1. Rights, preferences and restrictions attached to equity shares

The company has only one class of shares referred to as equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive surplus from sale of assets after setting off of the liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders.

2. Nature of Security for term loans

A. Working Capital Term loans from State Bank of India (SBI) is secured by:

(i) First charge on the entire fixed assets of company, present and future on pari passu basis with other term lender, SREI Equipment Finance Pvt Ltd

(ii) Registered mortgage of leasehold rights of land measuring 4.12 Ha. Bearing Survey Nos. 462, 467,636, 635/2, 625/1, 634/1, 635/3 and 635/4 situated at Bambooflat, Ferrargunj Tehsil, Andaman, A& N Islands, including assignment of Power Purchase Agreement, EPC contract and O&M contract, insurance policy and other project documents.

(iii) Collateral security by way of:

(a) Pledge of 84,37,388 shares of Suryachakra Power Corporation Limited (face value of Rs.10).

(b) Vacant urban residential plot no. 74 admeasuring 350 sq.yards, Survey Nos.300P, 302, 309P, in the name of Shri M. Seshavatharam and situated in Krishnaja Hills, Village: Bachupally, Mandal: Quthubullapur, District Ranga Reddy, Andhra Pradesh.

(c) Open vacant plots of land in the name of Shri M. Naveen Babu admeasuring— 1.47 acres RS No.368; 0.97 acre RS No.09; 0.38 acre RS No.11. All three at village: Thorreddu, Rajahmundry Rural Mandal, District East Godavari, Andhra Pradesh. 3.02 acres RS No.246/1, village: Madhurapudi, Korukondala Mandal, District East Godavari, Andhra Pradesh.

(d) 6 Nos. vacant residential plots in the name of Shri M. Naveen Babu in Western Block No.6-95, 6-95/1, 6-97, 6-97/1, 697/3 and 6-96 admeasuring 2082.88 sq. yards situated in RS 124/4, at village: Thorreddu, Rajahmundry Rural Mandal, District East Godavari, Andhra Pradesh.

(iv) Personal Guarantee by Dr. S.M Manepalli, Managing Director, Shri M. Seshavatharam and Smt T. Sreelatha relatives of Director and Shri M. Naveen Babu,

(v) Corporate guarantee by Mauktika Energy Private Limited and Manepalli Investments Private Limited.

B. Term loan from SREI Equipment Finance Private Limited is secured by:

(i) First charge on all movable and immovable assets, present and future of the company in favour of SREI on a pari-passu basis with SBI.

(ii) Assignment in favour of SREI, SBI on a pari-passu basis, of all rights titles and interests of the company in, to and under all assets of the project and all project documents, insurance policies, permits/approval etc, to which the company is a party and all other contracts relating to project

(iii) Pari-passu first charges on company’s all the accounts including but not limited to Trust and Retention Account and the Debt-Service Letter of Credit / Reserve Account.

(iv) The Equity Shares held by promoters in the project company (minimium 51%) shall be pledged to SREI and SBI on a pari-passu basis.

(v) Non-disposal undertaking by Caterpillar and BSES for not disposing off their respective equity shares of SPCL during the currency of the credit facilities sanctioned to SPCL without the written consent of SREI and SBI.

3. Terms of repayment of secured term loans

(i) Working capital term loan from State Bank of India (Kolkata) carries an interest of 12.75% per annum and is repayable in sixty nine monthly unequal installments. First sixty months @ Rs.35,40,000 each and next eight months @ Rs.39,30,000 each and the last installments @ Rs.39,60,000.

(ii) Term loan form SREI Equipment Finance Private Limited carries an interest of 19.5% per annum. The loan outstanding as on the date of the balance sheet has fallen due for repayment.

4. Nature of Security for Cash Credits

Cash Credits from State Bank of India is secured by:

(i) Exclusive first charge on the entire current assets of the company both present and future.

(ii) Assignment of LC from Andaman and Nicobar Administration

(iii) Collateral security on second charge on all fixed assets of the company

Note: 5

Disclosures under Section 22 of Micro, Small and Medium Enterprises Development Act, 2006

The Ministry of Micro, Small and Medium Enterprises has issued an office Memorandum dated August 26, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allotted after filing of the Memorandum. However, the Company has not received any intimation from suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 and hence disclosures, if any, relating to amounts unpaid as at year end together with interest paid / payable as required under the said Act, have not been given. Further in the view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

Note:

(a) Loans and Advances shown above, fall under the category of ‘Long Term Loans & Advances’ in nature of Loans. No repayment schedule has been specified in respect of these loans.

