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GVK Power & Infrastructure Ltd.

BSE: 532708 Sector: Engineering
NSE: GVKPIL ISIN Code: INE251H01024
BSE 15:59 | 23 Feb 17.50 0.75
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NSE 15:46 | 23 Feb 17.55 0.75
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OPEN 17.00
PREVIOUS CLOSE 16.75
VOLUME 1889750
52-Week high 27.85
52-Week low 5.05
P/E
Mkt Cap.(Rs cr) 2,764
Buy Price 17.55
Buy Qty 157978.00
Sell Price 0.00
Sell Qty 0.00
OPEN 17.00
CLOSE 16.75
VOLUME 1889750
52-Week high 27.85
52-Week low 5.05
P/E
Mkt Cap.(Rs cr) 2,764
Buy Price 17.55
Buy Qty 157978.00
Sell Price 0.00
Sell Qty 0.00

GVK Power & Infrastructure Ltd. (GVKPIL) - Director Report

Company director report

Dear Stakeholders

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

Financial results

Following is the summary of consolidated financial results of the Company itssubsidiaries and

Particulars 2016-17 2015-16
Financial Performance
Operational Income 351647 320687
EBIDTA 115632 117133
Other Income 53266 51002
Finance Costs 189037 165076
Depreciation 66867 54896
Loss from ordinary activities (87006) (51837)
Share of profit of associate 23464 18206
Share of loss of jointly controlled entity (65094) (27094)
Loss before tax (128636) (60725)
Tax expense/(credit) 5727 7994
Non - controlling interest (4135) (4039)
Loss for the year (130228) (64680)
Other comprehensive income net (287) 124
Total comprehensive income (130515) (64556)
EPS (Rupees) :
Weighted Avergage no. of Equity Shares 1579210400 1579210400
Basic and Diluted (8.25) (4.10)
Financial Position:
Fixed Assets (Net of depreciation) 1559023 1599528
Cash and Bank balance 102783 90616
Net current assets (498130) (390037)
Total Assets 2063123 2239967
Equity 15792 15792
Other equity (45476) 84328
Net worth (29684) 100120
Market Capitalisation 93963 107860

Our total income from operations increased by 9.65 % to Rs. 351647 Lakhs from Rs.320687 Lakhs in the previous year. The Transportation segment contributed an income ofRs. 37 959 Lakhs (10.79 % of total income) compared to Rs. 37666 Lakhs in the previousyear. Airport Segment contributed an income of Rs. 312 127 Lakhs (88.76 % of totalincome) as compared to Rs. 281557 Lakhs in the previous year. The other segmentcontributed Rs. 1561 Lakhs compared to Rs.1464 Lakhs in the previous year. The Airportassets (Mumbai and Bangalore Airports) have contributed to net profit of Rs. 19274 Lakhscompared to Rs. 13853 Lakhs in the previous year.

The net loss after tax share of profit from associate share of profit from jointventure and non controlling interest was Rs. 130228 Lakhs as against net loss ofRs.64680 Lakhs in the previous year. The net loss is mainly attributable to drop ingeneration of power due to acute which has resulted in either closure of power plants oroperational for a very few days in a month and an increase in interest cost.

Dividend

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

Share Capital

The paid up equity share capital as on March 31 2017 is Rs.157.92 Crore. There was nopublic issue rights issue bonus issue or preferential issue etc. during the year. TheCompany has not issued any shares with differential voting rights sweat equity shares norhas it granted any stock options.

Management Discussion and Analysis

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

Corporate Governance

Corporate Governance as required under Regulation 27 of SEBI (LODR) Regulations2015 certificatefromthe Company Secretary in Whole Time Practice on compliance with the mandatoryrecommendations of the Narayana Murthy Committee on Corporate Governance is annexed to theDirectors Report. As in the past your Company continues to follow best of CorporateGovernance policies.

Subsidiaries and Consolidated Financial Statements

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

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

Developments in the existing assets

(i) Energy

As already informed to members the validity period of PPA for Jegurupadu Phase I powerplant has expired on 20th June 2015.

Phase II operated in the month of September 2016 using e-bid RLNG and achieved PLF(G)of 3.75% and continues to declare availability on alternate fuel hence achieved 99.73%PLF for the year ending March 2017 based on Availability Declaration on

HSD fuel presently plant is shut down and kept under preservation.

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

Both units of 2 x 270MW coal based power plant GVK Power (Goindwal Sahib) Limitedcould not be operated during the FY 2016-17 due to non-availability of coal and units willbe restarted after accumulation of 1 lakh Metric Tons of coal at the project site.

