FY 2007-08

&.~~~IIC:The Futoure is Here

35th ANNUAL REPORT

2007 -08

AndhraPradesh Industrial Infrastructure Corporation Limited(A Government of Andhra Pradesh Undertaking)

"Parisrama Bhavanam" 6th Floor, 5-9-58/B, Fateh Maidan Road,HYDERABAD - 500 004.

ANDHRAPRADESHINDUSTRIALINFRASTRUCTURECORPORATIONLIMITED,HYDERABAD

INDEX

A

GeneralInformation 3 - 4

Notice 5 - 6

Directors'Report 7 - 12

CommentsoftheStatutoryAuditors 13 - 15

andRepliesoftheCorporation

CommentsoftheC&AGof India 16 - 17

andRepliesoftheCorporation

BalanceSheetandProfit&LossAccount 19 - 37

Withschedules

BalancesheetAbstract& GeneralBusinessProfile 38

CashFlowstatementfortheyear2007-08 39

Auditors'ReportoftheStatutoryAuditors 40 - 44

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4.£35thANNUALREPORT.APIIC

(GENERAL INFORMATION)

A) Chairman & Managing Directors:

B) Vice-Chairman & Managing Director:

Sri B.P.Acharya, IASVice-Chairman & Managing Director

21-08-2005 to 06-06-2007

C) Directors:

A

1. Smt.D.Lakshmi Parthasarathy, IAS 20-12-2007 to 06-06-2007Chairman, APIICPrLSecretary to Govt. &CIPInds. & Com.Department

2. Sri B.P.Acharya, IAS 06-06-2007 to till dateChairman & Managing Director

S.No Name of the Director Period

1. Smt.D.Lakshmi Parthasarathy, IAS 02.01.2006 to15-10-2007PrLSecretary to Govt. & CIPInds. & Com.Department

2. Sri Busi Sam Bob, IAS 15-10-2007 to till datePrLSecretary to Govt. & CIPInds. & Com.Department

3 SrL Rajeshwar Tiwari, IAS 30.01.2006 to 26-02-2009Member Secretary,AP Pollution Control Board

4 SrLK.Madhusudhana Rao 26-02-2009 to till dateMember Secretary,AP Pollution Control Board

5 Sri Ajeya Kallam, IAS 21-08-2005 to 24-05-2007MD. APSFC

6 Sri A.Giridhar, lAS, 24-05-2007 to till dateMD. APSFC

7 Sri Tishya Chatterjee, IAS 05-07-2006 to till datePrLSecretary to Govt.,T.R.& B. Department

8 Sri I.Y.R.Krishna Rao, IAS 05-07-2006 to 24-06-2008PrLSecy. to Govt.Finance (R&E) Department

9 Sri N.Ramesh Kumar, IAS 24-06-2008 to till datePrLSecy. to Govt.Finance (R&E) Department

10 SrLS. Bhattacharya, IAS 21-08-2005 to 24-05-2007Commissioner of Industries

11 . SrLNeerabh Kumar Prasad, IAS 24-05-2007 to till dateCommissioner of Industries

[;:

ANDHRAPRADESHINDUSTRIALINFRASTRUCTURECORPORATIONLIMITED,HyqERABAD

COMPANY SECRETARYSri M.Siva S.Reddy

BANKERS:Syndicate BankState Bank of IndiaState Bank of HyderabadIndian Overseas BankHDFC BankIng Vysya Bank Ltd

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AUDITORS:MIs. Tukaram & CompanyChartered AccountantsH.No.3-6-69/209Venkatrama TowersBasheerbaghHYDERABAD-500 29.

REGISTERED OFFICE:5-9-58/B, Fateh Maidan Road,6th Floor, Parisrama Bhavanam,Basheerbagh,Hyderabad - 500 004.

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~A35thANNUALREPORTA.PIIC

ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURECORPORATION LIMITED

(An undertaking of the Government of Andhra Pradesh)Regd.Office: 6th Floor, Parisrama Bhavan, 5-9-58/B, Fatehmaidan Road,

P.O.Bag.No.5, Basheerbagh, Hyderabad-500 004

NOTICE

Notice is hereby given that the 35th Annual General Meeting of the Membersof Andhra Pradesh Industrial Infrastructure Corporation Limited will be held onMonday, the 29th day of September, 2008 at 3.00 P.M.at the Registered Office of theCompany to transact the following ordinary business:

1. . To receive and adopt the Balance Sheet as at ended 31st March, 2008,Directors' Report along with the Auditor's Report and the comments of theComptroller and Auditor General of India and the replies thereon.

BY ORDER OF THE BOARDFOR APIIC LIMITED

SD\-M.SIVA S.REDDY

COMPANY SECRETARY

Place: HyderabadDate: 05-09-2008.

Note: A Member entitled to attend and vote at the meeting is entitled to appoint aproxy in the form enclosed to attend and vote instead of himself and the

proxy need not be a Member of the Company.

A


ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURECORPORATION LIMITED

. (Anundertakingof the GovernmentofAndhraPradesh)Regd.Office:6th Floor,ParisramaBhavan,5-9-58/B,FatehmaidanRoad,

P.O.Bag.No.5,Basheerbagh,Hyderabad-500004

NOTICE

Notice is here by given that the Adjourned 35thAnnual General Meeting of theMembers of Andhra Pradesh Industrial Infrastructure Corporation Limited will be heldon Tuesday, the 31st day of March, 2009 at 11.OOA.M.at the Registered Office of theCompany to transact the following ordinary business: ~

1. To receive and adopt the Balance Sheet as at ended 31st March, 2008,Profit and Loss Account for the year ended 31 st march, 2008 Directors'

Report along with the Auditor's Report and the comments of theComptroller and Auditor General of India and the replies thereon.

BY ORDER OF THE BOARDFOR APIIC LIMITED

SD\-M.SIVA S.REDDY

COMPANY SECRETARY


Note: A Member entitled to attend and vote at the meeting is entitled to appoint aproxy in the form enclosed to attend and vote instead of himself and theproxy need not be a Memberofthe Company.

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h..A35thANNUALREPORT.A.PIIC

DIRECTORS' REPORT TO THE SHAREHOLDERS FOR THJ: YEAR 2007-2008-

Dear Members,

The Directors take pleasure in placing before you the 35th Annual Report of your Company togetherwith the audited accounts for the year ended 3151March, 2008 and report of Statutory Auditors Mis. Tukaram& Co, Chartered Accountants.

1. SHARE CAPITAL:

During the year under review, your Company has not allotted any share capital. At the end of thefinancial year as on 31.3.2008, Government of Andhra Pradesh holds the paid-up share capital of yourCompany RS.1632.751akhsagainst theAuthorised Share Capital of Rs.2,OOO.00lakhs .

2. FINANCIAL RESULTS

Your Directors have pleasure in reporting that your company earned a net profit of RS.312.88Crores,during the year which includes the difference between the sale price and the cost price of the assets soldand kepJung~he headof account "Provision for Development of IEs& IDAs" to an extent of RS.277.62Crores pertainingtOlh~earlier years. 1..~ change in the accounting policy is mentioned separately in thisreport.

During the year, the company earned a net profit of RS.39.68 Crores as against net profit of RS.52.46Crores during the previous year. The profit of RS.39.68 crores has been arrived after providingdepreciation and interest amounting to RS.50.20 crores.

Change in Accounting Policy:

Till 31-03-2007, the difference between the sale price and cost price of the assets sold was keptunder the head of account "Provision for development of IEs/IDAs" as enhanced compensation claims forthe lands acquired are pending disposal in various courts and the internal infrastructure works like roads,water supply, electrification are being taken up over a period. This system of accounting was not acceptedby C &AG and StatutoryAuditors. In deference to the suggestions made by C&AG and Statutory Auditors, itwas decided to treat the amount of RS.277.62 crores lying under the. head of account "Provision forDevelopment of Industrial Estates and Industrial DevelopmentAreas" be treated as income during the yearand hencethe same was transferred to Profit and Loss account for the period ended 31.03.2008

Due to charge in the above Accounting Policy, the revenue generated from sale of land and sheds,the Corporation has earned a net income of RS.39.68crores during the year 2007-08.

Effect of changes in Income Tax Act .1961

APIIC has been granted registration U/s.12A of the Income Tax Act, 1961, w.e.f.01.04.1979. Thisentitles the Company for exemption of income U/s.11 of the Income TaxAct as a Charitable Organization.The claim for exemption U/s.11 read with section 2(15) for the Assessment years 1974-75 to 1977-78, 1979-80 and 1981-82 was escalated up to the Income TaxAppellate Tribunal, Hyderabad, which by a speakingorder confirmed that APIIC is a charitable organization of general public utility U/s.2(15) entitled forexemptionU/s11of IncomeTaxAct 1961.

However, the Income Tax department went on appeal against the order to High Court of A.P

A


(I.T.C. No.105 of 1991) which is pending adjudication. Subsequent years also saw a similar controversywhich now lay before different stages of appeal process.

Change in the scenario

The Finance Bill 2008 proposed an amendment to Sec.2 (15) which excluded entities of generalpublic utility carrying on business from the definition of charitable purpose. In short, this proposedamendment from the financial year 2008-09 will disentitleAPIIC from enjoying the benefits under Sec.11 ofthe IncomeTaxAct, 1961as discussed above.

3. SIGNIFICANT ACCOUNTING POLICIES:

To comply with the Accounting Standards, which are mandatory from 01.04.1999, the Land,Buildings, Sheds and other development works in the Industrial Estates, Industrial Development Areas,Autonagars, etc. of the Corporation are treated as CurrentAssets, till they are disposed off either on OutrightSale or allotment on Hire Purchase.

The stale cheques lying for more than 5 years have been transferred to Profit & Loss Account.

Provision for Bad and doubtful debts is made @ 100% on interest outstanding on account of Rental,Water, PenaJ interest on hire purchase, maintenance charges, principal and interest. .-

The Government of Andhra Pradesh have entrusted certain Local Authority pm"Jars to trn!'Corporation like collection of Property Tax, maintenance of common fatiiities in respect of certain IndustrialParK~dflu inali~liia: D~'.'~!Gpme!1!A.reg5.The Corporation formed Societies entrusting the work of collectionof taxes and maintenance of facilities etc. on behalf of the Corporation. The income and expenditure in thisregard have not been accounted for in the accounts of the Corporation, pending transfer ofthese amounts tothe Societies.

