FUTURE ENGINEERS INDIA Notes to Accounts

1.1 Contingent Liabilities and Commitments

i) Contingent Liabilities:

a) Claims against the Company not acknowledged as debt.

Commercial claims including employee''''s claims pending in the Courts or
lying with Arbitrators amounting to Rs.5509.03 Lakhs (Previous year:
Rs.4518.75 Lakhs).

b) Income Tax/ Wealth Tax assessments have been completed upto the
assessment year 2013-14.

Company has filed an application for rectification u/s 154 of short
credit given for Advance tax, Tax Deducted at Source (TDS) and other
processing mistakes amounting to Rs.1496.59 Lakhs for assessment year
2012-13 (Previous Year : Rs.348.86 Lakhs for assessment years 2010-
11 and 2011-12).

Income Tax Department is in appeal for an amount of Rs.363.37 Lakhs
with Income Tax Appellate Tribunal against the Commissioner of Income
Tax (Appeals) Orders in Company''''s favour for the Assessment Years
2002-03, 2004-05 , 2010-11 and 2011-12 (Previous Year : '''' 312.55 Lakhs
for assessment years 2002-03, 2004-05 and 2010-11).

Company has filed an appeal with Commissioner of Income Tax (Appeal)
for an amount of Rs.133.04 Lakhs against the order of Assessing Officer
u/s 143(3) for the Assessment Year 2012-13 and 2013-14 ( Previous Year:
Rs.43.48 Lakhs for assessment years 2012-13).

Company has filed an appeal with Commissioner of Income Tax (Appeals)
for an amount of Rs.0.32 Lakhs (Previous year: Rs.0.32 Lakhs) against
the order of Assistant Commissioner of Income Tax (TDS) u/s 201(1) for
the Assessment Year 2009-10.

Company has filed a special leave petition (SLP) before the Supreme
Court for an amount of Rs.105.37 Lakhs (Previous Year: Nil) against the
order of Delhi High Court regarding interest u/s 244A for the
assessment year 2006-07.

Company has filed an appeal against demand of service tax (inclusive of
penalty of Rs.31.44 Lakhs) for Rs.62.87 Lakhs (Previous Year: Rs.62.87
lakhs) and interest thereon by Commissioner of Central Excise (Appeals)
for the period 01.4.2002 to 17.4.2006 before Customs, Excise and
Service Tax Appellate Tribunal (CESTAT).

The Company has filed an appeal against the order of Additional
Commissioner (Appeals), Mathura before Sales Tax Tribunal, Agra for an
amount of Rs.132.53 Lakhs (Previous Year : Rs.132.53 Lakhs ) in respect
of assessment year 1999-2000 and Rs.116.12 Lakhs (Previous Year : Rs.
116.12 lakhs ) for assessment year 2000-01 on account of sales tax.

The Company has filed an appeal against the order of Additional
Commissioner (Appeals), Mathura before Sales Tax Tribunal, Agra for an
amount of Rs.18.71 Lakhs (Previous Year : Rs.18.71 Lakhs ) on account
of entry tax for the year 1999-2000 and against which an amount of Rs.
5.01 Lakhs (Previous Year : Rs.5.01 Lakhs ) had been deposited.

c) Corporate Guarantee given on behalf of Joint Venture Rs.1150.00
Lakhs (Previous year: Rs.200 Lakhs).

In respect of above contingent liabilities, it is not probable to
estimate the timing of cash outflow, if any, pending the resolution of
Arbitration/Appellate/Court/ assessment proceedings.

ii) Commitments:

Estimated amount of contracts remaining to be executed on capital
account (net of advances) and not provided for Rs.778.01 Lakhs
(Previous year Rs.2182.47 Lakhs).

Company''''s estimated share in work programmes committed under production
sharing contract in respect of oil & gas exploration blocks as on 31st
March, 2016 is Rs.4499.07 Lakhs (Previous year: Rs.5121.53 Lakhs).

