NOTES FORMING PART OF FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2018

30. The Hon'ble High Court of Allahabad had, vide its Judgement dated October 26, 2016, on a Public Interest Litigation filed in 2012 (challenging the validity of the Concession Agreement and seeking the Concession Agreement to be quashed) has directed the Company to stop collecting the user fee, holding the two specific provisions relating to levy and collection of fee to be inoperative, but refused to quash the Concession Agreement. Consequently, collection of user fee from the users of the NOIDA bridge has been suspended from October 26, 2016, purusant to which an appeal was filed before the Hon'ble Supreme Court of India, seeking an Interim Stay on the said Judgment.

On November 11, 2016, the Hon'ble Supreme Court issued an Interim Order denying the interim stay and sought the assistance of the CAG to verify if the Total Cost of the Project, in terms of the Concession Agreement, had been recovered or not by the Company. The CAG has submitted its report to Hon'ble Supreme Court on March 22, 2017.

At the last hearing held on April 03, 2018, the Hon'ble Supreme Court bench has directed that the Report submitted by CAG be kept in a sealed cover and that the case be listed for hearing on merits in July 2018.

The Company has also notified the NOIDA Authority that the Judgement of the Hon'ble Allahabad High Court read with Interim Order of the Hon'ble Supreme Court of India constitute a Change in Law under the Concession Agreement and sought to be placed in substantially the same legal, commercial and economic position as it was prior to the said Change in Law as provided in the Concession Agreement. The Company thereafter sent Notice of Arbitration to Noida Authority.

The Arbitral Tribunal has been constituted and Company has submitted its Statement of Claim. Noida too has submitted a Counter claim on the Company and filed application on the maintainability of the arbitration proceedings. The Company has challenged the application. At the hearing held on May 19, 2018, the Arbitral Tribunal heard the arguments of the legal counsel of Noida Authority in respect of their application on maintainability of the arbitration proceedings. As the arguments could not be concluded, the Arbitral Tribunal will decide on a date for the next hearing to continue with the arguments.

Based on legal opinion and the Board's reliance on the provisions of the Concession Agreement (relating to Compensation and other recourses), the Company is confident that the underlying value of the Intangible and other assets (total of Rs. 55664 lacs) are not impaired and useful life of Intangible assets remains intact i.e. up to March 31, 2031. Accordingly amortisation has been recognised over balance useful life using straight line method of amortisation.

The Company continues to fulfil its obligations as per the Concession Agreement, including maintenance of Project Assts. Accordingly, provision of major maintenance has been carried at Rs. 2176 lacs as on March 31, 2018

(ii) Based on an environment and social assessment, compensation for rehabilitation and resettlement of project-affected persons has been estimated and considered as part of the project cost and provided for based on estimates made by the Company.

(iii) Income Tax demand of Rs. 134003 Lacs (Previous Year Rs. 135520 Lacs) which is majorly on account of addition of designated returns to be recovered as per the concession agreement and revenue subsidy on account of allotment of Land. During the month of April 2018 the Company has received the combined order from the CIT(A) Noida for all the appeals along with the penalty notice under section 271(1)(c) of the Income Tax Act,1961 and the Company is in process of filing an appeal with Income Tax Appellate Tribunal (ITAT). Based on legal opinion, management believes that the outcome of the appeal will be in favour of the Company.

32. LITIGATION

(i) The Hon'ble High Court of Allahabad had, vide its Judgement dated October 26, 2016, on a Public Interest Litigation filed in 2012 (challenging the validity of the Concession Agreement and seeking the Concession Agreement to be quashed) has directed the Company to stop collecting the user fee, holding the two specific provisions relating to levy and collection of fee to be inoperative, but refused to quash the Concession Agreement. Consequently, collection of user fee from the users of the NOIDA bridge has been suspended from October 26, 2016, purusant to which an appeal was filed before the Hon'ble Supreme Court of India, seeking an Interim Stay on the said Judgment.

On November 11, 2016, the Hon'ble Supreme Court issued an Interim Order denying the interim stay and sought the assistance of the CAG to verify if the Total Cost of the Project, in terms of the Concession Agreement, had been recovered or not by the Company. The CAG has submitted its report to Hon'ble Supreme Court on March 22, 2017.

At the last hearing held on April 03, 2018, the Hon'ble Supreme Court bench has directed that the Report submitted by CAG be kept in a sealed cover and that the case be listed for hearing on merits in July 2018.

