and cost recovery toward the unexecuted portion of the contract and other recoveries towards various issues as per the terms & conditions of the contract. Accordingly, creditors write back has been worked out and arrived valuing to Rs.9519 lakhs during this quarter.

52 Upon termination of rental agreement with Progen, the factory activities have been discontinued as the building is not in our control at present. There are some Plant & Machinery inside the progen factory. Considering this situation, the fixed assets valuing about Rs.1096 lakhs related to Progen factory has been discarded. At the same time, balance rent payable of about Rs.153 lakhs is also reversed and taken to income.

53 During Mar-2023, Chattisgarh State Power Generation Co Ltd (CSPGCL) (Marwa Project) demanded encashment of two BGs totalling to Rs.16337 Lakhs. The Company obtained stay on encashment of bank guarantee from the Honourable Chattisgarh High Court. The said amount is included in Contingent Liability as on 31.03.2024.

During Jan-2024, Hindustan Urvarak & Rasayan Limited demanded encashment of CPBG and ABG totalling to Rs.1758.05 Lakhs. The Company obtained stay on encashment of bank guarantee from the The Honourable Delhi High Court. The said amount is included in Contingent Liability as on 31.03.2024.

54 The company reviewed its Investment in subsidaries i.e BGR Boilers Private Limited and BGR Turbines company Private Limited and confident of recovering its investment In lieu of settlement and seperation aggrement with Hitachi Group.Accordingly no provision for dlmunitation in value of Investment Is made.

55 Previous year figures

Figures of previous year have been regrouped / rearranged, wherever required to conform to the current year presentation.

For and on behalf of Board of Directors As per our report of even date

For Anand & Ponnappan Chartered Accountants Firm Registration No. : 000111S

ARJUN GOVIND RAGHUPATHY R PONNAPPAN

Managing Director Partner

DIN : 02700864 Membership No.021695

SADASIVAM DEIVANAYAGAM JEYAKRISHNA GANESAN

Independent Director Non-Independent Director

DIN : 07622466 DIN:03208035

Chennai

S.PATTABIRAMAN May 30,2024

Vice President & Chief Financial Officer

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Mar 31, 2023

a) The balance in project specific escrow,current and EEFC accounts have been netted off against respective project’s working capital loan accounts.

b) The Company has availed working capital loan from State Bank of India on sole banking basis for its Product business and project business which have not been specifically funded by other banks. The loan is secured by hypothecation of inventories, trade receivables and movable assets of Product Division viz AFC, ETD, OGED, EED and EPD excluding Project assets specifically charged to the banks / Consortium of banks. The loan from State Bank of India is further secured by first charge on land property at Panjetti Village, Tiruvallur Dist, Tamilnadu and first charge on the fixed assets of the Product Division.

The Loan is further secured by corporate guarantee and collateral of land held by Sravanaa Properties Limited (Subsidiary Company), pledge of shares held by BGR Investment Holdings Company Limited in BGR Energy Systems Limited and the corporate guarantee of BGR Investment Holdings Company Limited.

c) The Company has availed contract specific working capital loans from State Bank of India, IDBI Bank, Punjab National Bank, Canara Bank, Bank of Baroda, Indian Bank, Bank of India, Central Bank of India, Axis Bank, ICICI Bank, Kotak Mahindra Bank Ltd, Export Import Bank of India and Union Bank of India. These loans are secured by hypothecation of inventories, trade receivables and movable current assets of the respective contracts. The participating banks share the securities on pari-passu basis.

d) The working capital loan from Export Import Bank of India, is further secured by the second charge on current assets of the product divisions.

e) During the year the Company has availed unsecured Loans from Related Parties namely loan from Managing Director Rs.20000 Lakhs and Loan from BGR Investment Holdings Company Limited Rs.3107 Lakhs both at the interest rate of 9.75% p.a. These loans are repayable on demand subject to approval from Banks.

f) The quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.

Defined benefit plan and other long term employee benefits:

Gratuity plan

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors. The discount rate has been chosen by reference to market yields on Government bonds. The above information is certified by an actuary.

The overall expected rate of return on assets is determined based on the market prices prevailing on the date applicable to the period over which the obligation is to be settled.

While one of the parameters mentioned above is changed by 100 basis points, other parameters are kept unchanged for evaluating the defined benefit obligation. While there is no change in the method used for sensitivity analysis from previous period, the change in assumptions now considered are with reference to the current assumptions.

Fair value of mutual fund and equity investments is based on quoted price.

The Management has assessed the fair value of trade receivables, trade payables, cash & cash equivalents, bank balances, bank deposits, loans and advances, bank borrowings, lease liabilities and other financial assets and liabilities approximate their carrying amounts.

33. RISK MANAGEMENT STRATEGIES Financial risk management:

The Company’s activities exposed to market risk, credit risk and liquidity risk. The company’s senior management oversees the management of these risks.

Market risk

Market risk is the risk of loss of future earnings or fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. The company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate risk and the market value of its investments. Thus the Company’s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Foreign currency risk

The Company has entered into various contracts in several currencies and consequently the Company is exposed to foreign exchange risk through its sales, services and purchases from suppliers in various foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward contract to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the rupee and foreign currencies has changed substantially in recent years. The fluctuations in exchange rate may have an impact on Company’s operations.

An appreciation / depreciation of 0.50 percentage points in exchange rate between the INR and USD, the operating margins at the reporting date (31.03.2023) would have increased / (decreased) equity and profit by Rs.47 Lakhs (Rs.138 Lakhs)

The Sensitivity analysis is computed based on the change in the income and expenses in the foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting and the current reporting period

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates to the Company’s long-term debt obligations with floating interest rates.

Interest rate sensitivity

Fair value sensitivity for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the company does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity for variable rate instruments

An decrease / increase of 50 basis points in interest rates at the reporting date (31.03.2023) would have increased / (decreased) equity and profit by Rs.872 Lakhs

The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of Steel, Cement and other materials. Due to the significantly increased volatility of the price of the raw material, the Company also entered into various purchase contracts for supply of Steel, Cement & other material. The Company has escalation clause in some of their client contracts for variation in the price of commodities.

Equity price risk

The Company’s listed securities are susceptible to market price risk arising from uncertainties about future value of the investment securities.

At the reporting date, the exposure to listed securities at fair value was Rs.126 lakhs (Rs.101 lakhs). An increase / decrease of 10% on the BSE Market Index could have an impact of approximately Rs.12.60 lakhs (Rs. 10.10 lakhs) on the OCI or equity attributable to the Group.

Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade receivables

Outstanding customer receivables are regularly monitored and any major export shipments to customers are generally covered by letters of credit. The maximum exposure to the credit risk at reporting date is primarily from trade receivables amounting to Rs.86723 Lakhs

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is limited as the Company generally invests in banks and financial institutions with high credit ratings. Other financial instruments includes primarily investment in fixed deposits.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank borrowings.

Collateral risk

The Company has pledged its short-term deposits of Rs. 32692 lakhs to fulfil the security requirements for the contractual obligations. As at 31 March, 2023, 31 March, 2022 the fair values of the short-term deposits pledged were Rs. 32692 lakhs and Rs. 33047 lakhs respectively.

On application of Ind AS 116, the nature of expenses has changed from lease rent in previous periods to depreciation cost for the ROU asset, and finance cost for interest accrued on lease liability.

The lease agreements for the Company’s Corporate office measuring 96,300 SFT has expired at the starting of the financial year. However the Company continues to use the said premises during the current financial year. Accordingly the said lease rentals are treated as short term leases till renewal of existing lease\entering in to new lease agreements.

Lease payments of Rs. 644 lakhs (Rs. 479 lakhs) relating to leases with a term of 12 months or less and low value leases are charged to statement of profit and loss

Revenue of approximately INR Rs. 27379 lakhs (31.03.2022 - INR Rs.56166 lakhs) are derived from three external customers.

These revenues are attributed to the Construction and EPC contracts segment.

38. IMPAIRMENT OF ASSETS

a. Cash generating units :

There is no impairment loss in cash generating units and hence no provision was made in the financial statements.

b. Other assets :

The Company has recognised impairment loss of Rs. Nil (Rs. 312 Lakhs) in the books of accounts towards impairment of Buildings subsequent to closure of Lease period.

40. RELATIONSHIP WITH STRUCK OFF COMPANIES

The Company has no transactions \ outstanding balances as on 31.03.2023 with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

41. The project specific working capital limits outstanding as of 31.12.2022 availed from Punjab National Bank was classified as substandard by the bank. The outstanding were repaid in full and the account was upgraded as standard by the bank as of 31.03.2023.

42. During Mar-2023, Chattisgarh State Power Generation Co Ltd (CSPGCL) (Marwa Project) demanded encashment of two BGs totalling to Rs.16337 Lakhs. The Company obtained stay on encashment of bank guarantee from the Honourable Chattisgarh High Court. The said amount is included in Contingent Liability as on 31.03.2023.

43. PROVISIONS

a) The company has made a provision / transfer of Rs.91 lakhs, (Rs.132 lakhs) towards warranty and contractual obligations on the products supplied / contracts executed by the company during the year. The expenses on account of provision for warranty is grouped under other expenses.

44. PREVIOUS YEAR FIGURES

Figures of previous year have been regrouped / rearranged, wherever required to conform to the current year presentation.

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Mar 31, 2018

A. COMPANY OVERVIEW

BGR Energy Systems Limited (‘the Company’) is a public limited company incorporated under the provisions of the Companies Act, 1956. Its equity shares are listed on Bombay Stock Exchange (‘BSE’) and National Stock Exchange (‘NSE’).The Company is a manufacturer of capital equipments for Power Plants, Petrochemical Industries, Refineries, Process Industries and undertakes turnkey Balance of Plant (‘BOP’) and Engineering Procurement and Construction (‘EPC’) contracts for Power plants. The Company has been achieving its objectives through its five business units: Power projects, Electrical projects, Oil and Gas equipment, Environmental engineering and Air Fin Coolers.

1.A.(i). Cochin Project: The end client of Cochin Port Road Connectivity Project viz., Cochin Port Road Company Ltd., (SPV of NHAI) terminated the contract on May 28, 2007. Consequently, the end client encashed BGs for a value of Rs.1270 lakhs furnished by the company on behalf of MECON - GEA (JV). The main contractor viz., MECON - GEA (JV) contested the termination of the contract. The disputes after having been reviewed by the Dispute Review Board, have been determined through arbitration. The Arbitral Tribunal disposed off the matter and pronounced the award on 27.12.2015 and a sum of Rs 2673 lakhs was awarded to the JV. The recoverable amount of Rs 1654 lakhs grouped under loans and advances is covered by the arbitral award. Cochin Port Road Company Ltd., (SPV of NHAI) has challenged the award, before the Honourable Delhi High Court and is pending for adjudication.

