is bigis bigSMALLSMALL

2007-08A n n u a l R e p o r tSunil Hitech Engineers Limited

Forward Looking Statement

In this Annual Report, we have disclosed forward-looking information to enable investors to

comprehend our prospects and take informed investment decisions. This report and other statements

- written and oral - that we periodically make, contain forward-looking statements that set out

anticipated results based on the management’s plans and assumptions. We have tried, wherever

possible, to identify such statements by using words such as ‘anticipate’, ‘estimate’, ‘expects’, ‘projects’,

‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future

performance.

We cannot guarantee that these forward-looking statements will be realized, although we believe we

have been prudent in assumptions. The achievement of results is subject to risks, uncertainties, and

even inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should

underlying assumptions prove inaccurate, actual results could vary materially from those anticipated,

estimated, or projected. Readers should bear this in mind.

We undertake no obligation to publicly update any forward-looking statements, whether as a result of

new information, future events or otherwise.

2 Financial and Performance Highlights

3 SMALL is big

4 Vision, Mission, Philosophy

6 Business Model

9 Projects – Completed, Ongoing and Future

12 2007-08 Achievements

24 Chairman’s Message

26 MD’s Operational Overview

28 Board of Directors

32 Management’s Discussion and Analysis

38 Risk Management

42 Directors’ Report

48 Report on Corporate Governance

62 Financial Section

90 Consolidated Financial Statements

Contents

(MT)

43776

66465

980

88140Structure steel

Boiler & ESP

Piping

898.15

520.33

289.36

Gro

ss b

lock

(Rs.

mn)

2005-06

2006-07

2007-08210.08

75.67

55.89

PAT

(Rs.

mn) 2005-06

2006-07

2007-08

325.06

119.56

82.54

PBT

(Rs.

mn)

2005-06

2006-07

2007-08

Financial Highlights

Performance Highlights

20.07

7.55

8.18EP

S (R

s.) 2005-06

2006-07

2007-08

3083.73

1463.81

1331.78

Tota

l inc

ome

(Rs.

mn)

2006-07

2005-06

2007-08

Fabrication

Erection

3

In the pursuit of the big the small aspects are often overlooked. These apparently small components or features prove to be determinants of growth. It is therefore important to consider these dimensions and recognize their inherent potential at an early stage.

Sunil Hitech has identified a new vision for itself – to increase its turnover fivefold in the next five years. In order to do so, it has altered its business model to capture benefits from growing both by adding new verticals and diversifying its portfolio.

As a Company that efficiently utilizes its resources and taps opportunities of growth, Sunil Hitech nurtures client relationships and takes care of its employees to ensure superior performance. The Company takes small steps to diversify and grow in time. By adding verticals the willingness to be flexible is highlighted. By scaling up execution capabilities a focus to reach the top is emphasized. The Company has a clear vision to position itself in the competitive market and win accolades as an industry major. It is universally true that the small always precedes the big. One always grows big from being small. Those with an integrated approach and unflinching faith in their capabilities are able to realize that the small always plays a big role in the making of a giant. As Sunil Hitech does.

5

VISIOn To contribute to the development of power and process industries as well as related infrastructure areas.

To meet quality, price and schedule benchmarks and consistently satisfy our customers.

MISSIOn To develop, implement innovative construction and on-site implementation methods to meet the best industrial

standards.

To continuously improve on cycle time reduction and modernization of construction methods applicable for the

power, process and infrastructure industries.

PHIlOSOPHy To bring in a high level of project execution skills, meet customer benchmarks, serve customers and satisfy them

through timely completion of projects without compromising on quality

To improve on existing qua lity-systems in its operations

To achieve greater productivity and safety standards

To develop human resources and improve employee attitudes

To maintain good growth of net worth and build on the assets of the Company

To be a market leader and a highly dependable service provider

To develop partnerships for growth and diversification

Business Portfolio

Thermal Power

Fabrication & Erection of Heavy / Super Structures upto 660 MW

Fabrication and Erection of Chimney flues.

Civil work for power stations, staff buildings and colonies, water treatment, effluent plants,

water drainage systems, control buildings, construction of roads.

Erection of boiler and auxiliaries, ESPs upto 500 MW

Fabrication and erection of coal & ash handling plants

Turnkey contract for fuel oil handling systems

Piping work for CW, LP/HP, ash slurry and ash disposal, LD, DM & critical piping

EPC for 50 MW power projects

Hydro power

Civil works

Hydro Mechanical works

Radial gates, vertical gates and fabrication of pen stocks

Transmission & Distribution

EHV transmission line upto 132 kV, 220 kV & 400 kV

EHV sub-station upto 132 kV, 220 kV & 400 kV

Earthing systems for entire sub station.

Sub-transmission Line for 11 kV, 22 kV & 33 kV

Sub-station for 33/11 kV & 22/11 kV upto 10 MVA rating

ETC of distribution transformers upto 630 kVA rating

Erection of sub-transmission lines

Associated sub-station & switchyards

Distributed network including UG Cable from 1.1 kV upto 33 kV

Erection of EHV, transmission lines & sub-stations

non Destructive Testing

In-house facilities for:

Non Destructive Testing (Radiography Testing, Ultrasonic Testing,

Magnetic Particle Testing, Particle Testing)

7

Steel

Structural Steel works for:

Castor Shop

Steel Melt Shop

Blast oxygen furnace

Sinter plant

Continuous casting shop

Universal beam mill, bar & rod mills

Universal rail mill

Technological structure

Overhauling & Maintenance Renovation of boilers and auxiliaries.

Repair, modification and rehabilitation for boilers

Pressure parts, milling system, rotating parts and ducting.

HP/LP piping works.

Operation & maintenance of CHPs

Repair, replacement of ESP components

ManufacturingDesign and supply of following upto 500 MW capacity:

Re-heater, LTSH, Economiser coils.

Pressure parts tubes and bends.

Water Walls

ESP spare parts

Tanks and vessels

Piping

Pre-engineered building structures

Capabilities Ability to mobilize 150 high-pressure welders, meeting IBR and ASME Standards for Quality Boilers and more than 1500 LP welders for piping works Key skills in pressure parts and piping works Ability to fabricate and erect 100,000 MT of structures in a year Ability to complete 85,000 field weld joints in a year for boilers and critical piping work Ability to complete 250 MW boiler works in 16-18 months Ability to complete more than 70,000 high-pressure joints in re-hauling and maintenance works in a year

Achieve 2,500 - 3,500 MT of peak fabrication & erection work in a month per site In-house capabilities for radiography, UT, MPT. Strong asset base with more than 192 cranes with 8 - 250 tonne capacities and over 1,550 welding equipments

Engineering drawing detailing through state-of-the-art software (Stru Cad of ACE CAD Software system, UK) and dedicated team

9

Completed Projects

In MAHARASHTRA

MSEB, Khaparkheda (210 MW Boiler,

Main Plant Structures)

MSEB, Chandrapur (500 MW Main

Plant Structures, Boiler Auxiliaries)

MSPGCL, Parli, Unit-I (250 MW Main

Plant Structure, CHP, Main Water

Drainage System, Boiler & Auxiliaries)

MSPGCL, Paras, Unit-I (250 MW

Main Plant Structure, Fuel Oil

handling System)

In UTTAR PRADESH

UPRVUNL, Parichha (2 x 210

MW Boiler Auxiliaries, Structures

Fabrication)

NTPC, Rihand (500 MW Boiler

Auxiliaries, Misc. Structures, 250 m

RCC Chimney)

NTPC, Unchahar (210 MW Boiler &

Auxiliaries)

Gail-Pata (2 x 80 TPH HRSG)

In MADHyA PRADESH

NTPC, Vindhyachal (2 x 500 MW

Stg-II Bunker Structure)

NTPC, Vindhyachal (2 x 500 MW

Stg-III, Bunker Structure, CW Piping

Work)

MPPGCL, Amarkantak (210 MW

Structure, CW Piping Work)

In CHHATTISGARH

BALCO, Korba (1 x 275 TPH Boiler

BALCO)

BALCO, Korba (2 x 135 TPH Boiler &

Auxiliaries)

JPL, Raigarh (4 x 250 MW Main Plant

Structure)

In HARyAnA

IOCL, Panipat (125 TPH HRSG)

HPGCL, Panipat (2 x 250 MW TG

& Mill Bunker Structure & Boiler

Auxiliaries)

HPGCL, Yamunanagar (2 x 300 MW

TG & Mill Bunker Structure)

In RAJASTHAn

RSEB, Suratgarh (250 MW U-4, Main

Plant Structure, Boiler Auxiliaries)

RRVUNL, Suratgarh (250 MW

U-5, Main Plant Structure, Boiler

Auxiliaries)

RRVUNL, Giral (125 MW Main Plant

Building Structure)

In ORISSA

NTPC, Talcher (4X500 MW SG & TG

Area Civil Package, Structure & Ash

Piping)

In PUnJAB

PSEB, Bhatinda (250 MW Power

house Structure)

In GUJARAT

Hindalco, Dahej (Fabrication,

Erection, Structure & Piping Work)

10,575 MW Projects completed

Ongoing Projects

In MAHARASHTRA

MSPGCL, Parli (1 x 250 MW, Unit-2, Main Plant Structure, Boiler, STG, Bunker Belt System, LD Piping, RCC Chimney Flue & Staff Bldg.)

MSPGCL, Paras (1 x 250 MW, Unit-2, Main Plant Structure, Boiler, RCC Chimney Flue)

JSW, Ratnagiri (4 x 300 MW Main Plant Structure, BTG and its Auxiliaries)

MSPGCL, Khaperkheda (500 MW Boiler & its Auxiliaries)

MSPGCL, Bhusawal (2 x 500 MW Main Plant Structure, Boiler & Chamary Bldg.)

MSEDCL, Bhandup, Thane (Design, Supply Construction Erection Testing of 22/11kV & 22/22kV Sub-Station under Urban Zone)

MSETCL, Magarpatta, Kolhapur (Erection & Construction of 220822 kV Sub Staion)

MSETCL, Wathar & Bambawade, Pune (Erection & Construction of 220/33kV & 132/33kV Sub-Station)

MSEDCL, Kalyan (22kV Line Renovation work of Existing 22kV Lines Erection of New 22kVLines Laying of 22kV HT UC of 22/043kV DTC of under APDRP)

MSEDCL, Chandrapur (Transmission, Distribution Lines, Distribution

Transformer, Sub-Stations and Allied Works on Turnkey Basis)

In UTTAR PRADESH

UPRVUNL, Parichha (250 MW Fabrication and Erection of Structural Steel Works)

UPRVUNL Harduaganj (2 x 250 MW Fabrication and Erection of Structural Steel Works)

NTPC, Dadri (2 x 490 MW Erection, Testing & Commissioning of ESP)

In MADHyA PRADESH

MPPGCL, Amarkantak (1 x 210 MW PH & Bunker Structure)

In CHHATTISGARH

NTPC, Sipat (2 x 500 MW SG & TG Civil Area Package & 3 X 660 MW SG Area Package & ESP)

JPL, Raigarh (4 x 250 MW Structural Steel Work)

BESCPL, Bhilai (1 x 250 MW Boiler Auxiliaries)

In HARyAnA

HPGCL, Yamunanagar (2 x 300 MW Rotary Parts & Auxiliaries)

HVPNL, Gurgaon, Dahina & Halluwas (132 kV & 66 kV Construction of Substations)

HPGCL, Hissar (2 x 600 MW Main Plant Structural Work)

In RAJASTHAn

RRVUNL, Giral (125 MW Power

House & Bunker Structures)

NLC, Barsingsar (2 x 125 MW Boiler Auxiliaries, Works)

RRVUNL, Kota (195 MW Structural Work)

RRVUNL, Chhabra (2 x 250 MW Main Plant Structural Work)

In KARnATAKA

JSW, Bellary (Structural Work in Steel Plant & 4 x 300 MW General Structural Work)

In AnDHRA PRADESH

RINL, Visakhapatnam (6.3 MTPA Expansion Structural Work)

APGENCO, VV Reddynagar (210 MW, Boiler & TG Deck Civil Foundation Work)

In TAMIl nADU

NLC, Neyveli (2 x 250 MW Structural Work)

NTECL, Ennore (2 x 500 MW Main Plant Structural Work)

In HIMACHAl PRADESH

Sechi (4.5 MW Civil & Hydro Mechanical Works)

Panwi (4 MW Civil & Hydro Mechanical Works)

Melan (4.5 MW Civil & Hydro Mechanical Works)

In GUJARAT

Mangrol (2 x 125 MW Structural Steel Work & Boiler works)

A network across 11 States. 35 live projects totalling 15,450 MW.

11

Future Projects

In MAHARASHTRA

NTPC, Mauda (2 x 500 MW Main

Plant & off site Civil Package &

Boiler)

Adani Power Ltd, Tiroda (3 x 660 MW

Main Plant & BTG)

JSW, Jaigarh Port Ltd. (Structural

Work)

SEDC/CEDC, Warora (4 x 135 MW

Boiler Erection)

MSPGCL, Parli (1 x 300 MW Coal

based Thermal Power Project)

MSPGCL, Bhusawal (1x300 MW

Coal based Thermal Power Project)

MSPGCL, Koradi (2 x 600 MW Main

Plant & Boiler)

MSPGCL, Chandrapur (2 x 500 MW

Main Plant & Boiler)

Sophia Power, Amravati (3 x 660 MW

Main Plant pkg.)

In UTTAR PRADESH

UPRVUNL, Harduaganj (2 x 250 MW

Boiler & its Auxiliaries)

In MADHyA PRADESH

MPPGCL, Sarni (2 x 250 MW Main

Plant & BTG)

MPPGCL, Malwa (2 x 250 MW main

Plant & Boiler)

REL, Sasan (4 x 800 MW Main Plant

& Boiler)

In CHHATTISGARH

Aryan Coal, Korba (30 MW Civil

Work & Main Plant)

CSEB, Marwa (2 x 500 MW Main

Plant & Boiler)

SAIL, Bhilai (Structural Steel work of

BOF & URM)

NTPC, Korba (1 x 500 MW Erection

of Power Cycle Piping)

In HARyAnA

NTPC, Jhajjar (3 x 500 MW ESP &

1 x 500 MW Boiler and its

Auxiliaries)

In RAJASTHAn

RRVUNL, Kalisindh (2 x 600 MW

Main Plant & Boiler)

NLC, Barsingsar (1 x 250 MW Main

Plant Structure)

In KARnATAKA

KPCL, Bellary (1 x 500 MW Main

Plant Structure & Boiler)

In AnDHRA PRADESH

JSW Aluminium Ltd., S. Kota (Civil &

Structural work )

NTPC, Simadri (2 x 500 MW Erection

of Boiler)

In TAMIl nADU

NTECL, Vellur (2 x 500 MW Erection

of Boiler)

TNEB, Ennore (1 x 500 MW Main

Plant & Boiler)

In GUJARAT

Essar, Salaya (2 x 600 MW Erection

of Boiler, ESP, CW Piping & TG

Structure)

Tata Power, Mundra (5 x 800 MW

Main Plant & CW Piping)

BECL, Bhavnagar (2 x 250 MW Main

Plant Package)

10,575 MW completed27,500 MW of opportunities identified.

13

Bagged an order worth

Rs. 1,524.47 million from

Maharashtra State Power

Generation Company (MSPGC)

to supply, fabricate and erect

structural steel required in the main

plant building, bunker bay and

miscellaneous structures for New Parli

Project Unit - 2 (1 x 250 MW) and

for Paras Thermal Power Expansion

Project Unit - 2 (1 x 250 MW).

Bagged a contract worth

Rs. 1,257.59 million from JSW

(Ratnagiri) for the structural

fabrication, erection works for

4 x 300 MW thermal power plants.

Bagged an order worth

Rs. 421.13 million from BHEL

PSWR Nagpur for the MSPGCL Parli

and Paras for the erection of boiler

and its auxiliaries for a 1 x 250 MW

thermal power project

Bagged an order worth

Rs. 867.61 million contracts

from BHEL PSWR Nagpur for the

MSPGCL Khaperkeda and Bhusawal

for the erection of boiler and its

auxiliaries for a 1 x 250 MW thermal

power project

Bagged an order worth

Rs. 902.22 million contracts for

the 2 x 500 MW thermal power

project NTECL (NTPC:TNEB joint

venture), Vallur for the main plant

structure package

Bagged an order worth

Rs. 678.87 million from

Maharashtra State Transmission

Co. Ltd. (MSETCL) to design,

manufacture and supply all material,

execution of relevant civil works,

erection, testing and commissioning

of 220/132/100/33/22 kV sub-

stations at Magarpatta, Pune.

Awarded the Occupational Health

and Safety Management systems

Certificate (OSHAS 18001:2007)

by international certification services,

DNV

Raised Rs. 810 million through

qualified institutional placement

(QIPs) route. A total of 2.25 million

shares (face value of Rs. 10) were

placed with 5 top foreign and

domestic institutional investors at

Rs. 360 a share.

35 ongoing projects and

15,450 MW under execution

Achieved an order book position

of Rs. 11831.20 million as of

March 31, 2008.

2007

-08

Achie

vem

ents

SMALLbig

changes envision

oppor

15

SMALL

tunities

Balance of plant (BOP), as a concept involves

construction of everything in the power plant except for

the Manufacture of Boiler, Turbine & Generator (BTG)

package. These packages integrate the BTG package

with the entire systems. BOP package, on overall

basis, constitutes for 40-45 percent of the total cost of

the power plant. Cost variation happens depending

upon type, size, terrain, fuel type and many other

variables.

Power plant owner or the EPC contractor could place

order for BOP package in two possible ways:

Design and engineering of the BOP is done by the

owner or main EPC contractor and then tenders are

floated for individual packages to be given to the

sub-contractors.

Entire BOP package is awarded on EPC basis to a

single player. This BOP player might then outsource

some of the individual packages to other players.

Currently, Sunil Hitech executes major

components of BOP up to 800 MW.

Introducing small changes can lead to big

opportunities of growth. The strategy is to further

capitalize on opportunities being presented in the

power sector by quickly scaling up resources,

capabilities and product portfolio. Entering into

strategic tie-ups for balance of plant work is a

sensible option to exercise.

SMALLsteps create

Rome was not built in a day. Such proverbial truths

find relevance in the shaping up of any big edifice.

Strengthening its existing business, Sunil Hitech

is foraying into engineering, procurement and

construction (EPC) contracts ranging from capacities of

25 to 50 MW.

Further, it is adding more products and services to its

existing portfolio.

Executing standalone projects such as chimneys

and cooling towers will not only add to the

Company’s capabilities and experience but also

allow it to execute larger BOP contracts of up to

500 MW in the future.

Given the host of opportunities prevelent in the

power industry, Sunil Hitech is expanding its

product portfolio to emerge as a leader in the

field.

17

big structures

SMALLdesigns to

Sunil Hitech has designed its future on a big

scale. Though currently small, these hold

tremendous potential for the Company. The

win is big once it enters the league of bigger

players. By bidding for larger, high-margin and

more complex projects in competitive areas

with acceptable levels of contractual risk it will

strengthen its foothold in the industry.

To consolidate its financial position, Sunil Hitech

invested in fund raising activities over the year.

3,800,000 convertible preferential warrants were

allotted to the promoters and other strategic investors

at a conversion price of Rs. 146 per share. Issuance of

warrants would bring in Rs. 555 million of equity in the

Company.

19

SMALLwin

big

The warrants are to be converted into shares by April

2009. The Company also raised Rs. 810 million

through qualified institutional players (QIP). A total of

2.25 million shares (face value of Rs. 10) were placed

with 5 top foreign and domestic institutional investors

at Rs. 360 a share.

On the technical side, the Company has added

to its machinery base. It is committed to acquiring

sound technical knowledge. In the past two years, the

Company has done more than Rs. 608.79 million

capital expenditure taking the gross block to

Rs. 898.15 million, as on March 31, 2008.

Investments have been mainly done on the equipment

like specialized cranes and other machineries.

For the next two years, the Company has planned

investments of Rs. 500-600 million to be spent

on high technology machines (which are essential

for the execution of bigger orders) and the

manufacturing of boiler parts.

SMALLbig

yieldefforts

yield

21

performance

The Company manages costs of operations through

a number of operating measures and initiatives.

Employing a selective bidding process enables it to

procure projects at competitive rates. Sunil Hitech also

leverages its experience in mobilizing and managing

manpower requirements at various locations in a

cost efficient manner. Furthermore, its equipment

reserves facilitate the management of lower overhead

costs. These measures allow Sunil Hitech to be cost

competitive. At the same time neither quality nor

delivery timelines are compromised.

Taking pride in responding to enquiries within

24 hours, Sunil Hitech follows a flexible pricing

model, taking on smaller ticket projects and thereby

strengthening client relationships. For example, the

Company was requested to finish the balance 40

percent ESP work of other agency at the Jindal,

Raigarh project. Sunil Hitech not only engaged a

full fledged team of 260 members to the site but

also completed the work in time for the scheduled

commissioning.

Small efforts do matter a lot in ensuring big

performance.

Client relationships lie at the core of Sunil

Hitech’s corporate values. Sunil Hitech has won

several repeat orders from the major clients

like NTPC, BHEL, Reliance Energy Limited,

JSW Group, Tata Projects Ltd., and major State

Electricity Boards. This lends credence to the

Company’s exceptional execution capabilities.

SMALLgestures draw

At Sunil Hitech, human resources is a key

determinant of superior performance. Their

smiling faces create an atmosphere of

camaraderie at the workplace and they thrive on

challenges. Sunil Hitech values this disposition,

and hence undertakes measures to keep the

spirits high. Small acts often count a lot.

The success of the Company’s proposed expansion

into BoP projects will be largely dependent on

acquiring and retaining technical expertise. In order

to get a head start into recruiting qualified personnel,

Sunil Hitech has tied up with a local engineering

college to launch a training program for its existing

employees. Additionally, it will induct 40 engineering

graduates from the college every four months to

bolster its employee base.

In a fiercely competitive industry, every Company

faces the additional challenge of maintaining low

attrition rate. To achieve this objective, Sunil Hitech

has incorporated an incentive-driven system, with

bi-annual appraisals, medical and transport facilities.

Besides, it provides ample opportunities to aspiring

leaders to prove their worth onsite & offsite. When

workers get to express themselves, smiles spread on

their faces.

There are reasons galore to keep smiling. With

approximately 1,481 full-time employees,

including engineers and technical people, smiles

get bigger as Sunil Hitech leverages the flexibility

to adapt to the needs of clients and the technical

requirements of various projects.

23

smilesbig

Chairman’s Message

Dear shareholdersI take this opportunity to share with you

the reforms being introduced at Sunil

Hitech. To multiply our turnover five fold

in just five years calls for a paradigm

shift in focus. Hence, the Small is Big

approach. What is evidently small has

the potential of bringing in big growth.

Having realized this crucial fact, we

have converted it into a belief to usher

in growth of the desired scale.

