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Notes to Accounts of Gammon Infrastructure Projects Ltd.

Sep 30, 2014

Notes to the Consolidated financial statements for the Nine months period ended September 30, 2014 (All amounts in Indian Rupees unless otherwise stated)

1 Back ground

Gammon Infrastructure Projects Limited a listed company and its subsidiaries, joint ventures and associates, are engaged in the development of various infrastructure projects under the Public Private Partnership (''PPP'') model in sectors like transportation, energy and urban infrastructure through several special purpose vehicles ("SPVs"). Each project is governed by a separate concession agreement (''the Contract'') signed between the client (''grantor'') and the SPV. Majority of the projects secured are from the Government, (Central or State) or an organisation or body foated by the Government.

2 significant accounting policies and notes to this consolidated financial statement are intended to serve as a means of informative disclosure and a guide to better understanding of the consolidated position of the companies. Recognising this purpose, the Group has disclosed only such policies and notes from the individual financial statements, which fairly presents the needed disclosures.

3 During the period, two wholly owned subsidiaries namely Birmitrapur Barkote Highway Private Limited and Yamunanagar Panchkula Highway Private Limited have terminated the contracts with NHAI on mutually acceptable terms primarily due to non-availability of Right of Way to the site and Environment and Forest clearances and on cessation of the operations, accounts of these two subsidiaries were not prepared on the going concern basis. The exceptional item represents the write of of the expenditure incurred on these two projects amounting to Rs. 379,736,848 (Previous period : Rs. Nil).

4 During the period, one of the wholly owned subsidiary namely Youngthang Power Ventures Limited which has a license to develop a hydro power project in Himachal Pradesh has initiated correspondence with the State Government for exiting from the project primarily due to inability of the state government in resolving the local agitations related to environmental issues because of which the subsidiary was forced to stop its geological studies at the project site. The subsidiay has paid an upfront premium of Rs. 528,525,000 to the State Government and the Group''s exposure towards the project excluding the upfront premium is Rs. 144,620,933. The subsidiary has made a claim against the amounts spent on the project till date. The management believes that it has a strong case in this matter.

5 During the period, the Mormugao Port Trust (''MPT'') has unilaterally sought to terminate the concession agreement with one of the wholly owned subsidiary namely Mormugao Terminal Limited citing non-compliance with certain terms of the concession agreement. MPT also encashed the bid security bank guarantee for Rs. 20,000,000. The subsidiary has taken legal action in the matter including fling of arbitration. The Group''s exposure towards the project is Rs. 57,121,823 (including guarantees of Rs.20,000,000). Pending outcome of the legal proceedings, no adjustments have been made to the consolidated financial statements. The management believes that it has a strong case in this matter.

6 During the period, one of the wholly owned subsidiary of the Group namely Patna Buxar Highways Limited has initiated correspondence with NHAI towards closure of its project on mutually acceptable terms primarily due to non-availability of Right of Way to the site and Forest clearances. Subsequently vide its letter dated 29th August 2014, the NHAI unilaterally terminated the concession agreement and also invoked the bank guarantee of Rs. 112,911,000. The subsidiary has since, on October 22, 2014 referred the dispute to a conciliation procedure, contemplated in the terms of the concession arrangement by which it has sought to claim compensation towards the project related expenses and also the repayment against the invocation of the guarantee. The Group''s total exposure to this project including guarantees invoked and project expenses is Rs. 755,596,540 which is transferred to other current assets under project expenditure pending settlement. Pending conclusion of the conciliation procedure and reliefs under the terms of the concession agreement, no adjustments have been made to the consolidated financial statement. The management believes that it has a strong case in this matter.

7 Pravara Renewable Energy Limited (PREL - a wholly owned subsidiary of the Company) had fled a petition in the Hon. Bombay High Court for approval of the Scheme for its merger with the Company which has since been withdrawn.

8 During the period, the Greater Cochin Development Authority has sought to end/obstruct the toll collection by unilaterally sealing the toll booth of one of the subsidiary namely Cochin Bridge Infrastructure Company Limited. The subsidiary believes it has the right to collect toll at the bridge upto April 27, 2020. Further necessary legal recourse is being initiated. The Group''s total exposure towards the project inculdes Rs. 84,261,810 towards the unamortised project costs and 178,712,578 towards trade receivables. Pending outcome of the legal proceedings, no adjustments have been made to the consolidated financial statements. The management believes that it has a strong case in this matter.

9 As at September 30, 2014, the current liabilities exceed current assets by Rs. 6,273,378,210 (December 31, 2013 - Rs. 6,089,713,519). The Group is taking various steps to meet its commitments, both, short term and long term in nature. The Group intends to monetise some of its mature assets, securitise some of its future receivables and raise funds through capital market. Based on detailed evaluation of the current situation, plans formulated and active discussions underway with various stakeholders, management is confdent that the going concern assumption and the carrying values of the assets and liabilities in the consolidated financial statements are appropriate. Accordingly the consolidated financial statements do not include any adjustments that may result from these uncertainties.

10 One of the joint venture SPV of the Company namely Indira Container Terminal Private Limtied is engaged in the development of a container terminal in the Mumbai port. The commencement of this project has been delayed due to non-fulflment of certain conditions by the Mumbai Port Trust (''Licensor''). This has led to cost overruns and default in payment of debt obligations. The SPV has defaulted in meeting its debt obligations amounting to Rs. 376,008,859. Further, the SPV has incurred a loss of Rs. 30,393,909 during the period. These conditions indicates existence of significant doubt and material uncertainty regarding the SPV''s ability to continue as going concern and its ability to realise its assets and discharge its liabilities in the normal course. To address these issues, the management has taken various steps comprising of rescheduling of the loan (which has already being appraised by the Lead banker and recommended for sanction), temporary utilisation of constructed berths and claim for cost overruns on the Licensor. The management is confdent of addressing financial crunch and viability of the project.

