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Gammon India Ltd.

BSE: 509550 Sector: Infrastructure
NSE: GAMMONIND ISIN Code: INE259B01020
BSE 00:00 | 10 Sep Gammon India Ltd
NSE 05:30 | 01 Jan Gammon India Ltd
OPEN 1.40
PREVIOUS CLOSE 1.45
VOLUME 142636
52-Week high 1.54
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 54
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1.40
CLOSE 1.45
VOLUME 142636
52-Week high 1.54
52-Week low 0.00
P/E
Mkt Cap.(Rs cr) 54
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Gammon India Ltd. (GAMMONIND) - Director Report

Company director report

To

The Members of Gammon India Limited

Your Directors have pleasure in presenting their 98th Annual Report together with theAudited Financial Statements of the Company for the Financial Year ended March 31 2020together with the Statutory Auditors Report thereon.

1. Review of Financial and Operational Performance:

(Rs in crores)

Particulars Standalone Consolidated
For the Financial Year ended March 31 2020 For the Financial Year ended March 31 2019 For the Financial Year ended March 31 2020 For the Financial Year ended March 31 2019
Profit before Other Income (576.75) (1293.89) (62.06) (668.64)
Depreciation and Interest
Add:
Other Income 51.49 112.75 136.40 78.30
Less:
Depreciation 9.74 10.56 11.03 13.46
Interest 586.55 562.42 693.87 683.71
Profit/(Loss) before Tax (1121.55) (1754.12) (630.56) (1287.50)
Less:
Provision for Taxation 1.01 0.93 0.23 8.94
Profit/(Loss) after Tax (1122.56) (1755.05) (630.79) (1296.44)
Transferred to Minority Interest - - (0.97) (86.55)
Profit/(Loss) for the year (1122.56) (1755.05) (629.82) (1209.89)
Add:
Profit brought forward from the previous year (5065.40) (3310.22) (5673.09) (4797.90)
Available for Appropriation (6187.96) (5065.27) (6302.91) (6007.79)
Appropriations:
On Divestment of Subsidiary 1.25
Dividend (Proposed) Equity Shares
Tax on Dividend
Other Adjustments 0.25 0.12 0.32 333.46
Balance carried to Balance Sheet (6188.19) (5065.40) (6303.23) (5673.09)

The Financial Statements for the year ended 31st March 2020 have been restated inaccordance with Ind-AS for comparative information.

The Financial Statements are in compliance with Ind-AS notified by the Ministry ofCorporate Affairs under Section 133 of the Companies Act 2013 read with the relevantrules issued thereunder and other accounting principles generally accepted in India.

The year under review is a period of 12 (twelve) months commencing from 1st April 2019and ending on 31st March 2020. During the FY under review the Turnover of the Company ona Standalone basis stood at Rs 71.71crores as compared to Rs 197.40 crores during theprevious F.Y. ended 31st March 2019. The Company posted a Net Loss after Tax of Rs1122.56 crores during the year ended 31st March 2020 as against a Net Loss after Tax ofRs 1755.05 crores during the previous FY ended 31st March 2019.

On a Consolidated basis the Turnover of Gammon Group during the year under reviewstood at Rs 86.38 crores as compared to Rs 984.38 crores for the previous F.Y. ended 31stMarch 2019. The Group posted a Net Loss after Tax of Rs 630.79 crores during the F.Y.ended 31st March 2020 as against a Net Loss after Tax of Rs 1296.44 crores during theprevious F.Y. ended 31st March 2019. Interest and finance costs continue to be high. Theturnover/income is from the residual EPC business post carve out of the operatingbusiness. During the year under review the finance cost which includes the interest costswas Rs 586.55 crores. The loss was primarily due to the provisions made for the Company'sfunded and non-funded exposure of loans and investments the details of which isprovidedinnoteno . 31ofthestandalonefinancial statements

During the year under review the Company's operation were limited to execution of theongoing projects. As the company is currently an NPA with the Banks it is not in aposition to bid for new projects. The Company also focused on receiving monies againstarbitration awards however the recovery was negligible. The amount was used for operationsand to repay part of lenders dues. The Company is actively pursuing arbitration pending invarious stages and hopes to receive favourable awards in its favour. The Company continuesto focus on recovering its monies and resolving the lenders dues.

