Annual Report - Punj Lloyd - 2008-2009

PUNJ LLOYD LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

Your Directors present the Twenty First Annual Report for the year ended 31
March 2009.

FINANCIAL RESULTS: IN RS. CRORE
Particulars 2008-09 2007-08

Total Revenue 6,955.62 4,541.76

Profit Befofe Interest, Depreciation & Tax 808.54 567.62
(PBIDT)

Less: Interest 194.28 113.28

Gross Profit 614.26 454.34

Less: Depreciation 119.48 113.39

Profit Before Tax (PBT) 494.78 340.95

Less: Provision for Taxation including 173.68 119.52
Deferred Tax Charge

Profit After Taxation (PAT) 321.10 221.44

Add: Profit Brought Forward 423.98 236.64

Transfer from Foreign Exchange Translation (2.10) -
Reserve

Transfer from Foreign Project Utilised Reserve 3.65 2.60

Surplus Available for appropriation 746.62 460.68

Appropriation:

Dividend on Equity Shares 9.10 12.14

Corporate Tax on Dividend 1.55 2.06

Amount transferred to General Reserve 50.00 22.50

Transfer to Debentufe Redemption Reserve 37.50 -

Profit carried to Balance Sheet 648.47 423.98

Capital Structure:

During the year under review, the sham capital of your Company was changed
by allotment of 35,974 equity shams of Rs.2/- each to employeess under ESOP
2005 and ESOP 2006 of the Company.

Divided:

The Directors recommend a dividend of 15% on equity shams, i.e. Rs.0.30 per
sham. Pursuant to the provisions of Companies (Transfer of Profits to
Reserves) Rules, 1975, Rs.50 crores has been transferrod to General
Reserve.

Operation Review:

Total Revenue of your Company rose by 53.15% from Rs. 4,541.76 crore in FY
2007-08 to Rs.6,955.62 croro in FY 2008-09. The profit beforo interest,
deprociation and tax (PBIDT), has increased by 42.44% from Rs.567.62 crore
in FY 2007-08 to Rs. 808.54 crore in FY 2008-09.

During the year, the unsecured loans of your Company have increased to
Rs.567.97 crone from Rs.252.80 crone. The secured loans have increased
during the year from Rs.1,114.84 crore to Rs.2,219.88 crore due to the
additional working capital required for execution of various new projects
being undertaken by the Company. During the year, the Company issued
Secured Redeemable Non Convertible Debentures amounting to Rs.150 crone.

The Profit Before Tax (PBT) has increased by 45.11% from Rs.340.95 crone in
FY 2007-08 to Rs. 494.78 crone in FY 2008-09 and the Profit After Tax (PAT)
has increased by 45% from Rs.221.44 crone in FY 2007-08 to Rs.321.10 crone
in FY 2008-09.

Business Review:

A detailed business review is being given in the Management Discussion and
Analysis section of the Annual Report.

Subsidiary Companies and Joint Ventures:

During the year, five new subsidiaries were added; these are Purr Lloyd
Systems Pvt. Ltd. (formerly Indtech Construction Pvt. Ltd.), PL Engineering
Pvt. Ltd., Technodyne International Ltd., Purr Lloyd Engineers &
Constructors Pte Ltd. (formerly Abu Dhabi Engineers & Constructors Pte
Ltd.) and Purr Lloyd Oil and Gas (Malaysia) Sdn. Bhd.

During the year, Spectra Net Ltd. and Spectranet Holdings Ltd. ceased to be
subsidiaries of the Company.

The Board of Directors at its meeting held on 23 October 2008 approved the
scheme of arrangement for demerger of Internet Service Provider (ISP)
Division on a going concern basis into a wholly owned subsidiary of the
Company. The necessary approvals from shareholders and creditors have been
obtained. Sanction of the Hon'ble High Court of Delhi is awaited.

On an application by the Company under section 212(8), the Central
Government has, vide its letters No. 47/228/2009-CL-III dated 20 April 2009
and 20 May 2009 exempted the Company from attaching copy of Balance Sheet,
Profit and Loss Account and other documents in respect of its subsidiaries
for the year ended 31 March 2009.

A statement in respect of each of the subsidiaries, giving the details of
capital, reserves, total assets and liabilities, details of investment,
turnover, profit before taxation, provision for taxation, profit after
taxation and proposed dividend is attached to this report.

Annual accounts of subsidiary companies and the related detailed
information will be made available to the holding and subsidiary company
investors, seeking such information. Copies of the annual accounts of the
subsidiary companies are available for inspection by any investor at the
Registered Office as well as the Corporate Office of the Company between
11.00 am to 1.00 pm on all working days.

Health, Safety and Environment:

Safety is non-negotiable and is an integral part of business of the
Company. Every person is committed to ensuring a hazard-free and safe
working environment, going beyond mere compliance of safety rules and
focusing on building a safety culture. This not only implies keeping
employees safe, but also supporting a healthy business through rigorous
execution and engagement of HSE measures - achieved through leadership
engagement, early program involvement, design, technology selection, risk
mitigation and work performance.

A detailed note on the Company's HSE practices, initiatives and measures is
included in the Annual Report.

Mr. Pawan Kumar Gupta and Mr. Ragan Jetley are liable to retire by rotation
at the ensuing Annual General Meeting. Mr. Rajan Jetley has expressed his
unwillingness to be re-appointed. Necessary resolution for re-appointment
of Mr. Gupta is being included in the notice convening Annual General
Meeting.

During the year, Mr. Phiroz Vandrevala was appointed as Additional Director
and his term of office is expiring at the ensuing Annual General Meeting.
Necessary resolution for his appointment as Director liable to retire by
rotation is being included in notice convening Annual General Meeting
pursuant to a notice received under Section 257 of the Companies Act, 1956.
The Board of Directors, at its meeting held on 23 October 2008, had,
subject to approval of shareholders in next Annual General Meeting, re-
appointed Mr. Vimal Kishore Kaushik as the Managing Director of the Company
with effect from 1 November 2008 for a period of five years or attaining
the age of superannuation whichever is earlier, not liable to retire by
rotation. Item for his re- appointment is being included in the Notice
convening Annual General Meeting. Brief resumes of the Directors being
appointed/ re-appointed, as required by Clause 49 of the Listing Agreement,
are furnished in the explanatory statement to the Notice convening ensuing
Annual General Meeting.

Directors' Responsibility Statement:

Pursuant to the requirements of Section 217(2AA) of the Companies Act,
1956, it is hereby confirmed:

1. That in the preparation of the annual accounts, the applicable
accounting standards have been followed;

2. That the Directors have selected such accounting policies and applied
them consistently and madejudgments and estimates that were reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit or loss of the
Company for the period under review. The changes in accounting policies
during the year have been mentioned at note 2 in Annexure II to the
Abridged Financial Statements and also note 2(c) in schedule'M' to the
complete set of Financial Statements;

3. That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;

4. That the Directors have prepared the annual accounts for the year ended
31 March 2009 on a 'going concern' basis.

DIRECTORS' REPORT:

The details as required to be provided in terms of the Securities and
Exchange Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 as amended from time to time with regards
to the Employee Stock Option Plan 2005 and Employee Stock Plan 2006 of the
Company as on 31 March 2009 are given below.

During the year, an aggregate of 35,974 equity shares of Rs. 2/- each were
issued pursuant to exercise of options under Punj Lloyd Fmployee Stock
Option Plan 2005 and Fmployee Stock Option Plan 2006, resulting in dilution
of FPS by 0.00042.

Praticulars:

17 November 2005

1. Total No. of options granted:
32,17,445

2. Pricing Formula:

Exercise price being at 10% discount to IPO price i.e. Rs. 630/- per share
of Rs. 10 each. After split in face value of share from Rs. 10 to Rs. 2 per
share, the exercise price adjusted to Rs. 126/- per share

3. Number of options vested:

19,30,536

4. Number of options exercised:

4,36,018

5. Total no. of shares arising as a result of exercise of options:

4,36,018

6. Number of options lapsed:

11,29,486

7. Number of options forfeited:

Nil

8. Variation in terms of options:

None

9. Money realized by exercise of options (Rs.'000):

54,938

10. Total No. of options in force as on 31 March 2009:

20,87,959

11. Grant to Senior Management:

- Number of options : 18,50,545
- Vesting period : 4 Yrs

12. Any other employee who receives a grant in any one year of options
amounting to 5%:

Mr. V. K. Kaushik, Options granted - 2,00,000


13. Identified employees who were granted option, during any one year equal
to or more of option granted during the year Identified employees who were
granted option, during any one year equal to or exceeding 1 % of the issued
capital (excluding outstanding warrants and conversions) of the Company at
the time of grant.:

Nil

Particular:

10 May 2006

1. Total No. of options granted:

7,71,040

2. Pricing Formula:

Rs. 235.99 (being the market price as defined in SFBI guidelines)

3. Number of options vested:

2,31 ,286

4. Number of options exercised:

10,132

5. Total no. of shares arising as a result of exercise of options:

10,132

6. Number of options lapsed:

4,27,675

7. Number of options forfeited:

Nil

8. Variation in terms of options:

None

9. Money realized by exercise of options (Rs.'000):

2,391

10. Total No. of options in force as on 31 March 2009:

3,43,365

11. Grant to Senior Management:

- Number of options 3,52,935
- Vesting period 4 Yrs

12. Any other employee who receives a grant in any one year of options
amounting to 5% or more of option granted during the year:

Mr. Pradeep Kulshreshtha, Options granted- 40,000


13. Identified employees who were granted boption, during any one year
equal to or exceeding 1% of the issued capital (excluding outstanding
warrants and conversions) of the Company at the time of grant.