11 During the period on account of inadequacy of profits, the Company has paid managerial remuneration in excess of the limits specified under Schedule XIII of the Companies Act 1956 and Schedule V of the Companies Act 2013 wherever applicable. The total amount paid in excess of the limits as computed under the respective regulations is Rs. 20,855,390. The Company is in the process of making an application to the Central Government for approval of the same. Pending the approval, no adjustments have been made to the consolidated financial statements.

12 One of the subsidiary namely Aparna Infraenergy India Private Limited has achieved all milestones as required under Letter of Arrangement (LOA) for the purpose of the coal linkage for its thermal power project in Nagpur. However, Western Coal Fields Limited (WCL) had raised an issue that change of the status from partnership firm to company amounts to "Assignment" which is prohibited as per LOA. The subsidiary has represented the matter to standing linkage committee, which has upheld the contention of WCL. However, the company has approached the High Court for an interpretation in this regard and pending its decision in the matter the court has stayed the matter and directed that no action be taken till further orders. The management believes that it has a strong case in this matter and expects a favorable response on the same.

13 Lease

One of the SPV has taken land on lease from Visakhapatnam Port Trust under non-cancellable operating lease agreements and temporary housing from others under cancellable operating lease agreements. Total rental expense under non- cancellable operating lease was Rs. 4,368,423 (Previous period: Rs. 4,407,974) and under cancellable operating leases was Rs. 715,405 (Previous period: Rs. 698,774) which has been disclosed as lease rentals in the statement of profit and loss.

14 Related party transactions

a. Names of the related parties and related party relationships

i) Entities where control exists :

GIL Ultimate holding company (w.e.f September 29, 2014)

GPL Holding company (w.e.f September 29, 2014)

ii) ABIPL a subsidiary of the ultimate holding company

iii) Associates :

AIPL

ESMSPL

MTRL

iv) Key management personnel :

Abhijit Rajan

Kishor Kumar Mohanty

Parag Parikh

15 Contingent liabilities

Group''s share in contingent liability not provided for in the books of accounts.

Particulars As at As at September 30, 2014 December 31, 2013

Income tax matters (refer note a below) 755,626,265 764,913,874

Disputed statutory liabilities (refer note b below) 177,699,900 177,699,900

Claims against group not acknowledged as debt (refer note c below) 110,730,081 113,129,410

Counter guarantees given to the bankers 2,943,436,991 3,748,060,200

Total 3,987,493,237 4,803,803,384

a. During the previous year, some of the Group companies had received block assessment orders raising demand u/s 143(3) read with section 153(A) of the Income Tax Act, 1961 for assessment years from 2005-06 to 2011-12 totaling to Rs. 755,626,265 (Previous period: Rs. 764,913,874) including Rs. 13,440,400 (Previous period : Rs. 13,440,400) u/s 271 (1)(c). The subsidiaries of the Group are of the view that the said Orders are unjustifed and unsustainable and hence is in the process of fling appeals against the said assessment Orders with the Commissioner of Income-Tax (Appeals). Since the subsidiaries of the Group proposes to appeal against these orders, they believe that no liability will ultimately result from these and accordingly no provision has been made in these financial statements in respect of these amounts.

b. An amount of Rs. 177,699,900 claimed by the collector and district registrar, Rajahmundry, pursuant to and Order dated March 15, 2005, as defcit stamp duty payable on the concession agreement entered into between a subsidiary of the Group and NHAI, classifying the concession agreement as a ''lease'' under Article 31(d) of the Indian Stamp Act. The subsidiary has impugned the Order by way of a writ petition before the High Court of Andhra Pradesh at Hyderabad. No provision is considered necessary in respect of the said demand, as the management of the subsidiary believes that there is no contravention of the Indian Stamp Act. Further, another subsidiary of the Company has also been served a demand notice towards stamp duty amounting to Rs. 10,319,700 which is before the Controller of Stamps ofce. The Company has a very good case to succeed in this matter and accordingly no provision for the same is required.

c. Claims against a subsidiary of the group not acknowledge as debt includes:

A winding up petition against a subsidiary of the Group, has been fled by a creditor for recovery of Rs.14,140,343. The subsidiary is disputing the said amount and has recognised Rs.1,685,168 payable as there are claims and counter claims by both parties. Pending the final outcome of such proceeding, the claim from the trade payable is disclosed as a contingent liability. The management of the said is of the view that the same would be settled and does not expect any additional liabilities towards the same.

16 Commitments

a. Capital commitments

The total capital commitment as on September 30, 2014 is Rs. 36,525,848,403 (Previous period : Rs. 78,818,258,937). The capital commitments are in respect of projects where the concession agreements have been signed and does not include projects where only Letters of Intents are held.

c. Other commitments

i) In terms of the individual contracts signed by SPVs they are required to carry major periodic maintenance of the roads they are operating as a part of commitment against receipt of Tolling Rights and / or Annuities. The said SPVs have made provisions towards the same in their respective financial statements.

ii) One of the SPV''s engaged in generating power from a bagasse power plant has committed to purchase bagasse when the power plant becomes operational. The total commitment to purchase the bagasse upto September 30, 2014 is Rs. 65,000,000 (Previous period : Rs. 65,000,000).

iii) Buyback and / or purchase of shares of subsidiaries Rs. 999,818,173 (Previous period : Rs. 1,314,733,521).

17 Segment reporting

The Group''s operations constitutes a single business segment namely "Infrastructure Development" as per Accounting Standard (AS) - 17 "Segment Reporting". Further the Group''s operations are within single geographical segment which is India.

Infrastructure activities comprise of all the activities of investing in infrastructure projects, providing advisory services and operating and maintaining of Public Private Partnership Infrastructure Projects.

18 Remuneration to auditors of the subsidiaries and joint ventures not audited by any of the joint auditors of the Company are grouped with professional fees.