Sunil Hitech has been flexible to add

new verticals and diversify the portfolio.

As a step in this direction, we are not

only taking up 25 to 50 MW EPC

contracts but are also adding chimneys

and cooling towers to its portfolio. The

latter will enhance our ability execute

larger BOP contracts of up to

500 MW in the future. Strategic tie-ups

for balance of plant work are on the

anvil.

Sunil Hitech is joining the league

of bigger players and proposes to

strengthen its foothold in the industry

by bidding for larger, high-margin and

more complex projects in competitive

areas with acceptable levels of

contractual risk. To firm up its financial

position, Sunil Hitech has invested in

fund raising activities over the year.

3,800,000 convertible preferential

warrants were allotted to the promoters

and other strategic investors at a

conversion price of Rs. 146 per share.

Further, we raised Rs. 810 million

through the qualified institutional

placement (QIPs) route to consolidate

our financial position and fund our

expansion plans.

25

Client relationships lie at the core

of Sunil Hitech’s corporate values.

Winning several repeat orders from

clients like NTPC, BHEL, Reliance

Energy Limited, JSW Group, Tata

Projects Ltd., and major State

Electricity Boards lends credence to the

Company’s execution capabilities. Sunil

Hitech follows a flexible pricing model,

picking up smaller ticket projects

and thereby strengthening client

relationships.

At Sunil Hitech, human assets is a

critical determinant of outstanding

performance. The success of the

Company’s proposed expansion into

BoP projects will depend on acquiring

and retaining technical know-how. To

augment our human capital, we tied up

with a local engineering college which

will allow us to recruit 40 engineers

every four months. With happy smiles

the environment becomes conducive to

better productivity.

Sunil Hitech, with a growing order

book and proper analyses of risks,

seems poised to join the coterie of big

players and create a niche for itself. As

discussed, there are plenty of reasons

to cheer and keep smiling in the years

ahead.

Warm regards,

Ratnakar M. Gutte

Chairman

Joint MD’s Operational Overview

Over 2007-08, Sunil Hitech recorded

impressive growth, achieving a total

income of Rs. 3,208.15 million

compared to Rs. 1,509.61 million in

the previous year, registering a 112.51

percent growth. The profit before tax

grew from Rs. 120.44 million in 2006-

07 to Rs. 340.14 million in 2007-08

or by 182.41 percent, while net profit

increased to Rs. 118.94 million in

2007-08 from Rs. 64.79 million in

2006-07, recording a 83.58 percent

growth.

The key area of our expertise

constitutes Power Plant installation

and commissioning. The major

components includes Erection, testing

and commissioning of boiler and

auxiliaries, structural steel works and

civil works which forms around 75

percent of our order book position.

Other areas encompass building and

technological structures and various

segments of steel plants, transmission

and distribution networks which

includes turnkey contracts of EHV

substations, transmission and sub

transmission lines, hydro electric power

plants, manufacturing pressure part

components and the O&M of power

plants.

Over the year, we made several

achievements. Notable in the list

of technological improvements are

using MIG & SAW welding machines

with wire electrodes which replaced

traditional welding machines with

stick electrodes, thus allowing for both

time and cost savings. Investing in

technological upgradation is another

component to boost performance. 20

percent more resources translates into

40 - 100 percent more work.

To mitigate the risk of equipment

breakdown, more cranes were assigned

in every project. The ratio of owned

and leased major and big equipment

stands at 70:30.

Second-rung leaders get the

opportunity to grow professionally

when 200 teams work on the field and

understand labourers.

Greater volumes are generated with

low additional resources when assets

are optimally utilized at a location.

Cordial relationships with vendors of

raw materials are established for easier

availability and preferential use of old

stock.

Delays are sometimes unavoidable due

to reasons beyond our control. Like

labour strikes, delay in supply material

and equipment. Our track record is

flawless. Since inception, we have

not faced penalty for the delay of any

project. The order book position carries

a backlog of 24-36 months.

On the operational front, we

implemented Microsoft ERP

across all verticals, for enhanced

communications and effective time

27

and cost management. A planning

and procurement team was formed

to avoid unnecessary stocking while a

strategy team formulated key initiatives

are taken to solve issues related to

organization structure, recruitment

policies and operations. Over the year,

we received an OHSAS 18000 certified

for safety from DNV Netherlands and

tirelessly work to improve quality and

safety standards to benchmark with best

industry standards.

Sunil R. Gutte

Jt. Managing Director

State Electricity Boards

Private players

Public Companies

28.85%

29.85%

41.30%

Order book: Client composition

Order book & Backlog

Total Order Book Position: Rs. 11831.20 million

as on 31.03.2008

Order Book Position Unexecuted Orders

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Board of Directors

Ratnakar Manikrao Gutte

Chairman & Managing Director

Mr. Gutte brings in thirty years of rich experience in project-execution i.e. fabrication,

erection testing and commissioning of power plants. He started his career in the power

sector, working as a helper to a contractor engaged in rendering contractor-ship

services to the State Electricity Board and he grew to the present rank by virtue of his

sheer hard work and great insight.

Being a first-generation starter, with his working knowledge of engineering, finance,

banking, taxation, general management and commercial matters, he empowered the

company with the necessary direction for growth and vision. He has skillfully nurtured

the company since its inception and has established it as one of the leading companies

specialized to undertake work on thermal power plants. His key strength is delivering

qualitative and timely services. His forte is strong liaisoning in the industry. Recently,

he was honoured with the “Lifetime Udyog Achievement Award 2004” and “Great

Achiever in Industrial Excellence Award 2004” by EGSI and IOCI respectively.

Sudhamati Ratnakar Gutte

Director

Mrs. Gutte has more than fourteen years of working experience looking after the

overall management and administration of the company since its inception. She has

been assisting the Managing Director since the inception of the company and has

immensely contributed in the growth of the business via her key strengths like team-

building, motivation and managing administration and back-office functions. She is

equally responsible for nurturing the organization to its present status.

Sunil Ratnakar Gutte

Joint Managing Director

Mr. Gutte joined the company as a management trainee, armed with a degree in

Mechanical Engineering from Pune, Maharashtra, To hone his skills, he underwent

rigorous training at BHEL’s Welding Research Institute in Tiruchirapalli on Welding

Technology. He also completed an intensive training programme in project management

from IIM, Ahmedabad, to have a broader perspective of the functioning of the company.

By virtue of his zeal and creativity, sound inter-personal relations and effective ability to

motivate members of the Board on one hand and the work-force on the other, he has

helped to synergise the human resource assets in the company.

He enhanced the fund-raising capacities of the company by increasing its exposure to

capital markets through successful IPO and QIP placements.

29

Vijay R. Gutte

Director, Finance

Mr. Gutte, a MBA specializing in marketing and Finance, is a fresher having the best of

knowledge in the specialized field, has worked on many important projects in the field

of Banking, financial, institution, airline industry, taxes in India and many more.

His strengths are team building leadership qualities, dedication towards work and

getting new working style in the company.

S.K. Kodandaramaiah

Director

Mr. Kodandaramaiah, is a postgraduate in Mechanical Engineering with more than

thirty-two years of experience in the power sector. His twenty-one years in Bharat Heavy

Electricals Ltd. (BHEL) have helped him gain wide exposure in various areas such as

project management, construction management, commerce, contracting and overseas

marketing to name a few. He was also part of the export marketing team that helped

BHEL Western Region to implement the 120 MW turn-key export job in Malaysia. He

was involved in the execution of installing power plants of more than 4000 MW capacity.

In addition to this, he was appointed as Executive Director (Commerce) in General

Electric Power (GE) Services Ltd. New Delhi for five years. He has also worked as Advisor

for one year to Dhamwari Sunda Hydro-Electric Company in the development of the

70 MW Hydro-Power Project in Himachal Pradesh. He also has to his credit a training

programme at Oslo University, Norway in ‘Energy Planning and Environment’.

Mattathil narayanan Mohanan

Director

Mr. Mohanan has twenty-nine years of rich experience and is the ‘Execution Man’ in

the company. His wide experience in power sector projects, and his ability to handle a

large number of projects at a time have made him an invaluable asset to the company.

He has experience in the field of fabrication and construction of heavy steel structures,

boilers, auxiliaries and electrostatic precipitators among other equipment such as

power cycle piping and LP piping, he has headed many key projects with various

reputed customers of the company and under his able administration, these have been

completed well ahead of schedule.

Sajid Ali

Independent Director

Mr. Ali is a graduate engineer with 40 years of experience in the erection and

commissioning of equipment in coke oven plants, piping, boiler erection, turnkey

projects. He has vast knowledge about the planning and execution of various projects

and hashandled large-volume projects. His forte is able administration. He was in

charge of total construction management of the power sector for BHEL, Western

region, in 1994.

Dilip y. Ghanekar

Independent Director

After his graduation from V.R.C.E., Nagpur, Mr. Ghanekar worked for thirty six years

in Maharashtra State Electricity Board. He has experience in operation, maintenance,

construction and planning of power stations with a capacity of 500 MW units. He

has also been in charge of global procurement of equipment and encouragement of

non-conventional energy development of contracts for power purchase. He retired as

Technical Director, MSEB.

He has also undergone a four-week customer training programme at M/s. Combustion

Engineering U.S.A. as well as another four-week training programme on Coal

Technology and Environment.conducted by the United Nations in Australia.

Sarita Rathi

Independent Director

Ms. Rathi a diploma-holder in Business Management, has completed an intensive

programme on Self-Managing Leadership for entrepreneurs and managers conducted

by experts from Paris and Australia, at Mount Abu. She has also undergone a training

programme on value-based education held at Oxford Retreat, London.

She also provides training in human resource development to many companies such

as Thermax Limited and KSB Pumps Limited to name a few.

31

Kamlakar G. Holkar

Independent Director

Mr. Holkar, an engineer from Ujjain University, served BHEL, an esteemed organization

in the power sector for over four decades. He retired from BHEL as General Manager

(Western Region). During his tenure, he had also undergone a specialized training

programme in General Electric, UK.

He has a sound experience in manufacturing, construction, testing, commissioning,

repair and services in the power sector. He has to his credit the construction, testing

and commissioning of a 500 MW thermal power plant at Chandrapur for the MSEB,

a task that was accomplished in record time. His key strength is powerful leadership

through efficient and effective administration resulting in fast-track completion of

important projects.

Parag Sakalikar

Non – Executive Director

Mr. Sakalikar, a young entrepreneur, received a Diploma in Mech. Engg. from

Bombay Technical Board in 1994 and a B.E. in Mech. Engg. from Nagpur in 1998.

He established his own authorized Automobile service station, (an ISO 9001:2000

certified company) for the entire range of Maruti vehicles. His company was awarded

for its performance in Maharashtra from 2003-2007 and also in entire west region by

Maruti Suzuki. He has also setup additional new Maruti authorized service station in

Butibori MIDC with ‘A’ Grade category.

Sonyabapu S. Waghmare

Non – Executive Director

Mr. Waghmare has got 33 years of rich experience in banking sector. He retired

as DGM from UCO Bank in the year 2006. He has also undergone a training

programme at University of Bradford, England, on project planning and management.

He was also chairman of Thar Anchalik Gramin Bank, Jodhpur, Rajasthan (a Govt. of

India Undertaking) sponsored by UCO Bank

MAnAgeMent diScuSSion & AnALySiS

33

Industry Overview

The Government of India’s (GoI)

Planning Commission has emphasized

the importance of power in economic

growth by pegging the elasticity

for power to economic growth at

0.9:1 during the 11th plan period

(2007-2012). A projected 68,869

MW increase in generation capacity

is required in the next five years, that

is, an increase of 60 percent in total

installed capacity, to keep up with

GDP growth. Such a kind of capacity

addition plan is expected to create an

investment opportunity of Rs. 4,109

billion in power generation, Rs. 1,400

billion in transmission and Rs. 2,870

billion in the distribution space over this

period.

Coal is likely to remain the dominant

fuel — in spite of the GoI’s 50,000

MW hydroelectric power initiative

— due to the long gestation period of

hydroelectric plants, limited supplies of

gas, an increase in naptha prices, and

uncertainty over the nuclear deal with

the USA. The GoI is likely to continue

its fiscal support for imports of coal

for consumption by power plants, as

well as allocation of captive mines for

projects.

The central public sector utilities (PSUs),

which have drawn up large investment

plans across the generation and

transmission sectors, will continue to

play a major role in the power sector,

though aggressive plans to expand

capacity might lead to a deterioration

in credit profile in the medium term.

The state level power utilities — the

state electricity boards (SEBs) — are yet

to take the power sector reform process

forward by completing the splitting

of the verticals and by separating the

functioning of unbundled entities.

Lack of desired improvements in

the functioning of SEBs continues to

weaken the overall structural stability of

the power sector, as the SEBs remain

the largest intermediary buyers and

distributors of power.

The continued success of central PSUs

in recovering their dues from the SEBs

maintains the delicate balancing act of

the past few years, though the financial

position of the majority of the SEBs

remains weak. This is because the

various state governments have not

shown the political will to increase the

tariffs, improve recovery, reduce subsidies

and provide expected budgetary support.

As a result, the private sector has moved

towards merchant power plants —

backed by the expectation that it would

be able to sell directly to large industrial

units.

Current Scenario

Total installed capacity: 143,061 MW

(Source: Ministry of Power: http://powermin.nic.in/)

India’s electricity sources

Thermal power: 64.6%

Hydro: 24.2%

R.E.S.: 7.7%

Nuclear: 2.9%

India’s installed capacity

State sector: 52.5%

Central sector: 34%

Private sector: 13.5%

Power for All by 2012

The Ministry of Power has set an

ambitious goal of providing “Power for

All by 2012.

A comprehensive blueprint for the

power sector has been prepared

encompassing an integrated strategy

for its development with an objective

to generate sufficient power to achieve

a GDP growth rate of 8 percent and

above at optimum costs.

Strategies to achieve this objective

encompass:

Power generation with a focus on

low cost generation, optimization of

capacity utilization, controlling the

input cost, optimisation of fuel mix,

technology upgradation and utilization

of non-conventional energy sources

Power transmission with a focus

on the development of the National

Grid including interstate connections,

technology upgradation and

optimisation of transmission costs

Power distribution to achieve

distribution reforms with a focus on

system upgradation, loss reduction,

theft control, consumer service

orientation, quality power supply,

commercialization, decentralized supply

for rural areas

Ultra Mega Power Projects

The Ministry of Power has identified

the development of Ultra Mega Power

Projects (UMPP) as a thrust area. These

projects, approximately 4,000 MW

each, involve an estimated investment

of about Rs. 16,000 crores. In order to

meet the huge power demand, these

projects are being developed on a

build, own and operate (BOO) basis.

The Power Finance Corporation (PFC),

a PSU under the Ministry of Power, has

been identified as the nodal agency for

this initiative.

The salient features of the plant and

choice of technology are:

UMPPs use super critical technology

with a view to achieve higher levels of

fuel efficiency and lower greenhouse

gas emissions.

Integrated power projects will have

dedicated captive coal blocks while

coastal projects use imported coal.

A total of nine such projects had

been identified to be taken up – four

pithead-based projects and five at

coastal locations.

Power Project Capital Costs

Power projects are highly capital-

intensive and generally have a

gestation period of four to six years.

The capital cost of a power project

depends on a number of factors such

as the choice of fuel, location, size and

technology.

Source of energy: The most important

factor that influences the cost of a

power project is the source of energy

and the type of fuel used. The cost of

setting up a nuclear power plant is the

highest due to the complex technology,

the incorporation of safety measures

and the long gestation period (six to

eight years). Generally, the cost of

setting up a coal-based plant is lower

than nuclear plants, and higher than

that of plants based on natural gas,

naphtha and fuel oil. The higher cost

of coal-based plants is attributed to the

additional equipment required, such as

coal and ash handling plants.

Infrastructure: The availability of

water, transportation infrastructure, and

power evacuation and transmission

facilities influences the location of a

power plant. Water is used in thermal

plants to generate steam and for air

conditioning and cooling purposes.

Proximity to a water source can reduce

the investments in reservoirs, pipelines

and pumping equipment. In general,

power plants are located near coal

mines or gas pipelines in order to

save costs in setting up transportation

infrastructure for fuels.

Size: Significant economies of scale

exist in the capital costs of power

plants. A larger plant costs less, in

Year-wise break of capacity addition

Rs. in million

Particulars 2007-08 2008-09 2009-10 2010-11 2011-12 Total

Thermal Power (MW) 12,704 5,077 10,773 14,140 15,950 58,644

Hydro Power (MW) 2,751 1,625 3,425 2,330 6,422 16,553

Nuclear Power (MW) 880 1,000 1,000 500 3,380

Total addition per annum (MW) 16,335 7,702 15,198 16,970 22,372 78,577

Expected investment (Rs. mn) 8,54,201 4,02,758 7,94,744 8,87,406 1,169,891 4,109,000

Opportunity in BPO projects (Rs. mn) 3,41,680 1,61,103 3,17,898 3,54,963 4,67,957 1,643,600

Source: CEA

terms of cost per unit of capacity. Larger units also have better thermal efficiency and lower operations and maintenance costs.

Technology and equipment: Equipment costs usually account for roughly 75-80 percent of the total cost of a thermal plant.

Engineering, procurement and construction contracts: The setting up of a power project involves coordination with many suppliers. In order to ensure the timely execution of the project, the services of an engineering, procurement and construction (“EPC”) contractor are generally employed. The EPC contractor undertakes the turnkey execution of the project usually on a fixed time and fixed price basis, while guaranteeing the performance of the power plant in accordance with the specifications stipulated by the developer.

Company OverviewAn ISO 9001: 2000 and OHSAS 18001 certified company, Sunil Hitech Engineers Limited (Sunil Hitech) was incorporated in 1998 with a business focus on fabrication, erection, testing and commissioning of coal and ash handling plants, bunkers, for its clients present in the private and public sectors. With a client list spanning BHEL, NTPC, Reliance Energy, Jindal Steel and Power, the SEBs of Maharashtra, Chhattisgarh and Madhya Pradesh, Sunil Hitech is also engaged in overhauling and maintenance to ensure proper functioning of plants, post-installation.The company also undertakes projects in the transmission and distribution segments.

A public listed company on the Bombay and National Stock Exchanges, Sunil Hitech established a subsidiary, Sunil Hitech Engineers & Manufacturers

Private Limited, in November 2006 to manufacture pressure parts for boilers upto 500 MW.

Sunil Hitech has shown its expertise in power plant related work. By leveraging upon its existing engineering and execution capabilities, it has diversified its area of operations to power transmission and distribution, hydropower and steel plant related work. It is also taking up overhauling and maintenance services for the boiler and auxillaries upto 500 MW with the supply of spares. Additionally, Sunil Hitech has identified balance of plant (BoP) projects as an area for further expansion.

Products and Services Thermal Power projects: Fabrication & Erection of Heavy /

Super Structures upto 660 MW

Fabrication and Erection of Chimney flues.

Civil works for Power Station, Staff Bldg/Colony, Water treatment, Efflument Plant, Water Drainage System, Control buildings, Construction of Roads.

Erection of Boiler and auxiliaries, ESPs upto 500 MW

Fabrication and erection of coal & ash handling plants

Turnkey contract for Fuel Oil Handling System

Piping Work for CW, LP/HP, Ash Slurry and Ash Disposal, LD, DM & Critical Piping

EPC for 50 MW Power Project.

Hydro Power projects: Civil works

Hydro Mechanical works

Radial Gates, Vertical Gates and Fabrication of Pen Stock

Transmission & Distribution projects: EHV Transmission Line upto 132 kV,

220 kV & 400 kV

EHV Sub-Station upto 132 kV, 220 kV

& 400 kV

Earthing system for entire sub station.

Sub-Transmission Line for 11 kV, 22

kV & 33 kV

Sub-stations for 33/11 kV & 22/11

kV upto 10 MVA rating

ETC of distribution transformers upto

630 kVA rating.

Erection of sub-transmission lines

Associated sub-stations & switchyards

Distributed network including UG

Cable from 1.1 kV upto 33 kV

Erection of EHV, transmission lines &

substations

Steel plant projects:

Structural Steel works for:

Castor Shop

Steel Melt Shop

Blast Oxygen Furnace

Sinter Plant

Continuous Casting Shop

Universal Beam Mill & Bar & ROd Mill

Universal Rail Mill

Technological Structure

Overhauling and Maintenance projects:

Renovation of boilers and auxiliaries.

Repair, modification and

rehabilitation for boilers

Pressure parts, milling system, rotating

parts and ducting.

HP/LP piping works.

Operation & Maintenance of CHP

Repair, Replacement of ESP

Components

Manufacturing plant :

Design and supply of following upto

500 MW capacity :

Re-heater, LTSH, Economiser coils.

Pressure parts tubes and bends.

Water Walls ESP Spare Parts

Tanks and Vessels Piping

Structures

NDT :

In-house facilities for:

NDT (RT, UT, MPT, PT)

35

Equipment Reserves

Sunil Hitech’s strategic investment

in equipment and fixed assets is an

advantage that enabling it to rapidly

mobilize resources to project sites as

required. State-of-the-art technology

form the core of the company’s asset

base, providing the capability to

execute technically challenging and

diverse range of projects. Equipment is

managed, maintained and operated by

trained personnel.

Safety and Quality

As a crucial component of project

execution, reputation in the industry is

built on control over safety and quality,

thereby resulting in time and cost

savings and hence minimizing delays.

Management as well as dedicated

teams monitor project safety and quality

continuously, working to improve

and benchmark with best industry

standards. A policy to hold bi-annual

seminars at project sites to increase

awareness has been incorporated.

Further, the Company has been OHSAS

18000 certified for safety from DNV

Netherlands

ERP Implementation

An expanding business portfolio drove

the Company to implement Microsoft

ERP across all verticals. A consolidated

MIS platform allows for effective time

and cost management which further

facilitates enhanced communications

to various project sites, allowing for

greater control over operations. The

Company is also in the process of

implementing Business Analytics as an

add-on especially for management and

the board.

Planning and procurement

An executive committee has been

formed comprising of technical and

commercial personnel to take care of

planning and procurement to avoid

unnecessary stocking. The Company

incorporates prudent planning and

procurement practices to increase

control, thereby protecting margins.

Strategies

A dedicated team with external

consultants works on business strategies

every quarter. Key initiatives are

taken to solve critical issues related

to organization structure, recruitment

policies and operations, among others

to allow the Company to identify and

overcome issues generally related with

expanding business.

Strengths

Sunil Hitech has significant experience and a strong track record because of which it is among a select few companies pre-qualified to undertake critical BoP packages upto 660 MW.

The company has the expertise to undertake major civil and structural jobs. It is also specialized in handling critical and difficult boiler erection works up to 500 MW and also the experience of working with foreign EPC players like SEPCO China and Skoda exports.

The company has the advantage of expeditious scalability with equipment and power and has built a substantial equipment reserve which gives it the capability to execute projects of any scale and allows them to undertake technically challenging and a diverse range of projects.

