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Notes to Accounts of Gammon India Ltd.

Mar 31, 2016

(b) Securities for Term Loans and NCD : Rupee Term Loan (RTL) - 1 and FITL thereon -

1) 1st pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.

2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade Receivables and Other Assets of the Company.

Rupee Term Loan (RTL) - 2 and FITL thereon -

1) 1st pari-passu charge on Gammon House.

2) 2nd pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.

3) 2nd pari-passu charge on entire Current Assets, Loans and Advances, Long Term Trade Receivables and Other Assets of the Company.

Rupee Term Loan (RTL) - 3 and FITL thereon -

1) 3rd pari-passu charge over the entire Fixed Assets (movable and immovable) and Current Assets of the Company excluding the Gammon House.

2) 3rd pari-passu charge on the Gammon House.

Working Capital Term Loan (WCTL) -

1) 1st pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.

2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade Receivables and Other Assets of the Company.

Priority Loan -

1) 1st pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.

2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade Receivables and Other Assets of the Company.

Non Convertible Debentures (NCD) and FITL thereon -

1) 1st pari-passu charge by mortgage of Gujarat Property and hypothecation over the pari-passu security with the Non Convertible Debentures.

2) 3rd pari-passu charge over the entire Fixed Assets (movable and immovable) and Current Assets of the Company excluding the Gammon House.

3) 3rd pari-passu charge on the Gammon House.

4) In case of 9.95% NCD of Rs. 50 Crore, being not part of CDR scheme, interest is not converted in to FITL. This redeemable NCD is secured by hypothecation of specific Plant and Machinery with pari-passu charge by mortgage of immovable property in Gujarat.

(c) Funded Interest Term Loan (FITL) -

The interest amount on RTL - 1, RTL - 2, RTL - 3 and NCDs for the initial period of 15 months i.e. from cutoff date till

31st March, 2014 are converted to FITL.

(f) Collateral security pari-passu with all CDR lenders

a) Pledge of entire unencumbered Equity Shares (present and future) of GIL held by Promoters subject to section 19(2) and 19(3) of Banking Regulation Act including pledge of encumbered Equity Shares as and when such shares are released by the respective existing lenders.

b) Personal guarantee of Mr Abhijit Rajan, Chairman and Managing Director.

c) Undertaking to create pledge over the resultant shares of Metropolitan Infrahousing Private Limited (MIPL) after signing the JV agreement with developer.

d) Undertaking to create pledge over shares of Nikhita Estate Developers Private Limited (Promoter group company), as and when they are released in the future.

e) Corporate guarantee provided by Nikhita Estate Developers Private Limited ("Promoter entity")

f) Pledge over the following shares -

23% of Deepmala Infrastructure Private Limited 100% of SEZ Adityapur Limited 24% of Ansaldocaldaie Boilers India Private Limited 100% of Gactel Turnkey Projects Limited

100% of Transrail Lighting Limited (out of which currently only 25% pledged with the CDR Lenders)

(h) For details of continuing defaults as at 31st March, 2016 and 30th September, 2014, Refer Annexure 1.

(i) The Company had pursuant to the Shareholders approval in May, 2015, issued Unsecured Zero Coupon Compulsorily Convertible Debentures ("CCD''s") of upto Rs. 100 Crore to the Promoters against their contribution made to the Company''s Corporate Debt Restructuring ("CDR") package. However no allotment was made, since the in-principle approval for allotment was awaited from BSE Limited On 26th April, 2016, BSE has directed the Company to modify the "relevant date" adopted by the Company for the pricing of the CCD''s and seek shareholders approval afresh. The amount contributed by the Promoters continues to remain as debt in the Company.

(j) Transmission and Distribution (T&D) Business:

The Joint Lender''s Forum ("JLF") meeting convened on 17th November, 2015 and 16th December, 2015 and CDR EG meeting held on 23rd November, 2015 and 22nd January, 2016 approved the adoption of the Strategic Debt Restructuring scheme of the Company which interalia entailed a carve out of Transmission and Distribution (T&D) Business with the entry of strategic investors. Pursuant to the same the Company, with effect from 1st January 2016, through a business transfer agreement, as detailed in discontinuing Note, transferred borrowings aggregating to Rs. 200.13 Crore to Transrail Lighting Limited ("TLL"). The Company also proposes to file with the Hon''ble High Court of Bombay a scheme of arrangement for transfer of the retained T&D facility as detailed in Note 49 where under borrowings aggregating to Rs. 93.21 Crore would be transferred to TLL. Pending approval of the scheme of arrangement the borrowings are continued in the books of the Company.

1. The Company, as part of its restructuring scheme in which it is carving out the EPC and T&D Business into separate entities with residual non-core assets and some claims remaining in the main Company, had during the eighteen month period evaluated its existing claims in respect of on-going, completed and / or terminated contracts with the help of an independent expert in the field of claims and arbitration to assess the likely amount of claims being settled in favour of the Company. The expert had reviewed the claims and had opined that an amount aggregating to Rs. 1,657.22 will be reasonably certain to be settled in favour of the Company.

Based on the above opinion, the Company has during the year recognized claims of an aggregate amount of Rs. 1,343.97 Crore including a further claim of Rs. 300 Crore during the quarter ended 31st March, 2016 excluding amounts recognized earlier of Rs. 313.25 Crore based on management estimates of reasonable realization. These claims have been accounted as unbilled revenue and the management expects 25% of such claims other than on terminated projects to be realized within the operating cycle. Accordingly unbilled revenue has been disclosed as current and non-current in the Balance Sheet. The effects in the Statement of Profit and Loss are dependent upon the percentage of completion of the project.

2. Foreign and Domestic Venture

(a) The Company through its Special Purpose Investment Vehicle holds the following stakes :

- Sofinter S.p.A, Italy

- Franco Tosi Mecannica S.p.A, Italy (FTM)

- Sadelmi S.p.A, Italy

- SAE Power Line S.r.l, Italy

(b) Pursuant to the put option exercised, one of the Subsidiaries of the Company had paid USD 32 Million for acquisition of further 35% stake in Sofinter Group. The transferor has created pledge in favour of the lenders of the transferee company. The process of transferring the ownership in favour of the transferee company is expected to be completed by 31st July, 2016. Considering the proposed holding of 67.5% in Sofinter Group, the order book position, the valuation carried out of the said Sofinter Group by an independent valuer and the current financials of Sofinter, the Management is of the view that no impairment is required in the exposure of the Company towards its combined exposure of Rs. 887.82 Crore in Sofinter Group.

(c) The Company''s funded and non-funded exposure towards Franco Tosi Mecannica S.p.A (FTM) group is Rs. 892.19 Crore (net of provisions already made) Crore as at 31st March, 2016 including Investments and guarantees towards the acquisition loan taken by the SPV. This also includes the corporate guarantee given.

The Commissioner in charge of the Extraordinary Administration of Franco Tosi Meccanica S.p.A. has already concluded the sale of the operating business of FTM to the successful bidder and has commenced the disposal of the non-core assets (i.e. those assets which were not part of the sale of operating business), which includes 60 acres of land in Legnano, Italy. The Commissioner has not started the actual disposal of the property. The valuation pegged by the Commissioner is based on the valuation of land in adjoining premises which is also under administration. However the liabilities to be discharged against the surplus on disposal (net of tax) has not been made available by the Commissioner. Despite these factors the management expects that the surplus available to the equity shareholder will be adequate to cover the exposure of the Company towards FTM and no provision for impairment is accordingly made.

The Commissioner or the said FTM has not released any financials since 31st December, 2011 and therefore no further effects have been taken in respect of the said FTM in these financials.

(d) The Company through its step down subsidiary P. Van Eerd Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding in Sadelmi S.p.A for EUR 7.50 Million, Italy (Sadelmi) with the remaining 50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the economic conditions prevailing in different parts of the world where Sadelmi was present some of the projects under execution encountered serious contractual problems. Sadelmi therefore sought creditors'' protection through a Court in Italy and simultaneously, as part of scheme, applied for transferring the remaining projects and leased all references standing in its name since inception to a new company Busi Power S.r.l wholly held by Busi Group.

The above procedure however has not yet been completed as the decision in the Court is still awaited. The delay is on account of objections raised by some creditors among other reasons.

In view of the uncertainties prevailing in Europe and the delay in the outcome of the Court process in respect of the creditors'' protection sought by M/s Sadelmi in its application in connection therewith, the Company has, on prudent basis, made full provision towards its funded exposures in connection with the Investment in Sadelmi of Rs. 25.72 Crore and has charged the same as an exceptional item. The Company has exposure in respect of Corporate Guarantee for acquisition loan by its SPV.

The Company has made provision as risks and contingencies aggregating to Rs. 77. 54 Crore towards the guarantees issued to the banker of its wholly owned SPV PVAN, in respect of loans taken by the said subsidiary for making investment into Sadelmi, in accordance with AS-29 Provisions, Contingent Liabilities and Contingent Assets considering the net worth and operations of the said Sadelmi.

(e) The exposure of the Branch in SAE Powerlines S.r.l, Italy ("SAE"), a subsidiary of the Company and ATSL BV, Netherlands, the holding company of SAE, towards investments, loans, including guarantees towards the acquisition loan taken by the SPV is Rs. 196.84 Crore. The Branch has made provision for impairment of investments and Loan aggregating to Rs. 62.52 Crore and provision of Rs. 88.29 Crore for risk and contingencies for Corporate Guarantees for acquisition loan of the SPV and thus, the net exposure of the Branch is Rs. 46.03 Crore. The Branch has a further exposure of Rs. 139.48 Crore net of provision of Rs. 65.57 Crore towards receivables due from SAE which are outstanding for a long time. The Company had carried out a valuation of the business of SAE by an independent valuer in September, 2014, who determined an enterprise value of Rs. 71.34 Crore, which however is not updated to cover the present financial position. The Management is of the opinion that considering the order book position and adequate references and strengths in international markets especially the African and European Markets, the provision made by it for impairment of its investment, loan and trade receivable is adequate.

(f) During the year, a further amount of Rs. 18.82 Crore has been debited to the said ACBI on account of the encashment of Bank Guarantee. Considering that the Company has initatited arbitration proceedings and based on legal advice that it has a sound case against the wrongful encashment and therefore no further provision is required against the increased exposure of Rs. 32.61 Crore as on 31st March, 2016.

(g) The accounts of a subsidiary M/s Campo Puma Oriente S.A. have not been audited since December 2012, due to certain disputes with the partner in the project. The exposure of the Company in the said subsidiary is Rs. 411.67 Crore net of provisions made. The Company has received a valuation report for USD 60 Million approximately from an independent merchant banker for its share. Furthermore, the Company is in the process of enhancing its output of oil field from the current level, which is expected to further improve the value. Further the disputes between the partners are expected to be resolved within a short time after which the financial statements will be signed and released. In light of the same the management is confident that there will be no provision required for impairment.

3 ESOP Scheme

The erstwhile Associated Transrail Structures Limited("ATSL"), had instituted an ESOP Scheme during the Financial Year 2006-07 which was approved by the shareholders vide their resolution dated 27th March, 2007. The Board of Directors of ATSL granted 1,06,300 stock options to its employees on 27th March, 2007 pursuant to the ESOP Scheme. Each option entitled an Employee to subscribe to one equity share of ATSL at an exercise price of Rs. 80 per share.

The following options vest in a graded manner over a period of four years and are exercisable during a period of three years from the date of vesting thereof as described hereinafter :-

Options Granted on 27th March, 2007 :

The Intrinsic value was determined by independent valuer by following price to Net Assets Value (NAV) method, The fair value of options has been determined, using the Black-Scholes Option Pricing Model, by independent valuer as on 31st March, 2008.

Under this method, compensation expense, equivalent to the intrinsic value of the options granted, is amortized equally over the vesting period of the option following straight-line method. The intrinsic value is the excess of the value of the underlying stock as determined by the independent valuer over the exercise price at the measurement date, which typically is the grant date.

The fair value of 1,06,300 options, granted on 27th March, 2007 was determined using the Black-Scholes Option Pricing Model with the following assumptions:

NIL (Previous Period NIL) options were exercised by the employees during the year. NIL (Previous Period 8,700) options were lapsed during the year on account of cessation of employment / lapse of exercise period of option. None of the options granted have been forfeited during the year.

All the above options have an exercise price of Rs. 80 per share and have a weighted average remaining contractual life of 4 years.

Pursuant to the amalgamation of Associated Transrail Structures Limited (ATSL) with the Company, the outstanding options of the employees of the erstwhile ATSL outstanding as on 1st April, 2008,have been taken up as an obligation of the Company in accordance with the scheme approved by the Court, Accordingly, the Company has accounted for the grant of 1,06,300 options to such employees at an exercise price of Rs. 80 per share. The Company will issue two Equity Shares against each option in terms of the scheme of amalgamation approved by the Courts.

Since the assets and liabilities of the erstwhile ATSL have been accounted at the book value, the accounting effect in the accounts is continued at the same.

Had compensation cost been determined in accordance with the Fair Value Method described in the Guidance Note, the T&D Business net loss for the year ended 31st March, 2016 as reported would have changed to amounts indicated below

4 In respect of the projects undertaken by the Company

i) The Company in evaluating its jobs has considered an amount of Rs.153.29 Crore arising out of claims for work done on account of cost overruns arising due to client delays, changes of scope, escalation claims, variation orders, deviation in design and other charges recoverable from the client which are pending acceptance or certification by the client or referred the matter to the dispute resolution board / arbitration panel.

ii) In furtherance to the recommendation of the Dispute Resolution Board (DRB) and Arbitration Awards in the Company''s favour, the Company has recognized income to the extent of Rs. 135.75 Crore which is part of Long Term Trade Receivable. The Company contends that such awards have reached finality for the determination of the amounts of such claims and are reasonably confident of recovery of such claims although the client has moved the Court to set aside the awards. Considering the fact that the Company has received favourable awards from the DRB and the Arbitration Tribunal, the management is reasonably certain that the claims will get favourable verdict from the Courts.

iii) Trade Receivables includes Rs. 155.03 Crore in respect of two of its project based on advanced negotiation and discussion with the client and is confident of realising the same, pending the final revision in contract value.

iv) There are disputes in six projects of the Company. The total exposure against these projects is Rs. 355.56 Crore. The Company is pursuing legal recourse / negotiations for addressing the disputes in favour of the Company and is of the opinion that it has a good case in the matter hence does not require any provision considering the claims of the Company against the Clients.

v) The Company, as part of its restructuring scheme in which it is carving out the EPC and T&D Business into separate entities with residual non-core assets and some claims remaining in the main Company, had during the eighteen month period evaluated its existing claims in respect of on-going, completed and / or terminated contracts with the help of an independent expert in the field of claims and arbitration to assess the likely amount of claims being settled in favour of the Company. The expert had reviewed the claims and had opined that an amount aggregating to Rs. 1,657.22 will be reasonably certain to be settled in favour of the Company.

