Annual Report - Puravankara Projects - 2009-2010

PURAVANKARA PROJECTS LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

Your Directors are pleased to present their report for the financial year
ended 31 March, 2010.



Financial Performance

For the year ended 31 March 2010 Puravankara Projects Limited recorded a
net profit of Rs. 1,365,579,980 compared to previous year's net profit of
Rs. 1,329,535,143. A sum of Rs. 61,883,477 is appropriated towards the
Debenture Redemption Reserve and Rs. 102,500,000 to the General Reserve.

Dividend

The Board of Directors has recommended a dividend of Re. 1 per Equity share
on 213,424,335 Equity shares of Rs. 5/- each for the financial year ended
31 March 2010, which if approved at the forth coming Annual General
Meeting, will be paid to (i) all those Equity shareholders whose name
appear in the register of members as on 25 June 2010 after considering all
physical share certificates lodged for transfer, and (ii) those whose names
appear as beneficial owners as per the information furnished by the NSDL
and the CDSL as on 25 June 2010.

Directors

Mr. Pradeep Guha and Mr. RVS Rao, Directors of the Company, liable to
retire by rotation in the ensuing Annual General Meeting and being eligible
for re-appointment offer themselves for re-appointment as directors.

Directors' Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors
hereby confirm that:

i. In preparation of the annual accounts the applicable accounting
standards have been followed;

ii. 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 at the year ended 31 March 2010 and of the profit of the Company
for that period;

iii. 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 irregularities;
and

iv. The annual accounts of the Company have been prepared on a going
concern' basis.

Auditors

Walker, Chandiok & Co, Chartered Accountants, statutory auditors of the
Company hold office till the conclusion of the ensuing Annual General
Meeting and are eligible for re-appointment. The Company has received from
Walker, Chandiok & Co a consent letter to the effect that their
appointment, if made, would be within the prescribed limits under Section
224(1B) of the Companies Act, 1956.

Subsidiaries

Your Company has received the approval from the Ministry of Corporate
Affairs, Ministry of Finance, New Delhi, granting an exemption from
attaching the Audited Balance Sheet, Profit and Loss Account, Auditors'
Report and Directors' Report of the subsidiaries to the Annual Report of
your Company, for the financial year 31 March 2010.

Your Company has annexed to this report the information regarding each
subsidiary pertaining to capital, reserves, total assets, total
liabilities, details of investment, turnover and profit/loss.

Your Directors hereby inform you that the annual accounts and related
information of the subsidiaries will be available for inspection at the
Registered Office of the Company.

Directors' Report

Personnel

As required under the provisions of Section 217(2A) of the Companies Act,
1956, readwith the Companies (Particulars of Employees) Rules, 1975, the
names and other particulars of the employees are set out in the Annexure to
this report.

Energy, Technology Absorption and Foreign Exchange

Information in accordance with the provisions of Section 217(1)(e) of the
Companies Act, 1956, readwith Rule 2 of the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988, regarding
conservation of energy, technology absorption and foreign exchange earnings
and outgo:

We firmly believe that technology is the genesis of innovative business
practices, which in turn enable the organisation to carry out business
effectively and efficiently. Even though the real estate development
industry is labour intensive, we believe that there is an increasing need
to mechanise the processes involved in order to minimise costs and increase
efficiency. We have invested in a mechanised and technological construction
capability in order to increase the scale of our operations and the quality
of our products.

We have also implemented an ERP package based on Oracle software to
integrate our various operations. We intend to continue this process of
investments in innovative techniques.

Energy:

The Company is in the business of property development and does not require
large quantities of energy. However, wherever possible energy saving
efforts are made.

Foreign Exchange:

Foreign exchange earned during the year is equivalent to Rs. 8,867,307 and
the expenditure is equivalent to Rs. 12,745,056.

Corporate Governance

A separate section on Corporate Governance and a certificate from the
statutory auditors of the Company regarding compliance of the conditions of
corporate governance as stipulated in Clause 49 of the Listing Agreement
entered into with the Stock Exchanges form a part of this Annual Report.

Management Discussion and Analysis

A separate section on Management Discussion and Analysis as stipulated
under Clause 49 of the Listing Agreement entered into with the Stock
Exchanges forms a part of this Annual Report.

Employee Stock Options

On 1 July 2006, the Members of the Company approved the Puravankara
Projects Limited 2006 Employee Stock Option Scheme. The details of the
Scheme to be disclosed as per the SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999, are provided under the
Notes to the Financial Statements.

Acknowledgements

Your Directors express their grateful appreciation for the assistance and
co-operation received from the financial institutions, banks, government
authorities, customers, vendors and shareholders during the said financial
year.

Your Directors would also like to once again place on record their
appreciation to the employees at all levels, who through their dedication,
co-operation, support and smart work have enabled the Company to move
towards achieving its Corporate Objectives.

For and on behalf of the Board of Directors

Place: Bangalore Ravi Puravankara
Date : 29 April, 2010 Chairman and Managing Director

MANAGEMENT DISCUSSION AND ANALYSIS

1. Industry Structure and Developments

Since early 2009, the residential real estate segment has witnessed a
revival in demand after a steep fall in demand in the second half of 2008,
primarily due to improved affordability. Several developers launched new
projects in the affordable segment, which received encouraging response.
The loan rates were also made more attractive especially for the segments
below Rs. 20 lakhs.

The other significant event which improved the sentiments of the economy
was the outcome of the general election. The 2009 general elections was one
of the biggest event risk which was staring at the face of India and could
have had serious ramifications on market sentiments, if the results of the
elections came out to be outright negative. The 2,000 point surge in the
stock market that was witnessed as the immediate reaction to the UPA
government's sweeping victory could have easily gone the other way if the
verdict was of a hung parliament.

Things would have looked very different then.

This had also brought clarity in the market on the future course of action
based on the various Government policies which was unveiled. The relaxed
lending norms and debt restructuring window provided by the RBI, along with
the launch of affordable housing, helped companies to improve their highly
leveraged balance sheets. This was preceded by a scenario where the
developers where even considering liquidation of assets to raise funds, and
stalling of new projects, while attempting to reduce cost by downsizing
their workforce, cutting salaries and increments and adopting other cost
reduction measures.

The overall sentiments have also substantially improved in the later half
of the fiscal year due to the improvement in the performance of other key
sectors such as IT, Manufacturing, etc, which resulted in the revival of
demand to the middle and premium segments as well.

Overall the Indian Construction Industry is still able to maintain its
growth of over 12%, which has been one of the consistent performer and key
driver of the economy over the decade.

