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Gammon India Ltd.

BSE: 509550 Sector: Infrastructure
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OPEN 1.74
VOLUME 205434
52-Week high 9.40
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Mkt Cap.(Rs cr) 62
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Sell Qty 0.00
OPEN 1.74
CLOSE 1.69
VOLUME 205434
52-Week high 9.40
52-Week low 1.58
Mkt Cap.(Rs cr) 62
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


The Members of Gammon India Limited

Your Directors have pleasure in presenting their 95th Annual Report togetherwith the Audited Financial Statements of the Company for the Financial Year ended March31 2017 together with the Statutory Auditors Report thereon.

1. Review of Financial and Operational Performance:

(Rs. in Crores)



Particulars For the Financial Year ended March 31 2017 For the 18 (eighteen) months period ended March 31 2016 For the Financial Year ended March 31 2017 For the 18 (eighteen) months period ended March 31 2016
Profit before Other Income Depreciation and Interest (1419.34) 891.23 (292.71) 1320.61
Other Income 308.17 616.20 121.20 90.65
Depreciation 32.65 261.47 90.44 377.67
Interest 518.90 1028.17 874.97 1757.02
Profit/(Loss) before Tax (1662.72) 217.79 (1136.90) (723.44)
Provision for Taxation (2.80) 117.27 16.87 160.50
Profit/(Loss) after Tax (1659.92) 100.52 (1153.77) (883.94)
Transferred to Minority Interest - - (67.32) (104.66)
Profit/(Loss) for the year (1659.92) 100.52 (1086.45) (779.28)
Profit brought forward from the previous year 317.85 216.38 (2153.34) (1470.23)
Available for Appropriation (1342.07) 316.90 (3239.81) (2249.51)
On Divestment of Subsidiary - - - 90.24
Dividend (Proposed) Equity Shares - - - -
Tax on Dividend - - - -
Other Adjustments (5.08) 0.95 (3.28) 5.93
Balance carried to Balance Sheet (1347.15) 317.85 (3243.07) (2153.34)

The Financial Statements for the year ended 31stMarch 2017 havebeen restated in accordance with Ind-AS for comparative information.

• The Financial Statements are in compliance with the Ind-AS notified by theMinistry of Corporate Affairs under Section 133 of the Companies Act 2013 read with therelevant rules issued thereunder and other accounting principles generally accepted inIndia.

The year under review is a twelve (12) months period commencing from 1stApril 2016 and ending on 31st March 2017.

During the year under review the Turnover of the Company on a Standalone basis stood atRs.1069.85 crores as compared to Rs. 6697.50 crores during the previous 18 month periodended 31st March 2016. The Company posted a Net Loss after Tax of Rs. 1661.95crores during the period ended 31st March 2017 as against a Net profit afterTax of Rs. 100.52 Crores during the previous period ended 31st March 2016.

On a Consolidated basis the Turnover of Gammon Group during the period under reviewstood at Rs.1788.82 Crores as compared to Rs. 8072.57 Crores for the previous 18 monthperiod ended 31st March 2016. The Group posted a Net Loss after Tax of Rs.1153.77 Crores during the period ended 31st March 2017 as against a Net Lossafter Tax of Rs. 883.93 Crores during the previous 18 month period ended 31stMarch 2016.

The turnover of the company was impacted due to the carve-out and transfer of theTransmission and Distribution (T&D)business to Transrail Lighting Limited effective 1stJanuary 2016 and major part of the Civil Engineering Procurement and ConstructionBusiness ("Civil EPC Business ") to Gammon Engineers and Contractors PrivateLimited during the year effective from 1st July 2016 and the effect in thefinancials being given on the sanctioning of the respective Schemes of Arrangement by theNational Company Law Tribunal in end 2017. Hence the results of the company from 1stJuly 2016 onwards primarily reflect the business performance from residual business only.

The major reasons for the losses are primarily due to delay in restructuring andmonetization which led to a high interest burden that has eroded the profits.

During the year under review the Company has been focusing on restructuring andcarve-out of the Civil EPC business. The Company has also been successful in recoveringcertain arbitration claims. The Company is evaluating and exploring various courses ofaction for raising funds for resolving the Company's debts . The Company is also exploringvarious options of monetizing its investments and other non core assets including itsreal estate to ensure liquidity in the Company and repayment of debt.


The Company has been facing financial stress since 2012 on account of various reasonsincluding a slowdown in the economy inadequate capital slow and delayed projects stickyreceivables slow dispute resolution mechanism delays in land acquisition. Further theCompany had also invested in overseas subsidiaries and non-core assets by way of loans andadvances or equity. The subdued market conditions could not yield the desired returns onoverseas investments and the interest cost on acquisitions added to the Company'sfinancial stress. As a consequence the Company faced difficulties in meeting itsobligations to the lenders and referred itself under the aegis of Corporate DebtRestructuring ("CDR") Cell for restructuring of its debt in March 2013. Thefinal CDR package was approved on June 24 2013. The Master Restructuring Agreementpursuant to the package was signed on September 24 2013. Due to CDR the Company facedseveral problems in securing projects.