(ii) Airports

During the year under review Mumbai International Airport Private Limited (MIAL)handled 305463 aircraft movements (ATMs) in FY 17 a growth of 3% compared to previousyear growth was mainly seen in international ATMs that grew at 5.5%. MIAL touched 45.15million passengers in FY 17 a growth of 8.4% growth in domestic passengers was at 8.9%whereas international passengers grew at 7%. Cargo throughput at MIAL was 782288 MTdomestic cargo recorded a growth of 12% while international cargo grew by 10%. MIALmaintained its 2nd position in all India passenger and cargo share with 17.2% and 26%share respectively.

FY 17 witnessed the launch of operations by Garuda Indonesia and Brussels Airlines toJakarta and Brussels respectively. Air China also reinstated its operation to Beijing. InFY 18 RwandAir commenced operations to Kigali while Indonesia AirAsia X and Air Canadahave confirmed their planned operations. The year also witnessed launch of code Foperations by Etihad and Lufthansa thereby making MIAL the only airport in India to have4 code F operations daily. Aircraft upgrades were done by Jet Airways on routes likeBangkok Singapore Dubai Dammam Doha Riyadh and Amsterdam. Also to augment thedomestic capacity 6 wide body movements were introduced on Delhi Chennai and Bengalururoutes. The revised aeronautical tariff card was issued in FY 17 that reflects the routedevelopment philosophy at MIAL. Wide body aircraft on international routes are chargedless and new international routes are incentivised with no landing charges for 1 year.

Bangalore Airport & Infrastructure Developers Private Limited (BAIDPL) holdingcompany of Bangalore International Airport Limited (BIAL) has completed the saletransaction of 33% equity holding in the later to Fairfax Group on 24th March 2017 at arevised consideration of Rs.2202 Crore. With this sale BAIDPL's equity holding in BIALhas come down to 10% from 43% as of arch 31 2017.

Subsequently the balance 10% equity holding also has been sold to Fairfax on July 132017 for a sale consideration of Rs.1290 Crore. As a result of total dilution of ourequity in BIAL all the Directors representing BAIDPL have resigned from the Board ofBIAL.

During the year BIAL has handled 22.88 Mio (PY 18.97 mio) 178117 ATMs (PY 153831)and 319334 MT (PY 291920 MT) of cargo resulting in increase of 20.6% 15.8% and 9.4%respectively during the year. It has won the Skytrax Award 2017 for the Best Airport inIndia and Central Asia category and has been conferred with the Excellence Award 2016 forbeing IATA e-freight compliant Airport - South. The Company has been awarded GreenCoPlatinum rating from CII Green Building Council (GBC) and the "Most Innovative"(top category) in GreenCo Best Practice Award 2016 and also bagged the "Most usefulproject presentation" award during the event for the presentation on "Reduction& Optimization of pesticides at Kempegowda International Airport"

Directors Appointment by rotation

In accordance with the provisions of the Companies Act 2013 read with the Articles ofAssociation of the Company and Regulation

36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 G VSanjay Reddy Director of the Company will retire by rotation at this meeting and beingeligible your Board recommends his re- appointment.

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

Confirmation of Appointment

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

Key Managerial Personnel

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

Declaration by Independent Directors

Each of the Independent Directors have given a declaration to the Company that theymeet the criteria of independence as required under section 149(7) of the Companies Act2013 and Regulation 25 of the Listing Agreement with the Stock Exchanges.

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

Based on the recommendations of the Nomination and Remuneration Committee the Board ofDirectors have formulated and adopted a policy on appointment / remuneration of directorsincluding criteria for determining qualifications positive attributes independence ofthe Directors and other matters. This policy also covers the performance evaluation of alldirectors BoardCommittees and Key Managerial Personnel.

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

Mechanism for Evaluation of Board

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

Directors.

1. Criteria for evaluation of Board of Directors as a whole i) The frequency ofmeetings; ii) The length of meetings; iii) The administration of meeting; iv) The numberof committees and their notes; v) The flow of information to board members and betweenboard members vi) The quality and quantity of information; and vii) The disclosure ofinformation to the stakeholders

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

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

2. Criteria for evaluation of the Individual Directors i) Ability to contribute andmonitor corporate governance practices; ii) Ability to contribute by introducing bestpractices to address top management issues; iii) Participation in long term strategicplanning; iv) Commitment to the fulfillment of director obligations and fiduciaryresponsibilities; v) Guiding strategy; vi) Monitoring management performance anddevelopment; vii) Statutory compliance & Corporate governance; viii) Attendance andcontribution at Board/Committee meetings; ix) Time spent by each of the member; and x)Core competencies

Nomination and remuneration policy

The objectives of the Policy

1. To lay down criteria and terms and conditions with regard to identifying persons whoare qualified to become Directors (Executive and Non-Executive) and persons who may beappointed in Senior Management and Key Managerial positions and to determine theirremuneration.

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

3. To carry out evaluation of the performance of Directors

4. To provide them reward linked directly to their effort performance dedication andachievement relating to the Company's operations.

