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Directors Report of GVK Power & Infrastructure Ltd.

Mar 31, 2018

Dear Stakeholders,

The Directors present the 24th Annual Report of the Company along with the Audited Financial Statements for the financial year ended March 31, 2018.

Financial results

Following is the summary of consolidated financial results of the Company including its subsidiaries, associate and joint ventures.

(Rs. Lakhs)

Particulars	2017-18	2016-17
Financial Performance
Operational Income	386,321	351,647
EBIDTA	155,615	115,632
Other Income	100,422	53,266
Finance Costs	164,308	189,037
Depreciation	72,460	66,867
Loss from ordinary activities	19,269	(87,006)
Share of profit of associate	1,452	23,464
Share of loss of jointly controlled entity	(58,301)	(65,094)
Loss before tax	(37,580)	(128,636)
Tax expense/(credit)	16,157	5,727
Non - controlling interest	2,430	(4,135)
Loss for the year	(56,167)	(130,228)
Other comprehensive income, net	360	(287)
Total comprehensive income	(55,807)	(130,515)
EPS (Rupees) :
Weighted Average no. of Equity Shares	1,579,210,400	1,579,210,400
Basic and Diluted	(3.56)	(8.25)
Financial Position:
Fixed Assets (Net of depreciation)	1,558,839	1,559,023
Cash and Bank balance	137,347	102,783
Net current assets	(316,462)	(498,130)
Total Assets	2,027,185	2,063,123
Equity	15,792	15,792
Other equity	(99,918)	(45,475)
Net worth	(84,126)	(29,683)
Market Capitalisation	222,669	93,963

Our total income from operations increased by 9.86 % to Rs. 3,86,321 Lakhs from Rs. 3,51,647 Lakhs in the previous year. The Transportation segment contributed an income of Rs. 43,527 Lakhs (11.27 % of total income) compared to Rs. 37, 959 Lakhs in the previous year. Airport Segment contributed an income of Rs. 3,42,393 Lakhs (88.63 % of total income) as compared to Rs. 3,12,127 Lakhs in the previous year. The other segment contributed Rs. 401 Lakhs compared to Rs. 1,561 Lakhs in the previous year. The Airport assets (Mumbai and Bangalore Airports) have contributed to net profit of Rs. 3,976 Lakhs compared to Rs. 19,274 Lakhs in the previous year. Bangalore Airports profit was consolidated only for 3 months.

The net loss after tax, share of profit from associate, share of profit from joint venture and non-controlling interest was Rs. 56,167 Lakhs as against net loss of Rs. 130,228 Lakhs in the previous year. The net loss is mainly attributable to lower generation of power due to shortage of coal at our 540 MW Coal based thermal power plant, lack of fuel availability for 684 MW Gas Based power station, delay in fixation of tariff for our 330 MW Hydroelectric Power Plant and 540 MW coal based thermal power plant. Loss was reduced on account of profit of Rs 73,555 Lakhs on sale of stake in Bangalore Airport.

Dividend

The Board of Directors of your Company has not recommended any dividend for the financial year 2017-18.

Transfer to Reserves

During the current financial year, there are no funds that are required to be transferred to Reserves.

Share Capital

The paid up equity share capital as on March 31, 2018 is Rs. 157.92 Crore. There was no public issue, rights issue, bonus issue or preferential issue etc., during the year. The Company has not issued any shares with differential voting rights, sweat equity shares nor has it granted any stock options during the year under review.

Management Discussion and Analysis

The Management Discussion and Analysis Report highlighting the industry structure and developments, opportunities and threats, future outlook, risks and concerns etc. is furnished separately and forms part of this Annual Report.

Corporate Governance

As in the past, your Company continues to follow best of Corporate Governance policies. As stipulated under the requirements of the Listing Regulations, a report on Corporate Governance is appended for the information of the Members. A Certificate from the Practicing Company Secretary confirming compliance with the conditions of the Corporate Governance is annexed to the Directors Report.

Subsidiaries and Consolidated Financial Statements

As on March 31, 201 8 your Company has 6 direct Subsidiaries, 18 step down Subsidiaries and one Associate Company. There has been no material change in the nature of the business of the Company and its subsidiaries. Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management Discussion and Analysis Report.

A statement containing salient features of the financial statement of these companies as required to be provided under section 129(3) of the Act, are enclosed herewith in the specified form, as Annexure A. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. Any member intends to have a certified copy of the Balance Sheet and other financial statements of these subsidiaries may write to the Company Secretary. These documents are available for inspection during business hours at the registered office of the Company and that of the respective subsidiary companies. The Policy for determining material subsidiaries as approved may be accessed on the Companyâs website at the link: https://www.gvk. com/files/investorrelations/investors/corpgovernance/policy_for_determining_material_subsidiaries_gvk_pil.pdf

Disposal of stake in Subsidiaries

During the year under review, your Company had disposed off its entire equity stake in two of its whole owned subsidiaries i.e. GVK Oil & Gas Limited and Goriganga Hydro Power Private Limited, for cash at face value. Further, GVK Energy Ventures Private Limited also ceased to be a step-down subsidiary of your Company. Accordingly, each of these companies were no longer the subsidiaries of your Company from January 1, 2018. Necessary disclosures, in this regard, have been duly made to the concerned regulatory authorities.

Merger of Subsidiaries

Under the Airport vertical business, a proposed scheme of amalgamation pursuant to Sections 230 to 233 and other relevant provisions of the Companies Act, 2013, providing for the merger of GVK Airport Developers Limited with Bangalore Airport & Infrastructure Developers Limited have been approved by their respective board of directors and shareholders. The said scheme of amalgamation is subject to necessary approvals from the lenders and third parties, if any, and also from the concerned statutory authorities i.e. the Regional Director, Ministry of Corporate Affairs. The scheme of amalgamation will, inter alia, enable optimisation of legal entity structure through rationalization of subsidiaries, integration of business operations leading to operational synergies and also result in reduction of the multiplicity of legal and regulatory compliances.

Developments in Airport assets

Mumbai International Airport Private Limited (MIAL), a subsidiary of your Company, was given a Letter of Award (LOA) on October 25, 2017 by the City and Industrial Development Corporation of Maharashtra Limited (CIDCO), the nodal agency of the Government of Maharashtra for implementing a second international airport at Navi Mumbai which is a greenfield project. Navi Mumbai International Airport Private Limited (NMIAL) has been identified as a Special Purpose Vehicle, which is a step down subsidiary of your Company.

NMIAL has signed the Concession Agreement, Shareholders Agreement and State Support Agreement on January 8, 2018 with CIDCO, for implementation of the Navi Mumbai International Airport Project. MIAL, holds 74% while CIDCO holds the balance 26% equity capital of NMIAL. The initial concession period is 30 years from the appointed date which is extendable for a further 10 years. The Board of NMIAL has been broad based with the appointment of Directors representing MIAL and CIDCO apart from the Independent Directors.

Honâble Prime Minister Shri Narendra Modi had performed the ground breaking ceremony and unveiled the foundation stone plaque for NMIAL at a glittering public function held at the project site on February 18, 2018. NMIAL has appointed Zaha Hadid Architects, London, one of the worldâs best architect firms, for designing the Airport Project of Navi Mumbai Airport. NMIAL has been negotiating with various lenders including State Bank of India and is fully geared up to achieve Financial Closure.

Directors

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with the Articles of Association of the Company and Regulation 36(3) of Listing Regulations, 2015, Krishna R Bhupal, Director of the Company will retire by rotation at this meeting and being eligible, your Board recommends his re- appointment.

Details of the director seeking re-appointment at this meeting have been given separately under the Corporate Governance section of this report.

Key Managerial Personnel

During the year under review, Dr. GVK Reddy had stepped down from the position of Managing Director from November 11, 2017 and will continue as a Non-Executive Chairman. Further, Mr. P V Prasanna Reddy, director has been appointed as Whole-time Director and the Company had notified him as one of the Key Managerial Personnel of the Company w.e.f. November 11, 2017. Apart from the above two changes, there are no other changes amongst the Key Managerial Personnel of the Company.

Declaration by Independent Directors

Each of the Independent Directors have given a declaration to the Company that they meet the criteria of independence as required under section 149(7) of the Companies Act, 2013 and Regulation 25 of the Listing Agreement with the Stock Exchanges.

An exclusive meeting of the Independent Directors of the Company has been held on 14th February, 2018 which was attended by all the Independent Directors. They have reviewed the performance of the non-independent directors and the Board as a whole, performance of chairperson and quality of information to the Board as provided under Schedule IV of the Companies Act, 2013.

Based on the recommendations of the Nomination and Remuneration Committee, the Board of Directors have formulated and adopted a policy on appointment / remuneration of directors including criteria for determining qualifications, positive attributes, independence of the Directors and other matters. This policy also covers the performance evaluation of all directors, Board, Committees and Key Managerial Personnel.

The Company has adopted a program on familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of business and the industry in which the Company operates among other things. The same is put up on the website of the Company at the link https://www.gvk.com/files/investorrelations/investors/corpgovernance/ familiarisation_programme_for_independent_directors.pdf

Evaluation of Board

Board evaluation is in line with the Corporate Governance Guidelines of the Company. Annual Performance Evaluation was conducted for all directors along with the working of the Board and its Committees. This evaluation was led by the Chairman of the Nomination and Remuneration Committee with specific focus on the performance and effective functioning of the Board. The Board evaluation framework has been designed in compliance with the requirements under the Companies Act, 2013 and the Listing Regulations, and in consonance with Guidance Note on Board Evaluation issued by SEBI in January 2017.

The Board evaluation was conducted through questionnaire having qualitative parameters and feedback based on ratings. Evaluation of the Board was based on criteria such as composition and role of the Board, Board communication and relationships, functioning of Board Committees, review of performance and compensation to whole-time director, etc. Evaluation of Directors was based on criteria such as participation and contribution in Board and Committee meetings, representation of shareholder interest and enhancing shareholder value, experience and expertise to provide feedback and guidance to top management on business strategy, governance and risk, understanding of the organizationâs strategy, risk and environment, etc.

Evaluation of Committees was based on criteria such as adequate independence of each Committee, frequency of meetings and time allocated for discussions at meetings, functioning of Board Committees and effectiveness of its advice/recommendation to the Board, etc. The outcome of the Board evaluation for financial year 2017-18 was discussed by the Nomination and Remuneration Committee and the Board at their respective meetings held in May, 2018. The Board has received improved ratings on its overall effectiveness, including higher rating on Board communication, relationships and Board Committees. The Board has also noted areas requiring more focus in the future.

Policy on Directorâs Appointment and Remuneration

The Nomination and Remuneration Committee has framed a policy for selection and appointment of Directors including determining qualifications and independence of a Director, Key Managerial Personnel, Senior Management Personnel and their remuneration as part of its charter and other matters provided under Section 178(3) of the Companies Act, 2013. The policy covering these requirements is provided at page no. 31 to this Annual Report.

Board Meetings

During the year 2017-18, four Board Meetings were held, the details of which are given in the Corporate Governance Report. Board Committees

All Committees of the Board of Directors are in line with the provisions of the Companies Act, 2013 and the applicable Listing Regulations, 2015

Audit Committee

The Audit Committee comprises of Mr. Ch G Krishna Murthy, Chairman, Mr. S Balasubramanian and Mr. K Balarama Reddi, members, all of whom are Independent Directors. All the recommendations made by the Audit Committee were accepted by the Board.

Directorsâ Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, and secretarial auditors including Audit of internal financial controls over financial reporting by the Statutory Auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companyâs internal financial controls were adequate and effective during the financial year 2017-18.

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, with respect to the Directorsâ Responsibilities Statement, it is hereby confirmed that;

i) in the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable Accounting Standards have been followed along with proper explanations relating to material departures;

ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit or loss of the Company for the said period;

iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the directors had prepared the annual accounts for the financial year ended March 31, 2018 on a âgoing concernâ basis;

v) they have laid down internal financial controls in the Company that are adequate and were operating effectively and

vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.

Secretarial Auditors

The Board had appointed Mr. Gandhari Narender of Narender & Associates, a firm of Practicing Company Secretaries, to carry out the Secretarial Audit under the provisions of section 204 of the Companies Act, 2013 and the Rules made thereunder. The report of the Secretarial Auditor in Form MR-3 is enclosed to this report as Annexure B. The Secretarial Auditor Report does not contain any qualification, reservation or adverse remarks.

Statutory Auditors

Price Waterhouse Chartered Accountants LLP(Firm Registration No: 012745N/N500016), were appointed as Statutory Auditors of the Company for a period of five years from the conclusion of the Annual General Meeting held on September 27, 2017. It may be noted that on 10th January 2018, SEBI has issued an order, barring Price Waterhouse for auditing existing or fresh audits of any listed Company for a period two years after finding it guilty in the Satyam Computers scam case while giving a relief to continue the audit of existing companies for the financial year 2017-18. In this regard, Price Waterhouse has appealed to Securities Appellate Tribunal (SAT) seeking a blanket stay against SEBIâs Order. The SAT vide its order dated 19th February, 2018 refused to grant stay on SEBIâs ruling. However, SAT has modified its earlier order passed on 19th January, 2018 on pure technical grounds and allowed Price Waterhouse and its network entities to continue with audit works of their existing clients for the year 2017-18 and also extended this relief till the end of March 2019 or issue of final orders by the division bench of SAT, whichever is earlier. Accordingly, they are eligible to continue to audit the financial statements of the Company for the financial year 2018-19 as well.

Vide notification dated May 7, 2018 issued by the Ministry of Corporate Affairs, the requirement of seeking ratification of appointment of statutory auditors by members at each AGM has been done away with. Accordingly, no such item has been considered in notice of this 24th AGM.

Managementâs response on the Statutory Auditors Qualification / Comments

Standalone Financial statements

The Company has investments in and has given loans to GVK Energy Limited, a jointly controlled entity, amounting to Rs. 112,643 Lakhs and has also given financial guarantees (Outstanding balance: Rs. 10,298 lakhs) to the above mentioned jointly controlled entity. Projects under the jointly controlled entity are currently facing uncertainties in relation to availability of fuel (Gas/ coal), de-allocation of coal mines, pending capital costs approval for final tariff determination of power projects due to which these companies are incurring losses and have also defaulted in repayment of loans. Management is in the process of negotiating the terms with lenders for restructuring of loan accounts, one time settlements, and is also negotiating with the regulatory authorities for approval of additional capital costs. Management is confident that it will be able to settle the matters amicably and will be able to achieve final tariff approvals with retrospective effect and will be ultimately able to achieve profitable operations. However pending resolution of the above uncertainties currently the impact of the same is unascertainable.

Consolidated Financial statements

The Company has investments in and has given loans to GVK Energy Limited, a jointly controlled entity, amounting to Rs 36,460 Lakhs and has also given financial guarantees (Outstanding balance: Rs. 10,298 lakhs) to the above mentioned jointly controlled entity. Projects under the jointly controlled entity are currently facing uncertainties in relation to availability of fuel (Gas/ coal), de-allocation of coal mines, pending capital costs approval for final tariff determination of power projects due to which these companies are incurring losses and have also defaulted in repayment of loans. Management is in the process of negotiating the terms with lenders for restructuring of loan accounts, one time settlements, and is also negotiating with the regulatory authorities for approval of additional capital costs. Management is confident that it will be able to settle the matters amicably and will be able to achieve final tariff approvals with retrospective effect and will be ultimately able to achieve profitable operations. However pending resolution of the above uncertainties currently the impact of the same is unascertainable.

Awards and recognitions

Following are some of the awards and recognitions that your Company and its Subsidiaries have received during the year under review.

Certifications, Recognitions and Awards for Mumbai International Airport Private Limited (MIAL)

Awards, Accolades and Accreditation

- GVK CSIA has been awarded âBest airport in India/ C Asiaâ by Skytrax World Airport Awards 2018.

- GVK CSIA bagged the prestigious Gold - Green Airports recognition 2018 by ACI in the over 35 mppa category, recognizing the outstanding achievements in environmental projects on 6 March, 2018.

- CSIA has won the âGoldâ plaque at the âACI Asia-Pacific Green Airport recognition 2018â

- CSIA has been adjudged as the second runner-up in âBreakthrough level kaizenâ category at the prestigious CII TPM Kaizen Awards 2018

- CSIA received Worldâs Best Airport for the Airport Service Quality (ASQ) Awards 2017.

- CSIA received âBest Metro Airport awardâ and the âAirport offering best facilities for sick, elderly & physically challengedâ for 2017-18 by Air Passenger Association of India (APAI).

- GVK CSIA adjudged as the Best Domestic Airport at the âWINGS INDIA AWARDS 2018â for Excellence in the Aviation sector held in Hyderabad on 9 March, 2018.

- GVK CSIA received the INFHRA-FM Excellence Awards 2017-18 under the category of âEcological sustainabilityâ, for the implementation of green initiative, âGreen Seal Certified Products & Waterless Urinals Programmeâ held in Mumbai on 23 February, 201 8.

- GVK MIAL awarded the âCargo Airport of the Year - Indiaâ at STAT Times International Awards for Excellence on 21 February, 2018 in Mumbai.

- GVK MIAL wins âExcellence Awardâ at 7th Global Economic Summit, in the âBest Logistics Service Providerâ category.

- GVK CSIA has won CAPAâs award for excellence in Air Traffic Management productivity in Indian aviation.

- GVK MIAL bags the CII Renovative Kaizen award.

- GVK MIAL has been awarded as the âBest Airport Staffâ award in India & Central Asia at the Skytrax Awards 2017.

- GVK MIAL has been in the Top 10 âBest Airport Terminalsâ at the Skytrax Awards 2017.

- GVK MIAL has been awarded as the âHighly Commended Airport for Marketingâ award in Asia Pacific region in the over 20 million passengersâ category.

Particulars of Loans, Guarantees or Investments

Particulars of loans and guarantees given, investments made and securities provided under Section 186 of the Companies Act, 2013 are given under the Notes to the financial statements and forms part of this Annual Report.

Contracts and Arrangements with the Related Parties

All the related party transactions that were entered during the financial year were on an armâs length basis and were in the ordinary course of business. These transactions are placed before the Audit Committee and the Board for their prior approvals. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on a materiality of related party transactions. The policy on related party transactions is available on our website under the following link https://www.gvk.com/files/investorrelations/ investors/corpgovernance/RelatedPartyTransactionPolicy.pdf

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 in the prescribed Form AOC-2, is appended as Annexure C to the Boardâs report.

Extract of Annual Return

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, extract of the Annual Return as on March 31, 2018 in form MGT-9 is appended as Annexure D to the Boardâs report.

Internal Control Systems and their adequacy

The Management continuously reviews the internal control systems and procedures for the efficient conduct of the Companyâs business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee periodically reviews internal audit reports and effectiveness of internal control systems.

Public Deposits

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public.

Vigil Mechanism/Whistle Blower Policy

In terms of section 177(9) & (10) of the Companies Act, 2013 read with Regulation 22 of the Listing Regulation a Vigil Mechanism for Directors and employees to report genuine concerns has been established by the Board along with the whistle blower policy. The Vigil Mechanism and whistle blower policy have been uploaded on the website of the Company. The same can be accessed at the link https://www.gvk.com/files/investorrelations/investors/corpgovernance/GVK_Power_Infrastructure_Limeted.pdf

Under this policy, your Company encourages its employees to report any fraudulent financial or other information to the stakeholders, and any conduct that results in violation of the Companyâs code of business conduct, to the management (on an anonymous basis, if employees so desire). Further, your Company has prohibited discrimination, retaliation or harassment of any kind against any employees who, based on the employeeâs reasonable belief that such conduct or practice have occurred or are occurring, reports that information or participates in the investigation. The Audit Committee periodically reviews the functioning of this mechanism. No personnel of the Company was denied access to the Audit Committee.

Corporate Social Responsibility

Since, there are no average net profits for the Company during the previous three financial years, there are no specific funds that are required to be set aside and spent by the Company during the year under review. Members can access the CSR Policy on the website of the Company at link https://www.gvk.com/files/investorrelations/investors/corpgovernance/CSR_Policy_final_copy.pdf

Particulars of employees and related disclosures

None of the employees are in receipt of the remuneration which is in excess of the limits as specified in Rules 5(2) and 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time.

Disclosures pertaining to remuneration and other details as required under Section 197(12) read with Rule 5(1) of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 are enclosed to this report.

Particulars regarding Conservation of Energy and Research and Development and Technology Absorption

Details of steps taken by your Company to conserve Energy, Research and Development and Technology Absorption have been disclosed as part of the MD&A Report.

Foreign exchange earnings and Outgo:

In accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013, read with the Rule 5 of the Companies (Accounts) Rules, 2014, the information relating to foreign exchange earnings and outgo is provided under Notes to the Balance Sheet and Profit and Loss Account.

Material Changes and Commitments Affecting the Financial Position of the Company

There have been no material changes and commitments, affecting the financial position of the Company which occurred between the end of the financial year to which the financial statements relate and the date of this report.

Details of Significant and Material Orders Passed by the regulators/Courts/Tribunals Impacting the Going Concern Status and the Companyâs Operations in Future

There are no significant and material orders passed by the Regulators/Courts/Tribunals which would impact the going concern status of the Company and its future operations.