1.2 a) Guarantees issued by the banks and outstanding as on 31st
March, 2016 Rs.67576.08 Lakhs (Previous year: Rs.74142.29 Lakhs),
against which a provision of Rs.23337.63 Lakhs (Previous year:
Rs.23079.59 Lakhs) has been made in the books towards liability for
performance guarantees/warranties.

b) Letter of credit outstanding as on 31st March, 2016 Rs.328.99 Lakhs
(Previous year: Rs.3599.88 Lakhs).

c) Corporate Guarantees issued by the Company on its behalf for
contractual performance and outstanding as on 31st March, 2016 Rs.
6027.00 Lakhs (Previous year: Rs.22471.50 Lakhs).

1.3 The profit & loss account includes Research & Development
expenditure of Rs.1692.06 Lakhs (Previous year: Rs.1767.94 Lakhs).

1.4 i) Land & Buildings includes Rs.0.07 Lakhs (Previous year: Rs.0.07
Lakhs) being amount invested as share money in Cooperative Housing
Societies as detailed below:

Twintowers Premises Cooperative Society Ltd., Mumbai 10 ordinary shares
of Rs.50/- each fully paid.

Gardenview Premises Cooperative Society Ltd., Mumbai 10 ordinary shares
of Rs.50/- each fully paid.

Heera Panna Towers Cooperative Housing Society Ltd., Vadodara 10
ordinary shares of Rs.50/- each fully paid.

Suflam Cooperative Housing Society Ltd., Ahmedabad 8 ordinary shares of
Rs.250/- each fully paid.

Darshan Co-operative Society Ltd., Vadodara 80 ordinary shares of
Rs.50/- each fully paid

ii) The Company is having a plot measuring 6826.90 square meters with
three Buildings, comprising of 84 flats at GOKULDHAM, GOREGAON (EAST),
MUMBAI. It was noticed that out of total area of 6826.90 square meter,
around 4400 square meter of area only is in the Company''''s
possession.The Company has initiated action by filing an application
for eviction under the Public Premises (Eviction Of Unauthorised
Occupants) Act 1971 and proceeding thereunder are in progress.The
Capitalized cost & Written down value of the above property as on 31st
March, 2016 was Rs.238.19 Lakhs ( Previous Year : Rs.238.19 Lakhs) and
Rs.49.53 Lakhs (Previous Year : Rs.55.24 Lakhs) respectively.

1.5 There is no impairment of cash generating assets during the year
in terms of Accounting Standard (AS-28) "Impairment of Assets".

1.6 i) In terms of provision of Accounting Standard (AS -7)
"Construction Contracts", the information in respect of Lumpsum
services/ Trunkey Projects for contract in progress as on 31st March,
2016:

a. The aggregate amount of Cost incurred and recognized Profit up to
31st March, 2016 Rs.1151018.90 Lakhs (Previous Year: Rs.948988.09
Lakhs).

b. The amount of advances received Rs.3546.01 Lakhs (Previous Year:
Rs.4788.97 Lakhs).

c. The amount of retention Rs.605.00 Lakhs (Previous Year: Rs.576.92
Lakhs)

ii) The estimates with respect total cost and total revenue in respect
of construction contracts are reviewed and up dated periodically to
ascertain the percentage completion for revenue recognition in
accordance with Accounting Standard (AS) -7 "Construction Contracts".
However, it is impracticable to quantify the impact of change in
estimates.

1.7 The Working Capital and Non fund based facilities from Banks are
secured by hypothecation of stocks, book debts and other current assets
of the Company, both present and future.

1.8 (A) In terms of Accounting Standard 27, "Financial Reporting of
Interest in Joint Ventures of the Company", a brief description of
company''''s

joint ventures is:

a) TEIL Projects Limited

A joint venture with Tata Projects Limited was formed in the financial
year 2008-09 for pursuing projects on engineering procurement and
construction basis (EPC Projects) in selected sectors such as oil &
gas, fertilizers, steel, railways, power and infrastructure.