1.b.(ii). Tuticorin Project: The end client of Tirunelveli - Tuticorin Port Connectivity Project viz., Tuticorin Port Road Company Ltd (SPV of NHAI) terminated the contract and encashed BGs for aggregate value of Rs.2652 lakhs and the same were restituted as per orders of the High Court of Madras (Madurai Bench). The disputes, including termination of contract, were reviewed by the Disputes Review Board and recommendations were granted in favour of the JV. Tuticorin Port Road Company Ltd (SPV of NHAI) challenged the recommendations before the Arbitration Tribunal.The JV and NHAI are exploring a settlement and hence arbitral proceedings remain suspended. In view of these facts, the company has identified a sum of Rs. 83 lakhs C83 lakhs) as at March 31, 2018 as recoverable advances from the end client through the JV and is grouped under other loans and advances.

Trade receivables includes retention amount of Rs.128063 lakhs (Rs. 128760 lakhs) which, in accordance with the terms of the contracts were not due for payments as at March 31, 2018.

The Company has sought confirmation of balances of major trade receivables. In cases where letters of confirmation have been received from parties, book balances have been reconciled and adjusted, if required. In other cases, balances in accounts of trade receivables have been taken as per books of account.

a) Term loan includes Corporate loan of Rs.27355 lakhs Rs.34887 lakhs) from Syndicate Bank and is secured by the specified receivables of the Company and collateral security of the subsidiary companies and other companies\persons. The loan is repayable in 16 quarterly instalments starting from 01.07.2016.

b) The balance in project specific escrow,current and EEFC accounts have been netted off against respective project’s working capital loan accounts.

c) The Company has availed working capital loan from State Bank of India on sole banking basis for its Product business. The loan is secured by hypothecation of inventories, trade receivables and movable assets of the capital goods segment of the Company. The loan from State Bank of India is further secured by First charge on land property at Panjetti Village, Tiruvallur Dist, Tamilnadu , and second charge on the fixed assets of the Company.

d) The Company has availed contract specific working capital loans from State Bank of India, IDBI Bank, Punjab National Bank, Syndicate Bank, Vijaya Bank, Indian Bank, Indian Overseas Bank , Corporation Bank, Allahabad Bank, Bank of India, Andhra Bank, Central Bank of India, Axis Bank, ICICI Bank, Kotak Mahindra Bank Ltd, Export Import Bank of India, Union Bank of India and The Karur Vysya Bank Limited. These loans are secured by hypothecation of inventories, trade receivables and movable current assets of the respective contracts. The participating banks share the securities on pari-passu basis.

Disclosure under the Micro, Small and Medium Enterprises Development Act, 2006.

On the basis of confirmation obtained from suppliers who have registered themselves under the Micro, Small and Medium Enterprise Development Act, 2006 (MSMED Act, 2006) and based on the information available with the Company, the following are the details:

As required under Section 135 of Companies Act 2013, the company is required to spend Rs.138 Lakhs (Rs.221 lakhs) towards Corporate Social Responsibility (CSR) activities. Expenses incurred during the year is Rs.84 Lakhs C16 Lakhs) and no provision is made for balance amount during the financial year 2017-18.

2. EMPLOYEE BENEFITS

As per Ind AS -19 “ Employee Benefits”, the disclosure of employee benefits are given below:

Defined benefit plan and other long term employee benefits:

Gratuity plan

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors. The discount rate has been chosen by reference to market yields on Government bonds. The above information is certified by an actuary.

The overall expected rate of return on assets is determined based on the market prices prevailing on the date applicable to the period over which the obligation is to be settled.

Sensitivity analysis of significant actuarial assumptions

Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate and expected salary increase. The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below

While one of the parameters mentioned above is changed by 100 basis points, other parameters are kept unchanged for evaluating the defined benefit obligation. While there is no change in the method used for sensitivity analysis from previous period, the change in assumptions now considered are with reference to the current assumptions.

The applicable Indian statutory tax rate for fiscal 2018 and fiscal 2017 is 34.61%.

3. EXCEPTIONAL ITEMS

Exceptional item represents net write off of Rs.1119 Lakhs, being the amount of Rs. 8010 Lakhs paid, towards BG encashment by a client, after adjusting available provision of Rs.6891 Lakhs.

Fair value of mutual fund and equity investments is based on quoted price.

For loans and advances fair value is determined using discounted cash flow.

4. RISK MANAGEMENT STRATEGIES

Financial risk management:

The Company’s activities exposed to market risk, credit risk and liquidity risk. The company’s senior management oversees the management of these risks.

Market risk

Market risk is the risk of loss of future earnings or fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. The company is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate risk and the market value of its investments. Thus the Company’s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.

Foreign currency risk

The Company has entered into various contracts in several currencies and consequently the Company is exposed to foreign exchange risk through its sales, services and purchases from suppliers in various foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward contract to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the rupee and foreign currencies has changed substantially in recent years. The fluctuations in exchange rate may have an impact on Company’s operations.

For the year ended March 31, 2018 and March 31, 2017, every percentage point depreciation / appreciation in the exchange between the INR and USD, has affected the Company’s incremental operating margins by Rs. 177 lakhs (Rs. 188 lakhs) approximately 0.50% each.

The Sensitivity analysis is computed based on the change in the income and expenses in the foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting and the current reporting period.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates to the Company’s long-term debt obligations with floating interest rates.

As at the reporting date the Company’s interest - bearing financial instruments were as follows:

Interest rate sensitivity

Fair value sensitivity for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the company does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity for variable rate instruments

An decrease / increase of 50 basis points in interest rates at the reporting date (31.03.2018) would have increased / (decreased) equity and profit by Rs.1057 Lakhs

Commodity price risk

The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of Steel, Cement and other materials. Due to the significantly increased volatility of the price of the raw material, the Company also entered into various purchase contracts for supply of Steel, Cement & other material. However the Company has escalation clause in most of their client contracts for variation in the price of commodities.

Equity price risk

The Company’s listed securities are susceptible to market price risk arising from uncertainties about future value of the investment securities.

At the reporting date, the exposure to listed securities at fair value was Rs. 90 lakhs. An increase / decrease of 10% on the BSE Market index could have an impact of approximately Rs. 9 lakhs on the OCI or equity attributable to the Group.

Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade receivables

Outstanding customer receivables are regularly monitored and any major export shipments to customers are generally covered by letters of credit. The maximum exposure to the credit risk at reporting date is primarily from trade receivables amounting to Rs.404913 Lakhs.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is limited as the Company generally invests in banks and financial institutions with high credit ratings. Other financial instruments includes primarily investment in fixed deposits.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank borrowings.

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

Collateral risk

The Company has pledged part of its short-term deposits of Rs. 46216 lakhs to fulfil the security requirements for the contractual obligations. As at 31 March, 2018, 31 March, 2017 the fair values of the short-term deposits pledged were Rs. 46216 lakhs and Rs. 52018 lakhs respectively.

5. LEASES

Operating Leases

The Company has taken various residential / commercial premises, land and plant & equipment under cancellable and non-cancellable operating leases. These lease agreements are normally renewed on expiry. The future minimum lease payments in respect of non-cancellable leases are as follows:

* Excludes interest, penalty and self assessment tax paid.

** (1) Out of Service tax demand, for a sum of Rs. 24,482 lakhs (Rs. 24,482 lakhs) (excludes interest, penalty and self assessment tax paid), the Company has filed appeal before the Customs Excise and Service Tax Appellate Tribunal.

** (2) For a sum of Rs. 12,105 lakhs (excludes interest, penalty and self assessment tax paid), the Company is in the process of filing appeal before the Commissioner (Appeals-1) and Customs Excise and Service Tax Appellate Tribunal.

6. RELATED PARTY TRANSACTIONS

Subsidiary companies

i. Progen Systems and Technologies Limited

ii. BGR Boilers Private Limited

iii. BGR Turbines Company Private Limited

iv. Sravanaa Properties Limited

(Information provided in respect of revenue items for the year ended March 31, 2018 and in respect of assets / liabilities as at March 31, 2018)

7. Contracting Income includes an Income of Rs. 71452 lakhs C 18550 lakhs) as per terms of the agreement entered into by the Company with Hitachi, Ltd., Japan (HTC), Hitachi Power Europe GmbH, Germany (HPE) and the company’s Joint Venture companies viz., BGR Boilers Private Limited and BGR Turbines Company Private Limited.

8. During the FY 2016-17, termination notice has been served by one of the client on the Company for termination of the contract by exercising the right of termination as per of the terms of the contract on the ground of ‘Employer’s Convenience’. Pending discussions with the client, the Company has not made any adjustments to the carrying amount of advance received from customers and trade receivables.

9. IMPAIRMENT OF ASSETS

a. Cash generating units :

There is no impairment loss in cash generating units and hence no provision was made in the financial statements.

b. Other assets :

The Company has made a provision of ‘ Nil (‘ Nil) in the books of accounts towards impairment of other fixed assets based on the technicial valuation.

10. In respect to construction contracts, cost of material includes value added tax, central sales tax, works contract tax and service tax, up to the introduction of GST.

11. PROVISIONS

a) The company has made a provision / transfer of Rs. 5144 lakhs, (Rs. 4278 lakhs) towards warranty and contractual obligations on the products supplied / contracts executed by the company during the year. The expenses on account of provision for warranty is grouped under other expenses.

b) Movement in provisions

12. DISCLOSURE ON SPECIFIED BANK NOTES (SBNS)

During the previous year 2016-17, the Company had specified bank notes or other denomination notes as defined in the Ministry of Corporate Affairs notification G.S.R 308 (E) dated March 31, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per the notification is given below.

* For the purposes of this clause, the term “Specified Bank Notes” shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O 3407 (E), dated the 8th November, 2016.

13. Previous year figures

Figures of previous year have been regrouped / rearranged, wherever required to conform to the current year presentation.

---

Mar 31, 2015

1. COMPANY OVERVIEW

BGR Energy Systems Limited ('the company') is a public limited company incorporated under the provisions of the Companies Act, 1956. Its equity shares are listed on Bombay Stock Exchange ('BSE') and National Stock Exchange ('NSE').The company is a manufacturer of capital equipments for Power Plants, Petrochemical Industries, Refineries, Process Industries and undertakes turnkey Balance of Plant ('BOP') and Erection Procurement and Construction ('EPC') contracts for Power plants. The company has been achieving its objectives through its five business units: Power projects, Electrical projects, Oil and Gas equipment, Environmental engineering and Air Fin Coolers.

2. Terms/rights attached to equity shares

The company has one class of shares referred to as equity shares having a par value of Rs 10. Each holder of equity shares is entitled to one vote per share.

Gratuity plan

The company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

Stock option granted to the employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The company follows the intrinsic value method of accounting for the options and accordingly, the excess of value of the stock options as determined by an independent valuer on the date of grant over the exercise price of the options, if any, is recognized as deferred employee compensation cost and is charged to the statement of profit and loss.

