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GMR Infrastructure Ltd.

BSE: 532754 Sector: Engineering
NSE: GMRINFRA ISIN Code: INE776C01039
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VOLUME 6055616
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Mkt Cap.(Rs cr) 13,671
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Sell Price 22.65
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OPEN 22.75
CLOSE 22.75
VOLUME 6055616
52-Week high 25.00
52-Week low 12.48
P/E
Mkt Cap.(Rs cr) 13,671
Buy Price 0.00
Buy Qty 0.00
Sell Price 22.65
Sell Qty 14604.00

GMR Infrastructure Ltd. (GMRINFRA) - Director Report

Company director report

Dear Shareholders

The Board of Directors present the 21st Annual Reporttogether with the audited financial statements of the Company for the financial year (FY)ended March 31 2017.

Your Company GMR Infrastructure Limited ("GIL") operates inAirports Energy Transportation and Urban Infrastructure business sectors in India andfew other countries through various subsidiaries associates and jointly controlledentities. The Company has an Engineering Procurement and Construction (EPC) businessfocusing on execution of projects of Group SPVs and external customers like Railways inmany infrastructure sectors like Railways Transportation Energy etc. The Group hasacquired a prominent space in airports sector with more than 27% of total country'spassenger traffic being routed through the two airports managed by the Group and has anoticeable presence in Energy sector. The year under review was very eventful as we had anew investor coming-in at the Energy sector and being the 1st year of IndianAccounting Standards (Ind AS) implementation.

Performance highlights – FY 2016-17

Performance Highlights of your Company on consolidated basis for thefinancial year 2016-17:

Gross Debt came down significantly to Rs 19554 Crore in 2016-17 from

Rs 37482 Crore in 2015-16

Stellar Performance of Airports Sector driving the Group'sfinancials – Increase in Profits for both DIAL and GHIAL; DIAL and GHIAL declareddividend for the first time; Goa airport added to the portfolio

Energy Sector registers turnaround - GMR Warora achieves net profit ofRs 143 Crore for the first time

Restructuring of Energy Sector with induction of Tenaga Nasional Berhadas Strategic Partner

Winning of Arbitration Award for Maldives Airport; receivedcompensation of Rs 1800 Crore

Financial results are presented under Ind AS for the first time

EBITDA for the year increased by 16.75% to Rs 3219.97 Crore from

Rs 2757.69 Crore of the previous year.

Financial results – FY 2016-17

a) Ind AS implementation

Your Company has successfully adopted Ind AS for the first time duringthe FY 2016-17 and the financial statements for all the group companies includingsubsidiaries joint ventures and associates have been prepared under Ind AS. Consequentlythe consolidated financial results for the year ended March 31 2016 have also beenrestated in accordance with Ind AS.

Consolidation principles under Ind AS are different from the earlierIGAAP especially with respect to assessment of control of the subsidiaries andconsolidation of joint ventures. Ind AS goes by substance and any entity which is underjoint control of two or more shareholders is treated as jointly controlled entity andaccounted as a joint venture ("JV") irrespective of the shareholding pattern.Consequently many of our subsidiaries have been assessed as jointly controlled entitieson account of participative rights held by other partners / investors. Further under IndAS JVs are accounted under equity method as against the proportionate line by lineconsolidation under previous IGAAP. Accordingly only the net profit / (loss) of the JVsand associates is reported as a single line item in the statement of profit and loss.

The GAAP differences on account of differential treatment ofSubsidiaries and JVs have significant impact on the financial results which need to betaken into account while analyzing the results by stakeholders. Note no. 56 of theconsolidated financial statements present reconciliation of the Net profit / (loss) of theprevious year ended March 31 2016 reported as per the previous GAAP (IGAAP) and restatedInd AS financials. Further the presentation of Statement of Profit and Loss as perSchedule III of the Companies Act 2013 require separation of continuing and discontinuedoperations and this also significantly impacted the presentation of results.

Analysis of the Company's audited Ind AS consolidated andstandalone financial results is given below:

b) Consolidated financial results

(Rs in Crore)

March 31 2017 March 31 2016
Continuing operations
Income
Revenue from operations:
Sales / income from operations 9768.63 8260.96
Other income 465.44 416.54
Total Income * 10234.07 8677.50
*excluding turnover of discontinued operations of Rs 1397.79 crore (March 31 2016 : Rs 2556.44 crore)
Expenses
Revenue share paid / payable to concessionaire grantors 2762.93 2412.29
Operating and other administrative expenditure 3785.73 3090.98
Depreciation and amortization expenses 1059.92 1196.66
Finance costs 2128.52 2196.49
Total expenses * 9737.10 8896.42
*excluding expenes of discontinued operations of Rs 3265.11 crore (March 31 2016 : Rs 4663.66 crore)
Profit / (loss) before share of (profit) / loss of associate and joint ventures exceptional items and tax 496.97 (218.92)
from continuing operations
Share of (loss) / profit of associates and joint ventures (net) (68.40) 16.17
Profit / (loss) before exceptional items and tax from continuing operations 428.57 (202.75)
Exceptional items - (loss) / gains (net) (385.70) (64.15)
Profit / (loss) before tax from continuing operations 42.87 (266.90)
Tax expenditure 737.03 181.51
(Loss) / profit after tax from continuing operations (694.16) (448.41)
EBITDA from continuing Operations (sales/income from operations – Revenue share – Operating and other admin exp) 3219.47 2757.69
Discontinued operations
Profit / (loss) from discontinued operations before tax expenses 336.55 (2293.95)
Tax expenditure 6.69 6.92
Profit / (loss) after tax from discontinued operations 329.86 (2300.87)
Total (Loss) / profit after tax for the year (364.30) (2749.28)
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations 27.54 33.43
Other comprehensive income not to be reclassified to profit or loss in subsequent periods:
Re-measurement gains (losses) on defined benefit plans (5.29) (0.72)
Other comprehensive income for the year net of tax 22.25 32.71
Total comprehensive income for the year net of tax (342.05) (2716.57)
(Loss) / profit for the year attributable to (364.30) (2749.28)
a) Equity holders of the parent (574.59) (2712.50)
b) Non controlling interests 210.29 (36.78)
Total comprehensive income attributable to (342.05) (2716.57)
a) Equity holders of the parent (552.34) (2679.79)
b) Non controlling interests 210.29 (36.78)
Earnings per equity share (Rs) from continuing operations (1.30) (1.07)
Earnings per equity share (Rs) from discontinued operations 0.34 (3.74)
Earnings per equity share (Rs) from continuing and discontinued operations (0.96) (4.81)

Financial Year 2016-17 saw a very strong performance in both operatingand financial parameters of the airport sector which has contributed significantly to theincrease in consolidated revenues. There was very good growth in energy and EPC revenuesalso but highways revenue remained stagnant. Revenues don't include the revenue ofthe entities which were assessed as jointly controlled entity / JV under Ind AS includingGMR Kamalanga Energy Limited (GKEL) and Delhi Duty Free Services Private Limited (DDFS).Consequent to investment by Tenaga in Energy sector GMR Energy Limited (GEL) and itssubsidiaries were assessed as JV and accordingly the revenues for 2016-17 do not includerevenue of GEL and its subsidiaries post investment by Tenaga. Airport Energy HighwaysEPC and other segments contributed Rs 7080.54 Crore (72.48%) Rs 1485.89

Crore (15.21%) Rs 408.49 Crore (4.18%) Rs 380.86 Crore (3.90%) and

Rs 412.85 Crore (4.23%) respectively to the consolidated revenue fromoperations.