4. RESOURCE MOBILISATION

During the year 2007-08, an amount of RS.3529 crores was collected by way of sale of land asagainst an amount of RS.1,111crores during the year 2006-07.As per the Directions of the Govt. an amountof Rs. 3000 crores was remitted to Govt. during the year 2007-08 as against an amount t of RS.1000 croresduring the year 2006-07 as resource mobilization for the Government.

5. ACTIVITIES:

The following are the current activities of your Company by way of promotional efforts towardsindustrial development in the State ofAndhra Pradesh.

I. Acquisition of land for the establishment of Industrial Estates and IndustrialDevelopment Areas( now called as Industrial Parks).

II. Setting up of Industrial Parks /Autonagars in identified Industrial Growth Centres all overthe State and other developing areas for establishment of industries by providingnecessary infrastructure facilities viz., Water, Power and Roads etc.

III. Execution of deposit contribution works for Government of Indiaand also State GovernmentDepartments.

Development of Infrastructure Projects on Public Private Partnership mode as directedby Government of Andhra Pradesh.

IV.

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35thANNUALREPORTA.PIIC

6. PERFORMANCE:

a)

b)

c)

d)

LAND ACgUISITION:

Your Directors are happy to inform that your Company has taken possession of 5,655.06 acres ofpatta land and 16,422.73 acres of Government land during the year. The aggregate extent of landtaken over by your Company, since its inception is 40,412.76 acres of Patta land and 53,147.82acres of Government land.

DEVELOPMENT AND ALLOTMENT OF PLOTS AND SHEDS:

Your Directors are happy to inform that your Company allotted 10,323.05 acres of land/plots and 4sheds/shops/houses to various industrial ventures inour State during the year.

GOVERNMENT OF INDIA SCHEMES:

Your Directors are happy to inform that various Government of India schemes like Growth Centers,Apparel Parks were also taken up by your Company during the year. By developing these projects,your Company is able to utilize various funds available under Government of India Schemes fordevelopment of Industries in the State.

CIVIL WORKS & DEPOSIT WORKS:

APIIC has developed 20123 Nos. of plots and Constructed a total 3483 Nos. of factory sheds invarious Industrial Parks, Growth centers and EPIP Pashamylaram spread over Andhra Pradesh andtill2006 2007. During the year 2007 2008,447 additional plots were developed, with this the totaldeveloped plots are 20570.

APIIC is having full fledged Engineering Wing supported with Engineers with vast experience.During the year 2007 2008. Civil Works to a tune of about Rs. 237.76 Crores were executed. Out of this,Infrastructure Development works are for a value of Rs.126.03 Crores, Deposit works for Rs.37.60 CroresandAnnual Maintenance Fund works amounting to Rs. 74.12 Crores.

APIIC has been undertaking deposit works for various departments of State Government, besidesthe works for the development of industrial parks. The following Deposit Works have been undertaken:-

1.

2.

3.

4.

5.

Construction of Forest Department Head Quarters complex atAranya Bhavan, Hyderabad.

Construction of Hostel &Auditorium building forA.P.ForestAcademy at Dullapally.

Construction of Incubation Centre in Bio-TechPark atTurkapallly.

Construction of Office cum Godown forAPSTC at Mamidipally, Hyderabad.

Construction of Buildings for Indira Gandhi Centre for Animal Research laboratory atPulivendala Kadapa District.

Providing water to Gangavaram Port by tapping Yelerucanal

Construction of Boundary wall all along 3 sides of Baba Atomic Research Centre atAchuthapuram

Renovation of Hostel building for NIPERat Balanagar

6.

7.

8.

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During the yearAPIIC has executed development works at various industrial parks like 1) FinancialDistrict 2)Fabcity 3)Hardware Park 4) Biotech Park 5) Knowledge city Raidurg, Hyderabad 6)Apparel Exportpark Vishakapatnam 7) Growth Centre Bobbili, Srikakulam 8) Auto Nagar Mangalagiri 9) Jewellery Park atMachilipatnam 10) 4 way road at APSEZ Achuthapuram 11)Providing water supply to Pharmacity andAPSEZ by piping from yeleru canal at Parawada and also Construction of summer storage tank of 2000MLcapacity in phar~city 12) Development of Industrial Park at Mambathu 13) Approach road from NH-5 toApache 14)Formation of41aneapproach road forApache and SEZ in Nellore District

Further APIIC has carried out Repairs & Maintenance works at various Industrial Parks underInfrastructure Upgradation Fund, Environment Management PlanandAnnual Maintenance Funds.

e) Special Economic Zones. Andhra Pradesh:

Government appointed your company as NodalAgency for development of Special Economic Zonein State ofAndhra Pradesh. APIIC is developing 19 Nos of SEZs ,out of which 15 SEZs were notified and 4SEZs got formal approval from Government of India,so far.

7. BOARD OF DIRECTORS:.....

A) Chairman & Managing Directors:


Sri B.P.Acharya, IASVice-Chairman & Managing Director

21-08-2005 to 06-06-2007

C) Directors:

A

1. SmtD.Lakshmi Parthasarathy, IASChairman, APIICPrLSecretary to Govt &CIP

20-12-2007 to 06-06-2007

Inds. & Com.Department

2. Sri B.P.Acharya, IASChairman & Managing Director

06-06-2007 to till date


1. SmtD.Lakshmi Parthasarathy, IAS 02.01.2006 t015-10-2007PrLSecretary to Govt. & CIPInds. & Com.Department

2. Sri Busi Sam Bob, IAS 15-10-2007 to till datePrLSecretary to Govt & CIPInds. & Com.Department

3 Sri. Rajeshwar Tiwari, IAS 30.01.2006 to 26-02-2009Member Secretary,AP Pollution Control Board

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8. DIRECTOR'S MEETINGS:

During the year under review,four (4) meetings ofthe Board of Directors were held.

9. DIRECTORS RESPONSIBILITY STATEMENT:

The Board of Directors report.

i) that in the preparation of Annual Accounts, the applicable accounting standards have beenfollowed along with proper explanation relating to material departures;

ii) that the directors had selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of the profit orloss of the Company for that period;

iii) that the directors had taken sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities;

iv) that the directors had prepared the annual accounts on a going concern basis.

10. STATUTORY AUDITORS:

The Comptroller and Auditor General of India, New Delhi appointed Mis D.V. Ramana Rao & Co,CharteredAccountants, Hyderabad as Statutory Auditors of your Company for the financial year 2008-09 asperthe Companies Act, 1956.

~


4 Sri.K.Madhusudhana Rao 26-02-2009 to till dateMember Secretary,AP Pollution Control Board

5 Sri Ajeya Kallam, IAS 21-08-2005 to 24-05-2007MD. APSFC

6 Sri A.Giridhar, IAS 24-05-2007 to till dateMD. APSFC

7 Sri Tishya Chatterjee, IAS 05-07-2006 to till datePrLSecretary to Govt.,T.R.& B. Department

8 Sri I.Y.R.Krishna Rao, IAS 05-07-2006 to 24-06-2008PrLSecy. to Govt.Finance (R&E) Department

9 Sri N.Ramesh Kumar, IAS 24-06-2008 to till datePrLSecy. to Govt.Finance (R&E) Department

10 SrLS. Bhattacharya, IAS 21-08-2005 to 24-05-2007Commissioner of Industries

11 Sri.Neerabh Kumar Prasad, IAS 24-05-2007 to till dateCommissioner of Industries

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11. REPLIES TO RESERVATIONS IN THE STATUTORYAUDITORS REPORT AND COMMENTS OF THECOMPTROLLERAND AUDITOR GENERAL OF INDIA:

The explanations of the Board of Directors on the reservations/qualifications made by the StatutoryAuditorsand comments of the Comptrollerand AuditorGeneral of India are given at Annexure-A &Bto thisReport.

12. FIXEDDEPOSITS FROM THE PUBLIC

Your Company has not accepted any deposits from the public and as such no amount of principal orinterestwas outstanding as on March 31, 2008

13. PARTICULARS OF EMPLOYEES:

There are no employees drawing Rs. 2,00,000/- per month / Rs. 24,00,000/- per annum either partly.orfully during year respectively as required to be furnished under Section 217 (2A) of the Companies Act, 1956.

14. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTIONAND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars required to be furnished pursuant to Section 217(1)(e) of the Companies Act, 1956 arenot applicable to yourCompany.

15. HUMAN RESOURCE DEVELOPMENT:

YourCompany'sconstant endeavor is to retain and keep the relations with the employees of yourCompany on sound and cordial line. The same was achieved duringthis year also. Your Directors place onrecord their appreciation ofthe dedicated services rendered by employees at all levels without which it wouldhave not been possible to achieve the Company's objectives. During the year Government permitted yourcompany to recruit for certain important posts i.e Company Secretary and General Manager (Law).Recruitment processwas resumed inyour company after a gap of nearly two decades.

16. ACKNOWLEDGEMENTS:

Your Board of Directors place on record their deep sense of gratitude to the Government of AndhraPradesh, Government of India, Financial Institutions, Banks and all other Agencies connected with theindustrialdevelopment activities in the State for their continued guidance, interest and support

The Board places on record its appreciation of the confidence reposed in your Company by theentrepreneurs who help inthe industrialdevelopment ofthe State.

The Board thanks its Shareholders, who continue to extend their support.

For and on behalf of the Boardof APIIC LTD


sd/-B.P.ACHARYA, IAS

CHAIRMAN

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Annexure A

~A35thANNUALREPORTAP II c:

OBSERVATIONS OF STATUTORYAUDITORS ANDREPLY OF THE COMPANY FOR THE YEAR 2007-08

SI.No.1 Comments of Statutory Auditors

3(d).

3(e).

