Directors Report of Gammon India Ltd.

Mar 31, 2016

To,

The Members of Gammon India Limited

The Directors have pleasure in presenting their 94^th Annual Report together with the Audited Financial Statements of the Company for the 18 months period ended 31^st March, 2016.

1. REVIEW OF FINANCIAL & OPERATIONAL PERFORMANCE (Rs. in Crore)

Particulars	Standalone		Consolidated
	18 months ended 31.03.2016	9 months ended 30.09.2014*	18 months ended 31.03.2016	9 months ended 30.09.2014*
Profit before Other Income, Depreciation & Interest	879.99	(96.45)	1510.01	143.74
Add:
Other Income	434.96	708.46	132.73	58.32
Less:
Depreciation	254.16	81.85	681.73	275.17
Interest	1038.29	452.72	1478.86	699.25
Profit/(Loss) before Tax	22.50	77.44	(517.85)	(772.36)
Less:
Provision for Taxation	7.86	9.64	22.51	(12.14)
Profit/(Loss) after Taxation	14.64	67.80	(540.36)	(760.22)
Transferred to Minority Interest	Nil	Nil	37.85	31.34
Profit/(Loss) for the year	14.64	67.80	(502.51)	(728.88)
Add:
Profit brought forward from the previous year	(775.32)	(843.12)	(2591.25)	(1,913.86)
Available for Appropriation	(760.68)	(775.32)	(3093.76)	(2,642.74)
Appropriations:
Transfer from General Reserve	Nil	Nil	31.09	Nil
Transfer to Debenture Redemption Reserve	Nil	Nil	Nil	Nil
Transfer from Debenture Redemption Reserve	Nil	Nil	Nil	Nil
Dividend from Own Shares	Nil	Nil	Nil	Nil
Transfer from Capital Reserve	Nil	Nil	40.37	Nil
Transfer to Foreign Currency Translation Reserve	Nil	Nil	14.33	45.71
Adjustments to Minority Interest	Nil	Nil	0.09	5.64
Dividend (Proposed) Equity Shares	Nil	Nil	Nil	Nil
Tax on Dividend	Nil	Nil	Nil	Nil
Other Adjustments	Nil	Nil	(0.37)	0.14
Balance carried to Balance Sheet	(760.68)	(775.32)	(3008.25)	(2,591.25)
*Figures for the previous period have been regrouped.

The year under review is an eighteen (18) months period commencing from 1^st October, 2014 and ending on 31^st March, 2016.

During the period under review the Turnover of the Company on a standalone basis stood at Rs. 6,077 Crores, as compared to Rs. 2,909 crores during the previous 9 month period ended 30^th September, 2014. The Company posted a Net Profit after Tax of Rs. 14.64 Crores during the period ended 31^st March, 2016, as against a Net profit after Tax of Rs. 67.80 Crores during the previous period ended 30^th September, 2014.

On a Consolidated basis, the Turnover of Gammon Group during the period under review stood at Rs. 7,949 Crores as compared to Rs. 3,763 Crores for the previous 9 month period ended 30^th September, 2014. The Group posted a Net Loss after Tax of Rs. 502.51 Crores during the period ended 31^st March, 2016, as against a Net Loss after Tax of Rs. 775.32 Crores during the previous 9 month period ended 30^th September, 2014.

The overall slowdown in the construction industry over the past few years has greatly impacted the Company''s performance. The construction industry in India continues to be plagued by inadequate capital, slow and delayed projects, sticky receivables, lack of proper dispute resolution mechanism, slow moving or stalled projects, bureaucratic delays in awarding projects, delays in land acquisition, higher working capital cycles, highly leveraged balance sheets, policy indecisiveness of the previous government which has adversely affected the construction industry. Almost all the companies in the construction industry have been affected by the slow-down.

The Company has been continuously growing in the past, but due to elongated recessionary pressures after the slowdown in global and Indian economy post FY 2008, the Company has been experiencing reduction in revenues and negative growth in Net Profit. However inspite of the slow down the Company has posted a Net Profit of Rs. 14.64 Crores during the financial year (18 months) ended 31^st March, 2016.

The major reasons for the inadequate profits are primarily delay in receiving payments from clients in respect of completed jobs thereby resulting in liquidity crisis leading to increased debt and subsequently higher interest costs which have eroded the profits, delays in project execution primarily due to delay in getting approvals from various authorities and non availability of timely finances, slowdown in the construction industry and aggressive bidding resulting in reduced order booking, increase in outstanding receivables due to non settlement of legitimate claims for works completed, decline in revenues and operating margins, delayed and sticky receivables, delays in land acquisition, approval of design etc. by client, scarcity in availability of labour & materials and other operational issues. The working capital cycle of the Company was also stretched due to non-achievement of milestones and elongated recovery of receivables. Also expansion in the overseas operations in the previous years and slowdown in the European economies largely increased the interest burden on the Company.

The Company has been focusing on realizing long pending receivables, arbitration awards and retention moneys. The Company has been successful in recovering certain arbitration claims. The Company is also concentrating on efficient completion and execution of existing projects and has also successfully completed several stalled projects. The receivables from these completed projects are expected to be received in the current financial year. The Company has also been optimizing working capital and establishment costs and is concentrating on faster project execution and priorities have been set with improved systems. The Company is also focusing on reinforcing job selection filters and procedures to ensure positive cash flows and generate quality EBIDTA margins with higher bottom line contribution. Moreover, some prolonged job-related issues are being addressed with speed to close them at the earliest. The Company continues to negotiate with vendors for settlement, improved commercial terms and better credit facility and is in process of arranging additional working capital finance to improve short term liquidity position. The Company is evaluating and exploring various courses of action for raising funds for its operations, including options for strategic restructuring.

The Company has undertaken several measures for re-structuring the Company''s businesses with a view to attract strategic investors, reduce debt levels, derisk the businesses to make them more sustainable and ensure its growth in the interests of all stakeholders. The Company is also taking efforts for disposing of its non-core assets to ensure liquidity in the system.

The Company has outstanding arbitration claims of more than Rs. 5,000 Crores as on 31^st March, 2016 and is focusing on recovering these claims. The Company also hopes to recover retention moneys currently outstanding with the clients. Recovery of these long outstanding claims and receivables will ease liquidity pressure.

Also with the various restructuring exercises presently being undertaken by the Company, the operations will be streamlined. As specified above the Company''s performance has been greatly affected by external factors. The Company hopes that the various initiatives taken by the present government in reviving the infrastructure and construction sector will give a boost to the Company''s efforts in improving its performance. In our efforts to re-structure the business and its operations the Company''s lenders have been extending their support. The order book of the Company as on 31^st March, 2016 was Rs. 11,000 Crores.

STRATEGIC DEBT RESTRUCTURING ("SDR")

During the FY 2012 and FY 2013, the Company''s financial performance suffered on account of slowdown in the economy, delay in award of new projects and project execution delays. The working capital cycle of the Company was also stretched due to non-achievement of milestones and elongated recovery of receivables. Further the Company had also invested in overseas subsidiaries and non-core assets by way of loans and advances or equity. The subdued market conditions could not yield the desired returns on overseas investments and the interest cost on acquisitions added to the Company''s financial stress . As a consequence the Company faced difficulties in meeting its obligations to the lenders and referred itself under the aegis of Corporate Debt Restructuring ("CDR") Cell for restructuring of its debt in March, 2013. The final CDR package was approved at the CDR EG meeting held on June 24, 2013. The Master Restructuring Agreement pursuant to the package was signed on September 24, 2013.

However the mounting interest costs and the liquidity crunch continued due to industry wide issues viz;

- Bottlenecks on new infrastructure projects, postponement of investments and new projects in the industrial sector (as Indian manufacturing experienced a slowdown) contributed significantly to this lack of growth.

- Policy paralysis, delayed clearances and poor financial health of infrastructure companies have impacted investments in key infrastructure sectors like roads and power.

- Major construction players are experiencing liquidity crunch because of longer recovery timeframes from their customers and tightening funding norms being employed by institutional financiers.

- Increasing labour costs, commodity prices and aggressive tendering have put pressure on company margins over the past 2-3 years.

- Delays in completion of projects due to delay in approvals, issues relating to land acquisition and changes in project scope.

- Delays in claims settlement/payment across different Government employers has resulted into severe liquidity issues for the EPC Companies.

The Company''s project execution was severely impacted thereby resulting in the risk of devolvement of bank guarantees by clients, further deepening the liquidity crisis. Also monetization of assets as envisaged under the CDR package is slow. Due to the severe cash crunch and inability of the existing promoters to infuse additional funds the Lenders invoked Strategic Debt Restructuring ("SDR") in the Company pursuant to RBI Circular dated 8^th June, 2015, with reference date as 17^th November, 2015. On the invocation of SDR, the lenders converted part of their outstanding loan and interest aggregating to Rs. 277.12 Crores into 233,072,637 equity shares in the Company acquiring 63.07% of the total equity capital. The Company was the first to implement SDR successfully.

CORPORATE RESTRUCTURING

The severe liquidity stress exposed the Company to further delays in project execution and delays in meeting repayment obligations. A critical part of the earlier CDR scheme was monetization of various real estate / non-core assets so as to realize amounts totaling to Rs. 2000 Crores over a period of time. However, due to the slowdown in the economy both in India and overseas the Company could not monetize these assets. The Core Civil Engineering, Procurement and Construction (EPC) business and the Transmission & Distributions (''T&D'') business of the Company were being severely impacted due to the additional debt burden. Further the Company also faced difficulties in attracting strategic investors to invest in the Company.

With a view to improve the overall functioning of the Company and to ensure investment by strategic investors in core businesses to ensure their sustenance and growth, it was decided to restructure the businesses by carving out the transmission and distribution business and the Civil EPC Business together with all the assets and liabilities including the CDR Debt pertaining to each of these businesses into separate entities. The carve out will ensure the right sizing of debt in the core EPC and T&D entities allowing creation of maximum value for the existing stakeholders.

The rationale and objective of the restructuring inter-alia includes:

i. To create sector focused companies;

ii. To enable investments by strategic investor;

iii. De-risk businesses from each other;

iv. Deleverage balance sheet of the company;

v. Maintain the PQs including profitability and net worth criteria for bidding in new projects;

vi. Fulfill its debt servicing obligation as per the CDR repayment schedule;

vii. Expedite sale of non-core assets in a phased and more focused manner.

A. CARVE OUT OF THE TRANSMISSION AND DISTRIBUTION BUSINESS

The Board of Directors in its meeting held on 27^th October, 2015 approved the first phase of transfer of the transmission and distribution business viz. fixed assets pertaining to conductor manufacturing facility at Silvassa and tower fabrication facility (excluding tower testing station) situated at Deoli, Wardha together with the current assets and contracts of the T&D manufacturing division along with proportionate debt aggregating to Rs. 3580 crores )("Identified Business") to its then wholly owned subsidiary Transrail Lighting Limited ("TLL"). Accordingly a Business Transfer Agreement was entered into between the Company and Transrail Lighting Limited on 27^th October, 2015 for transfer of the Identified Business by way of a slump sale on a "Going Concern Basis" which was further amended on 12^th February, 2016 , for a consideration of Rs. 4,37,25,000 which was discharged by TLL by issue of 2,75,000/- optionally fully convertible debentures of Rs. 159/- each. The effective date of the Business Transfer is 1^st January, 2016.

Further an Investment cum Shareholders Agreement as duly approved by the Board on 27^th October, 2015 was executed with Ajanma Holdings Pvt Limited (" formerly Bilav Software Private Limited") ("Investor") pursuant to which the Investor acquired 75% of the Company''s stake in TLL for a consideration of Rs. 2,32,50,000/- and for investing balance of Rs. 47.70 Crores by the Investor in TLL, wherein the transmission and distribution business is transferred. The Slump sale and the Investment by the Investor was approved by the Lenders and also by the shareholders vide a postal ballot on 18^th December, 2015.

The Board also approved a Scheme of Arrangement between the Company ("Transferor") and TLL ("Transferee") and their respective Shareholders and Creditors for transfer of the Transmission and Distribution undertaking of the Company essentially comprising of the engineering, procurement and construction business of the Company in the power transmission and distribution sector, the tower testing facility located at Deoli, manufacturing facilities located at Baroda and Nagpur together with all the pre-qualifications, properties, assets, liabilities, debts, duties and obligations of the T&D Undertaking with appointed date as 1^st January, 2016 or such other date as may be approved by the High Court. On approval of the Scheme of Arrangement between Gammon India Limited ("GIL") and Transrail Lighting Limited ("TLL"), TLL will issue 7,25,000 equity shares of Rs. 10 each to GIL against the fair value of the T&D Undertaking. The said Scheme is subject to all necessary approvals.

Post the carve out of the transmission and distribution business into TLL as aforementioned, Gammon will continue to hold 25% of the total equity of TLL.

B. CARVE OUT OF CIVIL EPC BUSINESS

The Board in its meeting held on 21^st July, 2016 has approved the carve out of the Civil EPC business to its wholly owned subsidiary "Gammon Engineers and Contractors Private Limited" ("Gammon Engineers") in two phases i.e a part of the Civil EPC Business of the Company essentially comprising of the Civil Engineering, Procurement and Construction ("EPC") business carried on by the Company in roads, hydro-power, nuclear power, tunnels, bridges, etc including without limitation the execution capabilities in relation to the Civil EPC Business pertaining to "Identified Contracts" (including all contracts, agreements, licenses, engagements, financial instruments, commitments, other contractual arrangements and warranties there under including obligations under contracts which are surviving, relating exclusively to or in connection or forming a part of the Civil EPC Business and which are getting sub-contracted under the slump sale and which will be transferred under a proposed Scheme of Arrangement, (but excluding the Retained EPC Business)("Identified Business") along with all the assets and properties, whether tangible or intangible, rights, titles, interests, privileges, licenses and all liabilities, debts, obligations of all nature related to the Identified Business by way of a slump sale on a going concern basis with effect from 1^st July, 2016.

Accordingly a Business Transfer Agreement was executed on 21^st July, 2016 between the Company and Gammon Engineers and Contractors Private Limited. The consideration for transfer of the Civil EPC Undertaking is Rs. 8,05,00,000 (Rupees Eight Crores Five Lakhs only) which will be discharged by Gammon Engineers by issue of 23,00,000 equity shares at a price of Rs. 35/- per share.

The Board in its meeting held on 21^st July, 2016 also approved investment by GP Group of Thailand ("Investor") into the Company''s Civil EPC Business wherein GP Group will invest in Gammon Engineers and Contractors Private Limited where the EPC Business is proposed to be transferred. Accordingly an Investment cum Shareholders Agreement was executed between the Company, Investor and Gammon Engineers on 21^st July, 2016 pursuant to which G P Group will invest Rs. 150 Crores into Gammon Engineers in different tranches.

The Board in its meeting held on 21^st July, 2016 also approved a Scheme of Arrangement between the Company ("Transferor Company") and Gammon Engineers and Contractors Private Limited ("Transferee Company") for transfer and vesting of the balance of the Company''s Civil EPC Undertaking (as defined in the Scheme) viz. Civil Engineering, Procurement and Construction business carried on by the Company in roads, hydro-power, nuclear power, tunnels, bridges, etc. as a going concern, which shall include all the pre-qualifications, properties, rights and powers and all debts, liabilities, duties and obligations comprised in/and pertaining to the Civil EPC business (as defined in the Scheme) into Gammon Engineers against issue and allotment of equity shares by Gammon Engineers to GIL. The appointed date of the Scheme is 1^st July, 2016 or such other date as may be approved by the High Court. On approval of the Scheme by the Court, Gammon Engineers will issue 1,18,85,714 fully paid up equity shares of Rs. 10 each to GIL against the fair value of the Civil EPC Undertaking.

The EPC Carve out through slump sale and the Scheme of Arrangement is subject to the approval of the members, lenders ,the Court and all other approvals.

Post the restructuring, the Company will continue to hold 25% equity in Gammon Engineers and Contractors Private Limited.

GIL will continue to execute the Civil EPC projects it has retained and will monetize its non-core assets comprising of receivables, loans and advances, real estate, investments in subsidiaries and claims .The Company is looking to develop the sizeable land bank as also monetize its various assets and investments to repay its balance debts while exploring various business opportunities in the infrastructure sector. The Company expects that post carve out, the businesses will be viable and have potential for growth. Further almost 80% of the Lenders exposure in the Company will be transferred to the new entities post the carve out, thereby ensuring stability of the Company.

INFRASTRUCTURE DEVELOPMENT BUSINESS

Gammon Infrastructure Projects Limited (GIPL), the Company''s subsidiary is a pan India BOT infrastructure project development company and is engaged in development of infrastructure projects in core sectors such as Roads, Ports, and Power through a multi-segment footprint, significant geographical spread, vast repository of industry experience and technical expertise. GIPL also provide services in other areas of project development such as operations & maintenance and project advisory services.

GIPL posted a total income of Rs. 137,509.79 Lacs on a consolidated basis (Rs. 40,847.77 Lacs on a standalone basis) for the 18 month period ended 31^st March, 2016. It posted a Net Loss of Rs. 1,693.72 lacs on a consolidated basis (Net Profit of Rs. 5,815.38 lacs on a standalone basis) as on 31^st March, 2016.

GIPL Projects Commissioned and Under Operation

- Vizag Seaport Private Limited (VSPL)

- Rajahmundry Godavari Bridge Limited (RGBL)

- Pravara Renewable Energy Limited (PREL)

Projects Under Construction

- Patna Highway Projects Limited (PHPL)

- Indira ContainerTerminal Private Limited (ICTPL)

- 66 MW Rangit II Hydro Electric Project (SHPVL)

- Vijayawada Gundugolanu Road Project Private Limited (VGRPPL)

Projects Under Development

- Sidhi Singrauli Road Project Limited (SSRPL)

- Youngthang PowerVentures Limited (YPVL)

- Tidong Hydro Power Limited (THPL)

Name of the Company (SPV)	Location	Client	Project Length	Revenue Model	Annual Annuity (Rs. in Crore)	Concession Period	Project Cost (Rs. in Crore)	Project Stage
Patna Highway Projects Limited	Bihar	NHAI	63.17 Kms	Annuity	189.2	15 years	1284	Under Construction
Rajahmundry Godavari Bridge Limited	Andhra Pradesh	APRDC	14.49 Kms	Toll	NA	25 years	1071	Operational
Vijayawada Gundugolanu Road Project Pvt. Ltd.	Andhra Pradesh	NHAI	103.59 Kms	Toll	*57.57 (premium payment)	30 years	2,085	#Under Construction
Sidhi Singrauli Road Project Limited	Madhya Pradesh	MPRDC	102.6 Kms	Toll	NA	30 years	1,094	Under Construction

Vizag Seaport Private Limited	Andhra Pradesh	VPT	9 MMTPA Capacity	Rev Share 17.11%	NA	30 years	345	Operational
Indira Container Terminal Private Limited	Maharashtra	MBPT	1.2 Million TEUs Capacity	Rev Share 35.064%	NA	30 years	1,233	Under Construction (trial run been carried out)
Pravara Renewable Energy Limited	Maharashtra	Sahakari Sakhar Karkhana (PDWKSKL)	30 MW Capacity	Sale of power, steam to client; surplus power to MSEDCL	NA	25 years post COD	274	Operational
Sikkim Hydro Power Ventures Limited	Sikkim	Energy & Power Dept. of Govt. of Sikkim	66 MW Capacity	IPP	NA	35 years post COD	496	Under Construction

incremental at 5% p.a.

