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Gammon India Ltd.

BSE: 509550 Sector: Infrastructure
NSE: GAMMONIND ISIN Code: INE259B01020
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OPEN 6.20
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VOLUME 28720
52-Week high 13.70
52-Week low 5.13
P/E
Mkt Cap.(Rs cr) 225
Buy Price 0.00
Buy Qty 0.00
Sell Price 6.10
Sell Qty 220.00

Gammon India Ltd. (GAMMONIND) - Director Report

Company director report

DIRECTORSRs REPORT

The Directors have pleasure in presenting their 93rd Annual Report togetherwith the Audited Accounts of the Company for the nine (9) months period ended 30thSeptember 2014.

The Ministry of Corporate Affairs has vide General Circular08/2014 No. 1/19/2013-CL-Vdated 4th April 2014 clarified that the financial statements (and documentsrequired to be attached thereto) auditors report and board's report in respect offinancial years that commenced earlier than 1st April 2014 shall be governed bythe relevant provisions/schedules/rules of the Companies Act 1956. In view of the samethe aforementioned statements have been prepared in line with the applicable provisions ofthe Companies Act 1956.

1. FINANCIAL PERFORMANCE & OPERATIONS: (Rs in Crore)

Particulars

Standalone

Consolidated

9 months ended

9 months ended

9 months ended

9 months ended

30.09.2014

31.12.2013*

30.09.2014

31.12.2013

Profit before Other Income Depreciation & Interest (96.45)

(510.01)

143.74

(30.01)

Add:
Other Income 708.46

84.44

58.32

46.34

Less:
Depreciation 81.85

83.30

275.17

273.01

Interest 452.72

402.15

699.25

683.54

Profit/(Loss) before Tax Less: 77.44 (911.02) (772.36) (940.22)
Provision for Taxation 9.64

(145.11)

(12.14)

(123.29)

Profit/(Loss) after Taxation 67.80

(765.91)

(760.22)

(816.93)

Transferred to Minority Interest NIL

Nil

31.34

55.07

Profit/(Loss) for the year

Add:

67.80 (765.91) (728.88) (761.86)
Profit brought forward from the previous year (843.12)

(77.21)

(1913.86)

(1051.74)

Available for Appropriation Appropriations: (775.32) (843.12) (2642.74) (1813.60)
Transfer to General Reserve Nil

Nil

Nil

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 to Capital Reserve Nil

Nil

Nil

Nil

Transfer to Foreign Currency Translation Reserve Nil

Nil

(45.71)

120.64

Adjustments to Minority Interest Nil

Nil

(5.64)

(2.41)

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

Nil

Nil

(18.29)

Dividend (Proposed) Equity Shares Nil

Nil

Nil

Nil

Tax on Dividend Nil

Nil

Nil

Nil

Other Adjustments Nil

Nil

(0.14)

0.32

Balance carried to Balance Sheet (775.32)

(843.12)

(2591.25)

(1913.86)

*Figures for the previous period have been regrouped.

The year under review is a 9 month period commencing on 1st January 2014and ending on 30th September 2014. During the period the Turnover of theCompany on a standalone basis stood at Rs 2966.99 Crore as compared to Rs 3279.31 Croreduring the previous period. The Company posted a Net Profit after Tax of Rs 67.80 Croreduring the period ended 30 September 2014 as against a Net Loss after Tax of Rs 765.91Crore during the previous period ended 31 December 2013.The profit was mainly on accountof sale of the Company's stake in its infrastructure development arm Gammon InfrastructureProjects Limited to its wholly owned subsidiary Gammon Power Limited.

On a Consolidated basis the Turnover of Gammon Group stood at Rs 3842.61 Crore ascompared to Rs 4932.42 Crore for the previous period. The Group posted a Net Loss afterTax of Rs 728.88 Crore during the period ended 30 September 2014 as against a Net Lossafter Tax of Rs 761.86 Crore during the previous period ended 31 December 2013.

The macro -economic environment is facing a slow growth trend. It has furtherdeteriorated and year 2014 was another challenging year for EPC companies and your Companywas no exception. The Indian economy continued to face troubled times with thedepreciating rupee high inflation and endemic liquidity problems. Policy indecisivenessscarce financial resources inflationary pressures project delays due to unexpecteddevelopments bureaucratic hurdles and other similar factors continued to createinnumerable difficulties to both the sector and the Company.