The Company's operations have been affected in the last few years by various factorsincluding liquidity crunch unavailability of resources on timely basis delays inexecution of projects delays in land acquisition operational issues etc. The Company'soverseas operations are characterized due to weak order booking paucity of workingcapital and uncertain business environment Also the Company's current liabilities exceedthe current assets. The facilities of the Company with the Secured lenders are presentlymarked as NPA since June 2017. The liquidity crunch has resulted in several winding uppetitions being filed against the Company by various stakeholders for recovery of thedebts which the Company has been settling as per the mutually agreed repayment terms. Theliquidity crunch is affecting the Company's operation with increasing severity. The

Secured lenders have recalled the various facilities initiated recovery suits in theDebt Recovery Tribunals as well as filing a winding up petition with the National CompanyLaw Tribunal Mumbai bench under the Insolvency and Bankruptcy code.

The Company has been making every effort in settling the outstanding Secured lendersdues.

The Reserve Bank of India had vide its circular no. RBI/2018-19/ 203 DBR.No.BP.BC.45/21.04.048/2018-19 dated 7th June 2019 issued directions for ‘Prudential Frameworkfor Resolution of Stressed Assets'. These directions were called the Reserve Bank of India(Prudential Framework for Resolution of Stressed Assets) Directions 2019 and which cameinto immediate effect i.e. 7th June 2019 These directions were issued by RBI with a viewto providing a framework for early recognition reporting and time bound resolution ofstressed assets.

To take into consideration the above mentioned circular issued by RBI ICICI BankLimited being the erstwhile lead monitoring institution of the Secured Lenders invitedall the lenders for a consortium meeting held on 4th July 2019 to discuss the executionof the Intercreditor Agreement (ICA) wherein the ground rules for finalisation andimplementation of the resolution plan in respect of borrowers with credit facilities frommore than one lender will be provided. Based on the discussions at the aforementionedconsortium meeting the execution of the ICA was scheduled on 5th July 2019.The ICA wasexecuted by all the lenders.

Pursuant to the execution of the ICA the lenders appointed M/s Deloitte Touche TohmatsuIndia LLP as Process Advisory (PA) in the resolution process of the Company. Subsequent tothe above mentioned appointment the representatives of Deloitte attended one of the JointLenders Meeting held on 13th January 2020 wherein the plans regarding the way forward onthe resolution process were presented. Pursuant to the quotes sought by Deloitte fromvarious valuers and legal consultants to carry out the valuation of the Company andestimation on the recoverability of arbitration claims of the Company the quote receivedfrom Duff and Phelps (D&P) was found to be lower as compared to others. IDBI Bank thecurrent lead monitoring institution or the bank vide an appointment letter dated 27thJanuary 2020 appointed Duff and Phelps (D&P) on behalf of the consortium of lendersfor carrying out valuation of the Company. The scope of work of D&P included thefollowing: Fair realisable and distress value of Gammon House; Liquidationvalue of assets of the Company; Recoverable value of various awarded andarbitration claims of the Company.

Everstone Group Proposal

Everstone Group has proposed to infuse Rs 50 crores in the Company. The following arethe key points in the proposed investor plans: Everstone to infuse funds asadditional or preferential capital in the Company; Everstone will like to reviveGIL as an EPC company.

This arrangement will also ensure INR 50 crores of working capital in the company. Theproceeds of the capital raising exercise shall be utilized for the operations of theCompany.

OVERSEAS SUBSIDIARIES

Group Sofinter Italy

Established in 1979 Group Sofinter Italy comprises four principal Companies viz.Sofinter S.p.A. A.C. Boilers S.p.A (formerly

AnsaldoCaldaie S.p.A) Europower SpA ITEA SpA. The Group is engaged in themanufacture/EPC of packaged industrial boilers/utility/ power generation boilersrespectively catering to the oil and gas industry industrial manufacturing and powerutility plants worldwide. The Group has modern manufacturing facilities in Italy Romaniaand India and a dedicated R&D facility in Italy.

Sofinter SpA

Sofinter SpA the holding company of the Group also has Macchi as the mainmanufacturing division. Macchi is a world leader and original equipment manufacturer ofpackaged industrial boilers and Heat Recovery Steam Generators with applications manufacturingOilandGasrefineries units and co-generation plants. Till date Macchi has over 1000units installed world-wide to its credit which is backed by a strong after sales serviceunit to cater to their needs.

AC Boilers S.p.A.

AC Boilers S.p.A. is the market leader in design supply manufacturing andinstallation of utility power boilers and original equipment manufacturer of HRSGs upto260 MWe for CCP plants. With 150 years of experience in steam generation and burnertechnology field the company has an installed base of over 80000 MWe and 1000 units. Italso provides rehabilitation fuel conversion and after-sales services for existingboilers with a strong foothold in Egypt (ACBE – 98%) and India (Ansaldo CaldaieBoilers India – 26%). The Advance Combustion Research Centre of the company offersspecialized services to customers even as its products are qualified for SuperCriticalApplications.