19 Derivative instruments and unhedged foreign currency exposure

There are no derivative instruments outstanding as at September 30, 2014 and as at December 31, 2013. The Company has no foreign currency exposure towards liability outstanding as at September 30, 2014 and as at December 31, 2013.

20 Previous period''s comparatives

Previous period figures have been regrouped or reclassified wherever necessary. The current period is for a nine month period from January 1, 2014 to September 30, 2014. The comparitive figures for the previous period are also for a nine month period from April 1, 2013 to December 31, 2013. The figures are not strictly comparable.


Dec 31, 2013

1. Employees Stock Options Scheme (''ESOP'')

All balance options under the ESOP schemes issued in the previous years (ESOP Scheme 2007 and ESOP scheme 2008), have lapsed during the current period.

During the current financial period the Company has instituted an ESOP Scheme "GIPL ESOP 2013", approved by the shareholders vide their resolution dated September 20, 2013, as per which the Board of Directors of the Company granted 6,160,000 equity-settled stock options to the eligible employees. Pursuant to the ESOP Scheme each options entitles an employee to subscribe to 1 equity share of Rs. 2 each of the Company at an exercise price of Rs. 2 per share upon expiry of the respective vesting period which ranges from one to four years commencing from October 1, 2014. During the current period, 840,000 options were forfeited / lapsed and balance 5,320,000 options are outstanding.

II Details of Inter-corporate deposit ''ICD'' from MNEL :

This unsecured ICD currently carries an interest rate of 12.30% p.a. It''s repayment is in 36 structured monthly installments commencing from April 2018 to March 2021.

III Details of Inter-corporate deposit ''ICD'' from AEL and REL :

These are unsecured interest free ICD''s repayable on March 31, 2016.

a) The above term loan from financial Institution is secured by:

1) Pledge of equity shares of Subsidiary for an aggregate value of Rs. 1,433,447,400/- (PY: Rs. 2,194,500,000/-)

2) A first and exclusive charge on the: (i) Designated account

(ii) Debt Service Reserve aggregating to Rs. 73,500,001/- as on December 31, 2013 (Rs. 101,021,821/- as on March 31, 2013). (iii) Surplus Monies and (iv) the sale proceeds to be received by the Company upon Mumbai Nasik Expressway Limited ''MNEL'' Stake sale and/or the Lender exercising its power in respect of the Borrower''s stake in MNEL under the Loan Agreement.

The balance is secured by equity shares pledged by the promoter Company, hence is shown as unsecured portion.

b) This term loan carries an interest rate of 14.00% p.a. It''s repayment is due on September 15, 2014.

2. Related Party Disclosure

a. Relationships :

Entity where control exists :

1 Gammon India Limited - Holding Company

Subsidiaries:

1 Andhra Expressway Limited

2 Aparna Infraenergy India Pvt Ltd

3 Birmitrapur Barkote Highway Pvt Ltd

4 Chitoor Infrastructure Company Private Limited

5 Cochin Bridge Infrastructure Company Limited

6 Dohan Renewable Energy Private Limited

7 Earthlink Infrastructure Projects Pvt Ltd

8 Gammon Logistics Limited

9 Gammon Projects Developers Limited

10 Gammon Renewable Energy Infrastructure Projects Limited

11 Gammon Road Infrastructure Limited

12 Gammon Seaport Infrastructure Limited

13 Ghaggar Renewable Energy Private Limited

14 Gorakhpur Infrastructure Company Limited

15 Haryana Biomass Power Limited

16 Indori Renewable Energy Private Limited

17 Jaguar Projects Developers Limited

18 Kasavati Renewable Energy Private Limited

19 Kosi Bridge Infrastructure Company Limited

20 Lilac Infraprojects Developers Limited

21 Markanda Renewable Energy Private Limited

22 Marine Projects Services Limited

23 Mumbai Nasik Expressway Limited

24 Mormugao Terminal Limited

25 Pataliputra Highway Limited

26 Patna Buxar Highway Limited

27 Patna Highway Projects Limited

28 Pravara Renewable Energy Limited

29 Ras Cities and Townships Private Limited

30 Rajahmundry Expressway Limited

31 Rajahmundry Godavari Bridge Limited

32 Satluj Renewable Energy Private Limited

33 Segue Infrastructure Projects Pvt Ltd

34 Sidhi Singrauli Road Project Ltd

35 Sikkim Hydro Power Ventures Limited

36 Sirsa Renewable Energy Private Limited

37 Tada Infra Development Company Limited

38 Tangri Renewable Energy Private Limited

39 Tidong Hydro Power Limited

40 Vijaywada Gundugolanu Road Project Pvt Ltd

41 Vizag Seaport Private Limited

42 Yamuna Minor Minerals Private Limited

43 Yamunanagar Panchkula Highway Pvt Ltd

44 Youngthang Power Ventures Limited

Joint Ventures:

1 Blue Water Iron Ore Terminal Private Limited

2 Indira Container Terminal Private Limited

3 SEZ Adityapur Limited

4 Maa Durga Expressway Pvt Ltd (refer note 33)

5 GIPL - GIL JV

Associates:

1 Eversun Sparkle Maritime Services Limited

2 ATSL Infrastructure Projects Limited

3 Modern Tollroads Limited

Key Management Personnel:

1 Abhijit Rajan

2 Kishor Kumar Mohanty

3 R K Malhotra (up to May 7, 2013)

4 Parag Parikh

3. Contingent Liabilities

1) Guarantees:

a) The Company has issued Corporate Guarantees as a security for loan availed by its subsidiaries, amounting to Rs. 2,495,000,000 (previous year Rs. 1,185,200,000)

b) Counter Guarantees given to the bankers for the guarantees given by them on our behalf Rs. 3,724,586,200 (previous year Rs. 2,964,822,400).

