Challenging the challenge

PraJaY ENGINeers SYNDIcaTe LIMITeD

Activity Report and Financial Statements 2008-09

Forward Looking Statement In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements - written and oral - that we periodically make, contain forward-looking statements that set out anticipated results based on the managements plans and assumptions. We have tried wherever possible to identify such statements by using words such as anticipate, estimate, expects, projects, intends, plans, believes, and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should bear this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

2 Profile of the Board of Directors and Senior Management Team 4 Directors Report 8 Management Discussion and Analysis 16 Report on Corporate Governance 27 Standalone Financial Statements

NTENTS

27 Auditors Report 30 Balance Sheet 31 Profit and Loss Account 32 Schedules 52 Cash Flow Statement 53 Balance Sheet Abstract 54 Statement under section 212

55 Consolidated Financial Statements

55 Consolidated Auditors Report 56 Consolidated Balance Sheet 57 Consolidated Profit and Loss Account 58 Consolidated Schedules 75 Consolidated Cash Flow Statement

76 Notice

Corporate Information
BOARD OF DIRECTORS
D. S. Chandramohan Reddy, Managing Director D. Vijaysen Reddy, Executive Director K. Ravi Kumar, Technical Director Sumit Sen - Director, Sales and Marketing N. Ravinder Reddy, Whole Time Director and Chief Financial Officer Chakradhar Reddy, Independent Director Vijay Kishore Mishra, Independent Director N. Nageshwara Rao, Independent Director Rudresh, Independent Director

HEAD - CORPORATE FINANCE

Santosh Rathi

REGISTERED OFFICE
4-1-2/4, Eden Garden Road, Ramkote, Hyderabad 500 001

AUDITORS
Deloitte Haskins & Sells Chartered Accountants

BANKERS
Indian Overseas Bank, Alwal Branch, Secunderabad. The Hong Kong and Shanghai Banking Corporation Limited (HSBC), Somajiguda, Hyderabad. Punjab National Bank, Mid Corp Branch, B. Hills, Hyderabad. State Bank of India, Industrial Finance Branch, Somajiguda, Hyderabad. State Bank of Mysore, Secunderabad. Tamilnad Mercantile Bank Limited, Secunderabad. State Bank of Bikaner and Jaipur, Secunderabad. Tata Capital Limited

REGISTRAR AND SHARE TRANSFER AGENTS

Sathguru Management Consultants Private Limited Plot No. 15, Hindi Nagar, B/H Sai Baba Temple, Punjagutta, Hyderabad 500 034 Tel: 91-040-23356507, 23350586, 23356975 Fax: 91-40-23354042 Email: info@sathguru.com

LISTING
The Bombay Stock Exchange Limited National Stock Exchange of India Limited

2 | Annual Report 2008-09

Profile of the Board of Directors and Senior Management Team

D. S. Chandramohan Reddy, Managing Director

A commerce graduate, Mr. Reddy began his career as a civil sub contractor in the year 1974 till 1982 and gained wide experience in this period. He is the guiding force behind Prajay and has led the Company successfully from its humble beginnings to its present stature. He is involved with formulating Prajays overall vision and shaping its strategy. Alert to every opportunity and ready to accept all the challenges, he has been able to diversify the Companys activities into various fields, branding each with his dynamism.

D. Vijaysen Reddy, Executive Director

A qualified Chartered Accountant, Mr. Reddy is a widely respected figure in the construction industry. His rich experience drives the successful completion of projects at Prajay. He is also involved with the expansion strategy of the Company and is entrusted with the responsibility of identifying new ventures. He oversees the entire construction activities while his specialized training and broad vision helps energise the Prajay team.

K. Ravi Kumar, Technical Director

A qualified civil engineer, M. Tech and D. Arch., he brings a repository of technical expertise in construction and guides the adoption of progressive building practices to Prajay, steering innovation and quality in the Company.

Sumit Sen, Director - Sales and Marketing

A Post Graduate in Commerce and a diploma holder in Marketing and Personnel Management, he has served the Indian Air Force for 15 years and secured a diploma in Mechanical Engineering while in service. He is responsible for creating the sales strategy, identifying consumer trends and creating projects around these. He is also oversees the administrative functions. His expertise lies in appropriate pricing and financial structuring.

N. Ravinder Reddy, Whole Time Director and Chief Financial Officer

A Management graduate, he is responsible for the overall operations and also steers the hospitality division of the Company. His knowledge of contemporary management practices and financial systems is of immense help to the Company. He is driving the new initiatives of the Company in identifying and executing hotel projects.

Non-executive directors
Vijay Kishore Mishra, Independent Director
A qualified chartered accountant, with 22 years of professional experience in the field of finance and taxation, Mr. Mishra guides the Company in matters of accounting and taxation harnessing his vast experience in these areas.

N. Nageshwar Rao, Independent Director

A renowned figure in the hospitality business, Mr. Rao helps the Company in shaping its strategy for the hotels division. It benefits from his rich experience and insight into the hospitality industry in the country.

Rudresh, Independent Director

An architect who has executed many widely-acclaimed projects in Bangalore, Mr. Rudreshs presence on the Board enables Prajay to strengthen its design capabilities and explore newer markets in and around Bangalore.

Prajay Engineers Syndicate Limited | 3

Chakradhar Reddy, Independent Director

A commerce graduate with more than 15 years experience in Government Contract works and civil works, including road construction, Mr. Reddys presence enables the Company to strengthen its compliance functions.

Senior Management
Santosh Kumar Rathi, Head-Corporate Finance
A post graduate in commerce and a CAIIB, Mr. Rathi has rich banking experience at senior levels in various nationalised and private banks. He oversees the corporate finance functions of the Company and steers resource mobilisation. He is additionally responsible for maintaining investor relations.

Subid Sen, General Manager (Projects)

A Mechanical Engineer, Mr. Sen was a Wing Commander with the Indian Air Force. He has over 20 years of experience. He is responsible for overseeing the projects activities and ensuring timely execution.

Joseph Reverdo, General Manager (Operations)

With 30 years of experience in the hospitality industry, Mr. Reverdo has been associated with in a number of wellknown establishments in the country and abroad, prior to joining Prajay where he is responsible for hospitality services.

Bhaskara Rao, General Manager (Accounts)

A graduate in commerce, member of ICWAI and a LLB degree-holder, Mr. Raos experience spans 25 years and various industries. He is in charge of a wide range of finance and accounting responsibilities, in addition to serving as a liaison with banks and maintaining statutory compliances.

C.N. Rao, Deputy General Manager (Accounts)

An Honours graduate in Commerce and a member of ICAI, Mr. Rao has wide industrial and banking experience of more than 19 years. He is responsible for liaisoning with banks, institutions and overall co-ordination in finance and accounts department.

Sujatha Rao, Deputy General Manager (Projects)

A diploma holder in architecture with 22 years of experience in construction industry in administering various projects from design to conceptualisation using latest technical methods, Ms. Rao is responsible for coordinating various projects, structural designs and other allied activities.

Madhavi Latha, Company Secretary

A qualified member of institute of company secretaries of India (ICSI) with 4 years of working experience in software and construction industry, Ms.Lathas experience of handling various issues under companies act, SEBI and listing agreement helps the company to have good compliance of corporate governance and other statues.

4 | Annual Report 2008-09

, Directors Report

To The Members, Your Directors have pleasure in presenting the 15th Annual Report together with the Audited Accounts for the year ended 31st March 2009.

Financial Results
Your companys performance during the year as compared with that during the previous year is summarized below: Rs. in Lacs

Particulars

Year ended 31st March 2009 Year ended 31st March 2008 Standalone Consolidated
8285.82 2133.04 408.24 (273.64) 245.33 (518.97) (1.31) (1.31)

Standalone
34493.62 13881.45 225.24 12747.52 2460.87 10286.65 1030.00 1213.62 37.46 37.46

Consolidated
34542.62 13781.98 225.85 12647.18 2460.91 10186.27 1030.00 1213.62 37.10 37.10

Gross Turnover Profit before interest and Depreciation Depreciation Profit before Tax Provision for taxation Profit after tax Transfer to General Reserve Dividend EPS Basic Diluted

8283.60 2296.12 402.71 143.86 242.47 (98.61) (0.25) (0.25)

Against all odds viz. Subprime crisis in US, Credit crisis, market crashes, tight credit access, weaker growth and recession in global markets especially in Realty sector in India, your Company could manage to report a gross turnover of Rs. 8283.60 lacs against a turnover of Rs. 34493.62 Lacs for the previous year and made a profit before tax of Rs. 143.86 lacs against profit before tax of Rs. 12747.52 Lacs for the previous year. For detailed analysis of the performance, please refer Managements Discussion and Analysis section of the Annual Report.

DIVIDEND
Keeping in view the expansion plans & other significant capital expenditure programmes, your directors have, after due deliberations, decided to plough back the funds available and hence, do not recommend any dividend for the financial year 2008-09.

DEPOSITS
During the year under review, the company has not accepted any fresh deposits as per the provisions of Companies Act, 1956 and Companies (Acceptance of deposits) Rules, 1975. There are no unclaimed or overdue deposits during the year under review

Prajay Engineers Syndicate Limited | 5

The Directors had 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

DIRECTORS
Sri Kartik Vijay Punjabi has resigned from the Board effective from 31st August 2009 and the board places on record its appreciation for the valuable services rendered by him during his tenure. In accordance with the provisions of the Companies Act, 1956, Sri D. Chakradhar Reddy, Sri Rudresh Veerabhadrappa, Directors retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment and therefore the board recommends their re-appointment at the ensuing Annual General Meeting. The brief resume/details relating to Directors who are to be appointed / re-appointed are furnished in the Corporate Governance section.

DIRECTORS RESPONSIBILITY STATEMENT

In compliance with Section 217(2AA) of the Companies Act, 1956, your Directors hereby confirm that: (i) in the preparation of Annual Accounts for the financial year ended 31st March, 2009, the applicable accounting standards had been followed along with proper explanation relating to material departures; (ii) the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit/loss of the Company for that period; (iii) the Directors had 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; (iv) the Directors had prepared the annual accounts on going concern basis.

PARTICULARS OF SUBSIDIARY COMPANIES SEC. 212 OF THE COMPANIES ACT, 1956

The company has applied to the Central Government under Sec. 212(8) of the Companies Act, 1956 seeking an exemption from attaching a copy of the Balance sheet, Profit & Loss account, Directors Report and Auditors Report of the subsidiary companies and other documents required to be attached under sec. 212(1) of the Act to the balance sheet of the company and the said approval is expected shortly. Accordingly the said documents are not being attached with the balance sheet of the company. Copies of the annual accounts of the companys subsidiaries can be sought by any investor of the company on making a written request to the company at the registered office of the company in this regard. The annual accounts of the subsidiary companies are also available for inspection to any investor at the companys registered office. The financial data of the subsidiaries has been furnished along with the Statement pursuant to Sec. 212(1)(e) of the Companies Act, 1956 forming part of Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS-21 on consolidated financial statements, the audited consolidated financial statements are attached to this Annual Report.

AUDITORS
The Statutory Auditors M/s. Deloitte Haskins & Sells, Chartered Accountants hold office until the conclusion of the ensuing Annual General Meeting and being eligible, are recommended for re-appointment. A certificate from the

6 | Annual Report 2008-09

auditors has been received to the effect that the re-appointment, if made, would be within the limits as specified under Sec. 224(1B) of the Companies Act, 1956.

REPORT ON CORPORATE GOVERNANCE

Committed to good corporate governance practices, your company fully conform to the standards set out by various regulatory authorities and has implemented and complied with all of its major stipulations. The Report on Corporate Governance along with the compliance certificate issued by Sri P. Konda Reddy, Practicing Company Secretary in line with clause 49 of the Listing Agreement, are attached and forms part of this Report.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Pursuant to clause 49 of the listing agreement, a report on management discussion and analysis (MDA) for the year under review is given in a separate section in this Annual Report.

CEOs DECLARATION AS REQUIRED UNDER CLAUSE 49 OF THE LISTING AGREEMENT

Declaration as required under Clause 49(1)(D)(ii) of the listing agreement with regard to compliance of code of conduct of the company is annexed to this Report.

PARTICULARS OF EMPLOYEES
The details of the employees drawing remuneration exceeding the limits prescribed under the provisions of section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 are given in the Annexure forming part of this Report.

EMPLOYEE RELATIONS
Employee relations were cordial during the year and the Board would like to place on record its appreciation to all the employees of the Company for their dedicated services and performance.

CLARIFICATIONS TO THE OBSERVATIONS MADE IN AUDITORS REPORT:

Point No.4 (a) and (b): a) As a result of economic slowdown and recession in realty sector the realizations from customers are slow.

b) Due to long term investment in such projects, no provision has been considered necessary. Point no. vi of Annexure to Auditors Report: The Audit Committee had elaborate discussions on the said point. The company will take all steps to see that the scope and coverage of internal audit is increased to commensurate with the nature and size of the business of the company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Particulars as prescribed under Section 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are as follows: Conservation of Energy & Technology Absorption: Since your company does not own any manufacturing facility, the requirements pertaining to disclosure of particulars relating to conservation of energy, research & development and technology absorption, as prescribed under the

Prajay Engineers Syndicate Limited | 7

Directors Report

Yours directors take this opportunity to thank the Financial Institutions, Banks, regulatory authorities, Stock Exchanges and the stakeholders for their continued cooperation and support to the company.

Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are not applicable. However, adequate measures have been taken to conserve and reduce energy consumption. Foreign Exchange Earnings and Outgo: Foreign Exchange Earnings: Rs. 11.44 lacs Foreign Exchange Outgo: Rs. 48.05 lacs

ACKNOWLEDGEMENTS
Yours directors take this opportunity to thank the Financial Institutions, Banks, regulatory authorities, Stock Exchanges and the stakeholders for their continued co-operation and support to the company. Your Directors also wish to record their appreciation for the continued co-operation and support received from the customers, vendors, employees of the company at various levels. For and on behalf of the Board

Place : Hyderabad Date : 31st August, 2009

D.S.Chandra Mohan Reddy Chairman & Managing Director

Annexure to Directors Report

Statement Pursuant to Section 217(2A) of the Companies Act, 1956 and the Companies ( Particulars of employees) Rules 1975, forming part of the Directors Report for the year ended 31-03-2009

Name

Designation & Nature of Duties

Remu- Qualificaneration tions (in lacs)

Age (Years)

Experience (Years)

Date of Joining

Particulars of previous Employment

Not Applicable Not Applicable Not Applicable

D. S. Chandra Mohan Reddy D Vijay Sen Reddy N Ravinder Reddy Notes 1. 2. 3.

Chairman & M.D. Exe. Director DirectorOperations

42.46 42.57 31.50

B.Com. C.A. MBA

54 51 36

35 27 14

April 94 April 94 Feb. 2000

Remuneration includes salary, allowances, commission payable, taxable Value of perquisites, wherever applicable. The above directors at Sl. 1-2 are related to each other. The nature of employment of above directors is contractual.

8 | Annual Report 2008-09

Management Discussion and Analysis

Industry Overview
The real estate sector has witnessed tremendous growth in the last decade, especially during 2005-09. This growth is attributable to the policy and regulatory initiatives of the government. Relaxation in FDI norms as well as rationalization of a few taxes over this period has increased investor interest. Financiers on their part have supported the sector with low interest rates. The contribution of real estate construction activity to the GDP has increased from 5 per cent in 1996-97 to 6.5 per cent in 2007-08. Further, the contribution of real estate services to the GDP has increased from 5.7 per cent to 7.6 per cent during the same period. According to industry players, housing accounts for 4.5 per cent of the GDP with urban housing accounting for 3.13 per cent. Estimates suggest that the size of the Indian real estate sector is around $ 48 billion and is growing at the rate of 30 per cent per annum. The sector is currently the second largest employer in the country after agriculture. The IT and ITES sector alone is estimated to require 150 million sq ft of office space across urban India by 2010. Organised retail is also responsible for the growth in commercial office space requirement. The organised retail industry is likely to require an additional 220 million sq ft by 2010. Moreover, growth is not restricted to a few towns and cities but is pan-India, covering nearly all tier-I and tier-II cities. Almost 80 per cent of real estate developed in India is residential space, the rest comprising of offices, shopping malls, hotels and hospitals. According to the Tenth Five-Year-Plan, there is a shortage of 22.4 million dwelling units. Thus, over the next 10 to 15 years, 80 to 90 million housing dwelling units will have to be constructed with a majority of them catering to middle- and lower-income groups. Apart from the huge demand, India also scores on the construction front. A McKinsey report reveals that the average profit from construction in India is 18 per cent, which is double the profitability for a construction project undertaken in the US.

Commercial Office Space

a) Growth Drivers
Significant growth in FDI coupled with growth in IT/ITES sector at 30 percent annually (Source: NASSCOM) has led to the demand in commercial office space.

b) Market Structure
Market is dominated by a few large national developers with pan - India presence. Most of the regional players are currently expanding to achieve a pan-India presence. There has been a shift in the type of operations from Sale Model to lease and maintain model.

Prajay Engineers Syndicate Limited | 9

Rapid urbanization is a major contributor whereby urban population is expected to touch 590 million by 2030. Decreasing household is another growth driver with the average increase in the number of nuclear families is estimated to be over 300 million.

c) Outlook
Commercial market is expected to grow at CAGR of 20 per cent to 22 per cent over the next five years. IT/ITeS is expected to require in excess of 250 million square feet of commercial office space by 2012-13.

Residential Space
a) Growth Drivers
Rapid urbanization is a major contributor whereby urban population is expected to touch 590 million by 2030. Decreasing household is another growth driver with the average increase in the number of nuclear families is estimated to be over 300 million (middle class population). Increasing working age population (almost 64% in 16-64 age group) and increasing income levels i.e. per capita GDP increased by 66 per cent in last five years - have also led to increase in demand.

b) Market Structure
Market is highly fragmented and unorganized. Regional players are expanding to achieve pan-India presence.

10 | Annual Report 2008-09

c) Outlook
Currently there is a shortage close to 25 million units predominantly in middle and low income group. This sector is expected to grow at CARG of 18 per cent to 19 per cent by 2010.

Retail Space
a) Growth Drivers
Rising consumerism with doubling of disposable income, growth in organised retailing and entry of international retailers are the main growth drivers for this sector.

b) Market Structure
Market is largely dominated by unorganised retail. Winds of change are now sweeping this sector with large corporate houses entering the organised retail sector and International retail brands tying up with Indian partners.

c) Outlook
FDI norms are likely to be relaxed in the next two to three years opening up the market further. Organised retail is expected to grow at around 30 per cent. Share of organised retail by sales is expected to reach 10 per cent by 2010. By 2012, 323 million square feet of new retail space will be required.