The company has a strong and diverse order book, with orders pending worth Rs. 8366.73 million. It caters to public and private sector clients with interests in thermal power plants, hydro power plants, transmission and distribution and steel plants.

Sunil Hitech enjoys a long term

relationships with reputed industry players like NTPC, BHEL, Reliance Energy Limited, JSW Group, Tata Projects Ltd, and major state electricity boards.

Weakness

Delay in execution: The orders bagged by the company are required to be executed within a stipulated period. Any delay in execution may result into cost over-run and in turn may impact the margins.

Unavailability of skilled labours: The company may not be able to bid for large number of contract if there is dearth of skilled labours. This may impact the order book and in turn retard growth.

OutlookA developing and fast-growing economy and faces a great challenge to meet its energy needs in a responsible and sustainable manner, India faces the daunting task of providing energy to over 0.6 million human settlements, spread over 0.3 million square kilometres of territory, with a population of over 1 billion. India intends to provide a reliable energy supply through a diverse and sustainable fuel mix that addresses major national players, these including security concerns, commercial exploitation of renewable power potential, eradication of energy poverty, ensuring availability and affordability of energy supply and preparing the nation for imminent energy transition.

The 11th plan has set a target for an additional 1,700MW power generation capacity, consisting of 500 MW of biomass projects and 1,200MW of bagasse cogeneration projects by 2012. Based on government’s plans, by 2012, a capacity addition of 22,900 MW will have been identified for the private sector out of total target of around 107,000 MW.

The opportunities in electricity generation are now very encouraging on account of emerging power trading environment. The policy of open access on transmission and distribution networks and reforms in the power sector are leading to improvement in the financial health of the sector. All new private sector generation projects in the country would need to be set up based on International Competitive Bidding.

Human ResourcesA well-trained, motivated and satisfied employee base is key to maintaining a competitive advantage. As of March 31, 2008, approximately 1481 full-time employees were employed at various project sites. None of the employees are represented by any labour or workers’ union. During the execution of projects, services of individuals on daily wages are also procured. Sunil Hitech has established excellent relations with its workers and, as a result, has not experienced any delays in work due to labour issues.

Internal control systems and their

adequacy

The CEO and CFO certification provided in the report discusses the adequacy of the company’s internal

control systems and procedures.

Financial AnalysisProfit and Loss Statement AnalysisNet SalesThe Company’s net sales for 2007-08 stood at Rs. 3063.06 million as compared to Rs. 1448.05 million 2006-2007, a growth of 112 percent.

Other IncomeThe Company’s other income increased from Rs. 15.76 million in 2006-07 to Rs. 20.68 million in 2007-08, indicating a growth of 31 percent due to increase in interest and dividend earnings.

ExpenditureAdministrative expenses registered an increase from 3.22 percent of sales from last financial year to 3.54 percent in the current fiscal year, due to an increase in employment.

ProfitsThe gross profit recorded a growth of 172 percent, rising from Rs. 119.55 million in the last financial year to Rs. 325.06 million at present. The net profit increased by 178 percent, from Rs. 75.67 million to Rs. 210.08 million in 2007-08. Growth in profits is mainly due to the improved economies of scale achieved through an increased number of project packages at one site and the availability of owned cranes for better progress.

Earnings per ShareThe Company’s Earnings per share excluding exceptional items increased from Rs. 7.83 in 2006-07 to Rs. 20.80 in 2007-08.

Balance Sheet AnalysisSOURCES Of fUNDSEquity share capitalEquity share capital of company increased form Rs. 100.25 million in 2006-2007 to Rs. 122.75 million in 2007-08 on account of QIP.

Reserves and surplusReserves and surplus are the undistributed profits retained over the years. Reserves and surplus increased by 208 percent from Rs. 470.44 million to Rs. 1449.94 million.

Loan FundsThe total loan funds increased from Rs. 350.7 million to Rs 962.05 million.

APPLicAtion of fundS

Fixed assetsThe company’s gross block increased from Rs. 520.33 million in 2006-07 to Rs. 898.15 million in 2007-08,

representing a growth of 72 percent.

InventoriesInventories increased from Rs. 117.02 million in 2006-2007 to Rs. 493.88 million in 2007-08.

DebtorsThe company’s debtor increased from Rs. 497.12 million to Rs. 867.19 million, representing an increase of 74 percent.

37

RISK MANAGEMENT

39

Organization

Operational Risk Financial Risk Strategic Risk

Competition Risk fluctuating Share Price Risk

Machine Breakdown Risk

Economy Risk fluctuating Raw Material Cost Risk Stagnation Risk

Human Capital Risk Borrowing cost Risk Project Risk

Client Risk

Knowledge Risk

Sunil Hitech Engineers Limited recognizes the fact that every

business entails risk. Early risk identification and appropriate

counter-measures has enabled Sunil Hitech to mitigate the risks

at every possible stage. Sunil Hitech has categorized possible

risks into three broad segments :

OpeRAtIOnAl RISkS

1. Competition Risk

Being a tender-based business Sunil Hitech faces a risk of being outbid by an aggressive competitor on the pricing

front or losing out on a tender due to some miscalculation.

Risk Mitigation - Sunil Hitech is very meticulous and methodological in its tender calculations and being a

competitive industry player itself thoroughly understands the bidding procedures and calculative process that’s is

required in tender preparation of such a kind.

2. Economy Risk

Slow economic growth or economic downturn in the country could hamper the business.

Risk Mitigation - In the Eleventh Five Year Plan, 78,577 MW of fresh generation capacity is expected to be added.

The company is taking a positive cue from the large scale investment of Rs. 4,109 billion in power generation, Rs.

1,400 billion in transmission and Rs. 2,870 billion in distribution space in the next 5 years which gives firm outlook for

its future order book position.

3. Human Resources Risk

Competition for senior management and skilled engineers in the industry is intense. An inability to manage the attrition

levels in different employee categories may materially and adversely impact our business and results of operations.

Risk Mitigation - Our ability to meet future business challenges depends on our ability to attract, recruit and retain

skilled and key managerial personnel. We also tied up with a local engineering college to launch a training program

for our existing employees and induct 40 engineering graduates from the college every four months.

FInAnCIAl RISk

1. fluctuating Share Price Risk

Fluctuation in operating results or other factors may decrease equity share price

Risk Mitigation - In the last four years the net sales, EBITDA and net profit of the company grew at a CAGR of 112

percent, 154.9 percent and 174.6 percent respectively. The Company issued 3.8 million warrants in October 2007 at

Rs.146 per share to its promoters. The conversion of these warrants is expected to take place till March 2009. Further,

the Company issued 2.25 million equity shares through a QIP issue to domestic institutions, at a price of Rs. 360 per

share. Post the conversion of warrants, the fully diluted equity capital of the Company will increase to Rs. 160 million.

Due to increased profits the cash EPS for 2007-08 is 20.8.

2. fluctuating Raw Material Cost Risk

Due to many factors existing in this industry the raw material cost could fluctuate adding a concern for the industry

players.

Risk Mitigation - Depending on the terms of a contract, Sunil Hitech’s order book consists of contracts wherein, the

responsibility of the raw material procurement either lies with the customer or the Company. In case the supply of raw

material lies with the Company, hike in the cost of raw material is passed on to the customer as input costs as per price

variation clause in the said project. We formed a dedicated procurement department which continuously leverages its

knowledge of the industry, buying at fixed prices to ensure clients remain insulated from raw material cost fluctuations.

3. Borrowing cost Risk

Fluctuating interest rates may adversely affect Company margins.

Risk Mitigation - Sunil Hitech uses a mix of fixed and floating rate debts within stipulated parameters. It strictly

monitors interest rate exposures and hedges risks to the largest extent possible.

41

StRAtegIC RISk

1. Machinery Breakdown Risk

Non-availability or breakdown of machinery could happen at any given point of time.

Risk Mitigation - A dedicated maintenance team, centrally located in Nagpur, frequently overhauls and upgrades

our asset base, thus minimizing breakdown. We also manufacture major spare parts via our subsidiary company and

maintain an up-to-date inventory of parts.

2. Stagnation Risk

Stagnation in a particular field, or non-diversification could hamper growth to some extent.

Risk Mitigation - Sunil Hitech has forayed into BOP work and expansion in Hydro power, Transmission & Distribution

and Steel sectors. It plans to move up the value chain by taking entire BOP projects, which is 40-45 percent of

the total works of the power plant. The Company was awarded hydro power projects by Dodson Lindblom, USA.

Additionally, in the steel structural business, it recently won Rs. 1,257.59 million order from JSW.

3. Project Risk

Inability to acquire work or projects due to competition or some other factor could possibly downturn future business

prospects.

Risk Mitigation - Sunil Hitech has an order book position of Rs. 11831.20 million as on March 31, 2008 that is

2.75 times its 2007-08 net sales. These orders are to be executed in the next 18-24 months. To de- risk the business

model Company has diversify orders in various sectors About 76.45 percent of its order book consists of power

generation related contracts, followed by 12.83 percent from transmission, 3.82 percent from hydro power, 4.75

percent from steel sector and 2.15 percent from overhauling and maintenance contracts.

4. Client Risk

Inability in establishing credibility among clients and maintaining the same over a period of time could add to the

concerns of any organization.

Risk Mitigation - Sunil Hitech has established itself in the industry and has a very strong client base which includes

BHEL, NTPC, Reliance Energy, Jindal Steel and Power, the SEBs of Maharashtra, Chattisgarh and Madhya Pradesh,

and more.

5. Knowledge Risk

Key skills are required to execute BOP work and inexperience and ignorance regarding the same could be a risk.

Risk Mitigation - Electrical and civil works are one of the key skills needed to execute the BOP work. Sunil Hitech

has forayed into the Transmission and Distribution (T&D) sector, which will enable it to develop these skills over time.

Recruitment of senior & experienced staff at key positions from the respective segment of BOP works.

DIREcToRS’ REpoRT

43

To the Shareholders,

Your Directors are pleased to present the tenth annual report of the Company together with the audited financial results for the

year ended March 31, 2008.

Financial Results

Rs. in million

Particulars 2007-08 2006-07

Net Sales 3,063.21 1448.05

Other Income 20.68 15.76

Total Income 3,083.73 1463.81

Operating Profit 500.94 196.65

Interest 89.76 32.99

Depreciation 86.12 44.10

Profit Before Tax 325.06 119.56

Taxation – Current 108.88 40.24

Deferred (4.98) (.40)

Fringe Benefit Tax 3.41 1.20

Profit after Taxation (before extraordinary items) 217.74 78.51

Profit after Taxation (after extraordinary items) 210.08 75.67

Balance brought forward 118.82 64.79

Dividend on equity shares 14.73 12.03

Tax on Dividend 2.50 2.05

Balance carried to Balance Sheet 290.66 118.82

Operational Review

Over 2007-08, Sunil Hitech achieved

a total income of Rs. 3,083.73 million

compared to Rs. 1463.81 million in

the previous year, registering a 110.7

percent growth. The operating profit

grew from Rs. 196.65 million in

2006-07 to Rs. 500.94 in 2007-08

or by 154.7 percent, while net profit

increased to Rs. 210.08 million in

2007-08 from Rs. 75.67 in 2006-07,

recording a 177.6 percent growth.

The performance was driven by the

company executing an increased

number of projects. The current year

also appears bright in terms of orders

in hand, with the order book presently

worth Rs. 13761.70 million as on June

30, 2008.

Dividend

Your Directors are recommended

12 percent on equity shares for the

financial year ended March 31, 2008,

which if approved at the forthcoming

Annual General Meeting, will be paid

to equity shareholders whose names

appear in the Register of Members as

on September 16, 2008.

public Deposits

During the year ended March 31,

2008, the Company did not accept any

deposits from the public.

Directors

As per Article 107 and 108 of the

Articles of Association of the Company,

Mr. Dilip Y. Ghanakar and Mr. Sajid

Ali, Directors of the Company, are

liable to retire by rotation in the

forthcoming Annual General Meeting

and being eligible, offer themselves for

reappointment.

Directors’ Responsibility

Statement

Pursuant to Section 217(2AA) of the

Companies Act, 1956, your Directors

hereby confirm that:

a) In the preparation of annual

accounts of the Company, the

applicable Accounting Standards

have been followed along with

proper explanation to material

departure from the same, if there

any.

b) The Directors have selected such

Accounting Policies and applied

them consistently and made

judgments and estimates that are

reasonable and prudent so as to

give a true and fair view of the

state of affairs of the Company for

the financial year ended March

31, 2008 and of the profit of the

Company for the year ended on

that date.

c) The Directors have taken

proper and sufficient care

for the maintenance of

adequate accounting records in

accordance with the provisions

of the Companies Act, 1956

for safeguarding the assets of

the company and for preventing

and detecting fraud and other

irregularity.

d) The Directors have prepared the

annual accounts of the Company

on a going-concern basis.

particulars of employees

required under Section 217 (2A)

of the Companies Act, 1956

The particulars of employees as

required under Section 217(2A) of the

Companies Act, 1956 and Companies

(Particular of Employee) Rules, 1975

are set out in the Annexure to this

report.

Auditors and Auditor’s Report

M/s G. G. Randad & Company,

Chartered Accountants, Aurangabad

holds office until the conclusion of the

ensuing Annual General Meeting and

being eligible, offer themselves for re-

appointment.

Notes on Accounts and significant

Accounting Policies are self explanatory

hence do not require further

clarification.

Management’s Discussion and

Analysis

A detailed review of operational

performance and future outlook of

the Company is given under the

Management’s Discussion and Analysis

report which forms part of the annual

report.

Report on Corporate

governance

Pursuant to Clause 49 of the listing

agreement entered with stock

exchanges, a separate section on

Corporate Governance of the company

forms a part of this annual report.

Issue & Allotment Of Share

Warrant

The Company made an issue of

38,00,000 convertible share warrants

of Rs. 10 each at a price of Rs. 146

per share aggregating Rs. 554.8

million to 13 allottees as per Chapter

XII of SEBI (DIP) Guidelines, 2000.

Apart from the four promoters viz.

Mr. Ratnakar Gutte, Mrs. Sudhamati

Gutte, Mr. Sunil Gutte and Mr. Vijay

Gutte, there were other 9 allottees out

of which 5 are body corporates and 4

were individuals. The allotment of the

warrant was made on October 31,

2007. These warrants are compulsorily

convertible into equity shares within 18

months from date of allotment, i.e. by

April 30, 2009.

Qualified Institutional Placement

As per Chapter XII A of SEBI (DIP)

Guidelines 2000, the Company made

a Qualified Institutional Placement

(QIP) of 22,50,000 equity shares

of Rs. 10 each at a price of Rs. 360

aggregating Rs. 810 million to six

Institutional Investors viz. Bessemer

Venture Partners Trust, Franklin

Templeton Mutual Fund A/c Franklin

India High Growth Companies Fund,

Citigroup Global Markets Mauritius

Private Limited, Merril Lynch Capital

Markets Espana S. A. S. V, Tata Trustee

Co. Pvt. Ltd. A/c Tata Mutual Fund -

Tata Tax Advantage Fund, Tata Trustee

Co. Pvt. Ltd. A/c Tata Mutual Fund -

Tata Tax Saving Fund. The allotment of

the shares was made on January 18,

2008.

45

listing

Equity Shares issued by way of QIP are

listed on the Bombay Stock Exchange

Limited (BSE) and the National Stock

Exchange (NSE) w.e.f. January 25,

2008.

Subsidiary

As required under Section 212 of the

Companies Act, 1956, the accounts

relating to the subsidiary company, i.e.

Sunil Hitech Engineers & Manufacturers

Private Limited are attached herewith.

During the financial year 2007-08 the

Company subscribed 600,000 equity

shares of Rs. 10 each in the share

capital of the subsidiary company.

Presently, the Company holds 84.74

percent in the share capital of its

subsidiary.

Consolidated Accounts

As required under Clause 32 of

the Listing Agreement with Stock

Exchanges, a Consolidated Financial

Statement of the Company and its

subsidiary is attached.

Conservation of energy,

technology, Foreign exchange

earnings and Outgo

Information in accordance with the

provisions of section 217(1)(e) of the

Companies Act, 1956 read with the

Companies (Disclosure of particulars

in the Report of Board of Directors)

Rules, 1988 are given in Annexure B to

this report.

Acknowledgement

The Directors of the Company

acknowledge the continued support

extended by its investors, customers,

business associates, bankers and

vendors. They place on record their

appreciation for the significant

contribution made by the employees at

all levels through their hard work and

dedication.

The Directors also thank various

Government and Regulatory

Authorities and most importantly, their

Shareholders for their patronage,

support and faith in the Company.

The Board looks forward to their

continued support in the years to come.

For and on behalf of the Board,

Ratnakar M. Gutte

Chairman

Place: Nagpur

Date: 7th July, 2008

Statement of particulars of employees pursuant to the provisions of Section 217 (2a) of the Companies Act,1956 and forming

part of the Directors Report for the year ended 31st March 2008 Rules, 1975 and forming the part of the Directors’ Report for

the year ended on 31st March, 2008

Sl.No Name Designation Qualification Age

(years)

Date of

Joining

Experience

(years)

Gross

Remuneration

Previous

Employment

1 Mr. Ratnakar

M. Gutte

CMD Under

Graduate

50 Years 08.06.1998 21 Years 14400000 N.A.

2 Mrs.

Sudhamati

R. Gutte

Director Under

Graduate

46 Years 08.06.1998 17 Years 7200000 N.A.

3 Mr. Sunil R.

Gutte

Executive

Director

B.E. Mech.

Eng.

26 Years 01.06.2005 4 Years 4800000 N.A.

4 Mr. Vijay R.

Gutte

Director

Finance

MBA Finance 25 Years 29.05.2007 2 Years 2000000 N.A.

ANNExuRE I To ThE DIREcToRS’ REpoRT

ANNExuRE II To ThE DIREcToRS’ REpoRT

energy Conservation, technology Absorption and Foreign earnings and Outgo

(A) Conservation of Energy

The Company invests continuous efforts for improvement in energy efficiency and conservation of energy is given high

priority while implementing projects as well as at various offices

(B) Technology absorption

It has been Company’s constant endeavor to apply such latest domestic and imported technology which improve efficiency

and reduces cost. The Company has, in the past, imported cranes and other heavy equipments which are fully operational

at present and have resulted in substantive enhancement of productivity and cost reduction in several projects.

(c) foreign Exchange Earnings and Outgo

The Company has imported capital goods worth Rs. 411.27 lacs during Financial year 2007-08.

For and on behalf of the Board,

Ratnakar M. gutte

Nagpur, 7th July, 2008 Chairman

47

Sunil Hitech is committed to

establishing mutually beneficial

relations with our suppliers, customers

and business partners. In our business

dealings we expect our partners to

adhere to business principles consistent

with our own.

Community involvement :

Sunil Hitech strives to be a trusted

corporate citizen and, as an

integral part of society, to fulfill our

responsibilities to the

societies and communities in which we

operate.

Public Activities :

Sunil Hitech is encouraged to promote

and defend their legitimate business

interests. Sunil Hitech will co-

operate with governments and other

organizations, both directly and through

bodies such as trade associations,

in the development of proposed

legislation and other regulations which

may affect legitimate business interests.

Sunil Hitech neither supports political

parties nor contributes to the funds of

groups whose activities are

calculated to promote party interests.

The Environment :

Sunil Hitech is committed to making

continuous improvements in the

management of our environmental

impact and to the longer-term goal

of developing a sustainable business.

Sunil Hitech will work in partnership

with others to promote environmental

care, increase understanding of

environmental issues and disseminate

good practice.

Innovation :

In our scientific innovation to meet

consumer needs we will respect the

concerns of our consumers and of

society. We will work on the basis

of sound science, applying rigorous

standards of product safety.

Competition :

Sunil Hitech believes in vigorous

yet fair competition and supports

the development of appropriate

competition laws. Sunil Hitech and

employees will conduct their operations

in accordance with the principles of

fair competition and all applicable

regulations.

Business Integrity :

Sunil Hitech does not give or receive,

whether directly or indirectly, bribes

or other improper advantages

for business or financial gain. No

employee may offer, give or receive

any gift or payment which is, or may

be construed as being, a bribe, any

demand for, or offer of, a bribe must be

rejected immediately and reported to

management. Sunil Hitech accounting

records and supporting documents

must accurately describe and reflect the

nature of the underlying transactions.

No undisclosed or unrecorded account,

fund or asset will be established or

maintained.

conflicts of interests :

All Sunil Hitech ‘s employees are

expected to avoid personal activities

and financial interests which could

conflict with their responsibilities to the

Company. Sunil Hitech ‘s employees

must not seek gain for themselves or

others through misuse of their positions.

Compliance - Monitoring - Reporting :

Compliance with these principles is

an essential element in our business

success. The Sunil Hitech board is

responsible for ensuring these principles

are communicated to, and understood

and observed by, all employees. Day-

to-day responsibility is delegated to the

senior management of the company

and in charge of all sites of company.

They are responsible for implementing

these principles, if necessary through

more detailed guidance tailored to

local needs. Assurance of compliance

is given and monitored each year.

Compliance with the code is subject

to review by the board supported by

the audit committee of the board.

Any breaches of the code must be

reported in accordance with the

procedures specified by the Secretary.

The board of Sunil Hitech will into

criticise management for any loss of

business resulting from adherence to

these principles and other mandatory

policies and instructions. The board of

Sunil Hitech expects employees to bring

to their attention, or to that of senior

management, any breach or suspected

breach of these principles. Provision

has been made for employees to be

able to report in confidence and no

employee will suffer as a consequence

of doing so.

coDE oF coNDucT

REpoRT oN coRpoRATE GovERNANcE

49

1. Board of Directors

Role

The Company’s business is conducted

by its employees, managers, and

officers, under the direction of the

Board and its Chairman, to enhance

the long-term value of the Company

for its shareholders. The Board is

elected by the shareholders to oversee

management and to assure that the

long-term interests of the shareholders

are being served. Both the Board and

management recognize that the long-

term interests of the shareholders are

advanced by responsibly addressing

the concerns of other shareholders and

interested parties, including employees,

customers, suppliers, the communities

the Company serves, government

officials, and the public at large.

