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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
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VOLUME 142636
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P/E
Mkt Cap.(Rs cr) 54
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
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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 99th Annual Report together with theAudited Financial Statements of the Company for the Financial Year ended March 31 2021together with the Statutory Auditors Report thereon.

1. Review of Financial and Operational Performance: (' in crores)

Particulars

Standalone

Consolidated

For the Financial Year ended March 31 2021 For the Financial Year ended March 312020 For the Financial Year ended March 312021 For the Financial Year ended March 31 2020
Profit before Other Income Depreciation and Interest (137.58) (576.75) (155.14) (62.06)
Add:
Other Income 33.38 51.49 120.72 136.40
Less:
Depreciation 9.01 9.74 9.11 11.03
Interest 605.96 586.55 715.95 693.87
Profit/(Loss) before Tax (719.17) (1121.55) (795.48) (630.56)
Less:
Provision for Taxation (2.32) 1.01 -0.76 0.23
Profit/(Loss) after Tax (716.85) (1122.56) (794.72) (630.79)
Transferred to Minority Interest - - (13.04) (0.97)
Profit/(Loss) for the year (716.85) (1122.56) (781.68) (629.82)
Add:
Profit brought forward from the previous year (6188.19) (5065.40) (6303.23) (5673.09)
Available for Appropriation (6905.04) (6187.96) (7084.91) (6302.91)
Appropriations:
On Divestment of Subsidiary
Dividend (Proposed) Equity Shares
Tax on Dividend
Other Adjustments 0.10 0.25 0.10 0.32
Balance carried to Balance Sheet (6904.93) (6188.19) (7084.81) (6303.23)

• The Financial Statements for the year ended 31st March 2021 havebeen restated in accordance with Ind-AS for comparative information.

• The Financial Statements are in compliance with Ind-AS notified by the Ministryof Corporate 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 2020and ending on 31st March 2021. During the FY under review the Turnover of theCompany on a Standalone basis stood at Rs 52.84 crores as compared to '71.71 croresduring the previous F.Y. ended 31st March 2020. The Company posted a Net Lossafter Tax of Rs 716.85 crores during the year ended 31st March 2021 asagainst a Net Loss after Tax of Rs 1122.56 crores during the previous FY ended 31stMarch 2020.

On a Consolidated basis the Turnover of Gammon Group during the year under reviewstood at Rs 54.52 crores as compared to Rs 86.38 crores for the previous F.Y. ended 31stMarch 2020. The Group posted a Net Loss after Tax of Rs 794.72 crores during the F.Y.ended 31st March 2021 as against a Net Loss after Tax of Rs 630.79 croresduring the previous F.Y. ended 31st March 2020. Interest and finance costscontinue to be high. The turnover/income is from the residual EPC business post carve outof the operating business. During the year under review the finance cost which includesthe interest costs was Rs 605.96 crores. The loss was primarily due to the provisions madefor the Company's funded and non-funded exposure of loans and investments the details ofwhich is provided in note no. 30 of the standalone financial 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. TheSecured lenders have recalled the various facilities initiated recovery suits in the DebtRecovery Tribunals as well as filing a winding up petition with the National Company LawTribunal 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.BPBC.45/21.04.048/2018-19 dated 7th June 2019 issued directions for 'Prudential Framework forResolution 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 view to providing a framework for earlyrecognition reporting and time bound resolution of stressed assets. The followingcompliances were carried out pursuant to the above referred RBI Circular:

1. All the lenders executed the Intercreditor Agreement (ICA) in July 2019 wherein theground rules for finalisation and implementation of the resolution plan in respect ofborrowers with credit facilities from more than one lender will be provided;

2. GIL thereafter put forth before the lenders a draft resolution plan includingrestructuring and change in ownership;

3. Post execution of the ICA the lenders appointed M/s Deloitte Touche Tohmatsu IndiaLLP as Process Advisory (PA) in the resolution process of the Company. Subsequent to theabove 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;

> Liquidation value of assets of the Company;

> Recoverable value of various awarded and arbitration claims of the Company.