The Company is showing Government Grantsrelated to revenue as Deposits under currentliabilities. However, as perAccounting Standard"Accounting for Government Grants" - (AS-12)Government grants related to revenue should berecognized on a systematic basis in the profitand loss statement over the periods necessaryto match them with the related costs which theyare intended to compensate. Such grantsshould either be shown separately under 'otherincome' or deducted in reporting the relatedexpense. The effect on current year profitcannot be ascertained.

The Company's Investments (Long term andunquoted) are stated at Cost. As per theAccounting Standard (AS-13) - "Accounting forInvestment", the carrying values of Long terminvestments are to be adjusted for anydiminution in value of Investment. Further, theindicators of the value of investments areobtained by reference to the Investee's Assetsand liabilities, results and the expected cashflows. However, in absence of all the requireddetails of Investees, we are no; in a position toverify the carrying value of investments andconsequent provision, if any, for diminution invalue of Investments.

A

Reply of Corporation

Action is being taken to implement thesuggestion w.e.f.2008.09.

The company made certaininvestments in various companies byvirtue of Government directions or tofacilitate infrastructure projects underPublic Private Partnership (PPP). Thenature of the company is not to investin the enterprises but to facilitate theinfrastructure projects under PPPMode. From the reading of theAccounting Standard 13 it may beobserved that the same is applicablemainly to the enterprises, which are inthe business of making "Investments".

Hence, it is felt that AccountingStandard -13 is not applicable.



3(f).

3(g).

3(h).

3(i).

..

The Management is of the view that the carryingvalues of fixed assets are higher than therecoverable amount. Inthe absence of adequatedocumentation in respect thereof, we are unableto comment on impairment loss, if any, asrequired by the Accounting Standard"Impairment of Assets" - (AS-28) issued by theInstitute of Chartered Accountants of India.

'i'-

The Company even though has details of Workin progress, work wise expenditure executed atvarious sites and the amount to be capitalized isunder preparation. However, there is adifference of Rs.48,19,625/- between the ledgerand data file for which details are not provided.In the absence of the details, the correctness ofvalue ofworkin progress could notbe verifiedbyus.

The Company has given loan to VIWSCOandaccounted accrued interest on such loan. Thebalance as per books is Rs. 45,415.65 Lakhs.However, as per the copy of Balance sheet ofVIWSCOprovided to us by the Company, theamount due to Company was shown Rs.46,141.07 Lakhs. The company has to reconcilethe difference of 725.42 lakhs. The adjustmenton account ofdifference and consequent, impacton profit,ifany, is notascertainable at this stage.

The company is showing receivables on accountof Navodaya Vidyalaya Samithi project for aperiod of more than decade. The same figuresare being carried in tinancials without anyrecoveries or adjustments. The consequentadjustments at the time of closure of the accountare not ascertainable at this stage.

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The reading of the AccountingStandard 28 - Impairment of Assets,indicates that Impairment of Assets isnecessary for the enterprises whichare covered under 8 categoriesindicated inAS 28. As the Company isnot falling under any of the 8 categoriesindicated under AS 28, it is felt that AS28 is not applicable to the Company.

The difference of 48, 19,625/- betweenledger and data file has since beenreconciled and the same will beproduced to next audit.

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The loan transaction between VizagIndustrial Water SupplyCompany/APIIC/National ThermalPower Corporation /Rashtriya IspathiNigam Ltd/Greater VisakhapatnamMunicipal Corporation is a back toback arrangement. Hence there is noimpact on profit of the Company.

However, this is being reconciled withthe VIWSCO records.

Navodaya Vidyalaya Samithi wasalready addressed to make thepayment. Action will be initiated forrecovery ofthe amount.

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30).

3(k).

The Company is taking possession ofgovernment lands on the basis of instructionsreceived fromGovernment withoutany details ofcost of alienated land or any payments to bemade by the Company. The Company isaccounting the cost of land transferred byGovernment to iton the basis of estimated cost.Consequently, we are unable to comment oncorrectness of Stock in Trade (land)carriedinbooksand consequentimpacton profit, if any,either on account of upward or downwardrevision of land cost bythe Government.

The balances of Sundry debtors, Inter ZonalAdjustmentAlc., Hire PurchaseAdjustmentAlc.,creditors, loans & advances and otherreceivables & payables being subject toconfirmation and reconciliation resulting in thebalances as per books of accounts not verifiedby us. The consequent necessary adjustments,either of a revenue nature of otherwise, if any,upon which we are unable to comment at thisstage, will be made in the year they are finallysettled with the parties.

Date:30.12.2008Place:HYDERABAD

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~A35thANNUALREPORT.APIIC


The company has taken possession ofthe Government lands at variousplaces. Pending receipt of alienationorders from the Government, aprovision is made towards land cost inthe books of accounts. On receipt ofthe final land cost particulars, thedifference, if any,will beaccounted for.

The reconciliation work is in progress.

For and on behalf the boardof APIIC Ltd.

Sd/-B.P.Acharya

Chairman


Annexure -B

SNo

1

2

A G Comments

Balance SheetApplication of FundsWork in progress - Rs. 187.26 crore.

The above includes an amount of RS.70.06lakhs being the expenditure incurred on formingof approach road to Apparel park at Proddutor,Kadapa district which should have beenadjusted to the deposit received fromGovernment ofAndhra Pradesh as the work wasunder taken as deposit contribution work. Non -adjustment of the same has resulted inoverstatement of Current Assets - Work inprogress and Current liabilities by Rs.70.06lakhs.

Sundry Debtors (Schedule-?)Other Debts - Rs. 23.02 crore.

The above includes Rs. 9.61 crore beingadditional expenditure incurred over the actualamount of deposits received towards depositcontribution works undertaken by the companyfrom the year 1992onwards. However, the samecould not be recovered till the end of March2008. As these amounts were outstanding formore than 10 years, the recovery of the same isdoubtful. Non-provision for the same hasresulted in understatement of provision fordoubtful debts and overstatement of SundryDebtors- Other Debts and Profit for the year byRS.9.61crore.

A

Reply of the Company

The grant from GoAP was actuallyreceived in 2008-09 and hence, thisissue will be addressed during the year2008-09.

-(

As these amounts are due fromGovernment / Public Sector Units theCorporation is pursing with concernedfor recovery of the dues. Hence, theseamounts need not be considered asdoubtful debts.

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SNo A G Comments

3 Current Liabilities and ProvisionsLiabilities Schedule -11 A

. Sundry Creditors(Others) - Rs.6.91 Crore.

The above does not include Rs.35.68 lakh beingthe amount payables to Mis PadmavathiConstructions towards a case settled by he solearbitrator. The agreement with Mis PadmavathlConstructions was terminated due to non-receipt of funds from Technical educationdepartment/Government of Andhra Pradesh,which entrusted the work to the Company. TheCompany had agreed for payment of RS.72.22lakh (including interest of @ 16% calculated upto Dec 2007) during negotiation in an out of courtsettlement with Mis Padmavathi Constructions.However, the liability provided by the companyon this account was Rs.36.54 lakh only.This hasresulted in understatement of Sundry Creditors(others) and Sundry Debtors - Amountreceivable from Government ofAndhra Pradeshby Rs.35.68Iakh.

4 Comments on Disclosure

A reference is invited to item no.3 of AccountingPolicies (Schedule-21) wherein the Accountingpolicy in respect of Revenue Recognition waschanged during the current year. However, theimpact of change in Accounting Policy resultingin recognition of income of Rs.39.68 crore for thecurrent year has not been disclosed.


.A


Reply of the Company

A proposal was sent to Government forout of settlement for an amount ofRs.72,21,863/- with interest calculatedup to December'2007 even though theappeal is pending before the Court.Unless and until it is approved by theGovernment, the liability does notcrystallize. The liability arouse due tothe arbitration award, was onlyprovided in the books of account to anextant of Rs.35,53,924/-.

On the above, orders were receivedfrom Government vide G 0 Rt.No.55dated 23.01.2009 of TechnicalEducation Department accordingpermission to release the amount.

This Government approval wasreceived after the accounts for theFinancial year 2007-08 wereapproved.

Noted for future guidance.

For and on behalf the boardof APIIC Ltd.

Sd/-B.P.Acharya

Chairman

~~

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ACCOUNTS

A.

..

ANDHRAPRADESHINDUSTRIALINFRASTRUCTURECORPORATIONlIMITED,HYDERABADBALANCE SHEET AS ON 31-03-2008

Sch.No. AS AT 31-03-2008 AS AT 31-03-2007

SOURCESOFFUNDSSHAREHOLDERSFUNDSa)Capitalb)Shareapplicationmoneyc)Reserves&surplus

163,275,000 163,275,000

2 3,830,381,261 701,545,4433,993,656,261 864,820,443

LOANFUNDSa)SecuredLoansb)UnsecuredLoans 3 4,548,530,796 4,570,206,154

TOTAL4,548,530,7968,542,187,057

4,570,206,1545,435,026,597

ASPEROURREPORTOFEVENDATEfor TUKARAM& CO

CHARTEREDACCOUNTANTSsd/-

PMURAUPartner

MembershipNo.221625


FORAND ON BEHALFOF THE BOARD

Sd/-

B PACHARYA,IASCHAIRMAN &

MANAGINGDIRECTOR

Sd/-BUSISAMBOB.IAS

DIRECTOR

. Sd/-MSIVASREDDY

COMPANYSECRETARY

A

APPLICATIONOFFUNDSFIXEDASSETS 4GrossBlock 69,319,253 61,125,328LessDepreciation 35,390,288 30,400,131NetBlock 33,928,965 30,725,197INVESTMENTS 5 1,126,581,540 951,952,640CURRENTASSETS,LOANS&ADVANCES .a)Inventories 6 56,360,858,391 30,855,261,371b)SundryDebtors 7 187,032,317 82,424,475c)CashandBankBalances 8 3,095,808,452 2,794,920,628d)OtherCurrentAssets 9 46,339,094 32,970,817e)LoansandAdvances 10 10,319,970,143 8,666,835,549

70,010,008,397 42,432,412,840

LESS:CurrentLiabilities&ProvisionsLiabilities 11-A 62,520,221,254 35,128,882,484Provisions 11-B 113,099,673 2,860,006,944