(ii) "During the previous years, Income Tax Department has raised demands aggregating Rs. 1363.53 crores u/s 143(3)/147 of the Income tax Act,1961, in respect of Assessment Years 2007-2008 to 2014-2015 which are primarily on account of the addition of arrears of designated returns to be recovered in future from toll revenue and subsidy on account of allotment of land . Consequent upon the receipt of order from CIT(A) Noida on April 25, 2018, the Company is in the process of filing an appeal with the Income Tax Appellate Tribunal (ITAT) and based on a legal opinion, the management believes that the outcome of the same will be in favour of the Company.

(iii) "The Company had acquired land on the Delhi side for the construction of a Bridge from the Government of Delhi and DDA and the amount paid has been considered as a part of the project cost. However pending final settlement of the dues, the Company had estimated the cost at Rs. 29.32 million and provided the same as a part of the project cost. A sum of Rs. 9.20 million has so far been paid against the demand out of the aforesaid provision. The actual settlement may result in probable obligation to the extent of Rs. 20.12 million based on management estimates.

(iv) Since August 1, 2009, the Company was contesting imposition of a monthly license fee @ Rs. 115/- per sq.ft. of the total display area (as against 25% of the gross revenue generated) by MCD. In May 2010, the Hon'ble High Court directed the Company to deposit license fees at 50% of Rs. 115/- per sqft of the display, till the final disposal of the matter. Out of abundant caution, the management had decided to provide for the license fee as demanded by MCD in full.

In November 2014, the Company had entered into MOU with MCD whereby the Company has obtained permission to display advertisement against payment of monthly license fees @ 25% of total income or 25% of zonal rate (whichever is higher).

In February 2015, the Hon'ble High Court ordered that the imposition of License Fees does not have the authority of law and, accordingly, set aside the MCD demand and ordered MCD to refund the amount deposited pursuant to its order of May 2010. The Company had stopped paying license fees to MCD from February 2015 and filed an application for refund of the amount paid. The Company had written back the provision recognised in this respect in a previous financial year.

In August 2015, MCD has issued a show-cause notice alleging violation of various terms of MOU and subsequently removed all outdoor advertisement/display on the Delhi side of DND flyway. The Company initiated legal action and thereafter was in the process of amicable settlement with MCD.

In December 2017 a Settlement Agreement has been executed between South Delhi Municipal Corporation (SDMC) and the Company for resolving the disputes between SDMC and the Company. SDMC has granted approval to display Outdoor Advertisement for maximum display area of 31000 sq.ft. on the South Delhi side of DND Flyway, for an initial period of 5 years which may be extended by another 2 years period, on the terms and conditions as agreed between SDMC and the Company. This settles the dispute between the company and SDMC relating to display of Outdoor Advertisement within SDMC jurisdiction.

(v) Certain other matters relating to project lands, erection of advertising structure, exemption to armed forces personnel from paying toll etc are under litigation. However based on the legal opinion, the Company believe there is reasonable probability of success in the matters and that there will be no impact on the financial position of the Company.

33. There are no amounts outstanding as payable to any enterprise covered under the Micro, Small and Medium Enterprises Development Act, 2006. *(Refer Schedule 20)

36. EMPLOYEES POST RETIREMENT BENEFITS:

(a) Defined Contribution Plans

The Company has two defined contribution plans, namely provident fund and superannuation fund. The Provident Fund is a defined contribution scheme whereby the Company deposits an amount determined as a fixed percentage of basic pay to the fund every month. The benefit vests upon commencement of employment."

The Superannuation (pension) plan for the Company is a defined contribution scheme where annual contribution as determined by the management (Maximum limit being 15% of salary) is paid to a Superannuation Trust Fund established to provide pension benefits. Benefit vests on employee completing 5 years of service. The management has the authority to waive or reduce this vesting condition. The Trust Fund has taken a Scheme of Insurance, whereby these contributions are transferred to the insurer. These contributions will accumulate at the rate to be determined by the insurer as at the close of each financial year. At the time of exit of employee, accumulated contribution will be utilised to buy pension annuity from an insurance company.

A sum of Rs. 7,01,453 (Previous Year Rs. 15,62,716) has been charged to the Statement of Profit & Loss in this respect.