Based on the above opinion, the Company has during the year recognized claims of an aggregate amount of Rs. 1,343.97 Crore including a further claim of Rs. 300 Crore during the quarter ended 31st March, 2016 excluding amounts recognized earlier of Rs. 313.25 Crore based on management estimates of reasonable realization. These claims have been accounted as unbilled revenue and the management expects 25% of such claims other than on terminated projects to be realized within the operating cycle. Accordingly unbilled revenue has been disclosed as current and non-current in the Balance Sheet. The effects in the Statement of Profit and Loss are dependent upon the percentage of completion of the project.

5 The Company''s operating result have been affected in the last few years by various factors including liquidity crunch, unavailability of resources on timely basis, delays in execution of projects, delays in land acquisition, approval of design etc. by client, scarcity in availability of labour and materials, operational issues etc. Company''s overseas operations are characterized due to weak order booking, paucity of working capital and uncertain business environment. This has also resulted in various winding up claims filed against the Company. The Company is exploring several options for overcoming the liquidity crisis. The Group is in the process of development of its land parcel as well as monetizing its overseas investments and to divest some of its businesses, recovery towards final bills, retention money, settlement of non-routine collection including claims, arbitration awards etc. to meet the working capital needs. The Company is also in discussion with client for overcoming bottlenecks in timely executing the existing projects and to increase the order book. The Company is having a good order book in hand as on March 2016 of Rs. 11,000 Crore.

The Company continues to negotiate with vendors for settlement, improved commercial terms and better credit facility and is in process of arranging additional working capital finance to improve short term liquidity position. The Company is evaluating and exploring various courses of action for raising funds for Company''s operations, including options for strategic restructuring.

However due to the continuing stress and the inability of the Promoters to infuse fresh funds into the Company and the continuing losses, The Corporate Debt Restructuring Empowered Group in its meeting held on 23rd November, 2015 has discussed and noted the proposal of the CDR Lenders for invocation of Strategic Debt Restructuring ("SDR") in the Company and carve out of the Civil Engineering, Procurement and Construction and the Transmission and Distribution Businesses with change of management. The "Reference date" for the purpose of the SDR is 17th November, 2015. The lenders have invoked SDR and the requisite majority for approval of the SDR scheme in value and numbers had already been received and the CDR lenders have converted part of their loans and interest by taking a 62.65% stake in the Company up to the period ended 31st March, 2016. The Company has also as part of the SDR formulated a detailed restructuring package, which is detailed in a later paragraph.

Based on various developments including SDR by lenders resulting in lenders having majority stake and restructuring of businesses, the management is of the view that the Company will remain as going concern for future on the basis of existing order book, restructuring proposal, monetization of the various non-core assets, future business potential, pre-qualifications for project bidding and previous track record

6 Strategic Debt Restructuring

The lenders invoked SDR with reference date of 17th November, 2015. CDR EG noted the same in their meeting held on 23rd November, 2015 and approved by Joint Lenders Forum in its meeting held on 23rd November, 2015. As per the SDR proposal lenders can convert their debt into equity up to Rs. 300 Crore. As on date lenders have converted Rs. 272.22 Crore of the debt into equity representing 62.77 % of equity capital.

The Company as part of its revival plan has decided to carve out the Civil EPC and Transmission and Distribution (T&D) Businesses into separate companies through the process of BTA and Scheme of arrangement. This will help in getting new investors in the respective companies

T&D Business :

As part of the plan the Business Transfer Agreement (BTA) and the Court Scheme for transfer of the T&D Business in favour of Transrail Lighting Limited, a wholly owned subsidiary has been finalized. The BTA has been executed in October 2015 and the Court scheme is finalized and is pending approval of the Regulator. The Investor has been identified as Bilav Software Private Limited and the shareholder agreement is already signed with Bilav Software Private Limited for the T&D Businesses wherein they have acquired 75% stake in TLL at a cost of Rs. 2.33 Crore from GIL. They will also invest another Rs. 47.67 Crore approximately in TLL. As part of the carve out proposal of T&D Business Rs. 505 Crore funded and Rs. 3,350 Crore non-funded exposure will be transferred to TLL.

Civil EPC :

Company is in process of transfer its Civil EPC Business to its WOS through BTA and Scheme of arrangement. Company has signed BTA with its WOS. An investor GP Group of Thailand has given proposal to invest Rs. 250 Crore in Civil EPC Business.

Non-Core Assets:

Companies will develop / monetize its investments in India and also outside India in coming years to repay the loans remaining in the Company.

Conversion of Loan in to Equity:

Under SDR the lenders has converted overdue principal and interest of Rs. 272.22 Crore in to equity at Rs. 11.89 per share.

7 Disclosure of Discontinuing Operations as per AS 24

As part of its restructuring of its business in order to create sector focused companies and to invite investments by strategic investors the Company decided to carve out its Transmission and Distribution Business into Transrail Lighting Limited. The Company entered into shareholders agreement with M/s Bilav Software Private Limited to divest 75% of its stake in Transrail Lighting limited. The Restructuring plan contemplated carving out of a portion of business vide a Business Transfer Agreement and the balance portion of the T&D Business by way of a scheme of arrangement of the retained T&D Business in GIL through a Court process. Accordingly the businesses transferred under the BTA and proposed to be transferred under the Court scheme are treated as discontinuing operations.

Similarly, the EPC Business is proposed to be transferred out into a wholly owned subsidiary either through a BTA or a Scheme or a mix of both. The Board of Directors vide its meeting dated 12th February, 2016 have approved the restructuring plan. Attention is invited to note no 37 where the identification of the investor and other terms of the same are detailed. The said EPC Business proposed to be carved out are also included in as discontinuing operations.

The Statements of Profit and Loss , Balance Sheet and Cashflow relating to the discontinuing operations is given in Annexure 3

8 Disclosure under Accounting Standard - 19 "Leases" of the Companies (Accounting Standards) Rule, 2006

The Company has taken various residential / godowns / offices premises (including Furniture and Fittings, if any) under lease and license agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in Statement of Profit and Loss under Rent Expenses.

The Company has taken certain equipment on an operating lease and the future minimum committed lease rentals are given as follows on the basis of current usage -

9 Segment Reporting

The Company is engaged mainly in "Construction and Engineering" segment. During the previous year, the Company has started Real Estate Business which is a different segment of "Real Estate Development" and additionally the Company has revenue from Windmills. Revenue from such activities is not significant and accounts for less than 10% of the total revenue and total assets of the Company. Therefore no disclosure of separate segment reporting as required in terms of Accounting Standard AS -17 "Segment Reporting" is done. The Company also primarily operates under one geographical segment namely India.

10 Disclosure of transactions with Related Parties, as required by Accounting Standard - 18 "Related Party Disclosures" has been set out in a separate Annexure - 2.

11 The current period is from 1st October, 2014 to 31st March, 2016 . The comparative figures for the Previous period are for the period from 1st January, 2014 to 30th September, 2014. The figures for both these periods are therefore not strictly comparable.

12 I n the opinion of the Management, Current Assets and Non-Current Assets other than Fixed Assets and Non-Current Investments have a value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

13 The Company has during the year, with effect from 1st January, 2015 has extended the terms of the supports by way of loans to the overseas Special Purpose Vehicles which hold the Company''s equity investment in overseas subsidiaries and Joint Ventures by treating the loans as long term loan repayable at the end of 5 years. Since these SPV''s are in the nature of non integral operation of the Company, exchange gain / loss on restatement of such loan are carried in the Foreign Exchange Translation Reserves in accordance with AS -11 "The Effects of changes in Foreign Exchange Rates" issued under the Companies (Accounting Standard) Rules, 2006.

14 Balances of Trade Receivables, Trade Payables, Loans and Advances are as per the Books of Accounts are subject to confirmation and reconciliation.

15 Previous period figures are regrouped and rearranged with those of the current period.

16 Details of Rounded Off Amounts

The Financial Statements are represented in Rupees Crore. Those items which were not represented in the financial statement due to rounding off to the nearest Rupees Crore are given below :


Sep 30, 2014

1 Shares reserved under options to be given

NIL (Previous Period 17,400) Equity Shares have been reserved for issue as ESOP. Refer Note No. 34 for details of the ESOP Shares and Scheme.

2 Terms / rights attached to Equity Shares

The Company has only one class of equity shares having a par value of Rs. 2/- each. Each holder of equity share is entitled to one vote per share. The distribution will be in proportion to the number of equity shares held by the shareholders.

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 all 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.

3 Key features of the CDR proposal are as follows :

* Reschedulement of Short Term Loans & Term Loans (RTL) and NCD payable over a period of ten years.

* Repayment of Rupee Term Loans (RTL) after moratorium of 27 months from cut off date being 1 January 2013 in structured quarterly instalments commencing from April 2015.

* Conversion of various irregular / outstanding / devolved financial facilities into Working Capital Term Loan (WCTL).

* Repayment of WCTL after moratorium of 27 Months from cut off date in structured quarterly instalments commencing from April 2015, subject to mandatory prepayment obligation on realisation of proceeds from certain asset sale and capital infusion.

* Restructuring of existing and fresh fund based and non fund based financial facilities, subject to renewal and reassessment every year.

* Interest accrued but not paid on certain financial facilities till March 2014 is converted into Funded Interest Term Loan (FITL).

* Waiver of existing events of defaults, penal interest and charges etc in accordance with MRA.

* Right of Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guidelines and MRA.

* Contribution of Rs. 100 Crore in the Company by promoters, in lieu of bank sacrifice, in the form of Promoters Contribution which can be converted to equity.

4 Securities for Term Loans and NCD :

Rupee Term Loan (RTL) - 1 and FITL thereon -

1) 1st pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.

2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade Receivables and other assets of the Company.

3) For Canara Bank 1st pari-passu charge on land parcel of Metropolitan Infrahousing Private Limited (MIPL) along with their NCD holders.

Rupee Term Loan (RTL) - 2 and FITL thereon -

1) 1st pari-passu charge on Gammon House.

2) 2nd pari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company, including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.

3) 2nd pari-passu charge on entire Current Assets, Loans and Advances, Long Term Trade Receivables and other assets of the Company.

Rupee Term Loan (RTL) - 3 and FITL thereon -

1) 3rd pari-passu charge over the entire Fixed Assets (movable and immovable) and Current Assets of the Company excluding the Gammon House.

2) 3rd pari-passu charge on the Gammon house.

Working Capital Term Loan (WCTL) -

1) 1stpari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company,including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.

2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade Receivables and other assets of the Company.

Priority Loan -

1) 1stpari-passu charge on the entire Fixed Assets (movable and immovable), both present and future of the Company,including the pari-passu security with Non Convertible Debenture but excluding the exclusive security for Non Convertible Debenture and the Gammon House.

2) 2nd pari-passu charge on the Gammon House, entire Current Assets, Loans and Advances, Long Term Trade Receivables and other assets of the Company.

Non Convertible Debentures (NCD) and FITL thereon -

1) 1st pari-passu charge by mortgage of Gujarat Property and hypothecation over the pari-passu security with the Non Convertible Debentures.

2) 3rd pari-passu charge over the entire Fixed Assets (movable and immovable) and Current Assets of the Company excluding the Gammon House.

3) 3rd pari-passu charge on the Gammon house.

(c) Funded Interest Term Loan (FITL) -

The interest amount on RTL - 1, RTL - 2, RTL - 3 and NCDs for the initial period of 15 months i.e. from cut off date till 31 March 2014 will be converted to FITL.

5 Collateral security pari-passu with all CDR lenders

a) Pledge of entire unencumbered equity shares (present and future) of GIL held by Promoters subject to Section 19(2) & 19(3) of Banking Regulation Act including pledge of encumbered equity shares as and when such shares are released by the respective existing lenders.

b) Personal guarantee of Mr Abhijit Rajan, Chairman & Managing Director.

c) Undertaking to create pledge over the resultant shares of Metropolitan Infrahousing Private Limited (MIPL) after signing the JV agreement with developer.

d) Undertaking to create pledge over shares of GACTEL Turnkey Projects Limited (currently pledged to lenders of Gactel), as and when they are released in the future.

e) Pledge over the following shares -

23% of Deepmala Infrastructure Private Limited 100% of SEZ AdityapurLimited 24% of Ansaldocaldaie Boilers India Private Limited 100% of Transrail Lighting Limited

6 Remittance of Dividend in Foreign Currency

During the period the Company has not remitted any amount of dividend in foreign currency.

7 Foreign Venture

(a) The Company through its Special Purpose Investment Vehicle holds the following stakes :

* Franco Tosi Mecannica S.p.A, Italy (FTM)

* Sofinter S.p.A, Italy

* Sadelmi S.p.A, Italy

* SAE Power Line S.r.l, Italy

(b) The Company''s exposure towards investment in Sofinter Group is Rs. 563.62 Crore including investments, loans and guarantees towards the acquisition loan taken by the SPV, M/s Gammon International B.V. The Company has carried out valuation of Sofinter Group through an independent valuer considering business plan of all companies within the Sofinter Group, order book position and economic environment where the Company is operating. The carrying value as at September 2014 is higher compared to the valuation by Rs.159.49 Crore. The management is of the view that valuation carried out is based on current European scenario whereas growth option to various sub-continents in future cannot be ruled out. The management asserts that the valuation does not factor future growth when the world economies including those in Russia/CIS and USA improve and therefore considering the long term commitment of the management and its business plan, the management does not expect any provision towards diminution in the value of investment in Sofinter.