The Company's project execution was further impacted due to higher interest burdendelays in project execution thereby resulting in the risk of devolvement of bankguarantees by clients further deepening the liquidity crisis. Also monetization of assetsas envisaged under the CDR package was slow. Due to the severe cash crunch and inabilityof the existing promoters to infuse additional funds the Lenders invoked Strategic DebtRestructuring ("SDR") in the Company pursuant to RBI Circular dated 8thJune 2015 with reference date as 17th November 2015. On the invocation ofSDR the lenders converted part of their outstanding loan and interest aggregating toRs.277.12 Crores into 233072637 equity shares in the Company acquiring 63.07% of thetotal equity capital. The SDR came to an end on 17th May 2017.

The severe liquidity stress exposed the Company to further delays in project executionand delays in meeting repayment obligations. A critical part of the earlier CDR scheme wasmonetization of various real state/non-core assets so as to realize amounts totaling toRs. 2000 Crores over a period of time. However due to the slowdown in the economy both inIndia and overseas the Company could not monetize these assets. The Core CivilEngineering Procurement and Construction ("EPC") business and the Transmission& Distributions ('T&D') business of the Company were being severely impacted dueto the additional debt burden. Further the Company also faced difficulties in attractingstrategic investors to invest in the Company.

With a view to improve the overall functioning of the Company and to ensure investmentby strategic investors in core businesses to ensure their sustenance and growth it wasdecided to restructure the businesses by carving out the Transmission and Distributionbusiness and the Civil EPC Business together with all the assets and liabilities includingthe CDR Debt pertaining to each of these businesses into separate entities andtransferring related CDR debt.

The rationale and objective of the restructuring inter-alia includes:

i. To create sector focused companies;

ii. To enable investments by strategic investor;

iii. De-risk businesses from each other;

iv. Deleverage balance sheet of the company;

v. Maintain the PQs including profitability and net worth criteria for bidding in newprojects;

vi. Fulfill its debt servicing obligation as per the CDR repayment schedule;

vii. Expedite sale of non-core assets in a phased and more focused manner.

Carve Out of the Transmission And Distribution Business:

The Transmission and Distribution ("T &D") business of the Company wascarved out in two phases effective from 1st January 2016 i.e. by way of aslump sale through a Business Transfer Agreement ("BTA") between the Company andTransrail Lighting Limited ("TLL") and a Slump Exchange by way of a Scheme ofArrangement ("Scheme") between the Company and TLL and their respectiveshareholders and creditors. The BTA was executed on October 27 2015 and duly amended onFebruary 12 2016 pursuant to which the manufacturing facilities at Deoli and Silvassawere transferred along with all assets and liabilities including secured debt.

The Company also entered into an Investment cum Shareholders Agreement with AjanmaHoldings Private Limited (formerly Bilav Software Private Limited) ("Investor")wherein the Investor invested Rs.50 Crore for acquiring 75% stake in TLL through primaryand secondary acquisition.

The National Company Law Tribunal ("NCLT") vide its Order dated 30thMarch 2017 approved the Scheme. The Scheme came into operation on 19th April2017. On the Scheme becoming operational the Transmission and Distribution Undertaking ofthe Company essentially comprising of the Engineering Procurement and Constructionbusiness of the Company in the power Transmission and Distribution sector the towertesting facility located at Deoli manufacturing facilities located at Baroda and Nagpurtogether with all the pre-qualifications properties assets liabilities debts includingCDR debt of Rs. 3855.20 crores duties and obligations of the T&D Undertaking standstransferred to and vested in TLL with effect from the appointed date i.e. 1stJanuary 2016. The Company continues to hold 25% stake in TLL.

Carve Out of Civil EPC Business

The Company as part of the restructuring exercise also carved out major part of theCivil Engineering and Procurement Business of the Company in two phases i.e. by way of aslump sale through a Business Transfer Agreement ("BTA") between the Company andGammon Engineers and Contractors Private Limited ("GECPL") then a wholly ownedsubsidiary of the Company and secondly by way of a slump exchange through a Scheme ofArrangement ("Scheme") between the Company and GECPL and its respectiveshareholders and creditors. The Civil EPC business essentially comprising of CivilEngineering Procurement and Construction business carried on by the Company in roadshydro-power nuclear power tunnels bridges thermal power etc. as a going concern whichincludes all the pre-qualifications properties rights and powers and all debts includingCDR debt of Rs. 6505.42 crores (Fund and Non-Fund based) liabilities duties andobligations comprised in/and pertaining to the Civil EPC business which includes theportions being transferred under the BTA and the balance portions being transferred underthe scheme. The Business Transfer Arrangement (BTA) was entered into on 21stJuly 2016 for transferring certain identified business forming part of the EPC businessinto GECPL to speed up the process of transfer of the business. The National Company LawTribunal ("NCLT") in its hearing held on March 22 2017 also approved the Schemeof Arrangement and the Order became operational from 31st March 2017. In termsof the Scheme of Arrangement and also the BTA the Civil EPC business of the Companystands transferred to and vested into GECPL on a going concern basis with effect from theappointed date i.e. July 1 2016 .

