Notes to Accounts of AJR Infra and Tolling Ltd.

Mar 31, 2018

A 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.

The financial statements were authorised for issue in accordance with the resolution passed at the meeting of the board of directors on June 13, 2018.

B Recent accounting pronouncements

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs (““MCA”“) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company has evaluated the effect of this on the financial statements and expects no impact on profit before tax.

Ind AS 115- Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers.

The standard permits two possible methods of transition:

- Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors

- Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)

The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018.

The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. This will have no significant effect on the financials statements on adoption of Ind AS 115 .

C Significant Accounting Policies

I Basis of Preparation

These financial statements are Standalone Financial Statements and are prepared in accordance with Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

The standalone financial statements are presented in INR and all values are rounded to the nearest Rupees in lacs, except otherwise stated.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

The classification of assets and liabilities of the Company is done into current and non-current based on the operating cycle of the business of the Company. The operating cycle of the business of the Company is less than twelve months and therefore all current and non-current classifications are done based on the status of realisability and expected settlement of the respective asset and liability within a period of twelve months from the reporting date as required by Schedule III to the Companies Act, 2013.

II Use of estimates

The preparation of the financial statememts in conformity with Ind AS requires management to make estimates, judgements and assumptions. These estimates,judgements and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of financial statements and reported amounts of revenues and expenses during the period. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of circumstances surrounding the estimates. Changes in estimates are reflected in the finacial statement in the period in which changes are made and if material, their effects are disclosed in the notes to the financial statements.

1 The Company has carried out the exercise of assessment of any indications of impairment to its property, plant and equipment as on the Balance Sheet date. Pursuant to such exercise it is determined that there has been no impairment to its property, plant and equipment during the year.

b) 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 for facilities taken by GIPL or its project SPV’s as indicated below:

Expected Credit Loss:

The Company uses a provision matrix to determine impairment loss on portfolio of its trade receivable. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward- looking estimates. At every reporting date, the historical observed default rates are updated and changes in forward-looking estimates are analysed. Based on the past experience of receivables the Company has not provided for expected credit loss since the amounts are receivable from its SPV and there are no experience of losses on receivable in the past . The only case of provision is due to termination of contract with NHAI which has a separate receivable and not in normal course of business.

(*) Others considered good includes Rs. 1,514.01 lacs Due from Western Coalfields on account of wrongful encashment of bank guarantee against which the company has filed a suit and is legally advised that it has a good case of recovery. Refer detailed note no. 33

(**) Advance for Purchase of Shares:- The Company had entered into an Agreement for Sale and Subscription of Shares (SSA) with IFCI Limited for 8,64,80,000 equity shares of Rajahmundry Godavari Bridge Limited (RGBL) . However the company could not adhere to the terms of the aforesaid arrangement. The advance for purchase of shares represents advance paid to IFCI for purchase of equity shares of RGBL held by IFCI. The company has an obligation to pay an additional amount of Rs 3,500 Lacs representing the balance consideration as per terms of one time settlement, after discharge of which, RGBL shares held by IFCI would be transferred to the company. The Company has defaulted in fulfilling its obligation under the one time settlement (OTS) with IFCI Limited. The Company was required to pay the entire outstanding by September 30, 2017. The Company has been unable to discharge the liability and has not been able to get further extension for the payment of the outstanding although it is actively engaged with IFCI Limited for the extension of the time period for the payment of the outstanding. In terms of the original arrangement, the benefits received under the one time settlement of Rs. 3,776.69 lacs is to be reversed. The management is hopeful of receiving the extension with non-reversal of the benefits of OTS. Pending that no adjustments have been made in these financial results. The Company has however provided interest at the rate of 11.50% p.a. as per the agreement. The interest payable on the outstanding amount before reversal of the aforesaid benefit as on balance sheet date is Rs 158.13 lacs.

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. The shareholders are entitled to dividend in the proportion of their shareholding. 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.

c) Shares held by holding / ultimate holding company and /or their subsidiaries / associates

Out of equity shares issued by the Company, shares held by its holding / ultimate holding Company and /or their subsidiaries / associates are as follows:

e) As per the records of the Company, including its register of shareholders/members and other declarations received from shareholders, the above shareholding represents legal ownerships of the shares.

f) During the year Gammon Power Limited sold its shares thereby reducing its sharholding to 38.54% and Gactel Turnkey Projects Limited sold its entire shares. Gammon India limited ceased to be ultimate holding company and Gammon power limited ceased to be holding company w.e.f. September 7, 2017.

g) The Company had issued bonus shares in the year ended Mar’13 to the shareholders other than the promoter group in the ratio of 1:34 (with the fractions being rounded-off to the next higher whole number) aggregating to 5,262,820 equity shares of Rs. 2 each as fully paid by utilising securities premium account aggregating to Rs. 105.26 lacs/-

h) Shares reserved under options to be given:

60,000 equity shares (March 31, 2017 : 1,20,000 equity shares ) have been reserved for issue as Employee Stock Options. For details refer Note 8A .