Europower S.p.A

Europower SpA is active in EPC of waste-to-energy turnkey plants including CHP forrefinery petrochemical and chemical industry CCPP for power plants district heating andcooling plants. It is also engaged in operations and maintenance of power and industrialplants.

ITEA S.p.A

Established in 2002 ITEA is the R&D division dedicated to development andpatenting of zero-emission Isotherm PWR

Flameless Oxy- combustion technology (Isotherm PWR*) to be used in industrial andutility Power Plants. The flameless pressured oxy-combustion technology uses hightemperatures oxygen-enriched air and pressurization in an innovative manner to meetfuture environmental challenges in energy and waste segments. Industrial waste treatmentmunicipal solid urban waste and low-grade coal are other applications of thecost-effective clean technology.

ITEA S.p.A is set to commercially roll out this technology in select applications inthe coming years.

Group Sofinters' Consolidated Financial Statements include the financial statements ofSofinter S.p.A (the parent company) and those of the companies over which it exercisescontrol directly or indirectly from the date on which control was acquired upto the dateon which it ceases.

During the Financial Year ended on 31st December 2019the group clocked a turnover ofEuro 227 million EBITDA of Euro 16.8 million and Profit after tax of Euro 3.6 million.Despite a decline in revenues due to the late booking of new orders in Sofinter and ACBoilers the profitability of the Group has shown improvement due to the improvedexecution of Projects and better overall controls driven largely by the SAP system whichbecame fully operational during the year under review.

As reported in the previous Annual Report in November 2018 after a lapse of nearlyfour years since the expiry of the previous Bank Agreement Group Sofinter signed the LongTerm Agreement with the Italian Banks for Bonding Lines and Cash Lines valid up toDecember 2022.The final signature of this Agreement was facilitated as a result of theShareholders having irrevocably mandated the Board to search for a partner to infuseCapital into the Group within the fourth quarter of 2020 in order to strengthen itscapital base commensurate with the risks and opportunities for the Group going forward.However for various reasons including the Covid pandemic raging globally since early2020the process run by KPMG Milan concluded unsuccessfully in July 2020 with only onebidder placing a binding offer which was outside the perimeter of the Rules framed by theBoard who therefore had to reject the same.

As a consequence of the pandemic the Italian State has enacted decrees under whichItalian companies in stress may approach them for infusion of funds towards equity orquasi-equity instruments. The Rules governing this assistance are under finalisation bythe State after which the Board of Sofinter will approach the concerned authorities with arequest for capital infusion in lieu of the failed process and every effort will be madeto conclude this within 2020.

The 10% equity participation for strategic reasons by Ansaldo Energia in A.C. Boilersreported in the previous year continues yielding good results and AC Boilers is now ableto jointly participate in markets where significant demand for Gas based cogenerationplants exist and where Ansaldo Energia S.p.A has a significant presence. The move alsohelps

A.C. Boilers S.p.A and Ansaldo Energia S.p.A to qualify as one of the four consortiumsi.e. General Electrics Mitsubishi and Siemens for complete Power Island utility Powerplants. The Company is also active in the waste-to energy Plants as well as Solar PowerPlants using the molten salts technology.

ITEA S.p.A a research and development company engaged in flameless pressurizedoxycombustion technology is currently executing a Contract in Bari signed in 2017 and willshortly be signing a Contract for the second phase of the Project. Furthermore efforts todivest the Group's stake in ITEA S.p.A continue although at a slow pace due to theon-going pandemic. Europower S.p.A which is engaged in EPC of waste to energy plantsincluding the operation & maintenance continued to clock satisfactory revenues andprofitability as always.

The current order backlog of Group Sofinter is approximately Euro500 million.

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

As pointed out in the previous year with the transfer of the operational assets in allrespects having been completed to Bruno Presezzi S.p.A the Commissioner has started thesecond phase of disposing the non-core assets of the Company. These primarily comprise ofapprox 60 acres of land in Legnano Milan buildings and some equipments within. Howeverin view of the present market situation for disposal of property in Italy furthercompounded by the pandemic there has been hardly any progress in disposing off the same.Meanwhile creditors in order of ranking and their dues continue to be negotiated and willbe paid off to the extent of amounts received from the disposal of the assets as and whenthese materialize.