The Company had in 2011, issued Guarantees, including Corporate Guarantees, for an amount of USD 35.00 million on behalf of Gammon Holdings Mauritius Limited (GHML), a wholly owned subsidiary, to Guarantee its contractual commitment under a Put Option Agreement with BT Global Investors Limited (BT) who was a holder of shares and convertible bonds (the Sofinter Securities) in Sofinter S.p.A. The Put was to be exercised within February 2014 and on all the Sofinter Securities. Consequent upon the conversion of the bonds into additional shares in Sofinter on 18 December 2013, BT has become the holder of 35% shares in Sofinter, thereby diluting the holding of Gammon International B.V. in Sofinter to 32.5%. Prior to the date of this conversion, BT also exercised its Put Option on GHML for all the Sofinter securities, for an amount of USD 32.00 Million (Rs.197.16 Crore). The Put Option was duly honored by GHML by drawing on debt raised from Export Import Bank of India Limited (Exim) for USD 18.00 Million (Rs.110.90 Crore) and balance against the funded exposure by the parent Company for Rs. 93.99 Crore. Pending transfer of the shares by BT in favour of GHML, since certain pre-conditions in the bye-laws of Sofinter and the Shareholders Agreement are in the process of being fulfilled, without which the transfer cannot be recorded by Sofinter, BT has committed to pledge the Shares to Exim on behalf of GHML. Further pending the transfer of 35%, Sofinter continues to be an ''Associate Company''

Considering the valuation report issued by external agency and pending transfer of shares from BT Global increasing the stake to 67.5%, the carrying value of investment in Sofinter group will not require any impairment.

(c) i) The Board of Franco Tosi Mecanica S.p.A (FTM) filed on May 30th with the court of Milan (and with the Companies Registry)

a "preliminary" request for admission to the procedure of pre-insolvency composition agreement with creditors and restructuring debts ("concordato preventivo"), under Articles 161 Clause 6, Italian Government Publication dated 10 March 1942 No 267 - further amended in September 2012 in light of acute financial stress being faced by the Company due to several extraneous reasons.

The said application was admitted by the Court on 7 June 2013 and the court soon thereafter appointed a Judicial Commissioner to evaluate the possibility of FTM continuing its operations and, if this was established, to set out a procedure to continue and manage the Company for a period of at least two years. On 31 July 2013, the presiding Judge of the Court of Milan having received confirmation of the possibility of continuity of FTM called for bids for the lease of the business of FTM. Four bidders have submitted compliant bids for the lease.

However, instead of finalizing the lease, the commissioner announced a revised procedure by which, instead of lease of the business interested bidders will have to place an offer for the outright purchase of the operational business of FTM. One of the pre-conditions of the bidding offer is for the bidders to takeover and substitute all the bank guarantees issued by FTM in favour of its clients of its ongoing projects. The date of bid submission was fixed for 7 October 2014. Only two bids have been received by the commissioner, who after evaluation has concluded that both bids were defective. Accordingly, a fresh bid is being called to encourage large participation and the new date of submission of bid is 22 December 2014. The entire procedure is expected to be completed within 60 days thereafter.

The continuous delay in final closure has put the ongoing projects of Franco Tosi in Congo, Nicaragua and Bolivia at risk of cancellation with consequences thereof, unless immediate steps are taken to scale up the execution with intent to meet the existing project schedules.

However in light of the ongoing procedure the commissioner has not released any financial statements of the Company to date and it is expected that this will not be released until the entire process is complete.

ii) The Company''s exposure towards Franco Tosi Mecannica S.p.A group is Rs.1162.87 Crore (net of provisions and credit balances in foreign exchange translation reserve) which includes the loans and investments of Rs. 268.06 Crore and exposure of corporate guarantee towards the borrowings made by the overseas SPV through which the step down subsidiary is held of Rs. 302.94 Crore. Further there are guarantee exposures towards the non-fund based guarantees given to the projects of the said subsidiary of Rs. 591.87 Crore outstanding as at September 2014. The application for a pre-insolvency procedure filed by FTM was admitted by the court of Milan on 7 June 2013 after having received confirmation of the possibility of continuity of the Company, by calling for bids for the lease of its business. The successful bidder for the lease was foreseen to be finalized by early December 2013. However the commissioner has revised the procedure by which, instead of lease of a business the bidder will have to place an offer for outright sale of operational business to prospective bidders. The date of bid submission was to finalized as December 2014, however the same is delayed and not yet finalised. In light of the ongoing procedure no financial statements of the Company have been released to date and it is expected that this will not be released until the entire process is complete.

iii) During the period the clients of the said FTM have encashed the bank guarantees to a total amount of Rs.170.80 Crore (Euro 21.84 Million). The guarantees encashed includes an amount of (Euro 17.80 Million) Rs. 139.21 Crore relating to a project in Nicaragua of which, based on the agreement with the bankers and the client, an amount of Euro 12.00 Million would be reinstated by way of release of the amounts from the client to the bankers and hence the net exposure for Nicaragua would remain at Euro 5.80 Million for which the Company is negotiating to cancel the demand, for the remaining Euro 4.04 Million (Rs. 31.59 Crore) the Company has made a provision against the possible liability arising out of the said encashment to the Company.

(d) The Company through its step down subsidiary P. Van Eerd Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding in Sadelmi S.p.A for Euro 7.50 Million, Italy (Sadelmi) with the remaining 50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the economic conditions prevailing in different parts of the world where Sadelmi was present some of the projects under execution encountered serious contractual problems. Sadelmi therefore sought creditors'' protection through a Court in Italy and simultaneously, as part of scheme, applied for transferring the remaining projects and leased all references standing in its name since inception to a new Company Busi Power S.r.l wholly held by Busi Group.

The above procedure however has not yet been completed as the decision in the Court is still awaited. The delay is on account of objections raised by some creditors among other reasons.

In view of the uncertainties prevailing in Europe and the delay in the outcome of the Court process in respect of the creditors'' protection sought by M/s Sadelmi in its application in connection therewith, the Company has, on prudent basis, made full provision towards its funded exposures in connection with the Investment in Sadelmi of Rs. 25.72 Crore and has charged the same as an exceptional item. The Company has exposure in respect of Corporate Guarantee for acquisition loan by its SPV.

The Company has made provision as risks and contingencies of Rs. 69.46 Crore towards the guarantees issued to the banker of its wholly owned SPV PVAN, in respect of loans taken by the said subsidiary for making investment into Sadelmi, in accordance with AS-29 Provisions, Contingent Liabilities and Contingent Assets considering the net worth and operations of the said Sadelmi.

(e) The Auditors of M/s SAE Powerlines S.r.l, Italy (SAE), a subsidiary of the Company have expressed their inability to opine on the financial statements in view of the said SAE''s ability to operate as a going concern being at risk and the directors of the said SAE have highlighted the liquidity crisis. The total exposure of the Company in SAE and ATSL Netherlands B.V., the holding Company of SAE towards investments including guarantees towards the acquisition loan taken by SPV is Rs. 328.06 Crore. The Company has made provision for impairment of investments and loan of Rs. 110.45 Crore and provision for Rs. 88.29 Crore for risk and contingencies for corporate guarantees for acquisition loan of the SPV and the net exposure of the Company is Rs. 129.32 Crore. The management is of the opinion that considering the order book position and adequate references and strengths in international markets the provision made by it for impairment of its investment, loans and trade receivable is adequate notwithstanding the valuation carried out by an independent valuer for bankers specifying the value Rs. 72.76 Crore.

(f) Considering the losses in one of its subsidiary M/s Ansaldocaldaie Boilers India Private Limited (ACBI) of Rs. 37.15 Crore, the Company has carried out an impairment test of its investments in ACBI. On the basis of the impairment test carried out during the previous the Management has made full provision towards the impairment of its investment in ACBI of Rs. 37.15 Crore.

(g) In respect of outstanding balance of one the subsidiary, the accounts of the said subsidiary for the period up to December 2013 and later have not been finalized and therefore the balance outstanding of Rs. 29.24 Crore has not been confirmed and is subject to reconciliation thereof.

8 ESOP Scheme

Pursuant to the amalgamation of ATSL with the Company, the outstanding options of the employees of the erstwhile ATSL outstanding as on 1 April 2008 have been taken up as an obligation by the Company in accordance with the Scheme approved by the court. Accordingly the Company has accounted for the grant of 1,06,300 options to such employees at an exercise prize of Rs. 80 per share. The Company will issue two equity shares against each option in terms of the scheme of amalgamation approved by the Courts.

The options were granted by the erstwhile ATSL on 27 March 2007. The options vest in a graded manner over the period of four years and are exercisable during a period of three years from the date of vesting thereof.

Since the assets and liabilities of the erstwhile ATSL has been accounted at the book value, the accounting effect in the accounts are continued at the same value.

The fair value of the option however has been computed under the Black Scholes Method considering the data of the Company as on the date of grant of option for the purpose of disclosure as required under Guidance Note on Employee Share Based Payments detailed hereunder.

9 In respect of the projects undertaken by the Company -

i) The Company in evaluating its jobs has considered an amount of Rs. 451.56 Crore arising out of claims for work done on account of cost overruns arising due to client delays, changes of scope, escalation claims, variation orders, deviation in design and other charges recoverable from the client which are pending acceptance or certification by the client or referred the matter to the dispute resolution board / arbitration panel.

ii) In furtherance to the recommendation of the Dispute Resolution Board (DRB) and Arbitration Awards in the Company''s favour, the Company has recognized income to the extent of Rs.167.23 Crore which is part of Long Term Trade Receivable. The Company contends that such awards have reached finality for the determination of the amounts of such claims and are reasonably confident of recovery of such claims although the client has moved the court to set aside the awards. Considering the fact that the Company has received favourable awards from the DRB and the Arbitration Tribunal, the management is reasonably certain that the claims will get favourable verdict from the courts.

iii) Trade Receivables includes Rs.123.80 Crore in respect of two of its project based on advanced negotiation and discussion with the client and is confident of realising the same, pending the final revision in contract value.

10 The Company''s CDR package was approved by the CDR EG in its meeting held on 24 June 2013 and communicated to the Company vide its letter of approval dated 29 June 2013. The Company executed the Master Restructuring Agreement (MRA) with the CDR lenders on 24 September 2013. Substantial securities have been created in favour of the CDR Lenders.

Based on robust order in hand of Rs.12800.00 Crore and additional order inflow based on optimistic factors towards growth in infrastructure industry in India, the management is exploring various options to overcome the liquidity crunch such as sale of non- core and idle assets, pursuing rigorous austerity measure across all levels, downsizing its staff and actively exploring partnerships for its real estate projects. Company is also pursuing aggressively to realise non routine collection including claims and arbitration awards.

After detailed evaluation of current situation, annual operating plan, expected cash flow and implementation of CDR package towards continuous support to the Company by bankers, the management is confident about continuation of operations of the Company. In view of this assessment by the management the going concern assumption is appropriate.

11 Contingent Liability ( Rs. in Crore)

Particulars 30 Sep 2014 31 Dec 2013

a) Liability on contracts remaining to be executed on Capital Account 23.89 6.68

b) Counter Guarantees given to Bankers for Guarantees given by them and Corporate Guarantees, on behalf of 4,517.43 4,670.91 Subsidiary, erstwhile Subsidiary, Associate Companies

c) Corporate Guarantees and Counter Guarantees given to Bankers towards Company''s share in the Joint Ventures 89.22 99.92 for Guarantees given by them to the Joint Venture Project Clients

d) Disputed Sales Tax Liability for which the Company has gone into appeal 113.26 90.57

e) Claims against the Company not acknowledged as debts 220.73 126.39

f) Disputed Excise Duty Liability 0.02 0.05

g) Disputed Service Tax Liability 23.49 31.81

h) Outstanding Letters of Credit Pending Acceptance 164.77 144.16

i) On Partly Paid Shares (Refer Note 47(iii)) - -

j) In respect of Income Tax Matters of Company and its Joint Ventures 364.09 185.09

k) Commitment towards capital contribution in subsidiary under contractual obligation 47.36 47.36

l) Disputed stamp duty liability for assets acquired during amalgamation with erstwhile Associated Transrail Structures Limited 4.93 4.93

m) Right to recompense in favour of CDR Lenders in accordance with the terms of MRA 504.96 504.96

n) There is a disputed demand of UCO Bank pending since 1986, of USD 436251 i.e. Rs. 1.72 Crore. Against this, UCO Bank has unilaterally adjusted the Company''s Fixed Deposit of USD 30584 i.e. Rs. 0.12 Crore, which adjustment has not been accepted by the Company.

o) Counter Claims in arbitration matters referred by the Company - liability unascertainable.

p) The Disputed Service Tax Liability disclosed above is after considering legal advice on the probability of the liability materialising being remote.

12 Segment Reporting

The Company is engaged mainly in "Construction and Engineering" segment. During the previous years, the Company has started Real Estate Business which is a different segment of "Real Estate Development" and additionally the Company has revenue from Windmills. Revenue from such activities is not significant and accounts for less than 10% of the total revenue and total assets of the Company. Therefore no disclosure of separate segment reporting as required in terms of Accounting Standard AS -17 "Segment Reporting" is done. The Company also primarily operates under one geographical segment namely India.

13 The balance with The Freyssinet Prestressed Concrete Company Limited is as per books of accounts and subject to reconciliation.

14 Disclosure of transactions with Related Parties, as required by Accounting Standard - 18 "Related Party Disclosures" has been set out in a separate Annexure - 2.

15 The current period is from 1 January 2014 to 30 September 2014. The comparative figures for the previous period are for the period from 1 April 2013 to 31 December 2013. The figures for both these periods are therefore not strictly comparable.

16 Previous period figures are regrouped and rearranged with those of the current period.


Dec 31, 2013

1. Foreign Venture

(a) The Company through its Special Purpose Investment Vehicle holds the following stakes :

-Franco Tosi Mecannica S.p.A, Italy (FTM)

-Sofinter S.p.A, Italy

-Sadelmi S.p.A, Italy

-SAE Power Line S.r.l, Italy

(b) The Company''s exposure towards investment in Sofinter group is Rs. 560.77 Crore including Investments and guarantees towards the acquisition loan taken by the SPV The Company has carried out valuation of Sofinter group through an independent valuer considering business plan of all companies within the Sofinter group, order book position and economic environment where the Company is operating. The carrying value is higher compare to the valuation by Rs. 132.59 Crore. The management is of the view that valuation carried out is based on current European scenario whereas growth option to various sub-continents in future cannot be ruled out. The management asserts that the valuation does not factor future growth when the world economies including those in South East Asia and India improve and therefore considering the long-term commitment of the management and its business plan, the management does not expect any provision towards diminution in the value of Investment in Sofinter. The management is of the view that the diminution in the value being the difference in the carrying value of investment over the valuation carried out by the external valuer is temporary in nature and does not require provisioning. Hence, based on valuation report and management perception for future scenario, the carrying value of investment in this group does not require any impairment.