Information Placed Before The Board

In terms of the corporate governance

policy, the following information is being

placed before the Board:

i. Annual operating plans, budgets

and other updates.

ii. Capital budgets and other updates.

iii. Quarterly results for the Company

its operating divisions or business

segments.

iv. Minutes of meetings of audit

committee and other committees of

the Board.

v. The information of recruitment and

remuneration of senior officers just

below the Board level, including

appointment or removal of Chief

Financial Officer and the Company

Secretary.

vi. Show cause, demand, prosecution

notices and penalty notices which

are materially important.

vii. Fatal or serious accidents,

dangerous occurrences, any

material effluent or pollution

problems.

viii. Any material default in

financial obligations to and by

the Company, or substantial

nonpayment for goods sold by the

Company.

ix. Any issue, which involves possible

public or product liability claims

of substantial nature, including

any judgment or order which,

may have passed strictures on

conduct of the Company or taken

an adverse view regarding another

enterprise that can have negative

implication on the Company.

x. Details of any joint venture or

collaboration agreement.

xi. Transactions that involve substantial

payment towards goodwill, brand

equity, or intellectual property.

xii. Significant labour problems,

their proposed solutions and

other significant developments in

human resources and/or industrial

relations like signing of wage

agreements, implementation of

Voluntary Retirement Schemes and

others.

xiii. Sale of material nature,

investments, subsidiaries, assets,

which is not in normal course of

business.

xiv. Quarterly details of foreign

exchange exposures and the steps

taken by management to limit the

risks of adverse exchange rate

movement, if material.

xv. Non-compliance of any regulatory,

statutory or listings requirements

and shareholders service such as

non-payment of dividend, delay in

share transfers and such.

The Company recognizes corporate governance as an

imperative for sustained growth in shareholder value. As such,

it is committed to the highest standards of ethics, integrity,

transparency, professionalism, empowerment and accountability

driven by the objective to have both customers and investors

repose greater confidence in the Company.

Mr. Ratnakar M. Gutte Executive

Director 8 Yes Chairman Member Chairman Member

Mrs. Sudhamati R. Gutte Executive

Director 7 Yes No No No No

Mr. Sunil R. Gutte Executive

Director 11 Yes No No No No

Mr. Vijay R. Gutte Executive

Director 9 No No No No No

Mr. S.K. Kodandarmaiah Executive

Director 6 No No No No No

Mr. M.N. Mohanan Executive

Director 11 Yes No No No No

Mr. Kamlakar G. Holkar Independent

Director 9 Yes No No No No

Mr. Dilip Y. Ghanekar Independent

Director 8 Yes No No No No

Mr. Sarita Rathi Independent

Director 5 Yes No No No No

Mr. Sajid Ali Independent

Director 8 No No No No No

Mr. S.S. Waghmare Independent

Director 4 No No No No No

Mr. Parag Sakalikar Independent

Director 4 No No No No No

details of the Board Meetings held during the financial year

Name Category No. of Board

Meetings

attended

during

2007-08

Whether

attended

AGM held

on Sept.

20, 2007

No. of Directorships in

other public companies

No. of Committee

positions held

in other public

companies

5151

Details of the Board Meetings

held during the financial year

Sl. Date No. of

No. Directors

Present

1 30th April 2007 6

2 29th May 2007 7

3 19th July 2007 6

4 31st July 2007 7

5 26th Aug. 2007 7

6 31st Oct. 2007 8

7 28th Dec. 2007 11

8 09th Jan. 2008 12

9 18th Jan. 2008 12

10 24th Jan. 2008 8

11 29th March 2008 7

Board Committees

Currently the Board has three

committees, i.e., the Audit Committee,

the Remuneration Committee and the

Investors’ Grievance Committee. All

Committees except the Audit Committee

consist of entirely Independent Directors.

Normally the Committees meet four to

five times in a year. The quorum of the

meetings is two members or one-third of

the strength, whichever is higher.

2. Audit committee

Purpose

Audit Committee assists the Board in the

effective discharge of its responsibilities

for corporate governance, financial

reporting and corporate control. In the

discharge of its functions, the Committee

exercises the powers and responsibilities

vested on it under the Companies Act,

1956, or any re-enactment thereof

and the relevant clauses of the listing

agreement with Stock Exchanges.

The Board will continue to have the

overall responsibility in respect of all

such matters. Clause 49 of the listing

agreement makes it mandatory for

the listed companies to make the

Audit Committee charter. The primary

objective of the Audit Committee is to

supervise and effectively monitor the

financial reporting in object of proper,

effective and timely disclosures and

ensure transparency, quality and integrity

in financial reporting.

Organisation

(i) The audit committee has six

directors as members. Two-thirds

of the members of audit committee

are independent directors.

(ii) All members of audit committee

are financially literate and have

accounting or related financial

management expertise.

(iii) The chairman of the Audit

Committee is an Independent

Director.

(iv) The Company Secretary is the

Secretary of the committee.

Powers

The Audit Committee has the following

powers:

a. To investigate any matter within its

terms of reference or in relation to

the compliance with the provisions of

the Companies Act, 1956 or referred

to it by the Board

b. To seek information from any

employee

c. To obtain outside legal or other

professional advice

d. To secure attendance of outsiders

with relevant expertise, if it considers

necessary

Role

The role of the Audit is as follows:

i) Supervising the Company’s

financial reporting process and

the disclosure of its financial

information to ensure that financial

statements are correct, sufficient

and credible.

ii) Recommending the appointment,

re-appointment and, if required,

the replacement or removal of the

statutory auditor and the fixation of

audit fees to the Board.

iii) Approval of payment to statutory

auditors for any other services

rendered by the statutory auditors.

iv) Review with the management, of

the annual financial statements

before presentation to the Board

for approval, with particular

reference to:

a. Matters required to be included

in the Directors’ Responsibility

Statement forming part of

the Board’s report in terms

of relevant provisions of the

Companies Act, 1956 or any

re-enactment thereof;

b. Changes, if any, in accounting

policies and practices and

reasons for the same;

c. Major accounting entries

involving estimates based on

the exercise of judgment by

management;

d. Significant adjustments made

in the financial statements

arising out of audit findings;

e. Compliance with listing and

other legal requirements

relating to financial statements;

f. Disclosure of any related party

ransactions;

g. Qualifications in the draft

audit report.

v) Review with the management, of

the quarterly financial statements

before submission to the Board for

approval

vi) Review with the management, of

the performance of statutory and

internal auditors, adequacy of the

internal control systems

vii) Review of the adequacy of internal

audit function, if any, including

the structure of the internal

audit department, staffing and

seniority of the official heading the

department, reporting structure

coverage and frequency of internal

audit.

viii) Discussion with internal auditors

any significant findings and follow

up there on.

ix) Review of the findings of any

internal investigations by the

internal auditors into matters

where there is suspected fraud or

irregularity or a failure of internal

control systems of a material

nature and reporting the matter to

the Board

x) Discussion with statutory auditors

before the audit commences,

about the nature and scope

of audit as well as post-audit

discussion to ascertain any area of

concern

xi) To look into the reasons for

substantial defaults in the payment

to the depositors, debenture

holders, shareholders (in case

of non-payment of declared

dividends) and creditors

xii) Review of the functioning of the

whistle-blower mechanism

xiii) Carrying out any other function as

may be assigned to the Committee

by the Board from time to time.

xiv) Review of information relating to:

a) Management’s discussion and

analysis of financial condition

and results of operations;

b) Statement of significant related

party transactions, submitted by

management;

c) Management letters /letters of

internal control weaknesses

issued by the statutory auditors;

d) Internal audit reports relating

to internal control weaknesses;

and

e) The appointment, removal and

terms of remuneration of the

Chief internal auditor.

Details of the Audit Committee

meetings during the financial year

As of March 31, 2008, the following

were the members of Audit Committee:

Mr. S. S. Waghmare Chairman

Mr. Dilip Y. Ghanekar Member

Mr. Sajid Ali Member

Mr. Parag Sakalikar Member

Mr. Ratnakar M. Gutte Member

Mr. Vijay R. Gutte Member

during the financial year ended March 31, 2008, four meetings of the audit committee were as follows:

Name of Members Category No. of Meeting

attended during 2007-08

Mr. S.S.Waghmare Chairman 2

Mr. Dilip Y. Ghanekar Member 4

Mr. Vijay R. Gutte Member 3

Mr. Parag Sakalikar Member 1

Mr. Ratnakar M. Gutte Member 2

Mr. Sajid Ali Member 4

53

3. Remuneration committee

The Remuneration committee is constituted of three Independent Directors.

Name of Members Category No. of Meeting attended

during the Year 2007-08

Mr. K.G. Holkar Chairman 3

Ms Sarita Rathi Member 3

Mr. Dilip Ghanekar Member 3

Remuneration Policy

The Remuneration Committee which comprises of three independent directors, in setting remuneration policy recognises the

need to be competitive circumstances. The Committee’s policy is to set remuneration levels which ensure that the executive

directors are fairly and responsibly rewarded in return for high levels of performance.

Remuneration policy is designed to support key business strategies and create a strong, performance-orientated environment.

At the same time, the policy must attract, motivate and retain talent. The Remuneration Committee considers that a successful

remuneration policy must ensure that a significant part of the remuneration package is linked to the achievement of stretching

corporate performance targets. The policy adopted by the Committee ensures that a significant proportion of the remuneration

of executives is aligned with corporate performance, generating a strong alignment of interest with shareholders.

Details of remuneration for 2007-08 of Managing Director and Whole-time Directors

(in Rs.)

Name Salary Perquisites & Allowances Commission Stock Options

Mr. Ratnakar M. Gutte, MD 1,44,00,000/- 16,19,800/- - -

Mrs. Sudhamati R. Gutte 72,00,000/- - - -

Mr. Sunil R. Gutte 48,00,000/- - - -

Mr. M.N. Mohanan 15,00,000/- 50,000/- - -

Mr. S.K. Kodandaramaiah 15,00,000/- - - -

Mr. Vijay Gutte 20,00,000/- - - -

Apart from the sitting fees, no other remuneration is being paid to Non-Executive Directors.

Service Contracts, Severance frees and Notice Period

The appointment of the Executive Directors is governed by the resolutions passed by the Board and shareholders of the

Company which cover the terms and conditions of such appointment read with service rules of the Company. There is no

separate provision for the payment of severance fee under the resolutions governing the appointment of Executive Directors. The

statutory provisions however apply.

Shareholding of the Directors in the Company as on 31st March, 2008

Director held singly and/or jointly No. of Ordinary Shares of Rs. 10/- each

Mr. Ratnakar M. Gutte 2,202,500

Mrs. Sudhamati R. Gutte 1,968,750

Mr. Sunil R. Gutte 1,678,740

Mr. Vijay R. Gutte 675,000

Mr. M.N. Mohanan 1,005

Mr. S.K. Kodandaramaiah 1,005

Mr. Parag Sakalikar 100

5. Investors’ grievance committee

The Investors’ Grievance Committee comprised of three Directors and all of them are Independent Directors. The Committee

oversees the complaints and grievances of the investors.

Name of Members Category Nature of Directorship No. of Meetings

attended during

the year 2007-08

Mr. K.G.Holkar Chairman Executive 4

Mr. Dilip Y. Ghanekar Member Independent 4

Mr. Sunil R. Gutte Member Independent 4

name, designation & address of compliance officer:

Mr. Kalyan K. Ghosh,

Company Secretary & Compliance Officer,

97, East High Court Road, Ramdaspeth, Nagpur – 440010.

Shareholder/Investor Complaints

Complaints pending as on 31st March, 2008

Sr. No. Description Nos. Received Total Replied Total Pending

1 Non-recpt. Credit 7 7 0

2 SEBI 3 3 0

3 Stock Exchange 1 1 0

4 Non recipt of DEMAT Credit 1 1 0

5 Non receipt of Dividend Warrant 2 2 0

6 Non receipt of Dividend Annual Report 3 3 0

7 Non receipt of Refund Orders 7 7 0

55

6. general body meetings

Location and time of last AGM held

Financial Year Details of Location Date & Time

2006-07 Registered office at Parli, Vaijnath September 20, 2007, 10:30 AM

Three special resolutions were passed

in last AGM as follows:

i) The appointment of Mr. Vijay

Gutte as Executive Director. As

he was below 25 years of age it

required the passing of a special

resolution.

ii) Under Section 81(1A) of the

Companies Act, 1956, a special

resolution was passed authorizing

the Company to raise equity not

more than Rs.200 crores through

Qualified Institutional Placement

as per Chapter XIIIA of SEBI (D&P)

Guidelines, 2000.

iii) The authorized Capital was

raised from Rs. 120 million to

250 million that required passing

of special resolution as the

alteration of capital clause in the

Memorandum of Association.

One special resolution was passed in

EGM held in FY 2007-08 as follows:

The Company issued 38,00,000

convertible warrants of Rs.10/- each

at a price of Rs.146/ per warrant to

Non-Promoters and Promoters as per

Chapter XIII of SEBI(DIP) Guidelines,

2000.

All special resolutions were passed at

the annual general Meeting held on

September 20, 2007.

During financial year 2007-08 no

resolution was passed through Postal

Ballot.

7. Disclosures

i) There were no materially

significant related party

transactions that may have been

in potential conflict with the

interests of the Company at large.

All related party transactions

during the year under reference

were in the ordinary course of

business and on arm’s length

basis.

ii) There were no non-compliance,

penalties, strictures imposed

by stock exchange, SEBI, other

statutory authorities or any matter

related to the Capital Markets.

iii) All Directors and Senior

Management Personnel have

affirmed compliance with

the Code of Conduct and a

declaration is given below:

“I hereby confirm that the Company

has obtained from all the members of

the Board and Senior Management

affirmation that they have complied

with the Code of Conduct for Directors

and Senior Management in respect of

the financial year 2007-08.”

Ratnakar M. Gutte

Chairman & Managing Director

Secretarial Audit

A qualified practicing Company

Secretary carried out a secretarial audit

to reconcile the total admitted capital

with National Securities Depository

Limited (NSDL) and Central Depository

Services (India) Limited (CDSL) and the

total issued and listed capital. The audit

confirms that the total issued/paid up

capital is in agreement with the total

numbers of shares in physical form and

the total numbers of dematerialized

shares held with NSDL and CDSL.

8. Means of communication

The means of communication to

the shareholders are friendly and

transparent.

Half yearly reports

No separate half yearly reports are sent

to shareholder households. However,

financial results for half year ended

September 2007 was published in

Economic Times, Mumbai; Deshonatti,

Nagpur; Lokmat, Beed; Times of India,

Nagpur; Business Line, all editions. half

year ended March 2008 was published

in Economic Times, Mumbai;

Times of India, Nagpur; Business Line,

all editions; Lokasha, all editions;

Hitavada, Nagpur.

Quarterly results

The quarterly, half yearly along with the

segment report are generally published

in Business Line (Hindu Publication)

and Lokmat newspapers and annual

results are additionally published in

Times of India, Mumbai edition, shortly

after the submission of the same to the

stock exchanges and displayed at the

Company’s website at www.sunilhitech.

com.

Corporate website

The Company’s website (www.

sunilhitech.com) is a comprehensive

reference on Sunil Hitech’s management, vision, mission, policies, corporate governance, corporate sustainability, investor

relations, sales network, updates and news. The section on ‘Investor Relations’ serves to inform the shareholders, by giving

complete financial details, shareholding patterns, corporate benefits, information relating to stock exchanges, registrars and

share transfer agents and frequently asked questions.

official news releases

Official news is regularly posted on Company’s website.Presentations are made to institutional investors or analysts and are

generally displayed on the Company’s website.

Management’s Discussions and Analysis report

The Management’s Discussion and Analysis report forms a part of the Directors’ report.

9. general shareholder information

(i) AGM: Date, time and venue : 18th September, 2008, 11 AM

Parli, Vaijnath, Dist. Beed, Maharashtra

(ii) financial Year : April to March every year

(iii) Date of book closure : 17th September & 18th September, 2008

(iv) Dividend Payment date : Octaber 17th, 2008

(v) Listing on stock exchange : Bombay Stock Exchange

P.J. Towers, Dalal Street, Mumbai – 400 001

National Stock Exchange

Exchange Plaza, Bandra Kurla Complex,

Mumbai – 400 051

(vi) Stock Code : BSE CODE : 532711

NSE CODE : SUNILHITEC

(vii) Market Price Data : Monthly High & Low quotes of

shares traded in National Stock

Exchange (NSE)

Month High (Rs.) Low (Rs.)

April 2007 116.00 72.00

May 2007 142.90 103.40

June 2007 147.85 127.00

July 2007 201.70 132.55

August 2007 234.90 175.10

September 2007 273.90 210.10

October 2007 287.00 210.75

November 2007 327.00 250.00

December 2007 413.00 305.00

January 2008 408.95 305.00

February 2008 345.00 252.50

March 2008 278.90 160.00

57

ix) Registrar and Transfer Agents : Bigshare Services Private Limited, E-2/3, Ansa Industrial Estate, Saki Vihar Road, Saki

Naka, Andheri (E), Mumbai - 400 072

x) Share Transfer System : Share Transfers in physical form can be lodged with Bigshare Services Private Limited

at the above address. The transfers are generally processed within 10-12 days from

the date of receipt if the documents are complete in all respects. Certain Directors and

the Company Secretary are empowered to approve the transfers.

Pursuant to Clause 47-C of the Listing Agreement with stock exchanges, certificates on half yearly basis confirming compliance

of share transfer formalities by the Company from the practising Company Secretary are submitted to the stock exchange within

a stipulated timeframe.

viii) Performance of share price in comparison to S & P CNX Nifty

Market Price Data

0

1000

2000

3000

4000

5000

6000

7000

8000

S&P CNX Nifty SUNIL HITECH SHARE PRICE

Apr 07

450

Apr 0

7

May

07

Jun

07

Jul 0

7

Aug

07

Sep

07

Feb

08

Mar

08

Oct

07

Nov

07

Dec

07

Jan

08

400

350

300

250

200

150

100

50

0

High Low

450

400

350

300

250

200

150

100

50

0May 07 Jun 07 Jul 07 Aug 07 Sep 07 Feb 08 Mar 08Oct 07 Nov 07 Dec 07 Jan 08

Range (in Rs.) Total Holders % of Total Holders Total Holding (in Rs.) % of Total Capital

10,091 94.28198 8764540.00 7.14006

291 2.71886 2433050.00 1.98209

154 1.43885 2349870.00 1.91433

55 0.51387 1384790.00 1.12812

24 0.22424 876190.00 0.71379

28 0.26161 1358900.00 1.10703

27 0.25227 1774740.00 1.44580

33 0.30832 103809520.00 84.56877

10,703 122751600.00 100.00

b) Distribution of Shareholding

xii) Dematerialization of shares and liquidity

The shares are compulsorily in dematerialized form and available for trading system at both National Security Depository

Ltd. (NSDL) and Central Depository Services (India) Ltd.(CDSL).

As per regulation 55A of SEBI (DP) Regulations, Secretarial Audit reports for reconciliation of share capital duly certified by

the practising Company Secretary are submitted within the stipulated timeframe.

As on March 31, 2008 shares held by CDSL, NSDL & in physical form are as follows:

No. of Shares % of total Capital Issued

CDSL 691562 5.64%

NSDL 11572243 94.27%

Physical 11355 0.09%

xi) Distribution of Shareholding

Shareholding pattern and distribution schedule as on March 31, 2008 are as follows.

a) Shareholding Pattern

Category Total No. of Shares %

Promoter Group 6530990 53.20

FIs / Banks 0 0

Foreign Institutional Investors 839771 6.84

Mutual Fund/UTI 1001692 8.16

Non-Institutions/Public 2672301 21.78

NRIs 130406 1.06

Venture Capital Fund 1100000 8.96

totAL 12275160 100

1 - 5000

5000 - 10000

10001 - 20000

20001 - 30000

30001 - 40000

40001 - 50000

50001 - 100000

100001 - 999999

Total :

59

xiii) Outstanding GDRs/ADRs/

Warrants or any Convertible

instruments, conversion date and

likely impact on equity

a) During the financial year 2007-

08, the Company issued and allotted

3,800,000 convertible warrants as per

Chapter XIII of SEBI (D&P) Guidelines,

2000, to 13 investors at a face value of

Rs. 10 with a premium of Rs. 136 (total

Rs. 146 per warrant) aggregating Rs.

5548 lakhs. The Company has already

received 10 percent of the aforesaid

amount at the time of allotment which

was made on October 31, 2007.

The warrants are compulsorily due for

conversion in to shares April 30, 2009,

after expiry of 18 months from the date

of allotment. After conversion the share

capital will increase by Rs. 38,000,000

the balance will go to the Company’s

General Reserve.

b)The company made Qualified

Institutional Placement (QIP)as

per Chapter XIIIA of SEBI ( D & P)

Guidelines 2000, of 22,50,000 equity

shares to 6 Institutional Investors at a

face value of Rs. 10/- with premium of

Rs. 350/- total Rs. 360/- per warrant

aggregating Rs. 8100 lacs/-. Out of

8100 lacs 225 lacs have been added

to share capital & the balance amount

has been credited to General Reserve.

The allotment was done on 18th

January, 2008. The shares have been

listed with both BSE and NSE.

xiv) Address for Communication

Sunil Hitech Engineers Ltd,

97, East High Court Road,

Ramdaspeth,

Nagpur – 440 010.

The addresses of the Depositories are as follows:

1) Central Depository Services Limited

Phiroze Jeejeebhoy Towers

Dalal Street

Mumbai – 400 001

2) National Securities Depository Limited

TradeWorld, 4th Floor

Kamala Mills Compound

Senapathi Bapat Marg

Lower Parel, Mumbai – 400 013

CDSL NSDL Physical

To the Shareholders

Sunil Hitech Engineers Limited

We have examined the compliance of

conditions of Corporate Governance

by Sunil Hitech Engineers Limited for

the year ended on 31st March, 2008,

as stipulated in Clause 49 of the Listing

Agreement of the said company with

the stock exchanges in India.

The compliance of conditions

of Corporate Governance is the

responsibility of the management. Our

examination was limited to procedures

and implementation thereof, adopted

by the company for ensuring the

compliance of the condition of

Corporate Governance. It is neither

an audit nor an expression of opinion

on the financial statements of the

company.

In our opinion and to the nest of our

information and according to the

explanations given to us, we certify that

the company has complied with the

conditions of Corporate Governance

as stipulated in the above-mentioned

Listing Agreement.

We further state that such compliance

is neither an assurance as to the

future viability of the company nor the

efficiency or effectiveness with which the

management has conducted the affairs

of the company.

For G. G. RANDAD & CO.

Chartered Accountants

g.g. RAnDAD

Partner

Membership No. 31266

Place: Nagpur

Date: 7th July, 2008

Auditor’s Certificate on Corporate Governance

I, Sunil R. Gutte, Joint Managing

Director, responsible for the finance

function, certify that:

a) I have reviewed the financial

statements and the cash flow

statement for the financial year

2007-08 and that to the best of my

knowledge and belief:

i) these statements do not contain

any materially untrue statement

or omit any material fact or

contain statements that might

be misleading;

ii) these statements together

present a true and fair view

of the company’s affairs

and are in compliance

with existing accounting

standards, applicable laws and

regulations.

b) There are, to the best of my knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violative of the company’s code of conduct.

c) I accept responsibility for establishing and maintaining internal controls and that they have evaluated the effectiveness of the internal control systems of the company and I have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which I am aware and the steps I have taken or propose to take to rectify these deficiencies.

d) I have indicated to the auditors and the Audit Committee:

i) significant changes in internal control during the year

ii) significant changes in

accounting policies during the

year and that the same have

been disclosed in the notes to

the financial statements; and

iii) I am not aware of any

significant fraud, the

involvement therein, if any,

of the management or an

employee having a significant

role in the company’s internal

control system.