Pursuant to the Investment cum Shareholders Agreement entered into between the CompanyGECPL and the G .P Group of Thailand ("Investor") on 21st July 2016G P Group of Thailand acquired 75% stake in GECPL and will invest Rs.150.01 Crore. TheCompany will continue to hold 25% stake in GECPL.


As part of further restructuring the Board in its meeting held on 11thApril 2017 approved carve out of the retained Civil EPC business viz. Civil EPC businesscarried on by the Company in cooling towers chimneys industrial and residentialbuildings tunnels dams etc. in relation to the execution capabilities pertaining toidentified contracts along with all assets properties rights and all debts liabilitiesetc to its wholly owned subsidiary Gammon Transmission Limited ("GTL") in twophases viz. through a slump sale and part transfer through a Scheme of Arrangement betweenthe Company and GTL and its respective shareholders and creditors.

The Shareholders approved the slump sale on 15th May 2017 for transfer ofthe retained residual EPC undertaking for a cash consideration of Rs. 10 lakhs. TheCompany also executed another Business Transfer Agreement for transfer of two identifiedcivil EPC projects along with all assets properties rights obligations to GTL for aconsideration of Rs. 60000000/- (Rupees Six Crores) to be discharged by GTL way ofissue of 6000000 (Sixty Lakhs) equity shares of Rs. 10 each to the Company. On approvalof the Scheme of Arrangement between the Company and GTL by the National Company LawTribunal GTL will issue 740000 (Seven lakhs forty thousand ) fully paid up equityshares of face value of Rs. 10/- each to GIL towards transfer of the retained Civil EPCUndertaking. The said Scheme is awaiting SEBI approval .

The Board has also approved the sale of 90% of its equity stake in GTL to TransrailLighting Limited and Ajanma Holdings Private Limited ("Investors") for aconsideration of Rs. 50000000/- (Rupees Five Crores only) . The Board has also acceptedthe proposal from Transrail Lighting Limited and Ajanma Holdings Private Limited("Investors") for investment of Rs.100000000 (Rupees Ten Crores only) intoGTL post the completion of the Scheme as aforementioned. Post the investment theInvestors will hold 90% and the Company will hold 10% equity stake in GTL.

The Company has sought the approval of the lenders for carve out of the retained CivilEPC business .

Infrastructure Development Business

GIPL is a pan India BOT infrastructure project development company and is engaged indevelopment of infrastructure projects in core sectors such as Roads Ports and Powerthrough a multi-segment footprint significant geographical spread vast repository ofindustry experience and technical expertise. It also provide services in other areas ofproject development such as operations & maintenance and project advisory services.

GIPL posted a total income of Rs. 68585.11 Lakhs on a Consolidated basis (Rs.21677.96 Lakhs and on a Standalone basis) for the 12 month period ended 31stMarch 2017. It posted a Net Loss of Rs. 10405.95 Lakhs on a Consolidated basis (NetProfit of Rs. 1875.16 lakhs on a Standalone basis) as on 31st March 2017.

GIPL Projects Commissioned and Under Operation

• Vizag Seaport Private Limited (VSPL)

• Rajahmundry Godavari Bridge Limited (RGBL)

• Pravara Renewable Energy Limited (PREL)

• Patna Highway Projects Limited (PHPL)

Projects Under Construction

• Indira Container Terminal Private Limited (ICTPL)

• Sikkim Hydro Power Ventures Limited (SHPVL)

• Sidhi Singrauli Road Project Limited (SSRPL)

• Vijayawada Gundugolanu Road Project Private Limited(VGRPPL) Projects UnderDevelopment

• Youngthang Power Ventures Limited (YPVL)

• Tidong Hydro Power Limited (THPL)

Location Bihar Andhra


Andhra Pradesh Madhya


Andhra Pradesh Maharashtra Maharashtra Sikkim
Client NHAI APRDC NHAI MPRDC Visakhapatnam Port Trust Mumbai Port Trust Padamshree Dr. Vithalrao Vikhe Patil Sahakari Sakhar Karkhana (PDVVPSKL) Energy & Power Dept. of Govt. of Sikkim
Project Length 63.17 Kms 14.49 Kms 103.59 Kms 102.6 Kms 9 MMTPA Capacity 1.2 Million TEUs Capacity 30 MW Capacity 66 MW Capacity
Annual Annuity (Rs. in Crores) Rs 189.2 crore NA *Rs 57.57 crore



Concession Period 15 years 25 years 30 years 30 years 30 years 30 years 25 years post COD 35 years post COD
Project Cost (Rs. in Crores) Rs. 1284 crore Rs. 1071 crore Rs. 2085 crore Rs. 1094 crore Rs. 345 crore Rs. 1233 crore Rs. 274 crore Rs. 496 crore
Project Stage Under


Operational Under




Operational Under

Construction (trial run been carried out)

Operational Under


Revenue Model Annuity Toll Toll Toll Rev Share 17.11% Rev Share 35.064% Sale of power steam to client; surplus power to MSEDCL IPP

‘Incremental at 5% p.a.