(b) All the above loans and advances are interest free.

B. Investment by the loanee in the shares of the Company and subsidiaries

None of the loanees and loanees of subsidiary companies have made investments in shares of the Company.

(i) Investment by Suryachakra Global Enviro Power Limited in it’s subsidiaries, in equity shares :

Note: 6.

Revenue from A & N Administration

(i) The Company’s revenue from sale of electricity is based on the Power Purchase agreement (PPA) entered into with the Andaman and Nicobar (A & N) Administration. The PPA is for a period of 15 years initially shall have an extension of the terms and the effective terms of 3 further periods of 5 years each and contains a set of pre-defined formulae for calculation of the revenue to be billed on a monthly basis. Such billings as per terms of the PPA include a fixed charge payment, a variable charge payment, incentive payment, foreign exchange adjustment and change-in-law adjustment.

(ii) The Company, for the purpose of determining the monthly billings, invoices the A & N Administration based on the costs and formulae as envisaged in the PPA and as determined by the Order of Joint Electricity Regulatory Commission (JERC), Guregoan dated 29th April, 2015. Pending final confirmation and acceptance of actual cost and the formulae by the A & N Administration, no adjustment is made to the revenue. Such adjustments, if any will be made in the period in which the amount becomes determinable and is confirmed by the A & N Administration.

(iii) Revenues for the year ended March 31, 2016 include an amount of Rs.6,00,93,376 (Previous year: Rs.4,93,44,300 ) billed by the Company as per applicable provisions of PPA / JERC Order dated 29th April 2015, which has been rejected / withheld by the A & N Administration on the grounds of the technical interpretation of the formulae for computation of such charges. Aggregate receivables as at March 31, 2016 on such withheld amounts works out to Rs. 14,26,01,061/- (Previous year: Rs. 23,05,07,685/ -) on account of such rejections/ withheld amounts. Further, as at 31st March 2016, the Company also has to receive an amount of Rs. 12,75,74,329/- from A & N Administration towards interest on the above stated rejections or withheld amounts which have been recognized in earlier years. Management is pursuing the matter and is confident of recovering the amount. The amount so far recognized in the books of financial statements upto 31st March 2016 is a part of claim preferred on A & N Administration. In this regard, Honorable Supreme Court of India vide its Order dated 10th May 2016, Ordered A & N Administration to deposit an amount of Rs. 15 Crores with Supreme Court for the purpose of consideration of interim relief.

(iv) During the year ended 31st March 2016, the Company has enforced the Letter of Credit facility extended by the A & N Administration in its favour and encashed an amount of Rs. 14,80,00,000/- against the amounts withheld by the A & N Administration. State Bank of India which has given Letter of Credit in favour of the Company on behalf of the A & N Administration has credited the said amount to the Company’s Working Capital Account without releasing the funds to the Company. Aggrieved by the action of the Company and the Bank, the A & N Administration has approached the Division Bench of High Court at Kolkata for reversal of encashment. Dues from A & N Administration stated in Para (iii) above were net of the said LC encashment amount.

Status of the subsidiaries is as follows:

(a) Suryachakra Global Enviro Power Ltd (SGEPL): - Disinvestment of Stake

Suryachakra Global Enviro Power Limited (SGEPL), wholly owned subsidiary of the Company along with its subsidiaries engaged in the generation and sale of power have incurred substantial losses and the net worth of all these subsidiaries has been fully eroded. In view of high input cost, operations of all the subsidiary companies were suspended from the financial year 2011-12 onwards.

As a measure of prudence, the company, during 2014 - 15 has made a provision of Rs. 66,83,37,722/- towards diminution in the value of investments and during 2011-12 and 2014-15 made a provision aggregating to Rs. 38,31,28,691/- towards advances given to the subsidiaries as doubtful.

Further, during the year, pursuant to the Board resolution dated 3rd June, 2015 the Company sold its stake in SGEPL for a sale consideration of Rs. 6,27,080/-. This has resulted in a total loss of Rs. 89,04,89,883/-. The loss for the year (net of provisions made in 2014-15 aggregating to Rs. 66,83,37,722/- towards diminution in value of investments) amounting to Rs. 22,21,52,161/

- has been charged off to Statement of Profit and loss as Exceptional Item. (Refer Note No. 25).