Increase in revenue share paid / payable to concessionaire grantors wason account of higher revenue from DIAL. Reduction in other operational costfinance cost and depreciation charge was mainly on account of non-consolidation of GEL andits subsidiaries post investment by Tenaga and GREL and GCHEL post SDR.

Your Company was successful in bringing in a strategic investor Tenagawho has invested USD 300 million in the Energy sector.

c) Standalone financial results

(Rs in Crore)

Particulars

March 31 2017

March 31 2016

Revenue from operations 1179.77 1239.17
Operating and administrative expenditure (451.41) (221.61)
Other Income 2.65 16.68
Finance Costs (744.74) (708.31)
Depreciation and amortisation expenses (16.13) (15.77)
(Loss)/profit before exceptional items tax expenses minority interest and share of (loss)/ profit of (29.86) 310.16
associates
Exceptional Items:
Provision for diminution in value of investments / advances in subsidiaries / associate (3654.16) (2015.73)
(Loss)/profit before tax expenses minority interest and share of (loss)/ profit of associates (3684.02) (1705.57)
Tax expenses (0.09) (14.67)
(Loss)/profit before minority interest and share of (loss)/ profit of associates (3684.11) (1720.24)
Net (deficit) / surplus in the statement of profit and loss - Balance as per last financial statements (785.56) 938.76
Transfer from debenture redemption reserve (1.76) (4.11)
Surplus / (Deficit) available for appropriation (4471.43) (785.56)
Appropriations - (0.01)
Net deficit in the statement of profit or loss (4471.43) (785.56)
Earnings per equity share (Rs) - Basic and diluted (per equity share of Rs 1 each) (6.12) (3.05)

During the year ended March 31 2017 the revenue from EPC segment hasincreased by 120.65% from Rs 178.01 Crore to Rs 392.77 Crore which was mainly on accountof contribution by the ongoing DFCC (Railways) project. Other operating income of thecompany came down to Rs 787 Crore from

Rs 1061.16 Crore on account of reduction in interest income and onaccount of on conversion of loans given to its subsidiaries / joint ventures /associates as they were converted into equity.

During the year ended March 31 2017 based on an internal assessmentthe Company has made a provision of Rs 3654.16 Crore (March 31 2016:

Rs 2015.73 Crore) towards diminution in value of its investment in GMRHighways Limited (GHWL) GMR Generation Assets Limited (GGAL) GMR Aviation PrivateLimited (GAPL) GMR Rajahmundry Energy Limited (GREL) and GEL primarily on account oftheir accumulated losses and diminution in value of investments/advances in theirsubsidiaries. The same has been disclosed as an exceptional item in the financialstatements.

Dividend / Appropriation to Reserves

Your Directors have not recommended any dividend on equity shares forthe FY 2016-17.

Reserves

The net movement in the major reserves of the Company on standalonebasis for 2016-17 and the previous year is as follows: (Rs in Crore)

Particulars

March 31 2017

March 31 2016

Equity component of compound financial instruments 133.94 133.94
Treasury Shares (101.54) (101.54)
General Reserve 40.62 40.62
Securities Premium Account 10010.99 10010.99
Surplus in Statement of Profit and Loss (4471.47) (785.57)
Debenture Redemption Reserve 127.21 125.44
Capital Reserve 141.75 141.75
Foreign currency monetary translation difference account 33.45 (0.89)
Other comprehensive income (1.34) (0.51)
5913.61 9564.24

Management Discussion and Analysis Report (MDA)

MDA Report for the year under review as stipulated in Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (hereinafter referred to as "SEBI LODR") is presented in a separatesection forming part of the Annual Report.

The brief overview of the developments of each of the majorsubsidiaries' business is presented below. Further MDA forming part of this Reportalso brings out review of the business operations of major subsidiaries and jointlycontrolled entities.

Airport Sector

Your Company's airport business comprises of 3 operating airportsviz. Delhi and Hyderabad International Airports in India and Mactan Cebu InternationalAirport in Philippines and one asset under development viz. Greenfield airport at MopaGoa. The Indian airports are owned by your Company's subsidiary GMR Airports Limited(GAL) while the 40% stake in GMR Megawide Cebu Airport Corporation (GMCAC) is held throughanother subsidiary GMR Infrastructure (Singapore) Pte. Limited.

Your Company's aviation business comprises of GAPL a 100%subsidiary of the Company which is operating in the general aviation space.

An overview of these assets during the year is briefly given below:

Delhi International Airport Limited (DIAL)

DIAL is a Joint Venture (JV) between GAL (64%) Airports Authority ofIndia (AAI) (26%) and Fraport AG Frankfurt Airport Services Worldwide (Fraport) (10%).DIAL has entered into a long-term agreement to operate manage and develop the IndiraGandhi International Airport (IGIA) Delhi.

Highlights of FY 2016-17:

DIAL surpassed the 57 million passenger mark in FY 2016-17 witnessinga growth of ~20% in traffic over previous year led by domestic growth of ~24%. Delhiairport crossed the 5 million passenger/month mark twice during the year while the maximumAir Traffic Movements (ATMs) handled per day reached 1238. Strong growth in domesticcargo segment propelled DIAL to retain its number one position in cargo traffic in Indiawith an 8% overall growth in FY 2016-17 over the previous year. Due to delay indetermination of tariff for the second control period the tariffs of the first controlperiod have continued.

The non-aeronautical revenues continued its double digit growth led bycommercial non-aero sales and land / space rentals. Delhi airport became the first airportto launch an e-shopping platform.

Strong focus on developing organizational culture based on operationalexcellence and customer focused initiatives helped DIAL to emerge as the 2ndbest airport in the Asia Pacific region as well as the 2nd best airport in thegroup of airports which handle 40+ million passengers per annum (mppa) category.

DIAL also successfully completed the 2nd phase of landmonetization by awarding a 23 acre land parcel to Bharti Realty for an Integrated Retaildevelopment project.

Key Awards and Accolades received in FY 2016-17:

World's second best airport in the 40 million + pax category aswell as second best airport in Asia Pacific region as rated by Airports CouncilInternational.

Best Airport Staff in India and Central Asia in 2017.

SKYTRAX World Airport Awards for Third year in a row.

Best Airport – Central and South Asia FTE Asia Awards 2016.

‘Golden Peacock Award for Social Responsibility' in theAviation Transport Category in 2016.

First Airport in Asia Pacific region to achieve Carbon NeutralAccreditation.

First Airport in the world to adopt Green Building Monitoring PlatformSystem – ARC.

Platinum Rating from Indian Green Building Council for Terminal 3.

Network 18 and Honeywell Smart Building award for -

• Smartest Airport in India

• Smartest Building in India.

Best PR case study Best corporate event and social media campaign of2016 at the Public Relations Council Summit.

Excellence in Cost Management.

Overall Social Media Strategy Award 2016 for various travellers–friendly social media initiatives.

Special Recognition in the 29th Quality Circle Competitionby CII.

CII National Excellence Practice Competition-2016.

GMR Hyderabad International Airport Limited (GHIAL)

GHIAL is a JV between GAL (63%) AAI (13%) Government of Telangana(13%) and MAHB (Mauritius) Private Limited (11%) and has entered into a long-termagreement to operate manage and develop the Rajiv Gandhi International Airport (RGIA)Hyderabad.

Highlights of FY 2016-17:

GHIAL continued to record strong traffic growth in its 9thyear of operation. Passenger traffic touched 15.29 million registering a growth of 22%year on year (Y-o-Y). Similarly Cargo also registered impressive growth to reach 123489MT a growth of 9% Y-o-Y. ATMs also had a strong growth of 23% Y-o-Y ending the year with130455. The year also showed remarkable progress towards GHIAL's Mission of beingthe Gateway of Choice and Preferred Logistics Hub for South and Central India regionmarked by Air Asia and Go Air launching their passenger operations. With this all majorIndian carriers have a presence at Hyderabad airport.