2. Brief Organisational Background

The Puravankara Group, headquartered in Bangalore, was established in 1975
and has today grown to become one of the leading real estate developers in
India and the largest in South India serving the needs of a discerning
clientele in the housing, commercial and retail spaces.

The Group began operations in Mumbai and has established a considerable
presence in the real estate industry in the metropolitan cities of
Bangalore, Kochi, Chennai, Coimbatore, Hyderabad, Mysore, Kolkata and
overseas in Colombo and Dubai. Currently developing projects amounting to
about 19.01 million sq.ft. The Company's land bank of 125.39 million sq.ft.
spreads across India. The Puravankara Group is poised for exponential
growth. Puravankara is currently constructing about 13,200 homes across
South India and Kolkata which includes about 5,500 homes in the affordable
category.

Puravankara has the distinction of being the first to obtain FDI in the
Indian real estate industry through its joint venture with Singapore based
Keppel Land Limited, the property arm of the 54% government owned
conglomerate, Keppel Corporation Limited. The joint venture company, Keppel
Puravankara Development Private Limited, has ongoing housing projects in
two cities in India.

Provident Housing Limited, a 100% subsidiary of Puravankara Projects
Limited, has successfully launched its second affordable housing project in
Bangalore, after its successful launch in Chennai. Both the projects have
received an overwhelming response from the customers. The Company had
launched 1310 units in Chennai and 1088 units in Bangalore and almost 70%
of the units have been sold. The construction of both the projects is
progressing on schedule. Similar affordable housing projects are also
envisaged in other cities such as Mysore, Cochin, Coimbatore and Hyderabad,
besides more such projects in Chennai and Bangalore.

With a large and experienced team of engineers and technicians, the Group
has a unique and large in-house technologically advanced project management
and construction capability. This together with a host of India's leading
architects provides the organisation with an experience, capability and
expertise unmatched in the Indian real estate industry. Development
activities range from modern designer apartments, through ultra modern and
multi-functional integrated bungalow complexes, to plush and very
functional commercial complexes along with the capacity to build large
township with all modern amenities and other lifestyle facilities.

India's first resident's privileges program, Purva Privileges, was launched
in 2004. Purva Privileges entitles all Puravankara home owners to an
attractive referral program, concierge services and a host of special
offers.

The Puravankara Group has the distinction of being awarded the Finaliste,
international Prix d' Excellence for its project 'Purva Park' in Bangalore.
This was in the group residential category, by FIABCI, Paris, the
International Federation of Real Estate. Two prestigious projects, Purva
Graces & Purva Heights, received a PA 1 rating by CRISIL.

Puravankara has been acknowledged for the quality of its Accounting
Policies by The Institute of Chartered Accountants of India (ICAI) and has
been awarded a Plaque for its excellence in financial reporting for the
year ended 31 March 2008. These Awards are the most prestigious in the area
of financial reporting in India and we have won this recognition in our
very first attempt.

3. Management Discussion on Risks and Concerns

Risk management is a structured approach to manage uncertainty related to a
threat, through a process of risk identification and management process. In
business enterprise, risk management includes the methods and processes
used by organisations to manage risks related to the achievement of their
objectives. Risk management which typically involves the following process:

* Identifying particular events or circumstances relevant to the
organisation's objectives

* Assessing them in terms of magnitude of impact

* Implementing all of the planned methods for mitigating the effect of the
risks

* Clear assignment of responsibilities and accountability

* Management reporting

* Prioritise risk with regard to probability of its occurrence magnitude of
impact.

* Monitoring the progress of risk mitigation and control activities to
ensure identified objectives are complete or in process. Monitoring should
be ongoing, and the concerned should provide progress reports to management
on a periodic basis.

By identifying and proactively addressing risks and opportunities, business
enterprises protect and create value for their stakeholders, including
owners, employees, customers, regulators, and society at large.

Management has identified certain areas of risks where the Company is
susceptible. Listed below are the various events and the possible impact
with action to mitigate and control such probabilities.

Company Specific Risks

Inherent Risk Description:

1. Uncertainty/irregularity of titles to land acquired/developed by Company
due to inadequate due diligence, forged documents, Joint Development
partners not having clear titles to land, etc.

Business Process:

Land Acquisition

Impact Factors:

* Inability to transfer title

* Exposure to legal disputes and related costs

* Impact on land valuations

Mitigation Measures:

* Due diligence by independent and in-house counsel

* Representations/Encumbrance certificates

* Advertisements/Public notices in newspapers

* Suitable monetary compensation to settle disputes

* Experience of 30 years

Inherent Risk Description:

2. Delays in completion of projects due to shortage of skilled labour,
material, contractors and delays by contractors, etc.

Business Process:

Project Execution

Impact Factors:

* Higher construction costs

* Impact on reputation/customer dissatisfaction

* Payment of penalties to customers

Mitigation Measures:

* Increased usage of mechanised equipment

* Supply of labour outsourced to sub-contractors

* Dedicated Planning department

* Penalty clauses for delay in agreements with Contractors

* Extension of working hours on weekdays and Sundays

* Purchasing in bulk from outside the state-Kochi

* Clearance of bills as per defined Turn Around Time

Inherent Risk Description:

3. Inability to attract and retain employees as a result of increased
opportunities in the market, higher salaries offered by competition and
employee dissatisfaction with company policies/processes

Business Process:

Human Resources.

Impact Factors:

* Loss of expertise and continuity

* Higher recruitment and training costs

* Delay in project execution

Mitigation Measures:

* Fast growing Company-opportunities are better

* Site visits by HR personnel

* Defined Appraisal system to provide career guidance and feedback

* Compensation benchmarking survey

* Deployment of HR personnel at offices outside Bangalore

* Formal exit interview procedure to be implemented

* Innovative loyalty building programs being implemented

Inherent Risk Description:

4. Inadequate systems security due to absence of secure transmission lines,
absence of an IT policy indicating safe system usage mechanisms, inadequate
access controls to ERP, etc.

Business Process:

Information Technology

Impact Factors:

* Loss/pilferage of confidential data

Mitigation Measures:

* In built security controls in ERP system

* Plans to host own mail server

* Implementation of VPN system

* Creation and rollout of IT policy

* Anti-virus, anti-spam, Device control software being implemented

Inherent Risk Description:

5. Non-compliance with requirements of labour laws and other relevant rules
and regulations due to inadequate knowledge of requirements, absence of a
mechanism to obtain assurance, unorganized nature of labour market,
expansion into new geographies, etc.