Information Required under Sexual Harassment of Women at Work place (Prevention, Prohibition & Redressal) Act, 2013

Your Company has a policy and framework for employees to report sexual harassment complaints at workplace and its process ensures complete anonymity and confidentiality of information. During the year under review, there were no complaints filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is available on the website of the Company at https://www.gvk.com/investorrelations/investors/otherdisclosures.aspx

Acknowledgements

Your Directors take this opportunity to thank every shareholders, suppliers, bankers, business partners/ associates, financial institutions and Central and State Governments for their consistent support and encouragement to the Company. I am sure you will join our Directors in conveying our sincere appreciation to all employees of the Company and its subsidiaries and associates for their hard work and commitment. Their dedication and competence has ensured that the Company continues to be a significant and leading player in the Infrastructure industry.

For and on behalf of the Board of Directors

Place : Hyderabad Dr G V K Reddy

Date : May 23, 2018 Chairman

Mar 31, 2017

Dear Stakeholders,

The Directors submit the 23rd Annual Report of the Company along with the audited financial statements for the financial year ended March 31, 2017.

Financial results

Following is the summary of consolidated financial results of the Company, its subsidiaries and associates.

(Rs. Lakhs)

Particulars	2016-17	2015-16
Financial Performance
Operational Income	351,647	320,687
EBIDTA	115,632	117,133
Other Income	53,266	51,002
Finance Costs	189,037	165,076
Depreciation	66,867	54,896
Loss from ordinary activities	(87,006)	(51,837)
Share of profit of associate	23,464	18,206
Share of loss of jointly controlled entity	(65,094)	(27,094)
Loss before tax	(128,636)	(60,725)
Tax expense/(credit)	5,727	7,994
Non - controlling interest	(4,135)	(4,039)
Loss for the year	(130,228)	(64,680)
Other comprehensive income, net	(287)	124
Total comprehensive income	(130,515)	(64,556)
EPS (Rupees) :
Weighted Avergage no. of Equity Shares	1,579,210,400	1,579,210,400
Basic and Diluted	(8.25)	(4.10)
Financial Position:
Fixed Assets (Net of depreciation)	1,559,023	1,599,528
Cash and Bank balance	102,783	90,616
Net current assets	(498,130)	(390,037)
Total Assets	2,063,123	2,239,967
Equity	15,792	15,792
Other equity	(45,476)	84,328
Net worth	(29,684)	100,120
Market Capitalisation	93,963	107,860

Our total income from operations increased by 9.65 % to Rs. 351,647 Lakhs from Rs. 320,687 Lakhs in the previous year. The Transportation segment contributed an income of Rs. 37, 959 Lakhs (10.79 % of total income) compared to Rs. 37,666 Lakhs in the previous year. Airport Segment contributed an income of Rs. 312, 127 Lakhs (88.76 % of total income) as compared to Rs. 281,557 Lakhs in the previous year. The other segment contributed Rs. 1,561 Lakhs compared to Rs.1,464 Lakhs in the previous year. The Airport assets (Mumbai and Bangalore Airports) have contributed to net profit of Rs. 19,274 Lakhs compared to Rs. 13,853 Lakhs in the previous year.

The net loss after tax, share of profit from associate, share of profit from joint venture and non controlling interest was Rs. 130,228 Lakhs as against net loss of Rs.64,680 Lakhs in the previous year. The net loss is mainly attributable to drop in generation of power due to acute which has resulted in either closure of power plants or operational for a very few days in a month and an increase in interest cost.

Dividend

The Board of Directors of your Company has not recommended any dividend for the financial year 2016-17.

Share Capital

The paid up equity share capital as on March 31, 2017 is Rs.157.92 Crore. There was no public issue, rights issue, bonus issue or preferential issue etc., during the year. The Company has not issued any shares with differential voting rights, sweat equity shares nor has it granted any stock options.

Management Discussion and Analysis

A report for the year under review as stipulated under Part B of Schedule V of SEBI (LODR) Regulations, 2015 presented in a separate section forming part of the Annual Report.

Corporate Governance

Corporate Governance, as required under Regulation 27 of SEBI (LODR) Regulations, 2015, a certificate from the Company Secretary in Whole Time Practice on compliance with the mandatory recommendations of the Narayana Murthy Committee on Corporate Governance is annexed to the Directors Report. As in the past, your Company continues to follow best of Corporate Governance policies.

Subsidiaries and Consolidated Financial Statements

As on March 31, 2017 your Company has 8 direct Subsidiaries, 18 step down Subsidiaries and one Associate Company. There has been no material change in the nature of the business of the Company and its subsidiaries. Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management Discussion and Analysis Report.

A statement containing salient features of the financial statement of these companies as required to be provided under section 129(3) of the Act, are enclosed herewith in the specified form, as Annexure A. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. Any member intends to have a certified copy of the Balance Sheet and other financial statements of these subsidiaries may write to the Company Secretary. These documents are available for inspection during business hours at the registered office of the Company and that of the respective subsidiary companies. The Policy for determining material subsidiaries as approved may be accessed on the Companyâs website at the link: http:// www.gvk. comunderinvestorrelations/investors/policyfordeterminingmaterialsubsidiaries

Developments in the existing assets

(i) Energy

As already informed to members, the validity period of PPA for Jegurupadu Phase I power plant has expired on 20th June, 2015. Phase II operated in the month of September 2016 using e-bid RLNG and achieved PLF(G) of 3.75% and continues to declare availability on alternate fuel, hence achieved 99.73% PLF for the year ending March 2017 based on Availability Declaration on HSD fuel, presently plant is shut down and kept under preservation.

Alaknanda Hydro project has achieved cumulative year to date generation of 1275.458 Metric Units compared to 1163.395 Metric Units last year. Plant has effectively utilized the available water during the monsoon season to achieve the better operational performance.

Both units of 2 x 270MW coal based power plant, GVK Power (Goindwal Sahib) Limited could not be operated during the FY 201617 due to non-availability of coal and units will be restarted after accumulation of 1 lakh Metric Tons of coal at the project site.

(ii) Airports

During the year under review, Mumbai International Airport Private Limited (MIAL) handled 305,463 aircraft movements (ATMs) in FY 17, a growth of 3% compared to previous year, growth was mainly seen in international ATMs that grew at 5.5%. MIAL touched 45.15 million passengers in FY 17, a growth of 8.4%, growth in domestic passengers was at 8.9% whereas international passengers grew at 7%. Cargo throughput at MIAL was 782,288 MT, domestic cargo recorded a growth of 12% while international cargo grew by 10%. MIAL maintained its 2nd position in all India passenger and cargo share with 17.2% and 26% share, respectively.

FY 17 witnessed the launch of operations by Garuda Indonesia and Brussels Airlines to Jakarta and Brussels, respectively. Air China also reinstated its operation to Beijing. In FY 18, RwandAir commenced operations to Kigali while Indonesia AirAsia X and Air Canada have confirmed their planned operations. The year also witnessed launch of code F operations by Etihad and Lufthansa, thereby making MIAL the only airport in India to have 4 code F operations daily. Aircraft upgrades were done by Jet Airways on routes like Bangkok, Singapore, Dubai, Dammam, Doha, Riyadh and Amsterdam. Also, to augment the domestic capacity, 6 wide body movements were introduced on Delhi, Chennai and Bengaluru routes. The revised aeronautical tariff card was issued in FY 17 that reflects the route development philosophy at MIAL. Wide body aircraft on international routes are charged less and new international routes are incentivised with no landing charges for 1 year.

Bangalore Airport & Infrastructure Developers Private Limited (BAIDPL), holding company of Bangalore International Airport Limited (BIAL) has completed the sale transaction of 33% equity holding in the later to Fairfax Group on 24th March, 2017 at a revised consideration of Rs.2,202 Crore. With this sale, BAIDPLâs equity holding in BIAL has come down to 10% from 43% as of March 31, 2017.

Subsequently, the balance 10% equity holding also has been sold to Fairfax on July 13, 2017 for a sale consideration of Rs.1,290 Crore. As a result of total dilution of our equity in BIAL, all the Directors representing BAIDPL have resigned from the Board of BIAL.

During the year, BIAL has handled 22.88 Mio (PY 18.97 mio), 178,117 ATMs (PY 153,831) and 319,334 MT (PY 291,920 MT) of cargo resulting in increase of 20.6%, 15.8% and 9.4% respectively during the year. It has won the Skytrax Award 2017 for the Best Airport in India and Central Asia category and has been conferred with the Excellence Award 2016 for being IATA e-freight compliant Airport - South. The Company has been awarded GreenCo Platinum rating from CII Green Building Council (GBC) and the âMost Innovativeâ (top category) in GreenCo Best Practice Award - 2016 and also bagged the âMost useful project presentationâ award during the event for the presentation on âReduction & Optimization of pesticides at Kempegowda International Airportâ

Directors

Appointment by rotation

In accordance with the provisions of the Companies Act, 2013 read with the Articles of Association of the Company and Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, G V Sanjay Reddy, Director of the Company will retire by rotation at this meeting and being eligible, your Board recommends his re- appointment.

Details of the director seeking re-appointment at this meeting have been given separately under the corporate governance section of this report.

Confirmation of Appointment

Pursuant to the provisions of the section 161 of the Companies Act, 2013 read with the Article 109 of the Articles of Association of the Company, P V Prasanna Reddy was appointed as Additional Director w.e.f. 11th August, 2017 and he shall hold office only up to the date of this Annual General Meeting. Being eligible, the Board recommends his appointment as Director of the Company whose office is liable to retire by rotation.

Key Managerial Personnel

During the year under review, there is no change in the Key Managerial Personnel of the Company.

Declaration by Independent Directors

An exclusive meeting of the Independent Directors of the Company has been held on 14th February, 2017 which was attended by all the Independent Directors. They have reviewed the performance of the non-independent directors and the Board as a whole, performance of chairperson and quality of information to the Board as provided under Schedule IV of the Companies Act, 2013.

The Company has adopted a program on familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of business and the industry in which the Company operates among other things. The same is put up on the website of the company at the link http:// www.gvk.comunderinvestorrelations/ investorsfamiliarisationprogrammeofindependentdirectors.

Mechanism for Evaluation of Board

Evaluation of all Board members is done on an annual basis. The evaluation is done by the Board, Nomination and Remuneration committee and Independent Directors with specific focus on the performance and effective functioning of the Board and individual Directors.

1. Criteria for evaluation of Board of Directors as a whole

i) The frequency of meetings;

ii) The length of meetings;

iii) The administration of meeting;

iv) The number of committees and their notes;

v) The flow of information to board members and between board members

vi) The quality and quantity of information; and

vii) The disclosure of information to the stakeholders

One of the key functions of the Board is to monitor and review the evaluation framework. The Board works with nomination and remuneration committee to lay down the evaluation criteria for performance of the Chairman, the Board, Board Committees, and executive/non-executive/independent directors through a peer evaluation, excluding the director being evaluated.

To improve effectiveness of the Board and its committees, as well as that of each of independent director, a formal and rigorous Board review is internally undertaken on annual basis. The process took the form of questionnaires given to executive and independent directors.

2. Criteria for evaluation of the Individual Directors

i) Ability to contribute and monitor corporate governance practices;

ii) Ability to contribute by introducing best practices to address top management issues;

iii) Participation in long term strategic planning;

iv) Commitment to the fulfillment of director obligations and fiduciary responsibilities;

v) Guiding strategy;

vi) Monitoring management performance and development;

vii) Statutory compliance & Corporate governance;

viii) Attendance and contribution at Board/Committee meetings;

ix) Time spent by each of the member; and

x) Core competencies

Nomination and remuneration policy

The objectives of the Policy

1. To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration.

2. To determine remuneration based on the Companyâs size and financial position and trends and practices on remuneration prevailing in peer Companies.

3. To carry out evaluation of the performance of Directors,

4. To provide them reward linked directly to their effort, performance, dedication and achievement relating to the Companyâs operations.

5. To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

The brief Nomination and Remuneration policy is annexed to this report.

The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The outcome of the Board evaluation for fiscal 2017 was discussed by the nomination and remuneration committee at the meeting held on May, 24, 2017.

The committee makes a periodic appraisal of the performance of the executive directors based on a detailed performance matrix.

Board Committees

All Committees of the Board of Directors are in line with the provisions of the Companies Act, 2013 and the applicable SEBI (LODR) Regulations, 2015

Directorsâ Responsibilities Statement

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, with respect to the Directorsâ Responsibilities Statement, it is hereby confirmed that;

i) in the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable Accounting Standards have been followed along with proper explanations relating to material departures;

ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profit or loss of the Company for the said period;

iv) the directors had prepared the annual accounts for the financial year ended March 31, 2017 on a âgoing concernâ basis;

v) they have laid down internal financial controls in the company that are adequate and were operating effectively and

vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.

Financial Statements

As required under the Listing Agreement entered into with the Stock Exchanges, consolidated financial statements of the Company and all its subsidiaries are attached. The audited financial statements of the Company are prepared in accordance with the new Indian Accounting Standards (Ind AS) and are audited by the statutory auditors of the company, for the year ended March 31, 2017. These financial statements disclose the assets, liabilities, income, expenses and other details of the Company, its subsidiaries and associate companies.

Indian Accounting Standards (Ind AS) - IFRS Converged Standards

Your Company has adopted Indian Accounting Standards (Ind AS) with effect from April 1, 2016 pursuant to the Companies (Indian Accounting Standard) Rules, 2015 as notified by the Ministry of Corporate Affairs on February 16, 2015. Accordingly, your Company has prepared financial results on standalone basis as per Ind-AS for the first three quarters of the FY 2016-17 and on and from the period ending March 31, 2017, the formats for Unaudited/Audited quarterly financial results i.e. Statement of Profit and Loss and the Unaudited/Audited Half-Yearly Balance Sheet are to be submitted to the stock exchanges, shall be as per the formats for revised Balance Sheet and Statement of Profit and Loss as prescribed in Schedule III to the Companies Act, 2013.

Secretarial Auditors

The Board had appointed M/s Narendar & Associates, Company Secretaries in Whole-time Practice to carry out the Secretarial Audit under the provisions of section 204 of the Companies Act, 2013 and the Rules made thereunder. The report of the Secretarial Auditor in Form MR-3 is enclosed to this report as Annexure B.

Statutory Auditors

M/s. S R Batliboi & Associates LLP, the existing Auditors, were appointed on September 13, 2002, as the Statutory Auditors of the Company for auditing the annual financial statements of the Company from the financial year 2002-03 and have completed the permissible period of two terms of five years each.

As per second proviso to Section 139(2) of the Companies Act, 2013 (âthe Actâ), the existing auditors have completed their term of ten years at the commencement of the said Act, hence on their completing the additional transition period of three years provided under the Act, the term of existing auditors expires at the conclusion of the ensuing 23rd AGM.

The Board at its meeting held on August 11, 2017, based on the recommendations of the Audit Committee has recommended the appointment of Price Waterhouse Chartered Accountants LLP (Firm Registration No: 012754N/N500016) as Statutory Auditors subject to approval by the members.

Price Waterhouse Chartered Accountants LLP, have consented to the said appointment and confirmed that their appointment, if made, would be within the limits specified under Section 141(3)(g) of the Act. They have further confirmed that they are not disqualified to be appointed as statutory auditors in terms of the provisions of the proviso to Section 139(1), Section 141(2) and Section 141(3) of the Act and the provisions of the Companies (Audit and Auditors) Rules, 2014.

Price Waterhouse Chartered Accountants LLP will be appointed as statutory auditors of the Company from the conclusion of 23rd AGM till the conclusion 28th AGM, covering a term of five consecutive years, subject to a ratification by the members at each intervening annual general meeting, on a remuneration, out-of-pocket expenses, incurred in connection with the audit as may be decided by the Audit Committee in consultation with the auditors from year to year and approved by the Board. Accordingly, the Board recommends their appointment at this AGM.

The Notes to Accounts forming part of the financial statements are self-explanatory and need no further explanation.

Managementâs response on the Statutory Auditors Qualification / Comments (if any)

GVK Coal (Tokisud) Private Limited was incorporated for developing a coal mine with minable reserve of 52 Million Tons (geological reserve of around 92 Million Tons) in the state of Jharkhand as a captive coal mine to meet the requirements of coal of one of the step down subsidiary i.e. GVK Power (Goindwal Sahib) Limited, which is implementing a 540 MW Power Plant at Goindwal Sahib in Punjab.

The Honorable Supreme Court vide is decision of September 24, 2014 held that allotment of various coal blocks including those allotted to GVK Coal (Tokisud) Company Private Limited is arbitrary and illegal and had cancelled the allotment. Subsequently, the government promulgated The Coal Mines (Special Provisions) Ordinance 2014, which intends to take appropriate action to deal with situation arising pursuant to the Honorable Supreme Courtâs judgment. GVK Coal Tokisud, subsidiary company has filed writ petition before the Honâble High Court of Delhi challenging the decision of the Nominated Authority, Ministry of Coal which quantified the compensation payable to GVK for taking over the Tokisud Coal Block as Rs.11,129 Lakhs against the carrying value of assets of Rs.311,15 Lakhs. The Honâble High court had passed an order 09.03.2017. In the order, Honâble High cout has agreed that taking restricting compensation to the computed written down value as on 31.03.2014 may not be correct and valuation of the mine infrastructure should be done as on the date of execution of the vesting order or allotment order as the case may be. Court has advised the management to raise disputes before the tribunal for the quantum of compensation. Based on the managementâs judgment the Company has resubmitted its claim for balance compensation to nominated authority on 28th April 2017. Management believes that the subsidiary will be appropriately reimbursed for cancelled coal mine accordingly no provision was required to be made on carrying value of assets.

Awards and recognitions

Following are some of the awards and recognitions that your Company / its Subsidiaries / Associates received during the current year.

Certifications, Recognitions and Awards for Bengaluru International Airport (BIAL)

a) BIAL has won the Skytrax Award 2017 for the Best Airport in India and Central Asia category.

b) Kempegowda International Airport, Bengaluru has been recognized at the Quality Circle Forum of India 2016. All the thirteen entries submitted has been awarded the Gold recognition, the highest standard at the forum.

c) Kempegowda International Airport, Bengaluru has won the Excellence Award 2016 for being IATA e-freight compliant Airport - South.

d) Kempegowda International Airport, Bengaluru has won the Best Cargo Airport 2016 - Region: West & South and Best Airport Cargo Marketing Team - 2016, Region: West & South.

e) BIAL received the GreenCo Platinum rating from CII Green Building Council (GBC) and the âMost Innovativeâ (top category) in GreenCo Best Practice Award - 2016 and also bagged the âMost useful project presentationâ award during the event for the presentation on âReduction & Optimization of pesticides at Kempegowda International Airportâ.

f) Successful renewal of Airport Carbon Accreditation at Level 3 i. e. Optimization Level from Airport Council International in May 2016. This Accreditation is valid from 4th May 2016 to 3rd May 2017.

g) IT Service Management (ITSM) - ISO 20000, ISO 27001 - Information Security Management, Integrated Management System (IMS): ISO 9000 - Quality Management System and ISO 14001 - Environment Management System have all been renewed successfully.

Certifications, Recognitions and Awards for Mumbai International Airport Private Limited (MIAL)

Awards, Accolades and Accreditation

a) CSIA was adjudged as 2nd best airport globally in the âover 40 million passengersâ category by Airports Council International for airport service quality in 2016.

b) GVK MIAL has been awarded as the âBest Airport Staffâ award in India & Central Asia at the Skytrax Awards 2017.

c) GVK MIAL ranks in the Top 10 âBest Airport Terminalsâ at the Skytrax Awards 2017.

d) GVK MIAL has been awarded as âHighly Commended Airport for Marketingâ award in Asia Pacific region in the over 20 million passengersâ category.

e) GVK MIAL ranked as the Second Best Airport globally and in Asia Pacific by Airport Council Internationalâs Airport Service Quality Awards 2016.

f) GVK CSIA has been awarded with the âBest Executed Landmark Project of the Year (Airport)â at the Construction Times Award 2016.

g) GVK MIAL has been awarded âAir Cargo Terminalâ of the year 2016 at Logistics Asia Awards.

h) GVK MIAL has been awarded âBE Starâ recognition as Leader for Excellence in Customer Management;

i) GVK MIAL has received the âSustainable Carbon Management Practice Awardâ from World CSR Congress; j) GVK CSIA has won Procurement Excellence Awards at the 4th Procurement Strategies Forum 2016;

k) GVK MIAL has won the ICI Dr. Ramakrishna Award 2016 for Best Project with Pre-cast Concrete in India;

l) GVK CSIA has won award for Excellence in Travel Retail Infrastructure 2016 by Indian Retail Forum; m) GVK CSIA has been awarded as âBest Metro Airport 2015-16â by Air Passenger Association of India;

n) GVK CSIA has been inducted in the ACREX Hall of Fame for its world class design, architecture, infrastructure and operational efficiency.

Particulars of Loans given, Investments made and Guarantees given and Securities provided:

Particulars of loans given, investments made, guarantees given and securities provided under Sec 186 of the Companies Act, 2013 forms part of the Notes to the financial statements are provided in this Annual Report

Contracts and Arrangements with the Related Parties:

All the related party transactions that were entered during the financial year were on an armâs length basis and were in the ordinary course of business. These transactions, for a financial year, are placed before the Audit Committee and the Board for their prior approvals. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the company on a materiality of related party transactions.

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 in the prescribed Form AOC-2,is appended as Annexure C to the Boardâs report.

