AUDITORS Deloitte Haskins & Sells Chartered Accountants. PRINCIPAL BANKERS HDFC Bank Limited

IDFC Project Equity Company Limited DIRECTORS Dr. Rajiv B. Lall - Chairman Mr. Vikram Limaye Mr. Sunil Kakar Mr. Sadashiv S. Rao Dr. Rajeev Uberoi AUDITORS Deloitte Haskins & Sells Chartered Accountants PRINCIPAL BANKERS HDFC Bank Limited REGISTERED OFFICE Naman Chambers C-32, G-Block Bandra-Kurla Complex Bandra (East) Mumbai - 400 051 TEL: +91 22 4222 2000 FAX: +91 22 2654 0354 Website: www.idfc.com

Directors Report TO THE MEMBERS Your Directors have pleasure in presenting the Seventh Annual Report together with the audited accounts for the year ended. OPERATIONAL REVIEW Your Company continues to be committed to the development of infrastructure in the country and manage capital commitments of H 38.37 billion through India Infrastructure Fund ( Fund ). During the year, your Company closed one new investment and achieved one new partial exit for the Fund. Your Company devoted efforts on portfolio management and generating distributions from some of the operating assets. Within the portfolio, assets continued to mature in operations across all the sectors. In the power sector, although challenges of fuel shortages and timely clearances persisted in general across India, the power sector investments in the Fund s portfolio in both renewable energy & coal-based generation SPVs successfully added capacities and achieved plant commissioning. The portfolio commitments of the Fund have crossed the 75% mark and your Company has commenced preparations for the raising of India Infrastructure Fund II. With the support received from IDFC Limited as the Sponsor of the Fund, responses from existing Fund investors and other new potential investors for commitments has been encouraging. Your Company is targeting to announce a First Close of India Infrastructure Fund II during FY14. Lastly, your Company continues to be recognised as one of the leading infrastructure investment platforms in India and during the year was invited to participate in various infrastructure focused events and conferences across the globe. Financial Results PARTICULARS FOR THE YEAR ENDED MARCH 31, 2013 FOR THE YEAR ENDED MARCH 31, 2012 Total Income 586,337,596 590,374,144 Less: Total Expenses 363,112,678 402,830,233 Profit/(Loss) before Tax 223,224,918 187,543,911 Less: Provision for Tax 70,369,000 56,142,209 Profit/(Loss) after Tax 152,855,918 131,401,702 Dividend Your Directors are pleased to recommend a dividend of H 400 per equity share (i.e. 4,000%) amounting to 2 crore for the year ended on equity shares. This dividend would be paid subject to approval by the Members in the ensuing Annual General Meeting (AGM). Further at the Board Meeting held on October 25, 2012, the Board had approved interim dividend amounting to H 8 crore at the rate of 16,000% i.e. H 1,600 per equity share. Directors In terms of the provisions of the Articles of Association of the Company and Companies Act, 1956, Dr. Rajiv B. Lall and Mr. Sunil Kakar would retire by rotation at the ensuing AGM and being eligible, offer themselves for re-appointment. The Board of Directors recommends re-appointment of both the above Directors at the ensuing AGM. Auditors M/s. Deloitte Haskins & Sells, Chartered Accountants having registration no. 117366W will retire as the statutory auditors of the Company at the conclusion of the ensuing AGM. The Board at its meeting held on April 29, 2013 has proposed their re-appointment as Auditors to audit the accounts of the Company for the financial year ending March 31, 2014. M/s. Deloitte Haskins & Sells, the retiring Auditors, have confirmed that their re-appointment, if made, would be in conformity with the provisions of Sections 224 and 226 of the Companies Act, 1956 and also indicated their willingness to be re-appointed. You are requested to consider their re-appointment. Public Deposits During the year under review, your Company has not accepted any public deposits under Section 58A of the Companies Act, 1956. Particulars Regarding Conservation of Energy And Technology Absorption Since the Company does not own any manufacturing facility, the disclosure of information on other matters required to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, are not applicable and hence not given. 22 IDFC ANNUAL REPORT 2012 2013