Business Process:

Compliance

Impact Factors:

* Fines/Penalties/Imprisonment for non-compliance

Mitigation Measures:

* In house expert on relevant regulations

* Use of external consultants

* Periodic monitoring of checklists that list requirements of VAT, Service
Tax, Company's Act and Income Tax

* System controls for tax compliance

* IA Function

* Dedicated person to track compliance with labour laws

* Distribution of detailed checklists to all relevant departments

* Proof of compliance prior to making contractor payments

* Periodical internal training

* Directors & Officers Liability Insurance

Inherent Risk Description:

6. Customer dissatisfaction with the sales processes due to over
commitments/incorrect information provided by sales personnel,
customisation requirements not being adequately addressed, delays in
processing agreements, etc.;

Business Process:

Sales and Marketing

Impact Factors:

* Customer dissatisfaction

* Loss of potential customers

* Growth

* Margins

Mitigation Measures:

* Mock flats with standard specifications

* Adequate redressal system for property complaints

* Updates on progress of the project through website/mails

* Minimal customisation

* Projects are launched only after receipt of requisite sanctions.

* Process of generating/executing agreements being streamlined

* Decentralisation of cheque en-cashing

Inherent Risk Description:

7. Customer dissatisfaction with after sales processes due to lack of a
well defined customer redressal system, disputes over cancellation charges,
inadequate property management post sale.

Business Process:

Sales and Marketing

Impact Factors:

* Customer dissatisfaction

* Loss of potential customers

* Growth

* Margins

Mitigation Measures:

* Dedicated Customer Care department. Target of 24 hours for acknowledging
customer queries/complaints

* Cancellation charges clearly mentioned in the application forms and sale
agreements

* The Company handles Property Management for 6 months

Inherent Risk Description:

8. Inability to obtain financing/financing on favorable terms, due to
downgrading of debt rating, liquidity crunch, etc.

Business Process:

Business Development

Impact Factors:

* Higher financing costs

Mitigation Measures:

* In house Quality Control department

* Dedicated Planning department

* Increased use of technology

* Low outstanding on land payment

* To also use one of the leading nationalised banks going forward

Inherent Risk Description:

9. Sub-standard construction quality due to dependence on third parties,
absence of adequate number of quality structural consultants, sub-standard
quality of raw material, etc.

Business Process:

Project Execution

Impact Factors:

* Delay in project completion

* Impact on reputation

* Abortive costs

Mitigation Measures:

* In-house construction and quality team

* Use of snagging checklists

* Structure certified by Govt authorised consultants

* Defects liability insurance taken

* Expert opinion from local consultants

Inherent Risk Description:

10. New territory risks arising from uncertainty in the natural
parameters, inadequate knowledge of local regulations, dilution of control,
etc.

Business Process:

Project Execution

Impact Factors:

* Delay in project completion

* Impact on reputation

* Abortive costs

* Stay order by the courts due to PILs

* Project costs incorrectly estimated

Mitigation Measures:

* Expert opinion from local consultants sought

* Location audits on process implementation effectiveness

Inherent Risk Description:

11. Reduced margins due to significant escalation in material, labour costs
post project commencement/ineffective planning, etc.

Business Process:

Project Execution

Impact Factors:

* Reduced margins

Mitigation Measures:

* Selling strategy-only a certain percentage of apartments are sold upfront

* 5% contingency margin in initial estimates

* Implementation of newer technology to reduce construction time

* Dedicated Planning department

Inherent Risk Description:

12. Inability to anticipate and respond to consumer requirements due to
inadequate market research and analysis

Business Process:

Business Development

Impact Factors:

* Lower demand for Puravankara properties

Mitigation Measures:

* Direct sales

* Know Your Customer's Requirements' (KYCR') initiatives

* Analysis of buying patterns/size of loan disbursements

Inherent Risk Description:

13. Loss due to theft, accidents at site, defects, etc.

Business Process:

Project Execution

Impact Factors:

* Financial loss

Mitigation Measures:

* Adequate insurance policies

* Security guards

* Separate Stores Management team

* Rotation of stores personnel

* Asset Management System to be implemented

Inherent Risk Description:

14. High network downtime resulting in unavailability of data

Business Process:

Information technology

Impact Factors:

* Unavailability of data

* Delays in payments that could result in delay in Project timelines

* Delay in providing information to customers/potential customers

Mitigation Measures:

* Rollout of backup lines

Inherent Risk Description:

15. Inability to adopt/adapt to new technologies

Business Process:

Project Execution

Impact Factors:

* Impact on quality of construction

* Delay in project completion

* Impact on margins

Mitigation Measures:

* Key management personnel understands and is abreast with the latest
technology

* MIVAN technology sufficient for next few years

Inherent Risk Description:

16. Risk of capturing and/or reporting incorrect/inaccurate financial
information.

Business Process:

Financial Reporting

Impact Factors:

* Incorrect financial reporting

Mitigation Measures:

* Centralisation of accounting system, procurement, payments

* Audit of controls

Inherent Risk Description:

17. Death of labourers/construction personnel on site/Accidents on site due
to non-adherence to safety procedures, non-enforcement of safety procedures

Business Process:

Project Execution

Impact Factors:

* Delays in the project

* Compensation/litigation costs

* Impact on reputation

Mitigation Measures:

* Safety officers

* Safety programs

* Workmen's insurance policy

* Workers employed through contractors are insured by the contractors

* Location audits

* Company proposes to apply for a safety award

Inherent Risk Description:

18. Presence of fly-by-night operators resulting in decreased demand for
Puravankara properties

Business Process:

Business Development

Impact Factors:

* Loss of potential customers

Mitigation Measures:

* High quality of construction

* Established brand name

* Experience of 30 years

* Launch of Provident to provide affordable housing

Inherent Risk Description:

19. Issues with Joint Venture partner

Business Process:

Business Development

Impact Factors:

* Impact on types of projects that the Company undertakes

* Growth

Mitigation Measures:

* Clearly defined commercial terms

* Successful relationship

Inherent Risk Description:

20. Significant Dependence on few members of management/loss of key
management personnel

Business Process:

Human Resources

Impact Factors:

* Loss of experience/expertise

* Loss of key relationships

Mitigation Measures:

* Adequate systems and structure for smooth transition

* Introduction of succession plan for Key Managerial Personnel

Inherent Risk Description:

21. Inability to use acquired land for intended purpose due to non-
compliance with permitted land uses, inability to transfer titles to land
etc.

Business Process:

Business Development

Impact Factors:

* Exposure to legal disputes and related costs

* Delayed project commencement/Project abandonment

* Surrender of excess land held over ceiling

Mitigation Measures:

* Comprehensive Development Plan referred to

* Land in green zones/land not zoned is not purchased.