The infrastructure segment continued to be sluggish due to policy inaction andliquidity constraints. Project execution continued to be slow due to delays in funding.Interest and Finance costs continued to be high. The backlog at stalled project sitescreated due to severe liquidity crisis continued to adversely affect project execution.The Company was affected due to resource crunch delays beyond the control of the Companysuch as delays in land acquisition municipal permission approval of designs by clientand over and above scarcity in availability of labour and materials thereby widening thegap between the planned outlay and actual spending. Order intake remained sluggish sincemany of the stalled projects are yet to be kick-started. Projects already awarded aregenerally progressing slowly due to various continuing problems on ground which remainunresolved over the years leading to cost escalations which remain unpaid.

The Company's overseas operations were characterized by weak order booking inflexiblelabour markets paucity of working capital and uncertain political climate. Continuationof recession in the European economy and weak Euro position against the USD has frazzledthe investment of the Group.

The Company is exploring several options for overcoming the liquidity crisis. The Groupis in the process of monetizing its investments in real estate as well as of its overseasassets divesting its non-core businesses and disposal of idle equipment. During the periodunder review the Company focused on realizing long pending receivables arbitrationawards retention moneys. Several projects were concluded and moneys are being realized.The Company is now concentrating on bidding projects relating to its core competency asalso projects with high yielding margins. Your management has been striving hard andtaking all efforts in ensuring repayment of interest due to CDR lenders. The Order book ason 30th September 2014 stood at Rs 12800 Crore.

With a new and progressive government at the Centre the situation is likely toimprove. With the Government's helping hand and positive attitude we look forward to aphased economic revival and boosting of business confidence due to hard policy decisions.We are hoping the government will come up with a clear cut road-map for implementing thepolicies. The upturn in sentiment means roads ports and power projects will geton-stream. In addition to this there will also be expediting of stalled infrastructureprojects revival of investment climate and sorting of infrastructure clearances. Thegovernment is expected to provide an environment conducive for growth investments withmajor reforms in infrastructure sector enabling all-round growth. There is a expected tobe a kick-start to slow-moving highway projects.

Your Directors continue to believe in the long-term potential of India's infrastructurespace. Moving forward our business growth will be driven by our proven technical prowessin design operations and maintenance. Going forward our focus will be to consolidateexisting opportunities and leverage new possibilities.

2. DIVIDEND:

As the Company is under a corporate debt restructuring the Directors have notrecommended any dividend for the nine (9) months period ended 30th September2014 even though the Company has earned profits during the said period.

3. DEPOSITORY SYSTEM:

The Company's equity shares are compulsorily tradable in electronic form. As of 30thSeptember 2014 93.08% of the Company's total paid-up capital representing 127048879equity shares is in dematerialized form. In view of the benefits offered by the Depositorysystem members holding shares in physical mode are advised to avail the demat facility.

4. FINANCE:

The Company is presently under a Corporate Debt Restructuring which was approved bylenders in June 2013. Total debts aggregating to Rs 14817.17 Crore have beenrestructured. The said restructured debts have been secured by mortgage and hypothecationof the Company's movable and immovable properties. Collateral security has also beenprovided to the CDR Lenders by way of (i) infusion of an amount of Rs 100 Crore by thepromoters (ii) pledge of equity shares held by the promoters in the Company (iii)personal guarantee by Mr. Abhijit Rajan - Chairman & Managing Director and (iv)Corporate Guarantee by one of the promoter companies viz. Nikhita Estate DevelopersPrivate Limited. The CDR package provides a ten year repayment plan (including a two yearmoratorium) of the Company's existing debts. The interest rate on the restructured debthas been lowered by 1-2% for 15 months period from cut-off date i.e. 1stJanuary 2013 upto 31st March 2015 apart from waiver of penal charges from thecut-off date till the date of implementation of the project and additional funding by wayof priority loan. The CDR package approved by the lenders gave the Company the much neededbreather to streamline its operations improve cash flows recover its long term tradereceivables reduce its operational costs and also additional funding to tide over itsimmediate working capital requirements. ICICI Bank Limited is the monitoring institutionand IDBI Trusteeship Services Limited is the Security Trustee acting on behalf of all theCDR Lenders. Majority of the envisaged securities were created by 31st March2014.

