Dear Shareholder,

I would like to present this years'''' annual report with a lot of optimism. Although the past few years have been very tough and had a great toll on the Indian Economy including your company, I assure you that the worst seems to be over and there is a great ray of hope in the coming future.

India has long been viewed as a potential economic tiger that is yet to achieve its potential. Innumerable regulations and the intricate federal structure of the government inhibited business growth and held India back from achieving its expected economic potential. However, that appears to be changing gradually. The state governments along with the support of the central government, have unveiled several reforms and changes that have made it comparatively easier to do business in India, than ever before.

The Indian economy has shown resilience in the face of global downturns and has stood up to be one of the fastest growing economies in the world by posting a robust growth of 7.2% in FY 2015 and 7.6% in FY 2016. The World Bank also predicted that India would be the fastest-growing economy in the world in the next three years.

Also, Government of India has launched various proactive policy reforms along with several campaigns and initiatives, such as Make in India, Digital India, Skill India, Start-up India and Swachh Bharat Abhiyan (Clean India Mission), which are likely to transform the extent and the quality of rural and urban infrastructure. Some of the infrastructure plans are trans-national and would help India economically integrate more firmly and rapidly with the regional economies.

While cities and urban areas show a progressive rise in the average per capita spending, proactive measures directed towards benefitting rural India to help increase its income opportunities would contribute towards increasing total domestic consumption in India. In this context, large rural infrastructure projects such as interlinking the rivers and building rural roads would ensure less dependence on the monsoons for the agricultural output and a more efficient farm to fork supply chain. This, in turn, shall help ensure a broader consumption pattern.

On the other hand, the rising efficiency of the cities, through Smart City initiative, is expected to allow higher productivity, leading to increased wages and disposable incomes, contributing to the growth of domestic consumption.

India''''s macro story is expected to continue to become more attractive. Reform measures initiated by the government has underpinned India''''s long-term growth potential while the reduction in the current account deficit on the back of falling oil prices enabled the RBI to increase foreign exchange reserves, which could act as a cushion against external shocks.

Inflation has remained benign, and inflation expectations are likely to be anchored by the inflation targeting mechanism. Turning to the fiscal policy, the government is committed to bringing the fiscal deficit to 3 percent by FY2017-18 in compliance with the FRBM Act. The implementation GST bill should be a good boost towards simplified tax regime in the country.

These steps are expected to bring forth some investment opportunities. For example, the initial corpus of USD 6.2 billion by the National Investment and Infrastructure Fund (NIIF) is expected to bridge the investment gap in infrastructure, which would be addressed by FDI and private investments. In a scenario, where the nominal GDP is expected to reach USD 3.4 trillion by FY 2019-20 and further, to USD 7 trillion by FY 2024-25, the stakes for the return on investments is expected to be significantly high.

In addition, India has embarked on a process of increasing connectivity to its neighboring economies, thus integrating more tightly with these economies. By connecting its roads, highways and industrial corridors such as the Amritsar-Kolkata Industrial Corridor (AKIC), Bangalore-Mumbai Economic Corridor (BMEC), Chennai-Bangalore Industrial Corridor (CBIC) and Delhi-Mumbai Industrial Corridor (DMIC) to the neighboring South Asian and South-East Asian economies, India shall become the epicenter of a large economy.

The process of tighter economic integration with neighboring economies has started off with initiatives such as South Asian Association for Regional Cooperation (SAARC), Bangladesh, Bhutan, India and Nepal (BBIN) initiative, BBIN- Motor Vehicle Agreement, Kolkata-Dhaka-Agartala bus service, transnational inland waterways with Bangladesh, road agreements with Association of Southeast Asian Nations (ASEAN). Also, 6 of the 9 Asian Highway (AH) projects pass through India - a befitting case in point to leverage India''''s strategic location as an economic hub. Furthermore, India''''s coastline infrastructure is being further strengthened to support regional coastal shipping.

The legacy of payments outstanding with clients under various claims even after receipt of arbitration awards continued to be the largest hurdle in the construction sector leading to huge liquidity concerns and strain on the balance sheet of every prominent player in the industry.

To overcome the same, the government has taken a few positive steps,

Firstly, they amended the Arbitration Act to facilitate completion of all arbitrations faster and in a time bound manner, a common international practice but was missing in our country.

Secondly, the introduction of special commercial courts at the district and high court level to deal with all commercial disputes over a threshold of Rs, 1 crore. This act would enable all appeals related to arbitration awards in these specialized courts and may not get piled up with other matters in the courts; this is another step towards speeding up the settlement of claims.