* Agreements to sell/Power of attorney in Company's favour

* Due diligence process

* All land purchases are personally approved by the Chairman of the Company

Industry Risks:

Inherent Risk Description:

1. Slump in the real estate market/significant decline in property prices

Business Process:

Business Development

Impact Factors:

* Reduction in property prices

* Impact on demand for properties

Mitigation Measures:

* Vast majority of Puravankara flats priced at Rs. 3,000 per sq.ft. Certain
flexibility in pricing has also enable the company to mitigate this factor.

* Low land acquisition costs

* Ability to adapt to changing circumstances

* Low outstanding on land payments (8% of land cost)

Inherent Risk Description:

2. Declining affordability as a result of increase in loan interest rates,
withdrawal of tax benefits and decrease in availability of home loans.

Business Process:

Business Development

Impact Factors:

* Decreased demand for properties

Mitigation Measures:

* Vast majority of Puravankara flats priced at Rs. 3,000 per sq.ft.

* Flexible pricing policy

* Affordable housing-Provident

Inherent Risk Description:

3. Compulsory land acquisition by Government due to development of
infrastructure projects

Business Process:

Land Acquisition

Impact Factors:

* Delay in project completion

* Exposure to legal disputes and related costs

* Exposure to additional costs if changes are required to be made to the
master plan

Mitigation Measures:

* Review of City infrastructure plan/Possibility of future expansion of
roads considered

* NOC's from Government prior to purchase

* Project commenced only after receipt of sanctions from relevant
authorities

Inherent Risk Description:

4. Loss due to natural calamities

Business Process:

Project Execution

Impact Factors:

* Financial loss

* Inability to complete projects on schedule

Mitigation Measures:

* Appropriate insurance policies

* Disaster Recovery Plan/Business Continuity Plan to be rolled out

Inherent Risk Description:

5. Inability to grow existing land bank as desired due to inability/delay
in procuring contiguous land for large projects, inability to build land
bank at strategic locations at low costs, etc.

Business Process:

Business Development

Impact Factors:

* Inability to grow business

Mitigation Measures:

* Launch of larger projects in non-CBD areas

* Existing land bank will last for next five years

Note:

All risks described above are inherent to the Company and the market in
which it operates. Company specific risks are those risks for which the
mitigation measures lie largely within the power and control of the
management.

Industry risks are those which the management has very limited control
over.

4. Internal control systems and their adequacy

The Company has well defined and adequate internal control systems to
ensure that all the assets are safeguarded as well as are more productive.
These internal controls are supplemented by periodic audits with management
reports which are reviewed by our Audit Committee.

We have a qualified and independent Audit Committee which comprises our
Board of Directors.

The Audit Committee reviews the adequacy and efficiency of internal
controls and recommends any improvements or corrections. These internal
controls ensure efficiency in operations, compliance with the internal
policies of the Company, applicable laws and regulations, protection of
resources and the accurate reporting of financial transactions.

5. Material developments in Human Resources / Industrial Relations front,
including number of people employed.

We continue to believe that our employees are key contributors to our
success. The Group's endeavour to impart the best training, working
environment for retaining the best talents in the industry remains
unabated. Our work force consists of (i) permanent employees, (ii)
consultants who are engaged by us on a contractual basis to assist in the
architectural and structural design of our projects and (iii) contractors
who are engaged by us on a contractual basis and who employ labourers to
work at our project sites. The table below sets out the number of employees
as of March 31, 2010 and 2009 respectively.

Employee Category Fiscal 2010 Fiscal 2009

Non Technical 203 202
Technical 214 261
Trainees 14 2
Total 431 465

6. Opportunities and Threats

The Group was optimistic on the future outlook of the Industry even during
the downturn. We were confident about the fundamentals for the economy
which is strong. The Global economy is also showing a promise of revival
which is indicated by the improved performance of some of the IT Companies
as well as other export oriented industries.

The Indian middle class and the urban population continue to grow. The
population is comparatively young and thriving, especially in the 25 to 45
years range. The aspirations for this population to own their own dwelling
at a much younger age and the higher priority they accord to acquiring
homes give rise to the constant demand for dwelling units. However there is
a marked shift from the demand for high cost life style apartments to
medium cost affordable housing. The Group had recognised this trend quite
early and had been one of the earlier companies to move in the direction of
providing affordable housing projects to cater to this demand.

The improved sentiments and performance of various segments of the economy
has also resulted in the improvements in the demand for premium and
lifestyle apartments and the Company has already established its brand in
the market in this segment.

Income

Our total income comprises of income from operations, which are given under
Revenues' below:

Revenues

Our revenues comprise of:

* Income from projects;

* Rental income;

* Income from interiors

We derive revenues primarily from our residential projects. We also derive
income from the lease of our commercial properties and our interior works
division.

Income from projects

The income from our projects consists of income primarily from our
residential projects. Over 99.47% of our total income is contributed by the
residential business, with the balance 0.53% being contributed by the
commercial business. We generate income from the sale of residential
apartments and condominiums. A small portion of our income is also derived
from transfer fees and flat cancellation charges. Our Income from projects
represented 98.86% and 98.34% respectively, of our revenues in fiscal 2010
and fiscal 2009.

We account for income from projects using the 'percentage of completion'
method. Under this method, revenue is recognised on the basis of the
percentage of the actual construction cost incurred thereon as against the
total estimated cost of the project under execution. Estimates of saleable
area and the related income as well as project costs are reviewed
periodically. The effect of any changes to estimates is recognised in the
financial statements for the period in which such changes are determined.
Our project execution teams re-evaluate project costs periodically,
particularly when in their opinion there have been significant changes in
market conditions, costs of labour and materials and other contingencies.
Material re-evaluations will affect our income in the relevant fiscal
periods. Our estimates of the saleable area and the estimated total costs
of projects are also subject to change depending on the nature of the
approvals we receive for these projects and other economic considerations.
The major source of our future sales revenue is our on going and
forthcoming projects.

Rental income

We lease our commercial properties and derive rental income. Rental income
represented 0.53% and 0.85% respectively in fiscal 2010 and 2009.

Revenue from interiors

We derive income from our interior works division, which is involved in
designing, installing and maintaining the furniture, fixtures and other
fittings in our property developments

Expenditure

Our expenditure includes:

* Cost of revenues
* Selling costs
* General and administrative expenses
* Finance income/(charges)

Cost of Revenues

Our cost of revenues comprise of material and construction costs, salaries,
wages and bonus, depreciation, land costs, other costs.