Campo Puma Oriente S.A.(Puma Oil Block)

The Puma Oil Block is located in Ecuador's Oriente Basin in the Orellana Province eastof Quito with an area of 162 square

Kms. The Block was part of the second international marginal field bidding round andthe contract was signed in March 2008 for a 20 year term with Consorcio Pegaso comprisingtwo Companies namely Campo Puma Oriente S.A. (CPO) with 90% share and Joshi TechnologiesInc. with the balance 10%. Gammon India Limited has a 73.80% share in CPO corresponding to66.40% share in Consorcio Pegaso. Initially the contract was production sharing but inFebruary 2011 it was changed to a service contract for an 18 year term. The remainingoil recovery after considering production till date from the existing Puma field isapproximately 14.3 million barrels excluding probable and possible reserves.

There are 11 operational wells in the Puma Block. However as reported in the previousyear all wells have been capped for better part of the financial year 2019 awaitinginterventions including water injections artificial lift etc. as also additional CAPEX.In the absence of undertaking these procedures due to the stringent conditions for fundingunder SDR on Gammon there has been no progress in this direction prompting the Ministry ofHydrocarbons Ecuador to invoke various stringent provisions under the Contract citingbreaches. Had these interventions taken place these wells would have flowed approx 2000barrels apart from an upward revision in service fees to approx USD 29 per barrel. Ourattempts to identify a strategic partner to remedy the situation including completedivestment of the asset is continuing but in the absence of production and compounded bythe COVID impact in Ecuador this is proving to be a significant challenge.

2. Dividend

In view of the losses the Board of Directors do not recommend any dividend on theEquity Shares of the Company for the Financial Year ended March 31 2020.

3. Reserves

No amount was transferred to Reserves for the Financial Year ended March 31 2020.

4. Finance

During the year under review the Company did not raise any capital from the capitalmarkets either by way of issue of equity shares ADR/ GDR or any debt by way ofDebentures.

The standalone residual CDR Principal debt of Rs 4863.90 crores (amount as on 31stMarch 2020) (including an amount of Rs 1133.46 crores pertaining to recalledfacility of the SPV's) has become a Non Performing Asset with the lenders as on 30th June2017.

5. Debentures

As on March 31 2020 the Company had an outstanding principal balance of NCD'samounting to Rs 2883686297.92. Also the FITL outstanding on the NCD's was Rs 4536063which makes the total principal outstanding to Rs 2888222361. The said debentures andinterest thereon continue to remain unpaid for more than a year. Repayment of debenturesis also part of the settlement proposal as mentioned above subject to the approval of thelenders to the proposal.

6. Public Deposits deposits under Chapter V of the Companies Act 2013 and did notaccept any further deposits TheCompanyhasnofixed during the Financial Year 2019-20.

7. Transfer of Unclaimed Dividend and Unclaimed Equity Shares to InvestorEducation and Protection Fund

The Company did not pay any amount as dividend since the financial year 2012-13onwards. Hence there is no pending dividend which is outstanding to be transferred to IEPFauthorities pursuant to the provisions of Section 124 of the Companies Act 2013. Howeverthe Company has transferred unclaimed interim dividend for the Financial Year 2011 - 12which remained unclaimed and unpaid for a period exceeding seven years from its due dateaggregating to Rs 160720/- (Rupees One Lakh Sixty Thousand Seven Hundred and Twentyonly) to the Investor Education and Protection Fund (IEPF) on 16th November 2019.

Pursuant to the provisions of Section 124 of the Companies Act 2013 read with theInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 as amended (‘IEPF Rules') all the shares in respect of interim dividend2010-11 final dividend 2009-10 and 2010-11 are transferred to the demat account of theIEPF Authority as notified by the Ministry of Corporate Affairs. The details of suchdividends/shares transferred to IEPF are uploaded on the website of the Company atwww.gammonindia.com under the ‘Investors' section.

8. Material Changes and Commitments if any affecting the Financial Position ofthe Company which have occurred between the end of the Financial Year of the Company towhich the Financial Statements relate and the date of the Report.

There has been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the Financial Year of the Company towhich the Financial Statements relate and the date of the Report.

9. Change in Nature of Business

There has been no change in the nature of business as the Company continues to carry onits retained Civil EPC business.

10. Details Of Significant And Material Orders Passed By The Regulators Or Courts OrTribunals Impacting The Going

Concern Status And Company's Operations In Future

As on date of this report no significant and material orders have been passed by theregulators or courts or Tribunals which will impact the going concern status and company'soperations in future. However there are winding up petitions filed by creditors includingUnion Bank of India under the Insolvency and Bankruptcy Code which are in various stagesof hearing.

Also suits for recovery have been filed in the Debt Recovery Tribunals. To that extentthe Company faces the risk of winding up.