Nil

PARTICULARS:

30 October 2006

1. Total No. of options granted:

14,91,050

2. Pricing Formula:

Rs.154.46 (being the market price as defined in SEBI guidelines)

3. Number of options vested:

4,47,315

4. Number of options exercised:

85,455

5. Total no. of shares arising as a result of exercise of options:

85,455

6. Number of options lapsed

3,43,050

7. Number of options forfeited:

Nil

8. Variation in terms of options:

The remuneration committee had in its meeting held on 30 March 2009 revised
the period of exercise of stock options from 18 months to three years.

9. Money realized by exercise of options (Rs.'000):

13,231

10. Total No. of options in force as on 31 March 2009:

11,48,000

11. Grant to Senior Management:

- Number of options: 10,02,800
- Vesting period : 4 Yrs


12. Any other employee who receives a grant in any one year of options
amounting to 5% or more of option granted during the year:

Mr. V. K. Kaushik, Options granted- 75,000

13. Identified employees who were granted option, during any one year equal
to or exceeding 1% of the issued capital (excluding outstanding warrants
and conversions) of the Company at the time:

Nil

PARTICULARS:

27 September 2007

1. Total No. of options granted:

30,000

2. Pricing Formula:

Rs. 299.90 (being the market price as defined in SEBI guidelines)

3. Number of options vested:

30,000

4. Number of options exercised:

Nil

5. Total no. of shares arising as a result of exercise of options:

Nil

6. Number of options lapsed

Nil

7. Number of options forfeited:

Nil

8. Variation in terms of options:

The remuneration committee had in its meeting held on 30 March 2009 revised
the period of exercise of stock options from 18 months to throe years.

9. Money realized by exercise of options (Rs.'000):

Nil

10. Total No. of options in force as on 31 March 2009:

30,000

11. Grant to Senior Management:
- Number of options 30,000
- Vesting period 4 Yrs

12. Any other employee who receives a grant in any one year of options
amounting to 5% or more of option granted during the year:

Mr. Paul Birch, Options Granted - 30,000

13. Identified employees who were granted option, during any one year equal
to or exceeding 1% of the issued capital (excluding outstanding warrants
and conversions) of the Company at the time:

Nil

PARTICULARS:

30 May 2008

1. Total No. of options granted:

40,000

2. Pricing Formula:

Rs. 310.35 (being the market price as defined in SEBI guidelines)

3. Number of options vested:

Nil

4. Number of options exercised:

Nil

5. Total no. of shares arising as a result of exercise of options:

Nil

6. Number of options lapsed

20,000

7. Number of options forfeited:

Nil

8. Variation in terms of options:

The remuneration committee had in its meeting held on 30 March 2009 revised the period of exercise of stock options from 18 months to three years.

9. Money realized by exercise of options (Rs.'000):

Nil

10. Total No. of options in force as on 31 March 2009:

20,000

11. Grant to Senior Management:

- Number of options: 40,000
- Vesting period : 4 Yrs

12. Any other employee who receives a grant in any one year of options
amounting to 5% or more of option granted during the year:

Ms. Pratima Ram, Options Granted - 20,000

13. Identified employees who were granted option, during any one year equal
to or exceeding 1% of the issued capital (excluding outstanding warrants
and conversions) of the Company at the time:

Nil

PARTICULARS:

30 March 2009

1. Total No. of options granted:

30,000

2. Pricing Formula:

Rs. 90.40 (being the market price as defined in SEBI guidelines)

3. Number of options vested:

Nil

4. Number of options exercised:

Nil

5. Total no. of shares arising as a result of exercise of options:

Nil

6. Number of options lapsed

Nil

7. Number of options forfeited:

Nil

8. Variation in terms of options:

None

9. Money realized by exercise of options (Rs.'000):

Nil

10. Total No. of options in force as on 31 March 2009:

30,000

11. Grant to Senior Management:

- Number of options 30,000

- Vesting period 4 Yrs

12. Any other employee who receives a grant in any one year of options
amounting to 5% or more of option granted during the year:

Mr. Aditya Vg, Options Granted - 30,000

13. Identified employees who were granted option, during any one year equal
to or exceeding 1% of the issued capital (excluding outstanding warrants
and conversions) of the Company at the time:

Nil

Your Company's shares are listed at Bombay Stock Fxchange Ltd. and the
National Stock Exchange of India Ltd. and the listing fee for the year
2009-10 has been paid to these stock exchanges.

Corporate Governance:

Report on Corporate Governance as stipulated under Clause 49 of the Listing
Agreements with the Stock Exchanges forms part of this Annual Report.
Certificate of the auditors of the Company regarding compliance of the
conditions of Corporate Governance as stipulated in Clause 49 of the
Listing Agreements with the stock exchanges is attached to the report.

Management Discussion and Analysis:

A detailed section of the Management Discussion and Analysis forms part of
the Annual Report.

Consolidated Financial Statement:

In accordance with the accounting standard (AS-21), consolidated financial
statements, are attached and form part of the Annual Report and Accounts.

The Auditors, M/s S. R. Batliboi & Co. will retire at the conclusion of the
Twenty First Annual General Meeting and being eligible, have offered
themselves for re-appointment vide their letter dated 8 May 2009. The
observations of the Auditors have been fully explained in Note 6 in
AnneXUfe II to the Abridged Financial Statements and also Note 11 in
Schedule 'M' to the complete set of Financial Statements.

Internal Control System:

The Company has an effective internal control system that is commensurate
to the size and nature of its business and ensures:

- Timely and accurate financial reporting in accordance with applicable
accounting standards;

- Optimum utilization, efficient monitoring, timely maintenance and safety
of assets;

- Compliance with applicable laws, regulations, listing agreements and
management policies;

- Effective management information system and review of other systems.

The Company has an Oracle based ERP System across business units and all
processes like Procurement, Inventory Management, Vendor Payments, Accounts
Receivable, Fixed Assets and Financial Accounting are on this platform. ERP
ensures uniformity, swift exchange of information and alignment of business
units in different geographies.

Last year, Company had upgraded its Oracle E-Business suite from version 11
.5.5 to version 11.5.10.2 and implemented new modules viz. Enterprise Asset
Module (EAM) and Human Resource Management System (HRMS). These performed
satisfactorily during the year

The Internal Audit Division conducts audits across the Company throughout
the year to test check the internal control system, reports observations to
the Audit Committee and tracks the compliance status of the audit
observations. Data Analytics through Computer Assisted Auditing Techniques
(CAAT) has been made an integral part of Internal Audit. Project reviews
are also carried out by the Internal Audit team as part of internal control
on a regular basis.

The Company has not accepted any fixed deposits from public, shareholders
or employees during the year.

As required by the provisions of Section 217(2A) of the Companies Act, 1956
road with Companies (Particulars of Employees), Rules, 1957, as amended,
the names and other particulars of employees are set out as an annexure to
the Directors' Report. However, as per the provisions of Section 219 (1)
(b) (iv) of the Companies Act, 1956, the Directors' Report is being sent to
all members of the Company excluding the aforesaid information. Any member
interested in obtaining such particulars may write to the Company Secretary
at the Registered Office of the Company.

Consumption of Energy and Foreign:

Exchange and Outgo:-

The details as required under the Companies:

(Disclosure of Particulars in Report of Board of Directors) Rules, 1988 are
given as an annexure to the Directors' Report. However, as per the
provisions of Section 219 (1) (b) (iv) of the Companies Act, 1956, the
Directors' Report is being sent to all members of the Company excluding the
aforesaid information. Any member interested in obtaining such particulars
may write to the Company Secretary at the Registered Office of the Company.

Your Directors wish to place on record that your Company's success has been
a result of enduring dedication, commitment and hard work of employees at
all levels. Your Directors would also like to express their gratitude to
the customers, partners, business associates, financial institutions, banks
and various agencies of Central & State Government for their support. Your
Directors would also like to thank all the shareholders for their continued
confidence in the Company.
For and on Behalf of the Board

Place: Gurgaon Atul Punj
Date : 24 June 2009 Chairman

MANAGEMENT DISCUSSION AND ANALYSIS

Health, Safety and Environment:

Focusing on Building a Culture of Safety:-

Global Standards:

Safety at Site > At Punj Lloyd safety is non-negotiable and is an integral
part of business. Every person is committed to ensuring a hazard-free and
safe working environment, going beyond mere compliance of safety rules and
focusing on building a safety culture. This not only implies keeping
employees safe, but also supporting a healthy business through rigorous
execution and engagement of Health, Safety and Environment (HSE) measures -
achieved through leadership engagement, early program involvement, design,
technology selection, risk mitigation and work performance.

Punj Lloyd drives its HSE practices through the adaptation of three basic
principles: accountability from each employee (enforced through front-line
supervision); incorporating safe work practices as standard operating
procedures; and the philosophy that safety is not special - it is simply an
equal part of the business process. This is inculcated into employees from
Day 1; the Company trains all new hires on accident/hazard recognition even
before they start on any assignment. Punj Lloyd creates, selects and
delivers effective training, including group safety efforts that get the
most learning from existing teams. Regular training is carried out to
update knowledge of the employees on various project activities. 'Safety
Alerts', mock drills and reporting and learning from near-miss incidents
are some of the tools used in the training process. Safety promotion
activities are high on the Company agenda: including celebration of
National Safety Day, AIDS Awareness Day and Environment Day at sites across
the globe.

Punj Lloyd's international standards, construction and project management
techniques have been recognised for over a decade. The Company holds and
maintains Quality, Environment and Occupational Health & Safety Management
System Certification (ISO 9001:2008, ISO 14001:2004 & OHSAS 18001:2007,
respectively). Also, the IFC performance standards have been integrated in
the Company's existing occupational health, safety and environment
management system to establish requirements to avoid, reduce, mitigate or
compensate for impacts on people and the environment and to improve
conditions where appropriate.

These efforts have been recognised and appreciated by external agencies and
clients. At the YLNG project in Yemen and OGD III Project at Abu Dhabi, the
Company achieved more than 7 million safe man-hours. As recognition for its
efforts in safety, Purr Lloyd was awarded the Greentech Gold Award in
Safety Management for the Construction Sector in 2008-09.