(c) The Board of FTM has approved on 29 May 2013, to go in for a procedure permitted under recently notified Italian laws to minimize the risks attributed to the Company''s legacy statutory and other debts, while at the same time seeking to ensure the timely execution of ongoing and future projects by optimizing operational cash flows. This involves restructuring the Company with approval of the court. Post restructuring, the operations of the Company are for seen to significantly turn around and bring it back to profitability.

The said application was admitted by the Court on 7 June 2013 and the court soon thereafter appointed a Judicial Commissioner to evaluate the possibility of FTM continuing its operations and, if this was established, to set out a procedure to continue and manage the Company for a period of at least two years.

In July 2013, court received the confirmation of the possibility of continuity of FTM from the Judicial Commissioner authorized him, in agreement with FTM to call for bids for the lease of the business for two years, to be followed by a sale. Four bidders have submitted compliant bids for the lease. The initial date for identifying and closing the transaction with the successful lessee was early September 2013; further postponed to October 2013. In October 2013, Court has requested Ministry to directly handle this matter. The ministry has appointed committee of 3 people, who will be meeting during end of March 2014 to take a decision on bids.

In light of the on-going procedure, the Commissioner has not released any financial statements or financial information relating to the operations of FTM for 2013 and it is expected that this will not be released until the entire process is complete.

The continuous shifting of dates thereby delaying the finalization of the lease is affecting the ongoing projects of FTM. In few cases corporate guarantee of Gammon India Limited were invoked for amount of Euro 2.20 Million. This amount is fully provided in the books of Gammon India Limited and shown under provision for risks and contingencies. There is delay in other projects as well due to the slow pace of execution for reasons mentioned above and slippage in completion dates, these projects are also at high risk of cancellation with attendant consequences thereof in respect of the Bank Guarantees.

The Company''s exposure in FTM (Net of provisions made and credit balance in Foreign Exchange Translation Reserve) is Rs. 570.42 Crore including corporate guarantee given for acquisition loan taken by its SPV.

Management is of the view that due to this restructuring there will be no impairment of its investment in the Company. Management is also hopeful that notwithstanding the difficulties and risks, these Projects will be completed with some delays but without contractual consequences. Management is in an advance stage of negotiations with intended buyer for sale of its stake in the Company, given its large intellectual property, references etc.

(d) The Company through its step down Subsidiary P. Van Eerd Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding in Sadelmi S.p.A for Euro 7.50 Million, Italy (Sadelmi) with the remaining 50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the economic conditions prevailing in different parts of the world where Sadelmi was present some of the projects under execution encountered serious contractual problems. Sadelmi therefore sought creditors'' protection through a Court in Italy and simultaneously, as part of scheme, applied for transferring the remaining projects and leased all references standing in its name since inception to a new Company Busi Power S.r.l wholly held by Busi Group.

The above procedure however has not yet been completed as the decision in the Court is still awaited. The delay is on account of objections raised by some creditors among other reasons.

In view of the uncertainties prevailing in Europe and the delay in the outcome of the Court process in respect of the creditors'' protection sought by M/s Sadelmi in its application in connection therewith, the Company has, on prudent basis, made full provision towards its funded exposures in connection with the Investment in Sadelmi of Rs. 25.72 Crore and has charged the same as an exceptional item. The Company has exposure in respect of Corporate Guarantee for acquisition loan by its SPV.

The Company has made provision as risks and contingencies of Rs. 69.46 Crore towards the guarantees issued to the banker of its wholly owned SPV PVAN, in respect of loans taken by the said Subsidiary for making investment into Sadelmi, in accordance with AS-29 "Provisions, Contingent liabilities and Contingent Assets" considering the net worth and operations of the said Sadelmi.

(e) The accounts of M/s SAE Power Line S.r.l (SAE), a step down Subsidiary, of the Company are not audited and are as per management prepared unaudited accounts. The Company''s exposure towards investments in SAE is Rs. 318.74 Crore including investments and guarantees towards the acquisition Loan taken by the SPV. On the basis of offer received for this business from intended buyer, the management is of the view that carrying value of investment in this business needs to be impaired considering offer price as based valuation of business. Considering the offer price, the Company has provided for Impairment of investments, loans of Rs. 110.45 Crore and provision towards risk and contingencies of Rs. 88.29 Crore towards the guarantee given for the acquisition loan taken by SPV.

(f) Considering the losses in one of its Subsidiary M/s Ansaldocaldaie Boilers India Private Limited (ACBI) of Rs. 37.15 Crore, the Company has carried out an impairment test of its investments in ACBI. On the basis of the impairment test carried out the Management has made full provision towards the impairment of its investment in ACBI of Rs. 37.15 Crore.

2. ESOP Scheme

Pursuant to the amalgamation of ATSL with the Company, the outstanding options of the employees of the erstwhile ATSL outstanding as on 1 April 2008 have been taken up as an obligation by the Company in accordance with the Scheme approved by the court. Accordingly the Company has accounted for the grant of 1,06,300 options to such employees at an exercise prize of Rs. 80 per share. The Company will issue two equity shares against each option in terms of the scheme of amalgamation approved by the Courts.

The options were granted by the erstwhile ATSL on 27 March 2007. The options vest in a graded manner over the period of four years and are exercisable during a period of three years from the date of vesting thereof.

Since the assets and liabilities of the erstwhile ATSL has been accounted at the book value, the accounting effect in the accounts are continued at the same value.

The fair value of the option however has been computed under the Black Scholes Method considering the data of the Company as on the date of grant of option for the purpose of disclosure as required under Guidance note on Employee share based payments detailed hereunder.

During the year NIL (Previous Year NIL) options were exercised by the employees against which NIL equity shares (Previous Year NIL) were allotted and NIL (Previous Year 13,090) options were lapsed during the year on account of cessation of employment. None of the 8,700 options outstanding have been forfeited during the year.

3. The Company''s CDR package was approved by the CDR EG in its meeting held on 24 June 2013 and communicated to the Company vide its letter of approval dated 29 June 2013. The Company executed the Master Restructuring Agreement (MRA) with the CDR lenders on 24 September 2013. Substantial securities have been created in favour of the CDR Lenders.

Considering the approval of the CDR package and the availability of Priority Loans under the package, the Management is confident of meeting its projections made to the lenders. The Company has received further order during the period of Rs. 4,126 Crore, it is exploring sale of non-core assets, pursuing rigorous austerity measure across all levels, downsizing its staff and actively exploring partnerships for its real estate projects. In view thereof, although there are cash losses of Rs. 311.76 Crore during the period, the Management is confident that the going concern assumption is appropriate.

4. Disclosure under Accounting Standard - 19 "Leases" of the Companies (Accounting Standards) Rule, 2006

The Company has taken various residential / godowns / offices premises (including Furniture and Fittings if any) under lease and license agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in Statement of Profit and Loss Account under Rent, Rates and Taxes.

The Company has taken certain equipment on an operating lease and the future minimum committed lease rentals are given as follows on the basis of current usage-

5. Contingent Liability

(Rs. in Crore)

Particulars As at 31 Dec 2013 As at 31 Mar 2013 a Liability on contracts remaining to be executed on Capital Accounts 6.68 18.27

b Counter Guarantees given to Bankers for Guarantees given by them and Corporate 4,670.91 4,859.44 Guarantees, on behalf of Subsidiary, erstwhile Subsidiary, Associate Companies

c Corporate Guarantees and Counter Guarantees given to Bankers towards Company''s 99.92 105.08 share in the Joint Ventures for guarantees given by them to the Joint Venture Project Clients

d Disputed Sales Tax Liability for which the Company has gone into Appeal 90.57 43.45

e Claims against the Company not acknowledged as debts 126.39 68.34

f Disputed Excise Duty Liability 0.05 0.05

g Disputed Service Tax Liability 31.81 53.44

h Against bill discounting - 7.68

i Outstanding Letters of Credit Pending Acceptance 144.16 459.56

j On partly paid shares (Refer Note 46(iii)) - -

6. Segment Reporting

The Company is engaged mainly in "Construction and Engineering" segment. During the year, the Company has started Real Estate Business which is a different segment of "Real Estate Development" and additionally the Company has revenue from Windmills. Revenue from such activities is not significant and accounts for less than 10% of the total revenue and total assets of the Company. Therefore no disclosure of separate segment reporting as required in terms of Accounting Standard AS -17 - ''Segment Reporting'' is done. The Company also primarily operates under one geographical segment namely India.

7. The balance with The Freyssinet Prestressed Concrete Company Limited is as per books of accounts and subject to reconciliation.

8. Joint Venture and Operations in Oman

The Company has during the previous year suspended its operations at Oman JV and its branch office and has provided towards all receivables and assets in connection therewith. The Company has also suspended recognition of the results of the Joint Venture in its financials and does not expect any liabilities in connection therewith.

9. Disclosure of transactions with Related Parties, as required by Accounting Standard -18 ''Related Party Disclosures'' has been set out in a separate Annexure - 2.

8. In terms of the decision of the Board of Directors in their meeting held on 18 February 2014 and as noted by the CDR lenders, the Company has decided to close its financial year as at 31 December 2013. Accordingly these financial statements are for a period of 9 months from 1 April 2013 to 31 December 2013 and are not comparable with the figures for the previous year of 12 months.

9. Previous year figures are regrouped and rearranged with those of the current period.


Mar 31, 2013

1 Diminution in the Value of Investments

(a) The Company through its Special Purpose Investment Vehicle holds the following stakes :

- Franco Tosi Mecannica S.p.A., Italy (FTM)

- Sofi nter S.p.A., Italy

- Sadelmi S.p.A., Italy

- SAE S.r.l., Italy

(b) The Company has carried out an impairment test of its investments in Sofi nter and SAE Italy. Considering the business plans of these entities and the results of the tests and the fact that all these entities have an healthy order book positions and adequate references in international markets notwithstanding the turbulent market conditions in Europe, the management is of the view that there is no impairment of its investments in these companies.

(c) The Company through its step down subsidiary P. Van Eerd Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding in Sadelmi S.p.A for Euro 7.5 million., Italy (Sadelmi) with the remaining 50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the economic conditions prevailing in different parts of the world where Sadelmi was present some of the projects under execution encountered serious contractual problems. Sadelmi therefore sought creditors'' protection through a Court in Italy and simultaneously, as part of scheme, applied for transferring the remaining projects and leased all references standing in its name since inception to a new Company Busi Power S.r.l. wholly held by Busi Group.

The above procedure however has not yet been completed as the decision in the Court is still awaited. The delay is on account of objections raised by some creditors among other reasons.

In view of the uncertainties prevailing in Europe and the delay in the outcome of the Court process in respect of the creditors'' protection sought by M/s Sadelmi in its application in connection therewith, the Company has, on prudent basis, made full provision towards its funded exposures in connection with the Investment in Sadelmi of Rs. 25.72 Crore and has charged the same as an exceptional item. The Company has exposure of Rs. 64.78 Crore in respect of Corporate Guarantee towards which it will make provisions as and when the same translates to funded exposures

(d) The Board of FTM has approved on 29 May 2013, to go in for a procedure permitted under recently notifi ed Italian laws to minimize the risks attributed to the Company''s legacy statutory and other debts, while at the same time seeking to ensure the timely execution of ongoing and future projects by optimizing operational cash fl ows. This involves restructuring the Company with approval of the court and will be carried out within a time frame of between 60 days to 120 days. Post restructuring, the operations of the Company are forseen to signifi cantly turn around and bring it back to profi tability. Management is of the view that due to this restructuring there will be no impairment of its investment in the Company. However on a prudent basis the Company has provided as impairment of ~ Rs. 69.54 Crore (Euro 10 Mn) towards its exposure to Gammon Holdings B.V. holding Company of FTM.

(e) Considering the losses in one of its subsidiary M/s Ansaldo Caldaie Boilers India Private Limited (ACBI), the Company has carried out an impairment test of its investments in ACBI. Considering the business plans of the entity as approved by the board of ACBI and the results of the tests and the fact that the Company is in the process of executing certain jobs to be received from M/s Ansaldo Caldaie S.p.A and the jobs to be secured by it and adequate references in that context, the management is of the view that there is no permanent dimunition in the value of its investments in the Company.

2 ESOP Scheme

Pursuant to the amalgamation of ATSL with the Company, the outstanding options of the employees of the erstwhile ATSL outstanding as on 1st April 2008 have been taken up as an obligation by the Company in accordance with the Scheme approved by the court. Accordingly the Company has accounted for the grant of 1,06,300 options to such employees at an exercise prize of Rs. 80 per share. The Company will issue two equity shares against each option in terms of the scheme of amalgamation approved by the Courts.

The options were granted by the erstwhile ATSL on 27th March 2007. The options vest in a graded manner over the period of four years and are exercisable during a period of three years from the date of vesting thereof.

Since the assets and liabilities of the erstwhile ATSL has been accounted at the book value, the accounting effect in the accounts are continued at the same value.

The fair value of the option however has been computed under the Black Scholes method considering the data of the Company as on the date of grant of option for the purpose of disclosure as required under Guidance note on Employee share based payments detailed hereunder.

3 The board of directors in its meeting had decided to approach the banks through the corporate debt restructuring (CDR) process for restructuring of the Company''s debt. The CDR empowered group in its meeting held on 25th March, 2013 has admitted the Company''s proposal under the CDR which is under consideration.

4 Segment Reporting

The Company is engaged mainly in ''Construction and Engineering'' segment. During the year, the Company has started Real Estate Business which is a different segment of ''Real Estate Development'' and additionally the Company has revenue from Windmills. Revenue from such activities is not signifi cant and accounts for less than 10% of the total revenue and total assets of the Company. Therefore no disclosure of separate segment reporting as required in terms of Accounting Standard AS -17 is done. The Company also primarily operates under one geographical segment namely India.

5 Joint Venture and operations in Oman

The Company has during the year suspended its operations at Oman JV and its branch offi ce and has provided towards all receivables and assets in connection therewith. The Company has also suspended recognition of the results of the Joint Venture in its fi nancials and does not expect any liabilities in connection therewith.

6 Disclosure of transactions with Related Parties, as required by Accounting Standard - 18 ''Related Party Disclosures has been set out in a separate Annexure - 2.