Employee Stock Option Scheme - 2007

Pursuant to the decision of the shareholders, at their meeting held on July 11, 2007, the company has established an 'Employee Stock Option Plan 2007' ('ESOS 2007' or 'the Scheme') to be administered by the Compensation Committee of the Board of Directors. ESOS 2007 provides for grant of options amounting to not more than 1.5% of the issued and paid up equity capital of the company outstanding at any point of time to officers, directors and key employees to purchase equity shares of face value of Rs.10 each, with such option conferring a right upon the employee to apply for one equity shares of the company, in accordance with the terms and conditions of such issue. The exercise price of the option is Rs.408

3. LEASES Operating lease

The company has taken various residential / commercial premises and land under cancellable and non-cancellable operating leases. These lease agreements are normally renewed on expiry.

4. PARTICULARS OF RELATED PARTIES List of related parties

a. Subsidiary companies

i. Progen Systems and Technologies Limited

ii. BGR Boilers Private Limited

iii. BGR Turbines Company Private Limited

iv. Sravanaa Properties Limited

b. Associate company - Nil

c. Other companies (enterprises where significant influence exists and enterprises where key management personnel have significant influence)

i. GEA Cooling Tower Technologies (India) Private Limited

ii. GEA BGR Energy System India Limited

iii. Mega Funds India Limited

iv. Sasikala Estate Private Limited

v. Schmitz India Private Limited

vi. Cuddalore Powergen Corporation Limited

vii. ANI Constructions Private Limited

viii. Nannilam Property Private Limited

ix. BGR Odisha Powergen Limited

d. Joint venture

Mecon - GEA Energy System (India) Limited (JV)

e. Key Management Personnel

i. Mr.A.Swaminathan Joint Managing Director and CEO

ii. Mr. VR. Mahadevan Joint Managing Director

iii. Ms. Swarnamugi Karthik Director - Corporate Strategy

f. Relatives of Key Management Personnel

i. Mrs. Sasikala Raghupathy (Mother of Ms.Swarnamugi Karthik)

ii. Ms. Priyadarshini Raghupathy (Sister of Ms.Swarnamugi Karthik)

iii. Ms. Vaani Raghupathy (Sister of Ms.Swarnamugi Karthik)

iv. Mr. Arjun Govind Raghupathy (Brother of Ms.Swarnamugi Karthik)

Party-wise disclosure of related party transactions:

5. Sales represent, GEA Cooling Tower Technologies (India) Private Limited Rs. 3315 lakhs ( Rs. 2736 lakhs).

6. Purchases represent, Progen Systems and Technologies Limited Rs. 955 lakhs (Rs. 260 lakhs), GEA Cooling Tower Technologies (India) Private limited Rs. 3655 lakhs (Rs.2452 lakhs), GEA BGR Energy System India Limited Rs. 142 lakhs (Rs. 41 lakhs), BGR Boilers Private Limited Rs. 80354 lakhs (Rs 17707 lakhs), BGR Turbines Company Private Limited Rs. 47430 lakhs (Rs. 492 lakhs), Schmitz India Private Limited Rs.61 lakhs (Rs.Nil)

7. Sale of Investments represent, BGR Investment Holdings Company Limited Rs. Nil (Rs. 34 Lakhs), BGR Power Limited Rs. Nil (Rs. 10 lakhs).

8. Remuneration to key management personnel represents, Mr. B.G.Raghupathy Rs. Nil (Rs. 44 lakhs), Mr. VR. Mahadevan Rs. 129 lakhs (Rs.147 lakhs), Mr. A. Swaminathan Rs. 181 lakhs (Rs. 206 lakhs), Mr. K Chandrashekhar Rs.24 lakhs (Rs. 97 lakhs), Ms. Swarnamugi Karthik Rs. 88 lakhs (Rs. 88 lakhs).

9. Remuneration to relatives of key management personnel represent, Ms.Priyadarshini Raghupathy Rs. 28 lakhs (Rs. 32 lakhs), Ms. Vaani Raghupathy Rs. 6 lakhs (Rs.8 lakhs), Mr. Arjun Govind Raghupathy Rs. 5 lakhs (Rs.4 lakhs).

10. Rent paid represents, GEA BGR Energy System India Limited. Rs. 0.30 lakhs (Rs. 0.28 lakhs), Sasikala Estate Private Limited Rs. 83 lakhs (Rs. 89 lakhs), ANI Construction Private Limited Rs. 9 lakhs (Rs. 9 lakhs). Mrs. Sasikala Raghupathy Rs. 44 lakhs (Rs. 42 lakhs), Sravanaa Properties Limited Rs. 18 lakhs (Rs. 18 lakhs).

11. Sale of fixed assets represent, Progen System and Technologies Ltd Rs. 0.12 lakhs (Rs. Nil), GEA BGR Energy System India Ltd Rs. 4 lakhs (Rs. Nil)

12. Others represent, royalty to Mr. B.G. Raghupathy Rs. Nil (Rs. 8 lakhs), Mrs. Sasikala Raghupathy Rs. 25 lakhs (Rs. 17 lakhs).

13. Advances given represent, Progen Systems and Technologies Limited Rs. 1043 lakhs (Rs. 931 lakhs), BGR Boilers Private Limited Rs. Nil (Rs. 38192 lakhs), BGR Turbines Company Private Limited Rs. Nil (Rs. 241 lakhs), GEA BGR Energy Systems India Limited Rs. 304 lakhs (Rs. 60 lakhs), GEA Cooling Tower Technologies (India) Private Limited Rs. 1247 lakhs (Rs. 474 lakhs).

14. Gurantees given represent, Progen Systems and Technologies Limited Rs. 20 lakhs (Rs. 51 lakhs), GEA Cooling Tower Technologies (India) Private limited Rs. 661 lakhs (Rs. 661 lakhs).

15. Balances outstanding (Net) represent, Progen Systems and Technologies Limited Rs. 1623 lakhs (Rs.1277 lakhs), BGR Boilers Private Limited Rs. 7580 lakhs (cr.bal) (Rs.22898 lakhs), BGR Turbines Company Private Limited Rs. 16378 lakhs (cr.bal) (Rs. 12348 lakhs), GEA Cooling Tower Technologies (India)Private Limited Rs. 595 lakhs (cr.bal) (Rs.74 lakhs), GEA BGR Energy System India Limited Rs. 240 lakhs (Rs.66 lakhs) , Cuddalore Powergen Corporation Limited Rs. 671 lakhs (Rs.671 lakhs), Nannilam Property Private Limited Rs. 508 lakhs (Rs.508 lakhs), Mega Funds India Limited Rs. 39 lakhs (Rs. 39 lakhs), Schmitz India Private Limited Rs. Nil (Rs. 60 lakhs), B.G.Raghupathy Rs. Nil (Rs. 8 lakhs (cr. bal)), Sravanaa Properties Limited Rs. 6 lakhs (Rs. 6 lakhs), Sasikala Estate Private Limited Rs. 7 lakhs (cr.bal) (Rs. 7 lakhs (cr.bal)), ANI Constructions Private Limited Rs.0.77 lakhs (cr.bal) (Rs.Nil)Mrs. Sasikala Raghupathy Rs. 36 lakhs(cr. bal)(Rs. 39 lakhs(cr. bal)).

16. CONTINGENT LIABILITIES, GUARANTEES, CAPITAL COMMITMENTS AND OTHER COMMITMENTS

Rs. in Lakhs As at As at Particulars March 31,2015 March 31,2014

A Contingent liabilities

Claims against the company not acknowledged as debt

a) On account of sales tax * 29154 4222

b) On account of income-tax 10848 10848

c) On account of service tax ** 25 25

d) On account of provident fund 521 -

e) On account of contractual obligations 2350 2350

f) On account of royalty 4547 4547

B Guarantees

Guarantees and counter guarantees given 681 712 on behalf of subsidiary and other company

C Capital commitments

"Estimated amount of contracts remaining 471 817 to be executed on capital account (net of advances)"

D Other commitments

Commitments to fund subsidiaries 5923 5681

* Sales tax includes an amount of Rs. 23740 lakhs (Rs. Nil) (excluding interest and penalty) which has been contested by the VAT authorities before the Rajasthan Tax Board.

** Service tax represents a sum of Rs. 25 lakhs (Rs. 25 lakhs) (excluding interest and penalty) which has been contested by the service tax authorities before the Customs Excise and Service Tax Appellate Tribunal.

16. IMPAIRMENT OF ASSETS

a. Cash generating units :

There is no impairment loss in cash generating units and hence no provision was made in the financial statements.

b. Other assets :

The company has made a provision of Rs. Nil (Rs. 32 lakhs) in the books of accounts towards impairment of other fixed assets based on the technicial valuation.

17. In respect to construction contracts, cost of material includes value added tax, central sales tax, works contract tax and service tax.

18. Interest income from fixed deposits have been netted off with interest expense on working capital facilities..

19. As required under Section 135 of Companies Act 2013, the company is required to spend Rs.510 lakhs towards Corporate Social Responsibility (CSR) activities. The company is in the process of identifying programmesprojects, in accordance with the policy. Hence no expense has been either incurred or provided in the books during the financial year.

20. During the current financial year, notice under section 153A of the Income-tax Act 1961 was received and accordingly the company has since filed tax returns. Due to the revision, Rs.988 lakhs income tax has been provided during the year and adjusted against MAT credit available and disclosed under tax relating to earlier years.

21. PROVISIONS

a) The company has made a provision / transfer of Rs. 2336 Lakhs (reversal) (Rs.477 Lakhs) towards warranty and contractual obligations on the products supplied / contracts executed by the company during the year. The expenses on account of provision for warranty is grouped under other administrative expenses.

22. PREVIOUS YEAR FIGURES

Figures of previous year have been regrouped / rearranged, wherever required to conform to the current year presentation.

---

Mar 31, 2014

A. COMPANY OVERVIEW

BGR Energy Systems Limited (''the company'') is a public limited company incorporated under the provisions of the Companies Act, 1956. Its equity shares are listed on Bombay Stock Exchange (''BSE'') and National Stock Exchange (''NSE''). The company is a manufacturer of capital equipments for Power Plants, Petrochemical Industries, Refineries, Process Industries and undertakes turnkey Balance of Plant (''BOP'') and Erection Procurement and Construction (''EPC'') contracts for Power plants. The company has been achieving its objectives through its five business units: Power projects, Electrical projects, Oil and Gas equipment, Environmental engineering and Air Fin Coolers.

ii. Contingent liabilities

The company recognizes contingent liability for disclosure in notes to accounts, if any of the following conditions is fulfilled:

a) a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the enterprise; or

b) a present obligation that arises from past events but is not recognized because:

– it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

– a reliable estimate of the amount of the obligation cannot be made.

b. Terms/rights attached to equity shares

The company has one class of shares referred to as equity shares having a par value of Rs. 10. Each holder of equity shares is entitled to one vote per share.

c. Nil (540,00,000) shares out of the issued, subscribed and paid up share capital were alloted as bonus shares in the last five years by capitalization of profits.

a) The balance in project specific escrow accounts have been netted off against respective project''s working capital loan accounts.

b) The company has availed working capital loans on pari-passu basis from State Bank of India and State Bank of Hyderabad. These loans are secured by hypothecation of inventories, trade receivables and movable assets of the capital goods segment of the company. The loans from State Bank of India and State Bank of Hyderabad are further secured by a second charge on the fixed assets of the company.

c) The company has availed contract specific working capital loans from State Bank of India, State Bank of Hyderabad, State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner & Jaipur, State Bank of Mysore, IDBI Bank, Punjab National Bank, Vijaya Bank, Indian Bank, Indian Overseas Bank, Corporation Bank, Allahabad Bank, Bank of India, Andhra Bank, Central Bank of India, Syndicate Bank, Axis Bank, ICICI Bank, ING Vysya Bank Ltd, Export Import Bank of India, Union Bank of India and The Karur Vysya Bank Limited. These loans are secured by hypothecation of inventories, trade receivables and movable current assets of the respective contracts. The participating banks share the securities on pari-passu basis.