Prajay Engineers Syndicate Limited | 11

Management Discussion and Analysis

Indian tourism industry is expected to grow by eight per cent per annum over the next ten years. Service apartments, hospitals and wellness spas are gaining popularity. International hotel chains have big expansion plans for India.

Hospitality Space
a) Growth Drivers
India is now increasingly being recognized as a medical tourism destination. Playing host to Commonwealth games in 2010 will open Indias chances in international events. Amidst the countless ways that India can capture

world attention as a tourist paradise, there also exists a dynamic business opportunity as a splendid venue for international conferences and conventions of no less than global standards. India is in a continual process of upgrading its MICE (Meetings, Incentives, Conferences & Exhibitions) facilities. There are multiple plans on the anvil for more world-class convention centres, airports that contest with the best in the world and efforts to team the famous Indian hospitality with customisation as per a visitors requirement. All of this spells a definite boom for this sector.

b) Market Structure
Besides existing hotel operators scaling up their operations, several corporate houses have forayed into this sector such as Reliance. Developers are now tying up with major international chains and have set up RE funds to finance their ventures.

c) Outlook
Indian tourism industry is expected to grow by eight per cent per annum over the next ten years. Service apartments, hospitals and wellness spas are gaining popularity. International hotel chains have big expansion plans for India.

12 | Annual Report 2008-09

Government Initiatives
The government has introduced many progressive reform measures to unlock the potential of the sector and also meet increasing demand levels. The stimulus package announced by the government, coupled with the Reserve Bank of Indias (RBI) move allowing banks to provide special treatment to the real estate sector, is likely to impact the Indian real estate sector in a positive way. RBI has decided to extend exceptional concessional treatment to the commercial real estate exposure and restructured it to 30th June, 2009. Urban Land (Ceiling and Regulation) Act, 1976 (ULCRA) repealed by increasingly larger number of states. Minimum capital investment for wholly-owned subsidiaries and joint ventures stands at US$ 10 million and US$ 5 million, respectively. Full repatriation of original investment after three years. 51 per cent FDI allowed in single-brand retail outlets and 100 per cent in cash-and-carry through the automatic route. The Union Ministry of Commerce & Industry has initiated steps to reduce the time taken to develop special economic zones (SEZs) by simplifying procedures to get the tax-free industrial enclaves notified. Developers will now be able to get their land classified as an SEZ at the initial stage of approval by submitting legal documents that prove land ownership.

Affordable housing on the rise

A decline in property prices, falling interest rates and stability in the job market has helped the sector gain momentum once again. As developers realised that affordability was the key to lure buyers, they experimented with no frills smaller apartment sizes. Projects that were launched in this segment received a good response, which indicated that homebuyers were waiting for a good opportunity to make an entry. Global property consultancy firm Knight Frank has estimated that affordable housing requirement would be in excess of 2 million units across key cities in India and 80% of demand is expected to originate from the 3-5 lakh income group. It is seen that real estate sector is realigning its focus towards affordable housing and is estimated to reach a whopping market size of over Rs. 3 lakh crore by 2011. With the sixth pay commission being implemented, those government employees who could not participate in the earlier real estate cycle will now be participants in the market. This, along with private sector employees who had postponed purchasing homes due to uncertainty in the market, would also be scouting for good bargains.

Revival of Hyderabad Realty

Hyderabads real estate market has remained flat for the last eight months. But no more, it is showing signs of a recovery. And there are three major reasons for this revival. First: An election result that gave a clear mandate against bifurcation of Andhra Pradesh. The congress government is against splitting the state into Andhra and Telangana. And this has prompted investors to resume investing in real estate. The second: Easing of interest rates Third: Withdrawal of the 5% stamp duty on property up to 1,200 square feet. The builders did their part. They reduced prices by 15-25%, and altered the product mix, giving buyers better choice and perceived value for money.

Prajay Engineers Syndicate Limited | 13

Management Discussion and Analysis

Prajay enjoys an early mover advantage i.e. strategic locations were identified far ahead of the competition and properties were purchased at very low prices. It owns large properties near some of the major infrastructure projects coming up in Hyderabad and its outskirts.

Company Overview
Hyderabad based Prajay Engineers Syndicate Limited (Prajay) is one of the leading players in construction and hotel industry set up by a first generation entrepreneur. With more than 75 projects under its belt and over 6.7 mn square feet of development through past twenty years, Prajay is scaling new heights each year in the field of construction. The entire retail value chain is being addressed by Prajay encompassing housing, hospitality and land development. Prajay enjoys an early mover advantage i.e. strategic locations were identified far ahead of the competition and properties were purchased at very low prices. It owns large properties near some of the major infrastructure projects coming up in Hyderabad and its outskirts. Prajay has a land bank which gives it the opportunity to come up with competitive prices. In line with this, Prajay has come up with sub-Rs 10 lakh, two-bedroom homes near Shamirpet on the outskirts of Hyderabad. The companys existing land bank was being used, which gave it the flexibility of pricing. As the real estate sector has been hit hard in Hyderabad in the past one year, affordable homes is one concept that will work.

Forthcoming Projects
Prajay Virgin County
Subsequent to the economic meltdown, subprime crisis and the collapse of Lehman Brothers, the real estate market slowed down in general and development around the Rajiv Gandhi International Airport was adversely affected. In view of this the Company decided to adopt a more cautious approach to the development of this project until a more favourable market scenario appears.

Prajay Waterfront City

The project has been launched with successful booking of 147 villas till Jan. 2009. However the break out of Satyam news and subsequent recession in Indian Economy has led to a stand still position in sales and thus the last quarter of the year had affected the entire sales. The market has started picking up and the project has been witnessing construction of around 200 units.

Prajay Megapolis
The site has been under the process of development and basement excavation. The company plans to launch the project for sales in November 2009.

Prajay Maheshwaram Township

Various plans have been under discussion and finalisation. A leading housing finance company has appraised the proposal for Rs.105 crores and also approved 57% of the funding requirements. The company is in process of tying up the balance and move forward for launching of the project for construction.

Prajay Windsor Park

The project has started seeing the development and is expected to be launched for sale in the current financial year.

Prajay Gulmohar
The project has started seeing the development and is expected to be launched for sale in the current financial year.

14 | Annual Report 2008-09

Prajay Velocity Mall

The project could not see the permissions for high rise development and hence the model is being redesigned and discussed. The project shall see the developments thereafter.

SEGMENTAL ANALYSIS
Residential
Companys premier residential project Prajay Water Front city has been soft launched in the current year and received a warm response from the market. The project received its financing tie up from HSBC and moves at a steady pace barring few initial hiccups. The project has seen a sale of Rs.2210.26 lakhs during the financial year 200809. Celebrity Villas an another premier project of the company has also contributed an equal amount of Rs.2596.85 lakhs. This 2 projects have been the major contributor to the revenue of stream of the company.

Hospitality
The hospitality business continued to report a steady growth registering a steady 8 percent growth to reach a consolidated Rs.1460.12 lakhs as against the revenue of Rs.1335.85 lakhs in corresponding previous year. The higher turnover was a result of a better occupancy rate.

Financial Analysis
Operations and sales revenue
The year under review saw the worst phase of bottoming out of real estate sector in the entire country. Hyderabad market was also affected in line with the nation. Triggered by global recession, Job scarcity, retrenchments, the demands in residential sector, started looking southwards. The companys performance also looked down in line with other similar companies due to multiplicity of these reasons. The sales revenues of the company has come down from Rs.34493.62 lakhs to Rs.8283.60 lakhs i.e. by 75.99% over the last years sales revenue. This was also had a severe effect on profitability of the company. Despite such fall in sales, the company could manage to meet its all fixed expenditure successfully. The company could also keep all its accounts with Banks performing. Of the total revenues earned, construction and property development segment contributed a significant portion of Rs.6744.52 lakhs in 2008-09 which is lesser by Rs.26,321.53 lakhs over the corresponding previous year. On the other hand, the turnover in hospitality segment looked up registering a total revenue of Rs.1374.29 lakhs in 2008-09 as against the recognized revenue of Rs.1272.91 lakhs during corresponding previous year.

Profits and ratios

As a result of slowdown, the companys operating profit declined to Rs.143.86 lakhs in 2008-09 as against Rs.12747.52 lakhs last year. The company posted a net loss after tax at Rs.98.61 lakhs in 2008-09 as against profit of Rs.10286.65 lakhs last year. Operating profit to sales stood at 1.74% while net loss to sales stood at 1.19%. The company paid total interest on its finances to the extent of Rs.1749.55 lakhs as against Rs.908.69 lakhs during corresponding previous year.

Earnings per share

Prajays basic earnings per share stood at -0.25 in 2008-09 over last years Rs.37.46 on an expanded equity base and due to higher interest outgo in the present year.

Prajay Engineers Syndicate Limited | 15

Management Discussion and Analysis

(
Loans Outlook

We expect that the demand will pick up rapidly and as one of the most well positioned companies in Hyderabad, we stand to gain from this rise in offtake. The outlook therefore is decidedly positive.

Share capital & Networth

The paid up share capital of the company stood at the same level for the last 2 consecutive years. All warrants and FCCBs stand fully converted. Reserves and surplus of the company has marginally declined to Rs.56,403.30 lakhs in 2008-09 from Rs.56,501,91 during corresponding previous year i.e. 2007-08, mainly due to losses in current year. This has brought down the companys networth to Rs.60372.88 lakhs as against Rs.60471.49 lakhs during previous year.

The Company continued to get the support from bankers and financial institutions and its total secured loan portfolio has improved to Rs.13,554.02 lakhs as against Rs.10609.50 lakhs during last year. The company has kept all its repayment obligations on time and the companys all accounts continued to remain performing assets with their bankers. The companys gearing ratio stood at a comfortable level of 0.22:1.

The realty prices in Hyderabad are gradually recovering given the positive sentiments that have regained momentum. We expect that the demand will pick up rapidly and as one of the most well positioned companies in Hyderabad, we stand to gain from this rise in offtake. The outlook therefore is decidedly positive.

Internal control systems

Prajay continued to have competent internal procedures, commensurate with the growth of the Company and its nature of operations. The Company continues to follow the highest safety and internal control standards as expected by Indian GAAP. The Company has made all necessary required reporting to RBI, SEBI, and the stock exchanges in a timely manner. The Companys internal audit has been carried out by M/s Mahesh and Varaprasad, a chartered accountant firm and the external audit has been carried out by M/s Deloitte Haskins & Sells as the external auditor. Similarly, the Audit Committee of the Company continued to be headed by an independent non executive Chartered Accountant director. The committee and the internal chartered accountant firm covered all operational areas and their reports and remarks have been discussed in the meeting of Audit Committee and the Board Meetings. The audit committee and the Internal Auditor firm did not find any fault with the internal control system and its adequacy. The Company has been found maintaining accurate records, showing full details including quantitative details. The management has carried proper verification of its fixed assets at reasonable intervals as prescribed by Indian GAAP. The Company has an audit committee, an executive committee, a shareholders/investors grievance committee, a remuneration committee and also a share allotment committee. All these committees meet as per the provisions of the Companies Act and listing agreement and their decisions, suggestions and recommendations have been put up before the Board for approval and implementation.

Human Capital
Prajays human capital continues to contribute to the growth of the Company with its motivated team increased its employees strength over the past year. It has about 700 employees on roll which includes about 80 percent engineers. The Company introduced new welfare measures and benefits for its contributing team. A group life insurance scheme was installed as a social measure to protect the interest of the family of employees. All employees and directors are covered under this scheme. The Company also has plans to implement a Mediclaim policy to cover the medical expenses of the employees.

16 | Annual Report 2008-09

Report on Corporate Governance

COMPANYS PHILOSOPHY ON CODE OF GOVERNANCE

A Corporate Governance code is of substantial importance in todays economic environment not just for the benefit of the company but to restore the public confidence in corporate organisations. Corporate governance is the application of best management practices, compliance of law and adherence to ethical standards to achieve the companys objective of enhancing shareholder value and discharge of social responsibility. The corporate governance structure in the company assigns responsibilities and entrusts authority among different participants in the organisation viz. the Board of Directors, the Senior Management, Employees etc. Your companys essential character revolves around values based on transparency, integrity, professionalism and accountability. The company continusously endeavours to improve upon these aspects on an ongoing basis. The existing corporate governance structure besides ensuring greater management accountability and credibility, facilitates increased autonomy of business, performance discipline and development of business leaders, leading to increased public confidence.

BOARD OF DIRECTORS:
Composition:
The Board consists of Executive, Non-Executive and Independent Directors. Non-Executive Directors include Professional Directors. Presently, the Board consists of 10 Directors with 2 Promoter Directors and is in conformity with clause 49 of the listing agreement (position as at 31.03.2009). The board is a blend of executive and non-executive directors with vast experience in various fields viz. construction, architecture, marketing, management and finance. The board also provides leadership, strategic guidance, objective and independent view of the Companys management while discharging its fiduciary responsibilities thereby ensuring that the management adheres to high standards of ethics, transparency and disclosure.

Prajay Engineers Syndicate Limited | 17

The following table gives the composition of the companys Board, their category, designation, other Directorships and memberships of committees held by each of them:

Table 1: Name of the Director Category Designation Other Director ships

16 19 NIL 13 3 NIL 3 1 NIL 1

Commit- Chairmantee ships in MemberCommitships tees

Nil 1 Nil 1 Nil 1 Nil Nil Nil Nil Nil Nil Nil Nil Nil 1 1 Nil Nil Nil

D.S.Chandra Mohan Reddy D.Vijay Sen Reddy K.Ravi kumar N.Ravinder Reddy Sumit Sen D.Chakradhar Reddy Vijay Kishore Mishra N.Nageshwara Rao Rudresh Karthik Vijay Punjabi

Promoter Chairman & Managing & Executive Director Director Promoter & Executive Executive Director Director Executive Director Director-Technical Executive Director Director-Operations Executive Director Director-Marketing & sales Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Non-Executive Director Independent Director Director Director Director Director

None of the directors are holding Chairmanships/Memberships of committees in other Companies as on 31.03.2009.

MEETINGS
As per the listing Agreement, the Board of Directors must meet at least four times a year, with a maximum time gap of four months between any two meetings. During the financial year 2008-09, the Board of Directors met 11 (Eleven) times on the following dates: 18th April 2008, 23rd May 2008, 2nd June 2008, 30th June 2008, 31st July 2008, 16th August 2008, 30th August 2008, 30th October 2008, 29th December 2008, 31st January 2009 and 27th February 2009. The company is in compliance with the provisions of the listing agreement on the gap between two Board Meetings. Details of Directors and their attendance at the board meetings and at the last annual general meeting are given in Table 2.

18 | Annual Report 2008-09

Table 2: Directors Attendance at Board Meetings & last AGM: Name of the Director No. of Board Meetings Attended
11 11 11 11 11 09 11 05 03 03

Attendance at the last AGM held on 29.09.2008

Yes Yes Yes Yes Yes Yes Yes No No No

D.S.Chandra Mohan Reddy D.Vijay Sen Reddy K.Ravi Kumar N.Ravinder Reddy Sumit Sen D.Chakradhar Reddy Vijay Kishore Mishra N.Nageshwara Rao Kartik Vijay Punjabi Rudresh Veerabhadrappa

Brief resume of the directors being appointed / re-appointed at the ensuing annual general meeting, nature of expertise in specific functional areas and names of companies in which they hold directorships and their membership of committees of the board are furnished hereunder: Sri D. Chakradhar Reddy (Director): Sri Chakradhar Reddy is a commerce graduate with more than 15 years of vast experience in Government contract works and civil works including road construction works. His experience adds to the companys construction teams expertise and also enables the company to adhere to corporate compliances. Sri Rudresh Veerabhadrappa (Director): Sri Veerabhadrappa is an Architect with more than 25 years of experience in construction industry. He has executed many widely-acclaimed projects in Bangalore. Mr. Rudreshs presence on the board helps the board to strengthen its design capabilities and explore newer markets in and around Bangalore.

BOARD COMMITTEES
To have proper control of the affairs of the company, the board can delegate its certain powers to one or more committees. The committees shall have such number of members as may be required and discharge such duties as are delegated by the board. All the decisions / recommendations of the committees are placed before the Board for information and/or their approval. The following are the committees of the board

A. Audit committee:
The role of Audit committee includes the following: Overseeing the companys financial reporting process and disclosure of its financial information. Recommending the appointment of statutory Auditors and fixation of their remuneration. Reviewing and discussing with the statutory auditors and internal auditors about the internal audit system.

Prajay Engineers Syndicate Limited | 19

Report on Corporate Governance

Reviewing the adequacy and independence of the internal audit function, and observations of the internal auditor. Reviewing the risk management mechanisms of the company. Reviewing the quarterly and half yearly financial results and the annual financial statements before they are submitted to the board of directors. Reviewing major accounting policies and practices and adoption of applicable accounting standards.

The Audit Committee consists of 3 (three) Non executive Directors, all of whom are independent, namely, Sri Vijay Kishore Mishra (Chairman), Sri N. Nageswara Rao and Sri D. Chakradhar Reddy (members). The meetings of the Audit Committee were held on 25th April 2008, 30th June 2008, 31st July 2008, 30th October 2008 and 31st January 2009 and all the members were present.

B. Remuneration committee
The Remuneration Committee consists of 3 Non-Executive Directors, namely, Sri Vijay Kishore Mishra, Sri N. Nageswara Rao and Sri D. Chakradhar Reddy, all of whom are independent directors. Remuneration Committee of the Board reviews, assesses and recommends the appointment of executive and nonexecutive directors and reviews their remunerations package. Details of remunerations paid to Executive Directors for the year ended March 31, 2009 are as follows: Rs.

Name of the Director

D.S.Chandra Mohan Reddy D.Vijay Sen Redddy K.Ravi Kumar N.Ravinder Reddy Sumit Sen

Salary
42,00,000 42,00,000 18,00,000 31,50,000 10,50,000

Commission
NIL NIL NIL

Perquisites
46,880 57,149 NIL

Total
42,46,880 42,57,149 18,00,000 31,50,000 10,50,000

There was no occasion for Remuneration Committee to meet at any time during the year under review. Shareholding of Non-Executive Directors The following are the details of the shares held by Non-Executive Directors as on 31st March 2009

Sl. No.
1 2 3 4 5

Name of the Director

Vijay Kishore Mishra Kartik Vijay Punjabi D. Chakradhar Reddy N. Nageswara Rao Rudresh Veerabhadrappa

No. of shares held

36,500 90,000 Nil Nil Nil

20 | Annual Report 2008-09

C. Shareholders / Investors Grievance Committee

The terms of reference of the shareholders / investors grievance committee are as follows: Redressal of shareholders / investors complaints, Allotment, transfer / transmission of shares or any other securities and issue of duplicate share certificates and new certificates on split / consolidation / renewal etc.