Extract of Annual Report

An extract of the Annual Return for the financial year ended 31st March, 2017 as required under section 92(3) of the Act is enclosed herewith, in the specified format, as Annexure - D

Internal Control Systems and their adequacy

Apart from the above, the Company is in consultations with the external and independent consultants to have a policy for development and implementation of risk management for the company including identification of elements of risk, if any, that may threaten the existence of the Company and a mechanism to mitigate the same. Once the above policy is finalized, the same will be adopted by the Board and uploaded in the website of the Company thereafter.

Public Deposits

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public.

Vigil Mechanism

In terms of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for Directors and employees to report genuine concerns has been established by the Board along with the whistle blower policy. The Vigil Mechanism and whistle blower policy have been uploaded on the website of the Company. The same can be accessed at the link www.gvk.comunderinvestorrelations/ investors/codeofconduct.

Corporate Social Responsibility

Members can access the CSR Policy on the website of the Company at link www.gvk.comunderinvestorrelations/investors/ corporategovernance/ CSR Policy

Particulars of employees and related disclosures

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, none of the employees are in receipt of the remuneration which is in excess of the limits as specified in the regulation.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO ETC:

Information on conservation of Energy, Technology a bsorption, Foreign Exchange earnings and outgo required to be disclosed under Section 134 of the Companies Act, 2013 read with Companies (Accounts ) Rules, 2014 are provided hereunder :

(A) Conservation of Energy:

(i) the steps taken or impact on conservation of energy : NA

(ii) the steps taken by the company for utilising alternate sources of energy : NA

(iii) the capital investment on energy conservation equipments; : NA

(B) Technology absorption:

(i) the efforts made towards technology absorption; : NA

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution; : NA

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) : NA

(a) the details of technology imported;

(b) the year of import;

(d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof;

(iv) the expenditure incurred on Research and Development. :

Expenditure on R& D

(Rs. In lakhs)

S.No.	Particulars	2016-17	2015-16
A	Capital	Nil	Nil
B	Recurring	Nil	Nil
C	Total	Nil	Nil
D	Total R&D expenditure as a percentage of total turnover	Nil	Nil

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Acknowledgements

The Directors of your Company thank the Government of India, various State Governments and their concerned Department / Agencies / Regulatory Authorities for their continued support and cooperation. The Directors also wish to place on record the support extended by various Banks, Financial Institutions and every stakeholder of the Company.

The Directors further wish to appreciate and value the contributions made by every employee of the GVK Family.

For and on behalf of the Board of Directors

Place : Hyderabad Dr G V K Reddy

Date : August 11, 2017 Chairman & Managing Director

Mar 31, 2016

Dear Stakeholders,

The Directors submit the 22nd Annual Report of the Company along with the audited financial statements for the financial year ended March 31, 2016.

Consolidated Financial results

Being a Holding Company of different vertical business operations, your Company doesn''t have independent operating revenues other than O&M fee, incentives and dividends, if any, from its subsidiaries, Interest and other treasury income earned on surplus funds. Following is the summary of consolidated financial results of the Company, its subsidiaries and associates.

(Rs. Lakhs)
Particulars	2015-16	2014-15
Financial Performance
Operational Income	416,447	304,965
EBIDTA	165,353	81,772
Other Income	13,400	8,665
Interest & Financial Charges	229,125	147,652
Depreciation	86,867	70,555
Provision for taxes	2,846	(10,922)
Profit before tax and share of profits for associate and minority interest	(140,085)	(116,848)
Add: Share of income from Associates	18,833	3,220
Less: Minority Interest	(27,834)	(30,160)
Total Profit for the year	(93,418)	(83,468)
EPS (Rupees)
Weighted Average no. of Equity Shares	1,579,210,400	1,579,210,400
Basic and Diluted	(5.92)	(5.29)
Financial Position
Fixed Assets (Net of Depreciation)	2,451,103	2,398,888
Cash and Bank balance	106,354	149,551
Net Current Assets	(488,414)	(517,478)
Total Assets	3,364,648	3,285,303
Equity	15,792	15,792
Reserves	119,812	178,076
Net worth	135,604	193,868

Our total income from operations increased by 36.56% to Rs.416,447 Lakhs from Rs.304,965 Lakhs in the previous year. The Power segment contributed an income of Rs.96,387 Lakhs compared to Rs.29,040 Lakhs in the previous year. The Transportation segment contributed an income of Rs.35,847 Lakhs as compared to Rs 29,983 Lakhs in the previous year. Airport Segment contributed an income of Rs. 283,918 Lakhs as compared to Rs 245,479 Lakhs in the previous year. The other segment contributed Rs. 295 Lakhs as compared to Rs 463 Lakhs.

The net loss after tax, share of profit from associate and minority interest was Rs.93,418 Lakhs as against net loss of Rs.83,468 Lakhs in the previous year The losses during the year are attributable mainly to the restricted supply of gas for power plants as a result of which the plants did not operate at full capacity, one-time loss on write-off of investment in Oil & Gas , Road and other projects amounting to Rs 162 Crs and higher finance cost.

Dividend

The Board of Directors of your Company has not recommended any dividend for the financial year 2015-16.

Management Discussion and Analysis

In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 Management''s Discussion and Analysis is set out in a separate section forming part of the Annual Report.

Corporate Governance

Corporate Governance, as required under relevant provisions of SEBI (LODR) Regulations, 2015, a certificate from the Company Secretary in Whole Time Practice on compliance with the mandatory recommendations of the Narayana Murthy Committee on Corporate Governance is annexed to the Directors Report. As in the past, your Company continues to follow best of Corporate Governance policies.

Subsidiaries and Consolidated Financial Statements

As on March 31, 2016 your Company has 8 direct Subsidiaries, 17 step down Subsidiaries and 2 Associate Companies. There has been no material change in the nature of the business of the Company and its subsidiaries. Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management Discussion and Analysis Report.

A statement containing salient features of the financial statement of these companies as required to be provided under section 129(3) of the Act, are enclosed herewith in the specified form, as Annexure A. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. Any member intends to have a certified copy of the Balance Sheet and other financial statements of these subsidiaries may write to the Company Secretary. These documents are available for inspection during business hours at the registered office of the Company and that of the respective subsidiary companies. The Policy for determining material subsidiaries as approved may be accessed on the Company''s website at the link: http:// www.gvk. comunderinvestorrelations/investors/policyfordeterminingmaterialsubsidiaries

Developments in the existing assets

(i) Energy

As informed in the last annual report, the validity period of PPA for Jegurupadu Phase I power plant was expired on 20th June, 2015 and APDISCOM has issued buy-out notice on 19th June, 2015. Agreement for Buy out of the Project was signed on 8th February, 2016. In terms of this agreement, APDISCOM has taken over the Phase I Power project on 22nd April, 2016 with a Terminal Value of Rs.261.27 Crore. Discussions are being held with APPCC/APDISCOMs regarding lease amount for utilizing the land for Phase-II power plant and cost of operating the shared facilities. Once these are crystalised, a lease agreement would be executed with them.

Construction of 330MW Shrinagar Hydro Electric Project has been completed in all respects. This power plant comprises of four units of 82.5MW each. Commissioning and synchronization of all units to the grid have been done in a phased manner and was completed by June, 2015. The plant achieved Capacity Index of 96.01% for the FY 2015-16 with a Plant Load Factor of 43.08%. Based on the water flows, the plant is being operated with at least one turbine, either on part or full load. All four turbines are expected to run this monsoon season.

Construction of 2 x 270MW Coal based power plant situated at Goindwal Sahib, Tarn District in the State of Punjab is completed in all respects. The Punjab State Power Corporation Limited (PSPCL) had confirmed and accepted 16th April, 2016 as the Commercial operations Date (CoD) after receiving the Independent Engineers Final Test Certificate. However, the plant has been shut down on 22nd April, 2016 due to non-availability of Coal. The Ministry of Power / Ministry of Coal are yet to finalize the long term coal linkage policy. Company will apply for suitable schedule-I coal mines, to be auctioned (shortly) to have permanent source of coal linkage for long term planning.

(ii) Airports

During the year under review, Mumbai International Airport Private Limited (MIAL) has handled total of 296,634 aircraft movements compared to 269,456 during the previous year, an increase of 10.01%. On an average 810 flights were operated per day during the current year as against 738 flights per day during the previous year. MIAL handled 41.67 million passengers during the year compared to 36.63 million passengers during the previous year, an increase of 13.76%. On an average 113,853 passengers travelled per day through the airport during the year as against 100,369 passengers during the previous year.

Bangalore International Airport Limited (BIAL) has handled 18.97 Mio (PY 15.40 mio) passengers, 153,831 ATMs (PY 134,209 ATMs) and 291,920 MT (PY 279,532 MT) of Cargo resulting in an increase of 23.20%, 14.60 % and 4.40 % respectively during the year. It has received its 100 Millionth Passenger since AOD on 18th March 2016 and has achieved the distinction of becoming the first Airport in the country to achieve the Greenco platinum rating from CII Green Building council. BIAL has received GreenCo best practices Award for solid waste management organized by CII in June 2015. Kempegowda International Airport, Bangalore has achieved an overall satisfaction score of 4.66 for the year 2015 in the ACI Airport Service Quality passenger survey (ASQ) and was ranked 29 among 258 participating airports worldwide.

(iii) Transportation

Partial Commercial Operations for the 83.04 km Deoli-Kota Road Project, in the State of Rajasthan, have commenced from August, 2015 and full commercial operations started from March 2016.

Directors / Key Managerial Personnel (KMP)

Appointments by rotation

In accordance with the provisions of the Companies Act, 2013 read with the Articles of Association of the Company and Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Mr. Krishna Ram Bhupal, Director of the Company will retire by rotation at this meeting and being eligible, your Board recommends his re- appointment.

Details of the director seeking re-appointment at this meeting have been given separately under the corporate governance section of this report.

During the year review, there is no change in the Key Managerial Personnel of the Company.

An exclusive meeting of the Independent Directors of the Company has been held on 12th February, 2016 which was attended by all the Independent Directors. They have reviewed the performance of the non-independent directors and the Board as a whole, performance of chairperson and quality of information to the Board as provided under Schedule IV of the Companies Act, 2013.

The Company has adopted a program on familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of business and the industry in which the Company operates among other things. The same is put up on the website of the company at the following link; http://www.gvk.comunderinvestorrelations/investors/ familiarisationprogrammeofindependentdirectors.

Mechanism for Evaluation of Board

1. Criteria for evaluation of Board of Directors as a whole

i) The frequency of meetings;

ii) The length of meetings;

iii) The administration of meeting;

iv) The number of committees and their notes;

v) The flow of information to board members and between board members

vi) The quality and quantity of information; and

vii) The disclosure of information to the stakeholders

2. Criteria for evaluation of the Individual Directors

1. Ability to contribute and monitor corporate governance practices;

2. Ability to contribute by introducing best practices to address top management issues;

3. Participation in long term strategic planning;

4. Commitment to the fulfillment of director obligations and fiduciary responsibilities;

5. Guiding strategy;

6. Monitoring management performance and development;

7. Statutory compliance & corporate governance;

8. Attendance and contribution at Board/Committee meetings;

9. Time spent by each of the member; and

10. Core competencies

Nomination and remuneration policy

Objectives of the Policy:

a) To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration.

b) To determine remuneration based on the Company''s size and financial position and trends and practices on remuneration prevailing in peer Companies.

c) To carry out evaluation of the performance of Directors,

d) To provide them reward linked directly to their effort, performance, dedication and achievement relating to the Company''s operations.

e) To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

f) The brief Nomination and Remuneration policy is annexed to this report.

Board Committees

All Committees of the Board of Directors are in line with the provisions of the Companies Act, 2013 and the applicable SEBI (LODR) Regulations, 2015.

Directors'' Responsibilities Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, and secretarial auditors including Audit of internal financial controls over financial reporting by the Statutory Auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year 2015-16

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, with respect to the Directors'' Responsibilities Statement, it is hereby confirmed that;

i) In the preparation of the annual accounts for the financial year ended March 31, 2016, the applicable Accounting Standards have been followed along with proper explanations relating to material departures;

ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit or loss of the Company for the said period;

iv) The directors had prepared the annual accounts for the financial year ended March 31, 2016 on a âgoing concernâ basis;

v) They have laid down internal financial controls in the company that are adequate and were operating effectively and

vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.

Financial Statements

As required under the Listing Agreement entered into with the Stock Exchanges, a consolidated financial statement of the Company and all its subsidiaries is attached. The consolidated financial statements have been prepared in accordance with the relevant accounting standards as prescribed under section 133 of the Companies Act, 2013 read with Rule 7 of The Companies (Accounts) Rules, 2014. These financial statements disclose the assets, liabilities, income, expenses and other details of the Company, its subsidiaries and associate companies.

Indian Accounting Standards (Ind AS) - IFRS Converged Standards

Your Company will adopt Indian Accounting Standards (Ind AS) with effect from 1st April, 2016 pursuant to the Companies (Indian Accounting Standard) Rules, 2015 as notified by the Ministry of Corporate Affairs on 16th February, 2015. The implementation of Ind AS is a major change process and the preliminary impact assessment on Company''s standalone financial statements would be prepared and presented to the Board.

Secretarial Auditor

The Board had appointed M/s Narendar & Associates, Company Secretaries in Whole-time Practice to carry out the Secretarial

Audit under the provisions of section 204 of the Companies Act, 2013 and the Rules made thereunder. The report of the Secretarial Auditor in form MR-3 is enclosed to this report as Annexure B.

Statutory Auditors

In terms of the sub-section (2) of section 139 of the Companies Act, 2013 (effective from 01-04-2014) no Listed Company shall appoint or re-appoint an Auditing Firm as the Auditor for more than two terms of five consecutive years. Provided that the firm is eligible to be re-appointed in the same Company for another five years from the completion of first term.

In pursuance of the above, every listed Company shall comply with this requirement within a transitional period of three years from the date of commencement of the Act i.e. 1st April, 2014. M/s. S R Batliboi & Associates LLP, the existing Auditors, have been appointed on 13-09-2002 as the Statutory Auditors of the Company for auditing the annual financial statements of the company from the financial year 2002-03 and have completed the permissible period of two terms of five years each as on date.

At the Board meetings held on 29-05-2014 and 16-05-2015, the Board had reappointed them for financial years 2014-15 & 201516 separately and the company now proposes to re-appoint M/s. S R Batliboi & Associates LLP as Statutory Auditors for another financial year i.e. 2016-17 subject to approval of the Shareholders. This will be the last financial year, for which, they can be reappointed as the Statutory Auditors within the transitional period of 3 years and the Company will appoint a new firm of Chartered Accountants as its Statutory Auditors to comply with the provisions of the Companies Act, 2013 as amended from time to time.

Based on the recommendations of the Audit Committee and subject to the approval of the shareholders, it is proposed to re-appoint M/s. S R Batliboi & Associates LLP as the Statutory Auditors of the Company for another financial year i.e. 2016-17. M/s. S R Batliboi & Associates LLP, the Statutory Auditors of the Company will retire at the conclusion of this Annual General Meeting and being eligible, they have offered themselves for re-appointment as Statutory Auditors and have confirmed that their re-appointment, if made, would be within the limits prescribed under section 141 of the Companies Act, 2013. Accordingly, the Board recommends their reappointment at this AGM. The Notes to Accounts forming part of the financial statements are self-explanatory and need no further explanation.

Management''s response on the Statutory Auditors Qualification / Comments

Qualification on recoverability against carrying value of assets of GVK Coal (Tokisud) Private Limited

Awards and recognitions

Following are some of the awards and recognitions that your Company / its Subsidiaries / Associates received during the current year. Certifications, Recognitions and Awards for Bangalore International Airport (BIAL)

a) Company has received its 100 Millionth Passenger since AOD on 18th March 2016 at 15:20 hours arriving from Mumbai on 9W 394. Mr. Vinay Kulkarni who was identified as our 100 Millionth Passengers was felicitated at the terminal.

b) Kempegowda International Airport, Bangalore has achieved the distinction of becoming the first Airport in the Country to achieve the GreenCo Platinum rating from CII Green Building Council (GBC).

c) Kempegowda International Airport, Bangalore has achieved an overall satisfaction score of 4.66 for the year 2015 in the ACI Airport Service Quality passenger survey (ASQ) and was ranked 29 among 258 participating airports worldwide.

d) The Business Continuity Management Systems surveillance Audit by the British Standard Institutions (BSI) under ISO 22301:2012 was successfully completed and the ISO BCM certification has been recommended for continuation until December 2017.

e) Successfully renewed Airport Carbon Accreditation Certificate for Level - 3 (Optimization level) for year 2015 - 16 in May 2015. This is successfully achieved for 3 years now.

f) BIAL received GreenCo Best Practices Award for Solid Waste Management, organized by CII in June 2015.

g) The Business Continuity Management Systems surveillance audit by the British Standard Institutions (BSI) under ISO 22301:201 2 was successfully completed in the last week of September 2015. Subsequently, it is recommended for continuation of the ISO BCM certification until December 2017.

h) CII âEnergy Efficient Unitâ Award in September 2015.CII âGreenCo Best Practiceâ Award on 24th June 2015.

i) All the 13 QC projects that were nominated for the Quality Circle Forum of India Competition 2015 has been awarded Gold Category.

Certifications, Recognitions and Awards for Mumbai International Airport Private Limited (MIAL)

Awards, Accolades and Accreditation

a) GVK CSIA has been voted as the Best Airport in India and Central Asia by Skirted World Airport Awards 2016

b) GVK CSIA has been inducted in the ACREX Hall of Fame for its world class design, architecture, infrastructure and operational efficiency.

c) GVK MIAL has been rated as the World''s Best Airport in the 25-40 million passengers per year category by ACI in the Airport Service Quality Awards 2015.

d) GVK MIAL has bagged the âCargo Airport of the Year - Region India'' award for the second consecutive year at the âSTAT Trade Times International Awards'' for excellence in Air Cargo.

e) GVK CSIA has become the first Brownfield airport to receive the âGreenCo Gold Rating''.

f) GVK MIAL''s Cargo division has bagged the âAir Cargo Terminal Award 2014-15'' at the Economic Times Logistics Awards.

g) GVK MIAL has been awarded the âBest Airport - National'' for excellence in connecting air cargo community by âAir Cargo Agents Association of India'' during the 42nd ACAAI Annual Convention.

h) GVK CSIA has been selected as the âWorld''s Leading Airport Lounge - First Class'' at the World Travel Awards 2015.

i) GVK CSIA has been awarded the Golden Peacock National Award for Risk Management.

j) GVK CSIA has been rated as the âSmartest Airport Building in India'' and the âSmartest Building in India'' at the recently concluded âTimes of India and Honeywell Smart Building Awards'' for 2015. k) Obtained CII GREENCO Gold certification (A rating system to analyze business impact on environment)

l) GVK CSIA''s has bagged the âInnovation in Tunnels Award'' for its proposed Airside Road Tunnel project at the Third Arabian Tunnelling Conference & Exhibition 2015, Dubai. m)GVK CSIA has been awarded the Asia Pacific Airport of the Year 2015 at the CAPA Aviation Awards for Excellence 2015. n) CSIA''s GVK Lounge at Terminal 2 has been conferred as Asia''s Leading Airport Lounge at the World Travel Awards 2015.

o) GVK CSIA has been bestowed with the âDr. A Ramakrishna Award 2015 for the Best Project with Precast Concrete in India'' by Indian Concrete Institute.

p) Pranaam GVK Guest Services has been recognized for its service excellence with the âBest Customer Experience award'' by Customer Experience Management (CEM) Asia. q) GVK CSIA has bagged the Asia Training & Development Excellence Awards 2015 for âBest Change Management Initiative or Program''.

r) Mr. R. K. Jain, CEO, Mumbai International Airport Private Limited was conferred with the âBest CEO with HR Orientation Award'' at the 6th Asia''s Best Employer Brand awards. s) GVK MIAL has received the ISO 50001:2011 accreditation for its efforts towards effective Energy Management System.

Particulars of Loans given, Investments made and Guarantees given and Securities provided:

Contracts and Arrangements with the Related Parties:

All the related party transactions that were entered during the financial year were on an arm''s length basis and were in the ordinary course of business. These transactions, for a financial year, are placed before the Audit Committee and the Board for their prior approvals. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the company on a materiality of related party transactions.

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 in the prescribed Form AOC-2,is appended as Annexure C to the Board''s report.

Extract of Annual Return

An extract of the Annual Return for the financial year ended 31st March, 2016 as required under Section 92(3) of the Act is enclosed herewith, in the specified format, as Annexure D

Internal Control Systems and their adequacy

The Management continuously reviews the internal control systems and procedures for the efficient conduct of the Company''s business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee periodically reviews internal audit reports and effectiveness of internal control systems.

Apart from the above, the Company in consultations with the external and independent consultants adopted a policy for development and implementation of risk management for the company including identification of elements of risk, if any, that may threaten the existence of the Company and a mechanism to mitigate the same.

Public Deposits

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public.