(a) Plant and equipment include original cost of Rs. 792 lakhs (Rs. 792 lakhs), which are jointly owned along with a Joint Venture, of which the company is a member

(b) Office fixtures and office equipments includes original cost of Rs. 7 lakhs (Rs. 7 lakhs), which are jointly owned along with subsidiary companies.

(c) Buildings include original cost of Rs. 1642 lakhs (Rs. 1169 lakhs), which are constructed on lease hold land.

(d) Impairment loss recognised in the statement of profit and loss during the financial year for office equipments & furniture and fixtures is Rs. 32 lakhs (Rs. 81 lakhs) (refer Note 41).

2.1. Other Loans and advances include dues from customers and tax refund (net of provision for taxation) from the Government.

2.2. Cochin Project: The end client of Cochin Port Road Connectivity Project viz., Cochin Port Road Company Ltd., (SPV of NHAI) terminated the contract on May 28, 2007. Consequently, the end client encashed BGs for a value of Rs. 1270 lakhs furnished by the company on behalf of MECON – GEA (JV). The main contractor viz., MECON – GEA (JV) contested the termination of the contract. The disputes after having been reviewed by the Dispute Review Board are now subject to arbitration. The Arbitral Tribunal has passed preliminary order in favour of the J V, which is under challenge before the High Court of Delhi. The High Court of Delhi has passed the judgement recommending that the Arbitral Tribunal permit the NHAI to contest their disputes and to adjudicate the same on merits. The final arguments before the Arbitral Tribunal is listed for hearing in August'' 2014. The arbitral award is expected in due course of time. Based on legal opinion, the company has identified a sum of Rs. 1654 lakhs (Rs. 1654 lakhs) as at March 31, 2014 as recoverable advances from the end client through the JV and is grouped under other loans and advances.

2.3 Tuticorin Project: The end client of Tirunelveli – Tuticorin Port Connectivity Project viz., Tuticorin Port Road Company Ltd (SPV of NHAI) terminated the contract and encashed BGs for aggregate value of Rs. 2652 lakhs and the same were restituted as per orders of the High Court of Madras (Madurai Bench). The disputes, including termination of contract, after having been reviewed by the Disputes Review Board are now subject to arbitration. The proceeding before the Arbitral Tribunal are in an advanced stage. In view of these facts, the company has identified the sum of Rs. 83 lakhs (Rs. 83 lakhs) as at March 31, 2014 as recoverable advances from the end client through the JV and is grouped under other loans and advances.

3.1. Trade receivables – Others, includes retention amount of Rs. 150898 lakhs (Rs. 127332 lakhs) which, in accordance with the terms of the contracts were not due for payments as at March 31, 2014

3.2. During the year, the company and State Company for Oil Projects, Iraq (Client) terminated with mutual consent the contract for two gas development projects. In line with the mutual terms of settlement, the company has accounted a loss of Rs. 202 lakhs (net of provisions) and the same is included under trade receivables written off. (refer Note 27)

3.3. The company has sought confirmation of balances of major trade receivables. In cases where letters of confirmation have been received from parties, book balances have been reconciled and adjusted, if required. In other cases, balances in accounts of trade receivables have been taken as per books of account.

4. EMPLOYEE STOCK OPTION PLANS

Stock option granted to the employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The Company follows the intrinsic value method of accounting for the options and accordingly, the excess of value of the stock options as determined by an independent valuer on the date of grant over the exercise price of the options, if any, is recognized as deferred employee compensation cost and is charged to the statement of profit and loss.

Employee Stock Option Scheme – 2007

Pursuant to the decision of the shareholders, at their meeting held on July 11, 2007, the company has established an ''Employee Stock Option Plan 2007'' (''ESOS 2007'' or ''the Scheme'') to be administered by the Compensation Committee of the Board of Directors. ESOS 2007 provides for grant of options amounting to not more than 1.5% of the issued and paid up equity capital of the company outstanding at any point of time to officers, directors and key employees to purchase equity shares of face value of Rs. 10 each, with such option conferring a right upon the employee to apply for one equity shares of the company, in accordance with the terms and conditions of such issue. The exercise price of the option is Rs. 408.

5. PARTICULARS OF RELATED PARTIES List of related parties

a. Subsidiary companies

i. Progen Systems and Technologies Limited ii. BGR Boilers Private Limited iii. BGR Turbines Company Private Limited iv. Sravanaa Properties Limited

b. Associate company – Nil

c. Other companies (enterprises where significant influence exists and enterprises where key management personnel have significant influence)

i. GEA Cooling Tower Technologies (India) Private Limited

ii. GEA BGR Energy System India Limited

iii. Germanischer Lloyd Industrial Services (India) Private Limited

iv. Mega Funds India Limited

v. Sasikala Estate Private Limited

vi. Schmitz India Private Limited

vii. Cuddalore Powergen Corporation Limited

viii. ANI Constructions Private Limited

ix. Nannilam Property Private Limited

x. Pragathi Computers Private Limited

xi. BGR Odisha Powergen Limited

xii. BGR Investment Holdings Company Limited

xiii. BGR Power Limited

d. Joint ventures

Mecon – GEA Energy System (India) Limited (JV)

e. Key management personnel

i. Mr. B.G.Raghupathy Chairman and Managing Director (till July 28, 2013)

ii. Mr.A.Swaminathan Joint Managing Director and CEO (Director - Sales & Marketing till September 30, 2013)

iii. Mr. V.R. Mahadevan Joint Managing Director (Director - Technologies & HR till September 24, 2013)

iv. Mr. K. Chandrashekhar Director - Projects

v. Ms. Swarnamugi Karthik Director - Corporate Strategy

f. Relatives of key management personnel

i. Ms. Priyadarshini Raghupathy (Daughter of Mr.B.G.Raghupathy and Mrs. Sasikala Raghupathy) ii. Ms. Vaani Raghupathy (Daughter of Mr.B.G.Raghupathy and Mrs. Sasikala Raghupathy) iii. Mr. Arjun Govind Raghupathy (Son of Mr.B.G.Raghupathy and Mrs. Sasikala Raghupathy)

Party-wise disclosure of related party transactions:

1. Sales represent, GEA Cooling Tower Technologies (India) Private Limited Rs. 2736 lakhs (Rs. 6454 lakhs).

2. Purchases represent, Progen Systems and Technologies Limited Rs. 260 lakhs (Rs. 21 lakhs), GEA Cooling Tower Technologies (India) Private limited Rs. 2452 lakhs (Rs. 3903 lakhs), GEA BGR Energy System India Limited Rs. 41 lakhs (Rs. 92 lakhs), BGR Boilers Private Limited Rs. 17707 lakhs (Rs. 31 lakhs), BGR Turbines Company Private Limited Rs. 492 lakhs (Rs. Nil).

3. Investments made represent, Sravanaa Properties Limited Rs. Nil (Rs. 12787 lakhs).

4. Sale of Investments represent, BGR Investment Holdings Company Limited Rs. 34 lakhs (Rs. Nil), BGR Power Limited Rs. 10 lakhs (Rs. Nil).

5. Remuneration to key management personnel represents, Mr. B.G.Raghupathy Rs. 44 lakhs (Rs. 1319 lakhs), Mr. T. Sankaralingam Rs. Nil (Rs. 95 lakhs), Mr. V.R. Mahadevan Rs. 147 lakhs (Rs. 122 lakhs), Mr. A. Swaminathan Rs. 206 lakhs (Rs. 206 lakhs), Mr. K ChandrashekharRs. 97 lakhs (Rs. 40 lakhs), Mrs. Swarnamugi KarthikRs. 88 lakhs (Rs. 13 lakhs).

6. Remuneration to relatives of key management personnel represent, Mrs. Swarnamugi Karthik Rs. Nil (Rs. 16 lakhs), Mrs.Priyadarshini Raghupathy Rs. 32 lakhs (Rs. 8 lakhs), Ms. Vaani Raghupathy Rs. 8 lakhs (Rs. 3 lakhs), Mr. Arjun Govind Raghupathy Rs. 4 lakhs (Rs. 3 lakhs).

7. Rent paid represents, GEA BGR Energy System India Limited. Rs. 0.28 lakhs (Rs. 0.34 lakhs), Sasikala Estate Private Limited Rs. 89 lakhs (Rs. 106 lakhs), ANI Construction Private Limited Rs. 9 lakhs (Rs. 9 lakhs). Mr & Mrs B G Raghupathy Rs. 42 lakhs (Rs. 45 lakhs), Sravanaa Properties Limited Rs. 18 lakhs (Rs. 5 lakhs).

8. Purchase of fixed assets represent, GEA Cooling Tower Technologies (India) Private Limited Rs. Nil (Rs. 16 lakhs).

9. Sale of fixed assets represent, BGR Boilers Private Limited Rs. Nil (Rs. 31 lakhs).

10. Others represent, royalty to Mr. B.G. RaghupathyRs. 8 lakhs (Rs. 25 lakhs), Mrs. Sasikala RaghupathyRs. 17 lakhs (Rs. Nil).

11. Advances given represent, Progen Systems and Technologies Limited Rs. 931 lakhs (Rs. 34 lakhs), BGR Boilers Private Limited Rs. 38192 lakhs (Rs. 1387 lakhs), BGR Turbines Company Private Limited Rs. 241 lakhs (Rs. 12577 lakhs), GEA BGR Energy Systems India Limited Rs. 60 lakhs (Rs. 1 lakh), GEA Cooling Tower Technologies (India) Private Limited Rs. 474 lakhs (Rs. 230 lakhs).

12. Repayment of advance given represents, Mega Funds India Limited Rs. Nil (Rs. 4 lakhs).

13. Gurantees given represent, Progen Systems and Technologies Limited Rs. 51 lakhs (Rs. 208 lakhs), GEA Cooling Tower Technologies (India) Private limited Rs. 661 lakhs (Rs. 661 lakhs).