Human Resources:

Empowering Individuals Nurturing Careers:-

People:

HR Philosophy > Punj Lloyd believes in empowering its people and in
meritocracy. Employees are given significant responsibility at the early
stage of their work life, and based on their ability to take up and execute
challenging assignments, career paths are suitably accelerated. Individual
achievement targets are aligned to Company goals and objectives and Punj
Lloyd's appraisal system not only factors in monetary incentives, but also
career and knowledge development opportunities. The Company also believes
that cross-border experience creates global managers and supervisory staff;
thus, over a period of time, key performers are not only geared to greater
responsibilities in a country but are exposed to global work practices and
cultures that enable them to successfully take up and execute assignments
across the world. 'Grow from within' is also something in which Punj Lloyd
believes: lateral inductions are necessary, but identifying, growing and
promoting internal talent to more and more challenging positions in the
Company is critical.

The Key HR Issues > Punj Lloyd has rapidly evolved in size, reach and
complexity of operations. From an EPC group in the engineering and
construction sector, the Company is fast transforming itself into a
diversified conglomerate, exploring and exploiting business opportunities
in energy, building, infrastructure, defence, aviation, marine and
upstream. Therefore, the key issues that Punj Lloyd wishes to address from
a people perspective are:

* Inducting talent and skills in business areas that have not traditionally
been the business areas of the Company; e.g. Defence.

* Building managerial talent and developing a leadership pipeline to meet
the ever increasing demand of top talent to manage and execute the Companys
business.

* Developing the skill sets of workmen and supervisors who can then be
utilised for the various projects that Purr Lloyd executes: not only in
India but across the world.

The Major Initiatives:

Inducting talent:-

Punj Lloyd is one of the countrys premier recruiters. Annually about 350
Graduate Fngineer Trainees and Management Trainees are inducted into the
Company from premier institutes and government polytechnics across the
country. Purr Lloyd has also implemented an accelerated development program
for MBAs from Indias leading business schools and over the past two years,
the Company has recruited 16 MBAs with 5 years or more of related industry
experience. In addition, the Company and the Group are exploring
opportunities for laterally inducting people at various levels.

Developing worker skill sets:

Punj Lloyd requires about 8,000 skilled people with diverse skill sets for
its various projects globally. Since execution time, quality and safety
imperatives vary across geographies, upgrading workmen skills is not only
desirable, it is often a key differentiator between Purr Lloyd and its
competition. The Company has set up Craftsmen Training Institutes (CTI) in
Chhindwara (near Nagpur), Belgaum and Banmore (near Gwalior).

The institutes train welders, fitters, operators and mechanics to hone
their skills. Through these institutes, Punt Lloyd will be providing skill
training of 54,000 man days per annum.

Building managerial capabilities:

Inaugurated in July 2008, the Fxecutive Development Centre at Banmore (LDC)
is the Company's landmark training initiative to develop Graduate Fngineer
Trainees, Lngineering Diploma Holder Trainees and Management Trainees. As
part of the induction process, new recruits undergo an intensive, inter
disciplinary 7- 8 weeks residential training cum foundation programme at
the L DC, comprising presentations, assignments, site visits and practice
exposure in various disciplines, which gives new recruits an understanding
of the Groups operations in different business segments and geographies.

Learning needs of existing employees are also identified for all locations
and geographies and appropriate training partners are chosen to get the
best possible solutions. The training programs are aimed at sharpening
personal/inter-personal effectiveness, leadership skills, team building and
communication skills. The Group is planning to achieve a total of 11 ,270
man days of training per annum.

Punj Lloyd has also started a programme for training project managers on
the commercial and financial aspects of business, along with Management
Development Institute, Gurgaon, a premier Indian management school. The
training programme helps the managers to understand the criticality of
management decisions with regards to top line and bottom line of projects.

Punj Lloyd is partnering with Indian School of Business (ISB) to set up its
new centre at Mohali. The Company is among the four Founder Supporters who
have contributed towards the development of ISB Mohali. The campus will
have four Centres of Excellence amongst which will be Purr Lloyd Institute
of Physical Infrastructure Management.

Talent building is notjust a function of training: it is also a function of
'on thejob mentoring and guidance. To emphasise this, all senior managers
are encouraged to identify and mentor talent within their business segments
and geographies. The Company has laid down processes for mentoring,
assessing, transforming, rewarding and promoting, which are cascaded down
from the senior most levels of management. Identification and nurturing of
people talent is one of the significant Key Performance Indicators (KPI) of
senior management in Purr Lloyd.

Corporate Social Responsibility:

Creating Value for Society:-

Enriching Lives:

Punj Lloyd's Corporate Citizenship Initiatives > The Company's initiatives
are born out of a deep desire to make a significant change in the areas
where it operates. The Company focuses on two major areas: AIDS awareness
and, by extension, life enrichment and education.

The Life Enrichment Programme > Construction workers are the mainstay of
Punj Lloyd's projects. Many of them are migrants, socially displaced and
economically challenged; they travel many hundreds of miles in search of
jobs. Often enough, government health programmes do not reach these people
precisely because they are on the move from one site to another. Punj Lloyd
has taken upon it to address the challenge of health and life improvement
of these migrant workers at its myriad construction sites in India. And it
is addressing the challenge through its Life Enrichment Programme. Phase I
of the Life Enrichment Programme was launched in February 2007 at Medicity,
a multi-speciality institute that was being constructed by Punj Lloyd in
Gurgaon, India. The project was initiated as a sustained programme of
securing safe health practices for Punj Lloyd's workers/employees at all
levels at the site, with focused action on propagating an enabling
environment for the prevention of HIV/AIDS. With SNS Foundation being the
implementation partner, the one year project involved 1,400 unskilled and
semi-skilled, marginally literate migrant workers employed by Punj Lloyd in
the age range of 18-30 years.

In addition to educating these workers about safe sex practices, the
programme focused on access to healthcare, counselling and health building,
through blood tests, free medical check-ups, free distribution of condoms
and various educational tools to make them aware about a safer and
healthier lifestyle.

Phase I was a great success - so much so that people who were involved in
the project have now become the core group that would educate others
wherever they go.

Appreciating the work done by Punt Lloyd during Phase I, International
Finance Corporation (IFC) Washington supported the Company in Phase II of
the Life Fnrichment Project (LF II), where construction workers of the
Company at throe Indian Oil Corporation (IOC) sites are the target
audience. The throe sites are at Panipat (Haryana), Vadodara (Gujarat) and
Haldia (West Bengal).

The eighteen-month programme targets an overall improvement in health-
seeking behaviour of 4,000 Purr Lloyd construction workers to substantially
add to their self worth. The programme includes providing on-site medical
facilities, intensive communication and counselling, courses on nutrition
and yoga, condom promotion and the adoption of a peer educator model to
provide education on important health issues such as substance abuse,
sexual and reproductive health, including HIV/AIDS, and tuberculosis.

Mentors' and 'Ambassadors' have been identified from among the management
personnel at each site, while 'Peer Fducators (PFs) and 'Peer Coordinators'
(PCs) will lead the communication and behaviour change among peers.
Together, they demonstrate their wholehearted commitment to support the
objective of making the workplace environment a safe haven for all.

The Education Initiatives:

Dayawanti Punj Model School, Sitamarhi During his visits to the areas of
Bhadohi and Sitamarhi, Mr. S.N.P. Punj, the Founder of the school at
Sitamarhi, came face to face with illiteracy, prejudice against girl
children and poverty. Although Sitamarhi in eastern Uttar Pradesh is a
famous religious site and has important historical implications, economic
development seemed to have bypassed the area. Illiteracy, superstitions,
gender bias, lack of social awareness and poor hygiene have all contributed
to the lack of growth in the region.

To address this problem, Mr. S N P Purr started an English medium school
for girls at Sitamarhi, Dayawanti Purr Model School, which gives freeships
and scholarships as an incentive to parents to educate their daughters.

The school is affiliated to the Central Board of Secondary Education
(CBSE). From 100 students five years ago, the school today has 1,100+
students from Nursery to Class 10. In 2008, the school had sent its first
batch for the CBSE Secondary exams and is expected to soon grow to the
senior secondary level, under the 10+2 scheme. In addition to the
proscribed curriculum, students are exposed to various extra curricular
activities. Started as a school for the girl child, it has gained so much
in popularity that local parents requested to have their sons educated in
the school as well; and in response, the institution has evolved into a co-
educational English medium school.

The students, who largely belong to families of small farmers and traders,
are equipped with both intellectual and practical skills; where needed, the
school arranges for tutorials and remedial teaching. Scholarships and
sponsorships are provided to encourage education among children, especially
the girl child. Presently 150 students, mostly girls, benefit from these
scholarships. The school also provides free nutrient-rich midday meals to
students from nursery to Class 3. Systematic medical check-ups are
undertaken and the children are taught the importance of maintaining good
health.

52 well qualified teachers from various parts of India, reside at the
campus along with their families. Teachers and their families are provided
well furnished accommodation.

The school has a training centre where the teachers are updated with the
latest developments in teaching methodology and child psychology. In
addition to their teaching responsibilities, a number of them also
undertake regular door to door campaigns in and around the Sitamarhi
district to spread awareness about the importance of education.

Leveraging on Purr Lloyd's infrastructurebuilding capabilities, the school
has been built with the best amenities, including a swimming pool,
gymnasium, internet facilities and a state-ofthe art auditorium. To meet
the constant demand of the parents for lodging and boarding for the
students, two hostel blocks are being built.

Students of Dayawanti Purr Model School have won accolades at various
national drawing and general knowledge competitions held in various cities
every year. The school is also looking at establishing a 'Sports Academy'
to train the children.