The Share Transfer and Investors Grievance Committee presently comprises 2 Executive Directors namely Sri D.Vijay Sen Reddy, Sri. N.Ravinder Reddy and a Non-Executive Director Sri.D.Chakradhar Reddy. The Committee is headed by Sri.D.Chakradhar Reddy, Non-Executive Director. Sri N.Ravinder Reddy is the Compliance officer of the company. The committee attends to the shareholders / investors grievances / correspondence expeditiously. All the complaints pending at the beginning of the year were resolved. During the year under review, 106 investor requests / correspondence were received which were all resolved and no requests were pending as on 31st March, 2009. The Committee approves share transfers in physical form, if any, once in fortnight.

GENERAL BODY MEETINGS:

Particulars of past 3 AGMS:

Financial Year
2007-08

Venue
Prajay Corporate House 1-10-63 & 64, Begumpet, Hyderabad 500 016.

Date & Time Special Resolution Passed

29.09.2008 at 3.00 P.M. 1. To revise the remuneration of Sri D.S. Chandra Mohan Reddy, Chairman and Managing Director.

2. To revise the remuneration of Sri D. Vijay Sen Reddy, Executive Director 3. To revise the remuneration of Sri N. Ravinder Reddy, Director Operations 4. To revise the remuneration of Sri Sumit Sen, Director Marketing 5. To revise the remuneration of Sri K. Ravi Kumar, Director Technical 2006-07 Prajay Corporate House 1-10-63 & 64, Begumpet, Hyderabad 500 016. 26.09.2007 at 11.30 A.M. 1. To alter Articles of Association to modify the capital clause. 2. To consider and approve payment of commission to Chairman & Managing Director 3. To consider and approve payment of commission to Executive Director 4. To consider and approve payment of commission to Director - Operations 2005-06 Prajay Corporate House 1-10-63 & 64, Begumpet, Hyderabad 500 016. 29.09.2006 at 3.00 P.M. NIL

During the year ended 31st March 2009 no special resolution was passed by the company through postal ballot and no special resolution is proposed to be passed by postal ballot at the ensuing annual general meeting.

Prajay Engineers Syndicate Limited | 21

Report on Corporate Governance

Particulars of Extra-Ordinary General Meetings:

Financial Year
2008-09

Venue
Prajay Corporate House 1-10-63 & 64, Begumpet, Hyderabad 500 016.

Date & Time Special Resolution Passed

15.05.2008 at 4.00 P.M. 1. To appoint statutory auditors

DISCLOSURES:
a. Materially significant related party transactions
During the year, there were no transactions of material nature with related parties that had potential conflict with the interests of the company. Related party transactions have been disclosed in the Notes to Accounts in the financial statements as at March 31, 2009.

b. Risk Management
The company has laid down well defined procedures to appraise the board of directors about the risk assessment and minimization procedures and the same are reviewed periodically.

c. Remuneration of Non-Executive Directors

No remuneration was paid to Non-Executive Directors during the year.

MEANS OF COMMUNICATION:
The un-audited quarter and / or half-yearly financial results are published in the news papers and are usually published in Financial Express (English) and Andhra Prabha (Telugu). The annual / half yearly / quarterly results are displayed on the website of the company www.prajayengineers.com.

GENERAL SHAREHOLDER INFORMATION:

(i) Annual General Meetings Day, Date Time Venue
Prajay Corporate House, 1-10-63 & 64, Chikoti Gardens, Begumpet, Hyderabad 500016. Tuesday 3.00 P.M. 29th September 2009

(ii) Financial Calendar

Tentative calendar of events for the year 2009-2010 (financial year) is as under

Event
Financial year First Quarter details Second quarter details Third quarter details Last quarter details

Period
1st April 2009 to 31st March 2010 July 2009 October 2009 January 2010 April 2010

22 | Annual Report 2008-09

(iii) Date of book closure

25th September 29th September 2009 (both days inclusive)

(iv) Listing on stock exchanges

The equity shares of the company are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Company has paid listing fee to both the exchanges for the year 2009-2010. The company has also paid custodial fee to both the depositories on the basis of no. of folios maintained by them as on 31st March 2009.

(v) Stock Code / Symbol

The Stock Code of the Company (BSE) The Stock Code of the Company (NSE) ISIN No. for companys equity shares in Demat Form Depositories Connectivity : 531746 : PRAENG : INE505C01016 : NSDL and CDSL

(vi) Stock Market data for the Year 2008-09

Monthly high and low quotations and volume of shares traded on the Bombay Stock Exchange Limited

Month
April, 2008 May, 2008 June, 2008 July, 2008 August,2008 September, 2008 October, 2008 November, 2008 December, 2008 January, 2009 February,2009 March, 2009

High (Rs.)
299.00 275.00 221.90 103.40 76.35 64.70 36.00 24.35 28.20 25.75 18.25 15.55

Low (Rs.)
260.10 213.10 100.30 52.45 58.25 33.50 18.00 17.50 17.50 16.20 14.70 12.50

Volume traded in month

2231203 165047 1469376 15117190 11522297 2859312 4640981 3592782 3166365 1089644 567725 2040892

(vii) Relative stock performance in comparison to BSE Sensex:

301 243 185 127 69 11
1st Apr 2008 16th May 2008 30th Jun 2008 11th Aug 2008 24th Sep 2008 10th Nov 2008 26th Dec 2008 10th Feb 2009 30th Mar 2009 Prajay Engineers Syndicate Sensex

Prajay Engineers Syndicate Limited | 23

Report on Corporate Governance

(viii) RTA and Share Transfer System:

The Companys Shares are required to be traded in the Stock Exchanges compulsorily in Dematerialized mode. A Committee of Directors has been constituted to approve the transfer, transmission, issue of duplicate share certificates and allied matters. The Share Transfer Agents, M/s. Sathguru Management Consultants Pvt. Ltd., have adequate infrastructure to process the above matters Physical shares received for dematerialization are processed and completed within a period of 21 Days from the date of receipt, provided they are in order in all respects.

(ix) Distribution of Shareholding as on 31st March, 2009: Category No. of shareholders Physical Demat (A) (B)
332 98 11 13 2 3 3 3 17065 13490 1556 746 244 112 129 139 184

No. of shares % of total shareholding Physical Demat Physical Demat (A) (B) (A) (B)
74233 86600 15500 31200 7500 13700 23100 324700 39695776 2141752 1306974 1133373 635482 404754 616925 1054473 31825510 0.19 0.22 0.04 0.08 0.02 0.03 0.06 0.82 100 5.40 3.29 2.85 1.60 1.02 1.55 2.66 80.17

1-5000 5001-10000 10001-20000 20001-30000 30001-40000 40001-50000 50001-100000 100001-above Grand Total (A+B)

(x) LIST OF TOP 10 BENEFICIARY HOLDERS (NSDL & CDSL) AS ON 31.03.2009 S. No. Folio No. First Holder Name No. of % on share equity capital shares
5336134 2276990 2244616 2067762 1971609 1964700 1952569 1746760 1233420 898800 13.44 5.74 5.65 5.21 4.97 4.95 4.92 4.40 3.11 2.26

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

IN30016710041997 IN30102221067113 IN30005410007065 IN30016710012569 IN30005410015153 1203070000068021 IN30005410009054 IN30102221067120 IN30014210626257 IN30102221067105

MERLIN SECURITIES LIMITED D VIJAY SEN REDDY COPTHALL MAURITIUS INVESTMENT LIMITED DEUTSCHE SECURITIES MAURITIUS LIMITED MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. S.V. RAVINDAR REDDY NANDI CITIGROUP GLOBAL MARKETS MAURITIUS PRIVATE LIMITED D.S. CHANDRAMOHAN REDDY SWISS FINANCE CORPORATION (MAURITIUS) LIMITED D HYMAVATHI REDDY

24 | Annual Report 2008-09

(xi) Distribution of shareholding as on 31st March, 2009 Category

A. Promoters holding 1. Promoters Indian Promoters Foreign Promoters 2. Persons acting in Concert Sub-total B. Non Promoters Holding 3. Institutional Investors a) Mutual Funds and UTI b) Banks, Financial Institutions, Insurance Companies (Central/ State Gov.Institutions/ Non-Govt. Institutions) c) FIIs Sub-total 4. Non-Institutions a) Private Corporate Bodies b) Indian Public c) NRIs/OCBs d) Any other (Directors & Relatives) Sub-total Grand Total

No. of Shares held

Percentage of Shareholding

6492136 Nil Nil 6492136

16.35 Nil Nil 16.35

Nil Nil 18172919 18172919 2782452 9432125 577044 2239100 39695776

Nil Nil 45.78 45.78 7.01 23.76 1.46 5.64 100.00

(xii) Dematerialization of Shares and liquidity

Details of Shares Dematerialized as on 31st March, 2009

Particulars
NSDL CDSL Physical Total

No. of Shares
31921725 7197518 576533 39695776

% of Share Capital
80.41 18.13 1.46 100%

(xiii) No GDRs/ ADRs/Warrants or any convertible instruments are pending for conversion as on 31st March 2009. (xiv) Address for Correspondence
All communications with regard to transfer, transmission, dividend, demat etc., should be addressed to Companys Registrar and Transfer Agents, whose address is given below: REGISTRAR AND TRANSFER AGENTS M/s. Sathguru Management Consultants (P) Limited Plot No.15, Hindi Nagar, Panjagutta, Hyderabad -500 034. Tel: 91-040-23356507, 23350586, 23356975 Fax: 040-40040554 Email: info@sathguru.com

Prajay Engineers Syndicate Limited | 25

Report on Corporate Governance

Unclaimed Dividend: Shareholders who have not yet encashed their dividend for the years 2004-05, 2005-6, 2006-07 and 2007-08 may approach the Company for re-validation, issue of duplicate warrants etc. Dividend which remains unpaid / unclaimed over a period of 7 years from the date of declaration shall be transferred to the Investor Education and Protection Fund as per law.

PRACTICING COMPANY SECRETARYS CERTIFICATE ON COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE

To the members of Prajay Engineers Syndicate Limited I have examined the compliance of the conditions of corporate governance by Prajay Engineers Syndicate Limited, for the year ended 31st March, 2009, as stipulated in clause 49 of the listing agreement of the said company with the stock exchanges. The compliance of the conditions of corporate governance is the responsibility of the management. My examination was limited to a review of the procedures and implementation thereof, adopted by the company for ensuring compliance with the conditions of corporate governance. It is neither an audit nor an expression of opinion on the financial statements of the company. In my opinion and to the best of my information and according to the explanation given to me, I certify that the company has complied with the conditions of corporate governance as stipulated in the above mentioned listing agreement. I further state that such compliance is neither an assurance as to the future viability of company nor the efficiency or effectiveness with which the management has conducted the affairs of the company. P. Konda Reddy Place : Hyderabad Date : 31st August, 2009 Company Secretary in Practice Membership No. : 4384

DECLARATION
This is to confirm that the company has adopted a code of conduct for its board of directors and senior management personnel. The code is available on the companys website. I confirm that pursuant to the provisions of Clause 49(I)(D)(ii) of the Listing Agreement, all the board members and senior management personnel have affirmed compliance with the code of conduct and ethics for the financial year ended 31st March, 2009. Place : Hyderabad Date : 31st August, 2009 D. Vijay Sen Reddy Chief Executive Officer

26 | Annual Report 2008-09

CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION
We, D. Vijay Sen Reddy, Chief Executive Officer and N. Ravinder Reddy, Chief Financial Officer, of M/s. Prajay Engineers Syndicate Limited, certify that: 1. We have reviewed the financial statements and the cash flow statement for the year ended 31st March, 2009 and to the best of our knowledge and belief: a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

b) these statements together present a true and fair view of the companys affairs and are in compliance with existing accounting standards, applicable laws and regulations. 2. 3. There are, to the best of our knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violative of the companys code of conduct. We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of internal control systems of the company pertaining to financial reporting and there were no deficiencies in the design or operation of such internal controls. We have indicated to the auditors and the Audit Committee a) That there were no significant changes in internal control during the year

4.

b) There were no significant changes in accounting policies during the year c) There were no instances of significant fraud during the year D. Vijay Sen Reddy Chief Executive Officer N. Ravinder Reddy Chief Financial Officer Place : Hyderabad Date : 31st August, 2009

Prajay Engineers Syndicate Limited | 27

, Auditors Report
To The Members of Prajay Engineers Syndicate Limited 1. We have audited the attached Balance Sheet of Prajay Engineers Syndicate Limited, as at March 31, 2009 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As required by the Companies (Auditors Report) Order, 2003 issued by the Central Government of India in terms of subsection (4A) of Section 227 of the Companies Act, 1956 we enclose in Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order. Attention is drawn to the following: a. Note B. 17 (a) of Schedule 18, in respect of Sundry Debtors, unsecured considered good outstanding for a period of more than six months amounting to Rs.30635.67 lacs. For the reasons stated therein we are unable to comment on the realizations of the aforesaid debtors. Note B. 17 (b) of Schedule 18, in respect of advances amounting to Rs. 7974.94 lacs given towards purchase of land/ development, outstanding from earlier years in respect of which no provision has been made for reasons stated therein.

2.

3.

4.

b.

5.

Subject to paragraph 4(a) and further to our comments in the Annexure referred to in paragraph 3 above, we report that: a. b. c. d. e. we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; in our opinion, proper books of accounts as required by law have been kept by the Company so far as appears from our examination of those books; the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account; in our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; for recognizing profit on construction project under an agreement to sell, stage of completion is determined as a proportion that contract costs incurred for the work performed bear to the estimated total costs. Further, expected loss on contracts is recognized when it is probable that the total contracts costs will exceed the total contract revenue. This practice is being consistently followed by the Company. For this purpose, total project costs incurred, and cost to completion of projects which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies, etc, which being technical matters have been relied upon by us. in our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with accounting principles generally accepted in India: i) ii) in the case of the Balance Sheet, of the state of affairs of the company as at 31st March, 2009; in the case of the Profit and Loss Account, of the loss for the year ended on that date; and

f.

iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date. 6. On the basis of written representations received from the directors, as on 31st March, 2009 and taken on record by the Board of Directors, we report that, none of the Directors is disqualified as on 31st March, 2009 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; For Deloitte Haskins & Sells Chartered Accountants Place : Hyderabad Date : 30th June, 2009 Ganesh Balakrishnan Partner Membership No.201193

28 | Annual Report 2008-09

Annexure to the Auditors Report

[Referred to in paragraph (3) of the Auditors Report of even date to the members of Prajay Engineers Syndicate Limited] The nature of the Companys business/ activities during the year is such that clauses (vi), (xii), (xiii), (xiv), (xix) of paragraph 4 of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. i. In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. (b) As explained to us all the fixed assets are physically verified by the management in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the Company and the nature of its assets. According to the information and explanation given to us, no material discrepancies were noticed on such verification. (c) The fixed assets disposed off during the year, in our opinion, do not constitute substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. ii. (a) The inventories in respect of hotels and resorts have been physically verified by the management at the year end. In our opinion the frequency of verification is reasonable. (b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and nature of its business. (c) On the basis of our examination of the records of inventory, in our opinion, the Company is maintaining proper records of inventory and the discrepancies noticed on physical verification between the physical stocks and the book records were not material in relation to the operations of the Company.

iii. (a) According to the information and explanations given to us, the Company has not granted any loan secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and accordingly clauses iii (b) to iii (d) of paragraph 4 of CARO are not applicable. (b) According to the information and explanations given to us, the Company has taken unsecured loan from two parties covered in the register maintained under Section 301 of the Companies Act, 1956. The Maximum amount of loan outstanding during the year was Rs. 3718.42 lakhs and balance as at the year end is Rs.1357.75 lakhs. (c) In our opinion and according to the information and explanations given to us, the rates of interest and other terms and conditions of such loans are not, prima facie, prejudicial to the interest of the Company (d) In respect of the loan taken, the principal and the interest amounts were repaid at the due dates during the year and there are no overdue amounts.

iv. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventories and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system. v. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 have been entered in the register required to be maintained under that section. (b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements and exceeding the value of rupees five lacs in respect of any party during the year have been made at prices, which are reasonable having regard to the prevailing market prices at the relevant time. vi. The Company has an internal audit system, the scope and coverage of which needs to be increased to make it commensurate with its size and nature of the business of the Company. vii. We are informed that the Central Government has not prescribed maintenance of cost records under clause (d) of subsection (1) of Section 209 of the Companies Act, 1956. viii. (a) According to the records of the Company, the Company is generally regular in depositing undisputed statutory dues including provident fund, employees state insurance, income tax, sales tax, wealth tax, service tax, customs duty, excise duty, cess and other material statutory dues applicable to it. There are no arrears of the aforesaid dues as at 31st March, 2009 outstanding for a period of more than six months from the date they became payable except in respect of Income Tax dues amounting to Rs.1051.21 lacs and Dividend Tax of Rs.168.66 lacs. There are no dues towards investor education and protection fund.

(b) As at 31st March, 2009 according to the records of the company and the information and explanations given to us, there are no dues of income tax, sales tax, wealth tax, service tax, customs duty, excise duty and cess matters that have not been deposited on account of any dispute.