7 Previous year fi gures are regrouped and rearranged with those of the current year to make them comparable.


Mar 31, 2012

(a) Shares reserved under options to be given

43,580 (Previous Year 92,466) Equity shares have been reserved for issue as ESOP. Refer Note No. 33 for details of the ESOP Shares and Scheme.

(b) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 2/- each. Each holder of equity share is entitled to one vote per share. The distribution will be in proportion to the number of equity shares held by the shareholders.

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 all 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.

(a) The General Reserve is created to comply with the Companies (Transfer of Profit and Reserve rules 1975) and is bound by the rules in connection therewith.

(b) The foreign Currency Translation Reserve is created in terms of Accounting Standard 11 "The effect of changes in foreign exchange rates" issued under the Companies Accounting Standard Rules 2006.

(c) During the year an amount of Rs. 16.85 Crore (Previous YearRs.13.33 Crore) has been transferred from Foreign Currency Translation Reserve to the Statement of Profit and Loss on retirement of certain portion of the long term loans from the subsidiaries.

(d) The Special Contingency Reserve has been created by the Company to meet any possible contractual losses / liabilities / claims following the principles of conservatism and prudence.

(e) Dividend received from own investment held through Gammon Trust is adjusted under Surplus Rs. 0.23 Crore (Previous Year Rs. 0.58 Crore).

Note :

(a) Employer's contribution includes payments made by the Company directly to its past employees.

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

(c) The Company's Gratuity fund is managed by Life Insurance Corporation of India. The plan assets under the fund are deposited under approved securities.

(d) The Company's Leave Encashment liability is entirely unfunded.

(i) Unpaid dividend includes Rs. 0.17 Crore (Previous Year Rs. 0.14 Crore) and Unpaid matured deposits includes interest accrued and due Rs. 0.01 Crore (Previous YearRs. 0.05 Crore) towards interest on fixed deposit to be transferred to the Investor Education & Protection Fund.

(ii) The provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, have been implemented at the work sites where code numbers have been allotted. In respect of the remaining work sites necessary applications have been made for allotment of code numbers. However, a provision of Rs. 0.25 Crore is available under other payables to cover any liability arising there from.

NOTES :

1) Freehold Property includes cost of Freehold Land Rs. 123.50 Crore including the revaluation portion (Previous Year Rs. 123.50 Crore).

2) Leasehold Land is at cost less amount written off.

3) The Company has once again revalued on 31st March, 2007 all its Freehold Property, most of which were revalued earlier on 31st March, 1999 by Approved valuers.

The consequent increase in the value of Fixed Assets pursuant to the second revalutaion amounted to Rs. 186.89 Crore and has been credited to the Revaluation Reserve A/c.

4) Depreciation for the Year amounts to Rs. 104.03 Crore (Previous Year Rs. 94.84 Crore) from which has been deducted a sum ofRs. 3.13 Crore (Previous YearRs. 3.13 Crore) being the depraciation in respect of Revaluation of Fixed Assets which has been drawn from the Revaluation Reserve.

5) Exchange Valuation difference in respect of Oman Fixed Assets Rs. Nil (Previous Year Rs. 0.22 Crore) being transferred to Foreign Currency Translation reserve.

6) Borrowing cost capitalised to Capital Work In Progress is Rs. 2.41 Crore (Previous Year -2.61 Crore)

NOTE :

(a) Pursuant to the scheme of amalgamation, the Company owns 58,04,620 equity shares of itself through Gammon India Trust which was allotted the shares against the Company's holding in erstwhile ATSL in terms of the order of the Hon'ble High Court of Mumbai and Gujarat.

(b) The details of Beneficial & Contractual interest acquired and transferred in favor of it's subsidiary M/s Gammon Infrastructure Projects Limited is detailed herein below -

The Company with effect from 1st, Jan 2010 has modified the terms of the supports by way of loans to the overseas Special Purpose Vehicles which hold the Company's equity investment in overseas subsidiaries and Joint Ventures by treating the loans as long term loan repayable at the end of 5 years. Since these SPV's are in the nature of non integral operation of the Company, exchange gain / loss on restatement of such loan are carried in the Foreign Exchange Translation Reserves in accordance with AS -11 "The Effects of changes in Foreign Exchange Rates" issued under the Companies (Accounting Standard ) Rules, 2006.

(a) In respect of the road projects undertaken by the Company, in furtherance to the recommendation of the Dispute Resolution Board (DRB), the Company has been awarded claims by the Arbitration Tribunal for an aggregate amount of Rs. 109.09 Crore which has been recognized as revenue & included in Non-Current Trade Receivables. The Company contends that such awards have reached finality for the determination of the amounts of such claims and are reasonably confident of recovery of such claims although the client has moved the Court to set aside the awards.

Considering the fact that the Company has received favourable awards from the DRB and the arbitration tribunal, the Management is reasonably certain that the claims will get favourable verdict from the Courts.

(a) Interest from Joint Stock Companies includes accrued onetime non-recurring interest income of Rs. Nil (Previous Year Rs. 182.39 Crore) under contractual conditions from one of the subsidiary of the Company.

(b) Dividend received from own investment held through Gammon Trust is adjusted under appropriation Rs. 0.23 Crore (Previous YearRs. 0.58 Crore).

In respect of currency swap derivative contracts entered into by the Company, the Company has Marked to Market (Gain) / loss of Rs. Nil (Previous Year (gain) Rs. (2.36) Crore) as at 31st March 2012 based on the valuation given by the bankers. Following the principle of prudence and in accordance with the announcement of the ICAI, the Company has made a provision for the same. Since the same was entered into to reduce the cost of borrowings, the said MTM loss is included under Financial Costs.

1 Diminutions in the Value of Investments

(a) The Company through its Special Purpose Investment Vehicle holds the following stakes :

- Franco Tosi Mecannica S.p.A., Italy

- Sofinter S.p.A., Italy

- Sadelmi S.p.A., Italy

- SAE S.r.l., Italy

(b) The Company has carried out an impairment test of its investments in Franco Tosi Meccanica S.p.A., Sofinter and SAE Italy. Considering the business plans of these entities and the results of the tests and the fact that all these entities have an healthy order book positions and adequate references in international markets notwithstanding the turbulent market conditions in Europe, the management is of the view that there is no impairment of its investments in these Companies.

(c) The Company through its step down subsidiary P. Van Eerd Beheersmaatschappij BV, Netherlands (PVAN) held a 50% shareholding in Sadelmi S.p.A for € 7.5 million., Italy (Sadelmi) with the remaining 50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the economic conditions prevailing in different parts of the world where Sadelmi was present some of the projects under execution encountered serious contractual problems. Sadelmi therefore sought creditors' protection through a Court in Italy and simultaneously, as part of scheme, applied for transferring the remaining projects and leased all references standing in its name since inception to a new Company Busi Power S.r.l. wholly held by Busi Group. By an Agreement dated 2nd March 2009, Busi Group agreed to give PVAN 50% stake in lieu of its stake in Sadelmi for a consideration of € 1 while also agreeing to capitalise the Company with € 2.5 million and convert the S.r.l. status into an S.p.A. to facilitate the same.

The above procedure however not yet been completed as the decision in the Court is still awaited. The delay is on account of objections raised by some creditors among other reasons.

The management is reasonably optimistic of a satisfactory conclusion of the matters. The total exposures of the Company as of balance sheet date is Rs. 5.04 Crore under loans and advances, Rs. 0.05 Crore under investment and under corporate guarantee Rs. 60.93 Crore. The result of these operations will be consolidated in the Company on completion of Court procedures and after upto date financials are drawn up.

In the managements assessment the value of such references and infusion of € 2.5 million by Busi Group would be in excess of the acquisition cost of such stake and hence no impairment is considered necessary.

2 ESOP SCHEME

Pursuant to the amalgamation of ATSL with the Company, the outstanding options of the employees of the erstwhile ATSL outstanding as on 1st April 2008 have been taken up as an obligation by the Company in accordance with the Scheme approved by the Court. Accordingly the Company has accounted for the grant of 1,06,300 options to such employees at an exercise prize of Rs. 80 per share. The Company will issue two equity shares against each option in terms of the scheme of amalgamation approved by the Courts.

The options were granted by the erstwhile ATSL on 27th March 2007. The options vest in a graded manner over the period of four years and are exercisable during a period of three years from the date of vesting thereof.

Since the assets and liabilities of the erstwhile ATSL has been accounted at the book value, the accounting effect in the accounts are continued at the same value.

The fair value of the option however has been computed under the Black Scholes method considering the data of the Company as on the date of grant of option for the purpose of disclosure as required under Guidance note on Employee share based payments detailed hereunder.

3 Disclosure under Accounting Standard - 19 "Leases" of the Companies (Accounting Standards) Rule, 2006

The Company has taken various residential/godowns/offices premises (including Furniture and Fittings if any) under lease and license agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in Profit and Loss Account under Rent, Rates and Taxes.

4 Contingent Liability

(Rs. in Crore)

S.N. Particulars 31-Mar-12 31-Mar-11

1 Liability on contracts remaining to be executed on Capital Accounts 23.90 12.59

2 Counter Guarantees given to Bankers for Guarantees given by them and Corporate Guarantees, on behalf of 7,443.95 6,531.96 subsidiary, erstwhile subsidiary, associate Companies

3 Corporate Guarantees and Counter Guarantees given to Bankers towards Company's share in the Joint Ventures 542.06 556.31 for guarantees given by them to the Joint Venture Project clients

4 Disputed Sales Tax liability for which the Company has gone into Appeal 29.71 24.66

5 Claims against the Company not acknowledged as debts 56.11 47.26

6 Disputed Excise Duty Liability 0.03 0.03

7 Disputed Customs Duty Liability - 0.32

8 Disputed Service Tax Liability 21.13 18.61

9 Against bill discounting 22.20 -

Since Realised (8.81) -

10 On partly paid shares - -

11 In respect of Income Tax Matters 19.70 -

12 Commitment towards capital contribution in subsidiary under contractual obligation 47.36 -

13 Disputed stamp duty liability for assets acquired during amalgamation with erstwhile Associated Transrail 4.93 - Structures Limited

14 There is a disputed Demand of UCO Bank pending since 1986, of US$ 436251 i.e. Rs. 1.72 Crore. Against this, UCO Bank has unilaterally adjusted the Company's Fixed Deposit of US$ 30584 i.e. Rs. 0.12 Crore, which adjustment has not been accepted by the Company

15 The Company had deposited customs duty of Rs. 2.20 Crore under protest in respect of certain machineries imported for the project in Sikkim. The Company contends that the import of machinery is duty free as per the Project Import regulations prevailing then. The Company has preferred an appeal against the levy of Custom Duty. Pending outcome of the appeal, the said amount is carried under Advances recoverable in cash or in kind

16 In respect of Joint Venture and operations in Oman, Gammon India Limited-AL Matar JV, refer note no. 41

17 Counter claims in arbitration matters referred by the Company - liability unascertainable

5 Segment Reporting

The Company is engaged mainly in one reportable segment viz., "Construction and Engineering". Additionally the Company has revenue from Windmills which is not significant and accounts for less than 10% of the total revenue and total assets of the Company. Therefore no disclosure of separate segment reporting as required in terms of Accounting Standard AS -17 is done. The Company also primarily operates under one geographical segment namely India.

6 The balance with The Freyssinet Prestressed Concrete Company Limited is as per books of accounts and subject to reconciliation.

7 Joint Venture and operations in oman

(a) As on March 31st, 2012, there were primary Court rulings against certain legal cases arising out of disputes in the Joint Venture's commercial operations amounting to RO 620,455 (Rs. 8.33 Crore) as of March 2012. The Joint Venture has appealed against the primary Court judgements and is currently awaiting judgements from the Appeal Court. Based on legal advice, the management believes that the Appeal Court judgements will be in Joint Ventures favor and no amount will be payable. However a provision of RO 4818 for liability pertaining to these claims has been made in the financial statements.

(b) The statutory auditors of the Joint Venture have qualified their report stating that in their view it more likely than not that the Joint Venture will be liable to incur expense against these claims and accordingly it should record the total liability in the financial statements as of March 2012. Thus in their view the accounts payable and loss for the year are understated by RO 615,637 (Rs. 8.27 Crore).

(c) As on March 31st, 2012, the Joint Venture has contingent liabilities in respect of bank and other guarantees and other matters arising in the ordinary course of business from which it is anticipated that no material liabilities will arise, amounting to RO(177,891) (Rs.2.39 Crore) previous year RO (377891)C 4.43 Crore).

(d) Transactions of the Oman branch and the Joint Venture are accounted on the basis of the audited accounts received from the statutory Auditors of the respective entity.

8 Exceptional Item represents prior year expenditure of Rs. 6.32 Crore (Previous Year Rs. 2.72 Crore)net of Rs. 2.30 Crore of prior period income (Previous Year NIL).

9 Disclosure of transactions with Related Parties, as required by Accounting Standard - 18 "Related Party Disclosures" has been set out in a separate statement - 1 annexed to this schedule.

10 Basis of preparation

Till the year ended March 31, 2011, the Company was preparing the financial statements as per the pre-revised Schedule VI to the Companies Act, 1956. During the year ended March 31, 2012, the Revised Schedule VI notified under the Companies Act, 1956, has become applicable to the Company. The Company has reclassified the published previous year figures to conform to the norms of the Revised Schedule VI. The adoption of the revised Schedule VI does not impact recognition and measurement principles followed for preparation of the financial statements. However, it significantly impacts presentation and disclosures made in the financial statements, particularly presentation of Balance Sheet.


Mar 31, 2011

1. 8.75% – Secured Redeemable Non Convertible Debentures of Rs. 5 Crores are secured by hypothecation of specific Plant & Machinery with paripassu charge by mortgage of immovable property in Gujarat. Out of Rs. 5 Crores, based on contractual terms, debentures valuing Rs. 1.5 Crores have been redeemed on 30th March, 2011. The debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment. i.e. 30th March, 2003.

7.50% – Redeemable Non Convertible Debentures of Rs. 15 Crores and 7.25% – Redeemable Non Convertible Debentures of Rs. 6 Crores are secured by hypothecation of specific Plant & Machinery with paripassu charge by mortgage of immovable property in Gujarat with 8.75% Secured Redeemable Non Convertible Debentures of Rs. 3.5 Crores. The Debenture holders holding Rs. 15 Crores of 7.50% Redeemable Non-Convertible Debentures and Rs. 6 Crores of 7.25% Redeemable Non Convertible Debentures have exercised their put option and accordingly same have been redeemed on 29th September, 2010.