#The project SPV has commenced tolling on the 4 lanes &4to6 laning works are under progress.

DIVESTMENT BY GIPL

GIPL signed a Share Purchase Agreement on 27^th August, 2015 for divestment of nine project companies (6 road projects and 3 power projects) to a consortium comprising funds managed by Brookfield Asset Management and its affiliates ("Brookfield") and Core Infrastructure India Fund Pte Ltd ("CIIF") (collectively the "Consortium") under the name BIF India Holdings Pte Ltd. ("BIF").

Key terms of the divestment transaction are as follows:

a. The consideration towards equity comprises of cash consideration of approx. Rs. 192 Crore and a waiver of advances to GIPL of Rs. 285 Crore;

b. Repayment of inter corporate deposits of approx. Rs. 371 Crore given by GIPL to the divested Project SPVs;

c. Aggregate cash inflows into GIPL on account of divestment would be approx. Rs. 563 Crore subject to closing adjustments;

d. Additional cash inflow of up to Rs. 100 Crore may be realized by GIPL upon crystallization of certain milestones in future;

e. Outstanding liabilities to the tune of Rs. 87 Crore will stand reduced and 75% of past contingent receivable may also be received by GIPL when realized.

The divestment transaction was segregated in two tranches of which the first tranche comprising six project companies out of the total nine project companies has been successfully completed with BIF India Holdings PTE. Ltd. on 29.02.2016. The second tranche of the divestment transaction is yet to be concluded subject to certain condition precedents being fulfilled. Of the six Companies which BIF acquired, five were operational and one was under development. Post the transaction the consolidated debt of GIPL stands reduced from Rs. 3,947 Crore to Rs. 2,229 Crore which is expected to improve the gearing at a consolidated level and make GIPL net cash surplus.

The Board of GIPL on 27^th August, 2016 resolved to divest by way of sale, transfer or disposal of part of the equity shareholding held by GIPL in Vizag Seaport Private Limited (VSPL), subsidiary of the Company, to the extent of 50% of Paid up Equity Share Capital of VSPL, to Lastin Infrastructure Projects Limited (''Buyer''), being Affiliate of Lastin Holdings Limited for an aggregate consideration of Rs. 62.50 Crores and upon such other terms and conditions, if any, mutually agreed to by and between GIPL and the said Buyer whereby GIPL would continue to hold balance 24% equity shareholding in VSPL. However, the deal is yet to be consummated.

OVERSEAS SUBSIDIARIES

GROUP SOFINTER

Group Sofinters'' consolidated financial statements include the financial statements of Sofinter S.p.A (the parent company) and those of the companies over which it exercises control directly or indirectly, from the date on which control was acquired up to the date on which it ceases. The eighteen (18) month period up to 31^st March, 2016 was characterized by a significant upswing in the economic performance of the Group over the previous period largely on account of a significantly higher backlog in AC Boilers S.p.A with signing of three large contracts in Egypt viz South Helwan, Shabab and West Damietta for over Euro 500 Million. Additionally negotiations with the Unions were successfully concluded due to which the manufacturing costs especially in Gioia del colle were reduced. Also global procurement processes were fully implemented leading to cost saving in overall procurement. Consequently, Group Revenues improved to Euro 538 Million during this period vs Euro 127 Million recorded in the 9 months of the previous year. The EBIT was however negative at Euro 20.20 Million vs Negative Euro 20.39 Million in the previous 9 months. This is however due to an extraordinary write off of Euro 21.46 Million in the last quarter of 2014 and otherwise would have significantly been positive during this period.

At the end of March, 2016, the order backlog of the Group was approx. Euro 550 Million which is a backlog of one and half years. In addition, the Group consolidated upon its new operating model with integration of some of the business functions with the aim to exploit synergies, bring in flexibility within the organization to deal with fluctuating volumes and improve cost competitiveness, given the constantly changing market dynamics. The model also featured a time bound relocation of production activities to the low cost countries including the Group''s facilities in Romania and other such low cost but quality conscious countries by gradually reducing the production plant near Rome. The impact of all these initiatives have started in 2015 and will be fully realized by 2018.

The Macchi Division engaged in the manufacture of industrial boilers mainly for the oil, gas and petrochemical industry has consolidated its presence as envisaged in the previous year in the shale gas producing countries led by the United States while also growing in its traditional markets. During the 18 month period 31^st March, 2016, the Macchi Order intake remained at 250 Million. The sluggish demand for Macchi equipment was largely on account of low crude prices which ultimately impacted the Capex in oil & gas segment which is one of the largest end users of the same.

AC Boilers S.p.A. engaged in EPC of utility power plants had robust order booking during the period especially from the Egypt Market. This helped the Company to clock significantly improved economic results. To overcome fluctuating order bookings and its consequential impact, the Company continued to consolidate on the streamlining measures undertaken by it since 2014 leading to lower per hour costs. The pipeline orders are in excess of Euro 1.5 Billion and it is expected that during 2016 this would translate into new orders of about Euro 250 Million.

Itea S.p.A. the R&D company engaged in flameless pressurized oxycombustion technology had, as reported last year, consolidated its technology leadership position in applications using industrial waste, municipal solid waste and low grade coal and is set to roll these out commercially in the coming year.

Europower S.p.A. which is engaged in the EPC of waste-to-energy plants and their operation and maintenance has successfully ventured outside its traditional market in Italy to neighboring countries in the region. The company continues to improve its revenues and profitability and has an order book of approximately Euro 56 Million.

Franco Tosi Meccanica S.p.A. (In Extraordinary Administration)

The Commissioner in charge of selling the operating business of the Company and thereafter the non-core assets has entered into an Agreement to transfer the operating business to Bruno Presezzi S.p.A in August, 2015, through a bidding process. Consequent upon the disposal, the new owner has returned all the live Bank Guarantees posted by the Company against the Corporate Guarantee of Gammon and taken over the operational projects in Congo. The projects in Nicaragua did not get transferred under the procedure resulting in the devolvement of Euro 17.8 Million Bank guarantees posted by the Company against the Corporate Guarantee of Gammon. With this transfer complete and operational in all respects the Commissioner has obtained the second phase of disposing off the non-core assets of the Company. These comprise primarily appx 60 acres of land in Leganano, Milan and some equipments. Considering the quantum of these assets and the present market situation for disposal of property in Italy no time frame for the sale of the same is fixed. As and when these are sold the proceeds thereof shall be utilized to pay the creditors in order of ranking and the amount, if any remaining after this payment shall be disbursed to the shareholders.

No financial statements of the Company for the year ending December, 2015, are prepared. However a statement of Assets and Liabilities prepared in mid 2015 prior to disposal of the operating business was received from the Commissioner in terms of the procedure. No further updates to this document are available as on the date of this Report.

Campo Puma Oriente S.A.

The 11 operational wells during the eighteen months period ended 31^st March, 2016 were producing an average of 750 barrels of oil per day at a per barrel service fee of $21.50 approx. It was programmed to increase the flow above 2000 barrels during 2014/2015 with timely interventions and enhanced recovery techniques including water injection, acid stimulation artificial lift etc. which entailed capex from both partners as also an upward revision in service fee to approximately $29 per barrel. However, due to the stringent conditions imposed under the CDR on Gammon, the entire work program has been put on hold. Meanwhile, the well pressures continued to decline and the average monthly production in the first quarter of 2016 is 700 barrels. We are in the process of identifying a strategic partner to remedy the situation apart from pursuing complete divestment of the asset.

SAE POWERLINES, ITALY

SAE Power lines Milan Italy, an international recognized brand in the T&D market founded in 1926, has progressed positively in the restructuring path during the period. We believe that SAE could be seen again as a further point of strength for your Company with its Engineering and Project Management capabilities, its presence in the T&D market particularly in Africa and, last but not least, its remarkable heritage. SAE is currently executing Transmission line projects in Mozambique, Tanzania, Ghana, Togo and Benin. Current order backlog of SAE is approximately Rs. 300 Cores.

2. DIVIDEND

Though the Company has earned profits during the period ended 31^st March, 2016, since it is under a Corporate Debt Restructuring ("CDR") the Directors have not recommended any dividend as it is necessary to conserve resources for meeting payment obligations to lenders .

3. RESERVES

No amount was transferred to the reserves for the period ended 31^st March, 2016.

4. FINANCE

During the period under review the Company did not raise any capital from the capital markets either by way of issue of equity shares, ADR/GDR or any debt by way of Debentures. The Company continued to get financial assistance and support from its CDR lenders within the overall facilities sanctioned under the CDR package to meet the working capital requirements.

Further pursuant to a Novation Agreement dated 26^th February, 2016 executed with the lenders, debts aggregating to Rs. 3580 Crores (Rs. 230 Crores Fund Based and Rs. 3350 Crores of non fund based) are transferred to the Company''s associate, Transrail Lighting Limited ("TLL") as part of the slump sale vide a Business Transfer Agreement ("BTA") dated 27^th October, 2015 read with First Amendment to BTA dated 12^th February, 2016 entered into between the Company and TLL for transfer of part of the Transmission and Distribution undertaking of the Company effective from 1^st January, 2016. The CDR Debts of the Company stand reduced to the extent of the debts transferred as part of the aforementioned slump sale.

The Joint Lenders comprising of the CDR lenders and DBS Bank Limited, invoked Strategic Debt Restructuring ("SDR") pursuant to RBI circular dated 8^th June, 2015 with reference date as 17^th November, 2015. Pursuant to the invocation of SDR, 16 lenders converted part of their outstanding loan and interest aggregating to Rs. 277.12 Crores into 233,072,637 equity shares of the face value of Rs. 2/- each at a price of Rs. 11.89 per equity share (including premium of Rs. 9.89 per equity share) to acquire 63.07 % of the total equity capital of the Company.

Sr. No	Name of Lenders/ Banks	No. of Shares allotted under SDR	%age to total capital post conversion	Amount of loan converted along with interest into equity shares of the Company (Rs. in Crore)
1.	ICICI Bank	39,696,547	10.74	47.20
2.	Punjab National Bank	24,209,101	6.55	28.78
3.	Allahabad Bank	19,582,216	5.30	23.28
4.	Bank of Baroda	22,104,507	5.98	26.28
5.	Syndicate Bank	22,696,508	6.14	26.99
6.	Oriental Bank of Commerce	12,389,240	3.35	14.73
7.	Union Bank Of India	5,803,088	1.57	6.90
8.	Bank of Maharashtra	3,635,106	0.98	4.32
9.	Central Bank of India	4,39,017	0.12	0.52
10.	Indian Bank	3,92,490	0.11	0.47
11.	Karnataka Bank	2,48,264	0.07	0.30
12.	IDBI Bank	1,40,53,827	3.80	16.71
13.	UCO Bank	45,21,203	1.22	5.38
14.	Canara Bank	5,28,14,769	14.29	62.80
15.	United Bank of India	63,62,258	1.72	7.56
16.	DBS Bank Limited	41,24,496	1.12	4.90
	Total	23,30,72,637	63.07	277.12

Pursuant to the above allotment the paid up capital of the Company is Rs. 737,694,610 divided into 368,847,305 equity shares of Rs. 2/- each.

5. DEBENTURES

The Company in its Extra-Ordinary General Meeting held on 26^th May, 2015 had approved the issue of 100 Unsecured Zero Coupon Compulsory Convertible Debentures (Zero Coupon "CCDs") of face value of Rs. 10,000,000/- (Rupees one crore) each aggregating to Rs. 100 crores to the Promoter, Promoter group and Affiliate of promoter on private placement basis against the "promoter contribution" of Rs. 100 crores made by them in the Company''s CDR package. The Zero Coupon CCDs were convertible into 395,256 equity shares of Rs. 2/- each at a price of Rs. 25.30 (including Rs. 23.30/- premium). However no allotment has been made to the promoters since BSE has not granted its in principle approval for issue and has directed the Company to change the "Relevant Date" with reference to the determination of price of the zero coupon CCD''s.

During the period under review Non Convertible Debentures ("NCD"S) held by the lenders aggregating to Rs. 10.57 Crores have been novated/ transferred as part of the CDR debt pursuant to the Novation Agreement dated 26^th February, 2016 entered into between the Company, the lenders and Transrail Lighting Limited, such debt being notated as part of the slump sale of part of the Transmission and Distribution Undertaking.

6. PUBLIC DEPOSITS

The Company did not invite or accept deposits from public during the year under review.

7. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

During the 18 (eighteen) months period ended 31^st March, 2016, the Company has transferred unclaimed dividend for the financial year 2007 - 08 amounting to Rs. 228,685/- to the Investor Education and Protection Fund (IEPF) in compliance of Section 125 of the Companies Act, 2013, which was due and payable and remained unclaimed and unpaid for a period exceeding seven years from its due date.

8. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

As mentioned above, the Board of Directors in its meeting held on 21^st July, 2016 approved the carve out of the Civil Engineering and Procurement ("EPC") Undertaking of the Company essentially comprising of the Civil Engineering, Procurement and Construction business carried on by the Company in roads, hydro-power, nuclear power, tunnels, bridges, etc. together with all the prequalification’s, properties, assets, liabilities, debts, duties and obligations of the Civil EPC Undertaking to its wholly owned subsidiary Gammon Engineers and Contractors Private Limited through a combination of "Slump Sale" and a Scheme of Arrangement. Details of the same have been given under the heading "Strategic Debt Restructuring and Corporate Restructuring" above.

Turnover of the EPC Division to be carved out and as percentage to the Total Turnover as on 31^st March, 2016:

Particulars	Amt (Rs. In crores)	%age to Total Turnover as on 31st March, 2016
EPC Turnover -BTA	657.18	11%
EPC Turnover -Scheme	3,005.12	49%
Total Turnover	6,147.00

9. CHANGE IN NATURE OF BUSINESS

Post completion of restructuring of business as mentioned above, the Company, will continue to carry on execution of it''s retained

Civil EPC projects, bidding for newer projects, monetizing it''s investments and real estate assets.

10.DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

There are no significant and material orders passed by the regulators or courts or Tribunals which will impact the going concern status and company''s operations in future.

11.DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134 (5) of the Companies Act, 2013 ("hereinafter referred to as the "Act"), your

Directors confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) the selected accounting policies were applied consistently and judgments and estimates were made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2016 and of the Profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for 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 frauds and other irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) t he internal financial controls have been laid down to be followed by the Company and such controls are adequate and are operating effectively;

f) proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems are adequate and are operating effectively.

12.EXTRACT OF ANNUAL RETURN

The extract of Annual Return as per Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 is annexed to the report as Annexure "A" in Form MGT-9.

13.SUBSIDIARY / ASSOCIATES AND JOINT VENTURE COMPANIES

During the period under review the following changes have taken place with respect to the Company''s subsidiaries;

1 . Transrail Lighting Limited - Ceased to be a subsidiary of the Company effective from 26^th February, 2016 pursuant to sale of 75% of its holding to Ajanma Holdings Private Limited (formerly "Bilav Software Private Limited") in terms of a Shareholders cum Investment Agreement dated 27^th October, 2015.

2. The following subsidiaries (SPVs of Gammon Infrastructure Projects Ltd [GIPL]- subsidiary of the Company) ceased to be subsidiaries effective from 29^th February, 2016, pursuant to divestment by GIPL through sale of its shareholding in these SPV''s to BIF Holdings Pte. Ltd:

S. No	Name of the step-down subsidiary
1	Aparna Infraenergy India Private Limited
2	Andhra Expressway Limited
3	Rajahmundry Expressway Limited
4	Kosi Bridge Infrastructure Company Limited
5	Gorakhpur Infrastructure Company Limited
6	Mumbai Nasik Expressway Limited

3. The following SPV''s of Gammon Infrastructure Projects Ltd [GIPL, a subsidiary of the Company] have ceased to be subsidiaries of the Company effective from 31^st March, 2016:

S. No	Name of the step-down subsidiary
1	Patna Buxar Highways Limited
2	Mormugao Terminal Limited
3	Patliputra Highway Limited

4. Gammon Engineers and Contractors Private Limited ("Formerly Nikias Metals Private Limited ") has become a step down wholly owned subsidiary on 11^th July, 2016.

The Company has 57 subsidiaries including step-down subsidiaries, 5 Associates and 4 Joint venture companies as on 31^st March, 2016.

Report on the financial performance of each of the subsidiaries, joint ventures and associate companies is included in the consolidated financial statements of your Company in prescribed Form AOC-1 and is also set out in Annexure "B" to this Report.

14 CONSOLIDATED FINANCIAL STATEMENTS

As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Consolidated Financial Statements of the Company and its subsidiaries form part of the Annual Report. Pursuant to Section 129 (3) of the Act, a Statement containing the salient features of the financial statements of the subsidiary companies is attached to the said financial statements in Form AOC-

1. The said financial statements and detailed information of the subsidiary companies shall be made available by the Company to the shareholders on request. These financial statements will also be kept open for inspection by any member at the Registered Office of the Company and the subsidiary companies.

Pursuant to Section 136 of the Companies Act, 2013, the financial statements of the Company, consolidated financial statements alongwith all relevant documents and separate audited accounts in respect of the subsidiaries are available on the Company''s website.