Construction Costs

Our construction costs primarily consists of material used in our
construction, salaries, wages and bonuses, contribution to provident and
other funds and staff welfare benefits. Our construction costs also include
depreciation of building, plant and machinery and certain other items used
in construction. Depreciation on fixed assets is provided on straight
Management Discussion and Analysis-Financial Conditions & Results of
Operations 38 line method in the manner and rates prescribed in Schedule
XIV to the Companies Act. For shuttering materials, which is treated as
part of plant and machinery, the estimated useful life, based on technical
evaluation has been determined as seven years and the value is depreciated
accordingly.

Land Costs

Land costs consist of the cost of acquisition of land, and the cost of
acquisition of development rights.

Other Costs

Our other costs consist of the expenses incurred in the equipment and
machinery for the construction and design for our projects. This also
include any expenses involved in equipment and machinery required for the
interior works services and other services that we provide and which are
not specifically allocated to a project.

Selling Costs

This relates to the cost of business promotion and the costs of
advertisement and publicity for our projects.

The selling costs consist of salary, wages and bonus of our employees
involved in our sales and marketing function, costs in relation to
advertising and sales promotion, sales incentives and commission, brokerage
and referral charges, travel and communication expenses incurred in
relation to the sales and marketing of our projects.

General and Administrative expenses

Our general and administrative expenses consist of employee costs
comprising of salaries, wages, allowances and bonuses paid to employees,
contribution to employees' provident funds and other staff welfare expenses
and not recognised under either costs of revenues' or under selling
costs' above. In addition, we also recognise rates and taxes, our
expenditure under legal and professional charges, communication costs,
printing and stationary, travelling and conveyance, security charges,
remuneration for auditors, repairs and maintenance of our office premises
and losses from our foreign exchange fluctuations. We also include
provisions made for certain expenses and other miscellaneous expenses and
depreciation charges not covered under cost of revenues' or selling
costs' under this category. Net Finance income/(charge).

This consists of the net of interest income from bank deposits, interest
from loan to our associates, interest received from our customers and
expenses incurred by us as interest charges payable by us on short term and
long term loans including working capital loans, overdrafts, interest
charges on loans for the purchase of certain equipments and vehicles and
financial charges like processing fees for loans, bank guarantees, net of
interest capitalised.

Share of Profit in Associates

This consists of our share of profit in associates, namely Keppel
Puravankara Development Private Limited and Keppel Magus Development
Private Limited.

Profit Before Tax

Our profit before tax represents the difference between our total income
and total expenditure after adjusting for share of profit in associates.

Gross Profit

Our gross profit represents the difference between our revenues and our
cost of revenues. Our management believes that gross profit provides a
useful basis on which to compare our core operating performance from period
to period. Although we incur expenses other than cost of revenues in the
course of operating our business, we believe that cost of revenues provides
the underlying trend in the efficiency of our operations and believe that
providing the gross profit calculated using revenues and cost of revenues
that management believes to be more closely related to the efficiency of
our operations is helpful additional disclosure. The gross profit
calculated on this basis is not intended to be, and should not be
considered to be, a substitute for our profit before tax.

Taxation

Income taxes are accounted for in accordance with AS-22 issued by the ICAI
on 'Accounting for Taxes on Income'. Taxes comprise current tax and
deferred tax.

Provision for current taxes is made at current tax rates after taking into
consideration the benefits admissible under the provisions of the Income
Tax Act, 1961. The major benefit we take advantage of is under Section 80-
IB of the Income Tax Act, 1961 as a majority of our residential projects
meets the criteria including of size prescribed by the statute. Deferred
tax assets are recognised only to the extent that there is reasonable
certainty that sufficient future taxable income will be available against
which such deferred tax assets can be realised. Deferred tax assets are
recognised on carry forward of unabsorbed depreciation and tax losses only
if there is virtual certainty that such deferred tax assets can be realised
against future taxable profits. Unrecognised deferred tax assets of earlier
years are re-assessed and recognised to the extent that it has become
reasonably certain that future taxable income will be available against
which such deferred tax assets can be realised.

Factors Affecting Results of Operations

Our results of operations depend on various factors, including the
following:

* Condition and performance of the real estate market

* Supply of land

* Cost of land

* Construction costs

* Availability of financing for customers

* Taxation

* Other factors

Each of these factors is discussed below:

Condition and performance of the real estate market in India:

Developments in the real estate sector are driven by:

* Demand for more housing units in cities and towns because of growing
urbanisation of Indian population, expanding middle class, increased
disposable income, easy availability of housing finance at cheaper rate and
tax incentives;

* Demand for office premises by the growing Indian market, including the IT
industry, the retail industry and the manufacturing industry;

Factors affecting the real estate market in India still has a direct
relation to the performance of the Company. The gross domestic product in
India has not undergone any significant change when compared to the fiscal
year 2009. There has been no substantial change in the other general
economic data in comparison to the previous year. However, there is a
significant improvement in the sentiments.

Supply of land:

Our operations are dependent on the availability of land for our projects.
Our growth is linked to the availability of land in areas where we can
develop projects that are marketable mainly to the mid income to higher
income groups. Increased competition for land or excess supply of land may
adversely affect our operations.

Cost of land:

The cost of acquisition of land which includes the amounts paid for
freehold rights and cost of registration and stamp duty was Rs.985.81
million and Rs. 281.57 million in fiscal 2010 and fiscal 2009 respectively.
We acquire lands from government and governmental authorities and private
parties. We are typically required to enter into a deed of conveyance or a
lease deed transferring title in our favour. The registration charges and
stamp duty among other things are also payable by us.

Construction Costs:

The cost of construction includes cost of material used in our
construction, which primarily comprise of cost of steel, cost of cement,
cost of wood, cost of flooring materials and cost of other accessories.

Cost of Steel:

Steel is an important component in the construction of buildings and the
cost of steel comprised 32.34% and 29% of our total cost of construction in
fiscal 2010 and 2009 respectively. The price of steel is dependent on the
international demand supply scenario. The market price of steel has
decreased from Rs. 38,500 per metric ton on an average in fiscal 2009 to
Rs. 30,000 per metric ton on an average in fiscal 2010.

40 Cost of cement:

Cement is an important component in the construction of buildings and the
cost of cement comprised 13.50% and 12% of our total cost of construction
during the fiscal 2010 and 2009 respectively. The price of cement varies
across regions due to variations in the demand supply balance, the level of
concentration and demand growth.

Cost of timber:

Timber is an important component in the construction of buildings and the
cost of timber comprised 3.47% and 1.11% of our total cost of construction
in fiscal 2010 and 2009 respectively.

Cost of personnel or labour:

The cost of personnel used in a specific project is assigned to the cost of
construction and development and was 10.21% and 10.5% of our total cost of
construction in fiscal year 2010 and 2009 respectively.