Directors Report Foreign Exchange Earnings & Expenditure There was no foreign currency income earned during the year. The particulars regarding foreign exchange expenditure are furnished in Note No. 20 of Notes to Financial Statements. Particulars Of Employees And Remuneration Your Company had 21 employees as on. As required by the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in Annexure to the Directors Report. Directors Responsibility Statement Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that: in preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to the material departures; they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at and the profit of the Company for the year ended on that date; they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and they have prepared annual accounts on a going concern basis. Acknowledgements The Directors thank the investors of India Infrastructure Fund, Reserve Bank of India and Securities and Exchange Board of India for their continuous support to the Company. The Directors also express their gratitude for the unstinted support and guidance received from IDFC Limited and other group companies. The Directors would also like to express their sincere thanks and appreciation to all the employees for their commendable teamwork, exemplary professionalism and enthusiastic contribution during the year. For And On Behalf Of The Board Of Directors Rajiv B. Lall Chairman Mumbai, July 1, 2013 IDFC PROJECT EQUITY COMPANY LIMITED 23

Independent Auditors' Report TO THE MEMBERS OF IDFC PROJECT EQUITY COMPANY LIMITED Report on the Financial Statements We have audited the accompanying financial statements of IDFC PROJECT EQUITY COMPANY LIMITED ( the Company ), which comprise the Balance Sheet as at, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements The Company s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 ( the Act ). This responsibility includes the design, implementation and maintenance of internal controls relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal controls relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (a) in the case of the Balance Sheet, of the state of affairs of the Company as at ; (b) in the case of the Statement of Profit and Loss, of the profit of the Company for the year ended on that date and (c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor s Report) Order, 2003 ( the Order ) issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. 2. As required by Section 227(3) of the Act, we report that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary 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 as it appears from our examination of those books. (c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account. (d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement comply with the Accounting Standards referred to in Section 211(3C) of the Act. (e) On the basis of the written representations received from the directors as on taken on record by the Board of Directors, none of the directors is disqualified as on from being appointed as a director in terms of Section 274(1)(g) of the Act. For DELOITTE HASKINS & SELLS Chartered Accountants (Firm registration number: 117366W) Z. F. Billimoria Partner (Membership No.: 42791) Mumbai, April 29, 2013 24 IDFC ANNUAL REPORT 2012 2013

Annexure to the Auditors Report (Referred to in paragraph 1 under Report on Other Legal and Regulatory Requirements section of our report of even date) (i) Having regard to the nature of the Company s business / activities / result / transactions, etc. clauses (ic), (ii), (vi), (viii), (x), (xi), (xii), (xiii), (xv), (xvi), (xvii), (xviii), (xix), and (xx) of CARO are not applicable. (ii) In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of the fixed assets. (b) The fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification. (iii) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956. (iv) In case of loans, secured or unsecured, taken by the Company from companies, firms or other parties listed in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us: (a) The Company has taken loan of 35,000,000 during the year from one party. At the year-end, the outstanding balance of such loan aggregated to Nil and the maximum amount involved during the year was 35,000,000. (b) The rate of interest and other terms and conditions of such loans are, in our opinion, prima facie not prejudicial to the interests of the Company. (v) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of fixed assets and for the sale of services. During the course of our audit, we have not observed any continuing failure to correct major weakness in such internal control system. (vi) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956. (vii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. (viii) According to the information and explanations given to us in respect of statutory dues: (a) The Company has been regular in depositing undisputed statutory dues, including Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues applicable to it with the appropriate authorities. (b) There were no undisputed amounts payable in respect of Provident Fund, Income-tax, Service Tax, Cess and other material statutory dues in arrears as at for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax which have not been deposited as on on account of disputes are given below: Name of Statute Nature of Dues Forum where dispute is pending Period to which the amount relates Amount involved () Income Tax Act, 1961 Income Tax DCIT(A) A.Y. 2010-11 1,250,300 (ix) Based on our examination of the records and evaluation of the related internal controls, the Company has maintained proper records of the transactions and contracts in respect of its dealing in mutual fund investments and timely entries have been made therein. The aforesaid securities have been held by the Company in its own name. (x) To the best of our knowledge and according to the information and explanations given to us, no fraud by or on the Company has been noticed or reported during the year. For DELOITTE HASKINS & SELLS Chartered Accountants (Firm registration number: 117366W) Z. F. Billimoria Partner (Membership No.: 42791) Mumbai, April 29, 2013 IDFC PROJECT EQUITY COMPANY LIMITED 25