15.DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Abhijit Rajan - Chairman and Managing Director, whose term of office expired on 16^th May, 2016 was re-appointed as the Chairman and Managing Director of the Company for a period of 3 (three) years effective from 17^th May, 2016 by the Board of Directors of the Company on the recommendation of the Nomination and Remuneration Committee in their respective meetings held on 13^th May, 2016, subject to the approval of the Central Government and all other necessary approvals.

Pursuant to the provisions of Section 203 of the Companies Act, 2013, the following personnel of the Company are designated as "Key Managerial Personnel"

Sr.No	Name of the Key Managerial Personnel	Designation of Key Managerial Personnel
1.	Mr.Abhijit Rajan	Chairman and Managing Director
2.	Mr. Ajit B.Desai	Executive Director and Chief Executive Officer
3.	Mr. Raju Bhansali	Executive Director - International Operations
4	Mr. Digambar Bagde	Deputy Managing Director- Transmission and Distribution Business
5.	Mr. Vardhan Dharkar	President Finance & Chief Financial Officer
6.	Ms. Gita G. Bade	Company Secretary

Pursuant to Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr.Ajit Desai - Executive Director and Chief Executive Officer retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

16.AUDITORS

(A) STATUTORY AUDITORS

The members had at the 92^nd Annual General Meeting (AGM) held on 30^th June, 2014, approved the appointment of:

(a) M/s. Natvarlal Vepari & Co., Chartered Accountants, Firm Registration No. 106971W, Statutory Auditors of the Company to hold office for a period of 3 (three) years from the conclusion of the 92^nd AGM until the conclusion of the AGM to be held for the financial year 2016-17.

(b) M/s. Vinod Modi & Associates, Chartered Accountants, Firm Registration No. 111515W and M/s. M. G. Shah & Associates, Chartered Accountants, Firm Registration No. 112561W, as the Joint Branch Auditors of ''Gammon India Limited - Transmission & Distribution Business to hold office from the conclusion of that AGM until the conclusion of the AGM to be held for the financial year 2018-19.

Pursuant to Rule 3(7) of the Companies (Audit and Auditors) Rules, 2014, the aforesaid appointments need to be ratified by the members at the forthcoming Annual General Meeting.

Accordingly, (i) the appointment of M/s. Natvarlal Vepari & Co., Chartered Accountants, (Firm Registration No. 106971W) as the Statutory Auditors of the Company to hold office from the conclusion of this meeting until the conclusion of the Annual General Meeting to be held for the financial year 2016-17 and (ii) the appointment of M/s. Vinod Modi & Associates, Chartered Accountants, Firm Registration No. 111515W and M/s. M. G. Shah & Associates, Chartered Accountants, Firm Registration no. 112561W, as the Joint Branch Auditors of ''Gammon India Limited -Transmission & Distribution Business, to hold office from the conclusion of this meeting until the conclusion of the Annual General Meeting to be held for the financial year 2018-19 repectively, are sought to be ratified by members at the forthcoming Annual Genral Meeting.

As required under Section 139 of the Companies Act, 2013, certificates have been received from (i) M/s. Natvarlal Vepari & Co., Chartered Accountants, Statutory Auditors (ii) M/s. Vinod Modi & Associates, Chartered Accountants and (iii) M/s. M. G. Shah & Associates, Chartered Accountants, to the effect that their respective appointments, if made, will be within the prescribed limits under Section 141 of the Companies Act, 2013.

(B) COST AUDITOR

In accordance with the provisions of Section 148 of the Companies Act, 2013, the Board of Directors of the Company in its meeting held in December,2014 has appointed Mr. R. Srinivasaraghavan and Co. as the Cost Auditor for auditing the cost accounting records of (a) Civil Engineering, Procurement and Construction business (b) Transmission and Distribution business of the Company for the 18 months period ended 31^st March, 2016 on a remuneration of Rs. 2.25 lakhs.

Mr. R. Srinivasaraghavan was also appointed as the Cost Auditor for auditing the Company''s cost audit records of the aforementioned business for the Financial Year 2016-17, by the Board in its meeting held on 20^st July, 2016 on a remuneration of Rs. 2.5 lakhs.

In terms of the provisions of Section 148 (3) of the Companies Act, 2013 read with Rule 14 (a)(ii) of the Companies (Audit and Auditors) Rules 2014,the remuneration of the Cost Auditor for the aforementioned periods is sought to be ratified by the members at the ensuing 94^th Annual General Meeting.

(C) SECRETARIAL AUDITOR & OBSERVATIONS

M/s Pramod Shah & Associates, Practicing Company Secretaries were appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the 18 months period ended 31^st March, 2016 in accordance with the provisions of Section 204 of the Companies Act, 2013. The Secretarial Auditors Report is annexed as Annexure "C" to this report.

The Secretarial Audit Report confirms that the Company has generally complied with the provisions of the Act, Rules, Regulations and Guidelines applicable to it and does not contain any adverse remark or observation.

17.REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

A Report on Corporate Governance and Management Discussion and Analysis for the period ended 31^st March, 2016, together with certificate from Mr. V. V Chakradeo & Co., Practising Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.

18.BOARDS'' EXPLANATION ON AUDITORS QUALIFICATION ON FINANCIAL STATEMENTS

The Board''s explanation on the Statutory Auditor''s qualifications in their Auditors Report both on the Standalone and Consolidated Financial Statements is annexed to this report as Annexure “D”.

Members attention is drawn to "Emphasis of Matter" stated in the Auditor''s Report dated 17^th June, 2016 on the Standalone Financial Statements and in the Audit Report dated 20^th July, 2016 on the Consolidated Financial Statements for the 18 (Eighteen) months period ended 31^st March, 2016. The Directors would like to state that the said matters are for the attention of members only and have been explained in detail in the relevant notes to accounts as stated therein and hence require no separate clarification.

19.DECLARATION BY THE INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013. The Declarations received from all the Independent Directors were taken on record by the Board of Directors.

20.NOMINATION AND REMUNERATION POLICY FOR THE DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

The Nomination and Remuneration Committee of the Company formulated a Nomination and Remuneration Policy in terms of Section 178 of the Companies Act, 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 laying down inter-alia, the criteria for appointment and payment of remuneration to Directors, Key Managerial Personnel and Senior Employees of the Company . In line with this ,the Board adopted the Nomination and Remuneration Policy which is annexed in Annexure - "E".

21.COMMITTEES OF DIRECTORS

The Board has appointed mandatory and non mandatory Committees with specific powers in specific areas with delegated authority. The following Committees of the Board have been formed which function in accordance with the powers delegated to them:

1 . Audit Committee

2. Stakeholders Relationship Committee

3. Nomination and Remuneration Committee

4. Corporate Social Responsibility Committee

5. Securities Allotment Committee

6. Review Committee of Independent Directors

Details of the composition of each of the committees, number of meetings held and all other relevant details have been given in the Corporate Governance Report which forms part of the Annual Report.

22.FAMILIARIZATION PROGRAM FOR THE INDEPENDENT DIRECTORS

The Company has in place a system to familiarize its Independent Directors with the operations of the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. No new independent director was appointed during the period.

All the Independent Directors are updated about the ongoing events and developments relating to the Company from time to time either through presentations at board or committee meetings or through in-house journals.

The Independent Directors also have access to any information relating to the Company, whenever they so request. In addition presentations are made to the Board and its committees where independent directors get an opportunity to interact with members of the senior management. The Independent Directors also have interaction with the Statutory Auditors, Internal Auditors, and External Advisors, if any, appointed by the Company at the meetings.

Several sessions and programs were conducted for the Independent Directors where the senior management team of the Company updated the Directors on the industry scenario, project updates and systems and processes within the Company. Details of the familiarization programmes are available on the Company''s website on www.gammonindia.com under the Investor Section.

23.NUMBER OF MEETINGS OF THE BOARD

During the 18 (eighteen) months period ended 31^st March, 2016, sixteen (16) Board meetings were held on 5^th December, 2014, 18^th December, 2014, 11^th February, 2015, 13^th February, 2015, 27^th April,2015, 14^th May, 2015, 25^th June, 2015, 14^th August, 2015, 27^th August, 2015, 27^th October, 2015, 17^th November, 2015, 17^th December, 2015, 18^th December, 2015*, 12^th February, 2016, 23^rd March, 2016 and 31^st March, 2016.

*Adjourned meeting

24.AUDIT COMMITTEE

The Audit Committee has been formed in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The Audit Committee as on 31^st March, 2016 comprised of four Independent Directors viz (1) Mr. Chandrahas C.Dayal (Chairman) (2) Ms. Urvashi Saxena (3) Mr. Naval Choudhary and (4) Mr. Atul Kumar Shukla.

Details of the composition of the Audit Committee, number of meetings held and all relevant details have been given in the Corporate Governance Report which forms part of the Annual Report.

25. VIGIL MECHANISM

A Vigil Mechanism as per the provisions of Section 177 (9) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 has been established by adoption of "Whistle Blower Policy" for Directors and Employees to report to the management about suspected or actual frauds, unethical behaviour or violation of the Company''s code. The Whistle Blower Policy is uploaded on the company''s website at www.gammonindia.com under the Investors Section.

26.PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, investments and guarantees is provided in Notes to Standalone Financial Statements.

27.PARTICULARS OF CONTRACT/ARRANGEMENT WITH RELATED PARTIES

All contracts/arrangements/transactions entered by the Company during the period 1^st October, 2014 up to the date of this report with related parties were in the ordinary course of business and on arm''s length basis. All related party transactions are placed before the Audit Committee for its approval and duly approved by the Board. No omnibus approvals were taken during the period under review . Further all continuing related party transactions as defined under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been duly approved by the shareholders.

Information on transactions with related parties pursuant to Section 134 (3)(h) of the Act read together Rule 8(2) of the Companies (Accounts) Rules ,2014 are given in Annexure "F" in Form AOC -2 and the same forms part of this Report.

28. BOARD AND INDIVIDUAL DIRECTORS PERFORMANCE EVALUATION

As per Section 149 of the Companies Act, 2013 read with Schedule IV and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 201 5, the Independent Directors at their meetings evaluated the performance of the Non-independent Directors, the Chairman and Managing Director ("CMD") with inputs from the Non-executive Directors and of the entire Board.

A performance evaluation of each of the Independent Directors was carried out by the Board members wherein the feedback of each member was sought separately. The Board members were asked to give their feedback on the functioning, participation, contribution made by each Independent Director to the Board and Committee processes, the degree of each Independent Director''s involvement in Board and Committee decision making , communication and other attributes of each of the Independent Directors.

Post the meeting of the Independent Directors and the Boards’ evaluation of Independent Directors, the feedback received from all Directors was communicated to the Nomination and Remuneration Committee, to the CMD and to each of the Board members for improving the Board dynamics, strengthening the Board and enhancing Board''s overall performance in the challenging environment.

29.CORPORATE SOCIAL RESPONSIBILTY

The Company''s Corporate Social Responsibility (CSR) Policy as formulated by the Corporate Social Responsibility Committee and approved by the Board is annexed to this Report as Annexure "G" and is also available on the website of the Company viz; www. gammonindia.com.

The Company has not spent any amount on CSR activities during the period 1^st October, 2014 to 31^st March, 2016 since the average net profits of the Company for immediately preceding three years stood negative. Annual Report as per the Companies (Corporate Social Responsibility Policy) Rules is annexed as Annexure "H".

30.RISK MANAGEMENT POLICY

The Company has structured a Risk Management policy in terms of the SEBI (Listing Obligations and disclosure Requirements), Regulations, 2015. The risk framework covers the management''s approach and initiatives taken to mitigate a host of business and industry risks by identifying such risks and redefining processes, decision making authorities, authorization levels, risk and control documentation etc. and reviewing these periodically and details of the same are set out in the MDA which forms part of the Annual Report.

31.INTERNAL FINANCIAL CONTROLS

Your Company believes that sound internal controls and systems are related to the principle of good governance and should be exercised within a framework of proper checks and balances. Accordingly, your Company has devised and implemented such internal control systems as are required in its business processes. The Company remains committed to ensuring an effective internal control environment that provides assurance on the operations and safeguarding of its assets. The internal controls have been designed to provide assurance with regard to recording and providing reliable financial and operational information, complying with the applicable statutes, safeguarding assets, executing transactions with proper authorization and ensuring compliance with corporate policies.

Internal Audit is that function which monitors the Company''s internal control environment. Conventional and strong internal audit processes, both at the corporate and project level ensure concurrent review of the adequacy and effectiveness of internal controls across the Company and the compliance status with laid down systems, policies and procedures. In the ERP environment of the Company, authentication of IT security and rights to operate and view and periodically addressed by the internal audit team and observations are submitted to the management on a case to case basis.

The Internal Audit department is made up of professionally qualified accountants, management graduates & engineers, located at its corporate office and elsewhere in the country, who regularly review the planning and conduct of internal audits of major construction and transmission line sites, In addition to the in-house team, a firm of Chartered Accountants has been appointed to carry out internal audits of various functional areas at the Head Office.

During the year, the internal controls across the Company''s business processes were reviewed for adequacy and robustness and documentation was updated as and where required, after discussion with relevant process owners. The mitigation of procedural risks was also reviewed and a document in this behalf was tabled before the Audit Committee and the Board and duly made available to the Company''s statutory auditors.

Your Company''s Internal Audit function has a documented process which is in conformity with ISO quality standards. In addition to the traditional "post-audit", i.e. a review of historical transactions, your company has also introduced in its Internal Audit methodology a concept of "pre-audit", where a separate Centralized Certification Unit has been established to verify & certify all liabilities that are generated at the site level.

The Audit Committee consists of Independent Directors and is headed by experienced professional. The Committee meets periodically to inter-alia review the Internal Auditor''s Reports and their observations and makes recommendations for adequacy, effectiveness of Internal Controls and required remedial action, if any, to the Board of Directors for its implementation.

32.PARTICULARS OF FRAUDS,IF ANY REPORTED UNDER SUB-SECTION (12) OF SECTION 143 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT.

No frauds have been reported under sub-section (12) of Section 143 of the Companies Act, 2013.

33.PARTICULARS OF EMPLOYEES

The information required pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure "I" to this Report.

34.CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

Pursuant to the provisions of Section 1 34(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 the information on conservation of energy, technology absorption and foreign exchange earnings and outgo is enclosed as Annexure "J" to this report.

35.SEXUAL HARASSMENT

During the period under review, there were no cases filed pursuant to Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

36.ACKNOWLEDGEMENTS

The Board thanks all its valued customers and various Government, Semi-Government and Local Authorities, Suppliers and other Business Associates. Your Directors appreciate continued support from Banks and Financial Institutions and look forward to their co-operation in the future. Your Directors place on record their appreciation of the dedicated efforts put in by the employees at all levels and wish to thank the Shareholders and all other stakeholders for their unstinted support and co-operation.

For and on behalf of the

Board of Directors

Abhijit Rajan

Chairman & Managing Director

Place : Mumbai

Dated : 21^st July, 2016

---

Dec 31, 2013

The Directors have pleasure in presenting their 92nd Annual Report together with the Audited Accounts of the Company for the nine (9) months period ended 31st December, 2013.

1. FINANCIAL PERFORMANCE & OPERATIONS:

(Rs. in Crores)

Standalone Consolidated

Particulars 9 months 2012-2013* 9 months 2012-2013 ended ended 31.12.2013 31.12.2013

Profit before Other Income, Depreciation & (510.01) (21.54) (30.01) 163.79 Interest

Add:

Other Income 84.44 132.42 46.34 91.37

Less:

Depreciation 83.30 107.39 273.01 343.67

Interest 402.15 443.41 683.54 827.35

Profit/(Loss) before Tax (911.02) (439.92) (940.22) (915.86)

Less:

Provision for Taxation (145.11) 5.75 (123.29) 6.06

Profit/(Loss) after Taxation (765.91) (445.67) (816.93) (921.92)

Transferred to Minority Interest Nil Nil 55.07 72.09

Profit/(Loss) for the year (765.91) (445.67) (761.86) (849.83)

Add:

Profit brought forward from the previous year (77.21) 368.34 (1051.74) (173.80)

Available for Appropriation (843.12) (77.33) (1813.60) (1023.63)

Appropriations:

Dividend from Own Shares Nil (0.12) Nil (0.12)

Transfer to Capital Reserve Nil Nil Nil 0.70

Transfer to Foreign Currency Translation Nil Nil 120.64 23.70 Reserve

Adjustments to Minority Interest Nil Nil (2.41) 0.09

Adjustments due to change of stake in Sofinter Nil Nil (18.29) Nil S.p.A.

Dividend (Proposed) Equity Shares Nil Nil Nil 2.29

Tax on Dividend Nil Nil Nil 1.48

Other Adjustments Nil Nil 0.32 (0.04)

Balance carried to Balance Sheet (843.12) (77.21) (1913.86) (1051.74)

*Figures for the previous period have been regrouped.

The year under review is a 9 month period commencing from 1st April, 2013 and ending on 31st December, 2013. During the period, the Turnover of the Company on a Standalone basis stood at Rs. 3,279.31 Crores as compared to the Turnover of Rs. 5,197.36 Crores for the previous year. The annualized percentage decrease in the Turnover over the previous year''s Turnover amounted to 16%. The Company posted a Net Loss of Rs. 765.91 Crores during the period ended 31st December, 2013 as against a Net Loss of Rs. 445.67 Crores during the previous year ended 31st March, 2013.

On a Consolidated basis the Turnover of the Gammon group stood at Rs. 4,932.42 Crores as compared to the Turnover of Rs. 7,494.22 Crores for the previous year. The annualized percentage decrease in the Turnover over the previous year''s Turnover amounted to 12%. The group posted a Net Loss of Rs. 761.86 Crores during the period ended 31st December, 2013 as against a Net Loss of Rs. 849.83 Crores during the previous year ended 31st March, 2013.

Since the last two years the construction industry has been facing severe recessionary trends. This has created negative sentiment in the sector leading to postponement of projects, delays in decision making by government agencies and large PSU''s. Furthermore, inordinate delays in clearing of dues, adverse regulatory environment and bureaucratic apathy has caused numerous delays in execution of projects. The downturn in the Company''s operations continued unabated during the year under review. The severe liquidity crisis affected project execution. The Company continues to face difficulties in realising receivables and arbitration claims and revenues continued to remain stagnant due to delay in execution. All this led to re-assessment of jobs, higher borrowings and higher interest costs coupled with fall in margins.