Vigil Mechanism

Corporate Social Responsibility

Since, there are no average net profits for the Company during the previous three financial years, there are no specific funds that are required to be set aside and spent by the Company during the year under review. Members can access the CSR Policy on the website of the Company at link http://www.gvk.comunderinvestorrelations/investors/corporategovernance/CSR Policy

Particulars of employees and related disclosures

Conservation of Energy, Technology Absorption, Foreign Exchange Earning and outgo Etc.,

Information on conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo required to be disclosed under Section 134 of the Companies Act, 2013 read with Companies (Accounts ) Rules, 2014 are provided hereunder:

(A) Conservation of Energy:

(i) the steps taken or impact on conservation of energy : NA

(ii) the steps taken by the company for utilising alternate sources of energy : NA

(iii) the capital investment on energy conservation equipments; : NA

(B) Technology absorption :

(i) the efforts made towards technology absorption; : NA

(ii) the benefits derived like product improvement, cost reduction,

product development or import substitution; : NA

(iii) in case of imported technology (imported during the last three

years reckoned from the beginning of the financial year) : NA

(a) The details of technology imported;

(b) The year of import;

(d) If not fully absorbed, areas where absorption h as not taken place, and the reasons thereof;

(iv) the expenditure incurred on Research and Development : NA

Expenditure on R& D

S.No.	Particulars	2015-16	2014-15
A	Capital	Nil	Nil
B	Recurring	Nil	Nil
C	Total	Nil	Nil
D	Total R&D expenditure as a percentage of total turnover	Nil	Nil

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Acknowledgements

The Directors further wish to appreciate and value the contributions made by every employee of the GVK Family.

For and on behalf of the Board of Directors

Place: Hyderabad Dr. GVK Reddy

Date: May 20, 2016 Chairman & Managing Director

Mar 31, 2015

Dear Stakeholders,

The Directors submit the 21st Annual Report of the Company along with the audited financial statements for the financial year ended March 31,2015.

Consolidated Financial results

Being a Holding Company of different vertical business operations, your Company doesn't have independent operating revenues other than O&M fee, incentives and dividends, if any, from its subsidiaries, Interest and other treasury income earned on surplus funds. Following is the summary of consolidated financial results of the Company, its subsidiaries and associates.

(Rs. Lakhs) Particulars 2014-15 2013-14

Financial Performance

Operational Income 304,965 282,093

EBIDTA 81,772 100,595

Other Income 8,665 12,066

Interest & Financial Charges 147,362 96,452

Depreciation 70,555 43,771

Provision for taxes (10,922) 14,460

Profit before tax and share of profits for associate and minority interest (116,848) (42,022)

Add: Share of income from Associates 3,220 2,764

Less: Minority Interest (30,160) (2,390)

Total Profit for the year (83,468) (36,868)

EPS (Rupees)

Weighted Average no. of Equity Shares 1,579,210,400 1,579,210,400

Basic and Diluted (5.29) (2.33)

Financial Position

Fixed Assets (Net of Depreciation) 2,398,888 2,236,641

Cash and Bank balance 149,551 181,347

Net Current Assets (512,978) (208,279)

Total Assets 3,285,303 3,202,375

Equity 15,792 15,792

Reserves 178,076 262,026

Net worth 193,868 277,818

Our total income from operations increased by 8.11% to Rs.304,965 Lakhs from Rs.282,093 Lakhs in the previous year. The Power segment contributed an income of Rs. 29,040 Lakhs compared to Rs.36,698 Lakhs (9.52% of total income) in the previous year. The Transportation segment contributed an income of Rs.29,983 Lakhs ( 9.83% of total income) compared to Rs.27,195Lakhs in the previous year. Airport Segment contributed an income of Rs.245,942 Lakhs (80.65% of total income). The associate company (Bangalore Airports) has contributed to net profit of Rs. 3,220 Lakhs compared to Rs. 2,764 Lakhs in the previous year. The net loss after tax, share of profit from associate and minority interest was Rs.83,468 Lakhs as against net loss of Rs.36,868Lakhs in the previous year. The net loss is mainly attributable to drop or no generation of power due to acute supply of gas which has resulted in either closure of power plants or operational for a very few days in a month and also increase in interest cost on acquisition debt.

Dividend

The Board of Directors of your Company has not recommended any dividend for the financial year 2014-15.

Management Discussion and Analysis

A Management Discussion and Analysis report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is presented in a separate section forming part of the Annual Report.

Corporate Governance

Corporate Governance, as required under amended Clause 49 of the Listing Agreement with the Stock Exchanges, a certificate from the Company Secretary in While Time Practice on compliance with the mandatory recommendations of the Narayana Murthy Committee on Corporate Governance is annexed to the Directors Report. As in the past, your Company continues to follow best of Corporate Governance policies.

Subsidiaries and Consolidated Financial Statements

As on March 31,2015 your Company has 7 direct Subsidiaries, 16 step down Subsidiaries and 2 Associate Companies. There has been no material change in the nature of the business of the Company and its subsidiaries. Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management Discussion and Analysis Report.

A statement containing salient features of the financial statement of these companies as required to be provided under section 129(3) of the Act, are enclosed herewith in the specified form, as Annexure A. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. Any member intends to have a certified copy of the Balance Sheet and other financial statements of these subsidiaries may write to the Company Secretary. These documents are available for inspection during business hours at the registered office of the Company and that of the respective subsidiary companies. The Policy for determining material subsidiaries as approved may be accessed on the Company's website at the link: http:// www.gvk. comunderinvestorrelations/investors/policyfordeterminingmaterialsu -bsidiaries

Developments in the existing assets

(i) Energy

Since March, 2013 there has been no supply of natural gas to Jegurupadu Phase II and Gautami Power plants of your Company. Hence, both the plants are kept under long term preservation mode. However, with a restricted supply of gas, Jegurupadu Phase I operated at a part load (50%). As the plants are either not operating or partly operational and the situation of non- availability of gas is expected to continue for the foreseeable future, the Major Maintenance of gas turbines is also deferred.

However, Jegurupadu Phase II and Gautami Power Plants have been declaring availability of the plants on alternate fuel since November, 2013 and June, 2012 respectively to the extent of non-availability of gas and submitting the monthly tariff bills for the respective tariff months claiming Capacity Charges.

The validity period of PPA for Jegurupadu Phase I power plant will expire on 20th June, 2015. As per the terms of PPA, the DISCOMs can extend the PPA for another 15 years or lower period if accepted by both the parties OR Buy-out the Project at the Buy-out price decided by an Independent Appraiser. In case DISCOMs opt 'not to do' any of the above, the Project remains with GVK as its own property.

(ii) Airports

During the year under review, Mumbai International Airport Private Limited (MIAL) has handled total of 269,456 aircraft movements compared to 260,666 during the previous year, an increase of 3.37%. On an average 738 flights were operated per day during the current year as against 714 flights per day during the previous year. MIAL handled 36.63 million passengers during the year compared to 32.22 million passengers during the previous year, an increase of 13.70%. On an average 100,369 passengers traveled per day through the airport during the year as against 88,278 passengers during the previous year.

Bangalore International Airport Limited (BIAL) surpassed 15 million annual passengers on 22nd March 2015 and has positioned itself as the 3rd busiest Airport in the Country after Delhi and Mumbai and also moved into the ACI mid - sized (15 - 25 million) airport category globally. BIAL became the first airport in the Country to be IATA e-freight compliant by successfully completing a proof-of-concept and operationalization of e-freight facility.

(iii) Transportation

Partial Commercial Operations for the 83.04 km Deoli-Kota Road Project, in the State of Rajasthan, is likely to commence from the first/second quarter FY 2015-16.

Directors / Key Managerial Personnel (KMP)

Appointments by rotation

In accordance with the provisions of the Companies Act, 2013 read with the Articles of Association of the Company G V Sanjay Reddy, Director of the Company will retire by rotation at this meeting and being eligible, your Board recommends his re- appointment.

Confirmation of Appointment

Pursuant to the provisions of the section 161 of the Companies Act, 2013 read with the Article 109 of the Articles of Association of the Company, K Balarama Reddi and Santha K John were appointed as Additional Directors (Independent) w.e.f. 14th November, 2014 and 31st March, 2015 respectively and they shall hold office only up to the date of this Annual General Meeting. Being eligible, the Board recommends their appointment as Independent Directors of the Company in terms of section 149(10) of the Companies Act, 2013 for a fixed term of 5 years.

Based on the recommendations of the Nomination & Remuneration Committee of the Company your Board of Directors had approved the terms of appointments of Ch G Krishna Murthy, S. Balasubramanian and K Balarama Reddi, the existing Independent Directors, under the Companies Act, 2013 for a fixed period of 5 years from 13th February, 2015 to 12th February, 2020 and they shall not retire by rotation. Being eligible, the Board recommends their appointment as Independent Directors of the Company in terms of section 149(10) of the Companies Act, 2013 for a fixed term of 5 years.

Details of these directors seeking appointment / re-appointment at this meeting have been given separately under the corporate governance section of this report.

Each of these Independent Directors have given a declaration to the Company that they meet the criteria of independence as required under section 149(7) of the Companies Act, 2013 and clause 49 of the Listing Agreement with the Stock Exchanges.

Based on the recommendations of the Nomination and Remuneration Committee, the Board of Directors have formulated and adopted a policy on appointment / remuneration of directors including criteria for determining qualifications, positive attributes, independence of the Directors and other matters. This policy also covers the performance evaluation of all directors, Board, Committees and Key Managerial Personnel.

An exclusive meeting of the Independent Directors of the Company has been held on 13th February, 2015 which was attended by all the Independent Directors. They have reviewed the performance of the non-independent directors and the Board as a whole, performance of chairperson and quality of information to the Board as provided under Schedule IV of the Companies Act, 2013.

The Company has adopted a program on familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of business and the industry in which the Company operates among other things. The same is put up on the website of the company at the link http:// www.gvk.comunderinvestorrelations/investors/familiarisationprogrammeof independentdirectors.

Dr. GVK Reddy, Chairman & Managing Director, Mr A Issac George, Director & CFO and Mr. P V Rama Seshu, General Manager & Company Secretary are the Key Managerial Personnel of the Company in terms of Section 203 of the Companies Act, 2013 and the Rules made the thereunder. The performance of each of these KMP are evaluated annually by the Nomination and Remuneration Committee (NRC) and the Independent Directors and report their analysis to the Board.

Mechanism for Evaluation of Board

Evaluation of all Board members is done on an annual basis. The evaluation is done by the Board, Nomination and Remuneration committee and Independent Directors with specific focus on the performance and effective functioning of the Board and individual Directors.

1. Criteria for evaluation of Board of Directors as a whole

i) The frequency of meetings;

ii) The length of meetings;

iii) The administration of meeting;

iv) The number of committees and their notes;

v) The flow of information to board members and between board members

vi) The quality and quantity of information; and

vii) The disclosure of information to the stakeholders

2. Criteria for evaluation of the Individual Directors

i) Ability to contribute and monitor corporate governance practices;

ii) Ability to contribute by introducing best practices to address top management issues;

iii) Participation in long term strategic planning;

iv) Commitment to the fulfilment of director obligations and fiduciary responsibilities;

v) Guiding strategy;

vi) Monitoring management performance and development;

vii) Statutory compliance & Corporate governance;

viii) Attendance and contribution at Board/Committee meetings;

ix) Time spent by each of the member; and

x) Core competencies

Nomination and remuneration policy

The objectives of the Policy

1) To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration.

2) To determine remuneration based on the Company's size and financial position and trends and practices on remuneration prevailing in peer Companies.

3) To carry our evaluation of the performance of Directors,

4) To provide them reward linked directly to their effort, performance, dedication and achievement relating to the Company's operations.

5) To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

The brief Nomination and Remuneration policy is annexed to this report.

Directors' Responsibilities Statement

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, with respect to the Directors' Responsibilities Statement, it is hereby confirmed that;

i) in the preparation of the annual accounts for the financial year ended March 31,2015, the applicable Accounting Standards have been followed along with proper explanations relating to material departures;

ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2015 and of the profit or loss of the Company for the said period;

iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the directors had prepared the annual accounts for the financial year ended March 31,2015 on a "going concern" basis;

v) they have laid down internal financial controls in the company that are adequate and were operating effectively and

vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.

Financial Statements

As required under the Listing Agreement entered into with the Stock Exchanges, a consolidated financial statement of the Company and all its subsidiaries is attached. The consolidated financial statements have been prepared in accordance with the relevant accounting standards as prescribed under section 133 of the Companies Act, 1956 read with Rule 7 of The Companies (Accounts) Rules, 2014. These financial statements disclose the assets, liabilities, income, expenses and other details of the Company, its subsidiaries and associate companies.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its subsidiaries are available on our website www.gvk.com. These documents will be available for inspection during business hours at our registered office in Secunderabad, India.

Secretarial Auditor

The Board had appointed M/s Narendar & Associates, Company Secretaries in Whole-time Practice to carry out the Secretarial Audit under the provisions of section 204 of the Companies Act, 2013 and the Rules made thereunder. The report of the Secretarial Auditor is enclosed to this report as Annexure B. This report contains an emphasis of matter on filling the intermittent vacancy caused by the resignation of a woman director. This delay is not intentional but purely because of the time taken for identifying a suitable person.

Auditors

In terms of the sub-section (2) of section 139 of the Companies Act, 2013 (effective from 01-04-2014) no Listed Company shall appoint or re-appoint an Auditing Firm as the Auditor for more than two terms of five consecutive years. Provided that the firm is eligible to be appointed or re-appointed in the same Company after five years from the completion of existing term. In pursuance of the above, every listed Company shall comply with this requirement within a transitional period of three years from the date of commencement of the Act i.e. 1st April, 2014.

M/s. S R Batliboi & Associates LLP, the existing Auditors, have been appointed on 13th September, 2002, as the Statutory Auditors of the Company for auditing the annual financial statements of the Company from the financial year 2002-03 and have completed the permissible period of two terms of five years each as on date. The Company would like to comply with this new provision within said transitional period of three years. In the meantime, the Company proposed to re-appoint M/s. S R Batliboi & Associates LLP as Statutory Auditors for the financial year 2015-16 as well.

M/s. S R Batliboi & Associates LLP, the Statutory Auditors of the Company will retire at the conclusion of this Annual General Meeting and being eligible, they have offered themselves for re-appointment as Statutory Auditors and have confirmed that their re-appointment, if made, would be within the limits prescribed under section 141 of the Companies Act, 2013. Accordingly, the Board recommends their reappointment at this AGM. The Notes to Accounts forming part of the financial statements are self- explanatory and need no further explanation.

Management's response on the Statutory Auditors Qualification / Comments

a) Qualification on termination notice served by GVK Oil & Gas Ltd

GVK Power & Infrastructure Limited (GVKPIL) had incorporated a subsidiary GVK Oil & Gas Limited (GVK) for carrying out the business activity of exploration & production of Oil & Gas. GVK along with M/s BHP Billiton (BHP) had bid for 7 of the 57 blocks offered by the Ministry of Petroleum and Natural Gas (Ministry) under New Exploration and Licensing Policy, Seventh offer of Blocks ("NELP VII"). The consortium of GVK & BHP was awarded the license for exploration, development and production of oil / gas in 7 blocks. Six of the blocks are of the western coast and one block is of the Kerala-Konkan coast. The consortium of GVK & BHP had entered into a Production Sharing Contract (PSC) with Ministry on December 22, 2008 for all the seven blocks allotted.

The participating interest held by GVK and BHP in each of the blocks are 74% and 26% respectively. BHP was appointed as the Operator for the Blocks pursuant to the Joint Operating Agreements ("JOAs") entered between BHP and GVK for each Block, each dated December 22, 2008.

Under the PSC, the contractor has the obligation to complete the minimum work program and the mandatory work program for each of the blocks within the time stipulated therein. The minimum work program in all blocks (except MB 3) was completed as committed under the PSC's. Only, 3D seismic data acquisition, processing and interpretation ("API") in an area covering 300 Sq. KM in MB 3 (as part of committed work program) couldn't be completed, because of the defence (Naval) restrictions and later conditional release imposed. Subsequently, the clearance was given by introducing additional conditions by the Ministry, which was neither contemplated 22 by the Contractor at the time of entering into the PSC nor was the Contractor informed of the existence/ requirement of such conditions by the Government of India at that time. This has not only rendered the performance obligations of the Contractor under the PSC impossible but has also destroyed the foundation and the objectives of the PSC. Hence, during the previous year, Termination Notice was served by GVK on the Ministry for termination of PSC. The Management based on legal advice believes that the Ministry will reimburse the costs incurred by it and accordingly no adjustment is required for carrying value of investments and advances aggregating to Rs. 10,161 Lakhs.

b) Qualification on recoverability against carrying value of assets of GVK Coal (Tokisud) Private Limited

GVK Coal (Tokisud) Private Limited was incorporated for developing a coal mine with minable reserve of 52 Million Tons (geological reserve of around 92 Million Tons) in the state of Jharkhand as a captive coal mine to meet the requirements of coal of one of the step down subsidiary i.e. GVK Power (Goindwal Sahib) Limited, which is implementing a 540 MW Power Plant at Goindwal Sahib in Punjab.

The Hon'ble Supreme Court vide its decision dated September 24, 2014 held that allotment of various coal blocks including those allotted to GVK Coal (Tokisud) Company Private Limited is arbitrary and illegal and had cancelled the allotment. Subsequently, the government promulgated The Coal Mines (Special Provisions) Ordinance 2014, which intends to take appropriate action to deal with situation arising pursuant to the Honorable Supreme Court's judgment. GVK Coal Tokisud, subsidiary company has filed writ petition before the Hon'ble High Court of Delhi challenging the decision of the Nominated Authority, Ministry of Coal which quantified the compensation payable to GVK for taking over the Tokisud Coal Block as Rs. 11,129 Lakhs against the carrying value of assets of Rs. 35,575 Lakhs. The Management believes that the subsidiary will be appropriately reimbursed for cancelled coal mine accordingly no provision was required to be made to carrying value of assets.

Particulars of Loans given, Investments made and Guarantees given and Securities provided:

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statements. Please refer to Note 5,7,10 and 25 to the standalone financial statement.

Board Committees

All Committees of the Board of Directors are constituted and rechristened, wherever needed, in line with the provisions of the Companies Act, 2013 and Clause 49 of the amended Listing Agreement with the Stock Exchanges.

Awards and recognitions

Following are some of the awards and recognitions that your Company/its Subsidiaries/Associates received during the current year. Certifications, Recognitions and Awards for Bengaluru International Airport (BIAL)

BIAL surpassed 15 million annual passengers on 22nd March 2015 and has positioned itself as the 3rd busiest Airport in the Country after Delhi and Mumbai and also moved into the ACI mid - sized (15 - 25 million) airport category globally.

Achieved an overall satisfaction score of 4.37 in the ACI Airport Service Quality passenger survey (ASQ) for calendar year 2014. First airport in the Country to be IATA e-freight compliant, successfully completing a proof-of-concept and operationalization of e-freight facility.

New dedicated facility to support the Governments Tourist Visa on Arrival enabled with Electronic Travel Authorization (ETA) initiative, is ready for operations.

SKYTRAX 2015 - Kempegowda International Airport, Bengaluru has been awarded the 'Best Regional Airport in Central Asia' by Skytrax World Airport Awards 2015 held in Paris.

Awarded the ASQ 'Best Improvement Award 2014' at the recently concluded ASQ Airport Forum for Asia, Middle East and Africa held at Sanya, China.

India Travel Awards South for "Best Airport Marketing Award 2013" and "Best Airport Award".

'Best Airport Award 2014', Aviation Awards 2014 by SAP Media.

Best Maintained Landscape / Garden - The Bangalore City Landscape Garden competition by The Mysore Horticultural Society. World HRD Congress award for Dream Company to work for in the Airlines and Aviation sector.

BIAL has successfully renewed its Airport Carbon Accreditation for Level 3 i.e. Optimization Level in the month of May 2014.

BIAL has completed surveillance audit successfully for ISO 9001:2008 (QMS), ISO 14001:2004(EMS), ISO 50001:2011(EnMS),

OHSAS 18001:2007(Health & Safety), ISO 27001 certification along with upgradation from ISO 27001:2005 revision to the latest ISO 27001:2013 revision and ISO 22301:2012.

Accreditation of Training Institute of BIAL - Aviation Security Training Institute of BIAL has been approved by BCAS for conducting Aviation Security Courses / Training for the airport community.

Certifications, Recognitions and Awards for Mumbai International Airport Private Limited (MIAL)

GVK CSIA has been conferred the award for 'Outstanding Contribution in Airports - Infrastructure' category at the 5th EPC World Awards 2014

GVK CSIA has been bestowed with the runner-up award in the Airport category for being the favourite among readers by Conde Nast Traveller India

GVK MIAL received the Best Airport from "ACAAI & KALE Logistics" for the third consecutive year in 41st ACAAI Convention. The award acknowledges our excellence in connecting the cargo community.

Structural Steel Excellence Awards 2014 Trophy Award for "The Innovative, Efficient and productive use of Steel Structures in the Built Environment" in the category of Infrastructure or Transportation Structures (Overseas) from Singapore Structural Steel Society GVKPIL received the Dun and Bradstreet's Infra Awards 2014 for its exemplary performance for CSIA T2 project.

GVK MIAL has been awarded the prestigious 'Golden Peacock Award for Sustainability'.

GVK MIAL has been awarded THE SWORD OF HONOR by the British Safety Council for excellence in health and safety management. GVK MIAL receives the 'Outstanding Concrete Structure Award of ICI, 2014'

GVK MIAL is proud to be the first airport to receive a TAPA Freight Security Requirements (FSR) 2011 Certification Classification (A). GVK MIAL is proud to be the 1st Airport in Asia and 5th in the world to release "The Sustainability Report 2014" as per GRI G4 reporting guidelines.