The consortium of lenders requested the Company to obtain Independent Credit Evaluation(ICE) as is provided in the above referred RBI Circular of 7th June 2019. Asper the circular Resolution Plan involving restructuring / change in ownership in respectof accounts above a prescribed threshold limit shall require independent creditevaluation (ICE) of the residual debt by credit rating agencies (CRAs) specificallyauthorised by the Reserve Bank for this purpose. Considering the same the Lenders videtheir meeting dated 3rd June 2021 decided to appoint 2 credit rating agencies.Subsequently ICRA Limited and Brickwork Ratings were appointed as credit rating agenciesto conduct independent credit evaluation in respect of residual debt of GIL.

Everstone Group Proposal

Everstone Group has proposed to infuse '50 crores in the Company. The following are thekey points in the proposed investor plans:

> Everstone to infuse funds as additional or preferential capital in the Company;

> Everstone will like to revive GIL 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 ITEASpA. The Group is engaged in the manufacture/EPC of packaged industrial boilers/utility/power generation boilers respectively catering to the oil and gas industry industrialmanufacturing and power utility plants worldwide. The Group has modern manufacturingfacilities in Italy Romania and 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 in Oiland Gas refineries petro chemical plants industrial manufacturing units andco-generation plants. Till date Macchi has over 1000 units installed world-wide to itscredit which is backed by a strong after sales service unit 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 Caldaie BoilersIndia - 26%). The Advance Combustion Research Centre of the company offers specializedservices to customers even as its products are qualified for Super Critical Applications.

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 (IsothermPWR*) to be used in industrial and utility Power Plants. The flameless pressuredoxy-combustion technology uses high temperatures oxygen-enriched air and pressurizationin an innovative manner to meet future environmental challenges in energy and wastesegments. Industrial waste treatment municipal solid urban waste and low-grade coal areother applications of the cost-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 2020the group clocked aturnover of Euro 212 million(previous year €227 million)and net loss of Euro 3.3million against a net profit in the previous year of €3.7 million.

During 2020the COVID-19 pandemic on the wane since April 2021 in Italy had adisruptive effect both on the profitability of the main orders and on the working methodshitherto adopted by the Group. In relation to the major input costs notably materials andsub- contractors there is a negative impact as a result of the use of alternativesourcing(alternative vendors as well as alternative freight routes to that originallyenvisaged).This had a cascading impact on the delivery schedules to the end clientresulting in contractual claims from them. While some remedies have fructified in theGroup's favour negotiations are ongoing due to the continuing nature of the pandemic.

In relation to working methods great emphasis has been placed on employee health andremote working has been largely followed except where inevitable in the offices but evenin this case with all due precautions and processes to ensure their safety. Re-startingphysical working commenced in a phased manner since April 2021 and is currently at about75% capacity. The production units worked in shifts with presence of limited number ofemployees to the detriment of economy and efficiency. The Group has registered a number ofCOVID-19 cases among its employees but fortunately with no fatalities.

From a commercial standpoint the volatility in oil prices leading to negative pricesof the barrel for a few days led to a slowdown in new investments by the major oilcompanies many of whom also stopped ongoing works and preferred write-offs instead. Thishas resulted in a slowdown of new orders in general and the Group has faced the sameduring the year under review and in the first half of 2021.Moreoverin certaingeographical areas the Government has postponed or cancelled direct investments in newprojects instead opting for private enterprise participation with the attendant lengthyprocedures and complex rules.

Globally the demand for electricity is confirmed to grow at least until 2040 with astrong emphasis on renewable sources instead of fossil fuel plants. However the Group hasthe references the know-how the technologies and execution capacity to meet the changingdynamics in demand for these plants wherever these may be.

The backlog for the Group as at the end of December 2020 was approximately €410million ensuring a healthy revenue visibility for 2021.

The current Banking facilities for the Group in terms of the Agreement with the Banksvalid until the last quarter of 2022 are sufficient in size and form in line with thebusiness needs of the Group. To further strengthen the capital base and ensure enhancedcontinuation of the banking facilities beyond this period to scale up the Groupsactivities the Group has engaged the services of KPMG Italy and Axia Capital Italy toexplore the possibility of equity participation by financial investors including theItalian Government by infusion of fresh equity into the Group within the first quarter of2022.

