BOARD OF DIRECTORS B. N. KALYANI A. B. KALYANI G. …kalyanigroup.com/bfutilities/annual/Annual...

1BF UTILITIES LIMITED annual report 2007-2008

B O A R D O F

D I R E C T O R S

B. N. KALYANI

Chairman

A. B. KALYANI

G. K. AGARWAL

B. B. HATTARKI

S. S. VAIDYA

B A N K E R S

IDBI Bank Limited

ICICI Bank Limited

HDFC Bank Limited

A U D I T O R S

Dalal & Shah, Chartered Accountants

R E G I S T E R E D O F F I C E

BF Utilities LimitedMundhwa, Pune Cantonment,Pune 411 036, Maharashtra, IndiaPhone : (020) 26822552 / 26702777Fax : (020) 26823061E-mail : [email protected]

2 BF UTILITIES LIMITED annual report 2007-2008

Table 1 - Details about Board of Directors of the Company

Name of Director Category Number of Number of Whether Number of Materially significant

meetings meetings attended directorships pecuniary or

held attended last AGM of public business

limited relationship with

companies the Company

B. N. KALYANI Promoter,

(Chairman) Non- executive 6 5 Yes 14 None

A. B. KALYANI Non- executive 6 6 No 14 None

G. K. AGARWAL Non- executive 6 5 Yes 1 None

B. B. HATTARKI Non- executive

Independent *** 6 5 Yes 10 None

S. S. VAIDYA Non- executive

Independent *** 6 6 No 8 None

*** Independent Director means a director who apart from receiving director's remuneration does not have any

other pecuniary relationship or transactions with the company, its promoters, its management or its subsidiaries,

which in the judgement of the board may affect independence of judgement of director.

CORPORATE GOVERNANCE

BF Utilities is committed to the highest level of transparency, in all facets of its operations and interaction with its

stakeholders. This report on Corporate Governance is to fulfil this commitment.

The SEBI code on Corporate Governance has been incorporated in the Listing Agreement of Stock Exchanges,

including Pune and Mumbai, with whom BF Utilities's Equity Shares are listed. Certain provisions in the Companies

Act, 1956 also deal with Corporate Governance.

This Chapter of the report, plus the information given under 'Management Discussion and Analysis' and 'Shareholder

Information' constitutes the report on Corporate Governance for 2007-2008.

1. BOARD LEVEL ISSUES :

● Composition of the Board

As on 30th September, 2008 the Board of Directors of BF Utilities is composed of five Directors. The Board of

Directors of Company comprises the Chairman, who is promoter non-executive director and other four non-

executive directors, of whom two are independent. In respect of compliance with Corporate governance

norms, i.e. Clause-49 of Independent Directors, Company is in the process of complying the same. Details

are given in Table 1.

● Number of Board Meetings

During the year, Five Board meetings were held. These were on 20th October, 2007, 29th December, 2007,

30th January, 2008, 30th April, 2008, 31st July, 2008 and 20th September, 2008. The maximum gap between

any two Board Meetings was less than four months.

● Directors' Attendance Record and Directorships

Table 1 gives the composition of the Board, the category of the Directors, their attendance record and the

number of directorships.

None of the Directors is a member of more than ten Board-level committees of public companies in which

they are Directors, nor is chairman of more than five such committees.

● Information Supplied to the Board

Among others, information supplied to the Board includes ;

_ Annual operating plans and budgets, capital budgets, updates.

_ Quarterly results for the Company and its operating divisions or business segments.

_ Minutes of meetings of committees.

_ Compliance of regulatory, statutory nature or listing requirements and shareholder services.

The Board is presented with detailed notes along with the agenda papers.

● Directors with materially pecuniary or business relationship with the Company

There has been no materially relevant pecuniary transaction or relationship between the Company and its

non-executive and/or independent Directors during the year 2007- 08.


Remuneration of Directors

The details of the remuneration paid to Directors is given in Table- 2.

Table 2 - Remuneration paid to Directors during 2007-08 and relationship with each other

Name of Director Relationship Sitting Fees Salaries and Commissions Totalwith other (in Rs.) perquisites (in Rs.) (in Rs.)directors (in Rs.)

B. N. KALYANI(Chairman) * 25,000 Nil Nil 25,000

A. B. KALYANI * 30,000 Nil Nil 30,000

G. K. AGARWAL None 25,000 Nil Nil 25,000

B. B. HATTARKI None 25,000 Nil Nil 25,000

S. S. VAIDYA None 30,000 Nil Nil 30,000

The Company does not have a Remuneration Committee.

* None of the employees is related to any of the Directors of the Company except Mr. A. B. Kalyani,

son of Mr. B. N. Kalyani, Chairman of the Company.

Audit Committee

The Audit Committee performs the following functions :

1. Reviewing of the Company's financial reporting process and disclosure of financial information to

ensure that the financial statement is correct, sufficient and credible;

2. Reviewing with management the annual financial statement before submission to the Board;

3. Reviewing with the management, external and internal auditors, the adequacy of internal control

systems;

4. Discussing with internal auditors any significant finding and follow up on such issues;

5. Discussing with the external auditors before the audit commences on the nature and scope of audit,

as well as having post audit discussion to ascertain any area of concern;

6. Reviewing any changes in accounting policies or practices as compared to last completed financial year

and commenting on any deviation from accounting standards;

7. Reviewing details of related party transactions exceeding 1% of last year's turnover;

8. Reviewing the company's financial and risk management policies;

The Audit Committee consists of qualified and non-executive directors. It comprises of Mr. S. S.

Vaidya (Chairman), Mr. B. B. Hattarki and Mr. A. B. Kalyani. The internal auditor is M/s. P. V. Deo

& Co., Chartered Accountants, Pune. The committee met four times during the course of the year on

29th December, 2007, 30th January, 2008, 30th April, 2008 and 31st July, 2008. Table 3 gives

attendance record. The Chairman of the Board is invited to attend the meetings of the Audit Committee

as a permanent invitee. The committee has access to all records of the Company.

Table 3 - Attendance record of Audit Committee members for 2007-08

Name of the Director No. of meetings Meetings attended

Mr. S. S. Vaidya 4 4

Mr. A. B. Kalyani 4 4

Mr. B. B. Hattarki 4 3


2. MANAGEMENT :

Management Discussion and Analysis

This annual report has a detailed chapter on management discussion and analysis.

Disclosures by Management to the Board

All disclosures relating to financial and commercial transactions where Directors may have a potential

interest are provided to the Board and the interested Directors do not participate in the discussion

nor do they vote on such matters.

3. SHAREHOLDERS :

Disclosures regarding Appointment or Re-appointment of Directors.

Two Directors - Mr. A. B. Kalyani and Mr. G. K. Agarwal - are retiring by rotation and being

eligible offer themselves for re-appointment. Their details are given below :

Mr.Amit B. Kalyani, B.E.(Mech.) born on 26th July, 1975. Mr.Amit Kalyani joined Bharat Forge

Limited w.e.f.24th October, 1999 as Chief Technology Officer and has since been instrumental in

induction of Technology in the Company and providing system support services to the Company's

process. He also designed and implemented e-Commerce strategies and is contributing significantly

in manufacturing, marketing, exports and technology upgradation areas in the Company. He has

over seven years of working experience

Mr. G. K. Agarwal, B.E.(Mech.), M.B.A., born on 17th February, 1951, is Executive Director of Bharat

Forge.

Communication to shareholders

The quarterly results of the Company's performance are published in leading newspapers such as

Business Standard, all India edition (English) and Sakal, Pune edition (Marathi).

Investor Grievances

The Company has constituted the 'Shareholders'/Investors' Grievance Committee' for redressing

shareholders'/investors' complaints. The Committee comprises of Mr. B. B. Hattarki (Chairman), Mr.

A. B. Kalyani and Mr. S. S. Vaidya, all non-executive Directors. The status on complaints is also

reported to the Board of Directors, as an agenda item. Mr. B. S. Mitkari, VP-Finance & Company

Secretary, is the compliance officer.

Share Transfer

The Company has constituted the 'Directors Executive Committee'. The Committee comprises of Mr.

B. B. Hattarki (Chairman), Mr. A. B. Kalyani and Mr. G. K. Agarwal all non-executive Directors. The

committee meets at a regular interval to consider and approve the transfer, transmission,

consolidation, sub-division, issue of duplicate certificates and requests of dematerialisation of

Company's shares. There are no legal proceedings against the Company on any share transfer

matter.

Details of Non-Compliance

There have been no instances of non-compliance on any matter relating to the capital market

during the year under report.

General Body Meetings

Financial Year Date Time Venue

2004-05 27th March, 2006 10.30 A. M. Training Centre, Kalyani Steels Limited.




SHAREHOLDER INFORMATION

Annual General MeetingDate :- 30th March, 2009, At 10.30 A.M.Venue :- Training Centre at Kalyani Steels Limited, Mundhwa, Pune - 411 036, Maharashtra, IndiaFinancial Calendar1st October to 30th SeptemberBook ClosureThe books will be closed from rd March, 2009 to th March, 2009 as annual closure for the purposeof AGM.Dividend DateThe Board has not recommended any dividend on Equity Shares.ListingNational Stock Exchange of India, Bombay Stock Exchange and Pune Stock Exchange Ltd.Stock CodesNSE : BF UTILITIEBSE : 532430PSE : BFUTI - 160284Stock DataTable 1 below gives the monthly high and low prices and volumes of the Company's Equity Sharesat Bombay Stock Exchange & National Stock Exchange, Mumbai for the year 2007-08.

Table 1: High and Low Prices & Trading Volumes at BSE and NSE

BSE NSE

Month High Low Volume High Low Volume (Rs.) (Rs.) (Rs.) (Rs.)

Oct-07 2849.00 2105.00 942647 2825.00 2050.00 471363

Nov-07 2610.00 1980.00 275202 2625.00 1980.00 134900

Dec-07 2750.00 2025.00 445605 2768.40 1950.00 361759

Jan-08 2749.85 1494.40 343509 2751.45 1467.30 240649

Feb-08 1725.25 1175.00 140701 1694.40 1190.00 87198

Mar-08 1205.00 882.70 178260 1195.00 890.40 108457

Apr-08 2095.70 1012.00 226356 2110.00 1021.00 215422

May-08 2554.65 1601.55 776840 2565.50 1601.25 414696

Jun-08 1839.90 1229.35 269099 1840.00 1231.60 185313

Jul-08 1981.85 1025.00 267344 1990.60 1025.10 376094

Aug-08 2655.65 1981.85 334052 2667.75 2050.00 250590

Sep-08 2289.80 1198.90 170936 2275.00 1211.45 115692

Share Transfer Agents and Share Transfer System

M/s. Link Intime India Private Limited (formerly Intime Spectrum Registry Limited), 202, Akshay Complex,Near Ganesh Mandir, Dhole Patil Road, Pune 411 001 are the Registrar and Transfer Agents of theCompany. They carry out the transfer, transmission, consolidation, sub-division, issue of duplicatecertificates and requests of dematerialisation of Company's shares on behalf of the Company. Thecomplaints received from shareholders, investors etc., are redressed promptly. During the year underreport, no complaints were received from the shareholders.

Shareholding pattern

The following tables 2 & 3 give the Pattern of Shareholding as on 30th September, 2008

Table 2 Pattern of shareholding by ownership as on 30 September, 2008

Company No. of shares held Shareholding %

Promoters 24853469 65.98

Financial Institutions 0 0.00

Mutual Funds 1909 0.01

Nationalised Banks 3235 0.01

Insurance Companies 160127 0.43

Foreign Institutional Investors/ Foreign Banks 4333180 11.50

Private Corporate Bodies 3654663 9.70

Indian Public 4482654 11.90

NRIs 178391 0.47

TOTAL 37667628 100


ToThe Members,BF Utilities Limited,Mundhwa,Pune 411 036

REPORT OF THE AUDITORS ON CORPORATE GOVERNANCE

We have reviewed the records concerning the company's compliance of the conditions of Corporate Governance as stipulated in

Clause 49 of the Listing Agreement entered into by the Company with the Stock Exchanges of India for the financial year ended

on 30 September 2008.

The compliances of conditions of corporate governance is the responsibility of the management. Our review was limited to

procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the corpo-

rate governance. It is neither an audit nor an expression of an opinion on the financial statements of the company.

We have conducted our review on the basis of the relevant records and documents maintained by the Company and furnished

to us for examination and the information and explanations given to us by the Company.

Based on such a review, and to the best our information and according to the explanations given to us, in our opinion, the

Company has complied with the applicable conditions of Corporate Governance as stipulated in Clause 49 of the Listing

Agreement of the Stock Exchanges of India.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency with

which the management has conducted the affairs of the Company.

For and on behalf of Dalal & Shah

Chartered AccountantsAnish Amin

Place : Mumbai PartnerDate : 27th December, 2008 Membership No. 40451

Table 3 Pattern of shareholding by share class as on 30 September, 2008

Shareholding class No. of shareholders No. of shares held Shareholding %

Up to 500 24548 1677738 4.46

501 to 1000 1022 732229 1.94

1001 to 2000 421 603885 1.60

2001 to 3000 137 343712 0.91

3001 to 4000 56 195491 0.52

4001 to 5000 49 223467 0.59

5001 to 10000 77 541454 1.44

10001 and above 107 33349652 88.54

TOTAL 26417 37667628 100.00

Dematerialisation

As on 30th September, 2008 dematerialised shares accounted for 36.12% of the total equity.

Site Location

The Company's Wind Farm is located at Village Maloshi, Boposhi and Kadve Khurd, Taluka Patan,

District Satara, in the state of Maharashtra, India.

Investors Correspondence Address

1. Secretarial Department

BF Utilities Ltd.,

Mundhwa, Pune Cantonment, Pune - 411 036 Maharashtra, India.

Phone No. 020 - 26702618, 26822552, Fax No.26823061,

E-mail : [email protected]

2. Link Intime India Private Limited (formerly Intime Spectrum Registry Limited)

Registrar & Transfer Agents

202, Akshay Complex, Off Dhole Patil Road,

Near Ganesh Mandir, Pune 411 001.

Phone No.: 020-26051629 Fax No.020-26053503

Email : [email protected]


FOR THE YEAR ENDED 30TH SEPTEMBER, 2008

To,

The Members,

Your Directors have pleasure in presenting their Eighth

Annual Report on the business and operations of the

Company together with Audited Statement of Accounts

for the year ended 30th September, 2008.

1. FINANCIAL HIGHLIGHTS :

(Rs. in Million)

Year Year

ended ended

30th Sept., 30th Sept.,

2008 2007

Sales 194.50 295.23

Other Income 81.96 30.24

Profit before Interest

and Depreciation 173.19 233.14

Less : Interest 59.03 24.36

Depreciation 61.26 61.26

Profit/(Loss) before tax 52.90 147.52

Provision for Taxation

a) Current Tax 6.50 19.80

b) Deferred Tax (Credit) 0 2.39

c) Fringe Benefit Tax 0.13 0.51

Net Profit/(Loss) 46.27 124.82

Balance of Profit/(Loss)

from previous year 56.26 (68.56)

Surplus retained in Profit &

Loss Account 102.53 56.26

For the year ended 30th September, 2008, your

Company achieved a total sales of Rs.194.50 Million

(previous year Rs. 295.23 Million) and the Company

has earned a Profit of Rs.52.90 Million (previous year

profit of Rs.147.52 Million).