Developmental Initiatives at Sitamarhi:

Punj Lloyd's involvement with Sitamarhi is not restricted to the school
alone. Today, using the school as a fulcrum, the Company has a number of
allied initiatives running in the area - all focused on lifting the
standard and quality of life of the people in the immediate region.

Pt. Kanahya Lai Punj Bal Bhawan Government of India has sanctioned a Bal
Bhawan - the ' Pt. Kanahya Lal Purr Bal Bhawan', sponsored by Purr Lloyd -
at Sitamarhi, on similar lines to that of the National Bal Bhawan in New
Delhi. The Bhawan provides children between the age of 5-16 years a
platform to engage in activities like art, music, dance, drama, painting
and photography, electronic repairs, doll-making and designing.

Village Development Programme:

A Village Development Programme was launched, which aims at developing
three villages falling within a 5 km radius by adopting one village every
year and converting it into a 'Model Village'. The programme is centred
round a five point agenda:

* Education for all
* Health, Hygiene, Sanitation
* Women Work Centre
* Tree Plantation
* Social Awareness & Awakening

New Projects, New Opportunities:

Evaluating Performance:-

Economic Overview > The World Economy > After significant global growth
over almost a decade, signs of a slowdown were to be seen by the end of
2007. Matters worsened in 2008, especially in the second half - and more so
after the collapse of Lehman Brothers on 14 September 2008. The global
credit meltdown that followed soon translated to the real economy. By the
fourth quarter of 2008, every major developed nation was in recession -
which is expected to continue throughout calendar 2009.

Economic activity in the US has declined sharply; the US economy is
expected to shrink between 2.6% and 2.8% in calendar 2009. The Euro area,
too, is facing large contraction; with high unemployment rates, significant
structural rigidities, and, in many countries, a poor budgetary situation,
the EU runs a serious risk of entering a long deflationary cycle, with de-
growth in the region being projected to be between 3.5% to 4%. Global
growth projections for calendar 2009 reflect a 1.3% shrinkage (Chart A) -
the first decline in world output on record.' And even the 1.3% shrinkage
is seen to be optimistic; the World Bank expects the shrinkage figure to be
1.7%.To combat all of this, large amounts of liquidity have been injected
into the global economy through government announced funding. Already, well
above US$ 2.5 trillion have been, or is in the process of being, injected -
the G20 announced a global stimulus package of US$1.1 trillion in April
2009. Simultaneously, central banks across countries have rapidly reduced
policy rates, with a consequent drop in short-term interest rates.

'Source: International Monetary Fund, World Economic Outlook Database,
April 2009

However, how much of these measures have translated to 'money on the
ground' for corporate entities and individuals to borrow and spend still
remains in doubt.'

India:

The official GDP growth numbers released on 29 May 2009 is 6.8% for 2008-
09, with Q4 GDP growth at 5.8%. But that isjust one part of the problem. At
the time of writing this Management Discussion and Analysis, India is
facing two conflicting situations. The first is a hugely positive uplift in
sentiments, with the Congress winning 206 seats in the recent elections for
the 151 Lok Sabha and the United Progressive Alliance (UPA) comfortably
securing a majority. The fact that Dr. Manmohan Singh will be again leading
his team -this time unfettered by the compulsions of meeting the demands of
the Left parties - has created a universally positive milieu throughout
India.

But there are disquieting trends. Industrial growth has been falling
sharply. While there seems to be no dearth of liquidity in the financial
system, banks are still not lending enough, and there doesn't seem to be an
adequate credit uptick. The consolidated fiscal deficit for 2008-09 is
estimated at 11% of GDP; and, given the government's objective of
increasing spends on education, health, social infrastructure and support
for families below the poverty line, there is little likelihood of the
consolidated deficit reducing sharply in 2009-10. Thus, there are concerns
of interest rates hardening in the second half of 2009-10. Equally, with
the rise in crude oil prices - it is now at US$ 70 per barrel -there is a
scope of rising inflation during the second half of the year.

Thus, as far as India goes 2009-10 may be an unpredictable year. The
baseline GDP growth forecast remains at around 6% to 6.5%. However, if the
new government shows speed and determination - as people think it will - we
could see a significant upsurge in investment demand and, with it, a rise
in growth rate to the 7% to 7.5% range. We will have to wait and see.

The Business Segments:

As shown in Table 1, Punj Lloyd Ltd. ('Punj Lloyd' or 'the Company')
operates in four major.

REVENUES AND ORDER BACKLOG: BY BUSINESS SEGMENT IN IRS CRORE:

Segments Oil & Gas Civil & Petro- Power Total
Infrastr- chemicals
ucture

Total Revenue (2008-09) 7233.76 3007.37 1017.64 457.13 11715.90
Percentage Share 61% 26% 9% 4% 100%

Of which, Top 15 4118.83 1624.72 1003.24 352.81 7099.60
revenue earners

Percentage Share 58% 23% 14% 5% 100%

Order Backlog 10514.67 6425.99 2525.83 1218.72 20685.21

Percentage Share 51% 31% 12% 6% 100%

segments: Oil and Gas, Civil and Infrastructure, Petrochemicals and Power.
Chart B shows the revenue distribution of the four segments. Table 1 gives
the figures.

Oil & Gas:

The oil & gas business contributes to 61% of Purr Lloyd's total revenues
and about 58% of Purr Lloyd's top 15 revenue earning projects in 2008-09.
This business offers services in process engineering, pipelines, both
onshore and offshore, and tankages.

The segment earned revenues of Rs. 7,234 crore during the year and as on 31
March 2009, has an order backlog of Rs. 10,515 crore.

In 2008-09, Purr Lloyd won the Strategic Gas Transmission Project for Qatar
Petroleum, valued at Rs. 3,636 crore and involved laying two new 360 dia
pipelines and 24 Core FOC laying. This is the largest project that the
Company has undertaken in the oil & gas business till date. The Company's
capabilities in the oil & gas sector are also well recognised in India. In
2008-09, the Company has won big ticket projects both for the refineries as
well as for pipelines. Some of the projects that Purr Lloyd has been
awarded are highlighted in Table 2 below.

In tankage, the Company has the expertise to execute a complete EPC project
for tank farms and terminals, including cryogenic storage. Purr Lloyd is
one of the few companies in the world having its own design capabilities
and construction expertise for cryogenic and floating roof tanks.

Among the projects under execution during the year, the 'EPCC 8 packages'
for IOCL Panipat is worth separate mention. The Rs.350 crore project is for
the design and construction of offsites and storage facilities for the
naphtha cracker project at IOCL's Panipat refinery. Unlike other projects,
hero all kinds of storage equipment are being manufactured at site,
including spheres, moulded bullets, atmospheric tanks and propylene and
ethylene cryogenic tanks.

Table 3 summarises the revenues the Company has earned from process
engineering and tankage for 2008-09 and the order backlog as on 31 March
2009.

Some of the other major projects that have been executed are detailed
below:

* Two orders for New Doha International Airport fuel system; contract value
Rs. 608 crore.

* Two order for mechanical work, including steel, equipment and pipeline
fabrication and erection for Abu Dhabi Polymers Company (Borouge); contract
value Rs. 762 crore.

Offshore Projects in Oil & Gas:

During 2008-09, this business unit (in association with our wholly owned
subsidiary, PT Sempec of Indonesia) was executing an offshore EPC project,
with a contract value of Rs.1,289 crone, involving four well head
platforms, pipelines, flexibles, cable laying and SBM, etc, for ONGC at
Heera. Subsequently, in April 2009, Purr Lloyd has successfully
commissioned and handed over the first of the four offshore wellhead
platforms to ONGC for it to commence drilling and production operations.
Heera is the first of Purr Lloyds offshore platform projects in India and
the successful technical execution of the project has established the
Company's credentials in offshore.

MAJOR PROJECTS: AWARDED AND UNDER EXECUTION FOR 2008-09: OIL & GAS:

IN RS CRORE
Project Client Contract
Value

Delayed Coker Unit IOCL, Vadodara 590

Sulphur Block for Bina Refinery Bharat Oman Refinery, Bina 590
Project

Motor Spirit Quality Upgradation IOCL, Barauni 649

EPC Contract for Pipeline Gujarat State Petronet Ltd. 239

Heated and Insulated Gas Pipeline: Cairn India Ltd. 141
Three Sections

Dense Phase Ethylene and Butane Ras LafFan Olefins Company 191
Pipe lines between Ras LafFan and Ltd, Qatar
Mesaieed

EPC for 21 Storage Tanks Eastern Bechtel Co. Ltd., 140
Abu Dhabi
Oftsite and Utilities Yemen LNG, Yemen 322

Construction of Two Gas Pipelines Sirte Oil Company of Libya 1,349
in Libya

PROCESS ENGINEERING & TANKAGE: SEGMENT-WISE REVENUE & ORDER BACKLOG:

IN RS CRORE
Business Segments Oil & Gas Petrochemicals Total

Revenue 3,204.79 1,017.54 4,222.33

Percentage Share 76% 24% 100%

Order Backlog 4,061.55 2,525.83 6,587.38

Percentage Share 62% 38% 100%

It also completed the Uran Trombay Gas Pipeline (the UTG pipeline), where a
substantial part of the project was offshore. The project scope included 24
km of 200 dia pipeline and terminal work and was completed before time.

During 2008-09, Purr Lloyd bid for a US$ 130 million project in Thailand,
as well as for the ZADCO block in Abu Dhabi. It has also submitted bids to
ONGC with a combined value of more than US$ 2.5 billion.

In the offshore business, Purr Lloyd identifies two issues critical to
success: equipment and the skills to effectively deploy them. Purr Lloyd
has acquired sophisticated equipment and machinery over the past few years,
especially during 2008-09. Pipe-laying barges are used to lay sections of
the pipeline at various water depths; the Company has acquired two such
barges, one operating in depths up to 60 metres; the other can lay pipes in
depths of 150 metres. Purr Lloyd is one of the few companies in the world
that has such sophisticated equipment. In 2008-09, the Company also
acquired an accommodation and crane barge.