14. Balances outstanding (Net) represent, Progen Systems and Technologies Limited Rs. 1277 lakhs (Rs. 554 lakhs), BGR Boilers Private Limited Rs. 22898 lakhs (Rs. 1688 lakhs), BGR Turbines Company Private Limited Rs. 12348 lakhs (Rs. 12599 lakhs), GEA Cooling Tower Technologies (India)Private Limited Rs. 74 lakhs (Rs. 1111 lakhs), GEA BGR Energy System India Limited Rs. 66 lakhs (Rs. 21 lakhs (cr. bal)), Cuddalore Powergen Corporation Limited Rs. 671 lakhs (Rs. 671 lakhs), Nannilam Property Private Limited Rs. 508 lakhs (Rs. 508 lakhs), Mega Funds India Limited Rs. 39 lakhs (Rs. 39 lakhs), Schmitz India Private Limited Rs. 60 lakhs (Rs. 60 lakhs), B.G.Raghupathy Rs. 8 lakhs (cr.bal.) (Rs. 3 lakhs (cr. bal)), Sravanaa Properties Limited Rs. 6 lakhs (Rs. 6 lakhs), Sasikala Estate Private Limited Rs. 7 (cr.bal) lakhs (Rs. Nil), Mrs. Sasikala RaghupathyRs. 39 lakhs(cr. bal)(Rs. Nil)

15. CONTINGENT LIABILITIES, GUARANTEES, CAPITAL COMMITMENTS AND OTHER COMMITMENTS

Rs. in lakhs Particulars As at As at March 31, 2014 March 31, 2013

A Contingent liabilities Claims against the company not acknowledged as debt

a) On account of sales tax 4222 4228

b) On account of income tax* 10848 23045

c) On account of service tax** 37 37

d) On account of contractual obligations 2350 2350

e) On account of royalty 4547 4538

B Guarantees

Guarantees and counter guarantees given on behalf of subsidiary 712 869 and other company

C Capital commitments

Estimated amount of contracts remaining to be executed on capital account (net of advances) 817 809

D Other commitments

Commitments to fund subsidiaries 5681 7180

* Income-tax demand includes a sum of Rs. Nil (Rs. 11495 lakhs) which has been contested by the IT authorities before the Income-Tax Appellate Tribunal.

** Service tax demand represents a sum ofRs. 37 lakhs (Rs. 37 lakhs) which has been contested by the service tax authorities before the Customs Excise and Service Tax Appellate Tribunal.

16. IMPAIRMENT OF ASSETS

a. Cash generating units :

There is no impairment loss in cash generating units and hence no provision was made in the financial statements.

b. Other assets :

The company has made a provision of Rs. 32 lakhs (Rs. 81 lakhs) in the books of accounts towards impairment of other fixed assets based on the technicial valuation.

17. In respect to construction contracts, cost of material includes value added tax, central sales tax, works contract tax and service tax.

18. Interest income from fixed deposits have been netted off with interest expense on working capital facilities.

19. During the last quarter, search operations under Section 132 of the Income-tax Act 1961, was carried out by the Income-tax Authorities, for which the company has provided statements and documents.

20. (a) Current tax includes Rs. Nil (Rs. 160 lakhs) being provision for income-tax in respect of earlier years. (b) MAT credit entitlement includes Rs. 395 lakhs (Rs. Nil) being MAT credit in respect of earlier years.

21. PREVIOUS YEAR FIGURES

Figures of previous year have been regrouped / rearranged, wherever required to conform to the current year presentation.

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Mar 31, 2013

A. COMPANY OVERVIEW

BGR Energy Systems Limited is a public limited company incorporated under the provisions of the Companies Act, 1956. Its equity shares are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).The company is a manufacturer of capital equipments for Power Plants, Petrochemical Industries, Refineries, Process Industries and undertakes turnkey Balance of Plant (BOP) and Erection Procurement and Construction (EPC) contracts for Power plants. The Company has been achieving its objectives through its five business units: Power projects, Electrical projects, Oil and Gas equipment, Environmental engineering and Air Fin Coolers.

1. EMPLOYEE STOCK OPTION PLANS

Stock option granted to the employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by the SEBI (Employee Stock Option Scheme and Employee stock purchase scheme) Guidelines, 1999. The company follows the intrinsic value method of accounting for the options and accordingly, the excess of value of the stock options as determined by an independent valuer on the date of grant over the exercise price of the options, if any, is recognized as deferred employee compensation cost and is charged to the Statement of Profit and Loss.

Employee Stock Option Scheme - 2007

Pursuant to the decision of the shareholders, at their meeting held on July 11, 2007, the company has established an ''Employee Stock Option Plan 2007'' (''ESOS 2007'' or ''the Scheme'') to be administered by the Compensation Committee of the Board of Directors. ESOS 2007 provides for grant of options amounting to not more than 1.5% of the issued and paid up equity capital of the company outstanding at any point of time to officers, directors and key employees to purchase equity shares of face value of Rs. 10 each, with such option conferring a right upon the employee to apply for one equity shares of the company, in accordance with the terms and conditions of such issue. The exercise price of the option is Rs. 408.

2. LEASES

Operating Lease

The company has taken various residential / commercial premises and land under cancellable and non-cancellable operating leases. These lease agreements are normally renewed on expiry.

3. SEGMENT REPORTING

Primary segment information (Business segments)

Information about Business Segments (information provided in respect of revenue items for the year ended March 31, 2013 and in respect of assets / liabilities as at March 31, 2013) are furnished below:

4. PARTICULARS OF RELATED PARTIES

List of Related Parties

a. Subsidiary Companies

i. Progen Systems and Technologies Limited

ii. BGR Boilers Private Limited

iii. BGR Turbines Company Private Limited

iv. Sravanaa Properties Limited

b. Associate Company - Nil

c. Other companies (Enterprises where significant influence exists and enterprises where key management personnel have significant influence)

i. GEA Cooling Tower Technologies (India) Private Limited

ii. GEA BGR Energy System India Limited

iii. Germanischer Lloyd Industrial Services (India) Private Limited

iv. Mega Funds India Limited

v. Sasikala Estate Private Limited

vi. Schmitz India Private Limited

vii. Cuddalore Powergen Corporation Limited

viii. ANI Constructions Private Limited

ix. Nannilam Property Private Limited

x. Pragathi Computers Private Limited

xi. BGR Odisha Powergen Limited

d. Joint Ventures

Mecon - GEA Energy System (India) Limited (JV)

e. Key management personnel :

i. Mr. B.G.Raghupathy Chairman & Managing Director

ii. Mr. T.Sankaralingam Managing Director (relinquished office on 31.12.2012)

iii. Mr. V.R. Mahadevan Director - Technologies & HR

iv. Mr. A.Swaminathan Director - Sales & Marketing

v. Mr. K. Chandrashekhar Director - Projects (appointed on 01.11.2012)

vi. Ms. Swarnamugi Karthik Director - Corporate Strategy (appointed on 08.02.2013)

f. Relatives of Key Management Personnel

i. Ms. Swarnamugi Karthik (Daughter of Mr. B.G. Raghupathy and Mrs. Sasikala Raghupathy) (appointed as Director - Corporate Strategy on 08.02.2013)

ii. Ms. Priyadarshini Raghupathy (Daughter of Mr.B.G.Raghupathy and Mrs. Sasikala Raghupathy)

iii. Ms. Vaani Raghupathy (Daughter of Mr.B.G.Raghupathy and Mrs. Sasikala Raghupathy)

iv. Mr. Arjun Govind Raghupathy (Son of Mr.B.G.Raghupathy and Mrs. Sasikala Raghupathy)

5. IMPAIRMENT OF ASSETS

a. Cash Generating Units :

There is no impairment loss of cash generating assets and hence no provision was made in the financial statements.

b. Other Assets :

The company has made a provision of Rs. 81 Lakhs (Rs. 34 Lakhs) in the books of accounts towards impairment of other fixed assets based on the technical valuation.

6. In respect to construction contracts, cost of material includes value added tax, central sales tax, works contract tax and service tax.

7. Interest income from fixed deposits have been netted off with interest expense on working capital facilities.

8. PROVISIONS

a) The company has made a provision / transfer of Rs. 1776 Lakhs (Rs. 3451 Lakhs) towards Warranty and Contractual obligations on the products supplied / contracts executed by the company during the year.

b) Current tax includes Rs. 160 Lakhs ( Nil ) being provision for income tax in respect of earlier years.

9. PREVIOUS YEAR FIGURES

Figures of previous year have been regrouped / rearranged, wherever required to confirm to the current year presentation.

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Mar 31, 2012

A COMPANY OVERVIEW

BGR Energy Systems Limited is a public limited company incorporated under the provisions of Companies Act, 1956. Its equity shares are lised on Bombay Stock Exchange ("BSE") and National Stock Exchange ("NSE").The company is a manufacturer of Capital Equipment for Power Plants, Petrochemical Industries, Refineries, Process Industries and undertake turnkey BOP and EPC contracts for Power plants. The Company has been achieving its objectives through its five business units: Power projects, Electrical projects, Oil and Gas equipment, Environmental engineering and Air Fin Coolers.

a. Terms/rights attached to equity shares

The company has one class of shares referred to as equity shares having a par value of Rs. 10/-. Each holder of equity shares is entitled to one vote per share.

b. 54000000 (54000000) Shares out of the issued, subscribed and paid up share capital were alloted as bonus shares in the last five years by capitalization of profits.

c. The company has reserved issuance of 291100 (335851) Equity shares of Rs. 10/- each for offering to eligible employees of the company and its subsidiary under the employee stock option scheme - 2007. (Refer Note 31)

Term Loan includes Rs. 2463 Lakhs (Rs. 2124 Lakhs) from State Bank of Travancore is secured by a first charge on fixed assets of the Company. The loan is repayable in 20 quarterly equal instalments starting from September, 2011. All the other term loans and fixed assets loans are secured against the assets purchased out of the respective loans. Fixed Assets loans are payable in monthly instalments. Fixed Assets purchased under Buyers Credit arrangements are payable on maturity.

a) The balance in project specific escrow account have been netted off against respective project's working capital loan account.

b) The Company has availed Working Capital loans on pari-passu basis from State Bank of India and State Bank of Hyderabad. These loans are secured by hypothecation of inventories, trade receivables and movable assets of the Capital goods segment of the company. The loan from State Bank of India and State Bank of Hyderabad is further secured by a second charge on the fixed assets of the company.

c) The Company has availed contract specific Working Capital loans from State Bank of India, State Bank of Hyderabad, State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner & Jaipur, State Bank of Mysore, IDBI Bank, Punjab National Bank, Vijaya Bank, Indian Bank, Indian Overseas Bank, Corporation Bank, Allahabad Bank, Bank of India, Andhra Bank, Central Bank of India, Syndicate Bank, Axis Bank and The Karur Vysya Bank Limited. These loans are secured by hypothecation of inventories, trade receivables and movable current assets of the respective contracts. The participating banks share the securities on pari- passu basis.

* Both the assets are other than internally generated.

(a) Plant and Equipment include Rs. 687 Lakhss (Rs. 687 Lakhss), which are jointly owned along with a joint venture, of which the Company is a member

(b) Office Fixtures and Office Equipments includes Rs. 111 Lakhss (Nil), which are jointly owned along with subsidiary companies.

(c) Buildings includes Rs. 1169 Lakhss (Nil), which are constructed on lease hold land.