62,633,320,927 37,988,889,428NETCURRENTASSETS 7,376,687,470 4,443,523,412MiscellaneousExpendituretotheextentnotwrittenoff-VRS 12 4,989,082 8,825,348TOTAL 8,542,187,057 5,435,026,597

NotestoBalanceSheetandProfit&LossAccount:scheduleNo:21



Profit& LossAccountfortheYearended31stMarch,2008

ACCOUNT 31.03.2008Rs

31.03.2007Rs

Sch.No

INCOMESalesRentals

WaterChargesInterestOtherIncomeProvisionsWrittenBack

CentageCharges

13 1,877,452,18841,604,59352,900,545

811,270,402255,493,800

2,776,217,90836,191,085

5,851,130,521

1415

EXPENSESCostofSales

SalariesandotherBenefitstoEmployeesAdmn.&OtherexpensesAdmn.ChargesonDep.worksInterest&financechargesDepreciationMinorAssetswrittenoff

ExpenditureonSocialWelfareMiscellaneousExpenditureWrittenOff-VRS

161718

1944

LESS:CapitalExpenditureduringconstructionperiod

Profit(+)/Loss(-) fortheyearPriorPeriodAdjustments:(Net)ProfitbeforetaxationProvisionfortaxationProfitaftertaxation

20

TransferredtoGeneralReserve

Balanceofprofit

FORANDON BEHALFOF THE BOARDASPEROURREPORTOFEVENDATEfor TUKARAM& CO


PMURAUPartner

MembershipNO.221625


Sd/-B PACHARYA,IAS

CHAIRMAN &MANAGINGDIRECTOR

Sd/-MSIVASREDDY

COMPANYSECRETARY

A<..,

585,424,260

25,231,795

33,516,274

859,568,216

219,464,585

0

36,788,080

1,759,993,210

Sd/-BUSISAMBOB.IAS

DIRECTOR

1,480,662,252 585,266,336 -217,482,125 167,233,030635,254,154 158,797,46716,620,448 20,598,336

496,698,914 367,500,0004,619,684 2,633,922

672,609 470,4024,643,723 0

. 3,836,265 5,067,617

2,860,490,174 1,307,567,110

89,748,613 69,878,1562,770,741,561 1,237,688,954

3,080,388,960 522,304,256-48,446,859 -2,304,867

3,128,835,819 524,609,1230 0

3,128,835,819 524,609,123

3,128,835,81 524,609,1230 0

SCHEDULE FORMING PART OF BALANCE SHEET

~~35thANNUALREPORT.APIIC

---

Sch.No.

ACCOUNT As at31.03.2007

As at31.03.2008

1 SHARECAPITAL

AUTHORISED

2,00,000equitysharesofRs.1,OOO/-each

ISSUED,SUBSCRIBEDANDPAIDUP:163,275(PreviousYear163,275)EquitysharesofRs.1,OOO/-eachfullypaidup(Rs.862.10lakhsshareswereallottedforcashandRS.770.65lakhsshareswereallottedpursuanttocontractwithoutpaymentbeingreceivedincash)

2 RESERVESANDSURPLUSGENERALRESERVEAsatthecommencementoftheYearAdd:TransferfromProfit& LossAccount

BADDEBTSRESERVEAsatthecommencementoftheYear

LessWrittenoffduringtheyear

3 LOANFUNDSSECUREDLOANS

UN-SECUREDLOANSLoansInterestaccruedanddue

~

Rs. Rs.

200,000,000 200,000,000

163,275,000 163,275,000

163,275,000 163,275,000

701,545,4433,128,835,818

176,936,320524,609,123

3,830,381,261 701,545,443

0003,830,381,261

000

701,545,443

0 0-0 0

3,500,000,000 3,500,000,0001,048,530,796 1,070,206,1544,548,530,796 4,570,206,154

-0 0-

-4,548,530,796 4,570,206,154

SCHEDULE.4 FIXEDASSETSason31stMarch2008

~

\

:to

~~):;.

~CJ

~:t:

~c::C/):a);;:r-~~C/)

:ac::()

~()0::tJ\)0

~::j0~r-~n:I~:t::<t::i

~~CJ

GROSSBLOCK I DEPRECIATION NET BLOCK

Asat1st Additons& Total Salesand Totalasat Upto1st Forthe OnSales& Totalasat Ason31st Ason31stPARTICULARS

April2007 Adjustments Adjustments 31stMarch April2007 Year Adjustments31stMarch March2008 March'2007

2008 2008

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

Land 330,344 0 330,344 0 330,344 0 0 0 0 330,344 330,344

Buildings 24,368,524 1,182,295 25,550,819 0 25,550,819 4,580,476 416,478 0 4,996,954 20,553,865 19,788,048

Refregirators&ACs 1,048,819 141,160 1,189,979 0 1,189,979 565,347 54,380 0 619,727 570,252 483,472

Furniture&Fixtures 3,105,739 2,773,941 5,879,680 0 5,879,680 2,721,970 787,496 0 3,509,466 2,37.0,213 383,769

OfficeEquipment 8,100,257 996,456 9,096,713 0 9,096,713 4,231,158 539,392 0 4,770,550 4,326,163 3,869,099

Vehicles 2,566,912 809,210 3,376,122 0 3,376,122 1,312,694 243,435 0 1,556,129 1,819,993 1,254,218

ElectricalEquipment 609,089 155,476 764,565 0 764,565 402,523 28,421 0 430,944 333,621 206,566

DrawingEquipment 213,624 0 213,624 0 213,624 147,317 9,871 0 157,188 56,436 66,307

Computers 20,240,229 2,222,052 22,462,281 86,664 22,375,617 15,964,487 3,190,514 302,135 18,852,865 3,522,751 4,275,742

QualityControlEquipment 541,790 0 541,790 0 541,790 474,159 22,304 0 496,463 45,327 67,631

Total: 61,125,327 8,280,590 69,405,917 86,664 69,319,253 30,400,131 5,292,292 302,135 35,390,288 33,928,965 30,725,196

PreviousYear: 55,835,721 5,365,072 61,200,793 75,465 61,125,328 27,299,478 3,104,324 3,671 30,400,131 30,725,197 28,536,243


&..A35thANNUALREPORTA.PIIC

Sch.No.

ACCOUNT

5 INVESTMENT::UNQUOTED AT COST:

I 8900 equity shares of RS.10/- each fully paid up inFab City Spy (India) P Ltd

II 250000 equity shares of Rs.10/- each fully paid up inPatancheru Envirotech Ltd

III 2970000 equity shares of Rs.10/- each fully paid upin L&T Infocity Ltd (including 990000 Bonus sharesissued on 12.05.2003)

IV 20825 equity shares of RS.10/- each fully paid up*in HITVEL (Previous year 42500)

V 1000 Units of RS.25000/-each fully paid up inCTCPL ( HIVE FUND)

VI 4165 equity shares of RS.10/- each fully paud up inCTCPL (Previous year 8500)*

VII 1980000 equity shares of Rs.10/- each fully paid upin Ramky Pharam City (India) Ltd

VIII 22027064 equity shares of RS.10/-each fully paid upin VIWSCO Ltd

VIII 110000 equity shares of RS.10/- each fully paid upin K Raheja IT Park Ltd

IX 44000 equity shares of Rs.10/- each fully paid up inVizag IT Park Ltd

XI 470800 equity shares of Rs.10/- each fully paidup in Nano Tech Silican India Ltd

XII 38480000 equity shares of RS.10/- each fully paid upin Cyberabad Convention Center (P) Ltd

XIII 19749698 equity shares of RS.10/- each fully paid upin Boulder Hills Leisure (P) Ltd

XIV25032202 equity shares of RS.10/- each fully paid up inEmmar Hills Leisure (P) Ltd

XV 500 equity shares of Rs.10/- each fully paid up inHyderabad Pharma Infrastructure & Techonalgies Ltd

A

As at31.03.2008

Rs.

As at31.03.2007

Rs.

89,000 0

2,500,000 2,500,000

19,800,000 19,800,000

208,250 425,000

25,000,000 25,000,000

41,650 85,000

19,800,000 0

220,270,640 65,270,640

1,100,000 1,100,000

440,000 440,000

4,708,000 4,708,000

384,800,000 384,800,00

197,496,980 197,496,980

250,322,020 250,322,020

5,000 5,000

1,126,581,540 951,952,640


SCHEDULE FQRMING PART OF BALANCE SHEET

Sch.No.

ACCOUNT As at31.03.2007

6 INVENTORIES(Asverified,valued& Certifiedby Management)

a)Constructionmaterialsatcostb}StockinTradeat IEsIIDAsc}Housingstock[atcost]d}Worksinprogresse}HPStockatcost

7 SUNDRYDEBTORSUNSECUREDNotover6 monthsOtherdebtsTotalLess:ProvisionforBad&DoubtfulDebts

8 CASHANDBANKBALANCES(Ascertifiedby Management)Cashonhand

ChequesandD.D.sonhandBalancewithScheduledBanks

a] Incurrentaccountsb]Non-operativecollectionalcsc]PublicDepositaccount[SBH]d]Remittenceintransite] i}ShorttermDepositswithBanks

ii}AccruedinterestonDeposits

9 OTHERCURRENTASSETS::

DeposittowardsShareapplicationmoneyIncome-taxdeductedatsource

ExpenditureonProjects

AiI

5700219

230168227

235868446

48836129

As at31.03.2£)08

Rs.

8,014,81054,470,082,610

3,933,9051,872,629,127

6,197,94056,360,858,391

187,032,317187,032,317

27,86618,156,191

506,525,96488,881,11456,000,000

0

2,355,000,00071,217,317

3,095,808,452

0

14,936,79031,402,30446,339,094

Rs.

8,441,96029,769,306,722

4,110,1971,067,200,154

6,202,33830,855,261,371

A

6,276,796

124,851,462

131,128,258

48,703,783

82,424,475

82,424,475

22,768

5,018,949

462,462,097

136,518,0650

8,458,654

2,100,000,000

82,440,095

2,794,920,628

0

5,241,370

27,729,447

32,970,817

..~A

35thANNUALREPORT A.PIIC

Sch.No.