7.50% – Redeemable Non-Convertible Debentures of Rs. 50 Crores are secured by hypothecation of specific Plant & Machinery with paripassu charge by mortgage of immovable property in Gujarat with 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 3.5 Crores. The Debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment i.e. 5th August, 2005.

9.95% – Redeemable Non-Convertible Debentures of Rs. 50 Crores are secured by hypothecation of specific Plant & Machinery with paripassu charge by mortgage of immovable property in Gujarat with 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 3.5 Crores and 7.50% Secured Non-convertible Debenture of Rs. 50 Crores. The Debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment being, 24th March, 2008.

10.80% – Redeemable Non Convertible Debentures of Rs. 100 Crores are secured by hypothecation of specific Plant & Machinery with paripassu charge by mortgage of immovable property in Gujarat with 9.95 % Secured Redeemable Non-Convertible Debentures of Rs. 50 Crores and 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 3.5 Crores and 7.50% Secured Non-convertible Debenture of Rs. 50 Crores. The Debentures are due for repayment at the end of 5th, 6th and 7th year from the date of allotment being, 25th July, 2008.

10.50% – Redeemable Non Convertible Debentures of Rs. 74 Crores are secured by hypothecation of specific Plant & Machinery with paripassu charge by mortgage of immovable property in Gujarat with 10.80% Secured Redeemable Non-Convertible Debentures of Rs. 100 Crores and 9.95% Secured Redeemable Non-Convertible Debentures of Rs. 50 Crores and 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 3.5 Crores and 7.50% Secured Non-convertible Debenture of Rs. 50 Crores. The Debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment being, 7th May, 2009.

9.50% – Redeemable Non Convertible Debentures of Rs. 50 Crores are secured by hypothecation of specific Plant & Machinery with paripassu charge by mortgage of immovable property in Gujarat with 10.50% Secured Redeemable Non-Convertible Debentures of Rs. 74 Crores and 10.80% Secured Redeemable Non-Convertible Debentures of Rs. 100 Crores and 9.95% Secured Redeemable Non-Convertible Debentures of Rs. 50 Crores and 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 3.5 Crores and 7.50% Secured Non-convertible Debenture of Rs. 50 Crores. The Debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment being 18th June, 2010.

9.50% – Redeemable Non Convertible Debentures of Rs. 50 Crores are secured by hypothecation of specific Plant & Machinery with paripassu charge by mortgage of immovable property in Gujarat with 9.50% Secured Redeemable Non-Convertible Debentures of Rs. 50 Crores and 10.50% Secured Redeemable Non-Convertible Debentures of Rs. 74 Crores and 10.80% Secured Redeemable Non-Convertible Debentures of Rs. 100 Crores and 9.95% Secured Redeemable Non-Convertible Debentures of Rs. 50 Crores and 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 3.5 Crores and 7.50% Secured Non-convertible Debenture of Rs. 50 Crores. The Debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment being 5th September, 2010.

2. Issued Share Capital includes 725,800 shares of Rs. 2 each kept in abeyance.

3. Share Forfeited account includes Rs. 0.26 Crores of Share Premium collected on application in respect of forfeited shares.

4. In terms of the approval of the shareholders in the Extra Ordinary General Meeting of the Company on 17th June, 2009 the Company issued 16,000,000 equity warrants to the promoter group on a preferential basis, entitling them to apply for and obtain allotment of one equity shares of Rs. 2 each at a premium of Rs. 88.20 per share. During F.Y. 2009-2010, the promoter group had exercised 7,750,000 warrants for conversion to equity shares and paid in an amount equivalent to 25% of the 8,250,000 outstanding warrants. The balance warrant of 8,250,000 have been exercised during the year for conversion to equity share and accordingly 8,250,000 shares have been allotted on 7th January, 2011.

5. As per the intimation available with the Company, there are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, and Medium Enterprises Development Act, 2006, to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises have been determined to the extent such parties have been identifed on the basis of information available with the Company. This has been relied upon by the Auditors.

6. Loans and advances include Rs. Nil (previous year Rs. 50.00 Crores) which are secured by pledge of equity shares of a private Company. The security value is adequate to recover the amount advanced. The said loan has been repaid during the year.

8. (a) In respect of currency swap derivative contracts entered into by the Company, the Company has Marked to Market (Gain)/loss of Rs. (2.36) Crores (Previous Year loss Rs. 3.92 Crores) as at 31st March 2011 based on the valuation given by the bankers. Following the principle of prudence and in accordance with the announcement of the ICAI, the Company has made a provision for the same. Since the same was entered into to reduce the cost of borrowings, the said MTM loss is included under Financial Costs.

In respect of these shares where the voting rights and beneficial rights are so transferred, the holder continues to be the original allotees as per the records of the respective companies.

10. Provident Fund:

The provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, have been implemented at the work sites where code numbers have been allotted. In respect of the remaining work sites necessary applications have been made for allotment of code numbers.

However, a provision of Rs. 0.25 Crores is available to cover any liability arising there from.

13. In respect of the road projects undertaken by the Company, in furtherance to the recommendation of the Dispute Resolution Board (DRB), the Company has been awarded claims by the Arbitration Tribunal for an aggregate amount of Rs. 94.54 Crores which has been recognized as revenue & included in Sundry Debtors. The Company contends that such awards have reached finality for the determination of the amounts of such claims and are reasonably confdent of recovery of such claims although the client has moved the court to set aside the awards.

Considering the fact that the Company has received favorable awards from the DRB and the arbitration tribunal, the Management is reasonably certain that the claims will get favorable verdict from the courts.

16. Dividend income includes dividend of Rs. Nil (Previous Year Rs. 0.07 Crores) from trade investments. Dividend received from own investment held through Gammon Trust is adjusted under appropriation Rs. 0.58 Crores.

1 7. Interest from Joint Stock companies includes accrued onetime non-recurring interest income of Rs. 182.39 Crores under contractual conditions from one of the subsidiary of the Company.

18. Pursuant to the amalgamation of ATSL with the Company, the outstanding options of the employees of the erstwhile ATSL outstanding as on 1st April, 2008 have been taken up as an obligation by the Company in accordance with the Scheme approved by the court. Accordingly the Company has accounted for the grant of 106,300 options to such employees at an exercise prize of Rs. 80 per share. The Company will issue two equity shares against each option in terms of the scheme of amalgamation approved by the Courts.

The options were granted by the erstwhile ATSL on 27th March, 2007. The options vest in a graded manner over the period of four years and are exercisable during a period of three years from the date of vesting thereof.

Since the assets and liabilities of the erstwhile ATSL has been accounted at the book value, the accounting effect in the accounts are continued at the same value.

The fair value of the option however has been computed under the Black Scholes method considering the data of the Company as on the date of grant of option for the purpose of disclosure as required under Guidance note on Employee share based payments detailed hereunder.

(c) The requirement of quantitative information of the Company as required by A.S.E. 494 – E dated 30.10.1973 is not applicable to the Company as regards construction activities of transmission line. As regards various other quantitative details the same have not been reported as various items are of dissimilar nature and it is not practicable to disclose the quantitative information.

23. The Company is engaged mainly in only one reportable segment viz., "Construction and Engineering". Additionally the Company has revenue from Windmills which is not significant and accounts for less than 10% of the total revenue and total assets of the Company. Therefore no disclosure of separate segment reporting as required in terms of Accounting Standard AS – 17 is done. The Company also primarily operates under one geographical segment namely India.

24. Disclosure of transactions with Related Parties, as required by Accounting Standard – 18 'Related Party Disclosures' has been set out in a separate statement – 1 annexed to this Schedule.

25. Disclosure under Accounting Standard – 19 "Leases", issued by the Institute of Chartered Accountants of India.

The Company has taken various residential/godowns/offices premises (including Furniture and Fittings if any) under lease and license agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the Company has given refundable security deposits. The lease payments are recognized in Profit and Loss Account under Rent, Rates and Taxes.

For the purposes of computation of earning per shares the equity shares issued against the options granted to the employees of the erstwhile ATSL have been considered in the weighted average shares during the period. Similarly 725,800 equity shares kept in abeyance from earlier equity offerings have also been considered for dilution. The weighted shares have been determined with reference to the respective dates of allotment of the shares issued under ESOP's and the Warrants respectively.

2 7. During the year an amount of Rs. 13.33 Crores has been transferred from Foreign Currency Translation Reserves Account to the Profit & Loss Account on retirement of certain portion of the long term loans from the subsidiaries.

28. Pursuant to the scheme of amalgamation, the Company owns 5,804,620 equity shares of itself through Gammon India Trust which was allotted the shares against the Company's holding in erstwhile ATSL in terms of the order of the Hon'ble High Court of Mumbai and Gujarat.

29. Diminution in the Value of Investments:

A. The Company through its Special Purpose Investment Vehicle holds the following stakes:

(1) Franco Tosi Meccanica S.p.A., Italy

(2) Sofnter S.p.A., Italy

(3) Sadelmi S.p.A., Italy

(4) SAE S.r.l., Italy

B. The Company has carried out its impairment test of the investments of Franco Tosi Meccanica , Sofnter and SAE Italy. Considering the business plans of these entities and the results of the tests and the fact that all these entities have healthy order book positions and adequate references in international markets notwithstanding the turbulent market conditions in Europe, the management is of the view that there is no impairment in its investments in these companies.

C. The Company through its step down subsidiary P. Van Eerd Beheersmaatschappij B.V., Netherlands (PVAN) held a 50% shareholding in Sadelmi S.p.A for Euro 7.5 million, Italy (Sadelmi) with the remaining 50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the economic conditions prevailing in different parts of the world where Sadelmi was present some of the projects under execution encountered serious contractual problems. Sadelmi therefore sought creditors' protection through a Court in Italy and simultaneously, as part of scheme, applied for transferring the remaining projects and leased all references standing in its name since inception to a new Company Busi Power S.r.l. wholly held by Busi Group. By an Agreement dated 2nd March, 2009, Busi Group agreed to give PVAN 50% stake in lieu of its stake in Sadelmi for a consideration of Euro 1 and convert the S.r.l. status into an S.p.A. to facilitate the same. Consequently PVAN will cease to be a shareholder of Sadelmi from that date and will become a shareholder of Busi Power. The compliances is expected to be reached in ensuing year, at which time Busi Group will duly capitalize its wholly owned subsidiary in India with an equity infusion of Euro 2.5 million and will also permit it to freely draw up the references to undertake future projects in India, as was mentioned in the previous year consequent upon this arrangement. The management's assessments of the references indicate that the value of such references and the infusion of Euro 2.5 million by Busi Group would be in excess of the acquisition cost of such stake.

Consequent upon this arrangement, Busi Group will be wholly responsible for the operations and all future funding of Busi Power S.r.l. and Gammon will be wholly responsible for the operations and future funding of the Indian subsidiary for the projects undertaken by them in the territories identifed respectively for them. The results of these operations will be consolidated in the Company after the Court scheme is given effect to and the fresh set of financial are drawn up.

31. Unpaid dividend includes Rs. 0.14 Crores (Previous Year – Rs. 0.10 Crores) and accrued interest includes Rs. 0.05 Crores (Previous Year – Rs. 0.16 Crores) towards interest on fxed deposits to be transferred to the Investor Education & Protection Fund.

32. CONTINGENT LIABILITIES:

(Rs. in Crores)

Sr. Particulars As at As at

No. 31st March, 2011 31st March, 2010

1. Liability on contracts remaining to be executed on Capital Accounts 12.59 73.83

2. Counter Guarantees given to Bankers for Guarantees given by them and Corporate Guarantees, on behalf of subsidiary, erstwhile subsidiary, associate Companies stand at 6,531.96 5,436.41

3. Corporate Guarantees and Counter Guarantees given to Bankers towards Company's share in the Joint Ventures for guarantees given by them to the Joint Venture Project Clients 556.31 463.36

4. Disputed Sales Tax liability for which the Company has gone into Appeal is 24.66 23.88

5. Claims against the Company not acknowledged as debts 47.26 47.76

6. Disputed Excise Duty Liability 0.03 0.03

7. Disputed Customs Duty Liability 0.32 0.32

8. Disputed Service Tax Liability 18.61 29.21

9. Contingent Liability on partly paid shares — —

10. There is a disputed demand of UCO Bank pending since 1986, of US$ 436,251 i.e. Rs. 1.72 Crores. Against this, UCO Bank has unilaterally adjusted the Company's Fixed Deposit of US$ 30,584 i.e. Rs. 0.12 Crores, which adjustment has not been accepted by the Company.

11. The Company had deposited customs duty of Rs. 2.20 Crores under protest in respect of certain machineries imported for the project in Sikkim. The Company contends that the import of machinery is duty free as per the Project Import regulations prevailing then. The Company has preferred an appeal against the levy of Custom Duty. Pending outcome of the appeal, the said amount is carried under Advances recoverable in cash or in kind.

12. In respect of Joint Venture and operations in Oman, Gammon India Limited – AL Matar JV, refer note no. 37.

13. Counter claims in arbitration matters referred by the Company – liability unascertainable.

33. The balance with The Freyssinet Prestressed Concrete Company Limited is as per books of accounts and subject to reconciliation.

34. Cash & Bank balances include Rs. 2.00 Crores (Previous Year Rs. 2.13 Crores) with bank branches in foreign countries relating to certain foreign projects which are not readily available for use by the Company and are subject to exchange control regulation of the respective countries. The Fixed Deposit related interest and principal account as at the year-end are as per ledger and are subject to reconciliation, which is under progress.

35. During the F.Y. 2010-2011, search action was initiated against the Company u/s 132 of the Income Tax Act, On a prudent basis an additional tax provision of Rs. 17 Crores have been made in accounts of F.Y. 2009-2010.

3 7. Joint venture and operations in Oman:

(a) There are claims against the Joint venture not acknowledged as debts of RO 0.84 million (Rs. 9.85 Crores) in respect of which the lower courts have ruled in favour of the claimant. The Management is hopeful of obtaining relief from the higher courts in the matter.