Punj Lloyd has a long-term growth objective of being able to graduate to
deep-water offshore work, both in India and the overseas markets,
especially in the Gulf region.

Business Development and Growth Plans In India, capital investments in the
upstream oil & gas sector are expected to grow. Hindustan Petroleum
Corporation Limited (HPCL) is planning to upgrade both its Vizag and Mumbai
plants to conform to Furo IV emission norms. There are also plans for
Diesel Hydrotreater (DHT) units, in which Hydrogen Units and Sulphur
Recovery Units form a part. These projects have an estimated spend of
Rs.3,500 crore. In addition, Mangalore Refinery & Petrochemicals Ltd.
(MRPL) is expanding its operations; Purr Lloyd is bidding for major
packages, especially for the Delayed Coker Unit. The Government of India is
planning to build an Underground Strategic Reserve, for which Purr Lloyd
has bid for the topside of the cavern storage.

On the pipelines side, Gas Authority of India Ltd (GAIL) is putting in a
parallel pipeline between Dahej and Vgaipur, which is about 550 km long;
Purr Lloyd has already submitted its bid. The Bawana Nangal gas pipeline
project is also in the offing. According to newspaper reports(The Fconomic
Times, 13 April 2009 )

'GAIL has upped its planned expenditure for 2009- 70 by as much as 56%
compared to the pre vlous fiscal. The gas major has pegged its capex for
2009-70 at Rs 5, 558 crore against a revised estimate of Rs 3, 559 crore
for 2008-09'.

Punj Lloyd also plans to enter new geographies. The Company is one of the
four international pro-qualified bidders for a mega pipeline project in
Papua New Guinea.

Though crude oil prices have come down from US$ 147 per barrel to around
US$ 70 per barrel, oil producing nations and oil majors have not cut back
significantly on their expansion and investment plans, as can be seen from
the following comments and reports:

* The onshore division of UAE state-run oil firm ADNOC plans to award
around $2 bil/ion of contracts to expand capacity before the end of the
year (2009).(3)

* The Abu Dhabi Government is going ahead with its plans to invest as much
as $20 billion by 2070 to increase its crude output capacity. and also pump
in $25 billion over the coming five to six years into its gas industry. (4)

* Libya's National / Corporation (NOCJ has approved the development plan
which is aimed at improving the economics of the refinery, cementing its
position in the local market, and also allowing it to meet new production
specifications. a UAE based consortium of hransAsla Gas and Star Petro
Energy have agreed to take a 50% stake in Ras Lanuf Libya's largest
refinery. The Azzawiya plans call for a two-phase refinery revamp project,
harbour expansion, and revamp of a lube oil b/ending p/ant. ARC has not
announced the forecast cost of its upgrade, but previous estimates have put
the refinery's revamp at around $650 millions. (5)

In India, about 27 million tonnes per annum additional capacity is planned
to come up under PSUs. Underjoint venture, 43 million tonnes per annum
capacity will be added in the next four to six years. Creating additional
refining capacity ofabout 170 million tonnes per annum during the near
future and will require an investment of over US$ 22 billion. (6)

Given the increasing demand for oil and petroleum products from developing
economies, it is unlikely that oil companies will 'shut down' their
offshore plans. In India, ONGC is going ahead with its offshore projects:
the Heera project is ongoing and ONGC has major investment plans in their
offshore operations, giving rise to optimism about business prospects in
the offshore segment.

3'Source: http://business.maktoob.com/20090000001755/ADNOCplans$2blnoil
expansion contact/Article.htm

4'Source:
http://www.oilandgasnewsworldwide.com/bkArticIesF.asp?Article=25621&Sectio
n=3952& IssuelD=540

5'Source: https://www.zawya.com/story.cfm/sidv52n14-
3NC11/Libya’%3Bs%20Azzawiya %20

Refinery%20Continues%2OTo%2OSeek%201nvestors%2OFor%20U pgrade %2FExpansion

6'Source: Ministry of Petroleum, Govt. of India website

Geographies Afrinca East Asia Middle South Total
Revenue East Asia

Civil Fngineering, - 2348.12 80.45 468.34 2896.91
Building & Power

Roads & Other Infra- - - - 567.59 567.59
structure

Percentage Share - 68% 2% 30% 100%
Order Backlog
Civil Fngineering, 2058.05 1824.61 146.87 2606.43 6635.96
Building & Power

Roads & Other Infra- - - - 1008.75 1008.75
structure

Percentage Share 27% 24% 2% 47% 100%

Civil, Infrastructure & Power:

The Civil, Infrastructure & Power business of Punt Lloyd comprises two
elements (Civil Lngineering, Building & Power, and Roads & Other
Infrastructure). Together, they have contributed Rs. 3,465 crore of topline
to Punt Lloyd during the year ended 31 March 2009, with a residual order
book of Rs. 7,645 crore as on that date (Table 4).

Civil & Infrastructure work is executed through three entities: Punt Lloyd
Ltd. (which mainly executes projects in India), Sembawang Fngineers and
Constructors Pte Ltd. (SLC) and Sembawang UAL.

India Operations:

In India, Punj Lloyd provides integrated design, LPC and management
services for infrastructure projects, including roads, highways, flyovers,
bridges, elevated railroads, metro rail, underground tunnels, seaports and
airport terminals.

The Company has successfully completed four of its eleven highway project
during the year. The multi-speciality 'Medicity project at Gurgaon
(Haryana) is also nearing completion. Some of the other projects won and
being executed during the year are as follows:

* Civil works for the aerodrome at Pakyong, Sikkim; contract value Rs. 264
crore.

* Llevated Metro rail viaduct at Delhi; contract value Rs. 86 crone.

ESTIMATED INFRASTRUCTURE SPENDS: 11TH PLAN PERIOD (2009 - 2012)

Key Sectors' Estimated Investment (US$ Billion)
2009-2010 2010-2011 2011-2012

Electricity 31.60 39.51 49.65
Roads & Bridges 14.80 17.09 19.99
Railways (Ind MRTS) 12.38 15.10 19.18
Ports 4.34 5.00 5.85
Airports 1.48 1.66 1.92
Water Supply & Sanitation 6.83 8.32 10.27
Irrigation (Ind watershed) 11.80 15.57 20.11
Telecommunication 12.15 15.41 19.67
Storage 1.11 1.21 1.31
Gas 0.83 0.93 1.03

Source: Planning Commission Documents

* Seaport project in Maharashtra; contract value Rs. 800 crore.

* Providing a parking facility for the Commonwealth Games at Delhi in 2010;
contract value Rs. 304 crore.

The Company is also executing two projects, totalling Rs. 2,058 crore, in
Libya in ajoint venture with a Libyan company; Purr Lloyd will have 85% of
the project while Public Works Company, Tripoli will have the balance 15%
share. The two projects involve FPC and project management water, sewerage,
roads and other facilities for Arada Zones 4 & 5 of Tripoli City.

Growth Plans:

The spend commitments of the Government of India in the infrastructure
sector have increased substantially, especially for the 121' Plan Period.
Table 5 details the estimated infrastructure investment for the next three
financial years in various sectors'

* Railways Indian Railways have plans for large scale infrastructure
development. The qualification process of the 300 km dedicated Fastern
Freight Corridor is expected to commence shortly. Purr Lloyd is in
discussions with various leading international companies in the railway
segment forjoint participation in this and other railway projects.

* Ports Almost all the major ports in the country have announced capacity
enhancement, which are being coordinated through the National Marine
Development Programme. Purr Lloyd has been pre-qualified for the Goa port
project. In Abu Dhabi, the Company has been technically qualified for the
Khalifa Port and Industrial Zone Project in consortium with a Greek
company.

* Airports Government of India has already invited private participation in
the upgrade of airports and airport terminals and in the construction of
new ones. The next throe years should see spends of around US$ 6 billion
and the Company is looking to exploit these opportunities. With Purr Lloyd
executing the Sikkim project, a reference has been created.

* Roads and Highways Phase V of the development programme of the National
Highway Development Plan (NHDP) looks at further upgrading Indian roads.
The National Highways Authority of India (NHAI) has started inviting for
pro-qualification bids for various road packages. Purr Lloyd is looking at
tie-ups with select companies where it can go forward for these bids,
either on a 'Build-Own-Transfer (BOT)/Annuity basis or on a 'project
execution' basis.

* Mass Rapid Transport Systems The Company has won throe contracts for the
Bangalore Metro Rail Project ('See News Flash').

* Libya The country offers large and varied opportunities in the
infrastructure sector. Due to past international sanctions, infrastructure
development in Libya has not progressed at the pace it ought to have; the
country, however, has sufficient funds to explore and execute expansion
projects in various infrastructure segments. Purr Lloyd has already
established its credentials in the region and expects to leverage this
further in the near future.

Sembawang Engineers & Constructors Pte. Ltd., Singapore (SEC):

SEC, the engineering and construction arm of SembCorp Industries Ltd.
Singapore and the biggest constructor in Singapore, was acquired by Punj
Lloyd in 2006-07. In its second full year of operations after being
integrated with the Purr Lloyd Group, Sembawang has been reorganised and
refocused in line with the overall business goals of the Purr Lloyd Group.
During the year, SFC earned revenues of Rs. 2,462 crore (Singapore $ 775
million) with an order backlog of Rs. 3,777 crone.

The Marina Bay Sands project, where SFC was involved in constructing the
substructure and superstructure of this mega resort, was substantially
completed during the year; as was the construction of Bayfront Station
including associated tunnels for Downtown Line Stage 1 for the Singapore
Land Transport Authority. These two large projects generated revenues of
Rs. 1,356 crone for SFC during the year. SFC is also exploring business
opportunities in India, where it has pro-qualified for the extension of the
Metro Rail Project in Kolkata. Indian MRTS projects offer ample
opportunities for SFC, in conjunction with the Civil & Infrastructure Group
based out of India.