ACCOUNT


10 LOANSANDADVANCES::AdvancesrecoverableincashorkindforthevaluetobereceivedSecured

i)includesaccruedinterestofRs.21873098/-(PreviousYearRs14910614/-)

Unsecured:

i) includesaccruedinterestRs.21246001-(PreviousYearRs2744282/-ii) includesadvancesduefromDirectors&otherOfficersOftheCompanyMaximum-Nil

Less:ProvisionforBad& Doubtful- Loans&Advances

11 CURRENTLIABILITIES::

A) CURRENTLIABILITIESSundrycreditors SSI

Others

SundryAdvancesduetoGovt.ofAPLiabilityonaccountofstalechequesDepositsreceivedfromallottesofplots/shedsetcAmountsreceivedinadvancetowardsrent,wateretc.Otherliabilities

UnpaidDividend

11 PROVISIONS::

ForDevelopmentof les/lDAs/HousesForBonus

ForPSChargesForEarnedLeaveSalaryForGroupGratuityPremiumtoLlCProvisonforOiminiutioninvalueof Inventories

12 MiseExpenditureto the extentnotwrittenoff (VRS)BalanceattebeginningAdd:Additions

Less:ChargedoffBalanceattheclose

A

10,284,096,534 8,639,420,038

0

9,000,00010,319,970,143

0

9,000,0008,666,835,549

As at As at31.03.2008 31.03.2007

Rs. Rs.

44,873,609 36,415,511

0 0

69,147,248 7,594,733

12,363,121,868 16,804,795,804

19,618,455 15,563,189

45,510,876,250 16,168,215,344

4,243,719 4,206,051

4,548,903,264 2,124,196,913

4,310":450 4,310,450

62,520,221,254 35,128,882,484

0 2,779,420,940

34,922 0

11,269,082 0

80,310,834 59,101,168

21,342,344 21,342,345

142,491 142,491

113,099,673 2,860,006,944

8,825,348 10,763,9220 3,129,043

3,836,266 5,067,617

4,989,082 8,825,348


A


Sch. ACCOUNT As at As atNo. 31.03.2008 31.03.2007

Rs. Rs.13 SALES

Land 1,791,071,399 491,140,387Sheds 5,552,319 9,462,233Houses 1,187,652 1,183,807BUILDINGS 30,931,178 0

Land(break-up) 31,569,239 58,158,668Developmentcharges(break-up) 17,140,401 25,479,165

1,877,452,188 585,424,260

14 INTERESTON:.Loansandadvances 531,866,553 401,445,206Fixeddeposits 229,822,094 361,489,692OutRightSales 44,035,592 90,991,502Hire298,090 263,721Rentals 1,519,609 1,482,728WaterCharges 1,027,265 989,544MaintenanceCharges 0 0AdvancestoStaff 2,701,199 2,905,823

811,270,402 859,568,216

15 OTHERINCOMEMiscellaneousReceipts 177,277,820 216,055,702MaintenanceCharges 324,195 0

SuccessFeeonProjectstt 64,476,269 0

LocalAuthority 13,415,516 3,408,883255,493,800 219,464,585

16 COSTOFSALESLand 1,445,899,566 491,140,387Sheds 3,111,029 9,462,233Houses 1,119,331 1,025,883Buildings 30,250,018 0

Land(break-up) 282,308 58,158,668Developmentcharges(break-up) 0 25,479,165

1,480,662,252 585,266,336

17 PAYMENTSANDBENEFITSTOEMPLOYEESSalaries,AllowancesandBonus 192,164,580 140,266,624ContributiontoPFandotherFunds 14,404,402 13,306,681GroupGratuityPremium 2,268,985 8,185,053StaffWelfareExpenses 8,644,158 5,474,672

217,482,125 167,233,030

~~35thANNUALREPORTA.PIIC

A


Sch. ACCOUNT As at As atNo. 31.03.2008 31.03.2007

Rs. Rs.18 ADMINISTRATIVE& OTHEREXPENSES

Travellingexpenses:-Directors 206,833Employees 12,018,013

12,224,846 14,036,226Rent 1,524,559 1,386,393RatesandTaxes 445,410 378273VehiclesMaintenance 14965374 9,534,605ElectricityCharges 5,200,315 3,624,256WaterCharges 37,297,033 30,739,303RepairsandMaintenanceEstates 334,414,422 26,216,188IALA 1,400,000 1,462,673EnvironmentalManagement 19,443,742 0

Up-gradationof Infrastructure 96,972,561 0

IndustrialForestry 4,414,532 0

Others(Vehicles,Pumpsetsetc.) 1,086,702 662,777Insurance 62,946 59,215Printing&Stationery 3,537,371 2,520,242PublicityExpenses 31,785,145 17,929,206Postage,Telegrams&Telephones 3,945,462 3,520,486Legal&Professionalexpo 39,717,018 24,296,934Recruitment&Trainingexpo 6,185,599 7,880,450DirectorsSittingFee 0 6,750FeeforStatutoryAuditorsAuditFee 150000FeeforTaxAudit 20000Servicetax 21012

191,012 112,240ProvisionforBad& doubtfuldebts 132,346 300,098ProvisionforBad& Doubtful- Loans&Advances 0 0ProvisionforDiminutioninvalueof Inventories 0 0BadDebts 0 0

PreliminaryLandSurveyWrittenoff 2,166,018 2,865,037ConstructionMaterialsWrittenoff 50,459 0SmallToolsWrittenOff 0 22,028Donations 300,000 0Waivalof Interest 201,726 1,028,004OfficeMaintainance 4,487,426 2,478,456MiscellaneousExpenses 12,756,421 7,653,643AuditExpenses 49,164 38,090StaffAdvancesWrittenOff 296,545 0LossonsaleofFixedAssets 0 45,894

635,254,154 158,797,467

19 INTEREST& FINANCIALCHARGES 496,698,914 367,500,000


Sch.No.

ACCOUNT


20 PriorperidadjusbnentsNatureof expenditurenncomeDebits-5380InterestRental Demands

Misc.Rentals

Traveling Expenses

Other Income

Sal&A Other benefits to employees

Admin & Other expenses

Other expenditure

Business Pron ,,,,tion Expenses

Waival of penal interest

AuditlTax audit Fees

Credits- 4210

Interest

Rental Demands

Misc.ReceiptsWater demands

Sal&A Other benefits to employees

Admin & Other expenses

Lease Rentals

Mise rentals

Net prior period adjustments

~

Sub-totalI

Sub- total II

As at31.03.2008

Rs

*

1,110,261167,295536,69216,944

0

1,124,82184,147

2,050,25924,350

073,142

5,187,911

7,2280

25,232,5048,5078,500

15,72628,350,491

11,81453,634,770

-48,446,859

A

As at31.03.2Q07

Rs

22,20729,241

00

100,000178,674117,098

2,5750

299,17711,800

760,772

2,208,252944

830,8700

17300

25,4003,065,639

-2,304,867

~A35thANNUALREPORT.APII C

Schedule -21 ACCOUNTINGPOLICIES&NOTES FORMINGPARTOF ACCOUNTS

I ACCOUNTINGPOLICIES:

1) BASISOF PREPRATIONOF FINANCIALSTATEMENT:

The financial statements of the Company have been prepared based on Historicalcost convension inaccordance withIndianGenerallyAccepted AccountingPrinciples (GAAP)and provisions ofthe Companiesact 1956, as adopted consistently by the Company.The company follows the Mercantile system ofaccounting.

2) ESTIMATES:

The preparation of financial statements require the management of the company to make estimates andassumptions that affect the reported balances of assets and liabilities and disclosures relating to contingentliabilities as at the date of financial statements and reported amounts of income and expenses during theperiod. Examples of such estimates includes provision for doubtful debts, employee retirement benefit plan,provision for gratuity etc.

3) REVENUE RECOGNITION:

a) Till 31-3-2007, no profiUlosswas recognised on allotment of sheds, land, houses on outright sale orhire purchase as all the contemplated development works in the estates were not yet completed and claimsof pattadars in regard to enhanced land compensation are pending in various Courts. The differencebetween the sale price and cost price of the assets sold was kept under the head of account "Provision forDevelopment of IEs/IDAs". During the year, ProfiULoss is recognised on allotment of sheds, land,houses on outright sale or hire-purchase and the difference between sale price and cost price of theassets sold is taken to Profit & Loss Alc. The income under this head upto 31.3.2007 (Rs.277.62crores) is also taken as income during the year.

b)The dividend revenue is recognised on receipt basis. Other incomes are recognised on accrual basis.

4) VALUATION OF INVENTORIES:

Inventories such as land, HP stock, construction material, stock in trade at IES/IDAs, housing stock,work in progress are valued at cost.

5) FIXEDASSETS:

Fixed assets are accounted on historical cost and are shown net of accumulated depreciation.Historical cost includes purchase price and all attributable(freight and non refundable duties and taxes)costs of bringing the asset to working condition for intended use.

A


Any profitllosS:~n sale, discarded /disposal of an asset is charged off to profit & loss account in thatyear. In the case of any purchase/addition to assets it is taken in tp account after receiving the certificationfrom the competent authority.The cost of fixed assets written down to <= 5000/- and in case of purchase / addition valued <=5000/-charged off to Proft & LossAle.

6) DEPRECIATION:

Depreciation on assets is charged on Straight Line method at the rates prescribed in schedule XIV ofCompanies act 1956.

In the case of any addition/transfer/deletion of an asset depreciation is charged proportionately basedon number of days, from the date when the asset is ready for intended use or till the date of disposal ortransfer, as the case may be.

7) INVESTMENTS:

All the long term investments (unquoted) are stated at cost of acqui$ition. Cost of the investmentincludes all direct cost incurred for acquisition of investments such as purchase price(Land transferred orCash), brokerage, commission,stampduty etc. no Provision is made for permanent diminution in value of aninvestment in accordance withAS-13.