A Employees Stock Options Scheme (‘ESOP’):-

During the financial period ending Dec’13 the Company had 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.

Of the aforesaid vested options of 1,20,000 ( March 17: 2,40,000 option) , 60,000 options (March 17: 1,20,000 options vested) were lapsed during the year .

The Company has used intrinsic value method for valuation of options by reducing the exercise price from the market value. However if the compensation cost would have been determined using the alternative approach to value options at fair value, the Company’s net loss would have been changed to amounts indicated below:

a) Details of ICD from VSPL :

Based on the revised terms with VSPL :- Moratorium in repayment of the principal and interest overdue outstanding of Rs 10,976.97 lacs and Rs 264.09 lacs as on March 31, 2018 is granted for a period of 12 months and 9 months respectively from April 1, 2018 to the Company. Accordingly entire ICD outstanding shall be fully repaid on or before March 31, 2019 and interest shall be paid on or before December 31, 2018. Interest shall be paid at a rate equal to interest rate of IDFC charged on VSPL plus a markup of 0.5% i.e., applicable interest rate of IDFC charged on VSPL plus a margin of 50 bps. In case of interest default a penalty of 1% and liquidated damages of 1% as charged by IDFC on VSPL is payable by GIPL.

b) Term Loans from Others

a) This secured term loan carries an interest rate of 14.50% p.a. It’s repayment is in 7 semi-annual structured instalments from June 2014 to June 2017.

b) It is secured by the following:

(i) Pledge of 26% shares of SSRPL including pledge of 26% of the incremental share capital as and when the same is issued;

(ii) Hypothecation over the O&M Fees from AEL deposited in the Escrow Account;

(iii) Hypothecation over the income from the O&M Fees income arising from the GIL O&M Sub-contract

(iv) Hypothecation over the O&M Fees to be received from AEL in the Borrower and deposited in the Escrow Account;

(v) Hypothecation over the developer fee payable by SSRPL to the Borrower under the SSRPL Developer Fee Agreement and deposited in the Escrow Account; and

(vi) Hypothecation over the developer fee payable by VGRPPL to the Borrower under the VGRPPL Developer Fee Agreement and deposited in the Escrow Account.

c) As the event of certain covenants related to underlying security has been breached the entire outstanding amount has been recalled by the lender and accordingly the outstanding sum due has been classified as current.The amount has been paid during the year.

e) The ICD from VSPL has since been renegotiated on June 08, 2018 and the entire ICD as at 31st March, 2018 of Rs.10,976.97 lacs is due for repayment on or before March 31, 2019. Accordingly the same is not shown as continuing default as at 31st March, 2018.

f) The default of IREP Credit Capital Private Limited on account of Principal and interest was paid subsequently.

(*) The interest on ICD from VSPL due on March 31, 2018 has since been renegotiated on June 08, 2018 and the entire interest as at March 31, 2018 of Rs.264.09 lacs and also the interest for the period upto December 2018 is due for payment on or before December 31, 2018. Accordingly the same is not shown as continuing default as at 31st March, 2018.

Margin money received of 100 lacs (Previous year 100 lacs) was received towards a Performance Bank Guarantee issued by Gammon Infrastructure Projects Limited in favour of MbPT as required in the L.A. The margin money deposit carries an interest of 6% p.a.

The company has carried out the actuarial valuation of Gratuity and Leave Encashment liability under actuarial principle, in accordance with Ind AS 19 - Employee Benefits.

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 Company’s gratuity liability is unfunded.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

There is no minimum funding requirement for a gratuity plan in India and there is no compulsion on the part of the company fully or partially pre-fund the liabilities under the plan. Since the liabilities are un funded there is no asset liability matching strategy devised for the plan.

a) Bank of India has sanctioned facility of Rs. 8,000 lacs to Gammon Infrastructure Projects Limited (GIPL). This involves Rs. 2500 lacs of overdratft facility and Rs. 5,500 lacs of non fund facilities ( Bank Guarantee). The BOI sanction dated 31st August 2016 stipulated the requirement of second charge on the project assets of Patna Highway Projects Limited, wholly owned subsidiary of GIPL. The second charge on the PHPL assets for the above mentioned facility was executed on 9th February 2018 in favour of BOI.

b) Company has taken interest free loan from Ras c Cities and Townships Pvt Ltd (subsidiary) for short term purposes repayable within next one year.

c) List of principal defaults incurred during the year and remedied by the balance sheet date

a) 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 is relied upon by the auditors.

a) The disclosures as per provisions of INDAS 11”Construction Contracts”