Balance Sheet AS AT MARCH 31, 2013 As at As at Notes () () Equity and liabilities Shareholders funds (a) Share capital 3 500,000 500,000 (b) Reserves and surplus 4 73,714,436 37,235,518 74,214,436 37,735,518 Non-current liabilities (a) Long-term provisions 5-13,162,573-13,162,573 Current liabilities (a) Trade payables 6 122,763,518 128,345,630 (b) Other current liabilities 7 113,470,073 112,150,230 (c) Short-term provisions 8 23,399,000 1,401,185 259,632,591 241,897,045 TOTAL 333,847,027 292,795,136 Assets Non-current assets (a) Fixed assets (i) Tangible assets 9 (a) 1,889,499 1,894,269 (ii) Intangible assets 9 (b) 10,736 45,615 1,900,235 1,939,884 (b) Deferred tax asset 10 205,957 5,051,957 (c) Long-term loans and advances 11 111,468,849 56,375,180 113,575,041 63,367,021 Current assets (a) Cash and cash equivalents 12 195,689,839 134,703,690 (b) Short-term loans and advances 13 21,364,515 94,475,033 (c) Other current assets 14 3,217,632 249,392 220,271,986 229,428,115 TOTAL 333,847,027 292,795,136 See accompanying notes forming part of the financial statements In terms of our report attached. For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors of IDFC Project Equity Company Limited Z. F. Billimoria Partner Sunil Kakar Director Rajeev Uberoi Director Mumbai April 29, 2013 26 IDFC ANNUAL REPORT 2012 2013

Statement of Profit and Loss FOR THE YEAR ENDED MARCH 31, 2013 Notes I II Income Revenue from operations 15 575,508,582 575,508,582 Other income 16 10,829,014 14,865,562 Total Income (I) 586,337,596 590,374,144 Expenses Employee benefit expense 17 233,533,511 237,609,200 Finance cost 18 50,990 9,637 Depreciation and amortisation expense 9 887,061 861,131 Other expenses 19 128,641,116 164,350,265 Total expenses (II) 363,112,678 402,830,233 III Profit before tax (I - II) 223,224,918 187,543,911 IV Tax expense Current tax 65,523,000 55,593,834 Deferred tax (see note 10) 4,846,000 552,705 Fringe benefit tax - (4,330) V Profit for the year from continuing operations (III - IV) 152,855,918 131,401,702 Earnings per share (nominal value of 10 per share): 26 (1) Basic () 3,057.12 2,628.03 (2) Diluted () 3,057.12 2,628.03 See accompanying notes forming part of the financial statements In terms of our report attached. For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors of IDFC Project Equity Company Limited Z. F. Billimoria Partner Sunil Kakar Director Rajeev Uberoi Director Mumbai April 29, 2013 IDFC PROJECT EQUITY COMPANY LIMITED 27

Cash Flow Statement FOR THE YEAR ENDED MARCH 31, 2013 (A) Cash flow from operating activities Profit before taxation 223,224,918 187,543,911 Adjustment for: Loss on sale of fixed assets - 46,786 Depreciation and amortisation expense 887,061 861,131 Profit on sale of current investments - (2,471) Dividend income on current investment (10,505,987) (14,495,170) Interest income on bank deposits (322,224) (365,729) Provision for employee benefit - 3,669,434 Operating profit before working capital changes 213,283,768 177,257,893 Changes in working capital: Decrease/ (increase) in short-term loans and advances 73,110,518 (68,152,520) Decrease/ (increase) in long- term loans and advances (55,000,000) 72,000,000 Decrease/ (increase) in other current assets (2,876,003) 894,608 Decrease in trade payables (5,582,112) (9,784,643) Increase in other current liabilities 1,319,843 3,196,343 Decrease in other long-term liabilities - (486,802) Decrease in long-term provisions (13,162,573) - Decrease in short-term provisions (1,401,185) - Cash generated from operations 209,692,256 174,924,879 Net income tax paid (65,616,669) (64,391,875) Net cash flow from operating activities (A) 144,075,587 110,533,004 (B) Cash flow from investing activities Purchase of fixed assets (847,412) (700,738) Sale proceeds of current investments 714,005,991 821,297,641 Dividend received on current investments 10,505,987 14,495,170 Purchase of current investments (714,005,991) (821,295,170) Interest received on bank deposits 229,987 322,983 Net cash from investing activities (B) 9,888,562 14,119,886 (C) Cash flow from financing activities Interim equity dividend paid (including dividend distribution tax) (92,978,000) (244,067,250) Net cash used in financing activities (C) (92,978,000) (244,067,250) Net increase/(decrease) in cash and cash equivalents (A+B+C) 60,986,149 (119,414,360) Cash and cash equivalents at the beginning of the year (see note 12) 134,703,690 254,118,050 Cash and cash equivalents at the end of the year (see note 12) 195,689,839 134,703,690 60,986,149 (119,414,360) In terms of our report attached. For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of Directors of IDFC Project Equity Company Limited Z. F. Billimoria Partner Sunil Kakar Director Rajeev Uberoi Director Mumbai April 29, 2013 28 IDFC ANNUAL REPORT 2012 2013