Availability of financing for customers:

One of the major drivers behind the growth of demand for housing units is
low interest rates on housing loans. The interest rate has reduced from the
last decade. As a result, the amount of housing loans disbursed in India
has been increasing consistently. However, if the rates of interest for
housing loans are increased by the financial institutions, it may adversely
affect our results of operations.

Taxation:

The other primary factor which affects our financial conditions is the tax
payable by us. Deferred taxes arise from timing differences between our
book profits and our taxable profits that originate during an accounting
period and which can be reversed in subsequent periods. Deferred taxes are
measured using the tax rates and laws that have been enacted or
substantively enacted as of the date of financial statements in which they
are recorded. We provide for deferred tax liability/assets on such timing
differences subject to prudent considerations.

Other factors:

Other factors affecting our results of operations include:

* Regulations affecting the real estate industry;

* Our ability to acquire suitable lands at reasonable costs;

* Our ability to identify suitable projects and execute them in a timely
and cost effective manner;

* competition.

Critical Accounting Policies

Preparation of financial statements in accordance with Indian GAAP, the
applicable accounting standards prescribed by Company's (Accounting
Standards), Rules 2006 and the relevant provisions of the Companies Act
require our management to make judgments, estimates and assumptions
regarding uncertainties that affect the reported amounts of our assets and
liabilities, disclosures of contingent liabilities and the reported amounts
of revenues and expenses. Certain of our accounting policies are
particularly important to the portrayal of our financial position and
results of operations and require the application of significant
assumptions and estimates of our management. We refer to these accounting
policies as our 'critical accounting policies'. Our management uses our
historical experience and analyses, the terms of existing contracts,
historical cost convention, industry trends, information provided by our
agents and information available from other outside sources, as
appropriate, when forming our assumptions and estimates. However, this task
is inexact because our management is making assumptions and providing
estimates on matters that are inherently uncertain.

The preparation of financial statements in conformity with the generally
accepted accounting principles in India requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent liabilities on the date of the
financial statements. Actual results could differ from those estimates. Any
revision to accounting estimates is recognised prospectively in current and
future periods. While all aspects of our financial statements should be
read and understood in assessing our current and expected financial
condition and results, we believe that the following critical accounting
policies warrant additional attention.

(a) Revenue recognition

Revenues from Projects

Revenue from the sale of properties is recognised when the significant
risks and rewards of ownership have been transferred to the customer, which
coincides with the entering into a legally binding agreement. Revenues from
such contracts are recognised under the percentage of completion method.
Contract revenues represent the aggregate amounts of sale price for
agreements entered into and are accrued based on the percentage that the
actual construction costs incurred until the reporting date bears to the
total estimated construction costs to completion. Land costs are not
included for the purposes of computing the percentage of completion.

Contract costs include the estimated construction, development,
proportionate land cost and other directly attributable costs of the
projects under construction. Losses expected to be incurred on projects in
progress, are charged to the profit and loss account in the period in which
these losses are known.

The estimates for saleable area and contract costs are reviewed by
management periodically and the cumulative effect of the changes in these
estimates, if any, are recognised in the period in which these changes may
be reliably measured.

Cost and recognised profits to date in excess of progress billings on
construction projects in progress are disclosed under Properties under
Development (a current asset). Where the progress billings exceed the costs
and recognised profits to date on projects under construction, the same is
disclosed as Advances Received from Customers, (a current liability). Any
billed revenue that has not been collected is disclosed under Trade Debtors
and is net of any provision for amounts doubtful of recovery.

Impact of the Proposed IFRS implementation;

Revenue recognition on sale of 'off plan' multi unit real estate
development will be impacted as a result of IFRIC 15.

Real Estate companies can recognise revenues on the percentage completion
method only when the agreement for construction meets the definition of a
construction contract' under IAS 11 or if there is continuous transfer of
control and significant risk and rewards of ownership as construction
progresses. In all other cases, Revenues will have to be recognised on
completion of construction and delivery.

The Company is required to follow as of now the IFRS method of financial
reporting from the financial year 2011-12 and may face certain challenges
with regards to revenue recognition in the initial years. However there is
still no full clarity on the various aspects of IFRS, especially with
regards to relevant amendments to Companies Act, acceptance by other
statutory authorities, especially the Income tax, who recognise only the
percentage completion method.

Rental income

Income from rentals is recognised on a straight line basis over the
primary, non-cancellable period of the arrangement.

(b) Impairment of assets

The Company assesses at each balance sheet date whether there is any
indication that an asset may be impaired.

If any such indication exists, the Company estimates the recoverable amount
of the asset. If such recoverable amount of the asset or the recoverable
amount of the cash generating unit to which the asset belongs is less than
its carrying amount, the carrying amount is reduced to its recoverable
amount. The reduction is treated as an impairment loss and is recognised in
the profit and loss account. If at the balance sheet date there is an
indication that if a previously assessed impairment loss no longer exists,
the recoverable amount is reassessed and the asset is reflected at the
recoverable amount subject to a maximum of depreciated historical cost.

(c) Inventories

Inventory comprises raw materials used for the construction activity of the
Company. Raw materials are valued at the lower of cost and net realisable
value with the cost being determined on a First In First Out' basis. Net
realisable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and to make the sale.

(d) Accounting for taxes for income

Tax expense comprises both current and deferred taxes. The current charge
for income taxes is calculated in accordance with the relevant tax
regulations. Deferred income taxes reflects the impact of current year
timing differences between taxable income and accounting income for the
year and reversal of timing differences of earlier years. Deferred tax is
measured based on the tax rates and the tax laws enacted or substantively
enacted at the balance sheet date.

Deferred tax assets are recognised only to the extent that there is
reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised. Deferred
tax assets are recognised on carry forward of unabsorbed depreciation and
tax losses only if there is virtual certainty that such deferred tax assets
can be realised against future taxable profits.

Unrecognised deferred tax assets of earlier years are re-assessed and
recognised to the extent that it has become reasonably certain that future
taxable income will be available against which such deferred tax assets can
be realised.

Results of Operations

The following table summarises the consolidated results of operations of
the Group FY 10 with comparatives for FY 09, in each case stated in
absolute terms and as a percentage of revenue.