Method used to determine the contract revenue : stage of completion method

Method used to determine the stage of completion of contract : stage of completion is determined as a proportion of costs incurred upto the reporting date to the total estimated cost to complete

a) Due to inadequacy of profits, Managerial remuneration amounting to Rs. 497.17 lacs for the period upto March 2017 was paid 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 Payment of Excess Managerial remuneration has been approved by the Nomination & Remuneration Committee, Board of Directors and also by the shareholders at the last Annual General Meetings held on 30th September, 2016 & 19th December,2017. The Company has made representation to the Ministry of Corporate Affairs (MCA) to reconsider its earlier decision wherein the applications made by the Company for approval for waiver of recovery of the said excess remuneration Rs. 388.45 lacs for the period upto March 2016 was rejected. For the balance amount of Rs. 108.72 lacs paid for the previous financial year ended 31st March, 2017 the Company has made an application to the Ministry of Corporate Affairs (MCA) for approval of the same. Pending these, no adjustments have been made to the financial statements for the remuneration.

2 Disclosure as required by Accounting Standard - IND AS 33 “Earning Per Share” of the Companies (Indian Accounting Standards) Rules 2015.

Net Profit / (loss) attributable to equity shareholders and the weighted number of shares outstanding for basic and diluted earnings per share are as summarised below:

3 Contingent Liabilities

1 Guarantees:

i) The Company has issued Corporate Guarantees as a security for loan availed by its subsidiaries, amounting to Rs.331,320.00 lacs (previous period Rs. 333,320.00 lacs)

ii) Counter Guarantees given to the bankers for the guarantees given by them on our behalf Rs.14,803.30 lacs (previous period Rs.13,735.18 lacs).

2 Other Contingent liability :

3 The Company have received a letter for transfer of shares of one of its divested subsidiary from a party who has paid advance for the same. The Company does not acknowledge the Claim due to non satisfaction of certain conditions and is in the process of refunding the said advance to the party.

4 Vijayawada Gundugolanu Road Project Private Limited (SPV) had received termination notice from NHAI on 26th Aug 2016 and consequently NHAI took possession of the Toll Plazas at the Project Site on 27th August 2016. As a result of the Company’s efforts and dialogues with top officials of NHAI and MORTH, NHAI has agreed to revoke the termination notice vide letter dated 16th Jan, 2017 and also agreed to handover of Toll plazas subject to completing financial closure and fulfilling other commitments as specified in the letter within the stipulated time frame. Pursuant to the requirements stipulated by NHAI, the SPV had entered into a binding agreement with a Strategic investor for a committed equity participation of 49% in the Project. However the SPV could not achieve financial closure and consequently its agreement with the Strategic investor was terminated. The SPV has finally made an application to NHAI for mutual exit from the Project vide letter dated September 08, 2017 with terms including return of bank guarantee and non-levy of any charges or claims by either parties. The decision of NHAI in response to the SPV’s aforesaid letter of mutual exit is pending. No effects have been given in the financial statements of the SPV pending the decision of NHAI. The Auditors of the SPV have highlighted the going concern matter in the case of the SPV as in either case the entity would not be continuing the project and would be eventually wound up. In case the mutual exit proposal is accepted then the exposure of the Company is likely to be capped at Rs.7,246.13 lacs as the Bank Guarantee would be released as requested by the Company in its letter dated 8th September 2017. In case the proposal is not accepted then the entire exposure of Rs. 15,666.13 lacs of the Company in the SPV needs to be tested for impairment. Accordingly, the decision of NHAI is more likely to have adverse impact on the Statement of Profit and Loss. No effects have been given in the financial statements of the SPV pending the decision of NHAI.

5 The Company has defaulted in fulfilling its obligation under the one time settlement (OTS) with IFCI Limited. The Company was required to pay the entire outstanding by September 30, 2017. The Company has been unable to discharge the liability and has not been able to get further extension for the payment of the outstanding although it is actively engaged with IFCI Limited for the extension of the time period for the payment of the outstanding. In terms of the original arrangement, the benefits received under the one time settlement of Rs. 3,776.69 lacs is to be reversed. The management is hopeful of receiving the extension with non-reversal of the benefits of OTS. Pending that no adjustments have been made in these financial results. The Company has however provided interest at the rate of 11.50% p.a. as per the agreement. The interest payable on the outstanding amount before reversal of the aforesaid benefit as on balance sheet date is Rs 158.13 lacs

6 Material Uncertainty related to Going Concern

The Company had divested some of its subsidiaries in the previous periods for a cash surplus, which reduced the current liability and current asset mismatch. However there is a continuing mismatch of cash flows including the dues to the subsidiary which are due for repayment pursuant to negotiation by March 31, 2019. Further various projects of the Company as stated in note 32 below are under stress and the outcome of the continuance of these projects would be dependent upon a favourable decision being received by the management on the litigations outstanding. In view of the matters detailed in note 8 and as aforesaid, there are material uncertainties which cast significant doubt on the ability of the Company to continue as a going concern. The auditors of the following SPVs have carried a separate paragraph on the Material Uncertainty related to Going Concern in its auditors report

- Indira Container Terminal Private Limited

- Vijayawada Gundugolanu Road Projects Private Limited

- Rajahmundry Godavari Bridge Limited

The management however is confident that the going concern assumption and the carrying values of the assets and liabilities in these Standalone Financial Results are appropriate. Accordingly the financial results do not include any adjustments that may result from these uncertainties.