PHPL Patna Highway Projects Limited VSPL Vizag Seaport Private Limited
RGBL Rajahmundry Godavari Bridge Limited ICTPL Indira Container Terminal Private Limited
VGRPPL Vijayawada Gundugolanu Road Project Private Limited PREL Pravara Renewable Energy Limited
SSRPL Sidhi Singrauli Road Project Limited SHPVL Sikkim Hydro Power Ventures Limited

Gammon Infrastructure Projects Limited ('GIPL') and its subsidiaries have ceased to bethe subsidiary of the Company effective from 8th August 2017 pursuant to thesale of GIPL shares by Gammon Power Limited and Gactel Turnkey Projects Limited (whollyowned subsidiaries of the Company) in various tranches in the open market . The Companycontinues to hold as on date 39.61% of the equity stake in GIPL through its wholly wonedsubsidiary Gammon Power Limited .


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.


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 March 2017 the group clocked aturnover of Euro 337.80 million EBITDA of Euro 6.28 million and Loss after tax of Euro3.25 million. The improved results were mainly on account of better execution of theprojects in Egypt by A.C Boilers S.p.A. The higher revenues were inspite of the Italianbanks continuing with only the Standstill Agreement operational since 1st January 2016and currently extended upto September 2017 when it is expected to sign a formallong-term loan agreement for a 3 (three) year period. The main reason for the Bankcontinuing with the Standstill Agreement is due to the insistence by them on a capitalincrease within Sofinter group in order to enhance its Net worth to support the levels offunding sought by the Group. However the continuous extension of the Standstill Agreementsince January 2016 has also resulted in Banks making the same conditional upon thereconstitution of the Board of Sofinter S.p.A and A.C. Boilers S.p.A. Consequently thestrength of the Board of these two companies has been fixed at five members of which 4including the Managing Director are nominated by the group of Italian Banks withrepresentation from the shareholders side restricted to 1 (one) which is given to Gammongroup it being the single largest shareholder with 67.5% combined holding as a result ofthe formal transfer of the shares of the B.T. Global investors under an erstwhile PutOption agreement. The transfer was concluded in September 2016 and the nominee of Gammonon Group Sofinter Board is the President of the Board.

Furthermore in February 2017 Sofinter S.p.A entered into a Share Purchase Agreementwith Ansaldo Energia S.p.A for transferring 10% stake held in A.C. Boilers S.p.A for aconsideration of Euro 6 million. The participation by Ansaldo Energia in A.C. Boilers isstrategic in order to jointly participate in markets where significant demand for Gasbased cogeneration plants exist and where Ansaldo Energia S.p.A has a significantpresence. The move also helps A.C. Boilers S.p.A and Ansaldo Energia S.p.A to qualify asone of the four consortiums i.e. General Electrics Mitsubishi and Siemens for completePower Island utility Power plants.

The Group continues to consolidate on various initiatives taken by it in the previousperiod towards cost optimization and relocation of its main production facilities and theimpact of these initiatives are reflected in the results during this period.

The Macchi division engaged in the manufacture of Industrial boilers mainly in the Oilgas and petrochemical industry witnessed a modest decline in order intake to Euro 130million due partly to delays by customers notably in U.S.A in placing orders. Howeverthese are expected to materialize in the third quarter of 2017.

A.C. Boilers S.p.A received two large orders for heat recovery steam generators valuedat approx Euro 210 million and is expected to exceed its target booking for 2017 in viewof the pipeline orders where it is well placed.

ITEA S.p.A a research and development company engaged in flameless pressurizedoxycombustion technology has successfully concluded MOU to undertake initial phases ofcontracts in the region of Bari Italy. It is expected a formal contract in this regardwill materialize in the calendar year 2017.

Europower S.p.A which is engaged in EPC of waste to energy plants including theoperation & maintenance continued to clock satisfactory revenues and profitability andpresently has an order book of approx Euro 45 million.

The order backlog of Group Sofinter as on 31st March 2017 is approx Euro 600million.

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

As pointed out in the previous period's report with the transfer of the operationalassets in all respects having been completed to Bruno Presezzi S.p.A the Commissioner hasstarted the second phase of disposing the non-core assets of the Company. These primarilycomprise of approx 60 acres of land in Legnano Milan buildings and some equipmentswithin. However in view of the present market situation for disposal of property in Italythere has been hardly any progress in disposing off the same. Meanwhile creditors in orderof ranking and their dues are also being negotiated and will be paid off to the extent ofamounts received from the disposal of the assets as and when these materialize.

A statement of assets and liabilities prepared by the Commissioner in December 2016 isavailable in terms of the procedure. No further updates to this document or AuditedFinancial Statements are available on the date of this report.

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 Kms. The Block was part of the second international marginalfield bidding round and the contract was signed in March 2008 for a 20 year term withConsorcio Pegaso comprising two Companies namely Campo Puma Oriente S.A. (CPO) with 90%share and Joshi Technologies Inc. with the balance 10%. Gammon India Limited has a 73.80%share in CPO corresponding to 66.40% share in Consorcio Pegaso. Initially the contractwas production sharing but in February 2011 it was changed to a service contract for an18 year term. The remaining oil recovery after considering production till date from theexisting Puma field is approximately 14.3 million barrels excluding probable and possiblereserves.