Prajay Engineers Syndicate Limited | 29

ix. The Company does not have accumulated losses as at 31st March, 2009 and has not incurred cash losses during the financial year ended on that date and in the immediately preceding financial year. x. In our opinion and according to the information and explanations given to us, the company during the year has not defaulted in repayment of dues to banks and financial institutions. There are no debentures as on the balance sheet date. xi. According to the information and explanations given to us, the Company has not given any guarantees for loans taken by others from banks or financial institutions. xii. In our opinion and according to the information and explanations given to us, the term loans were applied for the purposes for which they were obtained. xiii. Based on the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, in our opinion, there are no funds raised on short term basis which have been used for long term investments. xiv. The Company has not made preferential allotment of shares to the parties and companies covered in the register maintained under Section 301 of the Act during the year. xv. The Company has not raised any money through a public issue during the year. xvi. To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company has been noticed or reported during the year. For Deloitte Haskins & Sells Chartered Accountants Place : Hyderabad Date : 30th June, 2009 Ganesh Balakrishnan Partner Membership No.201193

30 | Annual Report 2008-09

Balance Sheet

as on 31st March, 2009

Rs. in lacs Schedules As on 31-03-09 As on 31-03-08

SOURCES OF FUNDS Shareholders' Funds Share Capital Reserves and Surplus Loan Funds Secured Loans Unsecured Loans Deferred Tax Liability (Net) (Refer Note B.10 on Schedule 18) TOtaL

1 2

3,969.58 56,403.30

3,969.58 56,501.91

3 4

13,554.02 2,866.75 304.82 77,098.47

10,609.50 147.07 427.22 71,655.28

II

APPLICATION OF FUNDS Fixed Assets Gross Block Less: Depreciation Net Block Capital Work in Progress including capital advances 5 6,245.60 1,184.57 5,061.03 2,267.77 7,328.80 6 9,937.76 5,002.32 800.86 4,201.46 2,011.57 6,213.03 7,649.27

Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions

7 8 9 10 11

31,493.27 31,969.04 872.63 11,935.65 76,270.59 14,097.44 2,341.24 16,438.68 59,831.91 77,098.47

30,441.98 35,237.04 283.43 12,756.73 78,719.18 16,341.21 4,584.99 20,926.20 57,792.98 71,655.28

Net Current Assets TOtaL Significant Account Policies and Notes to the Accounts Schedules 1 to 18 annexed hereto form an integral part of the accounts 18

per our report attached for Deloitte Haskins & Sells Chartered Accountants Ganesh Balakrishnan Partner Place : Hyderabad Date: 30th June, 2009 D.Madhavi Latha Company Secretary

For and on behalf of the Board D.S. Chandra Mohan Reddy Chairman and Managing Director D.Vijay Sen Reddy Executive Director

Prajay Engineers Syndicate Limited | 31

Profit and Loss Account

for the year ended 31st March, 2009

Rs. in lacs Schedules I Income Sales and Services Other Income II Expenditure Cost of Land, Plots and Constructed Properties Direct Cost Hotels & Resorts Employee Cost Establishment and Other Expenses Interest and Finance Charges Depreciation and Amortisation III Profit before Tax Provision for Tax - Current Tax (includes interest aggregting to Rs. 242.46 lacs ) - Deferred Tax - Fringe Benefit Tax IV Profit/ (Loss) after Tax Balance brought forward from previous year Amount available for appropriation V Appropriations Proposed Dividend Dividend including tax of earlier year Tax on Dividend Transfer to General Reserve Balance Carried to Balance Sheet Earnings per share (in Rs.) Basic Diluted Significant Account Policies and Notes to the Accounts Schedules 1 to 18 annexed hereto form an integral part of the accounts 18 16,514.86 (0.25) (0.25) 992.39 52.57 168.66 1,030.00 16,613.47 37.46 37.46 14 15 16 17 12 13 8,204.66 78.94 8,283.60 3,516.07 440.52 751.33 1,279.56 1,749.55 402.71 8,139.74 143.86 350.29 (122.40) 14.58 242.47 (98.61) 16,613.47 16,514.86 34,401.90 91.72 34,493.62 17,946.36 371.37 1,365.51 928.93 908.69 225.24 21,746.10 12,747.52 2,247.22 203.40 10.25 2,460.87 10,286.65 8,570.44 18,857.09 Year Ended 31-03-09 Year Ended 31-03-08

per our report attached for Deloitte Haskins & Sells Chartered Accountants Ganesh Balakrishnan Partner Place : Hyderabad Date: 30th June, 2009 D.Madhavi Latha Company Secretary

For and on behalf of the Board D.S. Chandra Mohan Reddy Chairman and Managing Director D.Vijay Sen Reddy Executive Director

32 | Annual Report 2008-09

Schedules annexed to and forming

part of the Accounts
Rs. in lacs As on 31-03-09 SCHEDULE 1 Share Capital Authorised 50,000,000 (31.03.2008: 50,000,000) Equity Shares of Rs. 10 each Issued, Subscribed and Paid up 39,695,776 (31.03.2008: 39,695,776) Equity Shares of Rs. 10 each 3,969.58 3,969.58 Of the above: 2,972,787 shares have been allotted pursuant to a contract without payments being received in cash. SCHEDULE 2 Reserves and Surplus Share Premium As per last Balance Sheet Add: Amount received during the year General Reserve As per last Balance Sheet Add: Transfer from Profit and Loss Account 1,999.08 1,999.08 16,514.86 56,403.30 * on conversion of Foreign Currency Convertible Bonds Rs. 26,554.89 lacs and on conversion of share warrants Rs.7,153.44 lacs. 969.08 1,030.00 1,999.08 16,613.47 56,501.91 37,889.36 37,889.36 4,181.03 33,708.33* 37,889.36 3,969.58 3,969.58 5,000.00 5,000.00 As on 31-03-08

Balance in Profit & Loss Account

Prajay Engineers Syndicate Limited | 33

Schedules annexed to and forming

part of the Accounts contd...
Rs. in lacs As on 31-03-09 SCHEDULE - 3 Secured Loans Cash Credit from Banks Secured by way of first charge on the project assets of the Company which includes land and other assets relating to specified projects. Term Loans From: - Indian Overseas Bank Secured by way of first charge on project assets of the Company which includes land and other assets relating to specified projects and current assets of the Hospitality Division. - HSBC Secured by way of equitable mortgage of the plotted land with common areas at Murharipally village in the project Water Front City and exclusive charge over recoverables of Water Front City. - State Bank of India - State Bank of Mysore - State Bank of Saurashtra - State Bank of Bikaner and Jaipur - The Tamilnad Mercantile Bank Limited - Punjab National Bank * Secured by way of first joint mortgage/ charge on the entire project assets of Princeton Towers and second charge on current assets of the Princeton Towers project. - Andhra Pradesh State Financial Corporation Secured by way of assignment of developer rights of 64% in the specified project and first charge on the project assets of the Company which includes land and other assets relating to the specified project. - Tata Capital Limited Secured by way of equitable mortgage of the immovable property situated at Kukatpally Village. - L&T Infrastructure Finance Company Limited Secured by pledge of shares held by Mr. Chandra Mohan Reddy and Mr. Vijay Sen Reddy aggregating to Rs. 50 crores. - Life Insurance Corporation Secured against the Keyman Insurance Policy. - Interest Accrued and Due Other Loans: Hire Purchase Secured by hypothecation of vehicles and equipments acquired out of the said loan. 511.98 13,554.02 387.99 10,609.50 26.74 26.74 2,000.00 130.55 4,435.02 1,432.29 3,035.78 3,491.93 3,328.44 As on 31-03-08

1400.00* 300.00* 210.00* 300.00* 210.00* 380.00*

800.00

1,700.00

56.06

34 | Annual Report 2008-09

Schedules annexed to and forming

part of the Accounts contd...
Rs. in lacs As on 31-03-09 SCHEDULE - 4 Unsecured Loans From Subisidiary * Short Term: - From Director - Hyderabad Steel Traders - Overdraft from Bank Other than Short Term: - Kotak Mahindra Bank [Repayable within one year Rs. 20.64 lacs (31.03.2008 - Rs. 23.93 lacs)] - Prajay Financial Services Limited - Others 20.64 77.50 25.00 2,866.75 * Prajay Properties Private Limited - Rs. 1270.76 lacs 44.57 77.50 25.00 147.07 86.99 1,328.57 57.29 1270.76 As on 31-03-08

SCHEDULE-5 Fixed Assets

Cost Particulars As On 31st March 2008 430.85 1,831.19 401.35 1,604.95 249.21 72.06 412.71 5,002.32 Additions Deductions As On 31st March 2009 0.96 430.85 2,343.37 429.32 2,096.29 340.35 35.10 36.06 1,921.25 84.03 521.39 6,245.60 5,002.32 Depreciation And Amortisation As On 31st March 2008 201.63 22.84 375.27 48.39 35.20 117.53 800.86 599.98 For The Year On Deduction As On 31st March 2009 246.54 132.87 0.72 18.28 19.00 24.36 528.69 88.86 45.52 142.09 1,184.57 800.86 Net Block As On 31st March 2009 430.85 2,096.83 296.45 1,567.60 251.49 38.51 379.30 5,061.03 4,201.46 As On 31st March 2008 430.85 1,629.56 378.51 1,229.68 200.82 36.86 295.18

Land-Free hold Buildings Lease Hold Improvements Plant & Machinery Furniture & Fixtures Computers Vehicles

512.18 27.97 492.30 91.14 11.97 143.78 1,279.34 1,525.14

44.91 110.03 154.14 40.47 10.32 42.84 402.71 225.24

As at March 31, 2008

5,398.43

Note: Plant & Machinery costing Rs. 589.44 lacs (31.03.2008: Rs. 573.52 lacs) and Vehicles costing Rs.349.06 lacs (31.03.2008: Rs. 242.62 lacs) have been acquired on hire purchase, the legal ownership of which will be transferred to the Company after the final payment.

Prajay Engineers Syndicate Limited | 35

Schedules annexed to and forming

part of the Accounts contd...
Rs. in lacs As on 31-03-09 SCHEDULE - 6 Investments Long Term (at cost) A. Non Trade - Quoted Indian Overseas Bank 9,500 Equity Shares of Rs.10 each, fully paid B. Trade - Unquoted Prajay Urban Private Limited 1,000 Equity Shares of Rs.10 each, fully paid C. In Subsidiary Companies - Unquoted Prajay Developers Private Limited 10,000 Equity Shares of Rs.10 each, fully paid Prajay Properties Private Limited * 50,000 Equity Shares (31.03.2008: 10,000) of Rs.10 each, fully paid Prajay Land Capital Private Limited * 50,000 Equity Shares (31.03.2008: 10,000) of Rs.10 each, fully paid Dillu Cine Enterprises Private Limited 5,000 Equity Shares of Rs.1,000 each, fully paid Prajay Holdings Private Limited 9,99,900 Equity Shares (31.03.2008: 1,000,000) of Rs.10 each, fully paid Prajay Realty Private Limited 10,000 Equity Shares of Rs.10 each, fully paid Prajay Holdings Private Limited 6,44,38,944 Preferential Shares of Rs.10 each, fully paid D. Investments in Capital of Partnership Firm Prajay Binjusaria Estates 2,280.50 9,937.76 Notes: (i) Aggregate of Quoted Investments Cost Market Value (ii) Aggregate of Unquoted Investments (Cost) * Pledged with Lehman Brothers Capital Private Limited towards loan taken by Prajay Properties Private Limited and Prajay Land Capital Private Limited. 7,649.27 As on 31-03-08

2.28

2.28

0.10

0.10

1.00

5.00

1.00

5.00

1.00

1,100.00

1,100.00

99.99

100.00

1.00

6,443.89

6,443.89

2.28 4.32 7,654.98

2.28 12.84 7,646.99

36 | Annual Report 2008-09

Schedules annexed to and forming

part of the Accounts contd...
Rs. in lacs As on 31-03-09 SCHEDULE - 7 Inventories Land at Cost Constructed Properties - Land and construction work in progress - at cost Hotel & Resorts - Food and Beverages - at cost 15,105.87 18,385.25 As on 31-03-08

16,360.92

12,031.66

26.48 31,493.27

25.07 30,441.98

SCHEDULE - 8 Debtors Unsecured, considered good Outstanding for more than six months Other Debts 30,635.67 1,333.37 31,969.04 SCHEDULE - 9 Cash and Bank Balances Cash on Hand Balance with Scheduled Banks On Current Account On Escrow Account On Deposit Account Balance with Non Scheduled Banks 751.21 84.11 18.35 872.63 59.10 45.47 283.43 18.96 178.86 14,335.58 20,901.46 35,237.04

Prajay Engineers Syndicate Limited | 37

Schedules annexed to and forming

part of the Accounts contd...
Rs. in lacs As on 31-03-09 SCHEDULE - 10 Loans & Advances (Unsecured considered good unless otherwise specified) Advances to Subsidiaries Advances recoverable in cash or in kind or for value to be received Advance for purchase of land/ development Advance Tax (including tax deducted at source) 286.61 1,841.62* 8,720.31 1,087.11 11,935.65 Maximum amount outstanding during the year from subsidiaries: Prajay Developers Private Limited - Rs. Nil (31.03.2008 - Rs. 2183.85 lacs) Prajay Holdings Private Limited - Rs. Nil (31.03.2008 - Rs. 6443.89 lacs) Prajay Land Capital Private Limited - Rs. 286.61 lacs (31.03.2008 - Rs. 153.85 lacs) Prajay Properties Private Limited - Rs. 2171.92 lacs (31.03.2008 - Rs. 867.08 lacs) Dillu Cine Enterprises Private Limited - Rs. 10.69 lacs (31.03.2008 - Rs. 9.44 lacs) * includes deposit with Director - Rs. 500 lacs (31.03.2008 - Rs. Nil) SCHEDULE - 11 Current Liabilities and Provisions Current Liabilities Sundry Creditors (i) Due to micro enterprises and small enterprises (ii) Due to other Creditors * Due to Subsidiaries** Advance from Customers Unclaimed Dividend @ 12,517.80 1,099.38 464.93 15.33 14,097.44 Provisions Proposed Dividend Tax on Dividend Taxation Fringe Benefit Tax Gratuity 168.66 2,146.31 14.58 11.69 2,341.24 Notes: * ** @ includes due to Directors - Rs. 5.30 lacs (31.03.08 - Rs.26.37 lacs) (a) Dillu Cine Enterprises Private Limited - Rs.44.19 lacs (31.03.08 - Rs. Nil) (b) Prajay Holding Private Limited - Rs.1055.19 lacs (31.03.08 - Rs.72.94 lacs) There is no amount due and outstanding to be credited to Investor Education and Protection Fund 992.39 168.66 3,396.29 11.82 15.83 4,584.99 15,915.72 72.94 336.56 15.99 16,341.21 3,167.28 1,177.68 7,754.11 657.66 12,756.73 As on 31-03-08

38 | Annual Report 2008-09

Schedules annexed to and forming

part of the Accounts contd...
Rs. in lacs

Year Ended 31-03-09

SCHEDULE - 12 Sales & Services Sale of Constructed Properties Sale of Land Revenue from Hospitality Services (a) Sale of Rooms (b) Food and Beverages (c) Others Membership Fees 263.41 932.64 178.24 85.85 8,204.66 SCHEDULE - 13 Other Income Rental Income Interest Income [ ( includes tax deducted at source Rs.0.34 lacs ( 31.03.2008 - Rs. 0.30 lacs ) ] Dividend from non trade investments Miscellaneous 30.64 4.98 0.33 42.99 78.94 SCHEDULE - 14 Cost of Land, Plots and Constructed Properties Opening Stock: - Land - Constructed Properties Add: Purchases/ development and construction costs including civil, electrical, contracting, etc., incurred during the year Less: Closing Stock - Land - Constructed Properties 4,819.66 1,924.86

Year Ended 31-03-08

24,683.65 8,382.40

319.42 793.35 160.14 62.94 34,401.90

29.76 5.33 0.29 56.34 91.72

18,385.25 12,031.66 4,565.95

16,874.40 10,192.34 21,296.53

15,105.87 16,360.92 3,516.07

18,385.25 12,031.66 17,946.36

Prajay Engineers Syndicate Limited | 39

Schedules annexed to and forming

part of the Accounts contd...
Rs. in lacs

Year Ended 31-03-09

SCHEDULE - 15 Employee Cost Salaries, Wages and Bonus Commission to whole time Directors Contribution to Provident Fund/ Pension Fund and Gratuity Staff Welfare

Year Ended 31-03-08

871.22 19.57 21.64 912.43

587.54 886.19 19.21 16.88 1,509.82 144.31 1,365.51

Less: Allocated to Projects

161.10 751.33

SCHEDULE - 16 Establishment and Other Expenses Rent Rates and Taxes Insurance Power and Fuel Repairs and Maintenance - Building - Plant & Machinery - Others Travelling Expenses Printing and Stationery Postage, Telegrams and Telephones Professional Charges Advertisement (Profit)/ Loss on Sale of Assets (net) Miscellaneous Expenses 213.18* 112.24 17.17 171.31 119.21 42.87 42.09 46.40 44.13 36.07 133.23 162.72 6.32 132.62 1,279.56 *Includes rent paid to Director - Rs. 92.85 Lacs ( Previous Year : Rs. Nil ) SCHEDULE - 17 Interest and Finance Charges On Fixed Loans Others Bank Charges 1,528.04 1,045.58 309.48 2,883.10 Less: Allocated to Projects 1,133.55 1,749.55 748.43 572.94 70.09 1,391.46 482.77 908.69 112.36 49.69 21.78 142.63 115.76 52.65 43.66 61.53 28.49 35.08 93.06 63.23 (6.44) 115.45 928.93

40 | Annual Report 2008-09

Schedules
SCHEDULE 18

forming part of Financial Statements

Significant Accounting Policies and Notes to the Accounts for the year ended 31st March, 2009 A. SIGNIFICANT ACCOUNTING POLICIES 1. Method of Accounting The financial statements are prepared under the historical cost convention in conformity with the accounting principles, generally accepted in India and in accordance with accounting standards specified in the Companies (Accounting Standards) Rules, 2006 notified by the Central Government in terms of Section 211 (3C) of the Companies Act, 1956. 2. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 and the result of operations during the reporting periods. Although these estimates are based upon managements knowledge of current events and actions, actual results could differ from those estimates. 3. Fixed Assets Fixed Assets are stated at cost less accumulated depreciation and amortisation. Direct costs inclusive of inward freight, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalized until fixed assets are ready for use. Capital Work in Progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use at the reporting date of the financial statements. 4. Depreciation and Amortisation i) Depreciation on fixed assets is provided on straight-line method as per rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. ii) Leasehold Improvement is amortised over the period of the lease. iii) Assets costing less than Rs.5000 are fully depreciated in the year of purchase. 5. Investments Long term investments are carried at cost, less provision for diminution other than temporary if any, in the value of such investments. Current Investments are carried at lower of cost and fair value. 6. Inventories Inventories are valued as under: i) Land earmarked for property development is valued at cost. Cost includes land acquisition cost, registration charges and stamp duty. ii) Constructed properties includes cost of land, premium for development rights, construction costs and allocated interest and expenses incidental to the projects undertaken by the company. iii) Stock of food and beverages are carried at cost and net realizable value, whichever is lower. Cost is determined on the weighted average method. 7. Revenue Recognition i) Sale of Land and Plots is recognised in the financial year in which the agreement to sell is executed. ii) Revenue from constructed properties (excluding service tax) is recognized on the percentage of completion method. Total sale consideration as per the agreements to sell constructed properties entered into is recognized as revenue only when the stage of completion is 20 percent or more when the outcome of the project can be estimated reliably. When it is probable that total costs will exceed the total project revenue the expected loss is recognised immediately. Service tax does not form part of gross revenue.

iii) Income from sale of Rooms, Food and Beverages and allied services relating to hotel operations is recognized upon rendering of the service. Income stated is exclusive of amount received towards sales tax/ service tax etc., iv) In respect of membership (club) sales, revenue is recognized as under: -Life membership, Permanent membership and Time-share membership over a period of 15 years. -Long-term membership over a period of 3 years. -Health club membership fully in the year of receipt.

Prajay Engineers Syndicate Limited | 41

Schedules

forming part of Financial Statements contd...

