There are positive signals emerging for the Indian economy with expectations of seven to nine per cent growth in the years ahead. However, despite the green shoots, your company is geared for a long haul since the macro economy recovery will neither be immediate nor be on a smooth curve.

The positives are that the growth of the infrastructure sector in India is a priority. The Governments ambitious targets are being matched by policies and actions to realize them. The policy vision in power, for example, sets a target of an installed capacity of 200,000 MW with spinning reserves of 5 %. Inter-regional transmission capacity of 37,000 MW is aimed at, over the same period.

The Union Road Transport and Highways Ministry has a draft report for a proposed 17,661 Km of expressway stretches in three phases, by 2012, 2017 and 2022. Similar large scale goals are being set across the infrastructure sector. Your company is resource ready to address opportunities in all these areas.

Over the last three years, your company's pace of growth has been impressive. During this period, it has evolved into a truly integrated infrastructure developer respected by peers and which is at a threshold for a new plane of growth.

Your company has a strong presence across the value chain in the power business. This will soon span transmission and distribution too. Our strengths in construction, EPC and O&M are well attested. The presence in coal mining is aligned to our growth in the thermal power segment. Your company's presence in highways and airports is expected to grow significantly. Our focus areas will also include seaports, oil & gas, and other new initiative areas.

FINANCIAL PERFORMANCE
Your company's performance during 2008-09 inspires it to push forward in all our business areas. Your company registered an impressive growth in Gross Revenues of 84% up from Rs. 33,365 million to Rs. 61,282 million in the previous year. The major contributors to the revenues were Construction and EPC division and the Power business. The Net Profit After Tax for the year shrunk by 21% from Rs. 3,542 million in the previous year to Rs. 2,804 million in the current year, primarily on account of higher elimination of inter-company profit on consolidation as per Indian Accounting Standard. Without elimination of inter-company profit, our Profit After Tax would have grown by 7% from Rs. 3,823 million to Rs. 4094 million. The net cash generated from operating activities for the year was Rs. 4,093 million in comparison to Rs. 5,450 million the previous year. The Net Worth including minority interests of the company was Rs. 28,009 million on March 31, 2009.

PEFFORMANCE OF VARIOUS BUSINESSES
Power Business
Our Power business has registered revenue growth of 54% up from Rs. 17,579 million to Rs. 27,149 million on account of higher revenue in Power trading and operating Power plants.

The performances of the operating power projects, particularly Kondapalli and Aban, have been very satisfactory. Both the Power Plants operated at a Plant Availability Factor in excess of 90 per cent. The operating income of both of the projects put together was more than Rs. 14 billion while the operating profits were Rs. 3.6 billion translating into an operating margin of more than 25%.

During the year 2008-09, we have signed an agreement to sell our Rithwik and Clarion power plants and successfully commissioned the Vamshi Hydro Power project.

The Power Trading arm of the company also registered significant growth and recorded a turnover of Rs 12.4 billion and was amongst the major power trading companies in India in terms of the volume of electricity traded.

In line with our vision of becoming one of the largest power utilities in the country in the Private Sector we are developing power projects of 8,000 MW capacities. Out of this, around 2,000 MW capacities are in advance stage of construction and it is expected that our power portfolio will have more than 2,500 MW operational power assets in the coming 12-15 months.

Construction and EPC Business
The order book of this business segment is about Rs 103 billion, approximately US$ 2.2 billion. The business registered revenues amounting to around Rs. 40.5 billion during the year. The projects being implemented by the Construction and EPC division are largely on schedule and we expect the projects to be commissioned as per the time schedule committed. The order book pipeline for the divisions is quite strong and the outlook for the incremental order book is positive.

Infrastructure Projects
Your company is presently developing two road projects awarded by National Highways Authority of India (NHAI) in the State of Karnataka which are expected to be in operation by next year. We are also looking at opportunities in other infrastructure projects such as Transmission and Distribution of Power, Airports, Metro Rail Systems, Railway Station Modernization, Gas Distribution Systems amongst others. I believe that the infrastructure prospects which exist in our country provide us enough opportunities to leverage our capabilities in the Construction and EPC business and win the rights to build and operate more infrastructure assets.

Property Development
Your company had launched first major initiative in the property development business in the form of Lanco Hills Information Technology Park. There have been changes in the macro-economic environment in general and specifically for the property development business. This has resulted in a certain slow down for the demand for property and the effects of the same are also being felt in the Lanco Hills property. However, we believe that we would be in a position to deliver on our commitments in the project without affecting our capital commitments in other businesses.

New Initiatives
Your company is also evaluating various other opportunities which are coming up not only in the Power Sector but also in other space of Infrastructure like Road, Airports, Sea ports etc..

HUMAN RESOURCE
Last year when layoffs were common following the financial turmoil cross the globe, we have increased our human resources head count from around 3,300 to 5,000.

The management has implemented a major strategic initiative of relocating the Corporate Office to Gurgaon. This creates an opportunity for total internal cohesiveness considering the fact that most of our Projects are in the Northern Region. In addition, the proximity to Financial Institutions, Regulators, Policy Bodies and other networks gives an added impetus to our sustained growth as a mature Corporate.

CORPORATE SOCIAL RESPONSIBILITY
Your company has always considered Corporate Social Responsibility as virtually a vertical within the company. The focus of our CSR initiatives is towards achieving growth which is sustainable. To help us in charting out a clear roadmap for our CSR activities we have retained KPMG as consultants for formulating a CSR policy document and our endeavour would be to start Sustainability Reporting, benchmarking ourselves for corporate best practices.

ACKNOWLEDGEMENTS
I would like to take this opportunity to express my gratitude to the Central and State Governments, Bankers, Financial Institutions, Customers and Vendors for their support and encouragement without which our growth would not be possible. We seek their continued support in all future endeavours as well. I would like to thank all Lanconians once again whose commitment is essential for the company to target its aggressive growth plans. I am also grateful for the capable guidance of my colleagues on the Board. And last but not least, my special thanks to you, our shareholders, for your confidence in your Company in turbulent times.