7 In respect of the following projects / SPV of the Company there are legal issues, arbitration proceedings or negotiations with the grantor for which the management is taking necessary steps to resolve the matters. These issues are commonly encountered in the Infrastructure business and the management is confident of a favorable resolution in due course.

a) Bridge project at Cochin - the Greater Cochin Development Authority has sought to end the toll collection by unilaterally sealing the toll booth. The subsidiary has initiated arbitration / settlement. The Company has also in parallel filed a writ in the matter before the Hon’ble Kerala High Court for specific performance. However Government of Kerala approached the Hon’ble High Court for further extension of time and the Court granted extension to settle the matter subsequent to which Company has filled amended plaint. The said SPV pursuant to court proceedings filed a fresh writ for recovery of dues. The bankers of the said SPV have initiated action under SARFAESI Act and have taken symbolic possession of the property of the SPV. They have also initiated proceedings under DRT against which the Company is taking necessary legal steps. The SPV has filed for keeping the proceedings on hold sine die till the disposal of the matter before the Hon’ble Kerala High Court. The Company has in parallel applied for a One time settlement of dues to its lenders which is under consideration of their respective competent authorities for approval and implementation. Exposure of the Company in the SPV is Rs. 2,856.96 lacs (funded and non-funded).

b) Hydro power project at Himachal Pradesh - the project is stalled due to local agitation relating to environment issues. The matter with State Government is under active negotiation to restart the project or reimburse the costs incurred. The Company has invoked arbitration on 19.02.2018 but is yet to receive the nomination of arbitrators from GOHP. The Company has received letter from GOHP to discuss the matter mutually towards amicable resolution. The management is hopeful of an early settlement in the matter and is confident of recovering the amount of exposure. The exposure of the Company in the SPV is Rs. 7,119.23 lacs.

c) Container terminal at Mumbai -The project was delayed due to non-fulfilment of certain conditions by the Mumbai Port Trust. This has resulted in the SPV incurring losses and default in repayment of debt obligation. The matter with the MBPT was under active discussions for resolving the outstanding issues and the Project being re-organized with change in Cargo Mix (i.e. all Clean cargo including containers). Pursuant to detailed negotiation with MBPT on the concession agreement for the Offshore Container Terminal, the parties have agreed in principle to enter into a joint supplementary agreement between Board of Trustees of MBPT, SPV and the lenders. The draft supplementary agreement is subject to clearance from the Ministry of Shipping, Government of India. The project is proposed for re-bid and the draft agreement provides for a mix of cargo of containers, steel and RORO. The SPV has a Right Of First Refusal (ROFR) to match the winning bid within a pre-defined margin. The draft agreement also provides for waiver of Outstanding Interest. The management has during the current financial year acquired further stake from the JV partner and has obtained control over the JV. It currently holds 74% of the equity of the SPV Company. The RORO (Roll On Roll Off) operation which was allowed by MBPT as an alternate use of the two berths is continuing. However the same is inadequate for repayment of principal and interest of the lenders. There exists material uncertainty relating to the rebid fructifying in favour of the SPV. The auditors of the SPV have highlighted the material uncertainty regards going concern issue. In case the management is unable to match the bid and win the contract, the cash flows would be sufficient to pay its debts as well as exposure of the Holding Company. However the Company will not continue in the said case and would be eventually wound up. The management is hopeful that it will successfully match the bid and win the concession and continue to operate the facility, which would be operationally viable under the revised terms. The exposure of the Company in the SPV is Rs. 13,831.00 lacs (funded and non-funded).

d) The actual toll collections of the tolling bridge project at Rajahmundry Godavari Bridge across river Godavari are significantly lower than the forecasted revenue at the time of bid, resulting in inadequate cash flow to meet the debt / Interest servicing obligations of the Lenders. Consequently, the debt facility has been classified as a NonPerforming Asset (NPA) by the Lenders. The Company had earlier submitted a proposal under the Scheme for Sustainable Structuring of Stressed Assets (S4A) to the Lenders, which was cleared by the Lenders for approval of the Overseeing Committee (OC) set up by the Indian Banking Association (IBA), in consultation with the Reserve Bank of India (RBI). The Company provided its response to the observations of the Lenders and the OC on the S4A proposal and was awaiting the OC/lenders’ approval. In the interim, RBI vide its circular dated 12th February 2018, discontinued with immediate effect all restructuring schemes for stressed assets (including S4A). As per this circular, all schemes, including S4A which have been invoked but not implemented, shall be governed by the new circular. Thus the restructuring proposal by the Company is no longer being pursued by the Lenders.