Sembawang was already involved in the Middle Fast with a building project
in Bahrain. The company is now looking at deepening its footprint in the
region, and have, therefore, set up Sembawang UAF in the third quarter of
2008-09. Infrastructure spends in the Middle Fast economies (Qatar, Abu
Dhabi and Oman) are ongoing and offer the company growth potential. Also,
the UAF operations also serve as the base for exploring and executing
business opportunities in Africa and Furope. In the Middle Fast and
Furopean markets, Sembawang is looking at government or triple-A rated
clients; the company is pre-qualified in Poland, where the Furopean Games
to be held in 2012 offer business opportunities.

Sembawang has a healthy cash flow position and is largely debt free, giving
it the edge required in the present market conditions, over other players.
It is because of this focus and careful planning that its position is not
only strong but it is also well placed to get large orders at better
margins in the present markets.

Power:

There are two parts to the power business: thermal and conventional and
nuclear power. During the year, the power business segment of Purr Lloyd
generated revenues of Rs. 457 crore, with an order backlog of Rs. 1,219
crore as on 31 March 2009.

Thermal and Conventional Power:

During the year, Purr Lloyd is executing the complete F PC, including civil
work of balance of plant (BOP) package for 2 x 250 MW Chhabra Thermal Power
Project in Rajasthan; the order value of the project is Rs. 823 crone. The
first unit was synchronised on 16 April 2009 and the project is expected to
be completed by July 2009.

Punj Lloyd has also been awarded the F PC for BOP at the 2 x 270 MW
Govindwal Sahib Power project in the Tarn Taran district of Punjab. Purr
Lloyd has already started the engineering work for the project, which is
valued at Rs.1,005 crone.

On the business development front, the power segment has entered into an
agreement with General Flectric (GF) to work together in Indian and
international markets, with Punt Lloyd as the FPC contractor for the entire
plant (including turbine) and GF as the equipment and technology supplier.
Over the next few years, Punt Lloyd wishes to migrate from being an FPC
player of BOP in power plants to a full F PC player.

Nuclear Power:

India will need to develop its nuclear power generation capability if it is
to meet its growing demand for power. The power shortage for 2008-09 is
estimated at 11.0%8. Currently, only 4,120 MW (2.8%) of Indias total
generation is met through nuclear power. The country proposes to add
another 3,380 MW of generation capacity by the end of the 11th Plan
period'; have 20,000 MW of nuclear power by 2020 and targets 25% of its
electricity supply to come from nuclear power by 2050'0. This will not be
possible without Private Public Partnerships (PPPs); though, currently, the
sole authority supervising India's civil nuclear programme is the Nuclear
Power Corporation of India Ltd (NPCIL).

Punj Lloyd recognises that this area offers long term growth opportunities
for its engineering and construction businesses. Purr Lloyd envisages that,
over a period of time, the following business opportunities will arise for
the Company in the nuclear power generation business:

* In FPC.

* Decommissioning of Nuclear Power Plants and nuclear waste management;
using the experience of Simon Carves Ltd (UK), which has 3.5 million man
hours of experience in nuclear de-commissioning, spent-fuel management and
engineering advisory services.

* In Nuclear Fuel and Consultancy.

* In Components.

* In Operations & Maintenance.

The team is establishing relationships with leading global nuclear
technology providers for FPCjobs, as well as exploring qualification
opportunities jointly with the appropriate international FPC majors. Punt
Lloyd has also been issued the pro-qualification (PQ) documents for civil
work contract for the Pressurised Heavy Water Reactors (PHWR) of 700 MW
each, worth Rs. 650 crone at Kakarpara in Gujarat.

In 2008-09, the petrochemicals segment generated revenues of Rs.1,018
crone, with an order backlog of Rs. 2,526 crone as on 31 March 2009 (Table
6).

Simon Carves:

Simon Carves Limited, UK (SC):-

Simon Carves Limited provides comprehensive Fngineering, Procurement,
Construction and Commissioning (FPCC) services the across the global
process industry sector, focusing on petrochemicals and renewables,
especially biofuel manufacture. Its expertise lies in the following areas:

* Polymers and Petrochemicals, having designed and supplied over 80
manufacturing facilities to its customers world wide.

* Chemicals, with its own acid technology and through strategic licensor
relationships for other technologies: SCL has built over 350 chemical
manufacturing facilities worldwide; the company has extensive experience in
the Pharmaceutical and Agro chemical markets particularly in Furope having
worked closely in partnership with AstraZeneca over a long period of time.

* Nuclear Power, where it has been involved in the design and build of new
installations in the U K particularly fuel fabrication, waste treatment and
processing.

Geographies Middle East East Asia Europe Rest of Total
World

Revenue 125.24 10.67 881.24 0.49 1,017.64

Percentage Share 12% 1% 87% 0% 100%

Order Backlog 1,251.10 398.32 186.49 689.92 2,525.83

Percentage Share 50% 16% 7% 27% 100%

In 2008-09, Simon Carves generated revenues of #169 million (2007-08: #177
million).

At 31 March 2009, the Purr Lloyd Group reorganised its holding structure of
Simon Carves Limited. Simon Carves Singapore Pte. Ltd. is now the parent
company. There will be no effect on Simon Carves Limited, and is a
reflection of the Group wide focus on projects in Asia and the Middle Last.
The Abu Dhabi office becoming the global headquarters of Simon Carves will
allow it to exploit opportunities in the Middle Last and Asia.

Projects Under Execution:

Over the last year, SC has continued to establish itself as a leader in the
LPCC space of bio-ethanol facilities as it delivers the world's largest
wheat based facility. On the back of its performance on this plant, SC has
secured a further contract with the existing customer; it has also
completed a study for Vireol and negotiated an exclusive position for the
proposed L PC contract for their plant in the UK.
SC has been implementing a number of major projects through the period.

* Teesside LDPE Plant involving LPC of a 400,000 TPA LDPL plant. The
project had reached substantial completion when the contract was terminated
early by the customer. This early termination is considered wrongful by SC
and is now the subject of a formal dispute that is being pursued vigorously
by the company.

* Teesside Bio-ethanol Plant involves LPC and commissioning of 1,100
Kilolitres /day bio-ethanol manufacturing facility, which is the largest of
its type in the world. Construction is nearing completion and commissioning
work has commenced.

* Humberside Bio-ethanol Plant Work has been completed on the front end
design and the project is now progressing towards full LPC of a 540
Kilolitres /day bio-ethanol facility directly with SC on an exclusive
basis.

* Thailand LDPE Plant This project is a joint venture between SC and Toyo-
Thai Corporation Public Company Limited (TTCL) with SC performing
engineering and
procurement work on the critical high pressure systems. Fngineering work is
complete and SC is now providing technical assistance to the field
construction and commissioning activities.

* Abu Dhabi Aluminium Fluoride Plant This project was awarded in the period
and is to engineer, procure and provide construction assistance to build a
sulphuric acid facility and the associated utilities and infrastructure for
an aluminium fluoride facility in Abu Dhabi.

* Middle East LDPE Plant This project is to deliver FPCC of a 300,000 TPA
LDPF facility. SC has provided the engineering and procurement of the high
pressure plant; the work is now complete and is supporting the field
construction completion and commissioning activities.

Growth Plans:

The Middle Fast has shown some resilience and proposed investments in the
region range between US$ 100 to 120 billion (2008 - 2012) with focus on
LDPF, HDPF, Sulphuric Acid and Chlor Alkali. The Furope and Far Fast
markets are 'softer'. The market for renewables is largest in Furope
(approximately US$ 10 billion); funding availability and financial closure,
however, will remain key issues. SC is adapting to these market conditions
and is shifting the centre of excellence for petrochemicals to the Middle
Fast and will focus its Furopean operation on renewables. Opportunities in
the Far Fast will be pursued on a project by project' basis. To support its
activities in the Middle Fast, SC has established a branch office based in
Abu Dhabi during the period.

Simon Carves India Limited (SCIL):

SCIL is a full spectrum design, engineering and consulting company that
provides services in Plant, Infrastructure and Product sectors.
Incorporated in November 2006, the company currently has 733 engineers, of
which 204 people have over 10 years of applicable experience in their
fields. During the year, SCIL earned revenues of Rs. 80 crore, compared to
Rs. 35 crore in the previous year. SCIL have closed design work for
projects such as 360 TPD Sulphur Recovery Units, Storage Units for
cryogenic tank farms, a bio-ethanol plant, an LNG plant and pipelines of
varying dimensions.

The company is currently working on projects for plant and ancillary
facilities for a polysilicon manufacturing unit (detailed design and
engineering), a naphtha hydra treating unit, an LDPF plant, a Delayed Coker
unit and a number of pipeline projects.

In the nearfuture, SCIL hopes to grow its business portfolio to encompass
product design projects as well, with a stronger presence in South Fast
Asia and the Middle Fast. During the next year, the company plans to grow
business in its target verticals of process plants, petrochemicals,
chemicals, infrastructure, polysilicon and tankage, with the ambition of
being a globally recognised engineering consulting company in its field of
expertise.

The Geographies Asia PacifiIrm:

In spite of the economic slowdown in the Asia Pacific region, Purr Lloyd
has performed well during 2008-09, with all its projects under execution
being profitable and 'cash flow positive

Table 7 lists some of the region's headline projects of 2008-09.

The ExxonMobil refinery site at Singapore, where Purr Lloyd is working on
throe construction packages, is also on schedule. FxxonMobil has extremely
high standards of safety and quality and it is a reflection of Purr Lloyd's
capabilities that it was adjudged as the best contractor for safety for the
month of December 2008 for the IRF Tankage project.

In the Asia Pacific region, Purr Lloyd has also entered into the business
of manufacturing power plants, where it is working on a 52 million IFC
funded project for ADARO (Indonesia's second largest coal mining company)
in Fast Kalimantan.