The Joint Venture Company formed in this regard having its Registered
Office at New Delhi has an Authorized capital of Rs.1500 Lakhs &
Issued, Subscribed & Paid-up capital of Rs.1000 lakhs.

Of the issued, subscribed and paid-up capital, 4,999,997 shares of
Rs.10/- each fully paid-up amounting to Rs.500.00 lakhs (Previous year:
Rs.500.00 Lakhs) are held by the Company, being 50% of paid-up capital
of joint venture company.

Till 31st March, 2015, the joint venture company had accumulated losses
to the tune of Rs.1093.30 Lakhs. The Company share of losses for
Rs.546.65 Lakhs has been provided for in the financial statements for
the year ending 31st March, 2015 as given below:

i) a diminution in value of its investment to the extent of Rs.500.00
Lakhs; and

ii) as additional provision of Rs.46.65 Lakhs for provision from losses
of joint venture exceeding company''''s investment of Rs.500.00 Lakhs.

During the current financial year 2015-16, the Joint Venture Company
had a net profit of Rs.3.64 Lakhs. The company''''s share of profit for
Rs.1.82 Lakhs has been written back from provision from losses of joint
venture exceeding company''''s investment of Rs.500.00 Lakhs for the year
ending 31st March, 2016.

TEIL Projects Limited Board in its meeting held on 7-10-2015 and
20-01-2016 has recommended that the Company be wound-up after
completing the existing jobs by 31st December 2015. The promoter
Companies i.e. Engineers India Limited and TATA Projects Limited
accordingly have approved the winding up of the Company in their
respective Board meetings.

b) Jabal Eiliot Co. Ltd.

A joint venture with Jabal Dhahran Company Limited Saudi Arabia and IOT
Infrastructure & Engineering Services Limited, Mumbai was formed during
the financial year 2011-12 for execution of contracts in Saudi Arabia
in the field of oil & gas, non ferrous metallurgy, infrastructure
projects etc.

The joint venture company namely "Jabal Eiliot Co. Ltd." was registered
with Dammam Commercial registry, Kingdom of Saudi Arabia. The Joint
Venture Company formed for pursuing its business interests has an
initial capital of SR. 15000000, out of which one third i.e. 5000000
SR. (Equivalent Indian Rs.599.00 Lakhs) was contributed by the Company
as its share.

Till 31st December, 2014, the Joint Venture Company had incurred losses
to the tune of SR 4897181, of which the Company''''s share of SR 1632394
(equivalent Indian Rs.195.56 Lakhs at historical conversion rate) which
was provided for as diminution in value of investment in company''''s
financial statements till 31st March, 2015.

Based on unaudited financial statement for the period 1-1-2015 to
22-1-2016 the Joint Venture Company had a net loss of SR 491608 of
which Company''''s share is SR 37076 after adjustment of taxes between
partners (equivalent Rs.4.44 Lakhs at historical conversion rate) which
has been provided for as diminution in the value of investment in the
financial statements of the Company for the year ended 31st March,
2016.

Despite all around efforts, the JV Company could not secure any EPC
business (except one small order of engineering) due to extremely
challenging environment coupled with the preconditions of deployment of
large work force in KSA to secure business.

In the absence of any business and to arrest further losses of capital
the JV partners decided to dissolve the Company and accordingly the
Board of Directors of EIL in their meeting held on 30th January, 2015
passed the resolution to initiate action for dissolution and
liquidation of JABAL EILIOT Company Limited. The process of dissolution
is underway.

In view of process of dissolution, till date the part capital amounting
to SR 3308713.33 (equivalent Rs.549.85 Lakhs) was repatriated. The
prorata historical cost of SR 3308713.33 works out at Rs.396.38 Lakhs
and as such Rs.153.47 Lakhs (Rs.549.85 lakhs - Rs.396.38 lakhs) is
recognized as exchange gain on repatriation of part equity share
capital of Joint Venture Company.

c) Ramagundam fertilizers and chemicals limited

The Company has, along with National Fertilizers Limited (NFL) and
Fertilizer Corporation of India Limited (FCIL) incorporated a joint
venture for setting up and operation of a gas based urea and ammonia
complex in February, 2015 namely Ramagundam Fertilizers and Chemicals
Limited (RFCL) having registered office in Delhi.