(Rs/million)
Fiscal 2010 Fiscal 2009
Amount % of Total Amount % of Total
Income Income

Revenues 4,783.62 100.00% 4,449.04 100.00%

Cost of Revenues 2,748.13 57.45% 2,638.91 59.31%

Gross Profit 2,035.49 42.55% 1,810.13 40.69%

Selling expenses 170.51 3.56% 215.81 4.85%

General and 282.45 5.90% 282.82 6.36%
administrative expenses

Operating Profit 1,582.53 33.08% 1,311.50 29.48%

Net finance income/(expense) 15.90 0.33% 7.63 0.17%

Share of profit in associate 152.83 3.19% 151.02 3.39%

Profit before tax 1,751.26 36.61% 1,470.15 33.04%

Provision for tax 298.08 6.23% 25.97 0.58%

Profit after tax 1,453.18 30.38% 1,444.18 32.46%

Our Company's consolidated net profit for the year ended 31 March 2010 is
Rs.1,453.18 million compared to Rs. 1,444.18 million in the last fiscal.
Revenue at Rs.4,783.62 million for the year, an increase of 7.52% over the
previous year. Net profit margins have remained more or less same in
absolute terms. However the reduction in the percentage from 32.46 to 30.38
percent is mainly due to higher provision for tax. There are reductions in
selling, general and administrative expenses compared with the previous
year.

The area currently under development is 19.01 million sq. ft. with projects
spread across Bangalore, Chennai, Kochi, and Kolkata. There are 13 on-going
residential projects and 2 commercial projects currently under development.
A range of residential and commercial projects are planned to be launched
in the coming months in Coimbatore, Colombo, Cochin, Bangalore and Mysore.

The current land stands at 125.39 million square feet of developable area
and 115.44 million square feet of saleable area.

Comparison of Fiscal 2010 and Fiscal 2009

Income

Our revenues increased by 7.52% to Rs. 4,783.62 million in fiscal 2010 from
Rs.4,449.04 million in fiscal 2009, primarily due to income from our
projects which increased to Rs. 4,729.12 million in fiscal 2010 from
Rs.4,375.22 million in fiscal 2009, representing a increase of 8.09%. The
increase in the income is also due to sale of land in Kochi the revenue
taken for this transaction is Rs.1,632.15 million.

In fiscal 2010, we were able to recognise income from sale of seven
completed projects and ten from our ongoing projects.

Our rental income decreased to Rs.25.18 million in fiscal 2010 from
Rs.37.98 million in fiscal 2009.

Expenditure

Our total expenditure increased by 1.77% to Rs. 3,185.19 million in fiscal
2010 from Rs. 3129.91 million in fiscal 2009, primarily due to an increase
in our revenues resulting in a corresponding increase in cost.

Our cost of revenues increased by 4.14% to Rs. 2,748.13 million in fiscal
2010 from Rs.2,638.91 million in fiscal 2009, primarily due to increase in
depreciation and Kochi land sold during the year.

Material and contract costs decreased to Rs. 1,095.94 million in fiscal
2010 from Rs.1656.26 million in fiscal 2009. This decrease was due to lower
recognition of cost of revenues from the various ongoing projects.

Depreciation increased to Rs. 98.01 million in fiscal 2010 from Rs.42.55
million in fiscal 2009 mainly on account of accelerated depreciation taken
on some of the Plant and Machineries including shuttering materials
pertaining to Venezia and Highlands projects. As a percentage of total
income, our cost of revenue decreased to 57.45% of total income in fiscal
2010 from 59.31% of total income in fiscal 2009. However land cost
increased to Rs.985.81 million in fiscal 2010 from Rs. 281.57 million in
fiscal 2009 mainly on account of the cost of Kochi land sold during the
year.

Our selling cost decreased by 21% to Rs.170.51 million in fiscal 2010 from
Rs.215.81 million in fiscal 2009, primarily due to a decrease in the costs
relating to advertising & sales promotion and sales incentives.

Our general and administrative expenses decreased by 0.13% to Rs.282.45
million in fiscal 2010 from Rs.282.82 million in fiscal 2009. As a
percentage of total income, our general and administrative expenses
decreased to 5.90% of total income in fiscal 2010 from 6.36% of total
income in fiscal 2009. The increase in certain heads of expenses include
increase in salaries, wages and bonuses to Rs.142.93 million in fiscal 2010
from Rs. 124.31 million in fiscal 2009, increase in legal and professional
charges from Rs.16.68 million in fiscal 2009 to Rs.25.74 million in fiscal
2010 and increase in security charges from Rs.9.80. million in fiscal 2009
to Rs.13.12 million in fiscal 2010. However there are substantial reduction
in Rates and Taxes from Rs. 45.65 million in fiscal 2009 to Rs. 33.16
million in fiscal 2010, decrease in printing and stationery from Rs. 10.09
million in fiscal 2009 to Rs.3.73 million in fiscal 2010, decrease in
travelling expenses from Rs.19.37 million in 2009 to Rs 15.28 million in
2010 and decrease in Miscellaneous expenses from Rs.11.91 million in 2009
to Rs. 4.91 million.

Our net finance income was Rs.15.90 million in fiscal 2010 compared to a
net finance income of Rs.7.63 million in fiscal 2009.

Share in profit of associate

Our net share in profit of associates was Rs.152.83 million representing
3.19% of total income.

Profit before tax

Our profit before tax increased by 19.12% to Rs.1751.26 million in fiscal
2010 from Rs.1470.15 million in fiscal 2009, due to an increase in our
operating income. Our profit before tax as a percentage of total income
increased to 36.61% in fiscal 2010 from 33.04% in fiscal 2009, primarily
due to increase in our total income.

Gross Profit

Our gross profit increased by 12.45 % to Rs.2035.49 million in fiscal 2010
from Rs.1810.13 million in fiscal 2009.

As a percentage of our total revenues, our gross profit increased to 42.55%
in fiscal 2010 from 40.69% in fiscal 2009, primarily due to decrease in our
revenues.

Provision for tax

Our provision for tax liabilities increased to Rs.298.08 million in fiscal
2010 from Rs.25.97 million in fiscal 2009, as a result of the profits
booked on the sale of Kochi land. Our current tax liability has increased
to Rs.312.19 million in fiscal 2010 from Rs.43.15 million in fiscal 2009
due to the profits booked on the sale of Kochi land. Our profit before tax
in fiscal 2010 increased by 19.12% compared to fiscal 2009.

Net Profit After Tax

Our net profit after tax increased by 0.62% to Rs. 1,453.18 million in
fiscal 2010 from Rs.1444.18 million in fiscal 2009.

As a percentage of total income, the net profit decreased to 30.38% in
fiscal 2010 from 32.46% in fiscal 2009.

Financial Indebtedness

Our total net debt was Rs. 8,028.51 million and Rs. 7,877.89 million as of
2010 and 2009 respectively. Our net debt equity ratio was 0.54 in fiscal
2010 compared to 0.58 in fiscal 2009.