Further considering the economic scenario in Europe and uncertainties prevailing there, the Company on a prudent basis and following the principal of conservatism, made provisions against risk & contingencies towards impairment of investments/ advances in its overseas companies.

Several options are being explored for overcoming the liquidity crisis such as sale of non-core assets, disposal of idle equipment, pursuing rigorous austerity measure across the Company and actively exploiting its real estate projects. The Company is also aggressively pursuing monetisation of international power and oil business and amicable settlement of non-routine collection including claims and arbitration awards. In view thereof, although there are cash losses during the period, management is confident of tiding over the tight liquidity position with support from its bankers. During the year under review the order book however has been encouraging. The Company has been awarded 17 new projects aggregating to Rs. 3,500 Crores. The order book position of the Company as on 31st December, 2013 stood at Rs. 14,000 Crores.

2. DIVIDEND:

In view of the loss incurred during the nine (9) months period under review, the Board regrets its inability to declare any dividend for the nine (9) months period ended 31st December, 2013.

3. DEPOSITORY SYSTEM:

The Company''s equity shares are compulsorily tradable in electronic form. As of 31st December, 2013, 93.05% of the Company''s total paid-up capital representing 127,027,064 equity shares is in dematerialized form. In view of the benefits offered by the Depository system, members holding shares in physical mode are advised to avail the demat facility.

4. CHANGES IN CAPITAL STRUCTURE:

During the period under review, the Company increased its Authorized Share Capital from Rs. 176 Crores to Rs. 15,047 Crores. The aforesaid increase was approved by the shareholders by way of Postal Ballot, results of which were declared on 31st December, 2013. The aforesaid increase in the share capital was necessitated to comply with the terms of the agreement with the CDR Lenders to provide for adequate equity capital in case the lenders wish to exercise their option for converting loans into equity.

5. FINANCE:

During the year under review the Company did not raise any funds from the capital markets either by way of issue of equity shares / ADR / GDR. The Company has obtained financial assistance from its consortium bankers to meet its short term working capital requirements.

During the year under review the Company did not raise any debt by way of issue of Debentures. The total amount of outstanding Non-Convertible Debentures as on date is Rs. 324 Crores.

CARE has assigned the following ratings:

Facilities Amount Ratings (Rs. in Crores)

Long Term Bank Facilities 1,300 CARE B

Long / Short Term Bank Facilities 10,400 CARE A4

Non-Convertible Debentures 500 CARE B

CP / STD 900 CARE A4

CP / STD* 100 CARE A4

*Carved out of working capital limits.

Members may recall that the Company had, in the 91st Annual Report for the financial year 2012-13, informed that the Company''s Corporate Debt Restructuring package ("CDR Package") was approved by the Corporate Debt Restructuring Empowered Group. Further, a snapshot of the Company''s CDR Package was also provided in the aforementioned Annual Report. The Company had commenced implementation of the CDR package during the period under review.

To ensure implementation of the CDR Package ICICI Bank Limited has been appointed as the Monitoring Institution and IDBI Security Trusteeship Limited ("ITSL") has been appointed as the Security Trustee to act as such on behalf of the CDR Lenders. Total Debt aggregating to Rs. 14,814.17 Crores (including both, fund based & non-fund based and additional priority loan for meeting the immediate financial needs of the Company) has been restructured.

As on the date of this Report, the following activities, as envisaged in the Company''s CDR Package have been completed:

- Master Restructuring Agreement executed with the CDR Lenders.

- The Promoters along with their affiliates have brought in an amount of Rs. 100 Crores as Promoters'' Contribution.

- Personal Guarantee executed by Mr. Abhijit Rajan - Chairman & Managing Director.

- The Promoters have pledged their shareholding in the Company in favour of ITSL.

- Nikhita Estate Developers Private Limited, a promoter group company, has executed Corporate Guarantee on behalf of the Company in favor of ITSL as collateral security.

- The Company has opened separate Trust & Retention Accounts with ICICI Bank Limited.

- The promoters of Nikhita Estate Developers Private Limited ("NEDPL''), a promoter group company, have pledged their shareholding in NEDPL in favor of ITSL.

- The Company has also created security by way of:

(i) Pledge over its shareholding in its following subsidiaries viz. Deepmala Infrastructure Private Limited (23%),

Ansaldocaldaie Boilers India Private Limited (24%), Transrail Lighting Limited (100%) and Gactel Turnkey Projects Limited (100%).

(ii) Hypothecation of the Company''s Current Assets.

(iii) Mortgage of the Company''s immovable properties in the State of Maharashtra, Gujarat, Karnataka & West Bengal.

(iv) Execution of an undertaking to create pledge over (i) the resultant shares of Metropolitan Infra housing Private Limited (the Company''s subsidiary) after signing the joint venture agreement (by whatever name called) with the developer.

6. PUBLIC DEPOSITS:

Your Company did not invite or accept deposits from public during the year under review.

7. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:

During the year under review, the Company has transferred Dividend (for the year 2005-06) amounting to Rs. 241,101/- to Investor Education and Protection Fund (IEPF), which was due and payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205C(2), of the Companies Act, 1956. Unclaimed interim dividend and the unclaimed final dividend for the year 2006-2007 is due for transfer on or before 23rd May, 2014 and 21st November, 2014 respectively.

8. EMPLOYEE STOCK OPTION SCHEME:

The erstwhile Associated Transrail Structures Limited (ATSL) had introduced an Employee Stock Option Scheme for the benefit of its employees. Pursuant to the amalgamation of ATSL with the Company, effective from 7th July, 2009, the said scheme was taken over by the Company. The said scheme expired on 28th March 2014. Details of the stock options granted under the Employee Stock Option Scheme-2007 of erstwhile ATSL are disclosed in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and set out in Annexure ''A'' of this Report.

9. SUBSIDIARY COMPANIES:

No new subsidiary was incorporated / acquired by the Company during the nine (9) months period ended 31st December, 2013. During the period under review, the name of Gammon Renewable Energy Infrastructure Limited (Company''s step down subsidiary) was changed to Gammon Renewable Energy Infrastructure Projects Limited. The Company''s step down subsidiaries viz. (a) Kasavati Renewable Energy Private Limited & (b) Dohan Renewable Energy Private Limited were struck off the Register of Companies by the Ministry of Corporate Affairs on an application made by the respected companies. The said companies stand dissolved w.e.f. 21st March, 2014.

As per the General Circular 08/2014 No. 1/19/2013-CL-V dated 4th April 2014 issued by the Ministry of Corporate Affairs, the financial statements (and documents required to be attached thereto), auditors report and Board''s report in respect of financial years that commenced earlier than 1st April, 2014 shall be governed by the relevant provisions/ Schedules/rules of the Companies Act, 1956. In view of the same the financial information of the Company''s subsidiaries have been provided as per the provisions of the erstwhile Companies Act, 1956 and the applicable circulars issued there under.

The Ministry of Corporate Affairs, Government of India has, vide General Circular No. 2/2011 dated 8th February 2011 read together with General Circular No. 3/2011 dated 21st February, 2011, granted exemption under Section 212(8) of the Companies Act, 1956, for not attaching Annual Report of subsidiary companies, subject to fulfillment of certain conditions by the holding company. As stated in the said circulars, the Board of Directors, vide its resolution dated 3rd April, 2014 accorded its consent for not attaching the balance sheet of the subsidiaries. Further the Company has presented in the Annual Report, the consolidated financial statements of the Company and all its subsidiaries duly audited by its statutory auditors. The consolidated financial statements have been prepared in strict compliance with the applicable Accounting Standards and, where applicable, the Listing Agreement as prescribed by the Securities and Exchange Board of India. The Company has disclosed in the consolidated balance sheet the following information in aggregate for each subsidiary including subsidiaries of subsidiaries:- (a) capital (b) reserves (c) total assets (d) total liabilities (e) details of investment (except in case of investment in the subsidiaries) (f) turnover (g) profit before taxation (h) provision for taxation (i) profit after taxation (j) proposed dividend.

10. CONSOLIDATED FINANCIAL STATEMENTS:

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.

11. DIRECTORS'' EXPLANATION ON AUDITOR''S REPORTS:

Following are the directors'' comments on the "Basis of Qualified Opinion" in the Audit Report dated 18th March, 2014 on Standalone Financial Statements and "Basis of Qualified Opinion" in the Audit Report dated 3rd April, 2014 on Consolidated Financial Statements for the nine (9) months period ended 31st December, 2013:

a. With reference to clause (a) of the "Basis of Qualified Opinion" in the Audit Reports on both Standalone as well as Consolidated Financial Statements wherein the auditors have opined that "due to non-availability of Financials of Franco Tossi Mecanica S.p.A, ("FTM") the Company''s subsidiary in Italy, they are unable to comment upon the adequacy or otherwise of the provisions made", the Board would like to inform you that as mentioned in Note 33(c) of Standalone and in Note 1(a)(ii) of Consolidated Financial Statements, FTM had filed an application for a pre-insolvency procedure which has been admitted by a court at Milan. In light of the ongoing procedure no financial statements of the company have been released to date by the empowered Commissioner. It is expected that these will not be released until the entire process is complete. However the Company has made adequate provision towards its exposure for all the known liabilities in the said subsidiary. Further, the step down subsidiary holding the shares of FTM has entered into a memorandum of understanding with an intended purchaser for sale of its investment in FTM. The sale purchase agreement is however subject to the regulators, bankers and shareholders'' approval.

b. With reference to clause (b) of the "Basis of Qualified Opinion" in the Audit Reports on both Standalone as well as Consolidated Financial Statements wherein the auditors have opined that "they are unable to comment on the adequacy of the provisions made towards the Company''s exposure in investments in and Guarantees given by the company in respect of SAE Power lines S.p.A, the Company''s subsidiary in Italy", the Board would like to inform you that as mentioned in Note 33(e) of Standalone and in Note 1(a)(v) of Consolidated Financial Statements, on the basis of offer received from an intended buyer the Company has made a provision towards guarantees given for the acquisition loan taken by SPV.

c. With reference to clause(c) of the "Basis of Qualified Opinion" in the Audit Report on Standalone financial statements regarding contribution to charitable funds /institutions, the Board would like to inform you that these were necessitated due to business exigencies and the permission of the shareholders is being sought to make any further contributions.

d. With reference to clause(d) of the "Basis of Qualified Opinion" in the Audit Report on Standalone Financial Statements and Clause (h) of the "Basis of Qualified Opinion" in the Audit Report on Consolidated Financial Statements, wherein the auditors have opined on managerial remuneration, the Board would like to inform you that as mentioned in Note 24(a) of Standalone and in Note 24(a) of Consolidated Financial Statements, the Company''s application for waiver of excess remuneration paid to CMD and paid to an Executive Director during the year 2011-12 has been rejected. The Company has preferred a representation to the Ministry to reconsider its decision and reply is awaited. The Company''s application for payment of remuneration to Chairman & Managing Director for years 2012-13 and 2013-14 is pending for approval with the Central Government. Hence no effect for the same has been given in the financial statements.

e. With reference to clause (c) and clause (d) of the "Basis of Qualified Opinion" in the Audit Report on Consolidated Financial Statements wherein the auditors have reported that the financial statements of Sofinter S.p.A., Campo Puma Oriente S.A. and Finest S.p.A. are unaudited, the Board would like to inform you that as mentioned in Note 1 (b)(iv) and Note 1 (a)(i) of Consolidated Financial Statements, the financial statements of Sofinter S.p.A., Campo Puma Oriente S.A. and Finest S.p.A. could not be audited due to the short period of time available for the completion of the audit. The audit work is in progress. Meanwhile, the financial statements are therefore based on Unaudited/management accounts signed by one of the directors representing GIL.

f. With reference to clause (e) of the "Basis of Qualified Opinion" in the Audit Report on Consolidated Financial Statements, wherein the auditors have reported that in absence of sufficient information they are unable to assess the recoverability of the net receivables of Itro Pte Ltd, an Associate of Sofinter S.p.A., the Board would like to inform you that as mentioned in Note 1(b)(iv) of Consolidated Financial Statements, the directors of Itro Pte Ltd believe that it will be able to complete the start-up phase in a reasonable time frame and to start generating sufficient cash flows to enable it to discharge its financial commitments. However, the directors of Itro Pte Ltd believe that since they are unable to forecast with reasonable certainty the time frame for collection, auditors of Itro Pte Ltd have qualified their opinion in this regard.

g. With reference to clause(f) of the "Basis of Qualified Opinion" in the Audit Report on Consolidated Financial Statements, wherein the auditors have reported about the non-recognition of possible claims on trade receivables of Europower S.p.A., a subsidiary of the Associate Sofinter S.p.A., the Board would like to inform you that Europower S.p.A. has initiated legal proceedings in the competent court in Italy, against their customer to recover the amount of Euro 3 Million i.e. Rs. 25.61 crores (Company''s share being Euro 1.35 Million (Rs. 11.52 crores). Pending the outcome of the said litigation, the risk of non-recovery arising from the same has been provided by Europower S.p.A to the extent of 2.3 Million Euro i.e. Rs. 17.92 crores. Considering the current status of the legal proceedings, the Directors of the said Euro power S.p.A. believe that Sofinter S.p.A. will not incur additional losses over and above the said amount.

h. With reference to clause(g) of the "Basis of Qualified Opinion" in the Audit Report on Consolidated Financial Statements, wherein the auditors have reported about non provision of trade receivables of Gammon & Billimoria LLC (GBLLC),Dubai a Subsidiary of the Company, the Board would like to inform you that the amount is due from a Debtor of GBLLC which includes retention money aggregating to AED 2.7 million (Rs. 4.54 crores) due to GBLLC acting as a sub-contractor. The management of the said subsidiary is of the opinion that the amount is contractually recoverable and the subsidiary company is in negotiations with the principal client and in the company''s opinion no provision is required to be made towards the same.

i. With reference to clause(x) of the Annexure to the Audit Report on Standalone Financial Statements, wherein the auditors have mentioned that the accumulated losses of the Company are in excess of 50% of the net worth of the Company, the Board would like to inform you that the said disclosure has been made by the auditors as a requirement under the Companies (Auditor''s Report) Order, 2003 for the nine (9) months period ended 31st December, 2013 and that the Company is not a potentially sick company in terms of Section 23 of the Sick Industrial Companies Act, 1985.

j. Members attention is drawn to "Emphasis of Matter" stated in the Auditor''s Report dated 18th March, 2014 on the Standalone Financial Statements and in the Audit Report dated 3rd April, 2014 on the Consolidated Financial statements for the nine (9) months period ended 31st December, 2013. The Directors would like to state that the said matters are for the attention of members only and have been explained in detail in the relevant notes to accounts as stated therein and hence require no further clarification.

12. AUDITORS:

M/s. Natvarlal Vepari & Co., Chartered Accountants, Firm Registration No. 106971W, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment. A certificate to the effect that their appointment, if made, will be within the prescribed limits under Section 141 of the Companies Act, 2013, has been obtained from them. The Board on the recommendation of the Audit Committee recommends the re-appointment of M/s. Natvarlal Vepari and Company as Statutory Auditors of the Company for the next three (3) financial years i.e. 2014-15, 2015-16 and 2016-17.

The Board also, on the recommendation of the Audit Committee, recommends the re-appointment of M/s. Vinod Modi & Associates, Chartered Accountants, Firm Registration No. 111515W and M/s. M. G. Shah & Associates, Chartered Accountants, Firm Registration No. 112561W, as the Joint Branch Auditors of ''Gammon India Limited - Transmission & Distribution Business, Nagpur'' for the next five (5) financial years i.e. 2014-2015, 2015-16, 2016-17, 2017-18 and 2018-19, subject to approval by the Shareholders.

13. COST AUDITOR :

Pursuant to the Cost Audit Order dated 24th January, 2012 issued by the Ministry of Corporate Affairs (MCA), the Board of Directors has appointed Mr. R. S. Raghavan, as the Cost Auditor for audit of cost accounting records of the transmission and distribution business for the nine (9) months period ended 31st December, 2013. The report of the Cost Auditor will be filed with the MCA within the prescribed period.

The Board, in its meeting held on 18th March 2014, has on the recommendation of the Audit Committee approved the re-appointment of Mr. R. S. Raghavan as the Cost Auditor of the Company for the financial year 2014-15 for the applicable product of the transmission and distribution business. The appointment is subject to the approval of the Central Government.

14. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS:

Report on Corporate Governance and Management Discussion and Analysis Report for the year under review, together with a Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

15. DIRECTORS:

Pursuant to the provisions of Section 152 of the Companies Act, 2013 (the "Act") and the Articles of Association of the Company, Mr. Parvez Umrigar retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Notice convening the Annual General Meeting includes the proposal for his re-appointment as the Director.

As on the date of this report, the Company''s Board consists of the following Independent Directors:

1. Mr. Chandrahas C. Dayal

2. Mr. Naval Choudhary

3. Mr. Jagdish Sheth

4. Mrs. Urvashi Saxena

5. Mr. Atul Kumar Shukla

6. Mr. Atul Dayal

The period of office of the aforementioned directors was liable to determination by retirement of directors by rotation under the erstwhile Companies Act, 1956. In terms of Section 149 and other applicable provisions of the Companies Act, 2013, the aforementioned directors being eligible and offering themselves for appointment, are proposed to be appointed as Independent Directors for a term of five (5) consecutive years commencing from 1st April, 2014 upto 31st March, 2019.

Brief profile of the proposed appointees together with other disclosures in terms of Clause 49 of the Listing Agreement are part of the Annexure to the Notice of the 92nd Annual General Meeting.

16. DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies (Amendment) Act 2000, the Directors confirm that:

1. The applicable accounting standards have been followed by the Company in preparation of the annual accounts for the nine (9) months period ended 31st December, 2013;

2. The Directors have selected 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 December, 2013 and of the loss of the Company for the year ended on that date;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

4. The annual accounts for the nine (9) months period ended 31st December, 2013 have been prepared on a going concern basis.

17. PARTICULARS OF EMPLOYEES:

The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholders, excluding the statement of particulars of employees. Any shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company.

19. ACKNOWLEDGEMENTS:

Your Directors thank all its valued customers and various Government, Semi-Government and Local Authorities, Suppliers and other Business associates. Your Directors appreciate continued support from Banks and Financial Institutions and look forward to their co-operation in the future.

Your Directors place on record their appreciation of the dedicated efforts put in by the employees at all levels and wish to thank the Shareholders and all other stakeholders for their unstilted support and co-operation.