2) Disputed demand in respect of assessment year 2007-08 u/s 271(1)(c ) amounting to Rs. 13,440,400 (previous year Rs. 13,440,400) not provided for. The Company has contested the demand and the management believes that its position will likely be upheld in the appellate process.

3. The Company has executed an agreement on August 30, 2013 with Simplex Infrastructures Limited (SIL) to terminate shareholders agreement for purchasing 49% in Maa Durga Expressways Private Limited (MDEPL). With this agreement the shares of MDEPL will be sold back to SIL at cost. Consequentially an amount receivable of Rs. 325.45 lakhs from MDEPL is written-off as bad debt.

4. Pravara Renewable Energy Limited (a wholly owned subsidiary of the Company) has fled the requisite petition in the Hon. Bombay High Court for approval of the Scheme for its merger with the Company. Pending the approval of the Hon. Bombay high Court, the financial statement do not contain any effect of the Scheme of the merger.

5. During the current period two wholly owned subsidiaries of the Company have initiated correspondence with NHAI requesting for closure of its projects on mutually acceptable terms on account of NHAI''s inability to fulfill conditions precedent due to non-availability of Right of Way to the Site and non-receipt of Environment and Forest Clearances. The Company has made equity contributions and advances amounting to Rs. 40,60,52,000/- and guarantees of Rs. 38,91,00,000/- in this projects. The closure is subject to confirmation by NHAI and involves a process of discussions and settlement between the Company and NHAI to determine the terms of closure or continuance of the project, pending which, no adjustments have been made in the financial statements.

6. As on December 31, 2013, current liabilities exceed current assets by Rs. 4,570,946,831 and the Company has incurred cash losses in the 9 months ended December 31, 2013. The Company is taking various steps to meet its commitments, both, short term and long term in nature. The Company intends to monetize some of its mature assets, as well as securitize some of its future receivables. The Company is in active discussions with various lenders for raising additional long term debts. The Company will also generate Operation and Maintenance income as further projects get operational as well as contracting income and developer fees out of the new projects that it has been awarded. Based on detailed evaluation of the current situation, plans formulated and active discussions underway with various stakeholders, management is confident that the going concern assumption and the carrying values of the assets and liabilities in these financial statements are appropriate. Accordingly the accompanying financial statements do not include any adjustments that may result from these uncertainties.

7. In the opinion of the Board of Directors, all 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..

8. Lease

The Company has taken office premises on leave and license basis which are cancellable contracts.

9. Segment Reporting

The Company''s operations constitutes a single business segment namely "Infrastructure Development" as per AS 17. Further, the Company''s operations are within single geographical segment which is India.

10. Derivative Instruments and Unhedged Foreign Currency Exposure

There are no derivative instruments outstanding as at December 31, 2013 and as at March 31, 2013. The Company has no foreign currency exposure towards liability outstanding as at December 31, 2013 and as at March 31, 2013.

11. Prior Period comparatives

Current period''s figures are for the period from April 1, 2013 to December 31, 2013 and that of previous year are for the period from April 1, 2012 to March 31, 2013. Therefore, the figures for the current period are not comparable with those of the previous year, however previous year''s figures have been regrouped and rearranged wherever necessary to conform to this period''s classification.


Mar 31, 2013

1. Corporate Information

The Company is an infrastructure development company formed primarily to develop, invest in and manage various initiatives in the infrastructure sector. It is presently engaged in the development of various infrastructure projects in sectors like transportation, energy and urban infrastructure through several special purpose vehicles ("SPVs"). It is also engaged in carrying out operation and maintenance ("O&M") activities for the transportation sector projects.

2. Basis of Preparation

The financial statements have been prepared to comply in all material respects with the notified accounting standards by the Companies (Accounting Standards) Rules 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention, on an accrual basis of accounting.

The classification of assets and liabilities of the Company is done into current and non-current based on the criterion specified in the Revised Schedule VI notified under the Companies Act, 1956.

The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year.

3. Related Party Disclosure

a. Relationships :

Entity where control exists :

1 Gammon India Limited - Holding Company

Subsidiaries:

1 Andhra Expressway Limited

2 Aparna Infraenergy India Pvt Ltd

3 Birmitrapur Barkote Highway Pvt Ltd (From April 13, 2012)

4 Chitoor Infrastructure Company Private Limited

5 Cochin Bridge Infrastructure Company Limited

6 Dohan Renewable Energy Private Limited

7 Earthlink Infrastructure Projects Pvt Ltd

8 Gammon Logistics Limited

9 Gammon Projects Developers Limited

10 Gammon Renewable Energy Infrastructure Limited

11 Gammon Road Infrastructure Limited

12 Gammon Seaport Infrastructure Limited

13 Ghaggar Renewable Energy Private Limited

14 Gorakhpur Infrastructure Company Limited

15 Haryana Biomass Power Limited

16 Indori Renewable Energy Private Limited

17 Jaguar Projects Developers Limited

18 Kasavati Renewable Energy Private Limited

19 Kosi Bridge Infrastructure Company Limited

20 Lilac Infraprojects Developers Limited

21 Markanda Renewable Energy Private Limited

22 Marine Projects Services Limited

23 Mumbai Nasik Expressway Limited

24 Mormugao Terminal Limited (From December 26, 2012)

25 Pataliputra Highway Limited

26 Patna Buxar Highway Limited

27 Patna Highway Projects Limited

28 Pravara Renewable Energy Limited

29 Ras Cities and Townships Private Limited

30 Rajahmundry Expressway Limited

31 Rajahmundry Godavari Bridge Limited

32 Satluj Renewable Energy Private Limited

33 Segue Infrastructure Projects Pvt Ltd

34 Sidhi Singrauli Road Project Ltd (From April 24, 2012)

35 Sikkim Hydro Power Ventures Limited

36 Sirsa Renewable Energy Private Limited

37 Tada Infra Development Company Limited

38 Tangri Renewable Energy Private Limited

39 Tidong Hydro Power Limited

40 Vijaywada Gundugolanu Road Project Pvt Ltd

41 Vizag Seaport Private Limited

42 Yamuna Minor Minerals Private Limited

43 Yamunanagar Panchkula Highway Pvt Ltd (From April 13, 2012)

44 Youngthang Power Ventures Limited

Joint Ventures:

1 Blue Water Iron Ore Terminal Private Limited

2 Indira Container Terminal Private Limited

3 SEZ Adityapur Limited

4 Maa Durga Expressway Pvt Ltd

Associates:

1 Eversun Sparkle Maritime Services Limited

2 ATSL Infrastructure Projects Limited

3 Modern Tollroads Limited

Key Management Personnel:

1 Abhijit Rajan

2 Kishor Kumar Mohanty

3 R K Malhotra

4 Parag Parikh

4. Contingent Liabilities

1) Guarantees:

a) The Company has issued Corporate Guarantees as a security for loan availed by its subsidiaries, amounting to Rs. 1,185,200,000 (previous yearRs. 2,950,000,000)

b) Guarantees given for equity share buy-back transaction;Rs. 925,965,501 as on March 31, 2013 andRs. 1,186,657,102 as on March 31, 2012.

c) Counter Guarantees given to the bankers for the guarantees given by them on our behalf Rs. 2,964,822,400 (Previous year Rs. 2,219,792,800).

2) Disputed demand in respect of assessment year 2007-08 u/s 271(1)(c ) amounting toRs. 13,440,400 not provided for.

5. In the opinion of the Board of Directors, all assets other than fixed assets and non-current investments have a value onrealization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet.

6. Lease

The Company has taken office premises on leave and license basis which are cancellable contracts.

7. Segment Reporting

The Company''s operations constitutes a single business segment namely "Infrastructure Development" as per AS 17. Further, the Company''s operations are within single geographical segment which is India.

8. Derivative Instruments and Unhedged Foreign Currency Exposure

There are no derivative instruments outstanding as at March 31, 2013 and as at March 31, 2012. The Company has no foreign currency exposure towards liability outstanding as at March 31, 2013 and March 31, 2012.

9. Prior Period comparatives

Previous year''s figures have been regrouped and rearranged where necessary to conform to this year''s classification.


Mar 31, 2012

1. CORPORATE INFORMATION

The Company is an infrastructure development company formed primarily to develop, invest in and manage various initiatives in the infrastructure sector. It is presently engaged in the development of various infrastructure projects in sectors like transportation, energy and urban infrastructure through several special purpose vehicles ("SPVs"). It is also engaged in carrying out operation and maintenance ("O&M") activities for the transportation sector projects.

2. BASIS OF PREPARATION

The financial statements have been prepared to comply in all material respects with the notified accounting standards by the Companies (Accounting Standards) Rules 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention, on an accrual basis of accounting.

The classification of assets and liabilities of the Company is done into current and non-current based on the criterion specified in the Revised Schedule VI notified under the Companies Act, 1956.

Basis of Presentation

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.

The accounting policies adopted in the preparation of financial statements are consistent with those used in the previous year, except for the change in accounting policy explained in note 2.1 a.

b) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 2/- per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after payment of all external liabilities . The distribution will be in proportion to the number of equity shares held by the shareholders.

3. Employees Stock Options Scheme ('ESOP')

The Company has instituted an ESOP Scheme "GIPL ESOP 2007" scheme during the year 2007-08, approved by the shareholders vide their resolution dated May 4, 2007, as per which the Board of Directors of the Company granted 1,640,000 equity-settled stock options to its employees pursuant to the ESOP Scheme on July 1, 2007 and OCTober 1, 2007. Each options entitles an employee to subscribe to 1 equity share of Rs. 10 each of the Company at an exercise price of Rs. 80 per share. During the year 2008-09, the Compensation Committee of the Board of the Directors of the Company at its meeting held on OCTober 1, 2008, has further granted 920,000 equity-settled options to eligible employees of the Company at the market price of Rs. 63.95 per equity share of Rs. 10 each, prevailing on September 30, 2008 upon expiry of the respective vesting period which ranges from one to three years. During the current year, 229,500 (Previous year 150,000) options were forfeited / lapsed. Out of the options granted, 485,750 (Previous year 715,250) are outstanding at the end of the year.

During the year 2008-09, the Compensation Committee of the Board of the Directors of the Company at its meeting held on OCTober 1, 2008, instituted a new ESOP Scheme "GIPL ESOP 2008" scheme as per which the Company has further granted 490,000 equity-settled options to eligible employees of the Company at the market price of Rs. 63.95 per equity share of Rs. 10 each, prevailing on September 30, 2008 upon expiry of the respective vesting period which ranges from one to three years. During the current year, 33,334 (Previous year 25,000) options were forfeited / lapsed. Out of the options granted, 93,334 (Previous year 126,668) are outstanding at the end of the year.

Further, during the year 2009-10, the Compensation Committee of the Board of the Directors of the Company at its meeting held on May 8, 2009 has further granted 210,000 equity-settled options to eligible employees of the Company at the market price of Rs. 72.10 per equity share of Rs. 10 each, prevailing on that date upon expiry of the vesting period of three years. During the current year, 20,308 (Previous year 68,000) options were forfeited / lapsed while 4,692 (previous year: 17,000) options were exercised by the employees. Out of the options granted, 100,000 (Previous year 125,000) are outstanding at the end of the year.

The Company was an unlisted Company at the date when options were granted under GIPL ESOP 2007 scheme and therefore the intrinsic value was determined on the basis of an independent valuation by following the price to Net Asset Value (NAV) method.