There are 11 operational wells in the Puma Block. However of these only 2 wells arecurrently flowing with the remaining being capped awaiting interventions including waterinjections artificial lift etc. as also additional CAPEX. In the absence of undertakingthese procedures due to the stringent conditions for funding under SDR on Gammon there hasbeen no progress in this direction resulting in drop in average to approx 300 barrels ofoil per day at the per barrel service fee of USD 21.50. Had these interventions takenplace these wells would have flowed approx 2000 barrels apart from an upward revision inservice fees to approx USD 29 per barrel. Our attempts to identify a strategic partner toremedy the situation including complete divestment of the asset is continuing but in thecontext of the current production levels is proving to be a significant challenge.

2. Dividend

The Board of Directors do not recommend any dividend on the Equity Shares of theCompany for the Financial Year ended March 31 2017 with a view to conserve the resourcesof the Company to meet the payment obligations towards the lenders.

3. Reserves

No amount was transferred to Reserves for the Financial Year ended March 31 2017.

4. Finance

During the period 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.

Pursuant to the carve out of part of the Civil EPC Undertaking to Gammon Engineers andContractors Private Limited ("GECPL") and the Transmission and DistributionUndertaking to Transrail Lighting Limited ("TLL") proportionate CDR debt hasalso been transferred to GECPL and TLL.

The Company executed Novation Agreements on 29th December 2016 and 10thMay 2017 for novating CDR debts aggregating to Rs. 6505.42 crores (Fund and Non-Fundbased) to GECPL as part of the carve out of the Civil EPC Undertaking.

The Company executed Novation Agreements on 26th February 2016 and 10thMay 2017 for novating CDR debts aggregating to Rs. 3855.20 crores (Fund and Non-Fundbased) to TLL pursuant to the transfer of the Transmission and Distribution business.

The Company also availed a non fund based facility of Rs. 500 crores during the yearunder review from its lenders to enable GIL to secure release of 75% of cash whereverarbitration award is in its favor but appealed by the clients and the said client iswilling to release 75% of the awarded amount against issue of bank guarantee as prescribedby Niti Aayog Guidelines.

The residual CDR debt of Rs. 4263 crores has become a Non Performing Asset with thelenders as on 30th June 2017 . The Company is working on a resolution planwith the lenders for resolving the residual debt.

5. Debentures

During the period under review Non-Convertible Debentures ("NCD's") held bythe CDR lenders aggregating to Rs.15.49 crores have been novated/transferred to TransrailLighting Limited ("TLL") as part of the carve out of the Transmission andDistribution business into TLL .

During the period under review Non-Convertible Debentures ("NCD's") held bythe CDR lenders aggregating to Rs. 6.21 Crores have been novated/transferred as part ofthe CDR debt pursuant to the Novation Agreements entered into between the Company theLenders and Gammon Engineers and Contractors Private Limited such debt being novated aspart of the carve out of the Civil EPC Undertaking. However some NCD holders have yet toapprove the novation .

6. Public Deposits

Your Company has not accepted or renewed any deposits under Chapter V of the CompaniesAct 2013 during the Financial Year 2016-17.

7. Transfer of Unclaimed Dividend and Unclaimed Equity Shares to Investor Education andProtection Fund

Pursuant to Section 124 of the Companies Act 2013 the Company has transferredunclaimed dividend for the Financial Year 2008 - 09 which remained unclaimed and unpaidfor a period exceeding seven years from its due date aggregating to Rs. 420977/- (RupeesFour Lakh Twenty Thousand Nine Hundred and Seventy Seven only) to the Investor Educationand Protection Fund (IEPF) on 14th December 2016 . The Company has alsotransferred unclaimed and unpaid Interim Dividend outstanding for seven or more years forthe Financial Year 2010-11 amounting to Rs. 241168/- (Rupees Two Lakh Forty One ThousandOne Hundred and Sixty Eight) to the IEPF Fund on 21st October 2017 andUnclaimed

Final Dividend for the financial year 2009-10 amounting to Rs. 368722/- (Rupees ThreeLakh Sixty Eight Thousand Seven Hundred and Twenty Two only) to the IEPF Fund on 22ndNovember 2017 .

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 are transferred to the demat account of the IEPF Authority as notified by theMinistry of Corporate Affairs. The details of such dividends/shares transferred to IEPFare uploaded on the website of the Company at www.gammonindia.comunder the 'Investors' section.

In accordance with the aforesaid provision of the Act read with the IEPF Rules theCompany has already initiated necessary action for transfer of all shares in respect offinal dividend for the financial year 2009-10 which has remained unpaid or unclaimed bythe Members for 7 (seven) consecutive years or more. The details of such dividends/sharestransferred to IEPF are uploaded on the website of the Company at www.gammonindia.comunder the 'Investors' section.

The following are the due date(s) for claiming the unpaid/unclaimed dividend declaredby the Company

Financial year Type of Dividend Due date for transfer to IEPF account
2010-11 Final Dividend 29th October 2018
2011-12 Final Dividend 28th November 2019

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

The Scheme of Arrangement for transfer of the Civil EPC business to Gammon Engineersand Contractors Private Limited ("GECPL") as approved by the National CompanyLaw Tribunal Mumbai bench came into operation on 31st March 2017 with effectfrom the appointed date i.e 1st July 2016 . GECPL ceased to be the subsidiaryof the Company on 31st March 2017 . Similarly the Scheme of arrangementbetween the Company and Transrail Lighting Limited ("TLL") for transfer of thetransmission and distribution business which was approved by the NCLT Mumbai bench on 30thMarch 2017 came into operation on 19th April 2017 with effect from theappointed date i.e. 1st January 2016.