Subsequently the Company has issued a cure period notice to Andhra Pradesh Road Development Corporation (APRDC or the Client) on 26th February 2018 under clause 37.2.1 of the Concession Agreement to cure the breaches of APRDC which includes provision of Revenue shortfall loan along with other mentioned breaches. In the event that the client is unable to correct the breaches in the project, the management would need to decide on the ability to continue or terminate the agreement. Management discussion is currently underway with APRDC. The Company is hopeful that the breaches would be cured by the Client and the Company would be able to continue to operate the Project. The Management estimates the revenue from the project would meet the levels as forecasted post cure of defaults and thus would make the project viable. In addition, the management also estimates reduction of the operating & finance costs. In the event of termination, the Company is confident of recovery of compensation / Payment of outstanding dues to Lenders from the client in terms of the Concession Agreement. Pending disposal of the matter by APRDC, there exists material uncertainty with respect to the future of the Project and that cast significant doubt on the Company’s ability to continue as a going concern. The auditors of the SPV have highlighted the material uncertainty regards to going concern issue in their audit report.

However, based on the on-going discussions with the client, the Company is hopeful that breaches would be cured and the Company will continue to operate the Project. The Management is also of the opinion that the Project will be viable post cure of defaults and on optimising the operating and finance costs and improved traffic / revenue due to major infrastructure development proposed by the State Government around the Project route. In view of above, no impairment of assets has been accounted as per Ind AS 36 in the hands of the SPV or towards the Investment by the Company in the SPV. In the event, the breaches are not cured by the client as envisaged by the management, the Company would be required to reassess the ability of the SPV to continue as a going concern. The exposure of the Company to the SPV is Rs. 95,578.24 lacs (funded and non-funded).

e) In respect of an Annuity Road project : The project has obtained pre-COD on September 1, 2016. In respect of the project on annuity basis of the Company, has recorded the project in accordance with the requirement of Appendix A to Ind AS 11, titled “Service Concession Arrangement” with retrospective period in accordance with the requirements of Ind AS 101- First Time Adoption. Accordingly, the Company has recognized “Trade Receivables” being financial asset. The Company will have cost overrun on account of issue beyond the scope of the Company and attributable to the Grantor. This will not result in any changes in the Annuity from the grantor. Based on certification of delay period attributable to the Grantor certified by the Independent Engineer, the Company expects a sizeable claim on this amount and has obtained legal support for the validity of its claim from an Independent Expert on claim and litigation. However this amount has been treated separately as receivable from the Grantor. The Company had also applied to the lenders for 5/25 flexible Structuring Scheme. However, in view of the RBI vide its circular dated 12th February 2018, the application became infructuous.

During the year, the management, although having a valid claim for compensation, supported by Independent Engineer’s assessment, has decided to account the finance income under the annuity model on the basis of the original plan. No finance income is accounted on such cost overrun in the annuity model on a conservative basis till the final decision of the realisability is settled pursuant to arbitration and other legal proceedings. The exposure of the Company to the SPV is Rs 1,30,254.07 lacs (funded and non funded).

f) The Company has incorporated a SPV for developing Rangit II Hydroelectric Power Project in Sikkim on BOOT basis. The project involves the development of a 66 MW run-of-the-river Hydroelectric Power Project on Rimbi River, a tributary of River Rangit. Concession period for the project is 35 years from the date of COD. The project cost is estimated to be Rs 496 Crores. Though the project has received all major clearances and approvals including environmental clearances from MoEF and all major contracts for the project have been awarded, Power purchase agreement is yet to be signed. Over a period of time, the scenario in power sector changed substantially and in absence of financial closure, funding of the Project has been a major issue leading to frequent stoppages of work. The Proposed Hydro power Policy is eagerly awaited which will hopefully bring more opportunity in this sector. The Company is hopeful that power purchase agreement would be signed under the new policy which will also enable the financial closure to be done. Policy initiatives taken by the Government to address key concern facing the power sector will enable the sector to keep pace with the growing demand. The Management is of the view that the present situation in power business is temporary and does not foresee any need for impairment. The exposure of the Company in the SPV is Rs. 9,622.91 lacs.

8 Other Financial Assets includes Rs 1,514.01 lacs due from Western Coalfields Limited on account of wrongful encashment of bank guarantee against which the Company has filed a suit for Recovery of damages. During the year ended September 2017, Western Coalfields Limited (WCL) had encashed Bank Guarantee amounting Rs 1,514.01 lacs given in favour of Aparna Infraenergy India Private Limited (one of the SPV’s sold to BIF India Holding Pte ltd on February 29, 2016) towards the coal linkages to be granted by WCL. Subsequent to the encashment, Company has filed an application for converting earlier injunction application to suit for recovery of damages. The Company has sought a legal opinion in this matter and has been advised that it has a good case of recovery. The management is hopeful of getting favourable decision on the matter and recovery of damages based on legal advice on the matter. Pending the outcome, the Company has shown guarantee encashment amount as receivable from Western Coal Fields and not debited the same to the statement of profit and loss for the year ended March 31, 2018.