8) EMPLOYEE BENEFITS:

a)PROVIDENT FUND:

Company's contribution to the Provident Fund is deposited with the Trust formed by the Companyunder the Employee Provident Fund & Miscellaneous Provisions Act 1952 and which is recognized bythe IncomeTaxauthorities. Such contributions are charged to Profit & Loss account each year.

b) GRATUITY:

The Group Gratuity for the employees of the Company is covered under a policy taken from LifeInsurance Corporation of India (LlC).The premium paid is charged off in the accounts. The amounts paidincertain cases in excess of amounts reimbursed by LlC are also charged off in the accounts.

c) LEAVE ENCASHMENT:

In respect of Leave Salary payable to employees on retirement, provision is made in the accountsbased onsalary drawn at the end of the year.

d) NO PROVISION OF LEAVE SALARY IS MADE IN RESPECT OF DEPUTED EMPLOYEES.

Leave Salary and Pension Contribution payable in respect of employees on deputation as thequantum of amount is not known. The amounts so paid on demand from the respective Departments ischarged off to revenue during the year of payment.

A

r

~A


e) VOLUNTARY RETIREMENT SCHEME:

Expenditure incurred under Voluntary Retirement Scheme is treated as deferred revenueexpenditure to be written off over a period of five years including the financial year in which suchexpenditure is incurred.

9) PROVISION FOR BAD AND DOUBTFUL DEBTS:

Provision for bad and doubtful debts is made @ 100% on Interest receivable on account of Rentals,Penal interest on Hire purchase, water charges etc.

10) GOVERNMENT GRANTS:

Government grants received for execution/development of projects(Growth Centers etc.,) Arerecognized as and when received and shown under the deposits and grouped under other liabilitiesSchedule 11-A current liabilities - other liabilities. Expenditure incurred for concerned projects aregrouped under Schedule - 6 Inventories as the works are under progress and on completion of the worksfor which the grants are received will be adjusted and the revenuewill be accounted for.

Grants received under agency function is shown separately under current .liabilities and disbursedfor the purpose for which it is received. Balance of unutilized funds is not shown separately.

11) STALE CHEQUES:

The amount lying under Stale cheques for more than five years is treated as " Revenue" during theyear.

12) CONTINGENT LIABILITIES:

Contingent liabilities not provided for are indicated by way of notes to accounts

13) TREATMENT OF EXPENDITURE DURING CONSTRUCTION/DEVELOPMENTPERIOD:

The civil works expenditure during construction period is treated as Works in progress. Like-wise,the administrative expenditure on engineering personnel/officers of the Company engaged on civil worksis treated as works in progress. On completion of works and on receipt of completion reports, the worksare capitalised and taken as current assets of the Company.

A


14) MISCELLANEOUS:

The liability on account of leave travel facilities available to the employees, liability towards electricity and. water chargesfor which bills are not receivedand propertytax, etc., for which assessmentsare notcompleted, have not been taken into account as the same are not determinable.

15)TREATMENT OF INTEREST ON LOANS AND ADVANCES TO STAFF:

Interest accrued on loan or advances given to the staff is treated as interest accured but not due andshown as current asset.Recevory ofthe interestwill commence after the recovery of principal amount.

II NOTESONACCOUNTS

1. The Company has been executing civil works on behalf of various departments of State and CentralGovernments. These works which are in various stages of completion are in possession of the Corportionand they are to be handed over to the respective Departments after their completion. The amount excessspenUbalanceadvance outstanding are shown in Sundry debtors/Deposits - Other Liabilities depending ontheir nature.

2. Contingent Liabilities:

a) CIVIL WORKS:

A

b) LAND ACQUISITION:

.

S.No Particulars For the year Previous Year

Amount Amount

Rsin lakhs Rsin lakhs

i) Estimated amount of contracts remaining to

be executed on capital account not provided for 4589.71 1395.23

ii) Claims against the company no

acknowledged as debts 57.53 71.55

iii) Arbitration & Court cases

Contingent liabilities:Works Contracts Etc. 25.44 11.42

S.No Particulars FOR THE YEAR PREVIOUS YEAR2007-08 2006-07

AREA AMOUNT AREA AMOUNT(in acres) (Rs in lakhs) (in acres) (Rs in lakhs)

i) Claims made by pattadarsbut being contested in lower Courts 942.68 5223.37 1010.99 5414.92

ii) Claims decreed by lower courts,but being contested in higher Courts 807.65 816.37 821.88 636.37

.....


Note: The amounts indicated at 2(b) above are excluding Solatium,Additional Market Valueand Interest.

3. The amount of Rs.4.80 lakhs (Previous year Rs.100.88 lakhs) pertains to Inter Zonal Adjustment AlCunder Other Current Assets represents the differences in advances accounts (Staff Advances) given tocertain employees who were transferred from one office to another office of the company. Reconciliationofthe differences is under progress.

4. No provision for Income Tax has been made in view of the claim ofthe Company U/s 11 of Income Tax Act1961 which was upheld by Income Tax Appelate Tribunal and the appeal made by Income Tax Departmentagainst the orders of ITAT is pending in the High Court of Andhra Pradesh.

The total Income Tax demanded by IT Department from Financial Years 1978-79 to 2004-05 amounted toRs.5152.40 lakhs (previous year Rs.3,827.70 lakhs). No Income Tax has been demanded for the FinancialYears2005-06 & 2006-07 by IncomeTax Departmenttill date.

5. lands:

A

Name of the area Details

AlE, Bodhan Current Assets includes land, sheds, buildings etc.,amounting to Rs.16.01Iakhs acquired by Company forwhichsale deed is yet to be executed.

IDA, Jeedimetla, PhaseV 86.725 acres of land was taken possession from Governmenton lease for 99 years for which no liabilitywas createdpending fixation of lease rentals.

IE, Gudur 10 acres of land was taken possession along with superstructures as per G.O.Ms.No.703, Health, dt.29.6.1977which was not included in the assets ofthe Company pendingfinalization of the cost and other formalitiesby Government.

Izzatnagar (v), An extent of 15.139 acres of Government land in surveySerilingamapalli mandai, N05/9(p ),5/1 O(p) and 5/11(p) at Izzatnagar (v),R R District Serilingampalli mandai of R R District was taken possession

by the Corporation on 10.10.2005 as per GO Ms N0133, TR& B (R III) Department dated 22.06.2005. The same was nottaken to books of account pending finalisation of land costand other formalities by Government.

Krishnapatanam(v), An exteRtof 1021.67acres of ceiling surplus land was leasedNellore district out to the Company by GO AP vide G 0 Ms No.241 dated

28.02.2005 for a period of 25 years. This land was not takento books of accounts as the lease terms and conditions arenot finalised by GoAP.


6. On a requisition from the company, the LAO Vizianagaram passed an award for Rs.27.22 lakhs andhanded over possession of 57.86 acres of land at Cheluvuru (V) of Vizinagaram District to the company on30.10.93 for establishment ofAutonagar. However, the said land has not been taken into books of accountsin view of the interim order of Hon'ble High Court ofAP in the writ petition filed by the pattadars. The amountof Rs.29.00 lakhs remitted to the LAO, Vizianagaram by the Company and deposited by him in theGovernmentTreasury is exhibited under "Loans &Advances", pending decision of the High Court ofAP.

7. Assam Company Ltd along with four others filed a Civil Suit N0284 of 2001 against Government ofAP,Corporation and L&T Ltd for recovery of an amount of Rs.396A5 crores towards damages andcompensation.The Company is contesting the case and the same Is pending for disposal before Hon'bleHighCourtof Kolkata. No provision is made in the books ofAccount.

8. MANAGERIAL REMUNERATION

For the yearRs.

Previous yearRs.

A) Chairman Salaries & Allowances

Contribution to leave salary

Contribution to Pension

Medical expenses

Leave Travel Concession

6,96,594

NIL

NIL

9,244

NIL

5,85,789

NIL

NIL

NIL

NIL


Salaries and allowances

Contribution to Leave Salary

Contribution to Pension

Medical expenses

Leave Travel Concession

NIL

NIL

NIL

NIL

NIL

40,179

NIL

NIL

20,377

NIL

A

Name of the area Details

Raidurg(v), An extent of 424.325 acres of surplus land in survey No.83 ofSerilingampalli mandai, Raidurg(v),Serilingampalli mandai, R R District was takenR R District possession on 14.02.2006 as per the directions in G 0 Ms

No.161 dated 13.02.2006 of Revenue(UC.II) Department. Anamount of RsA,OOO.OOcrores was taken to books towardscost of the above lands. A litigation is pending in variouscourts against this land.

~A35thANNUALREPORT.APIIC

9. The Company has been appointed as Nodal Agency to execute the following schemes and theGrants released by GOI/GOAP till the end of the year are as follows: (Schedule11)

(Rs.lakhs)

These grants are treated as deposits and grouped under other liabilities in Schedule 11A- CurrentLiabilities - Other Liabilities. The expenditure incurred on these schemes is grouped under Schedule - 6Inventories since the works are in progress and completion of the works for which grants are received will beadjusted andthe revenuewill beaccounted for.

10. ASSISTANCE TO STATES FOR DEVELOPING EXPORT INFRASTRUCTURE & ALLIEDACTIVITES (ASIDE)

Government of India has launched a scheme "Assistance to States For Developing ExportInfrastructure & Allied Activites (ASIDE)" for involvement of States in export efforts. Under this scheme, fundsto the State are directly disbursed to State level Nodal Agency by Government of India. APIIC has beennominated as Nodal Agency by GoAP. In this process an amount of RS.2970.00 lakhs was released byGovernment of India during the year 2007-08 ( Previous year Rs. 850.00 lakhs). The Company hasreleased an amount of RS.2086.48 lakhs during 2007-08 to various projects for the development ofinfrastructure facilities with the approval of State level Export Promotion Committee (Previous yearRs.1279.60 lakhs).

11. INDUSTRIAL INFRASTRUCTURE DEVELOPMENT FUND ("DF)

Government ofAndhra Pradesh created a fund called IIDFfor taking up infrastructure works where everthere is no provision to take up such works under regular budget.

Under this scheme an mounts of RS.7861.81lakhs was received during 2007-08(Previous year Rs.nil),the Company has spent an amount of RS.2049.57 lakhs on various projects for the development ofinfrastructure facilities during 2007-08 (Previous year RS.1522.79 lakhs) by utilising the same for layingapproach roads, provision of water supply for FABCity,BioTechPark.Textile Park etc., in the State ofAP.