11. Directors' Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act 2013 ("the Act") we herebystate that: i) in the preparation of the Annual Accounts the applicable AccountingStandards have been followed along with proper explanation relating to materialdepartures if any; ii) The Directors have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the Company as at March 312020 and its loss for the year ended on that date; iii) The Directors have takenproper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities iv) The Directors haveprepared the Annual Accounts for the year ended March 31 2020 on a going concern basis; v)The Directors have laid down internal financial controls which are followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; vi) The Directors have devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems are adequate andoperating effectively.

12. Annual Return

The Annual Return as per the provisions of Section 92(3) and Section 134 of theCompanies Act 2013 and Rule 12(1) of the Companies (Management and Administration) Rules2014 is available on the Company's website i.e. www.gammonindia. com.

13. Subsidiary / Associates and Joint Venture Companies

The Company had 24 subsidiaries including step-down subsidiaries 4 Associates and 4Joint venture companies as on 31st March 2020.

Gammon Engineers and Contractors Private Limited ("GECPL") and TransrailLighting Limited (TLL) ceased to be the associates of the Company pursuant to theinvocation of pledge by the lenders of the Company in each of the two companies.

14. Consolidated Financial Statements/Subsidiary Companies

The Company its Subsidiaries Associates and Joint Ventures have adopted Ind-ASpursuant to the Ministry of Corporate

Affairs notification notifying the Companies (Indian Accounting Standard) Rules 2015under Section 133 of the Companies Act 2013. Your Company has published Ind AS Financialsfor the year ended March 31 2020 along with comparable as on March 31 2019 on aStandalone and Consolidated basis which form part of this Annual Report.

As required under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Consolidated Financial Statements of the Company its subsidiariesand associates form part of this Annual Report. A Statement containing the salientfeatures of the financial statements of the subsidiary companies and its associates isattached to the said Financial Statements in Form AOC-1 (Annexure A).

The said Financial Statements and detailed information of the subsidiary and associatecompanies shall be made available by the Company to the shareholders on request. TheseFinancial Statements will also be kept open for inspection by any member at the RegisteredOffice of the Company and the subsidiary and associate companies.

Pursuant to Section 136 of the Companies Act 2013 the Financial Statements of theCompany Consolidated Financial Statements alongwith all relevant documents and separateaudited accounts in respect of the subsidiaries and associates are available on theCompany's website viz. www.gammonindia.com.

15. Directors/Key Managerial Personnel

During the year under review the following changes took place in the Board composition;

Mr. Abhijit Rajan was a Non-Executive and Non-Independent Director designated bythe Board as Non-Executive Chairman effective from 7th June 2018. He furthervacatedofficeas a Director w.e.f. 7th June 2019 and was subsequently designated asPresident of the Company.

Mr. Anurag Choudhry was appointed as Chief Financial Officer of the Company w.e.f.30th April 2019. He was further appointed as Whole - Time Director designated asExecutive Director w.e.f. 17th August 2019.

Mr. Jaysingh L. Ashar was appointed as a Whole - Time Director designated asExecutive Director of the Company w.e.f. 19th February 2019. He resigned from his postw.e.f. 17th August 2019.

Mr. Soumendra Nath Sanyal was appointed as Non-Executive Independent Director ofthe Company w.e.f. 1st April 2019 Mr. Ulhas Dharmadhikari was appointed asNon-Executive Independent Director of the Company w.e.f. 17th April 2019. Ms.Vinath Hegde was appointed as Non-Executive Independent Director of the Company w.e.f.25th December. 2019 Mr. Sugato Ghosh was appointed as a ‘Nominee Director'duly nominated by Axis Trustee Services Limited the Debenture Trustee w.e.f. 7thFebruary 2019. He resigned from the Company's Board w.e.f. 4th June 2019.

Ms. Niki Shingade was appointed as the Company Secretary w.e.f. 30th April 2019.Ason the date of this Report

All the directors except for Ms. Vinath Hegde suffer disqualification as on 31stMarch 2020 pursuant to the provisions of Section 164(2) of the Companies Act 2013.

16. Auditors

(A) Statutory Auditors

In compliance with the provisions of Section 139 of the Companies Act 2013 theshareholders at the 95th AGM held on 21st March 2018 approved the appointment of M/sNayan Parikh & Co. Chartered Accountants (Firm Registration No. 107023W) as theStatutory Auditors of the Company in place of the retiring auditors for a period of5(Five) years i.e. from the conclusion of the 95th AGM till the conclusion of the 100thAGM.

Vide Notification dated 7th May 2018 issued by the Ministry of Corporate Affairs therequirement of seeking ratification of appointment of statutory auditors by members ateach Annual General Meeting has been done away with. Accordingly no such item has beenconsidered in the Notice of the 98th Annual General Meeting.