(b) Defined Benefit Plans

The Company has defined benefit plan, namely gratuity. Gratuity is computed as 30 days salary, for every completed year of service or part there of in excess of 6 months and is payable on retirement/termination/resignation. The benefit vests on the employee completing 3 years of service. The Gratuity plan for the Company is a defined benefit scheme where annual contributions as demanded by the insurer are deposited to a Gratuity Trust Fund established to provide gratuity benefits. The Trust Fund has taken a Scheme of Insurance, whereby these contributions are transferred to the insurer. The Company makes provision of such gratuity asset/ liability in the books of accounts on the basis of actuarial valuation."

The following table summarises the components of net expense recognised in the income statement and amounts recognised in the balance sheet for gratuity.

Significant actuarial assumptions for the determination of the defined obligation are discount rate, expected salary increase and mortality. The sensitivity analyses below have been determined based on reasonably possible changes of

the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

• If the discount rate is .50% higher (lower), the defined benefit obligation would decrease by Rs. 1,72,744 lacs (increase by Rs.1,84,626 lacs) (as at March 31, 2017: decrease by Rs. 2,73,110 lacs (increase by Rs.2,94,362 lacs)).

• If the expected salary growth increases (decreases) by .50%, the defined benefit obligation would increase by Rs 1,85,928 lacs (decrease by Rs. 1,75,471 lacs) (as at March 31, 2017: increase by Rs. 2,95,418 (decrease by Rs. 2,76,509))

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The plan asset consists of a scheme of insurance taken by the Trust, which is a qualifying insurance policy. Break down of individual investments that comprise the total plan assets is not supplied by the Insurer.

The estimates of future salary increases considered in the actuarial valuation take into account inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market

Contributions expected to be made by the Company during the next year is Rs. 1.08 lacs (previous year Rs. 0.58 lacs)

35. LIST OF RELATED PARTIES AND TRANSACTIONS / OUTSTANDING BALANCES:

(I) Company exercising significant influence over the Company:

Infrastructure Leasing & Financial Services Ltd. IL&FS Transportation Network Limited

(iii) Key Management Personnel

Mr.Ajai Mathur (Managing Director.since March 9,2017)

Mr. Harish Mathur (CEO & Executive Director, upto March 9, 2017)

Ms.Monisha Macedo (Whole Time Director- upto March 14,2017)

Mr.Dhiraj Gera (Company Secretary wef June 1, 2017)

Mr.Rajiv Jain (CFO)

Ms.Pooja Agarwal (upto May 31, 2017)

Executive Directors

Mr.Pradeep Puri (Executive Vice-Chairman, from November 23, 2016 to December 31, 2017)

Non Executive Directors

Mr K Ramchand

Mr R K Bhargava

Mr Deepak Prem Narayan

Mr Piyush G Mankand (upto March 25,2018)

Mr. Sanat Kaul

Mr. Pradeep Puri (Since January 01,2018)

Ms. Namita Pradhan

Mr. Arun K Saha (upto November 23, 2016)

36. FINANCIAL INSTRUMENTS

36.1 Capital management

The company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the company consists of debt (borrowings as detailed in notes) and equity of the Company (comprising issued capital and reserves).

38.1.1 Gearing ratio

(i) Debt is defined as long-term, current maturity of long term, short term borrowings and interest accrued thereon (ii) Total equity is defined as equity share capital and reserves and surplus

36.2Categories of financial instruments

36.3 Financial risk management objectives

The main risk arising from the Company's financial instruments are cash flow interest rate risk, liquidity risk and credit risk. The board reviews and agrees policies for managing these risks as summarised below.

36.3.1 Market risk

The company's activities expose it primarily to the financial risks of changes in interest rates.

There has been no significant change to the company's exposure to market risks or the manner in which these risks are managed and measured.

36.3.2 Interest rate risk management

The company is exposed to interest rate risk because it borrows funds primarily at floating interest rates. However, the interest rates are dependent on prime lending rates of the Banks which are not expected to change very frequently and the estimate of the management is that these will not have a significant upward trend

The following tables detail the company's remaining contractual maturity for its financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the company can be required to pay.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Company's profit before tax is affected through the impact on floating rate borrowings, as follows:

36.3.3 Liquidity risk

The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of term loans with banks and other loan instruments.

36.3.4 Credit risk

The Group trades only with recognised creditworthy third parties. It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant.