2. DIVIDEND :

Your Directors do not recommend any dividend on

the equity shares for the year ended 30th

September, 2008.

3. CONSOLIDATED FINANCIAL STATEMENTS :

Pursuant to Clause 32 of the Listing Agreement with

the Stock Exchanges, read with the applicable

Accounting Standards, issued by the Institute of

Chartered Accountants of India, financial statements

relating to Subsidiaries, investments in Associates

and investments in Joint ventures, as defined under

the said Standards, are merged with the Accounts

DIRECTORS’ REPORT

of the Company and the Consolidated Financial

Statements are attached to these Account. The

details are given under Note 'L' to the said

Consolidated Financial Statements.

4. SUBSIDIARIES :

In terms of the approval granted by the Government

of India, Ministry of Company Affairs under Section

212(8) of the Companies Act, 1956, copies of the

Balance Sheet, Profit and Loss Account, Directors'

Report and the Report of the Auditors of the Wholly

Owned Subsidiary Companies viz. Bhalchandra

Investment Limited, Mundhwa Investment Limited,

Forge Investment Limited, Jalakamal Investment &

Finance Limited and Jalakumbhi Investment &

Finance Limited and Indirect Subsidiaries viz.

Kalyani Utilities Development Limited and Nandi

Infrastructure Corridor Enterprises Limited have not

been attached with the Accounts of the Company.

The Company will make available these documents/

details upon request made by any shareholder of

the Company interested in obtaining the same and

the same can also be inspected at the Registered

Office of the Company. Pursuant to the Approval, a

statement of the summarised financials of all the

subsidiaries is attached along with the Consolidated

Financial Statements. Pursuant to Accounting

Standard (AS)-21 issued by the Institute of

Chartered Accountants of India, Consolidated

Financial Statements presented by the Company

includes the financial information of its Wholly

Owned Subsidiaries and its Indirect Subsidiaries.

5. PARTICULARS OF EMPLOYEES :

The information required under the provision of

Section 217(2A) the Companies Act, 1956, read with

Companies (Particulars of Employees) Rules, 1975,

and forming part of the report is annexed hereto.

6. CONSERVATION OF ENERGY, TECHNOLOGY

ABSORPTION AND FOREIGN EXCHANGE EARNINGS

AND OUTGO :

The additional information required under the

provisions of 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, and forming part of the Report is

reproduced hereunder :

I. CONSERVATION OF ENERGY : Since the Company is

in the business of Generation of Power through

non-conventional sources, this part is not

applicable.


II. TECHNOLOGY ABSORPTION :

1. Research and development (R&D) :

The company continuously conducts R&D activities

in-house using the existing manpower and other

resources on continuous basis. The capital and

recurring expenses on R&D activities is not

separately identified.

2. Technology Absorption, Adaptation and

Innovation :

The Company has not imported any technology.

III. FOREIGN EXCHANGE EARNINGS AND OUTGO :

Total Foreign Exchange Used and Earned :

Used : Rs. 205,359/-.

Earned : Rs. 18,279,804/-.

7. DIRECTORS :

In accordance with the provisions of the Companies

Act, 1956 and the Articles of Association of the

Company, Mr. A. B. KALYANI and Mr. G. K. Agarwal,

Directors of the Company, retire by rotation at the

ensuing Annual General Meeting and, being eligible,

they offer themselves for re-appointment.

8. DIRECTORS' RESPONSIBILITY STATEMENT :

Pursuant to the requirement under Section 217(2AA)

of the Companies Act, 1956, with respect to

Directors' Responsibility Statement, it is hereby

confirmed :

(i) That in the preparation of the accounts for the

financial year ended 30th September, 2008, the

applicable accounting standards have been followed

along with proper explanation relating to material

departures ;

(ii) That the Directors have 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 or loss of the

company for the year under review ;

(iii) That the Directors have taken proper and sufficient

care for the maintenance of adequate accounting

records in accordance with provisions of the

Companies Act, 1956 for safeguarding the assets

of the Company and for preventing and detecting

fraud and other irregularities ;

(iv) That the Directors have prepared the annual

accounts for the financial year ended 30th

September, 2008 on a 'going concern' basis.

9. AUDITORS :

You are requested to re-appoint Auditors for the

current year to hold the office from the conclusion

of the ensuing Annual General Meeting until the

conclusion of the next Annual General Meeting.

Your directors wish to place on record their

appreciation for the positive co-operation received

from the Central Government, Government of

Maharashtra, Financial Institutions and the Bankers.

The directors also wish to place on record their

appreciation of the unstinted efforts and

contributions made by the Management Team and

the employees of the Company at all levels.

The Directors express their special thanks to Mr. B.

N. Kalyani, Chairman for his untiring efforts for the

progress of the Company.

For and on behalf of the

Board of Directors

PUNE B. N. KALYANI

Dated : 27th December, 2008 Chairman


Annexure to the Directors’ Report

Information required as per Section 217(2A)(b)(ii) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975and forming part of the Directors’ Report for the year ended 30th September, 2008.

Sr. Name of the employee and (Age) Gross Remuneration Particulars of Last employmentNo. Qualifications and Experience (Net Take Home Pay) held, designation, Organization

Designation / Nature of Date of Commencement and period.duties. of Employment

1 Mr. A V Whabi (48) 5,685,019 Director

B.Sc., A.C.A. 25 Years (3,226,336) Machtool Automation Pvt. Ltd., Pune

Sr. Vice President (Corporate Finance) 5/15/1999 5 Years

2 Mr. Pradeep Sharma * (52) 3,482,950 Sr. General Manager

B.Tech. (Mech. Engg.) 30 Years (2,005,893) Voltas Ltd.,

CEO - Projects 17/10/2005 6 Years

Notes :

1 Designation denotes the nature of duties also.

2 Gross remuneration includes salary, Company’s contribution to Provident Fund and Superannuation Scheme, Allowances, perquisites butexcludes Gratuity unless paid/payable.

3 None of the employees are related to any of the directors of the Company

4 Experience includes number of years of service elsewhere wherever applicable.

5 Asterisk against name indicates that the employee was in service for a part of the year.

For and on behalf of Board of Directors

B.N.KALYANIPune, 27th December, 2008 Chairman


AUDITORS REPORT

ANNEXURE TO THE AUDITORS’ REPORT:

Statement referred to in Paragraph 2 of the Auditors’ Report of even date to the Members ofBF UTILITIES LIMITED on the Financial Statements for the year ended 30th September, 2008.

On the basis of the records produced to us for our verification/perusal, such checks as we considered appropriate, and in termsof information and explanations given to us on our enquiries, we state that:

i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation offixed assets.

(b) As explained to us, considering the nature of the Fixed Assets, the same have been physically verified by themanagement at reasonable intervals during the year. According to the information and explanations given to usand the records produced to us for our verification, there were no discrepancies noticed on such physical verification.

(c) As per the information and explanation given to us on our enquires the disposal of assets during the year were notsubstantial and would not have an impact on the operations of the Company;

ii) (a) As per the information and explanation given to us and the records produced to us for our verification the companyhas not granted any loans, secured or unsecured, to companies, firms and other parties covered in the registermaintained under section 301 of the Companies Act, 1956;

REPORT OF THE AUDITORS TO THE MEMBERS

We have audited the attached Balance Sheet of BF UTILITIES LIMITED, as at 30th September 2008 and also theannexed Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date.These financial statements are the responsibility of the Company's management. Our responsibility is to expressan opinion on these financial statements based on our Audit.

(1) We conducted our audit in accordance with auditing standards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatements. An Audit includes examining, on a test basis, evidence supporting theamounts and disclosures in financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

(2) As required by the Companies (Auditor's Report) Order, 2003 (CARO, 2003), issued by the Central Governmentof India in terms of Section 227(4A) of the Companies Act, 1956, we annex hereto a Statement on the mattersspecified in paragraphs 4 of the said Order;

(3) Further to our comments in Annexure referred to in paragraph 2 above, we report that:

(a) We have obtained all the information and explanations, which to the best of our knowledge and belief werenecessary for the purposes of our audit;

(b) In our opinion, proper books of account as required by law have been kept by the Company so far asappears from our examination of the Books of the Company;

(c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by the report are inagreement with the Books of Account of the Company;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by thisreport comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act,1956,to the extent applicable;

(e) On the basis of the written representations received from the Directors as on 30th September, 2008, andtaken on record by the Board of Directors, we report that none of the Directors is disqualified as on 30thSeptember, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of section274 of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the saidFinancial Statements, read together with the notes thereon, give the information required by the CompaniesAct,1956, in the manner so required and present a true and fair view in conformity with the accountingprinciples generally accepted in India:

(i) In the case of the Balance Sheet, of the state of the affairs of the Company as at 30th September, 2008,

(ii) In the case of the Profit and Loss Account, of the profit for the year ended on that date, and

(iii)In the case of the Cash Flow statement, the cash flows of the company for the year ended on that date.

For and on behalf ofDALAL & SHAH

Chartered Accountants

Anish AminPartner

Membership No: 40451MUMBAI: 27th December 2008


(b) As per the information and explanation given to us and the records produced to us for our verification the companyhas not taken any loans, secured or unsecured, from companies, firms and other parties covered in the registermaintained under section 301 of the Companies Act, 1956;

iii) In our opinion and according to the information and explanations given to us, there are adequate internal controlprocedures commensurate with the size of the Company and the nature of its business with regard to the purchase offixed assets and for the sale of goods and services. As per the information given to us, no major weaknesses in internalcontrols have been identified by the management or the internal auditors of the Company during the year. During thecourse of our audit, nothing had come to our notice that may suggest a major weakness in the internal control systemsof the Company;

iv) On the basis of the audit procedures applied by us, and according to the information and explanations given to us onour enquiries on this behalf and the records produced to us for our verification, there are no transactions that need tobe entered into the register in pursuance of section 301 of the Companies Act, 1956 ;

v) The Company has not accepted any deposits from the public during the year;

vi) On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, the Company has anadequate internal audit system commensurate with the size and nature of its business;

vii) We have broadly reviewed the Books of Account maintained by the Company pursuant to the rules made by the CentralGovernment for the maintenance of Cost Records under Section 209(1)(d) of the Companies Act,1956, in respect of theCompany's products to which the said rules are made applicable, and are of the opinion that prima facie the prescribedaccounts and records have been made and maintained. We have, however, not made a detailed examination of therecords with a view to determine whether they are accurate;

viii) (a) According to the records of the Company, the Company has been generally regular in depositing undisputedstatutory dues including Income Tax, Service Tax, Cess and other Statutory dues with the appropriate authorities.According to the information and explanations given to us, provisions of the Employees Provident Fund &Miscellaneous Provisions Act, 1952 and the Employees State Insurance Act, 1948 are at present not applicable tothe Company. However, the Company is regular in depositing Provident Fund Dues with Trust formed by theCompany in this regard;

(b) On the basis of our examination of the documents and records of the Company and the information and explanationsgiven to us upon our enquiries in this regards, there are no disputed amounts payable in respect of Income-tax,Service Tax, cess which have not been deposited with the appropriate authorities;

ix) The Company has not defaulted in repayment of dues to any financial institution or banks during the year;

x) The Company has in our opinion, maintained proper records and contracts with respect to its investments where timelyentries of transactions are made in the former. All Investments held by the Company at the close of the year are held inits own name.

xi) The Company has not given any guarantees for loans taken from financial institutions and/or banks by others;

xii) The Company has applied the funds raised by way of term loans towards the purposes for which they have been raised;

xiii) The Company has not applied any short term funds for long term investments;

xiv) As per the information and explanation given to us on our enquiries on this behalf there were no frauds on or by theCompany noticed or reported during the year.

In view of the nature of activities carried on by the Company and considering the reporting requirements clauses no (ii) and (xiii)of CARO, 2003 are not applicable to the company. Further in view of the absence of conditions prerequisite to the reportingrequirement of clauses (iii) (b), (c), (d), (f) & (g), (x), (xii), (xviii), (xix) and (xx) the said clauses are, at present, not applicable.

For and on behalf ofDALAL & SHAH


Anish Amin Partner

Membership No: 40451

MUMBAI: 27th December 2008


Balance Sheet as at 30th September, 2008

As at 30thSeptember, 2007

Schedule Rs. Rs. Rs.

I. SOURCES OF FUNDS:

1. Shareholders' Funds:

(a) Share Capital "A" 188 338 140 188 338 140

(b) Reserves and Surplus "B" 2 015 041 765 1 968 772 765

2 203 379 905 2 157 110 905

2. Loan Funds:

(a) Secured Loans "C" 710 800 000 197 400 000

(b) Unsecured Loans "D" 850 369 385 784 369 385

1 561 169 385 981 769 385

3. Deferred Tax (See Note No. 9)

(a) Deferred Tax Liability 63 291 842 63 291 842

(b) Deferred Tax Asset 42 869 294 42 869 294

20 422 548 20 422 548

TOTAL 3 784 971 838 3 159 302 838

II. APPLICATION OF FUNDS:

1. Fixed Assets:

(a) Gross Block 1 177 058 641 1 177 301 827

(b) Less: Depreciation 493 849 817 432 935 621

(c) Net Block "E" 683 208 824 744 366 206

2. Investments "F" 501 651 631 492 092 095

3. Current Assets,

Loans and Advances: "G"

(a) Sundry Debtors 7 998 665 44 643 545

(b) Cash and Bank Balances 84 975 520 37 520 882

(c) Other Current Assets 122 457 505 188 371 044

(d) Loans and Advances 2 941 874 260 2 218 138 255

3 157 305 950 2 488 673 726

Less: Current Liabilities and Provisions: "H"

(a) Liabilities 454 673 159 487 615 079

(b) Provisions 102 521 408 78 214 110

557 194 567 565 829 189

Net Current Assets 2 600 111 383 1 922 844 537

TOTAL 3 784 971 838 3 159 302 838

NOTES FORMING PART OF THE FINANCIAL STATEMENTS "K"

As per our attached report of even date On behalf of the Board of Directors

For and on behalf of

DALAL & SHAH


ANISH AMIN B. S. MITKARI G. K. AGARWAL B. B. HATTARKI

Partner VP Finance & Director Director

Company Secretary

Mumbai, 27th December, 2008. Pune, 27th December, 2008.


Profit And Loss Account For The Year Ended 30th September, 2008

Year Ended 30thSeptember, 2007

Schedule Rs. Rs. Rs.