Both these businesses accounted for almost 65% of the total revenues of the Company .

During the period under review the retained civil EPC Business of the Company has alsobeen proposed to be carved out to the Company's wholly owned subsidiary GammonTransmission Limited. However the same is awaiting approvals of necessary authorities andall the stakeholders including the lenders .

Turnover of the residual EPC Division to be carved out and as percentage to the TotalTurnover as on 31st March 2017

Particulars Amt (Rs. In crores) %age to Total Turnover as on 31st March 2017
EPC Turnover 1559.25 59.31%

9. Change in Nature of Business

Post completion of restructuring of business as mentioned above the Company continuesto carry on the retained Civil EPC business . The Company has investments in its overseassubsidiaries and will monetize its real estates and recover long pending receivablesincluding arbitration claims .

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 the Company continues to face risk of winding up from itscreditors both secured and unsecured .

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

ii) your 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 2017 and its loss for theyear ended on that date;

iii) your 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 fraud and other irregularities;

iv) your Directors have prepared the Annual Accounts for the year ended March 31 2017on a going concern basis;

v) your Directors have laid down internal financial controls which are followed by theCompany and that such internal financial controls are adequate and are operatingeffectively;

vi) your Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

12. Extract of Annual Return

The extract of Annual Return as per the provisions of Section 92(3) of the CompaniesAct 2013 and Rule 12(1) of the Companies (Management and Administration) Rules 2014 isannexed to this report as ''Annexure A" in Form " MGT-9".

13. Subsidiary / Associates and Joint Venture Companies

During the period under review Gammon Engineers and Contractors Private Limited("GECPL") ("Formerly Nikias Metals Private Limited") ceased to be thesubsidiary of the Company effective from 31st March 2017 .

The Company had 57 subsidiaries including step-down subsidiaries 5 Associates and 8Joint venture companies as on 31st March 2017.

Gammon Infrastructure projects Limited ("GIPL") ceased to be the Company'ssubsidiary effective from 8th August 2017 post divestment by the Company ofits stake in GIPL held through two of its wholly owned subsidiaries Gammon Power Limitedand Gactel Turnkey Projects Limited. Pursuant to this all the subsidiaries and SPV's ofGIPL have ceased to be the subsidiaries of the Company .However the Company continues tohold as on date 39.61% of the equity stake in GIPL through its wholly owned subsidiaryGammon Power Limited.

Report on the financial performance of each of the subsidiaries joint ventures andassociate companies is included in the consolidated financial statements of the Company inprescribed Form AOC-1 and is also set out in "Annexure B" to this Report.

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 2015 under Section 133 of the Companies Act 2013.Your Company has published Ind AS Financials for the year ended March 31 2017 along withcomparable as on March 31 2016 on a Standalone and Consolidated basis which form a partof this Annual Report.

As required under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Consolidated Financial Statements of the Company and itssubsidiaries form part of this Annual Report. A Statement containing the salient featuresof the financial statements of the subsidiary companies is attached to the said FinancialStatements in Form AOC-1.

The said Financial Statements and detailed information of the subsidiary companiesshall be made available by the Company to the shareholders on request. These FinancialStatements will also be kept open for inspection by any member at the Registered Office ofthe Company and the subsidiary 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 are available on the Company's websiteviz. .

15. Directors/Key Managerial Personnel

Mr. Digambar Bagde-Non Executive and Non-Independent Director resigned from theCompany's Board on 5th May 2017. Mr. Atul Dayal and Mr. Jagdish Sheth resignedas the Independent Directors of the Company w.e.f. 23rd August 2016 and 5thOctober 2016 respectively. Mr. Chandrahas Dayal resigned as the Non - Executive and Non -Independent Director of the Company w.e.f. 29th September 2017. Mr. Ajit B.Desai ceased to be an Executive Director of the Company effective from 17thDecember 2017 by virtue of expiry of his term. However he was appointed as a ChiefExecutive Officer for a period of one year w.e.f. 18th December 2017.

The Board in its meeting held on 6th February 2018 appointed Mr. ChayanBhattacharjee as Non-Executive Non-Independent Director of the Company in a casual vacancycaused by the resignation of Mr. Digambar Bagde and whose term expires at the ensuing 95thAnnual General Meeting. (i.e. Mr. Bagde would have retired by rotation at the 95thAGM had he not resigned). Notice has been received pursuant to Section 160 of theCompanies Act 2013 with the requisite deposit from a shareholder proposing the name ofMr. Chayan Bhattacharjee as a Non Executive and Non Independent Director of the Companyfor a period of three years w.e.f. 6th February 2018. Mr. Bhattacharjee shallbe liable to retire by rotation.

Further Mr. Vardhan Dharkar - President Finance and Chief Financial Officer and Ms.Gita Bade - Company Secretary resigned from the Company's services w.e.f. 2ndMay 2017.