During the year under review the Company did not raise any capital from the Capitalmarkets either by way of issue of equity shares /ADR/GDR / or any debt by way ofDebentures. The Company continued to get financial assistance from its CDR lenders withinthe overall facilities sanctioned under the CDR package to meet the working capitalrequirements.

5. PUBLIC DEPOSITS:

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

6. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND:

During the nine (9) months period ended 30th September 2014 the Company hastransferred Interim Dividend amounting to Rs 209863/- and Final Dividend amounting to Rs47094/- (both for the year 2006-07) to Investor Education and Protection Fund (IEPF)which was due and payable and remained unclaimed and unpaid for a period of seven yearsas provided in Section 205C(2) of the erstwhile Companies Act 1956.

7. SUBSIDIARY COMPANIES:

No new subsidiary was incorporated / acquired by the Company during the nine (9) monthsperiod ended 30th September 2014. During the period under review names of theCompany's following step down subsidiaries were struck off the Register of Companies bythe Ministry of Corporate Affairs on an application made by the respective companies:

(a) Dohan Renewable Energy Private Limited (effective 23rd March 2014)

(b) Kasavati Renewable Energy Private Limited (effective 23rd March2014)

(c) Indori Renewable Energy Private Limited (effective 2nd July 2014)

(d) Markanda Renewable Energy Private Limited (effective 2nd July 2014)

(e) Sirsa Renewable Energy Private Limited (effective 29th August 2014)

During the period under review the Company divested its entire stake in its subsidiaryviz. Gammon Infrastructure Projects Limited ("GIPL") by sale of 528000000equity shares (constituting 52.28% at the time of the sale) of Rs 2/- (Rupees Two Only) ofGIPL to its wholly owned subsidiary viz. Gammon Power Limited . As a result of the saidsale of shares GIPL is now a step-down subsidiary of the Company.

As per the General Circular 08/2014 No. 1/19/2013-CL-V dated 4th April 2014issued by the Ministry of Corporate Affairs the financial statements (and documentsrequired to be attached thereto) auditors report and board's report in respect offinancial years that

commenced earlier than 1st April 2014 shall be governed by the relevantprovisions/Schedules/rules of the Companies Act 1956. In view of the same the financialinformation of the Company's subsidiaries have been provided as per the provisions of theerstwhile Companies Act 1956 and the applicable circulars issued thereunder.

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. 3/2011dated 21st February 2011 granted exemption under Section 212(8) of theCompanies Act 1956 for not attaching Annual Report of subsidiary companies subject tofulfillment of certain conditions by the holding company. As stated in the said circularsthe Board of Directors vide its resolution dated 18th December 2014 accordedits consent for not attaching the balance sheet of the subsidiaries. Further the Companyhas presented in the Annual Report the consolidated financial statements of the Companyand all its subsidiaries duly audited by its statutory auditors. The consolidatedfinancial statements have been prepared in strict compliance with the applicableAccounting Standards and where applicable the Listing Agreement as prescribed by theSecurities and Exchange Board of India. The Company has disclosed in the consolidatedbalance sheet the following information in aggregate for each subsidiary includingsubsidiaries of subsidiaries:- (a) capital (b) reserves (c) total assets (d) totalliabilities (e)details of investment (except in case of investment in the subsidiaries)(f) turnover (g) profit before taxation (h) provision for taxation (i) profit aftertaxation (j) proposed dividend.

8. CONSOLIDATED FINANCIAL STATEMENTS:

Your Directors have pleasure in attaching the Consolidated Financial Statementspursuant to Clause 32 of the Listing Agreement entered into with the Stock Exchanges andprepared in accordance with the Accounting Standards prescribed by the Institute ofChartered Accountants of India in this regard and forms part of the Annual Report.