INCOME:

Operating Income

Wind Power Generated 176 223 918 152 861 669

Sale of Certified Emission Reduction

Units (See note No. 10) 18 279 804 142 365 964

194 503 722 295 227 633

Other Income "I" 81 963 763 30 238 056

276 467 485 325 465 689

EXPENDITURE:

Operating and other expenses "J" 162 312 779 116 679 245

Depreciation 61 255 706 61 261 691

223 568 485 177 940 936

Profit for the year before taxation 52 899 000 147 524 753


Current Tax (See note No. 8) 6 500 000 19 800 000

Deferred Tax (See note No. 9) - 2 393 600

Fringe Benefit Tax 130 000 510 000

6 630 000 22 703 600

Profit for the year after taxation 46 269 000 124 821 153

As per last account

56 262 292 (68 558 861)

Balance carried to Balance Sheet 102 531 292 56 262 292

Earning Per Share

(Face Value of Rs. 5/- each).

Net Profit / (Loss) after Taxation 46 269 000 124 821 153

Average number of shares issued & Subscribed 37 667 628 37 667 628

Basic & Diluted Earning per Share 1.23 3.31

NOTES FORMING PART OF THE FINANCIAL STATEMENTS "K"



DALAL & SHAH




Company Secretary



Particulars Year ended Year ended 30th Sept. 30th Sept.

2008 2007 Rs. Rs. Rs. Rs.

A Cash Flow From Operating Activities

Profit/ (Loss) before taxation 52 899 000 147 524 753

Add Interest / Depreciation / Other Non Cash Expenses

Depreciation 61 255 706 61 261 691

Interest 59 033 256 24 359 928

Loss on sale of assets - 9 767

120 288 962 85 631 386

Less Interest / Dividend / Other Adjustments

Profit on sale of Assets 8 260 -

Provision no longer required 302 724 4 910 353

Interest 21 459 220 4 872 641

Interest on Income Tax Refund - 11 540

Profit on sale of Investments 52 219 103 13 295 250

Dividend from other companies 5 115 240 5 170 796

Dividend from Mutual Funds - 1 949 727

(79 104 547) (30 210 307)

Operating Profit before Working Capital Changes : 94 083 415 202 945 832

(Increase) / Decrease Working Capital

(Increase) / Decrease in Current Assets :

(Increase) / Decrease in Sundry Debtors 36 644 880 78 810 601

(Increase) / Decrease in Other current assets and

loans and advances 65 221 270 (173 840 979)

101 866 150 (95 030 378)

Increase / (Decrease) in Current Liabilities :

Liabilities (16 433 355) 29 973 573

(16 433 355) 29 973 573

85 432 795 (65 056 805)

Cash Generated from operations 179 516 210 137 889 027

Direct taxes paid

Income Tax 22 007 728 1 383 785


(22 177 728) (1 893 785)

Net Cash Flow from Operating Activities 157 338 482 135 995 242

B Cash Flow from Investing Activities

Additions to Fixed Assets / Other Adjustments

(Increase)/Decrease in Investment, net (9 559 536) 280 833 019

Additions to Fixed Assets ( 167 551) ( 424 023)

Sales proceeds of assets 77 487 149 255

Non Operating Income

Interest 21 459 220 4 872 641

Interest on Income tax refund - 11 540




78 793 563 25 299 954

(Increase) / Decrease in Loan Given to Subsidiaries (Net) (702 266 008) (331 072 905)

Increase / (Decrease) in Advance under an arrangement 1 659 444 -

Net Cash Flow from Investing Activities (631 462 601) (25 214 700)

C Cash Flow from Financing Activities

Secured loans (Net of Repayment) 513 400 000 (163 200 000)

Unsecured Loans (Sales Tax Deferral) 66 000 000 27 600 000

Interest Paid (57 821 243) (24 359 928)

Net Cash from Finance Activities 521 578 757 (159 959 928)

Net changes in cash and cash equivalents (A+B+C) 47 454 638 (49 179 386)

Cash and cash equivalents as on 30th September 2007 37 520 882 86 700 268


Cash Flow Statement for the year ended 30th September 2008

As per our attached report of even date On behalf of the Board of DirectorsFor and on behalf of

DALAL & SHAHChartered Accountants

ANISH AMIN B. S. MITKARI G. K. AGARWAL B. B. HATTARKIPartner VP Finance & Director Director

Company Secretary



Schedule “A” to “K” annexed to and forming part of the Financial Statements for the year ended 30th September,2008

As at 30thSeptember, 2007

Rs. Rs. Rs.

SCHEDULE “A” SHARE CAPITAL:

Authorised:

40 000 000 Equity Shares of Rs. 5/- each 200 000 000 200 000 000

200 000 000 200 000 000

Issued , Subscribed and Paid up:

37 667 628 Equity Shares of Rs. 5/- each fully paid 188 338 140 188 338 140

Total 188 338 140 188 338 140

Note : 3,76,67,628 Equity Shares of Rs. 5/- each were allotted

on June 16, 2001 as fully paid up for consideration other

than cash, under a scheme of arrangement between

BF Utilities Ltd. & Bharat Forge Ltd. with effect from

1st March 2001 sanctioned by the High Court of

Judicature of Mumbai.

SCHEDULE “B” RESERVES AND SURPLUS :

Capital Reserve :

As per last account 1 912 510 473 1 912 510 473

Excess of Assets over Liabilities in terms of the Scheme of

Arrangement sanctioned by the High Court of Judicature

at Mumbai.

Surplus As Per Annexed Profit and Loss Account 102 531 292 56 262 292

Total 2 015 041 765 1 968 772 765

SCHEDULE "C" SECURED LOANS :

Term Loans :

Rupee Term Loan From Industrial Development Bank of India Ltd. 110 800 000 197 400 000

(For Security See Note 4 (i))

Rupee Term Loan From Citicorp Finance (India) Ltd. (Since Repaid) 400 000 000 -

(For Security See Note 4 (ii))

Rupee Term Loan From Axis Bank Limited 200 000 000 -

(For Security See Note 4 (iii))

Total 710 800 000 197 400 000

SCHEDULE "D" UNSECURED LOANS:

Sales tax deferral obligation collected under Government of

Maharashtra Package Scheme of Incentives by a

beneficiary under an arrangement. 850 369 385 784 369 385

Total 850 369 385 784 369 385


As at 30th September,

2007 Rs. Rs. Rs.

SCHEDULE “F” INVESTMENTS ; at book value or as indicated : Face

ValueRs.

Short Term :

In Mutual Fund Units :

Unquoted

- (3,785,247.3130) Kotak Flexi Fund of Fund Growth 10 - 38 704 154

- (1,500,000.0000) Kotak Dynamic Asset Allocation-

Growth Plan 10 - 15 000 000

- (26,877.6510) DSPML Strategic Bond Fund 1,000 - 27 500 000

- (2,056,511.9210) Kotak Flexi Debt Scheme - Growth Plan 10 - 24 699 440

- (33,633.3750) Reliance Liquid Plus 1,000 - 35 000 000

- (2,251,824.3300) ICICI Prudential Flexible Income Fund 10 - 32 000 000

245,023.9720 - ABN Amro Money Plus Regular Growth 10 3 000 000 -

1,108,221.5260 - DWS liquid Plus Regular rowth 10 15 000 000 -

231,025.6440 - HDFC CMF Fund Saving Plus Retail Growth 10 4 200 000 -

3,851,789.1970 - HDFC CMF Fund Saving Plus

Wholesale Growth 10 70 257 939 -

4,905,583.4210 - Kotak Flexi Debt Scheme -

Institutional Growth Plan 10 50 000 000 -

26,515.5580 - Reliance Liquid Plus Fund

Institutional Growth Plan 1,000 30 005 191 -

8,991.8770 UTI Liquid Plus Fund Institutional Growth 1,000 10 000 000

182 463 130 172 903 594

Long Term :

In Fully paid Equity Shares :

Quoted

1 278 810 (1,278,810) in Kalyani Steels Limited 10 16 688 471 16 688 471

Unquoted:

55 556 (55,556) Equity Shares of Rs.10/- each

in Vasudeva Textiles Limited, at cost. 4 555 592 4 555 592

* 1 (1) Equity share of Rs. 10/- each in

Nandi Highway Developers Limited, at cost. 10 10

4 555 602 4 555 602

In wholly owned subsidiaries,Unquoted:

In Bhalchandra Investment Limited

22,997,506 (22,997,506) Equity Shares of Rs. 10/- each. 9 000 001 9 000 001

In Mundhwa Investment Limited

23,747,500(23,747,500) Equity Shares of Rs. 10/- each. 144 500 001 144 500 001

In Forge Investment Limited


In Jalakamal Investment & Finance Limited


In Jalakumbhi Investment & Finance Limited


300 500 004 300 500 004

504 207 207 494 647 671

Less : Provision for diminution in value of investments 2 555 576 2 555 576

Total 501 651 631 492 092 095

Rupees

Particulars Gross Block Depreciation Net Block

Sr. As At Additions Deductions & As At Upto On Deductions For the Upto As At As AtNo. 30.09.2007 Adjustments 30.09.2008 30.09.2007 & Adjustments year 30.09.2008 30.09.2008 30.09.2007

1 Land 15 199 252 - - 15 199 252 - - - - 15 199 252 15 199 252

2 Building 13 108 730 - - 13 108 730 1 578 710 - 213 675 1 792 385 11 316 345 11 530 020

3 Plant & Machinery 1 144 688 812 - - 1 144 688 812 429 333 385 - 60 439 569 489 772 954 654 915 858 715 355 427

4 Electrical Installation 14 000 - - 14 000 10 866 - 1 448 12 314 1 686 3 134

5 Office Furniture 211 921 - 25 000 186 921 111 910 9 698 17 555 119 767 67 154 100 011

6 Office Equipments 1 219 236 167 551 - 1 386 787 626 457 - 180 790 807 247 579 540 592 779

7 Vehicles 2 859 876 - 385 737 2 474 139 1 274 293 331 812 402 669 1 345 150 1 128 989 1 585 583

Total 1 177 301 827 167 551 410 737 1 177 058 641 432 935 621 341 510 61 255 706 493 849 817 683 208 824 744 366 206

Previous year Total 1 177 326 324 424 023 448 520 1 177 301 827 371 963 428 289 498 61 261 691 432 935 621 744 366 206

Note :- Refer para 2, of significant accounting policies referred to in Note No. 16 in schedule 'K'.

Schedule - “E” Fixed Assets


Book value Market Value

as at as at as at as at 30-Sep-08 30-Sep-07 30-Sep-08 30-Sep-07

QUOTED 16 688 471 16 688 471 QUOTED 151 155 342 549 376 776

UNQUOTED 484 963 160 475 403 624

TOTAL 501 651 631 492 092 095

* Investments are still in the process of being transferred in the name of the Company.

Note : Following Investments were purchased and sold during the year

S.No. Name of the Company Qty. Purchased Face PurchaseNos. Value Cost

Rs. Rs.

1 DWS Liquid Plus Regular Growth Plan 3493896.6660 10.00 46,600,000

2 DWS Money Plus Fund Regular Plan Growth 835205.5860 10.00 10,000,000

3 DWS Premier Bond Fund Regular Plan Growth 769213.0180 10.00 10,000,000

4 HDFC Cash Management Fund Saving Plan - Growth 598659.0040 10.00 10,000,000

5 HDFC Cash Management Fund Saving

Plus Plan - Retail - Growth 1950995.5820 10.00 34,000,000

6 HDFC Cash Management Fund saving

Plus Plan - Wholesale - Growth 6246168.6210 10.00 109,042,061

7 HDFC Income Fund - Growth 282991.6570 10.00 5,200,000

8 ICICI Prudential Income Plan - Growth 413197.5230 10.00 10,000,000

9 Kotak Flexi Debt Scheme Growth 726890.9260 10.00 9,000,000

10 Lotus India Liquid Fund - Institutional Growth 14202506.8210 10.00 155,439,586

11 Lotus India Short Term Plan Institutional Growth 7125644.4340 10.00 77,515,610

12 Reliance Liquid Fund Treasury Plan Institutional

Option-Growth Option Growth 979283.2630 10.00 20,000,000

13 Reliance Liquid Fund Cash Plan Institutional - Growth 659804.6980 10.00 9,000,000

14 Reliance Liquid Plus Fund Institutional Option

Growth Plan 8408.5840 1,000.00 9,000,000

15 Tata Floater Fund Growth 4479399.0710 10.00 52,000,000

16 UTI Liquid Cash Plan Institutional Growth 30984.3700 1,000.00 40,000,000

17 UTI Liquid Plus Fund Growth Plan 3968.5670 1,000.00 8,000,000


As at 30thSeptember,

2007Rs. Rs. Rs.

SCHEDULE “G” CURRENT ASSETS, LOANS & ADVANCES

a) Sundry Debtors, unsecured, Good :

(unless otherwise stated)

Outstanding for less than six months 7 998 665 44 643 545

b) Cash and Bank Balances:

Cash on Hand 2 570 4 238

Bank Balances:

With Scheduled Banks:

In Current Account & Cash Credit Account 67 698 656 1 362 397

In Fixed Deposit Account 17 274 294 36 154 247

84 975 520 37 520 882

c) Other Current Assets:

Energy Credit Receivable 94 614 625 44 353 773

Income Receivable (See Note No. 10) 26 341 586 142 365 964

Interest Receivable 1 501 294 1 651 307

122 457 505 188 371 044

d) Loans and Advances, Unsecured, Good :

(Unless otherwise stated):

Loans and Advances to Subsidiaries (See Note No. 5) 2 742 665 801 2 040 399 793

Loan to Companies 39 530 000 39 530 000

Purchase of "Development Rights" of Land (See Note No. 11) 134 567 106 132 600 806

Advances recoverable in cash or in kind or for

value to be received

Good 1 187 408 2 461 439

Tax paid in advance 23 923 945 3 146 217

2 941 874 260 2 218 138 255

Total 3 157 305 950 2 488 673 726

SCHEDULE "H" CURRENT LIABILITIES AND PROVISIONS

(a) LIABILITIES:

Sundry Creditors 13 461 146 49 274 523

Security Deposit 200 000 000 200 000 000

Advance under an arrangement (See Note No. 13) 240 000 000 238 340 556

Interest accrued but not due 1 212 013 -

454 673 159 487 615 079

(b) Provisions:

Taxation 26 300 000 21 200 000

Fringe Benefit Tax 1 117 000 987 000

Employee Benefits (See Note No. 14) 1 598 595 1 695 705

Others (See Note No. 12) 73 505 813 54 331 405

102 521 408 78 214 110

Total 557 194 567 565 829 189


Year ended30th September,

2007

Rs. Rs. Rs.