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 continuing pandemic during FY 2020 in Italy there has been hardly any progressin disposing off the same. Meanwhile creditors in order of ranking and their dues continueto be negotiated by the administrator and will be paid off to the extent of amountsreceived from the disposal of the assets as and when these 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 Kims. The Block was part of the second internationalmarginal field bidding round and the contract was signed in March 2008 for a 20 year termwith Consorcio Pegaso comprising two Companies namely Campo Puma Oriente S.A. (CPO) with90% share and Joshi Technologies Inc. with the balance 10%. Gammon India Limited has a73.80% share in CPO corresponding to 66.40% share in Consorcio Pegaso. Initially thecontract was production sharing but in February 2011 it was changed to a servicecontract for an 18 year term. The remaining oil recovery after considering production tilldate from the existing Puma field is approximately 14.3 million barrels excludingprobable and possible reserves.

There are 11 operational wells in the Puma Block. However as reported in the previousyear all wells have been capped during FY 2020 due to the continuing pandemic delayingmuch needed interventions including water injections artificial lift etc. as alsoadditional CAPEX. In the absence of undertaking these procedures due to the stringentconditions for funding under SDR on Gammon there has been no progress in this directionprompting the Ministry of Hydrocarbons Ecuador to invoke various stringent provisionsunder the Contract citing breaches. Had these interventions taken place these wells wouldhave flowed approx 2000 barrels apart from an upward revision in service fees to approxUSD 29 per barrel. Our attempts to identify a strategic partner to remedy the situationincluding complete divestment of the asset is continuing but in the absence of productionand compounded by the COVID impact in Ecuador this is proving to be a significantchallenge.

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 2021.

3. Reserves

No amount was transferred to Reserves for the Financial Year ended March 31 2021.

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 4893.83 crores (amount as on 31stMarch 2021) (including an amount of Rs 1120.99 crores pertaining to recalled facility ofthe SPV's) has become a Non Performing Asset with the lenders as on 30th June 2017.

The Company was identified as a Large Corporate with reference to the SEBI CircularSEBI/HO/DDHS/CIR/P/2018/144 dated November 26 2018.

Accordingly the Company made the Annual Disclosure pursuant to the format as specifiedby SEBI in Annexure B1 as under: Details of the borrowings (all figures in Rs crore): Ason 31st March 2021 the total outstanding debt is Rs 3745.91 crore

Sr. No. Particulars Details
i. Incremental borrowing done in FY (a) NIL
ii. Mandatory borrowing to be done through issuance of debt securities (b) = (25% of a) NIL
iii. Actual borrowings done through debt securities in FY (c) NIL
Sr. No. Particulars Details
iv. Shortfall in the mandatory borrowing through debt securities if any (d) = (b) - (c) {If the calculated value is zero or negative write "nil"} NIL
v. Reasons for short fall if any in mandatory borrowings through debt securities The Company is currently a NPA hence no borrowing in current year

5. Debentures

As on March 31 2021 the Company had an outstanding principal balance of NCD'samounting to Rs 2883686298. 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

The Company has no fixed deposits under Chapter V of the Companies Act 2013 and didnot accept any further deposits during the Financial Year 2020-21.

7. Transfer of Unclaimed Dividend and Unclaimed Equity Shares to Investor Education andProtection 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 '160720/- (Rupees One Lakh Sixty Thousand Seven Hundred and Twenty only)to the Investor Education and Protection Fund (IEPF) on 16th November 2019.

Details of Nodal Officer

Pursuant to the provisions of Rule 6 of the 'Investor Education and Protection FundAuthority (Accounting audit Transfer and Refund) Amendment Rules 2017 appointed Ms.Niki Shingade as the Nodal Officer.