With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, loans and advances and available-for-sale financial assets, the Group's exposure to credit risk arises from default of the counterparty, with maximum exposure equal to the carrying amount of these instruments.

Since the Group trades only with recognised third parties, there is no requirement for collateral. However wherever management feels adequate, obtain collateral in the form of bank guarantees or security deposits from the third parties.

There are no significant concentrations of credit risk within the Group. 36.4 Fair Value Measurement

The following table provides the fair value measurement hierarchy of the company's asset as of March 31, 2018

There have been no transfers between Level 1 and Level 2 during the period.

Management determined that the intangible assets constitute one class of asset, based on the nature, characteristics and risk of the asset.

37. SEGMENT REPORTING

The Concession Agreement with NOIDA confers certain economic rights to the Group. These include rights to charge toll and earn advertisement revenue, development income and other economic rights. The income stream of the Group comprises of Advertisement income and other related income for the year.

Both these rights are directly or indirectly linked to traffic on the Delhi Noida Toll Bridge and are broadly subject to similar risks. Advertisement Revenue is fully variable while license fee is fixed to a certain extent. The operating risk in both the cases is similar and the expenses cannot be segregated as the Company does not have separate departments for the management of each activity. The Management Information System also does not capture both activities separately. As both emanate from the same Concession Agreement and together form a part of the Return as specified in the Concession Agreement, the Group does not have different business reporting segments.

Similarly, the Group operates under a single geographical segment.

38 NOIDA has irrevocably granted to NTBCL the exclusive right and authority during the concession period to develop, establish, finance, design, construct, operate, and maintain the Delhi Noida Toll Bridge as an infrastructure facility.

NOIDA has further granted the exclusive right and authority during the concession period in accordance with the terms and conditions of the agreement to:

Enjoy complete and uninterrupted possession and control of the lands identified constituting the Delhi Noida Toll Bridge site.

Own all or any part of the project assets.

Determine, demand, collect, retain and appropriate a Fee from users of the Delhi Noida Toll Bridge and apply the same in order to recover the Total Cost of Project and the Returns thereon.

Restrict the use of the Delhi Noida Toll Bridge by pedestrians, cycle Rickshaws etc from the Delhi Noida Toll Bridge.

Develop, establish, finance, design, construct, operate, maintain and use any facilities to generate development income arising out of the Development Rights that may be granted in accordance with the provisions of the Concession agreement.

Appoint subcontractors or agents on Company's behalf to assist it in fulfilling its obligations under the agreement.

SIGNIFICANT TERMS OF THE ARRANGEMENT THAT MAY AFFECT THE AMOUNT, TIMING AND CERTAINTY OF FUTURE CASH FLOW

Concession Year

The Concession Year shall commence on December 30, 1998 (the Effective Date) and shall extend until the earlier of:

• A year of 30 years from the Effective Date;

The date on which the Concessionaire shall recover the total cost of the project and the returns as determined by the independent auditor and the independent engineer through the demand and collection of fee, the receipt, retention and appropriation of development income and any other method as determined by the parties.

In the event of NTBCL not recovering the total project cost and the returns thereon within the specified time the Concession Year shall be extended by NOIDA for a year of 2 years at a time until the total project cost and the returns thereon have not been recovered by the Concessionaire.

In the past, New Okhla Industrial Development Authority has been in discussion with the Company to consider modifications of a few terms of the Concession Agreement. The Company at it's 9th July 2015 Board meeting, approved the draft proposal (Subject to approval by Noida & Shareholders) for terminating the concession & handing over the bridge on March 31, 2031 & freezing the amount payable as on 31st March 2011.

Return

Return means the designated return on the Total Cost of the project recoverable by the concessionaire from the effective date at the rate of 20 % per annum.

Independent Auditor

An Independent Auditor shall be appointed for the entire term of the Concession Agreement. The Independent Auditor shall approve the format for the maintenance of accounts, the accounting standards and the method of cost accounting to be followed by the Concessionaire. The Independent Auditor shall audit, on a quarterly basis the Concessionaire's accounts.

The Independent Auditor shall also certify the Total Cost of Project outstanding and compute the returns thereon from time to time on a per annum basis.