For and on behalf of the Board of Directors

ABHIJIT RAJAN

Chairman & Managing Director

Place : Mumbai

Dated : 3rd April, 2014

---

Mar 31, 2013

The Directors have pleasure in presenting their 91st Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2013.

1. FINANCIAL PERFORMANCE & OPERATIONS:

(Rs.in Crore)

Standalone Consolidated Particulars 2012-2013 2011-2012* 2012-2013 2011-2012

Profi t before Other Income, Depreciation & (21.54) 459.02 163.79 689.13

Interest Add:

Other Income 132.42 159.52 91.37 180.86

Less:

Depreciation 107.39 101.99 343.67 242.96

Interest 443.41 363.42 827.35 652.83

Profit/(Loss) before Tax (439.92) 153.13 (915.86) (25.80)

Less: Provision for Taxation 5.75 66.09 6.06 95.52

Profi t/(Loss) after Taxation (445.67) 87.04 (921.92) (121.32)

Transferred to Minority Interest Nil Nil 72.09 16.18

Profi t/(Loss) for the year (445.67) 87.04 (849.83) (105.14)

Add:

Profi t brought forward from the previous year 368.34 341.67 (173.80) 64.37

Available for Appropriation (77.33) 428.71 (1023.63) (40.77)

Appropriations:

Transfer to General Reserve Nil 10.00 Nil 19.06

Transfer to Debenture Redemption Reserve Nil 47.43 Nil 47.43

Transfer from Debenture Redemption Reserve Nil Nil Nil Nil

Dividend from Own Shares (0.12) (0.23) (0.12) (0.23)

Transfer to Capital Reserve Nil Nil 0.70 0.28

Transfer to Foreign Currency Translation Reserve Nil Nil 23.70 56.46

Adjustments to Minority Interest Nil Nil 0.09 0.58

Dividend (Proposed) Equity Shares Nil 2.73 2.29 2.73

Tax on Dividend Nil 0.44 1.48 7.73

Other Adjustments Nil Nil (0.04) (1.01)

Balance carried to Balance Sheet (77.21) 368.34 (1051.74) (173.80)

*Figures for the previous period have been regrouped.

The Turnover of the Company on a Standalone basis stood at Rs. 5,197 Crore for the year ended 31st March, 2013 (Rs. 5,533 Crore previous year). Operating Profi t (PBDIT) amounted to Rs. (21.54) Crore (Rs. 459.02 Crore previous year). After providing Rs. 107.39 Crore (Rs. 101.99 Crore for the previous year) towards depreciation and Rs. 5.75 Crore (Rs. 66.09 crore previous year) towards tax for current and deferred taxation, the net profi t amounted to Rs. (445.67) Crore (Rs. 87.04 Crore previous year). The annualized percentage decrease in turnover over previous year amounted to 6%.

On a consolidated basis the turnover of the Gammon group stood at Rs. 7494.22 crore for the year ended 31st March, 2013. The annualized percentage decrease in turnover over previous year''s turnover amounted to 8.03%. The group made a loss of Rs. 849.83 crores for the year ended 31st March, 2013 as compared to a loss of Rs. 105.14 crores in the previous year. This was mainly on account of increase in interest costs due to higher borrowings, impairment of Goodwill and diminution in the value of investment.

During the year under review, the Company has been facing tight liquidity position arising out of overall deceleration in the economy, lower industrial growth, delayed or indecisions at various governments and large PSU clients'' level affecting the project progress and project variations. The liquidity crisis arising out of delayed and withheld payments resulted in higher debts thereby increasing the interest costs by 22%. Slowdown in the power investments in the power sector had adversely affected the power projects and this has also affected your Company''s construction projects in the power sector.

This necessitated re-assessment of jobs considering the delays in project execution on account of funding diffi culty. Many of the jobs turned negative on increased costs due to time and cost overruns on account of unfavorable working capital cycle arising out of increased inventory and outstanding receivables, which in accordance with Accounting Standard 7 required upfront recognition of the project loss.

Considering the current economic scenario in Europe, the Company on prudent basis has made provisions in connection with its investments / advances to/in its overseas companies. While the Company is entitled to claims of prolongation and other variations which would be subject matter of arbitration/disputes relating to above, pending raising of the claim and its settlement, on a prudent basis it has not factored for any claims/ variations in excess of costs incurred thereon.

All these factors have eroded margins resulting in PBT losses, both on a standalone and consolidated basis.

During the year under review the Company re-alligned its debts through the process of Corporate Debt Restructuring which has been explained in detail below as well as in the Management Discussion and Analysis Report .

Given the challenging times ahead in order to improve margins and liquidity position, the Company is working on the following parameters to improve margin and liquidity. The Company has focused on cost management, making leaner organization, focused bidding process and being selective, optimum design and engineering with focus on standardization, improving plant productivity, rigorous focus on cash fl ow with focus on debtors, retention and inventory cycle and active and rigorous contract management to realize claims held up with clients.

The order book position of the Company as on 31st March, 2013 stood at Rs. 13,760 Crore. The Company secured additional projects worth Rs. 2,055.73 crores until the date of this report.

2. DIVIDEND:

In view of the loss incurred during the year the Board regrets its inability to declare any dividend for the year ended 31st March, 2013.

3. DEPOSITORY SYSTEM:

The Company''s equity shares are compulsorily tradeable in electronic form. As of 31st March, 2013, 93.04% of the Company''s total paid-up capital representing 127,003,594 equity shares is in dematerialized form. In view of the benefi ts offered by the Depository system, members holding shares in physical mode are advised to avail the demat facility.

4. FINANCE:

During the year under review the Company did not raise any funds from the capital markets either by way of issue of equity shares / ADR / GDR. The Company has obtained fi nancial assistance from its consortium bankers to meet its short term working capital requirements.

During the year under review the Company did not raise any debt by way of issue of Debentures. The total amount of outstanding Non-Convertible Debentures as on date is Rs. 324 Crores.

CARE has assigned the following ratings:

Facilities Amount Ratings

(Rs.in Crores)

Long Term Bank Facilities 1,300 CARE B

Long / Short Term Bank Facilities 10,400 CARE B / CARE A4

Non-Convertible Debentures 500 CARE B

CP / STD 900 CARE A4

CP / STD* 100 CARE A4

*Carved out of working capital limits.

5. CORPORATE DEBT RESTRUCTURING:

The construction industry has been facing severe recessionary trend. Decelerated economy, slower industrial growth, delays in large PSUs projects caused delays wherein profi tability of certain projects eroded on increased costs. Further Government inaction, delays in awarding projects, delays in clearances by various government agencies, bureaucratic apathy has led to delays in the project progress at various project sites. Also, delayed recievables, stagnation in revenues, high interest costs and expansion into non-core areas did not yield the expected returns which led to liquidity mismatches and increase in borrowings. This further resulted in higher interest outgo on higher borrowings coupled with higher interest regime.

In order to overcome this fi nancial crisis, the Company sought to realign its debts through the Corporate Debt Restructuring mechanism. The Corporate Debt Restructuring Empowered Group (''CDR EG'') examined the Company''s proposal and a fi nal debt restructuring package was approved by the CDR EG and communicated to the Company by the Corporate Debt Restructuring Cell vide its Letter of Approval dated 29th June, 2013, amendment letters dated 31st July, 2013 and 3rd August, 2013. The salient features of the CDR package are:

1. Cut off date is 1st January, 2013.

2. Total Debt rescheduled :

a) Rs. 3373.74 crores fund based inclusive of short term and long term loans.

b) Rs. 10,400 crores of non-fund based limits sanctioned earlier are being continued.

3. Re-schedulement of Short Term Loans, Term Loans and Non Convertible debentures payable over a period of ten years.

4. Funded interest for fi fteen months period from January, 2013 to March, 2014.

5. Priority loan sanctioned for meeting the immediate fi nancial needs of the Company.

6. Waiver of penal charges from the cut off date to the date of implementation of the package.

7. Reduction in the rate of interest by 1% for 15 (fi fteen) months period from January 2013 to March, 2014.

The documentation and security creation is under process and the Company will be seeking shareholders approval for the same.

The Approval of the CDR package refl ects the faith of the CDR lenders in the Company‘s commitment towards being ''Builders to the Nation''.

6. PUBLIC DEPOSITS:

Your Company did not invite or accept deposits from public during the year under review.

7. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:

During the year under review, the Company has transferred Fixed Deposits amounting to Rs. 500,000/- and Dividend (for the year 2005-06) amounting to Rs. 217,424/- to Investor Education and Protection Fund (IEPF), which was due and payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205C(2), of the Companies Act, 1956. Unclaimed Dividend for the year 2005-2006 is due for transfer to IEPF on 29th November, 2013.

8. EMPLOYEE STOCK OPTION SCHEME:

The erstwhile Associated Transrail Structures Limited (ATSL) had introduced an Employee Stock Option Scheme for the benefi t of its employees. Pursuant to the amalgamation of ATSL with the Company, effective from 7th July, 2009, the said scheme has been taken over by the Company. Details of the stock options granted under the Employee Stock Option Scheme-2007 of erstwhile ATSL are disclosed in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and set out in Annexure ‘A'' of this Report.

9. SUBSIDIARY COMPANIES:

In addition to the subsidiaries as reported in the previous year the following companies were further incorporated/ acquired as subsidiaries/step down subsidiaries during the year under review:

1. Patna Water Supply Distribution Network Private Limited

2. Birmitrapur Barkote Highway Private Limited

3. Yamunanagar Panchkula Highway Private Limited

4. Sidhi Singrauli Road Project Limited

5. Mormugao Seaport Limited

During the year under review, the name of Mormugao Seaport Limited (Company''s step down subsidiary) was changed to Mormugao Terminal Limited. The name of Yamuna Renewable Energy Private Limited was changed to Yamuna Minor Minerals Private Limited. The Company had incorporated an LLP viz Brookfi eld Multiplex Gammon India LLP for the specifi c purpose of carrying out the project of constructing high rise viz'' Nathani Heights''. However Brookfi elds Multiplex Private Limited resigned from the joint venture and the partnership and the project is now being executed by the Company .

The Ministry of Corporate Affairs, Government of India has, vide General Circular No. 2/2011 dated 8th February, 2011 read together with General Circular No. 3/2011 dated 21st February, 2011, granted exemption under Section 212(8) of the Companies Act, 1956, for not attaching Annual Report of subsidiary companies, subject to fulfi llment of certain conditions by the holding company. As stated in the said circulars, the Board of Directors, vide its resolution dated 30th May, 2013 accorded its consent for not attaching the balance sheet of the subsidiaries. Further the Company has presented in the Annual Report, the consolidated fi nancial statements of the Company and all its subsidiaries duly audited by its statutory auditors. The consolidated fi nancial statements have been prepared in strict compliance with the applicable Accounting Standards and, where applicable, the Listing Agreement as prescribed by the Securities and Exchange Board of India. The Company has disclosed in the consolidated balance sheet the following information in aggregate for each subsidiary including subsidiaries of subsidiaries:- (a) capital (b)reserves (c) total assets (d) total liabilities (e)details of investment (except in case of investment in the subsidiaries) (f) turnover (g) profi t before taxation(h) provision for taxation (i) profi t after taxation (j) proposed dividend;

The annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the Company and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be kept for inspection by any shareholders in the head offi ce of the Company and of the subsidiary companies concerned and a note to the above effect has been included in the Annual Report of the Company. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

10. CONSOLIDATED FINANCIAL STATEMENTS:

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.

11. DIRECTORS'' EXPLANATION ON AUDITOR''S REPORT:

a. With reference to point nos. (iii)(c), (ix), (xi), (xvii) of the Annexure to the Auditors'' Report dated 30th May, 2013 on the Standalone Financial Statements for the year ended 31st March,2013, your Directors wish to clarify as follows:

During the last twelve months the Company has been facing a very tight liquidity position arising out of overall deceleration in the economy, lower industrial growth, delayed decisions at various governments and large PSU clients'' level affecting the project progress.

This has necessitated re-assessment of jobs considering the delays in project execution on account of funding diffi culty. Many of the jobs have turned negative, on increased costs due to stretched time frames with unfavourable working capital cycle arising out of increased inventory and receivables, which in accordance with Accounting Standard-7 required recognition of the project loss upfront.

While the Company is entitled to claims of prolongation and other variations which would be subject matter of arbitration/disputes relating to above, pending raising of the claim and its settlement, on a prudent basis it has not factored for any claims/variations in excess of costs incurred thereon.

Even in the last few months the Company is unable to service interest and repayment of principal to bankers. The Company has utilised the funds for long term purpose which had been taken for short term period from lenders due to increase in working capital cycle. In order to overcome this fi nancial crisis the company sought to realign its debts through the Corporate Debt Restructuring mechanism. The Company made a reference to the Corporate Debt Restructuring Cell. Company has received Letter of Approval (CDR LOA) pursuant to the Restructuring Package approved by the CDR Empowered Group.

Other group companies are also passing through the similar liquidity crunch. As of now they are not in the position to service the interest, but based on the business plan of these companies we will be in a position to bring a turnaround of business cycle.

b. With reference to point no. (iv) of the Annexure to the Auditors'' Report dated 30th May, 2013 on the Standalone Financial Statements for the year ended 31st March, 2013 your Directors wish to clarify as follows:

Inventory cycle of the company is on a higher side. To improve this, the company has prepared an agenda to enhance control and bring down the inventory level. The key areas which will be driven are doing material reconciliation on a regular interval, identify waste and plan to reduce waste, raising material requisition based on inventory level and assessing inventory demands segment wise, training store team to build skills to drive various initiatives, doing review on monthly basis.

c. With reference to clause a) of the ''Basis of Qualifi ed Opinion'' in the Audit Report dated 21st June,2013 on the Consolidated Financial statements for the year ended 31st March, 2013 the Board would like to inform you that as mentioned in Note 11(a) the Board of M/s. Franco TosiMeccanica S. p. A. (FTM), a Subsidiary of the Company out of prudence, due to its net losses exceeding 33% of its net worth had decided against an audited Financial Statement of 2012 since, in case if the audit of these accounts were done, FTM had to mandatorily go for recapitalization of the Company as per Article 2447 of the Italian Civil Code. With this, the immediate urgency of recapitalizing FTM was negated.

The Board of FTM fi led on May 30th, 2013 with the Court of Milan (and with the Companies Registry) a ''preliminary'' request for admission to the procedure of pre-insolvency composition agreement with creditors and restructuring debts (''concordatopreventivo''), under Articles 161 Clause 6, Italian Government Publication dated 10 March 1942 no 267 – further amended in September, 2012, in the light of acute fi nancial stress being faced by FTM due to recessionary trends in the industry and Europe in general.

The said application was admitted by the Court on 7th June, 2013. The Court on 25th July, 2013 has appointed a Commissioner, while maintaining the current Management and Board, whose task is to start appropriate procedures, including leasing, by which the operations of the company relating to the backlog and front log orders are preserved and completed while also drawing up a scheme for settlement of the outstanding debts of the creditors of the Company. The time limit available to the Commissioner and the Management of FTM to complete the above and the fi nal approval by the Court is expected by October, 2013. Steps have been initiated to meet the above deadlines including the approval by the Court at which time the further way forward for FTM will get better defi ned.

d. With reference to clause b) of the ''Basis of Qualifi ed Opinion'' in the Audit Report dated 21st June, 2013 on the Consolidated Financial statements for the year ended 31st March, 2013 the Board would like to inform you that as mentioned in note 1(b) (v) of the directors of ItroPte Ltd, an Associate of our Joint Venture Sofi nter S.p.A. believe that due to recent modifi cations to its plant and continuous maintenance ItroPte Ltd will be able to complete the start-up phase in a reasonable timeframe and to start generating suffi cient cash fl ows to enable it to discharge its fi nancial commitments. However, the directors of ItroPte Ltd are unable to forecast with reasonable certainty the time frame for collection, due to which their auditors have qualifi ed their opinion.

e. With reference to clause c) of the ''Basis of Qualifi ed Opinion'' in the Audit Report dated 21st June, 2013 on the Consolidated Financial statements for the year ended 31st March, 2013 the Board would like to inform you that Europower S.p.A. a subsidiary of the joint venture Sofi nter S.p.A. has initiated legal proceeding in the competent court in Italy, against their customer to recover the amount of Euro 3 Million i.e. Rs. 20.86 crores (Company''s share being Euro 1.35 Million (Rs. 9.39 crores). Pending the outcome of the said litigation, the risk arising from outstanding disputes, Europower has made a provision for total of 2.3 Million Euro i.e. Rs. 16 crores. Considering the current status of the legal proceedings, the Directors of Europower S.p.A. believe that Sofi nter S.p.A. shall not incur additional losses over and above the amount of funds allocated.

f. With reference to clause d) of the ''Basis of Qualifi ed Opinion'' in the Audit Report dated 21st June, 2013 on the Consolidated Financial statements for the year ended 31st March, 2013 the Board would like to inform you that with respect to the extent of recoverability of receivables in Dubai from a debtor including retention aggregating to AED 2.7 million (Rs. 3.93 crores) which is due to Gammon & Billimoria LLC (GBLLC), a Subsidiary of the Company acting as a sub-contractor, the management of the said subsidiary is of the opinion that the amount is contractually recoverable and the subsidiary company is in negotiations with the client and hence no provision is made towards the same.

g. Members attention is drawn to ''Emphasis of Matter'' stated in the Auditor''s Report dated 30th May, 2013 on the Standalone Financial Statements and in the Audit Report dated 21st June, 2013 on the Consolidated Financial statements for the year ended 31st March, 2013. The Directors would like to state that the said matters are for the attention of members only and have been explained in detail in the relevant notes to accounts as stated therein and hence require no further clarifi cation.

12. AUDITORS:

M/s. Natvarlal Vepari & Co., Chartered Accountants, Firm Registration no. 106971W, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment. A certifi cate to the effect that their appointment, if made, will be within the prescribed limits u/s 224(1B) of the Companies Act, 1956 has been obtained from them. The Board on the recommendation of the Audit Committee recommends the re-appointment of M/s. Natvarlal Vepari and Company as Statutory Auditors of the Company for the fi nancial year 2013-14.

The Board also, on the recommendation of the Audit Committee, recommends the re-appointment of M/s. Vinod Modi& Associates, Chartered Accountants, Firm Registration no. 111515W and M/s. M. G. Shah & Associates, Chartered Accountants, Firm Registration no. 112561W, as the Joint Branch Auditors of ‘Gammon India Limited –Transmission& Distribution Business Headquarters, Nagpur'' subject to approval by the Shareholders.