GVK CSIA received the Best Managed Airport award at the 8th CNBC Awaaz Travel Award 2014

GVK CSIA has bagged the prestigious 'Golden Peacock Innovative Product/Service Award 2014' for its newly launched 'Pranaam GVK Guest Services'

GVK CSIA received the Forbes India Art Awards under the Corporate Commitment to Art category 2014

GVK CSIA received the Cargo Recognition Award from Swiss World Cargo for its Swiss Air Mumbai Airport station.

GVK CSIA received Gold rating in Leadership in Energy and Environmental Design (LEED) India from the Indian Green Building Council (IGBC) for energy efficient, eco-friendly and sustainable terminal building design Contracts and Arrangements with the Related Parties:

All the related party transactions that were entered during the financial year were on an arm's length basis and were in the ordinary course of business. These transactions, for a financial year, are placed before the Audit Committee and the Board for their prior approvals. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the company on a materiality of related party transactions. Transactions entered by the Company with the related parties on arm's length basis and in the normal course of business, for the financial year 2014-15, with the prior approval of the Audit Committee and the Board are enclosed as Annexure C. A policy on related party transactions can be accessed at the link http://www.gvk.com/files/investorrelations/investors/corpgovernance/ RelatedPartyTransactionPolicy.pdf

Extract of Annual Report

An extract of the Annual Return for the financial year ended 31st March, 2015 as required under section 92(3) of the Act is enclosed herewith, in the specified format, as Annexure D Internal Control Systems and their adequacy

The Management continuously reviews the internal control systems and procedures for the efficient conduct of the Company's business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee periodically reviews internal audit reports and effectiveness of internal control systems.

Apart from the above, the Company is in consultations with the external and independent consultants to have a policy for development and implementation of risk management for the company including identification of elements of risk, if any, that may threaten the existence of the Company and a mechanism to mitigate the same. Once the above policy is finalized, the same will be adopted by the Board and uploaded in the website of the Company thereafter.

Public Deposits

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public.

Vigil Mechanism

In terms of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for Directors and employees to report genuine concerns has been established by the Board along with the whistle blower policy. The Vigil Mechanism and whistle blower policy have been uploaded on the website of the Company. The same can be accessed at the link www.gvk.comunderinvestorrelations/ investors/codeofconduct.

Corporate Social Responsibility

During the year, the Board had reconstituted the CSR Committee by appointing K Balarama Reddy, Independent Director as its member and made G V Sanjay Reddy as Chairman of this Committee in place of Dr. GVK Reddy who had resigned as its member. Majority members of this Committee are Independent Directors. Members can access the CSR Policy on the website of the Company at link http://www.gvk.comunderinvestorrelations/investors/corporategovernance/CSR Policy

Since, there are no average net profits for the Company during the previous three financial years, there are no specific funds that are required to be set aside and spent by the Company during the year under review.

Particulars of employees and related disclosures

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, none of the employees are in receipt of the remuneration which is in excess of the limits as specified in the regulation.

Disclosures pertaining to remuneration and other details as required under Section 197(12) read with Rule 5(1) of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 are enclosed to this report.

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operavtions in future.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Acknowledgements

The Directors of your Company thank the Government of India, various State Governments and their concerned Department / Agencies / Regulatory Authorities for their continued support and cooperation. The Directors also wish to place on record the support extended by various Banks, Financial Institutions and every stakeholder of the Company.

The Directors further wish to appreciate and value the contributions made by every employee of the GVK.

For and on behalf of the Board of Directors Place : Hyderabad Dr. GVK Reddy Date : May 16, 2015 Chairman & Managing Director

Mar 31, 2014

Dear Stakeholders,

The Directors submit the 20th Annual Report of the Company along with the audited financial statements for the financial year ended March 31st, 2014.

Consolidated Financial results

Being a Holding Company of different vertical business operations, your company doesn''t have independent operating revenues other than O&M fee, incentives and dividends, if any, from its subsidiaries, Interest and other treasury income earned on surplus funds. Following is the summary of consolidated financial results of the company, its subsidiaries and associates.

(Rs. Lakhs)

Particulars 2013-14 2012-13

Financial Performance

Operational Income 282,093 260,765

EBIDTA 100,596 68,325

Other Income 12,066 13,613

Interest & Financial Charges 96,452 74,609

Depreciation 43,771 35,118

Provision for taxes 14,460 12,870

Profit before tax and share of profits for associate and minority interest (42,021) (40,659)

Add: Share of income from Associates 2,764 5,092

Less: Minority Interest (2,390) (1,970)

Total Profit for the year (36,867) (33,597)

EPS (Rupees)

Weighted Average no. of Equity Shares 1,579,210,400 1,579,210,400

Basic and Diluted (2.23) (2.13)

Financial Position

Fixed Assets (Net of Depreciation) 2,236,641 2,104,619

Cash and Bank balance 186,567 208,016

Net Current Assets (207,973) (246,769)

Total Assets 3,203,046 2,788,652

Equity 15,792 15,792

Reserves 262,026 298,739

Net worth 277,818 314,531

Our total income from operations for the year increased to Rs. 2,82,093 Lakhs from Rs. 2,60,765 Lakhs of the previous year registering a growth of 8.18%. The Power segment contributed an income of Rs. 36,698 Lakhs, (9.56% of total income) compared to Rs. 89,545 Lakhs (13% of total income) in the previous year. The Transportation segment contributed an income of Rs. 27,195 Lakhs (9.64% of total income) compared to Rs. 24,933 Lakhs in the previous year. Airport Segment contributed an income of Rs. 218,200 Lakhs (77.35% of total income) compared to Rs. 146,212 Lakhs in the previous year. The other segment contributed Rs. Nil compared to Rs. 75 Lakhs in the previous year. The Airport assets (Bangalore Airport) have contributed to net profit of Rs. 2,764 Lakhs compared to Rs. 5,092 Lakhs in the previous year.

The net loss afer tax, share of profit from associate and minority interest was Rs. 34,148 Lakhs as against net loss of Rs. 33,597 Lakhs in the previous year. The net loss is mainly attributable to drop in generation of power due to no supply of natural gas to Jegurupadu Phase II and Gautami Power Plants and an increase in interest costs on the funds borrowed for acquiring airport assets. The Company is exploring various options, including raising funds from the market through permissible modes to reduce the interest costs and also to meet other general corporate purposes.

Dividend

The Board of Directors of your company has not recommended any dividend for the financial year 2013-14.

Management Discussion and Analysis

A report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges is presented in a separate section forming part of the Annual Report.

Corporate Governance

Corporate Governance, as required under Clause 49 of the Listing Agreement with the Stock Exchanges, a certifcate from the Company Secretary in Whole-time-practice on compliance with the mandatory recommendations of the Narayana Murthy Committee on Corporate Governance is annexed to the Directors Report. As in the past, your company continues to follow best of Corporate Governance policies.

Subsidiaries and Consolidated Financial Statements

As on 31st March, 2014 your Company has 7 direct Subsidiaries, 16 step down Subsidiaries and 2 Associate Companies. A list of these companies is provided separately as Annexure "A" to this report. There has been no material change in the nature of the business of the subsidiaries. Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management Discussion and Analysis Report.

Pursuant to the provision of section 212(8) of the Companies Act, 1956, the Ministry of Corporate Afairs (MCA), Government of India, New Delhi vide its Circular No. 2/2011 dated: 08-02-2011 has granted general exemption from attaching the balance sheet, statement of profit and loss and other documents of the subsidiary companies with the balance sheet of the Company. As required under the said Circular, the Board of directors of your Company at its meeting held on 6th February, 2014 gave its Specific consent for not attaching the balance sheets of its subsidiaries, as they would be made available to its members at the company''s website.

A statement containing the brief financials of the Company''s subsidiaries for the financial year ended 31st March, 2014 is provided as Annexure "B" to this report. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. Any member intends to have a certified copy of the Balance Sheet and other financial statements of these subsidiaries may write to the Company Secretary. These documents are available for inspection during business hours at the registered ofce of the Company and that of the respective subsidiary companies.

Developments in the existing assets

(i) Energy

Since March 2013, there has been no supply of natural gas to Jegurupadu II and Gautami power projects of your company. Hence, both the plants are kept under long term preservation mode. However, with a restricted supply of gas, Jegurupadu Phase I plant operated at a part load (50% PLF). As the plants are either not operating or partly operational and the situation of non-availability of gas is expected to continue for the foreseeable future, the Major Maintenance of gas turbines is also deferred.

(ii) Airports

Mumbai International Airport Limited (MIAL):

During the year, MIAL has completed the construction of the state-of-the-art Terminal II (T2) at GVK Chhatrapati Shivaji International Airport (CSIA). The new T2 built in four years is an Iconic global mega structure and India''s frst and the most advanced vertical passenger terminal that integrates world class design, architecture, infrastructure and operational efciency with a rich infusion of Indian heritage and cultural character. The new T2 was inaugurated by the then Prime Minister of India Dr. Manmohan Singh on 10th January 2014 and commenced international operations from 12th February 2014. The Iconic 83.8 m ATC Tower was also commissioned from 1st February 2014.

The new T2 houses the world''s largest art programme ''Jaya He'' in the form of a 3 km multi storeyed art gallery. The airport also has a multi level car parking facility to park 5,200 cars, largest in the country.

Bangalore International Airport Limited (BIAL):

The expansion of existing Terminal 1A with a new elevated design, exteriors, facilities and infrastructure was successfully completed and inaugurated by Chief Minister of Karnataka, Mr. Siddaramaiah on 14th December 2013. The commercial operations of the new Terminal 1A commences from 8th February 2014. The airport is now set to handle 20 million passengers per year. The modernised airport not only reflects the city''s dream but also culture, ethos and landscape of the State of Karnataka. The new Terminal 1A epitomises the technological prowess of Bengaluru. Apart from the new VIP Terminal at the airport that befits the prominent personalities who visit the city, the airport is ready to accommodate large aircraft such as Airbus 380. Befitting the garden city, the airport has been designed with a 100 acres of landscape greeting the traveller to bring out the essence of city as tranquil and greenzone. The modernised Bangalore International Airport has been renamed as Kempegowda International Airport, Bengaluru.

(iii) Transportation

The 83.04 km Deoli-Kota Road Project is nearing completion and the commercial operations are likely to start during FY 14-15. This project has the longest tunnel (1.1 km) in state of Rajasthan.

Emerging Opportunities

During the year, GVK received the environmental approval from State and Federal governments for its Kevin''s Corner thermal coal project in the Galilee Basin in the Queensland, Australia.

During the year, Aurizon and GVK Coal Infrastructure (Singapore) Pte Ltd (GVK Hancock) have reached a significant milestone towards their proposed transaction for the joint development of a rail line and a new coal terminal at the existing Abbot Point Port to unlock the Galilee Basin''s coal resources, including GVK Hancock''s Alpha, Alpha West and Kevin''s Corner coal projects. In November of 2013, GVK Hancock and Aurizon reached alignment on a rail solution and on the commercial terms for the proposed transaction such as governance, timing of milestones, funding and conditions for completion. The parties have since progressed the proposed transaction significantly and expect to complete the transaction in the coming weeks, subject to meeting necessary approvals.

Mr. Darren Yeates, has been appointed as new Chief Executive Officer, who brings in over 30 years of experience in technical, operating and senior management roles within the mining industry. Prior to joining GVK, he spent 23 years with Rio Tinto where his most recent positions were Acting Managing Director and Chief Operating Officer at Rio Tinto Coal Australia.

Financial Statements

As required under the Listing Agreement entered into with the Stock Exchanges, the audited stand alone and consolidated financial statements of the Company along with its subsidiary Companies are attached herewith and form part of this annual report. The consolidated financial statements have been prepared in accordance with the relevant accounting standards as prescribed under section 211(3C) of the Companies Act, 1956. These financial statements disclose the assets, liabilities, income, expenses and other details of the company, its subsidiaries and associate companies.

Management''s response on the Auditors qualification

GVK Power & Infrastructure Limited (GVKPIL) had incorporated a subsidiary GVK Oil & Gas Limited (GVK) for carrying out the business activity of exploration & production of Oil & Gas. GVK along with M/s BHP Billiton (BHP) had bid for 7 of the 57 blocks offered by the Ministry of Petroleum and Natural Gas (Ministry) under New Exploration and Licencing Policy, Seventh offer of Blocks ("NELP VII"). The consortium of GVK & BHP was awarded the license for exploration, development and production of oil / gas in 7 blocks. Six of the blocks are off the western coast and one block is off the Kerala-Konkan coast. The consortium of GVK & BHP had entered into a Production Sharing Contract (PSC) with Ministry on December 22, 2008 for all the seven blocks allotted. The participating interest held by GVK and BHP in each of the blocks are 74% and 26% respectively. BHP was appointed as the Operator for the Blocks pursuant to the Joint Operating Agreements ("JOAs") entered between BHP and GVK for each Block, each dated December 22, 2008.

Under the PSC, the contractor has the obligation to complete the minimum work program and the mandatory work program for each of the blocks within the time stipulated therein. The minimum work program in all blocks (except MB 3) was completed as committed under the PSC''s. Only, 3D seismic data acquisition, processing and interpretation ("API") in an area covering 300 Sq. KM in MB 3 (as part of committed work program) couldn''t be completed, because of the defence (Naval) restrictions and later conditional release imposed. Subsequently, the clearance was given by introducing additional conditions by the Ministry, which was neither contemplated by the Contractor at the time of entering into the PSC nor was the Contractor informed of the existence/requirement of such conditions by the Government of India at that time. This has not only rendered the performance obligations of the Contractor under the PSC impossible but has also destroyed the foundation and the objectives of the PSC. Hence, during the year, Termination Notice has been served by GVK on the Ministry for termination of PSC. The Management based on legal advice believes that the Ministry will reimburse the costs incurred by it and accordingly no adjustment is required for carrying value of investments and advances aggregating to Rs. 17,745 Lakhs and guarantee aggregating to Rs. 813 Lakhs issued by the Company for subsidiary.

Corporate Social Responsibility (CSR)

The Company''s CSR initiatives are being implemented through GVK Foundation, a CSR Firm of the GVK Group. This Foundation is involved predominantly in the areas of education, health and hygiene, community based programs, including art, music, sports and other socio economic and culture activities. These activities are being developed/encouraged diferent parts of the country.

As required under the Companies Act, 2013, the Board of Directors of your company at its meeting held on 29th May, 2014 has constituted a CSR Committee comprising of Dr. GVK Reddy, as Chairman and Mr. G V Sanjay Reddy and Mr. Ch G Krishna Murthy, as other Members. This Committee has been entrusted with the responsibility of formulating and recommend to the Board a CSR policy broadly indicating the activities to be undertaken by the company apart from the activities (already under implementing) that are mandatory in the implementation of the frame work of CSR policy and recommend the money to be spent on each of the activities as prescribed under Act and the Rules made thereunder.

From now onwards your company will endeavour to extend these CSR activities to the areas across the country, where the company''s operations are present, directly or through its subsidiaries / associates.

Directors Appointments by rotation

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company Mrs. G Indira Krishna Reddy, Director of the company will retire by rotation at this meeting and being eligible, your Board recommends her re- appointment.

confirmation of Appointment

Pursuant to the provisions of the section 161 of the Companies Act, 2013 read with the Article 109 of the Articles of Association of the company, Mr. S Anwar is appointed as the Additional Director (Independent) w.e.f. 14th November, 2013 and he shall hold ofce only up to the date of this Annual General Meeting. Being eligible, the Board recommends his appointment as an Independent Director of the Company in terms of section 149(10) of the Companies Act, 2013 for a continuous period of 5 (five) years for a term up to 12th August, 2019.

Demise

Dr. A. Ramakrishna, Independent Director of the company was expired on 20th August, 2013. He was associated with the Company for a very long time. The board places on record it''s appreciation for the valuable services rendered by Dr. A. Ramakrishna and prayed for his soul to rest in peace.

Resignation

Due to personal reasons, Mr. K N Shenoy, an Independent Director, has expressed his inability to continue on the Board and submitted his resignation vide his letter dated 8th May, 2014. The Board at its meeting held on 29th May, 2014, accepted the same and placed on record its appreciation for the valuable services rendered by Mr. Shenoy, during his long association with the company.

Cessation

In terms of sub-section (10) of section 149 of the Companies Act, 2013 (efective from 01-04-2014), every listed company shall appoint Independent Directors, who shall hold ofce for a term up to 5 (five) consecutive years on the Board of a company and sub section (11) of section 149 states that no Independent Director shall be eligible to be appointed for more than 2 (two) consecutive terms of 5 (five) years.

Further, it may be noted that sub-section (5) of section 149 of the Companies Act, 2013, provides for a transitional period of one year (from 01-04-2014) for re-appointment of the Independent Directors, if eligible, for a consecutive period of 5 (five) years (if, it is intended so by the Board) subject to compliance with the eligibility and other prescribed conditions.

The Board at its meeting held on 29th May, 2014, has decided to re-constitute/ broad base the Board, if need be, within the above said transitional period, afer a detailed review of the latest regulations governing the appointment of the Independent Directors in the Companies Act, 2013 and the Listing Agreement with the Stock Exchanges.

All the Independent Directors of the company were appointed earlier as Directors whose period of office is liable to retire by rotation under the provisions of the erstwhile Companies Act, 1956. The Board of Directors of the company at its meeting held on 29th May, 2014 had taken a decision that all the existing Independent Directors, except Mr. S Anwar, (who is being confirmed at this AGM) and Mr. P Abraham and Mrs. Ranjana Kumar (who are retiring by rotation at this AGM) would serve their current term as Directors whose office is liable to retire by rotation based on their term of original appointment by shareholders.

Accordingly, Mr. P Abraham and Mrs. Ranjana Kumar, Independent Directors, are retiring by rotation at this AGM and the Board is not proposing their re-appointment at this AGM. The Board would like to thank both Mr. Abraham and Mrs. Ranjana Kumar for their guidance and support extended to the Company and placed on record its appreciation for their valuable services rendered during their tenure on the Board.

The remaining Independent Directors, who do not complete their term at this AGM, will continue to hold office till the expiry of their term, based on the retirement period calculation and thereafter would be re-appointed, if eligible, for a fixed term in accordance with the Companies Act, 2013 and the Regulations made thereunder.

Directors'' Responsibilities Statement

Pursuant to the requirements eligible under Section 217 (2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibilities Statement, it is hereby confirmed that;

i) in the preparation of the annual accounts for the financial year ended 31st March, 2014, the applicable Accounting

Standards have been followed along with proper explanations relating to material departures;

ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit or loss of the Company for the said period;

iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the directors had prepared the annual accounts for the financial year ended 31st March, 2014 on a "going concern" basis.

Auditors

In terms of the sub-section (2) of section 139 of the Companies Act, 2013 (effective from 01-04-2014) no Listed company shall appoint or re-appoint an Auditing Firm as the Auditor for more than two terms of five consecutive years. Provided that the firm is eligible to be appointed or re-appointed in the same company after five years from the completion of existing term. In pursuance of the above, every listed company shall comply with this requirement within a transitional period of three years from the date of commencement of the Act i.e. 1st April, 2014.

M/s. S R Batliboi & Associates LLP, the existing Auditors, have been appointed on 13th September, 2002, as the Statutory Auditors of the Company for auditing the annual financial statements of the company from the financial year 2002-03 and have completed the permissible period of two terms of five years each as on date. The company would like to comply with this new provision within said transitional period of three years. In the meantime, the company proposed to re-appoint M/s. S R Batliboi & Associates LLP as Statutory Auditors for the financial year 2014-15.

M/s. S R Batliboi & Associates LLP, the Statutory Auditors of the Company will retire at the conclusion of this Annual General Meeting and being eligible, they have offered themselves for re-appointment as Statutory Auditors and have confirmed that their re-appointment, if made, would be within the limits prescribed under section 141 of the Companies Act, 2013. Accordingly, the Board recommends their re-appointment at this AGM.

Board Committees

The Board of Directors at its meeting held on 29th May, 2014 has rechristened the existing Remuneration Committee as Nomination and Remuneration Committee and Investors Grievance Committee as Stakeholders Relationship Committee apart from constituting a Corporate Social Responsibility Committee so as to be in line with what is prescribed under the Companies Act, 2013 and Clause 49 of the amended Listing Agreement with the Stock Exchanges.

Key Managerial Personnel

Dr. GVK Reddy, Chairman & Managing Director, Mr A Issac George, Director & CFO and Mr. P V Rama Seshu, GM & Company Secretary of the Company were nominated as Key Managerial Personnel (KMP) of the Company under the provisions of section 203 of the Companies Act, 2013.

Awards and recognitions

Following are some of the awards and recognitions that your Company/its Subsidiaries/Associates received during the current year.

Mumbai International Airport Pvt Ltd (MIAL)

The CSIA has been rated as 5th best airport globally in 25 - 40 MPPA category in annual ACI airport service, quality, survey for 2013.

Forbes India award for ''Jaya He'' art programme at new T2.

Best cargo airport 2013 (runner up) by ACAAI for outstanding performance of cargo team in 2013. n Best airport (Excellence in connecting the cargo community) from ACAI and the KALE logistics for the second consecutive year.