Fees

The Concession Agreement had determined the Base Fee Rates which have been determined and set according to 1996 figures and shall be revised to determine the initial fee to be applied to the users of the project on the Project Commissioning Date (the "Initial Fee Rate"). The following are the Base Fee Rates:

The Initial Fee Rate shall be determined strictly in accordance with the increase in the CPI, based upon the Base Fee Rates as determined in the Concession Agreement and shall be revised in accordance with the following formula:

IFR = CPI (l)*Base Fee Rate/CPI (B)

Where

IFR = Initial Fee Rate

CPI (I) = Consumer Price Index for the month previous to the month of setting the Initial Fee Rate

CPI ( B) = Consumer Price Index of the month in which this Agreement is entered into

The Fee Rates are to be revised annually by the Fee Review Committee. Fee rates are revised as per the following formula:

RFR = CPI (R) * IFR/CPI (I)

Where

RFR = Revised Fee Rate

CPI ( R) = Consumer Price Index for the month previous to the month in which the revision is taking place

CPI (I) = Consumer Price Index for the month previous to the month of setting the initial fee rate

IFR = Initial Fee Rate

Fee Review Committee

A Fee Review Committee was established which comprised of one representative each of NOIDA, the Concessionaire and a duly qualified person appointed by the representatives of NOIDA and Concessionaire who shall also be the Chairman of the Committee. The Fee Review Committee shall:

• review the need for a revision to existing rates of Fee upon occurrence of unexpected circumstances;

• review the formula for revision of fees Cosf of Project and calculations of return

The total project cost shall be the aggregate of:

• Project Cost

• Major Maintenance Expenses

• Shortfalls in recovery of Returns in a specific financial year

The Project Cost had to be determined on the Project Commissioning date by the Independent Auditor with the assistance of the Independent Engineer.

The amounts available for appropriation by NTBCL for the purpose of recovering the total project cost and the returns thereon shall be calculated at annual intervals from the Effective Date in the following manner:

Gross revenues from Fee collections, income from advertising and development income

Less: O&M expenses

Less: Taxes (excluding any customs or import duties)

Major Maintenance Expenses

'Major Maintenance Expenses' refer to all expenses incurred by NTBCL for any overhaul of, or major maintenance procedure for, the Delhi Noida Toll Bridge or any portion thereof that require significant disassembly or shutdown the Delhi Noida Toll Bridge including those teardowns overhauls, capital improvements and replacements to major component thereof), which are (i) to be conducted upon the passage of the number of million standard axels or (ii) not regularly schedule. The Independent Engineer shall determine the necessity, of conducting the major maintenance and certify that the work has been executed in accordance with specifications.

TRANSFER OF THE PROJECT UPON TERMINATION OF CONCESSION PERIOD

On the transfer date, NTBCL shall transfer and assign the project assets to NOIDA or its nominated agency and shall also deliver to NOIDA on such dates such operating manuals, plans, design drawings and other information as may reasonably be required by NOIDA to enable it to continue the operation of the bridge.

On the transfer date, the bridge shall be in fair condition subject to normal wear and tear having regard for the nature of asset, construction and life of the bridge as determined by the Independent Engineer. NTBCL shall ensure that on the transfer date, the bridge is in the condition so as to operate at the full rated capacity and the surface riding quality of the bridge will have a minimum performance level of 3000 - 3500 mm per Km when measured by bump integrator.

The asset shall be transferred to NOIDA for a sum Re. 1/-. NOIDA shall be responsible for the cost and expenses in connection with the transfer of the asset.

OTHER OBLIGATIONS DURING THE CONTRACT TERM

Major Repairs and Unscheduled Maintenance

NTBCL shall inform the Independent Engineer when the work is necessary and use materials that allow for rapid return to normal service and organise work cruise to minimise disruptions. The Independent Engineer to approve work prior to commencement and after repairs are completed Independent Engineer shall confirm that maintenance/ repairs confirm to the required standards.

Overlay

Based on traffic projections and overlay and design Million Standard Axel (MSA), NTBCL shall indicate, in annual report visa-vis the MSA projections, the point of time at which the pavement shall require an 'overlay'.

Overlay is defined as a strengthening layer which is require over the entire extent of pavement of the main carriageway and cycle track without in any way effecting the safety of structures. This 'Overlay' shall be carried out by NTBCL upon receipt of Independent Engineer approval. The Independent Engineer can also decide an overlay on particular sections based on pavement specifications.

Liability to Third Parties

NTBCL shall during the Concession year use reasonable endeavors to mitigate any liabilities to third parties as is foreseeable arising out of loss or damage to the bridge or the project site.