8. Cost of Construction Cost of constructed properties includes cost of land (including land under agreements to purchase), estimated internal development costs, external development charges, constructions costs and development/ construction materials, which is charged to the profit and loss account based on the percentage of revenue recognized as per accounting policy (7) above, in consonance with the concept of matching costs and revenue. Final adjustment is made on completion of the applicable project. Overhead expenses comprising costs other than those directly charged to the jobs are distributed over the various projects on a pro-rata basis having regard to the activity and nature of such projects. 9. Foreign Exchange Transactions Transactions in foreign currency and non monetary assets are accounted for at the exchange rate prevailing on the date of the transaction. All monetary items denominated in foreign currency are converted at the year-end exchange rate. The exchange differences arising on such conversion and on settlement of the transaction are dealt with in the profit and loss account. 10. Income Tax Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. 11. Borrowing Cost Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as part of the cost of such asset. A qualifying asset is one that necessarily takes substantial period of time i.e., more than twelve months to get ready for its intended use. All other borrowing costs are charged to the profit and loss account as incurred. 12. Earnings per share (EPS) In arriving at the EPS, the Companys net profit after tax, computed in terms of the accounting principles, generally accepted in India, is divided by the weighted average number of equity shares outstanding on the last day of the reporting period. The EPS thus arrived is known as Basic EPS. To arrive at the diluted EPS the net profit after tax, referred above, is divided by the weighted average number of equity shares that could have been issued on conversion of the shares having potential dilutive effect subject to the terms of issue of those potential shares. The date/s of issue of such potential shares determine the amount of the weighted average number of potential equity shares. 13. Employee Benefits Liability for employee benefits, both short and long term, for present and past services which are due as per the terms of employment are recorded in accordance with Accounting Standard (AS) 15 Employee Benefits. i) Defined Contribution Plan: Companys contributions paid / payable during the year towards Provident Fund are charged to the Profit and Loss Account. ii) Defined Benefit Plan: The gratuity liability is provided on the basis of actuarial valuation on the Balance Sheet date and the same is funded with Life Insurance Corporation as per their advice. B. NOTES TO THE ACCOUNTS 1. As stated in note A (7) (ii) for recognizing profit on projects, stage of completion is determined as a proportion that project costs incurred for the work performed bear to the estimated total costs. Further, as stated in that note expected loss on projects is recognised when it its probable that the total project costs will exceed the total project revenue. For this purpose total project costs are ascertained on the basis of project costs incurred and costs to completion of projects on progress, which is arrived at by the Management, based on current technical data, forecasts and estimate of net expenditure to be incurred in future including for contingencies etc., which being technical matters have been relied on by auditors. Further, in respect of certain properties where sale agreement has been entered with parties even though money has not been received as per stipulation in the contract, the Company has recognised revenue and debtors as management is confident that it shall be able to realize the sale proceeds. 2. Sundry Creditors Dues to Micro and small enterprises Sundry Creditors (Schedule 11, Current Liabilities and Provisions) include Rs. Nil due to micro enterprises and small enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006). The company has not received any memorandum (as required to be filed by the suppliers with the notified authority under the MSMED Act, 2006) claiming their status as micro or small or medium enterprises. 3. (a) As the Company is not a manufacturing/trading Company, additional information as required under Part II of Schedule VI to Companies Act, 1956 relating to capacities, production, sales, consumption of materials etc., is not applicable to it. (b) The Company has applied for exemption from giving the quantity wise details of turnover in respect of supply of Accommodation, Food & Beverage and Liquor & Wines, for which approval is awaited.

42 | Annual Report 2008-09

Schedules

forming part of Financial Statements contd...

4. Value of Import of CIF Basis 2008-09 Construction related equipment and material 5. Expenditure in Foreign Currency 2008-09 Professional and Consultation Fees Interest Foreign Travel Others 6. Earnings in Foreign Currency 2008-09 Sale of Constructed Properties Income from Rooms 7. Auditors Remuneration 2008-09 Audit Fees Other Matters * Paid to previous Auditor 8. Contingent Liabilities (not provided for) 2008-09 a) Income tax matters in dispute b) Bank Guarantees given on behalf of others Rs. in lacs 2007-08 37.55 10.00 15.00 8.95 Rs. in lacs 2007-08 20.00 1.59* 5.79 5.65 Rs. in lacs 2007-08 69.67 47.90 0.15 Rs. in lacs 2007-08 1.86 36.29 6.31 0.12 Rs. in lacs 2007-08 26.20

9. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance) Rs. 2,932.71 lacs (31.03.2008: Rs. 911.14 lacs). 10. Deferred Tax Asset / (Liability) (Net) comprise of: Rs. in lacs 31st March, 2009 Deferred Tax Liability (A) : Arising on account of timing difference Depreciation Net Deferred Tax Liability 11. Earnings Per Share (EPS): 2008-09 a) Weighted average number of equity shares of Rs.10 each Number of equity shares at the beginning of the year Number of equity shares at the end of the year Weighted average outstanding during the year b) Net Profit/ (Loss) available for equity share holders (Rs. in lacs) c) Earnings per share (Rs.) i) Basic ii) Diluted 39,695,776 39,695,776 39,695,776 (98.61) (0.25) (0.25) Rs. in lacs 2007-08 21,661,829 39,695,776 27,457,070 10,286.65 37.46 37.46 304.82 304.82 31st March, 2008 427.22 427.22

Prajay Engineers Syndicate Limited | 43

Schedules

forming part of Financial Statements contd...

12. Managerial Remuneration 2008-09 Salaries Perquisites Commission 144.00 1.04 145.04 Rs. in lacs 2007-08 74.85 1.20 886.19 962.24

Computation of Net Profit under Section 309 (5) of the Companies Act, 1956: Profit before Taxation as per Profit and Loss Account Add: a) Directors remuneration b) Depreciation charged in the books c) Loss on sale of assets Less: Depreciation under Section 350 of the Companies Act, 1956 Net Profit as per Section 309(5) of the Companies Act, 1956 Commission payable to : Managing Director @ 3% Executive Director @ 2% Director Operations @ 1.5% Restricted to: Managing Director Executive Director Director Operations

143.86 145.04 402.71 6.32 697.93 402.71 295.22

12747.52 962.24 225.24 13935.00 225.24 13709.76

411.30 274.20 205.65 891.15 409.01 272.67 204.51 886.19

13. Segment Information as per Accounting Standard 17 on Segment Reporting notified by the Companies (Accounting Standards) Rules, 2006 for the year ended 31st March, 2009. Rs. in lacs 2007-08 2008-09 Hospitality Hotels & Resorts Unallocated Total Unallocated Total 1,460.14 1,460.14 (190.23) 127.09 1,888.10 1,749.55 4.98 0.33 143.86 350.29 (122.40) 14.58 (98.61) 2008-09 Hospitality Hotels & Resorts Unallocated 11,062.94 11,062.94 19,382.14 19,382.14 93,537.15 93,537.15 33,164.27 33,164.27 1,999.28 402.71 Total 5,194.99 5,194.99 361.65 361.65 550.15 240.87 Construction & Development of Property 75,068.82 75,068.82 15,786.52 15,786.52 1,099.35 64.15 2007-08 Hospitality Unallocated Hotels & Resorts 5,111.92 5,111.92 240.66 240.66 425.79 161.09 12,400.74 12,400.74 16,082.81 16,082.81 Total 92,581.48 92,581.48 32,109.99 32,109.99 1,525.14 225.24 78.94 78.94 8,283.60 8,283.60 2,015.19 33,066.05 33,066.05 14,480.72 1,335.85 1,335.85 54.05 91.72 91.72 34,493.62 34,493.62 14,534.77 884.18 13,650.59 908.69 5.33 0.29 12,747.52 2,247.22 203.40 10.25 10,286.65 Construction & Development of Property Hospitality Hotels & Resorts

44 | Annual Report 2008-09

Schedules

Business Segment

Construction & Development of Property 6744.52 6744.52 2,205.42

Segment Revenue External Total Revenue Segment Result

forming part of Financial Statements contd...

Unallocated Corporate Expenses net of unallocated income Operating Profit Interest Expense Interest Income Dividend Income Profit before Taxation Income Tax Deferred Tax Fringe Benefit Tax Net Profit

Other Information 77,279.22 77,279.22 13,420.48 13,420.48 1,449.13 161.84 -

Construction & Development of Property

Segment Assets Total Assets Segment Liabilities Total Liabilities Capital Expenditure Depreciation Non cash expenses other than depreciation

Notes:

1. Segments have been identified in accordance with Accounting Standard 17 on Segment Reporting, concerning the returns/ risk profiles of the business. The Company has identified business segments as mentioned below as primary segments for disclosure:

(a) Construction and Development of Property (b) Hospitality - Hotels and Resorts 2. As the operations of the Company are only in India, there is no reportable geographical segment 3. Unallocated corporate expenditure includes common service expenses.

Prajay Engineers Syndicate Limited | 45

Schedules

forming part of Financial Statements contd...

14. Related Party Disclosures: Information relating to Related Party Transactions as per Accounting Standard 18 notified by the Companies (Accounting Standards) Rules, 2006. A. List of Related Parties Party a) Prajay Holdings Private Limited Prajay Developers Private Limited Prajay Land Capital Private Limited Prajay Properties Private Limited Prajay Realty Private Limited Dillu Cine Enterprises Private Limited Prajay Binjusaria Estates Relationship Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate

Upto 29th May, 2008

w.e.f. 29th December, 2008

b)

Key Management Personnel Designation Relatives (Relation)* Mr. Chandra Mohan Reddy Managing Director Mrs. Hymavathi Reddy (Wife) Mr. Vijay Sen Reddy Executive Director Mrs. Sharmila Reddy (Wife) Mr. Ravinder Reddy Director Operations Mr. Hanumanth Reddy (Father) Mr. K. Ravi Kumar Whole time Director Mr. Sumit Sen Whole time Director Mrs. Rina Sen (Wife) * Relatives of key management personnel with whom there were transactions during the year c) Other entities under the control of key management personnel and their relatives Prajay Resorts and Hotels Limited Prajay Township Private Limited Prajay Developers Private Limited Prajay Urban Private Limited Prajay Estates Private Limited Prajay Techpark Private Limited Prajay Hotels Private Limited Prajay Financial Services Limited Prajay Arnav Shelter Private Limited Prajay Chit Funds Private Limited Prajay Velocity Developers Private Limited Prajay ARRF Estates Private Limited VijMohan Constructions Private Limited Prajay Constructions Limited Prajay Resorts and Amusement Park Limited Secunderabad Golf and Leisure Resorts Private Limited

14 B. Name of the Related Party Subsidiaries Enterprises over which Key Management Personnel is able to exercise significant influence 31st March, 2009 389.02 39.19 145.04 113.05 380.65 4.00 4.00 1.00 2,280.50 6,542.89 1.00 1.00 1,100.00 0.10 50.00 962.24 6.72 132.73 1,100.00 31st March, 2008 31st March, 2009 31st March, 2008 Rs. in lacs Key Management Personnel (KMP) and their relatives

The following transactions were carried out with related parties in the ordinary course of business

46 | Annual Report 2008-09

Schedules

Description

31st March, 2009 VijMohan Constructions Private Limited Prajay Holdings Private Limited VijMohan Constructions Private Limited Key Management Personnel

31st March, 2008

forming part of Financial Statements contd...

Sale of land, property and material Purchase of land, material and services

1.00* 1,576.87 860.84 46.70

486.08 2.54 2,503.09 153.85 9.44

0.24

Remuneration paid (Refer Note 12 on Schedule 18) Rent paid Interest Paid Prajay Properties Private Limited Investments made during the year Prajay Holdings Private Limited Prajay Properties Private Limited Prajay Land Capital Private Limited Dillu Cine Enterprises Private Limited Prajay Realty Private Limited Prajay Binjusaria Estates Prajay Urban Private Limited Investments sold during the year Prajay Holdings Private Limited Advances given Prajay Holdings Private Limited Prajay Developers Private Limited Prajay Properties Private Limited Prajay Land Capital Private Limited Dillu Cine Enterprises Private Limited Prajay Urban Private Limited VijMohan Constructions Private Limited Secunderabad Golf and Leisure Private Limited Prajay Velocity Developers Private Limited Prajay Estates Private Limited Prajay Arnav Shelters Private Limited Key Management Personnel 29.87 1,153.06 295.01 358.30 25.02 -

2,631.97 55.36 197.36 1,106.63 93.55 0.10 181.79 -

14 B. Name of the Related Party Subsidiaries Rs. in lacs Enterprises over which Key Management Key Management Personnel (KMP) and Personnel is able to their relatives exercise significant influence 31st March, 2009 2,181.31 467.77 728.08 56.14 978.89 126.67 585.85 3,200.00 1,929.24 2,613.47 44.19 1,630.22 500.00 6,001.04 2,265.56 481.60 568.59 1,682.95 0.25 139.75 1,682.95 31st March, 2008 31st March, 2009 31st March, 2008

The following transactions were carried out with related parties in the ordinary course of business

Schedules

Description

31st March, 2009 559.02

31st March, 2008

Advances repaid

Loans Taken

Loans Repaid

forming part of Financial Statements contd...

Advance taken

Advance repaid Deposits given Shares Allotted on conversion of share warrants

Prajay Holdings Private Limited Prajay Developers Private Limited Prajay Properties Private Limited Prajay Land Capital Private Limited Dillu Cine Enterprises Private Limited Prajay Urban Private Limited VijMohan Constructions Private Limited Prajay Velocity Developers Private Limited Key Management Personnel Prajay Properties Private Limited Key Management Personnel Prajay Properties Private Limited Key Management Personnel Prajay Holdings Private Limited Dillu Cine Enterprises Private Limited Prajay Urban Private Limited Prajay Holdings Private Limited

Prajay Engineers Syndicate Limited | 47

*Investments in Prajay Developers Private Limited transferred to Prajay Holdings Private Limited

14 B.

The following transactions were carried out with related parties in the ordinary course of business Balance at the end of the year Name of the Related Party Subsidiaries Enterprises over which Key Management Personnel is able to exercise significant influence 31st March, 2009 2.78 564.04 31st March, 2008 31st March, 2009 31st March, 2008 Rs. in lacs Key Management Personnel (KMP) and their relatives

48 | Annual Report 2008-09

Schedules

Description

31st March, 2009 286.61 653.29 663.21 879.09 118.57 0.10 1,055.19 44.19 72.94 2,265.56 1,270.76 86.99 93.64 15.92 368.20 1,106.64 949.02 93.55 0.10 570.96 2,183.85 153.85 820.14 9.44

31st March, 2008

Debtors Loans & Advances

forming part of Financial Statements contd...

28.92

Creditors/ Payables

35.30 -

Unsecured Loan Outstanding

VijMohan Constructions Private Limited Prajay Developers Private Limited Prajay Land Capital Private Limited Prajay Properties Private Limited Dillu Cine Enterprises Private Limited VijMohan Constructions Private Limited Secunderabad Golf and Leisure Private Limited Prajay Velocity Developers Private Limited Prajay Urban Private Limited Prajay Estate Private Limited Prajay Arnav Shelters Private Limited Key Management Personnel Prajay Holdings Private Limited Dillu Cine Enterprises Private Limited Prajay Urban Private Limited Key Management Personnel Prajay Properties Private Limited Key Management Personnel

Prajay Engineers Syndicate Limited | 49

Schedules
i.

forming part of Financial Statements contd...

15. Disclosure as required by Accounting Standard 19 Leases notified by the Companies (Accounting Standards) Rules, 2006. a) Operating Lease: Where the Company is a lessee: The Companys significant leasing arrangements are in respect of operating leases for premises (residences, office, etc.). The leasing arrangements, which are not non-cancellable, range generally between 11 months to 5 years and are usually renewable by mutual consent on agreed terms. The aggregate lease rents payable are recognized in the Profit and Loss Account for the year and included as Rent (disclosed under Establishment and Other Expenses in Schedule - 16) The Company has taken a building under a non-cancellable lease. Rs. in lacs 31st March, 2009 Total Payments not later than one year 31st March, 2009 Payments later than one year but not later than five years 159.39 Payments later than five years Payments Payments Total Payments later than later than not later one year five years than one but not year later than five years 59.40 99.99 - 215.64 56.25

Total of future minimum lease payments at balance sheet date

159.39

ii. Where the Company is a lessor: Details of assets given on operating lease: Gross Block 31st 31st March, March, 2009 2008 Building 88.58 88.58 Accumulated Depreciation as on 31st 31st March, March, 2009 2008 14.20 12.76 Rs. in lacs Depreciation for the Year 31st 31st March, 2 March, 009 2008 1.44 1.44 Rs. in lacs Payments later than five years

Total

31st March, 2009 31st March, 2009 Payments Payments Payments Total Payments Payments not later later than later than not later later than than one one year but five years than one one year year not later than year but not five years later than five years 15.54 55.22 99.76 27.65 57.22

Total of future minimum lease amounts receivable at Balance Sheet date b) Hire Purchase:

70.76

14.89

i) The Company has taken plant and machinery, motor vehicles under hire purchase arrangements for which the ownership will be transferred to the Company at the end of the hire purchase term. ii) Reconciliation between the total of minimum hire purchase payments at the balance sheet date and the present value: Total 31st March, 2009 Payments Payments not not later later than one than one year but not year later than five years 335.11 47.72 287.39 Rs. in lacs 31st March, 2008 Total Payments Payments not later later than than one one year year but not than five years 235.43 32.06 203.37 199.21 14.59 184.62

Total of minimum hire purchase payments at the Balance Sheet date Less: Future Finance Charges Present value of minimum hire purchase payments at the Balance Sheet date

579.59 67.61 511.98

244.48 434.64 19.89 46.65 224.59 387.99

50 | Annual Report 2008-09

Schedules

forming part of Financial Statements contd...