Towards ensuring a well-rounded and enjoyable experience to itspassengers the airport enhanced its retail and shopping experience by modifying thelayout to unidirectional flow which has yielded additional number of new stores andretail outlets at the passenger terminal. The Airport charges for GHIAL (User DevelopmentFee (UDF) and Passenger Service Fee – Facilitation Component (PSF)) were successfullyrestored vide the Interim Order from the Hyderabad High Court which has enhanced the cashflow and the same was implemented with effect from November 05 2015. The same tariffscontinued through 2016-17 with Airports Economic Regulatory Authority (AERA) stillworking on the consultation paper for determining tariff for GHIAL for the control period2016-20.

To enhance the passenger experience GHIAL has operationalized anend-to-end E-Boarding process for domestic passengers becoming the first airport in Indiato implement the same. It has improved the efficiency at each security check point and hasstarted the journey of Indian Aviation along the path of "Digital India" asenvisaged by the Hon. Prime Minister.

Despite challenges GHIAL has always maintained its focus on servicequality and passenger delight and this continued dedication saw the airport win accoladesfrom passengers and industry associations for its excellence in service delivery with ACIranking RGIA as the best airport in the world for ASQ in the 5-15 million passengercategory with a score of 4.94.

With regard to real estate development GHIAL is proud to share thatAmazon has selected Hyderabad airport for setting up its fulfillment center. Further apharmaceutical company has also signed a long term lease with GHIAL for 33 acres of land.

Awards and Accolades received in FY 2016-17:

World's Best Airport 2016 in ASQ Rating by ACI in 5-15 mnpassenger category.

"Order of Merit" awarded in the field of environment by CAPA.

Fastest Growing Cargo Airport 2016 at India Cargo Awards - West andSouth.

ASSOCHAM's Corporate Governance Excellence Award as Runners upunder the unlisted private sector category.

GMR Megawide Cebu Airport Corporation (GMCAC)

GMCAC a JV between GMR group (40%) and Megawide Corporation (60%)entered into a concession agreement with Mactan Cebu International Airport Authority fordevelopment and operation of Mactan Cebu International Airport (Cebu airport) for a periodof 25 years. GMCAC took operational responsibility of the airport in November 2014 and hasnow been operating the airport for nearly 30 months.

Highlights of FY 2016-17:

GMCAC has laid great emphasis on boosting traffic at Cebu airport bothdomestic and international.

In a bid to boost international tourism GMCAC has been working withthe tourism body of Cebu and Philippines as well as with travel agents to boost touristtraffic from China Japan Australia United States and the Middle East. As a resultGMCAC has seen international traffic grow by 15% while the domestic traffic has also grownat 8.8%. In terms of international connectivity GMCAC has added some key routes viz.Cebu – Dubai Cebu – Los Angeles Cebu- Taipei Cebu- Xiamen and Cebu –Chengdu.

GMCAC is also steadily working towards development of the new terminal.To mitigate the delay in handover of land which was under occupation of the PhilippinesAir Force GMCAC has started work on the land parcels made available to it in June 2015.The structural works for the new terminal building are nearly complete and we areconfident of completing the terminal within the timelines specified in the concessionagreement. One of the key features of the new international terminal being developed byGMCAC is a wooden roof – the first time such a roof is being installed in Asia.

Awards and Accolades received in FY 2016-17:

Routes Asia Marketing award.

CAPA Asia Pacific Regional Airport of the Year 2016.

GMR Mal International Airport Private Limited (GMIAL)

GMR Group along with its partner Malaysia Airports was engaged in aninternational arbitration with Government of Maldives (GoM) and Maldives Airport CompanyLimited (MACL) after the latter repudiated the agreement in December 2012. Your Company ishappy to report that the 3 members tribunal awarded a compensation of $270 million to theGMR-MAHB consortium covering equity debt and termination costs incurred by GMR-MAHBconsortium as a result of the repudiation of the concession by GoM. The entirecompensation has been received from GoM and dues to the lenders have been settled.

GMR Goa International Airport Limited (GGIAL)

The Company through its wholly owned subsidiary GAL won the right todevelop and operate new greenfield international airport at Mopa North Goa throughinternational competitive bidding. The Concession Agreement was signed with Government ofGoa in November 2016. As per the Concession Agreement the Group will design buildfinance and operate the international airport for 40 years with extension option foranother 20 years. The construction period for the first phase of the project is threeyears and is expected to be operational by mid of 2020. The project envisages 7.7 mnpassenger capacity in Phase-1 and 232 acres of land for commercial city side developmentfor a period of 60 years. Financial close for the project has been recently achieved.

GMR Aviation Private Limited (GAPL)

GAPL owns and operates one of the youngest fleets in the country andaddresses the growing need for charter services. In order to boost revenues andrationalize overhead costs GAPL has entered into a 2 years management contract with JetSet Go – a general aviation fleet aggregator commonly referred to as the "Uberof the Skies". As per the agreement Jet Set Go has taken responsibility foroperations and marketing of the aircrafts and the business has shown marked improvementover the past years with all 3 aircrafts recording the highest number of hours flown on anannual basis. All maintenance contracts have also been renegotiated leading to a reductionin costs. We are confident that GAPL will continue on the turnaround path.

Energy Sector

The Energy Sector companies are operating around 4600 MWs of CoalGas Liquid fuel and Renewable power plants in India and around 2330 MWs of powerprojects are under various stages of construction and development besides a pipeline ofother projects. The Energy Sector has a diversified portfolio of thermal and hydroprojects with a mix of merchant and long term Power Purchase Agreements (PPA).

Following are the major highlights of the Energy Sector:

A. Operational Assets:

I. Generation:

1. GMR Warora Energy Limited (Formerly EMCO Energy Limited)(GWEL) – 600 MW:

• The Plant consists of 2 x 300 MW coal fired Units with allassociated auxiliaries and Balance of Plant Systems. GWEL has a Coal supply Agreement withSouth Eastern Coalfields Limited (SECL) for a total Annual Contracted Quantity (ACQ) of2.6 Million Tonnes per annum.

• Regulatory orders for Dadra Nagar Haveli (DNH) and MaharashtraState Electricity Distribution Company Ltd (MSEDCL) were received during the year. GWELhas started billing for Change in Law to both these customers.

• During the year the Plant has achieved availability of 86% andGross Plant Load Factor (PLF) of 71%.

More than 90% ash utilization was achieved during the year.

Weir construction for water availability by Maharashtra IndustrialDevelopment Corporation (MIDC) is under way and expected to be made ready in August 2017.

2. GMR Kamalanga Energy Limited (GKEL) – 1050 MW:

• GKEL subsidiary of GMR Energy Limited and in which

IIF & IDFC also hold equity stake has developed 1050 MW (3x 350)coal fired power plant at Kamalanga Village Odisha.

• The plant is supplying power to Haryana through PTC IndiaLimited to Odisha through GRIDCO Limited and to Bihar through Bihar State Power HoldingCompany Limited.

• 85% of the capacity is tied-up in long term PPAs.

• GKEL has received Letter of Assurances from Mahanadi CoalfieldsLimited (MCL) for 1050 MW of which 500 MW is for firm linkage and 550 MW was fortapering linkage. GKEL has signed Fuel Supply Agreement (FSA) for firm linkage for 500 MWand is getting coal supply accordingly.

• During this year Ministry of Coal has discontinued theextension of MoU for coal (earlier tapering linkage) to GKEL w.e.f June 30 2016.

• During this period GKEL achieved availability of 84% and PLF of65%.

