It is my pleasure to present to you our Company's performance for the fiscal year2016-17.
We started the year with the continuing financial stress in the midst of the ongoingdebt restructuring which you are aware of. Fortunately we managed to overcome some of thebiggest hurdles the Company has faced in its 100-year history and navigated this toughperiod which ultimately led the Company to exit under Strategic Debt Restructuring on May17 2017. During the year we have successfully completed the remaining carve out ofTransmission & Distribution (T&D) business to Transrail Lighting Limited (TLL)stake sale to new promoter Ajanma Holdings Private Limited and change in management. Withthe carving out of the T&D business Rs. 3855.20 crores (both funded and non-funded)CDR Debt has been transferred to TLL.
We also obtained shareholders lenders and National Company Law Tribunal("NCLT") approval and successfully completed the carve-out and transfer of CivilEPC business to Gammon Engineers and Contractors Pvt. Ltd. (GECPL). A new promoter GPGroup of Thailand acquired 75% of the equity shares in GECPL. With this approximately Rs.6505.42 crores (both funded and non-funded) CDR Debt was transferred to GECPL.
As one of the first and few companies to successfully implement SDR we have managed toresolve approx. 70% of lenders exposure. Both TLL and GECPL are now on a path to recoverygiving the traditional business lines nurtured and grown by Gammon India Ltd. over ninedecades of its existence a new lease of life and continuity.
The year 2016-17 continued to remain challenging for the Indian construction sectorbut Government at Central and State levels have continued taking various steps for itsrevival. Some of these include:
Increased spending in all areas of infrastructure: India's 2016-2017 UnionBudget has increased infrastructure expenditure allocation to Rs. 3.96 lakh crore for thesector with significant impetus given for transportation especially roads highways andmetros.
Implementation of a fair and speedy dispute resolution mechanism and contractingprocess: Introduction of the Arbitration and Conciliation (Amendment) Act 2015 whichfacilitates faster and time bound decision making in the arbitration process coupled withNITI Aayog's initiative to disburse 75% of the awarded amount against margin free bankguarantees.
Furthermore the adoption of a model EPC contract in place of item ratecontracts is a positive step.
During the year under review the Turnover of the Company on a standalone basis stood atRs. 1069.85 crores as compared to Rs. 6697.50 crores during the previous 18 monthperiod ended 31st March 2016. The Company posted a Net Loss after Tax of Rs.1661.95 crores during the period ended 31st March 2017 as against a Netprofit after Tax of Rs.100.52 Crores during the previous period ended 31stMarch 2016.
On a Consolidated basis the Turnover of Gammon Group during the period under reviewstood at Rs. 1788.82 Crores as compared to Rs. 8072.57 Crores for the previous 18 monthperiod ended 31st March 2016. The Group posted a Net Loss after Tax of Rs.1153.77 Crores during the period ended 31st March 2017 as against a Net Lossafter Tax of Rs. 883.93 Crores during the previous 18 month period ended 31st March
The acute financial stress in the Company has severely impacted its operations. Themounting interest burden caused due to delays in monetization of assets have further addedto the
In its overseas operations the Company has posted a turnaround in Group Sofinter inItaly. However the operations in its marginal oil-field in Ecuador continues to be underextreme stress due to lack of financial support needed to fund capex interventions underthe strategic debt restructuring plan.
We continue to strive vigorously to meet our debt obligations and to resolve theremaining 30% of the debt. We are exploring various strategic and tactical options toreduce the debt burden and improve financial viability of the business including carve outof the retained Civil EPC business to enable strategic
investors to invest in the business monetization of non-core assets like investmentsin domestic and overseas subsidiaries as well as real estate holdings and expediting thecollection of old receivables. The Company has over Rs. 3000 crores of outstandingarbitration claims of which it is expected to recover atleast Rs. 850 crores withpossibility to collect 75% against a bank guarantee in case further legal processes areinitiated.
We have also diluted our stake in Gammon Infrastructure Projects Limited (GIPL) ainfra development company to repay our debts. We however continue to hold 39.61% in GIPLwhich eventually will be sold to repay our debts to our lenders. We are one of the fewcompanies having made various efforts to resolve and repay our debts.
Tough times call for supportive stakeholders and I would like to extend my heartfeltgratitude to all our stakeholders our lenders and bankers suppliers employees andshareholders for their continued support and the faith reposed in us.
We look forward to better times ahead and will continue to focus on achieving ourstated goals with sincerity and dedication.
With best wishes Abhijit Rajan
Chairman & Managing Director