9. DIRECTORSRs EXPLANATION ON AUDITOR'S REPORTS:

Directors explanation on the Auditors comments on the financial statements (both onStandalone and Consolidated) for the year ended 30th September 2014 as set outin their respective auditors reports of 5th December 2014 and 18thDecember 2014 is as follows:

(a) With reference to clause (e) of the "Basis of Qualified Opinion" inthe Audit Reports on the Standalone Financial Statements wherein the auditors have opinedthat the Company has during the year after 1st April 2014 granted unsecuredloans to one of its Joint Ventures beyond the limits specified in Section 186 of theCompanies Act 2013 i.e. without the prior approval of the members in general meeting theBoard would like to inform you that as explained in Note 12(vi) of the StandaloneFinancial Statements the loan was given as a business exigency and in the ordinary courseof business. The Company had entered into joint venture namely Gammon Cidade TensacciaiJoint Venture (the "JV") with Construtora Cidade LTDA and Tensacciai S.p.A. forthe purpose of execution of "Construction of bridge and its approaches over riverYamuna downstream of existing bridge of Wazirabad [SH: Main Bridge (Cable Stayed)] atDelhi" (the "Project"). The JV was required to import materials for thesaid Project. On account of business exigency the Company had granted unsecured loan tothe JV for purchasing the material. The said transaction amounted to giving of loan by theCompany to the JV and though in the ordinary course of business exceeded the limitsprescribed under Section 186 of the Companies Act 2013. The Directors would also like toinform you that the Company shall in due course obtain shareholdersRs approval forgiving of loans/advances to its joint ventures/associates.

(b) With reference to clause (a) of the "Basis of Qualified Opinion" inthe Audit Reports on both Standalone as well as Consolidated Financial Statements whereinthe auditors have opined that they are unable to comment on the adequacy of the provisionsmade by the Company for diminution of the value of its investments due to non-availabilityof financials of Franco Tossi Mecanica S.p.A ("FTM") the Company's subsidiary inItaly the Board while drawing your attention to Note 33(c)(i) and (ii) of Standalone andin Note 1(a)(ii)(a) of Consolidated Financial Statements would like to reiterate that FTMhas filed an application for a preinsolvency procedure which has been admitted by a courtat Milan. In light of the ongoing procedure till date the financial statements of FTMhave not been released by the empowered Commissioner. Further it is envisaged that thesewill not be released until the process of insolvency is complete. However the Company hasmade adequate provision towards its exposure for all the known liabilities in FTM. Themanagement is of the opinion that since it will recover an amount not less than thecarrying amount of FTM no further provision for diminution is required to be made.

(c) With reference to clause (b) of the "Basis of Qualified Opinion" inthe Audit Reports on both Standalone as well as Consolidated Financial Statements whereinthe auditors have opined that "they are unable to comment on the adequacy of theprovisions made towards the Company's exposure towards corporate guarantees issued towardsthe jobs of FTM" the Board would like to inform you that as mentioned in Note33(c)(iii) of Standalone and in Note 1(a)(ii)(b) of Consolidated Financial Statements theCompany is in active negotiation with the clients of FTM for the cancellation of thedemand of € 17.80 Million (Rs 139.21 Crore) made by the Clients. Further the Companyhas made provision for the balance amount of € 4.04 Million (Rs 31.59 Crore).

(d) With reference to clause (c) of the "Basis of Qualified Opinion" inthe Audit Reports on both Standalone as well as Consolidated Financial Statements whereinthe auditors have opined that "they are unable to comment on the adequacy of theprovisions made towards the Company's exposure in investments in and Guarantees given bythe Company in respect of SAE Powerlines 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 inNote 1(a)(v) of Consolidated Financial Statements the management is of the opinion thatconsidering the order book position and adequate references and strengths in internationalmarkets of its subsidiary SAE Powerlines the provision made by it for impairment of itsinvestment loans and trade receivables is adequate.