The Company has Authorized share capital of Rs.150000 Lakhs consisting
15000 Lakhs shares of face value of Rs.10/- each.

The Shareholding of the Company, on commencement of commercial
production of the project shall be in the following proportion:
National Fertilizers Limited (NFL): 26%

Engineers India Limited (EIL): 26%

The Fertilizer Corporation of India Limited (FCIL): 11%

Others: 37% (untied as on 31st March 2016)

Shareholding of 11% by FCIL is in consideration of FCIL granting
concession rights in the land, opportunity cost and value of usable
assets and other items on the land at Ramagundam to the Company.

FCIL shall be allocated shares on completion of compliance of the
condition precedent of the Concession Agreement, which is in progress.

1.10 As per Cabinet Committee on Economic Affairs (CCEA) decision, the
nominated PSU (EIL) was required to pay a commitment fee of Rs.833.00
Lakhs to Fertilizer Corporation of India (FCIL) for revival of
RAMAGUNDAM fertilizer plant so that net worth of FCIL is made positive
to enable it to deregister from BIFR. In terms of approval, post
deregistration, based on sale of assets by FCIL, the amount can be
returned/ adjusted, if necessary.

The approval of Board of EIL was accorded in the financial year 2013-14
for release of Rs.833.00 lakhs towards commitment fee to FCIL subject
to refund/adjustment in due course. Till date no amount has been
disbursed to FCIL. Pending disbursement, if any, to FCIL, the amount
has been disclosed as short term loans & advances recoverable in cash
or in kind or for value to be received as an asset and a corresponding
liability has been disclosed as other current liabilities in the
financial statements of the Company for current year.

Subsequent to deregistration of FCIL from BIFR, the Company along with
National Fertilizers Limited (NFL) and Fertilizers Corporation of India
(FCIL) has formed a joint venture for setting up and operation of gas
based urea and ammonia complex by incorporating a company namely
Ramagundam Fertilizers and Chemicals Limited.

1.11 Jointly Controlled Assets

Company has entered into Production Sharing Contracts with Government
of India along with other partners for Exploration & Production of Oil
and Gas. The Company is a non-operator and is having following
participating interest in the ventures. The Company would share
Expense/Income/Assets/Liabilities of the ventures on the basis of its
percentage in the production sharing contracts. The detail of company''''s
interest in blocks is as under:

Block No. Participating Interest

CB-ONN-2010/11 20%

CB-ONN-2010/08 20%

Based on unaudited available information, revenue expenditure of
Rs.172.08 Lakhs (Previous year: Rs.719.98 Lakhs) and capital
expenditure of Rs.737.50 Lakhs (Previous year: Rs.4.77 Lakhs), being
the Company''''s share has been accounted for in the financial statements
for the year ended 31st March, 2016.

In Block No. CB-ONN-2010/11, during current financial year one of the
consortium member has defaulted in its obligation towards cash calls.
In accordance with Joint operating agreement the lead operator has
raised default cash calls and as such proportionate share amounting to
Rs.74.82 Lakhs in respect of same has been paid and accounted for as
Loans and Advances.

1.12 The disclosures in respect of employee benefits covered under
Accounting Standard (AS-15) "Employee Benefits" are made as far as
practicable.

In respect of Provident Fund, the Company has a separate irrevocable PF
Trust, managing the Provident Fund accumulation of employees. The
Guidance on implementing AS15, Employee Benefits (revised 2005) issued
by Accounting Standards Board (ASB) of ICAI states that benefits
involving employer established provident funds, which require interest
shortfalls to be re-compensated by the employer are to be considered as
defined benefit plans. In this regard, Actuarial valuation as on 31st
March, 2016 was carried out by the Actuary to find out value of
Projected Benefit Obligation arising due to interest rate guarantee by
the Company towards Provident Fund. In terms of said valuation the
Company has no liability towards interest rate guarantee as on 31st
March, 2016.