8. Material Changes and Commitments if any affecting the Financial Position of theCompany which have occurred between the end of the Financial Year of the Company to whichthe 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

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 by Rs 7731.64 Crore as at March 31 2021. The facilities of the Companywith the CDR lenders are presently marked as NPA since June 2017. The liquidity crunch hasresulted in several winding up petitions being filed against the Company by variousstakeholders for recovery of the debts which the Company has been settling as per themutually agreed repayment terms. The liquidity crunch is affecting the Company's operationwith increasing severity. The CDR lenders have recalled the various facilities initiatedrecovery suits in the Debt Recovery Tribunals as well as filing a winding up petition withthe National Company Law Tribunal Mumbai bench under the Insolvency and Bankruptcy code

The Company has been making every effort in settling the outstanding CDR dues.

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 Framework forResolution 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 view to providing a framework for earlyrecognition reporting and time bound resolution of stressed assets.

Considering the above mentioned directions all the lenders executed an Inter CreditorAgreement (ICA) in July 2019. Pursuant to the execution of the ICA the lenders appointedM/s Deloitte Touche Tohmatsu India LLP as Process Advisory (PA) in the resolution processof the Company. Subsequent to the abovementioned appointment the representatives ofDeloitte attended one of the Joint Lenders Meeting held on 13th January 2020 wherein theplans regarding the way forward on the resolution process were presented.Pursuant to thequotes sought by Deloitte from various valuers and legal consultants to carry out thevaluation of the Company and estimation on the recoverability of arbitration claims of theCompany the quote received from Duff and Phelps (D&P) was found to be lower ascompared to others. Based on the recommendation by Deloitte the Company signed anengagement letter with Duff and Phelps (D&P) on such terms and conditions as directedby IDBI Bank.

11. Impact of COVID- 19 Pandemic

The Covid-19 Pandemic has severely disrupted business operations due to lockdown andother emergency measures imposed by the Governments. The operations of the Company wereimpacted due to shutdown of Projects and offices following nationwide lockdown. Variousproposals for restructuring and arbitration & settlement matters have been delayed onaccount of the non-availability of the officials and the offices being shut. The COVID -19Pandemic has compounded the problems due to all the restrictions on the movement ofpeople opening of offices and the project work at sites which was already at itsslowest. The impact assessment of COVID-19 is a continuing process given the uncertaintiesassociated with its nature and duration and accordingly the impact may be different fromthat estimated as at the end of the financial year. The Company will continue to monitorany material changes to future economic conditions. The Management does not expect anyfurther material adjustment beyond the assessments and impairments already made in thefinancial statements to the assets and liabilities.

12. 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 Accounting Standards havebeen followed along with proper explanation relating to material departures if any;

ii) The Directors have 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 2021 and its loss for theyear ended on that date;

iii) The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Company and for preventing and detecting frauds and other irregularities

iv) The Directors have prepared the Annual Accounts for the year ended March 31 2021on 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 compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

13. 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.

14. Subsidiary / Associates and Joint Venture Companies

The Company had 23 subsidiaries including step-down subsidiaries 3 Associates and 4Joint venture companies as on 31st March 2021.

Gammon & Billimoria Limited ceased to be the subsidiary of the Company pursuant totransfer of shares by the Company.

15. 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 2015 under Section 133 of the Companies Act 2013.Your Company has published Ind AS Financials for the year ended March 31 2021 along withcomparable as on March 31 2020 on a Standalone and Consolidated basis which form part ofthis 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.

16. Directors/Key Managerial Personnel

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

> Mr. Sandeep Sheth was appointed as an Executive Director of the Company w.e.f. 15thApril 2021

> Mr. Kashi Nath Chatterjee was appointed as an Independent Director of the Companyw.e.f. 3rd May 2021.

> Mr. Anurag Choudhry (DIN: 00955456) who retires by rotation and being eligibleoffers himself for re-appointment at the ensuing 99th Annual General Meeting ofthe Company.

All the directors suffer disqualification as on 31st March 2021 pursuant tothe provisions of Section 164(2) of the Companies Act 2013.

17. 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 99th 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.S. Raghavan as theCost Auditor of the Company for the financial year 2020 - 21 on a remuneration of '70000excluding out of pocket expenses and tax. In terms of the provisions of Section 148(3) ofthe Companies Act 2013 read with Rule 14(a)(ii) of the Companies (Audit and Auditors)Rules 2014.