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

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

The evaluation of all the directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board. The outcome of the Board evaluation forfiscal 2017 was discussed by the nomination and remuneration committee at the meeting heldon May 24 2017.

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

Board Committees

All Committees of the Board of Directors are in line with the provisions of theCompanies Act 2013 and the applicable SEBI

(LODR) Regulations 2015

Directors' Responsibilities Statement

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors including Audit of internal financialcontrols over financialreporting by the Statutory Auditors and the reviews performed by Management and therelevant Board Committees including the Audit

Committee the Board is of the opinion that the Company's internal financial controlswere adequate and effective during the financial year 2016-17.

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

i) in the preparation of the annual accounts for the financial year have been followedalong with proper explanations relating to material departures;

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

iii) that the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

iv) the directors had prepared the annual accounts for the financial year ended March31 2017 on a "going concern" basis;

v) they have laid downinternalfinancialcontrolsinthecompanythat adequateand wereoperating effectively and are vi) they have devised proper systems to ensure compliancewith the provisions of all applicable laws and these are adequate and are operatingeffectively.

Financial Statements

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

Indian Accounting Standards (Ind AS) – IFRS Converged Standards

Your Company has adopted Indian Accounting Standards (Ind AS) with effect from April 12016 pursuant to the Companies (Indian Accounting Standard) Rules 2015 as notified by theMinistry of Corporate Affairs on February 16 2015. Accordingly your Company has preparedfinancial results on standalone basis as per Ind-AS for the first three quarters of the FY2016-17 and on and from the period ending March 31 2017 the formats forUnaudited/Audited quarterly financial results i.e. Statement of Profit and Loss and theUnaudited/Audited Half-Yearly Balance Sheet are to be submitted to the stock exchangesshall be as per the formats for revisedBalanceSheetandStatementofProfit prescribed inSchedule III to the Companies Act 2013. and Loss as

Secretarial Auditors

The Board had appointed M/s Narendar & Associates Company Secretaries inWhole-time Practice to carry out the Secretarial Audit under the provisions of section 204of the Companies Act 2013 and the Rules made thereunder. The report of the

Secretarial Auditor in Form MR-3 is enclosed to this report as Annexure B.

Statutory Auditors

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

As per second proviso to Section 139(2) of the Companies Act 2013 (‘the Act')the existing auditors have completed their term of ten years at the commencement of thesaid Act hence on their completing the additional transition period of three yearsprovided under the Act the term of existing auditors expires at the conclusion of theensuing 23rd AGM.

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

Price Waterhouse Chartered Accountants LLP have consented to the said appointment andconfirmed that their appointment if made would be within the limits specified underSection141(3)(g)oftheAct.Theyhavefurtherconfirmedthat they are not disqualified to beappointed as statutory auditors in terms of the provisions of the proviso to Section139(1) Section 141(2) and Section 141(3) of the Act and the provisions of the Companies(Audit and Auditors) Rules 2014.

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

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

Management's response on the Statutory Auditors Qualification / Comments (if any)

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

The Honorable Supreme Court vide is decision of September 24 2014 held that allotmentof various coal blocks including those allotted to GVK Coal (Tokisud) Company PrivateLimited is arbitrary and illegal and had cancelled the allotment. Subsequently thegovernment promulgated The Coal Mines (Special Provisions) Ordinance 2014 which intendsto take appropriate action to deal with situation arising pursuant to the HonorableSupreme Court's judgment. GVK Coal Tokisud subsidiary company has filed writ petitionbefore the Hon'ble High Court of Delhi challenging the decision of the NominatedAuthority Ministry of Coal which quantified the compensation payable to GVK for takingover the Tokisud Coal Block as Rs.11129 Lakhs against the carrying value of assets ofRs.31115 Lakhs. The Hon'ble High court had passed an order 09.03.2017. In the orderHon'ble High cout has agreed that taking restricting compensation to the computed writtendown value as on 31.03.2014 may not be correct and valuation of the mine infrastructureshould be done as on the date of execution of the vesting order or allotment order as thecase may be. Court has advised the management to raise disputes before the tribunal forthe quantum of compensation. Based on the management's judgment the Company hasresubmitted its claim for balance compensation to nominated authority on 28th April

2017. Management believes that the subsidiary will be appropriately reimbursed forcancelled coal mine accordingly no provision was required to be made on carrying value ofassets.

Awards and recognitions

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

Certifications Recognitions and Awards for Bengaluru International Airport (BIAL)

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

b) Kempegowda International Airport Bengaluru has been recognized at the QualityCircle Forum of India 2016. All the thirteen entries submitted has been awarded the Goldrecognition the highest standard at the forum.