Defined Benefit Plan

Company is having the following Defined Benefit Plans:

- Gratuity (Funded)

- Leave Encashment (Funded)

- Post Retirement Medical Benefits (Funded)

- Long Service Awards (Unfunded)

- Other benefits on Retirement (Unfunded)

1.13 The Board of Directors at their meeting held on 25th May, 2016 has
proposed a final dividend of Rs.2/- per share for financial year 2015-
16 (Previous year: Rs.2/- per share) subject to approval of
shareholders in annual general meeting. The above is in addition to an
interim dividend of Rs.2.00 per share for financial year 2015-16
(Previous year: Rs.3.00 per share) declared and already paid.

1.14 "Offer for sale" of 33693660 equity shares of Rs.5/- each
representing 10% of paid up equity share capital of the Company was
made on 29th January, 2016 through a separate designated window of the
BSE Limited and National Stock Exchange of India Limited by the
President of India, acting through Ministry of Petroleum & Natural Gas,
Government of India (Promoter). Further, 8388 equity shares of Rs.5/-
each of the Company were sold during the year to Central Public Sector
Enterprises Exchange Traded Fund (CPSE ETF) by the President of India,
acting through Ministry of Petroleum & Natural Gas, Government of
India. Due to above, shareholding of Government of India (Promoter) was
reduced from 69.37% to 59.37%.

1.15 LEASES

a) The Company has taken certain office/residential premises on
operating lease which are cancellable by giving appropriate notices as
per respective agreements. During the year an amount of Rs.1013.27
Lakhs (Previous year Rs.1021.80 Lakhs) has been charged towards these
cancellable operating leases.

b) The Company has taken certain assets like car,
commercial/residential premises etc. on non-cancellable operating
leases. During the year an amount of Rs.950.40 Lakhs has been paid
(Previous year Rs.643.73 Lakhs) towards these non-cancellable operating
leases. The future minimum lease payments in respect of these leases
are as follows:

i) Payable not later than 1 year Rs.681.56 Lakhs (Previous year:
Rs.547.96 Lakhs)

ii) Payable later than 1 year and not later than 5 years Rs.78.95 Lakhs
(Previous year:Rs.214.74 Lakhs)

iii) Payable later than 5 years Nil (Previous year:Nil).

c) The Company has given certain office/residential premises on
operating lease which are cancellable by giving appropriate notices as
per respective agreements. During the year an amount of Rs.254.46Lakhs
(Previous year: Rs.243.17 Lakhs) has been accounted for as rental
income in respect of these cancellable operating leases.

1.16 Company is having investment in Petroleum India International
(PII), an Association of Person (AOP). PII, since financial year
2010-11 has ceased its business activities and is in the process of
dissolution.

The process of dissolution is not completed due to pending activity
relating to

a) Income tax Assessment/ Appeals/ Refunds/ Rectification/
nullification of demands etc.

b) Service Tax Refunds.

c) Pending dispute with Bank of Baroda regarding FD of Rs.55.00 Lakhs
(approx) on which lien has been marked towards demand that could arise
from Saudi British Bank.

Since, the dissolution of PII is not completed due to above factors,
Management Committee of PII in their 57th Meeting held on 18-02-2016 at
BPCL, Mumbai decided to return all monies forthwith except for
retaining some amount to the members of PII.

Due to above decision, Company has received an amount of Rs.1180.00
Lakhs as its share out of total amount of Rs.12354.00 Lakhs distributed
to its members.

It was also decided that in case there is subsequent demand received,
the members shall return the money in proportion to their share.

It was also decided that corpus fund of PII shall be restored to
Rs.5.00 Lakhs per member being original seed capital at the time of
formation of PII.

1.17 The balances of Trade receivables, Loans & Advances, Customer''''s
advances, retention money, Security deposits receivable/payable and
Trade payables are subject to confirmation and reconciliation.