However the Cost Auditor Mr. R.S. Raghavan appointed for the Financial Year 2020-2021expired on 16th June 2021 and there was a Casual Vacancy in the office of theCost Auditor due to death.

According to the Companies (Cost Records and Audit) Rules 2014 any casual vacancy inthe office of a Cost Auditor whether due to resignation death or removal to be filled bythe Board of Directors within thirty days of occurrence of such vacancy and the companyshall inform the Central Government in Form CRA-2 within thirty days of such appointmentof Cost Auditor.

Pursuant to the abovementioned Rules and in order to ensure compliance with the samethe Board of Directors appointed Mr. Pradip Damania Cost accountant for conducting theAudit of Cost Accounting records maintained by the Company for the Company's CivilEngineering Procurement and Construction business and to fill up the casual vacancycaused due to the death of Mr. R.S. Raghavan. The audit fees that will be charged by Mr.Damania will be Rs 70000/- per Financial Year.

(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 Section204 of the Companies Act 2013 read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended from time to time. The Secretarial Auditor'sReport is annexed 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 the Quarter ended June 2020 -Published and filed with the Stock Exchanges on 15th September 2020.

Board's Explanation: Pursuant to the SEBI Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/140dated July 29 2020 considering the ongoing lockdown and the Pandemic every listed companycan publish its results for the quarter ended June 2020 by 15th September2020. The Company has filed its quarterly results by the permissible timelimits.

2. Secretarial Standards (SS - 1 SS - 2 SS - 3 and SS - 4) issued by the Institute ofthe Company Secretaries of India (ICSI) was complied to the extent possible. Followingobservations with reference to Revised SS-1:

• Minutes of few Board meetings comprise difference in time of commencement andconclusion of meeting;

• The Agenda and notes to agenda is not given 7 days in advance;

• With reference to Audit committee meeting minutes the General Manager of theCompany is not shown under list of invitees present;

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 managementstrives to comply with SS-1 upto the extent possible.

3. 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.

4. 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 paid Annual listing fees of Bombay Stock Exchange (BSE)and the National Stock Exchange (NSE). However the website of BSE comprises a remark thatthe Company has defaulted in payment of the fees.

Board's Explanation: The Company has already paid the listing fees of both theexchanges for the FY 2020-21. However BSE has not updated the same and its websitecomprises of a remark regarding the default in payment of fees. The Company has writtenvarious emails to the concerned department of BSE and raised this matter.

5. As per FEMA 1999 a return on Foreign Assets and Liabilities (FLA) is required to befiled by all the Indian companies which have received FDI (foreign direct investment)and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including thecurrent year i.e. who holds foreign Assets or Liabilities in their Balance Sheets. The FLAreturn for the year ended 31.03.2021 has been filed within the extension provided by theFLA Department of the Reserve Bank of India.

Board's explanation: The FLA return for the year ended 31.03.2021 has been filed withinthe extension provided by the FLA Department of the Reserve Bank of India.

18. Material Unlisted Companies:

Regulation 16 of the SEBI Listing Regulations defines a 'material subsidiary' to mean asubsidiary whose income or net worth exceeds 10% of the consolidated income or net worthrespectively of the listed entity and its subsidiaries in the immediately precedingaccounting year. Accordingly Gammon Power Limited a wholly owned subsidiary of the Companyhas exceeded the threshold limit and is deemed to be a 'Material Unlisted SubsidiaryCompany'.

In addition to the above Regulation 24A of the SEBI Listing Regulations requires"Every listed entity and its material unlisted subsidiaries incorporated in Indiashall undertake secretarial audit and shall annex a secretarial audit report given by acompany secretary in practice in such form as specified with the annual report of thelisted entity". Accordingly M/s. Pramod Shah & Associates Practicing CompanySecretaries were appointed as the Secretarial Auditors of the Company to conduct theSecretarial Audit of Gammon Power Limited for the Financial Year ended 31stMarch 2021.

The Secretarial Auditor's Report is annexed to this report as "Annexure C".