13. COST AUDITORS :

Pursuant to the Cost Audit Order dated 24th January, 2012 issued by the Ministry of Corporate Affairs (MCA), the Board of Directors has appointed R. Raghavan Cost Auditor, as the Cost Auditor for audit of cost accounting records of the transmission and distribution business for the fi nancial year March 31st, 2013. The report of the Cost Auditor will be fi led with the MCA within the prescribed period.

The Board in its meeting held on 21st June, 2013 has on the recommendation of the Audit Commmittee approved the re-appointment of Mr. R. Raghavan as the Cost Auditor of the Company for the year ending 31st March, 2014 for the applicable product of the transmission and distribution business. The appointment has been approved by the Central Government.

14. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS:

Report on Corporate Governance and Management Discussion and Analysis Report for the year under review,together with a Certifi cate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

15. DIRECTORS:

Mr. Parvez Umrigar was appointed as an Additional Director designated as Whole-time Director of the Company with effect from 2nd January, 2013. Effective 1st April, 2013. Mr. Umrigar ceased to be the Whole-time Director of the Company. He, however, continues to be on the Company''s Board as Non-Executive & Non-Independent Director and holds offi ce upto the date of the forthcoming Annual General Meeting and is eligible for appointment.

Mr. Rohit Modi resigned as the Deputy Managing Director of Gammon India Limited w.e.f. 30th May, 2012. The Board places on record its sincere appreciation for the services rendered by Mr. Modi during his tenure as the Deputy Managing Director of the Company.

Mr. Himanshu Parikh resigned as the Executive Director of Gammon India Limited w.e.f. 13th March, 2013. The Board places on record its sincere appreciation for the services rendered by Mr. Parikh during his tenure as a Executive Director of the Company.

Pursuant to the provisions of Section 256 of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Jagdish Sheth and Mr. Naval Choudhary retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Notice convening the annual general meeting includes the proposal for appointment /re-appointment of the Directors .Brief profi les of the proposed appointees together with other disclosures in terms of Clause 49 of the Listing Agreement are part of the Annexure to the Notice of the Annual General Meeting.

16. DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies (Amendment) Act 2000, the Directors confi rm that:

1. The applicable accounting standards have been followed by the Company in preparation of the annual accounts for the period ended 31st March, 2013;

2. The Directors have selected 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, 2013 and of the loss of the Company for the year ended on that date;

3. Proper and suffi cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

4. The annual accounts for the year ended 31st March, 2013 have been prepared on a going concern basis.

17. PARTICULARS OF EMPLOYEES:

The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholders, excluding the statement of particulars of employees. Any shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Offi ce of the Company.

18. PARTICULARS UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988:

A. Conservation of Energy:

Energy has been a vital resource in development of any Industry. With day to day escalation in energy requirements, there has been increased emphasis on energy Conservation to monitor energy consumption and avoid wastage. Company is endeavoring continuously towards energy conservation by adopting innovative measures. Some of the specifi c measures undertaken are :

- Installation of Energy Meters on all DG Sets.

- Monitoring Diesel Consumption of Plant & Machinery.

- Improvement in Diesel Consumption by using Soltron enzyme based additives.

- Installation of Capacitor Banks for Power Savings.

- Use of Variable Frequency Drive (VFD) Starting System, Energy Effi cient Motors for EOT / Gantry Cranes.

- Initiated use of energy saving lighting system at H.O./workshops/sites to maintain consumption of energy.

- Initiated time based operations in H.O & regional offi ces for preventing unwanted energy usage.

Initiatives taken at the Company''s T&D Division at Nagpur to conserve energy and environment by reducing the consumption of non-renewable energy sources are:

- Installation of drying oven for preheating of materials prior to galvanizing with the help of waste fl ue gases from galvanizing furnace which has reduced fuel consumption by 10%.

- Change in fuel from LDO to Ignite oil and from ignite oil to Liquefi ed Petroleum Gas through liquid off take (LOT) system in galvanizing furnace reduces carbon deposition which minimizes breakdown, gives uniform heating to kettle thereby increasing the life & increase overall effi ciency of the furnace.

- Maintaining power factor towards unity through capacitor bank.

- Transparent polycarbonate sheets provided at shop fl oor roof for usage of Natural light.

- Sewage Treatment Plant is installed to use waste water for gardening.

- Provided 85 Watt CFL in place of 250 Watts Metal Halide at fi nish yard Deoli works.

- Installed air operated diaphragm type pump instead of 10 HP electrical pump to save electrical power.

- Installed heat exchanger for heating of fl ux tank with the help of quench water.

B. Technology Absorption:

Timely completion of the projects as well as meeting the budgetary requirements are the two critical areas where different techniques help to a great extent. Many innovative techniques have been developed and put to effective use and the efforts to develop new techniques continue unabated.

C. RESEARCH AND DEVELOPMENT (R & D):

Increasing focus on developing infrastructure in the country has opened up many opportunities for the construction companies. To rise up to the challenge of completing huge quantum of work in a short time, we have to back up the onsite teams with continual improvement in construction technology. During the year under review the R&D activities undertaken by the company include:

Concreting of lining for pressure shaft of about 1540m length inclined at 30º Development of i) Self compacting concrete (SCC) suitable for lining of inclined pressure shaft, ii) Suitable equipment (Concrete Pump & Pipe line) to withstand pressure upto 250 bars.

Development for Launching scheme for caisson in the sea.

Developments of Form travellers for cable stay bridges.

Development of M60 grade development shotcrete.

Temperature Modeling for high strength mass concrete

In the continued diffi cult economic conditions, cost reductions and early completion of projects remains high on the agenda for every construction company. The opportunities for economizing the designs, improving the productivity, reducing wastage and adopting better construction practices leave a lot of scope for research and technology implementation. There is an urgent need to increase efforts for standardization of equipment, formwork, structural designs and construction procedures.

The current market challenges makes it all the more important not to lose focus on the Research & technology investments as innovating technologies are key to overcome the economic challenges.

Gammon has bagged ACCE(I) L&T Endowment Award 2012 for ''Excellence in Construction of Industrial Structures'' for Design and Construction of 03 nos. NDCT for Indira Gandhi STPP at Jajjarr Haryana & Design and Construction of NDCT at Simhadri Stage II, Vishakhapatnam.

D. Foreign Exchange earnings and outgo:

Total foreign exchange used and earned during the year:

(Rs.in Crores)

Current Period Previous Period

Foreign Exchange Earnings 303.51 235.48

Foreign Exchange Outgo 181.08 109.15

19. ACKNOWLEDGEMENTS:

Your Directors thank all its valued customers and various Government, Semi-Government and Local Authorities, Suppliers and other Business associates. Your Directors appreciate continued support from Banks and Financial Institutions and look forward to their co-operation in the future.

Your Directors place on record their appreciation of the dedicated efforts put in by the employees at all levels and wish to thank the Shareholders and all other stakeholders for their unstinted support and co-operation.

For and on behalf of the Board of Directors

ABHIJIT RAJAN

Chairman & Managing Director

Place : Mumbai

Dated : 12th August, 2013

---

Mar 31, 2012

The Directors have pleasure in presenting their 90th Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2012.

1. FINANCIAL PERFORMANCE & OPERATIONS:

(Rs.in Crore)

Standalone Consolidated Particulars 2011-2012 2010-2011* 2011-2012 2010-2011*

Profit before Other Income, Depreciation & 459.77 220.94 689.13 406.95 Interest

Add:

Other Income 157.22 280.82 180.86 557.74

Less:

Depreciation 101.99 91.71 242.96 241.23

Interest 363.42 233.65 652.83 459.31

Profit before Tax 151.58 176.40 (25.80) 264.15

Less:

Provision for Taxation 64.54 57.95 95.52 150.10

Profit after Taxation 87.04 118.45 (121.32) 114.05

Transferred to Minority Interest Nil Nil (16.18) (4.03)

Profit for the year 87.04 118.45 (105.14) 110.02

Add:

Profit brought forward from the previous year 341.67 273.36 64.37 40.94

Available for Appropriation 428.71 391.81 (40.77) 150.96

Appropriations:

Transfer to General Reserve 10.00 12.00 19.06 32.21

Transfer to Debenture Redemption Reserve 47.43 45.50 47.43 45.50

Transfer from Debenture Redemption Reserve Nil (19.15) Nil (19.16)

Dividend from Own Shares (0.23) (0.58) (0.23) (0.58)

Transfer to Capital Reserve Nil Nil 0.28 0.99

Transfer to Foreign Currency Translation Reserve Nil Nil 56.46 6.06

Adjustments to Minority Interest Nil Nil 0.58 3.42

Dividend (Proposed) Equity Shares 2.73 10.63 2.73 10.63

Tax on Dividend 0.44 1.74 7.73 7.52

Other Adjustments Nil Nil (1.01) Nil

Balance carried to Balance Sheet 368.34 341.67 (173.80) 64.37

*Figures for the previous period have been regrouped.

The year under review was a difficult period for the construction industry and for the Company. With fewer projects to bid for the order booking was sluggish. Competition continued to be intense due to low entry barriers resulting in smaller players underquoting to capture the projects. Further government inaction, delays in awarding projects, delays in clearances by various government agencies, bureaucratic apathy, rising inflation leading to an increase in prices of major construction raw materials such as steel, cement, bitumen leading to price escalation in contracts, squeeze on liquidity caused by higher interest costs, leading to delay in projects and delay in timely recoveries from clients all had a dampening effect on the overall performance of the Company. The impact led to pressures on the working capital and resulted in higher debt.

The Turnover of the Company on a Standalone basis stood at Rs. 5533 crore for the year ended 31st March, 2012 (Rs. 5558 crore previous year). Operating Profit (PBDIT) amounted to Rs. 460 Crore (Rs. 221 Crore previous year). After providing Rs. 102 Crore (Rs. 92 Crore for the previous year) towards depreciation and Rs. 65 Crore (Rs. 58 crore previous year) towards tax for current and deffered taxation, the net profit amounted to Rs. 87 Crore (Rs. 118 Crore previous year). The annualized percentage decrease in turnover over previous year amounted to 0.04%. The order book position of your Company as on 31st March, 2012 stood at Rs. 15078 Crore.

On a consolidated basis the turnover of the Gammon group stood at Rs. 8038 crore for the year ended 31st March, 2012. The annualized percentage decrease in turnover over previous year amounted to 8%. The group made a Loss of Rs. 105.14 crores for the year ended 31st March, 2012 as compared to a Profit of Rs. 110.02 crore in the previous year. This was mainly on account of increase in interest costs due to higher borrowings.

The recessionary trends in the infrastructure sector continues in the current financial year 2012-13. The Company has posted a Loss of Rs. 19.61 crore during the first quarter ended 30th June, 2012 . The Company has taken several critical steps for improving its funds flow, including strong austerity measures across the Company, the effects of which will be seen in the current financial year.

A review of the performance of various business sectors has been given in detail in the Management, Discussion & Analysis Report which forms part of the Annual Report.

2. DIVIDEND:

The Board of Directors at its meeting held on 14th August, 2012 has, subject to the Shareholder's approval, recommended a final dividend of Rs. 0.20 paise (10%) per share of face value of Rs. 2/- each for the year 31st March, 2012 on the equity shares. The dividend payout for the year under review is Rs. 2.73 Crores.Dividend Distribution Tax aggregates to Rs. 0.44 Crores.

3. DEPOSITORY SYSTEM:

The Company's equity shares are compulsorily tradeable in electronic form. As of 31st March, 2012, 93.01% of the Company's total paid-up capital representing 126,959,750 equity shares is in dematerialized form. In view of the benefits offered by the depository system, members holding shares in physical mode are advised to avail the demat facility.

4. FINANCE:

During the year under review the Company did not raise any funds from the capital markets either by way of issue of equity/ADR/GDR The Company has obtained financial assistance from its consortium bankers to meet its short term working capital requirements.

During the year under review the Company did not raise any debt by way of issue of Secured Non-Convertible Debentures. The Company redeemed debentures aggregating to Rs. 50 Crores. The total amount of outstanding Non-Convertible Debentures as on date is Rs. 324 Crores.

CARE has assigned the following ratings:

Facilities Amount (Rs. in Ratings Crores)

Long Term Bank Facilities 1,100 CARE A

Long / Short Term Bank Facilities 10,400 CARE A / CARE A1

Non-Convertible Debentures 500 CARE A

CP / STD* 900 CARE A1

CP / STD 100 CARE A1

*Carved out of working capital limits.

In the first quarter of this year, a policy change announced by the Finance Ministry, has put severe restrictions on financing of unsecured short term loans, which are a major source of funding for infrastructure companies, in general. Pending regularization through securitization of these loans, the cash flows have been squeezed, with consequent impact on turnover and profitability. Your Company has taken steps to address this issue with its consortium of banks and hopes for an early solution.

5. PUBLIC DEPOSITS:

Your Company did not invite or accept deposits from public during the year under review. 35 deposits (pertaining to previous year) aggregating to Rs. 570,000/- remained unclaimed as on 31st March, 2012. Of the above, 1 deposit amounting to Rs. 15,000/- has since been claimed and paid.

6. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:

During the year under review, the Company has transferred Fixed Deposits amounting to Rs. 70,000/- and Dividend (for the year 2003-04) amounting to Rs. 191,170/- to Investor Education and Protection Fund (IEPF), which was due and payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205C(2), of the Companies Act, 1956.

Unclaimed Dividend for the period ended 31st December, 2004 is due for transfer to IEPF on 1st September, 2012.

7. EMPLOYEE STOCK OPTION SCHEME:

The erstwhile Associated Transrail Structures Limited (ATSL) had introduced an Employee Stock Option Scheme for the benefit of its employees. Pursuant to the amalgamation of ATSL with the Company, effective from 7th July 2009, the said scheme has been taken over by the Company. Details of the stock options granted under the Employee Stock Option Scheme-2007 of erstwhile ATSL are disclosed in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and set out in Annexure 'A' of this Report.

8. SUBSIDIARY COMPANIES:

In addition to the subsidiaries as reported in the previous year the following companies were further incorporated/ acquired as subsidiaries/step down subsidiaries during the year under review:

1. Patna Buxar Highways Limited

2. Vijayawada Gundugolanu Road Project Private Limited

3. Aparna Infraenergy India Private Limited

4. Haryana Biomass Power Limited

During the year under review, the name of Satyavedu Infra Company Private Limited (Company's step down subsidiary) was first changed to Chitoor Infrastructure Projects Private Limited Ltd. and then changed to Earthlink Infrastructure Projects Private Limited. The name of Tada Sez Private Ltd. was first changed to Tada Infrastructure Projects Private Ltd. and then changed to Segue Infrastructure Projects Private Ltd.

During the current financial year, your Company incorporated the following subsidiaries:

1. Patna Water Supply Distribution Network Private Limited

2. Birmitrapur Barkote Highway Private Limited

3. Yamunanagar Panchkula Highway Private Limited

4. Sidhi Singrauli Road Project Limited

The Ministry of Corporate Affairs, Government of India has, vide General Circular No. 2/2011 dated 8th February 2011 read together with General Circular No. 3/2011 dated 21st February 2011, granted exemption under Section 212(8) of the Companies Act, 1956, for not attaching Annual Report of subsidiary companies, subject to fulfillment of certain conditions by the holding company. As stated in the said circulars, copies of the Balance Sheet, Profit & Loss Account, Report of the Board of Directors and Auditors' Report of the subsidiary companies for the year ended 31st March, 2012 have not been attached to the Company's accounts for the year ended 31st March, 2012 as the Company has fulfilled the following conditions:

(i) The Board of Directors, vide its resolution dated 23rd August 2012, accorded its consent for not attaching the balance sheet of the subsidiaries;

(ii) The Company has presented in the Annual Report, the consolidated financial statements of the Company and all its subsidiaries duly audited by its statutory auditors;

(iii) The consolidated financial statements have been prepared in strict compliance with the applicable Accounting Standards and, where applicable, the Listing Agreement as prescribed by the Securities and Exchange Board of India;

(iv) The Company has disclosed in the consolidated balance sheet the following information in aggregate for each subsidiary including subsidiaries of subsidiaries:- (a) capital (b)reserves (c) total assets (d) total liabilities (e) details of investment (except in case Of investment in the subsidiaries) (f) turnover (g) profit before taxation

(h) provision for taxation (i) profit after taxation (j) proposed dividend;

(v) The annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the Company and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be kept for inspection by any shareholders in the head office of the Company and of the subsidiary companies concerned and a note to the above effect has been included in the Annual Report of the Company. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand;

(vi) The Company as well as its subsidiary companies in question shall regularly file such data to the various regulatory and Government authorities as may be required by them;

(vii) The Company has given Indian rupee equivalent of the figures given in foreign currency appearing in the accounts of the subsidiary companies along with exchange rate as on closing day of the financial year;

The Financial Statements of the subsidiary companies are available for inspection by the shareholders at the registered office of the Company. Shareholders who wish to have a copy of the accounts of the subsidiaries will be provided the same on receipt of written request from them.

9. DIRECTORS' COMMENTS

With reference to the Auditors' qualification in point no. 5 of their report dated 14th August, 2012 on the Standalone Financial Statements for the year ended 31st March, 2012 read together with their qualification in point no. 8(b) of their Report dated 23rd August, 2012 on the Consolidated Financial Statements for the year ended 31st March, 2012 with respect to certain contingent liabilities amounting to OR 615637 (Rs. 8.26 Crore) of the Company's Joint Venture in Oman, the Board would like to inform the members that the Joint venture has appealed in the higher court and based on legal advice obtained your management is confident that the contingent liability would not result in an obligation to the Company.

With reference to the Auditors' observation in point no. 3(c) of their report dated 14th August, 2012 on the Standalone Financial Statements for the year ended 31st March, 2012 and point no. 9 (c) of their Report dated 23rd August, 2012 on the Consolidated Financial Statements for the year ended 31stMarch, 2012 relating to excess managerial remuneration paid, the Directors would like to inform the members that remuneration paid to the aforementioned Directors during the Financial Year 2011-2012, though approved by the Shareholders, has exceeded the limits as prescribed under Section 198 and 309 read with Schedule XIII of the Companies Act, 1956 for that year and the Company is seeking Shareholders' approval and the approval of the Central Government for payment of the remuneration to the Directors as "Minimum Remuneration" for the Year 2011-2012.