9 Disclosure in accordance with Ind AS - 17 “Leases”, of the Companies (Indian Accounting Standards) Rules, 2015.

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

b) The company has leased out crusher upto March 31, 2018 and is renewable by mutual consent.

10 Disclosure in accordance with Ind AS - 108 “Operating Segments”, of the Companies (Indian Accounting Standards) Rules, 2015.

The Company’s operations constitutes a single business segment namely “Infrastructure Development” as per INDAS 108. Further, the Company’s operations are within single geographical segment which is India. As such, there is no separate reportable segment under Ind AS - 108 on Operating Segments.

Revenue contributed by two customers in the operating segments exceeds ten percent each of the Company’s total revenue aggregating to Rs 15,078.88 lacs

11 Disclosure in accordance with Ind AS - 24 “Related Party Disclosures”, of the Companies ( Indian Accounting Standards) Rules, 2015

Details are given in Annexure -1

12 Derivative Instruments and Unhedged Foreign Currency Exposure

There are no derivative instruments outstanding as at March 31, 2018 and March 31, 2017 . The Company has no foreign currency exposure towards liability outstanding as at March 31, 2018 and March 31, 2017.

13 Significant accounting judgements, estimates and assumptions

The financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosures of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods

Judgements

In the process of applying the company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the separate financial statements.

Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The underlying bonds are further reviewed for quality. Those having excessive credit spreads are excluded from the analysis of bonds on which the discount rate is based, on the basis that they do not represent high quality corporate bonds.

14 Financial Instruments

i) The carrying value and fair value of financial instruments by categories as at March 31, 2018 & March 31, 2017 is as follows:

The management assessed that fair value of cash and short-term deposits, trade receivables, trade payables, book overdrafts and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

15 Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs)

The following table presents the fair value measurement hierarchy of financial assets and liabilities measured at fair value on recurring basis as at March 31, 2018 and March 31, 2017

16 Financial Risk Management

The Company is in the business of infrastructure development and it undertakes projects in multiple infrastructure segments. The nature of the business is complex and the Company is exposed to multiple sector specific and generic risks.

PPP projects which the Company undertakes are capital intensive and have gestation periods ranging between 3 to 5 years; coupled with longer ownership periods of 15 to 35 years. Given the nature of the segments in which the company operates, be it in the Road Sector, Power Sector, Ports or Urban Development, it is critical to have a robust, effective and agile Risk Management Framework to ensure that the Company’s operational objectives are met and continues to deliver sustainable business performance. Over the years, several initiatives have been taken by the Company to strengthen its risk management process. An enterprise wide comprehensive risk management policy including risk appetite, tolerance and risk limits for more effective, informed and measurable risk management has been developed and it continues to evolve.

The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk, and interest rate risk, regulatory risk and business risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the company is interest rate risk.

The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below: Financial risk factors

i) Business / Market Risk

Business/ Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. One of the first and foremost business risk is the achievement of the traffic projections made at the time of the bid. This will include the introduction of alternate roads by the state or central government which impacts the traffic projected to ply on the asset under the control of the Company. The concession agreement provides some safeguards in this regard but many of them are unforeseen and exposes the Company / SPV to risk.

ii) Capital and Interest rate Risk

Infrastructure projects are typically capital intensive and require high levels of long-term debt financing. The Company intends to pursue a strategy of continued investment in infrastructure development projects. In the past, the Company was able to infuse equity and arrange for debt financing to develop infrastructure projects on acceptable terms at the SPV-level of relevant projects. However, the Company believes that its ability to continue to arrange for capital requirements is dependent on various factors. These factors include: timing and internal accruals generation; timing and size of the projects awarded; credit availability from banks and financial institutions; the success of its current infrastructure development projects. Besides, there are also several other factors outside its control. However, the Company’s track record has enabled it to raise funds at competitive rates. The Company’s average cost of debt remains at 13.78% p.a.

iii) Interest rate sensitivity

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

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.

iv) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets.

a) Trade and Other Receivables

The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs. 5,136.34 lacs as at March 31, 2018 and Rs 6,511.75 lacs as at March 31, 2017 , which is primarily from the SPV of the Company.

Since the primary customer is the SPV the credit risk is remote. In the absence of any bad debts from the SPV in the past the expected credit loss is zero and the Company is making no provisions on account any expected credit loss.

The credit risk from customers in the case of the SPV is very low as without payment of upfront toll the vehicles is not allowed to pass. However there are frequent local political issues which result in leakages which is a credit risk for the Company.

(v) Liquidity risk

The company’s principal sources of liquidity are cash and bank balances and the cash flow that is generated from operations.

The company has outstanding borrowings of Rs 14,499.29 lacs as at March 31, 2018 and Rs 14,671.18 lacs as at March 31, 2017.