The auditors have qualified the report with the following observations:

1. Section 149 152 and 161 an additional director shall be regularized at the ensuingGeneral Meeting. However Mr. Noorani Choodamani was regularized before the meeting as aDirector.

Board's Explanation: After the appointment of Mr. Noorani Choodamani at a Board Meetinghe was appointed as a whole time director and his designation was accordingly changed.

2. Section 92 states that the Company shall prepare the return in the prescribed formi.e. Form MGT-9 however in case of the Company the Date Place and Signing of Directorsis not mentioned in the Form MGT-9 as provided to us.

Board's Explanation: The Company gets the document digitally signed and hence notmentioned the date and place of signing.

3. Section 101 states that notice shall contain a statement of business to betransacted. However regularization of Mr. Sandeep Sheth has not been mentioned in thenotice.

Board's Explanation: The Board has all revised Notices and Minutes in place. Howeverthe above seems to be a clerical lapse.

4. Section 203 read with Rule 8 of Companies (Appointment & Remuneration ofManagerial Personnel) Rules 2014 states that a Company whose Paid Up Share Capitalexceeds Rs. 10 Crore shall appoint a whole Time Key Managerial Personnel. The Company hasappointed a Chief Financial Officer but has not appointed other KMPs as per the saidSection.

Board's Explanation: The Company had duly appointed a whole time Company Secretaryduring the financial year under review. However after resignation of the Company Secretarythe Company is not able to shortlist a candidate for the same. The Company is incontinuous search for a suitable candidate to complywith the provisions of the saidregulation.

19. Annual Secretarial Compliance Report:

Pursuant to the provisions of Regulation 24A of the SEBI Listing Regulations"Every listed entity shall submit a secretarial compliance report in such form asspecified to stock exchanges within sixty days from end of each financial year".

Accordingly M/s. Pramod Shah & Associates Practicing Company Secretaries wereappointed to conduct an Annual Secretarial Compliance audit and thereafter provide theirobservations and report thereon which is annexed as "Annexure D."

Below are the auditors' qualifications along with Board's clarification thereon:

Sr. Compliance Requirement No. (Regulations/ Circulars/ Guidelines including specific clause Deviations Observations/ Remarks of the Practising Company Secretary Board's Explanation
1. As per Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 The listed entity shall submit quarterly and yearly standalone financial results to the stock exchange within forty-five days of end of each quarter (other than last quarter) along with Limited Review Report or Audit Report as applicable. Delay in submission and publishing of Financial Results The Company had delayed the submission of the financial statement for quarter ended March 2020 and year ended March 2020. For the Quarter and Half Year ended March 2020 - Published and filed with the Stock Exchanges on 14thAugust 2020 For the Quarter ended June 2020 - Published and filed with the Stock Exchanges on 15th September 2020 The state of the Infrastructure sector since the last couple of years is deteriorating our Company is no exception. To safeguard the interests of the clients and lenders the Company has hived off part of its business under a Court approved scheme. 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 financial situation of the Company makes it unable to attract and retain new staff.
Further due to the COVID-19 lockdown the Company has struggled to meet timelines with its already limited staff and the existing staff being affected by the pandemic. Pursuant to the SEBI Circular No. SEBI/HO/ CFD/CMD1/CIR/P/2020/140 dated July 29 2020 considering the ongoing lockdown and the Pandemic every listed company can publish its results for the quarter ended June 2020 by 15th September 2020. The Company has filed its quarterly results by the permissible timelimits.
2. As per FEMA Circular of RBI - A.P (DIR Series) Circular No. 133 dated June 20 2012 which 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 file the annual return on Foreign Liabilities and Assets (FLA) in the soft form which can be duly filled-in validated and sent by e-mail to the Reserve Bank by July 15 of every year. The Company has filed annual return on Foreign Liabilities and Assets (FLA) but not within the stipulated time because the Financial Statements of the Company were not ready. Due to delay in approving and publishing of financial results the Company filed its annual return on Foreign Liabilities and Assets (FLA) for the year ended 31st March 2020 after the prescribed time limits.
4. Secretarial Standards (SS - 1 SS - 2 SS - 3 and SS - 4) issued by the Institute of the Company Secretaries of India (ICSI). The Secretarial Standards were complied to the extent possible The management has complied with SS-2 and SS-4. Since the Company is under CDR SS-3 which pertains to dividend is not applicable. Further the management will 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 of the provisions of these regulations shall in addition to liability for action in terms of the securities laws beliable for the following actions by the respective stock exchange(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. The Company is endeavoring and continuously striving to publish its periodic results on time. Further the Company has also made representations before the BSE and NSE where the shares of the Company are listed to waive off the penalties levied on the Company post which the application for revocation of suspension will be filed.