• GKEL received favourable order from CERC for Change in Law inBihar PPA on the basis of which GKEL has raised supplementary bills of Rs 33 Crore toBihar.

3. GMR Chhattisgarh Energy Limited (GCHEL) – 1370 MW:

• GCHEL has developed 1370 MW (2 x 685 MW) pulverized coal-fired super critical technology based power project in Raikheda Village Tilda BlockRaipur District in the State of Chhattisgarh. GCHEL has received all the necessarystatutory and environmental clearances. The project has achieved COD of Unit – 1 andUnit – 2 on June 01 2015 and March 31 2016 respectively and started commercialoperation of Unit – 1 from November 01 2015. The project participated in the coalblock auction bid and won two coal blocks namely Talabira and Ganeshpur.

• The Railway track for movement of rake to site has beencompleted and siding operations have commenced.

• Following High Court order for Jaiprakash Power Ventures andOthers GCHEL has decided to surrender the mines asking the Govt. to return the BankGuarantee.

• GCHEL is actively pursuing to tie-up the entire capacity throughvarious upcoming medium and long-term power procurement tenders.

• Further the lenders have invoked Strategic Debt Restructuring(SDR) for GCHEL. As per the SDR scheme out of the total outstanding debt (includingaccrued interest) of Rs 8800 Crore debt to the extent of

Rs 2992 Crore has been converted into equity by which the consortiumlenders have 52.4% shareholding and balance 47.6% is held by GMR Group.

• Post the conversion the balance project debt stands at

Rs 5800 Crore with Rs 2992 Crore equity held by lenders and Rs 2721Crore equity held by GMR Group resulting in the debt-to-equity ratio of 1.0x. The lowerdebt levels would result in improving the long term viability of the project.

4. GMR Vemagiri Power Generation Limited (GVPGL) - 370 MW:

• GVPGL a wholly owned subsidiary of GEL operates a 370 MWnatural gas-fired combined cycle power plant at Rajahmundry Andhra Pradesh.

GVPGL won bid and operated under phase-III of E-RNLG scheme butcould not sell under phase - IV power because of no demand from Discoms.

• GVPGL received refund of MAT credit of Rs 6.88 Crore.

• Term sheet signed with GAIL for 0.9 mmscmd gas under HELP and0.5 mmscmd natural gas in October 2016.

• Enhancement of working capital limits from Rs75 Crore to

Rs 175 Crore from IDBI.

• To benefit from the softened LNG prices world-wide GVPGL isstriving continuously to import LNG on short term basis to achieve higher PLF.

• GVPGL operated at a PLF of 9% in FY 17.

5. GMR Rajahmundry Energy Limited (GREL) – 768 MW:

• GREL is a 768 MW (2 x 384 MW) combined cycle gas based powerproject at Rajahmundry Andhra Pradesh.

• GREL secured gas for operations through e-bid RLNG scheme at 30%PLF for the period April 2016 to September 2016. The plant continued operations from April2016 to September 2016 based on the roster decided by AP - Transco. To benefit with thesoftened LNG prices world-wide GREL is striving continuously to import LNG on short termbasis and looking forward to tie up power by exploring the PPA opportunities available.

• Further lenders have invoked SDR with lenders owning 55% andbalance being held by GMR Group. As a consequence outstanding debt of Rs1413.99 Crore(Rs1308.57 Crore of debt and Rs105.42 Crore of Interest accrued thereon) was convertedinto equity amounting to 55% shareholding in GREL. Post the restructuring the totaloutstanding debt of GREL would be Rs2366 Crore.

6. Barge mounted Power Plant of GMR Energy Limited (GEL)Kakinada:

• GEL owns the 220 MW combined cycle barge mounted power plant atKakinada Andhra Pradesh. There was no generation of power by the barge mounted powerplant during the year ended March 31 2017 on account of non- availability of gas.

• Plant is kept under preservation since March 2013.

Preservation methods were adopted based on Original EquipmentManufacturers' (OEM) procedures.

7. GMR Power Corporation Limited (GPCL) Chennai:

• GPCL in which GEL holds 51% stake owns the 200 MW dieselpowered power plant and was selling power to Tamil Nadu Generation and DistributionCorporation Limited (TAGENDCO). There was no generation of power during the year andcurrently the plant is kept under preservation.

• GPCL requested TAGENDCO for extension of PPA from February 152015 and is awaiting clearance for supplying power.

8. GMR Gujarat Solar Power Limited (GGSPL) Charanka VillageGujarat:

GGSPL a wholly owned subsidiary of GEL operates 25 MW Solar powerproject at Charanka village Patan district Gujarat. GGSPL has entered into 25 year PPAwith Gujarat Urja Vikas Nigam Limited for supply of entire power generation. GGSPL hasachieved commercial operation on March 04 2012 and received certificate of commissioningfrom M/s. Gujarat Energy Development Agency ("GEDA"). Indu Projects Limited hasbeen awarded the contract for operation and maintenance of the plant for a period of 5years. Plant has achieved a Gross DC PLF of 19% for FY 2016-17 and recorded revenue ofRs61 Crore for the FY.

9. GMR Rajam Solar Power Private Limited (GRSPPL) Rajam:

GRSPPL a wholly owned subsidiary of GEL commissioned a 1 MW Solarpower project in Rajam Andhra Pradesh in January 2016. The Company has signed a 25 yearPPA with both GMR Institute of Technology (700KW) and GMR Varalakshmi Care Hospital(300KW) for the sale of power generated. M/s Enerpac has been awarded O&M contract forthe Plant for a period of 5 years. Plant has achieved PLF of 14.35% for FY 2016-17 andrecorded revenue of Rs0.86 Crore for the FY. Net metering for the Plant was completed inJune 2016.

10. GMR Generation Assets Limited (Formerly GMR Renewable EnergyLimited) (GGAL) Kutch:

GGAL a wholly owned subsidiary of GIL commissioned a 2.1 MW wind basedpower plant at Moti Sindhodi Village Kutchh District Gujarat in July 2011. The Companyhas signed a 25 year PPA with Gujarat Urja Vikas Nigam Limited ("GUVNL") withrespect to the entire power generated from the Plant. M/s Suzlon has been awarded O&Mcontract for the Plant for a period of 5 years and is doing the O&M for the plant.

11. GMR Power Infra Limited (GPIL) Tamil Nadu:

GPIL a wholly owned subsidiary of GIL commissioned a 1.25 MW windbased power plant at Muthayampatty Village Tirupur District Tamil Nadu in December 2011.The Company has signed a 20 year PPA with TANGEDCO with respect to the entire powergenerated from the Plant. M/s Suzlon has been awarded O&M contract for the Plant for aperiod of 5 years and is doing the O&M for the plant.

II Transmission:

GEL had entered into definitive agreements with Adani TransmissionLimited agreeing to transfer its interest in Aravali Transmission Services Limited (ATSCL)and Maru Transmission Services Limited (MTSCL). The aforesaid transaction concluded inFY17.

B. Projects:

1. GMR Bajoli Holi Hydropower Private Limited (GBHHPL) - 180 MW:

• GBHHPL a wholly owned subsidiary of GEL is implementing 180 MWhydro power plant on the river Ravi at Chamba District Himachal Pradesh.

• GBHHPL has already achieved financial closure and tied-up thedebt requirement of Rs1380 Crore.

• GBHHPL had also executed the Connectivity Agreement with HPPower Transmission Corporation Limited and Long Term Access Agreement with Power GridCorporation of India Limited (PGCIL) for evacuating power outside Himachal Pradesh.

• The construction works of the project are in full swing andPower House and Dam concreting have commenced. Overall progress of 42% has been achievedtill end of FY 2016-17.