12. The Government of Andhra Pradesh has entrusted certain local Authority powers to the Company likecollection of Property Tax, maintenance of Common facilities in respect of certain Industrial Parks. TheCompany formed Societies entrusting the work of collection, and maintenance of facilities etc. on behalf of theCompany. The income and expenditure in this regard have not been accounted for in the accounts of theCompany.

13. Sundry debtors, loans and advances, creditors and deposits are subject to confirmation.

A.

S.No Name of the Scheme 2007-08 2006-07

Receipt Expenditure Receipt Expenditure

1 Growth Centres 2973.89 3612.53 2913.89 3612.532 EPIP - Pashamylaram 1300.00 1031.07 1300.00 1031.073 IIDC - Tada/Nandyal 159.50 369.95 159.50 369.954 AEP- Gundlapochampally 603.01 1382.42 603.01 1168.275 FPP - Kuppam 200.00 223.10 200.00 162.30


14. Pending registration of the floor area purchased from APSSIDC in respect of 4th floor of ParisramaBhavanam, the amount of Rs.1.50 crores paid toAPSSIDCduring 1998-99 has been shown under BuildingsinSchedule-4 FixedAssets.

15. LAND ALLOTTED UNDER IT POLICY OF GOVERNMENT OF A.P.

As per G.O.Ms.No.114 dated 25.05.1999 of Finance and Planning (Plg.IT&C)Department, the cost ofrebatelincentives granted to ITCompanies willbe adjusted against cost of Government lands alienated toAPIIC.

In that process an area of 10.57 acres was allotted to various companies (previous year 34.60 acres) at atotal consideration of Rs.634.20 lakhs (Previous year Rs. 1046.87 lakhs) to be adjusted against cost forGovernment lands alienated to the company.

Inpursuance ofthe above GO,the amount of Rs.40,52,70,854/- towards rebate on land cost (Previousyear Rs.40,52,70,854/-) is exhibited as Unsecured Loans under Schedule 10 (Loans & Advances) otBalance Sheet as alienation orders for various Government lands are awaited.

The details under Schedule VI- Part II of the Companies Act., 1956are not furnished as the paras in thatprovisiondeal withManufacturingand Tradingsector and not directly related to this Company.

16. BANKGUARANTEE

For availingthe rebate on cost of lands Bank Guarantee has to be furnished for the rebate amount for aperiod as per terms of the MoU between the IT Company and the Government of AP. Accordingly, theCompany is holding the performance Guarantee to the tune of Rs.10330.17 lakhs (Previous yearRs.9980.671Iakhs)which was nottaken to books of accounts.

17. INVESTMENT IN FABCITYSPV(INDIA)PLTD:

As per the directions of Government ofAP in G ° Ms.No.94 of Inds& Commerce (INF) Department dated28.04.2007, the Corporation has acquired 89% of equity (Rs.89,000/-) in Fab City SPV(lndia) P Ltd duringthe year. Consequently the the Fab City SPV(lndia) P Ltd has become a subsidiary company to theCorporation. The amounts due from the subsidiary company towards land cost and infrastructure and theamounts received for on behalf ofthe subsidiary company are shown under 'Due from Fab City SPV(lndia) PLtd' and grouped under CurrentAssets inthe books ofAccounts.

A

The Accounts of the subsidiary company are not attached as per Section 212 of the CompaniesAct, 1956,as the same are under finalisation.

'"

~A35thANNUALREPORTAPII C

18. SPECIAL ECONOMIC ZONES:

The company was appointed as nodal agency for development of Special Economic Zones (SEZs) inAndhra Pradesh. 13 Nos of SEZs were notified by Govt of India as on 31.3.2008 which are being developedby the company as Developer. In respect of the allotments made under lease basis during the year andlease deeds executed, the income on lease premium is taken proportionately depending upon the leaseperiod and lease rentals are accounted for as revenue.

19. Previous year figures have been regrouped wherever necessary for better comparison and to conform tocurrent year's classification.

AS PER OUR REPORT OF EVEN DATE

for TUKARAM & COCHARTERED ACCOUNTANTS

sd/-PMURAU

PartnerMembership NO.221625

Date: 30 .12.2008Place: HYDERABAD

FOR AND ON BEHALF OF THE BOARD

Sd/-B PACHARYA,IAS


Sd/-BUSISAMBOB. IAS

DIRECTOR

Sd/-MSIVAS REDDY

COMPANYSECRETARY

A

.

ANDHRAPRADESHINDUSTRIALINFRASTRUCTURECORPORATIONLlMITED,HYDERABADBALANCESHEETABSTRACTANDGENERALBUSINESSPROFILE

LREGISTRATIONDETAILS: REGDNO:1630BALANCESHEETDATE:

ILCAPITALRAISEDDURINGTHEYEAR:(AMOUNTINRS.THOUSANDS)FROMGOVT.OFANDHRAPRADESHPUBLICISSUERIGHTISSUEBONUSISSUEPRIVATEPLACEMENT

IILMOBILISATIONANDDEPLOYMENTOFFUNDS:(AMOUNTINRS.THOUSANDS)TOTALLIABILITIESTOTALASSETS

SOURCESOFFUNDS:PAID-UPCAPITALRESERVES&SURPLUSSECUREDLOANSUNSECUREDLOANS

APPLICATIONOFFUNDS:NETFIXEDASSETSINVESTMENTSNETCURRENTASSETSMISCELLANEOUSEXPENDITUREACCUMULATEDLOSSES

PERFORMANCEOFTHECOMPANY(AMOUNTINRS.THOUSAND)TURNOVERTOTALEXPENDITUREPROFIT/LOSSBEFORETAXPROFIT/LOSSAFTERTAXEARNINGPERSHAREOFRS.1000DIVIDEND

(inRupees)

GENERICNAMESOFTHREEPRINCIPALPRODUCTS/SERVICESOFCOMPANY

ITEMCODENO.(ITCCODE)PRODUCTDESCRIPTION DEVELOPMENTOFINDLESTATES



PMURAUPartner

MembershipNO.221625


++

STATECODE:01

March31, 2007

NILNILNILNILNIL

8,542,1878,542,187

163,2753,830,381

04,548,531

33,9291,126,5827,376,687

00

1,877,4522,770,7423,128,8363,128,836

19,1630

FORAND ON BEHALFOFTHE BOARD

Sd/-B PACHARYA,IAS


Sd/-MSIVASREDDY

COMPANYSECRETARY

A

Sd/-BUSISAMBOB.IAS

DIRECTOR

ANDHRAPRADESHINDUSTRIALINFRASTRUCTURECORPORATIONLlMITED,HYDERABADCASHFLOWSTATEMENTFORTHEYEARENDED31STMARCH2008

NETCASHFLOWFROMINVESTINGACTIVITIESC. CASHFLOWFROMFINANCINGACTIVITIESProceedsfrom UnsecuredloansInterestpaidNETCASH FLOWFROMFINANCINGACTIVITIES

B

A.CASHFLOWFROMOPERATINGACTIVITIESNetProfit/(Loss)asperProfit&LossaccountbeforePriorperiodAdjustmentsAdjustmentsfor .DepreciationfortheyearProvisionswrittenbackMiscellaneousExpenseswrittenoffWaiverofPenalInterestInterestreceivedonLoansGrantedInterestIncomeonFDsDividendreceiptInterestExpensesLossonsaleAssetsMinorAssetswrittenoffOperatingprofitbeforechangesinWorkingCapitalAdjustmentsfor:Increasein InventuriesIncreaseinSundryDebtorsIncreaseinOtherCurrentAssetsIncreaseinLoans&AdvancesIncreaseinLiabilitiesDecreaseinProvisions

CashgeneratedbeforeMiscellaneousExpenses&PriorperiodItemsExpensesonVRSPriorPeriodAdjustment

NETCASH FLOWFROMOPERATINGACTIVITIES A

B.CASHFLOWFROMINVESTINGACTIVITIESPurchaseofFixedAssetsSaleofAssetsIncreasein InvestmentsSaleof InvestmentsDividendreceiptInterestreceived

C

NETCASHFLOWCASH&CASHEQUIVALANTSASON01.04.2007CASH&CASHEQUIVALANTSASON31.03.2008Notes:1.CashFlowStatementhasbeenpreparedundertheIndirectmethodassetoutinAccontingStandardAS(3)- .CashFlowStatements.issuedbytheInstituteofCharteredAccountantsof India.2.Cash&CashequivalentsattheyearendincludesinterestaccruedonFixedDeposits3.Previousyearsfigureshavebeenregroupedorreclassifiedwherevernecessary.

{A+B+C} 300,887,8242,794,920,6283,095,808,452

{2,770,462,435}5,565,383,0632,794,920,628



PMURAUPartner

MembershipNO.221625


FORAND ON BEHALFOFTHE BOARD

Sd/-B PACHARYA,IAS


Sd/-BUSISAMBOB.IAS

DIRECTOR

Sd/-MSIVASREDDY

COMPANYSECRETARY

A

.oi...-.

2007.08 2006.07Rs. Rs.

3,080,388,959 523,949,524

4,619,684 2,633,922

3,836,265 5,067,617- 1,028,004

(531,866,553) (401,445,206)(229,822,094) (361,489,692)

(6,050,000) (10,142,000)496,698,914 367,500,000

- 45,894672,609 470,402

2,818,477,784 127,618,465

(25,505,597,020) (23,004,834,053)(104,607,842) 30,519,695(13,368,277) 14,256,245

(1,653,134,594) (1,543,217,834)27,391,338,770 20,598,705,647(2,746,907,271) 282,979,641

(21,675,358)164,526,192 {3,493,972,194}- (3,129,044)48,446,859 2,304,867

212,973,051 (3,494,796,371)

(8,582,725) (5,365,072)86,665 25,900

(174,889,000) (43,403,790)260,100 -

6,050,000 10,142,000761,688,647 762,934,898

584,613,687 724,333,936

-(496,698,914)(496,698,914)

TUKARAM & CO.,Chartered Accountants

AUDITOR'S REPORT

ToThe Members,ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURE CORPORATION LIMITED

We have audited the attached Balance Sheet ANDHRA PRADESH INDUSTRIAL INFRASTRUCTURECORPORATION LIMITED as at 31st March 2008 and also the Profit and Loss Account and the Cash FlowStatement for the period ended on that date annexed thereto.