Interest on Bank F.D (Gross - TDS Rs. 946,899/-, P.Y. Rs.281,150/-) 4 231 823 4 872 641

Interest on Loan (Gross - TDS Rs.3,903,728/-, P.Y. Rs. Nil) 17 227 397 -


Profit on Sale of Assets 8 260 -



Miscellaneous Income 2 859 216 27 749

Total 81 963 763 30 238 056

SCHEDULE "J" OPERATING AND OTHER EXPENSES:

(1) Operating Expenses:

Operations, Maintenance & CDM Expenses - Wind Mills 20 803 601 36 493 830

Lease Rent - Land 600 000 600 000

Insurance Expenses 925 666 1 863 034

Electricity Duty (See Note No. 12) 8 784 526 7,680,529

Wheeling & Transmission Charges 10 389 882 -

Other Operating Expenses 56 000 102,000

Repairs to Machinery 1 567 559 -

43 127 234 46 739 393

(2) Other Expenses:

Insurance - others 44 785 64 284

Rent 2 233 826 5 000 000

Rates & Taxes 332 804 545 446

Repairs & Maint. (others) 271 691 30 515

Interest:

On Fixed Loans 58 964 787 24 359 928

Others 68 469 -

59 033 256 24 359 928

Loan Processing Charges 23 039 400 -

Salary, Allowances etc. 18 077 684 16 109 974

Contribution to Provident & other funds 1 458 942 1 940 904

Staff Welfare Expenses 110 660 142 876

Director's sitting fees 135 000 120 000

Auditors Remuneration 918 971 724 162

Miscellaneous Expenses including Printing, Stationery

Postage, Travelling, Telephone, Bank Charges, etc. 5 877 638 13 515 707

Professional & Consultancy Expenses 7 650 888 7 376 289

Loss on Sale of Assets - 9 767

119 185 545 69 939 852

Total 162 312 779 116 679 245

SCHEDULE “I” OTHER INCOME


Rupees Rupees2007-08 2006-07

1 *Payment to Auditors

i) As Statutory Auditors 617 980 449 320

ii) In other capacity

a) for tax audit 56 180 28 060

b) for Certification & other matters 206 180 208,796

iii) For Expenses 38 631 37 986

* including service tax 918 971 724 162

2 A Expenditure in Foreign Currency :

(a) Travelling expenses 205 359 2 312 237

(b) Subscriptions & Others - 1 485 964

205 359 3 798 201

B Earnings in Foreign Currency

Certified Emission Reduction (Carbon Credits) 18 279 804 142 365 964

3 Licensed & Installed Capacity, Production and Turnover :

Class of Goods Unit Licensed Capacity Installed Capacity Actual Production(a) (b) (c)

2007-08 2007-08 2007-08

A. Power Generated from KW * 18 330 18 330Wind Mills ( Non- * (18 330) (18 330)Conventional Energy)

No. of Units 160 570 800 p.a. 160 570 800 p.a. 36 706 749(160 570 800 p.a.) (160 570 800 p.a.) (33 862 614)

* Licensed Capacity as approved by Government of Maharashtra on 100% utilisation basis. Figures in brackets represents previous year’s figures.

Turnover :

Class of Goods For the year For the year01/10/2007 to 30/09/2008 01/10/2006 to 30/09/2007

Qty. Units Rs. Qty. Units Rs.

Wind Power Generated 36 706 749 176 223 918 33 862 614 152 861 669(Non Conventional energy)

36 706 749 176 223 918 33 862 614 152 861 669

SCHEDULE “K’ NOTES FORMING PART OF THE FINANCIAL STATEMENTS :

4 (i) Term Loan from Industrial Development Bank Of India Ltd., is secured by first charge by way of hypothecation ofreceivables, both present and future from sale of power/electricity and sale assignment of Sales Tax benefit pertainingto the Wind Mill Project at village Boposhi, Maloshi and Kadave Khurd, Dt. Satara, the amount lying in cash Collateralaccount and Stock, book debts, machinery etc. pertaining to the above Wind Mill Project. Secured by first charge by wayof mortgage of land at village Boposhi,Maloshi and Kadave Khurd, Dt. Satara. pertaining to the above Wind Mill Project.

(ii) Term Loan from Citicorp Finance (India) Ltd., is secured against pledge of shares held by Subsidiary Companies.

(iii) Term Loan from Axis Bank Ltd., is secured by second charge on the movable and immovable assets of Wind Mill Projectlocated at village Boposhi and Maloshi, Dt. Satara and pledge of Equity shares of Kalyani Steels Limited held by associ-ates and other group companies with a security cover of 2 times.

5 Balances due from / (due to) the Subsidiary Companies:

Balance as on Balance as on Maximum

1-Oct-07 30-Sep-08 Balance during

the Year

Rs. Rs. Rs.

Bhalchandra Investment Ltd- Interest Free 585 433 893 612 857 058 637 720 548

Mundhwa Investment Ltd.- Interest Free 639 390 684 970 814 668 970 814 668

Forge Investment Ltd- Interest Free 125 302 575 513 593 344 524 033 165

Jalakamal Investment & Finance Ltd- Interest Free 315 103 923 296 158 023 315 103 923

Jalakumbhi Investment & Finance Ltd- Interest Free 375 168 718 349 242 708 375 168 718


SCHEDULE “K” NOTES FORMING PART OF THE FINANCIAL STATEMENTS, (CONTD.) :

6 Segment information, based on the consolidated financial statements of the Company and its Subsidiaries, Joint Ventures

& Associates is set out in a separate statement annexed to the schedule.

7 Related party disclosures have been set out in a separate statement annexed to this schedule. The related parties, as

defined by Accounting Standard 18' Related Party Disclosure' issued by the Institute of Chartered Accountants of India, in

respect of which the disclosures have been made, have been identified and taken on record by the Board.

8 The Company is liable to pay "Minimum Alternate Tax" under section 115JB of Income Tax Act 1961 and accordingly

provision for Tax has been made.

9 As required by and in accordance with Accounting Standard 22 - 'Taxes on Income' by the Institute of Chartered Accountants

of India, the Company recognises Deferred Tax which result from timing differences between Book Profits & Tax Profits

after ignoring Deferred Tax adjustments originating and reversing during the tax holiday period.

Particulars Balance Arising During Balance

As at the Year As at

30.09.2007 30.09.2008

Deferred Tax Liabilities :

On Account of Timing Differences in :

Depreciation 63,291,842 - 63,291,842

Total 63,291,842 - 63,291,842

Deferred Tax Assets :

On Account of Timing Differences in :

Privilege Leave Encashment 300,573 - 300,573

Unabsorbed Depreciation 42,568,721 - 42,568,721

Total 42,869,294 - 42,869,294

Net Amount 20,422,548 - 20,422,548

Deferred Tax Assets in respect of Unabsorbed Depreciation, had been recognised on the basis of their virtual certainty of

reversal against Business Income, the occurrence of which is typically associated with the Power generation business.

10 Consequent to completion of the renewal of registration of the wind power generation project as a Clean Development

Mechanism (CDM) project with UNFCCC, the Company has accrued income in respect of Certified Emission Reduction (CER)

units, which are to be received on completion of further formalities, for the period 1St April 2007 to 30th September 2008

aggregating Rs. 26 341 586/- (including for the year Rs. 18 279 804/-) as reasonable certainty of their receipt.

11 The Company has acquired “ Development Rights ” of 70,857 sq. mtrs. of Land situated in Pune for a consideration

aggregating of Rs. 134 567 106/- and in terms of Development Agreements the Company is entitled to construct buildings

for residential / commercial / non-commercial use on the said land or part thereof, and also marketing of the same.

12 The disclosures required by Accounting Standard 29 "Provision, Contingent Liabilities,Contingent Assets"

Class of Carrying Provision made / Amounts used Amount reversed Carrying amount

Provision amount as on Increase (Decrease) during the during the year as on

1st Oct.,2007 in Provision year 30th Sept., 2008

A. Electricity Duty 54,331,405 8,784,526 - - 63,115,931

B. Wheeling &

Transmission - 10,389,882 - - 10,389,882

Charges

Nature of Provisions

A. In terms of various notifications / circulars issued by Government of Maharashtra, electricity duty is payable in respect

of wind power sold to third parties. However in absence of clarity on the entire subject and also in view of various other

issues the Company as a matter of prudence and without prejudice has made a provision for Electricity duty.

B. The 6.90 MW Capacity project has completed the tenure of wheeling agreement with the distribution licensee viz.

Maharashtra State Electricity Distribution Company Ltd. (MSEDCL). Presently, this project is wheeling energy under the

open access provisions issued by the Hon'able Maharashtra Electricity Regulatory Commission (MERC). As a matter of

prudence and with out prejudice the Company has provided wheeling and Transmission charges under open access for

the period from 1st January 2008 to 30th September 2008.

Expected Timing of resulting Outflow :

A. Since the matter is to be resolved / clarified in respect of applicability of Electricity duty for Wind Power Generation, the

timing of outflow can not be determined.

B. Wheeling and Transmission charges have been paid subsequent to the end of the accounting year , to the distribution

licensee under protest as the matter is pending in appeal with the MERC.

13 Advance under an Arrangement represents advance from Bharat Forge Limited, to maintain and set up an advanced

Training Facility to enhance its Human Resource Development Programme.


14 Disclosure pursuant to Accounting Standard - 15 (Revised) - "Employee Benefits" :

a. The Company, during the year, has adopted Accounting Standard - 15 (Revised) "Employee Benefits" issued by the

Institute of Chartered Accountants of India which became mandatory in its application, for the company, with effect

from 1st October, 2007. Pursuant to the first time adoption the transitional provision in respect of Gratuity and Leave

entitlement amounting to Rs. 443 917/- is charged to Profit and Loss Accounts in the absence of Revenue Reserves.

b. Details of Long Term Employee Benefits determined by an appointed Actuary are as follows.

(Amount in Rupees)

As at 30th September, 2008

Leave

Gratuity Entitlement

Funded Unfunded

(I) Amount Recognised in the Balance Sheet :

Present value of Defined Benefit Obligations 1,267,037 2,032,658

Fair Value of Plan Assets at the end of the Period 1,701,100 -

Net liability / (Asset) recognised in the Balance Sheet (434,063) 2,032,658

(II) Expenses Recognised in the Statement of Profit and Loss A/c

Current Service Cost 238,021 110,019

Interest Cost 105,453 158,296

Expected Return on Plan Assets (92,579) -

Net Actuarial (Gain)/Loss To Be Recognised (211,304) (214,351)

Total, included in "Salary, Allowance etc." 39,591 53,963

(III) Changes in Defined Benefit Obligation and reconciliation thereof

Present value of Defined Benefit Obligation at the beginning of the year 1,318,160 1,978,695

Interest Cost 105,453 158,296

Current Service Cost 238,021 110,019

Benefit Paid (142,211) -

Actuarial (gain)/loss on obligations (252,386) (214,351)

Present value of Defined Benefit Obligation at the close of the year 1,267,037 2,032,658

(IV) Change in the fair value of Plan Assets and the reconciliation thereof

Fair Value of Plan Assets at the beginning of the year 1,157,233 -

Expected Return on Plan Assets 92,579 -

Contributions 634,581 -

Benefit Paid (142,211) -

Actuarial gain/(loss) on Plan Assets (41,082) -

Fair Value of Plan Assets at the end of the year 1,701,100 -

(V) Broad Categories of Plan Assets as a percentage of Total Assets

as at 30th September 2008

Insurer Managed Funds 100% -

Total 100% -

(VI) Summary of Actuarial Assumptions

Discount Rate 8.00% 8.00%

Rate of Return on Plan Assets 8.00% 8.00%

Salary Escalation Rate 7.50% 7.50%

15 Micro, Small and Medium Enterprises Development Act 2006 has come into force from 2nd October 2006 which has

repealed the provisions of interest on payment to small scale and ancillary industrial undertaking act, 1993. On the basis

of information available with the Company, regarding the status of suppliers as defined under the Micro Small and Medium

Enterprises Development Act 2006, there are no dues to suppliers covered under above mentioned Act as at 30th September

2008.

16 Significant accounting policies followed by the Company are as stated in the statement annexed to this schedule.

17 Disclosures required as per Clause 32 of the Listing Agreement have been set out in a separate statement annexed hereto.

18 Previous year's figures have been regrouped wherever necessary.

SCHEDULE “K” NOTES FORMING PART OF THE FINANCIAL STATEMENTS, (CONTD.) :



DALAL & SHAH




Company Secretary



Disclosure of Segment information as required by AS 17 “ Segment Reporting” :

Segmentwise Revenue, Results and Capital Employed based on Consolidated Financial Statementsfor the Year Ended 30th September 2008

Sr. Particulars Year ended Year endedNo. 30-Sep-08 30-Sep-07

1 Segment Revenue

a. Wind Mills 197,673,922 300,165,735

b. Investments 554,181,778 256,944,033

c. Infrastructure 20,739,000 4,290,000

d. Manufacturing 2,673,845,307 2,193,188,480

e. Trading / Others 4,400,391,651 3,570,197,335

Total 7,846,831,658 6,324,785,583

Less : Inter segment revenue - -

Net sales / income from operations 7,846,831,658 6,324,785,583

2 Segment results

Profit / (Loss)

(before tax and interest from each segment)

a. Wind Mills 74,089,067 170,157,272

b. Investments 888,639,976 638,816,016

c. Infrastructure 2,128,157 (1,565,106)

d. Manufacturing 326,131,427 317,624,020

e. Trading / Others 328,155,523 241,812,306

Total 1,619,144,150 1,366,844,508

Less : i) Interest 104,755,293 51,073,245

ii) Other unallocable expenditure net

off unallocable income 1,053,972 832,623

Total Profit / (Loss) before tax 1,513,334,885 1,314,938,640

3 Total Carrying Amount of Segment Assets

a. Wind Mills 881,052,334 1,020,711,810

b. Investments 5,635,605,383 4,995,806,186

c. Infrastructure 2,836,982,131 1,797,307,706

d. Manufacturing 1,267,090,489 1,249,948,871

e. Trading / Others 986,068,846 1,012,607,096

Total 11,606,799,183 10,076,381,669

4 Total Amount of Segment Liabilities

a. Wind Mills 286,009,619 303,956,764

b. Investments 490,468,637 452,243,127

c. Infrastructure 154,765,503 159,938,500

d. Manufacturing 357,823,211 395,790,625

e. Trading / Others 719,424,794 692,611,719

Total 2,008,491,764 2,004,540,735

5 Capital Employed (Segment Assets - Segment Liabilities)

a. Wind Mills 595,042,715 716,755,046

b. Investments 5,145,136,746 4,543,563,059

c. Infrastructure 2,682,216,628 1,637,369,206

d. Manufacturing 909,267,278 854,158,246

e. Trading / Others 266,644,052 319,995,377

Total 9,598,307,419 8,071,840,934

6 Total Cost incurred during the year to acquire Segment Assets

that are expected to be used during more than one period.

a. Wind Mills 167,551 424,023

b. Investments - -

c. Infrastructure - -

d. Manufacturing 157,909,587 139,434,462

e. Trading / Others 23,073,767 1,496,879

Total 181,150,905 141,355,364

7 Depreciation

a. Wind Mills 61,255,706 61,261,691

b. Investments 190,871 292,197

c. Infrastructure - -

d. Manufacturing 74,214,765 60,705,002

e. Trading / Others 2,149,524 2,418,883

Total 137,810,866 124,677,773

Annexure referred to in Note No. 6 of Notes forming part of the Financial Statements.


Annexure referred to in Note No. 7 of Notes forming part of The Financial Statements.

Disclosure of Transactions with Related Parties as required by Accounting Standard 18 :

Loans given to Subsidiaries (Net)

Sr. Nature of Transaction Year Subsidiaries KeyNo. Management

Personnel

1 Finance Provided (Loans) 2007-08 702,266,008 -

2006-07 331,072,905 -

2 Outstandings 2007-08 3,043,165,805 -

(Loans and Investments) 2006-07 2,340,899,797 -

3 Receiving Services 2007-08 - 6,357,021

2006-07 - 2,551,935

Note : Names of the related parties and description of relationship

Sr. Particulars Name of the PartyNo.