Cochin Project : The end client of Cochin Port Road Connectivity Project viz., Cochin Port Road Company Ltd., (SPV of NHAI) terminated the contract on 28.05.2007. Consequently, the end client encashed BGs for a value of Rs. 1270 Lakhs furnished by the company on behalf of MECON - GEA (JV). The main contractor viz., MECON - GEA ("JV") contested the termination of the contract. The disputes after having been reviewed by the Dispute Review Board are now subject to arbitration. The Arbitral Tribunal has passed preliminary order in favour of the JV, which is under challenge before the High Court of Delhi. The arbitral award is expected in due course of time. Based on legal opinion, the company has identified a sum of Rs. 1654 Lakhs (Rs. 1654 Lakhs) as on 31.03.2012 as recoverable advances from the end client through the JV and is grouped under loans and advances.

Tuticorin Project : The end client of Tirunelveli - Tuticorin Port Connectivity Project viz., Tuticorin Port Road Company Ltd (SPV of NHAI) has terminated the contract and encashed BGs for aggregate value of Rs. 2652 Lakhs and the same were restituted as per orders of the High Court. The disputes, including termination of contract, after having been reviewed by the Disputes Review Board are now subject to arbitration. In view of these facts, the Company has identified the sum of Rs. 83 Lakhs (Rs. 1461 Lakhs) as on 31.03.2012 as recoverable advances from the end client through the JV and is grouped under loans and advances.

1.1 Trade Receivables - Others, includes Retention amount of Rs. 120798 Lakhs (Rs. 114441 Lakhs) which, in accordance with the terms of the contracts were not due for payments as at 31st March 2012

1.2 The Company and State Company for Oil Projects, Iraq (Client) terminated with mutual consent the contract for two gas development projects in Iraq. The Company and Client agreed to settle contract claims by mutual agreement. Hence no provision or write off or write back on account of this contract is made in the books of account. The contract value is Rs. 40465 Lakhs and the revenue recognised so far is Rs. 8362 Lakhs. The balance receivable from the contractor and the amount of advance held by the Company are Rs. 4909 Lakhs and Rs. 4998 Lakhs, respectively.

2.1 Fixed deposits with banks include deposits of Rs. 42298 Lakhs (Rs. 44069 Lakhs) which are under lien to banks

2.2 Fixed deposits maintained by the company with banks, other than lien marked deposits, can be withdrawn by the company at any point without any prior notice or penalty

2.3 Bank balances of Rs. 3 Lakhs (Rs. 3 Lakhs) are subject to confirmation.

Defined Benefit Plan

The liability for gratuity is funded through a scheme administered by an insurer and provision is made based on actuarial valuation carried out as at Balance Sheet date.

Gratuity Plan

The company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors. The discount rate has been chosen by reference to market yields on Government Bonds. The above information is certified by an Actuary.

4. EMPLOYEE STOCK OPTION PLANS

Stock option granted to the employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The company follows the intrinsic value method of accounting for the options and accordingly, the excess of value of the stock options as determined by an independent valuer on the date of grant over the exercise price of the options, if any, is recognized as deferred employee compensation cost and is charged to the Statement of Profit and Loss.

Employee Stock Option Scheme - 2007

Pursuant to the decision of the shareholders, at their meeting held on July 11, 2007, the company has established an 'Employee Stock Option Plan 2007' ('ESOS 2007' or 'the Scheme') to be administered by the Compensation Committee of the Board of Directors. ESOS 2007 provides for grant of options amounting to not more than 1.5% of the issued and paid up equity capital of the company outstanding at any point of time to officers, directors and key employees to purchase equity shares of face value of Rs. 10 each, with such option conferring a right upon the employee to apply for one equity shares of the company, in accordance with the terms and conditions of such issue. The exercise price of the option is Rs. 408.

5. LEASES

Operating Lease

The company has taken various residential / commercial premises and land under cancellable and non-cancellable operating leases. These lease agreements are normally renewed on expiry.

The future minimum lease payments in respect of non-cancellable leases as at 31st March, 2012 are as follows:

6. SEGMENT REPORTING

Information about Business Segments (information provided in respect of revenue items for the year ended 31.03.2012 and in respect of assets / liabilities as at 31.03.2012) are furnished below:

7. PARTICULARS OF RELATED PARTIES

List of Related Parties

a. Subsidiary Companies

i. Progen Systems and Technologies Limited

ii. BGR Boilers Private Limited

iii. BGR Turbines Company Private Limited

b. Associate Company - Nil

c. Other Companies (Enterprises where significant influence exists and enterprises where key management personnel have significant influence)

i. GEA Cooling Tower Technologies (India) Private Limited

ii. GEA BGR Energy System India Limited

iii. Germanischer Lloyd Industrial Services (India) Private Limited

iv. Mega Funds India Limited

v. Sasikala Estate Private Limited

vi. Schmitz India Private Limited

vii. Cuddalore Powergen Corporation Limited

viii. ANI Constructions Private Limited

ix. Nannilam Property Private Limited

x. Pragati Computers Limited

xi. BGR Odisha Powergen Limited

d. Joint Ventures

Mecon - GEA Energy System (India) Limited (JV)

f. Relatives of Key Management Personnel

i. Ms. Swarnamugi Karthik (Daughter of Mr. B.G.Raghupathy and Mrs. Sasikala Raghupathy)

ii. Ms. Priyadarshini Raghupathy (Daughter of Mr. B.G.Raghupathy and Mrs. Sasikala Raghupathy)

iii. Miss. Vaani Raghupathy (Daughter of Mr. B.G.Raghupathy and Mrs. Sasikala Raghupathy)

iv. Mr. Arjun Govind Raghupathy (Son of Mr. B.G.Raghupathy and Mrs. Sasikala Raghupathy)

v. Mr. R.Prabhu (Son of Mr. S.Rathinam)

Disclosure in respect of related party transactions during the year :

1. Sales represents, GEA Cooling Tower Technologies (India) Private limited Rs. 6716 Lakhs ( Rs. 4635 Lakhs).

2. Purchase include, Progen Systems and Technologies Limited Rs. 416 Lakhs (Rs. 36 Lakhs), GEA Cooling Tower Technologies (India) Private limited Rs. 1040 Lakhs (Rs. 2709 Lakhs), GEA BGR Energy System India Limited Rs. 866 Lakhs (Rs. 466 Lakhs).

3. Purchase / Subscription of investment include, BGR Boilers Private Limited Rs. 5885 Lakhs (Rs. 3605 Lakhs), BGR Turbines Company Private Limited Rs. 4020 Lakhs (Rs. 9597 Lakhs).

4. Remuneration to Key Managament Personnel include, Mr. B.G. Raghupathy Rs. 1771 Lakhs (Rs. 2592 Lakhs), Mr. T. Sankaralingam Rs. 127 Lakhs (Rs. 127 Lakhs), Mr. S. Rathinam Rs. 94 Lakhs (Rs. 151 Lakhs), Mr. V.R. Mahadevan Rs. 91 Lakhs (Rs. 117 Lakhs), Mr. A. Swaminathan Rs. 129 Lakhs (Rs. 146 Lakhs).

5. Remuneration to relatives of Key Managament Personnel include, Ms. Swarnamugi Karthik Rs. 6 Lakhs (Rs. 3 Lakhs), Ms. Priyadarshini Raghupathy Rs. 12 Lakhs (Rs. 5 Lakhs), Miss. Vaani Raghupathy Rs. 1 Lakh (Rs. 1 Lakh), Mr.Arjun Govind Raghupathy Rs. 2 Lakhs (Rs. Nil), Mr. R. Prabhu Rs. 8 Lakhs (Rs. 5 Lakhs).

6. Rent paid include, Progen Systems and Technologies Limited Rs. 4 Lakhs (Rs. 111 Lakhs), GEA Cooling Tower Technologies (India) Private limited Rs. 24 Lakhs (Rs. Nil), GEA BGR Energy System India Limited. Rs. 0.33 Lakh (Rs. 1 Lakh), Sasikala Estate Private Limited Rs. 41 Lakhs (Rs. 40 Lakhs), ANI Construction Private Limited Rs. 9 Lakhs (Rs. 9 Lakhs). Mr. B G Raghupathy Rs. 44 Lakhs (Rs. 42 Lakhs).

7. Purchase of Fixed Assets include, Cuddalore Powergen Corporation Limited Rs. 9 Lakhs (Rs. Nil).

8. Sale of Fixed Assets include, BGR Boilers Private Limited Rs. 89 Lakhs (Rs. Nil), BGR Turbines Company Private Limited Rs. 22 Lakhs (Rs. Nil).

9. Others, include Royalty to Mr. B.G. Raghupathy Rs. 11 Lakhs (Rs. 11 Lakhs), Pragati Computers Limited Rs. 3 Lakhs (Rs. Nil) towards travel and other admin expenses.

10. Advance given include, BGR Boilers Private Limited Rs. Nil (Rs. 1084 Lakhs), BGR Turbines Company Private Limited Rs. Nil (Rs. 472 Lakhs), Nannilam Property Private Limited Rs. Nil (Rs. 1686 Lakhs), BGR Odisha Powergen Limited Rs. Nil (Rs. 21 Lakhs), GEA BGR Energy System India Limited Rs. Nil (Rs. 4 Lakhs).

11. Repayment of Advance given include, Progen Systems and Technologies Limited Rs. 2 Lakhs (Rs. Nil), BGR Boilers Private Limited Rs. 450 Lakhs (Rs. Nil), BGR Turbines Company Private Limited Rs. 783 Lakhs (Rs. Nil), BGR Odisha Powergen Limited Rs. 21 Lakhs (Rs. Nil), Nannilam Property Private Limited Rs. 1178 Lakhs (Rs. Nil), Mega Funds Limited Rs. 4 Lakhs (Rs. 7 Lakhs).

12. Balances outstanding (Net) include, Progen Systems and Technologies Limited Rs. 541 Lakhs (Rs. 590 Lakhs), BGR Boilers Private Limited Rs. 300 Lakhs (Rs. 1084 Lakhs), BGR Turbines Company Private Limited Rs. 22 Lakhs(Rs. 472 Lakhs), GEA Cooling Tower Technologies (India) Private Limited Rs. 1651 Lakhs (Rs. 408 Lakhs (cr. bal)), GEA BGR Energy System India Limited Rs. 20 Lakhs (cr. bal) (Rs. 174 Lakhs (cr. bal)), Cuddalore Powergen Corporation Limited Rs. 671 Lakhs (Rs. 671Lakhs), Nannilam Property Private Limited Rs. 508 Lakhs (Rs. 1686 Lakhs), Mega Funds India Limited Rs. 43 Lakhs (Rs. 47 Lakhs ), Schmitz India Private Limited Rs. 60 Lakhs (Rs. 60 Lakhs) BGR Odisha Powergen Limited Rs. Nil (Rs. 20 Lakhs), Mr. B.G.Raghupathy Rs. 11 Lakhs (cr. Bal) (Rs. 13 Lakhs (cr. bal),Pragati Computers Limited Rs. Nil (Rs. 3 Lakhs (cr. Bal)), Sasikala Estate Private Limited Rs. Nil (Rs. 3 Lakhs (cr. bal)), ANI Constructions Private Limited Rs. Nil (Rs. 8 Lakhs (cr. bal)).