Bengaluru International Airport Limited (BIAL)

Honoured with "Emerging Cargo Airport of the Year" award at the STAT TIMES International Award for Excellence in Air Cargo

"Best Airport Marketing Award" in India along with Hyderabad''s Rajiv Gandhi International Airport, at the India Aviation Conference and Exhibition 2014 held in Hyderabad.

First airport in Asia pacifc to be certified in Business Continuity Management under BS 2599 standard.

Promoters / Directors

Dr. GVK Reddy, Chairman & Managing Director of your company has been recognized as the "Infrastructure Person of the Year 2013" for his contribution to the infrastructure sector at the Construction Week India Awards held in Mumbai. He has been honoured with the Lifetime Achievement Award for his contribution to the aviation sector in the country at the Aviation India Conference & Exhibition 2014 conducted at Hyderabad.

Other Information

The Audit Committee of the Company has reviewed the audited financial statements for the year under review at its meeting held on 28th May, 2014 and recommended the same for the approval of the Board of Directors.

Internal Control Systems and their adequacy

The Management continuously reviews the internal control systems and procedures for the efcient conduct of the Company''s business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee actively reviews internal audit reports and efectiveness of internal control systems.

Internal Control Systems are implemented to safeguard the Company''s assets from loss or damage, to keep constant check on the cost structure, to prevent revenue leakages, to provide adequate financial and accounting controls and implement accounting standards.

Public Deposits

During the year under review, your company has neither invited nor accepted any fixed deposits from the public.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employee(s) are set out in the Annexure "C" to this report.

Foreign Exchange Earnings and Outgo

In accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is provided under Notes to the Balance Sheet and profit and Loss Account.

Acknowledgements

The Directors of your Company thank the Government of India, various State Governments and their concerned Department / Agencies / Regulatory Authorities for their continued support and cooperation. The Directors also wish to place on record the support extended by various Banks, Financial Institutions and every stakeholder of the Company.

The Directors further wish to appreciate and value the contributions made by every employee of the GVK Family.

For and on behalf of the Board of Directors Place : Hyderabad Dr. GVK Reddy

Date : May 29, 2014 Chairman & Managing Director

Mar 31, 2013

Dear Stakeholders,

The Directors submit the 19th Annual Report of the Company along with the audited financial statements for the financial year ended March 31, 2013.

Consolidated Financial results

Being a Holding Company of different vertical business operations, your company doesn''t have independent operating revenues other than O&M fee, incentives and dividends, if any, from its subsidiaries, Interest and other treasury income earned on surplus funds. Following is the summary of consolidated financial results of the company, its subsidiaries and associates.

(Rs.Lakhs)

Particulars 2012-13 2011-12

Financial Performance

Operational Income 260,765 249,183

EBIDTA 68,325 69,408

Other Income 13,613 8,887

Interest & Financial Charges 74,609 46,727

Depreciation 35,118 24,893

Provision for taxes 12,870 6,782

Profit before tax and share of profits for associate and minority interest (40,659) (107)

Add: Share of income from Associates 5,092 10,639

Less: Minority Interest (1,970) 4,386

Total Profit for the year (33,597) 6,146

EPS (Rupees)

Weighted Average no. of Equity Shares 1,579,210,400 1,579,210,400

Basic and Diluted (2.13) 0.39

Financial Position

Fixed Assets (Net of Depreciation) 2,103,888 1,670,814

Cash and Bank balance 208,016 172,626

Net Current Assets (230,509) (158,707)

Total Assets 2,788,652 2,287,448

Equity 15,792 15,792

Reserves 298,739 332,345

Net worth 314,351 348,137

Our total income from operations increased by 4.4 % to Rs. 260,765 lakhs from Rs. 249,183 lakhs in the previous year. The Power segment contributed an income of Rs. 89,545 lakhs compared to Rs.166,631 lakhs (34.34 % of total income) in the previous year. The Transportation segment contributed an income of Rs.24,933 lakhs (9.56 % of total income) compared to Rs.22,384 lakhs in the previous year. Airport Segment contributed an income of Rs.146,212 lakhs (56.07% of total income). The other segment contributed Rs.75 lakhs compared to Rs.616 lakhs in the previous year. The Airport assets (Bangalore Airport) have contributed to net profit of Rs.5,092 lakhs compared to Rs.10,639 lakhs in the previous year. The net loss is Rs.33,597 lakhs as against a net profit of Rs.6,164 lakhs in the previous year.

The net loss after tax share of profit from associate and minority interest was Rs.(33,597) lakhs as against a net profit of Rs.6,146 lakhs in the previous year. The net loss is mainly attributable to drop in generation of power due to acute shortage of fuel (gas), which has resulted in either closure of the power plants or operational for a very few days in a month and also an increase in interest cost.

Dividend

The Board of Directors of your company has not recommended any dividend for the financial year 2012-13.

Subsidiaries and Consolidated Financial Statements

Subsidiaries of your Company are predominantly spread across 3 main vertical business segments i.e., Energy, Airport and Transportation. In addition, your Company has other subsidiaries, which are engaged in Oil & Gas and Industrial Park among others. As on March 31, 2013 your Company has 7 direct subsidiaries, 16 step down subsidiaries and 2 associate companies. A list of these companies is provided separately as Annexure "A" to this report. There has been no material change in the nature of the business of the subsidiaries.

As required under the Listing Agreement entered into with the Stock Exchanges, a consolidated financial statement of the Company and all its subsidiaries is attached. The consolidated financial statements have been prepared in accordance with the relevant accounting standards as prescribed under section 211(3C) of the Companies Act, 1956. These financial statements disclose the assets, liabilities, income, expenses and other details of the company, its subsidiaries and associate companies.

Pursuant to the provisions of section 212(8) of the Companies Act, 1956, the Ministry of Corporate Affairs (MCA), Government of India, New Delhi vide its Circular No.2/2011 dated: 08-02-2011 has granted general exemption from attaching the balance sheet, statement of profit and loss and other documents of the subsidiary companies with the balance sheet of the Company. As required under the said Circular, the Board of directors of your Company at its meeting held on February 14, 2013 gave its specific consent for not attaching the balance sheets of its subsidiaries, as they would be made available to its members at the company''s website.

A statement containing the brief financials of the Company''s subsidiaries for the financial year ended March 31, 2013 is provided as Annexure "B" to this report. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. Any member intends to have a certified copy of the Balance Sheet and other financial statements of these subsidiaries may write to the Company Secretary. These documents are available for inspection during business hours at the registered office of the company and also at the registered offices of the respective subsidiary companies.

Developments in the existing assets

(i) Energy

The supply of natural gas to the gas based power projects of your company deteriorated further during the year 2012-13 with no major respite seen for another year or two. Due to an acute shortage of supply of natural gas, supply of gas to all power stations in Andhra Pradesh has been stopped since March 1, 2013. This has resulted in virtual closure of the power plants. However, Jegurupadu Phase I plant is operating with a partial load for a few days in a month. The Company however is positive that this situation would improve in the coming years.

(ii) Airports

The expansion works at Chhatrapathi Shivaji International Airport (CSIA), Mumbai is progressing very well and the new Terminal 2 (International Operation) is expected to be completed by end 2013. The first of its kind in India, a multi level car parking facility with a capacity to park around 5,100 cars is nearing completion. A unique 83.8 mtr height iconic structure is getting ready for the Air Traffic Control operations (ATC towers) at Chhatrapati Shivaji International Airport (CSIA) and the same will be operational by end 2013.

The ongoing expansion works at Terminal 1 at Bangalore International airport is taking a very good shape as planned and will be completed by last quarter of 2013. Upon completion, this will enhance the operational performance to handle the projected increase in passenger traffic from the current 11.2 million to around 20 million passengers per annum.

(iii) Transportation

During the year, GVK Shivpuri Dewas Expressway Private Limited, a subsidiary of the Company, had terminated the Concession Agreement dated:12-01-2013, executed by it with the National Highways Authority of India for four laning of Shivpuri Dewas section of NH-3 from Km 236.000 to Km 566.450, in the State of Madhya Pradesh, in terms of Clause 34.8 of the Concession Agreement.

Emerging Opportunities Resources

During the year, GVK Hancock, has received the Queensland Coordinator General''s Report (State approval) followed by the Federal Government approval on the environmental clearance for the Alpha Coal and Rail Project in Queensland, Australia. The milestone is a major achievement for GVK as Alpha Project is the only Galilee Basin proponent with an approved Environmental Impact Statement (EIS).

During the year, GVK Coal Infrastructure (Singapore) Pte Ltd one of the Group companies of GVK and Aurizon (Australia''s largest rail freight company) have signed a non-binding term sheet to jointly progress the development of rail and port infrastructure to unlock Galilee Basin coal reserves including GVK Hancock''s Alpha, Kevin''s Corner and Alpha West coal mines and a process to support the next phase of coal growth in the Bowen Basin. Under the proposed framework, Aurizon would acquire a majority (51%) interest in Hancock Coal Infrastructure Pty Ltd (HCI), which owns GVK Hancock''s rail and port projects and would invest through upfront consideration at completion of the transaction and deferred consideration at financial close of each phase of the projects.

GVK has signed a contract with Samsung C and T of Korea and Smithbridge of Australia for the construction of 80 mtpa T3 Port in North Queensland, Australia, taking a step closer to its target of bringing out the first coal in 2015-16.

Airports

GVK has signed an operations and management contract with The Airports Authority of Indonesia, (Angkasa Pura Airports APl), the Indonesian government airport operator to manage the non-aeronautical commercial operations at Indonesia''s second busiest Bali (Denpasar) International Airport. The scope includes both, the existing terminals and the new international terminal which is currently under construction and is expected to open in the third quarter of 2013 with a major make-over.

Financial Statements

The audited stand alone and consolidated financial statements of the company along with its subsidiary companies are attached herewith and form part of this annual report. These have been prepared in accordance with the provisions of the Companies Act, 1956, the Listing Agreement, the Accounting Standard (AS-21) on Consolidated Financial Statements and the Accounting Standard (AS-23) on Accounting for Investments in Associates.

Awards and recognitions

Following are some of the awards and recognitions that your Company / its Subsidiaries / Associates received during the current year. Certifications, Recognitions and Awards for your Company (GVKPIL)

- CDP India 200 Climate Change Report 2012 was released at Bombay Stock Exchange in the presence of dignitaries including Ms. Susan Howells, COO - CDP UK, wherein, GVK Power & Infrastructure Ltd. has been ranked 2nd in the Country across all sectors (compared to 8th position in 2011) for its Carbon Disclosure Leadership Index (CDLI).

- GVK was honoured with the EPC World Award for ''Outstanding Contribution in Power Generation - Infrastructure Category at the third EPC World Awards held in New Delhi

Certifications, Recognitions and Awards for Bangalore International Airport Limited (BIAL) :

- Distinction of being the first company in India to be certified as a Green Company as per the CII Green Co rating system.

- Airport carbon accreditation Level 2 by Airport Council International (ACI) and is the first Airport in Asia Pacific to cross this milestone.

- Recognized by the State of Karnataka on the International World Environment Day (5th June) for adopting environmental friendly best practices and setting benchmarks across all functions.

- Golden Peacock Award - Environmental Management 2012 for excellent environmental management initiatives taken in and around the airport.

- Excellent Energy Efficient Unit Award by CII.

- ISO 50001 : 2011 Energy Management System Certificate

- INDIA 3.0 - IT Innovation Awards -2013 - NASSCOM - Jury Commendation Certificate - Best IT driven Innovation.

Certifications, Recognitions and Awards for Mumbai International Airport Private Limited (MIAL) :

- GVK CSIA has been awarded ISO 14064-1- 2006 certification for its Green House Gas emission accounting for the 2nd consecutive year. With this achievement, GVK CSIA is, now in the process of upgrading CSIA''s ACI Airport Carbon Accreditation Rating from Mapping (Level 1) to Reduction (Level 2).

- GVK CSIA has been rated 3rd best Airport worldwide in the 25-40 mppa category by Airports Council International (ACI). The survey was conducted at 275 airports across the Globe.

Following are some of the achievements, awards and recognitions that your Promoter Directors received during the year;

- Dr. G V K Reddy, Chairman & Managing Director of your company has been recognized as ''Power Brands Hall of Fame Corporate Luminary of the year'' for his exemplary contribution to the industry and society.

Corporate Governance Report and Management Discussion and Analysis

Your Company continues to practice the best of the Corporate Governance policies. Your Company is in compliance with the recommendations of the Narayana Murthy Committee on Corporate Governance constituted by the Securities and Exchange Board of India (SEBI). A certificate, from a Company Secretary in whole time practice, on compliance with the mandatory recommendations of the committee is provided as an annexure to the Directors'' Report. As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a Corporate Governance Report and management Discussion and Analysis are attached to this annual report.

Corporate Social Responsibility (CSR)

- The GVK Group''s Corporate Social Responsibility (CSR) initiatives are implemented through GVK Foundation, the CSR arm of the GVK Group. The Foundation is involved mainly in the areas of education, health and hygiene; community-based programs; empowerment and entrepreneurship development, arts, music, sports and various social economical and cultural activities. It reaches out with the objective of improving the quality of life of the economically deprived people in the places where the Group has a presence.

- The Foundation has been funding GVK EMRI which was taken over the management of Emergency Management and Research Institute (EMRI), a non-profit organization and is providing integrated emergency response service across the country in 11 States and 2 Union Territories in India under public private partnership mode.

Directors

Appointments by rotation

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company Mr. Krishna Ram Bhupal and Mr. S Balasubramanian, Directors of the company will retire by rotation at this meeting and being eligible, your Board recommends their re-appointment.

Directors'' Responsibilities Statement

Pursuant to the requirements specified under Section 217 (2AA) of the Companies Act, 1956, with respect to the Directors'' Responsibilities Statement, it is hereby confirmed that:

i) in the preparation of the annual accounts for the financial year ended March 31, 2013, the applicable Accounting Standards have been followed along with proper explanations relating to material departures;

ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the profit or loss of the Company for the said period;

iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the directors had prepared the annual accounts for the financial year ended March 31, 2013 on a "going concern" basis. Auditors

SR Batliboi & Associates, Statutory Auditors of your Company have informed your Company that with effect from 01-04-2013 the legal status of their firm has been changed to SR Batliboi & Associates LLP consequent to their conversion into a Limited Liability Partnership (LLP) while their registration number (101049W) remains the same. The Board of Directors of your Company has taken note of the same.

S R Batliboi & Associates LLP, the Statutory Auditors of the Company will retire at the conclusion of this Annual General Meeting. They have offered themselves for reappointment as Statutory Auditors and have confirmed that their re-appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956. The Notes to Accounts forming part of the financial statements are self explanatory and need no further explanation.

Other Information

The Audit Committee of the Company has reviewed the audited financial statements for the year under review at its meeting held on May 14, 2013 and recommended the same for the approval of the Board of Directors.

Internal Control Systems and their adequacy

The Management continuously reviews the internal control systems and procedures for the efficient conduct of the Company''s business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee actively reviews internal audit reports and effectiveness of internal control systems.

Internal Control Systems are implemented to safeguard the Company''s assets from loss or damage, to keep constant check on the cost structure, to prevent revenue leakages, to provide adequate financial and accounting controls and to implement accounting standards.

Public Deposits

During the year under review, your company has neither invited nor accepted any fixed deposits from the public.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employee(s) are set out in the Annexure "C" to this report.

Foreign Exchange Earnings and Outgo

In accordance with the provisions of Section 21 7(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is provided under Notes to the Balance Sheet and Profit and Loss Account.

Acknowledgements

The Directors of your Company thank the Government of India, various State Governments and their concerned Department / Agencies / Regulatory Authorities for their continued support and cooperation. The Directors also wish to place on record the support extended by various Banks, Financial Institutions and every stakeholder of the Company.

The Directors further wish to appreciate and value the contributions made by every employee of the GVK Family.

For and on behalf of the Board of Directors

Place : Hyderabad Dr. G V K Reddy

Date : May 15, 2013 Chairman & Managing Director

Mar 31, 2012

The Directors have pleasure in presenting the 18 th annual report together with the audited balance sheet and profit and loss account of your Company for the year ended March 31, 2012.

Consolidated Financial results

Being a holding company of different vertical business operations, your company does not have independent operating revenues other than O&M fee, incentives and dividends, if any, from its subsidiaries, interest and other treasury income earned on surplus funds. Following is the summary of consolidated results of the company, its subsidiaries and associates.

(Rs.Lakhs)

Particulars 2011-12 2010-11

Financial Performance

Operational Income 249,183 191,466

EBIDTA 69,408 51,399

Other Income 8,887 2,853

Interest & Financial Charges 46,727 26,314

Depreciation 24,893 18,364

Provision for taxes 6,782 2,132

Profit before tax and share of profits for associate and minority (107) 7,442 interest

Add: Share of income from Associates 10,639 11,093

Less: Minority Interest 4,386 3,044

Total Profit for the year 6,146 15,491

Add: Balance brought forward from previous years 59,052 43,561

Balance available for appropriation 65,198 59,052

Appropriations

Transfer to General Reserve - - EPS (Rupees)

Weighted Average no. of Equity Shares 1,579,210,400 1,579,210,400

Basic and Diluted 0.39 0.98

Financial Position

Fixed Assets ( Net of Depreciation) 1,670,708 686,810

Cash and Bank balance 172,626 32,820

Net Current Assets (161,433) (26,930)

Total Assets 2,289,511 1,071,470

Equity 15,792 15,792

Reserves 332,345 322,886

Net worth 348,137 338,678

Our total income increased by 24.7 % to Rs.2,58,070 Lakhs from Rs.1,943,19 Lakhs in the previous year. The Power assets contributed an income of Rs.1,73,124 Lakhs compared to Rs.1,73,475 Lakhs (67.10 % of total income) in the previous year. The Transportation asset contributed an income of Rs.23,192 Lakhs (8.99% of total income) compared to Rs.19,243 Lakhs in the previous year. Airport assets contributed an income of Rs.59,700 Lakhs (23.15% of total income). The other assets contributed Rs.1,901 Lakhs compared to Rs.1,601 Lakhs in the previous year. Airport assets (Mumbai and Bangalore Airports) as the associates of the company have contributed to net profit of Rs.106,39 Lakhs compared to Rs.11,093 Lakhs in the previous year. The net profit after tax is Rs.6,164 Lakhs as against Rs.15,491 Lakhs in the previous year.

During the current year (from October 18, 2011), Mumbai International Airport Private Limited (MIAL) has become a subsidiary (associate company in the previous year) of your Company by virtue of increase in our equity holding from 37% to 50.50%. Accordingly, these financial statements reflect every line item of the financials of MIAL. However, Bangalore International Airport Limited (BIAL) continues to be an associate of your company during the current year (same as in previous year), even though our equity holding in BIAL was increased from 29% to 43% during the current year (from October 19, 2011).

The net profit after tax, share of profit from associate and minority interest was Rs.61.48 Crores as against Rs.154.92 Crores in the previous year. The fall in net profit is mainly attributable to drop in generation of power due to shortage of fuel (Gas) and an increase in interest cost.

Dividend

The Board of Directors of your company has not recommended any dividend for the financial year 2011-12.

Subsidiaries and Consolidated Financial Statements

Subsidiaries of your Company are predominantly spread across 3 main vertical business operations i.e., Energy, Airport and Transportation. In addition, your Company has other subsidiaries, which are engaged in Oil & Gas and Industrial Park amongst others. As on March 31, 2012 your Company has 7 direct subsidiaries, 15 step down subsidiaries and 2 associate companies. A list of these companies is provided separately as Annexure "A" to this report. There has been no material change in the nature of the business of the subsidiaries.

As required under the Listing Agreement entered into with the Stock Exchanges, a consolidated financial statement of the Company and all its subsidiaries is attached. The consolidated financial statements have been prepared in accordance with the relevant accounting standards as prescribed under section 211(3C) of the Companies Act, 1956. These financial statements disclose the assets, liabilities, income, expenses and other details of the company, its subsidiaries and associate companies.

Pursuant to the provision of section 212(8) of the Companies Act, 1956, the Ministry of Corporate Affairs (MCA), Government of India, New Delhi vide its Circular No.2/2011 dated: 08-02-2011 has granted general exemption from attaching the balance sheet, statement of profit and loss and other documents of the subsidiary companies with the balance sheet of the Company. As required under the said Circular, the Board of directors of your Company at its meeting held on February 14, 2012 gave its specific consent for not attaching the balance sheets of its subsidiaries, as they would be made available to its members at the company's website.

A statement containing the brief financial details of the Company's subsidiaries for the financial year ended March 31, 2012 is provided as Annexure "B" to this report. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. Any member intends to have a certified copy of the Balance Sheet and other financial statements of these subsidiaries may write to the Company Secretary. These documents are available for inspection during business hours at the registered office of the company and also at the registered offices of the respective subsidiary companies.

Developments in the existing assets

i) Energy

During the FY 2010-11, your Company through its subsidiary i.e. GVK Energy Limited had entered into an Investment Agreement with M/s. 3i India Infrastructure Fund, Actis Infrastructure India PCC Limited and an affiliate of the Government of Singapore Investment Corporation (GIC) for a total Private Equity investment of Rs.1,498 Crores for an ultimate equity dilution of 24.97%. Out of this, the second & final tranche of Rs.561.75 Crores was received from the said PE Investors during the current financial year.

ii) Airport

During the year (on 18-10-2011), your company through its step down subsidiary GVK Airport Holdings Private Limited (GVKAHPL), acquired additional 10,80,00,000 equity shares of Rs.10 each (aggregating to 13.50% stake) of Mumbai International Airport Private Limited (MIAL) from Bid Services Division (Mauritius) Limited (BSDM) at a cost of US$ 231 Million thereby increasing the aggregate total equity holding in MIAL to 50.50% from 37%.