1 Subsidiaries Bhalchandra Investment LtdMundhwa Investment Ltd.Forge Investment LtdJalakamal Investment & Finance LtdJalakumbhi Investment & Finance Ltd

2 Controlled through Subsidiaries Kalyani Utilities Development Ltd.Nandi Infrastructure Corridor Enterprises Ltd.Nandi Economic Corridor Enterprises Ltd.

3 Key Management Personnel Mr. A V WhabiMr. A S Karanth *

* Ceases from 10th July 2007

Annexure referred to in Note 16 in Schedule "K" of the Financial Statements for the year ended 30thSeptember 2008.

Statement on significant Accounting Policies

1. System of Accounting:

● The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basisexcept those with significant uncertainties.

● Financial Statements are based on historical cost. These costs are not adjusted to reflect the impact of the changingvalue in the purchasing power of money.

● Estimates and Assumptions used in preparation of the Financial Statements are based upon Management's evaluationsof the relevant facts and circumstances as of the date of the Financial Statements, which may differ from the actualresults at a subsequent date.

2. Fixed Assets and depreciation:

A. Fixed Assets are stated at their original cost of acquisition including incidental expenses related to acquisition andinstallation of the concerned assets. Fixed Assets are shown net of accumulated depreciation (except free hold land).

B. Expenditure on New Projects and Expenditure during Construction etc. :

In case of new projects or expansion at the existing units of the Company, expenditure incurred including interest andfinancing costs of specific borrowings, prior to commencement of commercial production is being capitalised to thecost of assets.

C. Depreciation:

Fixed Assets:

i. Depreciation on Buildings, Plant & Machinery, Electrical Installations, and Office Equipments is being provided on"Straight Line Method" basis in accordance with the provisions of Section 205(2)(b) of the Companies Act, 1956, inthe manner and at the rates specified in Schedule XIV to the said Act.

ii. Depreciation in respect of Furniture & Fittings, vehicles is being provided on "Written down value" basis in accordancewith the provisions of Section 205(2)(a) of the Companies Act, 1956 in the manner and at the rates specified inSchedule XIV to the said Act.

iii. Depreciation on additions to assets during the year is being provided at their respective rates on pro-rata basis fromthe date of acquisition/installation.

iv. Depreciation on assets sold, discarded or demolished during the year, is being provided at their respective rates onpro-rata basis up to the date on which such assets are sold, discarded or demolished.


Annexure referred to Note No. 17 of Notes forming part of Financial Statements

Disclosures required as per Clause 32 of the Listing Agreement

Name of the Company Loans and Advances Given Investments

Amount Maximum Balance AmountOutstanding as at outstanding Outstanding as at

30th Sept. 08 during the year 30th Sept. 08Rs. Rs. Rs.

Subsidiaries :

Bhalchandra Investment Limited 612 857 058 637 720 548 9 000 001

Mundhwa Investment Limited 970 814 668 970 814 668 144 500 001

Forge Investment Limited 513 593 344 524 033 165 120 000 001

Jalakamal Investment and Finance Limited 296 158 023 315 103 923 3 500 001

Jalakumbhi Investment and Finance Limited 349 242 708 375 168 718 23 500 000

Other Companies :

Kalyani Forge Limited 930 000 930 000 -

Krutadnya Management & Trading Services Pvt. Ltd. 38 600 000 38 600 000 -

Notes :

1 All the loans are interest free and there is no repayment schedule.

2 There are no loans and advances in the nature of loans to firms / companies in which Directors are interested.

3 Investments by loanee in the shares of the company - 1 568 600 (Previous Year -1 568 600)

3. Investments:

Investments are valued at cost of acquisition.

i) Long Term: Long Term Investments are stated at cost. Diminution in the value of long term investments are generallynot considered to be of a permanent nature. However where, in the opinion of the management, considering the factsand circumstances prevailing at the balance sheet date, diminution, if any, is determined to be of a permanent nature,provision for the same is made and investments are stated net of such provisions.

ii) Short Term : Short Term Investments are stated at cost less provision for diminution if any.

4. Revenue Recognition: -

a) Income from Electricity generated is accounted on the basis of electricity wheeled into MSEB grid.

b) Income from "Assignment of Sales Tax benefits" is accounted on the basis of agreements with the parties.

c) Interest is accrued on the period of loan/investment.

d) Dividend is accrued in the year in which it is declared, whereby right to receive is established.

e) Profit/Loss on sale of investment is recognised on contract date.

5. Borrowing Cost - Interest on borrowings are recognised in the profit & Loss account except interest incurred on borrowingsspecifically received for projects are capitalized to the cost of asset until such time the asset is ready to be put to use forintended purpose.

6. Share issue & Deferred Revenue expenses are written off in five years.

7. Preliminary Expenses are written off in five years.

8. Employee Benefits :

● Employee Benefit in the form of Provident Fund and Pension Scheme whether in pursuance of law or otherwise which aredefined contributions are accounted on accrual basis and charged to Profit & Loss account.

● Gratuity:

Payment for present liability of future payment of gratuity is being made to approved gratuity fund, which fully cover thesame under cash accumulation policy of the Life Insurance Corporation of India. The employee's gratuity is a definedbenefit funded plan. The present value of the obligation under such defined benefit plan is determined based on theactuarial valuation using the Projected Unit Credit Method as at the date of the Balance Sheet and the shortfall in the fairvalue of the Plan Assets is recognized as an obligation.

● Superannuation:

Defined contribution to Life Insurance Corporation of India for employees covered under Superannuation scheme are accountedat the rate of 15% of such employee's annual salary.

● Privilege Leave Benefits:

Privilege Leave benefits or compensated absences is considered as long term unfunded benefits and is recognized on thebasis of an actuarial valuation using the Projected Unit Credit Method determined by an appointed Actuary.

9. Taxation :

Provision for taxation is made on the basis of taxable profits computed in accordance with the 'Previous Year' as per IncomeTax Act. Deferred Tax resulting from timing difference between Book Profits & Tax Profits is accounted for at the applicablerate of tax to the extent timing differences are expected to crystallize, after ignoring deferred tax adjustments originatingand reversing during tax holiday period, in case of Deferred tax liabilities with reasonable certainty and in case of Deferredtax Assets with virtual certainty that there would be adequate future taxable income against which deferred tax asset can berealized.

10. Provisions:

Necessary Provisions are made for present obligations that arise out of past events prior to the Balance Sheet date entailingfuture outflow of economic resources. Such provisions reflect best estimates based on available information.


BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE :

(Submitted in terms of Part IV of Schedule VI to the Companies Act, 1956)

I. Registration Details

Registration No. : 15323 State Code : 25

Balance Sheet Date : 30/09/2008

II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue : Nil Rights Issue : Nil

Bonus Issue : Nil Others : Nil

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities : 3 784 972 Total Assets : 3 784 972

Sources of Funds :

Paid-up Capital : 188 338 Reserves & Surpluses : 2 015 042

Secured Loans : 710 800 Unsecured Loans : 850 369

Application of Funds :

Net Fixed Assets : 683 209 Investments : 501 652

Net Current Assets : 2 600 111 Misc. Expenditure : Nil

Accumulated Losses : -

IV. Performance of Company (Amount in Rs. Thousands)

Turnover : 276 467 Total Expenditure : 223 568

Profit/(Loss) before tax : 52 899 Profit/(Loss) after tax : 46 269

Earning per Share in Rs. : 1.23 Dividend rate % : -

V. Generic Names of three Principal Products / Services of Company(as per monetary terms)

1. Item Code. No. (ITC Code) : NA

Product Description : Non conventional energy generation

Statement Pursuant to Part IV of Schedule VI to the Companies Act,1956.

On behalf of the Board of Directors

B. S. MITKARI G. K. AGARWAL B. B. HATTARKIVP Finance & Company Secretary Director Director

Pune, 27th December, 2008


CONSOLIDATED FINANCIAL STATEMENTS

TO THE BOARD OF DIRECTORSBF UTILITIES LIMITED

REPORT OF THE AUDITORSON THE CONSOLIDATED FINANCIAL STATEMENTS

For and on behalf ofDALAL & SHAHChartered Accountants

Anish AminMumbai PartnerDate : 27th December 2008 Membership.No. 40451

We have examined the attached consolidated Balance Sheet of BF UTILITIES LIMITED and its Subsidiaries, Associates and Joint Ventures as at 30th September, 2008, andalso the consolidated Profit and Loss Account and the consolidated cash flow statement for the year then ended on that date annexed thereto. These financial statementsare the responsibility of the BF Utilities Limited's 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 obtainreasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on test basis, evidence supporting theamounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We did not audit the financial statements of following Subsidiaries having total assets, total revenues and cash flows for the year ended on 31st March, 2008, as detailedbelow;

Rupees

Name of the Subsidiary Total Assets Total Revenues Cash inflow/(outflow)

Bhalchandra Investment Limited 637 603 665 72 636 858 1 070 918

Mundhwa Investment Limited 1 998 563 207 235 352 505 1 072 465

Forge Investment Limited 1 476 603 640 72 468 531 721 546

Jalakamal Investment and Finance Limited 375 894 387 32 982 153 1 036 148

Jalakumbhi Investment and Finance Limited 480 610 847 42 338 329 944 519

Kalyani Utilities Development Limited 1 301 322 568 80 164 892 (29 706)

Nandi Infrastructure Corridor Enterprises Limited 992 758 765 21 246 936 308 279

These financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion, is based solely on the report of other auditors.

We have audited the financial statements of following Associates which have been included in Consolidated Financial Statements dealt with by this report, having totalassets, total revenues and cash flows for the year ended on 31st March, 2008, as detailed below;

Rupees

Name of the Associate Total Assets Total Revenues Cash inflow/(outflow)

Kalyani Steels limited 8 349 153 661 10 109 051 420 (14 215 693)

Synise Technologies Private Limited 20 520 392 202 765 006 2 199 503

The Consolidated Financial Statements of Kalyani Steels Limited,include amounts in respect of Hikal Limited,based on provisional statements of Assets,Liabilities andresults which do not include its subsidiaries and have not been subjected to validation tests or other auditing procedures and therefore any adjustments to these balancescould have an effect on the Consolidated financial statements of Kalyani Steels Limited and consequential effect on these Consolidated Financial Statements.

The Financial Statements of Bharat NRE Coke Limited, as associate of Kalyani Steels Limited, have not been made and therefore the resultant figures have not beenconsidered in Consolidated Financial Statements of Kalyani Steels Limited and its consequential effect is not considered in these Consolidated Financial Statements.

We have not audited the financial statements of following Associates, which have been accounted in Consolidated Financial Statements dealt with by this report, havingtotal assets, total revenues and cash flows for the year ended on 31st March, 2008, as detailed below;

Rupees

Name of the Associate Total Assets Total Revenues Cash inflow/(outflow)

Kalyani Carpenter Metal Centers Limited 7 669 299 388 932 580 464

Epicenter Technologies Private Limited 160 716 000 468 170 000 (37 403 000)

Kalyani Financial Services Limited 127 227 667 7 911 797 (6 011 052)

KSL Holdings Private Limited 1 006 817 878 126 768 244 1 030 106

Nandi Highway Developers Limited 958 515 299 183 844 122 19 153 406


We did not audit the financial statements of following Associate viz. Kalyani Agro Corporation Limited whose financial statements reflect total Assets of Rs (5,217,700)/- and total revenue of Rs. 2,999/- and cash inflows of Rs.3,250/-. However as detailed in Note No 1(ii) in Schedule No L, regarding erosion of Capital and continuing lossesand the carrying amount of investment being Re. 1/- no cognizance has been taken of capital or losses beyond the carrying amount.

We did not audit the financial statements of following Joint Venture Companies, which have been accounted in Consolidated Financial Statements dealt with by this report,having total assets, total revenues and cash flows for the year ended on 30th September, 2008, as detailed below;

Rupees

Name of the Joint Venture Company Total Assets Total Revenues Cash inflow/ (outflow)

Meritor HVS (India) Limited 554 807 354 8 980 391 125 432 598 422

Automotive Axles Limited 2 559 874 093 7 468 481 318 77 126 072


We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of the Accounting Standard (AS) 21,"Consolidated Financial Statements," Accounting Standard (AS) 23 'Accounting for Investments in Associates in Consolidated Financial Statements", and AccountingStandard (AS) 27, "Financial Reporting of Interest in Joint Ventures" issued by the Institute of Chartered Accountants of India.

On the basis of the information and explanations given to us and on the consideration of the separate audit reports on individual audited Financial Statements of BFUtilities Limited, its aforesaid Subsidiaries, Associates and Joint Ventures we are of the opinion that subject to:

1 Note No. 12 (a) (i) regarding capitalisation of pre operative expenses,

2 Note No. 12 (a) (ii) regarding mode of valuation of Investments,

3 Note No. 13 (a) in Schedule L with respect to Kalyani Carpenter Metal Center Limited, regarding appropriateness of the "going concern" assumptions used forpreparation of these Financial Statements, despite the net worth of the Company has substantially eroded as at March 31, 2008 as detailed in the note. and readspecifically together with:

1. Note no. 13( c ) relating to appropriateness of the "going concern" assumptions used for preparation of these Financial Statements, despite substantial erosion of networth of Epicenter Technologies Private Limited,

2. Note no. 13 ( d ) relating to Consolidated Financial Statements of Kalyani Steels Limited and the consequential effect , if any, on account of possible adjustments thatcould arise as stated above;

(a) The Consolidated Balance Sheet read together with the other notes thereon gives a true and fair view of the consolidated state of affairs of BF Utilities Limited and itsSubsidiaries, Associates and Joint Ventures as at 30th September, 2008 ;

(b) The Consolidated Profit and Loss Account read together with the other notes thereon gives a true and fair view of the consolidated results of operations of BF UtilitiesLimited and its Subsidiaries, Associates and Joint Ventures for the year then ended; and

(c) The Consolidated Cash Flow Statement read together with the other notes thereon gives a true and fair view of the cash flows of BF Utilities Limited and its Subsidiaries,Associates and Joint Ventures for the year then ended as at 30th September, 2008.