With reference to the Auditors' qualification in point no. 8(a) of their Report dated 23rd August, 2012 on the Consolidated Financial Statements for the year ended 31st March, 2012 with respect to the extent of recoverability of receivables in Dubai from the debtors including retention aggregating to AED 37.30 millions i.e. Rs. 52.63 crore, the Board would like to inform the members that the management is of the opinion that the amount is contractually recoverable and the component company is in negotiations with the client and hence no provision is made towards the same.

With reference to the Auditor's observations in point no. xxi of the annexure to their Audit Report dated 14th August 2012, your Board would like to inform the members that during internal investigations by the management instances of malafide conduct by certain employees were observed at two sites by the company. The management has lodged an FIR on some counts and is in the process of filing FIR on other counts. The total quantum of amount attributable to malafide conduct is yet to be determined and finalised and will crystallise on completion of investigation jointly with the Authorities. The Management does not expect any impact on the financials as all possible losses attributable to the matter have already been booked and appropriate intimation towards fidelity insurance have been given to the Insurance Company. Further necessary steps have been initiated and all systems, processes and procedures at the sites are being reviewed and modified to strengthen them as well as additional approval levels at various stages of operations have been implemented so as to avoid the recurrence of such instances in the future.

10. AUDITORS:

M/s. Natvarlal Vepari & Co., Chartered Accountants, Firm Registration no. 106971W, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment. A certificate to the effect that their appointment, if made, will be within the prescribed limits u/s 224(1B) of the Companies Act, 1956 has been obtained from them

The Board on the recommendation of the Audit Committee, recommends the re-appointment of M/s. Natvarlal Vepari & Co., Chartered Accountants, Firm Registration no. 106971W as the Statutory Auditors of the Company and also as the Branch Auditors, Oman Branch and any other branch for the year 2012-13, subject to approval by the Shareholders.

The Board also on the recommendation of the Audit Committee, recommends the re-appointment of M/s. Vinod Modi & Associates, Chartered Accountants, Firm Registration no. 111515W and M/s. M. G. Shah & Associates, Chartered Accountants, Firm Registration no. 112561W, as the Joint Branch Auditors of 'Gammon India Limited - Transmission& Distribution Business Headquarters, Nagpur' subject to approval by the Shareholders.

11. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS:

Report on Corporate Governance and Management Discussion and Analysis Report for the year under review, together with a Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance,as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

12. CONSOLIDATED FINANCIAL STATEMENTS:

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.

13. DIRECTORS:

Mr. Rohit Modi resigned as the Deputy Managing Director of the Company with effect from 31st May, 2012 and also ceased to be a member of the Board of Directors. The Board places on record its sincere appreciation for the valuable contributions made by Mr. Rohit Modi during his tenure as the Deputy Managing Director of the Company.

Mr. Rajul A. Bhansali, Executive Director - International Operations, whose term ended on 29th March, 2012, was re-appointed as a Whole-time Director of the Company designated as Executive Director - International Operations for a term of 3 (three) years with effect from 30th March, 2012. The shareholders have, by way of Postal Ballot, the results of which were declared on 24th April 2012, approved the aforesaid re-appointment.

Mr. D. C. Bagde - Executive Director, whose term ended on 8th July, 2012, was re-appointed as a Whole-time Director of the Company designated as Deputy Managing Director - Transmission & Distribution Business for a term of five (5) years with effect from 9th July, 2012. The Company has sought the shareholders' approval for the aforesaid re-appointment by way of Postal Ballot, the results of which will be declared on 29th August, 2012.

Pursuant to the provisions of Section 256 of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Atul Dayal and Ms. Urvashi Saxena retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Brief profiles of the proposed appointees together with other disclosures in terms of Clause 49 of the Listing Agreement are part of the Annexure to the Notice of the Annual General Meeting.

14. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies (Amendment) Act 2000, the Directors confirm that:

1. The applicable accounting standards have been followed by the Company in preparation of the annual accounts for the period ended 31st March, 2012;

2. The Directors have selected 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, 2012 and of the profits of the Company for the year ended on that date;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. The annual accounts for the year ended 31st March, 2012 have been prepared on a going concern basis.

15. HEALTH, SAFETY & ENVIRONMENT:

Continual strengthening on Construction Safety activities across Gammon sites and HQ remained the main focus during the year 2011-12 through a multipronged approach. Improvements have been achieved by strengthening the reporting and analysis of incidents & accidents, strengthening of safety surveillance, internal site reviews, independent review cum exchange, visits of projects, utilization of exchange of experience gained through safety coordinators meets, encouragement for excellence in safety through NSC Safety Award scheme. Development of additional safety documents like safety management manual, safety operating manual, training module for safety personnel, system for submission of periodic reports of sites through LAN are in good progress. Periodic reports of sites, strengthening of audit inspections were achieved. Conducted training on various aspects of Construction Safety, Safety awareness programmes etc. through various means & methods were achieved during National Safety Week and other appropriate similar occasions by involvement of all level of employees. Regular activities like safety surveillance, safety training, safety promotional activities and conducting emergency fire drills etc. were maintained. For achieving excellence in safety, awareness programme and implementation programs on work at height, basic scaffold safety requirements, Electrical Safety, Safety In charge Development, Safety Supervisor Development programmes were conducted across the organization. Evaluation and enhancement programs on Safety culture were continued.

Various Safety Initiatives taken during the year under review included:

- Conducting Corporate Safety Committee meeting.

- Sector wise Safety Committee set up & its meeting/ follow up.

- Competency Mapping of Safety Staff.

- Eligibility criteria of Safety Staff for recruitment defined.

- Safety I/c Training - covered all Safety I/c.

- Safety Supervisor Training - 32% covered &on going.

- Safety Coordinator Nominations & Strategy Workshop.

- Safety Alerts - For information on Fatal/Serious Incidents.

- Standard Signages Posters developed & dispatched.

- Safety inspections/Audits conducted & ongoing by Coordinators.

16. RESEARCH & DEVELOPMENT:

Increasing focus on developing infrastructure in the country has opened up many opportunities for the construction companies. To rise up to the challenge of completing huge quantum of work in a short time, we have to back up the onsite teams with continual improvement in construction technology. During the year under review the R&D activities undertaken by the company include:

- Designing high performance concrete for Chennai Metro Rail Project.

- Considering the continuous scarcity of river sand in Mumbai region we have established mix designs with 100% crushed sand for all grades of concrete.

- Preparing guideline for concrete mix design using different supplementary cementitious material.

- Designing high strength concrete with ultrafine GGSB instead of conventional use of micro silica.

- Working on designing Self Compacting Concrete for Precast Segments.

- Working on M60 grade dry shotcrete..

The company has also bagged the ACCE Bhagawati 2011 Award for Design of the power plant structures.

17. PARTICULARS OF EMPLOYEES:

The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholders, excluding the statement of particulars of employees. Any shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company.

18. PARTICULARS UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988:

A. Conservation of Energy:

Conservation of energy in all possible areas is undertaken as an important means of achieving cost reduction. Savings in electricity, fuel and power consumption receive due attention of the management on a continuous basis and as a result, some initiatives for energy management are being undertaken at sites as mentioned below:

(i) Using portable transformers instead of running DG sets.

(ii) Using APFC Panel with grid power for improvement of PF value.

(iii) Using of CFL instead of incandescent lamp.

(iv) Incorporating float switch with pump.

(v) Using grid power instead of DG at A-V during 7 months unproductive period.

(vi) Energy audit & control over redundant running.

Initiatives taken at the Company's T&D Division at Nagpur to conserve energy and environment by reducing the consumption of non-renewable energy sources are:

- Installation of drying oven for preheating of materials prior to galvanizing with the help of waste flue gases from galvanizing furnace which has reduced fuel consumption by 10%.

- Change in fuel from LDO to Ignite oil and from ignite oil to Liquefied Petroleum Gas through liquid off take (LOT) system in galvanizing furnace reduces carbon deposition which minimizes breakdown, gives uniform heating to kettle thereby increasing the life & increase overall efficiency of the furnace.

- Maintaining power factor towards unity through capacitor bank.

- Transparent polycarbonate sheets provided at shop floor roof for usage of Natural light.

- Sewage Treatment Plant is installed to use waste water for gardening.

- Provided 85 Watt CFL in place of 250 Watts Metal Halide at finish yard Deoli works. .

- Installed air operated diaphragm type pump instead of 10 HP electrical pump to save electrical power.

- Installed heat exchanger for heating of flux tank with the help of quench water.

B. Technology Absorption:

Timely completion of the projects as well as meeting the budgetary requirements are the two critical areas where different techniques help to a great extent. Many innovative techniques have been developed and put to effective use and the efforts to develop new techniques continue unabated.

C. Foreign Exchange earnings and outgo:

Total foreign exchange used and earned during the year:

(Rs. in Crores) Current Period Previous Period 31st March, 2012 31st March, 2011

Foreign Exchange Earnings 235.48 165.53

Foreign Exchange Outgo 109.15 146.87

19. ACKNOWLEDGMENTS:

Your Directors thank all its valued customers and various Government, Semi-Government and Local Authorities, Suppliers and other Business associates. Your Directors appreciate continued support from Banks and Financial Institutions and look forward to their co-operation in the future.

Your Directors place on record their appreciation of the dedicated efforts put in by the employees at all levels and wish to thank the Shareholders for their unstinted support and co-operation.

For and on behalf of the Board of Directors

ABHIJIT RAJAN

Chairman & Managing Director

Place: Mumbai

Dated: 23rd August, 2012

---

Mar 31, 2011

Dear Members, The Directors have pleasure in presenting their 89th Annual Report together with the Audited Accounts of the Company for the year ended 31st March, 2011.

1. FINANCIAL PERFORMANCE:

(Rs. in Crores)

Particulars Standalone Consolidated

2010-11 2009-10 2010-11 2009-10

Profit before Depreciation & Interest 280.70 421.84 557.23 752.61

Less :

Depreciation 91.71 70.93 241.23 198.11

Interest 12.31 139.66 47.10 386.89

Profit Before Tax 176.68 211.25 268.90 167.61

Less :

Provision for Taxation 58.23 85.54 150.39 114.97

Profit After Taxation 118.45 125.71 118.51 52.64

Transferred to Minority Interest — — (4.03) 4.03

Additional Tax Provision — — — —

Short/(Excess) Provision of Taxes of Earlier Period — — — —

Prior Period Adjustments — — (4.45) 2.91

Profit for the year 118.45 125.71 110.03 45.70

Add :

Profit brought forward from the previous year 273.36 231.43 40.94 70.32

Available for Appropriation 391.81 357.14 150.97 116.02

Appropriations :

Transfer to General Reserve 12.00 29.75 32.21 29.75

Transfer to Debenture Redemption Reserve 45.50 38.38 45.50 38.38

Transfer from Debenture Redemption Reserve (19.15) — (19.16) —

Dividend from Own Shares (0.58) (0.35) (0.58) (0.35)

Transfer from Foreign Project Reserve — — 6.06 —

Transfer to Foreign Currency Translation Reserve — — 0.99 (9.01)

Adjustments to Minority Interest — — 3.42 0.31

Dividend (Interim/Proposed) Equity Shares 10.63 7.65 10.63 7.65

Dividend (Proposed) Preference Shares — 6.07 — 6.07

Tax on Dividend 1.74 2.28 7.52 2.28

Balance carried to Balance Sheet 341.67 273.36 64.37 40.94

The Turnover of the Company on a standalone basis stood at Rs. 5,637 Crores for the year ended 31st March, 2011. The annualised percentage increase in turnover over previous year amounted to 24.33%. The order book position of your Company as on 31st March, 2011 was approximately Rs. 15,600 Crores.

On a consolidated basis the turnover of the Gammon group stood at Rs. 8,899.70 Crores for the year ended 31st March, 2011. The annualised percentage increase in turnover over previous year amounted to 25.11%.

2. DIVIDEND:

(a) The Board of Directors at its meeting held on 18th August, 2010, had declared an interim dividend of Rs. 0.40 paise (20%) per share of face value of Rs. 2/- each on the equity shares for the financial year 2010-11. The same was paid to the shareholders on 4th September, 2010. Members are requested to confrm the declaration and payment of the interim dividend at the Annual General Meeting of the Company.

(b) The Board of Directors at its meeting held on 12th August, 2011 has, subject to the Shareholder's approval, recommended a Final dividend of Rs. 0.40 paise (20%) per share of face value of Rs. 2/- each for the year 2011 on the equity shares. The total dividend for the financial year 2010-2011 (including interim dividend of 20% paid) aggregates to Rs. 0.80 paise (40%) per share. The dividend payout for the year under review is Rs. 10.63 Crores. Dividend Distribution Tax aggregates to Rs. 1.74 Crores.

3. DEPOSITORY SYSTEM:

The Company's equity shares are compulsorily tradeable in electronic form. As of 31st March, 2011, 90.90% of the Company's total paid-up capital representing 124,046,624 equity shares is in dematerialized form. In view of the benefts offered by the depository system, members holding shares in physical mode are advised to avail the demat facility.

4. FINANCE:

During the year under review the Company did not raise any funds from the capital markets either by way of issue of equity/ADRs/GDRs. The Company in its Board Meeting held on 9th July, 2009 had allotted 1,60,00,000 Equity Warrants convertible into Equity Shares (after receipt of 25% consideration as upfront payment at the time of allotment) to the Promoter Companies at a price of Rs. 90.20/- per warrant. During the year under review, the Promoter Companies exercised their option for conversion of balance 82,50,000 Equity Warrants into Equity Shares by paying balance 75% of the consideration aggregating to Rs. 55.81 Crores. These proceeds were utilized for meeting the working capital requirements, future expansion plans and CAPEX requirements.

The Company has also obtained financial assistance from its consortium bankers to meet its short term working capital requirements. During the year, the Company tied up Long term debt by way of issue of Secured Non-Convertible Debentures on private placement basis aggregating to Rs. 100 Crores. The total amount of outstanding Non-Convertible Debentures as on date is Rs. 377.50 Crores. The proceeds of debentures were utilized for the purposes for which they were raised.

CARE has assigned the following ratings:

Facilities Amount Ratings (Rs. in Crores)

Long Term Bank Facilities 1,100.00 CARE AA-

Long/Short Term Bank Facilities 10,400.00 CARE AA-/CARE A1

Non-Convertible Debentures 500.00 CARE AA-

CP/STD 100.00 CARE A1

CP/STD* 900.00 CARE A1

* Carved out of working capital limits

5. PUBLIC DEPOSITS:

Your Company did not invite or accept deposits from public during the year under review. 82 deposits (pertaining to previous year) aggregating to Rs. 790,000/- remained unclaimed as on 31st March, 2011. Out of these, 5 deposits amounting to Rs. 1,05,000/- have since been claimed and paid.

6. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:

During the year under review, the Company has transferred Fixed Deposits amounting to Rs. 452,000/- and Dividend (for the year 2002-03) amounting to Rs. 212,876/- to Investor Education and Protection Fund (IEPF), which was due and payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205C(2), of the Companies Act, 1956.

7. EMPLOYEE STOCK OPTION SCHEME:

The erstwhile Associated Transrail Structures Limited (ATSL) had introduced an Employee Stock Option Scheme for the beneft of its employees. Pursuant to the amalgamation of ATSL with the Company, effective from 7th July, 2009, the said scheme has been taken over by the Company. Details of the stock options granted under the Employee Stock

Option Scheme-2007 of erstwhile ATSL are disclosed in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and set out in Annexure 'A' of this Report.

8. SUBSIDIARY COMPANIES:

At the commencement of the year the Company had 43 (Forty Three) subsidiaries. It has further incorporated/acquired the following subsidiaries/step down subsidiaries during the year under review:

(i) SAE Transmission India Limited

(ii) Franco Tosi Hydro Private Limited

(iii) Franco Tosi Turbines Private Limited

(iv) Metropolitan Infrahousing Private Limited

(v) AnsaldoCaldaie Boilers India Private Limited

(vi) Preeti Townships Private Limited

(vii) Lilac Infraprojects Developers Limited

(viii) Chitoor Infra Company Private Limited

(ix) Chitoor Infrastructure Projects Private Limited (formerly known as Satyavedu Infra Company Private Limited)

(x) Tada Infrastructure Projects Private Limited (formerly known as Tada SEZ Private Limited)

(xi) Gammon Holdings (Mauritius) Limited.

The Ministry of Corporate Affairs, Government of India has, vide General Circular No. 2/2011 dated 8th February 2011, granted exemption under Section 212(8) of the Companies Act, 1956, for not attaching Annual Report of subsidiary companies, subject to fulfillment of certain conditions by the holding company. Pursuant to the Circular, the Board vide its Resolution dated 12th May, 2011 has given its consent for not attaching the Balance Sheet of the subsidiary company. In view of the said circular, the Financial Statements of the subsidiary companies have not been attached to the Company's accounts for the year ended 31st March, 2011. The consolidated financial statements published by the Company include the financial results of its subsidiary companies.

Information required to be provided in respect of subsidiary companies has been disclosed separately in the Annual report.

The Financial Statements of the subsidiary companies are available for inspection by the shareholders at the registered office of the Company. Shareholders who wish to have a copy of the accounts of the subsidiaries will be provided the same on receipt of written request from them.

9. AUDITORS' REPORT

With reference to the Auditors' observation in point no. 8 of their report on the Consolidated Financial Statements for the year ended 31st March, 2011, the management is of the opinion that the amount is contractually recoverable and the component company is in negotiations with its client and hence no provision is made towards the same.

10. AUDITORS:

M/s. Natvarlal Vepari & Co., Chartered Accountants, Firm Registration no. 106971W, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment. A certificate to the effect that their appointment, if made, will be within the prescribed limits u/s 224(1B) of the Companies Act, 1956 has been obtained from them.

The Board on the recommendation of the Audit Committee, recommends the re-appointment of M/s. Natvarlal Vepari & Co., Chartered Accountants, Firm Registration no. 106971W as the Statutory Auditors of the Company and also as the Branch Auditors, Oman Branch and any other branch for the year 2011-12, subject to approval by the Shareholders.

The Board also on the recommendation of the Audit Committee, recommends the re-appointment of M/s. Vinod Modi & Associates, Chartered Accountants, Firm Registration no. 111515W and M/s. M. G. Shah & Associates, Chartered Accountants, Firm Registration no. 112561W, as the Joint Branch Auditors of 'Gammon India Limited – Transmission Business Headquarters, Nagpur' subject to approval by the Shareholders.

11. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS:

Report on Corporate Governance and Management Discussion and Analysis Report for the year under review, together with a Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance, as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report.

12. CONSOLIDATED FINANCIAL STATEMENTS:

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard.

13. DIRECTORS:

Dr. Naushad Forbes resigned as the Director of the Company with effect from 11th November, 2010. The Board places on record its sincere appreciation for the valuable contribution made by him during his tenure as a Director of the Company.

Mr. Himanshu Parikh a Non Whole Time Director was appointed as a Whole Time Director of the Company with effect from 1st July, 2011.

Mr. Abhijit Rajan, Chairman & Managing Director whose term ended on 16th May, 2011 was re-appointed as the Chairman & Managing Director of the Company for a term of 5 (five) years with effect from 17th May, 2011.

Pursuant to the provisions of Section 256 of the Companies Act, 1956 and the Articles of Association of the Company, Mr. C.C. Dayal, Mr. Naval Choudhary and Mr. Atul Kumar Shukla retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Brief profles of the proposed appointees together with other disclosures in terms of Clause 49 of the Listing Agreement are part of the Annexure to the Notice of the Annual General Meeting.

14. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000, the Directors confrm that:

1. The applicable accounting standards have been followed by the Company in preparation of the annual accounts for the period ended 31st March, 2011;

2. The Directors have selected 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, 2011 and of the Profits of the Company for the year ended on that date;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. The annual accounts for the year ended 31st March, 2011 have been prepared on a going concern basis.

15. HEALTH, SAFETY & ENVIRONMENT:

We are committed as an organization to ensure that all our work practices and procedures emphasize on the importance of safety and are in the process of implementing various new safety measures. We want to inculcate and integrate a strong safety culture in all our operations. There are over 126 safety personnel on permanent rolls of the organization. Over half our safety personnel are diploma holders and the next majority is engineers and post graduates.

There are a lot of new processes and improvement of old processes that have been introduced in Gammon in the past year. One of the major changes has been to restructure and organize the reporting and functioning of the safety team. This was done to ensure that there is greater responsibility given as a line function so as to enhance the performance of the team. Certain major processes like third party inspection of equipment, safety related deficiency (SRD) process at site, communication channels, training and awareness programs have also been modifed. It has been made mandatory for workers who are working at critical jobs, to undergo training before commencement of the job. A process of awards, recognitions and penalties has been intiated in the Company. Based on the safety performance, various types of recognitions and penalties shall be given to individual projects to encourage the practice of a strong pro-active positive safety culture.

16. RESEARCH & DEVELOPMENT:

Increasing focus on developing infrastructure in the country has opened up many opportunities for construction companies. To rise up to the challenge of completing the huge quantum of work in a short time, it is essential to back up the onsite teams with continual improvement in construction technology. During the year under review the R&D activities undertaken by the company include:

- Pile concrete with a retention time of 7 hours and having 15 MPa strength in 24 hours successfully designed and implemented in Mumbai Port Trust Project.

- Considering the continuous scarcity of river sand in Mumbai region we have established mix designs with 100% crushed sand for all grades of concrete.

- Trials for using raw slag as replacement of sand with compatible admixture are in progress.

- Smart Dynamic Concrete mix designs established successfully for chimney shell for improving surface finish and faster construction.

- Trial for smart dynamic concrete are in process as replacement of conventional concrete.

- Structural Health monitoring device were successfully used in the launching girder which was designed after in-house R&D, at Kosi Bridge Project.

- For Kalpakkam Intake Structure, the launching of caisson was done successfully in spite of rough sea conditions with two portals on strand jacks entirely designed and fabricated in house. It was a unique system being used for the frst time in India.

17 PARTICULARS OF EMPLOYEES:

The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholders, excluding the statement of particulars of employees. Any shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company.

18. PARTICULARS UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988:

A. Conservation of Energy:

The Conservation of energy in all possible areas is undertaken as an important means of achieving cost reduction. Savings in electricity, fuel and power consumption receive due attention of the management on a continuous basis and as a result, some new initiatives for energy management are being undertaken at sites as mentioned below:

1. Using portable transformers instead of running DG sets.

2. Using APFC Panel with grid power for improvement of PF value.

3. Using of CFL instead of incandescent lamp.

4. Incorporating float switch with pump.

5. Using grid power instead of DG at A-V during 7 months unproductive period.

6. Energy audit & control over redundant running.

B. Technology Absorption:

Timely completion of the projects as well as meeting the budgetary requirements are the two critical areas where different techniques help to a great extent. Many innovative techniques have been developed and put to effective use and the efforts to develop new techniques continue unabated.

C. Foreign Exchange earnings and outgo:

Total foreign exchange used and earned during the year:

(Rs. in Crores)

Current Period Previous Period

Foreign Exchange Earnings 153.58 301.03

Foreign Exchange Outgo 170.91 145.63

19. ACKNOWLEDGMENTS:

Your Directors thank all its valued customers and various Government, Semi-Government and Local Authorities, Suppliers and other Business associates. Your Directors appreciate continued support from Banks and Financial Institutions and look forward to their co-operation in the future.

Your Directors place on record their appreciation of the dedicated efforts put in by the employees at all levels and wish to thank the Shareholders for their unstinted support and co-operation.

For and on behalf of the Board of Directors

ABHIJIT RAJAN

Chairman & Managing Director

Place : Mumbai

Dated : 19th August, 2011

---

Mar 31, 2010

The Directors have pleasure in presenting their 88th Annual Report together with the Audited Accounts of the Company for the year ended 31st March 2010.

1. FINANCIAL PERFORMANCE:

(Rs. in Crores)

Particulars Standalone Consolidated

2009-10 2008-09 2009-10 2008-09

Profit before Depreciation &

Interest 421.85 377.90 754.82 534.62

Less :

Depreciation 70.93 63.95 198.11 143.91

Interest 139.66 105.26 389.23 241.45

Profit Before Tax 211.26 208.69 167.48 149.26

Less :

Provision for Taxation 66.47 69.69 97.46 84.42

Profit After Taxation 144.79 139.00 70.02 64.84

Transferred to Minority

Interest - - 4.03 13.91

Additional Tax Provision 17.00 - 17.00 -

Short/(Excess) Provision of

Taxes of Earlier Period 2.07 (1.48) 0.50 (0.87)

Prior Period Adjustments - - 2.79 (4.52)

Profit for the year 125.72 140.48 45.70 56.32 Add :

Profit brought forward from

the previous years 231.43 159.92 70.32 118.39

Available for Appropriation 357.15 300.40 116.02 174.71

Appropriations :

Transfer to General Reserve 29.75 29.71 29.75 29.71

Reversal of Profits of

erstwhile ATSL - - - 35.47

Transfer to Debenture

Redemption Reserve 38.38 24.90 38.38 24.90

Dividend from Own Shares (0.35) - (0.35) -

Transfer from Foreign Project

Reserve - (0.32) - (0.32)

Dividend from erstwhile ATSL

received - (0.29) - (0.29)

Transfered to Foreign Currency

Translation Reserve - - (9.01) -

Adjustments to Minority Interest - - 0.30 -

Dividend (Proposed) Equity

Shares 7.65 6.50 7.65 6.50

Dividend (Proposed)

Preference Shares 6.08 6.30 6.08 6.30

Tax on Dividend 2.28 2.17 2.28 2.17

Compensation Cost Reversed

in Forfeiture of ESOP - - - (0.05)

Balance carried to Balance

Sheet 273.36 231.43 40.94 70.32

The turnover of the company on a standalone basis stood at Rs. 4,534 Crores for the year ended 31st March,

2010. The annualised percentage increase in turnover over previous year amounted to 23.14%. The order book position of your company as on 31st March, 2010 was approx Rs. 14,500 Crores.

On a consolidated basis the turnover of the Gammon group stood at Rs. 7,114 Crores for the year ended 31st March, 2010. The annualised percentage increase in turnover over previous year amounted to 36.49%.

2. DIVIDEND:

The Board of Directors at its meeting held on 14th August, 2010 has, subject to the Shareholders approval recommended:

(a) Dividend of Rs. 21/- per Share on 6% Redeemable Non-Convertible Preference Shares, proportionate upto the date of redemption.

(b) Final dividend of Rs. 0.60 paisa per share of face value of Rs. 2/- each (30%) for the year 2010 on the equity shares. The total dividend pay out for the year under review is Rs. 13.73 Crores. Dividend Distribution Tax aggregates to Rs. 2.28 Crores.

* (6% Redeemable Non-Convertible Preference Shares were redeemed on 19th March, 2010.)

3. DEPOSITORy SySTEM:

The Companys equity shares are compulsorily tradeable in electronic form. As of 31st March, 2010, 84.2% of the Companys total paid-up capital representing 107908430 equity shares are in dematerialized form. In view of the benefits offered by the depository system, members holding shares in physical mode are advised to avail the demat facility.

4. FINANCE:

During the year under review the Company did not raise any funds from the capital markets either by way of issue of equity/ADRs/GDRs. However to meet its working capital requirements and for future expansion plans and CAPEX requirements, the Company has raised money through the allotment of 1,28,09,400 Equity Shares of Rs. 2/- each at a price of Rs. 237.45/- per Equity share to Qualified institutional Buyers.

The Company has also obtained financial assistance from its consortium bankers to meet its short term working capital requirements as well as long term debt by way of issue of Non-Convertible Debentures on private placement basis aggregating to Rs. 50 Crores. As on date, total amount outstanding towards issue of Non-Convertible Debentures on private placement basis to banks and financial institutions stood at Rs. 400 Crores. CARE has assigned ‘AA’ rating for the same. The proceeds of debentures were utilized for the purposes for which they were raised.

The following credit ratings from CARE continue:

(i) PR1+ for short-term commercial paper of Rs. 600 Crores

(ii) AA for Non-Convertible Debentures of Rs. 400 Crores

(iii) AA for Long Term Bank Facilities and PR1+ for Short Term Bank Facilities aggregating to Rs. 7100 Crores.

5. PUBLIC DEPOSITS:

Your Company did not invite or accept deposits from public during the year under review. 121 deposits (pertaining to previous years) aggregating to Rs. 13,32,000 remained unclaimed as on 31st March, 2010. Out of these, 2 deposits amounting to Rs. 70,000 has since been claimed and paid.

6. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:

During the year under review, the Company has transferred Fixed Deposits amounting to Rs. 10,000/- and Dividend (for the year 2001-02) amounting to Rs. 88,404/- to Investor Education and Protection Fund (IEPF), which was due and payable and remained unclaimed and unpaid for a period of seven years, as provided in Section 205C(2), of the Companies Act, 1956.

7. EMPLOyEE STOCK OPTION SCHEME:

Erstwhile Associated Transrail Structures Limited (ATSL) had introduced an Employee Stock Option Scheme for the benefit of its employees. Pursuant to the amalgamation of ATSL with the Company, effective from 7th July, 2009, the said scheme has been taken over by the Company. Details of the stock options granted under the Employee Stock Option Scheme - 2007 of erstwhile ATSL are disclosed in compliance with Clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and set out in Annexure A of this Report.

8. SUBSIDIARY COMPANIES:

At the commencement of the year the Company had 39 (Thirty Nine) subsidiaries. It has further incorporated/ acquired the following subsidiaries during the year under review:

(i) Patna Highway Projects Limited

(ii) Gammon Seaport Infrastructure Limited

(iii) Gammon Renewable Energy Infrastructure Limited

(iv) Gammon Road Infrastructure Limited

(v) Vizag Seaport Private Limited

Bedi Seaport Limited, which was a step down subsidiary as on 31.03.2009, has ceased to be a subsidiary of Gammon Infrastructure Projects Limited (GIPL), your subsidiary. Therefore vide Section 4 (1) (c) of the Companies Act, 1956, it has ceased to be your step down subsidiary.

Pursuant to the approval granted by the Government of India vide its letter No. 47/601/2010-CL-III dated 23rd June, 2010 the Company has been granted exemption under Section 212(8) of the Companies Act, 1956 from attaching the Balance Sheet and Profit & Loss Account and other documents of its Subsidiaries and hence the same have not been attached to your company’s accounts for the year ended 31st March, 2010. Financial information of the subsidiary companies as required by the said order is disclosed in the Annual Report.

Statement pursuant to Section 212 (3) of the Companies Act, 1956 relating to subsidiary companies is attached. Information such as capital, reserves, assets etc. about each subsidiary as on 31st March, 2010 has been separately disclosed.

The Annual Accounts of subsidiary companies and the detailed related information are available for inspection by the shareholders at the registered office of the Company and at the offices of the respective subsidiary company.

9. AUDITORS:

M/s. Natvarlal Vepari & Co., Chartered Accountants, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-appointment. A certificate to the effect that their appointment, if made, will be within the prescribed limits u/s 224(1B) of the Companies Act, 1956 has been received from them.

The Board recommends the re-appointment of M/s. Natvarlal Vepari & Co., Chartered Accountants as the Statutory Auditors of the Company and also as the Branch Auditors, Oman Branch and any other branch.

The Board also recommends the re-appointment of M/s. Vinod Modi & Associates, Chartered Accountants and M/s. M. G. Shah & Associates, Chartered Accountants, as the Joint Branch Auditors of ‘Gammon India Ltd- Transmission Business Headquarters, Nagpur.

10. REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALySIS:

Report on Corporate Governance and Management Discussion and Analysis Report for the year under review, as stipulated under clause 49 of the listing agreement forms part of the Annual Report.

11. DIRECTORS:

Mr. Parvez Umrigar resigned as the Director of the Company w.e.f 23rd December, 2009. The Board places on record its sincere appreciation for the valuable contribution made by him during his tenure as a Director of the Company.

Mr. Himanshu Parikh who was appointed as a Whole-time Director of the Company for a period of 5 (five) years w.e.f. 1st May, 2008 ceased to be a Whole-time Director by virtue of his resignation as an employee of the Company effective from 6th July, 2010. He continues to be a Non-Independent Executive Director on the Board.

Pursuant to the provisions of Section 256 of the Companies Act, 1956 and the Articles of Association of the Company, Dr. Naushad Forbes, Mr. Jagdish Sheth and Mrs. Urvashi Saxena retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The approval of the members for re-appointment of the aforementioned Directors is being sought in the forthcoming Annual General Meeting.

12. DIRECTORS’ RESPONSIBILITy STATEMENT:

Pursuant to Section 217 (2AA) of the Companies (Amendment) Act, 2000, the Directors confirm that:

1. The applicable accounting standards have been followed by the Company in preparation of the annual accounts for the period ended 31st March, 2010;

2. The Directors have selected 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, 2010; and of the profits of the Company for the year ended on that date;

3. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. The annual accounts are prepared on a going concern basis.

13. HEALTH, SAFETY & ENVIRONMENT:

During the year under review the Company has taken the following initiatives to improve safety at its various sites:

- Conducted 3 Management Development Programs (84 in number) for site safety heads for functional competency development.

- Organized a 3 day interactive meet exclusively for discussing prime issues on safety & quality with preparation of time bound action plan.

- Implementation of safety action plan at project sites through effective training at all levels and promotional activities.

- Ensuring good health of our employees and spreading awareness at project sites by organizing health check up camps and HIV/ AIDS awareness programmes.

- November 2009 was celebrated as safety month for creating safety awareness at all levels and to motivate the top performers in safety.

- Introduced 5S system of work place organization for reduction of accidents and better productivity.

- Achievement of ISO: 14001-2004 EMS and OHSAS: 18001-2007 certification for our Head Office and Santacruz Chembur project site.

- Kalpakkam site 24 million safe man-hours completion.

14. RESEARCH & DEVELOPMENT:

Increasing focus on developing infrastructure in the country has opened up many opportunities for the construction companies. To rise up to the challenge of completing huge quantum of work in a short time, it is necessary to back up the onsite teams with continual improvement in construction technology. During the year under review the R&D activities undertaken by the Company include:

- High strength steel used to design double box steel launching girder for Kosi bridge, Bihar. The girder has been designed & fabricated in house and in order to ensure safe & proper working structural monitoring with high precision modern strain gauges, load cells, pressure transducers, and tilt angles will be carried out during actual loading. The monitoring mechanism is being devised so as to give a warning in case of excessive defections. The system is expected to be functional by September 2010.

- CLC gantries for casting 160 MT box girder was designed & fabricated in house for Bramhaputra bridge, Guwahati. The gantries are functional and erection works are in progress.

- For the first time in India extra-dosed bridge was constructed with cast-in-situ cantilever construction method at Sidhapura, Coorg, Karnataka. The entire design was done in house and successfully executed.

The method adopted not only enhanced the aesthetics but also provided an economical solution thus creating cost effective opportunities for future bridges in India.

- Various new techniques have been developed and implemented and existing systems improvised to enhance productivity.

15. PARTICULARS OF EMPLOYEES:

The particulars of employees required to be furnished under Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to all shareholders, excluding the statement of particulars of employees. Any shareholder interested in obtaining a copy may write to the Company Secretary at the Registered Office of the Company.

16. PARTICULARS UNDER COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988:

A. Conservation of Energy:

The Conservation of energy in all possible areas is undertaken as an important means of achieving cost reduction. Savings in electricity, fuel and power consumption receive due attention of the management on a continuous basis.

B. Technology Absorption:

Timely completion of the projects as well as meeting the budgetary requirements are the two critical areas where different techniques help to a great extent. Many innovative techniques have been developed and put to effective use in the past and the efforts to develop new techniques continue unabated.

C. Foreign Exchange earnings and outgo:

Total foreign exchange used and earned during the year.

(Rupees in Crores)

Current Previous

Period Period

Foreign Exchange Earnings 301.03 180.62

Foreign Exchange Outgo 145.63 137.51

17. ACKNOWLEDGMENTS:

Your Directors thank all its valued customers and various Government, Semi-Government and Local Authorities, suppliers and other business associates. Your Directors appreciate continued support from Banks and Financial Institutions and look forward to their co-operation in the future.

Your Directors place on record their appreciation of the dedicated efforts put in by the employees at all levels and wish to thank the Shareholders for their unstinted support and co-operation.



For and on behalf of the Board of Directors

ABHIJIT RAJAN

Chairman & Managing Director

Place : Mumbai

Dated : 14th August, 2010