16. Employee Benefits Disclosure in respect of gratuity as required under Accounting Standard 15 (Revised) notified by the Companies (Accounting Standards) Rules, 2006. Rs. in lacs Gratuity (Funded) 31st March, 2009 I. Expenses recognized in the Statement of Profit and Loss Account for the year ended 31st March, 2009 1. Current Service Cost 2. Interest 3. Expected return on plan assets 4 Actuarial (Gain)/Loss 5. Past Service Cost 6. Total Expense II. Net Asset/(Liability) recognized in the Balance Sheet as on 31st March, 2009 1. Present Value of defined Benefit Obligation as on 31st March, 2009 2. Fair Value of plan assets as on 31st March, 2009 3. Funded Status {Surplus/(Deficit)} 4. Net Asset/(Liability) as on 31st March, 2009 III. Change in Obligation during the year ended 31st March, 2009 1. Present Value of defined Benefit Obligation at the beginning of the year 2. Current Service Cost 3. Interest Cost 4 Actuarial (Gain)/Loss 5. Benefit Payments 6. Present Value of Defined Benefit Obligation at the end of the year. IV. Change in Fair Value of Assets during the year ended 31st March, 2009 1. Fair value of plan assets at the beginning of the year 2. Expected return on plan assets 3. Contributions by employer 4 Actual benefits paid 5. Actuarial Gain (Loss) Plan Assets 6. Fair Value of plan assets at the end of the year V. The major categories of plan assets as a percentage of total plan Funded with LIC VI. Actuarial Assumptions 1. Discount Rate 2. Expected Rate of Return on Plan Assets 3. Mortality 4. Turnover Rate 31st March, 2008

10.25 2.09 1.15 (7.85) 3.75 26.86 (15.17) (11.69) (11.69) 26.22 10.25 2.09 (8.98) (0.24) 26.86 10.39 1.15 5.00 (0.24) 1.13 15.17 100% 8% per annum 9% per annum LIC 1994-96 Ultimate 4% per annum

5.84 1.11 5.36 6.27 18.58 26.22 (10.39) (15.83) (15.83) 13.91 5.84 1.11 5.36 26.22 10.39 10.39 100% 8% per annum N.A LIC 1994-96 Ultimate 4% per annum

17. a) Sundry Debtors - Schedule 8, unsecured, considered good, includes Rs. 30635.67 lacs, outstanding for more than six months. As a result of economic slowdown and recession in realty sector the realisations from customers are slow. b) Loans and Advances - Schedule 10 include advances given to Landlords/ developers towards certain projects amounting to Rs. 7974.94 lacs, outstanding from earlier years. Due to long term involvement in such projects, no provision has been considered necessary.

Prajay Engineers Syndicate Limited | 51

Schedules

forming part of Financial Statements contd...

18. Details as required under Schedule VI - Part I of the Companies Act, 1956 relating to investment in partnership firm. a) Name of the Partnership Firm - Prajay Binjusaria Estates b) Total Capital of the said Firm is Rs. 2281.50 lacs c) As at 31st March, 2009 the partnership firm has not commenced any activities d) Share of each partner in the Profit or Loss Srl. No. 1. 2. 3. 4. 19. Previous year figures have been regrouped/ reclassified wherever necessary to conform to current year classification. Name of the Partners Prajay Engineers Syndicate Limited Binjusaria Developers Private Limited Mr. Arun Kumar Kedia Ms. Seema Kedia Share (%) 50 17 17 16

For and on behalf of the Board D.S. Chandra Mohan Reddy Chairman and Managing Director Place : Hyderabad Date: 30th June, 2009 D.Madhavi Latha Company Secretary D.Vijay Sen Reddy Executive Director

52 | Annual Report 2008-09

Cash Flow Statement

for the year ended 31st March, 2009

For The Year Ended 31-03-09
A Cash Flow from Operating Activities: Net Profit before Taxation Adjustments for: Depreciation (Profit) / Loss on sale of Fixed Assets Income from non trade investments Interest Income Interest and Finance Charges Operating Profit before working capital changes Adjustments for: (Increase)/Decrease in Inventories (Increase)/Decrease in Debtors (Increase)/Decrease in Loans and Advance Increase/(Decrease) in Trade and Other Payables Cash used in Operations Direct Taxes paid (including Fringe Benefit Tax) Net Cash Flows from Operating Activities B Cash Flow from Investing Activities Purchase of Fixed Assets Sale of Fixed Assets Purchase of Investments Purchase of Investments in Subsidiaries Sale of Investments in Subsidiaries Loans and Advance to Subsidiaries Income from non trade investments (dividend) Interest income received Net Cash used in Investing Activities C Cash Flow from Financing Activities Issue of Equity Capital Proceeds from long term borrowings Repayment of long term borrowings Interest Paid Dividend Paid (including Tax on Dividend) Net Cash from Financing Activities Net Increase/ (Decrease) in Cash and Cash Equivalents(A + B + C) Cash and Cash Equivalents at the beginning of the year Cash and Cash Equivalents at the end of the year 12,807.60 (4,822.95) (1,384.01) (993.05) 5,607.59 589.20 283.43 872.63 1,109.06 5,068.97 (2,339.75) (908.69) (723.16) 2,206.43 (2,979.13) 3,262.56 283.43 (1,682.81) 10.74 (9.00) 0.01 951.43 0.33 4.98 (724.32) (2,122.42) 14.70 (0.10) (1,201.00) (985.96) 0.29 5.33 (4,289.16) (1,051.29) 687.50 (1,630.14) (2,246.25) 402.71 6.32 (0.33) (4.98) 1,440.07 143.86 225.24 (6.44) (0.29) (5.33) 908.69 12,747.52

Rs. in lacs For The Year Ended 31-03-08

1,843.79 1,987.65

1,121.87 13,869.39

(4,240.18) (2,252.53) (2,041.54) (4,294.07)

3,964.83 (21,243.69) (1,908.05) 5,036.39

(14,150.52) (281.13) (615.27) (896.40)

Notes : Cash and cash Equivalents as on March 31,2009 includes Rs.84.11 lacs ( 31.03.2008 : Rs. Nil .) in Escrow Account. per our report attached for Deloitte Haskins & Sells Chartered Accountants Ganesh Balakrishnan Partner Place : Hyderabad Date: 30th June, 2009 D.Madhavi Latha Company Secretary For and on behalf of the Board D.S. Chandra Mohan Reddy Chairman and Managing Director D.Vijay Sen Reddy Executive Director

Prajay Engineers Syndicate Limited | 53

Statement Pursuant to Part IV of Schedule VI to the Companies Act,1956. Balance Sheet Abstract and Company"s General Business Profile
I. REGISTRATION DETAILS Registration No. Balalnce Sheet Date 0 1 3 - 0 1 1 0 3 7 2 3 8 4 State Code 0 1

0 0 9

II.

CAPITAL RAISEDE DURING THE YEAR (AMT IN 000"S) Public Issue Bonus Issue 0 0 0 0 Rights Issue 0 0 Private Placement 0 . 0 . 0 0 0 0

III. POSITION OF MOBILISATION AND DISPOSITION OF FUNDS (AMT IN 000"S) Total Liabilities 7 7 0 9 8 4 7 . 0 0 Total Assets 7 7 0 9 8 4 7 . 0 0

SOURCES OF FUNDS Paid Up Capital Secured Loans 1 3 3 9 5 6 5 9 4 5 0 8 2 . . 0 0 Reserves and Surplus 0 0 Unsecured Loans Def. Tax Liability APPLICATION OF FUNDS Net Fixed Assets Net Current Assets Accumulated Losses 5 7 9 3 8 2 3 8 1 8 9 0 1 0 . . . 0 0 Investments 0 0 Misc.Expenditure 0 0 9 9 3 7 7 6 . 0 0 5 6 2 4 8 3 0 6 0 3 6 4 3 7 8 0 5 2 . . . 0 0 0 0 0 0

IV. PERFORMANCE OF COMPANY (AMT IN 000"S) Turnover Profit/(Loss) Before Tax Earning per Share in Rs. 8 2 1 8 4 3 3 6 8 0 6 . . . 0 0 Total Expenditure 0 0 Profit/(Loss) After Tax 2 5 Dividends Rate (%) 8 1 3 9 8 7 6 4 1 0 . . . 0 0 0 0 0 0

(-) 9

(-) 0

V. GENERIC NAMES OF THREE PRINIPAL PRODUCTS/ SERVICES OF THE COMPANY ( AS PER MONETARY TERMS)

Item Code No: (ltc code) N A

Service Description : Service Description :

Construction Hospitality

for and on behalf of the Board Place : Hyderabad Date: 30th June, 2009 D.Madhavi Latha Company Secretary D.S.Chandra Mohan Reddy Chairman and Managing Director D.Vijay Sen Reddy Executive Director

Rs. in lacs Number of shares For the financial years of the subsidiary Profit/(losses) not dealt within the books of accounts of the parent company (except to the dealt within column 6) Profit/(losses) not dealt within the books of accounts of the parent company 6 Nil Nil 7 (91.94) Nil 8 Nil Nil Profit/(losses) not dealt within the books of accounts of the parent company (except to the dealt within column 6) Profit/(losses) not dealt within the books of accounts of the parent company 3 65438844 4 99.99% 5 (22.92) Nil Extent of holding For the previous financial years since it became a subsidiary

54 | Annual Report 2008-09

Name of the subsidiary

Financial year ending of the subsidiary

1 Prajay Holdings Pvt. Ltd. Prajay Developers Pvt. Ltd.

2 31.03.2009 31.03.2009

Statement under section 212 of the Companies Act 1956

Note: Subsidiary of Subsidiary i.e. Prajay Holdings Pvt. Ltd. Prajay Land Capital Pvt. Ltd. Prajay Properties Pvt. Ltd. Dillu Cine Enterprises Pvt. Ltd. Prajay Realty Pvt. Ltd. 50000 50000 5000 10000 100% 100% 100% 100% (402.08) 5.34 (0.69) Nil Nil Nil Nil Nil Nil Nil (8.45) Nil

31.03.2009 31.03.2009 31.03.2009 31.03.2009

Nil Nil Nil Nil

Prajay Engineers Syndicate Limited | 55

, Auditors Report
To The Board of Directors of Prajay Engineers Syndicate limited. On the Consolidated Financial Statements of Prajay Engineers Syndicate Limited. 1. We have audited the attached consolidated balance sheet of Prajay Engineers Syndicate Limited and its subsidiaries (the Group) as at 31st March, 2009 and also the consolidated profit & loss account and the consolidated cash flow statement for the year ended on that date, annexed thereto. These consolidated financial statements are the responsibility of Prajay Engineers Syndicate Limiteds management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the over all financial statement presentation. We believe that our audit provides reasonable basis for our opinion. Attention is drawn to the following a. Note C. 12 (a) of Schedule 18, in respect of sundry debtors, unsecured considered good outstanding for a period of more than 6 months amounting to Rs.30635.67 lakhs. For the reasons stated therein we are unable to comment on the realisations of the aforesaid debtors. Note C. 12 (b) of Schedule 18, in respect of Advances amounting to Rs.7974.94 lakhs given towards purchase of land/ development, outstanding from earlier years in respect of which no provision has been made for the reasons stated therein.

2.

3.

b.

4.

For recognizing profit on construction project, under an agreement to sell, stage of completion is determined as a proportion that contract costs incurred for the work performed bear to the estimated total cost. Further, expected loss on contracts is recognized when it is probable that the total contract cost will exceed the total contract revenue. This practice is being consistently followed by the Company. For this purpose, total project cost incurred, and cost to completion of the projects which is arrived at by the management based on current technical data, forecast and estimate of net expenditure to be incurred in future including for contingencies, etc, which being technical matters have been relied upon by us. We did not audit the financial statements of 5 subsidiaries, whose financial statements reflect the Groups share of total assets Rs.10717.89 lakhs as at 31st March, 2009, total revenues of Rs. Nil for the year ended on that date and net cash flows amounting to Rs.4.18 lakhs for the year ended on that date as considered in the consolidated financial statements. These financial statements and other financial information used for consolidation are based on the unaudited financial statements as certified by the management. We report that the consolidated financial statements have been prepared by Prajay Engineers Syndicate Limiteds management in accordance with the requirements of the Accounting Standards 21, Consolidated Financial Statements, notified by the Companies (Accounting Standards) Rules 2006. On the basis of the foregoing and the information and explanations given to us and on the consideration of separate Audit Reports on individual audited financial statements of Prajay Engineers Syndicate Limited, its subsidiary, in our opinion the consolidated financial statements subject to our comments in paragraph 3 (a) and 5 above give a true and fair view in conformity with the Accounting principles generally accepted in India: a. b. c. In the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2009; In case of the Consolidated Profit & Loss Account, of the Loss for the year ended on that date; In case of the Consolidated Cash Flow Statement, of the cash flows for the year ended on that date.

5.

6.

7.

For Deloitte Haskins & Sells Chartered Accountants Place : Hyderabad Date : 30th June, 2009 Ganesh Balakrishnan Partner Membership No.201193

56 | Annual Report 2008-09

Consolidated Balance Sheet

as on 31st March, 2009
Rs. in lacs Schedules I SOURCES OF FUNDS Shareholders' Funds Share Capital Share Application Money Reserves and Surplus Compulsorily Convertible Debentures Minority Interest Loan Funds Secured Loans Unsecured Loans Deferred Tax Liability (Net) (Refer Note C. 5 on Schedule 18) Total II APPLICATION OF FUNDS Goodwill on Consolidation Fixed Assets Gross Block Less: Depreciation Net Block Capital Work in Progress including capital advances 5 6,389.40 1,190.71 5,198.69 2,313.43 7,512.12 6 2,282.88 5,060.91 801.47 4,259.44 2,011.57 6,271.01 2.38 1,075.70 1,063.71 As on As on 31st March, 09 31st March, 08

1 1A 2 2A

3,969.58 100.00 55,882.56 7,532.42

3,969.58 56,401.53 7,162.65

3 4

21,554.02 1,595.99 304.82 90,939.39

10,609.50 1,830.07 427.22 80,400.55

Investments Current Assets, Loans and Advances Inventories Sundry Debtors Cash and Bank Balances Loans and Advances Less: Current Liabilities and Provisions Current Liabilities Provisions

7 8 9 10 11

50,075.21 31,969.04 1,080.05 12,511.79 95,636.09 13,223.80 2,344.10 15,567.90 80,068.19 0.50 90,939.39

43,513.82 35,237.04 6,182.78 9,651.65 94,585.29 16,937.39 4,585.03 21,522.42 73,062.87 0.58 80,400.55

Net Current Assets Miscellaneous expenditure to the extent not written off TOTAL Significant Account Policies and Notes to the Accounts Schedules 1 to 18 annexed hereto form an integral part of the accounts Per our report attached for Deloitte Haskins & Sells Chartered Accountants Ganesh Balakrishnan Partner Place : Hyderabad Date: 30th June, 2009 D.Madhavi Latha Company Secretary 18

For and on behalf of the Board D.S. Chandra Mohan Reddy Chairman and Managing Director D.Vijay Sen Reddy Executive Director

Prajay Engineers Syndicate Limited | 57

Consolidated Profit and Loss Account

for the year ended 31st March, 2009
Rs. in lacs Schedules I Income Sales and Services Other Income II EXpenditure Cost of Land, Plots and Constructed Properties Direct Cost Hotels & Resorts Employee Cost Establishment and Other Expeneses Interest and Finance Charges Depreciation and Amortisation 14 15 16 17 3,516.07 440.52 751.33 1,444.86 1,998.44 408.24 8,559.46 (273.64) 17,946.36 371.37 1,366.68 1,076.23 908.95 225.85 21,895.44 12647.18 12 13 8,204.66 81.16 8,285.82 34,401.90 140.72 34,542.62 Year Ended Year Ended 31st March, 09 31st March, 08

III

Profit/ (Loss) before TaX and MinoritY Interest Provision for Tax - Current Tax (including interest aggregating to Rs. 242.46 lacs) - Deferred Tax - Fringe Benefit Tax

353.04 (122.40) 14.69 245.33 (518.97) (518.97) 16,513.09 15,994.12

2,247.22 203.40 10.29 2,460.91 10,186.27 10,186.27 8,570.44 18,756.71

IV

Profit / (Loss) after TaX and before MinoritY Interest Minority Interest

Profit/ (Loss) after TaX and MinoritY Interest Balance brought forward from previous year Amount available for appropriation

vi

Appropriations: Proposed Dividend Dividend including tax of earlier year Tax on Dividend Transfer to General Reserve Balance Carried to Balance Sheet Earnings per share (in Rs.) Basic Diluted Significant Account Policies and Notes to the Accounts 15,994.12 992.39 52.57 168.66 1,030.00 16,513.09

(1.31) (1.31)

37.10 37.10

Schedules 1 to 18 annexed hereto form an integral part of the accounts

Per our report attached for Deloitte Haskins & Sells Chartered Accountants Ganesh Balakrishnan Partner Place : Hyderabad Date: 30th June, 2009 D.Madhavi Latha Company Secretary

For and on behalf of the Board D.S. Chandra Mohan Reddy Chairman and Managing Director D.Vijay Sen Reddy Executive Director

58 | Annual Report 2008-09

Schedules annexed to and forming

part of the Consolidated Accounts
Rs. in lacs As on As on 31st March, 09 31st March, 08 SCHEDULE 1 Share Capital Authorised 50,000,000 Equity Shares of Rs. 10 each Issued, Subscribed and Paid up 39,695,776 Equity Shares of Rs. 10 each 3,969.58 3,969.58 Of the above: 2,972,787 shares have been allotted pursuant to a contract without payments being received in cash. SCHEDULE 1A Share Application Money Share Application Money pending allotment 100.00 100.00 SCHEDULE 2 Reserves and Surplus Share Premium As per last Balance Sheet Add: Amount received during the year General Reserve As per last Balance Sheet Add: Transfer from Profit and Loss Account 1,999.08 1,999.08 15,994.12 55,882.56 * on conversion of Foreign Currency Convertible Bonds Rs. 26,554.89 lacs and on conversion of share warrants Rs. 7,153.44 lacs SCHEDULE 2A Compulsorily Convertible Debentures Interest Accrued and Due 7,162.65 369.77 7,532.42 7162.65 7162.65 969.08 1,030.00 1,999.08 16,513.09 56,401.53 37,889.36 37,889.36 4,181.03 33,708.33* 37,889.36 3,969.58 3,969.58 5,000.00 5,000.00

Balance in Profit & Loss Account

(Compulsorily Convertible Debentures (Unsecured) of face value Rs 1,000 each carry interest rate of 10% p.a issued on 24th October, 2007 and 28th February, 2008 with an option to convert in whole or in part within 8 years from the date of issue of such Debentures into such number of fully paid- up equity shares of the subsidiary Company i.e, Prajay Holding Private Limited which is equal to the conversion price mutually agreed as per applicable laws. If at anytime within 8 years from the date of issue, the subscribers to such debentures do not exercise the right to conversion, the Subsidiary Company shall compulsorily convert such debentures into fully paid up equity shares of the Company i.e. Prajay Holdings Private Limited at the expiry of 8 years. These Compulsorily Convertible Debentures have been issued under Foreign Direct Investment guidelines as issued by Government of India/ RBI from time to time latest vide RBI Circular A.P.(DIR series) Circular No.20 dated 14th December,2007 which classifies Compulsorily Convertible Debentures as equity instrument)