(B) Cost Auditor

The Company maintains adequate cost records as required under the provisions of Section148 of the Companies Act 2013.

In accordance with the provisions of Section 148 of the Companies Act 2013 the Boardin its meeting held on 14th August 2020 has appointed Mr. R. Srinivasarghavanas the Cost Auditor of the Company for the financial year 2020 - 21 on a remuneration ofRs 70000 excluding out of pocket expenses and tax. In terms of the provisions of Section148(3) of the Companies Act 2013 read with Rule 14(a)(ii) of the Companies (Audit andAuditors) Rules 2014 the remuneration of the Cost Auditor for the aforementionedFinancial Year 2020-21 is sought to be ratified by the members at the ensuing 98th AnnualGeneral Meeting.

(C) Secretarial Auditor and Audit Observations and Board's comments thereon;

M/s. Pramod Shah & Associates Practicing Company Secretaries were appointed as theSecretarial Auditors of the Company to conduct the Secretarial Audit of the Company forthe Financial Year ended 31st March 2020 pursuant to the provisions of Section 204 of theCompanies Act 2013 read with the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended from time to time. The Secretarial Auditor's Report isannexed to this report as "Annexure B".

The auditors have qualified the report with the following observations:

1. As per Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 The listed entity shall submit quarterly and yearly standalone financialresults to the stock exchange within forty-five days of end of each quarter (other thanlast quarter) along with Limited Review Report or Audit Report as applicable. The Companyhad delayed the submission of the financial statement for quarter ended March 2020 andyear ended March 2020

Board's explanation: The state of the Infrastructure sector is deteriorating since thelast couple of years our Company is no exception. To safeguard the interests of theclients and lenders the Company has hived off part of its business under a Court approvedscheme. Pursuant to the same majority of the operating staff was transferred to the new

Company and Gammon continues to operate with skeletal staff. The present financialsituation of the Company makes it unable to attract and retain new staff. This has delayedthe preparation and finalization of accounts and hence publication of the financialresults for the quarter and year ended 31st March 2020 has also been delayed.

Further the situation of the country wide Pandemic due to the COVID 19 worsened thesituation. However the Company endeavored to publish the same on 14th August2020 with a minimal delay of 14 days.

2. As per FEMA Circular of RBI - A.P. (DIR Series) Circular No. 133 dated June 20 2012which stipulates all Indian Companies who have received FDI and/ or have made FDI abroad(i.e. overseas investment) in the previous year(s) including the current year should filethe annual return on Foreign Liabilities and Assets can be duly filled-in validated andsent by e-mail to the Reserve Bank by July 15 of every year. The Company has not filedannual return on Foreign Liabilities and Assets (FLA) within the stipulated time becausethe Financial Statements of the Company was not ready. However the Management hasinformed that they are in the process of filing the same.

Board's explanation: Due to delay in approving and publishing of financial results theCompany filed its annual return on Foreign Liabilities and Assets (FLA) for the year ended31st March 2019 after the prescribed time limits.

3. As per Regulation 46 (1) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015; the listed entity shall maintain a functional website containing thebasic information about the listed entity. The Website of the Company is not maintainedup-to-date to a certain extent for example: The Company has not given the composition ofvarious committees of board of directors on the Website. However the Management informedus that they are in process of doing the needful.

Board's explanation: The Management is in the process of doing the needful.

4. Secretarial Standards (SS – 1 SS – 2 SS – 3 and SS – 4) issuedby the Institute of the Company Secretaries of India (ICSI) was complied to the extentpossible.

Board's explanation: The management has complied with SS-2 and SS-4. Since the Companyis under CDR SS-3 which pertains to dividend is not applicable. Further the managementwill comply with SS-1 upto the extent possible.

5. As per Regulation 98 (1) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015; the listed entity or any other person thereof who contravenes any ofthe provisions of these regulations shall in addition to liability for action in termsof the securities laws be liable for the following actions by the respective stockexchange(s) in the manner specified in circulars or guidelines issued by the Board: (a)holding of designated securities as may be applicable in coordination with depositories.The Company's trading has been suspended due to penal reasons.

Board's explanation: The Company is endeavoring and continuously striving to publishits periodic results on time. Further the Company has also made representations before theBSE and NSE where the shares of the Company are listed to waive off the penalties leviedon the Company post which the application for revocation of suspension will be filed.

6. As per Regulation 14 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015; the listed entity shall pay all such fees or charges as applicable tothe recognised stock exchange(s) in the manner specified by the Board on the recognisedstock exchange(s). The Company has not paid Annual listing fees of Bombay Stock Exchange(BSE).