20. Corporate Governance Report and Management Discussion & Analysis

A Report on Corporate Governance and Management Discussion and Analysis for the yearended 31st March 2021 together with certificate from M/s. V. V. Chakradeo andCo. Practising Company Secretary regarding compliance of conditions of CorporateGovernance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forms part of the Annual Report.

21. 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 E".

Members' attention is drawn to "Emphasis of Matter" stated in the Auditor'sReport dated 28th June 2021 on the Standalone Financial Statements and in theAuditor's Report dated 28th June 2021 on the Consolidated Financial Statementsof the Company for the year ended 31st March 2021. The Directors would like tostate that the said matters are for the attention of members only and have been explainedin detail in the relevant notes to accounts as stated therein and hence require noseparate clarification.

22. 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.

23. 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 F".

24. 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.

25. 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.

Further there were separate meetings of the Independent Directors held to update themabout various ongoing matters viz. WSS Projects of the company etc.

26. Meetings of the Board

During the Financial Year under review the Board of Directors of your Company met 4(Four) times i.e. on 14th August 202015th September 2020 12thNovember 2020 and 11th February 2021.

27. 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 4 (Four) times i.e. on 14th August 202015th September 202012th November 2020 and 11th February 2021.

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. Sandeep Sheth - Executive Director and Mr. Kashi Nath Chattejee- Independent Director.

Mr. Sanyal is the Chairman of the Committee.

28. 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.

29. 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.

30. Particulars of Contracts/Arrangements with Related Parties

All contracts/arrangements/transactions entered into by the Company during theFinancial Year ended 31st March 2021 with the Related Parties were in theordinary course of business and at arm's length basis. All such Related PartyTransactions if required were placed before the Audit Committee and also the Board forits approval wherever required. No omnibus approvals were taken during the period underreview.

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 which were required to be reported in Form AOC-2 andtherefore the Company is not required to report any transaction under the prescribed FormAOC-2 and the same does not form a part of this report.

None of the Directors/ KMPs or their relatives has any pecuniary relationships ortransactions vis-a-vis the Company other than their remuneration and their shareholdingif any in the Company.

31. 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 ofthe Report and to improve the Board dynamics and enhancing Board's overall performance inthe challenging environment.

32. 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.

33. 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.

However its implementation and effectiveness in certain areas are affected due tomanpower and liquidity issues.

34. 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.

35. 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 G" to this Report.

36. 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 H' tothis report.

37. 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.

38. 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 a result its difficult to retain/hire employees.This has delayed the preparation and finalization of accounts commencing from the quarterended June 2017. Further the exchanges had also levied heavy penalties on the Companywhich considering the financial crises the Company was unable to pay. The Company has madeseveral applications to the Stock Exchanges to consider the matter of the Company as aspecial case and waive off the penalties so that the Company could apply to resume tradingof its shares on the exchanges portal.

Further to inform the members that both the stock exchanges have given the opportunityof personal hearing and appearance before the committee of respective exchanges whereinthe Company officials have made their submissions pleading for waiver of penalties leviedby the exchanges. The Company is yet to receive any further communication post the abovereferred personal hearing.

39. 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 Shareholders andEmployees of the Company for their continued support and encouragement.

For and on behalf of the Board of Directors
Gammon India Limited
Place: Mumbai Soumendra Nath Sanyal Anurag Choudhry
Date: 7th September 2021 DIN No. 06485683 Executive Director and CFO

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