Secured loan lenders of SGEPL and it’s subsidiaries have issued notices under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002(SARFAESI Act) and Winding up Petitions Under Section 433 and 434 of Companies Act 1956. Except one Power Plant owned by M/s. Sri Panchajanya Power Private Ltd at Hingoli, Maharashtra all other three plants and one Plant in project stage were taken over by the respective secured loan lenders. The lenders have issued auction notice for sale of the respective plant and called for bids. The respective companies have filed a petition in the Debt Recovery Tribunal (DRT), Hyderabad seeking stay on the auction proceedings. The matter is pending before DRT. Indiabulls Housing Finance Ltd - a secured Lender for Suryachakra Global Enviro Power Limited (SGEPL) and South Asian Agro Industries Ltd (SAAIL) has initiated alleged criminal proceedings against the Managing Director of the Company and other Directors and Guarantors of SGEPL and SAAIL. These criminal proceedings were challenged by the SGEPL and SAAIL and the matter is pending before Courts. Meanwhile, the Honourable High Court of Adjudicature at Hyderabad vide its order dated June 22, 2015 has ordered that SGEPL and SAAIL be wound up under the provisions of the Companies Act, 1956 and appointed the Official Liquidator attached to the Honourable High Court as Liquidator of SGEPL and SAAIL.

(b) Suryachakra Energy(Chhattisgarh) Private Ltd (SECPL):

SECPL is a 100% subsidiary of the Company and is engaged in setting a coal based power project (with a planned capacity upto 350MW) at Sapos Village, Jangir-Champa District in the State of Chhattisgarh at an estimated project cost of Rs. 1,900 Crores.

SECPL has obtained most of the requisite licenses for setting up the project; signed a Memorandum of Understanding (MOU) with Chhattisgarh State Electricity Board; and entered into an Implementation Agreement with Chhattisgarh State Power Distribution Company Limited, for setting up the said power project.

SECPL upto March 31, 2016, spent an amount of Rs. 45,59,27,070/-towards advances to suppliers of capital equipments and incidental expenses. Management is confident of mobilizing the requisite funds either on its own or through strategic investors to execute the project and recover the investment made in the project. Hence, no provision in the value of investment and advance extended is considered necessary at this stage.

(c) Suryachakra Global Ventures Ltd (SGVL):

SGVL is a wholly owned subsidiary of the Company incorporated in Honkong under Companies Ordinance. The Company through SGVL has decided to acquire a coal mine for captive use by its earstwhile subsidiary companies. With this intention, the Company out of the proceeds of the GDRs issued during the year 2011-12, has advanced an amount of Rs. 85,01,25,542/- (USD 1,90,00,000) to SGVL.

SGVL has entered an into an MOU with Symphony Trading and Investments Limited (STIL) for acquiring interests in coal mines in Indonesia. STIL is having offices in Singapore, Honkong etc., and having experience in identifying and acquiring suitable coal mines for its clients. Pursuant to the said MOU, SGVL on 28th April 2011, has paid USD 1,90,00,000 as advance to STIL for acquiring interests in two coal mines from M/s. Surajaya Indelberg in Indonesia. As per the said MOU, STIL has agreed to return the advance if transaction of coal mine acquisition is not successful within the timelines mutually agreed / extended. Due to change in policies of Indonesia, the transaction could not be completed.

In view of the prevailing uncertain conditions relating to coal mining activities in Indonesia, the Company has called back the advance given to STIL and making efforts to recover the advance. During 2012-13, management had intensified the efforts for recovery; commenced the negotiations and was in the process of initiating legal remedies. Pursuant to the said efforts, the Company could recover an amount of Rs. 14,41,29,264/- (USD 25,90,886) during the year 2013-14 and pursuing the recovery of the balance amount.

Management is confident of recovery of the advance. Shortfall if any, in recovery will be adjusted in the year of final settlement. Hence no provision towards doubtful advances, if any, has been made.

Note: 7 Advances to related parties (Other than to subsidiaries) - Refer Note 12

Unsecured Loans and advances to related parties, considered good, included in Note 12 includes advance to Suryachakra Industries Private Limited Rs. 2,88,79,652/- (Previous year: 3,06,61,484/-) and Suryachakra Thermal (Madhya Pradesh) Private Limited Rs. 3,81,01,314/- (Previous year: 3,81,01,314/-) . The Company in the earlier years had given the advances to acquire land/ to incure preliminary expenses in connection with setting up the power projects. Due to financial difficulties the Company could not make further progress with regard to the respective projects. The land acquired is yet to be registered in the name of the respective companies. The Company had entered into a written agreements with the vendors and the agreements are live. The Company is making efforts to bring in the strategic investors and realise the advances given. Hence, no provision in the doubtful advances is considered at this stage.