Board's explanation: The Company faced severe financial crisis during the financialyear under review. However the Company strives to clear the pending listing fees at theearliest.

17. Corporate Governance Report and Management Discussion & Analysis

A Report on Corporate Governance and Management Discussion and Analysis for the yearended 31st March 2020 together . Practising withcertificate Company Secretary regardingcompliance of conditions of Corporate Governance as stipulated under the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of the AnnualReport.

18. Boards' Explanation On Statutory Auditors' Qualification on Financial Statements

The Board's explanation on the Statutory Auditor's qualifications and remarks in theirAuditor's Report both on the Standalone and Consolidated Financial Statements is annexedto this report as "Annexure C".

Members' attention is drawn to "Emphasis of Matter" stated in the Auditor'sReport dated 14th August 2020 on the Standalone Financial Statements and in the Auditor'sReport dated 14th August 2020 on the Consolidated Financial Statements of theCompany for the year ended 31st March 2020. The Directors would like to state that thesaid matters are for the attention of members only and have been explained in detail inthe relevant notes to accounts as stated therein and hence require no separateclarification.

19. Declaration by Independent Directors

The Independent Directors have furnished declaration in accordance with the provisionsof Section 149(7) of the Companies Act 2013 that they meet the criteria of independenceas provided under Section 149(6) and the same has been taken on record by the Board.

20. Nomination and Remuneration Policy

The Nomination and Remuneration Committee of the Company formulated a Nomination andRemuneration Policy in terms of Section 178(3) of the Companies Act 2013 and Regulation19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 layingdown inter-alia the criteria for appointment and payment of remuneration to DirectorsKey Managerial Personnel and Senior Employees of the Company the same was adopted by theBoard and is annexed to this Report as "Annexure – D".

21. Committees of the Board

The Board has appointed mandatory as well as non-mandatory Committees with specificpowers in specific areas with delegated authority. The following Committees of the Boardhave been formed which function in accordance with the powers delegated to them:

1. Audit Committee

2. Stakeholders Relationship Committee

3. Nomination and Remuneration Committee

The aforementioned committees have been reconstituted. Details of the composition ofeach of the committees number of meetings held and all other relevant details has beengiven in the Corporate Governance Report which forms a part of this Annual Report.

22. Familiarization Programme for Independent Directors

The Company has in place a system to familiarize its Independent Directors with theoperations of the Company their roles rights responsibilities in the Company nature ofthe industry in which the Company operates business model of the Company etc. All theIndependent Directors were updated about the ongoing events and developments relating tothe Company from time to time either through presentations at board or committee meetings.The Independent Directors also have access to any information relating to the Companywhenever they so request. In addition presentations are made to the Board and itscommittees where Independent Directors get an opportunity to interact with members of thesenior management. The Independent Directors also have interaction with the StatutoryAuditors Internal Auditors and External Advisors if any appointed by the Company atthe meetings.

23. Meetings of the Board

During the Financial Year under review the Board of Directors of your Company met 5(Five) times i.e. on 30th April 2019 3rd June 2019 30th September 2019 7thNovember 2019 and 5th March 2020.

24. Audit Committee

The Audit Committee has been formed in compliance with the provisions of Section 177 ofthe Companies Act 2013 and Regulation 18 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. During the financial year under review the Audit Committeemet 5 (Five) times i.e. on 30th April 2019 3rd June 2019 30th September 2019 7thNovember 2019 and 5th March 2020.

The Audit Committee consists of the following members viz. (1) Mr. Anurag Choudhry– Executive Director and CFO Mr. Soumendra Nath Sanyal and Mr. Ulhas Dharmadhikari– Independent Directors. Mr. Sanyal is the Chairman of the Committee.

25. Vigil Mechanism / Whistle Blower Policy

A vigil mechanism as per the provisions of Section 177 of the Act and Regulation 22 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 has beenestablished by adoption of "Whistle Blower Policy" for Directors and Employeesto report to the management about suspected or actual frauds unethical behaviour orviolation of the Company's code. The Whistle Blower Policy is uploaded on the company'swebsite at www.gammonindia.com under the Investors Section.

26. Particulars of Loans Guarantees or Investments

Details of loans guarantees and investments are given in the Notes to the StandaloneFinancial Statements forming a part of this Annual Report.

27. Particulars of Contracts/Arrangements with Related Parties

All contracts/arrangements/transactions entered into by the Company during theFinancial Year ended 31st March 2020 with the Related Parties were in the ordinary courseof business and at arm's length basis. All such Related Party Transactions if requiredwere placed before the Audit Committee and also the Board for its approval whereverrequired. No omnibus approvals were taken during the period under review.