13. Gurantees given include, Progen Systems and Technologies Limited Rs. 232 Lakhs (Rs. 83 Lakhs), GEA Cooling Tower Technologies (India) Private limited Rs. 270 Lakhs (Rs. 662 Lakhs).

8. CONTINGENT LIABILITIES, GUARANTEES & CAPITAL COMMITMENTS

Rs. in Lakhs

Particulars As at As at 31.03.2012 31.03.2011

A Contingent Liabilities

Claims against the company not acknowledged as debt

a) On account of Sales Tax 3443 161

b) On account of Income Tax* 6695 3780

c) On account of Service Tax - 42

d) On account of Contractual Obligations 2350 2350

e) On account of Royalty 2138 -

Guarantees

Guarantees and Counter Guarantees given on behalf of Subsidiary and Other 502 744 Company

B Capital Commitments

Estimated amount of contracts remaining to be executed on capital account 12172 8362

* Income Tax demand represents a sum of Rs. 6695 Lakhs (Nil) which has been contested by the IT authorities before the Income Tax

Appellate Tribunal.

9. IMPAIRMENT OF ASSETS

a. Cash Generating Units :

There is no impairment loss of cash generating assets and hence no provision was made in the financial statements.

b. Other Assets :

The company has made a provision of Rs. 34 Lakhs (Rs. 9 Lakhs) in the books of accounts towards impairment of other fixed assets based on the technicial valuation.

10. During the year, a fraud on the company has been identified and a police complaint was filed against certain employees of the Company. The sum involved as per First Information Report filed is Rs. 54 Lakhs. However, the eventual amount involved is under investigation. Pending investigation the employees are under suspension.

11. PROVISIONS

The company has made a provision / transfer of Rs. 3451 Lakhs (Rs. 9163 Lakhs) towards Warranty and Contractual obligations on the products supplied / contracts executed by the company during the year 2011-2012.

12. PREVIOUS YEAR FIGURES

Pursuant to the Notification No.447(E) dated February 28, 2011 and Notification No. 653 (E) dated March 30, 2011, issued by the Ministry of Corporate Affairs, the Company has prepared its annual financial statements as per revised Schedule VI to the Companies Act, 1956 with effect from April 1, 2011. Accordingly, the previous year periods / year's figures have been regrouped / rearranged, wherever required to align the financial statements to the revised format.

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Mar 31, 2011

1. SECURED LOANS

a) Term Loan of Rs. 2123.66 Lakhs (Rs. 1380.62 Lakhs) from State Bank of Travancore is secured by a frst charge on Fixed Assets of the Company. Rs. 2527.56 Lakhs (Rs. 2023.43 Lakhs) from State Bank of India and Rs. 58.75 Lakhs (Rs. Nil) State Bank of Travancore for purchase of capital equipment are Secured against respective Assets of the Project.

b) The company has availed Working Capital loan on pari-passu basis from State Bank of India and State Bank of Hyderabad. These loans are secured by hypothecation of inventories, book debts and movable current assets of the Capital Goods divisions of the Company. These loans are further secured by personal guarantees of two Directors of the company, including the Chairman & Managing Director of the Company. The loan from State Bank of India and State Bank of Hyderabad is further secured by a second charge on the Fixed Assets of the company.

c) The Company has availed contract specifc Working Capital loans from State Bank of India, State Bank of Hyderabad, State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner & Jaipur, State Bank of Mysore, IDBI Bank, Punjab National Bank, Vijaya Bank, Indian Bank, Indian Overseas Bank, Corporation Bank, Allahabad Bank, Bank of India, Andhra Bank, Central Bank of India, Syndicate Bank, Axis Bank and The Karur Vysya Bank Limited. These loans are secured by hypothecation of inventories, book debts and movable current assets of the respective contracts. The participating banks share the security on pari-passu basis. Certain specifc project loans are further secured by personal guarantees of two Directors, including the Chairman & Managing Director of the company.

d) Secured Loans includes Rs. 581.43 lakhs (Rs. 1346.51 lakhs) for which the respective Fixed Assets acquired under Loan are held as security.

2. CONTINGENT LIABILITIES, GUARENTEES AND CAPITAL COMMITMENTS

Rs. Lakhs

As at As at

PARTICULARS 31.03.2011 31.03.2010

a CONTINGENT LIABILITIES

Claims against the Company not acknowledged as debt

a) On account of Sales Tax 161.49 178.09

b) On account of Income Tax 3779.69 2915.49

c) On account of Service Tax 41.75 32.41

d) On account of Contractual Obligations 2350.25 2350.25

GUARANTEES

Guarantees and Counter Guarantees given on behalf of Subsidiary and Other Company 744.49 775.83

B CAPITAL COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account 8361.54 1371.63

3. Sundry Debtors – Others, includes Retention amount of Rs. 114441.27 lakhs (Rs. 74953.81 lakhs) which, in accordance with the terms of the contracts were not due for payments as at March 31, 2011.

4. CASH AND BANk BALANCES

i) Deposits amounting to Rs. 44068.51 lakhs (Rs. 44639.51 lakhs) are under lien to Banks.

ii) The balance of Cash and Cash equivalents includes Rs. 13.44 Lakhs (Rs. 8.01 Lakhs) as at March 31, 2011, being amount lying in unpaid dividend accounts.

iii) Bank balances of Rs. 3.48 Lakhs (Rs. 3.68 Lakhs) are subject to confrmation.

iv) The balance in project specifc escrow account have been netted off against respective project’s working capital account.

5. All the Investments held by the Company are long term in nature.

6. LOANS AND ADVANCES

cochin Project: The end client of Cochin Port Road Connectivity Project viz., Cochin Port Road Company Ltd., (SPV of NHAI) terminated the contract on 28.05.2007. Consequently, the end client encashed BGs for a value of Rs. 1270 lakhs furnished by the Company on behalf of MECON – GEA (JV). The main contractor viz., MECON – GEA (JV) contested the termination of the contract and had taken steps to constitute the Disputes Review Board (DRB) in terms of the contract. The DRB had given recommendations only partly allowing the claims of the J V. The JV preferred to approach the Arbitration Tribunal by invoking the arbitration proceedings. The Tribunal has been constituted and arbitration has commenced. In anticipation of determination of the dispute and based on the legal opinion, the company has identifed a sum of Rs. 1654.35 lakhs (Rs. 1654.35 lakhs) as on 31.03.2011 as recoverable advances from the end client through the JV and is shown under loans and advances.

Tuticorin Project: The end client namely Tuticorin Port Road Company Ltd (SPV of NHAI) viz, Thirunelveli – Tuticorin Port Connectivity Project has terminated the contract and encashed BGs furnished by the company on behalf of MECON – GEA (JV). The High Court has ordered restitution of the Bank Guarantee and has directed NHAI to redeposit the amount of BGs. The main contractor viz., MECON – GEA (JV) contested the termination of the contract and had taken steps to constitute the Disputes Review Board (DRB) in terms of the contract and DRB gave the recommendations favoring main contractor (MECON – GEA (JV). NHAI has invoked the arbitration clause against the recommendation of DRB. Arbitrators have been nominated by both parties. In view of these developments, the Company has identifed a sum of Rs. 1460.72 Lakhs (Rs. 1460.72 lakhs) as on 31.03.2011 as recoverable advances from the end client through the JV and is shown under loans and advances.

7. Plant and Machinery include Rs. 686.72 lakhs (Rs. 686.72 lakhs), which are jointly owned along with a Joint Venture, of which the Company is a member.

8. UTILISATION OF IPO FUNDS

The Company has raised Rs. 19012 Lakhs from IPO (Net of Issue Expenses) during the year 2007-2008. Rs. 19012 Lakhs has been fully utilized towards working capital requirement, as per the terms of the prospectus.

9. Securities Premium of Rs. 31895.37 Lakhs (Rs. 31252.36 Lakhs) represents money raised on account of IPO Rs. 31252.36 Lakhs (Rs. 31252.36 Lakhs) and ESOS Rs. 643 Lakhs (Rs. Nil).

10. During the year the Company has fled a police complaint against 3 of its employees for having stolen and passed on certain intellectual property information and data to competitor company. The value of the theft is not determinable. The Company has taken effective steps to strengthen the IT architecture to prevent recurrence of such instance.

11. EMPLOYEE BENEFITS

Defned Beneft Plan

The liability for gratuity is funded through a scheme administered by an insurer and provision is made based on actuarial valuation carried out as at Balance Sheet date.

Gratuity Plan

The Company operates gratuity plan wherein every employee is entitled to the beneft equivalent to ffteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The beneft vests after fve years of continuous service.

12. PARTICULARS OF RELATED PARTIES

List of Related Parties

a. Subsidiary companies

Progen Systems and Technologies Ltd.

BGR Boilers Private Limited

BGR Turbines Company Private Limited

b. associate company – Nil

c. Other companies

i. GEA Cooling Tower Technologies (India) Private Ltd.

ii. GEA BGR Energy System India Ltd.

iii. Germanischer Lloyd Industrial Services (India) Private Ltd.

iv. Mega Funds India Ltd.

v. Sasikala Estate Private Ltd.

vi. Schmitz India Private Ltd.

vii. Cuddalore Powergen Corporation Ltd.

viii. Ani Constructions Private Limited

ix. Nannilam Property Private Limited

d. Joint ventures

Mecon – GEA Energy System (India) Limited (JV)

e. key Management Personnel :

i. Mr. B.G. Raghupathy : Chairman & Managing Director

ii. Mr. T. Sankaralingam : Managing Director

iii. Mr. S. Rathinam : Director - Finance

iv. Mr. V.R. Mahadevan : Director - Technologies & HR

v. Mr. A. Swaminathan : Director - Sales & Marketing

f. Relatives of key Management Personnel

i. Ms. Swarnamugi Karthik (Daughter of Mr. B.G. Raghupathy)

ii. Ms. Priyadarshini Raghupathy (Daughter of Mr. B.G. Raghupathy)

iii. Ms. Vaani Raghupathy (Daughter of Mr. B.G. Raghupathy)

iv. Mr. R.Prabhu (Son of Mr. S. Rathinam)

13. EMPLOYEE STOCK OPTION SCHEME

Stock option granted to the employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by the Employee Stock Option Scheme and Employee stock purchase scheme Guidelines, 1999 issued by Securities Exchange Board of India. The Company follow the intrinsic value method of accounting for the options and accordingly, the excess of market value of the stock options on the date of grant over the exercise price of the options, if any, is recognized as deferred employee compensation and is charged to the Profit and Loss Account.

Employee Stock Option Scheme – 2007

Pursuant to the decision of the shareholders, at their meeting held on July 11, 2007, the Company has established an ‘Employee Stock Option Plan 2007’ (‘ESOS 2007’ or ‘the Scheme’) to be administered by the Compensation Committee of the Board of Directors.