Consolidated Balance Sheet as at 30th September, 2008

As at 30thSeptember,2007

Schedule Rs Rs. Rs.I. SOURCES OF FUNDS:

1. Shareholders' Funds:

(a) Share Capital "A" 188 338 140 188 338 140

(b) Reserves and Surplus "B" 7 202 776 850 6 160 953 980

7 391 114 990 6 349 292 120

2. Minority Interest 264 766 252 264 163 758

3. Loan Funds:

(a) Secured Loans "C" 911 732 312 496 410 518

(b) Unsecured Loans "D" 957 137 388 899 062 606

1 868 869 700 1 395 473 124

4. Deferred Tax

(a) Deferred Tax Liability 63 348 551 63 352 001

Share in Deferred Tax Liability of Joint Ventures 68 683 700 53 026 856

132 032 251 116 378 857

(b) Deferred Tax Asset 44 288 432 47 175 461

Share in Deferred Tax Assets of Joint Ventures 13 084 901 4 003 937

57 373 333 51 179 398

74 658 918 65 199 459

TOTAL 9 599 409 860 8 074 128 461

II. APPLICATION OF FUNDS:

1. Fixed Assets:

(a) Gross Block 2 211 954 741 2 045 862 234

(b) Less: Depreciation 914 564 775 791 634 810

(c) Net Block "E" 1 297 389 966 1 254 227 424

(d) Capital Work-in-progress 9 095 439 9 095 439

(e) Share in Capital Work-in-progress of Joint Ventures 28 599 327 56 856 858

(f) Pre-operative expenses pending allocations 42 917 685 42 421 181

1 378 002 417 1 362 600 902

2. Investments "F" 6 066 057 673 5 763 880 144

3. Current Assets,

Loans and Advances: "G"

(a) Inventories 355 014 634 368 015 266

(b) Sundry Debtors 608 507 410 872 139 481

(c) Cash and Bank Balances 384 091 702 92 144 487

(d) Other Current Assets 265 533 590 248 893 194

(e) Loans and Advances 2 549 591 757 1 368 708 193

4 162 739 093 2 949 900 621

Less: Current Liabilities

and Provisions: "H"

(a) Liabilities 1 211 451 793 1 371 687 979

(b) Provisions 797 039 972 632 852 755

2 008 491 765 2 004 540 734

Net Current Assets 2 154 247 328 945 359 887

4. Miscellaneous Expenditure

(to the extent not written

off or adjusted) "I" 1 102 442 2 287 528

TOTAL 9 599 409 860 8 074 128 461

NOTES FORMING PART OF THE FINANCIAL STATEMENTS "L"



DALAL & SHAH




Company Secretary



Year Ended 30thSeptember,2007

Schedule Rs. Rs. Rs.INCOME:

Wind Power Generated 176 223 918 152 861 669

Sale of Certified Emission Reduction Units ( CERs) 18 279 804 142 365 964

Sale / Redemption of Shares and Debentures - 5 200 000

Sales 20 739 000 4 290 000

Share in Sales of Joint Ventures 7 368 231 134 6 015 831 170

Less : Share in Excise duty of Joint Ventures 359 149 194 309 921 006

7 029 820 940 5 710 200 164

Share in Operating Income of Joint Ventures 17 979 749 14 843 678

Other Income "J" 604 527 247 299 325 648

7 846 831 658 6 324 797 123

EXPENDITURE:

Manufacturing, Operating and other expenses "K" 6 554 863 072 5 305 620 180

Depreciation 61 446 577 61 553 888

Share in Depreciation of Joint Ventures 76 364 289 63 123 885

6 692 673 938 5 430 297 953

Profit for the year before taxation 1 154 157 720 894 499 170


Current Tax 58 426 518 36 304 000

Share in Current Tax of Joint Ventures 210 636 800 169 479 940

Deferred Tax 2 883 579 2 448 901

Share in Deferred Tax of Joint Ventures 6 575 880 11 997 603


Share in Fringe Benefit Tax of Joint Ventures 810 860 717 855

279 463 637 221 458 299

Profit for the year after taxation 874 694 083 673 040 871

Income from Associates after taxation 359 177 165 420 439 470

1 233 871 248 1 093 480 341


Share in balance As per last account of Joint Ventures 417 464 692 271 230 529

3 036 957 126 2 184 622 105

4 270 828 374 3 278 102 446Adjustments in respect of previous yearTaxation ( 199 056) ( 214 773)

Others ( 737 182) ( 24 539)

4 269 892 136 3 277 863 134

Less : Minority Interest 602 494 ( 241 439)

Profit attributable to Consolidated group 4 269 289 642 3 278 104 573

Less : Transferred to Reserve Fund 76 097 000 36 854 000

Transferred to General Reserve 41 567 580 35 244 240

Interim Dividend 65 488 500 70 904 393

Proposed Dividend 100 379 028 73 588 280

Tax on dividend 28 189 187 24 556 534

Balance carried to Balance Sheet 3 957 568 347 3 036 957 126

Earning Per Share

(Face Value of Rs. 5/- each).

Net Profit / (Loss) after Taxation 1 233 871 248 1 093 480 341

Add / (Less) :

Taxation ( 199 056) ( 214 773)

Others ( 737 182) ( 24 539)

Minority Interest ( 602 494) 241 439

1 232 332 516 1 093 482 468

Average number of shares issued & Subscribed 37 667 628 37 667 628

Basic & Diluted EPS 32.72 29.03

NOTES FORMING PART OF THE FINANCIAL STATEMENTS "L"


Consolidated Profit And Loss Account For The Year Ended 30th September, 2008



DALAL & SHAH




Company Secretary




CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30TH SEPTEMBER 2008

Particulars Year ended Year ended 30th Sept. 30th Sept.

2008 2007Rs. Rs. Rs. Rs.

A Cash Flow From Operating Activities

Profit/ (Loss) before taxation 1 154 157 720 894 499 170

Add : Interest / Depreciation / Other Non Cash Expenses

Depreciation 137 810 866 124 677 773

Preliminary Expenses written off 1 185 086 1 186 898

Interest 81 715 893 40 457 299

Interest on others - 10 615 946

Loss on Sale of Assets 5 007 50 167

Unrealised Exchange Loss 15 969 565 -

236 686 417 176 988 083

Less Interest / Dividend / Other Adjustments

Non operating income

Provision no longer required & doubtful advances written back 491 089 4 969 690

Interest 17 984 213 21 295 035

Interest on Loans 144 546 259 42 549 066

Interest on Income Tax Refund - 11 540

Profit on sale of Investments,net 192 240 947 32 918 218



Profit on sale of Asset 565 806 114 380

Share of Exchange Gain of Joint Venture - 15 195 502

(555 692 268) (274 917 028)

Operating Profit before Working Capital Changes : 835 151 869 796 570 225

(Increase) / Decrease Working Capital

(Increase) / Decrease in Current Assets :

(Increase) / Decrease in Inventories 13 000 632 5 229 879

(Increase) / Decrease in Sundry Debtors 263 632 071 (543 163 604)

(Increase) / Decrease in Other current assets & loans & advances (15 924 070) (177 456 431)

260 708 633 (715 390 156)

Increase / (Decrease) in Current Liabilities :

Liabilities (134 900 856) 357 383 237

(134 900 856) 357 383 237

125 807 777 (358 006 919)

Cash Generated from operations 960 959 646 438 563 306

Direct Taxes Paid / (Refund)

Income Tax 251 264 067 188 370 477


Net Cash Flow from Operating Activities 708 754 719 249 522 241

B Cash Flow from Investing Activities

Additions to Fixed Assets / Other Adjustments

(Increase)/Decrease in Investment, net 60 546 705 259 323 948

Additions to Fixed Assets (153 389 876) (180 115 024)

Sale of Fixed Assets 738 297 431 694

Non Operating Income

Interest 17 984 213 21 295 035

Interest on Loans 144 546 259 42 549 066


Profit on sale of Investments, net 192 240 947 32 918 218



554 635 373 254 637 456

(Increase) / Decrease in Loan to Companies (1 094 282 035) (463 045 567)

Increase / (Decrease) in Advance under an arrangement 1 659 444 -

Net Cash Flow from Investing Activities (630 092 092) (128 767 493)

C Cash Flow from Financing Activities

Dividend & Tax on Dividend (162 737 006) (162 642 806)

Secured loans (Net of Repayment) 391 427 009 19 568 544

Unsecured Loans 66 000 000 27 600 000

Interest Paid (81 405 415) (50 337 837)

Net Cash from Finance Activities 213 284 588 (165 812 099)

Net changes in cash and cash equivalents (A+B+C) 291 947 215 (45 057 351)



As per our attached report of even date On behalf of the Board of DirectorsFor and on behalf ofDALAL & SHAHChartered Accountants


Partner VP Finance & Director DirectorCompany Secretary




Schedule “A” to “L” annexed to and forming part of the Consolidated Financial Statements for the yearended 30th September, 2008


Rs. Rs. Rs.SCHEDULE “A” SHARE CAPITAL:

Authorised:40 000 000 Equity Shares of Rs. 5/- each 200 000 000 200 000 000

200 000 000 200 000 000

Issued , Subscribed and Paid up:37 667 628 Equity Shares of Rs. 5/- each fully paid 188 338 140 188 338 140

Total 188 338 140 188 338 140

Note :3,76,67,628 Equity Shares of Rs. 5/- each were allottedon June 16, 2001 as fully paid up for consideration otherthan cash, under a scheme of arrangement betweenBF Utilities Ltd & Bharat Forge Ltd with effect from 1stMarch 2001 sanctioned by the High Court of Judicature of Mumbai.

SCHEDULE “B” RESERVES AND SURPLUS:

Capital Reserve :


Excess of Assets over Liabilities in term of the

Scheme of Arrangement sanctioned by the

High Court of Judicature at Mumbai

Excess of Parent's portion of equity in subsidiaries, Associates

and Joint Excess of Parent's portion of equity in subsidiaries

over its carrying cost Ventures over its carrying cost of Investments :

As per last account 662 701 419 553 297 254

Add/(Less) : Adjustments during the year 3 547 069 109 404 165

666 248 488 662 701 419

2 578 758 961 2 575 211 892

General Reserve

As per last account 870 000 870 000

Share in Balance as per Last Account of Joint Ventures 121 924 249 90 496 337

Add: Transferred from Profit and Loss Account 41 567 580 35 244 240

164 361 829 126 610 577

Less : Share in Transitional liability on Gratuity of Joint Ventures - 3 816 328

164 361 829 122 794 249

Reserve Fund


Add: Set aside this year 76 097 000 36 854 000

457 060 338 380 963 338

Capital Redemption Reserve

As per last account 1 340 1 340

Share in Capital Redemption Reserve of Joint Ventures 3 969 000 3 969 000

3 970 340 3 970 340

Share in Share Premium Account of Joint Ventures 41 057 035 41 057 035

Surplus as per Annexed Account 3 957 568 347 3 036 957 126

Total 7 202 776 850 6 160 953 980

SCHEDULE "C" SECURED LOANS :Term Loans :

Rupee Term Loan From Industrial Development Bank of India Ltd. 110 800 000 197 400 000

Rupee Term Loan From Citicorp Finance (India) Ltd. 400 000 000 -

Rupee Term Loan From Axis Bank Ltd. 200 000 000 -

Share in Rupee Term Loan of Joint Ventures 156 847 492 138 824 798

Share in Foreign Currency Loan of Joint Ventures 37 162 800 56 491 008

Others :

Share in Cash Credit Of Joint Ventures secured by hypothecation of inventories, 6 922 020 103 694 712

book debts and other current assets

Total 911 732 312 496 410 518

SCHEDULE "D" UNSECURED LOANS:Sales tax deferral obligation collected under Government of Maharashtra

Package Scheme of Incentives by a beneficiary under an arrangement. 850 369 385 784 369 385

Share in Sales Tax Loan - Interest Free of Joint Ventures - 7 008 911

Loans from other Companies 51 700 000 51 700 000

Share in Foreign Currency Loan of Joint Ventures 55 068 003 55 984 310

Total 957 137 388 899 062 606


As at 30thSeptember 2007

Rs. Rs. Rs.

SCHEDULE “F” INVESTMENTS

In Government and Trust Securities 1,464,785 1,464,785

In Preference Shares 33,000,000 77,500,000

In Equity Shares of Associates (Long Term) 2,786,242,390 2,467,353,747

Others 2,477,986,687 2,489,448,308

5,264,229,077 4,956,802,055

In Debentures and Bonds 550,000,000 550,000,000

In Mutual Funds 217,363,811 178,113,304

Total 6,066,057,673 5,763,880,144

SCHEDULE “G” CURRENT ASSETS LOANS & ADVANCES

a) Inventories (as valued and certified by directors)

Land 1 675 000 1 675 000

Shares and Debentures of Companies 6 439 242 6 439 242

Share in Inventories of Joint Ventures :

Raw Material and Components, at cost 200 921 705 161 060 150

stores and spares, at cost 30 359 188 27 255 918

Work-in-progress 48 995 632 73 350 919

Traded and Manufactured Finished Goods 30 569 591 8 374 464

(at lower of cost or net realisable Value)

Goods-in-transit - traded 36 054 276 89 859 573

355 014 634 368 015 266

b) Sundry Debtors, unsecured, Good :

(unless otherwise stated)

Share in outstanding for more than six months of Joint Ventures 12 926 625 5 079 993

Outstanding for less than six months 7 998 665 44 643 546

Share in outstanding for less than six months of Joint Ventures 587 582 120 822 415 942

608 507 410 872 139 481

c) Cash and Bank Balances:

Cash on Hand 31 268 53 336

Share in Cash on Hand of Joint Ventures 75 770 53 231

Bank Balances:

With Scheduled Banks:

In Saving Account 100 100

In Current Account 77 437 010 10 956 182

Share in Current Account of Joint Ventures 218 497 260 44 927 391

In Fixed Deposit Account 22 274 294 36 154 247

Share In Fixed Deposit Account of Joint Ventures 65 776 000 -

384 091 702 92 144 487

d) Other Current Assets:

Energy Credit Receivable 94 614 625 44 353 773

Income Receivable 26 341 586 142 365 964

Interest Receivable 144 577 379 62 173 457

265 533 590 248 893 194

Schedule - ‘E’ Fixed Assets

Particulars Gross Block Depreciation Net Block

Sr. as at Additions Deductions/ as at upto Deductions / for the upto as at as atNo. 30/09/2007 Adjustments 30/09/2008 30/09/2007 Adjustments Year 30/09/2008 30/09/2008 30/09/2007

1 Land 15 199 252 - 15 199 252 - - - - 15 199 252 15 199 252

Share in Land ofJoint Venture 2 899 587 - - 2 899 587 - - - - 2 899 587 2 899 587

2 Buildings 20 773 071 - - 20 773 071 3 101 482 - 337 607 3 439 089 17 333 982 17 671 589Share in Building of

Joint Venture 73 723 523 10 695 434 906 585 83 512 372 14 844 723 906 585 3 097 403 17 035 541 66 476 831 58 878 800

3 Plant & Machinery 1 144 688 812 - - 1 144 688 812 429 333 385 - 60 439 569 489 772 954 654 915 858 715 355 427

Share in Plant & Machinery

of Joint Venture 754 407 310 165 641 803 12 273 642 907 775 471 322 288 028 12 183 339 70 255 184 380 359 873 527 415 598 432 119 282

4 Electrical Installation 14 000 - - 14 000 10 866 - 1 448 12 314 1 686 3 134

5 Office Furniture 287 608 - 25 000 262 608 176 269 9 698 19 606 186 177 76 431 111 339Share in Office Furniture

of Joint Venture 16 479 774 1 199 655 1 411 536 16 267 893 10 179 301 1 405 955 1 846 452 10 619 798 5 648 095 6 300 473