Note: 8

Capital Advances :

In the earlier years, the Company has given Capital Advances for enhancing the capacities and increasing the efficiencies of the existing plant and machinery. Net advance as at 31st March 2016 aggregate to Rs. 8,84,28,238/- (Previous year: Rs. 10,36,59,272/-). Due to financial difficulties the Company could not go ahead with the envisaged expansion and modifications. The management is making efforts and expects to recover the balance amount at the earliest. Hence, no provision in the value of advance is considered at this stage Note: 37

Interest on Borrowings

(a) Certain lenders of the Company has initiated legal proceedings against the Company for recovery of their dues. The Company is negotiating with those lenders for settling the dues emicably. The Company stopped providing for the interest and other charges on loans from these lenders. Accordingly, no interest on these loans have been provided in the financial statements for the years ended on 31st March 2014, 31st March 2015 and 31st March 2016. The liability if any will be recognized in the year of settlement of dispute.

(b) During the year ended 31st March 2016 the management based on the discussions it had with the lenders, has written back the interest aggregating to Rs. 13,59,51,879/- recognized prior to financial year 2012-13. The management is of the opinion that there need not be any liability in this regard. Hence, the same has been written back and grouped under Exceptional Item (Refer Note: 25).

Note: 9

Confirmation of Balances

The Company has not received confirmation of balances from Lenders (Secured / Unsecured and Long Term /Short Term), Trade payables, Creditors for Capital goods and Loans & Advances including Capital Advances given by the Company as at March 31, 2016. In the absence of confirmation of balances from these parties, provision for adverse variations, if any, in the carrying amount of these balances are not quantifiable. However, management is confident that the settlement with the said parties will be made at the carrying amounts and no provision is required at present for adverse variations. Adjustments for variances, if any will be made in the year of settlement.

Note: 10

Notices from SBI Global Factors Ltd:

During the period ended 30th June 2012, M/s. SBI Global Factors Limited an unsecured creditor has filed a petition before the Honorable High Court of Andhra Pradesh for winding up of the company u/s 443 (1) (c) of the Companies Act, 1956. The Honorable High Court of Andhra Pradesh, had admitted the petition. State Bank of India, the holding entity of SBI Global Factors Limited and the principle lender of the Company has imp leaded opposing the winding up petition. The Company is confident of resolving the matter amicably.

Note: 11

Employee benefits

The following table sets out the status of the gratuity plan as required under AS 15 (Revised):

Reconciliation of opening and closing balance of the present value of the defined benefit obligation

Discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

Expected rate of return on plan assets:

This is based on the expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

Salary escalation rate:

The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors.

Note: 12

Segment Reporting

The Company’s operations predominantly consists of generation and sale of electricity. The coal trading business of the company has been discontinued. Hence there are no reportable segments under the Accounting Standard - 17. The Company’s business operations are primarily concentrated in India. The conditions prevailing in India being uniform, no separate geographical disclosures are considered necessary.

Note: 13

Related party transactions

(a) The related parties where control exists are subsidiaries and step down subsidiaries. There are no other parties over which the company has control.

(b) Related parties where control exists and with whom transactions have taken place during the year are as follows:

(i) Subsidiary

- Suryachakra Global Enviro Power Limited

- Suryachakra Energy (Chhattisgarh) Private Limited (from March 05, 2011)

- Suryachakra Global Ventures Limited

(ii) Key Management Personnel (KMP) represented on the Board of Directors

- Dr. S. M. Manepalli, Managing Director

- Mr. K Vijay Kumar, Executive Director

(iii) Enterprises over which Key Managerial Personnel or their relatives have significant influence (Significant interest entities)

- Suryachakra Industries Private Limited

- Suryachakra Thermal (Madhya Pradesh) Private Limited

(iv) Non-Executive on the Board of Directors

Dr. R. S. Murthy Mr. P.V.Subba rao Mr. V.S.Murthy Mrs. M.Mangatayaru Mr. B.P.Vijay Rao Mr. V.Subrahmanyam

Note: 14 Deferred taxes

The Company had started claiming deduction under Section 80-IA of the Income Tax Act, 1961 from the year ended 31,March 2011. Based on the assessment of the deferred tax as on March 31,2016, the timing differences arising in the current year will reverse within the tax holiday period. Accordingly, no deferred tax has been recognized in the books of accounts of the Company as on March 31,2016

Note: 15

Previous year figures

Previous figures have been recanted/ restated to conform to the current classification