These Financial Statements are the responsibility of the Company's management. Our responsibility is toexpress an opinion on these financial statements based on our audit.

1. We conducted our audit in accordance with auditing standards generally accepted in India. Thosestandards require that we plan and perform the audit to obtain reasonable assurance aboutwhetherthe financial statements are free of material misstatements. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessingthe accounting principles used and significant estimates made by management, aswell as evaluating the overall financial statement presentation. We believe that our audit provides areasonable basis for ouropinion.

2. As required by the companies (Auditor's Report) Order, 2003 and the Companies (Auditor'sReport)(Amendment) Order, 2004 issued by the Central Government of India in terms of section227(4A) ofthe CompaniesAct, 1956,we enclose in the Annexure, a statement on the matters specifiedin paragraphs4 & 5 ofthe said order.

3. Furtherto our comments in theAnnexure referred to in paragraph (2) above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge andbeliefwere necessary for the purpose of our audit.

(b) In our opinion, proper books of account as required by law, have been kept by the Company sofar as appears from our examination of such books of the company.

(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this reportare inagreement with the books of account of the company.

(d) The Company is showing Government Grants related to revenue as Deposits undercur.rent liabilities. However, as per Accounting Standard "Accounting for GovernmentGrants" - (AS-12) Government grants related to revenue should be recognized on asystematic basis in the profit and loss statement over the periods necessary to matchthem with the related costs which they are intended to compensate. Such grants shouldeither be shown separately under 'other income' or deducted in reporting the relatedexpense. The effect on current year profit cannot be ascertained.

(e) The Company's Investments (Long term and unquoted) are stated at Cost. As per theAccounting Standard (AS-13) - "Accounting for Investment", the carrying values of Longterm investments are to be adjusted for any diminution in value of Investment. Further,the indicators of the value of investments are to be obtained, by the management, withreference to the Investee's Assets and liabilities, results and the expected cash flows.However, in absence of all the required details of Investees, we are not in a position toverify the carrying value of investments and consequent provision, if any, for diminutionin value of Investments.

A.


(f) The Management is ofthe view is of the view that the carrying values offixed assets are higherthan the recoverable amount. In the absence of adequate documentation in respect thereof,we are unable to comment on impairment loss, if any, as required by the Accounting Standard"Impairment of Assets ". (AS-28) issued by the Institute of Chartered Accountants oflndia.

(g) The Company even though has details of work in progress, the work wise expenditureexecuted at various sites and the amounts to be capitalized is under preparation. However,there is a difference of Rs.48, 19,625/- between the ledger and data file for which details are notprovided. In the absence ofthe details, the correctness of value of work in progress could notbe verified by us.

(h) The Company has given loan to VIWSCO and accounted accrued interest on such loan. Thebalanceas perbooks is Rs. 45,415.66Lakhs. However,as per the copy of Balance sheet ofVIWSCO provided to us by the Company, the amount due to Company was shown Rs.46,141.07 Lakhs. The Company has to reconcile the difference of Rs. 3046.01 Lakhs. Theadjustment on account of difference and consequent, impact on profit, if any, is notascertainable at this stage.

(i) The company is showing receivables on account of Navodaya Vidyalaya Samithi project for aperiod of more than decade. The same figures are being carried in financials without anyrecoveries or adjustments. The consequent adjustments at the time of closure of the accountare not ascertainable at this stage.

U) The Company is taking possession of Government lands on the basis of instructionsreceived from Government without any details of cost of alienated land or any payment to bemade by APIIC. The company is accounting the cost of land transferred by Government to iton the basis of estimated cost. Consequently, we are unable to comment on correctness ofStock in Trade(Land) carried in the books and consequent impact on profit, if any, either onaccount of upward or downward revision of land cost by the Government.

(k) The balance of Sundry debtors, Inter Zonal Adjustment Alc., creditors, loans &advances andother receivable&payables being subject to confirmationand reconciliationresulting in thebalances as per books of accounts not verified by us. The consequent necessaryadjustments, either of a revenue nature of otherwise if any, upon which we are unable tocomment at this stage, willbe made in the year they are finally settled with the parties. (ReferNote 3 & 12 of Schedule 21 (II)

(I) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with thisreport subject to standards specified in Para 3(d) to Para 3(f) above comply with the accountingstandards referred to in Section211(3C) of the CompaniesAct, 1956.

(m) On the basis of written representations received from the Directors and taken on record by the Boardof Directors of the company, in our opinion, none of the directors is, as at 31st March 2008 prima faciedisqualified from being appointed as a director under section 274(1)(g) of the Companies Act, 1956.

(n) In our opinion and to the best of our information and according to the explanations given to us, thesaid accounts, read together with the significant accounting policies and other notes thereon give theinformation required by the Companies Act, 1956 in the manner so required and subject toparagraphs 3 (d) to 3(k) give a true and fair view

A


Sd/-P MURAU

PartnerM. No. 221625

(i)

(ii)

Inthe case ofthe Balance Sheet, ofthe state ofaffairs.ofthecompany as at 31st March, 2008 and

In the case of the Profitand Loss Account, of Profit of the Company for the period ended on thedate.

(iii) Inthe case ofthe Cash FlowStatement, of the cash flows for the period ended on that date.

Place: HyderabadDated 30.12.2008

For TUKARAM & CO.,Chartered Accountants

.A

.


ANNEXURE TO THE AUDITOR'S REPORT(This is the Annexure to in our Report of even date)

1. The company has to update its records to show full particulars including quantitativedetails and the situation of Fixed Asset. The management during the year has notphysically verified all the assets expect Vehicles. The Company has to device a regularprogramme of verification, wherein all the fixed assets are verified in a phased manner at leastover a period of three years. In respect of assets other than Vehicles, in absence of physicalverification and proper records, we are unable to report on discrepancies, if any.Substantial part of fixed assets has not been disposed of during the year, which will affect itsstatus as going concern.

2. As explained to us, the stock of inventory (excluding HP Stock, Sheds & House buildings)has been physically verified by the management at the year-end. As stock records were notupdated, we have relied on certification from management. As per explanation given to us, thephysical verification of Plots & Land could not done, as the same would involve unduly heavylabour and Expenditure.In our opinion, the procedure of the physical verification of inventory followed by themanagement is reasonable but it has to be at regular intervals considering the size of thecompany and the nature of its business. The company has to update its stock records ofinventory. As informed, the discrepancies noticed on verification were properly dealt in theaccounts.

3. The Company has neither taken nor granted any loans, secured or unsecured, to companies,firms or other parties listed under the register maintained under section 301 of the CompaniesAct, 1956.

4. In our opinion, on the basis of selective checks carried out during the course of audit, theCompany has to strengthen the internal control procedures relating toaccounting/recording procedures to commensurate with the size of the Company and natureof its business for the purchase of inventory and fixed assets and for the sale of goods andservices. During the course of our assessment, no major weakness in internal control had cometo our notice

5. According to information and explanation given to us, there are no contracts or arrangementsthat need to beentered inthe register maintained under section 301 of theAct.

6. As informed, the Company has not accepted any deposits from the public during the year.

7. The Company has a formalin-house InternalAudit Department. In our opinion, the same hasto be strengthened. However, the In-house internal audit department, the Company's InternalControl Procedures subject to para (4) above together with the internal checks conducted bythe management staff during the year can be considered as an adequate systemcommensurate with the size and nature of business.

8. As informed, the maintenance of cost records has not been prescribed by the CentralGovernment under section 209(1)(d) of the Companies Act, 1956 for the activities of theCompany.

9. (a)The Company is generally regular in depositing undisputed statutory dues includingemployees provident fund, sales tax, tax deducted at source and other statutory dues withappropriate authorities. However, amount payable to various local authorities areoutstanding for a period of more than six months from the date they became payable. Asthe Company is ascertaining the amount due to be remitted, the amount could not bequantified

A

r-


(b) According to the information and explanation given to us, the following dues of tax have not beendeposited on account of dispute:

10. The Company has no accumulated losses and has not incurred any cash losses during the financialyear covered by our audit and also in the immediately preceding Financial Year.

11. As per information and explanation given to us, the company has not taken any loans from Banks &Financial Institutions.

12. As per information and explanation provided to us, the Company has not granted loans and advanceson the basis of security by way of pledge of shares, debentures and other Securities.

13. The provisions of any special statue applicable to a Chit Fund, Nidi or Mutual Benefit Fund/Societiesare not applicable to the company.

14. The Company is not dealing or trading inshares, Securities, debentures and other investments.

15. As informed, the Company has not given any guarantee for loans taken by others, from Banks orFinancial Institutions of the Company.

16. As per information and explanation provided to us, there were no funds raised through term loans.Hence, nocomment is madeon their usage

17. According to the information and explanations given to us and on the basis of overall examination offinancial statements of the company, we are of the opinion that, prima facie, short-term funds havenot beenused for long-term purpose.

18. The company has not made any preferential allotment of shares during the year to Parties covered inthe register maintained under section 301 ofthe CompaniesAct, 1956.

19. The company has not issued any debentures during the year, hence the question of creation ofsecurity or charge in respect of debentures issued does not arise.

20. There company has not made any public issues during the current period, which requires themanagement to disclose the end use of funds raised from such issue.

For TUKARAM & CO.,Chartered Accountants

Place: HyderabadDated 30.12.2008

Sd/-P MURAU

PartnerM. No. 221625

A

Nameof Statute Natureof Amount Period Forumwhere Idisputed Dues Dispute is

I

Ipending

I

The Income TaxAct 1961 Income Tax 51.52 1978-79 to Various AuthoritiesCrore 2004-05

The Income TaxAct 1961 Fringe Benefit Not 2006-08 High CourtTax Quantified I

Documents

FY 2007-08