1.18 For Lump sum Services and Turnkey Contracts, balance efforts, cost
and time to complete the contract including probability of levy for
liquidated damages and price reduction schedules for delay as on
reporting date are assessed by the management and relied upon by the
auditors.

1.19 CSR Activity Reserve amounting to Rs.2753.05 Lakhs (Previous year
: Rs.2800.15 Lakhs ) under head Reserves & Surplus (Note 2.2)
represents unspent amount, out of amounts set aside of profit earned in
the past years for meeting social obligations as per Department of
Public Enterprise guidelines for Corporate Social Responsibility and
provisions of Companies Act, 2013 and rules made thereunder.

The requisite disclosure relating to CSR expenditure in terms on
guidance note on Corporate Social Responsibility (CSR) issued by
Institute of Chartered Accountants of India:

(a) Gross amount required to be spent by the company during financial
year ended 2015-16 - Rs.1363.01 Lakhs (Previous Year: Rs.1661.49 Lakhs)

(b) Amount spent during the financial year ended 2015-16 on:

1.20 M/s Fernas Construction India Pvt Limited (Contractor) was awarded
two contracts in the year 2011 based on evaluation by EIL (Company).
One of these orders valued at Rs.180000 Lakhs (approx.) was placed by
the client on the basis of recommendations of the Company as a Project
Management Consultant for that project and second order (valued at
Rs.27200 Lakhs approx.) was placed by the Company being Cost Plus
Contractor for the other Project. Based on pseudonymous complaint
regarding authenticity of completion certificate submitted by the
Contractor based on which the Contractor had qualified for both the
contracts, the Company referred the matter to an Investigating Agency.
During the year, the Investigating Agency in its report has concluded
that completion certificate submitted by the Contractor was bogus.

a) In the case where the Company is the Project Management Consultant,
besides findings of certificate submitted by Contractor being bogus,
the investigation Agency also alleged connivance of a senior officer of
the Company (since superannuated) in relaxing the qualification
criteria which enabled the contractor to qualify for the tender for the
contract awarded by its client based on recommendations of the Company
as a Project Management Consultant.

The concerned officer of the Company as well as the officers of the
Contractor have been charge sheeted, by the investigating Agency, for
this criminal act and are being tried in a court.

Consequent to above, the Company has communicated the fact of
certificate being bogus to the client for an appropriate action at
their end. The Company does not envisage any liability in this regard.

b) In other case where order was placed by the Company on the
Contractor, consequent upon receipt of findings of investigation agency
of certificate submitted by Contractor being bogus, the contract has
been terminated in April, 2016 and the Company has encashed performance
guarantee of Rs.2719 Lakhs submitted by the Contractor. Balance
activities for the contract are to be carried out at the risk and cost
of the Contractor in terms of contractual provisions.

The Company has estimated the additional expenditure of Rs.3167 Lakhs
to complete the Project and accounted for the same as per applicable
Accounting Standard (AS-7).

The Contractor has lodged the claim subsequent to termination of the
contract for net amount of Rs.38434 Lakhs. Management does not consider
any possible obligation on this account requiring future probable
outflow of resources.

1.21 Details of loans given, investment made and guarantee given
covered U/S 186 (4) of the Companies Act, 2013

a) Loans given- Nil

b) Investment made are given under Note No. 2.6.

1.22 In terms of Section 22 of the Micro, Small and Medium Enterprises
Development Act 2006, the outstanding to these enterprises are required
to be disclosed. However, these enterprises are required to be
registered under the Act. In the absence of the information about
registration of the Enterprises under the above Act, the required
information could not be furnished.

1.23 Remuneration to Chairman & Managing Director and full time
Directors are as per their appointment letters from the Ministry of
Petroleum & Natural Gas, Government of India, New Delhi. They are also
allowed to use the staff car for private journeys upto a ceiling of
1000 kms per month.

1.24 Previous year''''s figures have been re-casted and/or regrouped
wherever necessary to ensure their presentation in line with the
current year''''s figures.

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
“2019 © COPYRIGHT DYNAMIC EQUITIES PVT. LTD.”

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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