Thirdly, the decision of the government as per Niti Aayog to release 75% of the arbitration awards challenged in courts against submission of Bank Guarantees is one of the boldest decision, which would enable companies like us to generate much-needed liquidity and to retire a major chunk of our debt with the said cash flows.

These new steps introduced would take some time to be implemented at ground level, but, we are hopeful that “Good days will come" sooner and we shall see things moving within next 12-18 months.

Now, let me take you through the current condition of our company. Our company has been sustaining through the turmoil in the last few years where we have seen many large companies going down. Although the government has introduced great measures, there is at least another 12-18 months for the same to be implemented and result in bearing the expected fruits for companies like us, regarding real liquidity.

The delay in decision making mainly due to elections and other political unrest in states like Jammu & Kashmir has also taken a toll on the company, where the company was earlier declared L1 for one of the largest hydropower projects, 1000 MW PakalDul HE Project. We were declared L1 for the same in 2014. However, the project was not awarded due to various local concerns including political chaos, etc. which largely affected the future plans of the company, as it would have given a revenue of more than Rs, 7,500 crores over 4-5 years starting FY 16, if commenced in time as per original schedule.

The performance of the company''''s operations out of its core engineering & construction business reflected in standalone results were as follows:

- The Revenue from Operations increased by 5.8% to Rs, 2,614.95 crore in FY 2015-16 from Rs, 2,472.81 crore in FY 2014-15.

- The Company reported a Net loss of Rs, 18.68 crore in FY 2015-16 as against a Net Profit of Rs, 11.89 crore in FY 2014-15.

- The Order book of the Company as on March 31, 2016with positive signs stood at Rs, 10,175 crore.

The main constraints faced by the company remain to be Slowdown in order inflow including conversion of L1 to Letter of Awards, delays in settlement of claims and realization of receivables for work done, corresponding increase in debt and hence continuous increase in interest burden which the company is finding it difficult to meet out of its reduced cash flows.

Hence, to overcome the same and to get the much needed time of 12-18 months to generate cash flows, the Company finally and prudentially agreed and lenders took a decision to invoke Strategic Debt Restructuring (SDR) under which the consortium of lenders would convert part of debt into equity to hold at least 51% of the equity, post conversion, which will give a breather to the company with a moratorium of 18 months from the reference date viz. May 26, 2016 for repayment of all dues to lenders. The company expects that within the said period, it would be possible to revive, with various reform measures being taken by the government, give time to generate adequate liquidity required for meeting the liabilities of the lenders and the existing cash flows of the projects can be utilized for the operations of the company, without the strain of stretching the existing cash flows to service a large level debt.

During the said period of 18 months, the Company has plans to undertake various measures to sell its non-core assets and concentrate on the core E & C business even if it means to undertake harsh steps to keep all investments in Asset ownership business also on hold.

As a result the Company has already initiated steps like,

- We have also undertaken steps to enter into Joint Development Agreements with prominent developers to derrick from initial investments to commence, advertise the projects and also generate upfront cash flows to reduce debt.

- Signed Share Purchase Agreement (SPA) to sell its stake in 2 Annuity Projects KNT - 1 & AP - 7 to reduce the liability to repay debt.

- Started the process of identifying a buyer to hive off SDR invoked Bellona Estate Developers Ltd., a SPV formed for developing a mall in Electronic City, Bangalore.

- The Thermal Projects which were kept on hold earlier, and which continues to remain so, would be hived off at a right time.

- not to undertake any further investments for mining rights in Indonesia & Mozambique and to recognize the impairment of the value of majority of investments made therein.

The Consolidated Performance of the Company has taken a hit -

The Revenues from Operations increased by 18.5% from Rs, 3,415.38 crore to Rs, 4,046.35 crore. However, due to the impact of the impairment mentioned above provisions and increase in Finance Cost from Rs, 516.95 crore to Rs, 593.06 crore, the Company reported a net loss of Rs, 186.63 crore as against a Net Profit of Rs, 8.46 crore in FY 2014-15.

As the MD of the company, the future now looks bright and together with the support of the shareholders and the lenders the Company which has seen various ups'''' and down''''s in the last seven decades, we shall be up again and roaring in the years to come.

Thank you all for your much needed support and co-operation.

Yours truly,

Rupen Patel

Managing Director

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.

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

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