2. GMR Upper Karnali Hydro Power Public Limited (GUKPL) –900 MW:

• GUKPL a subsidiary of GEL is developing 900 MW Upper KarnaliHydroelectric Project (HEP) located on river Karnali in Dailekh Surkhet and AchhamDistricts of Nepal.

• Post execution of Project Development Agreement (PDA) severalkey activities have been completed. Technical design of the Project has been finalizedpost detailed technical appraisal by a seven member Panel of Experts (empaneled with IFC)and Hydraulic model studies.

• The bid submissions for two EPC Packages; EPC-1 for Civil and HMworks and EPC-2 for Electro mechanical works are expected to be completed by September2017 in first half of FY18.

• Total land identified for the Project comprises of forest landand private land. As for private land negotiation has been completed and MoU has beenexecuted with Rehabilitation Action Plan (RAP) committees for acquisition and theacquisition process will start soon. Whereas for forest land some forest land forinfrastructure works has already been acquired. For balance forest land acquisition thecoordination with the Government of Nepal is underway.

• Power Evacuation is proposed through 400KV D/C transmission linefrom Bus bar of project to Bareilly Pooling point of PGCIL in Uttar Pradesh India. Nepalportion transmission line (from project's Bus bar upto Indo-Nepal border) to bedeveloped by Karnali Transmission Company Pvt. Ltd. (KTCPL) a GMR Group Company andIndian portion upto Bareilly will be developed by GoI. Post execution of the PTA betweenGovernment of India (GoI) and Government of Nepal (GoN) and the SAARC energy pact betweenSAARC nations cross border policy has been notified by GoI on December 5 2016 and crossborder regulations are under formulation by CERC.

• The Project has received Letter of Intents (LoIs) in excess ofUSD 1.1 billion from Multilateral Development Banks (MDBs) across the globe and post thisthe first all lenders' site visit / lenders' meeting was held at Kathmandu on April 52016. Appointment of consultants is underway. The lenders are presently engaged in Projectappraisal activities.

3. GMR (Badrinath) Hydro Power Generation Private Limited(GBHPL) - Badrinath - 300 MW:

• GBHPL a subsidiary of GEL is in the process of developing a300 MW hydroelectric power plant on Alaknanda river in the Chamoli District of UttarakhandState. The project has received all major statutory clearances like Environmental andTechno economic concurrence from Central Electricity Authority (CEA).

• Implementation Agreement has been executed with the Governmentof Uttarakhand. However Hon'ble Supreme Court's stay order on 24 Hydro ElectricProjects in Uttarakhand (Order dated May 07 2014) issued while hearing a civil appeal inthe matters of Alaknanda Hydro Power Company Limited is in effect till date.

4. Himtal Hydropower Company Private Limited (HHCPL) – 600MW:

• HHCPL a subsidiary of GEL is developing a 600 MW UpperMarsyangdi-2 Hydroelectric Power Project on the river Marsyangdi in Lamjung and ManangDistricts of Nepal.

• Environment Clearance for the project is already in place. PDAnegotiation and execution is underway and post its completion tender level engineeringand procurement plan will be prepared.

• Power Evacuation is proposed through 400kV D/C transmission linefrom Bus bar of project to Gorakhpur pooling point of PGCIL in Uttar Pradesh India. Nepalportion transmission line (from project's Bus bar upto Indo-Nepal border) to bedeveloped by Marsyangdi Transmission Company Pvt. Ltd. (MTCPL) a GMR Group Company andIndian portion upto Gorakhpur will be developed by GoI. Post execution of PDA andformulation of cross border regulations MoU/PPA for power sale will be executed withselected buyers in India and Bangladesh for tie-up of power on long term route.

5. GMR Londa Hydropower Private Limited (GLHPPL) - 225 MW:

GLHPPL a subsidiary of your Company is developing a 225 MW project inEast Kameng district in Arunachal Pradesh. The Detailed Project Report ("DPR")has been prepared and has received techno-economic concurrence from the CEA. The ExpertAppraisal Committee (EAC) of Ministry of Environment Forest and Climate Change("MoEF & CC" or "MoEF") has recommended for EnvironmentalClearance and accordingly MoEF & CC had issued in-principle clearance to this project.However formal Environmental Clearance shall be granted by MoEF & CC after obtainingthe Forest- stage-I clearance. Defence clearance for setting up the project has beenreceived from Ministry of Defence GoI.

C. Mining Assets:

1. PT Barasentosa Lestari (PTBSL):

GEL had acquired 100% stake in PTBSL in September 2008 which has coalmine in South Sumatra Province with more than 650 MT Coal Resources in ~24385 Hectaresand total mineable reserves of about 280 Million Metric Ton (MMT). Trial coal productionand sales have commenced in FY 2015 however the operations were suspended because of thelimitations of transportation of coal by barging and distressed market conditions. Aconditional share purchase agreement (CSPA) was signed with PTGEMS on May 12 2017 forsale of PTBSL. Post the approval of CSPA from Singapore Exchange and other statutoryapprovals shares of PTBSL will be transferred to PTGEMS.

2. PT Golden Energy Mines Tbk (PT GEMS):

GEL through its overseas subsidiary GMR Coal Resources Pte. Limitedhad acquired 30% stake in PT GEMS a group company of Sinarmas Group Indonesia. PT GEMSa limited liability company is listed on the Indonesia Stock Exchange. PT GEMS iscarrying out mining operations in Indonesia through its subsidiaries which own coal miningconcessions in South Kalimantan Central Kalimantan and Sumatra. PT GEMS is also involvedin coal trading through its subsidiaries. Coal mines owned by PT GEMS and its subsidiarieshave total resources of more than 2.0 billion tons and Joint Ore Reserves Committee (JORC)certified reserves of more than 620 MT of thermal coal. GMR Group has a Coal off takeAgreement with PT GEMS which entitles GMR to off take coal for 25 years.

Transportation Highways

GMR Highways Limited a subsidiary of your Company is one of theleading highways developer in India with 7 operating highways including minority stake(36.01%) in GMR OSE Hungud Hospet Highways Private Limited (GOHHHPL). During the FY 2017the Group entered into definitive agreements to divest its entire stake (51%) in GOHHHPLand divestment of 14.99% was completed. Remaining stake sale is underway and shall becompleted post approvals from NHAI and lenders. The Group also divested minority stakes inUlunderpet Expressways Private Limited and Jadcherla Expressways Private Limited duringthe year. For Kishangarh-Udaipur-Ahmedabad (KUA) project which had been terminated inDecember 2012 a dispute notice to NHAI was served invoking arbitration to settle thedispute. In FY17 the matters with NHAI were resolved for the KUA project.

Urban Infrastructure

The Group is developing a 2100 acre multi product Special InvestmentRegion (SIR) at Krishnagiri near Hosur in Tamil Nadu and 10000 acre Port- basedmulti-product SIR at Kakinada Andhra Pradesh.

Krishnagiri SIR

GMR Group with an objective of building world class industrialinfrastructure in India is setting up a SIR at Hosur Tamil Nadu just 45 kms fromElectronic City Bengaluru. The location provides unique advantage of multi-modalconnectivity with National and State Highways and a railway line running alongside.Krishnagiri SIR is planned to be developed as an integrated city spread across 2100 acresin the influence area of proposed Chennai- Bangalore Industrial Corridor. Krishnagiri SIRis being planned to house the following manufacturing clusters:

Automotive & Ancillary

Defence and Aerospace

Precision Engineering

Machine tools

Electronics Product Manufacturing

Designed to encompass a complete ecosystem Phase 1A of Krishnagiri SIRspread over 275 acres will contain all that are essential for a large industrial citycenter. Krishnagiri SIR has following key offerings to its clientele:

Shovel ready developed plot with road drainage water supply WaterTreatment Plants (WTP) Sewage Treatment Plants (STP) and other similar facilities;

Water – Potable water;

Power –33 kV level dedicated sub-station with a Solar power plant.

