Bhagheeratha Engineering Ltd. is a public Limited Company Incorporated in 1976 and became a Public Limited Company in 1980. The company is engaged in the business of undertaking civil construction contracts. The company has an excellent track record in taking up and completing complex engineering projects such as roads, highways, bridges, dams, canals, tunnels, industrial structures and other turnkey jobs.

During the last few years the company had fallen into financial distress due to cancellation of contracts. The Management is making earnest efforts to revive the company.

2. RELATED PARTY DISCLOSURE

List of Related Parties:

a Key Management Personnel:

i Chairman - Mr. V.C. Antony

a Managing Director - Mr. Tomy C Madathil b Enterprise owned or significantly influenced by key management personnel or their relatives:

1) Associate Companies

i Bhagheeratha developers Ltd.

a Techni soft India Ltd.

Hi Bhagheeratha Energy controls Ltd.

2) Joint Ventures

i PATI-BEL Joint Venture Delhi a PATI-BEL Joint Venture, Kochi iii BEL-TBL Joint Venture

3. IMPAIRMENT OF ASSETS

No material Impairment of Assets has been identified by the Company and a detailed exercise is being done to examine this aspect to fall in line with the provision as required as per Accounting Standards (AS 28) issued by the Institute of Chartered Accountants of India, the results of which will be incorporated in the next financial year.

4. The Company has entered into Joint Venture agreements with other entities for execution of projects as detailed below.

Name of JV Project

PATI - BEL Joint Venture-Kochi Road work in Keraia-Thaikood-Chenganoor

Alleppey - Changanassery

PATI - BEL Joint Venture-Delhi Etawah Road Work (NH2) Package IC, U.P.

The Company has not made any investments in the capital of the above Joint Ventures. The JV is executing the projects of the PATI-BEL JV.

5. Contract works at the following four projects were terminated by the Clients.

Etawah Road Project - Client - National Highways Authority of India- work taken through BEL-ACC Joint Venture.

IWT Project at Kottayam - Client - Kerala State Transport Projects

West Bengal Bridge project - Client - National Highways Authority of India

Mizoram Road Project - Client - Mizoram State PWD- Work taken through BEL-ABL Joint Venture.

a) The clients of all the projects had imposed restrictions on transfer of equipment, vehicles, stores and spares in the projects, pending settlement of disputes, as a result of which equipments worth Rs. 318 lakhs (WDV) and stores worth Rs. 248 lakhs are retained at the respective project sites.

b) Company has challenged the above termination and preferred claims for the loss incurred in various Disputes Redressal forums. Though company is confident of getting the decisions in its favour the management as a measure of abundant caution has decided not to recognize the claims as revenue in strict adherence to the Accounting Standard No.7 (Accounting for Construction contract).

6. Claims if any against the company on account of the termination of contracts are not presently ascertainable.

7. Bank guarantees amounting to Rs.2140 lakhs (IWT-Kottayam, Rengali Project - Orissa, Gulab Sagar Project - Madhya Pradesh and ROB Project-Calicuf, Kerala ) are invoked by the clients and company has obtained stay orders from the Court and matter is pending for final decision. Company is confident of getting a decision in its favour and hence no provision for the same is considered necessary.

8. The Audit of Accounts of PATI-BEL JVs in which company is a partner is not complete, the turnover and loss of share on account ' of JV are incorporated based on provisional accounts.

9. Receivables against uncertified work amounting to Rs.623 lakhs, security deposit and with-holding from contract income amounting to Rs. 312 lakhs relating to closed projects are pending realization due to dispute with the clients which are in different stages of arbitration/legal proceedings. Based On the progress made so far in the cases, company is confident of realizing the above dues in the near future.

10. Sales tax assessment in relation to some of the projects of the company is pending. In respect of those projects sales tax paid in advance amounting to Rs. 252 lakhs is debited to sales tax advance account and provision for sales tax is created to the extent of Rs. 189 lakhs. In addition, in respect of one of the projects sales tax department has raised a demand of Rs. 136 lakhs which is disputed and appeal is pending.

11. The stock of spare parts and materials worth Rs. 48.37 lakh is written off during the year as these items have become obsolete and unusable due to ageing and corrosion and expiry of shelf life. Scrap value if any will be assessed and accounted at the time of disposal.

12. Earthmoving equipment having original cost of Rs261.52 lakh and WDV nil and Construction machinery worth original cost of Rs465.63 lakh and WDV nil have been written off as these items are obsolete and very old and are lying in a deteriorated and scrap condition. Scrap value if any will be assessed and accounted at the time of disposal.

13. CONTINGENT LIABILITY

1) Bankers of the company have issued general guarantees on behalf of the company amounting to Rs.2140 (Rs.2140) lakhs which are secured by hypothecation of machinery, pledge of fixed deposit receipts and personal guarantees of Directors in addition to the counter guarantees issued by the company for an equal amount.

14. PREVIOUS YEAR FIGURES ,

During the year ended 31st March 2012 the Revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to confirm to this year's classification.