Further, during the year (on 19-10-2011), your company through its step down subsidiary Bangalore Airport & Infrastructure Developers Private Limited, acquired additional 53,844,000 equity shares of Rs.10 each (aggregating to 14% stake) in Bangalore International Airport Limited (BIAL) from Siemens Project Ventures GmbH (Siemens) at a cost of Rs.613.82 Crores making the aggregate total effective stake in BIAL to 43% from 29%.

iii) Transportation

During the year, your Company formed a SPV in the name of Shivpuri Dewas Expressway Private Limited, a subsidiary of GVK Transportation Private Limited, a wholly owned subsidiary of the Company to implement the 332.46 Km Shivpuri Dewas Expressway project. With this, there would be three road projects under development in this vertical business.

Emerging Opportunities Resources

During the year, your company had participated as an investor for the acquisition of a major coal resource and infrastructure development project in the Galilee Basin, Queensland, Australia. Your Company currently holds 10% in the equity share capital of GVK Coal Developers (Singapore) Pte Limited ("GVKCD") a step down subsidiary of GVK Natural Resources Private Limited ("GVKNRPL") a GVK Group company, with an option to increase its stake upto 49%. The coal resource consists of an estimated 7.9 billion tonnes compliant with Australia's Joint Ore Reserves Committee (JORC) resource categorisation with a 3.3 billion tones reserves in Measured Indicated categories along with a 495 km rail line and a 60 million tonnes per annum port at Abbot Point.

GVKNRPL has entered into a transaction through its subsidiaries, incorporated in Singapore, to acquire:

a. 79% shareholding in Hancock Coal and Hancock Alpha West Coal Projects, located in the Galilee basin in the State of Queensland, Australia while the balance 21% has been retained by the Seller i.e. Hancock Prospecting Pty Ltd. The JORC study estimates the combined resources at Alpha and Alpha West at 3.6 billion tonnes.

b. 100% shareholding in Kevin's Corner Coal Project, located adjacent to Alpha Coal Project. The JORC study estimates the resources to be around 4.3 billion tonnes.

c. 100% shareholding in the proposed rail project connecting the above coal projects to the port of Abbot Point and in the proposed port expansion project to export the coal from the aforesaid coal projects.

The acquisition offers the following benefits to GVKPIL.

a. good investment opportunity with significant value upside.

b. option to enter into long term coal purchase contracts up to 20 Million tonnes per annum (to supply around 7,500 megawatts of power generating capacity) for securing long term fuel supplies for its subsidiary GVK Energy Limited.

c. option to take a lead role in the company that will own Rail and Port projects, on mutually agreed terms with GVKNRPL.

Financial Statements

The audited stand alone and consolidated financial statements of the company along with its subsidiary companies are attached herewith and form part of this annual report. These have been prepared in accordance with the provisions of the Companies Act, 1956, the Listing Agreement, the Accounting Standard (AS-21) on Consolidated Financial Statements and the Accounting Standard (AS-23) on Accounting for Investments in Associates.

Awards and recognitions

Following are some of the awards and recognitions that your Company/its Subsidiaries/Associates received during the current year

- GVK has been awarded the 'Asia Deal of the year' and the 'Asia Outbound Investor of the year' at the 8th annual Asia Mining Congress held in Singapore on 28-03-2012. GVK was recognized for its acquisition of the Australia based Hancock Coal and Infrastructure projects, which have paved the way for future investments from other corporate investors.

- GVKPIL is ranked among top ten companies on "Carbon Disclosure Leadership Index" in India as per the CDP India 200 Report 2011.

- GVK's EPC arm GVK Projects & Technical Services has received ISO 9001-2008 accreditation from internationally renowned agency TUV NORD.

- GVK EMRI has bagged the following prestigious awards

- The NASSCOM 2012 Innovation Award.

- Marico's Innovation for India Awards 2012 in Public Service category.

- Won eINDIA award for enabling IT in Saving Lives.

- GVKEMRI Assam received the Runner-Up in 6th National Road Safety Award

- Bangalore International Airport Limited (BIAL) has bagged the following prestigious awards

- First Company in India to be certified as a Green Company as per the CII GreenCo rating system

- Won the 'Most Innovative' Environmental Best Practice Award 2012 in the CII Environmental best practice award event.

- Won the Water Award for outstanding work in water management and sustainability at the Bangalore World Water Summit 2012.

- Mumbai International Airport Limited won the STAT TIMES International Award for Excellence in Air Cargo in the Indian region category - Cargo Airport of the year as runners up.

Following are some of the achievements, awards and recognitions that your Promoter Directors received during the year:

- Dr. G V Krishna Reddy, Chairman & Managing Director of your company has been awarded as the 'CONSTRUCTION WORLD-MAN OF THE YEAR' by the Construction World magazine.

- Mr. G V Sanjay Reddy, Vice Chairman of your company has been elected as Chairman of Confederation of Indian Industry, Southern Region for 2012-13.

Corporate Governance Report and Management Discussion and Analysis

Your Company continues to practice the best of the Corporate Governance policies. Your Company is in compliance with the recommendations of the Narayana Murthy Committee on Corporate Governance constituted by the Securities and Exchange Board of India (SEBI). A certificate, from a Company Secretary in whole time practice, on compliance with the mandatory recommendations of the committee is provided as an annexure to the Directors' Report. As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a Corporate Governance Report and management Discussion and Analysis are attached to this annual report.

Corporate Social Responsibility (CSR)

- The GVK Group's social responsibility initiatives are implemented through GVK Foundation, the CSR arm of the GVK Group. The Foundation is involved mainly in the areas of education, health and hygiene; community-based programs; empowerment and entrepreneurship development, arts, music, sports and various social economical and cultural activities. It reaches out with the objective of improving the quality of life of the economically deprived people in the places where the Group has a presence.

- The Foundation has been funding GVK EMRI which was taken over the management of Emergency Management and Research Institute (EMRI), a non-profit organization and is providing integrated emergency response service across the country in 11 States and 2 UT in India under public private partnership mode.

Directors

Appointments by rotation

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company Mrs. G Indira Krishna Reddy, Mr. G V Sanjay Reddy and Mr. Ch G Krishna Murthy, Directors of the company will retire by rotation at this meeting and being eligible, your Board recommends their re- appointment.

The Board of Directors at their meeting held on November 10, 2011 appointed Mrs. Ranjana Kumar as an additional director subject to your approval. Your Board recommends her appointment as an independent director whose period of office shall be liable to retire by rotation.

Cessation

During the year Mr. Pradip Baijal, Director has expressed his inability to continue as a director due to his other commitments. The board of directors at its meeting held on November 10, 2011 has accepted the same and placed on record its appreciation for the services rendered by Mr. Pradip Baijal, during his tenure as director of the company.

Superannuation

Mr. A Issac George, who has been with the Group for over a period of 17 years has attained superannuation on May 9, 2012 as Chief Financial Officer of the Company. He will continue to be on the Board as a Non Independent and Non Executive Director of the Company and is liable to retire by rotation. The Board placed on record its deep appreciation of the services rendered by Mr. Issac George. In recognition of his meritorious services, he is being appointed as a Chief Executive Officer of the Transportation vertical.

Directors' Responsibilities Statement

Pursuant to the requirements specified under Section 217 (2AA) of the Companies Act, 1956, with respect to the Directors' Responsibilities Statement, it is hereby confirmed that;

i) in the preparation of the annual accounts for the financial year ended March 31, 2012, the applicable Accounting Standards have been followed along with proper explanations relating to material departures;

ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of the profit or loss of the Company for the said period;

iii) that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv) the directors had prepared the annual accounts for the financial year ended March 31, 2012 on a "going concern" basis.

Auditors

M/s. S R Batliboi & Associates, the Statutory Auditors of the Company will retire at the conclusion of this Annual General Meeting. They have offered themselves for reappointment as statutory auditors and have confirmed that their re-appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956. The Notes to Accounts forming part of the financial statements are self explanatory and need no further explanation.

Other Information

The Audit Committee of the Company has reviewed the audited financial statements for the year under review at its meeting held on May 8, 2012 and recommended the same for the approval of the Board of Directors.

Internal Control Systems and their adequacy

The Management continuously reviews the internal control systems and procedures for the efficient conduct of the Company's business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee actively reviews internal audit reports and effectiveness of internal control systems.

Internal Control Systems are implemented to safeguard the Company's assets from loss or damage, to keep constant check on the cost structure, to prevent revenue leakages, to provide adequate financial and accounting controls and implement accounting standards.

Public Deposits

During the year under review, your company has neither invited nor accepted any fixed deposits from the public.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employee(s) are set out in the Annexure "C" to this report.

Foreign Exchange Earnings and Outgo

In accordance with the provisions of Section 21 7(1 )(e) of the Companies Act, 1 956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is provided under Notes to the Balance Sheet and Profit and Loss Account.

Acknowledgements

The Directors of your Company thank the Government of India, various State Governments and their concerned Department / Agencies / Regulatory Authorities for their continued support and cooperation. The Directors also wish to place on record the support extended by various Banks, Financial Institutions and every stakeholder of the Company.

The Directors further wish to appreciate and value the contributions made by every employee of the GVK Family.

For and on behalf of the Board of Directors

Place : Hyderabad Dr. G V Krishna Reddy

Date : May 9, 2012 Chairman & Managing Director

Mar 31, 2011

The Directors have pleasure in presenting the 17th annual report together with the audited balance sheet and profit and loss account of your Company for the year ended March 31, 2011.

Consolidated Financial results

Being a holding company of different vertical business operations, your Company does not have independent operating revenues other than O&M fee, incentives and dividends, if any, from its subsidiaries, interest and other treasury income earned on surplus funds. Following is the summary of consolidated results of the company, its subsidiaries and associates.

(Rs. Lakhs)

Particulars 2010-11 2009-10

Financial Performance

Operational Income 1,914,66 1,786,64

EBIDTA 513,99 468,30

Other Income 28,53 29,18

Interest & Financial Charges 263,14 217,10

Depreciation 183,64 137,12

Provision for taxes 21,32 20,01

Profit before tax and share of profits for associate and minority interest 74,42 123,25

Add: Share of income from Associates 110,93 51,68

Add: Profit on the sale of subsidiary - -

Less: Minority Interest 30,44 19,06

Total Profit for the year 154,91 155,87

Add: Balance brought forward from previous years 435,61 279,74

Balance available for appropriation 590,52 435,61

Appropriations

Transfer to General Reserve - -

EPS (Rupees)

Weighted Average no. of Equity Shares 1,579,210,400 1,532,189,062

Basic and Diluted 0.98 1.02

Financial Position

Fixed Assets ( Net of Depreciation) 3,671,88 3,948,32

Cash and Cash Equivalent 126,88 38,09

Net Current Assets 397,20 242,00

Total Assets 10,316,39 8,119,15

Equity 157,92 157,92

Reserves 3,228,86 2,998,00

Net worth 3,386,78 3,155,92

Our total income increased by 7% to Rs.1,943.19 Crores from Rs.1,815.82 Crores in the previous year. The Power assets contributed an income of Rs.1,712.93 Crores (88.15% of total income) compared to Rs.1,603.28 Crores in the previous year. This increase is mainly attributable to full year operation of Jegurupadu Phase II and Gautami Power Plants in the current year. The Transportation asset contributed an income of Rs.189.16 Crores (9.73% of total income) compared to Rs.170.75 Crores in the previous year. The other segment contributed Rs.41.10 Crores (2.12% of total income) compared to Rs.41.79 Crores in the previous year. The Airport assets (Mumbai and Bangalore Airports) as the associates of the company have contributed to net profit of Rs.110.93 Crores as compared to Rs.51.68 Crores in the previous year. The consolidated net profit after tax was Rs.154.91 Crores as against Rs.155.87 Crores in the previous year.

Dividend

Apart from implementing the existing or new projects and / their expansions under different vertical businesses, through its subsidiaries and associate companies, your company is also exploring various business opportunities. In this endeavour, it is necessary to conserve the funds to meet the investment opportunities, which your board believes would enhance the shareholders value in the long term. Therefore, your Board has not recommended any dividend for the financial year 2010-2011.

Subsidiaries

Subsidiaries of your Company are predominantly spread across 3 main vertical business operations i.e., Energy, Airport and Transportation verticals. In addition, your Company has other subsidiaries, which are engaged in Oil & Gas and Industrial Park among others. Having completed the creation of separate business verticals, your Company as on March 31, 2011 has 8 direct subsidiaries, 12 step down subsidiaries and 3 associate companies. A list of these companies is provided separately as Annexure "A" to this report.

In terms of section 212 of the Companies Act, 1956, your Company is required to attach the directors report, balance sheets, profit and loss account of its subsidiary companies to its Annual Report. However, the Ministry of Corporate Affairs (MCA), Government of India, New Delhi vide its Circular No.2/2011, dated: 08-02-2011 has granted a general exemption to all the Companies for not attaching the above documents of subsidiaries with the Annual Report of the Holding Company, subject to compliance of the conditions specified therein. As required under the said general circular, the Board of directors of your Company at its meeting held on May 7, 2011 gave its specific consent for not attaching the balance sheets of its subsidiaries, as they would be made available to its members at the companys website.

In terms of the said notification of the MCA, a summary of the financial information of each of the subsidiaries of your Company is provided as Annexure "B" to this report. Any member intends to have a certified copy of the Balance Sheet and other financial statements of these subsidiaries may write to the Company Secretary. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. These documents will also be available for inspection during the business hours at the registered office of the company and also at the registered offices of the respective subsidiary companies.

Performance of the existing assets

i) Energy

Currently we operate 900 MW gas based power plants through step down subsidiaries i.e. GVK Industries Limited Jegurupadu Phase-I (216 MW), Phase-II (220 MW) and GVK Gautami Power Limited (464 MW). Following is the gist of performance of these assets.

GVK Industries Limited

Phase-I

During the year Jegurupadu Phase I was operated at a Plant Availability Factor (PAF) and Plant Load Factor (PLF) of 95.94% and 76.62% respectively (PY 98.58 % and 89.56%) and reported a loss of Rs.29.03 Crores (PY Rs.0.15 Crores). The decline in PAF, PLF and profits are mainly attributable to non availability of natural gas. The energy generated during the year was 1455.32 Million kWh (PY 1685.82 Million kWh) out of which 1422.74 Million kWh was exported and 32.58 MUs were for Auxiliary Consumption. The Station Heat Rate during the year was 2007 kcal/kWh as against 1968 kcal/kWh in the previous year.

Phase-II

During the year Jegurupadu Phase II was operated at a PAF and PLF of 89.17% and 81.75% respectively (PY 95.29% and 90.35%) and reported a profit after tax of Rs.20.74 Crores (PY Rs.25.26 Crores). The decline in PAF, PLF and profits are mainly attributable to non availability of natural gas. The energy generated during the year was 1638.85 Million kWh (PY 1742.47 Million kWh) out of which 1606.96 Million kWh was exported and 31.89 MUs were for Auxiliary Consumption. The Station Heat Rate during the year was 1824 kcal/kWh as against 1808 kcal/kWh in the previous year.

GVK Gautami Power Limited

Phase-I

During the year Gautami Phase I was operated at a PAF and PLF of 88.64% and 83.39% respectively (PY 91.47% and 88.20%) and reported a profit after tax of Rs.76.58 Crores (PY Rs.28.14 Crores) showing a growth of 272.14%. The energy generated during the year was 3422.90 Million kWh (PY 2937.98 Million kWh) out of which 3346.76 Million kWh was exported and 76.14 MUs were for Auxiliary Consumption. The Station Heat Rate during the year was 1825.60 kcal/kWh as against 1798.98 kcal/ kWh in the previous year.

ii) Airport

Under Airport asset, currently we operate Chhatrapati Shivaji International Airport (CSIA), Mumbai (a brown field project) and Bengaluru International Airport, Bengaluru (a green field project). Following is the gist of performance of these assets.

Mumbai International Airport Pvt. Ltd (MIAL)

During the year MIAL handled 29.07 Mio (PY 25.61 Mio) passenger traffic, handled 242,659 ATMs (PY 229,799 ATMs) and 340,260 MT (PY 250,237 MT) of Cargo reflecting a growth of 14%, 5.6% and 36% respectively. MIAL reported a profit after tax of Rs.197.04 Crores for the financial year 2010-2011 (PY Rs.132.80 Crores) showing a growth of 48%. MIAL had completed 31 of the 32 mandatory projects under OMDA as of December 2010. The only mandatory project remaining to be completed is the S.09 International Terminal Expansion - South West Pier which is pending due to the delay in handing over of Chhatrapati Shivaji Maharaj statue area. During the year Terminal 1C was inaugurated with a lot of retail offerings. CSIA has become the first Indian airport website, to offer mobile airport portal.

Bangalore International Airport Ltd. (BIAL)

During the year BIAL handled 11.63 Mio (PY 9.92 Mio) passenger traffic, handled 111,787 ATMs (PY 104,653 ATMs) and 222,783 MT (PY 174,648 MT) of Cargo reflecting a growth of 17%, 7% and 28% respectively. BIAL reported a profit after tax of Rs.132.10 Crores for the financial year 2010-2011 (PY Rs.77.70 Crores) showing a growth of 70%. A new and spacious VIP lounge at the Airport has been opened in January 2011. The expansion of the existing terminal 1 has been designed to enhance the operational performance in order to handle, inter-alia, the increase of passenger traffic from the current 11.2 million passengers to approximately 17.2 million passengers annually up to the year 2015. The Project is scheduled to be completed within a period of 18 months from the commencement of its construction.

During the year 2010-2011, Mumbai and Bengaluru airports together have handled passenger traffic of 40.7 million. With these two busy airports under our management, GVK would be Indias biggest airport operator in the private sector.

iii) Transportation

A 90.4 Km Jaipur - Kishangarh Expressway on NH-8 connecting Mumbai and New Delhi is a BOT project and is a part the prestigious Golden Quadrilateral Project undertaken by the Central Government of India through National Highways Authority of India (NHAI) connecting all four major metro cities i.e. New Delhi, Mumbai, Chennai and Kolkata. Following is the gist of performance of this asset.

GVK Jaipur Expressway Pvt Ltd.

Toll collected by the Company during the year was Rs.189.16 Crores (PY Rs.170.75 Crores) registering a growth of 11%. The profit after tax is at Rs.80.02 Crores for the year (PY Rs.58.96 Crores) showing a growth of 35.73%. Multi Axis vehicles alone have contributed 73% of the toll revenue collections during the year. This is the first road project in India to have shared certain agreed percentage of excess toll revenue over the projected toll fee with NHAI.

Assets under construction

i) Energy

Alaknanda Hydro Power Company Limited

The 330MW Alaknanda Hydro Electrc Power Project on the river Alaknanda, Srinagar, Uttarakhand is being implemented with an estimated project cost of Rs.3,675 Crores. The Excavation in the Power House, the Forebay work, penstock work are fully completed and the 335000 M3 (i.e. 61%) of concrete for dam is complete. All other major works at project are being completed as scheduled and the project is expected to be commissioned by 2012.

GVK Power (Goindwal Sahib) Limited

The 540MW the thermal (coal based) power project in Tarn Taran district, Punjab is being set up at an estimated cost of Rs.3,200 Crores. The Power House building piling work and bunker bay concrete piling and raw water reservoir excavation work completed to the extent of 85% and BTG works are in full swing and the project is expected to be commissioned by 2013.

ii) Transportation

GVK Deoli Kota Expressway Private Limited

The Company was incorporated as a SPV during April 2010, to implement and augment the existing Deoli-Kota Section of National Highway (NH) No. 12 from Km 165 to Junction of NH - 76 on Kota Bypass (approximately 83.04 Km) in the State of Rajasthan by four laning on design, build, finance, operate and transfer (DBFOT) basis and has signed the financing documents on January 5, 2011 with a consortium of lenders for an estimated project cost of Rs.823.45 Crores with debt equity of 80:20. The project would become operational within 30 months as per the Concession Agreement.

GVK Bagodara Vasad Expressway Private Limited

The Company was incorporated as a SPV during February 2011, to implement the Six Laning of existing three lanes of Bagodara - Wataman - Tarapur - Vasad Road Project (State Highway No.8, Km 0/0 to Km 101/9) in the State of Gujarat on BOT Basis. Requisite Concession Agreement has been executed with the Gujarat State Road Development Corporation. Cost of the project is estimated at Rs.1200 Crores. The project would become operational within 30 months as per the Concession Agreement.

Other Developments

i) Energy

During the year your Company has transferred its entire shareholding in the power assets viz GVK Industries Limited, GVK Gautami Power Limited, GVK Power (Goindwal Sahib) Limited, Alaknanda Hydro Power Company Limited, GVK Coal (Tokisud) Company Private Limited, to GVK Energy Limited, a wholly owned subsidiary of the Company for a consideration of Rs.1333.17 Crores. With this, the creation of energy vertical has been completed in all respects.