Notes forming part of Financial Statements as AT AND 01 Background IDFC Project Equity Company Limited ( the Company ) was incorporated on February 06, 2007. The Company has entered into an Investment Management Agreement with IDFC Trustee Company Limited on March 11, 2008 to act as the Investment Manager of the India Infrastructure Fund ( Fund ) a domestic venture capital fund registered under the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996. In accordance with the agreement, the Company is entitled to receive an investment management fee for managing the Fund beginning from the Initial Closing of the Fund. 02 Significant accounting policies A. Basis of Preparation The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India. The Company has prepared these financial statements to comply in all material aspects with the accounting standards notified by the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under historical cost convention. B. Use of estimates The Company adopts the accrual concept in the preparation of the accounts. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. C. Cash and cash equivalents Cash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other shortterm highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value. D. Cash flow statements Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. E. Inflation Assets and liabilities are recorded at historical cost to the Company. These costs are not adjusted to reflect the changing value in the purchasing power of money. F. Revenue recognition i Management Fees are recognised on accrual basis as per the terms of the agreement. ii Interest and other dues are accounted on accrual basis. iii Dividend is accounted when the right to receive is established. G. Fixed assets Fixed assets are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated depreciation. H. Intangible assets Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the asset to its working condition, less accumulated amortisation. Any expenses on such software for support and maintenance payable annually are charged to the Statement of Profit and Loss. I. Depreciation and amortisation Tangible assets Depreciation for all Fixed Assets, excluding certain electronic items, is provided on the written down value method, at the rates prescribed by Schedule XIV of the Companies Act, 1956. Certain electronic items are depreciated over a period of two years on a straight-line method based on the Management s estimate of useful life of assets. Depreciation on additions during the year is provided on a pro-rata basis. Assets costing less than 5,000/- each are written off in the year of capitalisation. Intangible assets Intangible assets consisting of computer software are being amortised over a period of three years on the straight-line method. IDFC PROJECT EQUITY COMPANY LIMITED 29

Notes forming part of Financial Statements as AT AND J. Investments Non-current investments are carried at acquisition cost. A provision is made for diminution other than temporary on an individual basis. Current investments are carried at the lower of cost and fair value on an individual basis. K. Employee benefits Defined contribution plans The contribution to provident fund, superannuation fund and pension fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made. Defined benefit plan The net present value of the Company s obligation towards Gratuity to employees is funded and actuarially determined as at the year end based on the projected unit credit method. Actuarial gains and losses are recognised in the Statement of Profit and Loss for the year. Compensated absences Employees are not permitted to accumulate leave. Based on the leave rules, unavailed privilege leave to the extent encashable is paid to the employees and charged to the Statement of Profit and Loss for the year. L. Operating leases Leases of assets under which all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a straight-line basis over the lease term in accordance with Accounting Statndard 19 on 'Leases' as notified under the Companies (Accounting Standard) Rules, 2006. Initial direct cost incurred specifically for operating leases are recognised as expense in the year in which they are incurred. M. Earnings per share Basic earnings per share is computed by dividing the profit/(loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit/(loss) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. N. Income-tax The accounting treatment for income-tax in respect of the Company's income is based on the Accounting Standard 22 on 'Accounting for Taxes on Income' as notified by the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax asset is recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits. O. Provisions and contingencies A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. P. Foreign currency transactions Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transaction. Foreign currency monetary items outstanding as at the Balance Sheet date are reported using the closing rate. Gains and losses resulting from the settlement of such transactions and translation of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit and Loss. Q Impairment of Assets The carrying amount of assets at each Balance Sheet date are reviewed for impairment. If any indication of impairment based on internal / external factors exists, the recoverable amount of such assets is estimated and impairment is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and its value in use, which is arrived at by discounting the future cash flows to their present value, based on an appropriate discounting factor. If at the Balance sheet date, there is a indication that previously recognised impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount, subject to a maximum of the depreciable historical cost and reversal of such impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets. 30 IDFC ANNUAL REPORT 2012 2013