If the compensation cost been determined in accordance with the fair value approach described in the guidance note, the Company's net profit for the year ended March 31, 2011 as reported would have changed to amounts indicated below:

4. Employees 'ESOP' compensation cost:

During the previous years, the Compensation Committee of the Board of Directors has implemented a scheme of Retention Bonus for its employees under this scheme, employees (excluding the Managing Director), to whom stock options were offered in the current year are entitled to a cash alternative to the options which would be payable in lieu of their not exercising the right to apply for the shares against the options granted under the ESOP schemes. During the year, a provision of Rs. 3,895,902 (Previous year Rs. 11,436,424) has been made for Cash Compensation in accordance with the Guidance Note on Accounting of Employees Share Based Payments issued by the Institute of Chartered Accountant of India.

5. Gratuity

Gratuity is a defined benefit plan under which employees who have completed five years or more of service are entitled to gratuity on departure from employment at an amount equivalent to 15 days salary (based on last drawn salary) for each completed year of service. The Companies gratuity liability is unfunded.

The following tables summarise the components of net benefit expense recognised in the statement of profit and loss and amounts recognised in the balance sheet.

Amounts due to micro, small and medium enterprises

As per the information available with the Company, there are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, 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 by the Auditors.

6. UTILISATION OF MONEY RAISED THROUGH IPO

a) The Company had made an Initial Public Offer of 16,550,000 equity shares of Rs. 10/- each at a premium of Rs. 157 per share in the year 2007-08. The equity shares pursuant to the offer were allotted on March 27, 2008.

During the year Nil (Previous year Nil) equity shares were fully paid on receipt of the balance allotment money. The total number of partly paid equity shares was Nil (Previous year Nil) The Board of Directors of the Company, in their meeting held on July 31, 2009, forfeited the said 162,050 equity shares on which allotment money remained unpaid.

In terms of the approval of the members in the General Meeting held on September 15, 2008, authorising the Company to utilise the IPO proceeds for investments in other infrastructure projects of the Company including, acquisition of any such projects and repayment of loans availed by the Company, for any such purpose in addition to the purpose already specified in the prospectus, the Company has utilised a sum of Rs. 1,696,173,442 (Previous year Rs. 1,695,613,940) as of March 31, 2012 as follows:

7. RELATED PARTY DISCLOSURE

a) Relationships:

Entity WHERE CONTROL EXISTS:

1 Gammon India Limited - Holding Company SUBSIDIARIES:

1 Andhra Expressway Limited

2 Aparna Infraenergy India Private Limited (w.e.f. August 4, 2011)

3 Chitoor Infrastructure Company Private Limited

4 Cochin Bridge Infrastructure Company Limited

5 Dohan Renewable Energy Private Limited

6 Earthlink Infrastructure Projects Private Limited (earlier known as Satyavedu Infrastructure Company Projects Limited)

7 Gammon Logistics Limited

8 Gammon Projects Developers Limited

9 Gammon Renewable Energy Infrastructure Limited

10 Gammon Road Infrastructure Limited

11 Gammon Seaport Infrastructure Limited

12 Ghaggar Renewable Energy Private Limited

13 Gorakhpur Infrastructure Company Limited

14 Haryana Biomass Power Limited (JV in previous year)

15 Indori Renewable Energy Private Limited

16 Jaguar Projects Developers Limited

17 Kasavati Renewable Energy Private Limited

18 Kosi Bridge Infrastructure Company Limited

19 Lilac Infraprojects Developers Limited

20 Markanda Renewable Energy Private Limited

21 Marine Projects Services Limited

22 Mumbai Nasik Expressway Limited

23 Patliputra Highway Limited (earlier known as Gammon Metro Transport Limited)

24 Patna Buxar Highway Limited (w.e.f. November 22, 2011)

25 Patna Highway Projects Limited

26 Pravara Renewable Energy Limited

27 Ras Cities and Townships Private Limited

28 Rajahmundry Expressway Limited

29 Rajahmundry Godavari Bridge Limited

30 Satluj Renewable Energy Private Limited

31 Segue Infrastructure Projects Private Limited (earlier known as Tada Sez Pvt Ltd)

32 Sikkim Hydro Power Ventures Limited

33 Sirsa Renewable Energy Private Limited

34 Tada Infra Development Company Limited (earlier known as Gammon Hospitality Limited)

35 Tangri Renewable Energy Private Limited

36 Tidong Hydro Power Limited

37 Vijaywada Gundugolanu Raod Project Private Limited (w.e.f. March 1, 2012)

38 Vizag Seaport Private Limited

39 Yamuna Renewable Energy Private Limited

40 Youngthang Power Ventures Limited JOINT VENTURES:

1 Blue Water Iron Ore Terminal Private Limited

2 Indira Container Terminal Private Limited

3 Punjab Biomass Power Limited

4 SEZ Adityapur Limited ASSOCIATES:

1 Eversun Sparkle Maritime Services Limited

2 ATSL Infrastructure Projects Limited

3 Modern Tollroads Limited PARTNERSHIP:

1 Aparna Infraenergy (upto August 3, 2011)

KEY MANAGEMENT PERSONNEL:

1 Abhijit Rajan

2 Kishor Kumar Mohanty (w.e.f April 12, 2011)

3 R K Malhotra (w.e.f April 1, 2011)

4 Parag Parikh (w.e.f August 25, 2011)

5 Himanshu Parikh (upto March 31, 2011)

6 Parvez Umrigar (upto July 3, 2010)

8. CONTINGENT LIABILITIES Guarantees

a) The Company has issued Corporate Guarantees as a security for loan availed by its subsidiaries, amounting to Rs. 2,950,000,000 (previous year Rs. 850,000,000)

b) Guarantees given for equity share buy-back transaction; Rs. 1,186,657,102 as on March 31, 2012 and March 31, 2011.

c) Counter Guarantees given to the bankers for the guarantees given by them on our behalf Rs. 2,219,792,800 (Previous year Rs. 2,395,797,800).

9. CURRENT ASSETS, LOANS AND ADVANCES

In the opinion of the Board of Directors, 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.

10. LEASE

The Company has taken office premises on leave and license basis which are cancellable contracts.