Prajay Engineers Syndicate Limited | 59

Schedules annexed to and forming

part of the Consolidated Accounts contd...
Rs. in lacs As on As on 31st March, 09 31st March, 08 SCHEDULE 3 Secured Loans Cash Credit from Banks Secured by way of first charge on the project assets of the Company which includes land and other assets relating to specified projects. Term Loans From: - Indian Overseas Bank Secured by way of first charge on project assets of the Company which includes land and other assets relating to specified projects and current assets of the Hospitality Division. - HSBC Secured by way of equitable mortgage of the plotted land with common areas at Murharipally village in the project Water Front City and exclusive charge over recoverables of Water Front City. - State Bank of India - State Bank of Mysore - State Bank of Saurashtra - State Bank of Bikaner and Jaipur - The Tamilnad Mercantile Bank Limited - Punjab National Bank * Secured by way of first joint mortgage/ charge on the entire project assets of Princeton Towers and second charge on current assets of the Princeton Towers project. - Andhra Pradesh State Financial Corporation Secured by way of assignment of developer rights of 64% in the specified project and first charge on the project assets of the Company which includes land and other assets relating to the specified project. - Tata Capital Limited Secured by way of equitable mortgage of the immovable property situated at Kukatpally Village. - L&T Infrastructure Finance Company Limited Secured by pledge of shares held by Mr. Chandra Mohan Reddy and Mr. Vijay Sen Reddy aggregating to Rs. 50 crores. - Lehman Brothers Capital Private Limited Secured by way of equitable mortgage of the project land, pledge of shares, hypothecation of receivables and personal guarantees of the Directors. - Life Insurance Corporation Secured against the Keyman Insurance Policy. Interest Accrued and Due Other Loans: Hire Purchase Secured by hypothecation of vehicles and equipments acquired out of the said loan. 511.98 21,554.02 387.99 10,609.50 1,432.29 3,035.78 3,491.93 3,328.44

4,435.02

1400* 300* 210* 300* 210* 380*

130.55

800.00

1,700.00

2,000.00

8,000.00

26.74 56.06

26.74

60 | Annual Report 2008-09

Schedules annexed to and forming

part of the Consolidated Accounts contd...
Rs. in lacs As on As on 31st March, 09 31st March, 08 SCHEDULE - 4 Unsecured Loans Short Term: - From Director - Hyderabad Steel Traders - Overdraft from Bank Other than Short Term: - Kotak Mahindra Bank [Repayable within one year Rs. 20.64 lacs (31.03.2008 - Rs. 23.93 lacs)] - Prajay Financial Services Limited - Anand Rathi Realty Limited - Emami Realty Limited - Others 20.64 77.50 25.00 1,595.99 44.57 77.50 841.50 841.50 25.00 1,830.07 86.99 1,328.57 57.29

Rs. in lacs SCHEDULE-5 Fixed Assets

Cost Particulars As On 31st March 2008 430.85 1,875.54 401.35 1,612.52 249.91 72.36 418.38 5,060.91 Additions Assets Deductions taken over from New Company 0.96 35.10 As On 31st March 2009 430.85 2,387.72 429.32 2,174.87 354.36 85.16 527.12 Depreciation And Amortisation As On 31st March 2008 201.63 22.84 375.57 48.55 35.21 117.67 801.47 For The Year On Deduc tion 44.91 110.03 156.90 42.51 10.46 43.43 408.24 0.72 18.28 19.00 As On 31st March 2009 246.54 132.87 531.75 91.06 45.67 142.82 1,190.71 Net Block As On 31st March 2009 430.85 2,141.18 296.45 1,643.12 263.30 39.49 384.30 5,198.69 As On 31st March 2008 430.85 1,673.91 378.51 1,236.95 201.36 37.15 300.71

Land-Free hold Buildings Lease Hold Improvements Plant & Machinery Furniture & Fixtures Computers Vehicles

512.18 27.97 563.31 104.45 12.80 143.84 1,364.55

36.06 6,389.40

As at March 31, 2008 5,398.43 Note:

1,539.38

44.35

1,921.25 5,060.91 599.98

225.85

24.36

801.47

4,259.44

Plant & Machinery costing Rs. 589.44 lacs (31.03.2008: Rs. 573.52 lacs) and Vehicles costing Rs. 349.06 lacs (31.03.2008: Rs. 242.62 lacs) have been acquired on hire purchase, the legal ownership of which will be transferred to the Company after the final payment.

Prajay Engineers Syndicate Limited | 61

Schedules annexed to and forming

part of the Consolidated Accounts contd...
Rs. in lacs As on As on 31st March, 09 31st March, 08 SCHEDULE - 6 Investments Long Term (at cost) A. Non Trade - Quoted Indian Overseas Bank 9,500 Equity Shares of Rs.10 each, fully paid B. Trade - Unquoted Prajay Urban Private Limited 1,000 Equity Shares of Rs.10 each, fully paid C. Investment in Capital of Partnership Firm Prajay Binjusaria Estates

2.28

2.28

0.10

0.10

2,280.50 2,282.88

2.38

Notes: i. Aggregate of Quoted Investments Cost Market Value ii. Aggregate of Unquoted Investments (Cost) iii. The following are the movement in mutual fund units during the year.

2.28 4.32 0.10

2.28 12.84 0.10

Acquired No. of Units 1. ING Liquid Fund Super Institutional-Daily Dividend Option 2. ING Liquid Plus Fund Institutional-Daily Dividend 3. ING Income Fund-Institutional Plan-Growth Option 4,51,35,413 2,81,10,521 20,41,750

Amount (in Rs. thousands) 4,51,571 2,81,198 50,000

Sold No. of Units 4,51,35,413 2,81,10,521 20,41,750

62 | Annual Report 2008-09

Schedules annexed to and forming

part of the Consolidated Accounts contd...
Rs. in lacs As on As on 31st March, 09 31st March, 08 SCHEDULE - 7 Inventories Land at Cost Constructed Properties - Land and construction work in progress - at cost Hotel & Resorts - Food and Beverages - at cost 17,320.33 23,751.44

32,728.40

19,737.31

26.48 50,075.21

25.07 43,513.82

SCHEDULE - 8 Sundry Debtors Unsecured, considered good Outstanding for more than six months Other Debts 30,635.67 1,333.37 31,969.04 SCHEDULE - 9 Cash and Bank Balances Cash on Hand Balance with Scheduled Banks On Current Account On Escrow Account On Deposit Account 768.34 261.70 18.35 1,080.05 138.61 5,854.40 6,182.78 31.66 189.77 14,335.58 20,901.46 35,237.04

Prajay Engineers Syndicate Limited | 63

Schedules annexed to and forming

part of the Consolidated Accounts contd...
Rs. in lacs As on As on 31st March, 09 31st March, 08 SCHEDULE - 10 Loans & Advances (Unsecured considered good unless otherwise specified) Advances recoverable in cash or in kind or for value to be received Advance for purchase of land/ development Advance Tax (including tax deducted at source) 2,581.47 * 8,723.01 1,207.31 12,511.79 * includes deposit with Director - Rs. 500 lacs (31.03.2008 - Rs. Nil) SCHEDULE - 11 Current Liabilities and Provisions Current Liabilities Sundry Creditors (i) Due to micro enterprises and small enterprises (ii) Due to other Creditors * Advance from Customers Unclaimed Dividend @ 12,743.54 464.93 15.33 13,223.80 Provisions Proposed Dividend Tax on Dividend Taxation Fringe Benefit Tax Gratuity 168.66 2,149.06 14.69 11.69 2,344.10 Notes: * includes due to Directors - Rs. 5.30 lacs (31.03.08 - Rs.26.37 lacs) @ There is no amount due and outstanding to be credited to Investor Education and Protection Fund 992.39 168.66 3,396.29 11.86 15.83 4,585.03 16,584.84 336.56 15.99 16,937.39 1,235.22 7,757.44 658.99 9,651.65

64 | Annual Report 2008-09

Schedules annexed to and forming

part of the Consolidated Accounts contd...
Rs. in lacs Year Ended Year Ended 31st March, 09 31st March, 08 SCHEDULE - 12 Sales & Services Sale of Constructed Properties Sale of Land Revenue from Hospitality Services (a) Sale of Rooms (b) Food and Beverages (c) Others Membership Fees 263.41 932.64 178.24 85.85 8,204.66 SCHEDULE - 13 Other Income Rental Income Interest Income [(includes tax deducted at source Rs. 32.67 lacs (31.03.2008 - Rs. 1.63 lacs )] Dividend from non trade investments Miscellaneous 30.64 6.37 0.33 43.82 81.16 SCHEDULE - 14 Cost of Land, Plots and Constructed Properties Opening Stock: - Land - Constructed Properties Add: Purchases/ development and construction costs including civil, electrical, contracting, etc., incurred during the year Less: Closing Stock - Land - Constructed Properties 29.76 53.94 0.29 56.73 140.72 319.42 793.35 160.14 62.94 34,401.90 4,819.66 1,924.86 24,683.65 8,382.40

23,751.44 19,737.31 10,076.05

25,496.86 10,192.34 25,745.91

17,320.33 32,728.40 3,516.07

23,751.44 19,737.31 17,946.36

Prajay Engineers Syndicate Limited | 65

Schedules annexed to and forming

part of the Consolidated Accounts contd...
Rs. in lacs Year Ended Year Ended 31st March, 09 31st March, 08 SCHEDULE - 15 Employee Cost Salaries, Wages and Bonus Commission to whole time Directors Contribution to Provident Fund/ Pension Fund and Gratuity Staff Welfare

884.67 19.57 22.58 926.82

594.91 886.19 19.23 16.91 1,517.24 150.56 1,366.68

Less: Allocated to Projects

175.49 751.33

SCHEDULE - 16 Establishment and Other Expenses Rent Rates and Taxes Insurance Power and Fuel Repairs and Maintenance - Building - Plant & Machinery - Others Travelling Expenses Printing and Stationery Postage, Telegrams and Telephones Professional Charges Advertisement (Profit)/ Loss on Sale of Assets (net) Miscellaneous Expenses 213.18* 563.27 17.30 174.20 119.21 43.87 42.14 46.57 44.52 36.14 714.91 165.72 6.32 141.55 2,328.90 Less: Allocated to Projects 884.04 1,444.86 * Includes rent paid to Director - Rs. 92.85 lacs (Previous year: Rs. Nil) SCHEDULE - 17 Interest and Finance Charges On Fixed Loans Others Bank Charges 2,527.54 1,046.71 309.82 3,884.07 Less: Allocated to Projects 1,885.63 1,998.44 910.48 573.09 70.20 1,553.77 644.82 908.95 112.36 186.55 21.78 144.41 115.76 53.85 44.06 61.63 28.69 35.11 260.34 64.52 (6.44) 150.31 1,272.93 196.70 1,076.23

66 | Annual Report 2008-09

Schedules
SCHEDULE 18

forming part of Consolidated Financial Statements

Significant Accounting Policies and Notes to the Accounts for the year ended 31st March, 2009 A. SIGNIFICANT ACCOUNTING POLICIES a. The Consolidated Financial Statements have been prepared in accordance with Accounting Standard 21 (AS 21) Consolidated Financial Statements notified by the companies (Accounting Standards) Rules, 2006. b. The Companies (which along with Prajay Engineers Syndicate Limited, the parent, constitute the Group) considered in the preparation of these consolidated financial statements are: Name Relationship Country of Incorporation Percentage Percentage of ownership of ownership interests as at interests as at 31st March, 2009 31st March, 2008 99.99 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Prajay Holdings Private Limited (PHPL) Prajay Developers Private Limited (Formerly MVL Trading Company Private Limited) Prajay Properties Private Limited Prajay Land Capital Private Limited Dillu Cine Enterprises Private Limited Prajay Realty Private Limited (w.e.f. December 29, 2008)

Subsidiary Subsidiary of PHPL Subsidiary Subsidiary Subsidiary Subsidiary

India India India India India India

c. The Unaudited Financial Statements of the following Companies which have been included in the Consolidated Financial Statements are as under: i) Prajay Developers Private Limited (Formerly MVL Trading Company Private Limited) ii) Prajay Properties Private Limited iii) Prajay Land Capital Private Limited iv) Dillu Cine Enterprises Private Limited v) Prajay Realty Private Limited B. SIGNIFICANT ACCOUNTING POLICIES 1. Method of Accounting The financial statements are prepared under the historical cost convention in conformity with the accounting principles, generally accepted in India and in accordance with accounting standards specified in the Companies (Accounting Standards) Rules, 2006 notified by the Central Government in terms of Section 211 (3C) of the Companies Act, 1956. 2. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 and the result of operations during the reporting periods. Although these estimates are based upon managements knowledge of current events and actions, actual results could differ from those estimates. 3. Fixed Assets Fixed Assets are stated at cost less accumulated depreciation and amortisation. Direct costs inclusive of inward freight, duties and taxes, incidental expenses including interest relating to acquisition and cost of improvements thereon are capitalized when fixed assets are ready for use. Capital Work in Progress comprises advances paid to acquire fixed assets and the cost of fixed assets not ready for their intended use at the reporting date of the financial statements.

4. Depreciation and Amortisation i) Depreciation on fixed assets is provided on straight-line method as per rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. ii) Leasehold Improvement is amortised over the period of the lease. iii) Assets costing less than Rs.5000 are fully depreciated in the year of purchase.

Prajay Engineers Syndicate Limited | 67

Schedules

forming part of Consolidated Financial Statements contd...

5. Investments Long term investments are carried at cost, less provision for diminution other than temporary if any, in the value of such investments. Current Investments are carried at lower of cost and fair value. 6. Inventories Inventories are valued as under: i) Land earmarked for property development is valued at cost. Cost includes land acquisition cost, registration charges and stamp duty. ii) Constructed properties includes cost of land, premium for development rights, construction costs and allocated interest and expenses incidental to the projects undertaken by the company. iii) Stock of food and beverages are carried at cost and net realizable value, whichever is lower. Cost is determined on the weighted average method. 7. Revenue Recognition i) Sale of Land and Plots is recognised in the financial year in which the agreement to sell is executed. ii) Revenue from constructed properties (excluding service tax) is recognized on the percentage of completion method. Total sale consideration as per the agreements to sell constructed properties entered into is recognized as revenue only when the stage of completion is 20 percent or more when the outcome of the project can be estimated reliably. When it is probable that total costs will exceed the total project revenue the expected loss is recognised immediately. Service tax does not form part of gross revenue. iii) Income from sale of Rooms, Food and Beverages and allied services relating to hotel operations is recognized upon rendering of the service. Income stated is exclusive of amount received towards sales tax/ service tax etc., iv) In respect of membership (club) sales, revenue is recognized as under: Life membership, Permanent membership and Time-share membership over a period of 15 years. Long-term membership over a period of 3 years. Health club membership fully in the year of receipt. 8. Cost of Construction Cost of constructed properties includes cost of land (including land under agreements to purchase), estimated internal development costs, external development charges, constructions costs and development/ construction materials, which is charged to the profit and loss account based on the percentage of revenue recognized as per accounting policy (7) above, in consonance with the concept of matching costs and revenue. Final adjustment is made on completion of the applicable project. Overhead expenses comprising costs other than those directly charged to the jobs, are distributed over the various projects on a pro-rata basis having regard to the activity and nature of such projects.

9. Foreign Exchange Transactions Transactions in foreign currency and non monetary assets are accounted for at the exchange rate prevailing on the date of the transaction. All monetary items denominated in foreign currency are converted at the year-end exchange rate. The exchange differences arising on such conversion and on settlement of the transaction are dealt with in the profit and loss account. 10. Income Tax Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to consideration of prudence, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

11. Borrowing Cost Borrowing costs that are directly attributable to acquisition, construction or production of a qualifying asset are capitalised as part of the cost of such asset. A qualifying asset is one that necessarily takes substantial period of time i.e., more than twelve months to get ready for its intended use. All other borrowing costs are charged to the profit and loss account as and when incurred. 12. Earnings per share (EPS) In arriving at the EPS, the Companys net profit after tax, computed in terms of the accounting principles, generally accepted in India, is divided by the weighted average number of equity shares outstanding on the last day of the reporting period. The EPS thus arrived is known as Basic EPS. To arrive at the diluted EPS the net profit after tax, referred above, is divided by the weighted average number of equity shares that could have been issued on conversion of the shares having potential dilutive effect subject to the terms of issue of those potential shares. The date/s of issue of such potential shares determine the amount of the weighted average number of potential equity shares.

68 | Annual Report 2008-09

Schedules

forming part of Consolidated Financial Statements contd...

13. Employee Benefits Liability for employee benefits, both short and long term, for present and past services which are due as per the terms of employment are recorded in accordance with Accounting Standard (AS) 15 Employee Benefits. i) Defined Contribution Plan: Companys contributions paid / payable during the year towards Provident Fund are charged to the Profit and Loss Account. ii) Defined Benefit Plan: The gratuity liability is provided on the basis of actuarial valuation on the Balance Sheet date and the same is funded with Life Insurance Corporation as per their advice. C. NOTES TO THE ACCOUNTS 1. As stated in note B (7) (ii) for recognizing profit on projects, stage of completion is determined as a proportion that project costs incurred for the work performed bear to the estimated total costs. Further, as stated in that note expected loss on projects is recognised when it is probable that the total project costs will exceed the total project revenue. For this purpose total project costs are ascertained on the basis of project costs incurred and costs to completion of projects on progress, which is arrived at by the Management, based on current technical data, forecasts and estimate of net expenditure to be incurred in future including for contingencies etc., which being technical matters have been relied on by auditors. Further, in respect of certain properties where sale agreement has been entered with parties even though money has not been received as per stipulation in the contract, the Company has recognised revenue and debtors as management is confident that it shall be able to realize the sale proceeds. 2. Inventories of constructed properties, include land admeasuring 59 acres 21 guntas at Maheshwaram, Hyderabad, Andhra Pradesh for which the company has received approval vide letter no15903/HADA/GH/2007 dated 08.10.2008 for development of Group Housing layout, subject to certain conditions which include mortgage/ charge on certain dwelling units to Hyderabad Metropolitan Development Authority (HMDA). 3. Contingent Liabilities (not provided for) 2008-09 Income tax matters in dispute Bank Guarantees given on behalf of others Rs. in lacs 2007-08 37.55 10.00

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advance) Rs. 2,932.71 lacs (31.03.2008: Rs. 911.14 lacs). 5. Deferred Tax Asset / (Liability) (Net) comprise of: Rs. in lacs 31st March, 2009 Deferred Tax Liability (A) : Arising on account of timing difference Depreciation Net Deferred Tax Liability 6. Earnings Per Share (EPS) 2008-09 A. Weighted average number of equity shares of Rs.10 each i) Number of equity shares at the beginning of the year ii) Number of equity shares at the end of the year iii) Weighted average number of equity shares outstanding during the year B. Net Profit/ (Loss) available for equity share holders (Rs. in lacs) C. Earnings per share (Rs.) i) Basic ii) Diluted 39,695,776 39,695,776 39,695,776 (518.97) 2007-08 21,661,829 39,695,776 27,457,070 10,186.27 304.82 304.82 31st March, 2008 427.22 427.22

( 1.31) (1.31)

37.10 37.10

Prajay Engineers Syndicate Limited | 69

Schedules

forming part of Consolidated Financial Statements contd...