Sunil R gutte

Joint Managing Director

Place: Nagpur

Date: 7th July, 2008

The Board of Directors

Sunil Hitech Engineers Limited

97 East High Court Road

Nagpur 400 010.

I have examined the registers, records and documents of Sunil Hitech Engineers Limited (“the Company”) for the financial year ended on March 31, 2008 maintained under the provisions of:

•TheCompaniesAct,1956andtheRules made under that Act;

•TheDepositoriesAct,1996andtheRegulations and the Byelaws framed under the Act;

•ThefollowingRegulationsandGuidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):

•TheSecuritiesandExchangeBoard

of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997;

•TheSecuritiesandExchangeBoardof India (Prohibition of Insider Trading) Regulations, 1992;

•TheSecuritiesandExchangeBoardof India (Disclosure and Investor Protection) Guidelines, 2000; and

•TheSecuritiesContracts(Regulation)Act, 1956 (‘SCRA’) and the Rules made under that Act; and

•TheEquityListingAgreementwithBombay Stock Exchange Limited and National Stock Exchange of India Limited.

1. I report that, based on my examination and verification of the registers, records and documents produced to me and according to the information and explanations given

to me by the Company, the Company has, in my opinion, complied with the provisions of the Companies Act, 1956 (“the Act”) and the Rules made under the Act, and Memorandum and Articles of Association of the Company, with regard to:

(a) maintenance of statutory registers and documents and making in them necessary entries;

(b) closure of Register of Members / Debenture Holders;

(c) forms, returns, documents and resolutions required to be filed with the Registrar of Companies;

(d) service of documents by the Company on its Members,

Debenture holders, Debenture Trustees and Registrar of Companies;

CEO/ CFO Certification

Secretarial Audit Report

61

(e) Notice of Board meetings and Committee meetings of Directors;

(f) the meetings of Directors and Committees of Directors Sunil Hitech Engineers Ltd

(g) the 9th Annual General Meeting held on September 20, 2007;

(h) minutes of proceedings of General Meetings and of Board and other meetings;

(i) approvals of shareholders, the Board of Directors, the Committee of Directors and government authorities, wherever required;

(j) constitution of the Board of Directors and appointment, retirement and re-appointment of Directors;

(k) remuneration of Directors including the Managing Director and Whole-time Directors;

(l) appointment and remuneration of Auditors

(m) transfers and transmissions of the Company’s shares and debentures and issue and delivery of original and duplicate certificates of shares and debentures;

(n) form of balance sheet as prescribed under Part I of Schedule VI to the Act and requirements as to Profit & Loss Account as per Part II of the said Schedule;

(o) borrowings and registration, modification and satisfaction of charges;

(p) investment of the Company’s funds including inter corporate loans and investments;

(q) giving guarantees in connection with loans taken by subsidiaries and associate companies;

(r) contracts, common seal,

registered office and publication of name of the Company; and

(s) generally, all other applicable provisions of the Act and the Rules made under that Act.

2. I further report that:

(a) the Directors of the Company have obtained Director Identification Number as per Section 266A of the Act.

(b) the Directors have complied with the requirements as to disclosure of interests and concerns in contracts and arrangements, shareholdings/debenture holdings and directorships in other companies and interests in other entities.

(c) the Directors have complied with the disclosure requirements in respect of their eligibility of appointment, their being independent and compliance with the Code of Business Conduct & Ethics for Directors and Management Personnel.

(d) the Company has obtained all necessary approvals of the Central Government and / or other authorities, under the Act.

(e) there was no prosecution initiated against, or show cause notice received by, the Company and no fines or penalties were imposed on the Company under the Companies Act, SEBI Act, SCRA, Depositories Act, Listing Agreement and Rules, Regulations and Guidelines framed under these Acts against the Company, its Directors and Officers.

3. I further report that the Company has complied with the provisions of the Depositories Act, 1996 and the Regulations and the Byelaws framed thereunder with regard to dematerialisation / rematerialisation

of securities and reconciliation of records of dematerialised securities with all securities issued by the Company.

4. I further report that, the Company has complied with:

a) the requirements under the Equity Listing Agreements entered into with Bombay Stock Exchange Limited, National Stock Exchange of India Limited.

(b) the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 with regard to the disclosures and maintenance of records required under the Regulations.

(c) the provisions of the Securities and Exchange Board of India (Prohibition of Insider Trading Regulations, 1992 with regard to disclosures and maintenance of records required under the Regulations.

(d) the provisions of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 with regard to issue and allotment of warrants on preferential basis to entities in the Promoter Group.

Manish pandePractising Company Secretary

Certificate of Practice No. 3424

Place : NagpurDated: 7th July, 2008

62

Financial Section

63

Auditors’ Report

To The Members of,

Sunil Hitech Engineers Ltd.

1. We have audited the attached balance sheet of, Sunil Hitech Engineers Limited as at 31st March 2008, the profit and loss account and also the Cash flow statements for the period ended on that date annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit included examining, on a test basis, evidence supporting that amounts and disclosures in the financial statements. An audit also included assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4 A) of section 227 of the Companies Act, 1956 we enclose in the Annexure a statement on the matter specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we report that:

a) We have obtained all the information and explanation, which to the best of our knowledge and belief were necessary for the purpose of our audit.

b) In our opinion, proper books of account as required by law have been kept by the company so far as appears from our examination of those books.

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account.

d) In our opinion, the Balance Sheet, Profit and Loss

Account and Cash Flow Statement dealt with by this report comply with the Accounting Standard referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

e) On the basis of written representation received from the directors, as on 31st March 2008 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanation given to us, the said accounts read together with the Significant Accounting Policies & notes thereon give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) In the case of the balance sheet, of the state of affairs of the company as at 31st March 2008

ii) In the case of the profit and loss account, of the profit/loss for the period ended on that date. and

iii) In the case of the cash flow statement, of the cash flows for the period ended on that date.

For G.G.RANDAD & CO.Chartered Accountants

Place: Nagpur G.G. RANDAD

Date: 7th July, 2008 PartnerMembership No. 31266

64

Annexure to the Auditors’ Report(Referred to in paragraph 3 of our report of even date)

i) a) The company has maintained proper record showing full particulars including quantitative details and situation of fixed asset. All the assets have not been physically verified by the management during the period ended on 31st March 2008 but there is phased regular program of verification which, in our opinion, is reasonable having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

b) During the period ended on 31st March 2008, the company has not disposed off a major part of the fixed assets

ii) a) The inventory has been physically verified during the period by the management. In our opinion, the frequency of verification is reasonable.

b) In our opinion & according to information and explanations given to us, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The company has maintained proper records of inventory. As explained to us, the discrepancies noticed on verification between the physical stocks and the book records were not material.

iii) In respect of the loans, secured or unsecured, granted by the Company to companies, firms or Other parties covered in the register maintained under section 301 of the Companies Act, 1956:

a) The Company has given loan to a subsidiary of the Company. In respect of the said loan, the maximum amount outstanding at any time during the year is Rs.60 lacs and year end balance is Rs. Nil

b) In our opinion and according to the information and explanations given to us, the aforesaid loan is interest free and other terms & conditions are not prima facie prejudicial to the interest of the Company.

c) The said interest free loan was repaid on demand and there was no repayment schedule.

d) The company has not taken loans from companies, firms, or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and therefore, the provision

of Clause 4(iii), of the Companies (Auditor’s Report) Order, 2003 is not applicable to the Company.

iv) In our opinion and according to the information and explanation given to us, there are adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of inventory, fixed assets and with regard to the sale of goods & services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v) a) According to the information and explanations given to us, we are of the opinion that the particulars of the contracts or arrangements that need to be entered in the register maintained u/s 301 of the Companies Act ,1956 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained u/s 301 of the Companies Act, 1956 and exceeding the value of rupees five lakhs in respect of any party during the year, have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time, except that reasonableness could not be ascertained where comparable quotations are not available having regard to the specialized nature of some of the transactions of the Company.

vi) In our opinion and according to the information and explanations given to us, the company has not accepted deposits from the public during the year

vii) In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

viii) According to the information and explanations given to us, the Central Government has not prescribed maintenance of cost records under clause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 for any of the products of the Company.

ix) a) According to the information and explanations given to us, the company is generally regular in

65

depositing with appropriate authorities undisputed statutory dues including provident fund, investor education protection fund, employees’ state insurance, income tax, sales tax, wealth tax, custom duty, excise duty, cess and other material statutory dues applicable to it except Service Tax.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, investor education protection fund, employees’ state insurance, income tax, wealth tax, sales tax, customs duty, excise duty and cess were in arrears, as at 31st March 2008 for a period of more than six months from the date they became payable.

c) According to the information and explanation given to us, there are no dues of sale tax, income tax, customs duty, wealth tax, excise duty and cess which have not been deposited on account of any dispute.

ix) In our opinion, there are no accumulated losses of the company. The company has not incurred cash losses during the period ended on 31st March 2008 covered by our audit and in the immediately preceding financial period.

x) In our opinion and according to the information and explanations given to us, the company has not defaulted in repayment of dues to a financial institution, bank or debenture holders.

xi) We are of the opinion that the company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

xii) In our opinion, the company is not a chit fund or a nidhi/ mutual benefit fund/society. Therefore, the provisions of clause 4 (xiii) of the companies (Auditor’s Report) Order, 2003 are not applicable to the company.

xiii) In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.

xiv) In our opinion, the company has not given any guarantees for loans taken by other from banks or financial institutions.

xv) In our opinion, term loans have been applied for the purpose for which they were raised.

xvi) According to the information and explanations given to us and on overall examination of the balance sheet of the company, we report that the no funds raised on short-term basis have been used for long-term investment. No long-term funds have been used to finance short-term assets except permanent working capital.

xvii) According to the information and explanations given to us, the company has not been made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act.

xviii) According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures hence no need to create any security.

xix) The Company has not raised any monies by way of public issues during the year.

xx) According to the information and explanations given to us, no fraud on or by the company has been noticed or reported during the course of our audit.

For G.G.RANDAD & CO.Chartered Accountants

Place: Nagpur G.G. RANDAD

Date: 7th July, 2008 PartnerMembership No. 31266

66

Balance Sheet as at 31st March, 2008

(Rs.in Lacs)

Schedule 2007-08 2006-07

SOURCES OF FUNDSShareholders’ FundShare Capital A 1,227.52 1,002.52Share Warrants 554.80 –Reserve and Surplus B 14499.41 4,704.44

16281.73 5,706.96

Loans FundsSecured Loans C 9,620.46 3,506.99

Deferred Tax Liability (Net) – 16.29 (See Note No.22)

Total 25902.19 9,230.23

APPLICATION OF FUNDSFixed Assets DGross Block 8,981.46 5,203.35 Less : Depreciation 2,275.53 1,413.49 Net Block 6,705.93 3,789.86 Capital Work-in Progress 1,141.85 52.28

7,847.78 3,842.14

Investments E 5,294.26 390.00

Deferred Tax Asset (Net) 33.49 –(See Note No.22)

Current Assets, Loans and Advances FInventories 4,938.77 1,170.25Sundry Debtors and Bills Receivables 8,671.85 4,971.23Cash and Bank Balance 2,057.28 1,522.00Other Current Asset 94.84 7.50Loans, Advances and Deposits 6,344.12 2,786.05

22,106.87 10,457.03

Less: Current Liabilities and Provisions G 9559.69 5,536.46

Net Current Assets 12547.17 4,920.57

Miscellaneous Expenditure H 179.49 77.52 ( To the extent not written off or adjusted )

Total 25902.19 9,230.23

NOTES ON ACCOUNTS I

As per our Report of even date attached For and on Behalf of the Board of Directors For G.G.Randad & Co.Chartered AccountantsG.G.Randad R. M. Gutte Sunil R. Gutte Kalyan K. GhoshPartner C M D Jt. Managing Director Company SecretaryMembership No. 31266

Place : NagpurDate : 7th July, 2008

67

Profit & Loss Account for the year ended 31st March, 2008(Rs.in Lacs)

Schedule 2007-08 2006-07

INCOMEWork Order 1 29,674.66 14,329.61 Gross Sales 1,099.12 171.41 Less: Excise Duty 143.22 20.56 Net Sales 955.90 150.85 Other Income 2 206.76 157.61 Accretion/(Decretion) to Work in Progress 3 100.32 101.87

Total 30,937.64 14,739.94

EXPENDITUREConsumption of Materials 4 14,882.45 5,223.33 Site and Operating Expenses 5 8,272.11 6,335.83 Personnel Cost 6 1,688.23 747.04 Administration Cost 7 1,085.47 467.25 Interest and Financial Charges 8 897.60 329.89 Depreciation D 862.42 Less : Transferred from Revaluation Reserve 1.19 861.23 441.03

Total 27,687.08 13,544.37 PROFIT BEFORE TAXES 3,250.56 1,195.57 Provision for TaxesCurrent Tax 1,088.81 402.43 Fringe Benefit Tax 34.13 12.00 Deferred Tax Liability / (Asset) (49.78) (4.00)PROFIT BEFORE EXCEPTIONAL ITEMS 2,177.39 785.14 Loss From Forward Exchange Contract – 10.42 Loss from Sale of Investment – 8.58 Prior Period items 76.62 9.40 NET PROFIT FOR THE PERIOD 2,100.77 756.75 Balance Brought Forward from Previous Year 1,188.19 647.87 AMOUNT AVAILABLE FOR APPROPRIATIONS 3,288.96 1,404.61 Proposed Dividend 147.30 120.30 Provision for Tax on Proposed Dividend 25.03 20.45 General Reserve 210.08 75.67 Balance Carried to Balance Sheet 2906.55 1,188.19

Total 3,288.96 1,404.61

Earnings per share - Basic & Diluted (Rs.)-excluding exceptional items 20.80 7.83 -including exceptional items 20.07 7.55 Weighted average number of shares 10,468,995 10,025,160

NOTES ON ACCOUNTS I

As per our Report of even date attached For and on Behalf of the Board of Directors For G.G.Randad & Co.Chartered AccountantsG.G.Randad R. M. Gutte Sunil R. Gutte Kalyan K. GhoshPartner C M D Jt. Managing Director Company SecretaryMembership No. 31266

Place : NagpurDate : 7th July, 2008

68

Schedules Forming Part of Balance Sheet as on 31st March, 2008

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : AShare Capital

Authorised2,50,00,000 Equity Shares of Rs.10/- each 2,500.00 1,200.00 (Previous year 1,20,00,000 equity shares of Rs.10/-each)

Issued and Subscribed1,22,75,160 Equity Shares of Rs.10/- each 1,227.52 1,002.52 (Previous year 1,00,25,160 equity shares of Rs.10/-each)

Paid up1,22,75,160 Equity Shares of Rs.10/- each 1,227.52 1,002.52 Fully Paid up(Previous year 10025160 equity shares of Rs.10/-each)

1,227.52 1,002.52

SHARE WARRANT 554.80 –38,00,000 Equity Shares of Rs.146/- each

Foot Note:i) In terms of the approval of the shareholders of the Company and as per the applicable Statutory provisions including

Security and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000, the Company, on August 14, 2007, has issued and allotted 38,00,000 warrants on preferential basis to entities in the Promoter Group entitling them to apply for equivalent number of fully paid up equity shares of Rs. 10/- each of the Company, at the price of Rs. 146/- per equity shares. The warrant holders have a right to apply for equity shares within 18 months from the date of allotment of the warrants.

ii) During the year 2007-08 the Company has issued and allotted 22,50,000 fully paid up equity shares of Rs. 10/- each of the Company on preferential basis to the Qualified Institutionals Investers at a price of Rs. 360/- per equity share as per Chapter XIIIA Security and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : BReserve And Surplus

Revaluation Reserve 61.81 62.99As per last Balance Sheet 62.99 62.99Less: Transferred to Profit and Loss A/C 1.19 –

Securities Premium 11,142.86 3,275.14As per last Balance sheet 3,275.14 3,275.14Add.During the Period 7,875.00 –Share issue expenses (7.28) –

General Reserve 388.20 178.12Balance as per previous Balance Sheet 178.12 102.44Add: Transferred from Profit & Loss A/c. 210.08 75.67

Profit and Loss AccountBalance in Profit & loss Account 2906.55 1,188.19

TOTAL 14499.41 4,704.44Foot Note:

Premium on issue of equity shares represents premium of Rs.350 per share on issue of 22,50,000 equity shares on Preferential allotment basis to Qualified Institutionals

69

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : CSecured Loans

A. TERM LOANSFrom Banks 3,387.81 1,079.13 Foreign Currency Loans 464.76 –Rupee Loans 2916.78 1,065.78

3381.55 1,065.78

From OthersGE Capital Transportation Finan. Ser. Ltd. 6.26 13.35

B. WORKING CAPITAL LOANSFrom Banks 6,232.65 2,427.86Foreign Currency Loans – –Rupee Loans 6232.65 2,427.86

9,620.46 3,506.99

SCHEDULE : DFixed Assets

(Rs.in Lacs)

Gross Block Depreciation Net Block

DescriptionOriginal

Cost

Additions During the

Year

Deduction/Adjust-ments

As At 31.03.08

Upto 31.03.2007

For The Year

2007-08

Deduction/Adjust-ments

As At 31.03.2008

As At31.03.08

As At 31.03.2007

A. Tangible Assets:Land 340.77 6.96 – 347.73 – – – – 347.73 340.77Building 891.32 298.79 44.97 1,145.13 74.58 47.52 0.38 121.72 1,023.42 816.74 Plant & Machinery 3,370.38 3,209.25 – 6,579.63 1,144.56 684.05 – 1,828.61 4,751.03 2,225.83 Computer & Printer 63.74 36.48 – 100.22 27.31 21.83 – 49.13 51.08 36.43 Fruniture & Fixtures 193.31 117.54 – 310.86 43.02 33.34 – 76.36 234.49 150.29 Vehicles 323.37 138.32 – 461.69 124.02 68.44 – 192.47 269.22 199.34

– –B. Intangible Assets:Computer Software 20.46 15.74 – 36.19 – 7.24 – 7.24 28.95 –

TOTAL 5,203.35 3,823.08 44.97 8,981.46 1,413.49 862.42 0.38 2,275.53 6,705.93 3,769.41

Previous Year 2,893.63 2,355.37 45.65 5,203.35 1,009.89 441.03 (37.44) 1,413.49 3,789.86 1,883.74 Capital WIP 1,141.85 52.28

Note:Additions for previous year includes Rs.67.48 lacs being the amount added on revaluation of Land & Building as at 14th November 2003

Capital work in progress includes:i. Rs. 1141.85 Lacs on account of cost of construction material at site.(Previous year Rs. 52.28 Lacs)

Schedules Forming Part of Balance Sheet as on 31st March, 2008

70

Schedules Forming Part Of Balance Sheet as on 31st March, 2008

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : E Investments

a) Long Term Investments

i) Unquoted Equity SharesSubsidiary CompaniesFully Paid Equity SharesSunil Hi-Tech Engg. & Mgf. P. Ltd. 350.00 290.00 (35,00,000 unit of Rs.10/- each )

Associate CompaniesFully Paid Equity SharesGangakhed Sugar Allied Industries 0.25 –( 2500 unit of Rs. 10/- each )

Other Fully Paid Equity Shares 22.43 50.00

Yogeshwari Sugar Factory 10.00 10.00Pangeshwar Sugar Factory 40.00 40.00

Niyojit Vidarbha Sahakari Bank – 1.00

Less : Provision for dimunition in value of Long Term Investment 27.57 1.00

ii) Quoted Equity Shares (Fully Paid) 2,200.00 50.00

Units of Mutual FundICICI Prudential – 25.00(Sold during the year)HDFC Mutual Fund – 25.00 (Sold during the year)AIG Infrastructure & Eco.Ref.Fund 1,000.00 –(1,00,00,000 unit of Rs.10/- each Purchase during the year)Franklin India Index Fund 200.00 –(479879 unit of Rs.41.67/- each)JM Financial Mutual Fund 1,000.00 –(1,00,00,000 unit of Rs.10/- each Purchase during the year)

b) Current Investment 2,721.58 –

Reliance Natural resources fund 2,770.00(2,77,00,000 unit of Rs.10/-Each Purchase during the year)Franklin Templeton Floating Fund – –(75,035,314.060 unit of Rs.10.6190/-each Purchased during the year & 73153262.247 units sold during the year & 1882051.813 unit of Rs.10.626/- each transfer to Franklin India Index Fund during the year)

Less : Provision for dimunition in value of Investment 48.42 –5,294.26 390.00

Aggregate Value of:i) Quoted Investments aggregateBook Value 4,921.58 50.00 Market Value 4,544.87 39.50Unquoted Investments aggregateBook Value 372.68 340.00

ii) Although Market value of quoted current investment (as reflected in the schedule F,{b}) is lower than its cost,

71

Schedules Forming Part Of Balance Sheet as on 31st March, 2008

company has partly sold above investments at profit of Rs.1.32 lacs on 24th April 2008, i.e before the date on which financial statements are approved by the Board of Directors, henceforth in the opinion of management no provision is made on that portion against such decline.