The entire infrastructure is being developed and maintained by GMRGroup underscoring its commitment to quality service and timelines. The"integrated" design would endeavor to provide first world standard residentialsocial and commercial amenities making this zone truly "self- contained".

Project Progress:

Notwithstanding the political uncertainties in the state in the pastyear the company made good progress in securing the clearances and is aggressivelymarketing the SIR for client tie-ups.

Kakinada SEZ/ SIR

GMR Group owns 51% in Kakinada SEZ Limited which is developingKakinada SEZ / SIR in the State of Andhra Pradesh in proximity to the cities ofVishakapatnam and Kakinada. With an area span of over 10000 acres Kakinada SEZ / SIRwill be a self-contained Port-based Industrial park with ideally designed coreinfrastructure industrial common infrastructure business facilitation infrastructure andsocial infrastructure across varied dedicated areas such as housing lifestyle andhigh-end expat friendly zones. Kakinada SEZ / SIR is designed for balancing thesensitivity to culture and heritage of the region and also for integration with the nativeeco-system.

Project Progress:

MoU with GAIL/HPCL for setting up a petrochemical complex with aproposed investment of Rs40000 Crore has been signed. Other MoUs have also been signedwith Deepak Nitrate DCM Shriram IIFT among others.

Regarding our plans to develop Port for the SEZ public hearing wassuccessfully held and the implementation plan is on right track.

Executed lease deeds with AP Transco and Eastern Power DistributionCompany of Andhra Pradesh Limited (APEPDCL) for substations.

Approach roads to existing industries has been completed.

Laid down the power cables inside the industrial zone and providedindustrial power supply for existing industries.

Master Plan for Phase 1 development of around 916 acres has beencompleted.

EPC

Pursuant to the strategic decision taken to pursue EPC opportunitiesoutside GMR Group and consequent to the Group's entry into Railway Projects during FY2015-16 the Group has started construction of 2 Dedicated Freight Corridor Corporation(DFCC) projects (201 and 202) in the State of Uttar Pradesh. Mobilization and design forthe projects is substantially completed and construction is in full swing. In the Package201 the construction progress achieved is 18% whereas in the Package 202 the progress is11%. Your Company has successfully completed the Kasauli Housing project in the FY 2016-17and achieved substantial completion of 2 Rail Vikas Nigam Limited (RVNL) projects in theStates of Andhra Pradesh and Uttar Pradesh that were awarded in FY 2013-14.

Your Company also won two more packages worth Rs 2280 Crore on theEastern Dedicated Freight Corridor railway project in FY 2016-17. The first packagecomprises 175 km single line connecting Sahnewal and Pilkhani that passes through UttarPradesh Haryana and Punjab. The other package is a 46 km double line corridor in UttarPradesh connecting Dadri and Khurja.

Consolidated Financial Statement

In accordance with the Companies Act 2013 and Ind AS 110 -Consolidated Financial Statements read with Ind AS 28 – Investments in Associates andJoint Ventures the audited consolidated financial statement is provided in the AnnualReport.

Holding Subsidiaries Associate Companies and Joint Ventures

Pursuant to the order of Hon'ble Madras High Court conforming aScheme of Amalgamation GMR Holdings Private Limited (GHPL) was merged with GMREnterprises Private Limited (GEPL) with an appointed date of March 30 2015. AccordinglyGEPL became the Holding Company in place of GHPL.

As on March 31 2017 the Company has 119 subsidiary companies apartfrom 33 joint ventures and associate companies. During the year under review the entitieslisted below have become or ceased to be Company's subsidiaries or associatecompanies/ JVs. The Policy for determining material subsidiaries may be accessed on theCompany's website at the link:http://investor.gmrgroup.in/investors/GIL-Policies.html. The complete list of subsidiarycompanies and associate companies (including joint ventures) as on March 31 2017 isprovided in Section III of Annexure - F to this Report (Extract of Annual Return).

Kakinada Gateway Port Limited GMR Goa International Airport LimitedGMR SEZ Infra Services Limited and GMR Infra Developers Limited became subsidiaries duringthe FY 2016-17.

Aravali Transmission Service Company Limited Maru Transmission ServiceCompany Limited and GMR Airport Global Limited ceased to be subsidiaries during FY2016-17. Hyderabad Duty Free Retail Limited a subsidiary was merged with GMR Hotels andResorts Limited also a subsidiary of your Company.

Further the names of GMR Airport Handling Services Company Limited andGMR Hyderabad Multiproduct SEZ Limited were struck off from the list of companies byRegistrar of Companies during the FY 2016-17 and accordingly they ceased to besubsidiaries. GMR Highway Projects Private Limited is in the process of striking off.Further GMR Chhattisgarh Energy Limited and GMR Rajahmundry Energy Limited ceased to besubsidiaries and became associates during the year under review.

During the year under review Jadcherla Expressways Private Limited andUlundurpet Expressways Private Limited ceased to be associate.

During the year under review as per the accounting principles of newlyadopted Ind AS the status of GMR Energy Limited and its subsidiaries including GMRKamalanga Energy Limited GMR Warora Energy Limited Himtal Hydro Power Company PrivateLimited GMR Upper Karnali Hydropower Limited GMR Vemagiri Power Generation Limited GMR(Badrinath) Hydro Power Generation Private Limited GMR Energy (Mauritius) Limited GMRLion Energy Limited GMR Consulting Services Limited GMR Bajoli Holi Hydropower PrivateLimited GMR Maharashtra Energy Limited GMR Bundelkhand Energy Private Limited GMR RajamSolar Power Private Limited GMR Gujarat Solar Power Limited Karnali Transmission CompanyPrivate Limited Marsyangdi Transmission Company Private Limited GMR

Indo-Nepal Energy Links Limited and GMR Indo-Nepal Power CorridorsLimited and few other entities including Delhi Duty Free Services Private Limited GMRChhattisgarh Energy Limited GMR Rajahmundry Energy Limited and GMR Mining and EnergyPrivate Limited was assessed as jointly controlled entities.

Further PT Era Mitra Selaras PT Wahana Rimba and PT Berkat SatriaAbadi became Joint Ventures to the Company during the FY 2016-17.

Report on the highlights of performance of subsidiaries associates andjoint ventures and their contribution to the overall performance of the Company has beenprovided in Form AOC-1 as "Annexure A" to this Report.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements in terms of Section 134(3)(c) of the Companies Act 2013:

a) that in the preparation of the annual financial statements for theyear ended March 31 2017 the applicable accounting standards have been followedalong with proper explanation relating to material departures if any;

b) that such accounting policies as mentioned in Note no. 2 of theNotes to the Financial Statements have been selected and applied consistently and judgmentand estimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2017 and of the loss of theCompany for the year ended on that date;

c) that proper and sufficient care has been taken for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

d) that the annual financial statements have been prepared on a goingconcern basis;

e) that proper internal financial controls to be followed by theCompany have been laid down and that the financial controls are adequate and wereoperating effectively;

f) that proper systems have been devised to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Corporate Governance

The Company continues to follow the Business Excellence frameworkbased on the Malcolm Baldrige Model for continuous improvement in all spheres of itsactivities. Your Company works towards continuous improvement in governance practices andprocesses in compliance with the statutory requirements.

The Report on Corporate Governance as stipulated under relevantprovisions of SEBI LODR forms part of the Annual Report. The requisite Certificate fromthe Practicing Company Secretary confirming compliance with the conditions of CorporateGovernance is attached to the said Report.