The Company has framed a policy on Related Party Transactions for the purpose ofidentification and monitoring of such transactions. Details of Related Party Transactionsentered into by the Company are more particularly given in the Notes to the StandaloneFinancial Statements.

The policy on the Related Party Transactions as approved by the Board is hosted on theCompany's website i.e. www.gammonindia.com.

During the Financial Year there were no Related Party Transactions of the Company withits Directors and Key Managerial Personnel or their relatives its holding subsidiary orassociate companies as prescribed under Section 188 of the Companies Act 2013 and theSEBI Listing Regulations and therefore the Company is not required to report anytransaction under the prescribed Form AOC-2 and the same does not form a part of thisreport.

None of the Directors/ KMPs or their relatives has any pecuniary relationships ortransactions vis--vis the Company other than their shareholding if any in theCompany.

28. Board Evaluation

Pursuant to the provisions of Section 149 of the Companies Act 2013 read with ScheduleIV and Regulation 17 and 25 of the SEBI Listing Regulations the Independent Directorsevaluated the performance of the Non-Independent Director. Independent Directors were alsoevaluated by Board members on the functioning participation and contribution made by eachIndependent Director to the Board and Committee processes. A Report of the evaluation hasbeen forwarded to the

Nomination and Remuneration Committee to maintain confidentiality of the Report and toimprove the Board dynamics and enhancing Board's overall performance in the challengingenvironment.

29. Risk Management Policy

The Company is exposed to inherent uncertainties owing to the sector in which itoperates. A key factor in determining a Company's capacity to create sustainable value isthe ability and willingness of the Company to take risks and manage them effectively andefficiently. In order to evaluate identify and mitigate these business risks theCompany's risk management framework embodies the management's approach and the initiativestaken to mitigate business and industry risks and redefining processes to createtransparency and thereby minimize the adverse impact on the business objectives andenhance the Company's competitive advantage. Further details of the same are set out inthe MDA which forms a part of this Annual Report.

30. Internal Financial Controls

The Company has devised and implemented internal control systems as are required in itsbusiness processes. The internal controls have been designed to provide assurance withregard to recording and providing reliable financial and operational informationcomplying with the applicable statutes safeguarding assets executing transactions withproper authorization and ensuring compliance with corporate policies.

During the year the internal controls across the Company's business processes werereviewed for adequacy and were found to be adequate.

31. Particulars of Frauds if any reported under Sub-Section (12) of Section 143 otherthan those which are reportable to the Central Government

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

32. Particulars of Employees -

Information required pursuant to Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 for the year under review is enclosed as"Annexure E" to this Report.

33. Conservation of Energy Technology Absorption and Foreign Exchange Earnings &Outgo

Pursuant to the provisions of Section 134(3)(m) of the Companies Act 2013 read withCompanies (Accounts) Rules 2014 the information on conservation of energy technologyabsorption and foreign exchange earnings and outgo is enclosed as "Annexure F"to this report.

34. Prevention of Sexual Harassment of Women at Workplace

During the year under review no complaints were received with regard to SexualHarassment under the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.

35. Reasons for suspension of trading of equity shares

The shares of the Company are listed on BSE Limited and the National Stock Exchange ofIndia Limited. The trading of the equity shares are suspended from 23rd February 2018onwards due to non-compliance of Regulation 33 of the SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015.

Post the demerger of the two operating businesses in the financial year 2016-17 and2017-18 most of the employees pertaining to the two business were transferred to thedemerged entities and the Company continues with skeletal staff. Also the Company isfacing challenging financial times and as difficultto retain/hire resultitsemployees. This has delayed the preparation and finalization of accounts commencing fromthe quarter ended June 2017. Further the exchanges had also levied heavy penalties on theCompany which considering the financial crises the Company was unable to pay. The Companyhas made several applications to the Stock Exchanges to consider the matter of the Companyas a special case and waive off the penalties so that the Company could apply to resumetrading of its shares on the exchanges portal. Further to inform the members that theCompany has succeeded in publishing its financial results upto September 2020 within theprescribed time limit.

36. Acknowledgement

The Board thanks all its valued customers and various Central and State Governments aswell as other Stakeholders connected with the business of the Company includingContractors and Consultants and also Banks Financial Institutions Debenture TrusteesShareholders Debenture- Holders and Employees of the Company for their continued supportand encouragement.

For and on behalf of the Board of Directors
Gammon India Limited
Anurag Choudhry Soumendra Nath Sanyal
Place: Mumbai Director Director
Date: November 12 2020 DIN: 00955456 DIN: 06485683

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