Future Prospects and Growth Plans:

Despite the second half of 2008-09 and the first quarter of 2009-10
reflecting relatively bleak economic indicators, the overall Asia Pacific
region has growth potential for Purr Lloyd. Though there has been some
slowdown and some projects have been delayed, no major project has been
cancelled, either by sovereign entities or by large multinationals.

The Company is also planning projects and exploring business opportunities
in new territories. Given Purr Lloyd's track record in the region of
successfully bidding for; winning and executing large projects, the Company
feels that its prospects of gaining and executing profitable business
during the next financial year is high.

The Company feels that Malaysia presents significant opportunities in
offshore pipeline installation work. Purr Lloyd has, therefore, set up a
full fledged business development office in Kuala Lumpur. The Company has
also made considerable progress to gain opportunities in Thailand, Vietnam
and Papua New Guinea.

In this region, Punj Lloyd would explore three additional areas of
business: (a) offshore platforms; (b) construction of power plants on an
EPC basis and (c) large material handling projects.

CONSOLIDATED LIST OF PROJECTS: AWARDED AND UNDER EXECUTION FOR 2008-09 :
ASIA PACIFIC

Project Client Contract
Value

Turn around work in a live refinery ExxonMobil/Foster US$ 86
Wheeler - Worley million
Parsons JV

FPC of tank farm project Shell US$ 22
million

Sabah Sarawak Gas Pipeline Project Petronas Carigali US$ 500
Sdn Bhd million

South Utility Platform -Tunu Field Total F&P Indonesie US$ 15
Development TP11S/FPSC5 Project million

Calendar 2008 has been a good year for the Middle East (Chart D). All the
regional economies have outperformed the world average, with only UAE and
Saudi Arabia showing signs of marginal de-growth. Overall, the region
reflected about 6% growth over the year and most companies in the region
have enjoyed strong revenue and profit growth.

The Year in Perspective:

In 2008-09, the Company secured the Group's largest project of US$ 800
million -the Strategic Gas Transmission Project project, with Qatar
Petroleum. Purr Lloyd's Middle East operations also bagged and executed
other important orders, in excess of targeted numbers (Table 8).

Future Prospects:

Prospects of growth in the Middle East remain bright. Though oil revenues
have shrunk, the economies have not shut down spends, either in the oil &
gas or infrastructure sectors. Abu Dhabi, Yemen, Qatar and Oman all show
growth promise -and Purr Lloyd is present in all these countries. 2009 is
expected to be a year of changing fortunes, with the region ending the year
better placed for sustainable long-term growth.

In the near future, Purr Lloyd intends to expand its geographical footprint
in the Middle East and North Africa, using Abu Dhabi as the base.

Punj Lloyd had entered the Caspian region about a decade ago as one of the
early movers in the pipelines business. Last year, as reported, the Company
won a large order in the field of nonconventional energy. During 2008-09,
the Caspian region contributed Rs. 246 crore of revenues; the order backlog
as on 31 March 2009 was Rs. 877 crore. The major projects that are being
executed in the Caspian include the following:

* A major project in the field of non conventional sources of energy.

* Laying of pipeline from the onshore processing facility at Caspian
Pipeline Consortium pumping station for AGIP Kazakhstan North Caspian
Operating Company N.V.; contract value Rs. 357 crore.

* Solar Energy Chlor-Alkali Feed for Aizel; value of contract Rs. 5 crore.

The Caspian region is rich in mineral wealth; substantial investments in
the building and infrastructure space are also expected in the near future.
The area (especially Kazakhstan) has unique climatic challenges that make
for project execution difficult and thus forms a 'barrier to entry' for
competition. Purr Lloyd, having established itself in the region, now
expects to leverage its strengths and experience for greater growth.

India's defence expenditure has been growing over the past couple of years,
and, given the geo-political realities of the region, defence expenditure
is expected to keep growing (Table 9).

LIST OF PROJECTS: AWARDED AND UNDER EXECUTION FOR 2008-09: MIDDLE EAST

Segment &
Project Client Value

Pipelines:
Strategic Gas Transmission Project Qatar Petroleum US$ 800
million

Doha Urban Pipelines Relocation Qatar Petroleum US$ 180
million

Multi Product Pipeline Qatar Petroleum US$ 98
million

EP2 Pipeline Project Ras Laffan Olefins US$ 45
Company Limited million

EPC of OGC Pipelines Oman Gas Company US$ 112
million
Tankage & Terminals:
Early Need Tanks Saudi Kayan US$ 79
Petrochemical Company million


Fuel Handling System - NDIA New Doha International US$ 138
Airport million
Process Plants:
Borouge 2 - Polyolefins Project: Tecnimont Italy/Borouge, US$ 72
Mechanical Work Abu Dhabi million

Borouge 2 - U&O Project Mechanical Tecnicas Reunidas, US$ 108
Work Spain/Borouge, Abu Dhabi million

Yemen LNG Project Mechanical Work Yemgas/Yemen LNG Company US$ 69
million


Punj Lloyd Group has identified areas in which it will be able to
effectively contribute to Indian defence needs in land, sea and air
applications, notjust as a supplier for 'offset' materials, but as part of
the global supply chain for defence equipment majors.

Land:

Punj Lloyd Group is amongst the select few private companies having
licenses for the manufacture of guns, rockets, artillery missile systems
and for electro optical systems, fire control systems, C31 systems and
power packs associated with armoured fighting vehicles. The Company also
has the licence for the assembly and manufacture of small arms.

The Group has signed a collaboration agreement with a leading manufacturer
of artillery systems with whom Purr Lloyd has developed an artillery
weapon. The Group proposes to setup fabrication and assembly facilities for
artillery land systems in Madhya Pradesh (near Gwalior) where 65 acres of
land has been earmarked for this purpose.

Punj Lloyd has access to facilities in South India, capable of handling
Airbus and Boeing platforms. Purr Lloyd proposes to setup precision
manufacturing facilities that can be used for assembly, retrofit and
integration of sub-assemblies onto aircraft platforms; engine refurbishment
and overhaul and component and accessory repairs.

Sea:

Punj Lloyd is a co-promoter of Pipavav Shipyard Ltd. Located on India's
west coast at Gujarat, the shipyard is one of the world's largest. Spread
over 782 acres of land, the shipyard has excellent connectivity via road
and rail; proximity to Pipavav Port on the sea side is an added advantage.
The shipyard includes 210 acres of fully developed waterfront; nine
automated workshops developed in 250 acres of land; two dry docks, which
are the largest in South Asia and state-of-the-art fabrication facilities.
The shipyard will be able to build, repair and maintain naval platforms for
the Indian Navy and Coast Guard. Pipavav is also the only shipyard capable
of docking the 'Admiral Gorshkov' (to be renamed INS Vikramaditya), India's
new aircraft carrier. Production and development opportunities with global
primes for integration of sub systems and weapons on to naval platforms
will also exist at this port.

Punj Lloyd expects that over the medium to long term, its defence business
will contribute substantially to its topline and bottomline. The business
is, by its very nature, a 'long gestation' one; today, the Company is in
the process of establishing relationships and collaborations that would
help to grow the business over the next few years.

Material Procurement & Sourcing:

The sourcing function of Purr Lloyd looks after the buying of materials for
projects that are ultimately

BREAK-UP OF INDIAN DEFENCE EXPENDITURE:

IN RS. CRORE
Service/Department 2005-06 2006-07 Revised Budgeted
Estimate Estimate
2007-08 2008-09

Army 39,458 39,578 45,432 49,228
Navy 13,967 16,198 16,036 19,507
Air Force 21,704 24,274 24,683 30,127
Dept of Defence Production 137 83 452 251
Defence Research and Development 5,283 5,361 5,897 6,487

Source: Ministry of Defence Website transferred to the client, i.e. project
materials and project consumables.

In 2008-09, the function saw two different sets of phenomena. During the
first half of the year, material costs of major raw materials (steel,
cement, etc.) were on the rise; conversely, in the second half of the year,
prices dropped quite sharply. Thus, the function had two separate
objectives during the year. In the first phase, the function was focused on
keeping costs within budget through planned 'staggered procurement'; the
second phase was more a case of optimising procurement benefits.

During the year, Purr Lloyd has developed sourcing establishments and
initiatives in low cost countries. Through this, the Company hopes to
substantially reduce material acquisition costs. Other initiatives that the
function have undertaken for cost optimisation include bulking of common
requirements across multiple projects (for costeffective volume buying),
engaging vendors for volume discount contracts and tying up with vendors in
the pro-bid stage itself in order to reduce the 'time to project' cycle for
material procurement.

Punj Lloyd's people philosophy revolves around two tenets: 'empowerment'
and 'meritocracy'. Fmployees are encouraged to take up responsibilities
early in their careers and initiatives are suitably rewarded. To develop
people capabilities, the Company inducts the right quality of people,
trains them intensely and repeatedly over time and offers multiple growth
opportunities, notjust in India but across the world.

Details of Purr Lloyd's people initiatives are given in a separate section.

Punj Lloyd Ltd. had 11,268 people as on 31 March 2009; the Group's
headcount number is 14,811. Industrial relations remained cordial and there
were no disruptions of work due to any industrial relations issue.

Information Technology:

The Company's IT platform and initiatives are built around throe precepts:
Value Creation,

Operational Integrity and Cost Leadership and are aligned to the Group's
business goals.

Value Creation:

Value creation is focused on integrating processes to enhance productivity
and business value and works around three areas: a single footprint for
Oracle, Sales Management & Customer Relationship. Management (CRM) and
Knowledge Management.

All Punj Lloyd Group entities are on a unified Oracle FRP platform to
provide a 'single source of truth' for all reporting. The software caters
to an end to end F PC business model with sophisticated risk modelling
tools, budgets, estimation, project management and project controls
software. To support globally distributed engineering design centres, Purr
Lloyd uses state of the art engineering design software to enable
integration across geographies and between the Company and the client.