As on the date of this report the Board members suffer disqualification under theprovisions of Section 164(2) of the Companies Act 2013. Accordingly all the Directorshave given a declaration to that effect. The vacancy shall be filled up as and when theterm of the Directors expires.

The Company has designated the following persons as Key Managerial Personnel of theCompany

Sr. No Name of the Key Managerial Personnel Designation of the Key Managerial Personnel
1. Mr. Abhijit Rajan Chairman and Managing Director
2. Mr. Ajit B. Desai Chief Executive Officer
3. Mr. Rajul Bhansali Executive Director - International Operations

16. Auditors

(A) Statutory Auditors

M/s. Natvarlal Vepari & Co. Chartered Accountants Firm Registration No: 106971Wwere appointed as the Statutory Auditors of the Company at the 92nd AnnualGeneral Meeting (AGM) of the Company held on 30th June 2014 for a period of 3(three) years i.e. from the conclusion of the 92nd AGM until the conclusionof the AGM to be held for the Financial Year 2016-2017. Accordingly the term of theexisting Statutory Auditors i.e. M/s. Natvarlal Vepari & Co. expires on theconclusion of the ensuing 95th Annual General Meeting.

In compliance with the provisions of Section 139 of the Companies Act 2013 the Boardof Directors of the Company and as recommended by the Audit Committee has proposed theappointment of M/s Nayan Parikh & Co. Chartered Accountants (Firm Registration No.107023W) as the Statutory Auditors of the Company in place of the retiring auditorssubject to the approval of the shareholders at the forthcoming AGM for a period of 5(Five)years i.e. from the conclusion of this 95th AGM till the conclusion of the 100thAGM. As per the provisions of Section 139(1) of the Companies Act 2013 their appointmentfor the above tenure is subject to the ratification of the members of the Company at everysubsequent AGM.

Nayan Parikh & Co. Chartered Accountants being eligible for appointment have giventheir consent to such appointment and have rendered their eligibility certificate inaccordance with the provisions of Section 141 of the Companies Act 2013 .

(B) Cost Auditor

In accordance with the provisions of Section 148 of the Companies Act 2013 the Boardin its meeting held on 20th July 2016 appointed Mr. R. Srinivasarghavan andCo. as the Cost Auditors of the Company for the Financial Year ended 31stMarch 2017 at a remuneration of Rs. 250000/- (Rupees Two Lakh and Fifty Thousand only).The said payment was ratified by the members of the Company at the 94th AnnualGeneral Meeting held on 21st September 2016.

The Board in its meeting held on 20th September 2017 has on therecommendation of the Audit Committee appointed Mr. R. Srinivasarghavan and Co. as theCost Auditor for the Financial Year ended 31st March 2018 on a remunerationof Rs. 100000/- (Rupees One Lakh only).

In terms of the provisions of Section 148(3) of the Companies Act 2013 read with Rule14(a)(ii) of the Companies (Audit and Auditors) Rules 2014 the remuneration of the CostAuditor for the aforementioned Financial Year ended 31st March 2018 is soughtto be ratified by the members at the ensuing 95th Annual General Meeting.

(C) Secretarial Auditor and Audit Observations

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 2017 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 C".

With reference to the Auditor's qualification regarding non compliance under the FEMARegulations relating to filing of APR's and filing of Return of Foreign Liabilities andAssets within the stipulated time. The management would like to state that the delay infiling APR's is due to non -receipt of accounts from overseas subsidiaries . The Companyis in the process of complying with the regulations .

17. Corporate Governance Report and Management Discussion & Analysis

A Report on Corporate Governance and Management Discussion and Analysis for the periodended 31st March 2017 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.

18. Boards' Explanation On 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 D".Members attention is drawn to "Emphasis ofMatter" stated in the Auditor's Report dated 20th September 2017 on theStandalone Financial Statements and in the Auditor's Report dated 6th February2018 on the Consolidated Financial Statements of the Company for the year ended 31stMarch 2017. The Directors would like to state that the said matters are for the attentionof members only and have been explained in detail in the relevant notes to accounts asstated therein and hence require no separate clarification.

19. Declaration by Independent Directors

All the Independent Directors have furnished declaration in accordance with theprovisions of Section 149(7) of the Companies Act 2013 regarding meeting the criteria ofindependence as provided under Section 149(6) and the same has been taken on record by theBoard .

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. In line with this the Boardadopted the Nomination and Remuneration Policy which is annexed to this Report as"Annexure - E".

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

4. Corporate Social Responsibility Committee

5. Securities Allotment Committee

6. Review Committee of Independent Directors

Details of the composition of each of the committees number of meetings held and allother relevant details has been given in the Corporate Governance Report which forms apart 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 are updated about the ongoing events and developments relating tothe Company from time to time either through presentations at board or committee meetingsor through in house journals. The Independent Directors also have access to anyinformation relating to the Company whenever they so request. In addition presentationsare made to the Board and its committees where Independent Directors get an opportunity tointeract with members of the senior management. The Independent Directors also haveinteraction with the Statutory Auditors Internal Auditors and External Advisors if anyappointed by the Company at the meetings.