(b) The joint venture has carried out certain works including operations and maintenance of the project based on work instructions received from the consultant/client which is subject to certification and acceptance by the client on account of certain disputes with the client which the management is hopeful of resolving in favour of the Joint venture. The total value of such works being carried as part of the job estimates is RO 0.91 million (Rs. 10.67 Crores).

(c) The banking facilities including fund and other non-fund based borrowings utilized by the Joint Venture entity which are in the name of the Company but have been accounted in the books of Joint Venture. The borrowings have been guaranteed by the Company and are secured by assignment of the Joint Venture contract receivable and Joint registration and insurance of all equipments and Corporate guarantees of Gammon India Limited of RO 1.25 million (Rs. 14.66 Crores). The total of such borrowings as at 31st March, 2011 is RO 169,337 (Rs. 1.99 Crores) [Previous Year RO 4,002,265 (Rs. 46.99 Crores)] which consists of Fund based RO (208,554) (Rs. 2.44 Crores) [Previous Year RO 3,628,768 (Rs. 42.61 Crores)] and Non-fund based RO 377,891 (Rs. 4.43 Crores) [Previous Year RO 373,498 (Rs. 4.39 Crores)].

(d) Transactions of Oman Branch and the accounting effect of the Gammon Al Matar Joint Venture Profits are accounted on the basis of the accounts prepared specially for this purpose and which is duly audited by the Company's auditor.

(e) During the year the Assets held by the Oman Branch have been transferred to India. The related Foreign Currency Translation Reserve has been reversed.

39. Previous year's fgures are regrouped and rearranged with those of the current year to make them comparable.

SCHEDULE – 1

Related Party Disclosure (AS – 18):

(A) Relationships:

Subsidiaries/Fellow Subsidiaries:

1. Andhra Expressway Limited

2. Ansaldo Caldaie Boilers India Private Limited

3. ATSL BV, Netherland

4. ATSL Infrastructure Projects Limited

5. Associated Transrail Structures Limited, Nigeria

6. Campo Puma Oriente SA

7. Chitoor Infra Company Private Limited

8. Chitoor Infrastructure Projects Private Limited

(formerly known as Satyavedu Infra Company Private Limited)

9. Cochin Bridge Infrastructure Company Limited

10. Deepmala Infrastructure Private Limited

11. Dohan Renewable Energy Private Limited

12. Franco Tosi Hydro Private Limited

13. Franco Tosi Meccanica S.p.A.

14. Franco Tosi Turbines Private Limited

15. GACTEL Turnkey Projects Limited

16. Gammon & Billimoria Limited

17. Gammon & Billimoria LLC

18. Gammon Holdings BV

19. Gammon Holdings (Mauritius) Limited

20. Gammon Infrastructure Projects Limited

21. Gammon International BV

22. Gammon International FZE

23. Gammon International LLC, Oman

24. Gammon Italy S.r.l.

25. Gammon Logistics Limited

26. Gammon Power Limited

27. Gammon Projects Developers Limited

28. Gammon Realty Limited

29. Gammon Renewable Energy Infrastructure Limited

30. Gammon Retail Infrastructure Private Limited

31. Gammon Road Infrastructure Limited

32. Gammon Seaport Infrastructure Limited

33. Ghaggar Renewable Energy Private Limited

34. Gorakhpur Infrastructure Company Limited

35. Indori Renewable Energy Private Limited

36. Jaguar Projects Developers Limited

3 7. Kasavati Renewable Energy Private Limited

38. Kosi Bridge Infrastructure Company Limited

39. Lilac Infra Projects Developers Limited

40. Marine Project Services Limited

41. Markanda Renewable Energy Private Limited

42. Metropolitan Infrahousing Private Limited

43. Mumbai Nasik Expressway Limited

44. P. Van Eerd Beheersmaatschappij BV – Netherlands

45. Pataliputra Highway Limited

46. Patna Highway Projects Limited

47. Pravara Renewable Energy Limited

48. Preeti Townships Private Limited

49. Rajahmundry Expressway Limited

50. Rajahmundry Godavari Bridge Limited

51. RAS Cities and Townships Private Limited

52. SAE Powerlines S.r.l.

53. SAE Transmission India Limited

54. Sikkim Hydro Power Ventures Limited

55. Sirsa Renewable Energy Private Limited

56. Sutlej Renewable Energy Private Limited

57. Tada Infra Development Company Limited (formerly Gammon Hospitality Limited)

58. Tada Infrastructure Projects Private Limited (formerly known as Tada SEZ Private Limited)

59. Tangri Renewable Energy Private Limited

60. Tidong Hydro Power Limited

61. Transrail Lighting Limited

62. Vizag Sea Port Private Limited

63. Yamuna Renewable Energy Private Limited

64. Youngthang Power Ventures Limited

Joint Ventures:

1. Afghanistan ATSL AEPC Consortium

2. Aydeniz Gammon

3. BBJ Gammon

4. BBJ GIL

5. Bhutan Consortium Jyoti Structures Limited and Gammon India Limited

6. Blue Water Iron Ore Terminal Private Limited

7. Gammon Al Matar

8. Gammon Ansaldo (Kakrapara BOT Pkg. I)

9. Gammon Atlanta

10. Gammon Atlanta (Ghana Road Project)

11. Gammon Aydinar (Rammam)

12. Gammon BBJ

13. Gammon Cadagua (Guwahati WS Pkg. III)

14. Gammon CMC (DFCC Eastern Corridor)

15. Gammon Construtora Cidade Tensaccia Joint Venture

16. Gammon Construtora Tensacuai

17. Gammon Encee Consortium

18. Gammon Encee Rail (Consortium)

19. Gammon JMC

20. Gammon Limak (Vishnugod Pipalnote HEPP)

21. Gammon Marti

22. Gammon Mosmetrostroy (Bangalore Metro)

23. Gammon OJSC Mosmetrostroy Joint Venture

24. Gammon OSE

25. Gammon Patel

26. Gammon Pratibha (BWSSB)

27. Gammon Pratibha (Hogenkkal WS)

28. Gammon Progressive

29. Gammon Sew

30. Gammon Rizzani

31. Gammon Srinivas

32. Gammon Technofab (Transmission & Distribution of Electricity & Water)

33. Gammon Tensacuai

34. Gammon Yuksel (Greenfeld Airport, Sasan)

35. GIL Archirodon

36. GIL KCT (Rupiasagar Kasiabara HEP)

3 7. GIL Marti (Civil Work Sainj HEP)

38. GIL Simplex (Dholakal Tupul)

39. GIL Simplex (Khongsang Imphal)

40. Haryana Biomass Power Limited

41. Hyundai Gammon

42. Indira Container Terminal Private Limited

43. Jaeger Gammon

44. Jager Gammon

45. Lencon Gammon

46. OSE GIL

47. Patel Gammon

48. Punjab Biomass Power Limited

49. SEZ Adityapur Limited

50. Sofnter S.p.A.

51. Sumitomo Corp. Gammon, C & C Const. Limited, Sadbhav Engg. Limited

Associates & Group Companies:

1. Eversun Sparkle Maritime Services Private Limited

2. Finest S.p.A. Italy

3. Modern Toll Roads Limited

Entities where control exists:

1. Devyani Estate & Properties Private Limited

2. First Asian Capital Resources Private Limited

3. Masayor Enterprises Limited

4. Nikhita Estate Developers Private Limited

5. Pacific Energy Private Limited

Key Management Personnel & Relatives:

1. Mr. Abhijit Rajan

2. Mr. Himanshu Parikh

3. Mr. Rajul A. Bhansali

4. Mr. Rohit Modi

5. Mr. Harshit Rajan

6. Mr. D. C. Bagde


Mar 31, 2010

1. 8.75% - Secured Redeemable Non-Convertible Debentures of Rs. 5 Crores are secured by hypothecation of specific Plant & Machinery and paripassu charge by mortgage of immovable property in Gujarat. The debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment. i.e. 30th March, 2003.

7.50% - Redeemable Non-Convertible Debentures of Rs. 15 Crores and 7.25% - Redeemable Non-Convertible Debentures of Rs. 6 Crores are secured by hypothecation of specific Plant & Machinery and paripassu charge by mortgage of immovable property in Gujarat with 8.75% Secured Redeemable Non Convertible Debentures of Rs. 5 Crores. The Debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment i.e. 29th September, 2003.

7.50% - Redeemable Non-Convertible Debentures of Rs. 38 Crores and 7.25% Redeemable Non-Convertible Debentures of Rs. 12 Crores are secured by hypothecation of specific Plant & Machinery with paripassu charge by mortgage of immovable property in Gujarat with 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 5 Crores and 7.50% Secured Non-convertible Debenture of Rs. 15 Crores and 7.25% Secured Non-Convertible Debenture of Rs. 6 Crores. The Debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment i.e. 5th August, 2005.

9.95% - Redeemable Non-Convertible Debentures of Rs. 50 Crores are secured by hypothecation of specific Plant & Machinery with pari passu charge by mortgage of immovable property in Gujarat with 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 5 Crores and 7.50% Secured Non-convertible Debenture of Rs. 53 Crores and 7.25% Secured Non-Convertible Debenture of Rs. 18 Crores. The Debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment being, 24th March, 2008.

10.80% - Redeemable Non-Convertible Debentures of Rs. 100 Crores are secured by hypothecation of specific Plant & Machinery with pari passu charge by mortgage of immovable property in Gujarat with 9.95% Secured Redeemable Non-Convertible Debentures of Rs. 50 Crores and 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 5 Crores and 7.50% Secured Non-convertible Debenture of Rs. 53 Crores and 7.25% Secured Non-Convertible Debenture of Rs. 18 Crores. The Debentures are due for repayment at the end of 5th, 6th and 7th year from the date of allotment being, 25th July, 2008.

10.50% - Redeemable Non-Convertible Debentures of Rs. 74 Crores are secured by hypothecation of specific Plant & Machinery with pari passu charge by mortgage of immovable property in Gujarat with 10.80% Secured Redeemable Non-Convertible Debentures of Rs. 100 Crores and 9.95% Secured Redeemable Non-Convertible Debentures of Rs. 50 Crores and 8.75% Secured Redeemable Non-Convertible Debentures of Rs. 5 Crores and 7.50% Secured Non-convertible Debenture of Rs. 53 Crores and 7.25% Secured Non-Convertible Debenture of Rs. 18 Crores. The Debentures are due for repayment at the end of 8th, 9th and 10th year from the date of allotment being, 7th May, 2009.

2. Issued Share Capital includes 725,800 shares of Rs. 2 each kept in abeyance.

3. Share Forfeited account includes Rs. 0.26 Crores of Share Premium collected on application in respect of forfeited shares.

4. In terms of the approval of the shareholders in the Extra-Ordinary General Meeting of the Company on 17th June, 2009 the Company issued 16,000,000 equity warrants to the promoter group on a preferential basis, entitling them to apply for and obtain allotment of one equity shares of Rs. 2 each at a premium of Rs. 88.20 per share. The promoter group during the year has exercised 7,750,000 warrants for conversion to equity shares and paid in an amount equivalent to 25% of the 8,250,000 outstanding warrants.

5. (a) The Company allotted 3,000,000 preference shares of Rs. 350 each aggregating to Rs. 105.00 Crores to the preference shareholders of the erstwhile ATSL in terms of the scheme of amalgamation between ATSL and the Company approved by the Hon’ble High Court of Mumbai and Gujarat. The holders of the preference shareholders have sought redemption of the preference shares and the Company has during the year redeemed the said shares from its profits in accordance with the provision of Sec. 80. Accordingly, an amount of Rs. 105 Crores has been transferred to the Capital Redemption Reserve from the General Reserve. Dividend is payable for the proportionate period up to the date of redemption to the preference shareholders.

(b) The Company allotted 12,809,400 equity shares of Rs. 2 each at a premium of Rs. 235.45 per share to Qualified Institutional Buyers under Qualified Institutional Placement.

6. As per the intimation available with the Company, there are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, and Medium Enterprises Development Act, 2006, to whom the Company owes dues on account of principal amount together with interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises have been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.

7. Loans and advances include Rs. 50.00 Crores (Previous Year Rs. 50.00 Crores) which are secured by pledge of equity shares of a private company. The security value is adequate to recover the amount advanced.

8. Sundry Creditors include Rs. 10.81 Crores (Previous Year Rs. 12.03 Crores) due to Gammon Infrastructure Projects Ltd., Rs. 0.16 Crores (Previous Year Rs. 0.16 Crores) due to Cochin Bridge Infrastructure Company Ltd., Advance from client include Rs. Nil (Previous Year Rs. 24.00 Crores) due to Mumbai Nasik Expressway Ltd., Rs. 23.09 Crores (Previous Year Rs. 47.71 Crores) due to Kosi Bridge Infrastructure Company Ltd., and Rs. 44.48 Crores (Previous Year Rs. 56.03 Crores) due to Gorakhpur Infrastructure Company Ltd., Rs. 51.27 Crores (Previous Year Rs. 31.25 Crores) due to Rajahmundry Godavari Bridge Ltd., all subsidiary companies, Rs. 53.63 Crores (Previous Year Rs. 0.97 Crores) due to Indira Container Terminal Private Ltd., a Joint Venture company.

Sundry Debtors include Rs. 4.71 Crores (Previous Year Rs. 8.92 Crores) due from Rajamundry Expressway Ltd., Rs. 6.37 Crores (Previous Year Rs. 5.21 Crores) due from Andhra Expressway Ltd., Rs. 34.13 Crores (Previous Year Rs. 3.89 Crores) due from Rajahmundry Godavari Bridge Ltd., Rs. 13.62 Crores (Previous Year Rs. 1.56 Crores) due from SAE Powerlines S.r.l., Rs. 4.67 Crores (Previous Year Rs. 9.31 Crores) due from Mumbai Nasik Expressway Ltd., Rs. Nil (Previous Year Rs. 0.87 Crores) due from Vizag Seaport Pvt. Ltd. all subsidiary companies.