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : FCurrent Assets, Loans And Advances

A) Current Assets

Inventories 4,938.77 1,170.25(As valued and certified by Management)Stock in trade,at cost or net realisable value whichever is lowerRaw Material & Components 309.10 253.05 Stores, Spare Parts & Loose Tools 1,156.22 706.82 Finished Goods 3,172.93 10.74Stock in Transit 0.55 –Work in Progress Closing (At estimated cost) 299.97 199.65

Sundry Debtors 8,671.85 4,971.23 UnsecuredWithin Six MonthsGood Debt 8,108.54 4,537.25

Above Six MonthsGood debt 563.31 402.92 Considered Doubtful 20.68 37.90

8,692.53 4,978.07 Less : Provision for doubtful debts 20.68 6.84

Cash and Bank Balances 2,057.28 1,522.00 Cash on Hand 45.74 37.94 DD/Cheque on hand 8.00 –

Bank Balancesa) With Scheduled Banks

in Current Accounts 283.72 158.19 in Deposit Accounts 1,719.82 1,325.87

b) With NonScheduled Bankin Current Accounts – –

Other Current Assets 94.84 7.50Interest Accrued on Fixed Deposits 94.84 7.50

B) LOANS AND ADVANCES 6,344.12 2,786.05 (Unsecured Considered Good)Considered Goodi. Loans to Subsidiary Company – 60.00 ii. Advance recoverable in cash or in kind or for value to be received 3,824.94 792.67 iii. Deposits 2,114.97 1,428.04 iv. Advance Taxes (net of Provisions) – 395.36 v. Balances with Customes, Port Trusts & Excise 404.22 109.98

6,344.12 2,786.05

Considered Doubtfuli) Deposits 3.50 1.59

Less: Provision for Doubtful Advances (3.50) (1.59)22,106.87 10,457.03

72

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : GCurrent Liabilities And Provisions

A) Current Liabilities 8,561.85 4,655.99

a) Sundry CreditorsDue to – –i) Small Scale Industries 57.85 –ii) Others 2,284.28 1,116.82

2,342.14 1,116.82

b) Sub-Contractorsi) Amount Payable Against work 1,403.16 1,949.65ii) Security Deposit of Petty Contractors, 634.75 444.49

Retention Money, Withheld from Contractor 2,037.91 2,394.14

c) Advance from Customers 3,745.11 929.69

d) Investors Protection FundUnpaid Dividend for 2005-06 0.77 –Unpaid Dividend for 2006-07 1.99 –

e) Interest Accrued but not due on loan 2.63

f) Other Liabilities 431.30 215.34

B) PROVISIONS 997.84 880.47Provision for Taxation (Net of Advance Tax) 18.98 414.43Provision for Fringe Benifits Tax (Net of Tax) 6.49 –Provision for Wealth Tax 3.50 –Provision for Proposed Dividend 147.30 120.30 Provision for Tax on Proposed Dividend 25.03 20.45Other Provisions 773.09 325.28Provision for Gratuity 23.45 –

9559.69 5,536.46

SCHEDULE : HMiscellaneous Expenditure 179.49 77.52 (To the extent not Written off or adjusted)Preliminary Expense – –Expenses including commission or 175.54 73.57 brokerage on Subscription of SharesPre-Operative Expenses 3.96 3.95

179.49 77.52

Schedules Forming Part Of Balance Sheet as on 31st March, 2008

73

Schedules Forming Part of Profit And Loss Accountfor the year ended 31st March, 2008

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : 1Net Sales

Work Order (Fabrication, Erection, 29,674.66 14,329.61Modification & Overhauling)Gross Sales 1,099.12 171.41 Less: Excise Duty 143.22 20.56 Net Sales 955.90 150.85

30,630.56 14,480.46

SCHEDULE : 2Other Income

Interest On Bank deposits( TDS Rs.25,90,957, P.Y.Rs.27,56,332) 129.81 111.34 On Investments – 9.47 Dividend from Investment 2.52 17.43 Income from current investment in Mutual Funds(Net) 18.32 –Profit on sale of Fixed Assets 33.21 1.20 Miscellaneous Income 22.90 18.16

206.76 157.61

SCHEDULE : 3Accretion/ (Decretion) To Work In Progress

Work in Progress 100.32 101.87 Closing Work in Progress 299.97 199.65 Less : Opening Work in Progress 199.65 97.78

100.32 101.87

SCHEDULE : 4Consumption of Materials

i) Steel 4,948.90 1,991.67 Opening Stock – –Add: Purchases 8,121.83 1,991.67

8,121.83 1,991.67 Less : Closing Stock 3,172.93 –

ii) Other 9,008.36 3,099.15 Opening Stock 970.60 532.89 Add: Purchases 9503.63 3,536.85

10,474.23 4,069.75 Less : Closing Stock 1,465.87 970.60

iii) Purchases (trading based) 925.19 132.52 14,882.45 5,223.33

74

Schedules Forming Part of Profit And Loss Accountfor the year ended 31st March, 2008

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : 5Site and Operating Expenses

Construction, Erection & Fabrication Exp. 6,465.47 5,402.72 Hire Charges 473.06 314.86 Repair & Maintenance 172.54 122.06Taxes 644.02 192.69Others 517.02 303.50

8,272.11 6,335.83

SCHEDULE : 6Personnel Cost

ESIC 17.87 0.78Provident Fund 71.85 33.20Gratuity 23.45 –Salary to Staff 983.56 464.70Insurance Employer / Employee Scheme 71.42 76.66Other Benefits 203.99 103.05Salary to Director 316.10 68.64

1,688.23 747.04

SCHEDULE : 7Administration Expenses

Auditors Remuneration 8.10 4.92 Travelling & Conveyance 211.59 95.56 Insurance Expenses 93.55 39.81 Communication 65.46 38.02 Repair & Maintenance 86.94 51.33 Rate, Fees & Taxes 33.27 27.36 Donations 0.51 1.02Provision for dimunition in Value of Long Term Investment 27.57 –Dimunition in Value of Long Term Investment – 1.00Provision for dimunition in value of Current Investment 48.42 –Provision for Doubtful Debt 13.83 6.84 Provision for Doubtful Advances 1.92 1.59 Electricity Charges 28.79 9.22 IPO Expences 24.52 24.52 QIP & Warrant issue Expenses 31.62 –Legal Expenses 3.65 5.28 Professional Charges 83.06 50.36 Project Development & Financial Services 68.62 –Service Tax 19.99 46.53 Income Tax 8.32 –Other Administration Expenses 225.74 63.90

1,085.47 467.25

SCHEDULE : 8Interest and Financial Charges

Interest Paid to Bank 654.95 180.89Interest on Service Tax 16.14 13.85Interest Paid to Customer(Against Advance) 19.69 16.97Others 206.81 118.17

897.60 329.89

75

Cash Flow Statement for the year ended 31st March 2008

(Rs.in Lacs)

2007-08 2006-07

A CASH FLOW FROM OPERATING ACTIVITIESNet Profit before tax and extraordinary items. 3250.56 1195.57Adjustment for Depreciation 861.23 441.03Provision For Doubtful Debts And Advances 15.75 8.43Provision on Diminution In Value Of Long-Term Investments 27.57 -Diminution In Value Of Long-Term Investments - 1.00Misc. Expenditure Write Off 57.26 24.52Interest & Financial Charges 897.60 329.89Profit on Sale of Investments(Net) (18.32) -Profit on Sale Of Fixed Assets (Net) (33.21) (1.20)Interest Income (129.81) (120.82)Dividend Income (2.52) (17.43)

1675.55 665.43Operating Profit before Working Capital Changes 4926.11 1860.99

Adjustment forTrade and Other Receivables and Advances (7362.90) (3148.78)Inventories/ WIP (3768.52) (539.58)Miscellaneous Expenditure (165.40) (8.41)Trade and other Payable 4,377.12 1916.42

(6919.71) (1780.35)Cash used in Operations (1993.60) 80.64

Direct Taxes( Paid) (1508.41) (299.12)Extraordinary Item - (10.42)Prior year adjustment (80.57) (9.40)

(1588.97) (318.94)Net Cash used in Operating Activities (3582.57) (238.30)

B CASH FLOW FROM INVESTMENT ACTIVITIESPurchase of Fixed Assets (3819.13) (2355.37)Sale of Fixed Assets 77.80 8.17Advances for Asset(Capital WIP) (1089.57) (42.28)Purchase of Investments (12949.83) (309.00)Sale Investment/Bonds 8036.32 429.42Interest Received 129.81 120.82Dividend Received 2.52 17.43Net Cash Used in Investment Activities (9612.07) (2130.81)

C CASH FLOW FROM FINANCING ACTIVITIESProceeds from Issue of Share Capital including Securities 8100.00 -PremiumProceeds from Warrants 554.80 -Proceeds/(Repayment) from Long Term Borrowings (Net) 6113.48 2399.50Interest & Financial Charges (897.60) (329.89)Dividend Paid (Including Dividend Distribution Tax) (140.75) (114.31)Net Cash from Financing Activities 13729.93 1955.30Net Increase/(Decrease) in Cash & Cash Equivalent(A+B+C) 535.28 (413.81)Cash and Cash Equivalent at Beginning of the Year 1522.00 1935.81Cash and Cash Equivalent at Closing of the Year 2057.28 1522.00

As per our Report of even date attached For and on Behalf of the Board of Directors For G.G.Randad & Co.Chartered AccountantsG.G.Randad R. M. Gutte Sunil R. Gutte Kalyan K. GhoshPartner C M D Jt. Managing Director Company SecretaryMembership No. 31266

Place : NagpurDate : 7th July, 2008

76

SCHEDULE I

A) Significant Accounting Policies adopted in preparation and presentation of accounts.

a) Basis of Accounting:

i) The company follows mercantile system of accounting and recognizes Income and Expenditure on accrual basis.

ii) The accounts have been prepared in accordance with generally accepted accounting principals and Accounting Standards referred to in sub-section (3C) of the Section 211 of the Companies Act, 1956.However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account.

iii) Financial Statements are based on historical cost convention except for certain fixed assets which are revalued. These costs are not adjusted to reflect the impact of changing value in the purchasing power of money.

b) Use of estimates:

The preparation of financial statements required the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and the reported amounts of revenues & expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

c) Foreign Currency Transaction:

Foreign currency transactions

i) Initial Recognition

Foreign currency transactions are recorded in reporting currency, by applying to the foreign currency amount exchange rates between reporting currency and foreign currency at the date of transactions.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non-Monetary items which are carried at historical cost denominated in foreign currency are reported using the exchange rates at the date of the transaction.

iii) Exchange Differences

Exchange Differences arising on the settlement of monetary items or on reporting the Company’s

monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

Exchange differences in respect of fixed assets acquired, including foreign currency liabilities relating thereto, are recognized as income or expense in the period in which they arise.

d) Retirement and Other Employee Benefits:

Retirement benefits in the form of Provident Fund and Superannuating Schemes are defined contribution schemes and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due.

Gratuity liability under the Payment of Gratuity Act is accrued and provided for on the basis of an actuarial valuation made at the end of financial year.

Privileged Leave Benefits for short-term compensated absences are provided for on the basis of estimates.

e) Fixed Assets:

Tangible Assets:

Fixed Assets are stated at cost of acquisition, except for revaluation of certain land and building, less accumulated depreciation and impairment loss if any. Costs include all expenses incurred to bring the assets to its present location and condition. Exchange differences on translation of foreign currency transaction obtained to purchase fixed assets from countries outside India are included in the cost of such assets. Advances paid towards the acquisition of fixed assets and cost of assets not ready for their intended use before such date are disclosed under Capital Work in Progress.

Intangible Assets:

Intangible Assets are stated at cost of acquisition less accumulated amortization. Computer Software is amortized over a period of 5 years.

f) Depreciation:

i) Depreciation is provided on written down value method except freehold land at the rate and in the manner laid down in Schedule XIV to the Companies Act, 1956.

ii) Depreciation is calculated on a pro- rata basis from

77

the date of addition.

iii) Fixed Assets excluding buildings, computers and individually costing Rs. 5,000/- or less are not capitalized except when they are part of a larger capital investment program.

iv) The difference between depreciation provided based on revalued amount and that on historical cost is transferred from Revaluation Reserve to Profit and Loss Account.

g) Impairment of Assets:

As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:

a) The provision for impairment loss required, if any. or

b) The reversal required of impairment loss recognized in previous periods, if any.

Impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount.

Recoverable amount is determined:

i) In the case of an individual asset, at higher of the net selling price and the value in use;

ii) In the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at higher of the cash generating unit’s net selling price and the value in use.

h) Segment Reporting Policies:

Identification of Segments:

The Company’s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

i) Revenue Recognition:

i) Revenue from construction contracts is recognized as follows:

a) Fixed price contracts: Contract revenue is recognized by adding the aggregate cost and proportionate margin using the percentage completion method. Percentage of Completion is determined as a proportion of cost incurred to date to the total estimated contract cost.

ii) Subject to (i) above, Contract receipt are accounted for on the basis of Bills submitted to clients/bills certified by clients and do not include material

supplied by clients free of cost.

iii) Amounts due in respect of price escalation claims and/or variation in contract work approved by the customers are recognized as revenue only if the contract allows for such claims or variations and/or there is evidence that the customer has accepted it.

iv) Revenue from interest income is recognized on time basis.

v) Revenue from service related activities are recognized using the proportionate completion method.

vi) Dividend income is recognized when the right to receive dividend is established.

vii) Revenue from work in progress is recognized on estimated basis as certified by technical managers.

viii) Revenues from sale of products and services:

a) Revenue from sales of products is recognized on dispatch of goods to customers, which corresponds, to transfer of significant risk and rewards of ownership and is net of sales tax and trade discounts. Revenues from services are recognized when such services are rendered.

j) Investments:

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. Long term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary. Current investments comprising mutual funds investments are stated at cost less provision, (Please refer Notes to Accounts No.4) if any, for diminution, which is other than temporary in nature.

k) Inventories:

i) Items of inventories are measured at lower of cost or net realizable value after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. Raw Material & Components, Stores, Spare Parts & Loose Tools, finished goods are determined on FIFO basis.

ii) Work in Progress is valued at estimated cost. Cost includes direct materials, labour cost and appropriate overheads.

78

l) Taxes on Income and Fringe Benefits Tax:

Tax expense comprises current tax, deferred tax and fringe benefits tax.

Tax on income for the current period is determined on the basis of the taxable income and tax credits computed in accordance with the provision of the Income Tax Act, 1961, and based on the expected outcome of assessments. The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that the assets can be realized in future.

m) Provisions, Contingent Liabilities and Contingent Assets:

i) Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Provisions are not discounted to their present value

and are determined based on the best estimate required to settle the obligation at the balance sheet date. These provisions are reviewed at each balance sheet date and are adjusted up or down to reflect the current best estimate.

ii) Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

n) Public Issue Expenses:

Public Issue Expenses have been amortized in accordance with section 35-D of the Income Tax Act, 1961.

o) Custom Duties:

Custom Duty payable on raw materials, stores and machinery are accounted for on clearing of goods from Custom Warehouse.

p) Figures for previous year have been regrouped wherever considered necessary and practicable to the extent data is readily available.

79

B) Notes on Accounts:

1. i) Term Loan from UCO Bank is secured by way of first pari-passu charge on specific movable and immovable fixed assets of the Company procured out of Term Loan.

ii) Working Capital facilities from Consortium Bankers i.e.UCO Bank, SBI, Union Bank of India & HSBC Bank are secured by way of hypothecation of stock and book-debts both present and future of the Company, first pari-passu charge (hypothecation) on the fixed assets, Personal Guarantees of Chairman, and other Directors.

iii) Housing Loan from UCO Bank, HDFC Bank, ICICI Bank are secured by way of equitable mortgage of immovable property procured out of loan.

iv) Mobilization Advances from clients are secured against bank guarantees.

v) Hire purchase finance from ICICI, HDFC Bank, GE Capital, Kotak Mahindra Bank & ABN Amro Bank are secured by way of hypothecation of respective assets, first pari-passu charge on the fixed assets, personnel guarantees of Chairman, & other Directors.

vi) Loans in foreign currencies equivalent to Rs.464.76 Lacs (forming part of Loans from Banks – IDBI Mumbai) are secured by first mortgage on the Company’s immovable properties i.e. Cranes at certain locations and/or by hypothecation of movables at those locations (save and except book debts) both present and future, having pari passu, subject to prior charges, on specific assets in favour of the Company’s bankers.

vii) Foreign currency loans referred to in (vi) above are secured by way of mortgage on certain properties i.e. Cranes and assets situated at various places.

2. Contingent liabilities not provided for:

i) In respect of Sales Tax matters for which the company has preferred appeals with appropriate authorities- Rs. 61.20 Lacs (P.Y. Nil)

ii) In respect of Letter of Credits with banks- Rs. 596.23 Lacs (P.Y Rs. 122.62 Lacs)

iii) In respect of counter guarantees given to bank against guarantees given by bank Rs. 11,785.54 Lacs (P.Y. 5509.72 Lacs)

3. Capital Commitments:

i) Estimated amount of Contracts remaining to be executed on Capital Account (Net of Advances) Rs. 494.87 Lacs (P.Y. 37.27 Lacs)

ii) The Company has undertaken to provide continued financial support to its subsidiaries, Sunil Hi-tech Engineers & Mfg. Pvt. Ltd.

4. Although Market value of Quoted current investment (as reflected in the schedule F,{b}) is lower than its cost, company has partly sold above investments at profit of Rs.1.32 lacs on 24th April 2008-, i.e before the date on which financial statements are approved by the Board of Directors, henceforth in the opinion of management no provision is made on that portion against such decline.

5. In the opinion of Board of Directors all the Current Assets, Loans and Advances have a value on realization in the ordinary course of business at least equal to the amount at which they are stated and that all the known liabilities relating to the year have been provided for.

6. Profit for the year has been arrived after adjusting prior period debits of Rs. 80.57 Lacs (P.Y. Rs. 9.40 Lacs) and prior period credits of Rs. 3.95 Lacs (P.Y. Nil) charged/credited to Profit & Loss Account.

7. Managerial Remunerations

(Rs.in Lacs)

2007 – 08 2006 – 07

Salaries 3,16.10 68.64Contribution to Provident Fund 4.62 0.31*Estimated Value of perquisite 19.70 8.84Insurance 71.42 56.93Total 4, 11.84 134.71

* Valued as per Income Tax Rules, 1962 where applicable.

As the future liability for the gratuity is provided on an actuarial basis for the company as a whole, the amount pertaining to the director is not ascertainable and, therefore, not included above.

80

8. Computation of Net Profit in accordance with the Provision of section 349 of the Companies Act, 1956:

(Rs.in Lacs)

Particulars 2007 – 08 2006 – 07

a) Profit Before Taxation 3,250.56 11,95.57Add:i) Remuneration Paid to Directors 411.84 1,34.72ii) Provision for doubtful debts 13.83 8.43iii) Provision for Advances 1.20 –iv) Provision for diminution in value of investments 27.57 –v) Provision for current investments 48.42 –vi) Loss on sale of Investment 0.18 –vii) Sitting Fees 0.90 –

Less:i) Profit on sale of Fixed Assets 33.21 1.20ii) Profit on sale of Investment 18.50 –

Net Profit as per section 198 of the Companies Act,1956 3,702.79 13,37.51

b) Maximum permissible remuneration 370.28 133.75To whole time directors @ 10 % of the profit computed as above

c) Remuneration Paid as per service agreement 411.83 134.71* Company has already applied for Central Government permission for the excess remuneration paid (Rs. 41.55 Lacs) which is awaited

9. Auditor’s Remuneration:(Rs.in Lacs)

Particulars 2007 – 08 2006 – 07

Statutory Audit 5.00 2.00Other Audit Service / Certification 2.00 2.00Reimbursement of Expenses 1.10 0.92

10. CIF Value of Imports:(Rs.in Lacs)

Particulars 2007 – 08 2006 – 07

Raw Materials & Components NIL NILCapital Goods 3,95.52 310.61Software 15.75 Nil

11. Expenditure in foreign currency(Rs.in Lacs)

Particulars 2007 – 08 2006 – 07

Interest on IDBI Term Loan 13.83 NILOthers 1.59 NilTotal 15.41 Nil

12. Dividend Remitted during the year to Non-residential Shareholders:

Particulars 2007 – 08 2006 – 07

Number of Non Resident Shareholders 26 33Number of Equity Shares held by them 9253 15519A. Final Dividendi) Amount remitted (net of tax) Rs. in Lacs 1.11 0.16ii) Year to which dividend related 2006-2007 2005-2006

81

13. Related Party Disclosures

As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below:

i) List of related parties where control exists and related parties with whom transactions have taken place and relationships:

Sr. No. Name of the Related Party Relationship

1. Sunil Hi-Tech Engg. & Mfg. Pvt. Ltd. Subsidiary Companies (Control exists)2. Gangakhed Sugar & Energy Pvt.Ltd. Associate Companies3. a) Mr. Ratnakar.M. Gutte

b) Mrs. Sudhamati R. Guttec) Mr. Sunil R. Gutte Key Management Personneld) Mr. Vijay R. Guttee) Mr. M. N. Mohananf) Mr. S. K. K. Ramaiah

4. a) Ms Swati R. Gutte Relative of Directorb) Mr. Lahoodas M. Gutte

5. a) M/s. Essar Engineering WorksEnterprises over which Key Managerial Personnel are able to exercise significant influence

b) M/s. Trimurty Engineersc) M/s. Vijay Construction Companyd) M/s. Sadoday Laxmi Infra. Pvt. Ltd.

ii) Transactions with related party during the year:(Rs.in Lacs)

Particulars Subsidiaries AssociatesKey Mangmt.

PersonnelOthers Total

A. Fixed Assets /CWIP

Assets Purchased/ Addition during the year – – – – –

Capital Work In Progress – – – 2,03.57 2,03.57(–) (–) (–) (–) (–)

Sale of Fixed Assets – – – – –(–) (–) (1.61) (1.98) (3.59)

B. Investments

Balance as at 1st April, 2007 2,90 – – – 2,90(31) (–) (31)

Purchased / Adjusted during year 60 0.25 – – 60.25(2,59) – (2,59)

Balance as at 31st March, 2008 3,50 0.25 – – 3,50.25(2,90) (2,90)

82

Particulars Subsidiaries AssociatesKey Mangmt.

PersonnelOthers Total

C. Loans & Advances

Balance as at 1st April, 2007 60 – – – 60(80.22) (–) (–) (–) (80.22)

Given during the year – – – – –(–) (–) (–) (–) (–)

Returned during the year 60 – – – 60(20.22) (–) (–) (–) (20.22)

Balance as at 31st March,2008 – – – – –(60) (–) (–) (–) (60)

D. Other Advances as at 31.3.2008 8.81 – – – 8.81(1,58.71) (–) (–) (–) (1,58.71)

E. Purchases 10,57.98 – – – 10,57.98(1,32.51) (–) (–) (–) (1,32.51)

F. Expenditure

Remuneration – – 4,11.84 5.50 4,17.34(–) (–) (1,34.71) (5.40) (1,40.11)

House Rent – – 69.45 – 69.45(–) (–) (18.92) (1.50) (20.42)

Hire Charges of Vehicle – – 9.30 5.10 14.40(–) (–) (9.36) (4.94) (14.30)

Hire Charges Machinery – – 31.50 1.68 33.18(–) (–) (–) (–) (–)

Interest Paid – – – – –(4.81) (–) (–) (–) (4.81)

Dividend Paid – – 78.32 – 78.32(–) (–) (–) (–) (–)

The information given above, have been reckoned on the basis of information available with the company.

14. Opening Stock & Closing Stock:

Note: Opening Stock & Closing Stock of Trading based items are nil.