Notes forming part of Financial Statements as AT AND 03 Share capital Authorised As at As at Number Number Equity shares of 10 each 10,000,000 100,000,000 10,000,000 100,000,000 Issued, subscribed and paid up Equity shares of 10 each fully paid-up 50,000 500,000 50,000 500,000 All the above equity shares are held by IDFC Alternatives Limited (formerly, IDFC Private Equity Company Limited), the holding company and its nominees. (Previous year IDFC Limited formerly, Infrastructure Development Finance Company Limited) Total Issued, subscribed & fully paid up equity share capital 500,000 500,000 (a) Terms / rights attached to equity shares The Company has only one class of equity share having a par value of 10 per share. Each holder of equity share is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders. (b) Details of the shareholders holding more than 5% of the Share capital As at As at Number % of Holding Number % of Holding IDFC Limited (formerly, Infrastructure Development Finance Company Limited) and its nominees IDFC Alternatives Limited (formerly, IDFC Private Equity Company Limited) and its nominees - - 50,000 100% 50,000 100% - - 50,000 100% 50,000 100% (c) During the financial year ended, the Board of Directors, in their meeting held on October 25, 2012 had declared interim dividend of 1,600 (Previous year 4,200) per equity share. Also during the year ended, the Board of Directors have proposed dividend of 400 (previous year Nil ) per share, which is recognised as amount distributable to equity shareholders and is subject to approval of the shareholders at the ensuing Annual General Meeting. The total dividend appropriation amounted to 116,377,000 (Previous year 244,067,250 )including dividend distribution tax of 16,377,000 (Previous year 34,067,250). 04 Reserves and surplus As at As at a. General reserve Opening balance 31,823,000 18,682,000 Add : Transferred from surplus in the Statement of Profit and Loss 15,500,000 13,141,000 Closing balance 47,323,000 31,823,000 b. Surplus in the Statement of Profit and Loss Opening balance 5,412,518 131,219,066 Add : Net profit for the year 152,855,918 131,401,702 Less : Interim equity dividend (see note 24) (80,000,000) (210,000,000) Proposed equity dividend (20,000,000) - Tax on equity dividend (16,377,000) (34,067,250) Transfer to General reserve (15,500,000) (13,141,000) Closing balance 26,391,436 5,412,518 Total 73,714,436 37,235,518 IDFC PROJECT EQUITY COMPANY LIMITED 31

Notes forming part of Financial Statements as AT AND 05 Long term provisions As at As at Provision for employee benefits -gratuity (see note 22) - 13,162,573 Total - 13,162,573 06 Trade payables As at As at Provision for expenses 122,716,120 127,423,296 Payable to vendors 47,398 922,334 Total 122,763,518 128,345,630 No amount is payable in current year to "Suppliers" under Micro, Small and Medium Enterprises Development, Act 2006. No interest has been paid/payble by the Company during the year to the "Suppliers" covered under Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to the inquiries made by the Company for this purpose. 07 Other current liabilities As at As at Fees received in advance 108,794,781 108,794,778 Others Statutory remittances 4,675,292 3,355,452 Total 113,470,073 112,150,230 08 Short term provisions As at As at Provision for employee benefits -gratuity (see note 22) - 1,401,185 Proposed dividend (see note 3 (c)) 20,000,000 - Tax on proposed dividend 3,399,000 - Total 23,399,000 1,401,185 32 IDFC ANNUAL REPORT 2012 2013