6 Office Equipments 5 765 462 167 551 - 5 933 013 4 842 727 - 245 678 5 088 405 844 608 922 735

Share in Office Equipments

of Joint Venture 5 050 643 2 906 104 55,898 7 900 849 3 640 027 43,512 548 817 4 145 332 3 755 517 1 410 616

7 Vehicles 2 859 876 - 385 737 2 474 139 1 274 294 331 812 402 669 1 345 151 1 128 988 1 585 582

Share in vehicle ofJoint Venture 3 131 653 447 491 - 3 579 144 1 362 046 - 523 566 1 885 612 1 693 532 1 769 607

Share in Asset held fordisposal of Joint Ventures 10 121 - - 10 121 10 120 - - 10 120 1 1

Share in intangible assets

in Joint Ventures -- Software 571,542 92 867 - 664 409 571,542 - 92 867 664 409 - -

As at 30th Sept. 2008 2 045 862 234 181 150 905 15 058 398 2 211 954 741 791 634 810 14 880 901 137 810 866 914 564 775 1 297 389 966 1 254 227 424

As at 30th Sept. 2007 1 908 957 595 141 355 364 4 450 725 2 045 862 234 671 040 276 4 083 239 124 677 773 791 634 810 1 254 227 424


Rupees



Rs. Rs. Rs.e) Loans and Advances, Unsecured, Good :

(Unless otherwise stated):

Purchase of "Development Rights" of Land 134 567 106 128 349 806

Loan to companies 1 728 716 049 634 434 014

Share in Balance with Custom & Central Excise of Joint Ventures 18 940 18 940

Advances recoverable in cash or in kind or for

value to be received

Good 22 002 814 29 924 242

Share in Advances recoverable in cash or in kind or for value to be

received of Joint Ventures 57 584 856 61 580 544

Advance towards investments in shares 46 580 234 42 999 995

Security Deposit 4 360 4 360

Share in Security Deposit of Joint Ventures 6 443 150 5 039 897

Tax Paid in Advance 256 732 459 198 799 637

Share in Tax Paid in Advance of Joint Ventures 296 941 789 267 556 758

2 549 591 757 1 368 708 193

Total 4 162 739 093 2 949 900 621

SCHEDULE “H” CURRENT LIABILITIES AND PROVISIONS

(a) LIABILITIES:

Share in Bills payable of Joint Ventures 58 957 234 92 615 532

Sundry Creditors 169 032 981 209 942 356

Share in Sundry Creditors - micro and small scale undertaking of

Joint Ventures 1 451 413 8 411 956

Share in Sundry Creditors - others of Joint Ventures 500 263 012 559 897 253

Other Liabilities 16 854 13 176 137

Share in Other Liabilities of Joint Ventures 36 819 727 44 679 967

Security Deposit 200 000 000 200 000 000

Advance under an arrangement 240 000 000 238 340 556

Interest accrued but not due 1 212 013 -

Share in interest accrued but not due of Joint Ventures 2 513 560 3 415 096

Share in Unclaimed Dividend of Joint Ventures 1 184 999 1 209 126

1 211 451 793 1371 687 979

(b) Provisions:

Provision for taxation 273 896 000 220 285 000

Share in Provision for taxation of Joint Ventures 309 080 003 256 965 800

Provision for Fringe Benefit Tax 1 117 000 987 000

Share in Provision for Fringe Benefit Tax of Joint Ventures 785 722 587 582

Provision for Employee Benefits 1 598 595 1 695 705

Share in Provision for Employee Benefits of Joint Ventures 7 866 267 6 808 106

Share in Proposed Dividend of Joint Ventures 100 379 028 73 588 279

Share in Tax of Proposed Dividend of Joint Ventures 17 059 416 12 506 328

Provision for Others 73 505 813 54 331 405

Share in Provision for Others of Joint Ventures 11 752 128 5 097 550

797 039 972 632 852 755

Total 2 008 491 765 2 004 540 734

SCHEDULE "I" MISCELLANEOUS EXPENDITURE(TO THE EXTENT NOT WRITTEN OFF OR ADJUSTED) :

Preliminary Expenses :


Less: Written off 1 185 086 1 186 898

1 102 442 2 287 528

Total 1 102 442 2 287 528

SCHEDULE "J (i)" OTHER INCOMEDividend from other companies 199 863 954 155 913 870


Interest on Bank F.D (Gross - TDS Rs. 946,899/-, P.Y. Rs.281,150/-) 17 383 971 17 630 702

Share in Interest on Bank F.D. of Joint Ventures 600 242 3 664 333

Interest on Loan (Gross - TDS Rs.34,518,084/-, P.Y. Rs. 7,431,928/-) 144 546 259 42 549 066

Profit on sale of Investments,net 192 240 947 32 918 218



Share in Provision no longer required of Joint Ventures 188 365 59 337

Share in Scrap Sale of Joint Ventures 16 260 1 022 115

Profit on sale of Fixed Assets 8 260 -

Share in Profit on Sale of Fixed Assets of Joint Ventures 557 546 114 380

Share in Technical Service Fee of Joint Ventures 30 961 605 20 024 129

Share in Exchange Gain of Joint Ventures 12 777 295 17 517 945

Miscellaneous Income 3,005,863 810 198

Share in Miscellaneous Income of Joint Ventures 2 073 956 229 735

604 527 247 299 325 648



Year ended 30thSeptember,2007

Rs. Rs. Rs.

SCHEDULE “K” MANUFACTURING, OPERATINGAND OTHER EXPENSES:

(1) Purchases

Share in Purchase of Traded Goods of Joint Ventures 3 970 765 047 3 251 532 991

(2) Operating Expenses:

Operations, Maintenance & CDM Expenses - Wind Mills 20 803 601 36 493 830

Other Operating Expenses 56 000 102 000

Raw Materials and Components Consumed 15 879 993 4 290 000

Share in Raw Materials and Components Consumed of Joint Ventures 1 852 019 284 1 503 268 789

Share in Stores and Spares Consumed of Joint Ventures 70 973 659 56 758 367

(Increase) / Decrease in Stock of Shares and Debentures - 5 200 000

(Increase) / Decrease in Stock of Land - 4 290 000

Excise Duty on Finished goods

On Closing Stock 4 200 901 1 036 530

Less On Opening Stock 1 036 530 1 096 782

3 164 371 (60 252)

Share in (Increase) / Decrease in Stock

Share in (Increase) / Decrease in Stock of Joint Ventures

Closing Stock

Work-in-Progress 48 995 632 73 350 919

Finished Goods 30 569 591 8 374 464

79 565 223 81 725 383

Less : Opening Stock

Work-in-Progress 73 350 919 55 083 860

Finished Goods 8 374 464 7 332 480

81 725 383 62 416 340

2 160 160 (19 309 043)

Share in Power and Fuel of Joint Ventures 63 671 294 54 156 582

Share in Outside Processing Charges of Joint Ventures 79 265 462 63 786 240

Lease Rent - Land 600 000 600 000

Insurance Expenses 925 666 1 863 034

Electricity Duty 8 784 526 7 680 529

Wheeling & Transmission Charges 10 389 882 -

Repairs to Machinery 1 567 559 -

2 130 261 457 1719 120 076

(3) Other Expenses:

Insurance - others 46 323 66 337

Share in Insurance - others of Joint Ventures 1 507 232 2 479 282

Rent 2 233 826 5 000 000

Rates & Taxes 493 244 705 886

Share in Rates & Taxes of Joint Ventures 335 769 381 676

Repairs

Share in Building Repairs of Joint Ventures - 6 749

Share in Machinery Repairs of Joint Ventures 27 711 694 20 473 604

Others 271 691 30 515

Share in Other Repairs of Joint Ventures 2 995 176 1 956 323

30 978 561 22 467 191

Interest:

On Fixed Loans 58 964 787 24 359 928

Share in interest on Fixed Loans of Joint Ventures 17 186 855 16 097 371

On Others 68 469 -

Share in interest on others of Joint Ventures 5 495 782 10 615 946

81 715 893 51 073 245




Rs. Rs. Rs.

Loan raising Expenses 23 039 400 -

Salary, Allowances etc. 18 077 684 16 109 974

Share in Salary, Allowances etc. of Joint Ventures 104 252 827 86 723 888

Contribution to Provident & other funds 1 458 942 1 940 904

Share in Contribution to Provident & other funds of Joint Ventures 11 189 575 7 763 582

Staff Welfare Expenses 110 660 142 876

Share in Staff Welfare Expenses of Joint Ventures 12 758 177 9 636 272

Director's sitting fees 135 000 141 000

Share in Director's sitting fees of Joint Ventures 168 538 168 538

Auditors Remuneration 1 165 908 918 234

Share in Auditors Remuneration of Joint Ventures 2 127 473 1 834 807

Miscellaneous Expenses including Printing, Stationery,

Postage, Telephone, Bank Charges, etc. 7 354 426 14 932 803

Share in Miscellaneous Expenses including

Printing, Stationery, Postage, Telephone,

Bank Charges, etc. of Joint Ventures 70 697 938 55 543 223

Share in Warranty Claim and After Sale Service Charges of Joint Ventures 13 984 060 7 819 913

Share in Freight outward of Joint Ventures 28 985 899 24 324 173

Share in Royalty of Joint Ventures - 31 193

Share in exchange loss of Joint Ventures 15 344 828 3 111 162

Share in Doubtful Debts of Joint Ventures 4 737 590 -

Professional & Consultancy Expenses 14 982 039 16 306 741

Share in Professional & Consultancy Expenses of Joint Ventures 4 764 663 4 107 148

Loss on Sale of Assets - 50 167

Share in Loss on sale of Assets of Joint Ventures 5 007 -

Preliminary Expenses Written off 1 185 086 1 186 898

453 836 568 334 967 113

Total 6554 863 072 5 305 620 180


SCHEDULE “L” NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS.

1 i) The consolidated financial statements include results of all the subsidiaries of BF Utilities Limited, Associates and Joint Ventures. Thenames, country of incorporation or residence, proportion of ownership interest and reporting dates are as under:

a) Subsidiaries :

Name of the company Country of Parent’s ultimate Financial yearIncorporation holding as on ends on

30-09-2008

a. Bhalchandra Investment Limited India 100% 31/03/2008b. Mundhwa Investment Limited India 100% 31/03/2008c. Forge Investment Limited India 100% 31/03/2008d. Jalakamal Investment and Finance Limited India 100% 31/03/2008e. Jalakumbhi Investment and Finance Limited India 100% 31/03/2008f. *Kalyani Utilities Development Limited India 100% 31/03/2008g. *Nandi Infrastructure Corridor Enterprises Limited India 75% 31/03/2008

* held through subsidiaries

b) Associates :


30-09-2008

a. Kalyani Carpenter Metal Centers Limited India 45.51% 31/03/2008b. Epicenter Technologies Private Limited India 30.26% 31/03/2008c. Synise Technologies Private Limited India 46.77% 31/03/2008d. Kalyani Financial Services Limited India 49.00% 31/03/2008e. Kalyani Steels Limited India 39.06% 31/03/2008f. KSL Holdings Private Limited India 49.99% 31/03/2008g. Kalyani Agro Corporation Limited (see Note ii below) India 46.03% 31/03/2008h. Nandi Highway Developers Limited (see Note iii below) India 49.21% 31/03/2008

c) Joint Ventures :


30-09-2008

a. Automotive Axles Limited India 35.52% 30/09/2008b. Meritor HVS (India) Limited India 49.00% 30/09/2008

ii) In view of the erosion of Capital and continuing losses and the carrying amount of the investment in Kalyani Agro Corporation Limited, anAssociate Company, being Re.1/-, no cognisance has been taken of Capital or losses beyond carrying amount.


iii) The share of loss upto 31st March 2008 in Nandi Highway Developer Limited (NHDL) exceeds the carrying amount of the investment and

hence no cognisance has been taken of losses beyond the carrying amount. Further Goodwill recognised on consolidation, in the year in

which, NHDL became an associate, has been written off.

2 Nandi Infrastructure Corridor Enterprises Limited (NICE) holds 113,350,000 equity shares in Nandi Economic Corridor Enterprises Limited

(NECE), which amounts to 64.77% of voting rights in NECE as on 30th September 2008. Consequent to availment of long term loans, NECE

is bound by severe long term restriction on the transfer of funds to its parent, which have altered the Articles of Association of NECE to

that effect. Hence until debt repayments continue with regularity and the project commences generating income, NECE has not been

consolidated in terms of clause No. 11 of Accounting Standard 21-Consolidated Financial Statement’s issued by the ICAI.

3 The financial statements are prepared on the following basis:

The financial statements in respect of all subsidiary companies are drawn for the year ended 31st March,2008, whereas the financial

statements for BF Utilities are drawn for the year ended 30th September,2008.The effects of significant transactions and other events that

occur between 1st April, 2008 and 30th September, 2008 is taken in the consolidated financial statements if it is of material nature.

Material transactions with all subsidiaries taken together between the period 1st April, 2008 and 30th September, 2008 have been given

effect on account of the inconsistent reporting periods, which are as given below :-

Nature of Transaction Amount

Rupees

Loans from Companies 93,852,249

Investments 34,900,000

4 The financial statements of the Company and its subsidiary companies have been consolidated on a line-by-line basis by adding together

the book value of like items assets, liabilities, income and expenses after eliminating intra-group balances and intra-group transactions

resulting in unrealized profits and losses.

5 The excess of parent's portion of equity in subsidiary companies over its carrying cost of investments in subsidiary companies is treated

as a capital reserve.

6 Notes on these Consolidated Financial Statements are intended to serve as a means of informative disclosure and a guide to better

understanding of the consolidated position of the companies. Recognising this purpose, the company has disclosed only such Notes from

the individual financial statements, which :

a) are necessary for representing a true and fair view of the Consolidated Financial Statements and

b) the notes involving items, which are considered to be material.

7 Consolidated financial statements have been prepared substantially in the same format adopted by the parent to the extent possible, as

required by the Accounting Standard AS 21 "Consolidated Financial Statements" issued by the ICAI.

8 The Company had applied to the Government of India, Ministry of Company Affairs, for approval under Section 212(8) of the Companies

Act, 1956 for not attaching the accounts of all its subsidiaries under Section 212(1) of the Companies Act, 1956.

The Government of India, Ministry of Company Affairs, vide its letter dated 25th November, 2008 had granted the said approval and

directed the Company to disclose the following information in aggregate for each of the subsidiaries :


Sr. Particulars Bhalchandra Mundhwa Forge Jalakamal Jalakumbhi Kalyani NandiNo. Investment Investment Investment Investment Investment Utilities Infrastructure

Limited Limited Limited and Finance and Finance Development CorridorLimited Limited Limited Enterprises Ltd.