11. SEGMENT REPORTING

The Company's operations constitutes a single business segment namely "Infrastructure Development" as per AS 17. Further, the Company's operations are within single geographical segment which is India.

12. DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

There are no derivative instruments outstanding as at March 31, 2012 and as at March 31, 2011. The Company has no foreign currency exposure towards liability outstanding as at March 31, 2012 and March 31, 2011.


Mar 31, 2011

A. Background

- The Company is an infrastructure development company formed primarily to develop, invest in and manage various initiatives in the infrastructure sector. It is presently engaged in the development of various infrastructure projects in sectors like transportation, energy and urban infrastructure through several special purpose vehicles ("SPVs"). It is also engaged in carrying out operation and maintenance ("O&M") activities for the transportation sector projects.

1. INVESTMENTS

a) The Company has over and above its legal ownership of 37,458,063 (Previous year: 25,418,378] equity shares, in Gorakhpur Infrastructure Company Limited CGICL'j, acquired beneficial, controlling interest and voting rights in respect of 14,947.238 (Previous year: 9,596,923) equity shares.

b) During the year the Company acquired beneficial, controlling interest and voting rights in respect of 10,000 equity shares of Chitoor Infrastructure Company Private Ltd, Satyavedu Infra Company Private Limited and Tada Sez Private Limited each.

c) The Company has incorporated two new companies namely Lilac Infra Projects Developers Limited CLIPDL) and Satluj Renewable Energy Private Limited I'SREPL) as subsidiary, in the current year under review.

d)- Gammon Hospitality Ltd i'GHL'j, a wholly owned subsidiary of the Company was renamed as Tada Infra Development Company Ltd (TIDCL) during the year.

f) During the year the Company sold 1,160 bonus equity shares in Tata Consultancy Services Limited. The Company earned a long term capital gain ofRs. 1,352,219 (Previous year Rs. 36,517,961)

2. SUNDRY DEBTORS

Sundry Debtors as at March 31, 2011, represents amounts due from the holding company, GIL in respect of the Operations and Maintenance Contract, from subsidiary, Mumbai Nasik Expressway Limited in respect of the Maintenance contract and from Patna Highway Projects Limited in respect of Developer Fees.

3. INITIAL PUBLIC OFFER ('IPO']:

a] The Company had made an Initial Public Offer of 16,550,000 equity shares of Rs. 10/- each at a premium of Rs. 157 per share in the year 2007-08. The equity shares pursuant to the offer were allotted on March 27, 2008.

During the year Nil (Previous year 20,825) equity shares were fully paid on receipt of the balance allotment money. The total number of partly paid equity shares was Nil (Previous year 162,050] The Board of Directors of the Company, in their meeting held on July 31, 2009, forfeited the said 162,050 equity shares on which allotment money remained unpaid.

4. SUB-DIVISION OF EQUITY SHARES:

During the year ended March 31. 2010, the Company had with the approval of shareholders, sub-divided the face value of its equity shares from Rs. 10 per eauity share to Rs. 2 per equity share. The record date for effecting the sub-division was October 27, 2009.

5. LEASE

The Company has obtained its registered premises on operating lease from its holding company, GIL. It is a cancellable, non-renewable agreement with no escalation clause. The annual lease rentals are Rs. 1,200,000 plus service tax (Previous year Rs. 1,200,000]. There are no restrictions imposed on the Company by the lease agreement and there are no sub-leases.

6. SEGMENT REPORTING

The Company's operations constitutes a single business segment namely "Infrastructure Development" as per AS 17. Further, the Company's operations are within single geographical segment which is India.

7. RELATED PARTY DISCLOSURE

a. Relationships:

Entity where control exists :

1. Gammon India Limited - Holding Company Subsidiaries:

1. Andhra Expressway Limited

2. Chitoor Infrastructure Company Private Limited

3. Cochin Bridge Infrastructure Company Limited

4. Dohan Renewable Energy Private Limited

5. Gammon Logistics Limited

6. Gammon Projects Developers Limited

7. Gammon Renewable Energy Infrastructure Limited

8. Gammon Road Infrastructure Limited

9. Gammon Seaport Infrastructure Limited

10. Ghaggar Renewable Energy Private Limited

11. Gorakhpur Infrastructure Company Limited

12. Indori Renewable Energy Private Limited

13. Jaguar Projects Developers Limited

U. Kasavati Renewable Energy Private Limited

15. Kosi Bridge Infrastructure Company Limited

16. Lilac Infraprojects Developers Limited

17. Markanda Renewable Energy Private Limited

18. Marine Projects Services Limited

19. Mumbai Nasik Expressway Limited

20. Pataliputra Highway Limited

21. Patna Highway Projects Limited

22. Pravara Renewable Energy Limited

23. Ras Cities and Townships Private Limited

24. Rajahmundry Expressway Limited

25. Rajahmundry Godavari Bridge Limited

26. Satluj Renewable Energy Private Limited

27. Satyavedu Infra Company Private Limited

28. Sikkim Hydro Power Ventures Limited

29. Sirsa Renewable Energy Private Limited

30. Tada Infra Development Company Limited (formerly known as Gammon Hospitality Limited)

31. Tada Sez Private Limited

32. Tangri Renewable Energy Private Limited

33. Tidong Hydro Power Limited

34. Vizag Seaport Private Limited

35. Yamuna Renewable Energy Private Limited

36. Youngthang Power Ventures Limited

Associates and Joint Ventures:

1. Blue Water Iron Ore Terminal Private Limited

2. Eversun Sparkle Maritime Services Limited

3. Haryana Biomass Power Limited

4. Indira Container Terminal Private Limited

5. Modern Tollroads Limited

6. Punjab Biomass Power Limited

7. SEZ Adityapur Limited

8. ATSL Infrastructure Projects Limited

Key Management Personnel:

1. Abhijit Rajan

2. Parvez Umrigar (upto July 3, 2010]

3. Himanshu Parikh (w.e.f. July 3, 2010)

b. Details of related parties transactions for the year ended on March 31, 2011. - Please refer to the Annexure -

8. CURRENT ASSETS, LOANS AND ADVANCES

In the opinion of the Board of Directors, Current Assets, Loans and Advances 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

9. CAPITAL COMMITMENTS

The total capital commitments of the Company as on March 31, 2011 are Rs. 4,414,375,955 (inclusive of share of capital commitment in joint ventures]. Total capital commitment as on March 31, 2010, was Rs. 4,924,620.870. The capital commitment is in respect of projects where the concession agreements have been signed and does not include projects where the Company holds a Letter of Intent.