Notes forming part of Financial Statements as AT AND 09 Fixed assets Gross block Accumulated depreciation Net block As at April 1, 2012 Additions Disposals As at As at April 1, 2012 Additions Deletions As at As at As at a Tangible Assets Computer hardware 1,686,704 363,970-2,050,674 1,043,957 371,518-1,415,475 635,199 642,747 Furniture and fixtures 213,384 - - 213,384 78,441 24,423-102,864 110,520 134,943 Vehicles 1,540,571 - - 1,540,571 869,694 173,690-1,043,384 497,187 670,877 Office equipment 779,253 483,442-1,262,695 333,551 282,551-616,102 646,593 445,702 Total (A) 4,219,912 847,412-5,067,324 2,325,643 852,182-3,177,825 1,889,499 1,894,269 Previous Year 3,874,886 685,617 340,591 4,219,912 1,801,549 817,899 293,805 2,325,643 1,894,269 b Intangible Assets Computer software 164,418 - - 164,418 118,803 34,879-153,682 10,736 45,615 Total (b) 164,418 - - 164,418 118,803 34,879-153,682 10,736 45,615 Previous Year 149,297 15,121-164,418 75,571 43,232-118,803 45,615 Total (A+B) 4,384,330 847,412-5,231,742 2,444,446 887,061-3,331,507 1,900,235 1,939,884 Previous Year 4,024,183 700,738 340,591 4,384,330 1,877,120 861,131 293,805 2,444,446 1,939,884 10 Deferred tax asset As at As at Tax effect of items constituting deferred tax asset Provision for gratuity and other employee benefits - 4,883,154 On difference between book balance and tax balance of fixed assets 205,957 168,803 Total 205,957 5,051,957 In compliance with Accounting Standard 22 relating to 'Accounting for Taxes on Income' as notified under the Companies (Accounting Standards) Rules, 2006, 4,846,000 (previous year 552,705) has been debited to the Statement of Profit and Loss towards deferred tax (net) on account of timing differences. 11 Long-term loans and advances (Unsecured, considered good) As at As at Security deposits 59,000,000 4,000,000 Other deposits 11,881 11,881 Advance payment of income tax [net of provision for tax of 267,499,419 (previous year 52,456,968 52,363,299 201,976,419)] Total 111,468,849 56,375,180 12 Cash and cash equivalents As at As at Cash on hand 17,756 12,346 Cheques on hand - 1,105,236 Balances with bank: In current accounts 4,172,083 3,586,108 In deposit accounts 191,500,000 130,000,000 Total 195,689,839 134,703,690 IDFC PROJECT EQUITY COMPANY LIMITED 33

Notes forming part of Financial Statements as AT AND 13 Short-term loans and advances (Unsecured, considered good) As at As at Security deposits - 74,500,000 Prepaid expenses 16,002,148 16,132,619 Balances with government authorities- Service tax credit receivable 5,052,157 3,722,648 Loan and advances to employees 71,521 9,323 Supplier advances 238,689 110,443 Total 21,364,515 94,475,033 14 Other current assets As at As at Interest accrued on term deposits with bank 223,658 131,421 Contractually reimbursable expenses 815,456 117,971 Amount recoverable from funds 2,178,518 - Total 3,217,632 249,392 15 Revenue from operations Management fees 575,508,582 575,508,582 Total 575,508,582 575,508,582 16 Other income Dividend income from current investments 10,505,987 14,495,170 Interest income on bank deposits 322,224 365,729 Profit on sale of current investments - 2,471 Interest on income tax refund - 2,192 Miscellaneous Income 803 - Total 10,829,014 14,865,562 17 Employee benefit expenses Salaries and bonus (see note 25) 217,922,695 219,328,905 Contribution to provident and other funds (see note 22) 12,515,371 10,789,116 Staff welfare expenses 3,095,445 7,491,179 Total 233,533,511 237,609,200 34 IDFC ANNUAL REPORT 2012 2013