Business Responsibility Report

As stipulated under Regulation 34(2)(f) of SEBI LODR the BusinessResponsibility Report describing the initiatives taken by the Company from environmentalsocial and governance perspective is attached as part of the Annual Report.

Contracts and arrangements with Related Parties

All contracts / arrangements / transactions entered by the Companyduring the FY 2017 with related parties were in the ordinary course of business and onarm's length basis. During the year the Company had not entered into any contract /arrangement / transaction with related parties which could be considered material inaccordance with the policy of the Company on materiality of related party transactions.Since all the related party transactions were in ordinary course of business and atarm's length hence Form AOC-2 is not applicable.

The Policy on related party transactions as approved by the Board maybe accessed on the Company's website at the link: http://investor.gmrgroup.in/investors/GIL-Policies.html. Your Directors draw attention of the members to Note no. 33to the standalone financial statements which sets out related party disclosures.

Corporate Social Responsibility (CSR)

The Corporate Social Responsibility Committee (CSR Committee) hasformulated and recommended to the Board a Corporate Social Responsibility Policy (CSRPolicy) indicating the activities to be undertaken by the Company which was approved bythe Board. The CSR Policy may be accessed on the Company's website at the link:http://investor.gmrgroup.in/ investors/GIL-Policies.html.

The Company has identified three focus areas towards the communityservice / CSR activities which are as under:

Education

Health Hygiene & Sanitation

Empowerment & Livelihoods

The Company as per the approved policy may undertake other need basedinitiatives in compliance with Schedule VII to the Companies Act 2013. During the yearthe Company was not required to spend any amount on CSR as it did not have any profits.Accordingly it has not spent any amount on CSR activities directly. However theCompany through its subsidiaries/ associate companies spent an amount of Rs38.27 Croreduring the year. The details of such activities carried out with the support of GMRVaralakshmi Foundation (GMRVF) Corporate Social Responsibility arm of the GMR Group havebeen highlighted in Business Responsibility Report. The Annual Report on CSR activities isannexed as "Annexure B" to this Report.

Risk Management

The GMR Group's Enterprise Risk Management (ERM) philosophy is"To integrate the process for managing risk across GMR Group and throughout itsbusinesses and lifecycle to enable protection and enhancement of stakeholder value."

With significant changes in business environment over the last coupleof years your Company's businesses face emerging risks that require effective riskmanagement framework and dedicated resources to implement the framework.

Your Company's ERM framework follows the current best practices inorder to achieve Company's objectives.

Significant developments during the year under review are as follows:

Risk assessment was carried out in detail at bid stage for MopaInternational Airport (Goa) and Navi Mumbai International Airport. Key Risk Areas werealso identified for Kastelli International Airport (Greece). The ERM made a detailed riskassessment on key business assumptions for the bid for enabling informed decision-making;

ERM also carried out risk analysis for select business operations. Therisk management function is also being established at the sectors with expert advice fromoutsourced partners.

For the ongoing railway projects under Dedicated Freight CorridorCorporation in UP and the new projects ERM leads the project risk assessment incoordination with the project teams. The deployment of Project Risk Management (PRM)framework has enabled effective control over project costs.

With rapidly changing business environment the Group feels the needfor a measurable approach to decide the amount of risks it can take in achieving itsbusiness objectives. A draft Risk Appetite Framework for the Group is under developmentand review with an objective to establish thresholds for quantum of risks that the Groupcan accept. The Physical Risk Benchmarking framework developed earlier is underimplementation at Airport and Energy assets.

Updates on ERM activities are shared on a regular basis with ManagementAssurance Group (MAG) the Internal Audit function of the Group.

The Company has in place the Risk Management Policy duly approved bythe Board of Directors.

A detailed note on risks and concerns affecting the businesses of theCompany is provided in MDA.

Internal Financial Controls

The Company has in place adequate internal financial controls withreference to financial statements. These controls were tested and no reportable materialweaknesses were observed in the operations of the Company.

Directors and Key Managerial Personnel

During the year under review Mrs. Vissa Siva Kameswari Mr. R.S.S.L.N.Bhaskarudu Mr. N.C. Sarabeswaran Mr. S. Sandilya Mr. S. Rajagopal and Mr. C.R.Muralidharan were re-appointed as Independent Directors of the Company for a second termfor a period of five years or upto the conclusion of Twenty Fifth Annual General Meeting(AGM) of the Company whichever is earlier.

During the year under review Dr. Prakash G. Apte and Mr. V.Santhanaraman ceased to be the Independent Directors with effect from September 14 2016consequent upon completion of tenure of their appointment.

Further Mr. Jayesh Desai was regularized (i.e. as Director fromAdditional Director) by the members at the 20th AGM of the Company held onSeptember 14 2016. However during the year Mr. Jayesh Desai resigned from thedirectorship of Company with effect from February 13 2017.

In accordance with the provisions of the Companies Act 2013 and theArticles of Association of the Company Mr. G.M. Rao Executive Chairman of the Companyretire by rotation at the ensuing Annual General Meeting of the Company and being eligiblehas offered himself for re-appointment.

Further the Nomination and Remuneration Committee has recommended there-appointment of Mr. G.M. Rao Executive Chairman and Mr. Grandhi Kiran Kumar ManagingDirector of the Company for a further period of 3 years respectively. Subsequently Boardat its meeting held on August 11 2017 has recommended the said re-appointments.

The brief resume and details of Directors who are to be re-appointedare furnished in the Notice to the ensuing Annual General Meeting.

Annual performance evaluation of the Board its Committees andindividual directors pursuant to the provisions of the Companies Act 2013 and thecorporate governance requirements under SEBI LODR have been carried out. The performanceof the Board and its committees was evaluated based on the criteria like composition andstructure effectiveness of processes information and functioning etc.

The Board and the Nomination and Remuneration Committee reviewed theperformance of the individual directors on the basis of the criteria such as thecontribution of the individual director to the Board and committee meetings likepreparedness on the issues to be discussed meaningful and constructive contribution andinputs in meetings etc. In addition the Chairman was also evaluated on the key aspectsof his role.

The Company's Nomination and Remuneration Policy for DirectorsKey Managerial Personnel and Senior Management is annexed as "Annexure C" to theBoard's Report.

Declaration of independence

The Company has received declarations from all the IndependentDirectors confirming that they meet the criteria of independence as prescribed both underSection 149(6) of the Companies Act 2013 and Regulation 16 of SEBI LODR.

Auditors and Auditors' Report

Statutory Auditors

M/s. S. R. Batliboi & Associates LLP Chartered AccountantsStatutory Auditors of the Company hold office till the conclusion of the ensuing AnnualGeneral Meeting and are eligible for re-appointment. They have confirmed their eligibilityto the effect that their re-appointment if made would be within the prescribed limitsunder the Companies Act 2013 and that they are not disqualified for re-appointment.

In terms of Section 139(1) of Companies Act 2013 read with Rule 6 ofCompanies (Audit and Auditors) Rules 2014 (including any amendments thereto) the Boardon recommendation of Audit Committee has recommended the appointment of M/s. S. R.Batliboi & Associates LLP

Chartered Accountants as the Statutory Auditors of the Company to holdoffice from the conclusion of ensuing AGM upto the conclusion of 23rd AGM ofthe Company.

A resolution proposing appointment of M/s. S. R. Batliboi &Associates LLP Chartered Accountants as Statutory Auditors of the Company pursuant toSection 139 of the Companies Act 2013 forms part of the Notice for the ensuing AGM.