(e) With reference to clause(d) of the "Basis of Qualified Opinion" inthe Audit Report on Standalone Financial Statements and Clause (e) of the "Basis ofQualified Opinion" in the Audit Report on Consolidated Financial Statements whereinthe auditors have opined on managerial remuneration the Board would like to inform youthat as mentioned in Note 24(a) of Standalone and in Note 24 of Consolidated FinancialStatements the Company's application for payment of 'Minimum RemunerationRs of Rs 6 Croreto Mr. Abhijit Rajan - Chairman & Managing Director for the financial years 2012-13& 2013-14 was rejected by the Ministry of Corporate Affairs ("MCA"). TheCompany has made an application to the MCA for review of its decision and the MCA's replyin this matter is awaited. The Company had also made an application to the MCA for waiverof payment of 'Minimum RemunerationRs of Rs 2 Crore to Mr. Himanshu Parikh (FormerExecutive Director) for the financial year 2012-13. In response to the Company's saidapplication the MCA approved payment of 'Minimum RemunerationRs of Rs 1.66 Crore to Mr.Parikh. The Company has made a representation to the Ministry to reconsider its decisionand reply is awaited. In view of the pending status of the aforementioned applications noeffect for the same has been given in the financial statements.

(f) With reference to clause (d) of the "Basis of Qualified Opinion"inthe Audit Report on Consolidated Financial Statements wherein the auditors have reportedthat the financial statements of Sofinter S.p.A. ("Sofinter) Campo Puma Oriente S.A.("CPO") Ansaldo Caldaie Boilers (India) Limited Gammon Holdings (Mauritius)Limited Ansaldo Caldaie GB Engineering Limited and Gammon OJSC Mosmetrostroy JointVenture are unaudited the Board would like to inform you that as mentioned in Note1(a)(i) 1(b)(iii) and Note 1(c) of Consolidated Financial Statements the financialstatements of these companies could not be audited due to insufficient time unavailability of support staff and other severe administrative issues in these companies.Hence the financial statements are as per management prepared accounts except in case ofCPO & OJSC which were not audited on account of differences between the joint venturepartners.

(g) With reference to clause (d) of the "Basis of Qualified Opinion"inthe Audit Report on Consolidated Financial Statements wherein the auditors have reportedabout the non-recognition of possible claims on trade receivables of Europower S.p.A. asubsidiary of the Associate Sofinter S.p.A. the Board would like to inform you that asmentioned in Note 1(c)(i)(c) of Consolidated Financial Statements Europower S.p.A. hasinitiated legal proceedings in the competent court in Italy against their customer torecover the amount of Euro 3 Million i.e. Rs 23.46 crore (Company's share being Euro 0.98Million (Rs 7.62 crore). Pending the outcome of the said litigation the risk ofnon-recovery arising from the same has been provided by Europower S.p.A to the extent of2.3 Million Euro i.e. Rs 17.92 crore. Considering the current status of the legalproceedings the Directors of the said Europower S.p.A. believe that Sofinter S.p.A. willnot incur additional losses over and above the said amount.

(h) With reference to clause (d) of the "Basis of Qualified Opinion"inthe Audit Report on Consolidated Financial Statements wherein the auditors have reportedabout non provision of trade receivables of Gammon & Billimoria LLC (GBLLC) Dubai aSubsidiary of the Company the Board would like to inform you that as mentioned in Note16(iv) of Consolidated Financial Statements the amount is due from a Debtor of GBLLCwhich includes retention money aggregating to AED 2.7 million (Rs 4.54 crore) due

to GBLLC acting as a sub-contractor. The management of the said subsidiary is of theopinion that the amount is contractually recoverable and the subsidiary company is innegotiations with the principal client and in their opinion no provision is required to bemade towards the same.

(i) With reference to second para of clause (d) of the "Basis of QualifiedOpinion" in the Audit Report on Consolidated Financial Statements wherein theauditors have reported their inability to determine recoverability of an amount of Rs81.27 Crore in connection with legal proceedings initiated by the Company's subsidiariesviz. (i) Patna Buxar Projects Limited and (2) Mormugao Terminal Limited against unilateraltermination of their respective concession agreements the Board would like to inform youthat since the management of the respective aforementioned companies is confident ofrecovery of the aforesaid amounts no provision has been made in the accounts.

(j) With reference to clause (f) of the "Basis of Qualified Opinion" inthe Audit Report on Consolidated Financial Statements wherein the auditors have opined onencashment of bank guarantee of one of the subsidiaries viz. Patna Water SupplyDistribution Network Private Limited by the client and subsequent termination of thecontract by the Client the Board would like to inform you that since the said subsidiarybelieves that it has a good case against the Client it has sought legal advice on thematter and hence the said encashment does not require any provision.