Notes forming part of Financial Statements as AT AND 18 Finance cost Interest on Inter corporate deposit (see note 24) 45,548 - Bank charges 5,442 9,637 Total 50,990 9,637 19 Other expenses Shared service cost (see note 24) 10,151,004 24,405,912 Rent (see note 25) 1,830,967 1,067,780 Rates and Taxes 81,436 101,170 Repairs and maintenance Equipments 88,785 3,214 Others 101,432 179,524 Insurance charges 5,737 15,967 Travelling and conveyance (see note 20) 15,293,494 16,161,097 Printing and stationery 273,823 196,839 Communication expenses 1,537,162 1,507,867 Brokerage paid 217,742 89,282 Conference and sponsorships (see note 20) 5,773,756 7,695,080 Legal and professional fees (see note 20) 8,749,796 25,584,517 Service fees 81,657,122 83,061,925 Foreign currency loss (net) 7,490 1,624,701 Auditor's remuneration (see note (a) below) 707,679 713,431 Loss on sale of fixed assets - 46,786 Miscellaneous expenses 2,163,691 1,895,173 Total 128,641,116 164,350,265 (a) Break up of auditors remuneration: - Audit fee 300,000 300,000 - Tax audit fee 100,000 100,000 - Other services 300,000 300,000 - Out of pocket expenses 7,679 13,431 - Service tax 87,469 81,723 795,148 795,154 Less: Service tax set off claimed 87,469 81,723 Total 707,679 713,431 20 Expenditure in foreign currencies (on payment basis) Travelling expenses 215,941 127,397 Professional fees 728,331 - Conference and sponsorships 86,758 27,024 Staff welfare expenses - 1,352,523 IDFC PROJECT EQUITY COMPANY LIMITED 35

Notes forming part of Financial Statements as AT AND 21 Earnings in foreign currencies There are no earnings in foreign currencies 22 Employee benefits In accordance with the Accounting Standard 15 on 'Employee Benefits' as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosures have been made: The Company has recognised the following amounts in the Statement of Profit and Loss towards contribution to defined contribution plans which are included under contribution to provident and other funds: Provident fund 4,593,480 4,117,330 Pension fund 1,432,101 1,428,263 Superannuation fund 1,024,284 1,053,040 The details of the Company s post retirement benefit plans for gratuity for its employees are given below which is certified by the actuary and relied upon by the auditors: Change in the defined benefit obligations Liability at the beginning of the year 14,563,758 10,894,324 Current service cost 2,726,219 2,377,716 Interest cost 1,390,190 1,079,433 Benefits paid (352,634) (521,049) Actuarial loss 1,349,097 733,334 Liability at the end of the year 19,676,630 14,563,758 Fair value of plan assets: Fair value of plan assets at the beginning of the year - - Expected return on plan assets - - Contributions 20,029,264 521,049 Benefits paid (352,634) (521,049) Actuarial loss on plan assets - - Fair value of plan assets at the end of the year 19,676,630 - Total actuarial loss / (gain) to be recognised 1,349,097 733,334 Actual return on plan assets: Expected return on plan assets - - Actuarial loss on plan assets - - Actual return on plan assets - - Amount recognised in the Balance Sheet: Liability at the end of the year 19,676,630 14,563,758 Fair value of plan assets at the end of the year 19,676,630 - Amount recognised in the Balance Sheet under 'Current liabilities/provision for employee benefits' - 14,563,758 Expense recognised in the Statement of Profit and Loss: Current service cost 2,726,219 2,377,716 Interest cost 1,390,190 1,079,433 Expected return on plan assets - - Net actuarial loss to be recognised 1,349,097 733,334 Expense recognised in the Statement of Profit and Loss under 'Employee benefit expenses' 5,465,506 4,190,483 36 IDFC ANNUAL REPORT 2012 2013