During November 2010, your Company through its subsidiary GVK Energy Limited has entered into an Investment Agreement with M/s. 3i India Infrastructure Fund, Actis Infrastructure India PCC Limited and an affiliate of the Government of Singapore Investment Corporation (GIC) for a total Private Equity investment of Rs.1498 Crores for an ultimate equity dilution of 24.97% in GVK Energy Limited.

ii) Airport

During the year your Company has signed an agreement to acquire 13.5% additional equity stake in Mumbai International Airport Limited (MIAL), from Bid Services Division (Mauritius) Limited, through a step down subsidiary, subject to regulatory approvals. On completion of this acquisition, equity shareholding of the GVK Group stands at 50.5% from the existing 37% of the total paid-up share capital in MIAL.

iii) Transportation

During the year, your Company has formed two SPVs as subsidiaries of GVK Transportation Private Limited, a wholly owned subsidiary of the Company. Further, your Company on April 6, 2011, as a concluding transaction, has transferred its entire shareholding held in the GVK Jaipur Expressway Private Limited to GVK Transportation Private Limited, a wholly owned subsidiary of the Company for a consideration of Rs.274.01 Crores. With this, the creation of transportation vertical has been completed in all respects.

New Opportunities

i) Energy

During June 2010, your Company through a step down subsidiary, GVK Ratle Hydro Electric Project Private Limited (SPV), has signed the Power Purchase Agreement, with Power Development Department, Govt. of Jammu & Kashmir for implementing the 810MW Ratle Hydro Electric Project on the river Chenab, Kishtwar District, in the State of Jammu & Kashmir. The cost of the project is estimated at Rs.5368 Crores and expected to be operational by March 2017.

During February 2011 your Company has executed a Memorandum of Understanding (MOU) with the Punjab State Power Corporation Limited for implementation of 1320 MW Power Project (Phase-II), in the State of Punjab. For this purpose GVK Power (Khadur Sahib) Private Limited, a SPV has been incorporated as a step down subsidiary through GVK Energy Limited to implement the Coal based thermal power project with super critical technology, proposed to be developed in the additional land at the existing Goindwal Sahib site in Tarn Taran District, Punjab.

ii) Airport

Your Companys capabilities, expertise and strong track record in the airports sector helped getting two international airports to its portfolio. Your Company has signed two MoUs with Indonesian Government during its Presidents State visit to India in January 2011 to develop green field international airports in North Bali and Yogyakarta (Java), Indonesia. Bali and Java are the prime destinations for tourist traffic from both Europe and Asia. The signing of these MoUs marks a very significant milestone for GVK and your Company is confident that these agreements will yield significant synergies.

Financial Statements

The audited stand alone and consolidated financial statements of the company along with its subsidiary companies are attached herewith and form part of this annual report. These have been prepared in accordance with the provisions of the Companies Act, 1956, the Listing Agreement, the Accounting Standard (AS-21) on Consolidated Financial Statements and the Accounting Standard (AS-23) on Accounting for Investments in Associates.

Awards and recognitions

Following are some of the awards and recognitions that the promoters and the associate companies received during the current year. Dr. G V Krishna Reddy, Chairman & Managing Director of your company has been conferred with the prestigious "Padma Bhushan Award" for the Year 2011. The award was presented by Smt. Prathibha Devi Singh Patil, Honble President of India at a glittering function held on March 25, 2011. Our beloved Chairman has received this award towards his contribution to the society in the category of Trade and Industry.

Mr. G V Sanjay Reddy, Vice Chairman of your Company has been awarded as "Emerging Business Leader of the Year" by AIMA Managing India Awards 2011.

Chhatrapati Shivaji International Airport (CSIA) emerged as one of the top performing airports in the annual ACI Airport Service Quality Awards for 2010. It was rated the second best airport worldwide for airports in the 15-25 million passengers per annum (mppa) category as announced by ACI.

Bangalore International Airport Limited has bagged the prestigious Best Airport India award at the Skytrax World Airport Awards in Copenhagen, Denmark.

Liquidity

Your companys ability to raise finance for various projects of the Company has been its strength and is able to tie up the required financial assistance from the lending institutions even in the adverse market conditions. Surplus funds are deposited with banks, highly rated financial institutions and liquid mutual funds. These funds can be liquidated at a very short notice to meet the requirements of the company as and when needed.

Corporate Governance

Your Company continues to practice the best of the Corporate Governance policies. Your Company is in compliance with the recommendations of the Narayana Murthy Committee on Corporate Governance constituted by the Securities and Exchange Board of India (SEBI). A certificate, from a Company Secretary in whole time practice, on compliance with the mandatory recommendations of the committee is provided in the annexure to the Directors Report. As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance is attached to this report.

Corporate Social Responsibility (CSR)

Corporate Social Responsibility initiatives are implemented through GVK Foundation, the CSR arm of the GVK Group. The Foundation is involved mainly in the areas of education, health and hygiene; community-based programmes; empowerment and entrepreneurship development, arts, music, sports and various social economical and cultural activities. It reaches out with the objective of improving the quality of life of the economically deprived people in the places where the Group has a presence.

To further the CSR objective, GVK has taken over the management of Emergency Management and Research Institute (EMRI), a non-profit organization during May, 2009 to provide integrated emergency response service across the Country under public private partnership mode. Since then, the Foundation has been funding GVK EMRI.

Highlights of GVK EMRI

Operates through 11 States in the country and serves nearly 500 million people. Currently, there are about 2802 ambulances to provide pre hospital care which has saved Lives of approximately 323,924 people. GVK EMRI has partnered with global organizations (Stanford, CMU, 9-1-1, STC, AAPI, AAEMI, Geomed etc.) to strengthen its competencies, skills and to share the best international practices.

Government of Andhra Pradesh has identified GVK EMRI as out sourcing agency to run Fixed Day Health Services (FDHS) popularly known as "Hospital on wheels" in the districts of Srikakulam, Vijayanagaram, Visakhapatnam, Medak, Adilabad & Chittor. GVK EMRI has introduced boat ambulances in the state of Assam to facilitate Inter Facility Transfer requests from rural embankment regions of Brahmaputra River. Launched its services in Himachal Pradesh in the month of December 2010 with 100 ambulances. GVK EMRI has signed PPP agreement with the Government of Chattisgarh on May 17, 2010 for rendering emergency response services by deploying 172 ambulances.

Management Discussion and Analysis

A separate report on the Management Discussion and Analysis of the financial position and the results of operations of the Company for the year under review is annexed to this report as required under Clause 49 of the Listing Agreement with the Stock Exchanges

Directors

Appointment by rotation

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company Mr. K N Shenoy,

Mr. Pradip Baijal, Dr. A Ramakrishna and Mr. P Abraham, Directors of the company will retire by rotation at this meeting and being eligible, your Company recommends their re-appointment.

The Board of Directors at their meeting held on May 7, 2011 re-appointed Mr. A Issac George as Director & Chief Financial Officer of the Company for a further period of 3 years with effect from April 1, 2011. Your Company recommends his re-appointment.

Cessation

During the year Mr. Sanjay Narayen, Director has expressed his inability to continue as a director due to his other commitments. The Board of directors at its meeting held on May 7, 2011 has accepted the same and placed on record its appreciation for the services rendered by Mr. Sanjay Narayen, during his tenure as director of the company.

Directors Responsibilities Statement

Pursuant to the requirements specified under Section 217 (2AA) of the Companies Act, 1956, with respect to the Directors Responsibilities Statement, it is hereby confirmed that;

i. in the preparation of the annual accounts for the financial year ended March 31, 2011, the applicable Accounting Standards have been followed along with proper explanations relating to material departures;

ii. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and of the profit or loss of the Company for the said period;

iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company, for preventing and detecting fraud and other irregularities; and

iv. the directors had prepared the annual accounts for the financial year ended March 31, 2011 on a "going concern" basis.

Auditors

M/s. S R Batliboi & Associates, the Statutory Auditors of the Company will retire at the conclusion of this Annual General Meeting. They have offered themselves for reappointment as statutory auditors and have confirmed that their re-appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956.

The Notes to Accounts forming part of the financial statements are self explanatory and need no further explanation.

Audit Committee constitution

In compliance with the provisions of the Section 292A of the Companies Act, 1956 and the listing agreement entered into with the stock exchanges, the company had already constituted an Audit Committee during 2005 itself consisting of highly qualified and experienced members from various fields. The committee consists of four Independent Directors. The Chairman of the committee Mr. K N Shenoy, is an Independent Director and the committee meets periodically to review the quarterly financial statements and recommends its findings to the Board apart from taking action independently whenever required.

Other Information

The Audit Committee of the Company has reviewed the audited financial statements for the year under review at its meeting held on May 6, 2011 and recommended the same to the Board. The Board of Directors have taken the same on record at its meeting held on May 7, 2011.

Internal Control Systems and their adequacy

The Management continuously reviews the internal control systems and procedures for the efficient conduct of the Companys business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee actively reviews internal audit reports and effectiveness of internal control systems.

Internal Control Systems are implemented to safeguard the Companys assets from loss or damage, to keep constant check on the cost structure, to prevent revenue leakages, to provide adequate financial and accounting controls and implement accounting standards.

Public Deposits

During the year under review, your company has neither invited nor accepted any fixed deposits from the public.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employee(s) are set out in the Annexure "C" to this report.

Foreign Exchange Earnings and Outgo

In accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is provided under Notes to the Balance Sheet and Profit and Loss Account.

Acknowledgements

On behalf of the Directors of the Company, I would like to place on record my deep appreciation to all the Central and State

Government Authorities, Regulatory bodies, Banks, Financial Institutions and every Stakeholder of the Company.

I also thank all my colleagues on the Board for their timely guidance and support extended to me. I personally appreciate and place on record the sincere services rendered by all the employees and their families for making the company what it is today. I sincerely thank everyone for their support and reiterate humbly that I have accepted the Padma Bhushan award on your behalf.

For and on behalf of the Board of Directors

Place: Hyderabad Dr G V Krishna Reddy

Date : May 7, 2011 Chairman & Managing Director

Mar 31, 2010

The Directors have pleasure in presenting the 16th annual report together with the audited balance sheet and profit and loss account of your Company for the year ended March 31, 2010.

Consolidated Financial results

Being a holding company of different vertical business operations, your company does not have independent operating revenues other than O&M fee, incentives and dividends, if any, from its subsidiaries, interest and other treasury income earned on surplus funds. Following is the summary of consolidated results of the company, its subsidiaries and associates.

Rs. 000s

Particulars 2009-10 2008-09

Financial Performance

Operational Income 17,866,359 5,137,782

EBIDTA 4,682,992 1,762,989

Other Income 291,825 201,856

Interest & Financial Charges 2,171,000 333,853

Depreciation 1,371,201 779,537

Provision for taxes 200,087 100,356

Profit before tax and share of profits for associate and minority interest 1,232,529 751,099

Add: Share of income from Associates 516,838 315,509

Add: Profit on the sale of subsidiary - 12,074

Less: Minority Interest 190,621 3,053

Total Profit for the year 1,558,746 1,075,629

Add: Balance brought forward from previous years 2,797,382 1,721,753

Balance available for appropriation 4,356,128 2,797,382

Appropriations

Transfer to General Reserve - - EPS (Rupees)

Weighted Average no. of Equity Shares 1,532,189,062 1,405,848,900

Basic and Diluted 1.02 0.77 Financial Position

Fixed Assets (Net of Depreciation) 39,483,123 13,589,590

Cash and Cash Equivalent 4,236,393 1,781,441

Net Current Assets 2,366,620 2,886,761

Total Assets 81,191,474 58,197,142

Equity 1,579,210 1,405,849

Reserves 29,980,008 21,532,900

Networth 31,559,218 22,938,749

Our total income increased by 240% to Rs. 1815.82 Crores from Rs. 533.97 Crores in the previous year. The Power assets contributed an income of Rs. 1603.28 Crores (88.30% of total income) compared to Rs.355.60 Crores in the previous year. This increase is mainly attributable to the commencement of commercial operations of Jegurupadu Phase II and Gautami Power Plants from April and June of 2009 respectively. The Transportation asset contributed an income of Rs. 170.75 Crores (9.40% of total income) compared to Rs. 145.87 Crores in the previous year. The other segment contributed Rs. 41.79 Crores compared to Rs. 32.49 Crores in the previous year. The Airport assets (Mumbai and Bangalore Airports) as associates of the company have contributed to net profit of Rs. 51.68 Crores compared to Rs.31.55 Crores in the previous year. This includes Rs.2.59 Crores from the Bangalore Airport which has become an associate of your company only in January, 2010. The net profit after tax was Rs. 155.87 Crores as against Rs. 107.56 Crores in the previous year, an increase 44.91%.

Dividend

Apart from expansion of the existing ones, your company is implementing different projects through its subsidiaries and is also exploring various business opportunities. In this endeavour, it is necessary to conserve the funds to meet investment opportunities, which your board believes would enhance the shareholderÃs value in the long term. Therefore, your board has not recommended any dividend for the financial year 2009-10.

New assets

(i) Airport

During January, 2010 your company has acquired 29% equity stake in Bangalore International Airport Limited (BIAL) through another wholly owned subsidiary. BIAL is the 4th largest Airport in India in terms of passenger traffic having promising potential to grow in future. Bengaluru is one of the fastest growing air traffic hubs in the country with a potential to emerge as among the top three hubs ahead of the other key metro cities. Acquisition of BIAL shares will serve the Companys strategic business objective of airport business in India. It will also give headway to GVK to have its presence in Southern India, a fast expanding aviation market.

(ii) Power

During January, 2010 your Company through its wholly owned subsidiary has won the bid to develop 690 MW Rattle Hydro Electric Project on river Chinab, Kishtwar District, in the State of Jammu & Kashmir on Built, Own, Operate and Transfer basis. The estimated cost of the said project is around Rs.5,000 Crores and is targeted for commissioning by 2017.

(iii) Transportation

During March, 2010 your Company through its wholly owned subsidiary has won the bid to develop Deoli-Kota Road Project on NH-12 from km. 165.000 to Junction of NH-76 on Kota Bypass ("Project Highway") in the State of Rajasthan on BOT (Toll) basis on DBFOT pattern under NHDP Phase-III. The estimated cost of the project is around Rs.850 Crores.

Subsidiaries

As on March 31, 2010, your company has a total of 12 subsidiaries, 2 stepdown subsidiaries and 3 associate companies. The total list of these companies is provided as annexure "A" to this report.

In terms of section 212 of the Companies Act, 1956, the Company is required to attach the Directors Report, balance sheets, profit and loss account of its subsidiary companies to its Annual Report. The Ministry of Corporate Affairs (MCA), Government of India, New Delhi vide its order No.47/140/2010-CL-III dated 15-03-2010 has granted exemption to your company for not attaching the above documents of subsidiaries with Annual Report of the Company for the financial year 2009-10.

Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. The company will make available the annual audited accounts and related detailed information of the subsidiary companies upon request by any member of the Company. These documents will also be available for inspection during business hours at the registered office of the company and also at the registered offices of the subsidiary companies.

In terms of the said orders of the MCA, a summary of financial information of each of the subsidiary companies is provided as annexure "B" to this report.

Financial Statements

The audited stand alone and consolidated financial statements of the company are attached here with and form part of this annual report. These have been prepared under historical cost convention accrual basis to comply in all material respect with the mandatory accounting standards notified by The Companies Accounting Standards Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.

Awards and recognitions

- During the year, KPMG, a leading firm of Chartered Accountants has awarded the "Most Promising Infrastructure Developer (Overall)" to your company at a function held at New Delhi on January 27, 2010.

- Dr. G V Krishna Reddy, Chairman & Managing Director of your Company has been conferred with the "Entrepreneur of the Year, 2009" award at the 12th Economic Times Awards for Corporate Excellence, held at Mumbai on January 10, 2010.

Liquidity

Your companyÃs ability in raising finance for various projects of the Company is not a concern as we are fairly successful in tying up the required financial assistance for the projects under operations/construction from the lending institutions. Surplus funds are deposited with Banks, highly rated financial institutions and liquid mutual funds. These funds can be liquidated at short notice to meet the requirements of the company as and when needed.

Increase in share capital

During the year under review, we have issued 17,33,61,500 equity shares through a Qualified Institutional Placement (QIP). As a result, the outstanding issued, subscribed and paid up share capital of the Company has been increased from 140,58,48,900 shares to 157,92,10,400 shares as on March 31, 2010.

Corporate Governance

Your Company continues to practice the best of the Corporate Governance policies. Your Company is in compliance with the recommendations of the Narayana Murthy Committee on Corporate Governance constituted by the Securities and Exchange Board of India (SEBI). A certificate, from a Company Secretary in whole time practice, on compliance with the mandatory recommendations of the committee is provided in the annexure to the Directors Report. As required under Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance is attached to this report.

Corporate Social Responsibility (CSR)

- The GVK Groups social responsibility initiatives are implemented through GVK Foundation, the CSR arm of the GVK Group. The Foundation is involved mainly in the areas of education, health and hygiene; community-based programmes; empowerment and entrepreneurship development, arts, music, sports and various social economical and cultural activities. It reaches out with the objective of improving the quality of life of the economically deprived people in the places where the Group has a presence. The Foundation is also now funding GVK EMRI.

- To further the CSR objective, you company has taken over the management of Emergency Management and Research Institute (EMRI), a non-profit organization in early 2009 to provide integrated emergency response service across the country in 10 states under public private partnership mode with a vision to save one million lives per annum nationally by 2011 and also to establish EMRI as a premier research and training institute. During the year, this has been rechristened as GVK EMRI.

Highlights of services offered by GVK EMRI

- GVK EMRI is providing emergency services to the needy on dialing 108 (through fixed land line or mobile phones).

- GVK EMRI has tied up with various hospitals in Andhra Pradesh and other states with more than 2000 Police / Fire stations for attending the needy in medical or other emergencies.

- Operates through 10 States in the country and serves nearly 443 million people.

- Currently there are about 2800 state-of-the-art ambulances to provide pre hospital care which is estimated to go beyond 5000 ambulances.

- GVK EMRI is spread over a 39 acre campus at Hyderabad with modern facilities of emergency management and research and training.

- GVK EMRI is having partnership with globally reputed organizations (Stanford, CMU, 9-1-1, STC, AAPI, AAEMI, Geomed, etc) in order to strengthen its competencies and skills and to propagate the best international practices.

Management Discussion and Analysis

A separate report on the Management Discussion and Analysis of the financial position and the results of operations of the Company for the year under review is annexed to this report as required under Clause 49 of the Listing Agreement with the Stock Exchanges.

Directors

Appointments by rotation

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company, Mrs. G Indira Krishna Reddy, Director, Mr. G V Sanjay Reddy, Vice Chairman and Dr. Abid Hussain, Director of the company will retire by rotation at this meeting and being eligible, your Board recommends their re-appointments.

New Appointments

Mr. Krishna Ram Bhupal and Mr. S Balasubramanian, have been appointed as Additional Directors, and shall hold their office only upto the date of this AGM. Your Company is in receipt of notices from shareholders under section 257 of the Companies Act, 1956 signifying their intention to appoint them as Directors of the Company. Your Board recommends the above appointments.

Cessation

On September 01, 2009 we have lost our beloved Promoter Director Mr. Somanadri Bhupal. He has contributed immensely for the growth of the company. With a deep regret, your Board takes on record his sad demise and extend the deep condolences to the bereaved family.

Directors Responsibilities Statement

Pursuant to the requirements specified under Section 217 (2AA) of the Companies Act, 1956, with respect to the Directors Responsibilities Statement, it is hereby confirmed that;

i. in the preparation of the annual accounts for the financial year ended March 31, 2010, the applicable Accounting Standards have been followed along with proper explanations relating to material departures;

ii. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profit or loss of the Company for the said period;

iii. that the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

iv. the directors had prepared the annual accounts for the financial year ended March 31, 2010 on a "going concern" basis.

Auditors

M/s. S R Batliboi & Associates, the Statutory Auditors of the Company will retire at the conclusion of this Annual General Meeting. They have offered themselves for reappointment as statutory auditors and have confirmed that their appointment, if made, would be within the limits prescribed under section 224(1B) of the Companies Act, 1956.

The Notes to Accounts forming part of the financial statements are self explanatory and need no further explanation.

Internal Control Systems and their adequacy

The Management continuously reviews the Internal Control Systems and procedures for the efficient conduct of the Companys business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee actively reviews internal audit reports and effectiveness of internal control systems.

Internal Control Systems are implemented to safeguard the Companys assets from loss or damage, to keep a constant check on the cost structure, to prevent revenue leakages, to provide adequate financial and accounting controls and implement accounting standards.

Public Deposits

During the year under review, your company has neither invited nor accepted any fixed deposits from the public.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employee(s) are set out in the Annexure "C" to this report.

Foreign Exchange Earnings and Outgo

In accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, the information relating to foreign exchange earnings and outgo is provided under Notes to the Balance Sheet and Profit and Loss Account.

Other Information

The Audit Committee of the Company has reviewed the audited financial statements for the year under review at its meeting held on April 29, 2010 and recommended the same for the approval of the Board of Directors.

Acknowledgements

On behalf of the Directors of the Company, I would like to place on record my deep appreciation to all the Central and State Government Authorities, Regulatory bodies, Banks, Financial Institutions and every stakeholder of the Company. I also thank all my colleagues on the Board for their timely guidance and support extended to me.

I personally appreciate and place on record the sincere services rendered by all the employees and their families for making the company what it is today.

For and on behalf of the Board of Directors

Place: Hyderabad G V Krishna Reddy

Date: April 30, 2010 Chairman & Managing Director

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