Liquidity and Capital Resources

Our primary liquidity requirements have been to finance our purchases of
land, working capital requirements and for development of our projects. We
have met these requirements from cash flows from operations, short-term and
long-term borrowings.

Our growth plans will require us to incur substantial additional
expenditure in the current and future fiscal years across our existing and
new business lines. We expect that our land acquisitions as well as the
construction and development costs for our projects will be funded through
cash flows and borrowings. Our expansion plans and planned expenditure are
subject to change based on, and our ability to raise and service the
required financing depends on, various factors such as interest rates,
property prices and market conditions.

Net Worth

Our net worth, which is defined as the difference between (a) total assets
and (b) total liabilities and provisions, was Rs. 14,852.33 million and
Rs.13,648.84 million, respectively for the fiscal years 2010 and 2009.

Net Cash Flows

As of March 31, 2010 and 2009 we had cash and cash equivalents of Rs.782.15
million and Rs.267.94 million, respectively.

The table below summarizes our cash flows as restated for fiscal 2010 and
2009:
(Rs/million)
Fiscal 2010 Fiscal 2009

Net cash used in operating activities 555.33 (428.02)
Net cash used in investing activities 503.25 (94.76)
Net cash from financing activities (544.37) 441.00
Cash Flow from our Operating Activities

Our net cash used in operating activities in fiscal 2010 was 555.33
million, although our profit before taxes for such period was Rs.1,751.26
million. The difference was attributable to increase in inventories, loans
and advances, properties under development. Also due to decrease in trade
debtors, properties held for sale current liabilities and provisions.

Our net cash used in operating activities in fiscal 2010 and 2009 was
Rs.555.33 and Rs.(428.02) respectively.

Cash Flow from Investing Activities

Our cash flow from investment activities represents net purchase of fixed
assets (after adjustment for assets sold) comprising plant and equipment,
shuttering materials used in our construction business and purchase of
investments and interest received. Our cash flows from financing activities
is positive during the current fiscal primarily due to sale of a property
held for development. Our net cash from investing activities in fiscal 2010
and 2009 was 503.25 and (94.76) respectively.

Cash Flow from Financing Activities

Our cash flow from financing activities is determined primarily by the
level of our borrowings, loans repaid to our related parties, the schedule
of principal and interest payments on them. In fiscal 2010, our cash flow
from financing activities was Rs. (544.37) million. In fiscal 2009, our
cash flow from financing activities was Rs. 441.00 million.

Financial Condition

The financial leverage and gearing had been within control during the
fiscal year 2009-10. The debt equity ratio had been maintained at a
reasonable level between 0.54 to 0.58. The Group has met all the repayment
of loan and interest to the financial institutions as per the schedule of
the loan and disbursement arrangements.

Assets

Fixed Assets:

The net book value of our total fixed assets was Rs.362.34 million,
Rs.462.91 million as at March 31, 2010 and 2009, respectively. Our fixed
assets comprise of buildings, plant and machinery, office equipments,
furniture and fixture, computers, Shuttering Material and Vehicles.

Investments:

Our investments consist mainly of equity shares in our subsidiary
companies. In addition we also have investments in associate companies, in
Keppel Puravankara Development Private Limited and Keppel Magus Development
Private Limited. Our total investment in associate companies were
Rs.1,191.07 in million and Rs. 1,038.24 million as at March 31, 2010 and
2009, respectively.

Properties held for development:

This consists of various lands which have been acquired for the purpose of
development.

Our properties held for development were Rs. 13,527.72 million and
Rs.13,924.35 million as at March 31 2010 and 2009 respectively.

Current Assets, Loans and Advances:

The total current assets, loans and advances were Rs.12,658.28 million and
Rs.11,050.69 million as at March 31, 2010 and 2009, respectively. Our
current assets, loans and advances comprise of cash and cash equivalents,
inventory, trade debtors, properties under development, properties held for
sale, and loans and advances.

Cash and cash equivalents:

Our cash and cash equivalents consist of cash on hand and cash held in
current, deposit and foreign currency accounts with specified banks. The
cash and cash equivalents were Rs. 782.15 million and Rs. 267.94 million as
at March 31, 2010 and 2009 respectively.

Inventory:

Our inventories consist primarily of raw materials for our construction
projects. Our inventories were Rs.226.81 million and Rs. 197.34 million as
at March 31, 2010 and 2009, respectively.

Trade Debtors:

The total amount payable by our trade debtors was Rs.1,112.00 million and
Rs.1,146.15 million as at March 31, 2010 and 2009, respectively. Our trade
debtors consist of unsecured debtors.

Properties under development:

This consists of our projects currerntly under development. Our projects
under development was Rs. 6,801.81 million and Rs. 5,699.75 million as at
March 31, 2010 and 2009, respectively.

Properties held for sale:

This consists of finished projects which are unsold on the date of the
financial statements, which is valued at cost price or net realisable value
(equal to selling price less cost of selling), whichever is lower. Our
properties held for sale was Rs.852.45 million and Rs.973.50 million as at
March 31, 2010 and 2009, respectively.

Loans and Advances:

Our total loans and advances were Rs.2,883.04 million and Rs.2,766.01
million as at March 31, 2010 and 2009, respectively. Our loans and advances
also comprise of advances and loans made by us to suppliers, advances to
Associates, advances for acquisition of land, advance for purchase of
flats, advance for taxes, prepaid expenses and other advances.

Liabilities

Total Liabilities and Provisions:

Our total liabilities and provisions were Rs.4,067.78 million and
Rs.4,658.77 million as at March 31, 2010 and 2009 respectively. Our current
liabilities include sundry creditors and deposits received from customers,
dues to employees, dues to Related Parties', duties and taxes payable and
security deposits received and other liabilities. The amount reserved as
provisions' includes the provisions that we make for vacation pay.
Transactions with Associate Companies and Related Parties

We enter into transactions with companies, which are controlled by members
of our Promoter Group and other related parties in the ordinary course of
our business. As of March 31,2010, our balances involving transactions with
related parties include Rs.174.07 million in loans and advances to
associate companies. For details regarding our related party transactions,
please see 'Related Party Transactions'.

Significant Developments after March 31, 2010 that may affect our future
Results of Operations In compliance with AS 4, to our knowledge no
circumstances other than as disclosed in this Annual Report have arisen
since the date of the last financial statements contained in this report
which materially and adversely affect or are likely to affect, the trading
and profitability of the Company, or the value of our assets or their
ability to pay their material liabilities within the next 12 months.

Implementation of IFRS reporting standard will impact the revenue
recognition of the Company in the initial years as the revenues shall be
skewed towards the period of completion of projects and delivery to the

customers.