The companies’ working capital is not sufficient to meet its current requirements. Accordingly, liquidity risk is perceived. The Current Liabilities of the Company exceeds current Assets by Rs 33,898.04 lacs as at March 31, 2018 and by Rs. 30,906.57 lacs as at March 31, 2017. These conditions indicate the existence of an uncertainty as to timing and realization of cash flow of the company.

The achievement of the projections in the traffic and the toll rates by the SPV is critical for the liquidity to pay the lenders.

Timely completion of the project has a major impact on the liquidity of the SPV. The delay caused due to the grantor and the timely receipt of compensation from the grantor impacts liquidity of the SPV and the holding company materially and is one of the major reasons for the liquidity issue of the group.

(vi) Competition Risk:

The Company is operating in a highly competitive environment with various Companies wanting a pie in the project. This invariably results in bidding for projects at low margins to maintain a steady flow of the projects to enable the group to retain the projects team and to maintain sustainable operations for the Company and the SPVs. The ability of the Company to build the infrastructure at a competitive price and the ability to start the tolling operations is very important factor in mitigating the competition risk for the group.

(vii) Input cost risk

Raw materials, such as bitumen, stone aggregates cement and steel, need to be supplied continuously to complete projects undertaken by the group. As mentioned in the earlier paragraph of the business risk and the competition risk the input cost is a major risk to attend to ensure that the Company is able to contain the project cost within the estimate projected to the lenders and the regulators. To mitigate this the group sub-contracts the construction of the facility at a fixed price contract to various subcontractor within and without the group.

(viii) Exchange risk

Since the operations of the group are within the country the group is not exposed to any exchange risk directly. The group also does not take any foreign currency borrowings to fund its project and therefore the exposure directly to exchange rate changes is minimal. However there are indirect effects on account of exchange risk changes, as the price of bitumen, which is a by-product of the crude, is dependent upon the landed price of crude in the country.

17 Capital management

For the purpose of the Group’s capital management, capital includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Group’s capital management is to maximise the shareholder value.

The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The gearing ratio in the infrastructure business is generally high. The Group includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.

18 The balance sheet, statement of profit and loss, cash flow statement, statement of changes in equity, statement of significant accounting policies and the other explanatory notes forms an integral part of the financial statements of the Company for the year ended March 31, 2018.

Transactions pertaining to contract revenue and contract expenses with related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year-end are unsecured . This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

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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.

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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.

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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.

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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.

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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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Mar 31, 2010

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 19,647,450 (Previous year 19,647,450) equity shares each, in Rajahmundry Expressway Limited (REL) and Andhra Expressway Limited (AEL), acquired further beneficial, controlling interest and voting rights in respect of 9,352,550 (Previous year 7,467,550) equity shares each in these two entities. Due to this, AEL and REL, during the current year, have become wholly owned subsidiaries of the Company.

During the year, the legal ownership in respect of Nil (Previous year 5,437,450) equity shares each in AEL and REL was transferred to the Company out of the beneficial, controlling interest and voting rights held by it.

b) The Company had entered into an agreement with Gammon India Limited (GIL) for acquisition of beneficial, controlling interest and voting rights in respect of equity shares of Indira Container Terminal Private Ltd (ICTPL). During the year, the Company over and above its legal ownership of equity shares, acquired the beneficial, controlling interest and voting rights in respect of 26,407,160 ) equity shares of ICTPL.

c) During the year, the Company acquired 22,877,500 equity shares in the joint venture company Vizag Seaport Private Ltd (VSPL) from International Port Services Ltd. Due to this acquisition, VSPL became a subsidiary of the Company.

d) During the year, the Company has diluted its holding in Blue Water Iron Ore Terminal Private Ltd (BWIOTPL), formerly Bedi Seaport Ltd (BSL) in favour of its joint venture partners Noble Group Ltd (NGL) and Minerals and Metal Trading Corporation (MMTC). The Companys present holding in the said joint venture has been reduced to 37.30%.

e) The Company has incorporated four new companies namely Gammon Renewable Energy Ltd (GREIL), Gammon Road Infrastructure Ltd (GRIL), Gammon Seaport Infrastructure Ltd (GSIL) and Patna Highway Projects Ltd (PHPL) as 100% subsidiary, in the current year under review.

f) Gammon Metro Transport Ltd (GMTL), a wholly owned subsidiary of the Company was renamed as Patliputra Highway Ltd (PHL) during the year.