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

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

e) BIAL received the GreenCo Platinum rating from CII Green Building Council (GBC) andthe "Most Innovative" (top category) in GreenCo Best Practice Award 2016 andalso bagged the "Most useful project presentation" award during the event forthe presentation on "Reduction & Optimization of pesticides at KempegowdaInternational Airport".

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

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

Certifications Recognitions and Awards for Mumbai International Airport PrivateLimited (MIAL)

Awards Accolades and Accreditation

a) CSIA was adjudged as 2nd best airport globally in the ‘over 40 millionpassengers' category by Airports Council International for airport service quality in2016.

b) GVK MIAL has beenawardedasthe‘BestAirportStaff' award in India & CentralAsia at the Skytrax Awards 2017.

c) GVK MIAL ranks in the Top 10 ‘Best Airport Terminals' at the Skytrax Awards2017.

d) GVK MIAL has been awarded as ‘Highly Commended Airport for Marketing' award inAsia Pacific region in the over 20 million passengers' category.

e) GVK MIAL ranked as the Second Best Airport globally and in Asia Pacific by AirportCouncil International's Airport Service Quality Awards 2016.

f) GVK CSIA has been awarded with the "Best Executed Landmark Project of the Year(Airport)" at the Construction Times Award 016.

g) GVK MIAL has been awarded ‘Air Cargo Terminal' of the year 2016 at LogisticsAsia Awards.

h) GVK MIAL has been awarded "BE Star" recognition as Leader for Excellencein Customer Management;

i) GVK MIAL has received the "Sustainable Carbon Management Practice Award"from World CSR Congress;

j) GVK CSIA has won Procurement Excellence Awards at the 4th Procurement StrategiesForum 2016;

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

l) GVK CSIA has won award for Excellence in Travel Retail Infrastructure 2016 by IndianRetail Forum;

m) GVK CSIA has been awarded as "Best Metro Airport 2015-16" by Air PassengerAssociation of India;

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

Particulars of Loans given Investments made and Guarantees given and Securitiesprovided:

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

Contracts and Arrangements with the Related Parties:

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

Particulars of contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed Form AOC-2is appended as AnnexureC to the Board's report.

Extract of Annual Report

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

Internal Control Systems and their adequacy

The Management continuously reviews the internal control systems and procedures for theefficient conduct of the Company's business. The Company adheres to the prescribedguidelines with respect to the transactions financial reporting and ensures that all itsassets are safeguarded and protected against losses. The Internal Auditor of the Companyconducts the audit on regular basis and the Audit Committee periodically reviews internalaudit reports and effectiveness of internal control systems.

Apart from the above the Company is in consultations with the external and independentconsultants to have a policy for development and implementation of risk management for thecompanyincludingidentificationof elements of risk if any that may threaten the existenceof the Company and a mechanism to mitigate the same. Once the above policy is finalizedthe same will be adopted by the Board and uploaded in the website of the Companythereafter.

Public Deposits

During the year under reviewyourCompanyhasneitherinvitednoracceptedanyfixeddepositsfrom the public.

Vigil Mechanism

In terms of section 177(9) & (10) of the Companies Act 2013 a Vigil Mechanism forDirectors and employees to report genuine concerns has been established by the Board alongwith the whistle blower policy. The Vigil Mechanism and whistle blower policy have beenuploaded on the website of the Company. The same can be accessed at the linkwww.gvk.comunderinvestorrelations/ investors/codeofconduct.

Corporate Social Responsibility

Since there are no average net profits for the Company during the previous threefinancial years there are no specific funds that are required to be set aside and spentby the Company during the year under review.

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

Particulars of employees and related disclosures

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

Disclosures pertaining to remuneration and other details as required under Section197(12) read with Rule 5(1) of Companies (Appointment & Remuneration of ManagerialPersonnel) Rules 2014 are enclosed to this report.

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

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

(A) Conservation of Energy:
(i) the steps taken or impact on conservation of energy : NA
(ii) the steps taken by the company for utilising alternate sources of energy : NA
(iii ) the capital investment on energy conservation equipments; : NA
(B) Technology absorption:
(i) the efforts made towards technology absorption; : NA
(ii) the benefits derived like product improvement cost reduction product development or import substitution; : NA
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) : NA
(a) the details of technology imported;

(b) the year of import;

(c) whether the technology been fully absorbed;

(d) if not fully absorbed areas where absorption has not taken place and the reasonsthereof; (iv) the expenditure incurred on Research and Development. :

Expenditure on R& D

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

(C) Foreign exchange earnings and Outgo:

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

General

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

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

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

3. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except ESOS referred to in this Report. material orders were passed bythe Regulators or Courts or Tribunals which impact the going concern status 4.Nosignificant and Company's operations in future.

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

Acknowledgements

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

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

For and on behalf of the Board of Directors
Place : Hyderabad Dr G V K Reddy
Date : August 11 2017 Chairman & Managing Director