Notes forming part of Financial Statements as AT AND Reconciliation of the liability recognised in the balance sheet: Opening net liability 14,563,758 10,894,324 Expense recognised 5,465,506 4,190,483 Contribution by the Company (20,029,264) (521,049) Amount recognised in the Balance Sheet under 'Current liabilities/provision for employee benefits' Current - 1,401,185 Non-current - 13,162,573 Expected employer s contribution for the next year 3,000,000 1,401,185 Experience adjustments: March 31, 2011 March 31, 2010 March 31, 2009 Particulars Defined benefit obligation 19,676,630 14,563,758 10,894,324 6,381,328 - Plan assets 19,676,630 - - - - Surplus/(deficit) - (14,563,758) (10,894,324) (6,381,328) - Experience adjustment on plan liabilities 626,176 767,421 2,369,165 (177,117) - Experience adjustment on plan assets - - - - - As at As at % % Investment pattern Insurer managed funds Government securities 37.41 - Deposit and money market securities 29.58 - Debentures/bonds 33.01 - Principal assumptions: Discount rate (per annum) 8.05 8.38 Expected rate of return of assets per annum 8.00 - Salary escalation rate (per annum) 8.00 8.00 The estimate of future salary increases takes into account inflation, seniority, promotion and other relevant factors. 23 Segment reporting The Company s main business is to provide asset management services in India. All other activities revolve around the main business. The Company does not have any geographic segments. As such, there are no separate reportable segments as per Accounting Standard 17 on Segment Reporting as notified by the Companies (Accounting Standards) Rules, 2006. 24 Related party disclosures As per the Accounting Standard 18 on Related Party Disclosures as notified by the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows: I II III Holding Company: IDFC Alternatives Limited (Formerly, IDFC Private Equity Company Limited) (w.e.f. May 17, 2012) IDFC Limited (formerly, Infrastructure Development Finance Company Limited) (upto May 16, 2012) Ultimate Holding Company: IDFC Limited (formerly, Infrastructure Development Finance Company Limited) (w.e.f. May 17, 2012) Key Management Personnel: Mr. M.K. Sinha Managing Partner & CEO IDFC PROJECT EQUITY COMPANY LIMITED 37

Notes forming part of Financial Statements as AT AND The nature and volume of transactions carried out with the above related parties in the ordinary course of business are as follows: Name of the related party and nature of relationship (a) Holding Company IDFC Alternatives Limited (formerly, IDFC Private Equity Company Limited) IDFC Limited (formerly, Infrastructure Development Finance Company Limited) (b) Ultimate Holding Company IDFC Limited (formerly, Infrastructure Development Finance Company Limited) Interim dividend paid 80,000,000 - Esop compensation cost - 5,554,224 Interim dividend paid - 210,000,000 Shared Services Cost paid - 24,405,912 Esop compensation cost 487,519 - Shared Services Cost paid 10,151,004 - Finance cost 45,548 - Loan Received 35,000,000 - Loan Repaid 35,000,000 - (c) Key Management Personnel Mr. M.K. Sinha Remuneration paid* 44,524,922. 39,375,546 * Excludes contribution of gratuity and insurance premium. 25 Lease disclosure In accordance with the Accounting Standard 19 on Leases as notified by the Companies (Accounting Standards) Rules, 2006, the following disclosure in respect of operating leases is made: The Company has taken premises for employees under operating lease, which expire between June 2015 to December 2015 (previous year June 2012 to September 2013). Rent include gross rental expenses of 1,830,967 (previous year 1,067,780). The committed lease rentals in the future are: Not later than one year 2,160,000 472,500 Later than one year and not later than five years 2,861,613 105,333 The Company has taken vehicles for certain employees under operating leases, which expires between August 2014 to May 2016 (previous year August 2014 to September 2015). Salaries include gross rental expenses of 1,804,062 (previous year 1,593,827). The committed lease rentals in the future are: Not later than one year 1,878,464 1,575,540 Later than one year and not later than five years 1,681,058 2,616,550 26 Earnings per share In accordance with the Accounting Standard 20 on Earnings Per Share, as notified under the Companies (Accounting Standards) Rules, 2006 the Earning Per Share has been computed as under: Net profit after tax for the year 152,855,918 131,401,702 Weighted average number of equity shares 50,000 50,000 Par value per share 10 10 Earnings per share - Basic 3,057.12 2,628.03 Earnings per share - Diluted 3,057.12 2,628.03 38 IDFC ANNUAL REPORT 2012 2013

Notes forming part of Financial Statements as AT AND 27 Provision and contingencies 1) Contingent liabilities Claims against the Company not acknowledged as debt in respect of: Income-tax demands on account of disallowance under section 14A disputed by the Company. 1,250,300-1,250,300-28 Prior year figures Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. For and on behalf of the Board of Directors of IDFC Project Equity Company Limited Mumbai April 29, 2013 Sunil Kakar Director Rajeev Uberoi Director IDFC PROJECT EQUITY COMPANY LIMITED 39