1 Capital 229 975 060 237 475 020 217 475 020 86 000 020 23 500 020 300 000 000 1 042 563 029

2 Reserves 49 874 858 793 121 702 736 505 533 26 681 003 94 365 986 1 001 322 568 -

3 Total Assets 637 603 665 1 998 563 207 1 476 603 640 375 894 387 480 610 847 1 301 322 568 992 758 765

(Including Net Current Assets)

4 Total Liabilities 505 933 893 968 828 818 522 608 825 305 510 174 362 731 842 - -

5 Details of Investment 781 384 593 1 124 151 949 683 581 112 64 269 163 141 941 051 732 559 222 376 150

(Expect in case of investment

in subsidiaries)

6 Turnover 72 636 858 235 352 505 72 468 531 32 982 153 42 338 329 80 164 892 21 246 936

7 Profit before Taxation 71 378 437 231 704 930 54 005 502 31 828 476 41 204 024 79 751 330 2 636 093

8 Provision for Taxation 7 712 399 22 907 200 6 995 202 6 152 801 5 995 977 4 775 000 271 517

9 Profit after Taxation 63 666 038 208 797 730 47 010 300 25 675 675 35 208 047 74 976 330 2 364 576

10 Proposed Dividend - - - - - - -



On behalf of the Board of DirectorsFor and on behalf of

DALAL & SHAHChartered Accountants


Partner VP Finance & Director DirectorCompany Secretary


9 As required by Accounting Standard (AS 23) on Accounting for Investments in Consolidated Financial Statements issued by the Institutes of

Chartered Accountants of India, the carrying amount of investments in Associates at the beginning of the year has been restated by applying

"Equity Method" of accounting from the date of acquisition of the associate and corresponding adjustment has been made to the goodwill at

the beginning of the year.

10 Due to the diversity in the nature of business and business environment the Subsidiaries , Associates and Joint ventures operate, the Accounting

Policies most appropriate to each, for reporting Financial Statement have been adopted. However no adjustments have been made to bring

about any uniformity in the Accounting Policies in reporting consolidated Financial Statement. However, a statement of unique Accounting

Policies followed by each of the entities has been disclosed in a Statement annexed hereto.

11 Disclosure of transactions with Related Parties as required by the Accounting Standard 18 "Related Party Disclosures" has been set out in a

separate statement annexed to this schedule. Related Parties as defined under clause 3 of the Accounting Standard have been identified on the

basis of the information available with the Company.

12 In respect of Subsidiary Companies

a) Kalyani Utilities Development Limited

i) The expenses relating to investment activity incurred up to 31.3.2002 are shown under the head ' Fixed Assets as "Pre -operative

expenditure pending capitalisation /allocation. Similar expenses incurred subsequently has been charged off to the Profit and Loss

Account.

ii) Investments are valued at the average cost of acquisition inclusive of fees for advisory services for acquisition of investment and

processing charges, interest and duties on borrowed funds.

13 In respect of Associate Companies

a) The net worth of Kalyani Carpenter Metal Centers Limited (KCMCL) has been substantially eroded as on 31st March, 2008. However,

KCMCL continues the business of marketing of Specialty Steels and on the assurance of the continuance of the existing agency business

and ongoing financial support, if required, from the shareholders, the Accounts have been prepared on a "Going Concern" basis and

accordingly reflected in consolidated financial statements.

b) Since the results of Kalyani Agro Corporation Limited are not considered for consolidation, for reasons stated in Note No 1(ii) above, the

validity of the assumption of its 'going concern' is irrelevant to these Financial Statements.

c) In view of the substantial erosion of net worth of Epicenter Technologies Pvt. Ltd arising from operating losses, the principal share holder

Mundhwa Investment Ltd., wholly owned subsidiary of the Company, has informed of its intention of providing Financial Support to meet

its obligations, as they fall due, and, accordingly, the financial statements have been prepared on going concern basis and no adjustment

has been made to write down the assets to net realisable value.

d) Kalyani Steels Limited (KSL) and

i) Its Joint Venture Kalyani Mukand Ltd. (KML) : KSL's investment in Joint Venture Kalyani Mukand Ltd. (KML) has been committed for sale

to a third party, subject to approval for transfer of certain rights available with KML, the same has not been consolidated as a part of

these Consolidated Financial Statements of KSL.

ii) Its Associate Company Hikal Limited : Consolidated Financial Statement of Hikal Ltd. and its subsidiaries for the year ended 31st

March 2008,have not been prepared. However, unaudited financial results of Hikal Limited, on stand alone basis have been received

by KSL and the same have been considered in preparing the Consolidated Financial Statements. Changes, if any, in the audited results

and the effect of consolidated results of Hikal Limited will be incorporated by KSL in the next year. Accordingly, changes, if any,

related to above will be incorporated in the consolidated Financial Statements of BF Utilities Ltd. in the next year.

iii) Its Associate Company Bharat NRE Coke Limited : Financial Statements of Bharat NRE Coke Limited, for the year ended 31st March,2008

have not been prepared. Therefore, Consolidated Financial statement does not include the results of same.

14 A Contingent liability not provided for in respect of :

Rupees Rupees

2007-2008 2006-2007

i) Liability on account of Conveyance Deed of the Ownership premises of the company Amount Amount

at Antariksha Bhawan, New Delhi has not been executed at yet. Unascertainable Unascertainable

ii) Claims against the Company not acknowledged as debt.

[Including Rs. 7 249 784/- (previous year Rs. 15 046 133/-) being share in

Joint Ventures and Associates] 48 506 735 56 303 084

iii) Central Excise, matter under dispute, being share in Joint Ventures and Associates. 34 682 504 25 179 196

iv) Sales Tax Demand, matter under dispute, being share in Joint Ventures and Associates. 1 278 328 461 794

v) Special Entry Tax, matter under dispute. 12 181 223 -

vi) Guarantee issued by a bank on behalf of the company, being share in

Joint Ventures and Associates 3 147 040 3 060 658

vii) Liability on account of labour dispute pending for adjudication being share in Joint Ventures Amount Amount

Unascertainable Unascertainable

Note : The above details does not include the figures of Hikal Limited,an associate of Kalayni Steels Limited as detailed in Note No 13(d)

above.

B In respect of Associate Company, Kalyani Steels Limited, Mysore Minerals Limited has raised an illlegitimate claim aggregating to

Rs. 109,974,225/- being share in Associate, for the price of calibrated iron ore purchased by the Company over and above the agreed

contracted price. The company has repudiated the said claim as the same is in ultra-vires to the contract.

15 Estimated amounts of contracts remaining to be executed on Capital account, net of advances and not provided for, being share in Joint

ventures and Associates. 24 968 505 92 224 666

16 Previous Year figures have been regrouped wherever necessary.


Annexure referred to in Note No. 10 in Schedule L of the Consolidated Financial Statements for the Year Ended30th September, 2008

Unique Accounting Policies followed by the Associates and Joint Ventures :

1 Fixed Assets and Depreciation

Epicenter Technologies Private Limited

* Leased Assets

Assets acquired under leases where the Company has substantially all the risks and rewards of ownership are classified as finance leases. Such assets are

capitalised at the inception of the lease at lower of the fair value or present value of minimum lease payments. Assets acquired under finance lease are

depreciated on a Straight line basis over the lease term. Where there is reasonable certainty that the company shall obtain ownership of the assets at the end of

the lease term, such assets are depreciated over their useful life, which equates to or is higher than the rates specified in Schedule XIV to the Act.

* In case of following assets Depreciation is provided on Straight Line Method based on the useful lives estimated by Management, as stated below

Assets Useful Lives

Plant & Machinery (excluding head phones) 3 to 14 years Head Phones 1 year

Computer Systems 4 to 7 years

Furniture & Fixtures 5 to 8 years20% p.a.

Software Licenses 2 to 3 years.

Leasehold Improvements Over the period of Lease.

Automotive Axles Limited

* Expenditure on reconditioning of machinery is capitalised where such expenditure results in increase in the future benefits from the asset / and or results in an

extension of the useful life of the asset based on technical assessment.

* In cases where useful lives are estimated to be lower than those considered in determining rates specified in that Schedule, depreciation is provided under the

Straight Line Method over the useful lives of the assets as follows

Reconditioned Machinery & related Expenditure : as specifically estimated and currently ranging between 4 and six years

Tools Jigs Fixtures & measuring Gauges : 2 to 5 years

Certain imported machinery : as per technical evaluation of their

useful lives ranging between 4 to 15 years

In case of diminution in value due to technical reasons the difference between Written down value and estimated net realisable value of assets is

provided as depreciation in the year in which it is ascertained

Synise Technologies Private Limited

* Portal Development Cost

All expenditure relating and/or attributable to the development of the portal , net of realizations, is capitalised under Fixed Assets. The depreciation on Portal

is being provided over a period of twenty four months, i.e. the useful life as estimated by the management.

2 Deferred Revenue Expenditure


* Product Development Cost

All expenditure relating and/or attributable to the development of the software, is classified as deferred revenue expenditure, and is being amortized over a

period of 24 months, from the month from which the product is ready for its intended use.

Kalyani Steels Limited

* Debenture Issue Expenses :

Debenture issue expenses incurred in respect of debentures raised by the Company will be written off against the balance in the "Share Premium Account " in

accordance with Section 78 of the Companies Act, 1956 and in the event of inadequacy of balance in "Share Premium Account" the same will be written off

against the profits of the Company, in equal annual installments over a period of ten years or over the tenure of the Debenture whichever is less, from the

commencement of commercial production of the concerned project for which they have been raised.

* Share Issue Expenses :

Share issue expenses incurred in respect of shares raised by the Company will be written off from the date of allotment against the balance in the "Share Premium

Account", in accordance with Section 78 of the Companies Act, 1956 and in the event of inadequacy of balance in "Share Premium Account" the same will be

written off in ten annual installments against the profits of the respective years.

* Premium On Redemption Of Debenture

From the year ended 31st March, 1992 onwards, premium payable on redemption of debenture will be provided for against the balance in the "Share Premium

Account"on the date of redemption in accordance with Section 78 of the Companies Act,1956. In the event of inadequacy of balance in the "Share Premium

Account" the same will be provided for against the profits of the year of redemption.

KSL Holdings Private Limited

* The Miscellaneous expenses are being written off fully during the year.

3 Strategic Alliance at Ginigera


* The expense incurred by the Joint Venture Company viz. Hospet Steels Limited, formed with the specific purpose of managing and operating the composite steel

manufacturing facility at Ginigera in the course of carrying out its objectives are, as agreed upon, to be shared by the alliance components in the predetermined

mutually agreed 'sharing ratio'. Such expenses billed for reimbursement by Hospet Steels Limited have been booked into their natural heads of accounts and

presented as such in the Financial Statements.


Annexure referred to in Note No. 11 of Notes forming part of Accounts. Disclosure of Transactionswith Related parties as required by Accounting Standard 18 :

Sr. No. Nature of Transaction Year Companies controlled Key Managementthrough Subsidiaries Personnel

& Associates

1 Outstanding as on

30th September

(Investments) 2007-08 1 133 500 000 -

2006-07 1 133 500 000 -

2 Receiving of Services 2007-08 - 6 357 021

2006-07 - 12 407 931


Note :Names of the related parties and description of relationship

Sr. No. Particulars

1 Companies Controlled through Subsidiaries Nandi Economic Corridor Enterprises Ltd.

2 Associates Kalyani Carpenter Metal Centers Limited

Epicenter Technologies Private Limited


Kalyani Financial Services Limited


KSL Holdings Private Limited

Kalyani Agro Corporation Limited

Nandi Highway Developers Limited.

3 Key Management Personnel Mr. A. V. Whabi

Mr. Ashok Kheny

Mr. A S Karanth *

* Ceases from 10th July 2007

Sr. NAME OF THE BHALCHANDRA FORGE MUNDHWA JALAKUMBHI JALAKAMALNo. SUBSIDIARY COMPANY INVESTMENT INVESTMENT INVESTMENT INVESTMENT & FINANCE INVESTMENT & FINANCE

LIMITED LIMITED LIMITED LIMITED LIMITED

1 Financial Year of the 31st March 31st March 31st March 31st March 31st March 31st March 31st March 31st March 31st March 31st March

Subsidiary ended on 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008

2 Shares of subsidiary

Company held on the above

date and

Extent of Holding:

- Equity Shares of

Rs.10/-each 22 997 506 22 997 506 21 747 500 21 747 500 23 747 500 23 747 500 2 350 000 2 350 000 8 600 000 8 600 000

- Extent of Holding 100% 100% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99% 99.99%

3 Net aggregate amount

of profits less losses of

subsidiary for the above

financial year of this

subsidiary so far as they

concerns members

of BF Utilities Limited

I) Dealt with in the

accounts of

BF Utilities Limited Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

ii) Not dealt with in the

account of

BF Utilities Limited

(Rs. '000) 58 569 63 666 34 044 47 010 53 377 208 798 23 241 35 208 14 833 25 676

4 Net aggregate amount

of profits (including

transfers to Reserve

Fund) less losses for

previous financial

years of subsidiary

since it became

subsidiary so far as it

members of BF Utilities

Limited

I) Dealt with in the

accounts of

BF Utilities Limited

(Rs. '000) Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

ii) Not dealt with in the

account of BF Utilities

Limited (Rs. '000) (220 630) (162 061) 655 402 689 445 530 897 584 274 35 870 59 112 (56 436) (41 445)

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956RELATING TO SUBSIDIARY COMPANIES

On behalf of the Board of Directors

B.S. MITKARI G. K. AGARWAL B. B. HATTARKI

V P Finance & Director DirectorCompany Secretary

Pune, 27th December, 2008.


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BF UTILITIES LIMITEDRegistered Office : Mundhwa, Pune Cantonment, Pune 411 036.

NAME OF MEMBER/PROXY*

BF UTILITIES LIMITEDRegistered Office : Mundhwa, Pune Cantonment, Pune 411 036.

I/We .................................................................................. of ..................................................................................................

...............................................................................................................................................................................................

being a Member(s) of BF UTILITIES LIMITED, Pune, hereby appoint ..........................................................................................

of ............................................................................................................................................................................................

or failing him/her ......................................................................... of ......................................................................................

.................................................................................................................................. as my/our proxy to attend and vote for

me/us on my/our behalf at the Eighth Annual General Meeting of the Company to be held on Monday, 30th Day of March,2009 at 10.30 A.M.

Signed at ......................................... this .............................. day of ................................... 2009

Note : The Proxy must be deposited with the Registered Office of the Company not less than 48 hours before the time fixedfor the Meeting.

Signature(s) of Member(s)across the stamp

Folio No. DP Id.*

No. of Shares held Client Id.*

* Applicable for Members holding shares in Dematerialized form.

ATTENDANCE SLIP

PROXY

DP. Id.** Folio No.

Client Id.** No. of Shares held

I hereby record my presence at the Eighth Annual General Meeting held at the Training Centre, Kalyani SteelsLimited at Mundhwa, Pune 411 036 on Monday, 30th Day of March, 2009 at 10.30 A.M.

SIGNATURE OF THE SHAREHOLDER/PROXY*

* Strike out whichever is not applicable

** Applicable for Members holding shares in Dematerialised form

Note : Please handover this slip at the entrance of the Meeting venue.

Pleaseaffix

RevenueStamp of

proper value

1. Board of Directors etc. 1

2. Corporate Governance 2

3. Shareholder Information 5

4. Directors’ Report 7

5. Auditors’ Report 10

6. Financials 12

7. Consolidated Financial Statements 27

CONTENTS

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