7. Managerial Remuneration 2008-09 Salaries Perquisites Commission 144.00 1.04 145.04 Rs. in lacs 2007-08 74.85 1.20 886.19 962.24

8. The following interest payable on loan taken from Lehman Brothers Capital Private Limited has not been provided in the financial statements of the subsidiaries as on 31st March, 2009. Rs. in lacs Name of the Subsidiary Prajay Land Capital Private Limited Prajay Properties Private Limited Total 9. Related Party Disclosures Information relating to Related Party Transactions as per Accounting Standard 18 notified by the Companies (Accounting Standards) Rules, 2006. A. List of Related Parties Key Management Personnel a) Designation Relatives (Relation)* 190.41 200.17 390.58

Mr. Chandra Mohan Reddy Managing Director Mrs. Hymavathi Reddy (Wife) Mr. Vijay Sen Reddy Executive Director Mrs. Sharmila Reddy (Wife) Mr. Ravinder Reddy Director Operations Mr. Hanumanth Reddy (Father) Mr. K. Ravi Kumar Whole time Director Mr. Sumit Sen Whole time Director Mrs. Rina Sen (Wife) * Relatives of key management personnel with whom there were transactions during the year b) Other entities under the control of key management personnel and their relatives Prajay Resorts and Hotels Limited Prajay Township Private Limited Prajay Estates Private Limited Prajay Techpark Private Limited Prajay Hotels Private Limited Prajay Financial Services Limited Prajay Arnav Shelter Private Limited Prajay Chit Funds Private Limited Prajay Velocity Developers Private Limited Prajay ARRF Estates Private Limited Prajay Binjusaria Estates VijMohan Constructions Private Limited Prajay Resorts and Amusement Park Limited Prajay Constructions Limited Secunderabad Golf and Leisure Resorts Private Limited

9B. The following transactions were carried out with related parties in the ordinary course of business Name of the Related Party Enterprises over which Key Management Personnel is able to exercise significant influence 31st March, 2009 31st March, 2008 31st March, 2009 31st March, 2008 VijMohan Constructions Private Limited VijMohan Constructions Private Limited Key Management Personnel 145.04 113.05 Prajay Binjusaria Estates Prajay Urban Private Limited 29.87 1,378.06 295.01 358.30 25.02 1,106.63 93.55 0.10 181.79 978.89 126.67 585.85 1,682.95 0.25 139.75 568.59 481.60 Prajay Urban Private Limited 2,265.56 500.00 6,001.04 Prajay Urban Private Limited VijMohan Constructions Private Limited Secunderabad Golf and Leisure Private Limited Prajay Velocity Developers Private Limited Prajay Estates Private Limited Prajay Arnav Shelters Private Limited Key Management Personnel Prajay Urban Private Limited VijMohan Constructions Private Limited Prajay Velocity Developers Private Limited Key Management Personnel 2,631.97 55.36 197.36 2,280.50 0.10 389.02 39.19 50.00 962.24 6.72 1,100.00 Rs. in lacs Key Management Personnel (KMP) and their relatives

70 | Annual Report 2008-09

Description

Schedules

Sale of land, property and material

Purchase of land, material and services

Remuneration paid (Refer Note 7 on Schedule 18) Rent paid Investments made during the year

Advances given

Advances repaid

Loans Taken

Loans Repaid

forming part of Consolidated Financial Statements contd...

Advance taken

Deposits given

Shares Allotted on conversion of share warrants

9B. The following transactions were carried out with related parties in the ordinary course of business Balance at the end of the year Name of the Related Party Enterprises over which Key Management Personnel is able to exercise significant influence 31st March, 2009 31st March, 2008 31st March, 2009 31st March, 2008 564.04 15.92 368.20 1,106.64 949.02 93.55 0.10 570.96 28.92 878.29 663.21 879.09 118.57 0.10 Rs. in lacs Key Management Personnel (KMP) and their relatives

Description

Schedules

Debtors

VijMohan Constructions Private Limited

Loans & Advances

VijMohan Constructions Private Limited Secunderabad Golf and Leisure Private Limited Prajay Velocity Developers Private Limited Prajay Urban Private Limited Prajay Estate Private Limited Prajay Arnav Shelters Private Limited Key Management Personnel

Creditors/ Payables

Prajay Urban Private Limited Key Management Personnel

2,265.56

93.64 86.99 35.30

forming part of Consolidated Financial Statements contd...

Loan Outstanding

Prajay Engineers Syndicate Limited | 71

10. Segment Information as per Accounting Standard 17 on Segment Reporting Rs. in lacs 2008-09 Hospitality Hotels & Resorts 1,460.14 1,460.14 (190.23) 131.26 1,718.11 1,998.44 6.37 0.33 (273.64) 353.04 (122.40) 14.69 (518.97) 2008-09 Hospitality Hotels & Resorts Unallocated Total Eliminations Construction & Development of Property 2007-08 Hospitality Unallo- EliminHotels & cated ations Resorts 5,111.92 5,817.56 5,111.92 5,817.56 240.66 16,082.81 240.66 16,082.81 425.79 161.09 Total 1,849.37 14,332.02 54.05 81.16 380.65 (380.65) 461.81 (380.65) 8,285.82 8,285.82 33,066.44 132.73 33,199.17 1,335.85 1,335.85 140.33 (132.73) 140.33 (132.73) 34,542.62 34,542.62 14,386.07 884.17 13,501.90 908.95 53.94 0.29 12,647.18 2,247.22 203.40 10.29 10,186.27 Unallocated Eliminations Total Construction & Development of Property Hospitality Hotels & Resorts Unallocated Eliminations Total 2007-08

72 | Annual Report 2008-09

Schedules

Business Segment

Construction & Development of Property

Segment Revenue External Internal Total Revenue

6744.52 6,744.52

Segment Result Unallocated Corporate Expenses net of unallocated income Operating Profit Interest Expense Interest Income Dividend Income Profit before Tax Income Tax Deferred Tax Fringe Benefit Tax Profit after tax and before Minority Interest

2,039.60

forming part of Consolidated Financial Statements contd...

Other Information

Construction & Development of Property

96,708.34 5,194.99 4,603.96 106,507.29 90,993.49 101,922.97 Segment Assets Total Assets 96,708.34 5,194.99 4,603.96 106,507.29 90,993.49 101,922.97 Segment Liabilities 20,079.26 361.65 26,114.24 46,555.15 25,228.40 41,551.87 Total Liabilities 20,079.26 361.65 26,114.24 46,555.15 25,228.40 41,551.87 Capital Expenditure 1,580.02 550.15 2,130.17 1,113.59 1,539.38 Depreciation 167.37 240.87 408.24 64.76 225.85 Non cash expenses other than depreciation Notes 1. Segments have been identified in accordance with Accounting Standard 17 on Segment Reporting, concerning the returns/ risk profiles of the business. The Company has identified business segments as mentioned below as primary segments for disclosure: a) Construction and Development of Property b) Hospitality - Hotels and Resorts

2. As the operations of the Company are only in India, there is no reportable geographical segment

3. Unallocated corporate expenditure includes common service expenses.

Prajay Engineers Syndicate Limited | 73

Schedules

forming part of Consolidated Financial Statements contd...

11. Disclosure as required by Accounting Standard 19 Leases notified by the Companies (Accounting Standards) Rules, 2006. a) Operating Lease: i. Where the Company is a lessee: The Parent Companys significant leasing arrangements are in respect of operating leases for premises (residences, office, etc.). The leasing arrangements, which are not non-cancellable, range generally between 11 months to 5 years and are usually renewable by mutual consent on agreed terms. The aggregate lease rents payable are recognized in the Profit and Loss Account for the year and included as Rent (disclosed under Establishment and Other Expenses in Schedule - 16) The Parent Company has taken a building under a non-cancellable lease. Rs. in lacs Total 31st March, 2009 31st March, 2008 Payments Payments Payments Total Payments Payments not later later than later than not later later than than one one year five years than one one year year but not year but not later later than than five five years years 59.40 99.99 215.64 56.25 159.39 Payments later than five years

Total of future minimum lease payments at balance sheet date

159.39

ii. Where the Parent Company is a lessor Details of assets given on operating lease: Gross Block 31st 31st March March 2009 2008 Building 88.58 88.58 Accumulated Depreciatin as on 31st March 31st March 2009 2008 14.20 12.76 Rs. in lacs Depreciation for the Year 31st March 31st March 2009 2008 1.44 1.44

Rs. in lacs 31st March, 2009 31st March, 2008 Total Payments Payments not Payments Total Payments Payments Payments not later later than one later than not later later than later than than one year but not five years than one one year but five years year later than five year not than five years years Total of future minimum lease amount receivable at Balance Sheet date 70.76 15.54 55.22 99.76 27.65 57.22 14.89

74 | Annual Report 2008-09

Schedules
b) Hire Purchase:

forming part of Consolidated Financial Statements contd...

i) The Parent Company has taken plant and machinery, motor vehicles under hire purchase arrangements for which the ownership will be transferred to the Company at the end of the hire purchase term. ii) Reconciliation between the total of minimum hire purchase payments at the balance sheet date and the present value: Total 31st March, 2009 Payments Payments not later later than one than one year but not year later than five years 335.11 244.48 Total 31st March, 2008 Payments Payments not later later than than one one year year but not later than five years 235.43 199.21

Total of minimum hire purchase payments at the Balance Sheet date Less: Future Finance Charges Present value of minimum hire purchase payments at the Balance Sheet date

579.59

434.64

67.61 511.98

47.72 287.39

19.89 224.59

46.65 387.99

32.06 203.37

14.59 184.62

12. a) Sundry Debtors - Schedule 8, unsecured, considered good, includes Rs. 30635.67 lacs, outstanding for more than six months. As a result of economic slowdown and recession in realty sector the realisations from customers are slow. b) Loans and Advances - Schedule 10 include advances given to Landlords/ developers towards certain projects amounting to Rs. 7974.94 lacs, outstanding from earlier years. Due to long term involvement in such projects, no provision has been considered necessary.

13. Details as required under Schedule VI - Part I of the Companies Act, 1956 relating to investment in partnership firm. a) Name of the Partnership Firm - Prajay Binjusaria Estates b) Total Capital of the said Firm is Rs. 2281.50 lacs as at 31st March, 2009 c) As at 31st March, 2009 the partnership firm has not commenced any activities d) Share of each partner in the Profit or Loss Srl. No. 1. 2. 3. 4. 14. Previous year figures have been regrouped/ reclassified wherever necessary to conform to current year classification. Name of the Partners Prajay Engineers Syndicate Limited Binjusaria Developers Private Limited Mr. Arun Kumar Kedia Ms. Seema Kedia Share (%) 50 17 17 16

For and on behalf of the Board D.S. Chandra Mohan Reddy Chairman and Managing Director Place : Hyderabad Date: 30th June, 2009 D.Madhavi Latha Company Secretary D.Vijay Sen Reddy Executive Director

Prajay Engineers Syndicate Limited | 75

Consolidated Cash Flow Statement

for the year ended 31st March, 2009
Rs. in lacs
Year Ended 31st March, 2009 A Cash Flow from Operating Activities: Net Profit before Taxation Adjustments for: Depreciation Loss/ (Profit) on sale of Fixed Assets Dividend income Interest Income Interest and Finance Charges Operating Profit/(Loss) before working capital changes Adjustments for: (Increase)/Decrease in Inventories (Increase)/Decrease in Debtors (Increase)/Decrease in Loans and Advances Increase/(Decrease) in Trade and Other Payables Cash used in Operations Direct Taxes paid (including Fringe Benefit Tax) Pre-operative expenses Net Cash Flow from Operating Activities B Cash Flow from Investing Activities Purchase of Fixed Assets Sale of Fixed Assets Purchase of Investments Purchase of shares in Subsidiaries Investment in Mutual Funds Sale of Mutual Funds Dividend received Interest income received Net Cash used in Investing Activities Cash Flow from Financing Activities Issue of Equity Capital Share Application Money Proceeds from issue of debentures Proceeds from long term borrowings Repayment of long term borrowings Interest Paid Dividend Paid (including Tax on Dividend) Net Cash from Financing Activities Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) Cash and Cash Equivalents at the beginning of the year Cash and Cash Equivalents on acquisition of subsidiary Cash and Cash Equivalents at the end of the year (1,813.70) 10.74 (7,800.00) 7,831.83 0.33 108.03 (1,662.77) 100.00 17,607.60 (6,505.96) (3,148.42) (993.05) 7,060.17 (5,102.73) 6,182.78 1,080.05 1,109.06 7,162.65 6,751.97 (2,339.75) (908.95) (723.16) 11,051.82 2,913.40 3,264.03 5.35 6,182.78 408.24 6.32 (0.33) (6.37) 1,688.62 (273.64) 225.85 (6.44) (0.29) (53.94) 908.95 12,647.18 Year Ended 31st March, 2008

2,096.48 1,822.84

1,074.13 13,721.31

(4,809.24) 687.50 (2,311.82) (3,717.06)

(10,150.62) (8,327.78) (2,160.45) (11.90) (10,500.13)

(484.55) (21,243.69) (1,965.74) 5,619.15

(18,074.83) (4,353.52) (616.60) (0.48) (4,970.60)

(2,136.65) 14.70 (0.10) (1,100.00) 0.29 53.94 (3,167.82)

Notes : Cash and cash Equivalents as on March 31,2009 includes Rs. 261.70 lacs (31.03.2008 : Rs. Nil.) in Escrow Account.

per our report attached for Deloitte Haskins & Sells Chartered Accountants Ganesh Balakrishnan Partner Place : Hyderabad Date: 30th June, 2009 D.Madhavi Latha Company Secretary

For and on behalf of the Board D.S. Chandra Mohan Reddy Chairman and Managing Director D.Vijay Sen Reddy Executive Director

76 | Annual Report 2008-09

Notice
NOTICE is hereby given that the Fifteenth Annual General Meeting of the Members of Prajay Engineers Syndicate Limited, will be held on Tuesday, the 29th day of September, 2009 at 3.00 P.M. at Prajay Corporate House, 1-10-63 & 64, Chikoti Gardens, Begumpet, Hyderabad- 500016 to transact the following business.

ORDINARY BUSINESS
1 To receive, consider and adopt the Audited Balance Sheet as at 31st March 2009 and the Profit and Loss Account for the year ended on that date together with schedules annexed thereto and the reports of the Directors and Auditors thereon. To appoint a Director in the place of Sri D. Chakradhar Reddy, Director, who retires by rotation and being eligible, offers himself for re-appointment. To appoint a Director in the place of Sri Rudresh Veerabhadrappa, Director, who retires by rotation and being eligible, offers himself for re-appointment. To consider and appoint M/s Deloitte Haskins & Sells, Chartered Accountants, as Statutory Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company and to authorize the Board of Directors to fix their remuneration. By Order of the Board For Prajay Engineers Syndicate Limited D. S. Chandra Mohan Reddy Chairman & Managing Director Place : Hyderabad Date : 31st August, 2009

Prajay Engineers Syndicate Limited | 77

NOTES
1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote on a poll instead of himself or herself. A proxy need not be a Member of the Company.

2. Instruments of Proxy in order to be effective must be received by the Company, not less than 48 hours before the commencement of the meeting. Completion and return of the form of proxy will not prevent a member from attending the meeting and voting in person if he or she wishes. A form of proxy is given at the end of the Annual Report. 3. The Register of Members and Share Transfer Books of the Company will remain closed from 25.09.2009 to 29.09.2009 (both days inclusive) 4. Members are requested to send all communication relating to shares (Physical and Electronic) to the Companys share transfer agents at the following address: M/s. Sathguru Management Consultants Pvt. Ltd. Plot No.15, Hindi Nagar, Panjagutta, Hyderbad 500 034. Tel: 91-040-23356507, 23350586, 23356975 Fax: 91-0470-40040554 Email: info@sathguru.com 5. Members holding shares in dematerialized mode are requested to intimate all changes pertaining to their bank details, ECS, mandates, nominations, power of attorney, change of address / name etc. to their Depository Participant only and not to the Companys Registrar and Transfer Agents. Changes intimated to the Depository Participant will then be automatically reflected in the Companys records which will help the Company and its Registrar and Transfer Agents to provide efficient and better service to the Members. 6. Members attention is particularly drawn to the Corporate Governance section in respect of unclaimed and unpaid dividends. 7. Members / proxies are requested to bring duly filled in attendance slips sent herewith for attending the meeting. 8. Members are requested to bring their copy of Annual Report while attending the Annual General Meeting.

78 | Annual Report 2008-09

Notes

PRAJAY ENGINEERS SYNDICATE LIMITED

Registered Office: 4-1-2/4, Eden Garden Road, Ramkote, Hyderabad 500 001

PROXY FORM
*DP.ID *Client ID I/We of being a member/members of Prajay Engineers Syndicate Limited hereby appoint or failing him behalf at the 15
th

Regd. Folio No. No.of Shares(s) held

of of

as my/our proxy to vote for me/us on my/our ANNUAL GENERAL MEETING to be held on Tuesday, the 29th September, 2009 at 3.00 P.M. at Prajay
Affix Rupee One Revenue Stamp

Corporate House, 1-10-63 & 64, Begumpet, Secunderabad 16 and at any adjournment thereof. Signed this NOTES day of 2009.

(1) The Proxy in order to be effective should be duly stamped, completed and signed and must be deposited at the Registered Office of the Company not less than 48 hours before the time fixed for holding the aforesaid meeting. The Proxy need not be a member of the Company. * Applicable for investors holding shares in electronic form.

PRAJAY ENGINEERS SYNDICATE LIMITED

Registered Office: 4-1-2/4, Eden Garden Road, Ramkote, Hyderabad 500 001

ATTENDANCE SLIP
*DP.ID Regd. Folio No.

*Client ID I hereby record my presence at the

No.of Shares(s) held

15th ANNUAL GENERAL MEETING of the Company held on Tuesday, the 29th

September, 2009 at 3.00 P.M. at Prajay Corporate House, 1-10-63 & 64, Begumpet, Secunderabad 16. Name of the Member: (In Block Letters) Name of the Proxy: (In Block Letters to be filled in if the Proxy attends instead of Member) Members/ Proxy Signature: Note: Shareholder/Proxy holder wishing to attend the meeting must bring this Attendance slip to the meeting and hand over the same at the entrance duly signed. *Applicable for investors holding shares in electronic form.

Prajay Engineers Syndicate Limited

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