MembersRs attention is drawn to "Emphasis of Matter" stated in the Auditor'sReport dated 5th December 2014 on the Standalone Financial Statements and inthe Audit Report dated 18th December 2014 on the Consolidated Financialstatements for the nine (9) months period ended 30th September 2014. TheDirectors would like to state that the said matters are for the attention of members onlyand have been explained in detail in the relevant notes to accounts as stated therein andhence require no further clarification.

10. AUDITORS:

The members had at the 92nd Annual General Meeting held on 30thJune 2014 approved the appointment of:

(a) M/s. Natvarlal Vepari & Co. Chartered Accountants Firm Registration no.106971W Statutory Auditors of the Company for the next three (3) financial years i.e.2014-2015 2015-16 and 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 for the next five (5) financial years i.e. 2014-2015 2015-162016-17 2017-18 and 2018-19.

Pursuant to Rule 3(7) of the Companies (Audit and Auditors) Rules 2014 the aforesaidappointments need to be ratified by the members at the forthcoming Annual General Meeting.Accordingly (i) the appointment of M/s. Natvarlal Vepari & Co. CharteredAccountants as the Statutory Auditors of the Company to hold office from the conclusionof the meeting until the conclusion of the Annual General Meeting to be held for thefinancial year 2016-17 and (ii) the appointment of M/s. Vinod Modi & AssociatesChartered Accountants Firm Registration no. 111515W and M/s. M. G. Shah & AssociatesChartered Accountants Firm Registration no. 112561W as the Joint Branch Auditors of'Gammon India Limited -Transmission& Distribution Business to hold office from theconclusion of the meeting until the conclusion of the Annual General Meeting to be heldfor the financial year 2018-19 is commended for ratification by the members.

A certificate from (i) M/s. Natvarlal Vepari & Co. Chartered Accountants (ii)M/s. Vinod Modi & Associates Chartered Accountants and (iii) M/s. M. G. Shah &Associates Chartered Accountants that their appointment is within the prescribed limitsunder Section 141 of the Companies Act 2013 has been obtained.

11. COST AUDITOR :

Pursuant to the Cost Audit Order dated 24th January 2012 issued by theMinistry of Corporate Affairs (MCA) the Board of Directors had appointed Mr. R. S.Raghavan as the Cost Auditor for audit of cost accounting records of the transmission anddistribution business for the nine (9) months period ended 30th September 2014.The report of the Cost Auditor will be filed with the MCA within the prescribed period.The Board in its meeting held on 5th December 2014 has on the recommendationof the Audit Committee and subject to the approval of the Central Government approved there-appointment of Mr. R. S. Raghavan as the Cost Auditor of the Company for the financialyear commencing from 1st October 2014 for the applicable product of thetransmission and distribution business.

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

Report on Corporate Governance and Management Discussion and Analysis Report for theyear under review together with a Certificate from the Auditors of the Company regardingcompliance of the conditions of Corporate Governance as stipulated under Clause 49 of theListing Agreement forms part of the Annual Report.

13. DIRECTORS:

During the nine (9) months period ended 30th September 2014 Mr. PeterGammon Non-Executive Director (Chairman Emeritus) and Mr. Parvez Umrigar Non-ExecutiveNon-Independent Director resigned from the Company's Board with effect from 28thJune 2014 and 31st July 2014 respectively. The Board places on record itssincere appreciation for the services rendered by Mr. Peter Gammon and Mr. Parvez Umrigar.

The members have at the 92nd Annual General Meeting held on 30thJune 2014 approved the appointment of the following Independent Directors for a term offive (5) consecutive years up to 31st March 2019:

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 Board at its meeting held on 18th December 2014 on the recommendationof the Nomination and Remuneration Committee appointed/re-appointed the followingdirectors:

1. Mr. Ajit B. Desai was appointed as the Whole-time Director of the Company designatedas Executive Director & Chief Executive Officer for a period of three (3) years. Theappointment of Mr. Desai as the Executive Director & Chief Executive Officer issubject to the approval of the CDR Lenders the shareholders and the Central Government.