Simon Carves India has created a high end engineering design work
environment with clients to build global engineering teams working
seamlessly through high-security digital environments for collaboration,
productivity & speed. Advanced engineering tools like PDMS for plant
design, Ceaser for stress analysis, Aspen for process industry and
Microstation for design simulation are used to meet diverse requirements.
For knowledge management and collaboration with customers and partners the
latest FDMS technologies are being used widely.

Punj Lloyd is also creating a Global Intelligence Unit (GIU) for managing
its global business development opportunities. The GIU will track and
monitor sales opportunities globally and enable learnings through feedback.
Lessons across businesses and geographies will be available on a single
platform for managers to share and learn. Initiatives on document sharing
and collaborative working tools have already been implemented. The Company
is also examining knowledge management software that would allow it to
harness and share knowledge. A pilot project has already been rolled out
and based on the results Purr Lloyd expects to implement this further
during 2009-10.

Operational Integrity:

The Company has robust fail-safe mechanisms, especially for backup and
Disaster Recovery, with the Singapore and India data centres acting as
mutual fall back sites for disaster management. Purr Lloyd is exploring the
possibility of consolidating its backup and disaster recovery site
operations.

Punj Lloyd has a comprehensive IT security policy in line with ISO 27001
and BS 7799 standards. Risk audits for IT security are conducted and risk
registers for IT activities are in place. Access to Internet is monitored
to ensure data safety and integrity. Adequate physical security measures
have also been implemented.

Punj Lloyd uses a variety of modes including leased lines, VSAT and mobile
communication vans for fail-safe communications between all offices and
project sites. The Company is currently evaluating a unified communications
framework that would allow it to leverage technology to create a seamless
video, voice and data integrated communications network.

Cost Leadership:

All IT initiatives are benchmarked against costs. All cost leadership
initiatives are driven at the Group level; these ensure efficiency gains
and deal with volume growth without compromising on service quality and
operational integrity. Purr Lloyd has migrated a large number of its
employees to open standard software and globally standardised on its
hardware and software platforms. It has adopted 'software as a service' and
'virtualisation' concepts as it strives to be global environment conscious
moving towards a 'Green IT' and for bringing in cost efficiencies.

Risk:

Risk Management Structure:-

Punj Lloyd's risk identification and assessment activities revolve around
throe phases of the project life cycle: the 'sales decision' stage, the
'bidding and estimation' stage and the construction and execution' stage.
The Company has set up a risk management structure that cascades downwards
from the level of the Board of Directors to the Project Heads. Each level
has non-overlapping roles, with the overall responsibility of ensuring that
all major risks are identified, evaluated and catered to, whether in costs
(at the bidding stage) or through risk mitigation measures (at the
execution stage).

Risk Evaluation and Compliance:

Web enabled and templated risk identification and management processes have
to be completed even before a preliminary bid or estimate can be put in
place. The Bid Review Committee recommends the prospects of the bid to the
senior most levels of management. Risk tolerances have been built at the
Company level. A thorough assessment is done of client, capability,
competence and capacity to execute, within strictly defined timelines,
keeping in mind the strategic alignment of the Company. The Company's
Contracts Department also examines the bid and the tender documents to
evaluate legal and contractual clauses and Purr Lloyd's position and
liabilities with respect to them.

The Company has identified seventy operational risks, for which tolerance
parameters, treatment procedures have been defined and persons responsible
for managing these risks have been identified. These risks are broadly
categorised into contract and commercial risks (including financial risks),
engineering risks, sourcing risks and construction risks. Execution risks
are identified and monitored around a 'cost breakdown structure' template.
Once risks are identified, Purr Lloyd uses internationally accepted
simulation models to value them through a range of outcomes; an overall
'contingency risk value' is then generated. Contingency values cannot be
reduced or overridden, except in line with responsibility matrix. The value
is mapped against the Company's risk appetite and the stage of the project
life cycle to determine whether or not to proceed with a project, and if to
proceed, then at what cost and terms.

Punj Lloyd constantly reviews the execution risks of all its major projects
individually to adopt mid-course corrective measures where needed. If a
variation is more than the acceptable tolerance levels, the numbers and the
action plans are reviewed by the senior most management group of the
Company.

Financial Performance Stand-Alone Financials:

The Company grow its sales- revenues by over 53% over the previous year
reaching Rs.6,887.95 crore (compared to Rs.4,488.57 crore in 2007-08).
Total income also increased by the same margin, clocking Rs. 6,955.62 crore
vis-a-vis Rs. 4,541.76 crore during the previous year. Farnings before
Interest Depreciation and Taxes (FBIDTA) grow 42% year-on-year to reach
Rs.864.82 crore (2007-08: Rs.608.40 crore). Cash profit of the stand-alone
entity increased by 42% over last year to reach Rs.647.09 crore. Both
profit before taxes (PBT) and profit after taxes (PAT) have grown over 45%
compared to the previous year to reach Rs.494.78 crore and Rs.321.10 crore,
respectively. The PBT margin is at 7.11% for 2008-09 (7.51% in 2007-08) and
the PAT margin is at 4.62% (4.88% in 2007-08).

As on 31 March 2009, the standalone entity has a total debt of Rs. 2,937.85
crore, which is 214.81% higher than the total debt a year ago (Rs.1,367.64
crore). Secured loans have increased by Rs. 1,255.00 crore, while working
capital borrowings have increased by Rs. 920.49 crore, reflecting an
increase of 213% and 250%, respectively.

The standalone entity had a basic earning per share of Rs. 10.58, compared
to Rs. 7.81 in the previous year.

Consolidated Financials:

At a consolidated level, the Purr Lloyd Group increased its sales by 54%
over the previous year to reach Rs.11,912.03 crore for the year ended 31
March 2009 (previous year: Rs.7,752.92 crore). Total income, at
Rs.12,001.93 crore, registered an increase of over 52% over the 2007-08
figure of Rs. 7,871.11 crore.

The profit figures at the consolidated level, however, have reduced
sharply. Consolidated FBIDTA has come down from Rs. 810.35 crore in 2007-08
to Rs. 530.29 crore in 2008-09. This is mainly due to a one-time charge of
Rs. 473.06 crore taken on the books of accounts of Simon Carves Ltd., UK on
a disputed contract (see THE SABIC TEESSIDE LopE PLANT DISPUTE: page 37J;
which has, in turn, reduced the consolidated EBIDTA, profit before tax and
profit after taxes.

Total debt for the consolidated entity stands at Rs. 3,532.46 crore as on
31 March 2009 (Rs. 1607.17 crore as on 31 March 2008). The overall debt
equity ratio stands at 1.42:1.

Internal Controls and their Adequacy:

The Company has a proper and adequate system of internal controls
commensurate with its size and business operations to ensure the following:

* Timely and accurate recording of financial transactions and adherence to
applicable accounting standards.

* Optimum utilisation and safety of assets.

* Compliance with applicable laws, regulations, listing agreements and
management policies.

* An effective management information system and reviews of other systems.

There are well defined and documented procedures, policies and authority
guidelines for each business unit. The Companys Oracle based ERP ensures
uniformity of systems and processes, and thereby internal controls, for all
functions. The Company has also implemented an IT based Statutory
Compliance tracking tool to monitor compliance with applicable laws and
regulations at various projects sites and at the Head Office.

The Internal Audit Division conducts audits across the Company throughout
the year to test check the internal control system, reports observations to
the Audit Committee and tracks the compliance status of the audit
observations.

Project reviews are also carried out by the Internal Audit team as a part
of internal control process.

Punj Lloyd intends to leverage its global roach and wide spectrum of
business operations in its future quest for growth and profitability. The
Company is in a number of geographies: East Asia, South Asia (including
India), the Middle East, the erstwhile CIS countries and Europe. It is also
into a number of business segments: oil & gas, petrochemicals, civil &
infrastructure and power. This spread, both in reach and business segments,
substantially derisks it from economic volatility.

The world economy is showing signs of recovery; some countries and business
sectors have been less affected by the slowdown than others. The Groups
clients, being sovereign entities or global majors in their businesses, are
those where the quality of business is not in dispute.

Punj Lloyd Group is also entering new businesses that are expected to offer
exciting growth potential. Nuclear power and defence are two such areas.
Although the Groups initiatives in these areas are at a nascent stage, the
Group expects that, over a period of time, these will become substantial
revenue drivers in its portfolio.

As it goes forward, Purr Lloyd is excited and optimistic about the future:
of the economies and the business segments in which it operates and the
growth opportunities.

Cautionary Statement:

The management of Puny Lloyd Ltd. has prepared and is responsible for the
financial statements that appear in this report. These are in conformity
with accounting principles generally accepted in India and, therefore,
include amounts based on informed judgments and estimates. Statements in
this Management Discussion and Analysis describing the Company's
objectives, projections, estimates and expectations may be 'forward looking
statements' within the meaning of applicable laws and regulations. These
have been based on current expectations and projections about future
events. Wherever poss

SUMMARISED FINANCIALS: PUNJ LLOYD LTD. STAND-ALONE AND CONSOLIDATED:-

IN RS. CRORE
Stand-Alone Consolidated
2008-09 2007-08 % Change 2008-09 2007-08 % Change

Sales/Income from 6887.95 4488.57 53.46% 11912.03 7752.92 53.65%
Operations

Total Income 6955.62 4541.76 53.15% 12001.93 7871.11 52.48%
Earnings before 864.82 608.40 42.15% 530.29 810.35 (34.56%)
Interest
Depreciation
and Taxes

Cash Profit 647.90 454.34 42.43% 178.42 629.71 (71.67%)

Profit Before 494.78 340.95 45.12% 1.34 483.48 (99.72%)
Taxes

Profit After Tax 321.10 221.44 45.00% (224.69) 359.99 -