83

15. Sales by Class of Goods:

Product 2007 – 08 2006 – 07

Unit Qty. Value Unit Qty. Value

Seamless Straight Tube Mtr. 354 4.47 Mtr. 5665 66.68

Fin Flat on Size Mtr.& Nos. 12811Mtr1660 Nos. 593.61 Kgs. 3000 1.80

Acute Bend Nos. NIL NIL Nos. 800 69.92Heater Outlets Mtr. 195 2.52 NIL NIL NIL90 Degree Bend Mtr. 642 11.06 Nos. 360 20.41Alloy Steel Bend Nos. 35 5.30 NIL NIL NILHP Tube Nos. 507 5.98 NIL NIL NILSH Bends Nos. 400 3.54 NIL NIL NILPipes, Bends, Reducer Nos. 10 0.11 NIL NIL NILTube Bend Nos. 235 5.20 NIL NIL NILJ Bend Economizer Nos. 264 44.34 NIL NIL NILEconomical 180 d Tube Nos. 480 38.52 NIL NIL NILAir Register Asse.For Boiler Nos. 08 29.55 NIL NIL NILEconomizer Outlet HB Set 01 33.69 NIL NIL NILReheater Pendant Sets 02 321.23 NIL NIL NILOther Component NIL NIL NIL Nos. 240 12.59Total 1099.12 171.41

16. Purchase of Finished Goods:

Product 2007 – 08 2006 – 07

Unit Qty. Value Unit Qty. Value

Seamless Straight Tube Mtr. 54 3.71 Mtr. 565 64.07

Parts Fin Flat on Size Mtr & Nos 12811Mtr & 1670Nos. 499.08 Kgs. 000 1.74

Acute Bend Nos. NIL NIL Nos. 800 55.58Heater Outlets Mtrs. 195 2.04 NIL NIL NIL90 Degree Bend Mtrs. 642 9.24 Nos. 360 19.60Alloy Steel Bend Nos. 35 4.40 NIL NIL NILHP Tube Nos. 507 4.91 NIL NIL NILSH Bends Nos. 400 2.90 NIL NIL NILPipes, Bends, Reducer Nos. 10 0.08 NIL NIL NILTube Bend Nos. 235 4.33 NIL NIL NILReheater Pendant Sets 2 271.90 NIL NIL NILEconomizer OutletHB Set 1 27.90 NIL NIL NILJ Bend Economizer Nos. 264 36.70 NIL NIL NILEconomical 180 d Tube Nos. 960 33.00 NIL NIL NILAir Register Asse.For Boiler Nos. 08 25.00 NIL NIL NILOthers Component Nos. NIL NIL Nos. 240 12.06Total 925.19 153.05

17. Earning Per Share:

Sr. No. Particulars 2007 – 08 2006 – 07

i) Net Profit after tax attributable to shareholders (Rs. in Lacs) 2,100.77 7,56.75ii) Weighted Average Number of Equity Shares Outstanding during the year 10468995 10025160iii) Nominal Value per Share (In Rupees) 10 10iv) Basic/Diluted Earning Per Share (In Rupees)

- Before Exceptional Items 20.80 7.83- After Exceptional Items 20.07 7.55

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18. Disclosure required by Clause 32 of the Listing Agreement

Loans & Advances in the nature of loans include amount due from companies under the same management (subsidiaries, associates, firm) as under: -

(Rs.in Lacs)

Sr. No. Name of The Company As at 31st Mar 2008Maximum Balance During The Year

As at 31st Mar 2007Maximum Balance During The Year

1. Sunil Hi-Tech Eng. & Mfg. Pvt. Ltd. – 60.00 60.00 390.16

Notes:

a) Loans and Advances shown above fall in the category of Interest Free Loan

b) Loans to Employees as per Company’s policy are not considered.

c) Loans and Advances shown above, to subsidiaries fall under the category of Loans & Advances in nature of Loans where there are no repayments schedules and are re-payable on demand.

19. Details of Investments: -

Name of the Company As at 31st March 2008 As at 31st March 2007

Face ValueP.Unit

No. of Units Value Face Value No. of Units Value

(A) Long Term Investments

i) Unquoted Equity Shares (Fully Paid) NIL NIL

Unquoted Equity Shares inSubsidiary Companies (Fully Paid)

Sunil Hi-Tech Engg. & Mgf. P. Ltd. 10 35,00,000 350.00 10 29,00,000 290.00

Associate Companies Fully Paid equity Shares

Gangakhed Sugar Allied Industries 10 2500 0.25 NIL NIL NIL

Other Fully Paid Equity Shares

Pangeshwar Sugar Factory 10 4,00,000 40.00 10 4,00,000 40.00Yogeshwari Sugar Factory 10 1,00,000 10.00 10 1,00,000 10.00Niyojit Vidarbha Sahakari Bank Nil 1.00

ii) Quoted Equity Shares (Fully Paid)

Units of Mutual Fund

ICICI Prudential (Purchased on12-01-2007) – – – 24.78 1,00,887.813 25.00HDFC Mutual Fund (Purchased on11-01-2007) – – – 23.119 1,08,136.165 25.00

Franklin India Index Fund (Purchased on 28.01.08) 41.67 4,79,878.68 200.00 – – –

JM Financial Mutual Fund (Purchased on 05.03.08) 10 1,00,00,000 1,000.00 – – –

85

Name of the Company As at 31st March 2008 As at 31st March 2007

Face ValueP.Unit

No. of Units Value Face Value No. of Units Value

AIG Infrastructure & Eco. Ref. Fund (Purchased on 25.02.08) 10 1,00,00,000 1,000.00 – – –

(B) Other Current Investments

Reliance NaturalResources fund (Purchased on 25.02.08) 10 2,77,00,000 2,770.00 – – –Less: Provisions for Diminution in long-term

investments 27.57 – – 1.00

Provisions for Diminution in current investments 48.42

Total 5294.26 390.00

20. Following Short Term Investments were Purchased and redeemed / Sold during the year(Rs.in Lacs)

Name of The CompanyFace ValueRs. P.Unit

Nos.Purchase

CostSale / Redemption

Proceeds

Units of Mutual Funds Franklin Templeton Mutual Fund 10.62 75,035,314 7968.00 7982.91

21. Provision for current taxes

a) Includes provision for Wealth Tax Rs. 3.50 lacs (Previous Year: - Rs.2.85 lacs)

22. Deferred Tax

Timing differences relates mainly to depreciation as at 31.03.07 and for the twelve months ending 31.03.08 result in net deferred tax assets amounting to Rs.16.83 Lacs. Tax Assets/(liabilities) due to timing differences are in respect of:

(Rs.in Lacs)

1.04.2007 (Charge)/Credit 31.03.2008

Difference between book depreciation and tax depreciation. (12.96) 21.80 8.84Provision For Doubtful Advances Nil 0.65 0.65Provision For Doubtful Debts Nil 4.70 4.70Provision For Diminution in value of current investment Nil 16.46 16.46Expenditure debited to Profit and Loss Account but allowed for the tax purpose in subsequent assessment years Nil 2.84 2.84

Other items giving rise to timing differences (3.33) 3.33 NilTotal (16.29) 49.78 33.49

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23. Disclosures required by AS 29 “Provisions, Contingent Liabilities and Contingent Assets”:

a) Movement in provisions:

(Rs.in Lacs)

Class of Provisions

Excise Duty /Service Tax

Others Total

Balance as at 1-4-2007 317.42 7.87 325.29Additional provision during the year 2045.28 – 2045.28Provisions used during the year 1354.79 – 1354.79Provisions reversed during the year 242.68 – 242.68Balance as at 31-3-2008 765.23 7.87 773.10

24. Disclosure as required by Accounting Standard 15 (Revised) on Employee Benefits:

In respect of Gratuity, a Defined Benefit Scheme (based on Actuarial Valuation): -

(Rs.in Lacs)

DescriptionAs at

31st March, 2008

PV of past service Benefit 21.66Current Service Cost 1.79Interest Cost –Actuarial Gain/Loss –Benefits paid –Settlement Cost –Defined Benefit Obligation at year end 23.45

25. List of Small Scale Industrial Undertakings to whom amounts are due, have been determined based on the information available with the company and are as follows

Gould Electronics Private LTD. Kucheria Agencies Sea Linkers Private LTD.

Supreme Startech Private LTD. Sumeru Art Interior Vikrant Ropes Private LTD

IAC Electrical Private LTD. Shree Pavithra Ind. Magnarc Electrodes Private LTD.

26. The company has not received intimation from vendors regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures relating to amounts unpaid as at the year end together with interest paid/ payable under this Act have not been given.

27. Segment Information

Primary Segment Reporting: Business Segments

The Company’s business segments were classified into Project, and O & M, Supply.

Segment Composition:

Project Segment: This segment is engaged in the business of Fabrication, Erection & Commissioning of Boilers (Power Plants), Erection, Testing, and Commissioning of ESP.

O & M, SupplySegment: This segment is engaged in the business of Repair & Maintenance, Overhauling, and Renovations of Boilers and auxiliaries, Ash Handling Systems etc. and Supply of Economizer Coils, Reheater Coils, and Raiser Tubes & J Bends at various Thermal Power Plants.

Inter Segment Transfer: Segment revenues, segment expenses and segment results include transfer between business segments that are made based on negotiation between segments with reference to the costs, market prices and business risks, within the overall optimization objective for the Company and are comparable with competitive

87

market prices charged to external customers. Inter-segment transfer are eliminated on consolidation.

During the year Segment Reporting has been reconstituted in line with the revised reporting norms of the Company. Consequently, segment figures for the previous year have been regrouped.

Audited Segment wise Revenue result and Capital Employed for year ended 31st March 2008(Rs.in Lacs)

Sr. No. Particulars

Figures for current Year ended 31st March 2008

(Audited)

Figures for Previous Year ended 31st March 2007

(Audited)

1 21 Segment Revenue

(Net Sales/Income from each segment should be disclosed under this head)a. Project 28,299.20 13,079.85b. Supply, Operation & Maintenance 2,331.36 1,400.61

Total 30,630.56 14,480.46

Less: Intersegment Revenue – –Net Sales /Income from Operations 30,630.56 14,480.46

2 Segment Results

(Profit (+) / Loss (-) before tax and interest from each segment)a. Project 5,570.36 1,820.78b. Supply, Operation & Maintenance 389.41 120.94Total 5,959.77 1,941.72Less: i) Interest 897.60 329.89

ii) Other un-allocable expenditure net off un-allocable income 1,811.62 416.26

Total Profit Before Tax 3,250.55 1,195.57

3 Capital employed

(Segment Assets – Segment liabilities)a. Project 8,167.99 2,575.73b. Operation & Maintenance 676.84 57.27

Total 8,844.83 2,633.00

Less: i) (Other un-allocable Corporate Assets - Other un-allocable Corporate Liabilities) 17,257.16 7,510.64

88

28. Statement Pursuant to section 212 of the Companies Act, 1956, relating to Companies Interest in Subsidiary Companies for the Financial year 2007-2008:

Name of The Subsidiary Company Sunil Hi-Tech Engg. & Mfg. Pvt. Ltd.

Date from which they became Subsidiary Companies 28’th May, 2005.

The Financial year of the subsidiary company ended on 31.03.2008

Number of shares in the subsidiary company held by Sunil Hitech Engineers Ltd. at the above date 35,00,000 Shares of Rs.10 each

Extent of Holding at the end of the Financial year of the Subsidiary Company 84.75%

Subsidiary Company

The net aggregate amounts of the Subsidiary Companies Profit/(Loss) so far as it concerns the members of Holding Company:

a) Not dealt with Holding Co. accounts:i) For the financial year ended 31’st March, 2008 8149872.78ii) For the previous Financial years of the Subsidiary Companies since they became the Holding Company’s Subsidiaries 1431279.65

b) Dealt with in Holding Company’s accounts:i) For the financial year ended 31’st March, 2008 Nilii) For the previous Financial years of the Subsidiary Companies since they became the Holding Company’s Subsidiaries Nil

29. Details of Subsidiary Companies:(Rs.in Lacs)

Sr. No. Name of The Subsidiary Company Sunil Hi-Tech Engg. & Mfg. Pvt. Ltd.

1. Capital 413.002. Reserves 149.683. Total Assets 1204.584. Total Liabilities 1204.585. Investments 0.006. Turnover/Total Income 2040.197. Profit Before Taxation 121.128. Provision for Taxation 24.959. Profit After Taxation 96.16

10. Proposed Dividend NIL

Signatures to Schedules “ A “ to “ I “ and “ 1 “ to “ 8 “ and Accounting Policies.

As per our Report of even date attached For and on Behalf of the Board Directors For G.G.Randad & Co.Chartered AccountantsG.G.Randad R. M. Gutte Sunil R. Gutte Kalyan K. GhoshPartner C M D Jt. Managing Director Company SecretaryMembership No. 31266

Place : NagpurDate : 7th July, 2008

89

Balance Sheet Abstract And Company’s General Business Profile

ADDITIONAL INFORMATION UNDER PART IV OF THE SCHEDULE VI TO THE COMPANIES ACT, 1956.

1 Registration Details

Registration No. 1 1 5 1 5 5 State Code 1 1

Balance Sheet Date 3 1 0 3 0 8Date Month Year

2 Capital raised during the year (Amount in Rs. Lacs.)

Public Issue N I L Rights Issue N I L

Bonus Issue N I L Private Placement 2 2 5 . 0 0

Equity Share Warrant 5 5 4 . 8 0

3 Position of Mobilisation and Deployment of Funds (Amount in Rs. Lacs.)

Total Liabilities 2 5 9 0 2 . 1 9 Total Assets 2 5 9 0 2 . 1 9

Sources of Funds

Paid - up Capital 1 2 2 7 . 5 2 Reserves and Surplus 1 4 4 9 9 . 4 1

Equity Share Warrant 5 5 4 . 8 0 Unsecured Loans N I L

Secured Loans 9 6 2 0 . 4 6 Deferred Tax Liability N I L

Application of Funds

Net Fixed Assets 7 8 4 7 . 7 8 Investments 5 2 9 4 . 2 6

Net Current Assets 1 2 5 4 7 . 1 7 Share Issue Expenses N I L

Miscellaneous Expenditure 1 7 9 . 4 9 Accumulated Losses N I L

Deferred Tax Assets 3 3 . 4 9

4 Performance of Company (Amount in Rs. Lacs.)

Total Income 3 0 9 3 7 . 6 4 Total Expenditure 2 7 6 8 7 . 0 8

Profit/Loss Before Tax 3 2 5 0 . 5 6 Profit/Loss After Tax 2 1 0 0 . 7 7

Earning per Share (Weighted Average)

2 0 . 0 7 Dividend Rate (%) 1 2 . 0 0

5 Generic Names of Principal Products /Services of the Company (As per monetary basis)

Item Code No. N I L

Product Description F A B R I C A T I O N E R E C T I O N &

O V E R H A U L I N G

As per our Report of even date attached For and on Behalf of the Board of Directors For G.G.Randad & Co.Chartered AccountantsG.G.Randad R. M. Gutte Sunil R. Gutte Kalyan K. GhoshPartner C M D Jt. Managing Director Company SecretaryMembership No. 31266

Place : NagpurDate : 7th July, 2008

CONSOLIDATED FINANCIAL SECTION

91

Auditors’ Report on Consolidated Financial Statements

To The Members of,

Sunil Hitech Engineers Ltd.

1. We have audited the attached consolidated balance sheet of, Sunil Hitech Engineers Limited and its subsidiary company as at 31st March 2008, the consolidated profit and loss account and the consolidated Cash flow statements for the period ended on that date annexed thereto. These financial statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the Auditing Standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit included examining, on a test basis, evidence supporting that amounts and disclosures in the financial statements. An audit also included assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of subsidiary, whose financial statements reflect total assets of Rs.1204.58 lacs as at March 2008, the total revenue of Rs.2058.61 lacs and net cash outflows amounting to Rs.5.17 lacs for the year ended. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other auditors.

4. We report that the consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of the Accounting Standards AS-21, issued by the Institute of Chartered Accountants of India.

5. Based on our audit on consideration of the reports of other auditors on separate financial statements, and to the best of our information and according to the explanation given to us, the said accounts give the information required by the Companies Act,1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

i) In the case of consolidated balance sheet, of the state of affairs of the Sunil Hitech Group as at 31st March 2008

ii) In the case of consolidated profit and loss account, of the profit/loss for the period ended on that date. and

iii) In the case of consolidated cash flow statement, of the cash flows for the period ended on that date.

For G.G.RANDAD & CO.Chartered Accountants

Place: Nagpur G.G. RANDAD

Date: 7th July, 2008 PartnerMembership No. 31266

92

Consolidated Balance Sheet as at 31st March, 2008

(Rs.in Lacs)

Schedule 2007-08 2006-07

SOURCES OF FUNDSShareholders’ FundShare Capital A 1,227.52 1,002.52Share Warrants 554.80 - Reserve and Surplus B 14,628.42 4,705.83

16,410.74 5,708.34

Minority Interest 75.81 10.05 Loans FundsSecured Loans C 10,262.37 4,023.27 Unsecured Loans D – 58.00

10,262.37 4,081.27

Deferred Tax Liability(Net) - 22.20

Total 26,748.91 9,821.86

APPLICATION OF FUNDSFixed Assets EGross Block 9,688.59 5,448.32Less : Depreciation 2,282.76 1,427.10Net Block 7,405.82 4,021.22Capital Work-in Progress 1,141.85 416.95

8,547.67 4,438.16

Investments F 4,944.26 100.00

Deferred Tax Asset (Net) 44.25 –

Current Assets, Loans and Advances GInventories 5,436.58 1,807.15Sundry Debtors and Bills Receivables 8,739.60 5,046.38Cash and Bank Balance 2,059.56 1,529.44Other Current Asset 94.84 7.50Loans, Advances and Deposits 6,388.14 2,744.07

22,718.72 11,134.54

Less: Current Liabilities and Provisions H 9,705.78 5,951.94

Net Current Assets 13,012.93 5,182.60

Miscellaneous Expenditure I 199.80 101.09 ( To the extent not written off or adjusted )

Total 26,748.91 9,821.86

NOTES ON ACCOUNTS J

As per our Report of even date attached For and on Behalf of the Board of Directors For G.G.Randad & Co.Chartered AccountantsG.G.Randad R. M. Gutte Sunil R. Gutte Kalyan K. GhoshPartner C M D Jt. Managing Director Company SecretaryMembership No. 31266

Place : NagpurDate : 7th July, 2008

93

Consolidated Profit & Loss Account for the year ended 31st March, 2008

(Rs.in Lacs)

Schedule 2007-08 2006-07

INCOMEWork Order 1 29,674.66 14,329.61 Gross Sales 2,440.22 600.69 Less: Excise Duty 358.89 99.93Net Sales 2,081.33 500.76Other Income 2 225.18 163.81Accretion/(Decretion) to Work in Progress 3 100.32 101.87

Total 32,081.49 15,096.05

EXPENDITUREConsumption of Materials 4 15,638.23 5,474.15Site and Operating Expenses 5 8,324.45 6,343.63Personnel Cost 6 1,749.69 784.10 Administration Cost 7 1,122.11 486.01 Interest and Financial Charges 8 990.72 349.14 Depreciation D 856.03 Less : Transferred from Revaluation Reserve 1.19 854.85 454.65

Total 28,680.06 13,891.68PROFIT BEFORE TAXES 3,401.43 1,204.36Provision for TaxesCurrent Tax 1,113.76 415.88 Fringe Benefit Tax 34.13 –Deferred Tax (66.45) 1.91PROFIT BEFORE EXCEPTIONAL ITEMS 2,319.99 786.57 Loss from Forward Exchange Contract – 10.42 Loss from Sale of Investment – 8.58 Prior Period items 78.84 9.40 NET PROFIT FOR THE YEAR BEFORE MINORITY INTEREST

2,241.15 758.18

Minority Interest 12.76 0.05 NET PROFIT FOR THE PERIOD 2,228.40 758.13 Balance Brought Forward from Previous Year 1,189.44 647.87 AMOUNT AVAILABLE FOR APPROPRIATIONS 3,417.83 1,406.00 Proposed Dividend 147.30 120.30 Provision for Tax on Proposed Dividend 25.04 20.45 General Reserve 215.75 75.81 Balance Carried to Balance Sheet 3,029.74 1,189.43

Total 3,417.83 1,406.00

Earnings per share - Basic & Diluted (Rs.)-excluding exceptional items 22.04 7.85-including exceptional items 21.29 7.56Weighted average number of shares 10,468,995 10,025,160

NOTES ON ACCOUNTS IAs per our Report of even date attached For and on Behalf of the Board of Directors For G.G.Randad & Co.Chartered AccountantsG.G.Randad R. M. Gutte Sunil R. Gutte Kalyan K. GhoshPartner C M D Jt. Managing Director Company SecretaryMembership No. 31266

Place : NagpurDate : 7th July, 2008

94

Schedules Forming Part Of Consolidated Balance Sheet As on 31st March, 2008

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : AShare Capital

Authorised2,50,00,000 Equity Shares of Rs.10/- each 2,500.00 1,200.00(Previous year 1,20,00,000 equity shares of Rs.10/-each)

Issued and Subscribed1,22,75,160 Equity Shares of Rs.10/- each 1,227.52 1,002.52(Previous year 1,00,25,160 equity shares of Rs.10/-each)

Paid up1,22,75,160 Equity Shares of Rs.10/- each 1,227.52 1,002.52Fully Paid up(Previous year 10025160 equity shares of Rs.10/-each)

1,227.52 1,002.52

SHARE WARRANT 554.80 –38,00,000 Equity Shares of Rs.146/- each

Foot Note:i) In terms of the approval of the shareholders of the Company and as per the applicable Statutory provisions including

Security and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000, the Company, on August 14, 2007, has issued and allotted 38,00,000 warrants on preferential basis to entities in the Promoter Group entitling them to apply for equivalent number of fully paid up equity shares of Rs. 10/- each of the Company, at the price of Rs. 146/- per equity shares. The warrant holders have a right to apply for equity shares within 18 months from the date of allotment of the warrants.

ii) During the year 2007-08 the Company has issued and allotted 22,50,000 fully paid up equity shares of Rs. 10/- each of the Company on preferential basis to the Qualified Institutionals Investers at a price of Rs. 360/- per equity share as per Chapter XIIIA Security and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000.