2. Sundry Debtors

Sundry Debtors as at March 31, 2010, represents amounts due from the holding company, GIL in respect of the Operations and Maintenance Contract and from subsidiary, KBICL in respect of the 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, 20,825 (Previous year 4,280,181) equity shares were fully paid on receipt of the balance allotment money. The total number of partly paid equity shares was 162,050 (Previous year 182,875) 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, the Company has with the approval of shareholders, sub-divided the face value of its equity shares from Rs. 10 per equity 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 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 Companys operations constitutes a single business segment namely "Infrastructure Development" as per AS 17. Further, the Companys 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. Cochin Bridge Infrastructure Company Limited

3. Gammon Hospitality Limited

4. Gammon Logistics Limited

5. Gammon Projects Developers Limited

6. Gorakhpur Infrastructure Company Limited

7. Gammon Renewable Energy Limited

8. Gammon Road Infrastructure Limited

9. Gammon Seaport Infrastructure Limited

10. Jaguar Projects Developers Limited

11. Kosi Bridge Infrastructure Company Limited

12. Marine Projects Services Limited

13. Mumbai Nasik Expressway Limited

14. Patliputra Highway Limited

15. Pravara Renewable Energy Limited

16. Patna Highway Projects Limited

17. Rajahmundry Godavari Bridge Limited

18. Rajahmundry Expressway Limited

19. Ras Cities and Townships Pvt Limited

20. Sikkim Hydro Power Ventures Limited

21. Tidong Hydro Power Limited

22. Vizag Seaport Private Limited

23. 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 Key Management Personnel :

1. Abhijit Rajan

2. Parvez Umrigar

b. Details of related parties transactions for the year ended on March 31, 2010. - Please refer to the Annexure – 1

8. 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.

9. 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(ii), 4(c), 4(d) of Schedule VI of the Companies Act, 1956, are not required to be furnished.

10. 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.

11. Capital commitments

The total capital commitments of the Company as on March 31, 2010 are Rs. 4,924,620,870 (inclusive of share of capital commitment in joint ventures). Total capital commitment as on March 31, 2009, was Rs. 3,646,870,000. The capital commitments 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.

12. 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 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 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 options to eligible employees of the Company at the market price of Rs. 63.95 per equity share, prevailing on September 30, 2008 upon expiry of the respective vesting period which ranges from one to three years. During the current year, 180,000 (Previous year 750,000) options were forfeited / lapsed. Out of the options granted, 1,555,000 (Previous year 1,735,000) 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 options to eligible employees of the Company at the market price of Rs. 63.95 per equity share, prevailing on September 30, 2008 upon expiry of the respective vesting period which ranges from one to three years. During the current year, 185,000 (Previous year Nil) options were forfeited / lapsed. Out of the options granted, 305,000 (Previous year 490,000) are outstanding at the end of the year.

Further, during the year 2008-09, the Compensation Committee of the Board of Directors of the Company at its meeting held on December 5, 2008, allotted 500,000 stock options under the "GIPL Employees Stock Options Scheme 2008" to its Managing Director enabling him to apply for 500,000 equity shares at par on completion of the vesting period of one year. The market price on the date of grant was Rs. 43.45 per equity share. During the current year, all these options were vested and the Company allotted 2,500,000 equity shares of Rs. 2/- per equity share. Further Compensation Committee of the Board of the Directors of the Company at its meeting held on May 8, 2009 has further granted 210,000 options to eligible employees of the Company at the market price of Rs. 70.80 per equity share, prevailing on that date upon expiry of the vesting period of three years.

13. Retention Bonus for employees

During the year 2008-09, 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. The said scheme the Committee of the Board of Directors has extended the Retention Bonus scheme to few more employees of the Company. During the year, a provision of Rs. 11,065,132 (Previous year Rs. 5,973,334) against Cash Compensation in accordance with guidance note on accounting of employees share based payments.

14. Employee benefits

From the April 1, 2007, the revised AS -15 (Employee Benefits) is applicable to the Company. Gratuity

15. Contingent Liabilities

The Company has extended corporate guarantees on behalf of its two subsidiaries, Sikkim Hydro Power Ventures Limited for Rs. 25 crores and Youngthang Power Ventures Limited for Rs. 45 crores for availing unsecured loans from the banks.

a) The outstanding Bank Guarantees issued out of the limits sanctioned to the Company as at March 31, 2010, stands at Rs. 9,400,000 (Previous year Rs. 9,900,000) in favour of Gammon Logistics Limited, a wholly owned subsidiary.

b) During the year, the Company has issued a Corporate Guarantee of Rs. 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.

c) Counter Guarantees given to the bankers for the guarantees given by them on our behalf Rs. 1,579,310,000 (Previous year Rs. 454,600,000).

16. Derivative Instruments and Unhedged Foreign Currency Exposure

There are no derivative instruments outstanding as at March 31, 2010. There are unhedged foreign currency exposure of US $ 4,696 (Rs. 211,977) and of British Sterling Pound 126,035 (Rs. 8,574,514) of liability outstanding as at March 31, 2010 towards legal services for the Fund to be established by the Company in future. Further, there is an unhedged foreign currency exposure of US$ 50,000 (Rs. 2,257,000) of asset as on March 31, 2010 towards advance paid.

17. Prior period comparatives

Previous years figures have been regrouped where necessary to conform to this years classification.