2. Mr. Rajul A. Bhansali was re-appointed as the Whole-time Director of the Companydesignated as Executive Director - International Operations for a further period of three(3) years. The re-appointment of Mr. Bhansali as the Executive Director - InternationalOperations is subject to the approval of the shareholders and the Central Government.

14. DIRECTORSRs RESPONSIBILITY STATEMENT:

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

1. The applicable accounting standards have been followed by the Company in preparationof the annual accounts for the nine (9) months period ended 30th September2014;

2. The Directors have selected accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 30th September 2014 and ofthe Profit of the Company for the period ended on that date;

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

4. The annual accounts for the nine (9) months period ended 30th September2014 have been prepared on a going concern basis.

15. PARTICULARS OF EMPLOYEES:

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

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

A. Conservation of Energy:

"Energy conservation'Rs means to reduce the quantity of energy that is used fordifferent purposes. This practice results in increase of financial capital environmentalvalue national and personal security and human comfort. Your Company is continuing withenergy saving measures initiated earlier. Practices followed for conservation of Energyand efficient energy use are as follows:

• Constant monitoring of Diesel Consumption at the project sites.

• Replacement of diesel/fuel operated plant and machinery with electricallyoperated plant and machinery wherever possible at the project sites.

• Effective utilization of plant & machinery at the project sites.

The following initiatives taken at the Company's T&D Division at Nagpur to conserveenergy and environment by reducing the consumption of non-renewable energy sourcescontinue to be followed during the current year:

• Installation of drying oven for preheating of materials prior to galvanizingwith the help of waste flue gases from galvanizing furnace which has reduced fuelconsumption by 10%.

• Change in fuel from LDO to Ignite oil and from ignite oil to Liquefied PetroleumGas through liquid offtake (LOT) system in galvanizing furnace reduces carbon depositionwhich 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 ofNatural 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 Deoliworks.

• Installed air operated diaphragm type pump instead of 10 HP electrical pump tosave 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 thetwo critical areas where different techniques help to a great extent. Many innovativetechniques have been developed and put to effective use and the efforts to develop newtechniques continue unabated.

C. Research and Development (R & D):

Increasing focus on developing infrastructure in the country has opened up manyopportunities for the construction companies. In the continued difficult economicconditions cost reductions and early completion of projects remains high on the agendafor every construction company. The opportunities for economizing the designs improvingthe productivity reducing wastage and adopting better construction practices leave a lotof scope for research and technology implementation. There is an urgent need to increaseefforts for standardization of equipment formwork structural designs and constructionprocedures. The current market challenges makes it all the more important not to losefocus on the Research & Technology investments as innovating technologies are key toovercome the economic challenges.

To rise up to the challenge of completing huge quantum of work in a short time we haveto back up the onsite teams with continual improvement in construction technology. Duringthe year under review the R&D activities undertaken by the company include:

• Designing high strength M60 M80 grade concrete for vertical pumping distance of170 metres.

• Designing prestressed concrete for bridge superstructure with high earlystrength using Fly Ash as replacement of cement

• Designing concrete cooling systems for placing mass concrete at 10C

• Designing & construction of composite well on sloping rock profile

• 3T Capacity cantilever platform with telescopic arrangement for material loading& shifting

• 1.5T capacity Movable Formwork Lifting Gantry for DAM construction

• Access stair tower 4 storied high on modular cantilever structural arrangement

• 7m cantilever structural cover at high-rise building for safety of pedestrianmovement

• Designing fabrication and erection methodology for Santacruz-Chembur Link RoadProject (SCLR)-Phase-1- Section-II. Fabrication and Erection of 50.9 m long Steel PlateGirders (each girder weighing around 70 t).

D. Foreign Exchange Earnings and Outgo:

Total foreign exchange used and earned during the year:

Current Period

Previous Period

Foreign Exchange Earnings 145.97

186.63

Foreign Exchange Outgo 113.04

162.60

17. ACKNOWLEDGEMENTS:

Your Directors thank all its valued customers and various Government Semi-Governmentand Local Authorities Suppliers and other Business associates. Your Directors appreciatecontinued support from Banks and Financial Institutions and look forward to theirco-operation in the future. Your Directors place on record their appreciation of thededicated efforts put in by the employees at all levels and wish to thank the Shareholdersand 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: 18th December 2014