ESOS 2007 provides for grant of options amounting to not more than 1.5% of the issued and paid-up equity capital of the company outstanding at any point of time to Officers, directors and Key employees to purchase Equity shares of face value of Rs. 10 each, with such option conferring a right upon the employee to apply for one equity shares of the company, in accordance with the terms and conditions of such issue. The exercise price of the option is Rs. 408

14. LEASES

Operating Lease

The Company has taken various commercial premises and plant and machinery under cancellable operating leases. These lease agreements are normally renewed on expiry. Lease rental expense in respect of operating leases: Rs. 1181.64 Lakhs (Rs. 1001.66 Lakhs).

15. JOINT VENTURES

The company along with Mecon Ltd has formed an unincorporated Joint Venture namely Mecon – GEA Energy System (India) Limited (JV) (Association of Persons) for execution of two road projects.

16. IMPAIRMENT OF ASSETS

a. Cash Generating Units :

There is no impairment loss of cash generating assets and hence no provision was made in the financial statements.

b. Other Assets :

The company has made a provision of Rs. 9.07 Lakhs (Rs. 10.71 lakhs) in the books of accounts towards impairment of other fxed assets based on the technical valuation.

17. PROVISIONS

The company has made a provision of Rs. 9163.30 Lakhs (Rs. 5761.19 Lakhs) towards Warranty and Contractual obligations on the products supplied / contracts executed by the company during the year 2010-11.

18. Previous year fgures have been regrouped wherever necessary for comparative purposes and shown along side or in brackets.

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Mar 31, 2010

1. SECURED LOANS

a) Term Loan of Rs. 1380.62 lakhs from State Bank of Travancore (Rs.Nil) is secured by a first charge on fixed assets of the Company.

b) The company has availed Working Capital loan on pari-passu basis from State Bank of India and State Bank of Hyderabad. These loans are secured by hypothecation of inventories, book debts and movable current assets of the product divisions of the company. These loans are further secured by personal guarantees of two Directors of the company, including the Chairman & Managing Director of the company. The loan from State Bank of India and State Bank of Hyderabad is further secured by a second charge on the fixed assets of the company.

c) The company has availed contract specific Working Capital loans from State Bank of India, State Bank of Hyderabad, State Bank of Travancore, State Bank of Patiala, State Bank of Bikaner & Jaipur, UCO Bank, State Bank of Indore, State Bank of Mysore, IDBI Bank, Punjab National Bank, Vijaya Bank, Indian Bank, Indian Overseas Bank , Corporation Bank, Allahabad Bank, Bank of India, Andhra Bank, Central Bank of India, Syndicate Bank, Axis Bank and The Karur Vysya Bank Limited. These loans are secured by hypothecation of inventories, book debts and movable current assets of the respective contracts. The participating banks share the security on pari-passu basis. Certain specific project loans are further secured by personal guarantees of two Directors, including the Chairman & Managing Director of the company.

d) Term Loan from Corporation Bank Rs.27.89 Lakhs (Rs.259.36 Lakhs) is secured against the Fixed Assets acquired

e) Secured Loans includes Rs. 3369.92 lakhs (Rs.2222.24 lakhs) for which the respective Fixed Assets acquired under Loan are held as security.

2. CONTINGENT LIABILITIES, GUARANTEES & CAPITAL COMMITMENTS

(Rs. in Lakhs)

As at As at

Particulars 31.03.2010 31.03.2009

A CONTINGENT LIABILITIES

Claims against the company not

acknowledged as debt

a) On account of Sales Tax 178.09 156.22

b) On account of Income Tax 2915.49 -

c) On account of Service Tax 32.41 -

d) On account of Contractual Obligations 2350.25 2930.36

GUARANTEES

Guarantees and Counter Guarantees given

on behalf of Subsidiary and Other 775.83 844.00

Company

B CAPITAL COMMITMENTS

Estimated amount of contracts remaining

to be executed on capital account 1371.63 682.66

3. SUNDRY DEBTORS - Others includes Rs.74953.81 lakhs (Rs.56512.94 lakhs) which, in accordance with the terms of the contracts were not due for payments as at 31 st March 2010.

4. CASH AND BANK BALANCES

i) Deposits amounting to Rs. 44639.51 lakhs (Rs.20384.06 lakhs) are under lien to Banks.

ii) The balance of Cash and Cash equivalents includes Rs. 8.01 Lakhs (Rs.3.71 Lakhs) as at 31st March 2010 set aside for payment of Dividends.

iii) Bank balances of Rs.3.68 Lakhs (Rs.6.87 Lakhs) are subject to confirmation.

5. All the Investments held by the Company are long term in nature.

6. LOANS AND ADVANCES

Cochin Project: The end client of Cochin Port Road Connectivity Project viz., Cochin Port Road Company Ltd., (SPV of NHAI) terminated the contract on 28.05.2007. Consequently, the end client encashed BGs for an value of Rs.1270 lakhs furnished by the company on behalf of MECON - CEA (JV). The main contractor viz., MECON - CEA (JV) contested the termination of the contract and had taken steps to constitute the Disputes Review Board (DRB) in terms of the contract. The DRB has given recommendations partly allowing the claim of theJV The JV has preferred to approach the Tribunal by invoking the arbitration proceedings. The Tribunal has been constituted and proceedings will commence shortly. In anticipation of determination of the dispute and based on the legal opinion, the company has identified a sum of Rs. 1654.35 lakhs (Rs.1654.35 lakhs) as on 31.03.2010 as recoverable advances from the end client through the JV and is shown under loans and advances.

Tuticorin Project: The end client namely Tuticorin Port Road Company Ltd (SPVof NHAI) viz, Tirunelveli-Tuticorin Port Connectivity Project has terminated the contract and encashed BGs furnished by the company on behalf of MECON - CEA (JV). The main contractor viz., MECON - CEA (JV) is contesting the termination of the contract. The Company has identified a sum of Rs. 1460.72 Lakhs (Rs.1460.72 lakhs) as on 31.03.2010 as recoverable advances from the end client through the JV and is shown under loans and advances. The judgement regarding restitution of Bank Guarantees has been reserved on 08.03.2010. The same is still awaited.

7. Plant and Machinery include Rs. 686.72 lakhs (Rs.686.72 lakhs), which are jointly owned along with a Joint Venture, of which the Company is a member.

8. UTILISATION OF IPO FUNDS

The company has raised Rs.19012 Lakhs from IPO (Net of Issue Expenses) during the year 2007-2008. Rs.12500 Lakhs has been utilized towards working capital requirement, being one of the objects of the issue. The balance of Rs.6512 Lakhs, pending utilization are held as deposits in banks.

Defined Benefit Plan

The liability for gratuity is funded through a scheme administered by an insurer and provision is made based on actuarial valuation carried out as at Balance Sheet date.

Gratuity Plan

The company operates gratuity plan wherein every employee is entitled to the benefit equivalent to fifteen days salary last drawn for each completed year of service. The same is payable on termination of service or retirement whichever is earlier. The benefit vests after five years of continuous service.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors. The discount rate has been chosen by reference to market yields on Government Bonds. The above information is certified by the actuary.

9. PARTICULARS OF RELATED PARTIES List of Related Parties

a. Subsidiary Companies

Progen Systems and Technologies Ltd

b. Associate Company - Nil

c. Other Companies

i. GEA Cooling Tower Technologies (India) Pvt Ltd

ii. GEA BGR Energy System India Ltd

iii. Germanischer Lloyd Industrial Services (India) Pvt Ltd

iv. Mega Funds India Ltd

v. Sasikala Estate Pvt Ltd

vi. Schmitz India Pvt Ltd

vii. Cuddalore Powergen Corporation Ltd

d. Joint Ventures

Mecon - GEA Energy System (India) Limited (JV)

e. Key Management Personnel:

i. Mr. B.G. Raghupathy : Chairman & Managing Director

ii. Mr. T. Sankaralingam : Managing Director

iii. Mr. S. Rathinam : Director-Finance

iv. Mr. V.R. Mahadevan : Director - Technologies & HR

v. Mr. A. Swaminathan : Director - Sales & Marketing

f. Relatives of Key Management Personnel

i. Ms. Priyadarshini Raghupathy (Daughter of Mr. B.G. Raghupathy) ii. Ms. Vani Raghupathy (Daughter of Mr. B.G. Raghupathy) iii. Mr. R. Prabhu (Son of Mr. S. Rathinam)

10. LEASES

Finance Lease

i. Plant and Machinery amounting to Rs. 686.72 Lakhs (Rs.686.72 lakhs) on Finance Lease and the written down value of these assets as on 31.3.2010 is Rs. 357.96 lakhs (Rs.447.50 lakhs)

ii. The minimum lease rentals as at 31st March 2010 and the present value of minimum lease payments as at 31 st March 2010 in respect of assets acquired under finance lease are as follows.

The minimum lease rentals as at 31st March 2010 in respect of assets acquired under Operating lease are as follows.

i. Paid till 31.03.2010 is Rs. 137.20 Lakhs (Rs.137.20 Lakhs)

ii. Payable not later than 1 Year is Rs.NIL (Rs. NIL)

iii. Payable later than 1 year and not later than 5 Years is Rs. Nil (Rs. Nil)

11. EMPLOYEE STOCK OPTION SCHEME

Stock option granted to the employees under the stock option scheme established are evaluated as per the accounting treatment prescribed by the Employee Stock Option Scheme and Employee stock purchase scheme Guidelines, 1999 issued by Securities Exchange Board of India. The company follow the intrinsic value method of accounting for the options and accordingly, the excess of market value of the stock options on the date of grant over the excise price of the options, if any, is recognized as deferred employee compensation and is charged to the Profit and Loss Account.

Employee Stock Option Plan - 2007

Pursuant to the decision of the shareholders, at their meeting held on July 11, 2007, the company has established an Employee Stock Option Plan 2007 CESOP 2007 or the Scheme) to be administered by the Compensation Committee of the Board of Directors.

ESOP 2007 provides for grant of options amounting to not more than 1.5% of the issued and paid up equity capital of the company outstanding at any point of time to officers, directors and Key employees to purchase Equity shares of face value of Rs.10 each, with such option conferring a right upon the employee to apply for one equity shares of the company, in accordance with the terms and conditions of such issue. The excise price of the option is 85% of the issue price (Issue Price is Rs.480, 85% of Issue Price is Rs.408)

12. JOINT VENTURES

The company along with Mecon Ltd has formed an unincorporated Joint Venture namely Mecon - GEA Energy System (India) Limited (JV) (Association of Persons) for execution of two road projects.

13. IMPAIRMENT OF ASSETS

a. Cash Generating Units :

There is no impairment loss of cash generating assets and hence no provision was made in the financial statements.

b. Other Assets:

The company has made a provision of Rs.10.71 lakhs (Rs. 2.24 lakhs) in the books of accounts towards impairment of other fixed assets based on the technical valuation.

14. Previous year figures have been regrouped wherever necessary for comparative purposes and shown along side or in brackets.