Interest receivables include Rs. 3.35 Crores (Previous Year Rs. 2.40 Crores) due from Gammon & Billimoria Ltd., Rs. 13.19 Crores (Previous Year Rs. 13.62 Crores) due from Gammon Realty Ltd., Rs. 1.10 Crores (Previous Year Rs. Nil Crores) due from Gammon Cooling Tower Ltd., Rs. 1.95 Crores (Previous Year Rs. 0.14 Crores) due from Deepmala Infrastructure Pvt. Ltd., Rs. 0.87 Crores (Previous Year Rs. 1.42 Crores) due from SAE Power Lines S.r.l., Rs. 0.10 Crores (Previous Year Rs. 0.02 Crores) due from ATSL Holding B.V. Nethrlands, Rs. 0.27 Crores (Previous Year Rs. 0.02 Crores) due from Transrail Lighting Ltd., Rs. 0.04 Crores (Previous Year Rs. Nil) due from Associated Transrail Structure Ltd., Nigeria.,all subsidiary companies.

Investment includes Rs. 65.56 Crores (Previous Year Rs. 32.88 Crores) received from Gammon Infrastructure Projects Ltd., on account of deposit for acquisition of shares.

9. In respect of the road projects undertaken by the Company, in furtherance to the recommendation of the Dispute Resolution Board (DRB), the company has been awarded claims by the Arbitration Tribunal for an aggregate amount of Rs. 94.54 Crores which has been recognized as revenue & included in Sundry Debtors. The Company contends that such awards have reached finality for the determination of the amounts of such claims and are reasonably confident of recovery of such claims although the client has moved the court to set aside the awards.

Considering the fact that the Company has received favorable awards from the DRB and the arbitration tribunal, the Management is reasonably certain that the claims will get favorable verdict from the courts.

Accordingly the Company has recognized contract revenue of Rs. Nil (Previous Years Rs. 37.50 Crores) from such awards on the basis of the DRB recommendation and opinion of experts on the matter.

10. Provident Fund:

The provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, have been implemented at the work sites where code numbers have been allotted. In respect of the remaining work sites necessary applications have been made for allotment of code numbers.

However, a provision of Rs. 0.25 Crores is available to cover any liability arising there from.

11. Dividend income includes dividend of Rs. 675,000 from trade investments.

12. Pursuant to the amalgamation of ATSL with the Company, the outstanding options of the employees of the erstwhile ATSL outstanding as on 1st April, 2008 have been taken up as an obligation by the Company in accordance with the Scheme approved by the court. Accordingly the Company has accounted for the grant of 106,300 options to such employees at an exercise prize of Rs. 80 per share. The Company will issue two equity shares against each option in terms of the scheme of amalgamation approved by the Courts.

The options were granted by the erstwhile ATSL on 27th March, 2007. The options vest in a graded manner over the period of four years and are exercisable during a period of three years from the date of vesting thereof.

Since the assets and liabilities of the erstwhile ATSL has been accounted at the book value, the accounting effect in the accounts are continued at the same value.

The fair value of the option however has been computed under the Black Scholes method considering the data of the Company as on the date of grant of option for the purpose of disclosure as required under Guidance note on Employee share based payments detailed hereunder.

Note:

(i) Employers contribution includes payments made by the Company directly to its past employees.

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

(iii) The Companys Gratuity fund is managed by Life Insurance Corporation of India. The plan assets under the fund are deposited under approved securities.

(iv) Provision for gratuity has been made on the basis of the earlier amounts of Rs. 350,000. The data for the incremental liability is being computed by LIC and the effect will be given in next year.

(v) The Companys Leave Encashment liability is entirely unfunded.

13. The Company is engaged mainly in only one reportable segment viz., "Construction and Engineering” including the business transferred from the erstwhile ATSL on amalgamation with the company with all its manufacturing operations which are integral to its transmission tower business. Additionally the company has revenue from Windmills which is not significant and accounts for less than 10% of the total revenue and total assets of the Company. Therefore no disclosure of separate segment reporting as required in terms of Accounting Standard AS-17 is done. The Company also primarily operates under one geographical segment namely India.

14. Disclosure of transactions with Related Parties, as required by Accounting Standard - 18 Related Party Disclosures has been set out in a separate statement annexed to this Schedule.

15. Disclosure under Accounting Standard - 19 "Lases" issued by the Institute of chartered Accountants of India.

The Company has taken various residential/godowns/offces premises (including Furniture and Fittings if any) under lease and license agreements for periods which generally range between 11 months to 3 years. These arrangements are renewable by mutual consent on mutually agreed terms. Under some of these arrangements the company has given refundable security deposits. The lease payments are recognized in Profit and Loss Account under Rent, Rates and Taxes.

16. With effect from 1st January, 2010 the Company has modified the terms of the supports by way of loans to the overseas Special Purpose Vehicles which hold the Companies equity investments in overseas subsidiaries and joint ventures by treating the loans as long term loan repayable at the end of 5 years. Since these SPV are in the nature of non integral operations of the company, exchange gain / loss on reinstatement of such loans are carried in the Foreign Exchange Translation Reserves in accordance with AS-11 “The Effects of changes in Foreign Exchange Rates" issued under the Companies (Accounting Standard) Rules, 2006.

17. Pursuant to the scheme of amalgamation, the Company owns 5,804,620 equity shares of itself through Gammon India Trust which was allotted the shares against the Company’s holding in erstwhile ATSL in terms of the order of the Hon’ble High Court of Mumbai and Gujarat.

18. Diminution in the Value of Investments:

A. The Company through its Special Purpose Investment Vehicle holds the following stakes:

(1) Francotosi Meccanica, Italy

(2) Sofnter, Italy

(3) Sadelmi, Italy

(4) SAE, Italy

B. The Company has carried out its impairment test of the investments of Franco Tosi Mechannica , Sofinter and SAE Italy. Considering the results of the tests and the fact that all these investments have turned around their performance from loss to a marginal profits despite the turbulent market conditions in Europe, the management is of the view that there is no impairment in its investments in these companies.

C. The Company through its step down subsidiary P. Van Eerd Beheersmaatschappij B. V, Netherlands (PVAN) held a 50% shareholding in Sadelmi S.p.A., Italy (Sadelmi) with the remaining 50% held by Busi Impianti S.p.A, Italy since April 2008. Due to the economic conditions prevailing in different parts of the world where Sadelmi was present some of the projects under execution encountered serious contractual problems. Sadelmi therefore sought creditorsprotection through a Court in Italy and simultaneously, as part of scheme, applied for transferring the remaining projects of Euro 46 million and leased all references standing in its name since inception to a new company Busi Power S.r.L. wholly held by Busi Group. By an Agreement dated 2nd March, 2009, Busi Group agreed to give PVAN 50% stake in lieu of its stake in Sadelmi for a consideration of Euro 1 and convert the S.r.L. status into an S.p.A. to facilitate the same. Consequently PVAN will cease to be a shareholder of Sadelmi from that date and will become a shareholder of Busi Power. The Court approval which was received subsequent to 31st March, 2010 was subject to several compliances being met and which are currently in progress. All compliances are expected to be reached in the 4th quarter of 2010, at which time Busi Group will duly capitalize its wholly owned subsidiary in India with an equity infusion of Euro 2.5 million and will also permit it to freely draw up the references to undertake future projects in India, as was mentioned in the previous year consequent upon this arrangement.

Consequent upon this arrangement, Busi Group will be wholly responsible for the operations and all future funding of Busi Power S.r.L. and Gammon will be wholly responsible for the operations and future funding of the Indian subsidiary for the projects undertaken by them in the territories identifed respectively for them. The results of these operations will be consolidated in the Company with effect from FY 2010-11 after the Court scheme is given effect to and the fresh set of financial are drawn up.

19. The Company had deposited customs duty of Rs. 2.20 Crores under protest in respect of certain machineries imported for the project in Sikkim. The Company contends that the import of machinery is duty free as per the Project Import regulations prevailing then. The Company has preferred an appeal against the levy of Custom Duty. Pending outcome of the appeal, the said amount is carried under Advances recoverable in cash or in kind.

20. Unpaid dividend includes Rs. 0.10 Crores (Previous Year – Rs. 0.09 Crores) and accrued interest includes Rs. 0.16 Crores towards interest on fixed deposits to be transferred to the Investor Education & Protection Fund.

21. CONTINGENT LIABILITIES:

(Rs. in Crores)

Sr. Particulars As at As at

No. 31st March, 2010 31st March, 2009

1. Liability on contracts

remaining to be executed on

Capital Accounts 73.83 63.73

2. Counter Guarantees given to

Bankers for Guarantees given by them

and Corporate Guarantees, on behalf

of subsidiary, erstwhile subsidiary,

associate Companies stand at 5,436.41 4,515.33

3. Corporate Guarantees and Counter

Guarantees given to Bankers towards

Companys share in the Joint Ventures

for guarantees given by them to the

Joint Venture Project Clients 463.36 502.51

4. Disputed Sales Tax liability for

which the Company has gone into

Appeal is 23.88 22.23

5. Claims against the Company not

acknowledged as debts 4.81 47.69

6. Disputed Excise Duty liability 0.03 0.03

7. Disputed Customs Duty liability 0.32 0.32

8. Disputed Service Tax Liability 29.21 15.24

9. Contingent Liability on partly paid shares - -

10. There is a disputed demand of UCO Bank pending since 1986, of US$ 436,251 i.e. Rs. 1.72 Crores. Against this, UCO Bank has unilaterally adjusted the Companys Fixed Deposit of US$ 30,584 i.e. Rs. 0.12 Crores, which adjustment has not been accepted by the Company.

11. In respect of Joint Venture and operations in Oman, Gammon India Limited - AL Matar JV, refer note no. 38.

12. Counter claims in arbitration matters referred by the Company – liability unascertainable.

22. The balance with The Freyssinet Prestressed Concrete Company Limited is as per books of accounts and subject to reconciliation.

23. Balances in Foreign Bank Accounts are as per ledger and are subject to reconciliation.

24. During the course of action u/s 132 of the Income Tax Act after the Balance Sheet date, the Company has made declaration in order to buy peace. On a prudent basis an additional tax provision of Rs. 17 Crores have been made in accounts, pending receipt of all the paper and statements from the Income Tax department.

25. Cash & Bank balances include Rs. 2.13 Crores (Previous Year Rs. 2.13 Crores) with bank branches in foreign countries relating to certain foreign projects which are not readily available for use by the Company and are subject to exchange control regulation of the respective countries. The Fixed Deposit related interest and principal account as at the year-end are as per ledger and are subject to reconciliation, which is under progress.

26. Joint venture and operations in Oman:

(a) There are claims against the Joint venture not acknowledged as debts of OR 0.88 million (Rs. 10.36 Crores) in respect of which the lower courts have ruled in favour of the claimant. The Management is hopeful of obtaining relief from the higher courts in the matter.

(b) The joint venture has raised invoices on the client which is subject to certification and acceptance by the client which the management is hopeful of recovery. No effects have been given in these accounts for the same. The total value of such uncertified billing considered in these accounts aggregates to OR 0.73 million (Rs. 9.13 Crores).

The joint venture has carried out certain works including operations and maintenance of the project based on work instructions received from the consultant/client which is subject to certification and acceptance by the client on account of certain disputes with the client which the management is hopeful of resolving in favour of the Joint venture. The total value of such works being carried as part of the job estimates is OR 0.91 million (Rs. 11.33 Crores). Further the control estimates for the balance work includes certain expected variation orders aggregating to OR 0.90 million (Rs. 11.20 Crores) which the joint venture has factored considering the discussions with the client and the past trends of the acceptance by the client. Accordingly the works in progress are being carried as part of inventory pending receipt of the variation order from the client.

(c) The banking facilities including fund and other non-fund based borrowings utilized by the Joint Venture entity which are in the name of the company but have been accounted in the books of Joint Venture. The borrowings have been guaranteed by the Company and are secured by assignment of the Joint Venture contract receivable and Joint registration and insurance of all equipments. The total of such borrowings as at 31st March, 2010 is OR 4,002,265 (Rs. 46.99 Crores) [Previous Year OR 2,442,185 (Rs. 32.12 Crores)] which consists of Fund based OR 3,628,768 (Rs. 42.61 Crores) [Previous Year OR 860,440 (Rs. 11.32 Crores)] and Non-fund based OR 373,498 (Rs. 4.39 Crores) [Previous Year OR 1,581,741 (Rs. 20.80 Crores)].

(d) Transactions of Oman Branch and the accounting effect of the Gammon Al Matar Joint Venture profits are accounted on the basis of the accounts prepared specially for this purpose and which is duly audited by the Companys Auditor.

27. (a) The Company had in the past acquired voting rights and other beneficial interests in two companies Rajahmundry Expressway Limited and Andhra Expressway Limited in respect of 4,360,500 equity shares and 4,564,500 equity shares respectively from its Joint Venture partner in these entities in consideration of payment of deposit for the acquisition of shares of Rs. 5.66 Crores. Subsequently the company transferred its voting rights and other beneficial interests so acquired along with the voting rights and beneficial interests in respect of 11,092,500 equity shares of Rajahmundry Expressway Limited and 11,092,500 equity shares of Andhra Expressway Limited to its then wholly owned subsidiary Gammon Infrastructure Projects Limited against receipt of consideration being deposit for sale of equity shares in these companies of Rs. 32.84 Crores from the subsidiary. During the previous year 2008-2009, out of the said transfer of beneficial interest, the Company had transferred titular interest in respect of 5,437,500 equity shares of Rajahmundry Expressway Limited and 5,437,500 equity shares of Andhra Expressway Limited and had adjusted the deposit received against the consideration of transfer. The balance deposit made and deposit received as aforesaid are refected under the Investment Schedule. In respect of these shares where the voting rights and beneficial rights are so transferred, the holder continues to be the original allotees as per the records of the respective companies.

(b) Similarly the company had also transferred beneficial interest in respect of the investment in Kosi Bridge Infrastructure Company Ltd., Gorakhpur Infrastructure Company Ltd. and Tidong Hydro Power Ltd. in favour of its subsidiary company Gammon Infrastructure Project Ltd. In consideration of payment of deposit for an aggregate sum of Rs. 15.91 Crores. The said deposits received are refected in the Investment schedule.

During the year, the Company has transferred beneficial interest in respect of 6,278,685 Shares in Kosi Bridge Infrastructure Company Ltd. & the investment in Indira Container Terminal Pvt. Ltd. in favour of its subsidiary company Gammon Infrastructure Project Ltd. in consideration of payment of deposit for an aggregate sum of Rs. 32.69 Crores. The said deposits received are refected in the Investment schedule.

28. Auditors remuneration does not include Rs. 1,378,750/- paid towards fees for QIP issue which is debited to Security Premium Account.

29. Previous years figures are regrouped and rearranged with those of the current year to make them comparable.

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