The senior management conducted two sessions for the Independent Directors where thesenior management team of the Company updated the Directors on the Company and theprojects. Details of the familiarization programmes are available on the Company's websiteon under the Investor Section.

23. Meetings of the Board

During the Financial Year under review the Board of Directors of your Company met11(eleven) times i.e. on 2nd April 2016 13th May 2016 4thJune 2016 17th June 2016 8th July 2016 20th July2016 21st July 2016 13th September 2016 12thDecember 2016 15th February 2017 and 20th February 2017.

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 11(eleven) times i.e. on 13th May 2016 4th June 2016 17thJune 2016 18th July 2016 20th July 2016 21st July2016 13th September 2016 12th December 2016 29thDecember 2016 15th February 2017 and 20th February 2017.

Mr. Chandrahas Dayal ceased to be the Chairman of the Audit Committee due to hisresignation from the Company's Board on 29th September 2017. Mr. NavalChoudhary has been appointed as the Audit Committee Chairman.

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 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 2017 with the Related Parties were in theordinary course of business and at arm's length basis. All such Related Party Transactionswere placed before the Audit Committee and also the Board for its approval whereverrequired. No omnibus approvals were taken during the period under review. Further allcontinuing Related Party Transactions as defined under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 have been duly approved by the shareholders.

The Company has framed a policy on Related Party Transactions for the purpose ofidentification and monitoring of such transactions. The details of Related PartyTransactions entered into by the Company are more particularly given in the Notes to theStandalone Financial Statements.

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

The Details of the Related Party transactions are given in Form AOC-2 which is enclosedto this report as ‘Annexure F."

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

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 Obligations and Disclosure Requirements)Regulations 2015 mandates a formal evaluation to be done by the Board of its ownperformance and that of its Committees and individual Directors and that the IndependentDirectors shall evaluate Non-Independent Directors and the Chairperson of the Board

Pursuant to provisions of Section 178 of the Companies Act 2013 the Nomination andRemuneration Committee carried out an evaluation of every Director's performance and theBoard has carried out a formal annual evaluation of its own performance and that of itsCommittees and individual Directors.

The Independent Directors at their meetings evaluated the performance of theNon-Independent Directors the Chairman and Managing Director ("CMD") withinputs from other Directors. Independent Directors were also evaluated by Board members onthe functioning participation and contribution made by each Independent Director to theBoard and Committee processes the degree of each Independent Director's involvement inBoard and Committee decision making communication and other attributes of each of theIndependent Directors. A Report of the evaluation has been been forwarded to the Chairmanand Managing Director and the Nomination and Remuneration Committee to maintainconfidentiality of the Report and to improve the Board dynamics strengthening the Boardand enhancing Board's overall performance in the challenging environment.

29. Corporate Social Responsibility

The Company's Corporate Social Responsibility (CSR) Policy as formulated by theCorporate Social Responsibility Committee and approved by the Board is annexed to thisReport as ''Annexure G" and is also available on the website of the Company viz.

The Company has not spent any amount on CSR activities during the Financial Year ended31st March 2017 since the average net profits of the Company for theimmediately preceding three Financial Years stood negative.

The Annual Report as per the Companies (Corporate Social Responsibility Policy) Rulesis annexed to this Report as "Annexure H".

30. 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.

31. Internal Financial Controls

The Company has devised and implemented internal control systems as are required in itsbusiness processes. The Company remains committed to ensuring an effective internalcontrol environment that provides assurance on the operations and safeguarding of itsassets. The internal controls have been designed to provide assurance with regard torecording and providing reliable financial and operational information complying with theapplicable statutes safeguarding assets executing transactions with proper authorizationand ensuring compliance with corporate policies.

Internal Audit is that function which monitors the Company's internal controlenvironment. Conventional and strong internal audit processes both at the corporate andproject level ensure concurrent review of the adequacy and effectiveness of internalcontrols across the Company and the compliance status with laid down systems policies andprocedures. In the ERP environment of the Company authentication of IT security andrights to operate and view are periodically addressed by the internal audit team andobservations are submitted to the management on a case to case basis. The Company has aninhouse internal audit team and an external internal audit firm to carry out periodicinternal audits across the company's functions and premises.

During the year the internal controls across the Company's business processes werereviewed for adequacy and robustness and documentation was updated as and where requiredafter discussion with relevant process owners. The mitigation of procedural risks was alsoreviewed and a document in this behalf was tabled before the Audit Committee and the Boardand duly made available to the Company's statutory auditors.

The Company's Internal Audit function has a documented process which is in conformitywith ISO quality standards. The Audit Committee consists of Independent Directors and isheaded by experienced professional. The Committee meets periodically to inter-alia reviewthe Internal Auditor's Reports and their observations and makes recommendations foradequacy effectiveness of Internal Controls and required remedial action if any to theBoard of Directors for its implementation.

32. 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.

33. 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 I" to this Report.

34. 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 J"to this report.

35. Prevention of Sexual Harassment of Women at Workplace

During the year under review no complaints were received by the Committee forRedressal pursuant to Sexual Harrassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.

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
Abhijit Rajan
Place: Mumbai Chairman & Managing Director
Date: 6th February 2018