10. EMPLOYEES STOCK OPTIONS SCHEME CESOP'I

The Company has instituted an ESOP Scheme "GIPL ESOP 2007" scheme during the year 2007-08, approved by the shareholders vide their resolution dated May U, 2007, as per which the Board of Directors of the Company granted 1.640.000 equity-settled stock options to its employees pursuant to the ESOP Scheme on July 1, 2007 and October 1, 2007. Each options entitles an employee to subscribe to 1 equity share of Rs. 10 each of the Company at an exercise price of Rs. 80 per share. During the year 2008-09, the Compensation Committee of the Board of the Directors of the Company at its meeting held on October 1, 2008, has further granted 920,000 equity-settled options to eligible employees of the Company at the market price of Rs. 63.95 per equity share of Rs. 10 each, prevailing on September 30, 2008 upon expiry of the respective vesting period which ranges from one to three years. During the current year, 150,000 (Previous year 180,000] options were forfeited / lapsed. Out of the options granted, 715,250 (Previous year 1.555.0001 are outstanding at the end of the year.

During the year 2008-09, the Compensation Committee of the Board of the Directors of the Company at its meeting held on October 1, 2008, instituted a new ESOP Scheme "GIPL ESOP 2008" scheme as per which the Company has further granted 490,000 equity-settled options to eligible employees of the Company at the market price of Rs. 63.95 per equity share of Rs. 10 each, prevailing on September 30, 2008 upon expiry of the respective vesting period which ranges from one to three years. During the current year, 25,000 (Previous year 185,000) options were forfeited / lapsed. Out of the options granted, 126,668 (Previous year 305,000) are outstanding at the end of the year.

Further, during the year 2009-10, the Compensation Committee of the Board of the Directors of the Company at its meeting held on May 8, 2009 has further granted 210,000 equity-settled options to eligible employees of the Company ' at the market price of Rs. 72.10 per equity share of Rs. 10 each, prevailing on that date upon expiry of the vesting period of three years. During the current year, 68,000 (Previous year Nil) options were forfeited / lapsed. Out of the options granted, 125,000 (Previous year 210,000) are outstanding at the end of the year.

The Company was an unlisted Company at the date when options were granted under GIPL ESOP 2007 scheme and therefore the intrinsic value was determined on the basis of an independent valuation by following the price to Net Asset Value (NAV) method.

11. RETENTION BONUS FOR EMPLOYEES

During the previous years, the Compensation Committee of the Board of Directors has implemented a scheme of Retention Bonus for its employees Under this scheme, employees [excluding the managing Director), to whom stock options were offered in the current year are entitled to a cash alternative to the options which would be payable in lieu of their not exercising the right to apply for the shares against the options granted under the ESOP schemes. During the year, a provision of Rs. 11,436,424 (Previous year Rs. 11,065,132) against Cash Compensation in accordance with guidance note on accounting of employees share based payments.

12. EMPLOYEE BENEFITS Gratuity

Gratuity is a defined benefit plan under which employees who have completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The gratuity liability is unfunded.

13. PLEDGE OF SHARES

The Company has pledged the following shares in favour of the lenders to the projects as part of the terms of financing agreements of the respective companies and for availing non fund based limits from the banks:

14. CONTINGENT LIABILITIES

a) The Company has issued a Corporate Guarantee ofRs. 150,000,000 (Previous year Rs. 150,000,000) in favour of Bank of Maharashtra, as a security for loan availed by Cochin Bridge Infrastructure Company Limited, a subsidiary.

b) Counter Guarantees given to the bankers for the guarantees given by them on our behalf Rs. 2,395,797,800 (Previous yearRs. 1,579,310,000).

c) The Company has extended corporate guarantees on behalf of its two subsidiaries, Sikkim Hydro Power Ventures Limited for Rs. 250,000,000 (Previous year: Rs. 250,000,000) and Youngthang Power Ventures Limited for Rs. 450,000,000 (Previous year : Rs. 450,000,000) for availing unsecured loans from the banks.

d) Disputed demand of Rs. 6,985,000 (Previous year: Nit) towards encashment of 5% of bid security for a project by NHAI.

15. DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

There are neither any derivative instruments outstanding as at March 31, 2011 nor any unhedged foreign currency exposure towards liability outstanding as at March 31, 2011. In the previous year there were unhedged foreign currency exposures of US$4,696 (Rs. 211,977) and of British Sterling Pound 126,035 (Rs. 8,574,514) of liability outstanding towards legal services. Further, there was an unhedged foreign currency exposure of US$ 50,000 (Rs. 2,257,000) towards advance paid.

16. AMOUNTS DUE TO MICRO, SMALL AND MEDIUM ENTERPRISES

As per the information available with the Company, there are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, 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 by the Auditors.

17. QUANTITATIVE INFORMATION

Since the principal business of the Company is Infrastructure Development and carrying out operations and maintenance activities, quantitative details as required by Part II, para 3(ul, 4(c). 4(dl of Schedule VI of the Companies Act, 1956, are not required to be furnished

18. PRIOR PERIOD COMPARATIVES

Previous year's figures have been regrouped where necessary to conform to this year's classification.









 
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