(Rs.in Lacs)

Particulars 2007-08 2006-07

SCHEDULE : BReserve And Surplus

Revaluation Reserve 61.81 62.99As per last Balance Sheet 62.99 62.99Less: Transferred to Profit and Loss A/C 1.19 –

Securities Premium 11,142.86 3,275.14As per last Balance sheet 3,275.14 3,275.14Add.During the Period 7,875.00 –Share issue expenses (7.28) –

General Reserve 394.01 178.26 Balance as per previous Balance Sheet 178.26 102.44Add: Transferred from Profit & Loss A/c. 215.75 75.81

Profit and Loss AccountBalance in Profit & loss Account 3,029.74 1,189.43

TOTAL : 14,628.42 4,705.83Foot Note:Premium on issue of equity shares represents premium of Rs.350 per share on issue of 22,50,000 equity shares on Preferential allotment basis to Qualified Institutionals

95

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : CSecured Loans

A. TERM LOANSFrom Banks 3,580.76 1,281.47Foreign Currency Loans 464.76 –Rupee Loans 3102.75 1,268.13

3567.51 1,268.13

From OthersGE Capital Transportation Finan. Ser. Ltd. 13.25 13.35

B. WORKING CAPITAL LOANSFrom Banks 6,681.60 2,741.79Foreign Currency Loans – –Rupee Loans 6681.60 2,741.79

10,262.37 4,023.27

SCHEDULE : DUnsecured Loans

From Promoters – 58.00Mr.R.M.Gutte – 40.00Mr.S.R.Gutte – 18.00

– 58.00

SCHEDULE : EFixed Assets

(Rs.in Lacs)

Gross Block Depreciation Net Block

DescriptionOriginal

Cost

Additions During the

Year

Deduction/Adjust-ments

As At 31.03.08

Upto 31.03.2007

For The Year

2007-08

Deduction/Adjust-ments

As At 31.03.2008

As At31.03.08

As At 31.03.2007

A. Tangible Assets:Land 406.00 25.12 – 431.12 – – – – 431.12 406.00Building 891.32 677.51 44.97 1,523.86 74.58 9.17 0.38 83.37 1,440.48 816.74Plant & Machinery 3,536.60 3,254.71 – 6,791.31 1,156.35 709.64 – 1,865.99 4,925.33 2,380.26Computer & Printer 67.48 36.62 – 104.10 28.04 23.38 – 51.42 52.68 39.43Furniture & Fixtures 202.73 118.19 – 320.91 44.05 35.14 – 79.20 241.72 158.68Vehicles 323.74 157.35 – 481.09 124.09 71.46 – 195.55 285.55 199.66

– –B. Intangible Assets:Computer Software 20.46 15.74 – 36.19 – 7.24 – 7.24 28.95 –

TOTAL 5,448.32 4,285.24 44.97 9,688.59 1,427.10 856.03 0.38 2,282.76 7,405.82 4,000.76

Previous Year 2,924.29 2,569.68 45.65 5,448.32 1,009.89 454.65 (37.44) 1,427.10 4,021.22 1,893.34Capital WIP 1,141.85 416.95

Note:Additions for previous year includes Rs.67.48 lacs being the amount added on revaluation of Land & Building as at 14th November 2003

Schedules Forming Part Of Consolidated Balance Sheet As on 31st March, 2008

96

Schedules Forming Part Of Consolidated Balance Sheet As on 31st March, 2008

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : F Investments

a) Long Term Investments

i) Unquoted Equity Shares

Fully Paid Equity SharesGangakhed Sugar Allied Industries 0.25 –(2500 unit of Rs. 10/- each)

Other Fully Paid Equity Shares 22.43 50.00

Yogeshwari Sugar Factory 10.00 10.00Pangeshwar Sugar Factory 40.00 40.00

Niyojit Vidarbha Sahakari Bank – 1.00

Less : Provision for dimunition in value of Long Term Investment 27.57 1.00

ii) Quoted Equity Shares (Fully Paid) 2,200.00 50.00

Units of Mutual FundICICI Prudential – 25.00(Sold during the year)HDFC Mutual Fund – 25.00 (Sold during the year)AIG Infrastructure & Eco.Ref.Fund 1,000.00 –(1,00,00,000 unit of Rs.10/- each Purchase during the year)Franklin India Index Fund 200.00 –(479879 unit of Rs.41.67/- each)JM Financial Mutual Fund 1,000.00 –(1,00,00,000 unit of Rs.10/- each Purchase during the year)

b) Current Investment 2,721.58 –

Reliance Natural resources fund 2,770.00(2,77,00,000 unit of Rs.10/-Each Purchase during the year)Franklin Templeton Floating Fund – –(75,035,314.060 unit of Rs.10.6190/-each Purchsased during the year & 73153262.247 units sold during the year & 1882051.813 unit of Rs.10.626/- each transfer to Franklin India Index Fund during the year)

Less : Provision for dimunition in value of Investment 48.42 –4,944.26 100.00

Aggregate Value of:i) Quoted Investments aggregateBook Value 4,571.58 (240.00)Market Value 4,544.87 39.50Unquoted Investments aggregateBook Value 372.68 340.00

ii) Although Market value of quoted current investment (as reflected in the schedule F,{b}) is lower than its cost, company has partly sold above investments at profit of Rs.1.32 lacs on 24th April 2008, i.e before the date on which financial statements are approved by the Board of Directors, henceforth in the opinion of management no provision is made on that portion against such decline.

97

Schedules Forming Part Of Consolidated Balance Sheet As on 31st March, 2008

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : G Current Assets, Loans And Advances

A) Current Assets

Inventories 5,436.58 1,807.15(As valued and certified by Management)Stock in trade,at cost or net realisable value whichever is lowerRaw Material & Components 683.61 889.95Stores, Spare Parts & Loose Tools 1,181.57 706.82Finished Goods 3,172.93 10.74Stock in Transit 0.55 –Work in Progress Closing (At estimated cost) 397.92 199.65

Sundry Debtors 8,739.60 5,046.38UnsecuredWithin Six MonthsGood Debt 8,176.29 4,612.39

Above Six MonthsGood debt 563.31 402.93Considered Doubtful 20.68 37.90

8,760.28 5,053.22 Less : Provision for doubtful debts 20.68 6.84

Cash and Bank Balances 2,059.56 1,529.44Cash on Hand 45.83 39.14DD/Cheque on hand 8.00 –

Bank Balancesa) With Scheduled Banks

in Current Accounts 285.91 476.57in Deposit Accounts 1,719.82 1,013.73

b) With NonScheduled Bankin Current Accounts – –

Other Current Assets 94.84 7.50Interest Accrued on Fixed Deposits 94.84 7.50

B) LOANS AND ADVANCES 6,388.14 2,744.07(Unsecured Considered Good)

Considered Goodi. Loans to Subsidiary Company – –ii. Advance recoverable in cash or in kind or for value to be received 3,859.06 709.52iii. Deposits 2,114.97 1,529.21iv. Advance Taxes (net of Provisions) – 395.36v. Balances with Customs, Port Trust and Excise 414.12 109.98

6,388.14 2,744.07

Considered Doubtfuli) Deposits 3.50 1.59

Less: Provision for Doubtful Advances (3.50) (1.59) 22,718.72 11,134.54

98

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : H Current Liabilities And Provisions

A) Current Liabilities 8,694.03 5,071.48

a) Sundry CreditorsDue to –i) Small Scale Industries 57.85 –ii) Others 2,405.90 1,506.79

2,463.76 1,506.79

b) Sub-Contractorsi) Amount Payable Against work 1,403.16 1,949.65ii) Security Deposit of Petty Contractors, 634.75 444.49

Retention Money, Withheld from Contractor 2,037.91 2,394.14

c) Advance from Customers 3,745.11 929.69

d) Investors Protection FundUnpaid Dividend for 2005-06 0.77 –Unpaid Dividend for 2006-07 1.99 –

e) Interest Accrued but not due on loan 2.63

f) Other Liabilities 441.86 240.85

B) PROVISIONS 1,011.75 880.47Provision for Taxation (Net of Advance Tax) 26.21 414.43Provision for Fringe Benifits Tax (Net of Tax) 6.49 –Provision for Wealth Tax 3.50 –Provision for Proposed Dividend 147.30 120.30 Provision for Tax on Proposed Dividend 25.03 20.45Other Provisions 779.78 325.28Provision for Gratuity 23.45 –

9,705.78 5,951.94

SCHEDULE : IMiscellaneous Expenditure 199.80 101.10 (To the extent not Written off or adjusted)Preliminary Expense – –Expenses including commission or 175.54 73.57 brokerage on Subscription of SharesPre-Operative Expenses 24.26 27.54

199.80 101.10

Schedules Forming Part Of Consolidated Balance Sheet As on 31st March, 2008

99

Schedules Forming Part Of Consolidated Profit And Loss Accountfor the year ended 31st March, 2008

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : 1Net Sales

Work Order (Fabrication, Erection, 29,674.66 14,329.61Modification & Overhauling)Gross Sales 2,440.22 600.69Less: Excise Duty 358.89 99.93Net Sales 2,081.33 500.76

31,755.99 14,830.37

SCHEDULE : 2Other Income

Interest On Bank deposits( TDS Rs.25.91, P.Y.Rs.2.56) 129.81 111.34 On Investments – 9.47Dividend from Investment 2.52 17.43 Income from current investment in Mutual Funds(Net) 18.32 –Profit on sale of Fixed Assets 33.21 1.20Miscellaneous Income 41.32 24.36

225.18 163.81

SCHEDULE : 3Accretion/ (Decretion) To Work In Progress

Work in Progress 198.27 101.87Closing Work in Progress 397.92 199.65 Less : Opening Work in Progress 199.65 97.78

198.27 101.87

SCHEDULE : 4A) Consumption of Materials

i) Steel 4,948.90 1,991.67Opening Stock – –Add: Purchases 8,121.83 1,991.67

8,121.83 1,991.67Less : Closing Stock 3,172.93 –

ii) Other 9,008.36 3,099.15Opening Stock 970.60 532.89Add: Purchases 9,503.63 3,536.85

10,474.23 4,069.75Less : Closing Stock 1,465.87 970.60

iii) Purchases (trading based) 10.43 –

A) Cost of Goods Sold 1,670.54 383.34

Opening Stock 636.91 –Add: Raw Material Purchase 1,214.88 914.90Add: Other Allied Purchases 74.74 32.65

1,926.52 947.56 Less : Closing Stock 497.81 636.91

1,428.71 310.65Add: Direct Expenses 241.83 72.69

15,638.23 5,474.15

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Schedules Forming Part Of Consolidated Profit And Loss Accountfor the year ended 31st March, 2008

(Rs.in Lacs)

2007-08 2006-07

SCHEDULE : 5Site and Operating Expenses

Construction, Erection & Fabrication Exp. 6,476.82 5,402.72Hire Charges 473.06 314.86Repair & Maintenance 180.67 122.06Taxes 644.02 192.69Others 549.88 311.30

8,324.45 6,343.63

SCHEDULE : 6Personnel Cost

ESIC 18.79 1.18Provident Fund 74.71 34.06Gratuity 23.45 –Salary to Staff 1,018.71 481.37Insurance 71.42 76.66Other Benefits 209.71 107.33Salary to Director 332.90 83.49

1,749.69 784.10

SCHEDULE : 7Administration Expenses

Auditors Remuneration 11.03 5.20Travelling & Conveyance 213.76 96.31Insurance Expenses 95.46 40.84 Communication 66.50 38.76Repair & Maintenance 99.46 56.34Rate, Fees & Taxes 37.03 28.08Donations 0.51 1.02Provision for dimunition in Value of Long Term Investment 27.57 –Dimunition in Value of Long Term Investment – 1.00Provision for dimunition in value of Current Investment 48.42 –Provision for Doubtful Debt 13.83 6.84 Provision for Doubtful Advances 1.92 1.59Electricity Charges 28.88 9.28Shares Issue Expenses 56.15 24.52Legal Expenses 5.23 5.51Professional Charges 83.67 55.17Project Development & Financial Services 68.62 –Service Tax 20.08 46.87 Income Tax 8.32 –Other Administration Expenses 235.67 68.68

1,122.11 486.01

SCHEDULE : 8Interest and Financial Charges

Interest Paid to Bank 744.22 198.65Interest on Service Tax 16.14 13.85Interest Paid to Customer(Against Advance) 19.99 16.97Others 210.37 119.67

990.72 349.14

101

Consolidated Cash Flow Statement for the year ended 31st March 2008

(Rs.in Lacs)

2007-08 2006-07

A CASH FLOW FROM OPERATING ACTIVITIESNet Profit before tax and extraordinary items. 3401.43 1204.36Adjustment forDepreciation 854.85 454.65Provision for doubtful debts and advances 15.75 8.43Provision on diminution in value of Current Investments 48.42 -Diminution in value of Long-Term Investments - 1.00Misc. Expenditure write off 60.55 24.52Interest & Financial Charges 990.72 349.14Profit on sale of investments(Net) (18.32) -Profit on sale of fixed assets (Net) (33.21) (1.20)Interest income (129.81) (120.82)Dividend income (2.52) (17.43)

1814.01 698.30Operating Profit before Working Capital Changes 5215.44 1902.66

Adjustment forTrade and other receivables and advances (7441.50) (3181.95)Inventories/ WIP (3629.42) (1176.48)Miscellaneous Expenditure (165.40) (32.00)Trade and other Payable 4,100.49 2330.44

(7135.83) (2059.99)Cash used in Operation (1920.38) (157.33)

Direct Taxes( Paid) (1526.16) (299.12)Extraordinary Item - (10.42)Prior year adjustment (82.79) (9.40)

(1608.94) (318.94)Net Cash used in Operating Activities (3529.33) (476.27)

B CASH FLOW FROM INVESTING ACTIVITIESPurchase of Fixed Assets (5006.19) (3007.29)Sale of Fixed Assets 77.80 8.17Purchase of Investments (12938.25) (19.00)Sale investment/bonds 8036.32 429.42Interest received 129.81 120.82Dividend received 2.52 17.43Net Cash used in Investing Activities (9697.98) (2450.45)

C CASH FLOW FROM FINANCING ACTIVITIESProceeds from Issue of Share Capital including Securities Premium 8153.00 10.00Proceeds from Warrants 554.80 -Proceeds/(Repayment) from Long Term Borrowings (Net) 6239.10 2915.78Proceeds/(Repayment) of Unsecured Loan (58.00) 58.00Interest & Financial Charges (990.72) (349.14)Dividend Paid (including Dividend Distribution Tax) (140.75) (114.31)Net Cash From Financial Activities 13757.42 2520.33Net Increase/(Decrease) in Cash & Cash Equivalent(A+B+C) 530.11 (406.39)Cash and Cash Equivalent at Beginning of the Year 1529.45 1935.81Cash and Cash Equivalent at Closing of the Year 2059.56 1529.44

As per our Report of even date attached For and on Behalf of the Board of Directors For G.G.Randad & Co.Chartered AccountantsG.G.Randad R. M. Gutte Sunil R. Gutte Kalyan K. GhoshPartner C M D Jt. Managing Director Company SecretaryMembership No. 31266

Place : NagpurDate : 7th July, 2008

102

SCHEDULE J

A) Significant Accounting Policies adopted in preparation and presentation of Accounts.

a) Basis of Preparation

The consolidated financial statements of the group have been prepared and presented under the historical cost convention on the accrual basis of accounting in accordance with the accounting principles generally accepted in India and comply with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India to the extent applicable.

b) Principles of Consolidation

The Consolidated financial statements have been prepared on the following basis

i) The financial statements of the parent company and the subsidiaries have been consolidated on line by line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra group balances/ transactions in full as per Accounting Standard 21 on Consolidated Financial statements.

ii) Minority interest’s share of net profit of consolidated subsidiaries for the year is identified and adjusted against the income of the group in order to arrive at the net income attributable to shareholders of the company.

iii) Minority interest’s share of net assets of consolidated subsidiaries is identified and presented in the consolidated balance sheet separate from liabilities and the equity of the Company’s shareholders.

c) Basis of Accounting:

i) The company follows mercantile system of accounting and recognizes Income and Expenditure on accrual basis.

ii) The accounts have been prepared in accordance with generally accepted accounting principles and Accounting Standards referred to in sub-section (3C) of the Section 211 of the Companies Act, 1956.However, certain escalation and other claims, which are not ascertainable/acknowledged by customers, are not taken into account.

iii) Financial Statements are based on historical cost convention except for certain fixed assets which are revalued. These costs are not adjusted to reflect the impact of changing value in the purchasing power of money.

d) Use of estimates:

The preparation of financial statements required the management of the Company to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and the reported amounts of revenues & expenses during the reporting period. Actual results could differ from these estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

e) Foreign Currency Transaction:

Foreign currency transactions

i) Initial Recognition

Foreign currency transactions are recorded in reporting currency, by applying to the foreign currency amount exchange rates between reporting currency and foreign currency at the date of transactions.

ii) Conversion

Foreign currency monetary items are reported using the closing rate. Non-Monetary items which are carried at historical cost denominated in foreign currency are reported using the exchange rates at the date of the transaction.

iii) Exchange Differences

Exchange Differences arising on the settlement of monetary items or on reporting the Company’s monetary items at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

Exchange differences in respect of fixed assets acquired, including foreign currency liabilities relating thereto, are recognized as income or expense in the period in which they arise.

f) Retirement and Other Employee Benefits:

Retirement benefits in the form of Provident Fund and Superannuating Schemes are defined contribution schemes and the contributions are charged to the Profit and Loss Account of the year when the contributions to the respective funds are due.

Gratuity liability under the Payment of Gratuity Act is accrued and provided for on the basis of an actuarial

103

valuation made at the end of financial year.

Privileged Leave Benefits for short-term compensated absences are provided for on the basis of estimates.

g) Fixed Assets:

Tangible Assets:

Fixed Assets are stated at cost of acquisition, except for revaluation of certain land and building, less accumulated depreciation and impairment loss if any. Costs include all expenses incurred to bring the assets to its present location and condition. Exchange differences on translation of foreign currency transaction obtained to purchase fixed assets from countries outside India are included in the cost of such assets. Advances paid towards the acquisition of fixed assets and cost of assets not ready for their intended use before such date are disclosed under Capital Work in Progress.

Intangible Assets:

Intangible Assets are stated at cost of acquisition less accumulated amortization. Computer Software is amortized over a period of 5 years.

h) Depreciation:

i) Depreciation is provided on written down value method except freehold land at the rate and in the manner laid down in Schedule XIV to the Companies Act, 1956.

ii) Depreciation is calculated on a pro- rata basis from the date of addition.

iii) Fixed Assets excluding buildings, computers and individually costing Rs. 5,000/- or less are not capitalized except when they are part of a larger capital investment program.

iv) The difference between depreciation provided based on revalued amount and that on historical cost is transferred from Revaluation Reserve to Profit and Loss Account.

i) Impairment of Assets:

As at each Balance Sheet date, the carrying amount of assets is tested for impairment so as to determine:

a) The provision for impairment loss required, if any. or

b) The reversal required of impairment loss recognized in previous periods, if any.

Impairment loss is recognized when the carrying

amount of an asset exceeds its recoverable amount.

Recoverable amount is determined:

i) In the case of an individual asset, at higher of the net selling price and the value in use;

ii) In the case of a cash generating unit (a group of assets that generates identified, independent cash flows), at higher of the cash generating unit’s net selling price and the value in use.

j) Segment Reporting Policies:

Identification of Segments:

The Company’s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

k) Revenue Recognition:

i) Revenue from construction contracts is recognized as follows:

a) Fixed price contracts: Contract revenue is recognized by adding the aggregate cost and proportionate margin using the percentage completion method. Percentage of Completion is determined as a proportion of cost incurred to date to the total estimated contract cost.

ii) Subject to (i) above, Contract receipt are accounted for on the basis of Bills submitted to clients/bills certified by clients and do not include material supplied by clients free of cost.

iii) Amounts due in respect of price escalation claims and/or variation in contract work approved by the customers are recognized as revenue only if the contract allows for such claims or variations and/or there is evidence that the customer has accepted it.

iv) Revenue from interest income is recognized on time basis.

v) Revenue from service related activities are recognized using the proportionate completion method.

vi) Dividend income is recognized when the right to receive dividend is established.

vii) Revenue from work in progress is recognized on estimated basis as certified by technical managers.

viii) Revenues from sale of products and services:

104

a) Revenue from sales of products is recognized on dispatch of goods to customers, which corresponds, to transfer of significant risk and rewards of ownership and is net of sales tax and trade discounts. Revenues from services are recognized when such services are rendered.

l) Investments:

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. Long term Investments are stated at cost. Provision for diminution in the value of long-term investments is made only if such a decline is other than temporary. Current investments comprising mutual funds investments are stated at cost less provision, (Please refer Notes to Accounts No.4) if any, for diminution, which is other than temporary in nature.

m) Inventories:

i) Items of inventories are measured at lower of cost or net realizable value after providing for obsolescence, if any. Cost of inventories comprises of cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. Raw Material & Components, Stores, Spare Parts & Loose Tools, finished goods are determined on FIFO basis.

ii) Work in Progress is valued at estimated cost. Cost includes direct materials, labour cost and appropriate overheads.

n) Taxes on Income and Fringe Benefits Tax:

Tax expense comprises current tax, deferred tax and fringe benefits tax.

Tax on income for the current period is determined on the basis of the taxable income and tax credits computed in accordance with the provision of the Income Tax Act, 1961, and based on the expected

outcome of assessments. The deferred tax for timing differences between the book and tax profits for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as of the balance sheet date. Deferred tax assets arising from timing differences are recognized to the extent there is reasonable certainty that the assets can be realized in future.

o) Provisions, Contingent Liabilities and Contingent Assets:

i) Provisions involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These provisions are reviewed at each balance sheet date and are adjusted up or down to reflect the current best estimate.

ii) Contingent Liabilities are not recognized but are disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.

p) Public Issue Expenses:

Public Issue Expenses have been amortized in accordance with section 35-D of the Income Tax Act, 1961.

q) Custom Duties:

Custom Duty payable on raw materials, stores and machinery are accounted for on clearing of goods from Custom Warehouse.

r) Figures for previous year have been regrouped wherever considered necessary and practicable to the extent data is readily available.

As per our Report of even date attached For and on Behalf of the Board of Directors For G.G.Randad & Co.Chartered AccountantsG.G.Randad R. M. Gutte Sunil R. Gutte Kalyan K. GhoshPartner C M D Jt. Managing Director Company SecretaryMembership No. 31266

Place : NagpurDate : 7th July, 2008

R & T Agents :

M/s. Bigshare Services Private Limited, E-2/3, Ansa Industrial Estate, Saki Vihar Road, Saki Naka,

Andheri (E), Mumbai – 400 072

Depositories :

National Securities Depositories Ltd.

Central Depository Services (India) Ltd.

Company Secretary :

Mr. Kalyan K. Ghosh

97, East High Court Road,

Ramdaspeth, Nagpur – 440010

Auditors :

G.G. Randad & Co.

H/CD. Bharat Bazar, Near API Corner, CIDCO, Aurangabad. Maharashtra

Bankers :

Uco Bank, Union Bank, State Bank of India, HSBC Bank, Oriental Bank of Commerce

Corporate Office :

97, East High Court Road, Ramdaspeth, Nagpur – 440010 Maharashtra

Phone : + 91 712 2562087 / 88 /3209559 Fax : 2562091

Email: info@sunilhitech.com, cs@sunilhitech.com

Website: www.sunilhitech.com

Registered Office:

Parli Vaijnath, (Distt. Beed) Pin – 431520 (Maharashtra)

Chairman & Managing Director Mr. Ratnakar Manikrao Gutte

Joint Managing Director Mr. Sunil Ratnakar Gutte

Executive Director Mrs. Sudhamati Ratnakar Gutte

Director (Operations) Mr. Mattathil Narayanan Mohanan

CEO & Director (Business Development) Mr. S.K. Kodandaramaiah

Director (Finance) Mr. Vijay Ratnakar Gutte

Independent Director Mr. Kamlakar G. Holkar

Independent Director Mr. Dilip Y. Ghanekar

Independent Director Ms. Sarita Rathi

Independent Director Mr. Sajid Ali

Independent Director Mr. S.S. Waghmare

Independent Director Mr. Parag Sakalikar

CORPORATE INFORMATION

BOARD OF DIRECTORS

www.sunilhitech.com