Statutory Auditors' Qualification / Comment on the Company'sstandalone financial statement

GMR Hyderabad Vijayawada Expressways Private Limited (GHVEPL) has beenincurring losses since the commencement of its commercial operations. Based on a valuationassessment a legal opinion and for reasons explained in the said note the management ofthe Company believes that no further provision for diminution in the value of investmentsis considered necessary in the accompanying standalone Ind AS financial results for thequarter and year ended March 31 2017. We are unable to comment on the final outcome ofthe matter and its consequential impact on the carrying value of the Company'sinvestment in GHVEPL in the accompanying standalone Ind AS financial results of theCompany.

Management's response to the Statutory Auditors'Qualification / Comment on the Company's standalone financial statement

GHVEPL has been incurring losses since the commencement of itscommercial operations. The management believes that these losses are primarily due to lossof revenue arising as a result of drop in commercial traffic on account of bifurcation ofState of Andhra Pradesh and ban imposed on sand mining in the region. The management ofGHVEPL based on its internal assessment and a legal opinion believes that these eventsconstitute a Change in Law as per the Concession Agreement and GHVEPL is entitled to aclaim for losses suffered on account of the aforementioned reasons and accordingly filedits claim of Rs222.79 Crore for the loss of revenue till the year ended March 31 2016with NHAI. Subsequently NHAI rejected the aforementioned claims and consequently GHVEPLinvoked dispute resolution process as per the provisions of the Concession Agreement.Subsequently NHAI has intimated GHVEPL that conciliation has failed and the management ofGHVEPL has initiated arbitration proceedings.

GHVEPL has also issued notice of force majeure (Political Event) as perarticle 34 of the Concession Agreement vide its letter dated June 13 2016. Based on thepreliminary discussions with NHAI the management is confident that matter will beamicably settled and the loss on account of Change in Law will be received in due course.

The management of GHVEPL is confident that it will be able to claimcompensation from the relevant authorities for the loss it suffered due to aforementionedreasons and based on valuation assessment carried out by an external expert which issignificantly dependent on the fructification of the aforesaid claims believes that thecarrying value of its investments in GHVEPL (net of provision for diminution in the valueof investments) as at March 31 2017 is appropriate.

Cost Auditors

Pursuant to Section 148 of the Companies Act 2013 read with theCompanies

(Cost Records and Audit) Amendment Rules 2014 the cost audit recordsmaintained by the Company in respect of its EPC business is required to be audited.

M/s. Rao Murthy & Associates Cost Auditors have issued costaudit report for FY 2016-17 which does not contain any qualification reservation oradverse remark.

The Board on the recommendation of the Audit Committee has appointedM/s. Rao Murthy & Associates Cost Accountants as cost auditors for conducting theaudit of cost records of the Company for the FY 2017-18.

Accordingly a resolution seeking members' ratification for theremuneration to M/s. Rao Murthy & Associates Cost Accountants is included in theNotice convening the ensuing AGM.

Secretarial Auditor

The Board has appointed M/s. V. Sreedharan & Associates CompanySecretaries a firm of Company Secretaries in Practice to conduct Secretarial Audit forthe FY 2016-17. The Secretarial Audit Report for the FY ended March 31 2017 is annexedherewith as "Annexure D" to this Report. The Secretarial Audit Report does notcontain any qualification reservation or adverse remark.

Disclosures: CSR Committee

The CSR Committee comprises of Mr. R.S.S.L.N. Bhaskarudu as ChairmanMr. B.V.N. Rao and Mr. G.B.S. Raju as members.

Audit Committee

The Audit Committee comprises of Mr. N.C. Sarabeswaran as Chairman Mr.S. Rajagopal Mr. R.S.S.L.N. Bhaskarudu and Mrs. Vissa Siva Kameswari as members.

All the recommendations made by the Audit Committee were accepted bythe Board.

Vigil Mechanism

The Company has a vigil mechanism named Whistle Blower Policy whichprovides a platform to disclose information confidentially and without fear of reprisalor victimization where there is reason to believe that there has been seriousmalpractice fraud impropriety abuse or wrong doing within the Company. The details ofthe Whistle Blower Policy is explained in the Corporate Governance Report and also hostedon the website of the Company.

Meetings of the Board

A calendar of Meetings is prepared and circulated in advance to theDirectors. During the year six (6) Board Meetings were convened and held the details ofwhich are given in the Corporate Governance Report. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013.

Particulars of Loans Guarantees and Investments

Details of Loans/Guarantees given and Investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the notes to theFinancial Statements.

Conservation of energy technology absorption and foreign exchangeearnings and outgo

The information on conservation of energy technology absorption andforeign exchange earnings and outgo stipulated under Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of The Companies (Accounts) Rules 2014 is provided in"Annexure E".

Extract of Annual Return

The details forming part of the extract of the Annual Return in FormMGT-9 is provided in "Annexure F" to this Report.

Particulars of Employees and related disclosures

The information required under Section 197(12) of the Companies Act2013 read with Rule 5 of The Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 (including amendments thereto) is attached as "AnnexureG" to the said Report.

The information required under Rule 5(2) and (3) of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 (including amendmentsthereof) is provided in the Annexure forming part of this Report. In terms of the firstproviso to Section 136 of the Companies Act 2013 the Report and Accounts are being sentto the members excluding the aforesaid Annexure. Any member interested in obtaining thesame may write to the Company Secretary at the Registered Office of the Company. None ofthe employees listed in the said Annexure other than the Executive Chairman and ManagingDirector is related to any Director of the Company.

Dividend Distribution Policy

During the year under review the Board has adopted DividendDistribution Policy in terms of Regulation 43A of the SEBI LODR. The Dividend DistributionPolicy is provided as "Annexure H" and is disclosed on the website of theCompany at the link: http://investor.gmrgroup.in/Investors/GIL-Policies. html.

Developments in Human Resources and Organization Development

The Company has robust process of human resources development which isdescribed in detail in Management Discussion and Analysis section under the heading"Developments in Human Resources and Organization Development at GMR Group".

Changes in Share capital

There was no change in authorized issued and paid-up share capital ofthe Company during the year under review.

Environmental Protection and Sustainability

Since inception sustainability has remained at the core of ourbusiness strategy. Besides economic performance safe operations environment conservationand social well-being have always been at the core of our philosophy of sustainablebusiness. The details of initiatives/activities on environmental protection andsustainability are described in Business Responsibility Report forming part of AnnualReport.

Events subsequent to the date of financial statements

There are no material changes and commitments affecting financialposition of the Company between March 31 2017 and Board's Report dated August 112017.

Change in the nature of business if any

There is no change in the nature of business of the Company.

Significant and Material Orders passed by the Regulators

There are no significant and material orders passed by the Regulatorsor courts or tribunals impacting the going concern status and company's operations infuture.

Deposits

During the year under review the Company has not accepted any depositsfrom the public.

Disclosure under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013

Your Company has in place an Anti-Sexual Harassment Policy in line withthe requirements of The Sexual Harassment of Women at the Workplace (PreventionProhibition and Redressal) Act 2013. An Internal Complaints Committee (ICC) has been setup to address complaints received regarding sexual harassment. All employees (permanentcontractual temporary trainees) are covered under this Policy.

The following is a summary of sexual harassment complaints received anddisposed of during the FY ended March 31 2017:

Number of complaints received : NIL
Number of complaints disposed of : NIL
Acknowledgements

Your Directors thank the lenders banks financial institutionsbusiness associates customers Government of India State Governments in Indiaregulatory and statutory authorities shareholders and the society at large for theirvaluable support and co-operation. Your Directors also thank the employees of the Companyand its subsidiaries for their continued contribution commitment and dedication.

For and on behalf of the Board
Sd/-
Place: New Delhi G.M. Rao
Date: August 11 2017 Executive Chairman